New Report Challenges The Whole 'IP Intensive Industries Are Doing Well Because Of Strong IP' Myth
from the good-to-see dept
For many years we've vocally criticized a very questionable line of arguments made by various lobbyists and (tragically) the US Commerce Department, that if you look at so-called "IP intensive industries" and see that those industries employ lots of people and are often profitable, it therefore means that stronger copyright, patent and trademark laws are good for the economy. There are all sorts of problems with this argument, highlighted simply by the fact that the single largest employment listed in one of these studies for an "IP intensive" industry is grocery stores. It's somewhat comical to believe that grocery stores employ 2.5 million people because of trademark law.When challenged on this, the US Commerce Department's incredibly weak defense of this kind of argument (i.e., "Steve Jobs had patents, Steve Jobs made cool things, ergo, patents are important to innovation") was certainly troubling.
Thankfully, a new report by Eli Dourado and Ian Robinson at the Mercatus Center at George Mason University does a nice job dismantling most of the claims in these series of reports that suggest that lots of jobs in "IP intensive industries" automatically means "strong intellectual property laws are good." The report starts out by simply highlighting the problem of generally using "jobs" as a proxy for "good for society." That's a fallacy, and often a problematic one for innovation (where disruption may initially destroy a bunch of jobs, but, in the long-term, create many new opportunities).
Perhaps most fundamentally, jobs are not ends in themselves, and counting the number of jobs created is therefore not the best way to evaluate a policy. As Bryan Caplan notes, “Economists have been at war with make-work bias for centuries. [19th-century French economist Frederic] Bastiat ridicules the equation of prosperity with jobs as ‘Sisyphism,’ after the mythological fully employed Greek who was eternally condemned to roll a boulder up a hill.” Economic progress, Bastiat says, is defined by an increasing ratio of output to effort—indeed, economic nirvana is achieved when there is high output and zero labor effort.But of course, the bigger issue, as we've outlined, is the silly argument that these jobs exist because of strict intellectual property laws. Not a single one of these studies has looked at how the jobs change with changes in the law. It simply is ridiculous to naturally assume that most of these jobs (like the grocery store point above) exist because of the current laws.
Lawmakers could create jobs by requiring that construction projects be performed with spoons instead of shovels or tractors. Such a policy, however, would reduce worker productivity and decrease total economic output. Consequently, this spoon mandate would not promote economic progress.
Likewise, some of the jobs created by IP may harm the economy instead of helping it. Suppose IP laws necessitated that every firm hire 10 additional IP lawyers, but otherwise left output unchanged. IP could be said to create millions of additional jobs, but these would be jobs that reduced real output per worker, jobs that moved society further away from economic nirvana. They should be reckoned as economic costs of IP, not economic benefits. If (counterfactually) this were the only effect of IP, then abolition of IP would mean that the effort of the heretofore unproductively employed IP lawyers could be redirected to more productive uses.
As a reductio ad absurdum, consider the blogging “industry.” As a matter of law, all authors are automatically, without registration or any other formal notice, bestowed with a copyright in their blog posts. Since the entire output of the blogosphere is copyrighted, under IPUSE’s methodology it would qualify as an IP-intensive industry (if it were considered an industry). Nevertheless, it seems clear that copyright protection accounts for at best a tiny sliver of bloggers’ output—the vast majority of blogs are accessible without a paid subscription, and many bloggers do not attempt to monetize their posts (with ads, say) at all.On a similar note, for years we've pointed to CCIA's reports that did such a great job highlighting this fallacy by using the identical methodology to define "fair use intensive industries" to show that based on the copyright industry's own bogus methodology, clearly fair use is "more important" than copyright since it employs more people -- and thus, if we were to believe the original reports, then we should clearly expand fair use (massively, since it's so limited today). The whole point of the report was to mock the silly claims about "copyright intensive industries" -- and, amazingly, those who supported one report were horrified by the fair use report, attacking the methodology, without the self-awareness to recognize they were mocking their own preferred methodology.
