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back to article Patent law? It's all about Apples, Newton and iPads

As regular readers will know, I'm about as froth-mouthed free market as it is possible to get without descending into Randian lunacy. Yet even I support government interventions into the economy at times: it's only the times and methods used that are to be argued about. A case in point is the existence of the patent system. I'm …

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Early warning

Possibly worth pointing out at an early stage that the IP intervention is a *lot* tighter than any public good. Even in the weakest patent system it must at least be novel (so Newton is way out !) . More generally equations and mathematics are not patentable anywhere, only an application derived from them could be.

In the better systems* its only a novel technical effect, leaving most of the pragmatic debate on how to set the the threshold for patentability (in particular of course where technical effect is delivered via an innovation delivered in software), how to ensure a proper review and proper disclosure.

*so not the ones who were once caught defining prior art as *only* anything already patented in their own system ....

Would be interesting to know if there is a decent analysis of the various different patent systems around the world and their effect their differences have on both their domestic and overseas markets.

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Seeing the good

> university education probably isn't a public good

Well, that kinda depends on the subject being studied.

We can probably agree that most degree courses these days involve adequately educated 18 year-olds leaving home (much to their parents' relief) and going off to study a subject they like, think they'll like or were coerced into by their secondary school's in a bid to improve their ratings. Most of those who survive the parties, house-sharing dramas, love affairs, exams and occasional spot of intellectual striving will soon be moving back in with their parents (if they didn't move house at the first opportunity and "forget" to mention that to their offspring), when they realise their qualification is no help whatsoever in putting food on the table, or paying the rent.

However, some degrees for some students result in "goods" so far beyond the average, mode or median (choose whatever statistical measure you like), that they are undeniably a public good. Take as an example any technological advance over the past 60 years. Almost all have been made by degree-educated individuals and would not have been made if they hadn't received their tertiary education.

Obviously, there is no way to predict which particular student(s) in which particular course(s) will go one to invent or discover something that will change the world. But we can say, that for certain types of course: lets call them "sciences", the more people who study them at a sufficiently high level, the more discoveries and inventions will benefit the world as a whole. Though the same probably can't be said for economics students.

Therefore it follows that for the world as a whole, it is a sound investment to promote, grow and even pay for these sorts of courses: the ones that as a numbers-game do create things that make our world better, safer, more prosperous and nicer. As over time, we will want, use and even need the stuff these people will go one to give us. Patents or no patents.

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Re: Seeing the good

Sorry to go all economics in my reply but there appears to be an assumption of unconstrained resources underpinning the creation of an unlimited supply of STEM graduates. When does society have enough STEM graduates and could the resources be better allocated elsewhere? (If you are covering the total cost, graduate in whatever you want)

In the eighties, there was a chemical engineering graduate glut as a result of universities selling a false prospectus to those without the full information. Was that a Good Thing?

As a STEM myself I quite like living in a society with art literature and music. That some of it is public funded enables a benefit (e.g. free art galleries) I could not otherwise get. But how much art is enough art? Good luck with that one.

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Anonymous Coward

Re: Seeing the good

The argument that there is no reliable centrally controlled way of determining what number of degrees in each subject should be funded is reasonable, but there is no evidence that the free market is any better at it either. Consider, for instance, a hard degree subject - structural engineering. Four years to an MSc, 5 more to C Eng. The free market just cannot function on those timescales; if pay in civil engineering goes up, it's going to be 10 years (allowing for subject choices at A level) before the number of chartered engineers starts to increase.

The fact that there are inefficiencies in the system doesn't mean we shouldn't be trying to make the effort.

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Anonymous Coward

Universities

In fact you can claim that universities are in no way different from primary education in being a public good. An educated population reduces (though not to zero, obviously) the chance of a society lapsing into anarchy or being taken over by a dictator, and provides a more benign environment for general economic development. More directly, education in STEM subjects can fuel industrial growth. People who have not been to university do not directly benefit from my degree in a STEM subject, but when I invent a new production process, start a company or fix a potentially catastrophic engineering problem, I protect or create jobs which pay much better than minimum wage. It is a form of trickle down which works much better than making a small minority very rich, because it is far from a zero sum game.

