Ridiculous White House Report Pretends Getting Copyrights, Patents & Trademarks Means You Benefit From Them

from the coverage-and-incentives-are-different-issues dept

Fri, Apr 13th 2012 9:35am — Mike Masnick

The Department of Commerce just came out with a study on Intellectual Property and the US Economy, put together by the US Patent and Trademark Office and the Economics and Statistics Administration, seeking (supposedly) to "better understand" intellectual property and the "IP-intensive" companies. While the report insists that it is not taking a policy stance, its position is actually quite clear from the outset: to talk about how wonderful intellectual property laws are. The fact that the report was introduced by the government at a press conference with the US Chamber of Commerce & the AFL-CIO -- two of the biggest supporters of SOPA/PIPA -- shows you upfront that this report is not neutral on the policy position.

Further highlighting how bizarre this report is, the top industries it describes as "copyright-intensive" are actually tech companies -- the very ones who fought SOPA and PIPA. So this bizarrely disingenuous and misleading report really appears to be about SOPA/PIPA supporters co-opting the economic power of the tech industry that was against SOPA and PIPA, and obnoxiously trying to take their economic might and throwing its weight into an argument for IP expansionism -- even as the actual companies in the space continue to fight such laws.

The first paragraph of the executive summary alone represents the problem, in that they make statements that they pretend are connected to one another to prove a point, but which don't actually have any evidence of a direct connection.

The key problem is a simple one: those who wrote the report seem to have completely bought into the entirely faulty claim that because a company produces something that is covered by intellectual property laws, they needed those laws to produce that product. In other words, they are assuming -- entirely incorrectly -- that but for those laws, these products would not exist. This has been a key assumption in the bogus reports that the US Chamber of Commerce puts out every year, but it's scary that US government officials would fall for such a misleading assumption. Of course, when you base your entire report on such a completely false assumption, the rest of the report is going to look rather silly. And, indeed, this report looks incredibly silly. It is a true case of garbage in, garbage out. Let's look just at the opening paragraph alone:

Innovation--the process through which new ideas are generated and successfully introduced in the marketplace--is a primary driver of U.S. economic growth and national competitiveness.

Start with a factual statement that is difficult to dispute. This is absolutely true. Okay.

Likewise, U.S. companies' use of trademarks to distinguish their goods and services from those of competitors represents an additional support for innovation, enabling firms to capture market share, which contributes to growth in our economy

Wait, what? Already by the second sentence we've started to go off the rails with an unsupported and really tangential statement. Trademark doesn't "enable firms to capture market share." Trademark is a consumer protection law to keep people from being fooled into buying a product that is not what they think it is. That's got nothing to do with "support for innovation." When you're two sentences into a report, and you're already misrepresenting the nature of trademark law, you're not inspiring confidence.

The granting and protection of intellectual property rights is vital to promoting innovation and creativity and is an essential element of our free-enterprise, market-based system.

And here we take the entirely baseless assertion up a notch. They are honestly saying that a system of government granted monopolies issued from a centralized government organization are an essential element of a free-enterprise, market-based system? That's just wrong. Separately, there is little to no evidence that "the granting and protection of intellectual property rights is vital to promoting innovation and creativity." In fact study after study after study has shown much greater innovation and creativity in areas of the economy that do not have such protections. So, either the authors of the report are misinformed or they're lying. Neither makes them look good.

Patents, trademarks, and copyrights are the principal means used to establish ownership of inventions and creative ideas in their various forms, providing a legal foundation to generate tangible benefits from innovation for companies, workers, and consumers. Without this framework, the creators of intellectual property would tend to lose the economic fruits of their own work, thereby undermining the incentives to undertake the investments necessary to develop the IP in the first place

This is extremely disingenuous. Yes, granting companies monopolies on ideas and concepts may provide a legal framework for monetizing them by making them scarce rather than abundant (an economic loss in value), but to claim that without this framework creators "would tend to lose the economic fruits of their own work" is just not factually based. Once again, studies have shown repeatedly that in areas where there is no intellectual property protection, there are all sorts of creative, and oftentimes more lucrative, business models for people to monetize their work.

