Oracle sues Google over Java implementation methods.

Oracle has just sued Google over implementation methods used in the Dalvik virtual machine at the heart of the Android operating system. The complaint alleges knowing and willful infringement of seven patents originally issued to Sun Microsystems.

Oracle has retained Boies, Schiller & Flexner. One wonders if they’ll be any more competent than they were on the SCO lawsuit…

Results of a quick skim of the patents follow.

Here’s the list:

6125447: Protection domains to provide security in a computer system

6192476: Controlling access to a resource

5966702: Method and apparatus for pre-processing and packaging class files

7426720: System and method for dynamic preloading of classes through memory space cloning of a master runtime system process

RE38,104: Method and apparatus for resolving data references in generated code

6910205: Interpreting functions utilizing a hybrid of virtual and native machine

6061520:Method and system for performing static initialization

The six patents we can see are all mobile-Java implementation methods. Most seem to relate to optimization techniques, compilation, and JNI, though the claim language is general and vague enough in some cases that it is difficult to be certain.

I’m not seeing any algorithmic depth here – Google’s defense will almost certainly in part be that all this stuff fails the obviousness bar. There is also an interesting question as to whether Oracle has met its obligation under law to notify Google and allow it reasonable time to cure the infringement (removing these techniques from the Dalvik machine) before suing.

The commenter who tossed the complaint link at me notes that Steve Jobs and Larry Ellison are best buddies. So this could in part be Apple, rapidly losing the market-share battle to Android, striking back by proxy. I’m guessing Ellison told his lawyers to throw anything at Google that they thought might stick, and do it yesterday.

On a slightly different level, I think this is Apple implicitly conceding that it can’t beat Android with product design and needs to stop the competition before iOS gets kerb-stomped.

This post may be updated as I learn more.

UPDATE: On rereading, I see that there are copyright as well as patent claims; they’ll have to pierce Google’s clean-room defense to make those stick. Also, while they do seek an injunction, I see no request for a temporary restraining order; this suggests that Oracle’s lawyers know they don’t have an open-and-shut case and are wary of overplaying their hand. But if that’s so, why the actual-damages claim? Puzzling.

UPDATE2: A commenter found a link to the ’720 patent. These weakens the argument that the complaint was a sloppy rush job.

UPDATE3: There’s prior art for the ’720 patent in Emacs. Happens I know that part of the Emacs codebase of old and can confirm the author is correct. One down, six to go.

UPDATE4: I was incorrect in thinking the direct monetary damages claim is unsustainable; Oracle inherited J2ME, which it licenses to some handset makers.

UPDATE5: J2ME gives Oracle more skin in the mobile-Java game than I knew. This decreases the likelihood that Larry Ellison is doing a favor for his best buddy Steve.’

UPDATE6: Predating the ’476 patent, RFC 86.0 is probably grounds for an obviousness challenge.

UPDATE7: It has been alleged that the technique described in the ’205 patent was described in Efficient implementation of the smalltalk-80 system (1984)

254 thoughts on “Oracle sues Google over Java implementation methods.

  1. @Jim T It’s not business you should hate. That should be directed first at the Federalist elites that decreed “the exclusive Right [of Authors and Inventors] to their respective Writings and Discoveries” in Article I, Section 8 of the U.S. Constitution, and even couched it in the name of “the Progress of Science and useful Arts” to make it appear benevolent. Then you can hate the current elites that protect that “right” to enhance their own power. Businesses, or rather the men and women that manage businesses, act in self-interest, like anyone would.

  2. @Joe, yay a sensible comment, thanks for raising the tone :)

    In light of that I’ll modify slightly:

    I hate “screw you it’s in my self interest so I’ll pervert every loophole I can and force governing bodies to adopt ridiculously convoluted laws to cover every possible interpretation I can bring to the table because I want a bigger score in my bank account, bugger anyone who actually cares about progress or society” … aka, business.

  3. > Puzzling.

    Not puzzling to me at all. I’m sure you are puzzled about the details, not the overall devilish strategy. But you brought up patents, so I just gotta rant.

    I haven’t read the brief, my blood pressure is already high enough. However, it is just an illustration of the reality of the patent system rather than the perception of the patent system by the general public.

    The public thinks the patent system is to protect uncle Bob who comes up with a great new widget in his garage from mean big business stealing his idea. It plays on the hopes and dreams of all Americans and other people that they might strike gold one day with the great idea that they have in the back of their mind. They too have an idea like intermittent windshield wipers, and they love to think that there is a system in place that will protect them from the man — they eat up movies about this stuff.

    The reality is quite different. Many patent lawyers won’t even work with uncle Bob. When they do, they are often charlatans simply taking Bob’s money knowing full well the crappy patent they write won’t have much real protective value. Why? Because everything is patented, and new patents are winding, twisting meanders through the tiny amount of remaining space.

    The reality of the patent law is that it is a tool of big business to oppress uncle Bob should he ever be successful. It is a tool of ossified mega businesses to beat up on small, dynamic businesses, it is a tool that allows lawyers to be sand in the machinery of business to grind down competitors based not of quality, price and other important criteria. It is the tool of failed businesses to prevent the successful businesses getting too far ahead of them.

    As I have said before, the only reason the patent system doesn’t destroy the economy is that it is run by a government that is so breathtakingly inefficient that it takes them forever to get stuff done. (Consider this: with an oil spill in the Gulf of Mexico, the puffing popinjays in DC demand that BP provide a $20billion compensation fund, privately administered. Why? Why not use the normal mechanisms of the court? Because everyone knows that the courts are too damn slow and too damn expensive to provide justice. So the government demands praise for providing a tyrannical solution to a problem they themselves created. It is this kind of stupidity that allows the patent system to not cause the implosion of the economy.)

    I love the word “patent troll”. A patent troll is simply the free market reducing some of the spectacular inefficiency of the patent system. And because we take out a tiny amount of that inefficiency, everyone thinks the world will come to an end. They might be right, but “patents trolls” are just a quick peek under the kimono. The whole thing is one big lumbering patent troll.

    OK, I feel better now. I agree with Eric though, if Apple is resorting to such tactics by proxy, it might be time to think about selling your Apple shares.

  4. Copyright and patent law are not the enemy here. It is the desire to use government as a bludgeon to destroy competition that is the enemy.

    Of course the best possible thing that Google (and everyone else) could do is simply stop using Java.

  5. brian Says:
    > Copyright and patent law are not the enemy here.

    Really?

    > It is the desire to use government as a bludgeon to destroy competition
    > that is the enemy.

    Isn’t that what they are using patent law for?

    Isn’t that the purpose of patent law? A bully won’t beat you up if you give him your lunch money.

  6. No, it isn’t the purpose of patent law. The purpose of patent law is quite expressly dictated. That businesses abuse it is no reason to be rid of it. Instead, modify the terms of patent law so that submarine patents cannot be enforced. 90% of the bullshit goes away just by putting a limit on the patent that if it is not produced within n years from the filing date the patent is null and void.

    Of course we don’t really have the pure capitalist society that the founders envisioned either, we’ve got a corporatist/fascist setup where the government and megacorporations collude to control the economy for their mutual benefit. Strict separation of business and state would remedy that.

  7. Jim T: You should install a better filter. It’s not all businesses that behave this way. And I think I’d put a little more blame on Politicians and Lawyers.

    That said, it would be handy to update patent law to create more specific classes of inventions and provide protection based on the class of invention. Perhaps 6 months for software for example would not be too onerous, but 17 years is ridiculous. If they made me dictator, I don’t think I could suffer any IT related patent to be longer than 18 months (one Moore’s cycle), which gives the creator time to make his money, and allows innovation to continue at an appropriate pace. Once I’m dictator, I don’t think I’d allow any patent more than 5-6 years unless it could be proven by the filer that it would take a significantly longer time-line to recoup development costs (e.g. a nuclear plant design innovation wouldn’t be able to “pay off” for a decade because it would take a number of years to build the first nuclear plant to utilize it).

    Anyway, that’s all spec fic. The reality here is, if this is Ellison playing the knight to Jobs’ damsel, it pretty much proves that Apple sees the demise of the iPhone writ large. As I stated in a previous post, while the Mac can survive on a 10% market share because that leaves a sufficient customer base for app builders in the PC world to continue development and building new apps, the smart phone market has a significantly different financial advantage. When you’re charging $2/user, 10% market share likely no longer makes it worth the effort to develop an app for both platforms, especially if parallel development is as difficult as others here have made it sound.

  8. Wow, the fear is strong around here isn’t it? Stupid companies doing stupid things, and all of a sudden it’s about Apple? Seriously? So aside from the fact that Ellison and Jobs like to have a beer together every once in a while, is there any other evidence that substantiates the accusations that this is an Apple plot, or is this just the OSS version of FUD? Learned a couple things from Microsoft did we?

  9. @dgreer : “install a better filter” – maybe, just ranting.

    @Jessica Boxer : What would be more effective, remove the weapon or remove the bully?

  10. Would someone please run a cyclomatic complexity test against patent law?

  11. > is this just the OSS version of FUD

    Not all speculation is idle. Its suspicious that Oracle is suddenly going after Google out of the blue like this, and for damages when no obvious damage has occurred. Back-room business politics sounds like a plausible explanation to me, and although we may never know, its still fun to analyze.

  12. @tmoney -

    Why else would Oracle wait to go after Google? What’s in it for them? If Google’s on the right side of the license grant, then Oracle’s gonna lose. Unless they get a temporary injunction against Google and everyone else to stop them selling phones until the case is over. And given how long the SCO case dragged on, they could completely kill Android in the time span of the court case.

    Unless Google turns around and creates their own language or just has a C++ SDK and ditches Java entirely.

  13. brian Says:
    > No, it isn’t the purpose of patent law.

    Ah, obviously I was too brief. Let me explain. You said:

    > It is the desire to use government as a bludgeon to destroy competition that is the enemy.

    The purpose of patent law is to grant a monopoly right in some invention to a claimant (for a “limited” time.) “Monopoly” here means, “competition is illegal”. So the purpose of patent law is specifically to prevent and destroy competition. (For a “limited” time.)

    The means by which patent law enforces the “competition is illegal” purpose, is by using the government courts as a bludgeon.

    So my comment stands.

    Regarding JimT’s question, clearly the bully is made a bully by the weapon. So removing the weapon is the solution.

  14. It’s also possible that Oracle (a company which is known for its love of money) sees cash to be made over the popularity of Android and wants in on the action. I seem to recall there was some concern over whether Oracle’s acquisition of sun was going to mean gate keepers and licensing fees.

  15. Jessica – I disagree. Removing the “weapon” won’t stop companies from pulling stunts like this, they’ll just find other ways to do it. Like filing cases alleging restraint of trade, or violating trade secrets, or some other thing. Unless you want to get rid of all laws, that is, which I don’t think you do.

    The problem is that we allow patents on obvious things, we don’t punish companies (Rambus) for engaging in patent fraud, and we don’t punish losers when they bring frivolous cases hoping to bankrupt their competitors through litigation.

    Of course if you think that any use of the courts to enforce the laws counts as “bludgeon” we don’t have any common ground to start from.

  16. I don’t think Apple had anything to do with this. This is all about returning Sun to profitability by exploiting any and every possible revenue stream. You have to remember that pre-Oracle, Sun was grossly mismanaged for about ten years as they watched their hardware and OS deployments decline and tried to stop the bleeding by cozying up to the open source community. That meant Larry Ellison had to be a huge dick, but hey, the balance sheet never reflects how nice a guy you are.

    Of course we don’t really have the pure capitalist society that the founders envisioned either, we’ve got a corporatist/fascist setup where the government and megacorporations collude to control the economy for their mutual benefit.

    One of Chomsky’s key insights is that as the power-law distribution of wealth takes effect, true laissez-faire societies eventually degenerate into this.

  17. tmoney –

    Certainly a possibility, but why take this particular angle? Do they think Google is just gonna fold and hand them money to make them go away? At this point, suing Google is as dumb as suing IBM.

  18. Jessica Boxter : I’m not so sure the weapon makes the bully as the bully makes the weapon

    Of course, neither is true, but lets have some fun anyway.

