Opinion

Felix Salmon

Nastygram of the day, NYSE edition

Felix Salmon
May 27, 2011 19:48 UTC

RTR2JER9_Comp.jpg

This is a photo of the NYSE trading floor. It was taken on March 3 by Reuters photographer Lucas Jackson, and Reuters holds the copyright. The only permission I need to run this photo is that of Reuters. The NYSE, however, thinks otherwise:

NYSE has common law and Federal trademark rights in and to NYSE’s name and images of the Trading Floor… Moreover, NYSE owns Federal Trademark rights in one depiction of the Trading Floor and common law rights in the Trading Floor viewed from virtually any angle (collectively, “Trademarks”). Accordingly, NYSE has the right to prevent unauthorized use of its Trademarks and reference to NYSE by others.

That’s from one of the most ridiculous nastygrams I’ve seen in a long time, sent by NYSE chief counsel Kendra Goldenberg to Talking Points Memo. If Goldenberg really believes what she’s saying here, none of us is even allowed to mention the name NYSE if we’re not authorized to do so by the NYSE itself — let alone show a photograph of it.

The back story here is that TPM used a photo of the NYSE trading floor back in November, and then suddenly got the cease-and-desist note a couple of days ago, after everybody had forgotten about their story. At no point in the intervening months did the NYSE bother asking TPM nicely whether the photo was really relevant to the story or the right way to illustrate it. Instead, they just came out with a ridiculously tardy — and legally extremely dubious — c&d:

We demand that TMP remove all images of the Trademarks immediately. If we do not receive your response and written confirmation of the removal of all Trademarks within ten (10) days of your receipt of this letter, we will have no choice but to pursue further remedies.

This is an outright lie from the NYSE. TPM did the right thing, and stood its ground, refusing to take down the photo it had every right to use. That’s the end of the story: there’s no way that the NYSE will “pursue further remedies” at this point, they’ve made themselves enough of a laughingstock already. Rather than pursuing further remedies, then, Goldenberg and the NYSE are going to lick their wounds and slink quietly away.

The lessons here are clear: always publish any c&d you receive — it’s the best possible response. Don’t be intimidated by legalese; know your rights. And encourage other publishers to do the same thing: if big companies know that their nastygrams are likely to be ridiculed across the internet, they might be less likely to send them out.

I am a bit worried by the bit of Josh Marshall’s blog post where he says that “TPM is represented on Media and IP matters by extremely capable specialist outside counsel”. You shouldn’t need expensive lawyers to stand up to bullies — and in fact you don’t need expensive lawyers to stand up to bullies. In the vast majority of cases, a c&d is the only bullet these companies will ever fire: if it doesn’t do the job on its own, they won’t take things any further. Unless and until you get an actual lawsuit, there’s no need for lawyers.

Meanwhile, it’s worth wondering how many other publications have started receiving nastygrams from Kendra Goldenberg when they portray the NYSE in an unflattering light — and how many of them have simply folded rather than risk a legal battle with a multi-billion-dollar multinational corporation. That’s why c&ds should always be published, even if you comply with them.

If NYSE knows that even successful c&ds will always be accompanied by widespread ridicule, it might start respecting everybody else’s right to talk about them in any way they please. And it might instead start using the much more intelligent tactic of simply asking nicely if it thinks that it deserves some kind of change or edit.

Speaking personally, when I get a request for an edit or correction or update, I nearly always comply. Blogs are iterative; I make mistakes; I like to correct them. But the one time I don’t make corrections is when there’s been a legal letter sent straight to my superiors or to Reuters’s in-house counsel. At that point, things are immediately adversarial, and out of my hands. So if you want some changes, ask me nicely, directly. It’s much more effective than setting the likes of Kendra Goldenberg on my lawyers.

COMMENT

The medieval guild of type-setters probably sent similar letters to the NYTimes in the past. The new wrinkle is that I bet this was robo-signed.

Posted by FerdinandBull | Report as abusive

Broken market of the day: pharmaceuticals

Felix Salmon
Apr 3, 2011 18:53 UTC

Two highlights of the Kauffman Bloggers Forum were the presentations on the broken nature of the pharmaceuticals market. And they came from opposite ends of the left-right spectrum: Megan McArdle went first, followed by Dean Baker.

