Regarding There Are No Good Arguments for IP-Redux:

Go to https://c4sif.org/aip/.

1. See Patent vs. Copyright: Which is Worse?; Where does IP Rank Among the Worst State Laws?; The U.N. Threat to Internet Freedom; Masnick on the Horrible PROTECT IP Act: The Coming IPolice State; The Ominous PROTECT IP Act and the End of Internet Freedom. For examples of copyright censorship, see Libraries: Prepare to burn foreign books, courtesy copyright law; The Patent, Copyright, Trademark, and Trade Secret Horror Files; Paramount Trying to Ban “Godfather” Sequels with Copyright; Copyright Censorship versus Free Speech and Human Rights; Excessive Fines and the Eighth Amendment. See also  Patent Trolls Cost The Economy Half A Trillion Dollars since 1990; Yet Another Study Finds Patents Do Not Encourage Innovation; EU newsflash: patents are anticompetitive!; Intellectual Property Advocates Hate Competition; IP Rights as Monopolistic Grants to Overcome the Public Goods Problem; also Samsung, Apple continue patent dispute; Apple accuses Motorola, Samsung of monopolizing markets with patents–or, you’ve got to be kidding me; We Hope Apple Wins the Patent Wars; Android Patent Trouble Worsens: Motorola Considers Collecting IP Royalties; Apple vs. Microsoft: Which Benefits more from Intellectual Property?; EU: Apple-Samsung row could be stifling competition; EU Injects Itself Into Apple-Samsung Patent War. [↩]

Patent and copyright should be abolished, of course–and the sooner the better. They are both–especially copyright–threats to human freedom and prosperity.¹ As I noted in Patent Reform is Here! O Joy!, incremental reform would be welcome too–as long as it’s significant, and unambiguously positive. And, I would add: non-trivial, i.e. significant, substantial, meaningful.

I laid out some suggested incremental patent and copyright reforms in Radical Patent Reform Is Not on the Way and How to Improve Patent, Copyright, and Trademark Law. In the case of patents, significant reform would include things like:

• Reducing the Patent Term
• Removing Patent Injunctions/Providing Compulsory Royalties
• Adding a Royalty Cap/Safe Harbor
• Reducing the Scope of Patentable Subject Matter
• Providing for Prior-Use and Independent-Inventor Defenses

1. See Patent vs. Copyright: Which is Worse?; Where does IP Rank Among the Worst State Laws?; The U.N. Threat to Internet Freedom; Masnick on the Horrible PROTECT IP Act: The Coming IPolice State; The Ominous PROTECT IP Act and the End of Internet Freedom. For examples of copyright censorship, see Libraries: Prepare to burn foreign books, courtesy copyright law; The Patent, Copyright, Trademark, and Trade Secret Horror Files); Paramount Trying to Ban “Godfather” Sequels with Copyright; Copyright Censorship versus Free Speech and Human Rights; Excessive Fines and the Eighth Amendment. See also  Patent Trolls Cost The Economy Half A Trillion Dollars since 1990; Yet Another Study Finds Patents Do Not Encourage Innovation; EU newsflash: patents are anticompetitive!; Intellectual Property Advocates Hate Competition; IP Rights as Monopolistic Grants to Overcome the Public Goods Problem; also Samsung, Apple continue patent dispute; Apple accuses Motorola, Samsung of monopolizing markets with patents–or, you’ve got to be kidding me; We Hope Apple Wins the Patent Wars; Android Patent Trouble Worsens: Motorola Considers Collecting IP Royalties; Apple vs. Microsoft: Which Benefits more from Intellectual Property?; EU: Apple-Samsung row could be stifling competition; EU Injects Itself Into Apple-Samsung Patent War. [↩]
2. As explained here: “[W]hile it may well be fair use for an individual consumer to store a backup copy of a personally owned DVD on that individual’s computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies.” Chew on that one. It reminds one of the proposed thought crime of leaving the US with the intention to use drugs  in another country where they are legal… [↩]

As noted on Techdirt, Yahoo Going Patent Troll: Threatens Facebook Over Patent Infringement. On TechCrunch TV, former patent examiner and democrat/Obama advisor (but not a patent lawyer) Erin-Michael Gill opines on this: The Man Who Predicted the Yahoo/Facebook IP War on Why Patents Still Matter [TCTV].

