April 2007 Archives


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This has been a busy week for broadband policy, especially early on.

On Monday, OECD released its 2006 statistics for broadband penetration- OECD Broadband Statistics to December 2006

Over the past year, the number of broadband subscribers in the OECD increased 26% from 157 million in December 2005 to 197 million in December 2006. This growth increased broadband penetration rates in the OECD from 13.5 in December 2005 to 16.9 subscriptions per 100 inhabitants one year later.
It also showed the US slipping to 15th in broadband usage. (See also U.S. Broadband Access Slips Further.)

That was quickly followed by a report from the Information Technology and Innovation Foundation, Assessing Broadband in America: OECD and ITIF Broadband Rankings and an official statement from the State Department, expressing concern over the methodology.

Tuesday, the U.S. Senate Committee on Commerce, Science, & Transportation held a hearing on Communications, Broadband and Competitiveness: How Does the U.S. Measure Up? (See Answers Sought for U.S. Broadband Decline - News and Analysis by PC Magazine for a summary of the hearing.)

The House Commerce Subcommittee on Telecommunications and the Internet also held a hearing on Tuesday - the latest in its series of hearings on the Digital Future of the United States: Part IV, Broadband Lessons from Abroad

I have been some what agnostic about broadband. Yes, broadband is needed but speed isn't everything. Nor is broadband penetration the best measure. It is like measuring the number of cars per person and how fast they can go. That says little about the important questions of usage by whom and for what.

One of the first activities of Athena Alliance was a conference on Inclusion in the Information Age: Reframing the Debate. Our focus was on the question of access to information and services. I think the findings of the conference still relevant for today's broadband debate:

Points of Consideration
As America enters the 21st Century, we are simultaneously confronted with great opportunities and formidable challenges. A fundamental change is occurring in how human beings organize work and economic activity, driven only in part by developments in information technology (IT). As part of this transformation, those individuals and communities currently left behind are in danger of being further disadvantaged. Others who are currently just coping are at risk of being left behind.
To explore these issues, Athena Alliance – a non-profit organization dedicated to public education and research on the emerging global information economy and the networked society – hosted a conference on “New IT – New Equity – New Economy.” The discussion at that conference – and subsequent events – has resulted in the following points of consideration concerning the technological, economic and social aspects of the revolution in IT and the rise of a new economy.

Point one: Focus on the transformation, not the technology.
The issue of concern is the transformation to the Information Age. It is not simply a question of technological deployment. The end purpose is not to narrow some gap, but to ensure that everyone has access to the expanded opportunities. Our framework should be one of inclusion for all in the broader activities that make up society and the economy.

Point two: Review and coordinate efforts.
The problem has aspects of telecommunications policy, such as infrastructure and standards and elements of technology policy, such as research and development and technology deployment. But it also has aspects of policies on training and workforce development, education, economic development, housing and community development, human services and trade. Reaching our goal requires a coordinated approach -- in the private, public and non-governmental sectors – that combines the various elements of providing opportunity and inclusion in the information age. To coordinate policy, the focus of governmental digital opportunity efforts should be the White House, not in any one department or agency.
It is also time to take a new look at some policy areas. For example, a comprehensive approach is needed toward all parts of managing the information commons: privacy, intellectual property rights, “right-to-know” policies and other related areas.

Point three: Work to ensure that everyone has access to the technological infrastructure.
Barriers to access to the infrastructure are many. Ways of overcoming those barriers are also varied, including public access facilities that can combine access with training and other activities, as well as home access. With respect to access in the home, we must return to the question of universal access. We also need to address the development of broadband capabilities – both at home and at work. Both home use and public access points are important. Multiple access public points are needed, such as existing public facilities, training centers, libraries, and after-school centers. For these facilities, sustainability is the key. But, it is not enough to simply provide access. We must work to weave information technology into the operations of community groups in a way that will both help individuals use the technology and will make those groups more efficient and effective in their core mission.
Some of the barriers to digital inclusion are physical: the usability of the technology. This is not, as commonly thought of, an issue only for those with disabilities. The problems of usability and human-machine interfaces affect all of us and research on ways to increase access for those with disabilities will pay off in increased usability for all.

Point four: Encourage and facilitate participation and involvement by all in the digital economy and information society.
To foster participation and involvement, the technology must meet people’s needs – not define those needs. Information technology can help people in their day-to-day lives if it is designed and structured in such a way that it helps answer their questions and solve their problems. Otherwise it becomes a barrier and a source of frustration. This is the danger of what some refer to as the “over-wired” world.
It is important to understand that individuals have different needs. A one-size-fits-all may help some – and increase their participation and involvement – but will block others. By focusing on “demand-pull,” rather than “technology-push,” we can better tailor the technology to meet individual needs.
Development of meaningful content, including more locally-based content, is one of the ways to increase the level of participation. E-government is one important form of meaningful content. But, we must also insure that those who are not on-line are not left behind. No services or information should be removed or dramatically cut back from traditional means of dissemination in favor of electronic dissemination until and unless all members of the community have access to that electronic means as easily as they have to the traditional means.

Point five: Focus economic development on the Information Economy, not the Internet Economy.
The information age will require a new approach to economic development. Key to the process is using and developing assets: financial, social, skill-based, and information assets. We must focus on building the local economy’s vitality and ability to compete in the age of globalization and help people make the switch to the new economy.
Our priorities should include:
• development of processes for identifying and assessing local assets,
• revitalizing programs for training the existing workforce,
• helping small and medium size enterprises make use of IT, and
• fostering entrepreneurship at all levels and in all sectors.
We must also develop and utilize new mechanisms for financing the transformation, including Individual Development Accounts and new ways of financing intangible assets.
The New Markets Initiative is another example of a way to reach out to communities left behind. It is a true bipartisan effort, which the Bush Administration and Congress would do well to emulate and build upon.
Collaborative learning and sharing of information is also important in the larger process of economic development. There are a number of examples of information assets being applied within businesses and with local economies. We need to utilize new knowledge management techniques and old-fashioned communications techniques to collect, disseminate and better utilize that information.

Point six: We need a better understanding of what is going on.
We need to re-look at the data needed for economic development in the information economy. The problem of data extends beyond the scope of local economic data. We need both better data and expanded analysis of the socioeconomic aspects of the information technology. That research must be translated into policy relevant terms. For this reason, Congress should seriously consider re-establishing the Office of Technology Assessment (OTA).

