Complaints about the high cost of college textbooks grow but are now evoking new responses link here. Randall Stross, professor of business at San Jose State University, writes that Pirate Bay and other torrent sites have challenged the publishers, forcing them to explore new business models or lose most of the income from the copyright. The alternative of choice seems to be a gated site charging a fee and supplemented by the sale of additional teaching materials not included in the text, so the copyright produces income, but less than the sale of hard copies. While it will lower the high cost of accessing text material, it still doesn't beat free, so don't expect the torrent sources to dry up completely.

Something seems to be cooking in software patents, hopefully important news. However, it is a bit early to cheer, as big interests are engaged.

The source of the excitement is that the Patent and Trademark Office seems likely to declare software patents invalid if the expressed PTO view prevails. You can start reading the bare bones of the story here. Then go to the referenced post for a more detailed legal view link here .

The logic is that software patents ought to go. But remember as you cheer that there is a legal and a political process to be worked through and that ain't bean bag.

One of the factors missing from discussions of the cost of out patent system is hard data dollars and cents of what it costs society. Some of us have long known that it was a net loss, but that is hard to argue when you don't have the numbers. That has just changed, according to a book review by Timothy B. Lee link here. The book reviewed is Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk by James Bessen and Michael Meurer .

The hypothesis actually tested was, "Patents are supposed to create a positive incentive for innovation by enhancing the profits of companies that develop new technologies. If the patent system is working properly, the average firm's patent portfolio should generate more profits than the total cost of defending against patent infringement lawsuits from other firms. If, in contrast, litigation costs exceed patent profits, that suggests the patent system is actually creating a net dis-incentive to innovation. In that case, innovative companies would be better off with no patent system at all."

"Their data suggests three broad conclusions. First, patent litigation began rising sharply in the early 1990s. The costs of defending against patent litigation for non-chemical firms held steady at about $2 billion per year during the 1980s, but by 1999 (the last year for which they have reliable data), patent litigation was costing defendants more than $10 billion annually. Second, while the chemical and pharmaceutical industries also experienced increased litigation during the 1990s, the problem was much less dire; the patent system still appeared to offer positive innovation incentives for drug and chemical firms."

"Most shockingly, Bessen and Meurer's data suggest that outside of the chemical and pharmaceutical industries, litigation costs for the average public firm actually exceed profits from their patent portfolio by a wide margin. By 1999, the last year in their sample, defending against patent lawsuits cost non-chemical public firms about $12 billion, while their patent portfolios generated only about $3 billion in profits. This data suggests that outside the chemical and pharmaceutical industries, the patent system actually reduces the net returns to innovation; firms don't earn enough from their patents to offset the costs of defending themselves against patent infringement lawsuits brought by other firms."

There are some caveats to the study, so more work needs to be done. But with that proviso, not just the voter (consumer) needs to think about our busted patent system, but so does business and other patent owners. They should be banging the doors down on the Congress to get this changed.

One of the things we do not do is pay enough attention to IP developments in other countries. The Economist has a piece entitled "Sharing the wealth; Artists do battle to enrich their heirs link here." The story brings up a subject new probably to most Americans. The operative paragraph is, "For the past two years 4% of the price of a work by a living artist sold through an auction house or by a dealer has been payable to the artist. Sales of less than €1,000 (£796) are exempt, and the tax is capped for anything worth €500,000 or more. Throughout the European Union the tax is payable on sales of works by living artists or those who have died within 70 years; in Britain it is only works by living artists that qualify. The EU allowed Britain this exemption until 2012..... Damien Hirst, Britain's most commercially successful artist, [and] more than 500 signed a letter to the Telegraph urging the government to give them that right. 'Our loved ones often sacrifice a lot to support an artist in the family," [so that] Hirst and his colleagues would like to make sure it is not extended.'" That is a rich extension of copyright with no obvious benefit to society like encouraging innovation.

