Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

August 16, 2009


CNET - Nearly two years ago, the Bush administration sided with the major record labels in their civil lawsuit against an alleged and briefly famous Kazaa user named Jammie Thomas. Now the Obama administration is doing so as well. In a legal brief, the U.S. Department of Justice said the whopping $1.92 million fine that the Recording Industry Association of America slapped on Thomas was perfectly constitutional. Federal prosecutors argue the relevant law is "carefully crafted" and consistent with "due process" and part of a necessary "regime to protect intellectual property. Under current law, copyright holders can sue for up to $150,000 per work (such as an MP3 file, DVD, or book).


Blogger PunkLawyer said...

If punitive damages, such as those that the Supreme Court set aside in the Exxon Valdez case, are unconstitutional because they do not bear a reasonable relation to the amount of actual damages, then it would seem that statutory penalties under the Copyright Act should be equally unconstitutional because disproportionate to the actual harm.

August 16, 2009 10:36 PM  
Anonymous PJ said...

from Post-Autistic Economics Review

The Reform of Intellectual Property
Dean Baker
It is remarkable that economists, who usually view themselves as advocates of free market transactions, unquestioningly embrace various forms of intellectual property rights, especially copyrights and patents. Copyrights and patents are government granted monopolies. They have their origins in the feudal guild system, not the free market economics of Smith and Ricardo. (snip)
This paper details the ways in which patents in prescription drugs and medical equipment and copyrights lead to economic inefficiencies. It points out that the efficiency losses from these forms of protectionism are likely several orders of magnitude larger than the barriers to international trade that receive so much attention from economists.

The paper also outlines alternative systems for providing incentives for innovation and creative artistic work. (snip to fit) The relevant question is whether the existing patent and copyright systems are the most efficient mechanisms for supporting innovation and creative work.

The Inefficiency of Drug Patents and Copyrights

The basic argument for patents and copyrights is straightforward. In a free market, without protections for intellectual property, there will be under-investment in research and creative activity like writing or recorded music or movies. As soon as an innovation is made public, others could duplicate the process and sell a comparable product, without having to bear the costs of the research that allowed for the innovation. In the case of recorded music or movies, copies can be made at minimal cost (zero cost in the Internet Age), which means that in a free market, the original producers could not sell the products at a high enough price to allow the creative workers to be compensated for their work. However, the fact that a free market will under-invest in research and creative work hardly establishes that the feudal institutions of patents and copyrights are the most efficient way to support such work in the 21st century.

The economics profession has devoted vast amount of research and textbook space to proving the inefficiency of various forms of protectionism. The basic story in this work is that protectionism causes the price to exceed the marginal cost of production. All of this work is entirely applicable to patents and copyrights, except the impact is at least an order of magnitude larger than with most instances of protectionism in international trade. While tariffs and quotas rarely raise the price of goods by more than 30 or 40 percent, patents on prescription drugs typically raise the price of protected products by 300 to 400 percent, or more, above the marginal cost. In some cases, patent protected drugs sell for hundreds or thousands of times as much as the competitive market price. In the case of copyrighted material, recorded music and video material that could be transferred at zero cost over the Internet, instead command a substantial price when sold as CDs, DVDs, or licensed downloads. Copyrighted software commands even higher prices.

The distortions resulting from these huge gaps between price and marginal cost should cause an honest neo-classical economist great pain. At the onset, the lost consumer surplus from patent and copyright protected pricing is enormous. (snip) The United States alone is projected to spend $210 billion this year on prescription drugs. In the absence of patent protection, the same drugs would probably cost no more than $50 billion. (The savings would be equal to $500 per person for everyone in the country.) The United States will spend more than $30 billion on recorded music and videos this year, material that could be available at zero cost on the Internet. (snip)

Of course the deadweight losses are just the beginning of the story...

Thinking caps on...go read the rest of this eye-opener at the link!

August 17, 2009 7:33 AM  
Anonymous PJ said...

and...by the way...what HASN'T Obama sided with the corporados on?!

August 17, 2009 7:39 AM  
Anonymous Mairead said...

Why am I not surprised that Jammie Thomas is apparently not 100% White?

August 18, 2009 4:47 AM  
Anonymous Anonymous said...

Free Music!!!


August 19, 2009 12:55 AM  

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