Point seven: The decision making process must be open.
True inclusion and opportunity can only occur if the process of decision making is open and transparent. Information technology has a tremendous potential for opening and maintaining channels for general input and advocacy. However, decisions made about the technology can have the effect of closing off the process rather than opening it up. We must insure that all parties are at the table when decisions, including issues such as standard setting, are made.

Point eight: Innovate and experiment.
We are in a time of transformation and change. The speed of that change and the pace of economic activity will vary. Yet the change is real and will continue. In such a time, we must often invent new ways of coping with our problems and new policies for guiding our economy and society. Such experimentation will require great policy discipline, however. It requires a strong, unbiased means of evaluating programs and policies – and the political discipline to follow the guidance of that evaluation. We must also find means to ensure that the evaluations are timely for the fast moving policy arena. The goal in evaluation is not simply proving the effectiveness of an action – it is to facilitate learning. Learning is the hallmark of the Information Age. Our public policy process must embrace that concept as tightly as the rest of our economy and society already have.

Innovation bills pass

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Looks like the log jam on competitiveness/innovation bills in Congress has finally give way. Yesterday, the Senate passed the America COMPETES Act (S. 761) by a vote of 88 to 8. The bill is essentially the same bill as last year and implements many of the recommendations of the National Academy study, Rising Above the Gathering Storm. The full title describes the bills intentions: the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act. It strengthens and creates new programs for education and R&D, including the creation of an Advanced Research Projects Authority in the Department of Energy (ARPA-E). Two more minor provision in the bill which I believe are especially important for the future: the creation of a Cabinet-level Council on Innovation (see our 2005 letter of support on this) and a request that the National Academy conduct a study on barriers to innovation. These actions should lay the foundation for the next step in crafting a more comprehensive innovation strategy.

And earlier this week on Tuesday, the House passed two of its innovation/competitiveness bills -- the 10,000 Teachers, 10 Million Minds Science and Math Scholarship Act (HR 362) to authorize science scholarships for educating mathematics and science teachers and the Sowing the Seeds Through Science and Engineering Research Act (HR 363) to authorize appropriations for basic research and research infrastructure in science and engineering and for support of graduate fellowships. Both of these bills are much more narrowly focused on specific S&T issues.

Now come the really interesting part, reconciling the House and Senate actions. The Senate has passed a big package. The House has deliberately taken a more piecemeal approach. The two have to some how be put together.

The good news on this front is that the bills have overwhelming support. As the Los Angeles Times noted:

Congressional Democrats and Republicans have finally found something today that they can agree on--legislation intended to boost U.S. prowess in technological competition worldwide by improving science and mathematics teaching from kindergarten through graduate school and assisting researchers early in their careers.

So, there are still a number of bumps in the road, including less than enthusiastic support from the White House (see Statement of Administration Policy on S. 761, HR 362 and HR 363). But the tea leaves look promising.

Something to think about

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Two good reads I would like to point out:

1) Steven Pearlstein - From Old World To Real World - washingtonpost.com -- on globalization and strategic trade:

Consider Intel's recent announcement that it would build an advanced, $2.5 billion chip fabrication plant in Dalian, on China's northeast coast.

We can all agree this plant will be a boon to the Chinese economy. And we can be pretty sure it will be in the interests of Intel shareholders. But is it really in the best interests of the U.S. economy?

It would be one thing if the Chinese had developed the capacity to make advanced microchips on the basis of their own investment and ingenuity. But it is quite another when the technology for the chips and chip production has been created by American researchers and American companies, and transferred wholesale to a developing country that makes no secret of its intention to use that knowledge and experience to improve its own industry.

By what reasoning is this a net plus for an American economy that is supposed to prosper in this globalized world on the basis of its high-tech know-how? Can you really say that, in such a high-value-added industry, the lower cost of imported computer chips will offset the foregone economic output -- jobs and profits -- that Intel's move entails?

As it turns out, the reason it will be cheaper for Intel to make those chips in China has little to do with lower-cost labor. That's because chip factories aren't particularly labor intensive. In fact, a study by the Semiconductor Industry Association found that 90 percent of Asia's cost advantage over U.S. production is attributable to government subsidies and tax breaks. In the case of Intel's new plant, I'm reliably told that those subsidies amount to about $500 million. That's a sum well beyond anything available to Intel in the United States. And it hardly fits into any common-sense notion of free trade or fair and open competition.

. . .

Contrary to what you hear from editorial writers and other free-trade ideologues, it is not "protectionist" for the United States to impose countervailing duties on imports from a country that subsidizes exports and keeps its currency pegged to the dollar.

It's not "anti-business" to toss out a tax code that encourages multinational corporations to invest overseas and replace it with one that gives tax preferences to companies that create high-value-added jobs in the United States.

And it is not "class warfare" to raise taxes on those who have benefited from globalization to pay for health care, wage insurance and retraining of workers who have lost their jobs as a result of globalization.

2) James Surowiecki's It’s the Workforce, Stupid!: Financial Page: The New Yorker:
In the nineteen-nineties, with U.S. corporations in the midst of what the Times called “the downsizing of America,” a new term appeared: the “seven-per-cent rule.” It was a simple formula: when a company announces major layoffs, its stock price jumps seven per cent. No one worried too much about whether the rule was accurate—it was a catchy way of expressing a basic assumption about corporate layoffs: downsizing is an easy way to make Wall Street happy. So when, recently, two companies with lagging stock prices—Circuit City and Citigroup—announced major job cuts, one might have expected their stock to soar. Instead, Circuit City saw its stock price tumble four per cent the day after it announced it was getting rid of thirty-four hundred of its most experienced sales associates, and Citigroup’s stock barely budged when it said it would be cutting seventeen thousand jobs.

This may have surprised the executives who had planned the cutbacks, but it shouldn’t have. Over the past decade, many academics have looked at how layoffs affect stock prices, and they’ve found that the seven-per-cent rule is bunk. Instead of rising sharply, the stock of companies that trim their workforces is likely to fall. A recent meta-study that surveyed research from several countries, covering thousands of layoff announcements, concluded that, on average, markets had “a significantly negative” reaction to job cuts. Individual companies, of course, sometimes see stock prices jump after layoff news, but there’s no evidence that downsizing is a guaranteed hit with investors.

. . .

