Very good news: “Exhaustion doctrine” strongly supported by Supreme Court

SC overturns Lexmark’s patent win on used printer cartridges. Since the 17th century, restricting resale has been “against Trade and Traffique.”

Source: Supreme Court overturns Lexmark’s patent win on used printer cartridges | Ars Technica

Summary: once a product is sold, the original patent holder can’t control how it is subsequently used.

Not the only seller.

Today’s ruling is a win for many tech companies, with companies like Vizio, Dell, Intel, LG Electronics, HTC, and Western Digital all taking the side of Impression Products. [the winner] …The companies on Lexmark’s side, no surprise, were heavy licensers of patents, including tech giants like Qualcomm, IBM, Nokia, and Dolby. Biotechnology and pharmaceutical groups also supported Lexmark. Those lineups largely mirror industry divisions over Congressional debates around reforming patent laws, with the pro-Impression companies favoring user-friendly changes to patent laws, and the pro-Lexmark companies wanting more changes that favor patent owners.

I often gripe about the Supreme Court’s seeming “go with the big $” jurisprudence. But in this case, there was plenty of corporate power on both sides. And the 7-1 verdict means it was not a close call.

Theranos as innovation+disaster case study

I just taught the Theranos case in my course on “Innovation and Industry Development,” co-taught with Prof. Elizabeth Lyons. The first half is about positioning a startup: powerful new technology, established incumbents, how should we enter to disrupt the industry and make the world a better place? Any moderate set of numbers makes Theranos’ reputed  $9,000,000,000 valuation look reasonable.

Der Untergang der Titanic

The “case” presently consists of four articles. I put together a set of overhead slides to generate and lead the discussion. The first half ends with some general lessons about disruptive innovation and whether to follow an open or closed IP strategy. The second half starts in December 2015 and discusses the crash. I also compare Theranos with the Google contact lens (another technically impossible pseudo-invention).

“That’s a type of Silicon Valley arrogance,” he said. “That isn’t how science works.” (re Google, not Theranos)

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Each new generation needs to learn the lesson of Theranos: appearance ≠ reality

Every 10 years or so, a conspicuous bubble bursts, and in doing so it resets the expectations of the next generation of young adults.

  • Enron
  • 2008 financial collapse
  • Now Theranos

Reading this article, I’m astonished at how little substance the adulation of Elizabeth Holmes was based on. And how much secrecy her investors allowed her. Given that she was claiming that her system would be ~100x better than established technologies, why didn’t they demand evidence? Why was it left to a reporter to figure out that the emperor had no clothes? And, was she nothing more than a successful con-artist with no genuine scientific expertise?

“In a searing investigation into the once lauded biotech start-up Theranos, Nick Bilton discovers that its precocious founder defied medical experts—even her own chief scientist—about the veracity of its now discredited blood-testing technology.”

Source: Exclusive: How Elizabeth Holmes’s House of Cards Came Tumbling Down | Vanity Fair

Zika virus: Forbes columnist can’t bear to say “market failure”

Here’s a column by a Forbes blogger about Zika saying that “we should not wait so long to develop vaccines against tropical diseases.” He concludes:

 Many pharmaceutical companies don’t focus on a disease until it becomes common enough to be highly profitable. The trouble is the vaccine world has become a bit like the plot line for “She’s All That” or “Cinderella.” Attention towards a person or thing does not occur until a cool person notices he or she or it. But when it comes to disease and stock market opportunities, as the saying goes, once your grandmother knows about it, it is usually too late.

Source: Zika Vaccine: Another Example Of Waiting Until It’s Too Late? – Forbes

This is not news. And it’s a classic situation where market forces are not enough to give socially desirable behavior. Developing a vaccine for a disease that is not in rich countries has low expected profitability. Even if the disease goes epidemic, pharma company will have to sell at a price near marginal cost.

The only solution is to use a different way to fund development. Contests, grants (Gates foundation), purchase guarantees (used by US DoD) all work. But waiting for the traditional patent system + pharma profit motive won’t lead to timely development of medication for poor-country diseases.

I guess a Forbes columnist is not allowed to point this out.

Kindle books and academic research = needless pain

I’ve probably purchased 300 books in the last year for research purposes, not to mention all the fiction my wife gets (and so do I, if it costs $3 or less).  For the newer ones , buying them as eBooks is generally an option. But the state of software, DRM, and copy protection for Kindle books is a mess. Kindle’s software (like iBooks) is deliberately crippled – no copying into another document, no printing, and especially no way to copy diagrams. I’m running Kindle’s software on my Mac and on an iPad, rather than using a Kindle tablet, but that barely helps.

Librarians against DRM

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Joe Stiglitz disses TPP treaty: it’s for corporations, not people

Joe Stiglitz critique of TPP Trans-Pacific Partnership treaty:

 Corporations on both sides of the Pacific have an interest at lowering regulatory standards—to protect the environment, to protect consumers, to protect workers, to protect health. But ordinary citizens, our society, will suffer. So you can get corporations on both sides pushing an agenda that will be increasing corporate profits at the cost of the well-being of people on both sides of the Pacific.

…Philip Morris is suing Uruguay under an investment agreement. It says, “This interferes with our basic right to sell products to kill people.” It’s like the Opium War 150 years ago, where the West went to war because China said, “We don’t want opium,” and we said, “That interferes with the basic right to trade.”

Web Special: Joseph Stiglitz on TPP, Cracking Down on Corporate Tax Dodgers & New BRICS Bank

More analysis of corporate capture of the TPP treaty,

 

 

The Capture of International Intellectual Property Law through the U.S. Trade Regime by Margot E. Kaminski :: SSRN

This paper finds that the IP law in recent U.S. free trade agreements differs subtly but significantly from U.S. IP law. These differences are not the result of deliberate government choices, but of private capture of the U.S. trade regime. 

US trade negotiations on IP have always seemed heavily biased to me. For a while, it appeared that the bias reflected Congressional bias in favor of  “strong IP.” The extreme example of that bias was Congress being taken completely by surprise – dumbfounded, even – by the outcry over  the SOPA and PIPA bills. To most of Congress, these bills were common sense. To much of America, they were horrible. See e.g. http://www.forbes.com/sites/larrydownes/2012/01/25/who-really-stopped-sopa-and-why/

But this paper seems to say that US trade negotiators on the TPP treaty are going beyond the US law.  The Capture of International Intellectual Property Law through the U.S. Trade Regime by Margot E. Kaminski :: SSRN.

Of course the big news on TPP negotiation is the leaked draft of the TPP treaty, leaked by Wikileaks.  Unfortunately this article is not updated with insights from that draft, but it contains a variety of detailed examples in existing treaties. Another quote:

 

The USTR’s paraphrasing changes domestic rules into international standards; codifies domestic judicial interpretations as international rules; and omits parts of domestic law that balance IP protection against other values. These distortions shift the cost of lawmaking so that the advising industries bear fewer costs in obtaining the kind of law they want in implementing countries.