In the 1960s/70s, the number of people going to university was such that the State could fund them from an acceptable tax level, and the degrees they were getting contributed to economic growth. It's now the second decade of the 21st century, and the people with degrees want all the benefits of their work to accrue directly to them without taxation, or having to pay employees pesky living wages. This Randian approach has spread here from the US - which, with its huge debt, social problems and increasing reliance on foreign graduates to staff its high tech industries, isn't exactly an advert for their own system.

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Headmaster

economics in two pages never really works

It's not what you've written, it's what you've omitted, including: dead-weight loss (crudely, any intervention creates inefficiencies), moral hazard (if I can I will, even if I shouldn't, creating resource allocation distortion), public choice, (those "holding the ring" aren't incentivised to take the tough decisions) capture (who? whom? determined by power and influence rather than legal/moral/philosophical principles), signalling (how do I decide if the other party if telling the truth, the whole truth...)

Picking on your example of immunisation and herd immunity. For a healthy person, immunisation is an unnecessary and not-risk-free intervention at point of delivery (no pun intended). So the individual (more usually, the parent, guardian or other person with capacity) needs to have faith that the benefits outweigh the disadvantages, e.g. big pharma hasn't captured public policy, creating an unnecessary intervention and so a misallocation of resources (of course, the same resources can't be allocated twice). Given other public policy screw-ups how can the individual be sure of the outcomes (signalling, public choice).

The whole sorry tale of MMR and the triple vaccine is an example of what happens when any of the foregoing goes wrong.

On a smaller scale I heard on the news just this week that one child in a disaster area was vaccinated for measles three times by three different aid agencies.

More generally, none of your examples are relevant to intellectual property unless you can demonstrate read-across. Otherwise it's argument by false analogy.

So good luck with part 2...

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Re: economics in two pages never really works

"The whole sorry tale of MMR and the triple vaccine is an example of what happens ... WHEN MEDICAL FRAUDS SUCH AS ANDREW WAKEFIELD PUBLISH BOLLOCKS." The very fact MMR take-up is still depressed actually supports the inverse of the hypothesis that education is a public good; i.e. that lack of education negatively impacts a society.

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Re: economics in two pages never really works

A down-vote for gerryg for the bad example of MMR. But the first paragraph of his post contains some good points.

All patent / copyright protection create a cost to society to reward an individual (or company). The fundamental question whether an activity deserves an award is often discussed, but the size of the reward seems to be horribly unflexible with the current system. Does the author of some code solving a particular mathematical (economic, accounting, SCADA ...) problem deserve the same level of exclusivity as the inventor of the blue LED? One may have involved a person, a computer, and some time (and rather little risk of failure if the problem was well defined) -- the other involved years of research, a significant research facility, and a large risk of failure (ask all the others who didn't manage to get their LED working).

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Re: economics in two pages never really works

I apologise if I came across as supporting Wakefield. My intention was to illustrate the difficulties of trusting public policy and all the adverse consequences. If public policy were demonstrably universally benign and public servants always held in esteem Wakefield would not have got the floor space. Let's not forget the role of e.g., Private Eye, giving weight and making the decision all the more difficult.

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Anonymous Coward

Re: economics in two pages never really works

And Wakefield had a financial interest in attacking the MMR vaccine - another argument for State intervention to ensure that proper research standards are adhered to.

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Anonymous Coward

@John H Woods - Re: economics in two pages never really works

Are you talking here about education or "education" ? Haven't you heard about a large respectable pharmaceutical corporation establishing its own "scientific" phony medical journal ?

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Re: @John H Woods - economics in two pages never really works

Dear AC 04:21,

It is impossible to answer your question, if indeed you really seek an answer, without understanding the distinction you intend to convey by quoting "education" in that manner.

