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This
article caught my attention: the Swiss cross (the flag) is used
as a quality label for some 6,400 trademarks to vouch for their
reliability of adherence to national standards, presumably. A reputational
mark of nobility, as it were. The highly respectable Swiss Watch
Industry would even like to up the ante by making 80 per cent of
a mechanical watch guaranteed of Swiss origin (compared to 50 per
cent today). Reading this, I immediately looked at my own watch
and noted both the time, the mention Where does geography stop? Champagne, Cognac and other brands are protected by virtue of this legislation but the Swiss government is loath to define "Swissness", possibly a prudent policy; how many holes should there be in Swiss cheese? This is my last regular entry on this page before the CNE site
is overhauled, but I'll be back on the health blog soon. Best wishes
for the holidays, wherever your geographical indications may take
you. What's in store The evidence shows that international trade in counterfeit goods in 2005 probably amounted to some $600 billion, if we include the exchange of intangible products on the Internet, as well as fake goods produced and consumed domestically. In this context, it's also important to make the distinction between the primary and secondary markets, as pointed out by the report. The first is where consumers are unwittingly exposed to fakes, believing they have bought genuine goods. The second is when consumers actively seek pirated goods. It should be noted that counterfeiting and piracy now exist in
almost every market (including surprising ones, such as bath tubs,
scooters and spark plugs), and that it is expanding way beyond the
classic luxury goods. The OECD suggests that improvement of supply
chain management could help reduce the incidence of fake products.
Good idea, but in the case of food and medicines, suppliers cannot
control their supply, at least in the EU. Something for the US to
think about before allowing reimportation of medicines. The nature of compulsion A couple of months ago, the Thai government decided to grab various imported medicines to have them distributed at a cheaper price. Considering that this is a military government, any drastic action may be expected. It's a recurrent phenomenon, even in democratic countries: there's no more gratifying experience than being generous with public funds, or by redistributing property taken from others. And if public health may be invoked, no complaints will be lodged. Compulsory licensing is indeed part and parcel of international agreements, such as TRIPs. But it amounts to expropriation by legal means and under certain conditions, under the public health proviso. As someone said, when an individual steals, it is theft; when the government does it, it's political economy. The point is, you can put your hands (at least once) on what you are unable to produce yourself. But in the long, or even the medium-term, it should make sense - even to governments - not to kill the hen with the golden eggs. According to Wiktionary, compulsion
is defined as "An irrational need to perform some action, often
despite negative consequences". Sublime trademarks, subliminal tradeoffs First, Gauloises and other cigarette brands took the easy way out by advertising on matchboxes (and even cinema advertising) for Gauloises...matches. Legislators grudgingly came back from their smoking break to patch up the legislation. Marlboro then had the idea of promoting matches, featuring a Formula 1 car with the text "Red and white team"; the association may or not be by guilt. Nowadays, the cigarette brand may not advertise its clothing line either, although the European Commission will probably issue guidelines eventually against addictive shopping as well. Contrariwise, and to consider recent siren calls: the iPod, iPhoto, iMac etc need not trumpet out their trademark; it's obvious (the Apple logo is as tiny on the actual products as the real impact on the market is bombastic; come to think of it, does anybody know the brand of the lamp which features in the intro to Pixar movies?). My children would probably know: the other day, I attempted digital parental guidance, wanting to introduce them to Youtube. Their response: "OK, don't worry, we'll show you how it works." My roundabout point is: innovation is a "work in progress"
and an extremely competitive process at the same time. Today's garage
geeks will be Apple's, Skype's and even Dreamworks' headaches in
little time. IT and concurrent IP developments are far from monopolistic
