On the Economics of IP Rights

Trento, Economics Faculty, 19th December 2008: "How much should society fuel the greed of innovators? A critical assessment of the economics of intellectual property rights", Luigi Marengo, Laboratory of Economics and Management Sant'Anna School of Advanced Studies, Pisa.

John Vickers' Economics on Competition Policy and Financial Crisis

See the presentation held on December, 9. 

Competition Policy in "Interesting Times"

A pragmatic speech by Peter  Freeman, Chairman of the UK Competition Commission.

Neelie Kroes on Collective Redress

The European Commissioner for Competition Policy presents her view on the (possibly) not so clear relationship between the  Green Paper on Consumer Collective Redress and the  White Paper on Damages Actions for Breach of the EC Antitrust Rules.

Merger Policy Amid Financial Crises/2

A Merger Action Group (MAG) has been created to challenge the Lloyds/HBOS merger (see previous post). The case brought by this interest group was however rejected by the Competition Appeal Tribunal. 

US Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies

Comments received by the US Copyright Office.

Competition Policy in a Global Perspective

 "A View from the Italian Competition Authority”, Dr. Alessandra Tonazzi, Italian Competition Authority (AGCM), Faculty of Economics, Trento, December, 12. 

Multilateral Register for Geographical Indications on Wines and Spirits?

Issue currently debated at the World Trade Organization. 

See the compromise document put forth by, inter alia, the EU. 

Merger Policy Amid Financial Crises

Lloyds/HBOS Merger cleared by the UK Secretary of State for Business, Enterprise and Regulatory Reform in spite of the competition concerns expressed by the Office of Fair Trading.

Interdiction de vente sur Internet des produits cosmétiques et d’hygiène corporelle sanctionnée

Selon le Conseil de la Concurrence, Décision n° 08-D-25 du 29 octobre 2008, "bien que la pratique d’interdiction de vente par Internet ne soit pas expressément visée dans le règlement communautaire, elle équivaut... à une interdiction de ventes actives et passives. En conséquence, pratiquée au sein d’un réseau de distribution sélective, elle constitue, en vertu du c) de l’article 4 du règlement une restriction caractérisée", et ne peut pas bénéficier d’une exemption individuelle sur le fondement du paragraphe 3 de l’article 81 du traité.

"New" Eligibility Criteria for Software Patents in the U.S.?

According to the United States Court of Appeals for the Federal Circuit, Bernard L.Bilski and Rand A.Warsaw, the language of Sec. 101 precludes protection of innovation which is not "transformational" or "properly linked to a machine". In the meanwhile, back in Europe, the President of the European Patent Office, Alison Brimelow, refers to the Enlarged Court of Appeal a socalled point of law comprising four questions  concerning the limits of patentability in the field of computing. 

U.S. Digital Millennium Copyright Act turning ten

A Report by the Electronic Frontier Foundation about its "Unintended Consequences"

Deutscher Bundesrat: Kann ein starker Schutz geistigen Eigentums gleichzeitig bildungs- und wissenschaftsfreundlich sein?

Nachdem der deutsche Bundesrat sich bekanntlich  für die Schaffung eines bildungs- und wissenschaftsfreundlichen Urheberrechts eingesetzt hat, fordert er nun einen verstärkten Schutz geistigen Eigentums. 

Insbesondere hält der Bundesrat für notwendig, anhand von bilateralen Freihandelsabkommen der EU, "Mindeststandards zum Schutz des geistigen Eigentums zu verankern" und "Lücken von TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) bei der Umsetzung in nationale Rechtsordnungen zu schließen". Unter anderen müsste "eine stärkere Bewusstseinsbildung für die Werte des geistigen Eigentums geschaffen werden"

