Patents should be made more difficult to obtain, say by raising the obviousness standard or more speculatively by requiring patent terms to vary with investment. Aside from these types of changes, however, damages for infringement can also be made more reasonable. The issue is especially pronounced for design patents.

In the recent Apple v. Samsung case, the infringement of a handful of “look and feel” design patents resulted in Apple being awarded Samsung’s total profits on the infringing devices. A friend of the court brief from industry heavyweights, Dell, eBay, Facebook, Google, Hewlett-Packard, Limelight Networks, Newegg, and SAS Institute explains:

In this closely watched case, the panel upheld a jury’s award of the entirety of Samsung’s profits on smartphones that were found to have infringed three Apple design patents relating to a portion of the iPhone’s outer shell and one graphical-user-interface screen. Although the design patents covered only minor features of those complex electronic devices, the panel rejected Samsung’s argument that damages must be limited to the profits made from those infringing features. See slip op. 25-28. It instead concluded that the relevant statute, 35 U.S.C. § 289, “explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.” Id. at 26-27. Viewing the smartphone as a single “article of manufacture,” the panel held that the statute required it to award the total profit where the “innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.” Id. at 27-28.

A typical device might involve many design elements and what the total profit rule means is that a finding of infringement on any of these elements can get you all of the profits. The total profits rule is an invitation to rent seek. For a complex product, trawling the patent databases will almost always find some handful of patents that some court might rule were infringed. Defendants are put in the unenviable position of having to be right one hundred percent of the time while trawls need only be right once.

Do we really want to turn serifs into billion-dollar weapons of commercial war?

Hat tip: Mark Thorson.

Addendum: Keep in mind the general point: Patents are supposed to protect innovators but when weak claims of imitation are easily made and well-rewarded then patent law can harm innovators and reduce innovation, as the Tabarrok Curve illustrates.

I mean that question quite um…seriously.

Paul Krugman, who I believe originated the concept, recently defined it as follows: “…someone distinguished by his faith in received orthodoxy no matter the evidence.”  I would rather have something less normative and also more specific.

I think of it this way: the People are Very Serious if they realize that common sense morality must, to a considerable extent, rule politics.  At least if voters are watching.

So what is common sense morality in this context?  It embodies a number of propositions, including, for instance (with cultural variants across nations):

1. Political decisions should be based on what people and institutions deserve, based on their prior conduct and also on their contributions to the general good.

2. Economic nationalism.

3. Traditional morality, based on respect for authority, repayment of debts, savings, and hard work.

4. Inflation is bad, in part because it violates #1 and #3, and in the case of the eurozone it often violates #2 as well.

5. “I don’t care what you all say, the government should be able to find some way of arranging things so that I don’t have to suffer too badly from this.”

Now here’s the thing: common sense morality very often is wrong, or when it is right that is often with qualifications.

Therefore at the margin there is almost always a way to improve on what the Very Serious People are pushing for.  The Very Serious People realize this themselves, though not usually to the full extent, because they have been cognitively captured by their situations.  They see themselves as “a wee bit off due to political constraints,” instead of “a fair amount off due to political constraints.”  So there is usually some quite justified criticism of the Very Serious People.  Common sense morality is needed at some level, but still at the margin we wish to deviate from it.

That said, it is a big mistake to try to throw the Very Serious People under the bus.  The Very Serious People understand pretty well how to deal with a public which believes in some version of 1-5, and furthermore they often know that such public beliefs, whatever their limitations, are useful too.  Anyone else trying to manage the situation may come up with some favorable breakthroughs, but also may make a total hash of it, as was the case with Syriza.  Syriza failed to realize the import of 1-5 for both domestic and foreign politics,and so they drove the Greek economy to the point of total desperation.  There is a nested game going on, where the public has a big say on the heavily publicized issues, and the politicians must in some way heed that.

If you want to try the “replace the Very Serious People” game, and assume the subsequent risks, that is a judgment which can be made.  The mistake is to think that the partial wrongness of the Very Serious People is necessarily a reason to take matters out of their hands.

Addendum: Via Tim, here is the entry on Very Serious People on RationalWiki, it seems Atrios first put forward the concept.  And here are the remarks of Tsipras.

Yes, there is a great Singaporean novel

by on July 21, 2015 at 4:50 pm in Books | Permalink

Or is it a novella?  The Widower, by Mohamed Latiff Mohamed, was not recommended to me by anyone, but I found it during my recent browse in Singapore Kinokuniya.  It starts with the meditations of a man whose wife has passed away and who then delves into his obsessions.

Although the book was published in the 1990s, it was translated into English only this year; I hope Michael Orthofer at Literary Saloon is paying attention.  But alas it is not for sale on U.S. Amazon.