And, really, if all of this undermined the incentives to undertake the investments necessary to develop the IP in the first place, we'd see that as infringement increased, the product produced decreased correspondingly. Instead, we've seen the exact opposite. More and more things are being created, not because of IP laws, but for all sorts of other reasons. Yet this report more or less bases the entirety of its claims on the idea that because such things are covered by IP laws, it automatically means that it's because of those IP laws.

Moreover, without IP protection, the inventor who had invested time and money in developing the new product or service (sunk costs) would always be at a disadvantage to the new firm that could just copy and market the product without having to recoup any sunk costs or pay the higher salaries required by those with the creative talents and skills.

Again, while this may be the popular theory, it does not seem to be supported by the evidence. There's been research showing that the first mover advantage can often provide a much more important advantage than IP laws. And, as such, the fact that some companies can just "copy" does not actually put the originator at a disadvantage. As has been seen time and time again, being successful is not about copying. Companies copy each other all the time, but if all you're doing is copying, rather than the actual development, then you don't understand what really went into a product. You don't understand why the design choices were made. You don't know the research that was conducted to decide what the customer really wants. You don't know what changes were made, what mistakes were made, and what things really resonated. In other words, you only know how to copy the superficial parts -- and often those are the least important parts in building a successful business.

Tragically, it seems that this report is making assumptions that are common among those who have no experience in business -- that all you need to do to succeed in a market is copy someone else. The truth is quite different, but it's a shame that a government sponsored report would push this theory.

Again, that's just the opening paragraph of the executive summary, but it gives you a sense of the many problems with where the reports authors are starting from. The report has all sorts of other problems, many of which Tim Lee neatly outlined, so I don't need to repeat them all.

The biggest two things, however, are the bizarre definitions of what industries are covered by what areas. From Tim's writeup:

The report has an extraordinarily broad definition of an "IP-intensive industry." Thanks to the inclusion of industries that rely on trademark protection, the list includes the residential construction, "dairy product manufacturing," paper, and grocery industries. That's right—if you hang sheetrock, bag groceries, or answer phones at a paper mill for a living, you're probably in an "IP-intensive" industry as far as the Obama administration is concerned.

There are some other oddities, such as ranking industries based on IP registrations per employee -- a near totally meaningless ratio.

Of course, the authors of the report know these criticisms -- because they more or less acknowledge them in the report itself. At one point, they note the limitations of using these kinds of numbers and making these kinds of assumptions -- even highlighting the fact that many companies get patents with no intention of "using" them. But then, rather than using that to to question the data, they just move on and get back to talking about the importance of "IP intensive" industries.

There's also a separate issue raised by Tim, which is how the details of the report seem to nearly totally undermine the claims of those supporting the report. We've already seen a number of the copyright maximalist camp highlight the report as "proof" of the incredibly importance of stronger copyright laws. And yet, as one of the key charts in the report shows, the industries described as "copyright-intensive" seem to be thriving... and there is no noticeable "drop off" due to infringement. Over the time infringement grew, so did the success of these "copyright intensive" players.

Furthermore, as you look at the chart, you see that the swings in employment pretty much match up with other industries. That is, the report seems to pretty clearly suggest that the lack of respect for copyright law has had little impact -- and instead, any issues the industry has are caused by general cyclical economic factors.

To be honest, I'm a bit surprised at the details in this report. Government researchers are often more skeptical of some of the more bizarre claims from lobbyists, but here they not only accepted them, but then put out a big, misleading research report supporting them -- and then thought they showed something, when it appears they showed quite the opposite.

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Filed Under: department of commerce, economics, intellectual property

53 Comments

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dwg, 13 Apr 2012 @ 9:40am

"IP-Intensive"
Broad definition? Ya think? They defined it to believe the following:

"� IP-intensive industries contributed $5.06 trillion to the U.S. economy or 34.8 percent of GDP in 2010.

� 40 million jobs, or 27.7 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010."

