The Multiplex Strikes Back

In The Knockoff Economy,we wrote about how turning products into experiences is one way to blunt the detrimental effects of copies. Products – especially digital ones – are often very easy to copy. But experiences can be highly copy-resistant.  Just think of music: it’s easy to pirate a song, but it’s very difficult to effectively pirate a live show. Or movies: it’s easy to pirate a film, but it’s impossible to pirate the experience of watching a movie at a premium theater like The Arclight Hollywood in Los Angeles.  You can’t cheaply copy the comfy reserved seats, the fancy food and drink, the great sight lines and sound.

All this, of course, comes at a price. But it helps justify the idea of going to a movie theater in an age when home downloads, on a widescreen computer monitor, can be pretty good.

Apple vs Samsung: Who Owns the Rectangle?

This week in San Jose, a trial opened that may be the World War III of patents. Apple is suing Samsung, alleging that the Korean tech giant has knocked off many features of its iPhone and iPad. Apple wants $2.5 billion in damages – a record in a patent case -- and a court order forbidding Samsung from selling some of its most popular phones and tablets in the United States. Samsung claims that Apple is the one stealing, and that some of Apple’s patents are invalid because they are so commonplace.  

With respect to at least one of Apple’s patents, Samsung has a point. A patent at the heart of the dispute. Design Patent 504,889 — which lists Steve Jobs and Apple design guru Jonathan Ive, among others, as the “inventors” — is a claim for a rectangular electronic device with rounded corners. That’s right, Apple is claiming control over rectangles. The full claim is only 2 lines long, and amazingly broad – Apple is claiming all devices with the basic shape shown here.

Why Do Patent Holders Sometimes Pay Patent Copiers?

Like a lot of products, pharmaceuticals get knocked off. And when that happens to a drug that’s protected by a patent, the next event is unsurprising: a lawsuit brought by the patent holder. But there is a very unusual twist in the pharma world. When the dust settles, quite frequently it is the major pharmaceutical firm that is paying the company that has knocked off their patented drug.

In one recent case involving Cipro, a widely-used antibiotic with annual sales exceeding $1 billion, Bayer (the patent owner) paid $400 million to a generic drug maker, Barr Laboratories, to settle their patent dispute. Why would the patent holder make such a huge payment to the knockoff artist, and not the other way around?

The Vegas Strip Steak Patent

We’ve noted before on this blog that food receives limited protection from copying. But that doesn’t mean it receives no protection. As we all know, Coca-Cola’s secret formula is still secret. And sometimes food companies patent novel (and not so novel) dishes and techniques.

Patent and “trade secret” (the legal right Coke relies on) present very different economic benefits, however. Trade secret is forever—if the secret can be kept secret. Patent, by contrast, lasts 20 years and protects the invention against any copyist. More importantly, patent is fundamentally based on disclosure: to patent something, you have to explain how it works.

How do firms choose between the two? That’s a big question. But we can get a window on it by looking at something that has been in the news lately—the so-called  “Vegas Strip Steak.”

FREAK-est Links

1. Is a new cut of steak worthy of a patent? (HT: Eric M. Jones)

2. First there were metrosexuals; now meet the urban datasexual. (HT: Jeff Bladt)

3. Is flopping a problem in the NBA?

4. Fighter pilot Mary Cummings explains robotic crop dusting.

5. Corporate takeovers: they trim the fat, including corporate jets.

6. Does the ability to feel guilt make for great leaders?

7. Evidence that director John Waters still hitchhikes.

The Twitter I.P.A.

Almost a year ago, we posted here about patent trolling – when individuals and firms use patents as a tool to extract settlements out of defendants who wish to avoid expensive patent litigation, even when the target thinks it can ultimately win.

Because they can be so valuable, patents are a big source of litigation, especially in the tech industry. Apple and Samsung have been at each other's throats over smartphone patents, as have Apple and Motorola. Microsoft has been battling with Motorola over whether its Xbox violates Motorola’s patents, and Microsoft has also threatened smartphone maker HTC.  Oracle sued Google, claiming Google’s Android cellphone operating system infringed on Oracle patents.  Microsoft sued Barnes & Noble, claiming that its Nook e-reader violates Microsoft patents. Apple and Google are now eyeing each other warily over “slide to unlock” technology that Apple has patented and accuses Google of copying in its Android smartphone operating system. Google, as a defensive move, paid $12.5 billion to buy Motorola’s portfolio of nearly 25,000 patents. 

Why Aren't There More Female Patent-Holders?

We've blogged before about gender inequality and the persistent male/female wage gap.  A new working paper by Jennifer Hunt, Jean-Philippe Garant, Hannah Herman, and David J. Munroe highlights another arena where women are lagging: commercialized patents. Only 7.5 percent of regular patent and 5.5 percent of commercial patent holders are female.  The authors explored various explanations for the gap:

Using the National Survey of College Graduates 2003, we find only 7% of the gap is accounted for by women's lower probability of holding any science or engineering degree, because women with such a degree are scarcely more likely to patent than women without.

The Patent Gap: A New Marketplace Podcast

Our latest Freakonomics Radio on Marketplace podcast is called “The Patent Gap.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)  

It centers around a new working paper called "Why Don't Women Patent?" and we talk to one of its authors, the Rutgers economist Jennifer Hunt. (We recently previewed this research on the blog, and some of Hunt's earlier research too.)

Why Is It Easier to Copyright an Unhealthy Yoga Routine than a Healthy One?

You might wonder first how yoga, dating back thousands of years in India, can be copyrighted at all. (Not easily, as we will explain in a moment.) But the question we raise emerges from a very current dispute between two rival yoga studios.

Bikram Choudhury is the founder of Bikram Yoga, a popular chain of yoga studios frequented by celebrities such as Lady Gaga and David Beckham. In Bikram Yoga classes, students enter a room heated to 105 degrees Fahrenheit to perform a set of 26 traditional poses and two breathing exercises. While you might think demand for this would be low, “hot yoga” has made Choudhury very rich. He has a villa in Beverly Hills, and a collection of more than three dozen Rolls-Royces and Bentleys.

What's the Impact of Viagra's Patent Extension?

Last summer, a court ruled in favor of Pfizer’s patent on Viagra, extending its monopoly on the product through 2019. Many jokes were made when Viagra was first marketed, with Jay Leno remarking that it would keep comedians in business for years. With the patent extension, the price of Viagra will remain high for another 8 years.

There are many implications of this, but my question is the narrow one: What related markets will be affected by the absence of a generic equivalent of Viagra and the product’s continuing high price, and how?