  19. Okay, I’m curious.

    I consider myself a libertarian of a minarchist variety. With that, I see property rights as being foundational – you simply aren’t allowed to steal/take my stuff without compensation, and my opinion has been that the original intent of patent and copyright laws were to support this concept.

    Wouldn’t getting rid of patent law be more problematic than our current system? I’d note that I agree with Brian’s assertion that the capitalist system has degraded enough to not be what was originally intended, but would scraping it in the promotion of more open ideals work?

    I think Oracle is perfectly within their right to attempt to sue Google over what they see, essentially, as stealing. I think there is some silliness to it, and my hope is that a proper justice system comes back and tells them, no it isn’t a case of reducing product revenue, as Eric points out, but I have to give them the right to try.

  20. Jeff – and like in everything else, Chomsky’s wrong. It’s got nothing to do with distribution of wealth, it’s all about regulatory capture.

    When the regulatory environment is slanted to favor those who can buy the most political power, then of course you get a breakdown of laissez-faire. It is corruption, not wealth that is the enemy here.

    People were stunned to find out that Walmart favored Obamacare. Why? Simple – it hurts their competitors more than it hurts them.

  21. # brian Says:
    > Jessica – I disagree. Removing the “weapon” won’t
    > stop companies from pulling stunts like this,

    Of course. There are always illegitimate ways of doing business. However, that is hardly a reason not to remove one illegitimate way of doing business.

    > Unless you want to get rid of all laws, that is, which I don’t think you do.

    No, I want to get rid of all bad, unfair, unjust laws.

    > The problem is that we allow patents on obvious things,

    That is certainly a big problem. However, there is a deeper problem, namely the principle that someone can own an idea. What is the moral basis for that? If I stole an idea from someone that is a violation of whatever agreement under which the idea was revealed to me. But if I come up with the idea of, for example, intermittent windshield wipers independently of you, what right do you have to stop me from using my idea, even if you arrived at a government office ten minutes before me?

    In fact, the moral basis of patent laws isn’t, originally, that people have a moral right to own an idea. As the wording of the constitutional clause shows, it is really a pragmatic argument. If we give people exclusive rights to an idea, then they are incentivized to come up with more.

    Yet this principle has never actually been tested. No one can provide good evidence that it is true. On the surface it is appealing, but even a slightly deeper analysis reveals that it ignores many important factors that push in the other direction. In particular, it ignores the fact that patents are in fact a strong disincentive as well as an incentive.

    In fact there is a considerable body of work that demonstrates an explosion in creative activity the moment a patent expires, going all the way back to the expiration of James Watt’s patent on the steam engine. This seems reason to believe that patents are a drag on innovation, not an incentive.

    What is equally interesting is to look at it from a psychological point of view. It makes a huge assumption, namely that people are creative primarily based on extrinsic motivating factors (money for example.) When there is more and more research coming out to show that creative people are far more strongly incentivized by intrinsic factors, and often extrinsic factors can be demotivating, or at least anti creative. I’d suggest you read Clay Shirky’s book “Congitive Surplus” that discusses this at length. I’d also suggest you look at the open source world where massive value has been build basically on intrinsic motivations.

    So to put it another way, a grave injustice — namely the granting of monopolies on ideas — has been promulgated on the basis that there is a compelling state interest in doing so. However, this compelling state interest has never been tested, never mind proven, and there are strong reasons to believe that it is bogus.

    That doesn’t even address the basic reality that when patent law gets into the grubby hands of lawyers and politicians it becomes a cesspool of injustice on injustice. The idea that citizens like you or I can tweak it to be better is unrealistic. Government is a blunt instrument, the only solution is to take away the hammer, not try to teak the metal it is made of, or the radius of it’s swing.

    > Of course if you think that any use of the courts to
    > enforce the laws counts as “bludgeon” we don’t
    > have any common ground to start from.

    Well sure, of course that is the purpose of the courts. The purpose of government is to monopolize the violent enforcement of other people’s rights. This is legitimate if those rights are justifiable, it is illegitimate if they are not. The question is not the legitimacy of the use of force, it is a question of whether that force is legitimate in some particular instance.

  22. >Certainly a possibility, but why take this particular angle? Do they think Google is just gonna fold and
    >hand them money to make them go away? At this point, suing Google is as dumb as suing IBM.

    As you yourself noted, a temporary hold until the case is decided could be the end of Android, something I’m sure Google would be aware of. It’s not unreasonable to think that Oracle is hoping for something along those lines and Google decides licensing fees are cheaper than lost business. It wouldn’t be the first time a company has tried to extort licensing fees after the fact.

  23. >No, it isn’t the purpose of patent law. The purpose of patent law is quite expressly dictated. That businesses abuse it is no reason to be rid of it. Instead, modify the terms of patent law so that submarine patents cannot be enforced. 90% of the bullshit goes away just by putting a limit on the patent that if it is not produced within n years from the filing date the patent is null and void.

    You need to learn some economic history of patents, starting with James Watt. This is not something that happen in the modern days. This is something that repeat over and over again in our civilization.

    It is evil and should be burgeoned to death by any self-respecting anarchist. Thankfully, that has already happened. The major think tank of libertarianism, mises.org has already adopted creative common licenses and publishes article against the patent system.

    Really, everybody should read Against Intellectual Monopoly, http://levine.sscnet.ucla.edu/general/intellectual/againstfinal.htm

    Hopefully, it will cause a major perspective drift for you like it did for mine. Heck, this book should probably stuck into every single house in the United States.

  24. Patents are actually an early try at open-source.

    Sure, you get protection _for a limited time_. But to do that, you have to release enough detail to let everyone else duplicate the idea once the patent expires. So you reward the inventor (he gets the early market share) and society (everyone gets the details, they can’t be kept hidden if you want the legal protection.)

    That’s the theory, anyway. I admit the implementation could probably use some work (particularly when it comes to copyright). But if “everything is patented”, we should all rejoice, because once the patents expire nobody will be able to patent them again…

  25. I’m familiar with the arguments against patents, and they are strong. Don Lancaster is probably the single biggest proponent of not bothering to patent your ideas on the basis that someone WILL steal them, so you may as well get in the market fast, make your money, and bail when it gets co-opted.

    And there ARE industries which would simply fold up and die without patent protection. I know it’s unpopular to support the pharmaceutical industry, but there is a massive amount of money that goes into R&D for ideas that don’t pan out, and companies rely upon profits from drugs that do succeed to cover those costs. If the patent laws go away tomorrow, then the instant a drug hits the market anyone can reverse-engineer it, and make it for nothing more than the cost of reverse engineering, materials, and labor. Meanwhile the company that sunk $2 billion into testing and development and FDA certification doesn’t get squat.

    So while the patent laws might squash creativity at the low end of the cost-to-develop spectrum, their absence will destroy high-risk, high-cost development.

  26. @brian

    The cost of producing software is much higher than duplication. So the pharmaceutical industry is a matter of scale.

  27. @kiba – eh? That doesn’t make much sense. Without a mechanism to enforce ownership rights, how’s a software company or a pharmaceutical company supposed to get past the “one purchase, one time” problem?

    Making money off of open source only happens if enough people want or need long-term support and maintenance contracts. How many home users are going to pay for that? So the open source model is of limited utility for anyone seeking to earn a living at it.

    Same with pharma. The amount of highly specialized knowledge required to do drug research is expensive, and requires some level of guaranteed return for a successful product. Take that away, and people won’t pursue those advanced degrees in a quantity sufficient to support research.

    For any product with a small R&D budget, patents are a waste of time – you’ll blow all your potential future profits on the patent process and then on defense against much larger organizations who can afford to tie you up in court until you’re poverty stricken.

    Patents really only protect large entities from each other. Because they’re really the only ones with something to lose.

    The entire concept of patent trolls and submarine patents is a new and disruptive parasitism that takes an already flawed system and makes it dangerous. Because now even the low-cost researcher is in danger of being targeted because someone is being paid to simply patent every obvious derivation of some technology there is for the sole purpose of cashing in when someone else figures out how to actually do it in a financially viable way.

  28. brian Says:
    > The problem is that we allow patents on obvious things

    This is a problem that will never go away. What is obvious to a practitioner in a field is often overwhelmingly complicated from the point of view of the patent office, the courts, and the rest of the universe. No reasonable amount of money can solve the problem because those people qualified to work as designers in a field generally don’t want to waste their time working for the patent office.

    I’ll say it again: This is a problem that will never go away. Patents are fundamentally broken as a result.

  29. # brian Says:
    > I know it’s unpopular to support the pharmaceutical industry,

    I’m a HUGE supporter of the pharma industry. Only a fool wouldn’t be. Our lives depend on them.

    This is the classic case for patents, and I’m afraid it doesn’t work. In fact one of the few studies that have ever been done on the subject of the effects of patents was performed on this very industry. It is kind of lightweight, however, the GAO performed this study on the impact of patents on the pharma industry and concluded the exact opposite of what you say. Specifically, that patents cause a decrease in innovation in the pharma industry, not an increase.

    Why? For all the usual reasons. Patents in place make it hard to innovate. Patents in place force competitors to develop competing drugs circumventing existing patents wasting energy and resources. Patents in place cause pharma companies to be fat and lazy milking every last drop out of every patent rather than creating new revenue opportunities with new or improved products. It is the same old thing.

    Of course, it is also worth saying that a big problem with pharma is that it is so expensive to produce new drugs based on the insane burdens placed on drug manufacturers by government regulation. For sure, without patents, duplicators should have the same regulatory burden placed on them as original manufacturers. However, whenever there is such massive regulation, you end up on the situation we have today: a small number of massive pharam companies that innovate very slowly and very conservatively. That isn’t a good result for our health, but it is pretty much directly attributable to the regulatory burden and the patent system.

    Of course, I am not suggesting that inventing new drugs is easy, it isn’t, it is hard. However, adding extra burdens on top is not a good plan.

    If you want to know what is wrong with the drug industry consider this simple fact: today in the USA if you get bitten by a coral snake, there is a good chance you are going to die. Why? Because there are no supplies of coral snake antivenin available? Why? Is it hard to make? No, not at all, coral snake antivenin is a well known drug that has been used for years. However, coral snake bites are pretty rare, and so a big batch of it was made a while ago. However that batch is about to expire and nobody can afford to make any more, because it would cost millions of dollars to get the FDA to approve the new batch. Consequently, nobody will make it.

    If you get bitten by a coral snake, you’d better hope it happens in Mexico, because there, you can get the non FDA approved antivenin.

  30. So since any technology, sufficiently advanced, is indistinguishable from magic, we abandon all pretense of legal protection of ideas? That effectively values ideas at zero. I don’t think that’s going to make things any better.

  31. >Making money off of open source only happens if enough people want or need long-term support and maintenance contracts. How many home users are going to pay for that? So the open source model is of limited utility for anyone seeking to earn a living at it

    I get paid to work on open source games. A guy named Jason Rohrer earned 40,000 USD in just a few month even though the source code of his game is open source. Sometime when you ask people to give you money, they give you money. How many open source projects actually ask their users to pay for the privilege of getting software or even try to make money off their work? They have a totally different mindset.

    That being said, my biggest obstacle is those pirated copies of Starcraft 2 or pirated copies of some other indy game.

    >The entire concept of patent trolls and submarine patents is a new and disruptive parasitism that takes an already flawed system and makes it dangerous. Because now even the low-cost researcher is in danger of being targeted because someone is being paid to simply patent every obvious derivation of some technology there is for the sole purpose of cashing in when someone else figures out how to actually do it in a financially viable way

    This is when somebody don’t READ HISTORY. We got several hundred of years to make this right, and we never did. Moreover, they aren’t necessary, especially when you look at it in hindsight. James Watt was just one of the many steam engine inventor who just happen to get lucky. He then wasted his intellectual talent by wasting them in courts.That slow down the industrial revolution.

  32. Jessica – that’s right back to regulatory capture. The FDA regulations that exist were lobbied for, in part BY the pharmaceutical industry to create an excessively high barrier to entry to keep newcomers out of the field.

    So the pharma industry can’t really whine about it. They created the scorpion, and now they complain about being stung?

    I’d say that the regulatory burden is a confounding factor in the study you reference which would actually incentivize the more conservative approach. Why develop a new drug when we can wait for our present one to be nearly off-patent, submit an isomer for approval, get it approved with nearly no R&D costs, and then put it on patent and make money off that while the off-patent drug goes generic. (reference: cilatopram and escilatopram as just one example).

    I think we need to eliminate some variables before we determine that the patent system is itself to blame for the problem.

  33. >So since any technology, sufficiently advanced, is indistinguishable from magic, we abandon all pretense of legal protection of ideas? That effectively values ideas at zero. I don’t think that’s going to make things any better.

    Ideas are worth a dime a dozen. It’s the implementation that matters.

  34. > In fact, the moral basis of patent laws isn’t, originally, that people have a moral right to own an idea. As the wording of the constitutional clause shows, it is really
    > a pragmatic argument. If we give people exclusive rights to an idea, then they are incentivized to come up with more.

    My understanding is that patents were instituted to encourage disclosure of methods of operation. In effect, a policy trade-off which encouraged disclosure over trade secret. This helps to avoid the formation of closed and secret guilds which could truly limit the number of people in the field by requiring disclosure as a part of issuing the patent. In order to do that, a defined benefit was instituted (the patent) so that the inventor could decide if they wanted to keep it as a trade secret and risk somebody else coming up with the idea independently, or reverse-engineering, or instead gain long-lasting protection at the cost of disclosure.

    Having had some fun with the patent system, I’d argue that as a first pass, we should only issue patents which are specific and detailed enough to allow a compatible or similar implementation to be developed. This would encourage more disclosure, not less, and would at least open up a lot of holes for subsequent developers to work in.

  35. kiba – look at the stacker case. Yes, in some cases defending a patent is a fool’s errand. But taking away the patents won’t speed up innovation. How much innovation is going on in China right now? How much ever happened in the USSR? making everything de facto public domain is not going to spur innovation.

    And for every kiba that makes 40 grand selling open source games, there are probably a thousand others that never make a dime. You’re in a niche industry. That’s no way to have a growth economy.

  36. # brian Says:
    > That effectively values ideas at zero.

    Yes, close to zero anyway. Implementations of ideas are worth a lot though. Your obviously a smart guy, so I assure you, I can sit and talk to your over a cup of coffee for twenty minutes and come up with two dozen really interesting ideas, and probably several really cool products. However, those ideas are totally worthless until one of us converts them into useful things or services for other people.

    Sometimes ideas are powerful outside of the commercial market. For example, as I said in a separate post, the ideas contained in “The Cathedral and the Bazaar” were very valuable to me. But until I do something with them, outside of my own personal value system they aren’t worth much.

    I think the guy who described product development as “10% inspiration and 90% perspiration” greatly overestimated the size of the first part.

  37. brian Says:
    > So the pharma industry can’t really whine about it.
    > They created the scorpion, and now they complain
    > about being stung?

    Yes, I am with you 100% on that. However, I can certainly whine that my government has interfered in the market in such a way that life saving and life changing drugs are developed at a much slower rate. Literally millions of people have died prematurely, and been injured unnecessarily because of the regulatory system and patent system they have set up.

    I think I have a right, perhaps even a duty, to whine about that.

  38. # brian Says:
    > How much innovation is going on in China right now?

    Is that a serious question? The Chinese economy is growing by leaps and bounds in part because of huge innovation. Perhaps mainly in cost reduction and manufacturing rather than new products, but why would you dis that?

    And if you accept your implication that China is grossly violating intellectual property, you can’t seriously contend that we are all worse off for it, can you? The flood of spectacularly cheap, spectacularly high quality products the Chinese send us is surely a very strong argument in favor of telling them to keep doing what they are doing.

  39. I think I have a right, perhaps even a duty, to whine about that.

    That’s as may be, but in a corporatocracy, the government doesn’t represent you. The fish is rotten from the head down. You don’t get rid of the smell by cutting off the tail.

    Take away the influences that government and business have on each other, and we can start to talk about fixing the other things. As long as lawyers run the system, meaningful change is not possible.

  40. > kiba – look at the stacker case. Yes, in some cases defending a patent is a fool’s errand. But taking away the patents won’t speed up innovation. How much innovation is going on in China right now? How much ever happened in the USSR? making everything de facto public domain is not going to spur innovation.

    The Chinese are imitating until they become innovators. They got a base of knowledge from producing all these nice ipods and the like. Don’t underestimate the Chinese.

    The arudino guys are doing quite well, even with the proliferation of various arudino clones. You can get plans off the internet and build them. The clones help grow the hardware hacking community, and consequently expand the market.

    >And for every kiba that makes 40 grand selling open source games, there are probably a thousand others that never make a dime. You’re in a niche industry. That’s no way to have a growth economy.

    Don’t say things that you will later regret saying, especially a naysayer. Jason Rohrer is not some obscure guy either. He is famous within indie circles, but not so much within the open source community. In any case, every ground breaking video game Rohrer make only make him more famous, increasing his earning potential.

  41. Jessica – what China has done is taken other people’s innovations, copied them, and are making cheap, low-quality knock-offs. Any “innovation” that is taking place there is by companies looking to get the lowest possible labor costs and the least possible safety and environmental regulation. You think the Chinese are the ones coming up with the high-throughput factories? Hells no. They just copy what western companies have built.

    What’s happened in China is the triumph of cost over quality. I’ve never had a cell phone last more than a year and a half. Build quality for Chinese-made consumer goods is uniformly abysmal. I’d gladly pay twice as much for something well built, but the PTB have decided that I’m not the target market.

    But that’s far afield of the original discussion. My point in mentioning China is that we have an example of a country with no intellectual property regime whatsoever. And a complete lack of innovation as well. Are the two related? Most likely.

  42. There’s only one problem with all of this: Doing away with patents, economic arguments aside, will require political will on a large scale well beyond anything this country’s ruling class is likely to be able to muster. You can argue that patents are bad – and in the case of software patents, I’ve got more cause than most to feel that way – but how do you get there form here? How do you get rid of them?

  43. > Take away the influences that government and business have on each other, and we can start to talk about fixing the other things. As long as lawyers run the system, meaningful change is not possible

    There can be no patent system in a free market, because the patent system is fundamentally a central agency and patents goes beyond mere contract. Patent will laughed out of the court immediately due to the fact that it involves 3rd parties not involved in the agreement.

  44. > Jessica – what China has done is taken other people’s innovations, copied them, and are making cheap, low-quality knock-offs. Any “innovation” that is taking place there is by companies looking to get the lowest possible labor costs and the least possible safety and environmental regulation. You think the Chinese are the ones coming up with the high-throughput factories? Hells no. They just copy what western companies have built.

    All you have done is ignore evidences or articles contrary to your opinion. You can also continue to ignore my business model cases as much as you like.

    But the fact is, the Chinese are manufacturing all these nice iPods, and in some case even better version pirated version of brands.

  45. > kiba – my point is how much room is there for Jason Rohrers?

    There will be plenty of more room for Jason Rohrer when people stop pirating Starcraft 2, and even more room for Kyle Poole who ported wesnoth over to the iphone and the like. I welcome the video games’ anti-piracy and anti-consume stance.

    If you did not know, the video game industry is quite a brutal industry. For every indie that are laying in cash, there are a thousand starving indie.

    This is the same for open source game entrepreneur, but there aren’t any or they are so few in numbers.

  46. According to this article, the technique described in the ’720 patent has been around for ages. Apparently, emacs makes use of it.

  47. Jay Maynard Says:
    > How do you get rid of them?

    That is an excellent question Jay. I don’t know the whole road, but I do know the start. Consider what ESR did regarding Open Source. I was young at the time, but from what I hear in the 80s and early 90s the ideas of “open source business model” were considered laughable naive. However, along came people like Eric and built an intellectual foundation for the ideas of open source, and from the ideas flowed consequences, until we reach the point we are at today.

    So what I would say to you is this: the starting point is to challenge the status quo notions of patents, the first step is to question whether they are right. The first step is to begin to fill the meme-sphere with alternative ways of looking at innovation and creativity, and different ways of looking at how new products are developed. The first step is to yell “The Emperor has no clothes” as loud as you can, and accept the derisive, uncomfortable laughter directed your way. The first step is to put up a valid intellectual challenge to the bogus status quo. From there, perhaps, if we are lucky, a change can be brought about in attitudes and eventually legislation.

    Perhaps that is laughably naive. But at least it is something.

  48. All you have done is ignore evidences or articles contrary to your opinion.

    eh? What evidence? That China is building American-designed iPods in American-designed factories from American-designed chips? Assembly is the easy part of the job, which is why so many companies are hip to outsource it. Then the Chinese simply replicate what was done, or better yet (like the Cisco case) keep the production lines running overtime and make the same exact boxes and sell them as though they were supported by the original manufacturer.

    That doesn’t sound like innovation, it sounds like theft.

    There will be plenty of more room for Jason Rohrer when people stop pirating Starcraft 2, and even more room for Kyle Poole who ported wesnoth over to the iphone and the like

    You mean the Kyle Pool that the GPL gang are trying to punish for porting Wesnoth into Apple’s Walled Garden that they have an ideological beef with?

    People aren’t going to stop buying or pirating Starcraft until someone comes up with something better. And that’s not going to happen with a hobbyist in his garage. Just like nobody is going to design the CPU that knocks Intel off the top of the world on a shoestring budget.

    I welcome the video games’ anti-piracy and anti-consume stance.

    As more than a few companies have demonstrated lately, DRM does precisely zero to stop piracy, and drives erstwhile paying customers to the pirates rather than the original publishers.

  49. >Perhaps that is laughably naive. But at least it is something.

    You don’t need a conscious movement to do this. Open source hardware and the ability to create, and share contents will undermine the ideas of copyright and patents in the long run.

    You can kill a couple of hardware companies, but you can’t kill million of amateur cloners. If necessary, the community can then goes underground. Resiliency to attacks and aligning business interest is key.

  50. brian Says:
    > Jessica – what China has done is taken other people’s
    > innovations, copied them, and are making cheap, low
    > -quality knock-offs. Any “innovation” that is taking place
    > there is by companies looking to get the lowest possible
    > labor costs and the least possible safety and environmental
    > regulation. You think the Chinese are the ones coming up
    > with the high-throughput factories? Hells no. They just copy
    > what western companies have built.

    That is a gross mis-characterization of what is going on in China.

    > What’s happened in China is the triumph of cost over quality.

    That is called a trade off. In fact, the truth is that low cost leads to higher quality inexorably. Lower cost produces higher volume, higher volume produces more capital for R&D, more R&D produces more functionality and better quality (the last step being a trade off.)

    Who the heck keeps a cell phone for more than a year or two anyway?

    > My point in mentioning China is that we have an example of a
    > country with no intellectual property regime whatsoever. And
    > a complete lack of innovation as well. Are the two related? Most likely.

    And an economy growing at three times the rate of the USA, and a trade deficit at equal speed, exceeded only by the speed of dollar denominated debt flying from New York to Beijing.

    Yes I can see why you think the US system is so much better.

  51. Jessica – China’s entire economy is built on debt. That growth is all fictitious. There is nowhere near enough of an internal market to consume goods at a sufficient pace to keep them growing at their present rate, and external consumption is falling like a rock.

    My example of the cell phone isn’t the only one. Just about every single piece of electronics I have ever owned that was manufactured in China has failed. Sometimes spectacularly. Yes, the quality is improving, slowly. The same can be said of Japanese goods during the 1970s. Doesn’t change the fact that there’s no real innovation taking place in China.

    And the USA’s economy is growing faster than everyone in the Eurozone, but the pols here all want to adopt the economic policies that keep the Eurozone moribund.

    Maybe the trend in any society is for the government to do progressively stupider things until the society collapses.

  52. > Doesn’t change the fact that there’s no real innovation taking place in China.

    It doesn’t change the fact that imitation is a way to bootstrap your knowledge base. They have more honor student level kids than there are students. How does a country gain knowledge?

    Simple. Copy poorly. Copy a little better. Copy until you make it. Multiply that by million and millions, and somebody is bound to innovate. Somebody is bound to gain that little special knowledge that make the Chinese a world leader in the global market.

    Meanwhile, the American should stop wasting money on patents and keep working on improving their knowledge about electronics and manfuacturing. Legal wars waste talents and money.

    People with good sense will simply hire the more expensive American software developer over the Indian programming shops simply because they are better.