I can't even really add anything to that.
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:Lobo Santo (profile), 13 Apr 2012 @ 9:43am

Re: "IP-Intensive"
How about:
Every IP maintained job displaces 4 other possible open-source jobs...

And: 70% of all jobs could give a shit about Imaginary Property, most of them are barely aware of what it all means and would actually be horrified if they had a real idea of how much bullshit it could rain down on their heads.
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dwg, 13 Apr 2012 @ 9:47am

Re: Re: "IP-Intensive"
Man, if you could cite that study for me, I would be forever in your debt.
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:Lobo Santo (profile), 13 Apr 2012 @ 9:50am

Re: Re: Re: "IP-Intensive"
Sorry, dredged from my brain-files; not sure where from initially.
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dwg, 13 Apr 2012 @ 9:53am

Re: Re: Re: Re: "IP-Intensive"
That'll work. I'll figure out a CMOC/Bluebook acceptable citation format for that.
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Anonymous Coward, 13 Apr 2012 @ 9:55am

Re: "IP-Intensive"
And without piracy and flagrant acts of copyright infringement those numbers would read:

� IP-intensive industries contributed $10 trillion to the U.S. economy or 70 percent of GDP in 2010
� 100 million jobs, or 60 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010
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Chris Brand (profile), 13 Apr 2012 @ 9:58am

Re: "IP-Intensive"
Well over time they've broadened "IP" to the point where it affects basically everyone. I'm actually surprised that "IP-intensive industries" contribute as little as 35% of GDP.

After all, the "percentage of homes where people need to worry about whether what they're doing is legal under the Copyright Act" has increased from 0% to 100% in under 50 years.
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Leigh Beadon (profile), 13 Apr 2012 @ 9:58am

Re: Re: "IP-Intensive"
And without piracy and flagrant acts of copyright infringement those numbers would read:

� IP-intensive industries contributed $10 trillion to the U.S. economy or 70 percent of GDP in 2010
� 100 million jobs, or 60 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010

Yes, because we all know how home milking is killing the dairy industry.
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dwg, 13 Apr 2012 @ 10:00am

Re: Re: "IP-Intensive"
And with honesty, it would read:

"It's impossible to define an entire industry, outside of a very few, as 'IP-intensive,' and labeling 75 entire industries as such is something we, as government functionaries and public servants would never do.

That said, we're reasonably sure, or at least believe in our hearts, that IP protections have increased our GDP and added jobs to the economy. We're still working on the numbers."
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Anonymous Coward, 13 Apr 2012 @ 10:02am

Why do you keep using "tech industries" in relation to SOPA, giving, at least me, the impression that the entirety of "tech" was aligned against SOPA? Those in "tech" aligned against SOPA were but a very small subset of "tech industries" as a whole. This is not to say that they are small and/or insignificant, but only that there are "tons" of companies/people in "tech" having nothing to do with the subset, and their collective contribution to our national economy is vast.
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dwg, 13 Apr 2012 @ 10:03am

Re: Re: "IP-Intensive"
How about this?

"A statistically huge number of American citizens have added immeasurably to the GDP by purchasing multiple copies of items to ensure they don't get sued for any sort of infringement."

Does IP litigation count as an "IP-intensive" industry? That could also have something to do with the numbers.
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Anonymous Coward, 13 Apr 2012 @ 10:06am

Trademark is a consumer protection law to keep people from being fooled into buying a product that is not what they think it is.

That is wrong and dishonest. You are leaving out the fact that trademark law also has deep roots in the common law of unfair competition. It's disingenuous to pretend that trademark law only has roots in the tort of deception.
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MrWilson, 13 Apr 2012 @ 10:10am

Re: Re: "IP-Intensive"
As I've said before, when I violate copyrights (like when I illegally download the Spice Girls Movie and copy my friend's VHS copy of Ishtar), I intentionally burn the cash I would have spent on the purchases (yes, I still use cash, don't you?).