The increasingly short-term nature of C.E.O.s’ jobs, along with the pressure on them to deliver results quickly, doesn’t help matters. The average C.E.O.’s tenure today is just six years, long enough to see the benefits of downsizing (like a lower payroll) but not long enough to suffer costs that may appear in the long term. And the lack of job security means executives have to worry more about what shareholders and analysts are saying. While the market as a whole may be skeptical about downsizing, many powerful people on the Street aren’t. Before Citigroup announced its layoffs, for instance, it had to contend with a chorus of critics—including its biggest shareholder—insisting that the company was a bloated giant that needed to get its costs under control. Even if the job cuts didn’t move the stock price, they were at least a sign to those critics that the company was listening.

On top of all this, a C.E.O. is likely to look to layoffs as a solution because that’s what almost everyone else does, too. The word “downsizing” wasn’t even invented until the mid-seventies. The waves of layoffs that began at the end of that decade and peaked after the recession of 1990-91 were largely a response to crisis on the part of manufacturing companies swamped by foreign competitors and stuck with excess capacity. More recently, however, downsizing has become less a response to disaster than a default business strategy, part of an inexorable drive to cut costs. That’s why Circuit City can proclaim, “Our associates are our greatest assets,” and then lay off veteran salespeople because they earn fifty-one cents an hour too much.

There’s nothing wrong with costcutting, and in any dynamic economy layoffs will be necessary. The problem is that too many companies today define workers solely in terms of how much they cost, rather than how much value they create. This is understandable: after downsizing, it’s easier to measure a lower wage bill than it is to see the business the company isn’t getting because it has too few salesmen, or the new products it isn’t inventing because its R. & D. staff is too small. These lost opportunities may be hard to measure, but over time they can have a huge impact on corporate performance. Judging from its reaction to layoff announcements, the stock market understands this. It’s time executives did, too.

As I said, something to think about.

More or less outsourcing

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An interesting juxtaposition of stories today on outsourcing. On the Business Week blog is this story - The Myth of High-Tech Outsourcing:

High-tech employees are back in demand. The U.S. technology industry added almost 150,000 jobs in 2006, according to an Apr. 24 report by the American Electronics Assn. (AeA), an industry trade group. That was the largest gain since 2001, before the implosion of the tech bubble resulted in the loss of more than 1 million jobs in three years.
The findings counter concerns—sometimes voiced by opponents of outsourcing—that high-tech jobs are being sent overseas.

And over on the UK blog, New Economist, is this posting - The road to India:

More evidence of the global relocation of white collar labour today. The week before last, Citigroup announced it was to cut 17,000 jobs, and relocate 9,500 to India and other "lower cost locations". Today we read of another bank slashing jobs in the west and offshoring others: Barclays to Shift 10,800 Jobs to India, Elsewhere to Cut Costs,

Seems like we still don't understand what is really happening with task-level competition (see Alan Blinder's paper in Foreign Affairs- Offshoring: The Next Industrial Revolution?, the Grossman/Rossi-Hansberg paper at last summer's Fed Jackson Hole symposium - The Rise of Offshoring: It’s Not Wine for Cloth Anymore, and Baldwin - Globalisation: the great unbundling(s)).

Standard or IPR - part 2

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Are standards becoming a new trade barrier? That is the question raised by China and other "developing" countries, according to a recent story on Intellectual Property Watch: China Leads Developing Country Push For Balance In IP And Standards:

A key focus is on the treatment of standards for technology and the related intellectual property rights. Xiaozhun Yi, vice-minister of the Chinese Ministry of Commerce, said at a conference last week that standards and IP rights are critical for economies such as China’s that are basing their development on science and technology. But, he said, an “inappropriate convergence” between standards and IP rights has “caused problems.”

“Delayed or inadequate IPR [intellectual property rights] disclosure, stringent IPR licensing conditions and expensive licensing fees run counter to fair competition, hinder the promotion and application of new technologies, obstruct the normal operation of international trade and impede the harmonious development of global economy and society,” Xiaozhun said at an April 17-18 conference cosponsored by the commerce ministry and other Chinese agencies, as well as Sun Microsystems. “Developing countries are the worst hit by such problems which effectively hinders their greater participation in economic globalization.”

Chinese officials such as Xiaozhun say international standards bodies, which are typically based in western developed countries, have begun to recognise the imbalance in their policies that insufficiently reflect the interests of developing countries. “Standards bodies are mainly controlled by developed countries,” he said. As a result, new standards putting developing countries in an “underprivileged position” have “become new obstacles to international trade.”

A number of recent patent cases in the US have also highlighted the problem of determining what is IPR and what should be a standard (for example the MP3 case and the VoIP case.)

Here is another example of where we need to get it right. Or, as the above story implies, others may impose a solution on us.

Copyright and re-runs

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By now, many of you have probably heard of the copyright problems surrounding the civil-rights movement documentary "Eyes on the Prize." Because copyright permission for much of the material had expired, the film could no longer be shown (although PBS has re-issued the TV series for educational purposes). Two years ago, American University's Center for Social Media released a report outlining the increasing difficulty documentary film makers were facing due to stricter copyright (see earlier posting).

Well, nothing has changed in the copyright world, as is evidenced in this recent story from Wired:

Wired reported a couple years ago that copyright issues were preventing DVDs of the much-loved WKRP television sitcom from being released. The problem? The show depicted life at a radio station, and at radio stations, music tends to get played. The show's creators licensed the tracks included in the show for the length of its original run, but nobody predicted that there might eventually be another life for the series in syndication or as pre-recorded media, so those licenses expired, making it impossible to release the DVDs with that music included.

The series will finally be released on DVD on April 24th, but fans are already irate. The music originally included in the show has been replaced by generic muzak in order to placate the almighty copyright gods, who would otherwise have prevented the series from being released by (apparently) demanding so much licensing money as to render the whole project unfeasible

Somehow, there should be a fix for all this. I understand the rights of the copyright holder to a portion of the residual income. However, I worry about the ability of the copyright holder to change the terms of the deal and essentially hold up the entire project. Once again, it seems that our balance is off.

Access to Knowledge conference

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The Yale Law School is having its second Access-to-Knowledge conference later this month -- see Yale Information Society Project - Access to Knowledge:

Access-To-Knowledge (A2K) social movement that champions human rights, human development, and the public interest as the focal points of innovation and information policy.

Yale’s ISP 2006 Access to Knowledge (A2K) conference advanced our commitment to building a broad conceptual framework of "Access to Knowledge" that can foster powerful coalitions between diverse groups. The A2k conference brought together over 300 leading scholars and activists from over 40 countries to participate in the construction of an intellectual framework for access to knowledge. Full conference proceedings and foundational resources for Access to Knowledge are available at the Yale A2K conference wiki.