McArdle’s talk was narrowly focused on antibiotics. The problem here is resistance: even before antibiotics start being tested, resistance to them starts showing up. McArdle’s thesis is that this isn’t just a problem of drugs and biological science, but is a market problem too.

The size of the problem of multi-drug-resistant bacteria is immense: more than a million cases a year, many of which end in death. And the cause of the problem, McArdle says, is that “all of the incentives are bad”.

For one thing, the suppliers of antibiotics — doctors and farmers — have no incentive to reduce the quantity of antibiotics they hand out. At the margin, for the individual patient or cow, there’s no great harm in feeding them antibiotics even if they don’t need them. Some patients even explicitly ask for antibiotics “just in case” the infection turns out to be bacterial. But in aggregate, this behavior is exactly what’s causing the rise of multi-drug-resistant bacteria. The way McArdle puts it, “pharmaceutical profits in Europe are marginal, and they’re volume-driven. And in antibiotics, the last thing you want is volume-driven profits.”

Taxing antibiotics would reduce their over-use, at least at the margin — but would also reduce the incentive to develop new antibiotics which can be used where old ones are useless. Stockpiling new antibiotics might also be useful — but again that reduces incentives to develop new ones.

And the patent system is very much part of the problem as well. The way it works, the clock start running out on a new drug the minute it’s invented, even before it enters hugely expensive and time-consuming testing. So drug companies have every incentive to sell as much of a new antibiotic as possible as quickly as possible, while they still have a few years left with their patent in effect. After that, generic copies come on the market, and the price falls dramatically — which again is not necessarily a good thing, in the realm of antibiotics.

Baker’s talk picked up on the problem of pharmaceutical patents, and looked at it more generally. We spend about $300 billion a year on prescription drugs, up from essentially zero a few decades ago. That brings drugs out of reach of people who can’t afford them, and results in people cutting their dosages. It encourages companies to spend billions of dollars developing copycat drugs in order to chase patent rents. It discourages companies from doing R&D on diseases which aren’t tractable to cure by pills. And it means that an enormous amount of valuable of scientific research is kept secret.

Baker’s alternative to all the distortions created by the patent system is simple direct public funding for medical R&D and education: the costs of such a scheme would be lower than the amount we’re already paying on publicly-funded prescription drug benefits, so it would save money on a fiscal basis. All patents and research results would go into the public domain, which would generate huge global benefits.

Both presentations raised more questions than answers: for one thing, it’s politically impossible to enact a wholesale restructuring of pharmaceutical patent rules. These things are path-dependent, and we’ve gone far too far down this particular path to be able to make the enormous leap to something completely different. But even pharmaceutical companies will concede the current system isn’t working: McArdle’s slides came from a researcher for Pfizer, who is desperate to get the word out about how screwed up the current system of discovering, manufacturing, and distributing antibiotics is. Something, clearly, must be done. But I fear that in reality, nothing will be.

COMMENT

One small quibble – I think Dean Baker’s goal was to fund the research with the cumulative excess rents from all pharmaceuticals across the market, from both private and public payers.

Since the entire excess profit or “deadweight loss” could be recovered by eliminating patents, the bulk of those funds could be used to fund research.

So even if research costs were higher than the part of the loss that was paid for by public dollars, society would come out ahead overall.

Jim

Posted by magellannh | Report as abusive

The best report ever on media piracy

Felix Salmon
Mar 29, 2011 21:23 UTC

I’m way late to the massive and wonderful report on Media Piracy in Emerging Economies by Joe Karaganis and a big team of international researchers. I blame the fact that Karaganis sent me the report a week before it was formally released, on the sensible grounds that it might take a bit of time for me to digest its 440 pages of detailed new information on one of the defining issues of the information age. Of course, like any good procrastinator, I did no such thing. But I’ve read a good chunk of the report at this point, and I highly advise you do likewise — or else sit back with Karaganis’s presentation of its main points.

For starters, Mike Masnick is absolutely right that the report debunks the entire foundation of US foreign IP policy. That policy has essentially been written by the owners of US intellectual property, who jealously protect it and think that the best thing they can possibly do is be as aggressive as possible towards any sign of international IP piracy. As the report shows, this makes a tiny amount of profit-maximizing sense for the companies concerned. But it actually encourages, rather than reduces, piracy in the aggregate.