I am naturally aware, as are many people, that there is a risk that at least some medical journals may effectively operate as the part of the marketing departments of Big Pharma (Smith, 2005; Spurling et al., 2011; Handel et al., 2012).

Presumably we could agree that the ability to read and understand cogent arguments (i.e. that some journal articles should be taken with varying sizes of pinches of salt) and come to our own conclusions about them is a product of (perhaps a certain kind of) education. As, I would suggest, is the ability to go beyond feelings such as "there's no smoke without fire; it's obviously a conspiracy" and consider the evidence directly -- in this case that the benefits of MMR massively outweigh its risk.

A recent example: there was outrage a few weeks ago from some politicians that approximately £700 of the cost of an NHS childbirth was insurance premium. This was repeated ad nauseam by the journalists, and many people relayed this "news" to me (I have worked on projects for Insurance Companies, and the NHS) as if it were shocking. When I asked them what was shocking, that the risk of an accident necessitating life-long support of the child might be "as high" as a few cases in 100,000 or that the cost of that life-long support might be "as much" as a few £million, these people looked at me as if I were a special kind of idiot - of course those figures are perfectly reasonable. But, nevertheless, wasn't it shocking that insuring against this risk cost several hundred pounds?

This is what I mean by lack of education being the opposite of a public good. The politicians expressing the outrage are either uneducated themselves, or are exploiting a lack of public education to promote a political agenda. The journalists repeating it are either uneducated themselves, or are exploiting a lack of public education to report a good story. The people repeating it to me as if it were amazing are mostly intelligent people who have unfortunately missed that part of their education that would have empowered them to think critically about what is presented to them and to realize that it is not really all that amazing. In fact, I think it is mainly lack of empowerment (i.e. self confidence to apply their own intelligence and reach their own conclusions) rather than ability. Nevertheless, I did not see a single politician or pundit on the TV, Radio or in print putting forward the point of view that the insurance premium is pretty much the right order of magnitude for the insured risk. I'm sure some did, but it would certainly not have attracted the same attention.

Now that little storm in a teacup subsided without apparent harm, apart from wasting everybody's time. But it is the same sort of thing preventing us from using more nuclear power, even though the radiological risks are lower than those of fossil fuels; causing children to die of preventable illnesses, even though the risks of preventative vaccination are tiny in comparison; and numerous other public policy problems.

---

Handel et al., 2012 BMJ 2012;344:e4212

Smith R., 2005 Medical Journals Are an Extension of the Marketing Arm of Pharmaceutical Companies. PLoS Med 2(5)

Spurling et al., 2011, The Lancet, 378

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Re: economics in two pages never really works

Actually economics never really works - but when it is summed up in two pages the fact becomes glaringly obvious.

Given the chance to write a number of opaque 700-page books (or an equivalent number of still more impenetrable papers) most economists can effectively disguise the fact that their ideas, while undeniably interesting, cannot predict because they are incomplete. They are like the blind men and the elephant, except that we have to imagine just one or two blind men who have got hold of the ear, trunk, or tail. Thus they have no idea how big and complex the animal really is, nor can they have any idea what it is liable to do in response to a given stimulus.

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Anonymous Coward

I was sort of with you right up until you made a case against national health. Then I had to take the rest of your article as drivel.

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Then perhaps you should disengage your patella reflex, engage your brain and read that bit again, because he wasn't making a case against "national health" at all.

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That's the thing about right-wing economists - it's all ideology and story-telling. If you want accurate predictions of consequences, never ask someone like Worstall, because he's incapable of understanding how the world really works.

And that includes understanding the business consequences of policy. A case in point being the US, where the absence of public health-care, and the ensuing profiteering by the insurance companies, is a huge drain on the US economy.

It not only means less discretionary spending by most of the population, it also penalises businesses, and adds a huge risk for anyone thinking of contracting or going freelance - factors which we don't need to think about in the UK.

But in Worstall- world this gets translated to 'granny doesn't deserve a new hip, because economics.'