Gill is right that patents still “matter.” Hey, taxes “matter” too. I guess if your house is being taken by a state government to give it to Walmart, eminent domain “matters” too. But this doesn’t mean these statist polices are justified, or are anything more than a hindrance to human life and freedom and commerce.

Even though patent “reform” is needed, Gill implies that we need a patent system nonetheless, so big companies can’t just “take” your idea. Newsflash: big companies already have oligopolistic and anti-competitive advantages because of patents.¹ And if someone competes with you by emulating you, they are not “taking” your idea from you. Gill also naively implies that there are ways to reform the patent system, as in the recent Obama patent reform–which is a joke (see The American Invents Act and Patent Reform: The Good, the Meh, and the Ugly).

1. The Microsoft-Apple Gesture Oligopoly; Controls breed controls, Monopolies breed monopolies; The Patent Defense League and Defensive Patent Pooling; Are Patents Needed to Make Up for FDA Kneecapping?; Nortel Patents Sold for $4.5 Billion to Consortium Which Includes Apple; Apple vs. Microsoft: Which Benefits more from Intellectual Property?; Patent Cross-Licensing Creates Barriers to Entry. [↩]

Critics of patent and copyright often argue that copyright causes censorship,¹ while patents inhibit free trade and competition.² For this reason, and because of the way the state can use copyright and the fight against piracy as an excuse to clamp down on information sharing and also the Internet itself, I’ve argued that copyright is worse than patent.³

But patent and copyright are not so easily compartmentalized. Patents also give rise to censorship (see, e.g, my post Cato/Reason/CEO brief opposing medical diagnostic process patents as violating freedom of speech [update: Patents Threaten To Silence A Little Girl, Literally.]), and copyright also restricts free trade and competition. Patent law’s effect on speech and expression, and copyright law’s effect on free trade, is not surprising–after all, the price signals of a free market are a type of communication. So interfering with expression has to hamper the market, and hampering the market has to affect price signals, i.e. communications. Censorship affects the efficiency of the market, and intervention in the market suppresses free expression and communication of useful information. (This is one reason patent and copyright ought to be considered similar type of laws, despite protestations by some critics that we have to treat each IP law separately. See my post “Intellectual Property” as an umbrella term and as propaganda: a reply to Richard Stallman.)

We and others have given a lot of attention lately to the danger copyright poses to freedom of expression and also the Internet itself, in the wake of the SOPA battle. (See posts on C4SIF and Techdirt for more information.) But in the wake of the temporary defeat of SOPA, the looming Trans-Pacific Partnership trade agreement (Death by Copyright-IP Fascist Police State Acronym) threatens to exacerbate copyright’s affect not only on free speech and the Internet but on free trade itself.

I noted before (Supreme Court lets ban on “gray market” imports stand; Leveraging IP) how copyright law can be used to stop resales of legitimately purchased products, like Omega watches, by slapping some copyrighted symbol on the product and manufacturing it outside the US to exploit a quirk of US copyright law–and how this could imperil libraries and sales of used books, if the book was made outside the US (Libraries: Prepare to burn foreign books, courtesy copyright law).  As Mike Masnick explains in a recent Techdirt post (below), the TPP may make this even worse, by giving companies selling products the ability to ban secondary markets and resale of the goods they sell consumers–for example, an iPhone. In effect, TPP could allow Apple, for example, to prevent the “owner” of an iPhone from reselling it or even lending it to someone, on the grounds that it was includes copyrighted material (such as  iOS) but was made overseas so that it is exempt from the First Sale doctrine (which normally would permit someone who buys a copyrighted item to resell it, lend it, etc.). One can just imagine ebay and garage sales and gazelle.com being viewed as illegal “piracy” because owners of objects are … reselling them without permission of the original manufacturer.

Scary stuff. Here’s Masnick’s excellent but chilling, post.

Update: For another example of how patent law, not just copyright law, serves to censor free speech: here we have a patent troll using patents to potentially shut down, or impose a heavy tax, on podcasting, and to violate the First Amendment rights of donors to anonymity and privacy.  See UPDATE: EFF Fights Patent Troll Demand For Save Podcasting Campaign Donor Information.

See also Tom G. Palmer, “Intellectual Property: A Non-Posnerian Law and Economics Approach,” Hamline L. Rev. 12, no. 2 (Spring 1989; https://perma.cc/DH7K-ZCRV): 261­­–304, p. 264 (footnote omitted): “Monopoly privilege and censorship lie at the historical root of patent and copyright.”