in nature. Moment of truth on parallel trade? The EAEPC recently issued a press release following a symposium on parallel trade at the European Parliament and a question by French MEP Françoise Grosstête on the safety of parallel imports. According to fellow blogger Antoine Clarke, the UK regulatory agency MHRA had registered no evidence of counterfeit goods through PT until it recalled batches of a schizophrenia drug on 24 May . In this specific instance, it was in fact the parallel trader who alerted the original manufacturer about the suspicious batch. In terms of the supply chain, parallel trade doubtless offers numerous possibilities for fraudulent tampering with the products. Traders have the right (and are often obliged) to repackage and relabel the medicines: this includes inserting new product leaflets, sometimes cutting up blister packs to get the dosage right, etc. In theory, the trader is obliged to submit the modified trade dress (i.e. the packaging) to the manufacturer; it would be interesting to know to what extent this is actually enforced, for this essential feature of PT also makes it very difficult or even impossible to trace batches in case of problems. No doubt, the EAEPC sincerely believes that its members respect
the rules of parallel trading. But the problem is much more far-reaching,
if only because the organisation represents only a proportion of
parallel traders in Europe (70 firms in 18 countries). As a comparison,
from 1995 to 2003, some 9,638 parallel import product licenses were
granted in the UK alone. This makes the UK a hub for PT, but maybe
also for less healthy business. Sarkozy fan tutti He even ventured to say that it is "not a right, but a duty" to help ailing industries. In essence, in terms of discourse, he is a micro-liberal and a macro-statist. A French mix, to many observers. Yet, he has promised change, even "rupture". In an article co-signed with two French colleagues to be published in France this week, I tried to outline what the new government must tackle to give credibility to the campaign promises; indeed, the new president reportedly said that he has a few months to reform, no more. Sarkozy is no explicit friend of global markets nevertheless London
is now one of the largest "French" cities: some 300,000 (some sources
say 400,00) Frenchmen live and work there, predominantly in banking
and financial services, but also in restaurants, pubs and other
ordinary jobs. "Speedy Sarko" will be judged, not by the electorate
at large, but by this exiled community (in the UK, the US and elsewhere)
in terms of his commitments. This is not primarily a matter of economic
efficiency and wealth creation, but a test of political will to
respect human capital, creative activities and individual achievement.
Innovation in governance is a pre-requisite for reversing the exodus
of intellectual property. Don’t put your daughter on the stage, Mrs.
Worthington But no experiment means no danger. In reality, no experiment also means no benefit from risk-taking, i.e. no additional knowledge about what works and what doesn’t. The epistemological ban on innovation ought to be rejected once and for all. This applies to science and technology (the latter, incidentally, is no more than applied science). Entrepreneurial risk is inherent in human action : the fear of climate change or new technologies, such as GMOs or biomedicine, supposedly warrants precautionary (i.e. a prioristic) measures. Anti-hero José Bové is a veteran fighter, though his father (a scientist, not an activist) declared long ago that his son had no idea about GMOs. The French, albeit essentially positively inclined to scientfic inquiry, has seen disquieting actors on the stage in recent years. Some years ago, professor Testart (father of the first in vitro conception in France) announced that the potential consequences of genetic research of this kind were so frightening that he would cease looking into it. I hope he has reconsidered, for such an approach to science seems extremely fraught with danger. The hypothetical claim for catastrophe contains a basic flaw : the risk analysis is not based on an empirical cost/benefit evaluation. Instead, the assumption is that, given a certain idea or product put to the test, the potential hazards should determine legislation. In other words, what matters ultimately is not facts, but the possible disastrous outcome of infinitesimal risks. Be it for innovation, entrepreneurship or biotech, such an approach
is absurd science, and shaky knowledge will always engender bad
politics. Three cheers for the OECD This once more proved true as I listened to the key panel on "Innovation, Intellectual Property and Investment"at the OECD Forum in Paris this week. Yet, the OECD provides numerous research documents which are worthwhile reading, specifically on IP : the organisation's work includes incisive documents on patents, counterfeiting, digital rights and biotech. A visit to the OECD site is time well spent. But the preceding session was truly fascinating and surprisingly positive for advocates of free market reform. It was comforting to hear an international panel and audience endorse property rights and private enterprise to resolve the global water problem, specifically for developing countries. The issue is not directly related to IP, but it is certainly essential and indirectly helpful in terms of fostering it: how many able creators, entrepreneurs and generally hard working productive people have died from lack of water ? A most convincing and thoughtful contribution was made by the president of the Third World Centre for Water Management: I quote from memory : "There is not a hope in hell that we'll get water to the poor as long as it remains free." He went on to say that, although solutions and finances exist, the major obstacle in developing countries remain corruption and the lack of political will to implement these solutions. Citing Singapore, he also mentioned that visits to the waste water facility is currently the number 3 site for tourists! There was an astonishing consensus concerning the need for market
