A Soybean in the Supreme Court: Bowman v. Monsanto

The idea of patenting a living organism is strange to some people, if not frightening. Nonetheless, these kinds of patents have existed for decades. On Tuesday, the Supreme Court held argument in Bowman v. Monsanto, a case that will test just how far these patents reach. 

Vernon Hugh Bowman is a 75-year-old Indiana soybean farmer. Like pretty much every soybean farmer in America, Bowman is a regular purchaser of “Roundup-Ready” soybean seed from Monsanto. Farmers who plant the variety are able to kill weeds, but not soybeans, by spraying their fields with Roundup. Today, over 90% of the soybean crop in the U.S. uses Monsanto’s patented variety.

One special feature of a living thing is that it can grow and reproduce. And so farmers who buy Roundup-Ready soybean seed sign a contract with Monsanto promising that they will not replant any of the soybeans that they harvest. Monsanto wants farmers to buy a fresh batch of seed every time they plant a soybean crop — and not grow their own.

Pirates of the Caribbean

Hollywood is abuzz with reports that the tiny islands of Antigua and Barbuda may begin operating their own national versions of the Pirate Bay, where individuals can cheaply, or even freely, download the latest films and TV shows. The clincher: this will all be legal.

How is that possible? Because the World Trade Organization says so. Let us explain.

When the U.S. helped create the WTO back in the early 1990s, it had a few main goals. One was to create a serious world trade court. The WTO has a lot of complex rules on trade, and the idea was to build a legal system that could neutrally adjudicate allegations of rule breaking. And it would work by allowing the winning country to retaliate against the loser by “suspending obligations.”

In other words, if the U.S. takes Japan to trade court and wins, Japan has to stop doing whatever bad thing it was doing. And if it doesn’t, the U.S. gets to retaliate--by, for example, increasing tariffs on Japanese goods up to the amount of harm Japan was causing.

Shanzhai Skyscrapers

China is famously a hotbed of copying.  Western firms constantly kvetch about Chinese knockoffs of their products—and often with good reason. China’s intellectual property laws are fairly strong, at least on paper. The problem is that the laws aren’t effectively enforced – and it’s an open question whether the Chinese government is capable of shutting down the copyists. China’s uneasy relationship with intellectual-property law is due in no small part to China’s "shanzhai" culture. What is shanzhai? The literal meaning of the word is “mountain stronghold,” but it has come to connote imitation, and more, imitation done in a way that is upfront about its fakery and may even be celebrated for it. 

Shanzhai culture is incredibly vibrant and shows no sign of slowing down. Shanzhai cellphones, for instance, are sometimes applauded for their ingenuity. Some include nifty features not seen on the original they are imitating. Some mash-up features found on competing phones into a single device.  All are cheap.

What Do the Election Results Mean for I.P.?

In the wake of President Obama's solid re-election victory last night, we are left wondering (geeks that we are) about what (if anything) an Obama second term suggests about the future of IP law.  We'll talk mostly about copyright policy here: Any action on IP policy in the next couple of Congresses would probably focus on copyright, not least because we've just been through a substantial reform of the patent law and no one has any appetite to revisit that right away.

Even focusing only on copyright, the picture is far from clear.  Millions of people joined in a wave of online activism back in January to defeat the copyright expansions offered in the SOPA and PIPA bills.  But the coalition that defeated SOPA and PIPA is new and no one's sure whether it's a one-off or the beginning of a broader movement to slow, stop, or even reverse copyright's relentless expansion. We'd note also that two of the entertainment industry's favorite people in the House, Reps. Howard Berman and Mary Bono Mack, were both defeated last night. We doubt the losses have much to do with the pair's outspoken copyright maximalism, but losing Berman and Bono is a further blow to a pro-copyright side that is still getting its collective head around the SOPA/PIPA debacle.

Who Owns a Link? Google Vs. European Publishers

The New York Times published an interesting article last week about an ongoing dispute in Europe between Google and European newspapers (and their supporters in government). The issue is whether Google must pay for the privilege of linking to those sites, or should be able to link for free. Of course, at stake is who gains the revenue that comes from aggregating and compiling links.

As the Times notes:

Google got rich by selling a simple proposition: The links it provides to other Web sites are worth a lot of money, so much that millions of advertisers are willing to pay the company billions of dollars for them.

Now some European newspaper and magazine publishers, frustrated by their inability to make more of their own money from the Web, want to reverse the equation. Google, they say, should pay them for links, because they provide the material on which the Web giant is generating all that revenue.