How The US Trade Rep Is Trying To Wipe Out Used Goods Sales With Secretive TPP Agreement

from the trade-for-thee-but-not-for-me dept

For a while now, we’ve been covering the gradual legal assault on the First Sale doctrine and beyond. The First Sale doctrine, of course, is what lets you resell a legally purchased book without having to first obtain permission from the copyright holder. Of course, copyright holders generally hate the First Sale doctrine, because it often means that their products have to compete against “used” versions of their own products as well. Of course, this view is very shortsighted and economically ignorant. A healthy used or resale market has been shown to increase the amount people will pay for new items — because they recognize that there’s a secondary market and they can recoup some of what they paid for the original. Thus a healthy secondary market, contrary to what some believe, can often improve the health of the primary market.

But, there have been a few very questionable lawsuits that are chipping away at the first sale doctrine, starting with the infamous Omega case, in which the watchmaker exploited the phrase “made under this title” to argue that any goods made outside the US were not subject to first sale rights under copyright law, because they were not “made under this title.” That 9th Circuit ruling (which remains in place after the Supreme Court split down the middle — with Kagan abstaining due to her earlier involvement in the case) was one thing, in that there were some limitations. But then the 2nd Circuit went to loony town in suggesting that some books that were legally purchased in Asia could not be resold in the US without permission (i.e. an expensive license). While the district court who reviewed the Omega case on remand recently rejected Omega’s claim as copyright misuse, there is a lot of fear over this issue as the courts sort things out.

The risk of the Omega case goes even further, since it could wipe out the used goods market not just for “content,” but for physical goods as well. That’s because Omega didn’t just exploit the “under this title” part of the law, it exploited copyright law itself. Remember, it sells watches. What do watches have to do with copyright? Absolutely nothing. But Omega’s trick was to create a little design drawing, which it then got a registered copyright on… and then engraved that drawing in a tiny tiny spot on the back of the watch where almost no one will ever notice it. It serves absolutely no purpose… other than to make a physical object subject to the crazy excesses of copyright law. Thankfully the district court saw through that and recognized it was copyright misuse, but who knows what the higher courts (or other circuits) will say.

Of course, all this fighting in the courts over this might be moot if the Trans Pacific Partnership Agreement (TPP) is approved. We’ve been covering the incredibly secretive negotiations over that agreement, including last year’s leaked draft of the IP section. However, we didn’t quite realize the extent to which the US Trade Representative (USTR) and the big industry interests were seeking to use the TPP process to wipe out the used goods market. [continue reading…]

1. For examples of copyright censorship, see Libraries: Prepare to burn foreign books, courtesy copyright law; The Patent, Copyright, Trademark, and Trade Secret Horror Files); Paramount Trying to Ban “Godfather” Sequels with Copyright; Copyright Censorship versus Free Speech and Human Rights; Excessive Fines and the Eighth Amendment. [↩]
2. How many examples do we need? See Patent Trolls Cost The Economy Half A Trillion Dollars since 1990; Yet Another Study Finds Patents Do Not Encourage Innovation; EU newsflash: patents are anticompetitive!; Intellectual Property Advocates Hate Competition; IP Rights as Monopolistic Grants to Overcome the Public Goods Problem; also Samsung, Apple continue patent dispute; Apple accuses Motorola, Samsung of monopolizing markets with patents–or, you’ve got to be kidding me; We Hope Apple Wins the Patent Wars; Android Patent Trouble Worsens: Motorola Considers Collecting IP Royalties; Apple vs. Microsoft: Which Benefits more from Intellectual Property?; EU: Apple-Samsung row could be stifling competition; EU Injects Itself Into Apple-Samsung Patent War. [↩]
3. Patent vs. Copyright: Which is Worse?; Where does IP Rank Among the Worst State Laws?; The U.N. Threat to Internet Freedom; Masnick on the Horrible PROTECT IP Act: The Coming IPolice State; The Ominous PROTECT IP Act and the End of Internet Freedom. [↩]

Update: See Are anti-IP patent attorneys hypocrites?, collecting various posts about this topic.

