Of Course Tesla Wasn't Just Being Altruistic In Opening Up Its Patents: That's The Whole Point!

from the the-velocity-of-innovation dept

We, like many in the media, already wrote up the story about Elon Musk's announcement that Tesla was opening up all of Tesla's patents, promising not to bring any lawsuits against anyone who uses them in good faith. The "good faith" caveat has resulted in some head scratching and reasonable questions -- and we hope that Musk clarifies this position with a clearer explanation. Some have pointed out that with such vague language, it may really be more of an invitation to negotiate a licensing deal, rather than truly opening up the patents (though, I'd imagine anyone looking to challenge that has lawyers boning up on promissory estoppel). However, I wanted to address one of the "criticisms" that seemed to come out repeatedly about this move: that it wasn't a big deal because it's "not altruistic." That line was used over and over and over again in the press, almost always suggesting that people shouldn't be celebrating this move.

• LA Times: "Even if other competitors copy Tesla’s design, Tesla still gets to sell them batteries, and that’s pretty awesome. Tesla’s decision isn’t entirely altruistic."
• Seeking Alpha: "The general thinking is that somehow this move is altruistic for the benefit of the EV industry or that this has something to do with parallels like Mac OS X, Wikipedia, and crowdfunding. We disagree. This is simply a strategic move to rapidly expand and monetize the EV market. This move is hard-core strategy and really has nothing to do with altruism."
• NASDAQ: Elon Musk and Tesla: Altruistic or Ulterior Motive?
• Forbes: "Of course, Musk may have an ulterior motive in addition to his altruistic one."
• South China Morning Post: "Tesla’s apparent altruism with its patents is just smart business"
• ValueWalk: "Tesla Motors Inc's open source approach is far from altruistic."
• Harvard Business Review: "In sum, Elon Musk’s opening up of Tesla’s patent portfolio might be motivated as much by strategic necessity rather than by altruism."
• Market News Call: "Musk may not be successful running two industrial firms like online social media or cloud-focused firms, but he’s also not making decisions entirely out of altruism; he’s just using a non-traditional approach to creating value for his shareholders."
• Engineering.com: "I think he [Nikola Tesla] would approve of Tesla Motors’ decision to open its technology to the world, even if the motivation was more business than altruism."

I recognize why everyone feels the need to do this -- especially those sites that claim to be focused on "investors," but it's also somewhat frustrating. Perhaps it's just because we've been writing about this issue for well over a decade, but of course this move is being done because it's good for business: but that's the point. We've become so stupidly brainwashed into believing that locking up and protecting everything is good for business that people seem positively shocked when a company does something that shows that's simply not true. Everyone feels the need to explain what a "crazy" idea it is that not hoarding information to yourself might actually be good for business.

And the worst may be in that first link up there, in which analyst giant Gartner completely destroys what little credibility it may have had when one of its analysts, Thilo Koslowski, pans the decision: "If you open up all your books to everyone, it means you all are fighting a war with the same weapons." Talk about someone admitting their own ignorance of how business and innovation actually works. Opening up your patents hardly means fighting a war with all the same weapons. Everyone still gets to innovate, and many of those innovations are not in the patents themselves.

A further Musk quote in a Business Week piece further outlines what's happening here:

"You want to be innovating so fast that you invalidate your prior patents, in terms of what really matters. It’s the velocity of innovation that matters."

This is a point that we've been trying to make for years: innovation is an ongoing process, and what matters most is not the single burst of inspiration, but the pace of that process -- which Musk more eloquently calls "the velocity of innovation." Patents on pieces of that ongoing process act as friction or toll booths in that process, slowing it down. Truly innovative companies know that they're going to keep innovating, and others copying what they're doing is the least of their worries.

Of course this move is about innovation and business and will be good for Tesla. But it's depressing that so many people automatically think that needs to be explained. We live in a dangerous world for innovation when a concept as simple as this seems so foreign to so many people. Even the fact that the idea that "doing good" and "building a good business" seem to be contradictory terms is troubling. Whether or not Musk is personally "altruistic" is beyond the point. Increasing the velocity of innovation for electric vehicles can be both good for Tesla and for the world, and that shouldn't be such a crazy idea.

Oh, and in case you haven't seen it yet, go check out what Tesla did to the wall where they used to hang their patents: Because, perhaps even worse than everyone trying to explain why this isn't "altruistic" are all the people still confused about Musk's All Our Patents Are Belong To You language...

Filed Under: altruism, business, electric cars, elon musk, innovation, patents, protectionism, sharing
Companies: tesla

FTC Goes To Bat For Tesla: Says States Shouldn't Limit Tesla Sales Model

from the good-for-them dept

We've pointed out how states banning Tesla's direct sales model seems like a perfect indicator of how corrupt a state is. State laws that require that only independent dealers can sell cars have no legitimate purpose whatsoever -- other than to make life better for dealers, who have tremendous influence over local politics. However, it looks like the FTC may be stepping in to tell states who go in this direction that they may be crossing the line in a way that will make the federal government unhappy. In a surprise blog post, some FTC officials have made it pretty clear that states shouldn't be blocking Tesla direct sales.

In buying cars, however, these new ways to shop may not be available to consumers. For decades, local laws in many states have required consumers to purchase their cars solely from local, independent auto dealers. Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries.

This very question has been raised across the country, as a still-young car manufacturer, Tesla, pursues a direct-to-consumer sales strategy that does not rely on local, independent dealers.

In this case and others, many state and local regulators have eliminated the direct purchasing option for consumers, by taking steps to protect existing middlemen from new competition. We believe this is bad policy for a number of reasons.

Later on the FTC fires the real warning shot:

Instead of “protecting,” these state laws became “protectionist,” perpetuating one way of selling cars—the independent car dealer.

The FTC completely dismisses the bogus claim from dealers that these laws "prevent abuses" by noting "this rationale appears unsupported." It's not clear if the FTC will actually step in and do anything here, but just making it clear that these kinds of laws blocking things like Tesla's sales model are a serious problem that is more protectionist than good for consumers, is a good step.

Filed Under: autodealers, car sales, consumer protection, ftc, independent dealers, protectionism, sales models
Companies: tesla

Where Is The 'Free Trade' In The TPP IP Chapter?

from the still-searching... dept

People have pointed out how KORUS -- the "free trade" agreement that the US signed with South Korea a few years ago, which included draconian intellectual property rules, is "the model" for "modern free trade agreements." It was used as the basis for ACTA, and now it's often pointed to as the model for the TPP as well. When KORUS was first being debated, we wondered why a "free trade" agreement would include rules for stricter monopolies, as that seemed like the exact opposite of free trade. Free trade is about knocking down the walls to protectionism, not building more monopoly power. And yet, that's exactly what it did -- creating tremendous problems to the point that South Korea is now looking for ways to get out of the intellectual property requirements of the agreement.

And yet, defenders of the TPP still point to KORUS as the "model" for TPP and talk it up as if it's been a wonderful and successful agreement. However, it seems that others are noticing that there doesn't appear to be any "free trade" in this "free trade agreement." Instead, it's purely mercantilist cronyism, designed to limit economic growth and public welfare, to benefit a few large legacy companies.

Exhibit A was released by WikiLeaks last week: the latest draft of the "intellectual property" chapter of the agreement, one of 24 (out of 29) chapters that do not have to do with trade. This chapter has provisions that will make it easier for pharmaceutical companies to get patents, including in developing countries; have these patents for more years; and extend the ability of these companies to limit access to the scientific data that is necessary for other researchers to develop new medicines. And the United States is even pushing for provisions that would allow surgical procedures to be patented – provisions that may be currently against US law.

All of these measures will help raise the price of medicines and health care, which will strain public health systems and price some people out of the market for important medicines. It is interesting to see how much worse the TPP is than the WTO's Trips (Trade-Related Aspects of International Property Rights). This, too, was a massive rip-off of consumers and patients throughout the world, but after years of struggle by health advocates and public interest groups, some of its worst features were attenuated, and further consolidation of pharmaceutical companies' interests were blocked.

So why are we increasing protectionism and putting in greater monopoly power in a so-called "free trade" agreement? Because these legacy companies and the USTR long ago learned that if you say something on the label, but then put the exact opposite in the package, the press, the public and plenty of politicians will pretend that what you say on the label is actually in the package.

But it's time to make this clear: almost nothing in the TPP is about actual free trade. Real free trade can be quite beneficial to all trading partners, increasing efficiency and benefiting everyone. But this is not just fake free trade, it's anti-free trade, promoting protectionist, mercantilist monopolies for big political donor legacy companies, because the USTR either thinks that lining the pockets of big political donors is a good way to keep its friends in power or they know that it'll be easier to secure cushy private sector jobs after securing these "favors."

Either way, the next time someone (especially in the press or the government) claims that the TPP is about "free trade" ask them how. And ask them how increasing monopolies and putting up protectionist trade barriers is free trade.

Filed Under: copyright, free trade, mercantilism, monopolies, patents, protectionism, tpp

Members Of Congress: India's Pharma Industry 'Protectionism' Is Harming US Pharma Industry's Abuse Of Patent System

from the towards-a-forceful-homogenization-of-worldwide-IP-law dept

We recently discussed the US Chamber of Commerce's incredibly strange statement on the state of India's IP protection (or lack thereof). The CofC first applauded the success of India's Bollywood industry, achieved without strong IP protection, before insisting the only way it would survive was by implementing strong IP protection. This, of course, was the CofC advancing its own agenda, despite being faced with evidence to the contrary.

It's the sort of doublespeak frequently deployed by IP-reliant industries in the US in their attempt to force the world to align their laws with ours. The argument always seems to be for more "protection," even if foreign industries are thriving without it.

In a Congressional letter sent to the administration by 170 "concerned" members of Congress, India's IP laws come under attack again. This time it's the pharmaceutical industry being defended from India's supposedly inadequate protections.

Under the umbrella of claiming that policies of the Government of India favor domestic producers over U.S. Exporters – in other words, that India is protectionist – the Members of Congress claimed that “the intellectual property (IP) climate has become increasingly challenging in India.”

What's so challenging about it? Well, it seems that India actually practices some sort of quality control on patents, much to the dismay of American pharmaceutical companies looking to exploit the system the way they do domestically.

Under the WTO TRIPS Agreement, India has every right to define standards of patentability so long as they satisfy minimum standards of patentability set forth in TRIPS, namely novelty, inventive step, and industrial activity. India has elected to define and apply standards of patentability rigorously. When this rigorous standard is applied in India, it prohibits patents on secondary patents involving new uses of existing medicines or minor modifications of existing medicines/active ingredients that do not significantly enhance therapeutic efficacy.

This raises the bar for American companies, who are finding it harder to extend patents past the 20-year exclusivity through evergreening (or as pharma companies refer to it: "patent lifestyle management"). While a majority of patents run through the process smoothly, some just don't meet the Indian standard.

Although Members of Congress and Big Pharma executives, including those from Novartis and Pfizer, condemn an Indian decision denying a patent on secondary form of the anti-cancer medicine Glivec, they neglect to acknowledge that both Novartis and Pfizer have received hundreds of patents on medicines in India in the past 8 years and that it is only the frivolous or unworthy patents that are being screened out.

This rejection, and the more rigorous patentability standards India adheres to, suggest there will be more of the same in the future. That's simply not acceptable for pharmaceutical companies, who are used to extending patents for decades at a time. Also upsetting is the government's issuance of compulsory licenses on lucrative imported drugs, something India is legally allowed to do by the TRIPS agreement.

Using fully lawful compulsory licensing procedures, India did issue a compulsory license on an overpriced Bayer cancer medicine, citing three justifications in a 60-plus page decision: excessive pricing, failure to supply the market, and refusal to produce locally. As a result of this license, the cost of the cancer medicine has now fallen more than 97%, showing the excess mark-up that Bayer imposes on patients. Rather than acting arbitrarily, the legal system in India allows a court review of the compulsory license decision, which Bayer is now pursuing.

The members of Congress and the corporations behind him have decided to portray these actions as evidence the Indian government skews its protections in favor of domestic producers, a claim that's rather audacious in its hypocrisy.

It is deeply ironic when the world's biggest wolf cries wolf. Any objective examination of U.S. trade policy, including that represented in the current negotiations of the Trans-Pacific Partnership Agreement, would conclude that the U.S. is relentless in its pursuit of heightened standards of patentability, data protection, and enforcement in order to protect the interests of Big Pharma and other IP-intensive domestic industries. Over 600 industry representative sit on advisory committees to the U.S. Trade Representative having privileged access to otherwise secret trade agreement proposals...

It's an insult to our collective intelligence when Members of Congress misleadingly condemn alleged "protectionism" in India while tolerating monopoly encroachment globally and doing so to protect "jobs and investments" in the United States.

The industries propelling these secret trade agreements love protectionism, and want to extend this "home field advantage" to as many foreign markets as possible. This is aided greatly by making these agreements contingent on US-directed overhauls of existing IP law. The lesson is: if you want to do business with the US, you'll play the rules -- our rules. It's an agenda set by favored industries and executed by our legislators, both of whom seem more than willing to undermine successful foreign industries simply because it doesn't fit with the "strong IP protection creates jobs" narrative.

Filed Under: india, patents, pharma, protectionism

Because Congress Isn't Already Maximalist Enough: New 'Creative Rights' Caucus Forms

from the that's-a-euphemism-for...-maximalism dept

Congress already has an "Anti-Piracy caucus," a Recording Arts & Sciences caucus and a Songwriters Caucus, but apparently they needed another one. Reps. Howard Coble and Judy Chu have "formed" the "Creative Rights" caucus that appears to not actually be about supporting true creative rights. It is, instead, designed to focus on over-protecting the powers of a small group to hinder the creative rights of many, many people. That's because it's all about maximalism and protectionism, rather than encouraging wider creativity:

“American innovation hinges on creativity – it is what allows our kids to dream big and our artists to create works that inspire us all. The jobs that result are thanks entirely to our willingness to foster creative talent, and an environment where it can thrive and prosper.

“Serving that notion is exactly what this new caucus will do, and I’m thrilled to have Congressman Coble as my Co-Chair. He has a long record on supporting greater protections for American ingenuity and intellectual property. I look forward to continuing that work with him on these important issues,” said Rep. Chu.

Note the key line there: "greater protections... for intellectual property." This isn't about looking at what is actually driving creativity or protecting wider creative works. "Greater protections" for "intellectual property" means stricter copyright laws that block the creative rights of millions who try to do things like post their own videos online or create mashups and mixtapes. You see, that kind of creativity doesn't count. It means less fan art and fan fiction.

This isn't about protecting creators' rights. This is about ramping up copyright law, to try to prop up an increasingly obsolete business model, while limiting the rights of most creators.

Filed Under: caucus, congress, creative rights, howard coble, judy chu, protectionism

Copyright: The New Mercantilism

from the it's-a-protectionist-monopoly-law dept

We've argued for a while that copyright is frequently used as a new form of mercantilism, the mostly discredited economic theory that basically said that the government should be heavily involved in "protecting" local industries with monopolies and tariffs. Adam Smith's seminal works, which more or less created the field of economics were really, in part, a critique of mercantilism, and how it could cause more economic harm than good. When you take a wider view of copyright law and policy (especially in international trade), it's not difficult to conclude that it's very similar to classic 17th century mercantilism.

So it's interesting to see Tulane professor Glynn Lunney publish a paper arguing exactly this: that copyright has become a mercantilist tool, and that's a problem.

Over the last twenty years, arguments for broader copyright have taken an increasingly mercantilist turn. Rather than argue for broader copyright in terms of more or better original works, proponents have begun arguing for broader copyright on the basis of revenue and jobs. Consumer copying is theft or piracy, proponents insist, depriving copyright owners of revenue and destroying jobs. In this article, I review these arguments and show that they are empty. While the Internet and digital technology has made widespread consumer copying a reality, broader copyright can be justified only if this copying has interfered with the creation and dissemination of new original works. But it has not. Using a hand-coded data set examining the number of new artists and cover songs in the top fifty of the Billboard Hot 100 chart in the first week of each month for the years 1990-2010, I show that while music industry revenue has fallen sharply since Napster opened its virtual doors, output in the music industry, both in terms of quantity and quality, has increased just as sharply. Part of the explanation for this seemingly paradoxical result, is that the digital revolution, while it has made consumer copying trivially easily, has also reduced costs, risks, and barriers to entry in the music industry. Yet, this cannot be a complete explanation.

To account for the rest, I offer a theoretical model and a simple explanation for why the incentives for music creation have remained sufficient in the face of widespread consumer copying: Consumers don't just love music generally; they love their particular favorite artists and their specific favorite songs. While consumers would like to get music for free, they know that they have to support their favorite artists in order to get and to continue getting the music they want. As a result, self-interest tends to ensure that consumers do not free ride too much. While the resulting market is unlikely to be perfect, legislation from Congress is not likely to improve the situation. Just as product markets fail in predictable circumstances, so too do political markets. When, as in the debate over broader copyright, proposed legislation benefits a concentrated interest group, such as copyright owners, at the expense of a dispersed interest group, such as copyright consumers, Congress is systematically likely to get the answer of how much copyright is optimal wrong, and badly wrong at that. In short, we have far more to fear from government intervention in the markets for original works than we do from leaving these markets alone.

I met Lunney a few months ago, and saw him present some of this research at a conference, and he makes a really compelling case (I had a minor disagreement with him over some of his data, but the overall work is really, really solid). The full paper is totally worth reading. As I read through it, I kept thinking I wanted to quote basically everything, so instead I'll just repeat: go read the full paper. I will include this bit from near the end, however:

While I recognize the political difficulty, and perhaps futility, of proposing a constitutional amendment limiting Congress's power in this area, I think it is time, and past time, to put such options on the table. It has been over two hundred years since our Constitution was written, and we have a much better sense today for where representative democracy works and where it fails. Because copyright benefits a concentrated and well-organized interest group at the expense of a dispersed group, establishing an optimal copyright regime is simply not something Congress has done or will do well. We should therefore limit Congress's power to act on this issue. At the simplest, such a constitutional amendment might follow Jefferson's suggestion and substitute "for no more than fourteen years" for the phrase "for limited times" in Article I, section 8, clause 8. Taking it a step further, an amendment might specify or limit the nature of the "exclusive rights" that Congress may grant. I fully recognize that such an approach would enshrine a set of rights that, even if optimal today, may not prove optimal for all time. Such an approach would almost certainly impose a set of legal rights that will not fit perfectly the needs of the future, as technology and markets change. Nevertheless, I believe that such an approach remains preferable to our current approach. Any welfare losses that may result from constitutionalizing today's optimal set of rights and imposing those rights onto the future would be less than the welfare losses that will result, and have resulted, from leaving the issue to Congress. Given how overbroad copyright has become, even an amendment barring Congress (and the states as well) from granting exclusive rights to authors for their writings altogether would be better than where we find ourselves today.

Once again, go read the whole thing... and remember the key points he raises the next time you see copyright maximalists bring up how many "jobs are at stake." That's a bogus claim, as Lunney notes elsewhere in the paper:

for the copyright industries to receive more revenue, consumers must pay more for works of authorship. Broader copyright, after all, does not generate revenue from thin air. It has to come from somewhere. If consumers have to pay more for works of authorship, they will have less to spend on everything else. Thus, more revenue for the copyright industries necessarily means less revenue for other sectors of the economy. If more revenue for copyrighted works means more jobs for the copyright industries, presumably less revenue everywhere else means fewer jobs elsewhere in the economy

Copyright is about Congress picking winners and losers in a true mercantilist manner -- and Congress has proven especially bad at doing that well -- in part because they only seem to listen to the claims of the industry which benefits from such policies.

Filed Under: copyright, economics, glynn lunney, mercantilism, protectionism

Congress: Fear Chinese Networking Companies! But Ignore That China Makes All Our Networking Equipment!

from the where's-the-smoking-gun? dept

For years, there have been reports or whispers about how Chinese networking giant, Huawei, might not be trustworthy. Specifically, people talked about how China might hide trojan horses in the equipment for economic espionage or even cyberattack reasons. These rumors got so loud that Huawei last year flat out told the US government to investigate it and come to its own conclusion. Well, the House Intelligence Committee has done exactly that... and Huawei is not pleased (pdf). Despite the investigation coming at its own request, with its promises to be as open as it could be, the report slams Huawei and another company ZTE, and basically says "don't trust these companies."

Huawei has hit back hard, claiming that the report is "libel" and "utterly lacking in substance." They also note that it appears to just be political, calling it "an exercise in China-bashing and misguided protectionism." Indeed, some commentators are noting that this has all the indications of blatant protectionism, rather than a legitimate concern, with some pointing out that the Intelligence Committee seems to consistently ask Huawei to prove a negative and then bashes the company for failing.

But again and again, throughout the report, the pattern emerges: an allegation is made, Huawei denies it, without providing evidence deemed detailed enough to substantiate the denial, and the Committee is unimpressed.

As that writeup notes, Huawei has not been found guilty, but is repeatedly asked to prove its innocence, and being unable to prove conclusively that it hasn't done anything, the Intelligence Committee insists that the threat is just too great.

It is, of course, quite possible that something nefarious is going on with Huawei and ZTE. But there doesn't appear to be any detals in the report that actually proves anything. Instead, it's all just baseless allegations, followed by Huawei (and ZTE) not providing enough details to convince investigators that they're innocent. Given Congress' history of grandstanding, this certainly raises some questions.
But... an even bigger issue is that the whole focus on Huawei may be kind of silly. Yes, it's a Chinese company, but as others have noted, basically all of our electronics products are made in China, and if that country really wanted to do something questionable, why not sneak in trojan horses there as well?

One fundamental failure of all this official hand-wringing is that it neglects the fact that many if not most of the components, with the exception of certain higher-value chips like those from Intel, are manufactured in China. Cisco Systems and Juniper Networks in the U.S., Alcatel-Lucent in France and Ericsson in Sweden, all use Chinese-made parts and carry out at least some portion of the final assembly of their equipment in China.

Furthermore, that same report notes that, if this is just kicking off a trade war between the US and China over telco products, the US companies may get hurt a lot more than the Chinese:

Might China respond with its own restrictions against U.S. telecom firms like Cisco and Juniper? Is this the first shot of a telecom trade war? We’ll see.

If that happens, expect Cisco to be hurt more than Huawei. U.S. sales account for only 4 percent of its overall revenue, whereas Cisco’s operations in Asia, the Pacific Rim and China account for more than 16 percent, and China was its second fastest-growing market in that region after Japan.

Yes, it's entirely possible that Huawei and ZTE are doing something bad -- but you'd think any report claiming that would have a lot more evidence than what's in this report. Of course, considering it's by the same FUD-spewing folks responsible for CISPA, perhaps we should get used to the fact that FUD without evidence is their standard operating procedure.

Filed Under: china, congress, cybersecurity, espionage, house intelligence committee, mike rogers, protectionism
Companies: huawei, zte

The Legacy Entertainment Industry's Business Model: Charge A Ridiculous Markup On The 'Copy File' Command

from the pointing-out-the-obvious dept

Rick Falkvinge has a post up on his website highlighting how copyright is antithetical to the free market. We've pointed this out many times in the past, though for reasons I don't fully understand, some people still don't quite get it. Copyright is a government-granted monopoly privilege. In a true free market, you don't have monopolies (and you certainly don't have government's granting them). This doesn't necessarily mean that copyright is bad. It's just that it's clearly not a free market concept. It is, at best, a mercantilist concept of protectionism for the holder. Falkvinge digs in on this idea further, noting that copyright is, in many ways, also antithetical to the concept of personal property in that it seeks to limit what people can do with things they own:

When somebody buys something, no matter what, they own it. They have the right to do pretty much anything with it, they have the right to perform work on the object they have bought. Such work includes duplicating the object that you own; on a fair and free market, such duplication work is an offering like any other that competes with other people performing a duplication of the object in question.

In culture sharing, people perform this work for free for one another – duplicate files for one another – as a good social deed, just like helping anybody else out with your own time is a good deed. (The copyright industry tries to vilify this activity as somehow being immoral and unfair, which completely misses the positive social mechanisms of good people helping friends and strangers alike, and only makes the copyright industry appear absurd, anachronistic, and downright evil.)

He also notes where much of the confusion comes in -- which is that the legacy players "deliberately" confuse "the goods that they offer for sale with the service of duplication, which is a completely different kind of offering." And that leads to problems -- because the "markup" that the legacy players are trying to charge on the services of distribution are astronomical:

The competition in the copyright monopoly and culture-sharing field is about who executes the “copy file” command the most cost-efficiently. That is largely a pointless debate, as the cost of executing a “copy file” command is trillionths of a cent – nobody would buy it from anybody, as everybody can do it themselves. Claiming a legal right to charge a premium of a gazillion percent over and above the real cost of this service is absurd and macroeconomically counterproductive.

And what we're left with is a world that is not, in any way, a free or fair market, but one where there are inefficiencies due to government-granted monopolies.

In a fair and free market, competitiveness rules, and nobody has a monopoly – such as the copyright monopoly – on doing a particular kind of work, like duplication of a specific object. If somebody else can duplicate your original at a lower cost than yourself, then you weren’t able to compete and you’ll find yourself out of business. That’s called marginal cost – that competition takes place on the additional cost of every product once the investments are made, on the cost of duplicating an original – and that’s how the market works for all products in fair and free markets. It’s actually Economics 101.

So if we're going to argue over whether or not today's copyright system (or any copyright system) makes sense, it's important to recognize these basic facts. You can argue that copyright is good and necessary, but you can't argue that it fits into a free market system, because it doesn't.

Filed Under: copyright, free market, markets, protectionism

Countries In TPP Negotiations Begin To Wonder Why They Should Let The US Push Them Around

from the go-chile dept

It looks like some of the countries negotiating the awful and secretive TPP agreement are beginning to realize that perhaps they're better off not giving in to whatever protectionist policies the US is about to push on them. Officials in Chile are apparently starting to realize that perhaps they're better off without the TPP altogether:

At a PIJIP-hosted seminar on intellectual property and the Trans-Pacific Partnership Agreement (TPP) last week, present and former Chilean trade officials questioned whether joining the TPP would be worth its costs if it included additional demands on intellectual property.

The officials voicing this concern included Senator Ricardo Lagos, son of the former president of Chile and lead of the negotiation of the US-Chile free trade agreement (FTA) as the head of the Foreign Ministry’s Department of Trade Policy under President Michelle Bachelet; Alvaro DÃíaz, of CEPAL, the former Ambassador of Chile to Brazil and a senior official in the Foreign Ministry’s Department of Trade Policy at the time of the US-Chile FTA negotiation; and Ana Novik, a current senior official in DIRECON (the Ministry of Foreign Relations) overseeing the current TPP negotiations.

Each of the presenters explained that Chile already has market access agreements with every country in the TPP region, and therefore the trade benefits of joining TPP are likely to be minimal. Each therefore questioned whether the costs of joining TPP, especially in terms of any presumed increased obligations to expand proprietor rights in intellectual property law demanded by the U.S., would be worth incurring.

Apparently the session consisted of multiple Chilean experts (including some current government officials) making it clear that they're sick of the US bullying on this issue, when they know full well that there would be significant costs associated with signing up for the TPP. In particular, they point out that Chile's decision to participate in this discussion seems to come almost entirely because of the USTR's silly and bogus Special 301 report, that names and shames countries the US entertainment and pharma industries don't like -- but which has no objective methodology. Chile has been named and shamed in the report. Of course, the proper response is to tell the US to mind its own business, rather than putting in place draconian rules that will do significant domestic harm. Hopefully more people in Chile will recognize why it's a mistake to let the TPP process go any further.

Filed Under: chile, protectionism, tpp