This site is devoted to copyright and issues of 'intellectual property,' particularly the issue's analytical aspects. It also concerns itself with the gap between public perception and the true facts, and with the significant lag time between the coverage on more technical sites and the mainstream press. For site feed, see: To see the list of sites monitored to create this site, see:

Wednesday, March 27, 2013

Evidence on promotion

Cool paper. Press release below. Background is of course that the Constitution allows for copyright and patent law to, "Promote the useful arts and sciences," one of two directive clauses in the constitution. This stipulation didn't get much play in the early 2000's court cases, but it should IMHO. Do intellectual property rights on existing technologies hinder subsequent innovation? A recent study published in the Journal of Political Economy suggests that some types of intellectual property rights discourage subsequent scientific research. "The goal of intellectual property rights – such as the patent system – is to provide incentives for the development of new technologies. However, in recent years many have expressed concerns that patents may be impeding innovation if patents on existing technologies hinder subsequent innovation," said Heidi Williams, author of the study. "We currently have very little empirical evidence on whether this is a problem in practice." Williams investigated the sequencing of the human genome by the public Human Genome Project and the private firm Celera. Genes sequenced first by Celera were covered by a contract law-based form of intellectual property, whereas genes sequenced first by the Human Genome Project were placed in the public domain. Although Celera's intellectual property lasted a maximum of two years, it enabled Celera to sell its data for substantial fees and required firms to negotiate licensing agreements with Celera for any resulting commercial discoveries. By linking a number of different datasets that had not previously been used by researchers, Williams was able to measure when genes were sequenced, which genes were held by Celera's intellectual property, and what subsequent investments were made in scientific research and product development on each gene. Williams' conclusion points to a persistent 20-30 percent reduction in subsequent scientific research and product development for those genes held by Celera's intellectual property. "My take-away from this evidence is that – at least in some contexts – intellectual property can have substantial costs in terms of hindering subsequent innovation," said Williams. "The fact that these costs were – in this context – 'large enough to care about' motivates wanting to better understand whether alternative policy tools could be used to achieve a better outcome. It isn't clear that they can, although economists such as Michael Kremer have proposed some ideas on how they might. I think this is an exciting area for future work." Heidi L. Williams, "Intellectual Property Rights and Innovation: Evidence from the Human Genome." Journal of Political Economy 121:1 (publishing in February 2013 issue--due to release in April).

Thursday, March 07, 2013

Sales increased after Megaupload shutdown. Haven't read the paper, but here's the relevant paragraph from the abstract:
Simply examining changes in sales after the shutdown would produce an inaccurate measure of its actual effect as sales are changing over time for a variety of reasons. Instead we exploit cross- country variation in pre-shutdown usage of Megaupload as a measure of treatment intensity. Controlling for country-specific trends and the Christmas holiday, we find no statistical relationship between Megaupload penetration and changes in digital sales prior to the shutdown. However, we find a statistically significant positive relationship between a country’s Megaupload penetration and its sales change after the shutdown, such that for each additional 1% pre-shutdown Megaupload penetration, the post-shutdown sales unit change was 2.5% to 3.8% higher, suggesting that these increases are a causal effect of the shutdown.
Of course, there's still the effect of "competition" with pirated downloads which spurred movie studios to offer online services in the first place, but it's interesting to see a seemingly high-quality study that shows the effect go in this direction. Most of the others show piracy increasing sales.