Here is a recent article about the hand-wringing of Singaporeans over their failure to win major literary prizes.  Not long ago, Mohamed moved to Australia, proclaiming “Singapore is still my home.”

Here is my earlier post on what are the Singaporean literary classics, there were a few good answers in the comments.

Tuesday assorted links

by on July 21, 2015 at 12:58 pm in Uncategorized | Permalink

1. The politics of Silicon Valley and the Democratic Party.

2. The end of rhino privacy.

3. Against the mobile web.  And Felix Salmon on related issues.

4. “There’s a joke: I’m not heterosexual, I’m not homosexual, I’m aerosexual.”

5. The worst poems of the last one hundred years?

6. Dani Rodrik’s new home page.

7. The French Scrabble champion does not speak French.

In Arkansas, the median hourly wage is $14.01. In Mississippi, it’s an astoundingly low $13.76. It’s likewise below $15 in six other states, and three U.S. territories.

That is from Catherine Rampell.  In such situations, a $15 an hour minimum wage is…shall we say…risky?

China fact of the day

by on July 21, 2015 at 9:48 am in Current Affairs, Economics | Permalink

bailout support now stands at 9.8 trillion RMB or $1.6t USD

That is from Christopher Balding, and that is [to correct a claim from an earlier version of this post] combining both the stocks bailout and the ongoing municipal bailouts.

The authors are Nobel Laureates George A. Akerlof and Robert J. Shiller and the subtitle is The Economics of Manipulation and Deception.  It’s a popular take on how markets trap you and your preferences in places you don’t want to be.  Self-recommending of course.

There are chapters on advertising, tobacco, alcohol, junk bonds, credit cards, pharmaceuticals (some), and yes government.  My main complaint about the book is that its chooses easy targets and doesn’t puncture enough sacred cows.  For instance the chapter on government criticizes spending money on lobbying, whereas I would have preferred an attempt to show that an apparently beneficial and popular institution is in fact bad and appealing to the weaker elements in our preferences.  I wonder to what extent what the authors call “The Resistance and its Heroes” is in fact another example of…phishing for phools.  In other words, I wish this book were more Hansonian.

By the way, I have never eaten too much ice cream.

There are plans to legally restrict the export of some paintings from Germany, and so far the proposed policy is not working out well.  Collectors are rushing to take their loans off museum walls and get them out of the country, or hold them incognito.

The law would apply to works of historical importance more than fifty years old, worth more than 150,000 euros, and judged by regional boards to be of historic importance.  It is interesting which works may fall under this designation:

In one interview, she [Germany’s culture minister] raised the prospect that foreign works could be classified as national treasures. For example, she said the Warhol silk-screens of Elvis Presley and Marlon Brando that were sold by the state-owned casino were “emblematic” of the collecting history of the Rhineland.

Apparently Gerhardt Richter is a hard-core libertarian, like most other painters, because he asserted: “No one has the right to tell me what I do with my images.”

For the pointer I thank Cyril Morong, a loyal MR reader.

That is the new — well sort of new — Thomas Piketty book.  It was first published in France in 1997 and then updated several times through 2014, though we are told most of the book has kept its original structure.  It is a good, short read and will appeal to anyone with an interest in Piketty and “that sort of thing.”  The full-blown g > r model is not here, but you can see Piketty edging into being Piketty, with plenty of talk about capital-labor substitutability.

Mr Rouhani’s cabinet boasts more American doctorates than Mr Obama’s.

There are some more general remarks on Iran here.

Monday assorted links

by on July 20, 2015 at 12:55 pm in Uncategorized | Permalink

1. Different kinds of states have different kinds of foul language, foul language at the link.

2. Brad DeLong on Trekonomics, and more here.

3. The evolution of Adam Sandler.

4. Is self-control bad for people with low status?  And Uber is better for the poor.

5. China plans new SuperCity of 130 million people, about the size of Kansas.

6. Why are invisible birds shrieking near the World Bank?

7. Interfluidity on price stickiness and coordination failures.  And Bryan Caplan on worker resentment.

Obstfeld is the former chair of the department of economics at the University of California, Berkeley. He is currently a member of President Obama’s Council of Economic Advisers.

Like Blanchard, Obstfeld’s background is largely as an academic economist.

He is the co-author of two textbooks on international economics—Foundations of International Macroeconomics with former IMF chief economist Kenneth Rogoff, and International Economics with Paul Krugman and Marc Melitz.

Here is the FT coverage, here is the IMF announcement, and here is Obstfeld’s home page.  He wrote this on the eurozone.  Overall I would say this reflects the continuing preeminence of MIT-style macroeconomics in the current policy community, his MIT Ph.d. is from 1979 and his work has been very much in that vein.