This year, on April 27th-29th 2007, the weekend of World Intellectual Property Day, the A2K2 conference will be a pivotal event mobilizing the A2K coalition. A2K2 will further build the coalition amongst the institutions and stakeholders that crystallized at the first landmark conference, help set the agenda for access to knowledge policy and advocacy, and deepen the understanding of the theoretical underpinnings of access to knowledge issues. Developing both a theoretical framework and delving into the details of practical implementation, the program will focus on mobilizing the private sector, governments, technologists, and civil society around A2K issues. A2K2's policy panels will be structured towards tangible legal and technological solutions and collaborative strategies for policy makers and individual institutions.

Looks like an interesting line up of speakers. For those of you who can't make it, there will be a conference wiki. Interestingly enough, one of the conference sponsors is Microsoft.

Standard or IPR

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The issue of a technical standard versus a patent has raised its head in the Verizon v Vonage case, according to this story from PC World (Validity of Verizon's VoIP Patents Challenged):

Two of the three Verizon patents a jury upheld in a March decision were described in a standards group called the VOIP Forum before Verizon filed for the patents, said Daniel Berninger, who had a hand in launching Vonage but now works as a telecom analyst for Tier1Research.com. The VOIP Forum described the name translation call-processing step in an open standard developed in 1996, and Verizon applied for the two patents in March 1997 and February 2000, he said in an interview about the case.

Verizon's patents focus on using name translation to connect VOIP calls to traditional telephone networks. But without name translation, no VOIP calls could be completed, and all Verizon VOIP competitors are in danger of getting sued, Berninger said. "If you translate these patents so ridiculously broadly, then there's nothing left," he said. "Everybody infringes."

And so it continues . . .

FTC-DOJ second IP report

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The Federal Trade Commission (FTC) and Justice Department have issued the second report based on their examination of anti-trust and intellectual property laws. The first report (issued by FTC only) To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy was a path breaking study with numerious recommendations for patent reform.

This second report - Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition - looks at the enforcement side, which is split between Justice and the FTC. The report’s conclusions include the following:

* Antitrust liability for mere unilateral, unconditional refusals to license patents will not play a meaningful part in the interface between patent rights and antitrust protections. Antitrust liability for refusals to license competitors would compel firms to reach out and affirmatively assist their rivals, a result that is in tension with the antitrust laws.
* Conditional refusals to license that cause competitive harm are subject to antitrust scrutiny.
* Joint negotiation of licensing terms by standard-setting organization participants before the standard is set can be procompetitive. Such negotiations are unlikely to constitute a per se antitrust violation. The agencies will usually apply a rule of reason analysis when evaluating these joint activities.
* The agencies evaluate the competitive effects of cross-licenses and patent pools under the rule of reason framework articulated in the 1995 Antitrust-IP Guidelines.
* Combining complementary patents within a pool is generally procompetitive. A combination of complementary intellectual property rights, especially those that block the use of a particular technology or standard, can be an efficient and procompetitive way to disseminate those rights to would-be users of the technology or standard. Including substitute patents in a pool does not make the pool presumptively anticompetitive–competitive effects will be ascertained on a case-by-case basis.
* The agencies apply a rule of reason analysis to assess intellectual property licensing agreements, including non-assertion clauses, grantbacks, and reach-through royalty agreements.
* The Antitrust-IP Guidelines will continue to guide the agencies’ analysis of intellectual property tying and bundling. The agencies consider both the anticompetitive effects and the efficiencies attributable to a tie, and would be likely to challenge a tying arrangement if: (1) the seller has market power in the tying product, (2) the arrangement has an adverse effect on competition in the relevant market for the tied product, and (3) efficiency justifications for the arrangement do not outweigh the anticompetitive effects. If a package license constitutes tying, the agencies will evaluate it under the same principles they use to analyze other tying arrangements.
* The agencies consider both the anticompetitive effects and the efficiencies attributable to a tie or bundle involving intellectual property.
* The starting point for evaluating practices that extend beyond a patent’s expiration is an analysis of whether the patent in question confers market power. If so, these practices will be evaluated under the agencies’ traditional rule of reason framework, unless the agencies find a particular practice to be a sham cover for naked price fixing or market allocation.
* Collecting royalties beyond a patent’s statutory term can be efficient. Although there are limitations on a patent owner’s ability to collect royalties beyond a patent’s statutory term, see Brulotte v. Thys Co., 379 U.S. 29 (1964), that practice may permit licensees to pay lower royalty rates over a longer period of time which can reduce the deadweight loss associated with a patent monopoly and allow the patent holder to recover the full value of the patent, thereby preserving innovation incentives.

As an analysis of enforcement issues, the report will have less of an impact on the patent law reform debate. However, as the lawyers starting parsing the specifics, issue may creep into the legislative arena as people what to alter the enforcement activities.

New patent legislation

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Today, Senator Patrick Leahy, Chair of the Senate Judiciary Committee and Representative Howard Berman, Chair of the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property are scheduled to introduce new patent reform legislation. The introduction of this bill will mark the next step in the process of patent reform in the 110th Congress. In February, Berman held a packed-house hearing on the issue - American Innovation at Risk: “The Case for Patent Reform.” (Note: the line up of that hearing was similar to a 2005 Athena Alliance event Is the US Patent System Endangering American Innovation?)

The bills being introduced today are expected to be similar to legislation introduced in the last Congress. That process got bogged down, due in part to a disagreement between the IT and pharmaceutical industries as to the nature of the reforms needed. The IT industry needs a way to sort through the explosion of patents and the problem of inadvertent infringement. Their problems stem from the fact, as they claim, that it is almost impossible to innovate without tripping over someone else's patent. For pharma, the patents are much clearer. The descriptions of the chemical formulas are usually more precise, so it is easier to know what is or is not covered by the patent. Pharma is looking for clear enforcement of existing patents.

The dynamics of the issue seems to have changed from last year. As today's Washington Post points out (Patently at Odds):

The shift in political control on Capitol Hill coupled with the Supreme Court's newfound interest in taking patent cases has energized a congressional drive to revamp the patent system for the first time since the 1950s.
(For those of you new to the issue, the Post story is a good summary of these two contenting points of view).

We will see if there real has been a change from last year -- and if that change is enough to move a bill forward. One of the ideas that could break the dead lock has been constantly sidestepped during the debate. Brian Kahin and others have raised the possibility of move away from a unitary patent system, i.e. the same system for all industries. Kahin organized a conference last fall at the University of Michigan Law School: Patents and Diversity in Innovation.

