FDI = foreign direct investment

This afternoon we learned that if you give monopolies to foreign investors they will invest more in your country. Historically this was widely used to lure skilled artisans from one country to another. Of course another widely used method was to kidnap them...perhaps as an alternative to developing countries introducing patents under the TRIPS, they should just kidnap foreign investors.

On the bus on the way to the conference we were talking about what Microsoft is up to with the waving of patents and signing of licensing agreements with open source companies. The lunch keynote talk was by Brad Smith senior vice president and general counsel for Microsoft. I'm still catching my breath - at least as I read between the lines Microsoft's plan is to impose a tax on the commercial open source market. Historically the Microsoft model has been one of a broad-based tax - deals with computer manufacturers to pay a fee on every computer sold. Although the short-term revenue from Vista is good Microsoft I believe rightfully fears commoditization of the operating system market. A tax on all operating systems seems like a sure bet for long-term revenues. I'm not at all convinced it will work, but I can understand why they think it is worth a shot.

I am in Berkeley for a conference on the economics of competition and innovation - mostly about patents. It's a good conference, organized by Richard Gilbert, so I thought I'd try my hand at live-blogging. You can access information about the conference, including the papers here. I was a discussant at the morning session, which was quite lively. There were two papers, one a nice clean paper by Carl Shapiro showing how giving stays of injunctions to allow the redesign of products can substantially reduce the hold up problem, and a second paper by Anne Layne-Farrar attacking the Shapiro paper - mostly pointing out that the analysis doesn't apply in many cases. Since Carl didn't argue that it did in those cases, I'm not sure why this was an issue.

The discussion was quite lively. Strangely, I was the quiet one - Carl's model of downstream innovation is one in which patents are completely neutral, which I found useful for pointing out what we should be looking for to determine whether patent systems are a good idea or a bad idea. The wild discussant turned out to be Aaron Edlin who I hadn't met before, but is highly entertaining. He also appears to have no higher regard for the patent system than I do - and said so in no uncertain terms. Interestingly he comes at this from a business perspective - he runs a successful publishing business, BEPress. I think he is part of the majority of the R&D surveys in which they say that patents are only a hindrance to business.

Great News! The U.S. Patent Office has apparently rejected Amazon.com's patent on one-click shopping on obviousness grounds, after the original patent was challenged by New Zealand actor Peter Calveley. The post on CNet's news site is here.

The "Pepper ... and Salt" cartoon on the editorial page in today's issue of the Wall Street Journal depicts a man on the street, who looks like he's seen better times, holding a jerry built contraption that might contain coins donated by passers by. It looks vaguely like a Swiss Army knife. Beside him is a sign that says, "Invented the Swiss Army knife but Forgot to Patent It."

I assume the Swiss Army knife, invented in 1891 or so, was patented. But as Tim Lee says in this post at The Technology Liberation Front, "If there's prior art for the individual blades, then the knife is obvious, even if no one has happened to sell a knife with that particular combination of blades."

And why should we believe that the inventor's first mover advantage and entrepreneurial moxie couldn't have enabled him to earn competitive rents from the sale of Swiss Army knives? Another unexamined prejudice, this time in cartoon form.

"Google Files Patent Application for Mobile Payments" strikes me as bizarre link here. The first "mobile payment" was a piece of paper saying to your bank "Pay to the order of" and allowed you to write in the name of the recipient and give it to a messenger or send it through the mail (and hopefully still does, unless Google's patent stops that too, when and if it gets it). Does Western Union or whoever have a patent on a wire transfer?

Can patent applications get any sillier? Don't answer.

This is really wierd.

Hitt, Greg. 2007. "Patent System's Revamp Hits Wall: Globalization Fears Stall Momentum in Congress." Wall Street Journal (27 August): p. A 3. "A bipartisan effort in Congress to overhaul the patent system -- a priority for some of the nation's biggest technology companies -- is hitting resistance because of concerns the U.S. might be exposed to greater foreign competition. Patent overhaul appeared to be on a fast track earlier this summer. But plans for a quick vote got derailed last month after the AFL-CIO entered the debate, warning that innovation -- and union-backed manufacturing jobs -- might be at risk if the changes were adopted. The union has considerable clout in the Democratic Congress and expressed concerns with provisions that would expose patents to expanded challenges and might limit damages for infringement. "At a time when the Chinese government is constantly being challenged to live up to its intellectual-property obligations, we do not want to take actions that may weaken ours," the AFL-CIO's legislative director, William Samuel, said in the pointed missive that was circulated on Capitol Hill."

Michael Perelman

In todays patent troll news Sony is being sued over the cell processor. The patent Sony is alleged to have infringed is here. Why is Parallel Processing a patent troll? Simple: Parallel Processing, or more precisely Rob Chang to whom the patent was issued, has contributed little or nothing of social value. Read the patent: does it help you build a parallel processor? No. The basic ideas underlying parallel processing have been known for decades; the devil is in the details - which types of decentralization of processing and memory work well under practical conditions and with particular hardware. The Sony Cell is the product of a few cheap ideas and a lot of expensive tinkering. There is no evidence Rob Chang or Parallel Processing contributed to this process. So they have no moral or economic claim on Sony. And since they lack moral claim and are trying to file a financial claim that makes them trolls.

The sad thing is - it wouldn't be that hard to improve the patent system to get rid of this type of claim. Just force patent holders to provide evidence of having contributed in a substantial way to product they are claiming belongs to them.

After reading this article, I have a newfound respect for the art of the guys who hold advertising signs on street corners.

White is part of the competitive world of "human directionals," an industry term for people who twirl signs outside restaurants, barbershops and new real estate subdivisions.

Street corner advertising on human billboards has existed for centuries, but Southern California where the weather allows sign spinners to work year-round has endowed the job with style.

Local spinners have cooked up hundreds of moves. There's the Helicopter, in which a spinner does a backbend on one hand while spinning a sign above his head. In the Blender, a spinner twirls the sign behind his back. Spanking the Horse gets the most attention. The spinner puts the sign between his legs, slaps his own behind and giddy-ups.

Thanks to growing demand, the business has turned cutthroat. There's a frenzy of talent poaching. Spinners battle one another for plum assignments and the promise of wage hikes. Some of the more prominent compete for bragging rights by posting videos on YouTube and Google Video, complete with trash talking. One YouTube comment reads, "i don't know if you stole my tricks or i just do them better."

But the limits of my respect ended when I got to this section in the article -

Aarrow keeps dozens of moves in a "trick-tionary," which only a handful of people have seen, said co-founder Mike Kenny. The company records spinners' movements and sends them in batches to the U.S. Patent and Trademark Office. "We have to take our intellectual property pretty seriously," he said.

Got that folks? Even after the latest Supreme Court patent smackdown, the IP legal culture still fosters the idea that you can monopolize the way you twirl a piece of cardboard around your body. If try to do that yourself, you will be sued by the patent holder of this stunning new invention that pushes the boundaries of human progress.

Ah yes, we certainly need to "take our intellectual property seriously" don't we? Things like this will certainly help the public to do just that.

Is the patent system broken? You be the judge. Here is a case of several examples of prior art that were not caught by the Patent and Trademark Office and are now giving rise to a patent suit by Verizon against Vonage, closing it down for a period and threatening it over the long run link here. Even with the evidence, Verizon's patent will need to be declared invalid, a procedure that may take a long time and cost Vonage money it doesn't have and business it is now unlikely to get.