(Never mind that in the UK granny will already have paid for her new hip through tax and NI collected during her working life.)

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That's the problem with left wing readers - they get confused between economic arguments and moral/social ones. You can have a 'right wing' view on the world and still believe granny should get her hip - but you don't start mixing it up with some made up economic benefit.

Try re-reading the article again without the knee jerk reaction. Just because his politics are different to yours doesn't make the discussion moot. And, again, the article (as I read it) doesn't argue against national health care.

Seriously, why do people think they have some monopoly on caring? This is the biggest fraud perpetrated in modern politics - that somehow any given political group has the unique ability to care about old ladies and children. This comment will be downvoted, of course, but it doesn't stop me wanting to see my dear old mum with a knee replacement, or my kids getting a good education.

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Sightly strange complaint

"A case in point being the US, where the absence of public health-care,"

The US actually spends some 8 or 9 % of GDP on public health care. About the same portion as we were paying on the NHS back in 2001/02 sort of era.

The major complaint in the US is actually that they spend so much tax cash on public health and don't seem to get anything like the NHS for it.

BTW, I'm not a defender of the US health care system as it is, I would certainly recommend radical change in it. Just not in hte direction they are changing it.

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"I was sort of with you right up until you made a case against national health."

You haven't understood a word of what Tim Worstall was saying.

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Anonymous Coward

Re: Sightly strange complaint

I guess that you get your figures from somewhere other than the WHO, which estimates the US expenditure on healthcare as 17.2% of GDP despite 16% of the population not being covered, a statistic that places it alongside such countries as Turkey and Mexico. In the UK it is below 10%; it used to be around 8.5% but the economic contraction in 2008 increased it as a proportion of GDP.

Despite this my life expectancy in my area of the UK is better than that of my brother in an expensive part of the East Coast of the US, and my wife's treatment for a serious condition has so far been superb.

So yes, in the fully private system twice the expenditure (allowing for GDP differences) produces a worse outcome than the part-privatised British system. Add to that the economic damage, with around 60% of individual bankruptcies being linked to medical expenses. As it's plain that no radical change will take place in the US system because there is just so much money and muscle behind it, expect the average US citizen to continue to get an expensive and substandard service (just like their mobile phone service, in fact).

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Re: Slightly strange complaint

ribosome, Tim’s figures were on US public healthcare expenditure, not US total healthcare expenditure. The system here in the States is not fully private; for example, most people 65 and older are on public Medicare.

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Re: Sightly strange complaint

So why is the NHS not a public good? It works out in economy just like the herd immunity: In the US where we don't have such a thing a new hip costs a fortune, while it is cheap (and I don't just mean the cost to the individual) in most reasonable systems (such as Canada, UK or Germany). The reason is if you have a decent universal health care system it drives down cost of service for everyone. Not having a decent system in the US (and unfortunately Obamacare is just not enough) causes higher drug prices, higher service prices and even higher insurance company profits. So the true market approach here is if you spend enough money lobbying you can guarantee your profit base for the foreseeable future.

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Anonymous Coward

Re: Sightly strange complaint

Ribosome, once you correct the life expectancy figures in the US for accidental and violent deaths of young people (and that is in a relatively small number of specific areas) then the US life expectancy is higher than than UK. Their health system is not sub-standard at all, it is quite superior to the NHS in general, but it doesn't serve the cause to acknowledge that. The major causes for the high cost of medical treatment in the US are two, the horrendous cost of insurance because of the legal system, and the fact that the US pays high costs for all the various drugs and medicines, partly to subsidize the rest of the world, and probably more importantly because of the insurance style cover that has less incentive to attempt to reduce those costs. The litigation affect also works here, harder to use generic replacements when one could be sued for doing so.

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Timing is everything

Some state-granted monopolies are reasonable in their length of time, others are not.

Cliff Richard was the poster boy for those who whined that the copyright on the sound recording and performers rights for music (as opposed to the composition of the music itself) was 'only' 50 years. It was increased to 70 years as a result.