If some industries resemble blogging—for example, if copyrights are automatically awarded but not relied on, or if patenting is done for primarily defensive purposes, or if trademarks exist but are rarely relied on by consumers—then IPUSE and the other reports that rely on simplistic counts of IP grossly overstate the number of jobs due to intellectual property. For these industries, IP intensity is not a reliable indicator of IP dependence.
As the report also notes, many of these other reports on how "important" IP is assume that intellectual property is the sole incentive for these jobs and related innovations and progress. That's just silly. As the new report notes, there are lots of possible impacts that these studies don't even remotely account for:
As a general matter, intellectual property law can overprotect as well as underprotect. When it overprotects, it creates jobs without a corresponding increase in real output, it creates jobs by destroying other jobs that are not accounted for, and at the margin it accounts for very little of the actual output created by supposedly IP-intensive industries.The report then goes on to explore each of the three key areas -- copyrights, patents and trademarks -- to show why the assumptions underlying many of the reports simply don't hold up under scrutiny. It's a useful addition to counteract the bogus studies that make the bogus correlation argument based on the broadly defined "IP-intensive industries." If I have one complaint about it, it's that the report doesn't go as far as I expected, based on the title: "How Many Jobs Does Intellectual Property Create?" When I started reading the paper, I expected an attempt to actually look for some sort of causal methodology to determine such a figure, rather than just a dismantling of the arguments of those other reports. It's still a useful bit of research and analysis, but the title overpromises a bit.
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Filed Under: copyright, copyright intensive industries, correlation, grocery stores, ip intensive industries, patents, studies, trademarks
Companies: mercatus center, us chamber of commerce
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Thank you, report authors! People need to realize that this is a real thing. Next time you hear people say that Wal-Mart is the largest employer in the USA, remember that every place where a Wal-Mart shows up, it wreaks economic havoc on local stores and businesses, driving far more people out of business than it employs. And if they employ more people than any other company, by simple arithmetic that means they are, on balance, a truly massive job destroyer and ought to be regarded as the dangerous societal parasites they are, and not as some sort of benefactors.
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I get a little confused by attacks like this on Wal-Mart and other big box stores when they build a store somewhere. If the local population chooses to shop at Wal-Mart over Local Joe's Supermarket and that forces Local Joe's to close, how is that Wal-Mart's fault? It seems like it the real blame falls to the local shop for failing to deliver what their customers desired.
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However, it also depresses wages (not just at Wal-Mart but across the entire lower-end spectrum in the town) such that Wal-Mart becomes the only place that anyone can afford to shop at anymore. At best, it ends up being a wash overall for individuals (the cost of the goods as a percentage of income goes back up to about where it was before Wal-Mart came around), but the economic damage to the town can be devastating.
To place the blame for this on the local shop for not delivering what the customers want is a red herring -- Wal-Mart doesn't actually do any better than them in the long term: they're pulling a variant of a bait-and-switch.
Wal-Mart is a leach on society, and its presence is harmful.
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Interesting point of view from you. You usually seem to advocate that competitiveness in a free market system is good for all concerned, but not so much here.
Do you also view Amazon in a similar light?
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I do advocate that, yes. However, a free market where there are no rules, or where entities games the system or ignore the rules, is not a free market. I believe that Wal-Mart is such an entity.
Just as a general point (this has nothing to do with Wal-Mart), I also believe that a free market is not a panacea. There are many areas of society where a free market is the worst possible solution.
"Do you also view Amazon in a similar light?"
Amazon has not had the devastating effect on small businesses and individuals that Wal-Mart has had, and to the best of my knowledge, Amazon does not engage in anything remotely approaching the worst of what Wal-Mart does. My beef with Wal-Mart isn't that they're a big company, but that they are an abusive company.
I do have some big beefs with Amazon, but they center around other issues (patent abuse, etc.)
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Amazon is a borderline case - they do depend on underpaying workers, but even so are moving towards being more like Ikea and eliminating humans as far as possible from their supply chain.
