Subject: Re: termless copyright and patents
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Wed, 20 Sep 2006 17:53:02 +0900

>>>>> "Thomas" == Thomas Lord <lord@emf.net> writes:

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).

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

Since Congress is involved, it's already socialism; I'm arguing we can
have a better form of socialism.

All I meant was that a regular refereed match by Queensbury's rules is
probably a better alternative to the spontaneous all-out
no-holds-barred brawls we currently have.

>     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.

    Thomas> Then chuck copyrights and patents entirely.

*sigh* Copyrights are in no way compulsion.  All you have to do is
refrain from copying and you are under no obligations whatsoever.
Patents are arguably compulsive in cases like simultaneous invention,
but those are boundary cases, at least from the "free to share what
you haven't paid for" point of view of free software.

"IP" is still government force and still yuck, of course, but at least
they are explicit about the very simple compromise being made: a
monopoly vs. incentive to innovate.  This is already hellaciously hard
to analyze; why make it harder?

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

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

And?

    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.

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

Sez you.  I wonder how the taxpayers who don't get the break feel
about it, though.

    Thomas> 2) Group purchases.

I've discussed that.  The monopoly is potentially large and it's here
and now; the benefits from breaking the monopoly are small and dynamic
(unless you have a monopoly that is inhibited by the IP in question,
but not subject to undermining in the same way)---even if you have a
group.

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

My suspicion is that unlike Lay's potato chips, you're only ever going
to eat one, and that's the one that you're going to be able to sell.

    >> 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.

    Thomas> Correct.

But isn't that just plain backwards?  What you're saying is "if it's
valuable enough to overcome the transaction costs and generate
licensing fees, we'll blow it away.  If it's not, then we'll leave it
there for the patent sharks to pick up and use in their protection
racket."

    >> 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)

    Thomas> That gets to two things.

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

The only assumption I made was that it would be increasing in license
revenues.   The numbers I pulled out of a hat, of course.

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

If they think they can sell those promises, they already can sell
them.  But for some reason, they prefer to give it away when they
release it at all.

-- 
Graduate School of Systems and Information Engineering   University of Tsukuba
http://turnbull.sk.tsukuba.ac.jp/        Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
        Economics of Information Communication and Computation Systems
          Experimental Economics, Microeconomic Theory, Game Theory