Economic Gridlock – the Invisible Cost of IP Law 246
smellsofbikes writes "This week's New Yorker magazine has a financial article, 'The Permission Problem,' discussing the hidden cost of patent, trademark and copyright laws. It's a subject anyone here already knows well, but he brings up two interesting points: 1) He uses the term 'tragedy of the anticommons.' Instead of depletion of a shared resource, this describes under-use of hoarded resources: areas that can't be explored because they're encumbered by patent/copyright issues. As he points out, the result of this is an invisible loss: drugs not made, software not written. The loss is impossible to quantify and difficult to see. I like the term 'tragedy of the anticommons' because it encapsulates a long-winded explanation into a pithy, memorable phrase that will stick with people unfamiliar with the topic. 2) He also cites a study by Ben Depoorter and Sven Vanneste that discusses why anticommons effects are seen, beyond mere competition. Individual right holders value their contribution to the overall project as a significant fraction of the project value, so if there are more than three or four right holders, their perceived value can far exceed the total value of the project, making it uneconomical."
Translation: (Score:5, Interesting)
Let me translate.
People are greedy.
Making a profit is good. Making a fair profit is better.
Of course, this article points out what the problem is without tendering a solution. No, I don't have a solution, either. Is this just human nature?
I recall reading in "A Brief History of Nearly Everything" how an anthropologist was paying a local tribe a bounty for every bone or fragment recovered from a fossil field. He soon discovered that the bounty hunters were smashing the large bones into tiny fragments in order to maximize their profit.
In this case, of course, it's an ill-thought-out bounty - whereas I don't know the answer for the IP question from the article. However, it points out the same conclusion: People will tend to maximize their profit whenever they see a way to do it that doesn't involve extra work on their part.
Three step solution (Score:2, Interesting)
1. Full disclosure of the intellectual property, including human readable, compilable source code for any algorithms covered by patent, and programs covered by copyright. (Yes, that means source code for Windows.)
2. Declared value for all intellectual property, with taxes levied based on the value. The owner could set the value at zero in order to escape taxation, but that leads to...
3. Competitive bidding, where any person or group can offer an amount higher than the declared value to put the property in the public domain. The owner would have the option of matching the bid (and paying taxes on the new declared value), or accepting the money and releasing the property into the public domain.
To give an example, let's say I write the great American novel. As the creator, I own the rights to it. I declare a value of $0 because I hate paying taxes, and shop around for a publisher.
Unfortunately, no publisher wants to give me my preferred price of $100K. One offers me a $10K advance for exclusive rights, which I ignore. He then bids $5K to put the book into the public domain. I then have a choice of matching that bid (and paying whatever tax rate has been decided), negotiating with that publisher for a higher price, negotiating with another publisher for a higher price, or accepting the 5 grand and releasing the work to the public.
This not only encourages new work and allows derivative work, it also forces intellectual property to be used.
Golden Rice (Score:4, Interesting)
Re:Divesting yourself of intellectual property (Score:5, Interesting)
Actually, the person you are replying to is 100% correct.
The only time the service doesn't work is in an unestablished industry with 0 competitors. In every other industry if you look long term giving things out for free makes exponentially more.
You are absolutely incorrect about medical patents. If it weren't for medical patents, my cousin would have been able to release a cure for a form of HIV she discovered about 5 years back. 5 years! But what happened? A similar modification by a big company has been patented, and they did it merely by patenting every possible variant of the string she used.
Patents are allowing the medical R&D companies to over-recoup the costs of research by a factor of 50+, easily, considering government sponsored research as well.
Lets look at other industries. If cars were given away through promotions (which happens all the time), do you think it might draw up more buzz for the companies?
Lets look at other industries. Take any product, and the more you sell it for, the less people come back for more business. The less you sell it for, the more competitive and more people come back for more business. All products break, or wear down, or need some sort of service. Not all products are worth buying twice in anyone's eyes.
This is also why well trained and good customer service policies make or break a company. Think of Dell's customer service and how people hates them for that.
