The Lexra Story--"An example of how Patent law hurts innovation", according to my friend Max Chiz.

Also note the same old error creeping in of thinking that creation is an independent source of property rights (for more, see Libertarian Creationism, Inventors ... are like unto ... GODS...., Rethinking IP Completely, and Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors).

Notes Johnson, "the creator of a piece of intellectual property owns the product of his work." His argument? "If a baker bakes a loaf of bread, he therefore owns it." And likewise, for "music, movies, software." But note the mistake here Johson makes: "If a baker bakes a loaf of bread, he therefore owns it." The "therefore" is the giveaway: he says this because he thinks of the creation of the loaf as the act that gives rise to ownership. Then this leads to the analogy with other created things, like music. But creation of the loaf is not the reason why the baker owns it. He owns the loaf because he owned the dough that he baked. He already owned the dough, before any act of "creation"--before he transformed it with his labor. If he owned the dough, then he owns whatever he transforms his property into; the act of creation is an act of transformation that does not generate any new property rights. So creation is not necessary for him to own the resulting baked bread. Likewise, if he used someone else's dough--say, his employer's--then he does not own the loaf, but the owner of the dough does. So creation is not sufficient for ownership.

The rest of the argument is confused as well. Johnson argues that there are property rights in creations, and glorifies the (utilitarian) Constitution that enshrines them--why, then, ought they last only for a finite time, instead of forever, like other types of property rights do? And take this argument:

The pirate deprives the creator not only of the relatively small amount of money to be paid for the product. He deprives the creator of his very means of living, his ability to control, trade and profit from the work of his mind. That is a crime legally, morally, and on the deepest philosophical level, metaphysically. It is a matter of the creator's ability to maintain his own existence.

But this implies that property owners have a right not only in the physical integrity of their property but in the value of their property; they do not: value lies in the way others esteem your property. (See Rethinking IP Completely, and Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors for further comment on this.)

Finally, when he notes, "The PRO-IP Act ... is a welcome law and a welcome message," he accepts the idea that law can be or ought to be made by legislation. Of course, this is wrong, for several reasons--see my post Regret: The Glory of State Law for elaboration.

Update: see the vigorous debate in the comments section of the parallel post at Mises.org.

According to the Guardian, McDonald's is indeed filing such an application. Lord Sandwich must be spinning in his grave.

Singer Jackson Browne has sued John McCain for copyright infringement after a state Republican party ad supporting McCain used a snippet of Jackson's song "Running on Empty".

Some background of the case HERE and HERE.

Courtesy of The Hollywood Reporter blog, McCain's Motion to Dismiss the lawsuit can be found HERE. [PDF]

McCain's "Anti-SLAPP" Special Motion To Strike the complaint can be found HERE. [PDF]

While I support McCain's legal efforts in this instance, it is hard to feel sorry for him as he has little moral credibility on the issue. Leaving aside all other aspects of Presidential politics, McCain has stood aside for years in the Senate and allowed copyright law to metastasize out of control into the current cancer it is.

Then, after McCain's campaign first got BURNED with the law that he supported, he had the GALL to SUGGEST that SPECIAL fair use considerations should be given to politicians and their campaigns - but not necessarily to the general public. Because after all, we wouldn't want to make meaningful reforms to copyright law, now would we?

For shame Senator! But good luck with with your fair use defense in your copyright infringement suit using laws that apply to everyone equally.

In Global Online Effort To Ascertain Validity of Patents, Eric Sinrod notes the effort of startup Article One Partners to improve the quality of issued patents. (See also Online startup aims to improve patent quality.) The company seeks to do this by offering substantial payments to people who submit relevant prior art that helps to determine whether a given patent is valid or not. The resulting prior art can help to show a patent is invalid--or enhance the validity of others. Now I'm suspicious of the idea of trying to "legitimize the validity of patents"--but this is probably just PR. I suspect that on balance more patents will be sunk than strengthened by this type of crowdsourcing. Sunshine makes a good disinfectant!

Is the Digital Theft Deterrence Act constitutional? It is being challenged by the Boston University student Joel Tannenbaum and Harvard law Professor Charles Nesson link here. The case questions how the act allows a private group copyright holders to enforce a criminal statue by way of civil suits. Mr. Nesson's goal in making this argument is to ‘'turn the courts away from allowing themselves to be used like a low-grade collection agency."

This is an interesting strategic response to how the recording industry uses current law to end file sharing of copyrighted material. I wouldn't expect an early result, but anything that makes the industry's enforcement more difficult and expensive is good news for consumers.

