The Multiplex Strikes Back
In The Knockoff Economy,
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.
In The Knockoff Economy,
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.
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.
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?
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.”
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.
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.
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.
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.)
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.
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?
A short paper published this week by NBER from authors Albert N. Link and Christopher J. Ruhm takes a simple but oft-neglected look into patents and creativity; namely, how creative parents influence their potentially creative children.
The abstract states:
In this paper we show that the patenting behavior of creative entrepreneurs is correlated with the patenting behavior of their fathers, which we refer to as a source of the entrepreneurs’ human capital endowments. Our argument for this relationship follows from established theories of developmental creativity, and our empirical analysis is based on survey data collected from MIT’s Technology Review winners.
The U.S. just passed the first major patent reform in nearly sixty years – which includes as a central provision a change to the patent priority rule. Instead of awarding a patent to the first person to invent, we will join other nations in awarding patents to the first person to file an invention.
David Abrams and Polk Wagner have a great paper looking at whether the proposed change in our patent system from a “first to invent” regime to a “first to file” regime is likely to disadvantage individual inventors. The concern is that corporate inventors will have an easier time than the individual in gearing up to draft and file a patent application.
The paper ingeniously looks to see what happened when Canada introduced a similar reform in 1989. The paper is also a great way to teach yourself about the difference-in-difference approach to estimation. The paper first estimates the pre-reform difference between the U.S. and Canada in the proportion of patents going to individual inventors. It then looks to see whether this difference changed – that is, whether there was a difference in the difference – after the Canadian first-to-file reform went into effect.
Applying for a patent is expensive. Fees can exceed $25,000, and most applications require at least a couple years of effort. We might expect that anyone considering applying for a patent would be fairly certain of the merits of their case for one. And yet, of the patents granted by the U.S. Patent and Trademark Office (PTO) that are subsequently litigated, 40% are declared invalid in court.
A court’s declaration that a patent is “invalid” means it should never have been granted in the first place, usually because the invention has been done before, or because it’s obvious to anyone familiar with the patent’s particular scientific or technical field. So why do so many people spend so much time and money filing for patents that are ultimately declared invalid?