The Economist notes that the change will have an adverse effects on the British art market and then goes on to note that the gains are collected by only a relative few. "The artist's resale right (ARR) benefits a far smaller proportion of artists than its supporters might assume. A study sponsored by the Antiques Trade Gazette showed that, in the 18 months to August 2007, 10% of the 1,104 artists benefiting from ARR in Britain (around half of whom are British) got 80% of the pot; the bottom 30% received less than £100 each. The royalty has also proved cumbersome and costly to collect.

While it is still minor league, the amount of free downloadable material continues to grow. Here is one source, a website called Legal Torrents, which uses the Bittorrent software to distribute Creative Commons licensed material link here. Have a look at what is currently available here. All legal and fast to download.

The more people who come looking and download, the more licensed material is likely to be made available.

Tyler Cowen writes on his blog about a recent book, Michael Heller's The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives, whose key message is that the "tragedy of the anti-commons" is often a bigger problem than the better-known tragedy of the commons link here.

He provides this example: "Tarnation, a spunky documentary on growing up with a schizophrenic mother, originally cost $218 to make at home on the director's laptop.  It required an additional $230,000 for music clearances before it could be distributed."

Read the whole piece it is short and right on point.

One of the big issues with copyright is that it stifles innovation. I was reminded of this again yesterday, when I saw a play, The Mystery of Irma Vep link here. It was written by Charles Ludlam who, the program notes observe, "Upon realizing that his teachers, and the commercial theater, wanted him to subscribe to the Stanislavskian method of behaving in a 'civilized manner in a room, not to do anything extraordinary,' Ludlam and a group of like-minded artists founded The Ridiculous Theatrical Company.... He quickly became famous for gleefully ransacking other genres and works.... Everything was fair game,... drawing on great works of literature as well as movies, plays, television ads, songs, comic books, or 'something shouted in the street' for all twenty-nine of his plays." Irma is a marvel of casting and direction, with two men playing all seven parts, including those of three women. Imagine the rapid fire costume changes, since both actors had to be onstage together most of the time.

The audience laughed their heads off. What a loss if copyright had interfered.

You have probably never heard of the Naked Cowboy who parades around the streets of New York in his underpants, cowboy boots and hat, playing a guitar and singing. You should because it once again demonstrates the absurdity of IP law. The Mars candy people and its ad agency created billboards featuring a naked cowboy link here and here. He sued for invasion of privacy and breach of his trademark. A New York court has thrown out the privacy charge, which seems almost logical, since the cowboy's strutting is clearly not private. Some such "street artists" might even pay for the publicity.

But the trademark invasion remains to be adjudicated. Trial is set for high noon on July 11. I'll bet you can't wait to hear how it turns out. You can read the 23 page opinion link here.link here

The New York Times computer columnist, David Pogue, also writes books on software. He recently published an article complaining that he had given the PDF of one of his books to a few blind people as an act of generosity, and the PDF then appeared all over the internet link here. His column produced a deluge of comment, both favorable and not link here. Commenters suggested making the book for sale in downloadable form and others in free form, arguing that might actually increase sales of the hard copy. Another suggested a test using one of his older texts. Pogue has now agreed to such a test, selling a downloadable PDF, though not the free version.

The free downloadable form of publication is one that readers of this blog will find familiar, since two of its authors have published texts in that form, the most recent of which is available here . We will report the outcome of Pogue's experiment as it becomes available. A lot of us still like to have hard-copy reference books in hand as well as an online copy as we work on our computers so it will be an interesting experiment.

Been here before. The courts have blessed a settlement between Pfizer and Ranbaxy, an Indian generic maker of Lipitor, the anti-cholesterol medicine, in which the generic is kept off the US market for about 20 months link here. The news story suggests the deal may be worth on the order of $10 billion to Pfizer.

In an interesting twist to the story, the deal involved no cash payments which would have been against the law, but Ranbaxy was being allowed to sell its generic in a number of international markets. They include Canada, so smart American buyers can avoid the monopolist's prices by buying there and having the med mailed to them individually in the US.

Lipitor already faced competition from a generic form of Zocor, but Pfizer has apparently been pretty successful in keeping its established customers.