solutions and to view water as an economic good, rather than as
an abstract "right". Please carry on. Trading in opinions But they have brought something new to shopping: "fair trade". Quality may not always be part of the equation (one of my neighbours extolled the virtues of some fair trade coffee, but admitted it tasted like dead mouse). But evidence has it that the market is expanding, and if skipping quality in favour of some "higher" good is the new wave, why not? I recently discussed this with a French friend specializing in
brand image who confirmed the trend. He works with several highly
sophisticated brands which are closer to Body Shop professionalism
than The supermarket chain Leclerc is one of the few openly pro-market companies in France. In 1981, the minister of Culture imposed a minimum price on books, where rebates were limited to 5 per cent off the publisher price. Leclerc countered by offering a 20 per cent discount, and then let customers choose which price they would rather pay at the check-out. A couple of years ago, Virgin Megastore and IKEA fought to defend their employees' right to work on Sundays. Now we shall see if the new president got his branding right; on
the left, he's considered a fascist, and by the centre a potential
dictator. That should leave some room to wriggle. Sound, scent and sales It seems probable that the use of subtle, even subliminal methods such as sound and smell will become general as traditional advertising proves too blunt in a globalised and crowded market. According to McKinsey, the impact of television ads will probably fall by 40 per cent over the next few years. Smells often bring strong associations, such as childhood experiences (nice as well as unpleasant) : I always loved the smell of bicycle shops, less so that of the gym. The scent of one after-shave immediately reminds me of someone I disliked years ago (not a terrific sales argument in this case). And in case you like something at once tasty, exciting and esoteric,
try this
one. We should remember though that no brand management in the
world will help a crappy product. Ex libris, state hubris As you may recall, this all occurred to a large extent in reaction to Google's online library, carrying 1 million books from 14 universities. Well, not quite: France's Bibliothèque Nationale created its own online resource Gallica in 1997 (90,000 works). (Meanwhile, the Complutense University of Madrid chose to join the Google project in September 2006.) I tried to include a link to the Google project, but it insisted on giving me the French page; no doubt you can get there anyway. Supposedly, the French project enjoys many functionalities which Google doesn't have, so there. (After all, the French invented the Internet, with a little help from Al Gore). We are now safe from US cultural hegemony; just follow the instructions and nobody will get hurt. In our own sphere, I'd like to recommend Liberty Fund's Online
Library of Liberty which is less voluminous (perhaps because
of better IPR management and enforcement?) but very impressive:
it is not restricted to books, but also features debates, audio
files and podcasts. (And don't miss the virtual
tour of the Goodrich Room.) Do they really care? The outsider François Bayrou is a champion of small business, supposedly: 29 results for a search using the term IP. At closer inspection, this is mostly about property as such; fair enough, and he stresses the need to promote IP in the context of globalisation. The favourite, Nicolas Sarkozy doesn’t have a proper search function on his site, and the words "propriété intellectuelle" yields no results ; interesting, but possibly unfair. I will bet high odds that right-wing nationalist/populist Le Pen will, again, be present in the second round. Interestingly, the site offers some concrete proposals, but presumably these are contingent on national considerations and far from free-market policies. The largely clueless but still popular Ségolène Royal boasts 135,000 proposals from citizens (but no search function on her site) and a quick review of her "presidential compact" offers no substantial proposal in terms of innovation, let alone IP, except the vague notion that better conditions are offered elsewhere and that the brain-drain should be stopped. Finally, four communist/Trotskyite candidates are involved, but
I was loath to check out their proposals, seeing that North Korea
is their ultimate ideal. It reminds me of when the distinguished
French economist Alfred Sauvy was offered a ministerial position
by Léon Blum in 1936; the former asked the future Prime Minister
about his grasp of economics, and received the irascible reply :"
If I knew anything about economics, would I be a socialist ?"