I am even a member of a money-burning piracy ring involved in an international conspiracy to burn all money that could have been spent on IP content. Some days I go without buying food because I burn the money that I would have spent on buying a CD for $20 instead of buying food. We specifically want to make sure that money never goes back into the economy, especially the local economy. Because that's what true dirty pirate scumbag thieves do!
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Gwiz (profile), 13 Apr 2012 @ 10:13am

Re: Re: "IP-Intensive"
And without piracy and flagrant acts of copyright infringement those numbers would read:

� IP-intensive industries contributed $10 trillion to the U.S. economy or 70 percent of GDP in 2010
� 100 million jobs, or 60 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010

Bullshit. You act as if piracy were to somehow magically disappear customers would also magically have twice the disposable income to spend.

Have you actually read any economic news in the last 3 years?
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Another AC, 13 Apr 2012 @ 10:15am

Re:
Great. Doesn't change his point though...
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:Lobo Santo (profile), 13 Apr 2012 @ 10:17am

Re: Re: Re: "IP-Intensive"
Yes, but:

When there's more money, the money is less valuable.

Conversely, when there's less money the money is more valuable.

By burning the money you would have spent while pirating you're simultaneously devaluing the "pirated" content and envaluing the total money supply.

In short: bravo!
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Anonymous Coward, 13 Apr 2012 @ 10:20am

" In other words, they are assuming -- entirely incorrectly -- that but for those laws, these products would not exist. "

Prove that they would.

I await for twisted "I suppose" and "I feel" type answers to this one. Please try to cite actual examples.
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:Lobo Santo (profile), 13 Apr 2012 @ 10:22am

Re: pish.
"Oh yeah? Well, prove they wouldn't."
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PlagueSD (profile), 13 Apr 2012 @ 10:27am

a study on Intellectual Property and the US Economy, put together by the US Patent and Trademark Office

Wait a minute...Isn't this the same as saying the tobacco industry put out a study on how cigarette smoke no longer causes cancer? A little biased, don't you think?
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Leigh Beadon (profile), 13 Apr 2012 @ 10:38am

Re:
Well, people have been making cheese for ~10,000 years. If you can prove that late neolithic societies had robust intellectual property protections, we can continue this discussion.
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Anonymous Coward, 13 Apr 2012 @ 10:39am

Re: Re:
Sorry Mike-abee, don't want your stupid response. I wait for your master to speak.
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JEDIDIAH, 13 Apr 2012 @ 10:46am

Re: Re: Re: "IP-Intensive"
What study? The one from the article.

Spin can work both ways.

Most people aren't "content creators". If there are any patents or copyrights present in their work, they likely are a burden rather than some sort of advantage.

Intellectual property represents something that allows another company to steal their work because of something like a bogus trivial patent.
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surfer (profile), 13 Apr 2012 @ 10:48am

Re: Re: Re:
don't like the answer, shoot the messenger? how insightful.

Here are just two for you, Furniture and Fashion. Ding, you lose.
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Anonymous Coward, 13 Apr 2012 @ 10:48am

Wrong word...
They are using the wrong word when they talk about trademark allowing companies to gain market share. What they really mean is BRANDING. And a trademark is a protection on the brand that is developed for the very reason that Mike asserted. It's not the same as the brand.
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Leigh Beadon (profile), 13 Apr 2012 @ 10:49am

Re: Re: Re:
Fair - I can see why you'd want an excuse to not have to answer my point. Trying would just make you look stupider.
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JEDIDIAH, 13 Apr 2012 @ 10:49am

A little is good, a lot will kill you.
Even poison can be therapeutic if consumed in small doses.

Although I usually like to compare patents to weapons of mass destruction.
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JEDIDIAH, 13 Apr 2012 @ 10:52am

Re: Wrong word...
Even branding isn't sufficient.

Good marketing is what helps build market share. Branding and trademarks are really just a footnote.

Even the product itself is largely irrelevant.