Remote Storage Video Recorder System and US Copyright Law

The US Court of Appeals for the Second Circuit has reversed a district court’s award of summary judgment to Cablevision, stating the the "Remote Storage” Digital Video Recorder system ("RS-DVR") proposed by the latter violated the Copyright Act by infringing plaintiffs’ exclusive rights of reproduction and public performance. In the case at issue, the RS-DVR system allows television users to record cable programming on central hard drives housed and maintained by Cablevision, an operator of cable television systems. RS-DVR customers may then receive playback of those programs through their home television sets, using only a remote control and a standard cable box equipped with the RS-DVR software. The customer can record programming by selecting a program in advance from an on screen guide, or by pressing the record button while viewing a given program. Once the program has begun, the customer cannot record earlier portions of it. If multiple people decided to record the same program, a separate copy would be made for each of them. Differently from stand-alone DVR set-top boxes, such as TiVo, recorded cable programming is then stored at a "remote" location, i.e. Cablevision's own servers. According to the Second Circuit, the operation of the RS-DVR system by Cablevision does not amount to direct copyright infringement.
The appeals court has considered a bundle of interesting questions, that we will briefly examine in turn.

First of all, the storage system at issue involves the the buffering of data, and the relevant question is whether this process could amount to an infringement of the reproduction right of the content providers (broadcast and cable channels) . In practical terms, the single stream of data gathered from the content providers is split into two: whereas the first is routed immediately to customers, the second "flows into a device called the Broadband Media Router (“BMR”) which buffers the
data stream, reformats it, and sends it to the “Arroyo Server,”, id at 7. This latter consists mainly of two data buffers and a number of high-capacity hard disks. After having moved the stream of data to the first buffer (the "primary ingest buffer"), the server automatically inquires as to whether any customers want to record any of that programming. Only in case the customer requests a particular program, "the data for that program move from the primary buffer into a secondary buffer, and then onto a portion of one of the hard disks allocated to that customer". In this respect, content is taken from the stream of programming and stored into the BMR and the first buffer independently from actual customer requests.
In order to constitute a copy as defined in US copyright law, the Second Circuit asserts that two conditions should be met: 1) the work should be embodied in a medium, in the sense that it could then be perceived, reproduced, etc., from that medium (briefly, copied from that medium); 2) the work must must remain thus embodied “for a period of more than transitory duration”.
Therefore, the storage of content per se results in “copying” only if it is not transitory. The appeals court thus runs counter the Copyright Office’s 2001 DMCA Report, according to which a word is “fixed” in a given medium if the work is capable of
being copied from that medium for any amount of time, i.e. also transitory. Works in the case at issue are “embodied” both in the BMR buffer and the primary ingest buffer (i.e. they can be copied, respectively, from the BRM buffer to other components of the RS-DVR system and from the primary ingest buffer onto the Arroyo hard disks), but are not “fixed” because
- “no bit of data remains in any buffer for more than a fleeting 1.2 seconds” and
- “each bit of data here is rapidly and automatically overwritten as soon as it is processed”.
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Secondly, as regards the playback copy made on the hard disks of Cablevision’s Arroyo Server pursuant to a customer request, the question arises whether it is Cablevision who made that copy, and in that case there would be a direct infringement of copyright. According to the appeals court the decisive element should be the “volitional conduct that causes the copy to be made”. Since copies are made automatically upon the customer’s command, a RS-DVR user is similarly situated to a VCR user or to a customer using a photocopier. Cablevision would resemble a “a store proprietor who charges customers to use a photocopier on his premises, and it seems incorrect to say, without more, that such a proprietor “makes” any copies when his machines are actually operated by his customers”. Besides, Cablevision’s control over the content recorded by these customers is limited to the channels of programming available to a customer and not to the programs themselves (as it would be the case in the VOD context).

The final issue attains to the legal nature of the RS-DVR playback to a particular customer, in particular whether it should be considered as the transmission of a performance to the public and therefore an infringement of the content providers’ exclusive public performance rights. According to the Second Circuit, because the RS-DVR system only makes transmissions to one customer using a copy made by that customer, the “universe of people” capable of receiving a RS-DVR transmission is limited to that single customer. As the Court states,“the use of a unique copy may limit the potential audience of a transmission and is therefore relevant to whether that transmission is made to the public”, id. at 41.

