Category: Law

As suggested by earlier rulings, Posner has thrown out the entire Apple-Motorola case. As I argued in Launching the Innovation Renaissance our patent system has became a weapon wielded by large corporations against competitor innovations. Posner’s ruling is complex but one point is clear he thinks that the courts should not act as a second in these corporate battles:

…The danger that Apple’s goal in obtaining an injunction is harassment of its bitter rival, requiring particularly watchful supervision by the court should it issue the injunction, is suggested by the fact that while a delayed injunction would in principle render no benefit to Apple besides harming its competitor by forcing it to waste time and money finding a new way of performing the functions now performed in an allegedly infringing manner, an ongoing royalty would yield significant income to Apple—yet which it wants to forgo in favor of imposing costs and litigation burdens on its adversary.

The notion that these minor-seeming infringements have cost Apple market share and consumer goodwill is implausible, has virtually no support in the record, and so fails to indicate that the benefits to Apple from an injunction would exceed the costs to Motorola. An injunction that imposes greater costs on the defendant than it confers benefits on the plaintiff reduces net social welfare. That is the insight behind the “balance of hard-ships” component of the eBay standard for injunctive relief in patent cases.

Hat tip: @postlibertarian.

Adeel Malik has a very interesting essay responding to Timur Kuran’s excellent book The Long Divergence. There are many previous MR posts on Kuran’s thesis that Islamic law impeded the transition to impersonal exchange in the Middle East (see here and here).

I think The Long Divergence is one of the most important recent contributions to New Institutional Economics (incidentally I reviewed it for Public Choice). Malik takes on board Kuran’s main argument but then argues that it is not institutional enough because it does not tackle the argument that Islamic law was endogenous to the politics of the region.

‘Islamic law can be described, at best, as a proximate rather than a deep determinant of development, and that there is limited evidence to establish it as a causal claim. Finally, I propose that, rather than exclusively concentrating on legal impediments to development, a more promising avenue for research is to focus on the co-evolution of economic and political exchange, and to probe why the relationship between rulers and merchants differed so markedly between the Ottoman Empire and Europe.’

Last but not least, Glass-Steagall helped restrain the political power of banks. Under the old regime, commercial banks, investment banks and insurance companies had different agendas, so their lobbying efforts tended to offset one another. But after the restrictions ended, the interests of all the major players were aligned. This gave the industry disproportionate power in shaping the political agenda. This excessive power has damaged not only the economy but the financial sector itself. One way to combat this excessive power, if only partially, is to bring Glass-Steagall back.

There is much more at the link (“Why I was won over by Glass-Steagall”), interesting throughout.  An ungated version is here.

Our patent law is by and large judge created and thus it is judges rather than legislators who are responsible for most of the dysfunction in patent law. It was judges who expanded (or endorsed) patents to cover business methods, software and animals. It was judges who weakened the obviousness, enablement and possession requirements. Finally, it was judges who interpreted vague patents broadly, thereby midwifing fearsome patent trolls.

Fortunately, judges also have the power to reform patent law which is why Judge Posner’s recent suggestion that he may dismiss with prejudice the Apple v. Google/Motorola  suit over smartphone patents is potentially ground breaking.

We don’t yet have a full ruling but in early rulings Posner referred to claims made by Apple and Motorola as “silly” and “ridiculous.” Most importantly, Posner has said:

“injunctive relief would impose costs disproportionate to the harm to the patentee and the benefit of the alleged infringement to the alleged infringer and would be contrary to the public interest….”

which I read as saying that Posner is tired of the patent system being used by big business as a cudgel against competitive innovation.

Posner is a founder of the law and economics movement and one of the most influential judges in America. Indeed, as I have said before, Posner is the only person in the world who deserves a Nobel prize in economics and a seat on the Supreme Court so this ruling will be closely followed.

…Apple has been awarded a patent on wedge-shaped computers. Once again it is difficult to see why this sort of competition-stifling government-enforced monopoly would be beneficial to the overall cause of innovation. It’s absolutely true that the record should reflect the fact that Apple made wedge-shaped computers popular and the new wave of Ultrabooks are slightly lame imitators. But we progress as a society because of imitators! People come up with good ideas and then those ideas spread.

Copied from Matt Yglesias who I take it will not mind that I am helping to spread good ideas.

At S$86,889 ($67,000) just for a permit, the total price of a Volkswagen Passat in Singapore is about the same as the median U.S. metropolitan home. A 25 percent jump in residents in seven years, coupled with the world’s highest proportion of millionaire households, has fueled a 10-fold surge in license prices over three years. The government said last week it will postpone plans to cut the number of permits available and slow traffic growth, responding to the outcry over soaring prices.

…A new 2012 Passat sedan made by Volkswagen AG (VOW), the world’s second-largest carmaker, costs about $152,000 in Singapore, including the license, according to classified ads website SGCarMart.com. The median price of a U.S. metropolitan area home is $158,100, National Association of Realtors data show.

So-called open-category permit, which can be used to buy any type of vehicle, reached S$92,010 in April, the highest since the end of 1994 when a record of S$110,500 was reached. At the latest auction May 23, the licenses went for S$86,889, compared with S$8,501 three years ago. The permits give the right to own a car for 10 years. The next auction is tomorrow.

Besides having to bid for certificates at auctions that are held every two weeks, Singaporeans also pay registration fees and taxes that can amount to 150 percent of the market value of a vehicle, according to the Land Transport Authority website.

There is more here, and for the pointer I thank Ken Feinstein.