IPI Policy Blog

The most fundamental question in economics is not about math: It’s about philosophy and morality. And how you answer the question takes you down a path that is not only economic, but also philosophical and moral.

(Please bear with this brief economics discussion)

So what is this question? Whether the general public benefits from private ownership (and control) of capital.

Marx, of course, famously answered this “No” —the public does NOT benefit from private ownership of capital.  In fact Marx, who coined the term “capitalism,” said that private ownership of capital leads to abuse of the public because capitalists use control of their capital to enrich themselves at the expense of the public.  In this worldview, if private ownership of capital harms the public, it’s private ownership that is immoral, and theft becomes a moral, even heroic act. So Marxism does away with private ownership and control of capital and turns it over to the general public, in the assumption that the general public will better deploy capital in its own best interests.

According to a study released today by the European Patent Office (EPO), one-in-three jobs in the EU is dependent on the IP-intensive industries.

It’s a 144-page study, available here as a PDF. The press release is available here.

Carried out jointly by the Office for Harmonization in the Internal Market (OHIM) acting through the EU Observatory on Infringements of Intellectual Property Rights and the European Patent Office (EPO), the study finds that about 40% of total economic activity in the EU (some €4.7 trillion annually) is generated by IPR-intensive industries, and approximately 35% of all employment in the EU (77 million jobs) stems from such industries that have a higher than average use of IP rights. The report also finds that average remuneration in IPR-intensive industries is more than 40% higher than in other industries. 

Of course, this is no great surprise to those of us who understand that the modern, knowledge-based economies of the developed nations are very much dependent on their ability to imagine, create, and innovate, and then crucially to monetize those creations into economic activity.

And it’s completely consistent with what has been found by others who did similar such research with an honest look at the data, as opposed to those who set out intentionally to argue against IP protection.

Now, of course, we await the study by CCIA that claims that twelve-in-three jobs in the EU are dependent on fair use.

Admit it, we’ve all done it—This morning I was doing a web search on my own name. Normally there are no surprises, but that’s kinda why we do it, right? To see if there are any surprises? And when you have a last name like mine, odds are when you do a web search on your name, it’s you that comes up, not 500 other people with the same name.

Anyway, a surprise came up, and it was an unpleasant one: I found that a website called DocStoc.com is selling pirated copies of a book I wrote some years ago. You can buy copies of all sorts of pirated books on DocStoc, it seems.

This year’s International Property Rights Index, a project of the Property Rights Alliance, ranks the U.S. #17 for the protection of both physical and intellectual property.

The US score is thanks in part to its strong intellectual property protection system, and ranked second only to Finland’s IPR structure (which is also #1 on the overall property rights list.)

So this morning I see news of a release of a paper from a law professor in Australia who finds that graduated response enforcement, such as “three strikes” policies, doesn’t work.

And that’s as far as almost anyone goes these days in our information overload society. You see a subject line in an email that says graduated response doesn’t work according to a new study, and you tuck that little detail away in your mind. “I remember reading somewhere that graduated response doesn’t work” the little voice in your head will say 18 months from now when the topic comes up in a discussion somewhere.

And then Mike Masnick over at TechDirt and Tim Lee over at the Washington Post will gleefully blog that, according to this new study, graduated response doesn’t work. The echo chamber does it’s work. And that’s that.

So I decided to actually go to the trouble of reading the study. And not only that, but also reading a few other things the author has written, look into some of the author’s affiliations and assumptions, etc.  It takes time, of course. But I do these things as a service to you.

The new unemployment numbers are out and the best we can say is, well, actually there isn’t much good we can say. The Bureau of Labor Statistics announced that the economy added 169,000 jobs last month, but that’s about 10,000 lower than may economists were predicting.

Unemployment fell from 7.4 percent to 7.3 percent, which looks god initially, but that’s because so many more Americans quit looking for work.

When President George W. Bush took America into Iraq to invade the country, overthrow its government and install a new one more to our liking, he provoked a major crisis on the center-right regarding foreign policy; i.e., what should be our governing principles for such military intervention. Bush’s policies were, undeniably, a departure from any recent past calculus by Republican presidents.

[It’s important to note that Bush’s attack on Afghanistan did not cause consternation on the Right. We were attacked by a foe being provided safe harbor and resources by Afghanistan. All of the wealth and treasure that should have been directed at the Taliban and al-Queda in Afghanistan were misdirected at Iraq in the opinions of many conservatives.]

Conservatives like principles by which to make our decisions. We’re uncomfortable making emotional decisions, and we’re uncomfortable simply defending whatever “our guy in the White House” wants to do or, for that matter, we’re uncomfortable simply opposing whatever “their guy in the White House” wants to do. We value principles, intellectual consistency, and putting country above party. We know that, ultimately, military involvement overseas is always going to be a judgment call, but we want to feel good about how the judgment was made.

