defending the right to innovate
Monopoly corrupts. Absolute monopoly corrupts absolutely.
Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.
Via Randy Ray: Patent trolls
From the NBER Digest:
COUNTERFEITERS: FOES OR FRIENDS? Yi Qian
Counterfeits ... steal demand from low-end authentic products, but [have] positive spillover effects for high-end authentic products.
In fiscal 2009, the U.S. Customs and Border Protection seized more than $260 million worth of counterfeit goods, with counterfeit footwear accounting for 40 percent of the total seizures. Counterfeit footwear has topped the seizure list of the customs service for four years. How does the existence of such counterfeits affect the sales of authentic products?
In Counterfeiters: Foes or Friends? (NBER Working Paper No. 16785), author Yi Qian analyzes product data from Chinese shoe companies over 1993-2004. She can study the impact of policy changes, such as the 1995 change in government enforcement efforts in monitoring footwear trademarks in China. That change had different effects on counterfeit entry for branded companies with varying degrees of closeness to the Chinese government.
Qian finds that counterfeits have positive advertising effects for the brand of shoes they copy. However, they have negative substitution effects for the authentic products, driving buyers away from the authentic shoe to the counterfeit one. For sales of high-end authentic products, the positive advertising effect dominates the substitution effect. For sales of low-end authentic products, the negative substitution effect outweighs the advertising effect. All of the effects last for a few years before leveling off. And, these different effects for different products reinforce incentives for authentic producers to innovate and to move upward in the quality portfolio. Finally, after the entry of counterfeiters, market shares for the higher quality products increase while those of the lower end products decline.
Qian tests these results by conducting some surveys and finds similar effects regarding the purchase intent of high-end, medium-end, and low-end branded products. Her subjects' responses suggest that counterfeits signal brand popularity, at least to some consumers. Counterfeits thus appear to steal demand from low-end authentic products, but their presence has positive spillover effects for high-end authentic products.
(via George Leef) What will we do when every word in the English language is trademarked?
The mainstream blogs occasionally cover intellectual property. Andrew Sullivan, for example reproduced a few letters from his readers criticizing commentary on Yglesias's blog. I suppose he picked these letters because he thought they were the most sensible? I thought just for fun I would fisk one of them, mostly because it is the kind of nonsense I hear at seminars all the time:
I just wanted to weigh in on the budding IP debate to say that anyone who takes a firm stand on the specific meaning of IP law doesn't really understand IP law.
John Spiers was recently in Hong Kong and has a report about IP problems there. Any of our readers who think they might interested in helping can get in touch with him through his website (below)
I bought your book and noted you've made anti-IP presentations in Hong Kong. I have one book on small business international trade, and am working on another which will feature an argument against the individual entrepreneur from seeking IP rights, or even exclusive contracts (I disagree even with your trademark exception, but that is for another day.) I am alarmed by the concerted efforts to promote IP law in Hong Kong and China.
As you may know I am much more favorably inclined towards trademarks than other forms of intellectual property. (Michele is less favorably inclined.) It seems to me a good thing that it is possible to tell who you are doing business with, and no downside monopoly. That may be the purpose of trademark law...but there is another part of creeping IP: the apparent right under trademark law to protect the image of your product. Daniel Monchuk directs us to an article in the WSJ about what seems to me to be trademark abuse. The article is about costume companies that are being sued by trademark holders for providing costumes based on trademarked characters. For the life of me I don't see what this has to do with identity: there is no claim that these costumes are authorized by the trademark holder, nor can a costume based on a comic book be confused for a comic book. Perhaps Justin or someone else who knows more about the law than I do can comment on whether this is a proper use of trademark law as it exists. Certainly if the law allows it, then there is a big problem with trademark law.
For your amusement, a 45 page legal treatise by Andrew Beckerman Rodau entitled "The Supreme Court Engages in Judicial Activism in Interpreting the Patent Law in eBay ,Inc. v. MercExchange, L.L.C." The treatise opens with a long, cursory, and misinformed discussion about the economics of patents - misinformed not in the sense that Michele and I disagree with the economics, but that all economists would disagree with the economics. But the amusing part is the criticism of the Supreme Court for judicial activism. Their activism? Not respecting a long tradition of allowing permanent injunctive relief. The humor: the patents in question are business practice patents - for conducting auctions, no less - the real activism was of course the activism of the United States Court of Appeals for the Federal Circuit which created business practice patents whole cloth against an equally long tradition of not allowing them. Not surprisingly I didn't see any mention of this by Rodau in his article.
If you are looking for more IP humor, you might try this. Here is a bit from the abstract:
Origin stories serve both ontological and epistemological functions. They in- fuse everyday life and relations with signiﬁcance by explaining why things are as they are and by providing guidance for how things should evolve based on what we already understand about our world. Origin stories also literally give a culture life by designating a beginning and a history. Finally, most origin sto- ries are political, legitimating or justifying certain relations of power in society. This Article is a comparative analysis of the "origin stories" that structure several branches of United States intellectual property protection: copyright, trademark and patent law.
Sadly this paper by Silbey is probably closer to the mark than Rodau's.
Via Gerry Everding: What were they thinking?
In creating a double standard for copyright and trademark law, the courts appear to have been influenced by the "romantic nature" of copyright law, Bartholomew says. "It's romantic to think about someone writing the great American novel or producing a hit song," he explains, "and the people who appeal for protection of these rights authors, movie stars, musicians are themselves very appealing."
Complete article here
On the trademark front the legal system seems to have a degree of rationality. According to the AP an English Judge ruled against a claim by the Beatles and in favor of Apple computer: Apple computer can continue to use the apple logo in connection with iTunes.
I've often had the experience after presenting a paper arguing that copyright doesn't work, that someone asks "So you don't mind if I take your name off this paper, and put my name on it and redistribute it, right?" Although intended as a joke, it isn't really funny, because it demonstrates a lack of understanding of what the paper is about. Suppose I download a piece of music that I didn't previously have. Ignoring the future consequences regarding music production - it is certain that from a social point of view what I did made society better off. It made me better off - I have access to music I didn't have before - and nobody is worse off. They copyright holder might not be able to sell me music in the future - but that is just a transfer payment from me to him - it has no social consequence.
Contrast this to identity theft. I make a copy of your identity - that is, I masquerade as you. This equally certainly makes society worse off. The essence of identity is that it must be unique. If multiple people hold the same identity, then the identity loses its social value. This is why trademark is different than copyright. Copyright prevents the socially desirable use of creations; trademark prevents the socially undesirable theft of identities - it preserves the right to know who you are doing business with.
How does plagiarism fit into this? Plagiarism is the theft of identity. When you take my name off the paper and claim you wrote it, this is identity theft - you are claiming to be me. It serves no socially useful purpose, and indeed has bad social consequences. So while I am against copyright, I am for trademark, against identity theft, and against plagiarism.
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