IP Matters

On May 15, IPI convened a panel to discuss software patents, to discuss the criticism that the U.S. patent system has recently attracted, and to address whether that criticism is warranted. The goal was to explore a couple basic questions, such as can any of the existing challenges be addressed by creating a stronger system overall? If there are "trolls," then to what extent are they enabled by software patents? Is software best protected under copyright as an expression, or under patent as an invention? Why are there more software patents now? And how do we address the challenges while protecting US innovation? What role should patents be playing in protecting software? Why do they play a role at all? Doesn't copyright protect software adequately?

As most U.S. farmers shifted, over the last decade, to Monsanto’s genetically modified corn seed that had its own pest-fighting toxins that would take on the rootworm, they abandoned the use of most soil insecticides.  However, over the years the rootworm has become increasingly immune to the seed-based pesticide and the insects are making a comeback, killing lots of corn in the process. There are least a couple of public policy lessons to be learned.

A Washington Post op-ed today serves as a great follow up to my last post about the Special 301 report, as it describes the danger of the theft of U.S. intellectual property (IP). Put another way, the Special 301 report identifies countries that are a particular problem when it comes to protecting U.S. IP sold, or otherwise provided, into that country.

The op-ed makes clear what happens when our IP is stolen it also makes clear something else -- what happens if there were no longer IP protections in the U.S.? Just read the piece and extend and broaden the impact resulting from piracy. What are those results? More jobs would be lost, even more wealth would be transferred from the U.S. to other countries such as China, loss of the U.S. competitive edge and a long term economic decline, and a loss of our military protections.

Earlier this month, the USTR released this year's Special 301 report. The report is prepared and released annually, identifying trade barriers to U.S. companies doing business in another country because of a lack of "adequate and effective" intellectual property laws, that is, laws, or the lack thereof, that result in inappropriate protection for intellectual property rights.

As a general proposition, this year's report was no surprise.  The list of violators, of those who need to step up their efforts (to say the least), is fairly predictable.

China: "USTR reports grave concerns about misappropriation of trade secrets in China, and incremental progress on a few of China’s many other significant IPR and market access challenges"

Former Russia state, Ukraine: "USTR designates Ukraine a Priority Foreign Country (PFC) under the Special 301 statute due to severe deterioration of enforcement in the areas of government use of pirated software and piracy over the Internet, as well as denial of fair and equitable market access through the authorization and operation of copyright collecting societies"

I've already observed and complained about the fact that the copyright review process began with a hearing featuring people who participated in a process that completely omitted the most important stakeholders of all, the creators and owners of copyright.

What was interesting during the hearing was to hear at least one of the participants, Jon Baumgarten, admit that the Copyright Principles Project (CPP) was very much skewed toward the interests of those who see copyright as an obstacle, and skewed against the interests of creators and owners. Indeed, Mr. Baumgarten confessed that the CPP actually resulted in very little "consensus" at all, which called into question why the title of the hearing was “A Case Study for Consensus Building: The Copyright Principles Project.” Apparently the result of the case study was failure.

House Judiciary Committee Chairman Bob Goodlatte (R-VA) has announced that his committee will be undertaking a “comprehensive review of U.S. copyright law,” and they’re beginning this afternoon with a hearing.

This review is widely believed to have resulted from a speech given earlier this year by the Register of Copyrights, Maria Pallente. Soon after she testified before Mr. Goodlatte’s subcommittee outlining her thoughts in more detail.

For those of us who believe in intellectual property and copyright, there is obviously a concern that this review takes place in an intellectual climate where so much effort has been devoted to tearing down the idea that creators should be able to own and control and profit from their creations. Make no mistake—while some who call for copyright reform would be content once a handful of copyright modernizations were put into place, many copyright reformers would like to see the bulk of copyright protection go away, so that no obstacle remains between them and free access to anything they want, including the right to profit and build business models on top of free access to the creations of others.

Today, the Office of the United States Trade Representative has released its annual "Special 301" report which details the "adequacy and effectiveness of U.S. trading partners’ protection and enforcement of intellectual property rights (IPR)."

The report can be found here (it's a 59 page PDF).