What singer / musician has ever been put off recording something by having 'only' 50 years copyright on the performance?

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Re: Timing is everything

I'd go further. What singer would be put off singing if there was no copyright law at all?

For me the very idea that without copyright no-one would innovate is retarded.

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Re: Timing is everything

"For me the very idea that without copyright no-one would innovate is retarded."

You didn't read Tim's piece, did you? He specifically addressed that very point. Go back and see if you can find where (hint: don't skim read the piece with an Internet era attention span)

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Re: Timing is everything

Another huge anomaly in timing is copyright in computer software.

Why should - to pick a company not at random - Microsoft be able to retain the copyright on Windows XP when they start to refuse to fix the problems they've not yet fixed?

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Anonymous Coward

Well, thanks for not descending into Randian lunacy

I do see a problem with using taxation to try and reduce negative externalities. Government becomes addicted to the money. Smoking and alcohol are both causes of negative externalities, yet I suspect I suspect we'd all have to pay a lot more tax, if it wasn't for smokers and boozers. While I think smoking a filthy habit, I do often wonder why tax addicted government doesn't throw some of that tax at curing the problems caused by smoking, thereby causing smokers to live longer and pay more tax.

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Re: Well, thanks for not descending into Randian lunacy

"I suspect we'd all have to pay a lot more tax, if it wasn't for smokers and boozers"

Correct. I believe it was Sweeden that binned the study that proved this.

" I do often wonder why tax addicted government doesn't throw some of that tax at curing the problems caused by smoking, thereby causing smokers to live longer and pay more tax."

Doesn't work like that - the study I mentioned above indicated that one boon of smokers wasn't the extra tax they generated, but that they died younger and quicker than non-smokers, so they didn't draw as much in the way of pensions, and when they fell ill, they wouldn't need as much health care.

Harsh, but if the only consideration was money then the government would be positively encouraging smoking.

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Re: Well, thanks for not descending into Randian lunacy

To state the bleeding obvious: They may live longer, but they are very unlikely to pay more tax per year of life as a result (unless, of course, the government ups everybody else's tax to compensate).

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Pirate

Copyright and Patents both have positive feedback mechanisms

Positive feedback as in an unstable circuit case, in relation to how these areas of law have been extended to suit vested interests far beyond the optimisation of public benefit.

In the case of copyright the main financial beneficiary, once having concentrated ownership through capitalism, became the only voice on the issue of copyright extension fit for publication in the mass media they own. Prior to social networking this was likely to be the only voice which could ever be heard on the matter.

In the case of patents the law is largely decided by lawyers, who naturally want more of it, resulting in the original intent of legislators being stretched to the limits of the legal imagination. Once a patent application has been worked over expensively by a patent lawyer to the point of unreadability outside of his peer group, terms such as "obviousness" and "inventive step" have taken on entirely different legal meanings from the understandings of mere engineers knowledgeable in the state of the relevant technical art, once tampered with by sufficient case law over a long enough period.

Attempts (some of these successful) have also being made to extend both areas of law through international treaty, secretly negotiated, and once passed creating effective blocks to reform by elected parliaments and houses of representatives to ensure us plebs get no further say in the matter.

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Re: Copyright and Patents both have positive feedback mechanisms

@PyLETS:

Very well said and sensible too.

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Re: Copyright and Patents both have positive feedback mechanisms

Democracy is meant to safeguard society from the feedback loops you mention. If the cost becomes too large, then society can rewrite the rules. It just takes time for the process to work, so be patient.

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Alert

The ecomonics?

I'll sum it for you right now: IP is only as good as the lawyers and time you can afford and god help you if you are a small time inventor/creator who is robbed by a big company.

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Paris Hilton

Pragmatic and/or/nor Theoretical

I suppose that, as with most things technical, there are theoretical considerations and pragmatic considerations.