Think about the NYT paywall, for instance. It’s easy to imagine how the higher the price for which the NYT charges a subscription fee, the more money it gets — even as the total number of people finding ways around the paywall, rather than paying the full amount, would go up. (Here’s a hint: if you run into the paywall, just delete everything past the question mark in the URL, and hit Enter. It’ll think you’re coming straight to the story from outside the wall, and will show you what you’re looking for.)

Similarly, if companies charge only a very high price for their wares in the developing world, most people will become pirates and get that material for much less money. Meanwhile, the piracy notwithstanding, corporate revenues are still being maximized. As the report says,

we have seen little evidence—and indeed few claims—that enforcement efforts to date have had any impact whatsoever on the overall supply of pirated goods. Our work suggests, rather, that piracy has grown dramatically by most measures in the past decade, driven by the exogenous factors described above—high media prices, low local incomes, technological diffusion, and fast-changing consumer and cultural practices.

The big forces driving media piracy in developing countries are real and powerful and will not be changed, no matter how many western politicians get on their moral high horses and insist that countries like India and China build a “culture of intellectual property.” But the irony is that if governments and corporations really wanted to build such a culture, then they would encourage companies to set their prices low enough that the populations of those countries could actually afford to buy music, movies, and software at the full legal retail price. It turns out that domestic companies are quite good at distributing media at low prices, and can build profitable businesses by doing that. But foreign companies have different incentives in the short term, and don’t do that.

One part of the report which is very dear to my own heart is the section on the quality of industry research:

We see a serious and increasingly sophisticated industry research enterprise embedded in a lobbying effort with a historically very loose relationship to evidence. Criticizing RIAA, MPAA (Motion Picture Association of America), and BSA (Business Software Alliance) claims about piracy has become a cottage industry in the past few years, driven by the relative ease with which headline piracy numbers have been shown to be wrong or impossible to source. The BSA’s annual estimate of losses to software piracy— US$51 billion in 2009—dwarfs other industry estimates and has been an example of the commitment to big numbers in the face of obvious methodological problems regarding how losses are estimated. Widely circulating estimates of 750,000 US jobs lost and $200 billion in annual economic losses to piracy have proved similarly ungrounded…

The rationale offered for criminal-syndicate and terrorist involvement is that piracy is a highly profitable business. The RAND report, for example, states (without explanation) that “DVD piracy . . . has a higher profit margin than narcotics”—an implausible claim that has circulated in industry literature since at least 2004.

This study, in wonderful contrast, has enormous amounts of transparent quantitative data, collected over a period of about five years in an attempt to understand just how IP is consumed in emerging economies. (And no, there’s no evidence that organized crime is particularly involved.) To take one of dozens of insights more or less at random:

Our work highlights a more specific transformation in the organization of consumption: the decline of the collector and of the intentional, managed acquisition that traditionally defined his or her relationship to media… it is clearly a shrinking cultural role, defined by income effects and legacy cultural practices.

The collector, our work suggests, is giving ground at both the high end and low end of the income spectrum. Among privileged, technically literate consumers, the issue is one of manageable scale: the growing size of personal media libraries is disconnecting recorded media from traditional notions of the collection—and even from strong assumptions of intentionality in its acquisition. A 2009 survey of 1,800 young people in the United Kingdom found that the average digital library contained 8,000 songs, with 1,800 on the average iPod (Bahanovich and Collopy 2009). Most of these songs—up to two-thirds in another recent study—have never been listened to (Lamer 2006).

Such numbers describe music and, increasingly, video communities that share content by the tens or hundreds of gigabytes—sizes that diminish consumers’ abilities to organize or even grasp the full extent of their collections… On such scales, many of the classic functions of collecting become impersonal, no longer individually managed or manageable. A related effect is that personal ownership becomes harder to specify and measure: consumer surveys are poorly adapted to mapping terrain where respondent knowledge is unreliable… Increasingly, we live in an ocean of media that has no clear provenance or boundaries.