Winners of The Knockoff Economy Photo Contest

We are excited to the announce the winner of The Knockoff Economy contest for best photo of a knockoff. In fact, we are excited to announce that we have two winners (we had a lot of great entries, but these two jumped out). And, since they kind of go together in an odd way, we decided to award them both the prize. Winners receive a signed copy of The Knockoff Economy plus a copy of the new album Just Tell Me That You Want Me, featuring covers (i.e., legal knockoffs) of Fleetwood Mac songs by artists like Karen Elson, Lykke Li, and The New Pornographers.

Our congratulations to Donna Ivanisevic for the Louis Vuitton condom (originally created and sold, ever so briefly, for World AIDS Day) and to Terry Stedman (disclosure: a former student of Kal’s) for the Louis Vuitton Virgin Mary:

The Authors of The Knockoff Economy Answer Your Questions

We want to thank everyone for their questions -- it's great to see people responding to, critiquing and, in some cases, tweaking, the ideas we set out in The Knockoff Economy. We are fascinated by the complex relationship between copying and creativity -- and we're thankful that many of you are as well.  So, to the Q&A . . .

Q. The issue that concerns my industry most is internet sales of prescription skin products such as retin-A and hydroquinone. Some might be counterfeit, but many are probably diverted products. The manufacturer sells them to a physician, the unscrupulous physician sells them on the internet at a deep discount, the patient may be hurt by expired or dangerous medications or may not use them correctly even if they are real. This hurts legitimate physicians by drawing business away from them, but also hurts a manufacturer’s reputation. (Apparently, people who have qualms about buying Viagra online don’t think twice before buying skin medications from those same sources.)

Do you plan to do any research in this area? Will you be looking at diversion in addition to counterfeits?

The Knockoff Economy Is Out! Bring Your Questions for Kal Raustiala and Chris Sprigman

The Knockoff Economy: How Imitation Sparks Innovationis out! The book explores the relationship between copying and creativity. Copying has a well-known destructive side—which is why we have intellectual property rights—but it also has a much less appreciated productive side. We explain how some creative industries not only survive in the face of copying, but thrive due to copying.  These industries offer an important set of lessons about intellectual property law and highlight the often complex balance between innovation and imitation. While many of the cases we explore are unusual—such as fashion and fonts—we close the book with a broader examination of the main themes and lessons and a brief look at the music business, which is perhaps the poster child for the (often exaggerated) perils of copying.

The Knockoff Economy grew out of an earlier paper of ours on innovation in the fashion industry. We realized there were many creative fields that fell outside the scope of intellectual property law in one way or another, and just as importantly, these fields turned out to be really fun to explore. Writing the book allowed us to dig into things like football and fonts, and to do so in a way that, we hope, opens up a broader debate on the law and economics of innovation.

Why Knockoffs Can Help Build a Strong Brand

Here is an excerpt from The Knockoff Economy: How Imitation Sparks Innovation, which has just been published by Oxford University Press. Next week, we'll be taking questions from Freakonomics readers in a Q&A. We’ll also run a contest for the wackiest photo of a knockoff item.

THE KNOCKOFF ECONOMY
CONCLUSION

The traditional justification for trademark law, which protects brands, has little to do with innovation. Instead, trademark law’s justification is that brands help consumers identify the source of products, and thereby buy the item they want--and not an imitation. And yet brands—like Apple, or J. Crew--play an important and often unappreciated creativity-inducing role in several of the industries we explore in The Knockoff Economy.

Put in economic terms, trademarks reduce the search costs associated with consumption. If you’ve had a positive experience with basketball shoes from Adidas, then marking them with the trademark-protected three-stripes helps ensure that you can quickly find their shoes the next time you are shopping. And of course it also lets everyone else know which shoes you prefer. 

Excerpt from The Knockoff Economy: Tweakonomics

Here is an excerpt from The Knockoff Economy: How Imitation Sparks Innovation, which has just been published by Oxford University Press. Over the next few weeks, we'll be running 2 excerpts from the book here on the blog and taking questions from Freakonomics readers in a Q&A. We’ll also run a contest for the wackiest photo of a knockoff item. 

In The Knockoff Economy we examine the relationship between copying and creativity. Most people who study this area look at industries such as music or publishing, where intellectual property (IP) protections are central. We do something different: we explore innovative industries—such as fashion, food, fonts, and finance--in which IP is either unavailable or not effective. In these industries copying is common, yet we find that innovation thrives. In a world in which technology is making copying ever easier, we think these industries have a lot to teach us. And one of the key lessons is that copying is not just a destructive force; it can also be productive. Harnessing the productive side of copying—the ability to refine, improve, and update existing innovations—is at the heart of this excerpt.

THE KNOCKOFF ECONOMY
CHAPTER 4

Rules against copying don’t just cover outright imitation. They also address variations: works that use that some portion of another creative work but add in new stuff, and in the process transform the original work. Think of Shepard Fairey’s famous Hope poster of Barack Obama, which took an existing photograph and reworked it into an iconic image: