Subject: Re: termless copyright and patents
From: Thomas Lord <lord@emf.net>
Date: Tue, 19 Sep 2006 21:07:09 -0700

Stephen J. Turnbull wrote:
>     Thomas> So, patents and copyrights extend for X and Y years
>     Thomas> respectively and we can fight and fight about what the
>     Thomas> right values for X and Y should be.
>
> Alternatively, we could amend the copyright and patent statutes to
> require a mandatory review of costs and benefits every five years,
> including a series of public hearings, before a renewal of the
> existing term limits (and perhaps changing the expiry date of existing
> rights, but I think that is a bad idea---see the economists' amicus
> brief in the Eldridge case).
>   


And, this would be better because socialism is a more efficient allocator
of resources?




>     Thomas> Perhaps that fight can be put aside by choosing X and Y as
>     Thomas> upper bounds and additionally setting a statutory upper
>     Thomas> bound, based in part on past licensing revenue, on the
>     Thomas> price of a compulsory pull-the-trigger license.
>
> Compulsory anything is yuck.
>
>   


Then chuck copyrights and patents entirely.   Compulsory licensing of 
patents
and copyrights, as is already in force for audio recordings, is a 
*reduction*
not an *increase* in the amount of compulsory stuff going on.

I'm more interested in whether or not there is any hope at all of 
defining a
useful pricing formula.






>     Thomas> A pull-the-trigger license gives the licensee the right to
>     Thomas> grant the general public reasonably complete commercial
>     Thomas> rights to a work.
>
> As far as I can see there is very little gain from trade here.  The
> licensor's interest is going to be dominated by the loss of royalties
> from "premature" termination of "protection".  No single licensee's
> financial interest is ever going to be anywhere near that large.  The
> only kind of agent which can finance such purchases alone is going to
> one with the power to tax.  (Maybe they do it indirectly by grants to,
> eg, the FSF, but eventually it's going to be based on taxes.)  Yuck.
>
>   


1) A tax break for buying a pull-the-trigger *and* exercising it isn't a 
crazy idea.

2) Group purchases.

3) The really interesting fun happens licensors manipulate pricing and 
terms to
    sell many pull-the-trigger licenses.



> So basically what's left is that we grant you a monopoly, except that
> if it's really valuable, we're going to allow your would-be
> competitors to buy you out at a government-set price and put your
> technology into play. 

 Correct.



>  Is this going to hurt IBM, Sun, and Microsoft?
> Not much; they are going to prefer to *not* exercise those rights
> against each other, but instead participating in (conventional)
> cross-licensing pools.  If the regulated price is increasing in the
> amount of license revenue, then they can play the "repurchase
> agreement" game: "I'll license your patent at what it's worth + $1
> million, you license mine at what it's worth + $1 million, and Nobody
> will buy a compulsory pull-the-trigger license at what it's worth +
> 0.5*$1 million."
>
> So the end result is that IBM, Sun, and Microsoft get to buy up and
> free small researchers' IP at a capped price if it looks like they
> can't keep themselves from bidding up the monopoly value.  Next we'll
> have the AAUP demanding "free agency" for university-developed
> patents....
>
>   



That gets to two things.

a) One economics/game theory question I have is about what games are
    created by various  possible definitions of the statutory cap on
    pull-the-trigger licenses.   I think your analysis above makes certain
    non-necessary assumptions about the cap.

b)  IBM, Sun, and Microsoft will still have good reasons to announce
     promises, along the lines of Mr. Rosen's, Microsoft's, and IBM's (at
     least, I'm not sure where Sun is) -- i.e., to enable open source 
processes.

-t