    Nobody lose by overestimating the challenge, but people will certainly lose if they underestimate.

  53. > They have more honor student level kids than there are students

    I mean, they have more honor student level kids than we have students.

  54. brian Says:
    > So since any technology, sufficiently advanced, is
    > indistinguishable from magic, we abandon all
    > pretense of legal protection of ideas? That
    > effectively values ideas at zero.

    YES. When you have eliminated the impossible, whatever remains, however improbable, must be the truth. I’ve already shown above why preventing a flood of trivial patents is effectively impossible.

  55. So if we value ideas at zero, doesn’t that presage a race to the bottom? Whomever can produce for the lowest price, quality be damned? We already have that in consumer goods. There are plenty of companies that will pay for an Indian outsourcing company to program something three or four times rather than admit they made a mistake and pay someone in the West to do it once instead.

    In an ideal world, perhaps, we wouldn’t need patents. But this is not an ideal world.

    @kiba – I’m not going to get into a conversation about education in America – it’ll piss me off too much, and it’s a nice day.

  56. brian Says:
    > China’s entire economy is built on debt. That growth is all fictitious.

    That is a curious analysis to say the least.

    > There is nowhere near enough of an internal market to consume goods

    Hollywood can’t support their current level of production if the USA was their only market, but that matters exactly why?

    > My example of the cell phone isn’t the only one. Just about
    > every single piece of electronics I have ever owned that was
    > manufactured in China has failed.

    I don’t understand why that is important. Quality and price is a trade off. If you want to buy overpriced electronics, there are plenty of American manufacturers. Many are going out of business because they can’t scare up enough people with your preferences to hit 1%. Unfortunately that means your price is going up.

    > And the USA’s economy is growing faster than everyone in the Eurozone,

    Right, because the US economy is more liberal that the Euro economy. It is disturbing is it for me to say this, but the Chinese economy is more liberal than the USA in their economically liberalized areas such as Shanghai, Hong Kong and Shenzhen.

    >Maybe the trend in any society is for the government to do progressively stupider things until the society collapses.

    Perhaps. It is the nature of government to do counterproductive things because that is what their incentives demand. I wonder, assuming you accept this premise, why you favor massive interventions like patent law?

  57. >So if we value ideas at zero, doesn’t that presage a race to the bottom? Whomever can produce for the lowest price, quality be damned? We already have that in consumer goods. There are plenty of companies that will pay for an Indian outsourcing company to program something three or four times rather than admit they made a mistake and pay someone in the West to do it once instead.

    Ideas are already at zero if you have not noticed the million of half baked MMORPG ideas out there. That is why implementations are worth more than a million ideas.

    There may be plenty of companies that paid for Indian outsourcing, but there will be opportunity cost to pay for in the future.

  58. brian Says:
    > quality be damned?

    No, quality is a feature that some people want to pay for, and some don’t. Vive la difference.

    > There are plenty of companies that will pay
    > for an Indian outsourcing company to program
    > something three or four times rather than admit
    > they made a mistake and pay someone in the West
    > to do it once instead.

    If it is more economical to do it several times in India, why is it a “mistake”. And if it isn’t, then the rational choice would be to do it here. Of course people make mistakes, but that isn’t the point really.

    You speak with disdain for a race to the bottom. However, I can buy a phone for a couple hundred dollars today that has more computing power than all the world did eighty years ago. That sounds a pretty good bottom to me. I love a race to the bottom. Wall Street hates it.

  59. brian Says:
    > So if we value ideas at zero, doesn’t that presage a race to the bottom?

    Probably yes, and that’s a good thing. We as consumers like having a wide selection of commodity products.

    What you have to get past is the falsehood that an invention should be like a lottery ticket where an inventor hits the jackpot by thinking up one good idea. In a world without patents, an invention is still a great tactical advantage in business, and great profits await the first person to bring a great, new idea to market. Who has the easiest time marketing a new product, the one person or team who invented it for the first time, or the billions of other people who haven’t thought of it yet and won’t think of it until they see the finished product on the shelves?

    In the long run there is only one non-commodity product: human brains that can think up good ideas. Those brains will always be in demand. For everything else, the floor is the limit.

  60. @esr:

    Hard to see how this will fly since Oracle has no products in the mobile-Java space

    They sure do: J2ME, Java 2 Mobile Edition, sometimes called ‘MIDP’. Most commodity non-smartphone handsets use J2ME to support applications like Opera Mini, GMail, Google Maps, and the all-important games category.

    Sun was making at least some money licensing J2ME to the likes of LG, Samsung, Sony Ericsson, etc.

  61. > and great profits await the first person to bring a great, new idea to market.

    This is what economists called first mover advantage.

  62. The suit seems like a purely insane thing for Oracle/Sun to do, if you discount patent trolling for a moment. Aren’t Android phones a complementary product to almost everything Oracle makes? Maybe Oracle isn’t too well positioned to take advantage of Android’s success because Sun was so badly mismanaged for so long, but still, they should be hoping for many more smartphones. I suppose Oracle’s lawyers just wanted to cash out Sun’s corpse as fast as they could.

  63. If it is more economical to do it several times in India, why is it a “mistake”. And if it isn’t, then the rational choice would be to do it here. Of course people make mistakes, but that isn’t the point really.

    Companies have been known to pay more to have it done over again. In fact, I know of a few that paid more than once for Indian outsourcers to do the work, and then had to pay local talent to do it right. yet they continue to believe that outsourcing is the way to go because it has a better impact on this quarter’s numbers.

    You speak with disdain for a race to the bottom. However, I can buy a phone for a couple hundred dollars today that has more computing power than all the world did eighty years ago. That sounds a pretty good bottom to me. I love a race to the bottom. Wall Street hates it.

    That’s as may be, but if I could buy an American-made phone for 1.5 times the price that lasted twice as long, I’d do it. Catering to the bottom of the market (the price-only buyers) has caused just about all cell phones to be made in China. I’ve got a Palm Pre. It’s three months old. And it’s a piece of shit. On the other hand, I’ve got a Chinese-made Lenovo laptop that’s got six years on it. On the gripping hand, I’ve got electronic gizmos made other places (like my Minidisc player from Japan) that are going on 10 years without a burp. I don’t think I’ve got any 10 year old Chinese products. Well, maybe the Mahjongg tiles. The race to the bottom has been on more than price, it’s been about sacrificing quality to get to that price.

    In a world without patents, an invention is still a great tactical advantage in business, and great profits await the first person to bring a great, new idea to market

    This is the part I don’t get. Without patents, the first person to successfully clone it wins. No R&D to recover, it’s all profit from day 1. No patents means no licensing. Which means the only way to profit is to build your invention for less than the cloners can, and that’s a mathematical impossibility.

  64. >Companies have been known to pay more to have it done over again. In fact, I know of a few that paid more than once for Indian outsourcers to do the work, and then had to pay local talent to do it right. yet they continue to believe that outsourcing is the way to go because it has a better impact on this quarter’s numbers.

    That make it far easier for newer companies to cause market disruption. Ain’t capitalism so grand when companies act irrational enough for you to move in?

    >This is the part I don’t get. Without patents, the first person to successfully clone it wins. No R&D to recover, it’s all profit from day 1. No patents means no licensing. Which means the only way to profit is to build your invention for less than the cloners can, and that’s a mathematical impossibility.

    Even though the government report on 9/11 was especially clonable, the publisher who got it first was able to make money off of it. It’s called the FIRST MOVER ADVANTAGE for a reason. By the time the cloner got to it, the market may be effectively saturated. Cloning also carry the real risk that you’re cloning a dud product.

    Did I forgot to mention arudino again?

  65. brian Says:
    > Companies have been known to pay more to have it done over again.

    So? Some people do dumb things. What’s your point. Lots of people are saving lots of money by outsourcing. It is a good model for some types of software manufacture, not so good for others.

    > That’s as may be, but if I could buy an American-made phone
    > for 1.5 times the price that lasted twice as long, I’d do it.

    What if it cost 20x as much? The scaling isn’t necessarily linear. The cell phone market is pretty specialized because it is so highly controlled by government access to radio spectrum. I already got in deep on solutions to this on a different thread on this blogs, so I’ll pass on a revisit. However, if we talk about other electronics, I just don’t agree. Most electronics I have lasts for several years. I usually replace them due to obsolescence rather than failure. And if I can buy a WiFi router for $20, that lasts a year, I’m OK with that if the alternative is a locally made one that costs $200 and lasts ten years. FWIW I had a TMobile smartphone that I have had for three years, and it works just fine. It is Windows Mobile, so functionally it sucks, and the battery cover tends to fall off, but for three years of constant use, hanging out in my pocket, I think that is pretty durable.

    > it’s been about sacrificing quality to get to that price.

    Yup it is a trade off, however, I think you are really exaggerating the extent of the quality problems.

    > This is the part I don’t get. Without patents, the first person
    > to successfully clone it wins.

    There are many, many competitive advantages that can be exercised beside ownership of patents. First move advantage is huge in fast moving markets, and lets face it, nearly all markets are fast moving today. To be honest, I think this comment is extremely naive.

  66. I’ve been reading this blog for a long time, but I don’t usually comment, typically because the topics discussed here are just too engrossing, and I fear that a good discussion here will suck up all of my time. I couldn’t quite resist this one though.

    I’ve seen a lot of complaints above on how patents are, in and of themselves, the root of the problem. I disagree. The problem is patents on software and/or ideas. Patents do not (or at least were not intended to) protect ideas. They were intended to protect inventions. The hideous mess we find the patent system in today goes back to a 1981 Supreme Court decision in Diamond v. Diehr. Prior to this decision, software, business processes, genes, etc. were considered unpatentable. And they should have remained so. Patents are a valuable legal tool when used in the correct context, but that context should be the pre-1981 context, i.e. that of a process or invention which transforms matter.

    Also interesting (and infuriating) is that the Diamond v. Diehr decision, did not in any way specifically allow patents on “subject matter”, nor to my knowledge has anything else, except that there are now decades of (bad) case law involving decisions predicated on the fact that Diamond v. Diehr didn’t prohibit it either, which is just silly. It just said that a machine, which would normally be patentable, was not made unpatentable just because it happened to be controlled by a computer.

    Of course when you give lawyers the tiniest crack, they start breaking out the crowbars. Add to this the fact that the Patent Office is so overwhelmed by spurious patents, that if you file something often enough you are almost guaranteed to receive a patent, and the fact that large corporations keep trying to extend the “limited time” for which patents, copyrights and trademarks apply, and you arrive in our current situation, which is an utter mess.

    What I’d really, really _like_ to see, is Google to try for a decision in this case which would nail down, for once and all, that software is not, in fact, patentable. Period.

    I don’t think it will happen, but it sure would be nice.

  67. >The problem is patents on software and/or ideas. Patents do not (or at least were not intended to) protect ideas. They were intended to protect inventions. The hideous mess we find the patent system in today goes back to a 1981 Supreme Court decision in Diamond v. Diehr. Prior to this decision, software, business processes, genes, etc. were considered unpatentable.

    Again, you would, and others benefit from reading the history of patents. See the book that I mentioned several comments ago.

    This problem is not new by any chance.

  68. Kevin Horn Says:
    > I’ve been reading this blog for a long time, but I don’t usually comment, typically because the topics discussed here are just too engrossing, and I fear that a good discussion here will suck up all of my time.

    Ah, welcome. Welcome to the tar pit. Please expect your productivity to decrease by about 80%. :-)

    > I’ve seen a lot of complaints above on how patents are, in and of themselves, the root of the problem. I disagree. The problem is patents on software and/or ideas.

    What’s so special about machines? Why do you have a right to prevent me from making a door lock similar to your door lock, but you don’t have a right to prevent me from making a mutex lock similar to your mutex lock?

    You, as an advocate of patents need to prove to me that the patent system as a whole benefits society. Why do you need to prove it to me? Because you are demanding that I give up my rights to act in certain ways (such as competing with you) in exchange for a claim that it will benefit society. I think I need more than your unsubstantiated promise on that one. This is true even if you advocate a more limited form of patent than the present monster.