See R.Kazemi,Online-TV-Recorder - nun auch in den USA vor dem Aus?,MMR 2007,5, VIII for some German court decisions on the remote recording of TV-programs and the recent WIZZGO decision by the Parisian Tribunal de Grande Instance.

Conference on "Scientific Publications, Copyright and Open Access"

The point of view of researchers, publishers and libraries, Trento, Law Faculty, June, 20 (streaming, as well as post-event video for download).

Open Access for Fashion Design

Interesting use of Creative Commons Licences...The Berlin-based fashion label Pamoyo releases the designs for its clothes under a CC BY-NC-SA licence. Everybody is allowed to build upon Pamoyo's creations, provided that the new fashion design is released publicly under the same CC terms.

EU Report on Motor Vehicle Block Exemption Regulation: No Diversity in Distribution Formats

In its Evaluation Report on the operation of Regulation 1400/2002 concerning motor vehicle distribution and servicing, the European Commission comes to the conclusion that, as far as the goal of increasing competition between dealers by promoting diversity in distribution formats is concerned, this was far from achieved ( pp.5-6) - perhaps not unexpectedly, see a short comment I had written some time ago.

OLG Düsseldorf: Schadenersatzklage gegen Zementhersteller zugelassen

Das Oberlandesgericht Düsseldorf hat am 14.05.2008 entschieden, dass die Schadenersatzklage einer Aktiengesellschaft belgischen Rechts (Cartel Damage Claims - CDC) wegen Kartellrechtsverstößen zulässig ist. Die Klägerin hatte sich sich von 36 zementbeziehenden Unternehmen Schadensersatzansprüche abtreten lassen. Nach Meinung des Gerichts habe die Klägerin die Berechnungsgrundlagen dargelegt und den Mindestschaden ausreichend beziffert. Hinzu kommt, dass das OLG für eine Revision vor dem Bundesgerichtshof keinen Anlass sieht. Daher wird nun das Landgericht über die Begründetheit der Klage entscheiden können.
Nach den Ermittlungen des Bundeskartellamtes hatten jegliche Zementhersteller in den Jahren 1993 bis 2002 Preise, Betriebswege und Absatzquoten abgesprochen und Zementimporten verhindert.

Carlo Piana on Competition, Interoperability and Free Software (Open Source)

Carlo Piana is legal counsel for the Free Software Foundation Europe. On June, 9 he will be in Trento, at the Economics Faculty, to talk about the aftermath of the Microsoft Court of First Instance's decision, and in particular about its relevance for the open source movement (Presentation, in Italian)

Trento Economics Festival 2008

The central topic will be "Market and Democracy". Among other speakers, Mario Monti and Oliver Hart. Streaming (web TV) here.

Lawrence Lessig's proposal on "orphan works"

Counter to a bill currently before the US Congress, foreseeing an excuse for copyright infringers from significant damages if they can prove that they made a "diligent effort" to find the copyright owner, Lawrence Lessig suggests in an article published in the New York Times that:
- the copyright owner, after a 14-year period, should be required to register a work with an approved, privately managed and competitive registry and pay $1
- this rule should not apply to foreign works, or to work created between 1978 and today
- photographs and other difficult-to-register works should be subject to this rule depending on the technology available, both to develop simple registration databases and to make research handy and reliable.