Re:Divesting yourself of intellectual property (Score:2, Interesting)
The money is on the tour... Of course, as long as another band doesn't do -exactly- the same songs with a bigger marketing budget (and if everyone does it, ONE of the bands who copy you will most likely be bteter).
Great. So if, for example, a Beatles tribute band ends up being better than the Beatles (if they were still around), isn't that a good thing? Wouldn't the band deserve their profits? Why should the Beatles be given special protection from competition? And really, how much competition is there really going to be? It's a big world. There could be several bands playing the same songs as you, touring at exactly the same time as you, and it wouldn't matter because they would most likely be in different continents, in different countries, or in different states. In order for a band to feel the pinch of competition, there would have to be a lot of bands better than them, and if that's the case, well I really don't have any sympathy.
But lets remove all IP laws for a sec there... The photographer's customers aren't going to be too too happy once their FACE (your pictures that you, not only gave away, but couldn't restrict in any ways, shape and form) is on a box of cereals or used on TV to advertise condoms.
There are already laws against that that don't involve "IP" (that's a really crappy term: do you mean copyright?). The reason why you can't do that kind of thing legally without permission is because it implies an endorsement by that person and/or infringes on their privacy, not because their face is "IP".
The obvious answer... (Score:4, Interesting)
is to require that any patent or copyright holder be actively developing and/or selling related products. In other words, the economy must be able to obtain the "benefits" of the "innovation" in order to justify the government grant of monopoly. Remember that these "rights" are actually privileges granted by the government on behalf of the people for their greater benefit. Limitation or revocation of these privileges is not confiscation and should not be viewed in the same way as a taking of land or other tangible property; it is appropriate in cases in which the public interest is clearly not being served by their continuation.
For copyright, this approach is fairly easy because the work subject to protection already exists; if a work subject to copyright protection has not been newly licensed by or performed for an end user (i.e., not a reseller) in the past 3 years on terms generally available to other end users, that copyright expires. This definition prevents the holder from offering a work for sale at an absurd price, transferring it among subsidiaries, or giving away one copy a year to a "lucky winner" to avoid losing protection. Perpetually out-of-print books, obsolete software, and music owned by defunct record companies would all be freed from copyright protection.
Patents are harder because the patent may exist before commercially viable products do. One possible first-order approximation might be that patents may not be owned by holding companies; only individuals and operating companies may possess them. This requirement would make it difficult for patent trolls to execute their business model. Another strategy might be to require holders to notify the patent office when they first manufacture a product they believe is subject to protection under a specific patent; the patent office could then allow double-blind challenges (to protect trade secrets associated with ongoing R&D) to patents that are not apparently in use and are at least 3 years old. An inspector would then attempt to obtain evidence from the holder that product development is actively occurring; if it is not, the patent is invalidated. There are plenty of pitfalls here; I challenge everyone to try writing a definition that actually solves the problem. The principle is sound, but it's harder than it looks.
Re:Three step solution (Score:1, Interesting)
The people who write these sweeping articles attacking IP typically fail to point out the huge difference between patents and copyrights. In the case of patents, the same idea often occurs to several people nearly simultaneously; often the "winner" is the person who went through the trouble of filing for a patent on what seemed to the others to be a commonplace idea. A bad patent can block progress in a field, or create a mess of litigation, as we've seen with JPEG and streaming video.
In the case of a copyrighted work of literature, art, music, or software, it is highly unlikely that anyone else would have come up with the same work had the author not done so. And the copyright holder cannot prevent someone else from coming up with a work that resembles his or hers, so long as care is taken not to lift passages of prose or source code verbatim or steal video footage, copy the names of characters and places, etc.
I suspect that the popularity of these articles is closely related to the huge popularity of illegal firesharing, especially among teenagers and 20-somethings. People need to rationalize to themselves that there isn't anything wrong with what they and their friends are doing, that they aren't criminals and it's not the same as shoplifting, etc. And so they look for intellectual arguments to copyright as amounting to some sort of hoarding of public goods. It's all drivel because copyright does not prevent people from creating their own original works and freely sharing them via open source or creative commons licenses, or releasing them into the public domain.