But such principles have been hard to come by in recent practice. For better or worse, the crisis in Syria and the opportunity for congressional debate has created a chance for conservatives to think through how such decisions ought to be made.

The Dallas Fed put out a very interesting paper (PDF) in July in which they try to quantify the damage done by the 2007-09 financial crisis. Don’t go looking to this paper to find anything about the “cause” or “roots” of the crisis, or how to get out of it, or whether the right policies were followed, etc. No, they’re just trying to quantify the costs to the economy, which is valid and interesting in itself.

They come up with some astonishingly large numbers. Without going into enormous detail here (you can read the paper yourself if you have an appetite for enormous detail), they find that the cost of the financial crisis is at least 40-90% of a full year’s (2007) economic output for the United States. I say “at least” because, after they have figured in a few other factors they believe are valid, they conclude that “what the U.S. gave up as a result of the crisis is likely greater than the value of one year’s output.”

That’s between $6 trillion and $14 trillion lost, or the equivalent of $50,000 to $120,000 for every U.S. household. Now it seems big.

Associated Press reporter Martha Mendoza writes how a promised satellite patent office for tech giant Silicon Valley—the top region in the world producing patents—is being denied thanks to sequestration cuts, despite the fact that patent offices are funded through patent fees, not taxpayer dollars.

It’s time once again for us to delve into the logical fallacies of Mike Masnick. Previously, we dealt with Mike committing the bifurcation fallacy. In today’s installment, it’s Mike committing the logical fallacy of begging the question.

Mike has often broadly asserted that one of the many sins of copyright is that it is used to facilitate censorship. So anytime any proponent of copyright points out how copyright facilitates the creation and distribution of speech, and thus is a friend of free speech and the First Amendment, Mike is quick to retort something like “How can anyone claim with a straight face that copyright supports the First Amendment when it is so often used for censorship!”

Like he did here, for instance.

Perhaps no other area of innovation is more critical to protect than pharmaceuticals and medical technology. But a piece today in Forbes by Eli Lilly's CEO discusses how a trend in Canadian courts may be threatening drug innovation by invalidating therapies and medicines already in use by patients on a wide scale.

Lechleiter writes:

“Canadian courts have arbitrarily created – and retroactively applied – a standard for what is ‘useful’ under Canadian law. Applying the ‘Promise of the Patent Doctrine,’ the courts have set a standard found in no other developed country, and one that is more or less impossible for an innovative pharmaceutical company to consistently meet.”

I hate to bring back up the topic of net neutrality, since those of us who worked on the issue for a decade are pretty much sick to the teeth of it, and we're all enjoying a brief respite from net neutrality as we await the results of Verizon's court challenge of the FCC's authority to impose net neutrality rules.

. . . (ahhhhhh)

But I can't help but point out that, in the current retransmission dispute between Time Warner Cable and CBS, somehow CBS has managed to turn the major concern of net neutrality proponents on its head.

I was talking with a lady, who is probably in her late 50s, when she told me she was going to start looking for a different job. See, she’s a teller working in the branch of one of the country’s largest banks, and the bank is making some cutbacks, turning its full-time tellers into part-timers (at some branches anyway).

I asked the next question, but I was pretty sure I already knew the answer: How many hours was the bank willing to let her work? Under 30, she said, which just so happens to be ObamaCare’s dividing line between those who must be covered with employer-provided health insurance and those who don’t.

Not going to do a full dissertation on the topic, but the term "patent troll" is being thrown around quite a bit too broadly these days. For many, ANY non-practicing entity is, by their definition, a patent troll.

We think this is ridiculous. There is nothing wrong with an entity simply being in the patent business. Whether or not some entity is a "patent troll" should be determined by their behavior, not simply by their business model.

What brings this to mind? Noticed a patent application published by USPTO on July 25th, filed by Intellectual Ventures. If you're in the business of inventing things and filing patent applications, you are not a patent troll.

Why did I happen to notice? Well, the application has some very prominent names listed as inventors, including Bill Gates and Nathan Myhrvold. Those are names that stand out.

I'm probably going to regret the title of this blog post, not because I'm afraid to say that Mike Masnick committed a logical fallacy, but because he commits logical fallacies so often that I should reserve this title for a SERIES of blog posts . . . 

[Note: Title edited]

Anyway, a few weeks ago I did a blog post on the House IP Subcommittee's second hearing of the new copyright review process, this one themed copyright and innovation.

My main point was that there was actually very little criticism of the copyright status quo during the hearing, but you can read that blog entry for yourself.

My blog post aroused the ire of Mike Masnick over at TechDirt, which they often do (and which frankly isn't hard to do). But the nature of Masnick's complaint about my post was truly amazing, as Masnick made really obvious logical fallacies in supposedly rebutting my points.