Or check out this wonderful one-paragraph overview of the history of the Bolivian music industry:

The limit case, in our studies, is Bolivia, where the impasse of high prices, low incomes, and ubiquitous piracy shuttered all but one local label in the early 2000s and drove the majors out altogether. The tiny Bolivian legal market, worth only $20 million at its peak, was destroyed. But Bolivian music culture was not. Below the depleted high-end commercial landscape, our work documents the emergence of a generation of new producers, artists, and commercial practices—much of it rooted in indigenous communities and distributed through informal markets. The resulting mix of pirated goods, promotional CDs, and low-priced recordings has created, for the first time in that country, a popular market for recorded music. For the vast majority of Bolivians, recorded music has never been so prolific or affordable.

I’m particularly partial to analysis which shows a strong correlation between the profitability of a movie and the degree to which it’s pirated. I’ve long had this theory with regard to counterfeit handbags: the existence of the fakes only serves to increase demand for the real thing. The connection is less intuitive with movies: if you’ve seen a high-quality pirated copy, you’re not going to want to pay full price for the licit version. But Hollywood revenues are very healthy indeed, and there’s no evidence at all that they’re being harmed by increased piracy.

The most depressing aspect of this report is the fact that it doesn’t seem to have caused anything like the splash that it deserves. It’s an astonishing work of cooperative international scholarship, and really ought to fundamentally change the debate about intellectual-property enforcement in arenas with names like WIPO and USTR. But I fear that it’s too sensible and empirical for that. If the Obama Administration isn’t welcoming this report with open arms, then I fear no one will.

COMMENT

@EconomistDuNord

“They took lots of time to develop, learn, improve, try, fail. Great music takes investment.”

Apparently you know nothing about stolen content from these bands,they abused a lot of “black” musicians creativity by cutting and remixing their work and now they go after kids who do the same with no purpose of profit…Copyrights exists only for hollywood evryone else has no rights to it,so yes its moral to do whatever they have done to others,and yes i refuse to pay $10.000.000 to X actor or band.If we live in democracy let the people decide.I have never downloaded media and never bought media.Radio and streaming is enough i think ;)

Posted by leavemealone | Report as abusive

Myhrvold heads to court

Felix Salmon
Dec 9, 2010 14:39 UTC

On September 17, 2008, while the rest of us were running around like headless chickens watching the world come to an end, the WSJ‘s Don Clark ran an important story about Nathan Myhrvold’s patent-troll shop Intellectual Ventures:

Unlike most other pure licensing companies, Intellectual Ventures hasn’t filed patent-infringement lawsuits to help force settlements. But the group lobbying on behalf of tech companies in Washington, the Coalition for Patent Fairness — which includes several companies that have been approached for licensing deals by Intellectual Ventures — says it is only a matter of time…

In an interview at his Bellevue, Wash., headquarters, Mr. Myhrvold acknowledged facing resistance from companies he targets for licenses. But his patent inventory gives him leverage to extract settlements without litigation. “I say, ‘I can’t afford to sue you on all of these, and you can’t afford to defend on all these,’” Mr. Myhrvold said.

Now, two years later, Clark drops the inevitable update: Myhrvold hired a chief litigation counsel in May, and has now started suing:

On Wednesday, Mr. Myhrvold’s firm, unable to secure payments from nine companies, announced three patent-infringement suits. One suit names the best-known players in security software—Symantec Corp., McAfee Inc., Trend Micro Inc. and Check Point Software Technologies Ltd.

Some links would have been nice here: Intellectual Ventures is good about posting links to all the patents and complaints, even if it does make you download various PDF files to find them.

The complaints (here’s the security-software one) include some startling facts about the sheer scope of Myhrvold’s operation:

To date, Intellectual Ventures has purchased more than 30,000 patents and patent applications and, in the process, has paid hundreds of millions of dollars to individual inventors for their inventions. Intellectual Ventures, in turn, has earned nearly $2 billion by licensing these patents.

This is all predictably depressing, and poses, as I said two years ago, the single biggest risk to America’s continued leadership in technology and innovation. Intellectual Ventures might do a bit of R, but it doesn’t do any D. Instead, it just sits there, extracting rents (that’s the polite way of saying “blackmailing”) technology companies who actually want to make things.