I don't think the Congress is quite willing to wade into the issue of a non-unitary patent system. There are major issues to be addressed as to how to create flexibility for different industry situations within a consistent framework. But this conference has begun the process of building the foundation for the next wave of patent reform.

Of course, we still have to get this version of reform through the Congress. There are many other obstacles beyond the IT-pharma split. As the Post points out:

Congressional initiatives to revise the patent system have drawn intense interest from sectors including traditional manufacturers, universities, banks and financial services, and small businesses. The industries vying to sway the outcome have dramatically ramped up their campaigns, engaging some of Washington's most prominent lobbying firms since the start of the year.

So, one step at a time. But keep an eye on the future as well.

Yet another Supreme Court patent case?

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From today's Wall Street Journal - High Court Seeks U.S. View In LG Patent Dispute

The high court, acting on an appeal filed by Quanta Computer Inc., Compal Electronics Inc. and First International Computer Inc., signaled possible interest in the case by asking the U.S. Solicitor General's office to file a brief on the underlying legal issues. The case will be reviewed again by the Supreme Court later this year after the filing is made.
. . .
At issue in the lawsuits is whether the patent licenses between LG and Intel sufficiently spelled out limits on the patents.
. . .
The Federal U.S. Circuit Court of Appeals, a special patent appeals court based in Washington, ruled in favor of LG Electronics last year, saying the company had the right to seek patent royalties from the Taiwanese computer makers.

In their appeal, the Taiwanese companies accused LG Electronics of trying to double-dip. "This court has consistently held for more than a century that no patent owner is entitled to more than one royalty on the sale of a patented article," attorneys for the companies said in the appeal.

The case is Quanta Computer Inc. v. LG Electronics, 06-937.

This seems unlike previous cases where the patent itself was at the center of attention. If I read this right, it may be more of a contract law case. But we will wait to see what the Solicitor General has to say.

Changing drug research

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This story from Reuters this morning - Gates Foundation billions change pharma landscape:

The billions of dollars thrown at global health problems by the Bill & Melinda Gates Foundation are changing the game in drug discovery, posing big challenges to the world's top drugmakers, according to a report on Tuesday.

Pharmaceutical information group IMS Health Inc. said the emergence of megabuck philanthropy was both a threat and a collaboration opportunity for manufacturers.

"Pharma companies need to develop an explicit strategy to deal with this phenomenon," IMS said in its annual Intelligence.360 report on factors shaping the industry.

We have been watching with keen interest the various experiments in alternative research mechanisms. Looks like they are beginning to have an impact.

UXB in patent wars?

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The term "UXB" usually refers to "unexploded bomb". That is what might be lurking in the patent wars over email technology (think Blackberry - NTP patent case). According to a story in the New York Times, E-Mail Innovator Plans to Enlist in the Wireless Campaign of the Patent Wars, there is a new development that could invalidate a number of patents:

Nicholas Fodor is about to dive into the patent wars that have tangled up the business of wireless e-mail. But his weapon of choice is not a lawsuit. It is a new e-mail service he is developing using the knowledge gained from years of experience with e-mail software.

Mr. Fodor, 43, a French computer programmer, said that in the early 1990s he worked on “push” e-mail services that predated the filing of important patents in this area.

He intends to test his claims as soon as next month by introducing Freedom Mail, a simple free service that he says will make it possible to view and respond to messages sent to almost any e-mail account on a cellphone or other mobile device.

. . .

If it works as promised, Freedom Mail will compete with highly profitable services like those provided by Research in Motion, and could also undermine the lucrative patent portfolios of NTP and Visto, two firms that have won hundreds of millions of dollars in court with claims that they invented the idea of wireless electronic mail and mail synchronization.

“Visto could have some real problems,” said Gregory Aharonian, publisher of Internet Patent News Service, an industry newsletter, and an intellectual property consultant who has worked with Visto in the past. He said that once the service became widely available, “everyone they are suing is going to slap them with discovery requests to find out how much they knew about Mr. Fodor’s software.”

Mr. Fodor, who founded SetNet in Florida in 1993, said he was the first to offer a commercial product that could synchronize e-mail between machines.

He demonstrated e-mail synchronization in 1996 at an industry conference, three years before Visto received its first patent for the idea of synchronizing “work spaces” over a network in 1999.

SetNet’s software, which was sold in partnership with Hewlett-Packard beginning in 2002, could be viewed as important “prior art” in the intellectual-property wars that have pitted Visto and its investment partner, NTP, against Seven Networks and Motorola’s Good Technology Group, as well as Microsoft and Research in Motion.

Keep an eye on this one!

New innovation research (and patent reform)

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NBER held its annual Innovation Policy and the Economy session in Washington last week with a number of interesting papers (available on their website):

Wes Cohen and John Walsh on Real Impediments to Academic Biomedical Research;
Robert Litan, Lesa Mitchell and E.J. Reedy on Commercializing University Innovations: A Better Way (looking at alternative technology transfer mechanisms);
Shane Greenstein on Economic Experiments and Industry Know-How in Internet Access Markets;
Carl Shapiro on Patent Reform: Aligning Reward and Contribution;
Jean Tirole and Joshua Lerner on Public Policy toward Patent Pools.

I was especially interested in Shapiro’s conclusion that a stronger patent law is not always a good thing. Rather, what is needed is a stronger procedure for ensuring that the rights of all parties are protected. As he sums up:

Introducing an independent invention defense in patent infringement cases would predictably reduce excessive rewards. Strengthening the procedures by which patents are re-examined after they are issued would have a similar effect in aligning rewards and incentives, especially for patents licensed to multiple competing firms. Several other proposed reforms relating to patent infringement litigation also look promising using the reward/contribution framework: limiting the use of injunctions, clarifying the way in which damages based on “reasonable royalties” are defined, and narrowing the doctrine of willful infringement. Recent empirical work suggests that all of these reforms would affect important, real-world situations that frequently arise. The economic reasoning supplied here suggests that these reforms would enhance economic efficiency and promote innovation.

Many of these are to be found in proposed patent reform legislation. That legislation, however, seems to be stalled in Congress similar to what happened last Congress. Let’s hope that research work like Shapiro’s can help break the logjam. But, I doubt it. The issue appears to be interest group politics -- and that is rarely influenced by research findings.