  69. Electronics sucks nowadays probably mostly because of the European RoHS guidelines, which ban leaded solder. The addition of lead to solder was primarily to prevent the formation of “tin whiskers” which form over time and cause short circuits. There exist contractors to the U.S. military (which frankly doesn’t give a shit about the environment) whose line of business is reballing RoHS-compliant components with lead-based solder balls, so that e.g. military radio equipment is more durable in the field.

  70. Kevin, from what I can tell, In Re Bilski is a no-op as far as software patents are concerned. I was hoping that wouldn’t be the case, but it is what I had expected.

  71. Funny how we were all wringing our hands over Microsoft maybe, possibly, hypothetically enforcing patents over .NET, and that was supposedly one reason why Java is preferable to .NET — when now it turns out that Java was the IP time bomb waiting to go off. :)

    How I do wish Google had gone with C# instead of Java…

  72. “Wow, the fear is strong around here isn’t it? Stupid companies doing stupid things, and all of a sudden it’s about Apple? Seriously?”

    This. It’s laughable.

  73. As an aside…
    Jessica Boxer says:
    “Who the heck keeps a cell phone for more than a year or two anyway?”

    Uhhhh… I just got a new Samsung 2 months ago to replace the Mot 120C that I got 6 months before 9/11…

    As a hardware engineer, every patent I’ve ever filed for has been with one thought in mind:

    “There. Let the lazy b*st*rds do their own work.”

  74. >Even though the government report on 9/11 was especially clonable, the publisher who got it first was able to
    >make money off of it. It’s called the FIRST MOVER ADVANTAGE for a reason. By the time the cloner got to it,
    >the market may be effectively saturated. Cloning also carry the real risk that you’re cloning a dud product.

    This is a poor example. The expense of the product at hand was not in the publishing, but in the development of the report in the first place, all of the publishers had the same upfront costs (relatively). The cost to Thomas Edison for the production of his light bulb was not merely the cost of the first bulb, but all of the failures leading up to that bulb. A first mover has only enough advantage as it takes for the cloners to ramp up manufacturing, and then even if they produce for the same price, they’re earning profit while Edison is paying back R&D costs.

    Perhaps there is a way to solve the problem though, my thoughts:

    1) Bring the limits back to reasonable numbers. Evaluate on average how quickly returns are made in each given industry, and assign patent limits based on this evaluation, re-evaluated every 10-15 years as needed, but no patent longer than 10 years (needs to be in the constitution, or other similarly difficult to change law in other countries).

    2) Patents only given for completed, working, and sellable items, or items which will be within 1 year, or have been submitted for regulatory approval. If the item is not completed and on sale within 1 year or fails regulatory approval, the patent is void, and someone else can try. However, patents start on the grant date, not when they’re complete or pass regulations. So sure, you can apply for the patent a year before you’re ready to go to market, but you’ll eat a year of patent time, which I think is how things are anyway, but patents are so long lasting it doesn’t hurt.

    3) Patents are reviewed not by patent agents with little knowledge of the tech in question, but by your competitors and other entities in the industry, distributed based on share of granted patents. This puts companies against each other in the patent process, where you can allow patents on blatantly obvious things, but then you’re giving your competitor an edge; similarly, you can deny patents on truly novel inventions, but then you risk your competitors doing the same to you.

    Like most things, patents are a double edged sword, and they have a purpose (to bring inventions to light rather than being kept as trade secrets), but that purpose must be carefully balanced against the potential to be used as a weapon against fair competition.

  75. Somewhat-related to the J2ME reference, the Sun embedded JRE is usually licensed to entities like handset m’fers….yet it does not require licensing for “general purpose computing platforms”. The N900 is very much a general purpose debian-based linux computer….therefore the use of Sun’s embedded ARM JRE should carry no liicensing requirements – much like installing a mainstream JRE on a linux box.

  76. tmoney Says:
    > A first mover has only enough advantage as it takes for
    > the cloners to ramp up manufacturing…

    I suggest you do a little research on first mover advantage before you make a factually incorrect comment like this. wikipedia might be worth a looking at.

  77. > Like most things, patents are a double edged sword, and they have a purpose (to bring inventions to light rather than being kept as trade secrets), but that purpose must be carefully balanced against the potential to be used as a weapon against fair competition.

    For the love of Eris, pretty please do your research instead of assuming that patents actually disclose secrets. They do not, as far as economic evidence goes.

  78. Thinking as a game designer…

    1) The duration of the patent is equal to the time span between when the application was filed and when the product came to market. The application holds no legal weight to prevent someone from copying your idea; it only provides a time point from when the application was filed and when the device came to market.

    2) Industry trade associations and standards groups examine all patent applications related to their field before they go to the patent office. Their criteria is obviousness and uniqueness. This does mean that any member of said trade organization can see patent applications…and could conceivably beat the original inventors to market.

    What this does is put a game theoretic tension on creating new devices and getting them ready to patent and getting them to market. Filing early means someone can beat you to market; if you make it there first, you get more time to recoup your investment. Getting things nearly ready to go to market, filing and then getting them to market means you’re probably first to market, but the patent expires sooner.

  79. >For the love of Eris, pretty please do your research instead of assuming that patents actually disclose secrets.
    >They do not, as far as economic evidence goes.

    If they do not then that is our failing not a failing of patents in general. That we apparently do not require a full and complete disclosure is no more an argument against patents than a failure to read is an argument against contracts.

    >I suggest you do a little research on first mover advantage before you make a factually incorrect comment like this. wikipedia might be
    >worth a looking at.

    Sigh… yes, there are other advantages to be had, but even your wikipedia article notes that much of a first mover’s advantage comes from maintaining proprietary and secret control over the product and processes. It’s not really worth arguing though since the point was that an inventor / innovator incurs costs that cloners do not.

  80. OpenSolaris is being cancelled.

    Looks like Larry’s pissing on everybody’s parade.

  81. # tmoney Says:
    > It’s not really worth arguing though since the point was that an inventor / innovator incurs costs that cloners do not.

    But isn’t it obvious that the cloners incur costs that the inventors don’t? And isn’t it obvious that the inventor receives benefits that the cloners don’t? And isn’t it obvious that if you only look at one side of the equation then the results favor that side?

    I have no doubt that in the absence of patents some things that are made today would not be made. But I am equally sure that some things that are not made to day would certainly be made in the absence of patents.

    So the point comes back to this: if you are demanding the government oppress me by taking away my right to free action (such as competing against you), the onus is on you to make a very compelling case that the societal benefit you claim is not fictitious.

    Sorry, I don’t see it.

  82. > If they do not then that is our failing not a failing of patents in general. That we apparently do not require a full and complete disclosure is no more an argument against patents than a failure to read is an argument against contracts.

    This is not a failing of human beings, but the failing of the system. The system should be designed around human limitations, not the other way around.

    In any case, the patent system’s secret disclosure is a myth, and it actually distort away from technologies that have secrets.

    I’ll quote techdirt since it is more eqoluent in explaining the myth:

    Techdirt:If there’s economic benefit to keeping an idea secret, and the creator of that idea knows that he or she can keep it secret for greater than the length of the patent, then there’s still no incentive to disclose. They’ll simply keep the idea as a secret, because the economic benefit of it being a trade secret is much greater than the value of the patent. Alternatively, however, the people who will decide to patent their ideas, are those who recognize that the secret behind their invention is likely to become public no matter what, before the patent period has expired. For those people, there is economic benefit in patenting the idea and “disclosing” it

    >It’s not really worth arguing though since the point was that an inventor / innovator incurs costs that cloners do not.

    RedHat is a first mover. Other people copies redhat. Redhat still thrives. The thing is, Redhat accrues benefit in addition to the cost of being a first mover.

  83. Err, accidental space lead me to posting the comment prematurely.

    >I’ll quote techdirt since it is more equoluent in explaining the myth:

    I meant: I’ll quote techdirt since it is more eloquent in debunking the myth:

  84. Red Hat thrives by offering something nobody else in the linux community offers – paid support. That’s it. Red Hat is a support company, not a linux company. Differentiation is not “First Mover” when you’re the only one in the segment.

    But isn’t it obvious that the cloners incur costs that the inventors don’t? And isn’t it obvious that the inventor receives benefits that the cloners don’t? And isn’t it obvious that if you only look at one side of the equation then the results favor that side?

    No, it isn’t obvious at all. What costs do the cloners incur that they haven’t already amortized? Teva pharmaceutical could make Allegra for pennies per pill if not for the license they pay. Absent the patent that prevented them making it at all until recently, they could have come in right away and Aventis would have had no chance to recover their costs.

    Cloners selling counterfeit copies of Windows have almost no costs at all. Would you say that Microsoft is not entitled to charge for their product and actually get paid for it?

    I have no doubt that in the absence of patents some things that are made today would not be made. But I am equally sure that some things that are not made to day would certainly be made in the absence of patents.

    Much of the former, not much at all of the latter.

    First Mover advantage only works when the costs of manufacture are significant compared to R&D. Cloners of CNC machines are probably not going to do anywhere near the financial damage that pharmaceutical generics do. Every example on the Wikipedia page about it requires patents or trade secrets to work.

    Or are you saying ditch the patent system and go completely closed with everything being trade secret? Because that’s really the only option left at that point. And I’d say that is FAR more harmful to society that the patent system.

  85. I have multiple US and foreign patents to my name….yet I have come to despise the thought of intellectual property. The only people who profit from intellectual property are lawyers and bureaucrats . Rent seeking…pure and simple. Ideas are fungible at no cost. They are not property. Real things are property. If you can’t produce competitively, you should not be able to prevent me from utilizing my own property to copy “your” idea….sorry, but facts is facts. If you can’t figure out how to produce below market using trade secrets, or use encryption to protect your data…sorry…life sucks…should the inventor of the wheel and her/his heirs be entitled to royalties in perpetuity? This is a fiction. plain and simple. It is a monopoly invented and secured by force.

    As far as I can see patent law is simply another realm where artificial barriers to entry are created. Personally I’m sick of paying multiple 1000$$$ of dollars to paper shuffling, boring, fat ass do nothing lawyers. Even if you win in the patent realm you lose.

    Bring on encryption, free flow of information, and distributed manufacturing…..F the current order.

    sorry, I’m going to have to have to write a check to a patent attorney next week.

    Sincerely,

    H. Tuttle

  86. So this is Apple, rapidly losing the market-share battle to Android, striking back by proxy.

    That’s what’s known in legal circles as baseless libel, Eric. Larry and Steve are buddies, but Larry’s a businessman first and foremost. If he decided to sue Google, you can bet that he did it because there was a convincing business case for Oracle to do so.

    This suit looks to me like Oracle attacking a rival VM lest it threaten the main thing they bought Sun for.

  87. > Red Hat thrives by offering something nobody else in the linux community offers – paid support. That’s it. Red Hat is a support company, not a linux company. Differentiation is not “First Mover” when you’re the only one in the segment.

    There are companies that sell repackaged redhat products.

    >Cloners selling counterfeit copies of Windows have almost no costs at all. Would you say that Microsoft is not entitled to charge for their product and actually get paid for it?

    It is more convenient to buy window installed than tracking down window on a torrent site, burning it, and then finally install it.

    > First Mover advantage only works when the costs of manufacture are significant compared to R&D. Cloners of CNC machines are probably not going to do anywhere near the financial damage that pharmaceutical generics do. Every example on the Wikipedia page about it requires patents or trade secrets to work.

    Makerbot Cupcake CNC, anyone? How about the arudino?

    Plans are available for anybody to read and use to construct their own makerbot or arudino. Most of all, the business behind them make money.

    >Or are you saying ditch the patent system and go completely closed with everything being trade secret? Because that’s really the only option left at that point. And I’d say that is FAR more harmful to society that the patent system.

    It is your burden to prove to us that the patent system can and will benefit society. It is also your burden to prove that the patent system actually disclose real secrets, not the easily reverse engineered tech.

  88. >Cloners selling counterfeit copies of Windows have almost no costs at all. Would you say that Microsoft is not entitled to charge for their product and actually get paid for it?

    Cloners are what keep Microsoft in business. They are advertising for window. They hurt open source more than they hurt Microsoft.

  89. > There’s prior art for the ‘720 patent in Emacs

    there’s also similar prior art for the ’720 patent in Donald Knuth’s TeX, going back to late 1970s (TeX is using “format files”, which are memory dumps of TeX with lots of macros preloaded, to greatly reduce startup time, instead of re-loading and re-evaluating all these macro packages on each startup).

