Club Troppo

I’m doing some research on IP and particularly on patents.  As in other areas of economics we tend to debate IP according to well arranged protocols.  There’s a ‘pro’ and an ‘anti’ or a ‘more’ and a ‘less’ party with each accusing the other of  not getting it.  There’s lots legitimate to debate in there.  But something else is important, and that is that IP is often defined in an antediluvian way.  

The best way to make the point is by analogy. When airplanes first got themselves invented, the law of airspace was an expression of the Roman maxim “Cuius est solum, eius est usque ad caelum et ad inferos.  Since you ask, this means “To whoever owns the land, shall belong the earth to its center and up to the heavens.” Of course in a world of zero transactions costs, there is no problem as all the transactions will be done to clear a plane’s flight from New York to Chicago over all the farms along the way.  Of course that’s not very realistic. And so, as this a dumb way to build the law of airspace, as it was essentially unworkable, it got changed pretty quickly.  

In patent law, the fundamental value of a patent arises from the exclusive right it gives you to sell into a market. But just for good measure you get a bundle of other exclusive rights – the right to manufacture, import, offer for sale, use and so it goes.  Does this matter?  Often not much.  But big pharma have got themselves into such a bad place, such a low trust equilibrium in the way in which they interact with the world, that they cling to all these rights in their various campaigns to fight those who want more sensible outcomes – on the beaches and on the landing grounds, in the fields and in the streets.  They will never willingly surrender any right they have.

Thus when drug patents are still running in Australia it should be possible for Australian generics firms to manufacture drugs that are still under patent in Australia where their patents have expired overseas.  (In keeping with our sometime status as a ‘back office economy’ big pharma often apply for marketing approval in Australia later than in major markets and – though a chain of causation involving patent extensions I won’t bore you with here – this means drugs often come out of patent here a year or so after some markets have gone ‘generic’.) 

But because patents are defined so broadly, Australian generics cannot manufacture for export until the patent runs out, and by that stage, they’ve already decamped to India or Canada where they don’t extend patents and so are better set up for their generics to hop into the market immediately. 

I’m looking for some sources that discuss this issue – not necessarily regaring intellectual property rights, but property rights more generally.  There’s some stuff on ‘patent thickets’ which often uses the example fo the panoply of poorly understood, and poorly fitting together property rights in post Soviet Russia – which created a property ‘thicket’ which prevented people using retail property properly – and saw stands and various makeshift tents and buildings being errected in front of old department stores, because noone could buy the department stores and develop them with any confidence in their property rights – or in their ability to be protected from others’ claims and probibitions on what they could do with their property.

Easements in real property and ‘fair use’ exceptions of interllectual property are similar examples of small changes to the definition fo property rights that can make a huge difference to the efficiency of a property regime.  So I’m looking for some serious discussion of this topic in a generalised sense – but I can’t find much.  I’ve Googled ‘the economics of easements’ and that didn’t do it for me.      

I know that some people argue that one reason why English colonies were much more successful than others was that their legal system was more adaptive suited more to trying to enforce the changing mores of the society rather than just enforce strict rules. There is also an argument that in the South American colonies, there were absentee owners of land whose rights were upheld, which prevented systems of legal tenure from adapting to get the land utilised. By contrast in Australia we had squatters who the state did not prevent using the land whereas they did in the South American countries.  So its an issue about the flexibility of property.  

So, troppodillians, that’s my bleg, can you point me to any reading on this general issue, preferably with nice simple examples. And since this is part of a commercial research project, $100 to any commenter that is 1) the most useful and 2) is useful enough for me to feel like parting with the cash. If 2) is not met, the $100 goes to a charity of the commenters’ choice. 

Wikileaks have acquired a copy of the ACMA blacklist (which I am unable to link to without being fined) which forms part of Conroy’s filtering masterplan.

Conroy issued a press release saying that he was going to hunt down the person who leaked the list to Wikileaks.

Now Wikileaks have advised that if he does so, they will act under the Swedish law which protects their operations to have him charged with the criminal offence of trying to identify an anonymous press source, then start extradition proceedings in Australian courts. Yes, really.

Donate to wikileaks, folks. They are rolled-gold heroes.