The long term repercussions of this will be a competitive advantage for companies based in places like China or Brazil which have much weaker intellectual property laws. It’s sad, because patents, as originally envisaged, were designed to encourage innovation, rather than to stifle it.

COMMENT

@spectre855, to be granted a patent, you don’t actually have to build your invention. You just have to explain your idea for the invention and how it could be implemented. Then you can modify the application for many years, adding changes that other people might have thought of, and lengthening the life of the patent. If you don’t actually build the invention you allegedly create, then it isn’t an invention. And shouldn’t be patented.

Also, many patents are granted for applications, not inventions. If the securities ratings firms get the business school graduates who can’t get high paying jobs with investment banks, and then go on to have no idea how to assess risk and give out AAA ratings to collections of sub-sub-prime loans, the patent office similarly hires engineers who can’t get jobs designing products, and cannot distinguish between invention and application, or even design choice. An example: Apple, I believe, was granted a patent for using a finger swipe to validate that you want to unlock your phone. A good idea, but not an invention, it is just a design choice, but once granted patent protection, can now be used as a weapon. And is, as Apple is suing Motorola for using it in its Android based phones.

A less-than-average engineer who becomes a patent examiner may not understand what is obvious to someone who is trained in a particular art, and patents are granted for features that aren’t innovative, but that any designer would have chosen in the same situation.

And then there is the issue of prior art. Even with google, it seems to be difficult for patent examiners to verify that prior art does not exist. But when it comes to software, it usually does exist, and the burden of proof falls on the patent infringement defendant. Which is expensive and scares off customers, investors, and partners. Granting patents for software is absurd, because the essence of software is that it is a set of instructions for a computer that is designed to be programmed. The first computer should be patented, but every application that uses it is not. If a screw was invented today, it would be patentable, but every use of it should not be, because it is supposed to have many uses.

@staff3, firms may own patents, but it doesn’t mean they created it, or bought it from someone who created it. It just means that they patented it. Not the same thing, and certainly does not increase competition or innovation, as patent abusers like to claim.

Posted by OnTheTimes | Report as abusive

Can you patent financial innovations?

Felix Salmon
Nov 19, 2010 16:49 UTC

Time’s Stephen Gandel says that Loan Value Group’s Responsible Homeowner Reward program is one of “the 50 best inventions of 2010″:

Under LVG’s patented Responsible Homeowner Reward (RHR) program, banks promise to pay borrowers who continue to pay on time a lump sum — typically 10% of their original loan amount — when they sell or refinance their home. Miss more than one payment and the reward disappears. It’s still early (fewer than 5,000 people have been enrolled), but LVG says fewer than 10% of the borrowers in RHR have ended up defaulting, compared with a redefault rate of more than 20% for other loan-modification programs.

I like the program too, and am hopeful it will have lots of success. But what’s with that “patented”?

It turns out that RHR is technically an invention of 2009, not 2010, if you look at its patent application. Loan Value Group hasn’t actually been awarded the patent yet—Gandel was a little bit ahead of himself there—but LVG’s Frank Pallotta told me that applying for a patent on the idea “was the first thing we did” after setting up the company, and that the patent application preceded substantially all of the time and effort that LVG put in to building RHR.

Pallotta is an expert in mortgages, not in intellectual property, but he did say that he hadn’t personally ever come across a finance company applying for a patent on its idea before.

What’s more, it’s generally accepted that financial innovations can’t be patented: it’s an argument that Sebastian Mallaby regularly rolls out, for example, to defend and explain the secrecy of hedge funds. If you can’t apply for a patent, then the only way to stop people copying you is to operate in utmost secrecy.

But I’m not a fan of this development. For one thing, it’s unnecessary. The barriers to entry in this business are high: Pallotta says LVG has spent millions of dollars over the past few years building and marketing the program, as well as running it by a lot banks, servicers, investors, and regulators. And what’s more, LVG would probably benefit, at the margin, if and when its idea was ratified by the entrance into the market of other people doing pretty much the same thing.

More generally, I don’t want to see a world where people wanting to do positive things in the housing market are stymied by worries over patent suits. There is a worry that sleazy operators will put themselves forward as doing homeowners a favor when in fact they’re doing no such thing, but patent law is not the best way to stop such people. LVG had a good idea in 2009. But that doesn’t mean it should be able to patent the idea, and implicitly threaten anybody else thinking about entering the space with an expensive lawsuit.