The defence rests. Copycars, or a Chinese riddle In terms of IP legislation, counterfeit cars is more a matter of
trademark infringement than of patents (although more knowledgeable
people may want to correct this). But the reason why, for instance,
a This also applies to automobiles: they are made up of some 6,000
components, all of which have to be assembled to produce a final
product. Here's the riddle : not only do Chinese manufacturers
manage this feat : the copycar also sells at an extraordinary discount,
often half the price of the original. But as The
Economist pointed out last week, this weird phenomenon doesn't
vouch for quality: the copy of It reminds me of the Hungarian joke pre-1989 : "What do you
get when two Hungarian cars crash?" Answer : Porsche (which
translates as "nothing"). What price innovation? The cost might be several tens of thousands of euros per year; NICE in the UK recently was under fire, first about Herceptin and later for refusing to reimburse new medicines for liver cancer which are vastly superior to previous products. The problem is seemingly insoluble : interestingly, the UK (and my guess would be, almost any other country) sets a limit of £40,000 to a human life. Crude accounting. Biotech companies such as Genentech offer both huge perspectives and prohibitive prices. Now, industry bashers are always one step beyond: either companies are producing only “me-too drugs” (bad) or they are producing innovative stuff (worse, because too expensive). As Schumpeter said, opponents of capitalism have its death warrant ready; it’s only the reasons that change. History tells us that prices will eventually come down for new
products, as they get adopted and more producers enter the market.
For terminally ill patients, this is of course a small comfort ;
but rather than regulating prices for genuinely valuable innovations,
we should think about how the market can ensure the widest possible
diffusion, and ultimately the best price. And even if we remain
within a socialised medicine context, it seems reasonable to assume
that keeping people alive and healthy is a good idea and an even
better investment. Junk est bibendum : the hazards of liquid
assets In France, there are annual auctions, one of the most famous being for the benefit of the Hospices de Beaune where sales take place « à la bougie », i.e. a small candle is lit and the deal goes to the bidder who has the fortune of being the last before the light goes out. A famous example of rare wines is the Jefferson collection : the second US president had some bottles of the renowned Château d’Yquem (a Sauternes), a part of which went under the gavel in 1985 at Christie’s in London. The problem for the collector is only that opening a bottle from before the French revolution could be a memorable experience ; it may also turn (very) sour. To vinegar, to be precise. Hence the temptation to tamper with these precious products. There is supposedly an international market for empty bottles of famous wines, which are resold and refilled. A bottle of Château Lafite 1787 from the Jefferson cellar
was sold in 1985 for £ 105,000, reportedly the highest price
ever paid for a high-class plonk. I once tasted the wine (a 1950-something
vintage) and there is no wonder why such a product is subject to
counterfeit. From R to D: bringing innovation to market The point is obviously that it is not the government’s job to forecast and anticipate innovation, and then “direct” science and industry towards applied research. For a very simple reason: government is incapable of this. Sounds basic? Consider the current initiatives in Europe, both at national and EU level. Second, EU politicians often look with (hidden) envy on the US where the Bayh-Dole Act has let universities and start-ups work successfully in synergy. Consider: in the past 15 years or so, global companies such as Sun Microsystems, Google and Yahoo emerged from Stanford University. But EU politicians are generally loathe to imitate this model; don’t ask, don’t tell. It may have something to do with growing inequalities in society; “four legs good, two legs bad”. Innovators’ response : “I will work harder.” How long? The 10-year plan, aka the Lisbon
Strategy, is more than halfway “completed”, with little
result to boot; should we shoot the messenger or get to work? Don’t
count too much on your local MP to get an answer if the person in
question subscribes to the above. The invisible hand holds the pen Pencils are a strange product; ostensibly simple and essential. Yet I know of no other text to explain the intricate fabrication of pencils, and more importantly the essence of the market than "I, Pencil" by Leonard E. Read, founder of the Foundation for Economic Education. Were there a shortlist for brief texts in economics eligible for