Re:Divesting yourself of intellectual property (Score:5, Interesting)
Why would someone hire you to ghost write a book if they can't get any profit from the actual sale of that book?
Just because there's no copyright on a work doesn't mean that there can be no profit on selling copies of it. Every bookstore I've ever been in stocks copies of public domain works, e.g. Shakespeare plays, Sherlock Holmes stories, which suggests that they and the publishers of those works must make enough to justify doing it. Apparently some people are willing to pay for the tangible copy even if they could get the work fixed within for free elsewhere. Of course, competition between publishers will tend to drive the price down to just above marginal cost, but that's fine as far as the customers are concerned.
Additionally, there are some other advantages a publisher can get in the marketplace which are unrelated to copyright. For example, there is a first mover advantage, where the first publisher to market can capture more business than he otherwise would until his competitors catch up. Shakespeare more or less did this, as his company would perform his plays first, but couldn't really stop other people from copying them (sometimes by means of audience members committing the lines to memory and dictating them later). Authors can take commissions, as well. There tends to be an inverse relation between price and the size of the audience. E.g. a wedding photographer can charge a lot because really no one cares about the photos he takes other than the families involved. But if ten thousand fans of a particular author each pledge a few dollars to get that author to write a book (there are some escrow schemes to make sure of the deliverables on both sides, roughly mirroring the means that authors and publishers already use to avoid either side being cheated) then that may be enough to get him to do it. Some people might not care about the copyright status of their work, because that's not how they plan to make their money (e.g. the work is just a draw for some other thing), or they're not interested in making money at all (much of YouTube).
And of course, the entire system always runs on authors and investors who are unduly optimistic. Remember, most authors are not stars, or even successful, and most works are of no or very little economic value. Copyright can't make works valuable, it just lets the copyright holder monopolize whatever value there is to be had anyway. Thus, a copyright on Gigli or Ishtar, or Heaven's Gate just isn't worth much.
Without copyright, established and popular authors tend to be better off than unknowns, but that's really how it is with copyright as well. And copyright isn't a magic method of getting popular. No one's figured out a perfect method for always making hits that will draw in a huge audience over the short and long term.
There is a likelihood that without the artificial incentive of copyright (or with less of an artificial incentive from reduced copyright) that fewer works will be created and published. That is a loss to the public. But the public gains from being less restricted as to those works. The important thing is to maximize the net public benefit, whether that requires more copyright or less. The effect upon authors and publishers, save for how that interacts with the public benefit, is of no consequence.
FDA's mssion... (Score:3, Interesting)
Cases in point: they suppressed publication of research about
In the first of these, the FDA was more murderous than the Vietnam War; in the second, they were responsible for more torture than the Spanish Inquisition.
And their only use for altruism is to use it to try to whitewash their lust for power.
Re:Divesting yourself of intellectual property (Score:5, Interesting)
If he wants to give it away, fine. If he wants to restrict it a million different ways, fine. It's his work, so it's his choice. [...] Without a strong IP system, that choice will be taken away.
My answer to this is quite simple: So? So what if the author doesn't have that choice?
The purpose of copyright law is to benefit the public, by increasing the level of quality in writing, music, software and other items covered by it. The mechanism used is letting the authors apply restrictions to their customers, which will (according to the implicit assumption) make more people pay the authors, which will make being an writer (musician, coder, etc.) be a good enough way of making a living that enough people will do so; spending eight hours per day on your craft will make you better than one who spends only their spare time (assuming there's less of that). That's how copyright is thought to fulfill its purpose.
If we let the authors grant fewer restriction, it might mean that some fraction of them will choose to enter a different business, and the public loses some of their products (they may still perform music or write code in their spare time). In return, since the public is less restricted, it will be able to use all authors' works to a larger extent.
Whether the trade-off is beneficial to the public depends on the specifics; but what is certain is that as long as copyright has its stated purpose, one should choose the option that benefits the public the most. Whether the authors lose options they have previously had should not, per se, influence the decision; it could, however, influence which option is best for the public, but you haven't argued that it does (or will).
