Posted by: Paul A. Forsyth | April 4, 2013

The Novartis Decision, Patent Thickets, and Other Assorted IP Links

Tabarrok Curve

1. The Supreme Court of India has ruled that the Swiss pharmaceutical company Novartis is not entitled to a patent on a modified version of its previously patented drug Glivec. Forbes reports that the decision by the Indian high court “is being hailed by activists and has major implications for multinational pharmaceutical firms. The decision opens the door for Indian companies to continue to make generics of a large number of drugs that are under patent in the developed world. The decision is also a big setback for the ever-greening strategy employed by big pharma. In this strategy, big pharma makes minor changes to extend patents.”

The Demanding Mistress blog has a useful primer on the case, as well as a number of follow-up posts, for example here and here. Centre Right India, which pointed me toward the Demanding Mistress posts, also has a primer.

The New York Times and BBC News have pieces on this story, as does Frederick Abbott with IP-Watch.

More on this decision in a later post.

2. Marginal Revolution: patent thickets reduce innovation. Alex Tabarrok links to a report prepared for the UK Intellectual Property Office. An excerpt:

As we find thickets to affect entry negatively, there is a strong indication that thickets represent some kind of barrier to entry in those technology areas in which they are present. However, we must emphasize that the simple finding of a barrier to entry created by patent thickets is not proof positive that reducing that barrier and increasing entry would lead to welfare improvements in the innovation/competition space. Rather it is the existence of evidence that the presence of thickets reduces entry combined with the large literature we have reviewed that shows that currently patent systems do not work as well as they should. This literature documents quality issues with patents in technology areas affected by patent thickets, a large decline in the relationship between R&D spending and patenting in some sectors and a substantial increase in resources devoted to patent litigation leading to the partial or complete revocation of patents in areas identified as prone to thickets.

3. Apple’s trademark application for “IPAD MINI” has been rejected by the USPTO. The Office Action is here (and also here). Ed Krayewski at Reason also reports on the story here.

4. From NPR: a district court in New York has ruled (essentially) that the First Sale doctrine does not apply to digital copies of music (e.g., MP3s). Nate Hoffelder has a post on the (to me) disappointing ruling (emphasis added):

According to the ruling, the song you buy from iTunes cannot be resold unless you want to sell the specific chunk of the hard disk it was sitting on when you first downloaded it (I’m paraphrasing page 6). The judge goes on to exclude situations where users might make copies for themselves and limits the infringement to making a copy on someone else’s hard disk.

It is a shame that ReDigi might not have the funds to pursue this case to the US Supreme Court. There are several serious issues with the ruling that I suspect the USSC might overturn.

While I will agree that this ruling looks to be technically correct, it is also backward looking. It correctly applies current law to this case but it ignores the fact that the existing law and previous court decisions did not envision the market situation we find ourselves in today.

Thanks to this ruling, there is a significant difference in the rights you might have over the content you purchase. A significant amount of content was sold in digital form in 2012, including over 40% of the music sold in the US and about 21% of the book market. The sales that make up these market segments come with far fewer rights than if, for example, you bought physical media.

I would hope that a higher court would reverse or revise this ruling, but I am not optimistic.

5. Also via NPR: the Second Circuit seems to have held that Aereo is not violating copyright law by capturing over-the-air broadcast television signals and retransmitting the programming to subscribers via the Internet to computers and smartphones. Good. However, this ruling is only an appeals court affirming the trial court’s denial of a preliminary injunction. Future rulings could still go badly for Aereo.

6. “Copyright wars are damaging the health of the internet”: Cory Doctorow has an opinion piece in The Guardian. Mike Masnick at Techdirt has a post about the op-ed piece: “Damaging The Internet Is Not Acceptable Collateral Damage In The Copyright Wars.” An excerpt from the Doctorow piece (emphasis added):

The internet is the best – and often the only – place to publish all sorts of information, and yet England’s high court judges have decided that the entertainment industry can compile blacklists of sites they don’t like and get court orders demanding that service providers block them without a hearing, much less a trial.

Anti-piracy campaigns emphasise the risk to society if people get the idea that it’s OK to take without asking (“You wouldn’t steal a car…”) but the risk I worry about is that governments will get the idea that regulatory collateral damage to the internet is an acceptable price for achieving “important” policy goals. How else to explain the government’s careless inclusion of small-scale bloggers and friends with their own Facebook groups in the scope of the Leveson press regulation? How else to explain Teresa May’s determination, in the draft communications bill, to spy on everything we do on the internet?

These policy disasters spring from a common error: the assumption that incidental damage to the internet is an acceptable price in the service of your own goals. The only way that makes sense is if you radically discount the value of the internet – hence all the establishment sympathy for contrarian writers who want to tell us all that the internet makes us stupid, or played no role in the Arab spring, or cheapens discourse. Any time you hear someone rubbishing the internet, have a good look around for the some way that person would benefit if the internet was selectively broken in their favour.

Please do read the whole thing.

Image Credit: The Tabarrok Curve, September 2012, by Prof. Alex Tabarrok. Source: Marginal Revolution.

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