February trade in intangibles

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So far, the media and markets are treating this morning's BEA trade data as an afterthought to the PPI data on inflation. However, while the overall news is good with the monthly deficit narrowing, the numbers on our intangibles surplus is not so good. The intangible surplus declined yet again - for the fourth month in a row. Exports of private services and revenues from royalties were up. But imports of private services and payments of royalties rose even more.

The Advanced Technology Products (ATP) deficit also improved slightly. But is still significantly higher that where it was a year ago.

All in all, not bad news. But no major change in our technology and intangibles trade.

Intangibles trade-Feb07.gif

Note: we define trade in intangibles as the sum of "royalties and license fees" and "other private services". The BEA/Census Bureau definitions of those categories are as follows:

Royalties and License Fees - Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trademarks, and the term "license fees" generally refers to payments for the use of patents or industrial processes.

Other Private Services - Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term "affiliated" refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.

Why designs fail

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The design critic at the International Herald Tribune reminds us that not all innovation is a good idea: Why the overwhelming numbers of design flops? - International Herald Tribune:

Sometimes I wonder whether I owe our readers an apology. Like most design critics, I tend to write about what happens when design projects work, when intelligent designers try to make our lives a little better - and succeed.

Luckily, those successes happen from time to time, but not nearly as often as new designs flop. The inspiring innovations are exceptions. All you've got to do, if you can bear it, is glance at the contents of a shopping mall, an e-commerce Web site or a trade fair to realize that most of the new designs flooding onto the market are failures.

Of her 8 reasons why designs fail, 5 of the points had to do with one simple obsession: we want something new. Not that we need something better, or that the current design doesn't work; we just need something new.

Her number one reason is still my favorite, however: designing for other designers. Trying to show how clever you are -- or if you are a geek, how many neat features you can pile on -- seems to me to be the biggest reason why designs fail. By that I mean simply don't work for the average user (see earlier posting).

On the other hand, failure is good because it drives better innovation.

So, all you designers out there -- just keep failing. But remember to learn from your failures so you can finally come up with something I might both like and be able to use.

Wrong way education

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Over at the blog, Endless Innovation they caught an interesting point in a recent New York Times story: Can the Chinese educational system embrace creativity and innovation?:

What caught my attention was the fact that the American and Chinese educational systems appear to be going in the opposite directions. While Americans are really getting into rigorous testing and a renewed emphasis on science and math, the Chinese are learning to downplay testing and are emphasizing things like innovation:

This echoes what I have been saying for some time: why do people think that the US has some built in natural advantage in the creative I-Cubed Economy? Competitive advantage is created, not static. And our public policies need to help, not hinder that process.

Inexperienced is better?

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Last week's column by David Leonhardt was on broader issues of the recent Circuit City employee debacle -- One Safety Net Is Disappearing. What Will Follow?

But the corporate version of the welfare state is not just about retirement and health care. Another, much less obvious, piece of it is the steadily increasing pay that most workers receive over the course of their careers. All else equal, a typical worker in his early 60s makes about 50 percent more than a worker in his early 30s.

This arrangement produces some enormous benefits for society. It allows Americans to enjoy ever-rising living standards over their lives and helps them pay some big expenses, like their children’s college tuition and their parents’ elder care, that start to hit in middle age.

In strictly economic terms, however, paying people based on their age is a bit skewed. Sixty-year-olds are indeed more productive than 30-year-olds, studies have shown, but not 50 percent more productive. Experience isn’t quite as valuable as we might like to believe. In effect, most companies are underpaying their younger workers and overpaying their older ones.

This somewhat uncomfortable fact was a big part of the extraordinary layoff announcement from Circuit City Stores last week. On Wednesday, the company dismissed 3,400 people, or about 8 percent of its work force, not because they were doing a bad job and not because the company was eliminating their positions. Instead, executives said the workers were being paid too much and that the company would replace them with new employees who would earn less. It was the second such layoff at Circuit City in the last five years, and it offered an unusually clear window on the ruthlessness of corporate efficiency.

What he didn't point out were some questions about the economic logic and obvious problems with our public policy response. First, the logic. Accord to Leonhardt, studies show that 60 year olds are not 50% more productive than 30%. Meaning that experience isn't as valuable as we think. But, I have to ask what type of jobs we are looking at. In many old industrial era jobs, productivity doesn't really increase that much over time. Once you learn the few tricks of the trade, you are pretty much set. In other cases, the tricks of the trade take a long time to learn and skills are constantly refined. In yet other cases, experiences and judgment is continually increasing. The latter is more likely to be the case in information and knowledge rich activities that characterize the I-Cubed Economy. Conversely, it is often thought that creative genius declines with age. Mathematicians, for example, are said to do there best work in their 20's and 30's.

On the policy side, we need to examine our assumptions as to the pay off from experience. Our unemployment, training/re-training and labor market polices all have assumptions about age and experience. For example, the most obvious are the wage insurance proposals, which explicitly assume that a workers pay will go up as they gain more experience. If Circuit City is correct, no amount of wage insurance will help those laid off workers.

So, before we immediately jump to the economic and policy case, let's understand the specifics rather than over generalize. As we craft our new labor policies, we need to understand that this labor market may be very different from what we saw in the past. And we need to re-think our assumptions to keep up (much like all workers need to do to keep their experience current).

Fighting piracy -- or not

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By now, I'm sure everyone has heard about the anti-piracy cases that the USTR has filed against China. What is not so evident in most of the news stories is that not everyone with a stake in stronger IPR in China is applauding. According to the Wall Street Journal (U.S. Piracy Case May Raise Trade Tensions With China):

U.S. industry groups that aren't expected to support the WTO cases include the Business Software Alliance, whose members include Microsoft Corp. and Apple Inc., and the Pharmaceutical Research and Manufacturers of America, the drug industry's main trade group. Both sectors have made their own market-access and antipiracy advances and don't want to see that work disturbed, administration and industry officials said.

Interesting – since it is the deadlock between the IT guys and pharma that is holding up patent reform in the US.

I'm not sure whether I agree with these concerns. It may be a case of USTR sticking up for the exports (of books and movies which are produced in the US and pirated in China) at the expense of the investors (software and pharma who want better protections so that they can produce in China).

As the New York Times points out (U.S. Toughens Its Position on China Trade), this is the latest in a series of action on the pure trade (as opposed to investment) side:

That action came after two other unfair trade complaints earlier this year, one last month threatening stiff new duties on certain imports, and the other in February, challenging China over its subsidies of manufactured goods.

This is all interesting (and likely to the good). But, as everyone knows, the 800 pound gorilla in the room is currency. We are all waiting to see how that issue ends up.