The restrictions and the choice of whether and how to employ them are a means, not an end. You can't defend any means other than by showing how well they serve the end.
(sorry for the missing car analogy)
(insert a similarly styled rant on patents, and a similarly styled rant on trademarks, here)
dkloke (Score:2, Interesting)
An example (Score:3, Interesting)
As an aside, they are one of only three honest classical-music publishers I know (the other two being Novello and Oxford U Press, both British); all the others make a practice of claiming copyright for music written even before the American revolution.
I think that such fraudulent claim of copyright (as is the usual music-publishing practice) should be punished at least as severely as copyright infringement. Scaled by the number of copies sold. And (under the legal doctrine of assumed competence) counted as wilful infringement, so that the penalty is at least $750/copy. Many of them would have fines measured in the tens or hundreds of millions.
Re:Another form of gridlock (Score:3, Interesting)
And yet we can see from history (such as the airplanes mentioned in TFA...) that this doesn't happen reliably.
It might not happen 100% reliably, but if the only counter-example cited in the whole article is a scenario in one industry in one country from nearly a century ago, I'll take my chances. I note that the article cites multiple more recent examples where players in diverse markets have collaborated effectively for mutual benefit.
Much progress requires cooperation, and exclusive rights grant people the opportunity to forbid such cooperation.
Sure, but the only cost they can impose on competitors is losing the value of the exclusive invention, which for a lot of defensive patents isn't much, particularly since everyone knows the patent protection is unlikely to stand up in court and they're only filing because it's cheaper to pay the costs of seeking a defensive patent than it is to pay the legal costs of defending a court case against someone else who got it instead.
Forbidding co-operation if you have a valuable invention that you can license for royalties is usually against your own economic interests, which is why most big businesses have these cross-licensing deals rather than everyone stonewalling.
the questions are just how it compares to the benefit that comes from providing incentives for research, and whether there's a way to provide those incentives without the downsides of exclusivity.
I personally am certainly not claiming that patents or copyright are the only possible schemes for incentivising the creation and sharing of new products. There are other potentially viable schemes, such as public funding, but personally I prefer the idea of relying on market forces to the idea of higher taxes and allowing government to decide what works I might like to fund with my hard-earned cash when they take it away from me.
If anyone has a realistic alternative that doesn't require the exclusivity, doesn't screw the people doing the hard work, and still gets at least the same quantity and quality of works distributed to at least the same number people, I'm all ears. But the idea that everything should be free is just wishful thinking on the part of those who don't like paying for stuff. It can work sometimes because of the side effects, and it's certainly possible for some people to build a viable business model on that basis. But still, while running loss-leaders can be a useful technique, selling things at a price that doesn't recover the costs indefinitely will sink your company.
All I know is... (Score:5, Interesting)
Limit max profit share! (Score:1, Interesting)
It may seem difficult to fairly determine the significance of various patents used for a project, but hey, if one can value a real estate property, one can learn how to do it for patents.
Or just limit the patent enforceability to one year, so the inventors will need to hurry up and actually deliver products to the market. Hell, that's even better.
Re:Divesting yourself of intellectual property (Score:3, Interesting)
But where there's no credible service alternative--for example, writing fiction--then giving it away doesn't help you.
But there is. First to market is often sufficient to recoup costs and then some.
First of all I'm sure your cousin built upon decades of patentable work when figuring out her cure.
Says who? That's an awful presumption.
Further, mathematicians and programmers build on decades of work too, yet algorithms are not patentable, nor should they be. The idea that patents are required for the advancement of a field should not be accepted a priori, but only when rigourously supported by evidence. The evidence is thin my friends [truthout.org].
I personally know how much money pharma spends selling and marketing drugs, and not all in ethical ways, that could be better spent increasing production and cutting costs. In a more competitive market, the measures they are currently taking just wouldn't pay off. The luxury of monopoly results in unethical kickback schemes to push expensive brands over equally good generics.