Update: Mike Masnick points out 1998′s State Street decision, which was the point at which financial innovations started being patented.

COMMENT

Certainly sounds like a business method patent that is uncomfortably close to an “abstract idea,” and attempts at patent enforcement would eventually fail. Then again, clever claim drafting in a patent application can sometimes make a sow’s ear into a silk purse.
http://smallbusiness.aol.com/2010/05/10/ how-to-file-a-patent/

Posted by Gena777 | Report as abusive

How the WSJ magazine fails its readers

Felix Salmon
Sep 13, 2010 00:30 UTC

Lucas Conley’s piece on Ugg for the WSJ’s magazine is a perfect example of why the WSJ shouldn’t have a glossy, fashion-friendly magazine.

Conley does a reasonably good job of covering the way in which Deckers Outdoor Corporation, the American company which owns the Ugg trademark, has become a highly-aggressive trademark troll, and in the process has helped to decimate a small but longstanding Australian industry. But having found that story, he buries it, and ends up capitulating to all the evil impulses of the fashion industry.

If you read closely, you’ll find Conley explaining how, despite the fact that “uggs have been a cottage industry in Australia for decades”, Deckers became extremely aggressive when it comes to those small local companies, slapping them with cease-and-desist orders and in general trying as hard as they could to use trademark law to shut down anybody who might be considered a competitor. It won in the US against Koolaburra, a US firm importing sheepskin boots and selling them under the name “ug”, although it lost in Australia against Uggs-n-Rugs, a 32-year-old sheepskin outfitter. But the big picture is clear:

While Deckers may have lost the Australian trademark battle, the company is winning the war. Today, Deckers owns “ugg” trademarks in over 100 countries, protecting them with high-tech anti-counterfeiting tools and a sophisticated network of lawyers, customs officials, corporate coalitions and private investigators. “Counterfeiting is one of the plagues of a popular brand,” says Leah Evert-Burks, Deckers’ inhouse counsel and director of brand protection. “There are some anti-counterfeiting measures I can’t even talk about. It’s amazing what you go through when you get involved in this world.”

By Deckers’ count, last year the company terminated over 20,000 eBay auctions, shut down over 2,500 websites, and accounted for some 60,000 pairs of counterfeit boots seized by customs officials. While Evert-Burks emphasizes that the vast majority were blatant criminal operations out of China (which often glue inexpensive cow suede to the exterior of the boot in place of twinfaced sheepskin), Stewart says he still receives complaints from Australian vendors who have been lumped in with counterfeiters.

Like a global mute button, the threat of legal action has stifled the Australian ugg industry’s efforts to market internationally. The McDougalls claim to have lost 90 percent of their international business since 2004. Their daughter gave up entirely after Deckers shut down her eBay business. “Almost anyone who sells anything with the word ug, ugg or ugh is infringing on their trademark,” Bronwyn says. “There’s no argument.”

At the same time, however, Conley, or his editors, go to great lengths to be as friendly as possible to Deckers. For instance, he doesn’t actually come out and say that uggs have been a cottage industry in Australia for decades: he feels the need to call them “generic uggs” instead, as though they were somehow copying the Deckers Uggs long before the Deckers Uggs even existed.

What’s more, throughout the article, the Deckers product is referred to in all caps, as an UGG. No self-respecting newspaper style guide would ever allow such a thing, but glossy fashion magazines never had any self-respect in the first place, and it’s clear which side of the line the WSJ magazine falls.

Worst of all, however, is the sidebar, which compares Deckers’ boot to the competition:

The UGG Australia Classic boots come in short (midcalf) and tall versions. Any variation on these heights are not genuine UGG boots.

A genuine UGG has the registered trademark symbol ® next to its logo on the label…

Some fakes use synthetic “fleece”.

My emphasis, but you get the point, which almost tips into self-parody here:

Deckers’ UGG boots are made in China, so if the label says “Made in Australia,” it is not an UGG.

The point is that there are lots of Ugg boots. The most popular Uggs are made by a US company in China. That company owns a bunch of trademarks, which somehow means that the WSJ can talk with a straight face about “genuine UGG boots”, while saying that all other Ugg boots are fakes. But the fact is that an Australian Ugg boot, made by a company which long predates the Ugg trademark, is by any sensible definition just as genuine, if not more so, than the boots that the WSJ is falling over itself teaching us to recognize and distinguish.

Yet somehow Conley feels impelled to inform us that if a boot is made in Australia — the home of the Ugg boot — then “it is not an UGG”.

To give an example of how ridiculous this all is, imagine that an American company — maybe even Deckers, you never know — decided to buy up a small knife-making company in Thiers, France. And say that after doing so, it started to register the name Laguiole, and the famous bee symbol, in jurisdictions around the world.

Deckers then decides to outsource production of Laguiole knives to China, while at the same time slapping anybody else trying to sell Laguiole knives with a cease-and-desist order. It starts impounding any Laguiole knives which are imported into the US, and shuts down any market in Laguiole knives on eBay or in other marketplaces.

Laguiole knives have been made by thousands of French craftsmen for over 150 years, but suddenly there would only be one “genuine Laguiole® knife”, and all the others would, overnight, be branded “counterfeits” or “fakes”; their sales would collapse, while Deckers would essentially hijack all of the brand value which has been painstakingly built up over the generations. And heaven forfend that anybody else try to make Laguiole knives in China — those would get seized at customs, and branded as “blatant criminal operations” by Deckers’ in-house counsel.

If that were to happen, one would hope that the WSJ would try to expose the evil trademark troll, instead of running gushing articles about how the company was serving up “stunning results in the midst of a global recession”. It certainly wouldn’t — one hopes — tell its readers how to make sure they were buying a genuine Laguiole® knife rather than an expensive French “fake”.

Conley mentions in passing, in his piece, that after Deckers lost the lawsuit in Australia, it failed to pay certain legal costs of the winning side, as required under Australian law. If he ever asked Deckers counsel about this, there’s no sign of it in the story. Instead, he concludes with a paean to a highly-successful company:

Although UGG is not the haute couture brand it was years ago—the darling of fashion spreads, the envy of A-list gift bags—its sales are bigger than ever. That “alpha consumer,” the mother picking up her kids at private school in the Range Rover? While she may no longer roll up in a pair of the latest UGG boots, her counterparts at the neighboring public school are pulling away in Explorers full of UGG-boot-wearing adolescents. UGG Australia has become a mainstream brand, always in stock—found in several stores in any mall—and begrudgingly approved of even by its critics for its comfort and utility. It’s an appropriate irony; the humble boot of the masses has come full circle—albeit with a trademark this time. And that’s fashion, according to Simonton. “Things come back,” he says, “but they’re never quite the same.”

Well, “irony” is one way of putting it: the humble boot of the masses is still a humble boot of the masses, but now it’s wrapped up in aggressively-enforced trademarks, ensuring that all the profits from that humble boot accrue to a single multi-billion-dollar multinational corporation. But yes, “that’s fashion”. And you can be sure that a glossy fashion-focused magazine is never going to cut against the grain of the fashion industry when it comes to issues surrounding trademark law and intellectual property.

Which is why it’s crazy that the WSJ tries to cover the fashion industry from within the covers of a glossy fashion-focused magazine. The conflicts are far too big — and, as this story shows, the winner in those conflicts is always going to be the big fashion multinational, rather than the magazine’s readers.

Update: It turns out there already is a Laguiole trademark troll! Thanks to vb2b, in the comments, for the link.

COMMENT

I just discovered this article and it contains a lot of inaccuracies. It also omits several important facts. Before the mid-1990s, when Deckers bought the rights to the “UGG” trademark (and the company Ugg Holdings) from an Australian, and tiny companies with similar names in places like Cornwall and New Zealand, a typical Australian ugg boot “factory” consisted of a shack at the edge of a sheep farm, with two or three people working there — all members of the sheep herdsman’s family. They made, at most a few hundred thousand dollars a year. Ugg boots were considered a lower-class, trashy type of footwear, worn by young suburban thugs called “bogans” who didn’t have any money. The American equivalent term would be “white trash.” In the UK you call them “chavs.”