If so, the dichotomy can blur or give rise to false understandings? For example:

Pragmatic

Suppose I make chips, electronic circuitry stuff and I have a way to put some semiconductors together that might have an appeal to people involved with electronic games (hardware, firmware, software, assembler and customer oriented). It makes their stuff run better, look better and gives their customers a more moving experience and, well, they can charge more than the competition or other not possessing that technology or one similar to it.

So rather than make the extra bit available for free on every chip I make I ensure it is lockable and only people buying the right to use that bit of silicon will get the key. No copyright = no key.

The model makes sense to me because I can charge royalties on top of a general "copyright fee". If you want to buy copyright you can but then I also need a "royalty fee" for every instance of potential (emphasis on potential) use that might be made of that copyrighted, royalty accessed technology hidden behind an electronic and legal lock.

It's how I make my money dood?

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Meh

Crossing The Streams - Managing To The Nonexistent

Arguments like this drive me nuts. There is no such thing as a free market. Never has been. Every single aspect of trade is managed and regulated from the standardized forms of exchange (money) to the controlled production of goods and their distribution. Auctions are about as close to a free market as we get, but that's another issue.

I'm fine with the nonexistence of free markets, but for any policy to be effective it must address reality, not fiction. For several hundred years we, as a civilization, have charged full steam ahead with policies that address a 'free and open' market while at the same time rigging the system specifically to prevent a 'free and open' market. It's all fantasy.

Until we suck it up and admit that the markets are rigged, nothing we do will make a bit of difference to the 'public good'. If we're going to insist on playing a fixed game then nobody has any right to complain about the insanity surrounding IP or oil or key market indices. Those things are the only possible outcome of playing a rigged game. It isn't even cheating if the rules are laid out to allow the cheating...

We need to manage to the reality of the situation. What we're doing now is no different than acknowledging gravity is a thing but simultaneously building only anti-gravity cars. The results are predictable, the only people who will benefit are those who manufacturer anti-gravity cars. That's the way the anti-gravity car industry likes it too.

Personally I don't care. I create value through direct skilled labor and meeting a real market need. We can live in fantasy land or reality and I'll still do fine. But the vast armies of office workers pounding away in furtherance of displaced labor really don't have any valid complaints when their wages are continuously pushed down and they eventually become the next class of working poor and/or destitute. It's the only way the game can play out.

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Linux

Re: Crossing The Streams - Managing To The Nonexistent

mod up @Don Jefe.

No such thing as free markets. Regulated trade adds friction to commerce, but also inhibits entry into the market. The whole industry of lawsuits over pointless software patents has created a highly polarised landscape, but also made it toxic for small businesses to enter into it.

Look at the malign FAT patents that manages to tax the "magic" layout of data in memory. How is that in the public interest?

Dealing with reality is hard, but has one huge advantage. The results are truth. And in this world, we need all the truth we can find...

P.

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Re: Crossing The Streams - Managing To The Nonexistent

@Don Jefe:

I often say that "society is predicated on a fabric of lies". Unfortunately, some are necessary to reduce friction and that creates a situation where we come to accept that some lies are OK when they are not. This is used to our disadvantage with things like going to war and other sweeping allocations of resources based on lies.

Unfortunately, although I see that this fabric of lies is problematic, I am honestly not sure how we work around that. Some flexibility of the truth is actually necessary for society to function. I am not at all sure that we can remove the bedrock of falsehoods and still function.

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Re: Crossing The Streams - Managing To The Nonexistent

I agree, some lies are necessary. A society based on complete honesty would descend into barbarism quickly, plus it wouldn't be any fun.

It can go too far though. Like when your policy makers actually believe the lies they were told as children and base their decisions on them: Like free market and supply-and-demand economies. Supply and demand doesn't much (if at all) affect consumers, the markets have been 'stabilized' several rungs upstream and we only see the effects based on inventory controls on products already in the system. Everything is kept steady 'for the consumer' but in reality it's only modifying producer product velocity to match their maximum efficiency metrics.