The Happy Meal Fallacy

by on July 20, 2015 at 7:25 am in Economics, Food and Drink, Law | Permalink

Some restaurants offer burgers without fries and a drink. These restaurants cater to low-income people who enjoy fries and drinks but can’t always afford them. To rectify this sad situation a presidential candidate proposes The Happy Meal Act. Under the Act, burgers must be sold with fries and a drink. “Burgers by themselves are not a complete, nutritious meal,” the politician argues, concluding with the uplifting campaign slogan, “Everyone deserves a Happy Meal!”

happy-mealBut will the Happy Meal Act make people happy? If burgers must come with fries and a drink, restaurants will increase the price of a “burger.” Even though everyone likes fries and a drink they may not like the added benefits by as much as the increase in the price of the meal. Indeed, this must the case since consumers could have bought the meal before the Act but chose not to. Requiring firms to sell benefits that customers value less than their cost makes both firms and customers worse off.

The Happy Meal Fallacy is fairly obvious when it comes to happy meals but now let’s consider the debate over the gig economy and the hiring of employees versus contractors. Employees are entitled to benefits that contractors are not. Thus the standard conclusion is that classifying workers as contractors “is great for employers but potentially terrible for workers.” Wrong. Employees get their wages with fries and a drink while contractors get wages only. Would a law requiring firms to provide all workers with fries and a drink help workers?

If firms are required to provide benefits to contractors they will lower the contractor wage. But how do we know the extra benefits aren’t worth the reduction in wages? If the extra benefits were worth more to workers than they cost firms, firms would have eagerly provided these benefits as a way of increasing profits. Firms can profit whenever buyers are willing to pay more for a product than its cost. Benefits are a product that workers buy from firms.

Workers buy benefits from firms by offering to work at a lower wage. Firms are happy to sell benefits when workers will accept a wage reduction that covers the cost of the benefit. Thus, if workers value a benefit by more than its cost, there is a mutually profitable deal to be made. The firm will provide the benefit and wages will fall by more than the cost but by less than the value of the benefit. Both firms and workers will be better off. It’s implausible that firms and workers will overlook mutually profitable exchanges. Thus requiring firms to provide benefits with every job means requiring firms to sell benefits that workers value less than their cost and that makes both firms and workers worse off–just like requiring restaurants to sell burgers with fries and a drink makes firms and customers worse off.

If the cost of the benefits far exceed their value to workers, the firm will close. But even if the firm doesn’t close, firms and workers will both be worse off. The exact division of the burden will vary depending on particulars but the workers who value wages the highest and benefits the least will be the most burdened. Often these will be the lowest income workers.

The Happy Meal Fallacy can lead to very unhappy firms and workers.

Addendum: The theory of compensating differences in wages with benefits was pioneered by Adam Smith. See Matt Kahn for a short overview and Sherwin Rosen for a full treatment of the theory. Jonathan Gruber and Craig Olson offer empirical evidence. The MRU video, The Tradeoff Between Fun and Wages presents another application.

All-robot Japanese hotel

by on July 20, 2015 at 12:37 am in Economics, Science, Travel, Web/Tech | Permalink


There is no great stagnation:

The English-speaking receptionist is a vicious-looking dinosaur, and the one speaking Japanese is a female humanoid with blinking lashes.

“If you want to check in, push one,” the dinosaur says.

The visitor punches a button on the desk, and types in information on a touch panel screen.

And so starts your stay.  All or most of the other functions are automated in some manner or another.  This bit is clever:

Another feature of the hotel is the use of facial-recognition technology, instead of the standard electronic keys, by registering the digital image of the guest’s face during check-in.

The reason? Robots are not good at finding keys, if people happen to lose them.

The establishment is called Weird Hotel.  Snacks are delivered by drones, but the robots still cannot make the beds.

You will find additional details here, good photos here, and a room goes for only $73 a night.

For the pointer I thank the excellent Mark Thorson.

Sunday assorted links

by on July 19, 2015 at 3:23 pm in Uncategorized | Permalink

1. Cass Sunstein on Gone With the Wind.

2. These people need the Pigou Club.  Or maybe this is the Pigou Club?  But no, it is the “Sea of Death tourist resort.”  Are you sure it’s not the Pigou Club?

3. Medical bill for a rattlesnake bite.

4. Is it possible to privatize marriage?

5. “She Loves You, yeah, yeah, yeah.

6. The most common and distinctive ingredients by cuisine.  For which cuisine is egg the most common element?  And profile of Daniel Kahneman.

7. The hitchhiking robot.