Then Deckers embarked on a very clever and expensive marketing campaign, giving away thousands of pairs of boots not only to celebrities such as Pamela Anderson, Sarah Jessica Parker, Cameron Diaz and Oprah Winfrey, but also the entourage and fans for each celebrity. They carefully sought product placements in trendy films and TV series. The strategy paid off and Oprah named UGG brand boots one of her “Favorite Things” two consecutive years.

The UGG brand boot is now a high fashion item like Jimmy Choo shoes and Ralph Lauren sportswear. Instead of a few hundred thousand dollars in sales to a crowd of suburban Australian chavs, Deckers has just reached US$1 billion in annual sales worldwide. They have every right to protect the lucrative worldwide market that they have created, because they’re the ones who created it. The little Australian shacks on the edges of the sheep farms have every right to sell their wares in Australia but Deckers planted the seeds in the rest of the world, and now they’re reaping a bountiful harvest.

http://www.pjstar.com/business/x18959986 31/Ugg-kicking-it-in-the-U-S

Posted by JimDavis | Report as abusive

Bad idea of the day: copyrighting cocktails

Felix Salmon
Aug 31, 2010 17:32 UTC

I wonder whether Chantal Martineau stopped to think about her timing, as she wrote her piece for the Atlantic on a movement pushing for the ability to copyright cocktails. Intellectual-property protection isn’t getting great press this week, as Paul Allen has turned overnight into one of the world’s most gruesome patent trolls.

But ever since the seven-year-old sitting next to you in elementary school put his arm around his paper to stop you from copying his work, humans have felt very protective of their ideas, and very angry at anybody who they think might be copying them. As a result, mixologists are now joining fashion designers in looking for copyright protection for their inventions.

It’s all very silly, not least because the last thing the world needs is bartenders suing each other over copying cocktails. Even Susan Scafidi, the person mostly responsible for pushing the ability to copyright fashion design, realizes that copyright is a pretty narrow and limited protection, and that we shouldn’t try to apply it willy-nilly to anything remotely creative. Here’s what she told me back in 2007, telling critics to look at “legal and social realities”:

Furniture is protected by design patents (overall shape), copyright (surface designs), and trademark — not to mention utility patents (innovative useful elements). One lawyer who represents a number of furniture clients described the process of protecting their designs to me as “triage,” identifying what needs to be protected and sending it to the appropriate government office. Cuisine has a small amount of protection from copyright (recipe collections), and much more from the social norms against copying among creative chefs, particularly when it comes to signature dishes. Since my father is a serious amateur magician (and I confess to having performed a bit myself years ago), magic tricks are my favorite inapposite example. Not only is the literature copyrighted, but many effects are deliberately kept secret by magicians, and unlike fashion can’t be torn apart at the seams by interlopers …

Every industry is unique, and most copyright protection is one-size-fits-all.

Cocktails are clearly closer to recipes — in fact they are recipes — than they are to the kind of things which are normally copyrighted, like books. What’s more, they don’t scale. Fashion designers can sell the same design at many shops and to many different customers around the world, just as publishers can sell the same book through thousands of different outlets. But a bartender can only make cocktails one at a time, and there’s no way that I’m depriving a bartender in DC of any revenue if I order one of her cocktails from a bar in New York. As a result, anybody trying to prove damages is going to face an uphill task.

The fact is that the current cocktail renaissance is coming about because, rather than despite, the fact that cocktail recipes are easily shared and remixed, and because the rise of blogs is making doing so easier than ever, helping drive a surge in demand for well-made, well-mixed drinks.

Mixologists like Eben Freeman who want copyright protection seem to me a bit like the small neighborhood coffee shops who got scared when a Starbucks opened up across the street — only to find that demand for their own good coffee went up, rather than down, as a result. The more people copy your cocktail, the more demand there will be for your cocktail, and the happier everybody will be. Embrace it, don’t fight it.

COMMENT

How is this any different than when Moe stole The Flaming Homer?

Marge: So, Mr. Hutz, does my husband have a case?

Hutz: I’m sorry, Mrs. Simpson, but you can’t copyright a drink.

Homer: [whines] Oh!

Hutz: This all goes back to the Frank Wallbanger case of ’78. How about that! I looked something up! These books behind me don’t just make the office look good, they’re filled with useful legal tidbits just like that!

Posted by JeffChef | Report as abusive
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