Conseil de la concurrence: exclusivité France Télécom-groupe France Télévisions pour la "télévision de rattrapage" licite

Au sujet des critères qui guident l’appréciation des effets des clauses d’exclusivité, le Conseil dans sa décision a considérés comme décisifs le "champ et de la durée de l’exclusivité ainsi que des justifications techniques ou des contreparties économiques de l’accord".
Même si l'exclusivité porte sur les programmes du type "premium", les opérateurs ADSL concurrents pourraient, selon le Conseil, "proposer à leurs clients d’autres services interactifs que ceux qui font l’objet du partenariat" ou "développer des partenariats avec les autres diffuseurs pour une diffusion en rattrapage de leurs programmes". Quant à la durée, de deux ans à compter du lancement du service, soit au plus tard à compter du 1er juillet 2008, elle n'est pas jugée "excessive".
En plus, le partenariat exclusif réponderait "à une logique économique pour toutes les parties concernées". Les produteurs seraient satisfaits parce que "France Télévisions est le premier opérateur qui les rémunère pour une diffusion en non linéaire". Les partenaires bénéficent "du financement des investissements représentés par l’acquisition des droits, des coûts techniques et des coûts de promotion"; grâce à l'exclusivité, ils sont aussi à mesure "de trouver des sources de financement nouvelles et de développer un service innovant" et de pallier l’incertitude sur la profitabilité des investissements. Pour les consommateurs aussi il y aurait des effets positifs, en particulier dans la mesure où l'exclusivité permet "dans un premier temps l’émergence d’un service innovant que les partenaires sont les premiers à proposer".

Appeal against Skype GPL Munich court decision withdrawn

A district court in Munich (Landgericht München I) ruled in July 2007 that Skype had violated the GNU General Public Licence 2.0 because it had sold a SMC Networks Linux-based VoIP telephone (WSKP100) without providing both the copy of the license and the source code of the software. In particular, together with the product, there was only a leaflet pointing to an URL where the text of the license and "information on obtaining access to the GPL Code" could have been obtained, whereas according to art. 1 GPL v. 2.0, the licensee is required to "give any other recipients of the Program a copy of this License along with the Program". Moreover, art.3, par.1 together with par.3, requires the licensee to accompany the program/product either with the "complete corresponding machine-readable source code" or to offer access to copy the source code from a designated place, provided in the latter case that distribution of executable or object code is made by offering access to copy from the same place. Therefore, only if the binary had been made available in Internet for download, which was not the case, the offer to download the source code would have been in compliance with the GPL terms.
One of the appeal judges is cited to have said, as reported by Harald Welte's blog "if a publisher wants to publish a book of an author that wants his book only to be published in a green envelope, then that might seem odd to you, but still you will have to do it as long as you want to publish the book and have no other agreement in place". Skype's legal counsel thought it wise to withdraw the appeal.
Comment on the district court decision: Jörg Wimmers and Detlef Klett, Computer und Recht 2008, p. 59.

Event Studies and Competition Policy

Are the results provided by stock market event studies potentially delivering useful evidence to competition authorities? Probably not, according to a Paper published on the UK Competition Commission website.

ICN: Recommended Practices on the Assessment of Dominance and Substantial Market Power adopted

This happened at the International Competition Network 2008 Conference, Kyoto. The Reccomended Practices have now been published on the ICN website.

FTC supports broader jurisdiction over non-profit

Testifying before Senate Committee on Commerce, Science, and Transportation on proposed ‘Federal Trade Commission Reauthorization Act of 2008, the Commission supported repealing FTC Act's exemption for certain non-profit entities, such as in health-care, see the Prepared Statement.

Comisión Nacional de la Competencia launches investigation on football television rights

In particular, the Spanish competition authority intends to investigate if agreements between media operators and football clubs have exclusionary effects. See CNC press release

UK Competition Commission: market investigation on the supply of groceries

A highly informative, 269-page Study.
Features that (still) prevent, restrict or distort competition:
- barriers to entry leading to highly concentrated local markets;
- buyer power, when "grocery retailers transfer excessive risks or unexpected costs to their suppliers".

