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Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Olympic Trade Mark Grab

The August 1 edition of the Wall Street Journal reports that organizers of competitions involving animals, robots, and even body parts have been changing their names to avoid "infringing" the trademarked name "Olympics."

The Ferret Olympics is now the Ferret Agility Trials; the Raw Olympics and Rawlympics are now the Raw Games.

America's only native criminal class (i.e., Congress) passed a statute in 1978 giving the U.S. Olympic Committee a monopoly on the word "Olympic" and a few other words. This was buttressed by a 1987 SCOTUS ruling.

The USOC is trying to prevent "ambush marketing." Its lawyers think that people organizing races by ferrets and such will undermine its profitability. If ever there were an example of what Ludwig von Mises called the Montaigne fallacy (seeing the market as a zero-sum game with someone's profits causing someone else's losses), this is it.

Apple's Rotten Trademark Gambit

Today's Wall Street Journal has a special "Business Insight" report, which includes an article on innovation, "Shape of Things to Come", highlighting Apple's recent bid for trademarks related to its iPod and iPhone, and for all we know several other consumer products.

The story about how Apple leveraged its design patents to win these trademarks is a fascinating study in rent-seeking at its finest. They used them as a bridge to "nontraditional trademarks."

What's really interesting is how the Patent examiner suggested changes to Apple's trademark applications so that they could get in under the wire. Sounds like a bit of corruption to me.

Apple has had nothing if not a gigantic first mover advantage over its competitors thanks to rapid and repeated innovation in product design, as well as great execution and saavy marketing. Add it all up and you get a company with a long-term market beating stock, propelled by net operating margins consistently over 20% and a weighted average cost of capital under 10%. Valuepro.net pegs the latter at about 8.6%. Apple long ago earned back its cost of capital on its iPod.

The idea that Apple's recently won trademarks are necessary for the company to earn its shareholders an above average return on capital (or equity) is plainly contradicted by the facts of the case. Too bad the Patent Office examiner doesn't have some economics in his toolkit.

Btw, Apple patented its transparent stairways in its stores, so don't think you can copy their cool design at home.

China--Land of the Rising Patent Regime

China's patent regime (and I"P" system generally) is growing like a weed. Trademark applications there have increased 60% in five years. The number of patents issued has almost doubled to 850,000.

China has added 50 courts that handle I"P" cases. The lawyers are getting rich and, of course, are preventing non-Chinese firms from filing patents or representing clients in court. In fact, the lawyers are the main beneficiaries of the monopoly formerly known as intellectual property. Isn't monopoly great?

The Economist notes that under Mao private property was considered to be theft of the masses. However, it gets it wrong when it implies that the patent laws enacted in China starting in 1985 (and enforced starting in 2001) were consistent with private property.

Patents are a kind of theft of the masses. As Prodhoun should have said, "intellectual property is theft."

Trademark Rent Seeker Will Have to Get a Real Job

A federal appeals court upheld a lower court's 2006 ruling that a corporate consultant, who thought up American Express's "My Life, My Card" slogan, has no trademark rights in it. His claim is akin to an ad agency's marketing concept. Ad agencies get paid for their marketing and advertising work. So can this guy.

Here is the story.

Magic Without Monopoly

Informal "protection" of the incentive to innovate in magic tricks is discussed in this paper . No IP monopoly required.

The pointer is from Tyler Cowen at marginal revolution .

Yes, I am working on a trick to levitate the Patent and Trademark Office. I'll let a real magician, like David Copperfield make it disappear.

The China "IP" Ripoff

In today's Wall Street Journal Business World column, "Yes Logo", Holman Jenkins, Jr. writes that China's disregard of "intellectual property," such as trademarks, will cause firms to underinvest in "reputation" (his parentheses) and quality "and won't take place if they can be freely expropriated by knock-off artists."

Mr. Jenkins adduces not one iota of evidence for this remarkable claim, and ignores the fact that software firms such as Microsoft and many others continue to invest billions in producing new products and brand building. Could it be that they earn much more than their cost of capital even in the face of the rip-off artists thanks to their first mover advantages and ability to sell complementary services, not to mention their already strong postions in the market, strong brands, etc.?

So who needs intellectual property?

Levi's the Lawsuit King

Some investment advice: when a companies main business is filing lawsuits - sell short. Apparently the stitching on the pocket of your jeans is a trademark. Who knew.

Trademark Infringement? Identity Theft? You Decide

Following on David's post about trademarks below, here is the story of the Anti-Defamation League's campaign against groups using "Anti-Defamation League" as a title, including the Anarchists Anti- Defamation League.
The Anti-Defamation League was helped by some court decisions that lowered the bar in determining what constitutes exclusive use of trade names. Its real name is the Anti-Defamation League of B'nai B'rith. How on earth anyone could confuse it with the National Mexican American Anti-Defamation Committee or the American Italian Anti-Defamation League, Inc. or the Anarchists Anti-Defamation League is a mystery only a solon could unravel. And we know there are plenty of solons on the bench all over America.


   

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