This is only the opening gun but US producers, under pressure from imports, are suing the Korean firms for patent infringement in both the International Trade Commission and the courts link here. Silicon Valley flash memory maker Spansion is suing Samsung as well as a long list of companies like Apple using the chips. After announcing that it would be reducing its employees by half or 5000, a Spansion share rose 20 cents to $0.50.

In a similar case, Kodak is suing Korean companies Samsung and LG for violating its digital camera patents.

To read more about these cases, Google spansion+samsung.

I guess we can expect more such suits, given the recession and the drop in consumer demand. The great advantage of pursuing these cases before the ITC is that it usually acts much more rapidly than the courts.

Just because current IP law needs reform--to say the least--does not diminish the need to understand existing IP law so as to be aware of it and navigate around it. With this in mind, I'd like to mention four excellent new IP law books I've acquired. Each of these was published in 2008 by Oxford University Press (my publisher as well) as part of its expansion of its IP offerings.

The first two are useful for patent practitioners and companies: Intellectual Property Culture: Strategies to Foster Successful Patent and Trade Secret Practices in Everyday Business, by Eric M Dobrusin and Ronald A Krasnow (reviewed here); and The Business of Intellectual Property, by Christopher M. Arena & Eduardo M. Carreras.

Patent Appeals: The Elements of Effective Advocacy in the Federal Circuit, by Mark Simon Davies, will be most useful for patent litigators, and Publishing Forms and Contracts, by Roy Kaufman, will be of interest to media, entertainment, and copyright attorneys as well as media companies. All four of these books are handsome and nicely done, and, although I have not read all of them in detail yet, they all look to be very well-done and useful to their respective audiences.

As noted here here, one of Obama's transition "team members is Reed Hundt, who was Bill Clinton's FCC Chair from 1993 through 1997. Hundt is slated to work on the agency review team in charge of international trade and economics agencies." In a 2006 Forbes op-ed, Hundt had various suggestions for patent reform. They are not all terrible, but they continue to miss the point by struggling to find some way to make the system work better. Part of his proposal is to reduce the number of patents granted, increase fees, and increase funding of the USPTO. Writes Hundt: "First, we should slash the number of patents granted each year by 90%. In 2004 the U.S. Patent &Trademark Office issued 165,000 patents. Sixteen thousand is more like an optimal number." He proposes a $500k fee companies can pay for a "fast-track" one-year patent application review.

Typical bureaucratic hubris to think he knows the "optimal" number of patents--though technically he is right that 16,000 is "more like" an optimal number than is 165,000, since the optimal number is zero. This is not dissimilar to another recent proposal to improve patent quality and reduce the number of patents granted by radically increasing filing fees from the $1000 level to about $50,000. As Manuel Lora noted to me, this is like the Laffer Curve of Patents (see Rothbard's evisceration of the Laffer Curve). Such high fees would of course reduce the number of patents, but would also tend to benefit large corporations.

These guys ought to give up trying to fine-tune an inherently unjust system and just admit it ought to be scrapped. Hundt writes, "We have a horribly expensive system, with huge backlogs and a daunting litigation risk. No wonder the Chinese don't want to adopt it. Let's get rid of it and start from scratch." Well, he's half-right.

***

A few more responses to selected comments by Hundt:

Second, we need to spend more money on the system. The budget of the U.S. Patent & Trademark Office is $1.5 billion. That ought to be tripled to $4.5 billion . . .

Who do you mean, "we," kemosabe? Not if it requires taxpayer funding.

We don't want grossly overworked professionals trying to figure out whether specific algorithms used to refresh the pixels on a computer monitor screen ought to be patented.

No, we want bright young Clintonite master bureaucrats!

Fourth, all patent case awards should be forward looking and linked to lost sales. In other words, plaintiffs who win patent-infringement challenges should be able to enjoin only future competition.

I thought he was onto something with his first sentence, but then he shys away from radical reform by not urging the abolution of all patent injunctions.

The King family wants to sue people who are using Dr. King's image in conjunction with the recent election. Here's the story.

The fact that a lot of money is possibly at stake is irrelevant. If J.K. Rowling wrote a best seller that had a quote from an obscure author, would he have a right to sue for a piece of Ms. Rowling's royalty action just because she cleaned up financially, thanks only in part to her copyright monopoly? The monopoly formerly known as intellectual property is all about getting a piece of someone else's action by using the State, an institution rightly termed by Mr. Libertarian, Murray N. Rothbard, as "the biggest mass murderer, armed robber, enslaver, and parasite in all of human history." He couldn't have called it the biggest monopolist in history, because it's the only monopolist in history.