New Antitrust Law in China

The new Antimonopoly Law (AML) will go into effect in August 2008. See a first comment by NERA consultants Fei Deng and Gregory Leonard. Cfr. also Lorenz, Moritz, The new Chinese Competition Act, In: European competition law review ; 29(2008), 257-263

Bundeskartellamt: Abwägungsklausel in der Fusionskontrolle angewendet

Laut einer Pressemitteilung der deutschen Wettbewerbsbehörde überwiegen bei der Übernahme von sieben Tochtergesellschaften der Orion Cable durch KDG die Vorteile für den Wettbewerb die Nachteile. Im Übrigen konnten die Zusammenschlussbeteiligten nachweisen, dass aufgrund des Zusammenschlusses Verbesserungen der Wettbewerbsbedingungen auf den Märkten für Breitbandanschlüsse (DSL) und für schmalbandige Anschlüsse eintreten werden.

Issues for Academic Authors, Institutional Repositories, Open Access Journals and End-Users

Paper by Brian Fitzgerald and Anthony Austin, presented at the Open Repositories Conference 2008. Commercial publishers to co-exist with open access publishing.

BITKOM Leitfaden zur Patentierung computerimplementierter Erfindungen

Der Bundesverband Informationswirtschaft, Telekommunikation und neue Medien (Bitkom) hat einen 40 Seiten umfassenden Leitfaden erstellt, der IT-Erfindern bei Patenanträgen helfen soll.

2004 EU Microsoft Decision: Third set of fines (€ 899 million) against Microsoft for non-compliance

Decision adopted under Article 24(2) of Regulation 1/2003.
According to the EU Commission, Microsoft charged unreasonable prices for access to interface documentation for work group servers during a period starting on 21 June 2006 to 21 October 2007. As from 22 October 2007 Microsoft changed its previous conditions, providing for a licence giving access to the interoperability information for a flat fee of €10 000 and an optional worldwide patent licence for a reduced royalty of 0.4 % of licensees’ product revenues. See also Commission MEMO/08/125 and the transcript (on Groklaw) of Neelie Kroes Statement.

SUBITO Dokumentenlieferdienst: Neue Bedingungen

Nach einem Heise Bericht vom 24.02.2008:
- der Endkunde kann das per E-Mail-Lieferung gekaufte Dokument "ansehen und zweimal ausdrucken";
- spätestens einen Monat nach dem Datum der Lieferung läuft das elektronische Dokument zudem unwiderruflich ab "und ist nicht mehr zugänglich";
- jede Seite des Ausdrucks wird mit einem Wasserzeichen versehen;
- Subito explizit angeschlossene Lieferbibliotheken dürfen Kopien nur noch über den Dienst ausliefern, und nicht mehr etwa über andere übliche Leihverkehrsordnungen;
- Preise für den elektronischen Versand wurden auf mindestens 7,75 Euro angehoben;
- Subito führt bei den PDF-Kopien auf Lizenzbasis im Gegensatz zu den auf minimal 6,50 Euro festgesetzten Fax- oder Postlieferungen keine Kopiervergütung mehr an die VG Wort ab;
- Subito und die Lieferbibliotheken sollen innerhalb von 18 Monaten die Möglichkeiten schaffen, binnen Jahresfrist höchstens zehn Kopien aus einer einzelnen Zeitschrift pro Institution (oder auch Kundenbibliothek, Campus) zu versenden. Über die betroffenen Journale soll ein Ausschuss von Subito und den Verlagen entscheiden.
Armin Talke, Mitglied der DBV-Rechtskommission, hat inzwischen ein ausführliches Paper zu Auslegungsschwierigkeiten beim Kopienversand (§ 53a UrhG) veröffentlicht.

Neelie Kroes: 2008 Competition Policy challenges...

Speech delivered at the 100th meeting of the OECD Competition Committee. Rather vague, really. Among others, the issue of the more economic approach to art.82 was not touched on. But, perhaps, it is still coming..