Just compare Apple of the 90s to Apple of the oughts. It's all marketing.
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Anonymous Coward, 13 Apr 2012 @ 10:56am

To be fair...
I don't think it's quite fair to say the ENTIRE tech industry was against SOPA/PIPA in the same way as it isn't fair for them to claim that the tech industry is for more IP laws. There are some key companies, such as Apple or Microsoft, that are known abusers of IP laws that were all for SOPA/PIPA. I think it would be far more accurate to say that A LARGE PORTION of the tech industry (maybe even the majority of the tech industry) is against more IP laws and stronger enforcement.
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Anonymous Coward, 13 Apr 2012 @ 11:01am

Re:
So small that thousands of them joined in.
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Torg (profile), 13 Apr 2012 @ 11:02am

Re: Re: Re: Re: "IP-Intensive"
Piracy's responsible for inflation now?!
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Anonymous Coward, 13 Apr 2012 @ 11:02am

Re: Re: Wrong word...
Marketing is used to build the Brand. The brand recognition created in a large part by advertising is what separates one product from another in the consumer's mind and thus creates market share.
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Chuck Norris' Enemy (deceased) (profile), 13 Apr 2012 @ 11:04am

Re:
As long as you are waiting why don't you ask your cubicle mate at the paid shill farm to prove the assertion that ending infringement would double, well, pretty much everything magically?

And without piracy and flagrant acts of copyright infringement those numbers would read:

� IP-intensive industries contributed $10 trillion to the U.S. economy or 70 percent of GDP in 2010
� 100 million jobs, or 60 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010
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E. Zachary Knight (profile), 13 Apr 2012 @ 11:10am

Re:
The problem is that you and this report are based on an assumption of causation when at best we have a correlative relationship here. So there is no real answer to how much change there would be if IP laws did not exists because there are too many other variables to take into account.
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Anonymous Coward, 13 Apr 2012 @ 11:29am

reading comprehension makes the report say whatever you feel like writing about
you say they meant this when they said that
but htey also meant this when they said that

you are interpretting it your way, to bolster you postion

and leigh/marcus/idiot whatever you are this week, do let your master speak for himself

the dairy industry never cared about home milking, it didnt affect them, but if they tried to swap today to big dairy industry they would be screaming about home milking costing jobs and driving up costs
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MrWilson, 13 Apr 2012 @ 11:45am

Re: Re: Re: "IP-Intensive"
Of course he has. And the economic bright-minds at IP Maximalist Quarterly have proven with creative numbers that not only was the financial collapse caused by digital piracy, but that we would also all be flying around in hovercars if it weren't for those dirty pirates!
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Gwiz (profile), 13 Apr 2012 @ 11:48am

Re: Re: Re: Re:
Here are just two for you, Furniture and Fashion. Ding, you lose.

As an added bonus to drive surfer's point home, here is a music marketing company that comes to the same conclusion:

A Creative Industry Thriving Without Copyright
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BeeAitch (profile), 13 Apr 2012 @ 11:49am

Re:
I really don't know about your reading comprehension, but your writing comprehension is shit.

Care to repost in human language?
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gorehound (profile), 13 Apr 2012 @ 12:11pm

Re: "IP-Intensive"
Even cleaning other peoples Trash is an IP-Intensive Job.
Maybe IP means Idiot Proof !!!
On another Note and not to barrage any.I would like to get some people to sign my useless White House Petition against CISPA.
And I want to start up a Pirate Party in Maine.You only have to be over-18 to Vote.Now is the time for the Youth to Rise Up against the Establishment.If you do live in Maine and want to help I am Jordan the lead singer of Big Meat Hammer.Find me on Facebook.

http://wh.gov/U19
Sign my Petition and help stop CISPA
Let us all try to stop this Atrocious intrusion of our Privacy and yet another attempt to Censor The Internet !!
Please tell as many as you can and call Washington and your Reps.
Jordan Maine's Oldest Punk Warned you SOPA/PIPA Would be back.
Now we must work to try and stop this latest assault on our Freedom and the Freedom of The Internet !!!
Corporations Are Not People
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Anonymous Coward, 13 Apr 2012 @ 12:34pm

Ridiculous Google stooge Mike Masnick continues to push that mega-corporation's parasitical business model so its billionaires can get even richer.