Personally, I'd support raising the minimum wage and eliminating income support payments, lowering corporate taxes starting with payroll taxes to be revenue-neutral. Unfortunately, the US is somewhat anomalous in that industrial relations is a state matter but welfare largely federal, although the usual abuse of the commerce clause would allow the federal government to take over industrial relations.
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That tail consists of other services/enterprises/shops that doesn't compete with Wal-Mart directly, instead they provide goods and services for the local shops and their employees. When the local shops are gone there is a domino effect that severely shrinks the local economy since the support structure for those shops isn't needed anymore.
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Good to know jobs arent good for society, tho. Thanks for that brilliant opinion.
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No one said that. What was said that the number of jobs created is a poor indicator of economic progress and therefore is not a good thing to base policy upon.
Like the example given where we suddenly required all road construction to be done with spoons instead of heavy machinery, we would have created a shitload of jobs, but been worse off economically because it would reduce worker productivity and total economic output.
More jobs doesn't necessarily equal a stronger economy, regardless of what mainstream media would have you believe.
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Hmmm.
So you would rather work (pointlessly) than be a gentleman of leisure?
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The government should just create jobs by paying everyone to dig up a hole and fill it back up. More jobs and more money for all!!!
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Now some people would point out that that might cause inflation, but there's an easy fix for that too: burn money. Less money, less inflation. Easy. They wouldn't even need to tax people; they could just burn the money right as it comes out of the mints. In fact, if they started burning money instead of coal, they'd also solve the energy crisis!
Now, if you'll excuse me, I need to go put my new business idea up on Kickstarter: I'm going to combine professional window repair with professional window breaking. I'll break windows every time I'm done repairing them, and then I'll need to repair them again. It's a sure thing!
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Conflating copyright and patents into IP
But the pure insane, destructive, evil, horrid bullshit that is software patents is wreaking destructive havoc on the entire industry. Software patents are an innovation destruction machine.
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Re: Conflating copyright and patents into IP
Overly burdensome copyright stifles creativity and kills jobs. I know many who had their works pulled from the market because they somehow supposedly infringed on some copyright somewhere. I know others that don't publicly release their works for fear of being sued because they didn't get permission from someone who might lay claims to their work. Creators often have little to no knowledge of copyright law, and can't afford a lawyer to fight even a frivolous or unlawful claim. The fact is, most disputes never make it to court, the majority simply capitulate because they see no recourse. Sometimes the claims are brought by another independent creator who has no more actual knowledge of the law than the ones they harass, but these days it's usually from some faceless company that suffers no repercussions from false claims at all. These companies even higher others that automate the entire claim process with no real human oversight! In the end, the work of many is slashed to protect a sacred few, usually just those who have the "protection" of a company.
Despite how ridiculous copyright has become, creators usually don't fight it. They don't know any better and just accept it as the status quo. Some even support it because they feel entitled to the "right" to harass others for "infringing" on their works. The only other field I know of with such a thicket of vague overlapping claims is patents, especially software patents. However, those only last about two decades. Copyright can last over a century. Software patents might seem worse, because of the monetary claims in these cases, but they're usually just between companies in the industry. The common copyright claim is much smaller, but it directly effects numerous individuals throughout society. The economic cost of software patents is easier to count then there's a lawsuit or a company is forced into bankruptcy. The cost of copyright is much harder to estimate when most claims are not even formally filed.
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How exactly? If you move from say 75 years to 40 years (half your natural life) will there be a truly big difference for you?
Think about it. The song you likes as a teenager comes out of copyright when you are 60 something, as opposed to when you are 90 something. Is that really going to change your world?
The only way that change in copyright really means something would be to reduce it to a point where it would be too short to cover the current normal use. You would have to shorten it to something like 5 to 10 years for the change to be meaningful to the average person an an average day.
Creators often have little to no knowledge of copyright law, and can't afford a lawyer to fight even a frivolous or unlawful claim.
