Music to ears around here is a leader (editorial) in The Economist this week entitled Copyright and wrong: Why the rules on copyright need to return to their roots link here. It begins by observing that copyright became law in England 300 years ago this week, as "An act for the encouragement of learning." It put a time limit of 21 years if a book was already in print and 14 years if it was new, with a right to get it extended 14 more if the author was still alive. And that was the end of it.

The opinion piece goes on to make a series of familiar arguments; that the belief that extension of a copyright's term increases creativity is questionable and that current lengths discourage creativity when the penalties even for inadvertent infringement are draconian as is often the case. It also asserts, "Authors and artists do not generally consult the statute books before deciding whether or not to pick up pen or paintbrush." It ends by noting that a return to the earlier much shorter term of copyright would be "arbitrary but not unreasonable." And "[i]f there is a case for longer terms, they should be on a renewal basis, so that content is not locked up automatically." "[F]air use needs to be expanded and inadvertent infringement should be minimally penalized."

Well reasoned and stated.

We don't often think of the courts as playing an active role in the evolution of intellectual property law, perhaps because we tend to accept the assertion by judges that they follow precedent. Writing in the Washington Post, Steven Pearlstein cites four cases where the D. C. Circuit Court has gone out of its way to assert that the regulators have exceeded their Congressionally granted authority. link here

The key graph: "Many of the D.C. Circuit judges have long since stopped pretending to defer to the factual determinations and policy judgments of duly appointed regulators, as the law requires. Deference has now given way to skepticism, hostility and contempt that can easily be read between the lines of overly legalistic opinions that routinely ignore the plain language of statute and the clear intent of Congress. It's gotten so bad that top regulators told me privately this week that they routinely put aside consideration of needed new initiatives because they assume they will be foiled by the hostile appeals court."

In the first case, the DC court went after the Federal Communications Commission for exceeding its authority in trying to regulate Comcast violations of net neutrality. In the second case, Pearlstein charges the Court with interfering in the development of generic drugs, thus extending the drug patents of the large pharmacy companies. Thirdly, he knocks the Federal Trade Commission for going beyond the pale in trying to reign in " a tech company for enhancing its monopoly in a certain chip-making process by deceiving an industry standard-setting body. According to [Judge] Williams, the fact that its deceit 'merely' enabled a monopolist to charge higher prices doesn't constitute illegal anti-competitive behavior." Huh? Finally, the court stopped the Securities and Exchange Commission when it tried to require that 75 percent of the directors of a mutual fund be independent of the company chosen to manage the fund's investments, in order to protect small investors.

I can't find the quote, but Supreme Court Justice Oliver Wendell Holmes Jr. argued that justices first decide how they want a case to come out and then pick the arguments to reach that end. With that in mind, it is much easier for us commoners to understand how judges reach their judgments and that being human, they are not averse to expanding their own powers.

In the spirit of April 1, Miracle Jones at Slashdot writes, "In a move that has shocked the publishing world, Judge Denny Chin has filed a brief saying that he has decided to cut the Google Book Settlement in half, letting Google host the first half of every book the company has scanned, and letting other interested stakeholders fight for the rights to the rest." link here

More compelling is Annalee Newitz' long highly critical discussion of the proposed GBS (Google Book Settlement" entitled 5 Ways The Google Book Settlement Will Change The Future of Reading link here.

The five ways are: 1. It may become harder to get information online about books from writers you love.

2. You will find yourself reading free books online, by authors who have disappeared. And Google will make money when you do.

3. Google will be competing with Apple and Amazon and everybody else to be your favorite online bookseller.

4. Libraries and bookstores will be the same thing.

5. Pulp science fiction will make a comeback in ways you might not expect.

These points don't really do justice to the content of the piece. For those hung up on copyright monopolies, the GBS won't do. For those who want to see all those books that have evaporated into the "Out of Print" ether or are in libraries with the only copy, some settlement like the one proposed makes sense. Still, it might be better if time is allowed to run and wear the two sides down to a compromise.

In another of those court decisions that infuriate critics of intellectual property, Judge Denise Cote, of the United States District Court in New York, ruled in favor of Barclays, Bank of America, and Morgan Stanley. The banks claimed that the website, theflyonthewall.com, violated their copyright when it published headline news like changes in stock ratings link here. The site must now wait until 10 a.m. to publish news about research that was issued before the 9:30 a.m. opening bell or if issued during the day, by a full two hours.