Snore.
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varagix, 13 Apr 2012 @ 12:42pm

Re: Re: Re: Re:
Sorry to correct you, but its "more stupid." When insulting a person's intelligence, they'll grasp at anything to 'prove you wrong,' even minor grammar mistakes.

But to add to your point: What did people do before IP laws? Surely no one created great works of art before there were government imposed monopolies. Not like the ancient greeks, chinese, germanic tribes, native americans, etc created anything of any worth. Oh, wait...
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Cowardly Anonymous, 13 Apr 2012 @ 1:08pm

Re:
The tech industry is one of a very limited number of industries that doesn't predate the notion of a copy right, let alone of intellectual property. The open source movement, copyleft movement and pirate movement all grew out of technology.

Engineers and scientists deal every day with an advancing discipline that is relevant only in so far as it builds upon what came before. By in large, this subset of the population is predisposed to see the locking away of ideas as disruptive to the fundamental principles of their disciplines.

1) Preexisting industry, direct evidence it doesn't need protection (only concern here is rate of innovation). Arts

2) Basic principles at odds with protection, history rich with opposition to protection. Science/Tech

3) New, protected and overwhelmingly supportive of that protection. ???

Only those fitting group 3 would support your argument. Do you have any examples?
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dwg, 13 Apr 2012 @ 1:13pm

Re: Re: Re: Re: "IP-Intensive"
I'm sorry, friend--I think you massively misinterpreted my comment.
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dwg, 13 Apr 2012 @ 1:17pm

Re:
The quote you cited didn't say "the tort of deception." It said "keep people from being fooled." The entire stated reason for trademark law is to stop consumers from being confused. Hence, trademarks that pose a "likelihood of confusion" are not legally registrable. That trademark law can fall inside the laws of unfair competition doesn't change the purpose of trademark law proper.
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dwg, 13 Apr 2012 @ 1:18pm

Re:
How about ANY invention that has been created but not patented? Can you imagine one?
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Chris Brand (profile), 13 Apr 2012 @ 1:20pm

Re:
The works of Shakespeare, Homer, Beethoven, Mozart, etc all exist, despite not having copyright protection.

Difficult to find a movie, to use as an example, I'll admit :-)
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Anonymous Coward, 13 Apr 2012 @ 2:34pm

Re:
Hey! Wake up! Your dreaming again.
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Anonymous Coward, 13 Apr 2012 @ 6:04pm

Re:
>Prove that they would.

Alright, I'll give you one example. The diagonal-design seatbelt was produced without a patent precisely so other people could copy it and use it in cars for customer safety. (Prior to that it was just a strap across the waist.)

By your logic no manufacturer would ever fit seatbelts in cars because no patent for it exists.
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Jonathan, 13 Apr 2012 @ 7:04pm

Re:
Thank you for writing me out of the conversation just because I don't make $1MM/yr. Authoritarian.
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Spaceman Spiff (profile), 13 Apr 2012 @ 7:22pm

Patents anyone?
I was the inventor of a US patent for adaptive system software. What have I earned from it? A $500 bonus from my (previous) employer. If they exploited it, they could earn million$, but they haven't. What is this patent now worth? Probably a line on my resume, and helping me to land my current (new) position as a senior engineer for a tier-one mobile phone manufacturer...
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DC, 13 Apr 2012 @ 10:55pm

Re: Re: Re:
Wow ... You really are pathetic.
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DC, 13 Apr 2012 @ 11:07pm

Re:
be honest. are you paid to post here?
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DC, 13 Apr 2012 @ 11:10pm

Re:
google stooge ... really? That's all you have?

Seriously ... be honest. are you paid to post here?

You must be snoring /sleep posting because your rhetoric lives in fantasy land.
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Anonymous Coward, 14 Apr 2012 @ 2:34am

Re:
>but if they tried to swap today to big dairy industry they would be screaming about home milking costing jobs and driving up costs

And still no one would give a shit. Restauranting and fast food are big industries; do you hear them complaining about alternative food sources?
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