***

Writes Rothbard:

[T]here is … a good reason for our paying money to tax lawyers and accountants. Spending money on them is no more a social waste that our purchase of locks, safes, or fences. If there were no crime, expenditure on such safety measures would be a waste, but there is crime. Similarly, we pay money to the lawyers and accountants because, like fences or locks, they are our defense, our shield and buckler, against the tax man.

A similar justification could be made of patent attorneys who help defend companies and people from patent or copyright suits, or to help them acquire patents so that they can be used to defend against patent aggression from competitors.

Related posts:

• An Anti-Patent Patent Attorney? Oh my Gawd!
• The Most Libertarian Patent Work
• Taiwan’s Defensive “Patent Bank”
• Apple accuses Motorola, Samsung of monopolizing markets with patents–or, you’ve got to be kidding me
• The Patent Defense League and Defensive Patent Pooling
• The “Productivity” of Patent Brainstorming
• Are anti-IP patent attorneys hypocrites?
• Patent Lawyers Who Don’t Toe the Line Should Be Punished!

From the heroic EFF:

In previous posts,¹ I noted that, due to the monopoly granted by patent, people suffering from the genetic illness Fabry disease are unable to obtain the drug Fabrazyme, which is in short supply because of patents and the FDA. People are literally dying because Fabrazyme is in short supply and the sole, monopolistic manufacturer, Genzyme, can’t make enough quickly enough–and no one else is permitted to make it due to the patent.

Pro bono lawyer Allen Black, representing the victims, just notified me of the press release below, and said:  We just filed a civil rights suit against the government for its role in two drug shortages–including Fabrazyme.   I have attached the press release and the link to the complaint itself is here: http://freepdfhosting.com/3e9cb8c1ad.pdf

Drug Shortage Patients File Lawsuit against DHHS, FDA and NIH Over Two Life-Saving, Injectable Medicines

Pittsburgh, PA – February 21, 2012, — Today, 25 drug shortage patients announced that they have filed a lawsuit against the Department of Health and Human Services (“DHHS”), the Food and Drug Administration (“FDA”), and the National Institutes of Health (“NIH”) over their handling of two ongoing drug shortages.  The first drug, Fabrazyme, is used to treat Fabry disease, but has been severely rationed since June 2009 (manufactured by Genzyme, a Sanofi Company).  The second drug is Aquasol A used to treat vitamin A deficiency but has not been manufactured since November 2010 (manufactured by Hospira Corporation).

Patients are arguing that their constitutional rights were violated by FDA licensees saying “no” to state-authorized prescriptions and that the FDA has failed to take adequate enforcement actions against their licensees.   The complaint is available here: http://freepdfhosting.com/3e9cb8c1ad.pdf

Patients argue that in failing to address the drug shortage issues, the DHHS, FDA and NIH have interfered with the treatment decisions of state-licensed physicians and endangered patients’ health and the public health. Patients argue that the government’s actions violate (1) patients’ the 5^th Amendment right to due process (2) the states’ 10^th amendment right to protect the public health and (3) patients’ individual right to medical privacy and their right to control their own bodies.

Patients’ requests include asking the court to supervise the allocation of the currently limited supplies of drugs based on constitutional principles and medical oversight.  Patients request that drug companies be enjoined from creating secret waiting lists naming and ranking individual Americans for access to shortage drugs based on their private medical information or otherwise retaliating against patients by withdrawing or re-ranking access to medication. [continue reading…]

1. Update: Patents Kill: Compulsory Licenses and Genzyme’s Life Saving Drug and Patents Kill: Compulsory Licenses and Genzyme’s Life Saving Drug, FDA and USPTO: Joint Killers [↩]

As discussed on Tech News Today 443:

YouTube Identifies Birdsong As Copyrighted Music

Posted by timothy on Sunday February 26, @04:43PM
from the estate-of-john-cage-winces-with-envy dept.

(h/t Peter Surda)

The video is here (and below); a discussion thread is here. In the discussion, according to a friend, “people bring up
different examples of copyright (ab)use on YouTube.” However, as I responded:

I don’t think it’s abuse of the system. I don’t know what copyright abuse is. I don’t think copyright abuse is really possible. All these things are natural outcomes of having a copyright system.

From NBCSports: more trademark insanity (for more, see The Patent, Copyright, Trademark, and Trade Secret Horror Files). (h/t Skip Oliva)

Which is why NBA legend and current Bobcats owner Jordan — along with — Nike has a team of lawyers that protect that brand. And they have turned their guns on a Chinese firm, Qiaodan, and sued the company that manufactures sports apparel and shoes.