  90. There are two things everyone can do:

    1. Switch from iPhone to Android.
    2. Don’t use Oracle RDBMS, middleware and Apps

    This wasn’t really possible when Microsoft was playing evil, but now is much more feasible.

  91. Google would have been better off using C# instead of Java….

    Oracle’s Next stop — > sue springsource, apache, and eclipse foundation.

  92. Sorry. Not gonna give up my iPhone without a lot more reason. I think Eric’s reaching when he says this is Oracle doing Apple a favor; I agree that they’re simply protecting their JVM, as they have done consistently all the way through.

  93. brian Says:
    > No, it isn’t obvious at all. What costs do the cloners incur that
    > they haven’t already amortized?

    Not sure what the last part means, but the costs are replete. You just don’t see them. Do you think reverse engineering is free? Do you think lost opportunities have no opportunity cost? Do you think catching up in a market costs nothing? Do you think it is just as expensive to establish a brand in a virgin market as in an established market? Do you think it is costless to convince people to change from what is working for them? If you think that “cloners” have no extra costs, and that these costs aren’t significant then you need to do a little research on the realities of business. Which cost more: writing the IBM BIOS or clean room reverse engineering the IBM BIOS?

    > Cloners selling counterfeit copies of Windows

    You are changing the subject here from patents to copyrights. They are completely different things.

    > Much of the former, not much at all of the latter.

    I think you need to open your eyes to the possibilities. Let me give you a few things to think about:

    1. James Watt’s patent on the steam engine expired, after a special law passed by Parliament to extend it, in 1800. In the last 30 years of the 1700s there was almost not advancement in steam engine technology. In 1801 there were several advances. By 1805 the steam engine had dramatically changed in character: power output, size, fuel consumption and so forth. Why did the new inventors wait until 1800? (BTW, I am writing from memory, please forgive if my dates are a little off.)

    2. Schering-Plough had a drug named Claratin, a non drowsy antihistamine, approved by the FDA in 1993. They made a fortune selling this drug and having insurance companies buy the drug for their clients. In 2002 their patent expired, the drug went OTC and the profits plunged. At exactly the time their patent expired they released a new version Clarinex, which was (supposedly) better for the same function, and which had a patent on it. Why did Schering-Plough delay the release of Clarinex until that time, or was the timing just a coincidence? Did they want to milk every last drop out of the first patent, before ticking the clock on the second patent? Did we all sniff and sneeze more for ten extra years because Schering-Plough were not under constant pressure to improve their products allowing them to hide under the protection of their patents?

    3. This one is a hypothetical, though I have heard that there is some truth to this. Whether it is true or not isn’t relevant. It is certainly possible that something like it might be true. A medical company, ABC Pharma, working in the space of diabetes support makes a lot of money from their formulation of test strips, lancets and blood glucose meters, all protected from competitive pressures by patents. They have an ongoing R&D effort to develop new products. One day their R&D team demonstrates a new product to the board. This product shines several different colored bright LEDs into the skin of the patient, and based on the reflection and absorption spectrum can remotely detect the concentration of glucose in the blood. After a quick calibration, the patient never need prick their finger again. The company considers the small amount they could make selling the machine against the guaranteed ongoing revenue from strips and lancets, and buries the project. They have their industrial spies watching all competition so that if there is even a hint of someone else developing it, they mail in the patent on the device they have already prepared. They lock in the technology so no one else can make it, and diabetes patients continue to suffer the pain and indignity of finger pricks.

    4. Uncle Bob is working in his garage. He comes up with an amazing 3D printer device. It not only prints plastic structures, but can actually print electronic circuits too! Bob has all the technology ready to go, so he goes to his local patent attorney. The first five reject him, because they don’t deal with the little guy. The six guy is a charlatan who tries to rip him off. Finally, he talks to his nephew Fred who works in a law firm. Fred does a patent prior art search and finds that there are tens of thousands of patents relating to 3D printers. Fred explains to Bob that he will have to read all the patents and make sure his technology somehow avoids all the pedantic wording and technical terminology in the massively over broad patents before he can get a successful patent, and protect his invention. He offers his firms legal services to do this for him, for an investment of $300,000. Bob decides it is easier to go back to smoking weed in his garage, and a brilliant new technology never comes to light.

    5. Brian and TMoney get elected President and Vice President of the United States. As part of their aggressive agenda, they pass a law that requires all patents to be produced and marketed within one year of issue, or the patent is rescinded.

    ABC Parama gets wind of this. Although their device costs about $5 to make, they produce and market it to hospitals, and charge $500,000 for each device. They satisfy Brian and TMoney’s law, but still the diabetes patients have to prick their fingers. Brian and TMoney rage about this indignity and try to tweak the law to prevent this sort of thing. However, the legislative process is a slow moving dinosaur, and ABC Pharma, motivated by the bottom line, is quick and nimble and easily outmaneuvers their legislative machinations.

    To put it another way, you have no idea how badly the patent system screws up product development.

  94. >To put it another way, you have no idea how badly the patent system screws up product development.

    AMEN sister….

    All the semantic arguments are just theoretical ranting. The truth on the ground is a patent is merely the right to sue somebody. It is only as good as the legal fund and team backing it up.

    Patents do not protect the inventor.

    They are an impediment to innovation. A weapon used by large well funded corporations to do battle with each other. Simply another lever to be used against competition.

  95. >But isn’t it obvious that the cloners incur costs that the inventors don’t?

    No not really. What costs do cloners incur aside from the costs of reverse engineering the finished product, that the inventor does not also incur.

    >This is not a failing of human beings, but the failing of the system. The system should be designed around human limitations,
    >not the other way around. In any case, the patent system’s secret disclosure is a myth, and it actually distort
    >away from technologies that have secrets.

    I will freely admit the current system is broken, but that doesn’t mean that patents can’t or don’t serve a purpose. Similarly the current system of government is broken, that doesn’t mean that government can’t or doesn’t serve a purpose.

    >If you can’t produce competitively, you should not be able to prevent me from utilizing my own property to copy “your”
    >idea….sorry, but facts is facts. If you can’t figure out how to produce below market using trade secrets, or use encryption
    > to protect your data…sorry…life sucks…should the inventor of the wheel and her/his heirs be entitled to royalties in perpetuity?

    Once again, there are costs that an inventor incurs that subsequent cloners do not, the purpose of a patent system should be to encourage inventors to release complete information about their inventions in exchange for a limited protection against cloners. Yes the current system is broken, and no one here is suggesting that any inventor or their heirs should be entitled to royalties in perpetuity.

    >Makerbot Cupcake CNC, anyone? How about the arudino? Plans are available for anybody to read and use to construct
    >their own makerbot or arudino. Most of all, the business behind them make money.

    The Arudino is protected by copyright, the same evil that patents inflict upon society.

  96. >The truth on the ground is a patent is merely the right to sue somebody. It is only as good as the legal fund and team backing it up.
    >Patents do not protect the inventor.

    For one, patents aren’t really supposed to protect anyone, they’re supposed to encourage inventors to publish detailed information about their inventions, in exchange for short term protection against competition.

    So since the system is broken, how do we solve it, because honestly I’m not too keen on the idea of people having to reverse engineer every damn thing, especially because I’m sure that n the absence of patents we would see something more like EULAs every time you tried to buy something, where you sign a contract agreeing not to reverse engineer.

  97. tmoney Says:
    > No not really. What costs do cloners incur aside
    > from the costs of reverse engineering the finished
    > product, that the inventor does not also incur.

    I suggest you do a little research on how products are developed and brought to market if you have to ask that question. I gave a few off the top of my head in a previous comment. There are many more. What I see here is a classic Engineering mindset: Making the product is everything. I assure you, there is much more to product production than engineering.

    > I will freely admit the current system is broken, but
    > that doesn’t mean that patents can’t or don’t serve a purpose.

    Nothing in the world is all bad. Patents come pretty close though.

    > The Arudino is protected by copyright, the same evil that patents inflict upon society.

    Patents and copyrights are completely different, and have completely different effects on society. I am not a fan of the copyright system as it stands today either, but it is much less destructive than the patent system.

  98. tmoney Says:
    >they’re supposed to encourage inventors to publish detailed information about their inventions,

    I presume from this statement that you have never actually read a patent beginning to end. They are legal documents, not engineering documents. There is rarely any useful engineering information in them at all.

  99. >I presume from this statement that you have never actually read a patent beginning to end. They are legal documents,
    >not engineering documents. There is rarely any useful engineering information in them at all.

    Once again, a failure of the current system is not a failure of patents in general. Partly why I suggest that patents should be reviewed by your competition. Competing incentives should help ensure that patents are actually useful documents to the competition.

  100. >For one, patents aren’t really supposed to protect anyone, they’re supposed to encourage inventors to publish detailed information about their inventions, in exchange for short term protection against competition.

    self contradictory sentence. I know from personal experience that patents do not in practice achieve either of these goals.

    >Once again, there are costs that an inventor incurs that subsequent cloners do not, the purpose of a patent system should be to encourage inventors to release complete information about their inventions in exchange for a limited protection against cloners. Yes the current system is broken, and no one here is suggesting that any inventor or their heirs should be entitled to royalties in perpetuity.

    as to royalties forever-If you want to argue from a property stand point then I am merely carrying the argument to its logical conclusion. ergo you are now arguing for a limited property right granted by force.

    as to cloning cost-to clone a non information based product is going to be at least 60% of original development. It depends on the product. Information can be encrypted. The market will ensure your monopoly will not live long.

    You are ignoring the cost to patent and defend which in many cases is far higher than the cost to develop the product. In addition if some large well funded organization with a team of attack lawyers decides to knock you off…you are toast anyway. Even if you win the battle.

    Suppose I come up with the same or very similar idea half way around the world on my own totally independent from you (happens all the time). Do you honestly wish to make the argument that because you paid some stuffed shirt to file some papers somewhere you should have the ability to tell me I can’t do as I wish with my own property and resources? That is the bottom line.

    I also do not believe that a small collection of possibly very stupid people can manage a vast complex society with a bunch of rules dreamed up to address problems that are obsolete before the ink is dry on the rule book.

    The system is broken because it is obsolete and based on a false idea. It should be abolished and cannot be fixed. It made sense to have letters patent when letters and libraries were how information was exchanged. That is no longer the case.

    If not abolished, intellectual property law will increasingly be used to stifle innovation, seek rent, and control the use of new technology. Even if not abolished patent law will be destroyed by economic and technological forces.

  101. >Once again, a failure of the current system is not a failure of patents in general. Partly why I suggest that patents should be reviewed by your competition. Competing incentives should help ensure that patents are actually useful documents to the competition.

    Once again, you have forgotten to look at centuries of economic history. It’s an utter failure. You will realize that implementing your dream patent system is an impossibility, and maybe you wouldn’t even want to implement it.

    Broken system after broken system, and yet people like you cry out that if you only can reform it, that you make it impart the right kind of incentives.

    “If we tune the system juuuuuuuuuuuust right, we will get tons of economic growth and less brokeness!”

    But the fact is, patents are government interventions, and can only exists with the help of governments. And we all know from thousand of years how much government sucks. We all know how government interventions suck. From centuries of history, we all know how much patents suck.

    The possibility of your system actually producing tangible results get lower and lower every year.
    >The Arudino is protected by copyright, the same evil that patents inflict upon society.

    I can assure you that the Arudino is not protected by copyright. Anybody with knowledge of how to construct an arduino can do so. The chinese manufactures will be able to produce Arudinos as much as they like once they get their hand on an arudino or instruction sets on how to construct an arudino. The arudino team cannot take out a DMCA or charge arudino cloners with copyright infringement for merely cloning an arudino.

    Copyright for open hardware are like BSD, except they literally have no practical protection at all. The only thing they got running for them are trademark. Meanwhile, cloners will just call their product blahduino and everybody that it is a clone of the arudino.

    You only have your theoretical bantering, dreaming up the perfect system for disclosing secrets that have no relations with human actions. Meanwhile, we, IP skeptics, have mountain of empirical evidence, business model cases, and economic reasoning to support our case. And some of us actually eat our own dogfoods.