There is no room for competition as the price of things never changes enough to provide a toehold in the market. It's all stupid and I firmly believe that if we approached some things more honestly a lot more money and associated 'good things' would follow. We spend as much time and money managing a stacked deck as we do in actually doing business. The shitty part is it's our tax dollars that are being wasted on games and bullshit.

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Re: Crossing The Streams - Managing To The Nonexistent

@Don Jefe:

Well said. I lament that we require flexible interpretations of truth at all. I agree with you about the extent. I did not put it very well, but what I was trying to say was that the necessity for some particular flexibility has created a situation where we accept falsehoods we should not. There is, at this point, a disrespect for the truth that is troubling.

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We really need evidence.

Re: "We just think that we might well get less of these desirable things than we could get if we changed the incentives a bit."

When it comes to public policy allocating significant portions of the entire world's economy, I would like to be on more solid ground than "we think that we might".

I think it very unlikely that a society *with* patents and copyrights would have a chance competing against a society without them. If that is not the case, why would there be such a frantic rush to secretly negotiate and push through a treaty binding everyone to enforcing patents and copyrights?

If they really thought they had a point, they would let this fight itself out in the open market rather than asking for elaborate government protections and criminalization of things that are inherently civil matters.

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Re: We really need evidence.

"I think it very unlikely that a society *with* patents and copyrights would have a chance competing against a society without them."

We've an interesting example of that going on right now. India almost never observes copyright and China rarely either copyright or patents. They are significantly poorer than we are although growing faster.

The usual economic argument deployed is that a society will ignore foreigners' IP for as long as there's no serious domestic sources wanting to have their own IP protected domestically.

Indeed, I've often argued (elsewhere) that we should simply ignore IP violations in poor countries. No, not on their exports to us, but in their domestic economy? Meh: it's a problem that will solve itself over time. So I'm generally against TRIPS and so on, that tries to enforce IP in trade treaties.

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Paris Hilton

Conflating IP and that definition of 'Public Goods' is misleading though

And it takes an economist to ignore the reality of it.

An equation that Newton comes up with is only public if he publishes it publicly. If he keeps it to himself and hires himself out as a motion-prediction-trouble-shooter then he can make a bit of cash, at least until someone figures out his methods for themselves. And similarly only an economist could calculate the 'loss' to society of something they've never had or known about.

What is going on here is pre-supposing the flip-side of patent law - that the applicant is forced to divulge his methods publicly in order to receive the exclusive protection in law - in a set-up for banging on about the pros and cons of the other half of the system.

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But I can’t stop you using those equations […]

Tim, if excludability is Job One, then assassination is typically quite effective for the prevention of equation use. However, that comes with its own set of externalities.

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What about protection *from* patents?

I think this article looks at only at the ownership and not the missed-opportunity side.

Intellectual Privilege denies inventors the ability to create, independently, and allows a 3rd party with a better lawyer and more resources to deprive them of their livelihood. Most inventors (myself included) would gladly opt out of the entire system. Whole fields of endeavour are often "patent-encumbered", leading in some cases to patent-thickets.

Some examples:

* IBM have a vast portfolio, and they find that it is 10x more often used for defence than offense. i.e. if the system went away completely, the benefits would outweigh the costs.

* Google bid over $4billion for a set of patents covering Android - an attempt to pay protection money for not being sued, even though almost all of them would fail the "obviousness test".

* The Open Invention Network exists in order to allow its members to effectively contract out of the patent system.

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Meh

Re: What about protection *from* patents?

The patent system is quite effective, until you toss software into the mix. There's a subtle but crucial difference that in software patents that was rarely, if ever, an issue before.

Traditionally (pre-software patents) it wasn't so much the end product that was protected, but the means of arriving at the end product. I'll use my ironing board example to explain.

I have an ironing board from 1891. It is made of wood with a scissor type folding leg mechanism. At the intersection of the two sets of legs is an iron hook that slips through an eyelet on the opposing leg and locks the legs into position. Pretty straightforward right?