The court found that fair use was topped by the "hot news" doctrine, which protects organizations from theft by competitors. The ruling clearly gives big Wall Street clients a head start each trading day. "The banks claimed Fly's practice of publishing pieces of research reports almost instantly undercut their work by making key nuggets meant for exclusive client use available to a wider audience immediately. Why would clients pay big money those reports--which themselves cost the banks money to produce--if Fly was going to publish the important stuff right away? link here

Fly will appeal. The monopolists win, if only for the moment, but the lawyers profit, no matter what.

Two articles in the New York Times today point up the need for financial sector reform and the problems doing it.

The first, by Andrew Ross Sorkin, observes that the regulators must have been aware of Lehman's illegal financial deals to hide its financial weakness, since the company made no effort to hide them even as the feds made no mention of the questionable moves in its reporting link here. It is no great leap of logic to conclude that the regulators had no interest in disclosing what amounts to fraud on Lehman's part in hiding its truly precarious financial condition from its creditors and stockholders. One need not exert too much effort to recall that the regulators at the time were appointees of the Bush administration--and then to also observe that many of the same guardians are still on duty.

The second article, by Sewell Chan, reviews the financial reform bill and provides lots of detail about its new provisions, ostensibly to overcome the shortcomings revealed by recent experience link here. However, the drafts remain a confusing array of agencies and responsibilities among them such that there is plenty of room for regulatory arbitrage and little certainty that provisions will be appreciably strengthened in practice. None of this addresses the question of restructuring the banking system so that the big banks are radically reduced in size and the threat that as a group they are "too big to save" in a catastrophe like the one we have just experienced.

So the opportunities for extreme leverage remain, as do the temptations of excessive risk for hugely overpaid bank executives. The probability? Disaster.

The Washington Post has just given front page coverage to Murray Hill, a PR firm in Maryland that wants to run for public office link here. The article has a tongue-in-cheek character but it also has a serious objective--to make clear the absurdity of the Supreme Court determination in the Citizens United case that corporations have rights normally reserved to citizens, a position that is in fundamental conflict with common sense and precedent.

In quotations, the article says, "After the Supreme Court declared that corporations have the same rights as individuals when it comes to funding political campaigns, the self-described progressive firm took what it considers the next logical step: declaring for office." "It's an opportunity to see this court opinion play out to its logical conclusion.", "...the firm appears to be the first "corporate person" to run for office and is promising a spirited campaign that 'puts people second, or even third.'" "I guess with a corporation, should someone go on vacation, like many of our current members of Congress, you'd have fill-ins to take their place."

The tongue may be in cheek but the edge to its humor also comes through and the Supreme Court looks pretty bad. After President Obama spoke critically of the Court's finding and Chief Justice Roberts fired back, the Court seems to be getting the kind of treatment it deserves.

Simon Johnson writes that unless we shrink the big banks drastically, the banking system will become "Way Too Big To Save" link here. Interesting counterpoint to "Too big to fail." We are at the point where we can't afford to bail the system out again, incredible as that may seem. The issue is that the banking system is no longer just that of the US and if we save one bank, we will have to save all the others as well--and we won't have the resources to do it.

Johnson, who was International Monetary Fund's Economic Counselor (chief economist) and Director of its Research Department and now teaches at the MIT Sloan School of Management, writes a blog and a constant flow of papers, and serves on the Congressional Budget Office's Panel of Economic Advisers and as a senior fellow at the Peterson Institute for International Economics.

I will not try to repeat his argument. Read the original and the two other references he includes here and here.

Writing in the Washington Post, Kari Lydersen has a short and quite good summary on the pros and cons of gene patents link here. In the case under examination, a woman thinks she might have a gene that predisposes her to breast and ovarian cancer in which case she can decide on preemptive surgery. But, she can't afford the expensive test and it is not covered by her state's Medicaid (other states' Medicaid programs do cover the test). Her story ends up well enough--for her, but probably not for many people.

The article covers the pros and cons of gene patents and the dilemma they present. It doesn't, however, discuss how the applicable patent system might be modified, for example, by having the government pay for the research and development, probably through contracting with the private sector, and then making the test widely available at an affordable price.

This story does make the point, though by inference, that we have a busted health care system as well of a dysfunctional patent system which violates our generally accepted sense of what is right.