    If anything, it show your hubris that you think you can plan an economy.

  102. >self contradictory sentence.

    Effect != purpose.

    >as to royalties forever-If you want to argue from a property stand point then I am merely carrying the argument to its logical conclusion.
    >ergo you are now arguing for a limited property right granted by force

    It’s only a logical conclusion if you view the purpose of the patent as protection of royalties.

    >The system is broken because it is obsolete and based on a false idea. It should be abolished and cannot be fixed.
    > It made sense to have letters patent when letters and libraries were how information was exchanged. That is no longer the case.

    It’s based on a false idea, but it made sense at one point? Now who’s being self-contradictory. Any evidence that the system can’t be fixed?

    >But the fact is, patents are government interventions, and can only exists with the help of governments.
    >And we all know from thousand of years how much government sucks. We all know how government interventions suck.
    >From centuries of history, we all know how much patents suck.

    And without patents we would have something else. Abolish the patent system tomorrow, and the big corporations will pass different laws to accomplish the same thing.

    >I can assure you that the Arudino is not protected by copyright.

    From the arudio site:

    “These files are licensed under a Creative Commons Attribution Share-Alike license, which allows for both personal and commercial derivative works, as long as they credit Arduino and release their designs under the same license.”

    “The source code for the Java environment is released under the GPL and the C/C++ microcontroller libraries are under the LGPL.”

    “Deriving the design of a commercial product from the Eagle files for an Arduino board requires you to release the modified files under the same Creative Commons Attribution Share-Alike license. You may manufacture and sell the resulting product.”

    >If anything, it show your hubris that you think you can plan an economy.

    I don’t think I can plan an economy. I do however think there are worse things that companies can dream up other than our patent system, and since it appears we have no interest in scaling back our government and its reach, I prefer to stick with the devil I know rather than the one I don’t.

  103. tmoney Says:
    > I prefer to stick with the devil I know rather than the one I don’t.

    Aren’t you glad that George Washington, Abraham Lincoln and Martin Luther King didn’t follow your line of thinking here?

  104. @esr: There may be prior art on the ’476 patent. If you read the claims section, aside from the language that says each routine is associated with a class, you’ll quickly realize that this is pretty much what PAM does. Linux PAM itself doesn’t predate the patent, but I read somewhere that Linux PAM is an implementation of RFC 86.0, which goes all the way back to 1995, which does predate the patent. Ironically enough, RFC 86.0 was proposed by none other than Sun itself.

    Even if RFC 86.0 isn’t necessarily prior art, I think it demonstrates that the ’476 patent fails the obviousness test.

  105. >Aren’t you glad that George Washington, Abraham Lincoln and Martin Luther King didn’t follow your line of thinking here?

    Actually, all of them tried fixing the existing system rather than trashing it first.

  106. >“Deriving the design of a commercial product from the Eagle files for an Arduino board requires you to release the modified files under the same Creative Commons Attribution Share-Alike license. You may manufacture and sell the resulting product.”

    I interpret that the design is separate from the manufacture of the products. As far as I know CC licenses doesn’t cover the manufactured products.

    Let the lawyers tell us who’s right here.

    >Aren’t you glad that George Washington, Abraham Lincoln and Martin Luther King didn’t follow your line of thinking here?

    >Actually, all of them tried fixing the existing system rather than trashing it first.

    You advocated a system, and it was your burden to prove it to us. So far in this discussion, I see no reason now and ever, to believe that it could be a good idea and could be successfully implemented.

    To be honest, patent and copyright won’t mean a damn to future entrepreneurs. They will be crushed and trampled into one million little pieces along side with people like you who have sticked with the old system even though it have no merits. The advent of open hardware means that there are more hobbyists than ever before in the world of electronics, and certainly more entrepreneur who are aligned with the new paradigm.

    You are like a TV executive. It sucks to be a TV executives because your world is coming to an end, but the fact is covered over with a million dollars salary. Like a frog, you will simply just boil to death.

    When Jason Rohrer was able to make 40 K dollars in a few month with his public domain game, I simply declare “Copyright is dead. Long live the public domain!”

  107. >It’s based on a false idea, but it made sense at one point? Now who’s being self-contradictory. Any evidence that the system can’t be fixed?

    So you are going to fall back on semantics and argumentum ad ignorantiam….Lets see some arguments that refute the basic false premise in the system. It is a property issue. Period. dance around it all you like because there is no way you can avoid that. You are going to have to state that you wish to use force to prevent others from exercising their natural rights. Helping society through disclosure is a pathetically overused fig leaf over your naked aggression.

    The arguments you are making made sense before the information age. They do not anymore. And yes it was a false premise even then.

    >It’s only a logical conclusion if you view the purpose of the patent as protection of royalties.

    What is the purpose exactly? Don’t keep repeating for the inventor to disclose and have a limited monopoly. That is simply not how they are used in the real world.

    So exactly what is your dog in this fight? Let’s get the cards on the table here. What kind of work do you do related to patents?

  108. TMR Says:
    > So exactly what is your dog in this fight? Let’s get the cards on the table here. What kind of work do you do related to patents?

    FWIW, I think this is a ridiculous question. TMoney and Brian are trying to put forward a case for patents and the status quo. I think their case is entirely without merit. But making an ad hominem attack like this is just silly.

  109. >FWIW, I think this is a ridiculous question. TMoney and Brian are trying to put forward a case for patents and the status quo. I think their case is entirely without merit. But making an ad hominem attack like this is just silly.

    I’m not attacking him. I just want to point out any personal bias. We all have them. I will happily state mine.

    I hate being forced into the patent game in order to defend against all manner of infringement claims. I hate the vast amount of time and resources it sucks out of otherwise productive effort.

    So I have a bias.

    If TMoney is a patent attorney or something like that I would like to know. That’s all.

    Regrettably I am not the most adept at diplomacy.

  110. So if ’476 and ’720 are any indication, will the argument be about whether any of these techniques had ever been used in a VM prior to the Java VM?

  111. >When Jason Rohrer was able to make 40 K dollars in a few month with his public domain game, I simply declare “Copyright is dead. Long live the public domain!”

    Apparently not even Mr. Rohrer (who gets at least some of his income from a “patron”) believes that:

    “It is a bit frustrating, though I must take part of the blame: being an open-source, free software zealot tends to stand in the way of selling games to people. ”

    http://www.next-gen.biz/features/interview-jason-rohrer?page=0%2C0

    >What is the purpose exactly? Don’t keep repeating for the inventor to disclose and
    >have a limited monopoly. That is simply not how they are used in the real world.

    I presume you also agree then that Bit Torrent should be made illegal, because despite claims that people use it to download linux isos (and some people do, just like some patents aren’t abused), in the real world, its used for committing crimes. Or do you argue (reasonably) that the use of bit torrent is separate from its purpose and potential?

    >So exactly what is your dog in this fight? Let’s get the cards on the table here.
    > What kind of work do you do related to patents?

    No dog in this fight. I do no work with patents. At best, some of the work I do is protected copyright, but since my work remains unpublished, thats a moot point.

    In fact I think, if this were a less heated discussion, you would find that we agree on more points than we disagree on. To my mind the only point we actually disagree on is whether or not patents can be fixed. My opposition to the complete scrapping of the existing system is the same opposition I have to any massive change to a system: throwing out years or decades of work and lessons almost always results in a worse situation than when you started. In fact, throughout history I think you will find that very rare is the revolution which succeeds by scrapping everything and starting from scratch. Most revolutions succeed when the best of the old is recombined with lessons learned and simplified. You can’t force people to change, they have to want to change this is true whether you’re talking about bad habits or bad governments.

  112. have to leave my 2 cents worth here too, I have a pretty strong opinion about Java, so don’t read on if you love it too much….

    Something tells me that this time larry bit off a whole lot more than he will be able to chew. Google is ready for this… he’s got it coming…

    As far as Java goes… I have seen a number of huge Projects fail because of Java, of course very big Coorporations (… and Governments) don’t go on the record about it, they rather not tell about their failiures it is very embarrasing and not good for business.

    The idea of interpreting byte code, write once run anywhere, just does not really work, unless maybe one would design specific hardware for it. However, Super Scalar Risc design’s do not do the JVM thing well at all…, I don’t even want to start a rant about the issues when programming in the large, anyone who has had to do bytecode instrumentation and deep diagnostics in Java Applications will get my drift pretty fast and need I say the word Garbage collection?

    Even on something as tiny as a Phone, you get issues because power consumption is critical…

    So its not really a big deal, just don’t use Java, period. At Google they are working on opening up Android to other languages, because guess what…., a lot of developers at Google won’t touch Java.

  113. >“It is a bit frustrating, though I must take part of the blame: being an open-source, free software zealot tends to stand in the way of selling games to people. ”

    Sir, that was back in 2009. I was talking about his later game, which was still public domain and open source but more successful. Weather or not that he changed his mind, or not, is up for debate.

    Even if he didn’t change his mind, I am happy with the result.

    > My opposition to the complete scrapping of the existing system is the same opposition I have to any massive change to a system: throwing out years or decades of work and lessons almost always results in a worse situation than when you started. In fact, throughout history I think you will find that very rare is the revolution which succeeds by scrapping everything and starting from scratch. Most revolutions succeed when the best of the old is recombined with lessons learned and simplified. You can’t force people to change, they have to want to change this is true whether you’re talking about bad habits or bad governments.

    “If we tune the system juuuuuuuuuuuust right, we will get tons of economic growth and less brokenness!”

    Sorry, color me skeptical after centuries of history.

  114. >I presume you also agree then that Bit Torrent should be made illegal, because despite claims that people use it to download linux isos (and some people do, just like some patents aren’t abused), in the real world, its used for committing crimes. Or do you argue (reasonably) that the use of bit torrent is separate from its purpose and potential?

    They didn’t commit any crime other than copying without permission, which is a non-crime.

  115. They didn’t commit any crime other than copying without permission, which is a non-crime.

    Meh. I’m in the middle on this one. I don’t agree with the RIAA and the like that every copy is a lost sale, but I also don’t agree with the anti-copyright absolutists that copying is without cost to anyone. Whether you like it or not, there are people who do make their living by selling intellectual property. In that world, at least some copying is theft.

  116. >In fact I think, if this were a less heated discussion, you would find that we agree on more points than we disagree on. To my mind the only point we actually disagree on is whether or not patents can be fixed. My opposition to the complete scrapping of the existing system is the same opposition I have to any massive change to a system: throwing out years or decades of work and lessons almost always results in a worse situation than when you started. In fact, throughout history I think you will find that very rare is the revolution which succeeds by scrapping everything and starting from scratch. Most revolutions succeed when the best of the old is recombined with lessons learned and simplified. You can’t force people to change, they have to want to change this is true whether you’re talking about bad habits or bad governments.

    I think we probably do have a lot in common, after all we are both in this fairly obscure corner of cyberspace. Typing short messages is far too low a bandwidth to have a serious discussion. There are no facial expressions or body language to give emotional ques. Just because my argument appears aggressive does not mean I am emotionally aggressive. My intent was to understand where you are coming from, not to attack.

    It really doesn’t matter what either of us think. The arc of history will decide the issue. The reason I say scrap it is I believe that will happen anyway long term and I would rather see the benefits now. I am a realist and do not expect that to happen. I see something closer to a french revolution in IP if the issue is not dealt with. The current system is that bad. So far the only answer from TPTB is to turn the screws ever tighter. I would like to avoid the guillotines, but I’m afraid that “let them eat cake” is the meme of the day.

    I do not think bit torrent should be outlawed. If you want to have some form of patent system fine. Make it voluntary and part of a trade association. It can be a contractual agreement between the members. There may perhaps be some advantage to this guild type of arrangement where secrets are disclosed among the members in exchange for a VOLUNTARY contractual agreement not to copy for a certain time frame. There may be an incentive to join to have access. Personally I think such a closed system would be out-competed by other more open systems. Just don’t claim the right to show up at my house with guns to prevent me from using my property to do as I please.

    The central problem is one of property and the use of force. If you wish to protect your right to profit from your work you have to figure out an open source model, or a closed source licensing arrangement based on encryption. I do not believe in stealing. I also do not believe the various argumentum ad baculum justifications for a patent system.