the Nobel Prize, Read should receive it posthumously. So next time
you pick up a pencil, a ballpoint or hit the keyboard, please send
a thought to all the unknown people who, thanks to innovation and
the market, made their production possible. Dangerous dealings galore An investigation already in 2003 in an unnamed country, some 1,153 packages of imported medicines entering the country were examined: 88 per cent of them contained products which were either illegal imports, substandard or without prescription. In addition, 185 online pharmacies were surveyed, almost 90 per cent of which asked for no prescription before delivering the medicine. The Stockholm Network published a handbook in late 2006 on the danger of counterfeiting medicines which provides an excellent overview (as did professor David Taylor at a CNE event last month). And speaking of criminal activities, make sure to catch the latest
issue of Know IP where the Thai government’s dealings are examined. EU: catching up but far behind Meanwhile UK (government-financed) research gets the axe to the tune of € 100 million to pay for excess spending by the Ministry of Industry and Trade. It should be underlined though, that this pittance amounts to 1 per cent of the total science research budget. Even in France there is some excitement: the French "innovation indicator" remains slightly above the EU27 average; but it is increasing more slowly. Coming back to the somewhat ludicrous attempts to imitate US institutions enjoying long-term track records (a European "M.I.T." was launched recently), there seems to be a basic misunderstanding in EU circles about the connections between academic research and entrepreneurial outcomes. After all, technology is essentially applied science. Why is it that the US or Asian countries produce a lot of start-ups which work closely with universities, often even being located on campus? One Indian company even put up a sign: “Warning: trespassers will be recruited.” In France, there has always been a clear divide between academia
and the corporate world; the first despises the latter; the second
could care no less for the former. A big mistake and a huge loss
of potential wealth and fruitful partnerships. A tribute to imitation – hire a fake But how does this enter into IP? It would seem that there is no real protection when it comes to exploiting the image, posture and gestures of musical entertainers, for instance. No doubt you have heard of “Mamma Mia”, a magnificent rendering of ABBA music (but this show was subject to a copyright agreement). Until I saw it, I would never have imagined a Parisian audience dancing in the aisles to the music of “Waterloo” in the finale … An interesting fashion in this field is the proliferation of “Tribute
bands” which offer a wide a range of artists, available for
private celebrations. Their performance is often impressive; I was
amazed by the eerie similarity by this
Beatles re-make which, although based in Los Angeles, has managed
to fake it brilliantly (including British accents and 1960s hairstyles;
the McCartney look-alike has even adopted the reverse guitar pose,
no mean feat musically speaking). There is also a French
version performing soon in Paris. I’m rarin’ to go; and it seems
like the originals reap substantial royalties. Hit the road, Jacques At Stanford University, 1 euro spent on research yields 40 times as much as in France. It seems increasingly doubtful that equality and fraternity will suffice in retaining young French scientists who are emigrating massively (not necessarily because they want to, but because that's the only option in many cases). The so-called "social cohesion" is what is offered as a bonus for those who stay; yet no growth is not conducive to equality either. (Indeed, this will be a major theme at the upcoming OECD Forum). Two months before the French elections, something is stirring in
public opinion which may even attract the attention of the candidates
and eventually promote dynamism in R & D. Echoing Barroso's project
some months back, a team of high-level researchers have started
working on a French equivalent to MIT; the members all have impressive
CVs in terms of patents and entrepreneurial experience. A laudable
initiative indeed, which may lure back some of the tens of thousands
of gifted French graduate students and young professionals who vote
with their feet every year. Sadly, to succeed this venture will