The hook and eyelet locking mechanism is patented (cast into the part in one of those over fancy Victorian fonts). For the duration of the patent the manufacturer was granted the right to sue anyone else who they caught locking the legs of an ironing board in that fashion without first getting permission.

The patent did not prevent others from making ironing boards with folding legs or using a similar hook and eyelet configuration in an entirely different application. That's a good, fair arrangement all the way around.

Software patents however, are often enforced in a way that would make manufacturing any ironing boards or latching a fence gate with a hook and eyelet a breach.

That simply isn't how the system was supposed to work, and indeed didn't work like that prior to software (some of the 'business methods' patents were pretty dumb too). The system has been twisted to suit the needs of users for which it wasn't designed. It's stupid and accomplishes the exact opposite of what it was supposed to do.

Does software need a government backed protection mechanism? I really don't know. I do know however that the patent system isn't suitable for software and if government backed protection is required it should be provided under another mechanism which is tailored to software. The existing patent system shouldn't be changed to deal with software. It works pretty damn well for everything else.

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Re: What about protection *from* patents?

@Don Jefe:

Re:"It works pretty damn well for everything else."

I am not so sure of that and I am especially suspicious now that we have a global industrial base serving more than 5 billion people. I do not think it is unreasonable to say we pay on average something like $100 a month all-in for patents and copyrights accounting for not only straight costs but also lost opportunities created by artificial barriers. That is about $5 Trillion dollars a year. In essence, as a society, we are paying that amount of money so we can reap the benefit of the value of inventions created every year in excess of those that would be created without patents and copyrights. If the average life of a patent is twenty years, that is equivalent to agreeing to lock up $100 Trillion dollars.

I am especially troubled by the notion that the cost of copyrights and patents as a percentage of the economy is very large and still growing. Apple charges $0.30 on just about every song downloaded from iTunes and the only 'service' they are offering is to *limit* access to the songs. Apple is now attributing something like a billion dollars a month in revenue to iTunes. Essentially all of that money goes to rent-seekers of one kind of another and *not* back into the creation of art.

I say that as a matter of sane and sensible public policy we should at the very least determine roughly how much it costs society to have patent and copyright systems and what we get for our money. I have no doubt that the best financial course for society is to scrap the patent and copyright systems. That would pump billions of dollars a day into the world economy the moment it was done.

Note that in practice, as a matter of prudent public policy, I would not just scrap those systems without providing some sort of reasonable soft landing for people and industries affected by the change. However, that would not take the form of massive handouts to fatcats.

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False assumption of ownership

"IP" is not legitimate property, it's merely the arrogant assumption of ownership, like a land-grab that first requires displacing the indigenous inhabitants (i.e. all former contributors).

Actual, real property requires there to be a verifiable provenance of unique transactions, that legitimately transfers ownership of a unique article from one person to the next.

But the provenance of knowledge (i.e. "IP") is unverifiable, because it has so many largely unaccountable sources. It's also typically acquired (learnt) without record, isn't transferred exclusively (many people can learn the same thing at the same time), and moreover is always derivative, to one degree or another, and therefore should not rightfully be any one person's exclusive "property".

Indeed "IP" is often required to cite its sources (e.g. patents), which means those who drafted "IP" laws were acutely aware of the fact that they were facilitating the monopolisation of other people's work.

That means "IP" itself is actually theft, according to the "IP" proponents' own ethos.

Any practical argument in favour of "IP" is therefore a bit like arguing about the practical benefits of using a shotgun to rob a bank. The question should not be; "How are we supposed to rob banks without shotguns?", it should be; "How can we make money without robbing banks?"

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Re: False assumption of ownership

@Oh Homer:

Re: '"IP" itself is actually theft, according to the "IP" proponents' own ethos... The question should not be; "How are we supposed to rob banks without shotguns?", it should be; "How can we make money without robbing banks?"'

Very well said. I am stealing that idea for use in the future.

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Public good

The problem with the 'public good' concept ineconomics is that it's been defined by economists, not by the public.

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