Vonage update.

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In the latest in the ongoing saga of Vonage and VoIP patents, this morning the judge in the case imposed a partial ban (according to the Wall Street Journal - Judge Rules Vonage Can't Sign Up New Customers:

U.S. District Judge Claude Hilton imposed an immediate stay against Vonage, allowing the company to continue serving existing customers but effectively preventing it from adding new customers.

The partial ban had been somewhat expected. According to the Washington Post - Patent Ruling Impact:

In its filing, Verizon said there were no legal grounds for giving Vonage a reprieve from the judge's order that it be permanently prohibited from using the technologies. But Verizon acknowledged that the judge may be reluctant to order a total ban if he believes it could do "irreparable injury" to Vonage. In that case, Verizon said, Vonage should be allowed to continue providing existing services to its 2.2 million customers but not add new ones. If a partial stay is ordered, Verizon asked that Vonage post a bond of at least $251 million to cover what Verizon says will be its lost revenue while the case is appealed.

"That was a deft move by Verizon," said Rebecca Arbogast, a telecommunications analyst at Stifel Nicolaus. Vonage executives have said they would try to win a reprieve from the federal circuit court if Hilton does not give them one, but Arbogast said a partial stay could make it more difficult for Vonage to win a full stay from the appeals court.

The partial stay is an interesting twist. But, I'm not sure what it accomplishes if it results in Vonage not being able to grow to a point where it is financially viable.

This game is far from over.

Losing an intangible -- reputation

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I have often posted comments about how fleeting reputation can be. Well, let me share a personal example. Recently, I ordered some new home-office furniture from a major name-brand big-box retailer. It was delivered this morning by UPS. But I didn't know that -- despite the fact that two of us were in the house at the time and we had just had an earlier pick up this morning by a rug cleaning service. I opened the door at approximately 11 am to find the following in my front yard.


Nothing was missing, but I wonder what might have happened if I was not working from home today. Or if we had gone away for the Easter weekend (since the original delivery date I was given was next Monday).

Now, granted that the retailer did not require delivery signatures. And granted that these boxes are probably not the easiest for some one to walk off with. But opening up the door to find the front yard full of boxes is disconcerting and upsetting -- especially since there have been a number of complaints about stolen packages in the neighborhood. It is also an example of how UPS's reputation has taken a big hit -- at least in this consumer's eyes.

As I have said over and over -- the value of the brand and reputation is only as good as the value of the product or service behind it. The intangible world continues to rest firmly on the tangible.

Offshoring medical care, education and more ...

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Speaking of offshoring (see previous postings), think that two of those safe localized, non-tradable occupations are in health care and education? Think again.

We have heard of medical tourism before, but the Economist thinks rising health care costs in the US be a boon to the developing world -- Medical tourism: Sun, sand and scalpels:

All this presents a fantastic business opportunity for those Asian countries, principally Thailand, Singapore and India, which have excellent private hospitals that are used to treating foreigners and where costs are a fraction of those in rich countries. “Medical tourism” is booming as patients look abroad for cheap, fast treatment, often combined with a holiday afterwards.
. . .
To reassure foreign patients, many hospitals are seeking accreditation from the Joint Commission International (JCI), the international arm of the body that accredits American hospitals. Thailand's Bumrungrad and nine Singaporean hospitals already have JCI certificates. Raymond Chong, the boss of Bangkok Dusit's Samitivej Hospital, reckons it will be only a year or two before big American insurers and employers routinely offer patients lower premiums if they are prepared to travel to a foreign JCI-accredited hospital for surgery.

We've also heard about online tutoring for some time. But the technology is getting much better. Take, for example, TutorNet (Lending a mother’s touch to online tutoring around the world):

TutorNext uses an electronic classroom. A tutor overseas has a “white board,” where he or she writes down instructions for a student, as if using a chalkboard. Both teacher and student use headsets to communicate when going over problems.

The same technology could easily be used at the college level. And a number of universities are already putting course materials online.

Global wage competition hits professors and surgeons. What's next?

Well, how about this (from the New York Times - India’s Edge Goes Beyond Outsourcing:

increasingly the jobs of Western white-collar elites in fields as diverse as investment banking, aircraft engineering and pharmaceutical research have begun flowing to India and a few other developing countries.

New drug research models

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The blog Intellectual Property Watch has a good summary of a recent EU workshop on drug research - EU Hears Views On Policies For Addressing Neglected Diseases:

Among the speakers at the workshop were representatives of the pharmaceutical industry, WHO, nongovernmental organisations, and public-private partnerships (PPPs). A number of sources welcomed the opportunity to hear the concerns of the players and the issues at stake, although some were criticised for not tying their talks enough to the IGWG discussions. Most of the member states left the discussion to the speakers.
The debate centred on pros and cons for PPPs and alternatives such as a prize fund that could finance research and development instead of patents, as well as to what extent intellectual property should be part of the discussion.

I'm glad that alternative ideas are being looked at, but the summary sounded like the parties are still talking past each other. Frankly, I would like to see more action on these ideas rather than more debate. There are good signs about the expanding number of research prizes. But much more needs to be done.

From the IP wars - who owns the student's papers


Who owns copyright to your student papers? That is the question in a recent lawsuit, according to this story in the Washington Post - McLean Students Sue Anti-Cheating Service

The lawsuit, filed this week in U.S. District Court in Alexandria, seeks $900,000 in damages from the for-profit service known as Turnitin. The service seeks to root out cheaters by comparing student term papers and essays against a database of more than 22 million student papers as well as online sources and electronic archives of journals. In the process, the student papers are added to the database.
. . .
"All of these kids are essentially straight-A students, and they have no interest in plagiarizing," said Robert A. Vanderhye, a McLean attorney representing the students pro bono. "The problem with [Turnitin] is the archiving of the documents. They are violating a right these students have to be in control of their own property."
. . .
Andrew Beckerman-Rodau, co-director of the intellectual property law program at Suffolk University Law School, said that although the law regarding fair use is subject to interpretation, he thinks the students have a good case.
"Typically, if you quote something for education purposes, scholarship or news reports, that's considered fair use," Beckerman-Rodau said. "But it seems like Turnitin is a commercial use. They turn around and sell this service, and it's expensive. And the service only works because they get these papers."

While the story doesn't explicitly mention this, I would think that there is a third party here -- the school. Once the student turns in the paper, does copyright flow to the school or stay with the student? This there an implicit contract here? An interesting case in many respects.