depend essentially on public funds. Cherchez l'erreur. Politics 2.0 or a French (up)start Nevertheless, the Economist last week gave a well-deserved one page portrait of internet entrepreneur Tariq Krim. His young site Netvibes, created in late 2005 currently draws some 10 million users, and looks like a true platform operation. He has also successfully launched a music download site and many others. This is an interesting venture, perhaps primarily because it happens in France (and because the creator is an immigrant who could easily have gone elsewhere). The achievement is worth noting because it indicates a willingness to come through, despite the rough and rowdy conditions for any new company in France. Mr. Krim also highlights the need for networking and has launched an online think tank, Digital Catalyst. According to the Economist, he says if it works “we could have Politics 2.0”. This is badly needed; but maybe Mr. Krim should think about creating
an Economics 1.1 for politicians first. Right or wrong, any country
deserves deserting when it deserts IP (meaning intelligent people,
as well). Microsoft landing The Stockholm Network’s monthly newsletter carries an excellent summary of the issues involved and an analysis of the probable judgment by the Court of First Instance, in terms of interpreting Article 82 of the EC Treaty. As pointed out by Helen Disney and Meir Pugatch, the fundamental question is “in the case of a clash between IPRs and competition rules: which should make way?”. Further, “are trade secrets a legitimate form of IPRs?”. The authors predict that the Court will tend to avoid the broader political implications in favour of a more technical approach; and so the show must go on. Add to this the fact that the brand-new MS operating system Vista
faces similar
charges and you have another episode for a mini-series. Maybe
some movie rights could help to compensate for the substantial fines
already paid? Words, words, words IP doesn’t mean you can sue anybody for having the same name, or first name; or using the same expressions when writing an article. About ten years ago, frustrated with the lack of think-tank networking in France or even a word for it, I minted the term "réseauter" (a free translation). I was pleasantly surprised to discover recently that this is now widely used in French; no chance of royalties, but let’s just assume it was my invention. In 1946, the Marx Brothers produced the movie "A Night in Casablanca"; and quickly received a letter from Warner Brothers, threatening a lawsuit (supposedly, the production "Casablanca" held rights to the name). The reply by Groucho Marx is a model of comic retort: "I just don’t understand your attitude. Even if you plan on releasing your picture, I am sure that the average movie fan could learn in time to distinguish between Ingrid Bergman and Harpo. I don’t know whether I could, but I certainly would like to try." Similarly, the supreme ruler of Libya, col. Gadafi, claimed ludicrously some twenty years ago that Shakespeare was in fact an Arab poet (yes, Cheik Spear). Reminds me in turn of the movie "Pimpernel Smith" (starring Leslie
Howard) who answers the officer who claims Shakespeare was in fact
German: "Really? But then you must admit that the English translation
is remarkable." A contentious anniversary MSF has launched an international petition on a familiar theme: patents are the nemesis of access to medicines, especially in poor countries. India on the other hand boasts a generics industry with more than 20,000 manufacturers which supposedly ensures cheap products. The return of product patents will counter these positive developments, they claim. Old stuff, but the counterarguments need to be restated:
To boot, Novartis says it already hands out its product for free to 99% of the patients in India and stresses its concern about long-term development of products. One would be tempted to think that MSF is more concerned with criticising patents than helping patients; surely that cannot be right? The situation has probably evolved, but a
2004 study found that out of the 13 most common antiretrovirals,
the 8 cheapest ones were branded. The figures? Well, they came from
MSF. My name is Mark, Trade Mark Just before Christmas, the European Parliament voted to relax the rules applying to product placement in television by updating the TV Without Frontiers Directive. In line with existing regulations, certain products will not be authorised (i.e. alcohol, tobacco and prescription medicines). The Directive is now known as the Audiovisual Media Services Directive (are we to suppose that the frontiers are henceforth so completely gone that no further mention is necessary?). The reports and comments also seem to indicate that there is some understanding in high places for the need and proper role for advertising, if the whole thing doesn't go haywire, US style. What is original though, is the fact that the new rules come in the form of a blanket ban on advertising, but with the right for member states to opt out. Good overviews may be found here and here. A sympathetic approach to lawmaking; wonder whether this could
be extended?
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