Based on what is reported here and in the media, most creators will never face this issue. Replicators and derivative "artists" may run into this problem, but those who truly create generally don't have the issue. The numbers are there and pretty simple, just go look at the number of books, movies, tv shows, radio shows, songs, and other copyright works produced every year and look at the number of lawsuits or legal actions - the numbers are pretty small.
The cost of copyright is much harder to estimate when most claims are not even formally filed.
Nice empty statement. Anything to back that up? HINT: DMCA notices are formal, a step towards a legal process.
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Considering that copyright is 70 years after the author is dead, a mere 75 years would be an improvement. As it is now, my grandkids might be lucky to hear the songs from my teenage years come out of copyright. It might as well be from 1000 years till never, I'll never live to see it. The idea of copyright being for a "limited time", as mandated by the constitution, is a joke.
According to the studies I've seen, 14 years is more than sufficient time to cover cost and return a profit, for legitimate uses, and yet short enough to be "meaningful to the average person".
I guess you haven't been around here long. There's plenty of stories about about copyright claims and the DMCA being used to fraudulently take down content. Given the vast amount that's available these days, the odds that most creators will get hit with an unfounded claim is low. (For the record, I haven't either.) But I know creators that have and most of them didn't know what options are available to them. And no, they were not mere "Replicators and derivative artists". They either got hit with an automated takedown request or some jackass with an ax to grind, both of which is copyright fraud.
HINT: They are not filed with a court unless there's lawsuit.
I take it that you don't know much about copyright, do you?
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Yeah, there are plenty of stories. However, considering the volume of said "content" being created every day, the percentage of creators who will face that issue appears to be winning the lottery level, not the chance of rain this afternoon level.
According to the studies I've seen
Link please? I cannot say I have ever seen studies like this - although a few comments from the Falkvinge types might match this.
They either got hit with an automated takedown request or some jackass with an ax to grind, both of which is copyright fraud.
In both cases, handling the notice in a timely manner and replying is usually more than enough to handle the issue. It really isn't a big deal when it does happen, and it doesn't happen that often by and large. Most of the stories that you see on Techdirt (and elsewhere) reflect on people who are either infringing without realizing (background music, example) or are pushing the limits and edges of fair use. For the rest of us, it's generally not an issue.
HINT: They are not filed with a court unless there's lawsuit.
yes, but just like a lawyer's letter, they are part of the formal process. Your case in court generally hinges on showing that you touched all the basis and did all of the things, including sending appropriate DMCA notices that were ignored. Then you have a case. So love it or hate it, they are part of the formal process.
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1) Why is background and incidental music not fair use?
2) the incidents of abuse of DMCA that get reported are the tip of the iceberg. Most people do not know the law well enough, or have the money available to challenge DMCA notices.
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2) I don't know what world you live in, but the iceberg appears to be insanely small compared to the ocean of content it's floating in. There are issues and there are abuses by some, but the reality is that it is such a small number compared to the total amount of content posted every day on video sites, chat rooms, and the like. You see an iceberg because you are focused on the ice - I see a vast ocean of content with an ice cube bobbing on one side.
Go back and look - almost every DMCA / remove a youtube video story on Techdirt (not related to people using DMCA to try to get something they don't like taken down) relates to poor choices made at the time a video was produced.
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It's not about me (or you.) It's about the public domain, and not losing creative works. There was a story recently (too lazy to search for it) which showed the massive hole in availability of books which were fairly old but still under copyright, compared to those which were in the public domain, just a few years older. The comparison was stark, and the conclusion to draw from it was very clear - those older works were disappearing from our culture. That is the exact opposite of the purpose of copyright.
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Why The 'Missing 20th Century' Of Books Is Even Worse Than It Seems
https://www.techdirt.com/articles/20120330/12402418305/why-missing-20th-century-books-is-even-w orse-than-it-seems.shtml
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Jobs ripped off the design work of his colleagues and put it in his name.
I'll give him credit for being a shrewd - and ruthless - business leader but most od the tech credit belongs to people like Steve Wozniak
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Of course they don't. The copyright maximalists not only want to "create more jobs" they want ISPs and Google and others to hire the people to enforce copyright for them. Then it's a win, win, win for them in the form of more jobs created that they don't have to pay for which provide them a service. How could this possibly be bad for the economy?