Being a Territorian in exile, I like to keep abreast of developments on the home front by watching ABC Darwin and reading the NT News website. In the last few days I haven’t had to, as just about every newspaper in the country was talking about Nigel Scullion’s impromptu stairwell conference.

The NT’s other Senator is Labor warhorse Trish Crossin. She in turn also missed a Senate vote because she was in the ABC radio studio, lambasting Scullion for missing a vote. Really.
(Continued)

Recently, Jeremy Sammut of the Centre for Independent Studies has had a number of opinion pieces published in the Australian Welfare saps the will to save on March 5 and “Welfare killed saving” (December 18) and a longer paper published by CIS – A Streak of Hypocrisy: Reactions to the Global Financial Crisis and Generational Debt.

A common theme in these pieces that more generous age pensions have diluted incentives to save in Australia and therefore that we need to scale back existing pensions rather than increase them (and target them more) as advocated by groups such as the Brotherhood of St Laurence.

In Australia the real level of the age pension has doubled since 1970 – so are more generous age pensions responsible for low savings rates? My answer to this question is to ask two more questions first, are Australian household savings rates low and second, are Australian pensions generous?

(Continued)

It’s like my highschool love life all over again!

Well not really.

As some of you know, I’ve been working in ‘stealth mode’ on a dot-com project for a few months now. A week ago I applied to Westpac for merchant facilities — ie the ability to charge Visa and Mastercard — today they said it had been knocked back.

I was beginning to suspect that they would knock me back when my case manager at Westpac, Gina, began to quiz me closely about everything I owned. Did I own a computer? Worth how much? Books? How long at my previous job? Any cars? Insured? etc etc.

She was trying her level best to do me a favour by beefing up my resume as a director, because there’s not much else to hang a hat on. The business was incorporated a few weeks ago and has yet to turn a dime because it relies on credit cards to do so. I own, approximately, diddly and squat. My parents reckon it reminds them of the old days (and the new days, perhaps) when you practically had to beg bank managers for a loan.

I suspect I could improve my chances by bringing in a director or two with really impressive resumes and assets. But I’m open to other suggestions. I know that some Troppodillians are banking types. What can I do to improve my odds when I apply again?

Peter Klein at Organizations and Markets offers some calming thoughts on the AIG bonus debate.

1. The main lesson is that AIG should never, ever have been bailed out with taxpayer dollars. I said that at the beginning, and I stand by it even more today. AIG should have declared bankruptcy. Under bankruptcy there are well-established, orderly procedures for winding down a firm, distributing the remaining assets among the various legal claimants, and so on. Injecting taxpayer money without any serious thought about the implications of government subsidy and/or ownership for management and governance is just plain dumb. Naturally, thats what Congress and the last President people who know exactly zilch about what companies do and how they are run did.
…
4. As an outside investor, I certainly would not have the right to renege on whatever prior contractual arrangements I happen not to like. I cant pick and choose, willy-nilly. Employees, contractors, suppliers, bondholders, etc. all have contractual claims on the firm, and my infusion of cash doesnt allow me to ignore these without legal consequences.

Theres a laminated sign that sits over the sink in the office kitchen.  It says : There is NO magical kitchen fairy please clean up your dishes yourself. 

I hadnt really paid attention to it before, but noticing it for the first time the other day floored me. It was after all a bit of a shock after the recent disclosures about Santa Claus (If you dont know what Im talking about just forget I ever mentioned it), but more importantly, I was pretty sure that the Magical Kitchen Fairy had been going strong ever since Id been frequenting this particular office kitchen, and this sign was creating some uncomfortable cognitive dissonance.

To resolve this matter I deliberately left my empty coffee cup in the sink that evening and was thrilled to find that it was cleaned and put away the next morning. 

Im happy to say that my faith in the Magical Kitchen Fairy remains as strong as ever, and I wish her well in her epic battle against the Bossy Kitchen Guilt Fairy.

A couple of weeks ago recently retired High Court Justice Michael McHugh entered the public debate on whether Australia should have a legislated bill of rights.  The debate (such as it is) was one of the “outcomes” of the Rudd government’s 2020 Summit, and more recently led to the establishment of the National Human Rights Consultation Committee chaired by Father Frank Brennan.