ECJ ruling on responsibility for antitrust infringement

Case C-280/06 Autorità Garante della Concorrenza e del Mercato v. Ente tabacchi italiani .
The questions referred for a preliminary ruling by the Consiglio di Stato related to an infringement committed by an entity which then underwent a legal and organisational change (measures taken by the legislature in view of the entity's privatisation). The Court makes clear that:
- " When ... an entity infringes competition rules, it falls, according to the principle of personal responsibility, to that entity to answer for that infringement;
- "As to the circumstances in which an entity that is not responsible for the infringement can nevertheless be penalised for that infringement, it must be held first that this situation arises if the entity that has committed the infringement has ceased to exist, either in law... or economically; otherwise "undertakings could escape penalties by simply changing their identity through restructurings, sales or other legal or organisational change";
- ..."when an entity that has committed an infringement of the competition rules is subject to a legal or organisational change, this change does not necessarily create a new undertaking free of liability for the conduct of its predecessor that infringed the competition rules, when, from an economic point of view, the two are identical";
- "where two entities constitute one economic entity, the fact that the entity that committed the infringement still exists does not as such preclude imposing a penalty on the entity to which its economic activities were transferred.."; In particular, "applying penalties in this way is permissible where those entities have been subject to control by the same person within the group and have therefore, given the close economic and organisational links between them, carried out, in all material respects, the same commercial instructions".

Antitrust/IP: FTC challenges settlements with generic drug manufacturers on Provigil

The suit has been filed in the U.S. District Court for the District of Columbia against Cephalon. According to the Commission, Cephalon, faced with threat to its Provigil monopoly, paid more than $200 million to generic drug companies to abandon their patent challenges and forgo entry into the market until April 2012. As Cephalon's CEO allegedly put it shortly after entering these settlements: "We were able to get six more years of patent protection. That's $4 billion in sales no one expected".
The FTC is clearly taking the issue very seriously, see also here.

Consultation publique sur la procedure d'engagements lancée en France

Le Conseil de la Concurrence a publié un projet de communiqué de procédure relatif aux engagements, sur lequel une consultation publique à été ouverte (jusqu'au 15 mars 2008).
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Microsoft and standards setting: yet another antitrust issue?

This might be the case according to the Wall Street Jounal, 8 Feb. 2008, in connection with the alleged attempts by Microsoft to pressure countries to ratify the Office Open XML (OOXML) file standard within the ISO (International Organization for Standardization).

At the intersection between copyright and trademark law: Federal Court of Australia on Polo/Lauren's embroidered polo player logo

It would seem rather obvious that firms should not be entitled to control the market for their products "only" by devising a label or a package in which copyright will subsist. This principle has been clearly spelled out by the Federal Court of Australia in The Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd [2008] FCA 49 (5 February 2008). The issue involved an injunction to restrain importation and sale of clothing bearing embroidered polo player logo without licence of the owner of copyright, whereas the logo was lawfully embroidered in country of manufacture with licence of owner of copyright. The Court ruled, relying on s 44C Copyright Act (socalled exception of a non-infringing accessory) that the the importer is entitled to engage in parallel importing of those goods into Australia. In particular, the embroidered polo player logo was not primarily a decorative feature, but "a symbol to convey that the clothing was made by the Ralph Lauren design or fashion house. It is a ‘signature’ or label conveying that information of the garment’s provenance" in the meaning of subsection 10(1) Copyright Act.

Balance between Antitrust and IP Laws: Drug Patent Settlement Agreements

The FTC filed a brief as amicus curiae with the US Court of Appeals for the Federal Circuit on 25 January 2008 urging to reverse a district court's decision that immunized from antitrust laws a pharmaceutical patent settlement agreement. In the case at bar, a patent holder paid a potential rival $400 million to abandon competition and stay off the market. According to the FTC, the patent holder "purchased the exclusion that the patent could not provide". The agreement did not represent the patent holder's exercise of its right to exclude and therefore the patent did not immunize the agreement from antitrust scrutiny.