Needed -- a new trade policy - part 4

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Yesterday, the Commerce Department ordered countervailing duties on certain paper from China. The reaction (see U.S. Puts Tariffs on Chinese Paper) reveals one of the major tensions in our current trade policy:

In Washington, some analysts suggested the tariff case reflects domestic politics, not the pursuit of genuine national interest. Grant Aldonas, a former Bush administration undersecretary of commerce for international trade, said U.S. companies doing business in China are chiefly interested in greater protection of copyrights and patents, combating rampant counterfeiting, and eliminating barriers to selling products.
"This is for consumption on Capitol Hill," Aldonas said. "I'm afraid the administration is being responsive to the wrong group."

Grant [whom I know and like] makes an important point about our trade policy with China: it is geared toward helping those who want to do business in China. It is not geared towards those who are on receiving end of Chinese imports -- the "wrong group" as he calls them. Thus, the traditional tension: domestic producers versus exporters.

My worry about this formulation is two fold. First, it is not an either-or (domestic or exporter). It is certainly clear that other countries have a dual policy of promoting exports while restraining imports. And if you are interested in unbiased rules (rather than national promotion), having consistent trading rules fairly applied should benefit both.

My second worry is about the nature of globalized economic production. We often fail to make the distinction between policies that promote exports and policies that promote overseas investment. Many of the policies initiatives with China are aimed at helping US companies locate their economic activities in China -- not about helping US goods and services (produced in the US) enter China. At one point in our history, it could be argued that the former (investment) was inextricably linked to the latter (exports). People still make that argument. Given the new unbundled production (see earlier posting), I'm not sure.

That is one of the reasons why I think we need to step back and re-think our trade policy along these lines: what should we be doing to insure fair importation (i.e. without government provided, market-distorting subsidies); what should we be doing to promote exports; what type of investment promotion is in our national interest; and how do the three tie together. After such an examination, we may end up in the same place as today. But I don't think so.

Needed -- a new trade policy - part 3

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Dani Rodrik has his own version of the Grand Bargain (from FT.com - The cheerleaders' threat to global trade):

It is time, then, to consider a new bargain. When rich and poor nations come together to negotiate the rules of the game they should stop thinking in terms of exchanging market access: "I will open my markets in x if you open yours in y." They should consider instead exchanging policy space: "I will allow you to protect your national social compact if you allow me to engage in development strategies that conflict with WTO and International Monetary Fund rules of good behaviour." The challenge is to design procedures that enable the use of policy space for socially desirable purposes while limiting it for beggar-thy-neighbour purposes.

I agree that trade negotiations have long since gone beyond a process of lowering this tariff in exchange for lowering that tariff (except maybe in agriculture). But I've not sure that negotiating loop-holes in the agreements is the right way to go. Here is what I said about trade negotiations back in 2001: After Doha: What the WTO is not Talking About

The World Trade Organization (WTO) will shortly convene its 4th Ministerial Conference in Doha, Qatar. The goal is to launch a new round of multilateral trade negotiations. It remains to be seen whether the Doha meeting succeeds. The betting is that the participants cannot afford a failure such as happened in Seattle two years ago.

Slightly less than a decade ago, I played a small part in the implementation of the Uruguay Round and the birth of the WTO. As a Senate trade policy staffer, I had fly-on-the-wall view of the pushing and shoving. At the time, I could not help but think that I was witnessing the last major trade round. I may be proven wrong. But, regardless of whether a new round is launched and successfully completed, it will be outdated before it begins. As we engage in the first war of the 21st century, we may be entering into the last trade negotiations of the 20th Century.

This is not to say that the negotiations are unimportant. There are numerous areas, ranging from agricultural subsidies to the dispute settlement process, that need to be addressed. These are, however, the loose ends of trade in the Industrial Age – not the emerging issues of the Information Era.

Trade negotiations have long since gone beyond tariffs and quotas. They have even gone beyond issues of trade-distorting practices such as subsides and non-tariff barriers. As trade and international commerce have expanding and evolved, negotiations are more and more focused on issues of harmonization of commercial rules and regulations. The WTO system is now in the position of resolving disputes between internal regulatory systems. Thus, we have seen the rise of a number of issues such as investment, competition policy, labor standards and environmental protection. All of these issues are on the table, more or less, at Doha.

Not on the table is a comprehensive look at policies toward information and other intangibles. We are moving to a knowledge economy. Knowledge is both an increasingly important input into the production process and an end-use commodity in and of itself. As the role of information increases in both our economic and social systems, issues of control of information will become increasingly central to our policy and political debates. Parts of the issue are included in the WTO agenda, such as: Trade-Related Aspects of Intellectual Property Rights (TRIPS); the work program on electronic commerce; trade and investment; and the proposal for a new discussion on technology transfer. Missing from the discussions is the recognition of the interconnection between these areas.

Government policy and activities with respect to knowledge and information covers a number of areas: intellectual property rights (IPR); privacy policies; regulation of content and freedom of speech; data protection and security; access to government information and freedom of information; “right-to-know” policies. The intellectual foundations for these policies come from a number of different traditions, which often conflict with one another. Cutting across all of these various information management regimes is the fundamental tension between proprietary rights and public rights – that is, between the aspects of knowledge, information and data as a private commodity and that of knowledge, information and data as a public good.

This tension is often most viable in the area of intellectual property rights where the competing needs of scientific and technological research for sufficient proprietary rights to create incentives for action and the need for information exchange as the building blocks for that action. For centuries, patent laws and the practices and customs of scientific inquiry have sought to strike a balance between these two competing goals.

The tension manifests itself in all area of information management. For example, who owns the data about my DNA? What information is my personal property that I may sell, disclose or withhold according to my choice? Likewise, what is the larger community’s rights? What information is of such importance to the community as a whole that its disclosure should be mandated (e.g. details of toxic waste sites), should be allowed to be sold (e.g. micro-weather data), or should be withheld/censored (e.g. child pornography)? The issue centers on what information is and should be private, what information is and should be proprietary and what information is and should be public.

In the U.S., we are beginning a discussion of these broader issues under the rubric of an “information commons.” Yet, these are issues that by their very nature are global. The WTO may or may not be the best venue for discussion. However, the decisions that get made during the next round on issues such as TRIPS and electronic commerce will affect the entire information commons approach. We should at least be cognizant of that outcome, as it will have a major impact on shaping the environment in which business will operate in the future.

    Note: the views expressed here are solely those of the author and do not necessarily represent those of Athena Alliance.

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