The Committee’s terms of reference include that its recommendations to the Rudd government ”should preserve the sovereignty of the parliament and not include a constitutionally entrenched bill of rights”.  There are two divergent likely structural models for a legislative (not constitutionally entrenched) bill or charter of rights:

1. An Act which directly creates legally enforceable rights;
2. An Act which professes not to do that, but which requires courts (a) to interpret all other legislation “in a way which is compatible with human rights”; and (b) where that isn’t possible to issue a Declaration of Incompatibility stating that the legislation is contrary to one or more of the enshrined human rights (but without overriding the challenged legislation).  This is said to establish a constructive human rights “dialogue” between judiciary and politicians.

You would think that the first model would be by far the simpler and more effective to adopt, but in fact the second “dialogue” model has for some reason become the current fashion among bill of rights proponents.  Versions of it have been enacted in the UK (Human Rights Act 1998) and more recently in the ACT and Victoria, while a rather more primitive version was enacted in New Zealand in 1990.  I suspect that the reason for this vogue is that this sort of “dialogue” model at least superficially seems to pose less of a threat to parliamentary supremacy, and therefore to politicians’ power vis-à-vis the judiciary, than one which directly confers enforceable legal rights on citizens.

McHugh’s intervention appears designed to make two crucial points:

• The dialogue model is by no means as harmless as it looks in its potential effects on legislation and in empowering the judiciary at the expense of Parliament;
• there are quite strong arguments that both elements of the dialogue model (at least the version currently being advocated by groups like GetUp and New Matilda), namely the interpretive provisions and the “Declaration of Incompatibility” device, would be in breach of constitutionally-mandated separation of judicial power if implemented federally.

McHugh argues strongly that a bill of rights which directly implements the list of human rights contained in the International Covenant on Civil and Political Rights would be far preferable to pursuing a “dialogue” model at Commonwealth level, in large part because the Commonwealth, unlike the UK or the Australian states and territories, is constitutionally constrained by the separation of powers doctrine.

McHugh argues  that the declaration of incompatibility provisions are likely to be held in breach of separation of power because they confer non-judicial power on a federal court.  Such a declaration arguably creates no legally enforceable rights and therefore may not be a “matter” for constitutional purposes and may well be held to constitute merely an advisory opinion, something the High Court held was not an exercise of judicial power as long ago as 1921.

As for the interpretive provisions, McHugh points out that the New Matilda Bill differs from the already enacted ACT and Victorian legislation in a crucial respect:

(Continued)

All subjects are linked to crocodiles. Just ask the NT News (via Flickr)

High Court challenge jeopardises $900 bonus – Sydney Morning Herald (19 March) -

THE High Court has agreed to hear a challenge to the legality of the Federal Government’s proposed $900 tax bonus to 8.7 million taxpayers. The case has been brought by a law lecturer and former National Party office holder, Bryan Pape, a champion of states’ rights. The High Court will hear the case on March 30 and 31.

At least some of Pape’s constitutional arguments are outlined in a paper he gave to the Samuel Griffith Society in 2005 entitled “The Use and Abuse of the Commonwealth Finance Power“.  The arguments revolve around Constitution section 96 (financial assistance grants to the States) and section 81 (appropriations), as well as questions of whether citizens have standing to challenge such Commonwealth decisions and whether such a challenge is justiciable.  

I doubt that Pape’s current argument has anything to do with section 96 grants, because the $900 bonus payments are characterised as refunds to individuals of tax they have paid rather than as grants to the states.  My best guess is that Pape will argue that the payments can’t genuinely be characterised as refunds of tax (and hence supported by the Commonwealth’s taxation power in Constitution section 51(ii)), in that the flat $900 “refund” bears no quantifiable relationship to the amount of tax originally paid.  Thus it isn’t really a refund of tax but a gift, and the Commonwealth possesses no independent constitutional head of power permitting it to make gifts to citizens.  It’s an interesting argument because the Commonwealth can only enact an appropriation under s81 for the “purposes of the Commonwealth”.  However the argument could only succeed if the High Court is prepared to overrule previous authority (e.g. the AAP Case) holding on various different grounds that Commonwealth appropriations are not ordinarily susceptible to successful challenge.

Update – George Williams reaches similar conclusions in the SMH, only more succinctly.

(Continued)