From the press release:

• USTR designates Ukraine a Priority Foreign Country (PFC) under the Special 301 statute due to severe deterioration of enforcement in the areas of government use of pirated software and piracy over the Internet, as well as denial of fair and equitable market access through the authorization and operation of copyright collecting societies;
• USTR reports grave concerns about misappropriation of trade secrets in China, and incremental progress on a few of China’s many other significant IPR and market access challenges;
• USTR adds Barbados, Bulgaria, Paraguay, and Trinidad and Tobago to the Watch List due to specific problems identified in the report;
• USTR announces that while El Salvador and Spain are not listed in the Report, USTR will conduct out-of-cycle reviews to assess progress on IPR challenges identified in this year’s reviews of those countries; 
• Canada moves from the Special 301 Priority Watch List to the Watch List in recognition of significant progress on copyright issues, while USTR continues to work with Canada to address several remaining IPR concerns; and
• Brunei Darussalam and Norway move off of the Special 301 Watch List.

Last Thursday IPI was honored to once again host the major World IP Day policy event in Washington, DC during the observance of World IP Day.

And then, the very next day, we returned to Dallas to co-host Dallas' first ever World IP Day event.

We think World IP Day is important not only because of the very elemental importance of the intellectual property system and respect for the rights of creators and inventors, but also because it seems that almost any time intellectual property issues make their way into the news cycle, it's over something controversial or contentious. So World IP Day is an opportunity to back up and remind ourselves of the importance and function of IP systems in national economies, particularly with regard to the United States.

In Washington, we were delighted to have a terrific program. All of the video from the DC event is now posted on our website here, so you can check it out at your convenience. You may need to find a way to watch Professor Epstein's address at 3/4 speed if you want to try to comprehend it all in real time!

Much attention has been given to the Myriad Genetics case recently argued before the Supreme Court, where Myriad Genetics claims a patent to not only a DNA test, but also to the isolated and refined DNA itself. Myriad claims this as an invention, while opponents argue that the genes are existing, natural substances.

Today, there's a guest post on the Patently-O blog by Benjamin Jackson, Senior Director of Legal Affairs at Myriad Genetics, where he makes his post-SCOTUS arguments.

We’re not fans of the Obama 2013 budget, as you can probably guess. And it’s going nowhere, thankfully.  But it’s instructive to see the impact of the Obama administration’s budget vision as to how it would affect the creative and innovative industries.

On the Positive Side

There’s not much.

• The Intellectual Property Owners Association reports that the budget will allow USPTO to keep all of its user fees. We agree with this, and we’ve written about the problem of fee diversion in the past. This is actually an area where we found ourselves disagreeing with our usual ally, Rep. Paul Ryan.
• Additional funding for cybersecurity should, if successful, help reduce the threat of theft of intellectual property from American companies by overseas IP predators, most notably China. Some government agency estimates suggest that U.S. companies have lost more than $400 billion in intellectual property theft to cyberespionage.

Wall Street Journal columnist Carl Bialik takes a closer look at IPI’s film piracy study from 2006, which assessed the damages to the U.S. economy from worldwide motion picture piracy.

Bialik writes:

From their publication in 2006 through the debate over the Stop Online Piracy Act that ended early last year, the film industry frequently has cited the findings of a study by the Institute for Policy Innovation, a Lewisville, Texas-based think tank that found film piracy was costing the U.S. economy $20.5 billion annually.

IPI is gearing up for one of our favorite annual events, our eighth celebration of World Intellectual Property Day.

The event this year takes place Thursday, April 25 on Capitol Hill at Washington DC’s ROA Building from 10 am to 1 pm.

Ukraine’s stunning failure to crack down on piracy supercedes even that of the most notorious usual suspects. Why? While the governments of China, India, and Russia at least acknowledge the problems and seek to implement solutions to combat piracy, Kiev appears to be complicit in the IP crimes. 

Radio Free Europe reports that within weeks of Ukrainian authorities shutting down one of the largest film piracy websites in the world, in which over 200 servers and 6,000 terabytes of data were seized, the same website was soon live again, suggesting that government officials could be turning a blind eye—even protecting—the piracy ring. 

Last week I wrote about the Copyright Alert System (CAP) that is designed to educate users of copyright protected materials about those protections and the proper way to enjoy protected products; that is, don't steal them.