You don’t know that name but that is the nickname Jordan has gone by in China since he first came to popularity nearly three decades ago. This is a clear attempt to profit off his name.

In a statement released through his spokeswoman, Jordan says he’s worked hard to establish his name and calls the issue “deeply disappointing to see a company build a business off my Chinese name without my permission, use the number 23 and even attempt to use the names of my children.”

Read more>>

Alex Tabarrok has a good post up arguing that patent law should provide an independent invention defense (and he cites my post Common Misconceptions about Plagiarism and Patents: A Call for an Independent Inventor Defense). Some of the commentators are right that the recently enacted AIA does now provide a broader prior user right than before, which goes some way to providing a type of independent invention defense, but not far enough (see my posts The American Invents Act and Patent Reform: The Good, the Meh, and the Ugly and Prior User Rights and Patent Reform). Tabarrok is right that there should be an independent inventor defense, but still seems to accept the confused idea that there is something wrong with imitation:

Independent invention should be a defense in a patent infringement lawsuit. An independent invention defense would allow Kelly to exclude imitators but would prevent Kelly from excluding an independent inventor such as Pat.

Imitation and emulation are what market competition is about. There is nothing wrong with competition and imitation, despite protests of IP advocates, who really have a problem with “unbridled competition.”

Tabarrok also cites a couple of useful papers: Samson Vermont’s 2006 paper Independent Invention as a Defense to Patent Infringement, and Christopher Anthony Cotropia and Mark A. Lemley’s paper “Copying in Patent Law,” which shows that in most patent lawsuits, copying is not even alleged by the plaintiff.

Defending Independent Invention

by Alex Tabarrok on February 23, 2012 at 7:35 am in Economics, Law | Permalink

In the minds of the public someone who infringes a patent is like a plagiarist or a thief–the infringer has copied someone else’s work or, even worse, stolen their intellectual property. In reality, patent infringement has very little to do with copying or theft. Here’s how I described what is probably closer to the paradigmatic case of patent infringement in Launching the Innovation Renaissance:

Two inventors, Kelly and Pat, work independently, neither aware of the other’s existence. Kelly patents first. Under the present law, if Pat wants to sell or even use his own invention, he must pay Kelly a license fee (!) even though Pat’s idea came from his own head and no other.

If independent invention were uncommon this type of case wouldn’t be important but independent invention is very common. Classic cases include Newton and Leibniz with the calculus, Alexander Graham Bell, Elisha Gray and Johann Philipp Reis with the telephone, Ohain, Campini, and Whittle with the jet engine and so on. And if independent invention  is common with great discoveries and inventions then it is surely much more common with ordinary innovations. As a result, it’s not surprising that most patent cases don’t even allege copying.

Independent invention should be a defense in a patent infringement lawsuit. An independent invention defense would allow Kelly to exclude imitators but would prevent Kelly from excluding an independent inventor such as Pat.

Inventors should not have to pay to use their own ideas! An independent invention defense is not only just, it also has good economic properties. An independent invention would create more competition. On the one hand, this does reduce the “pot of gold” incentive to create new ideas, the winner of a patent race might have to sell as a duopolist rather than a monopolist.  In this case, however, there are several reasons why we wouldn’t expect the number of ideas to fall and innovation could even rise.

First, firms today are often surprised to find that they are being sued for patent infringement. An independent-inventor defense would give inventors greater security in their ideas, thus increasing the incentive to invest. In this age of cumulative innovation often what innovators want most is the security that they can build on what they have produced already. Lawsuits and associated transaction costs would also be reduced.

Second, the type of inventions that are most likely to be independently invented are those with high value relative to their cost. Thus, an independent-invention defense would automatically tend to offer smaller rewards to low-cost innovations and larger awards to more costly innovations, this is exactly the optimal rule discussed in my paper Patent Theory versus Patent Law (pdf) but unlike the system described in that paper it does not require anyone to examine an inventor’s costs.

The patent system is supposed to be about increasing the progress of science and the useful arts but to often it ends up cudgeling the very people it is meant to protect, the independent inventors.

Addendum: Joe Mullin has a good post on copying and patent as does libertarian patent attorney Stephan Kinsella. Samson Vermont, my colleague at GMU law, has a longer paper on the independent inventor defense that discusses details of implementation.