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The destructive influence of IP on content
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Similar things have been done before. Who Framed Rodger Rabbit always impressed me, mainly for all the copyright hoops they must have had to jump through to produce it.
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more dissembling by Masnick
Nonsense. The only ones harmed by patents are thieves of the inventions.
Can you say ‘dissemble’? Just because they call it patent "reform" doesn't mean it is.
Property rights and jobs in America are now hanging from a frayed thread. These changes are killing our small and startup firms and the jobs they would have created. When government fails to uniformly and justly enforce property rights they contribute to the wealth and the power of the well placed few, suppress the economic potential of the rest, and support giant monopolies that enslave the public. Some in Congress and the White House continue to follow the lead of their giant multinational campaign donors like lambs...pulling America along to the slaughter.
http://sunlightfoundation.com/blog/2014/05/07/patent-cash-flows-to-senate-judiciary-commit tee-members/
http://www.npr.org/2013/11/06/243022966/secret-persuasion-how-big-campaign-donors-stay-a nonymous
All this patent troll and ‘reform’ talk is mere dissembling by China, huge multinational thieves and their paid puppets. They have already damaged the American patent system so that property rights are teetering on lawlessness. Simply put, their intent is to legalize theft -to twist and weaken the patent system so it can only be used by them and no one else. Then they can steal at will and destroy their small competitors AND WITH THEM THE JOBS THEY WOULD HAVE CREATED. Meanwhile, the huge multinationals ship more and more American jobs to China and elsewhere overseas.
Do you know how to make a Stradivarius violin? Neither does anyone else. Why? There was no protection for creations in his day so he like everyone else protected their creations by keeping them secret. Civilization has lost countless creations and discoveries over the ages for the same reason. Think we should get rid of or weaken patent rights? Think again.
Most important for America is what the patent system does for America’s economy. Our founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they included inventors rights to their creations and discoveries in the Constitution. They understood the trade off. Inventors are given a limited monopoly and in turn society gets the benefits of their inventions (telephone, computer, airplane, automobile, lighting, etc) into perpetuity AND THE JOBS the commercialization of those inventions bring. For 200 years the patent system has not only fueled the American economy, but the world’s. If we weaken the patent system, we force inventors underground like Stradivarius and in turn weaken our economy and job creation. For a robust and stable economy America depends on a strong patent system accessible to all -large and small, not the watered down weak system the large multinationals and China are foisting on America.
For the truth, please see http://www.truereform.piausa.org/
http://piausa.wordpress.com/
http://www.kentucky.com/2014/05/27/3260938/george-ward-patent-reform-could.html?sp=/99/349/
http://ww w.hoover.org/publications/defining-ideas/article/142741
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Re: more dissembling by Masnick
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Re: more dissembling by Masnick
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I think it's funny how you guys think copying and pasting amounts to effort but you will scream and bawl whenever someone else does it.
Go get a room, you sick chucklefucks.
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The original reason for patent and copyright
article 2 section 8 (powers given to Congress)
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
First the authors(and artistic work) and Inventors are rarely able to reap any profits in the current system, so in my opinion the constitution is being violated by the current legal structure.
The original time was 17 years the thinking was thus:
A person needs enough time to recover the time money and effort to make an intellectual property, and a time of about 17 years or so is enough for anyone to make back the effort and incentivize new work.
What happened is companies lobbied congress to extend copyright past any reasonable reimbursement for the work. To have an author set for life as the result of say two or three years work was not the intent.
The intent is limited times to encourage arts and sciences. The longest possible limited time would be about 25 years and that would make back any long capital investment with profits.
Disney is the biggest culprit in extending the copyright laws to ludicrous times getting copyrights extended to 100 years.
Monopoly is against most parts of capitalism, so the limited times originally granted, worked well and returning to those limited times would serve to break up many of the large offenders to free markets, throug the free market process.
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