  117. Apparently, Oracle just shut down OpenSolaris though they will continue to release code after every commercial distribution of Solaris under the CDDL. I think the Illumos Project will have a hard time building a compatible and feature-packed Solaris OS since the release of the source will take such a long time. Guess its back to the dark ages of the Cathedral Model… Maybe its time for Illumos to fork officially.

  118. To all who claim that there is no useful information in a patent – if that is the case then those patents are facially invalid. The law explicitly requires that the patent explain the invention in sufficient detail that a practitioner of the art could replicate the device.

    If patents are being granted that do not specify this, then they ought not to have been granted. A great many of the submarine patents are explicitly like this, and I cannot for the life of me comprehend why the fight was not over whether or not the invention itself was novel, but over the validity of the overbroad patent in the first place.

    The other flaw being the granting of patents on obvious things – simply because someone took an already existing device or service and added “on the internet” to it. The NTP v. RIM patent case is a prime example – NTP’s patent should have been vacated, instead they won their claims. HOW? WHY? Who paid off whom here?

    kiba claims to be arguing against patents, when every example of the problems with patents he gives are examples of corruption in politics. If you really believe that we ought to abolish patents because they can be abused by the corrupt, well, what then CAN we keep?

  119. the fight was not over whether or not the invention itself was novel, but over the validity of the overbroad patent in the first place.

    Strike that. Reverse it.

  120. >kiba claims to be arguing against patents, when every example of the problems with patents he gives are examples of corruption in politics. If you really believe that we ought to abolish patents because they can be abused by the corrupt, well, what then CAN we keep?

    Careful! You are treading dangerously close to the rabbit hole. I would advise the red pill, but it will do bad things to you…….for a while anyway.

  121. # brian Says:
    > The law explicitly requires that the patent explain
    > the invention in sufficient detail that a practitioner
    > of the art could replicate the device.

    Patents are legal documents, not engineering documents. They meet that standard according to what the law says is appropriate, not what you, I or any reasonable engineer would think. More importantly, most patents are for things that don’t require any explanation. The headline is enough for an expert to produce it. This is because “obvious” doesn’t mean to lawyers what “obvious” means to you and I. The bar is set EXTREMELY low.

    > The NTP v. RIM patent case is a prime example –
    > NTP’s patent should have been vacated, instead
    > they won their claims.

    I’m shooting from memory here, but I think the NTP claims were pretty close to vacated. The court to all intents said they were insufficiently novel, or there was sufficient prior art. However, RIM paid them a big settlement anyway to make it all go away. That is how patents work. It is a lot like tort law. They raise the risk of a TRO succeeding high enough that it is easier to just pay the patent holder to go away. Like I say, it is a lot like tort law.

    What the NTP patent shows is not bad actors in the patent system. Rather it shows what happens when a little efficiency is introduced in the patent system. NTP bought the patent from someone who legitimately invented push email. Perhaps they were not unique in doing so, perhaps you think it isn’t all that novel — though surely it is more novel than, for example, an extra tumbler in a door lock. All NTP did was make for an efficient enforcement of the laws as they stand.

    It is kind of like that situation where a city hires a private firm to enforce the speeding or parking laws. The private firm does so with great efficiency, and everybody gets mad. But the problem isn’t the private firm’s efficiency, the problem is that the law is bad in the first place. All the private firm did was make the pain, normally suffered by a small number of capriciously selected victims, evident to everyone. The unlucky victims of caprice don’t have sufficient voice to complain of the injustice, but make it efficient and you reach a critical mass of complaints.

    As I have said before, the whole patent system is one big lumbering patent troll. I am in favor of more and more patent trolls. Perhaps it will build a constituency to destroy this evil system of legalized theft.

    > kiba claims to be arguing against patents, when every example of the problems with patents he gives are examples of corruption in politics. If you really believe that we ought to abolish patents because they can be abused by the corrupt, well, what then CAN we keep?

    This is an interesting question. From my perspective the government should not be involved in any business processes at all. We need a vibrant economy to have sufficient resources to fund the corruption and excess they have in all other areas of life. What should we allow the government to do? The absolute minimum we possibly can, because, as you point out, the nature of government is corruption and inefficiency. Some would argue there are some things that only a government can do. I would be one of these people, ESR, or host, is not. But, suffice it to say, keep cutting, and keep cutting, there is a lot of fat before we get anywhere near the bone.

  122. >> kiba claims to be arguing against patents, when every example of the problems with patents he gives are examples of corruption in politics. If you really believe that we ought to abolish patents because they can be abused by the corrupt, well, what then CAN we keep?

    How would the patent system exists in the free market without the use of government to enforce mandate?

    With governments, they are basically a vector of corruption that will easily be abused. It’s a catch-22. As well we all know, governments taxes people at gunpoint. That’s in itself mean less accountability.

    Even if you ever got around to a free market patent system, it would still violate libertarian ethics. I would still be angry that my right to work on electronic projects and invent stuff unmolested is interfered by scummy inventors.

    My friends, I don’t recognize the right to earn a living, as much I am a self-admitted greedy bastard of capitalism. After all, at the end of the day, my passion are my hobbies and making things, not making billion of dollars. I also would like to compete with those secretive and fearful inventors, just to see how my ideas of openness hold up.

    I have fear in my guts that my ideas are not true, but I also learn that armchair hypothetical theorizing is no replacement for testing business models and actual experience in making money. If anything, my experiments are hopeful.

    Patents destroy those wonderful alternative business models. You wouldn’t give them a chance because you believe that it could not possibly support million of people. You believe that somehow, the more nebulous patent system could be reformed.

    At the end of the day, our discussion won’t matter much. The course of history will determine the truth of the matter, like TMI said. I will concede my points if I am proven wrong, no matter how painful it is.

  123. This is an interesting question. From my perspective the government should not be involved in any business processes at all. We need a vibrant economy to have sufficient resources to fund the corruption and excess they have in all other areas of life. What should we allow the government to do? The absolute minimum we possibly can, because, as you point out, the nature of government is corruption and inefficiency. Some would argue there are some things that only a government can do. I would be one of these people, ESR, or host, is not. But, suffice it to say, keep cutting, and keep cutting, there is a lot of fat before we get anywhere near the bone.

    Who shall cut the fat?

    The knaves have all the knives.
    The rules as written we are to abide.
    In judgment, behind their rules they hide.

    No, I think the system will consume itself eventually. As it becomes more and more unwieldy, more force will be used to attempt to keep it in place. Every action has a reaction. The tools are available to render the knaves blind, deaf and toothless. Currently the pain level amongst the peasants is not high enough to make widespread use of these tools worth the effort. That will change.

    The key difference this time around is the lack of a need for central organization. And the flip side that the current system is built on the need for a central organization and cooperation of the peasants to maintain the organization.

    The internet is Gutenberg^10. It does have weaknesses and TPTB will move to exploit them.

    We are at the beginning of the reformation trying to imagine the world without the Roman Catholic Church and the Monarchy.

    Everything from how we are educated to how products are produced and society organized will be affected. It will probably take a couple hundred years to shake out. Add to that the whole biology thing. If we manage to live through it collectively as a species…things will be very different.

  124. @JessicaBoxer:

    Patents are legal documents, not engineering documents. They meet that standard according to what the law says is appropriate, not what you, I or any reasonable engineer would think. More importantly, most patents are for things that don’t require any explanation. The headline is enough for an expert to produce it. This is because “obvious” doesn’t mean to lawyers what “obvious” means to you and I. The bar is set EXTREMELY low.

    How much time did you spend in the Corporate Lawyer Brainwashing Chamber (TM & Patent Pending), anyway?

    Obviousness in patent law means “obvious to person having ordinary skill in the art.” Here is the relevant section of law.

    For recent case law, check out KSR v. Teleflex, in which SCOTUS held that “[t]he proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading [a prior art patent] with a sensor.”

    IOW, there doesn’t even have to be a particular motivation. So indeed, the law as written, as well as recent case law, is completely at odds with your statement.

  125. > The internet is Gutenberg^10. It does havve weaknesses and TPTB will move to exploit them.

    The rise of the makerbot and thingiverse.com will be interesting to see. With cognitive surplus, there will be more small time inventors there are professional inventors. Perhaps, there are already more small time inventors than professionals.

    Basic human nature did not change, but it is certain that barriers and change in opportunity costs will change how people act. The average American watch 4 hours a day. Some said that’s about a million wikipedia.

    The part time job of watching TV is an unhealthy habit that will be replaced by more healthy alternative such as playing world of warcraft, operating makerbots, and 3D modelings. Heck, even making LOLCAT pictures is more productive than watching reality TV.

  126. >The part time job of watching TV is an unhealthy habit that will be replaced by more healthy alternative such as playing world of warcraft, operating makerbots, and 3D modelings. Heck, even making LOLCAT pictures is more productive than watching reality TV

    I stopped regularly watching TV 20 years ago. Recently my parents began to complain about there being nothing to watch on TV. I asked them if they were upset because there was nothing to listen to on AM radio. I would say that most of their TV watching has been replaced by surfing now. They are pushing 70 so if that is any indication I would say a sea change is under way. My father’s political opinions have already begun to shift based on getting his news from multiple independent sources.

    There will always be the bubblegum for the mind market, but at least there are places now for curious minds to escape.

  127. # Morgan Greywolf Says:
    > How much time did you spend in the Corporate
    > Lawyer Brainwashing Chamber (TM & Patent
    > Pending), anyway?

    Not sure about the chamber, but certainly WAY too much time with lawyers. Patent lawyers are an interesting subspecies. Almost to a man (and I have never even seen a female patent lawyer) that are all frustrated engineers who couldn’t hack it in physics, and so got a law degree instead. But, YMMV.

    > Obviousness in patent law means “obvious to
    > person having ordinary skill in the art.”

    Yes, I probably over stated the case. My point was simply that these terms like nearly every word in contract and patent law has a huge history of meaning behind them based on thousands of pages of case law. The simple fact is that legal documents mean a lot more to lawyers than they mean to non lawyers. “Obvious” is a word with a great deal more case law than the Teleflex case you cited, and I’m afraid citing the original statute doesn’t even begin to convey the real meaning.

    The mere fact it is at the USSC tells you something: namely that the hundred lawyers and judges who look at it before the nine wise guys got it couldn’t agree what the law meant. And if all these trained lawyers and judges don’t know, what hope do lay-folks like you and I have?

    To put it another way, success in business doesn’t come from the wise pronouncements of Talmudic scholars.

  128. Kiba – the entire reason we as a society gave the government the sole option on the use of force is so that we don’t have vigilantism.

    Unless there’s some kind of protection offered by the government, you’re going to end up with trade secrets protected by private means.

    As in “That’s a nice factory you’ve got there. Be a shame if something were to happen to it.”

    And yes, I start from the assumption that the default alignment of humans is “chaotic evil”. Which would go a long way towards explaining why no anarchist society has ever existed.

  129. >And yes, I start from the assumption that the default alignment of humans is “chaotic evil”

    So you wish to give these “chaotic evil” beings power over you and the right to judge not only your actions, but their own as well? Have you found some repository of angelic individuals, incapable of corruption that we can vote for?

    > Which would go a long way towards explaining why no anarchist society has ever existed.

    What do you think an anarchist society is? The argument you are using was used to justify everything from the divine right of kings to slavery.

  130. Kiba – the entire reason we as a society gave the government the sole option on the use of force

    Bzzt. The government does not have the sole option on the use of force. The Second Amendment guarantees that.

  131. @Jessica Boxer:

    You have far too much faith in lawyers and judges. We have an adversarial legal system. That means that lawyers don’t argue in court about what they believe the law to be; they argue in court what they think they can get a jury or judge to believe. These are not the same thing. if you ask me, the obviousness section of patent law is actually pretty unambiguous.

    Lawyers don’t seize on ambiguity in the law; they create it where none exists.

  132. So you wish to give these “chaotic evil” beings power over you and the right to judge not only your actions, but their own as well? Have you found some repository of angelic individuals, incapable of corruption that we can vote for?

    Uh, no. When 50% of the populace turns out to vote, and less than half of them know what’s going on, we end up with the shit we have now.

    In theory, Congress is supposed to be accountable. When Congress hands off its accountability to bureaucrats and then doesn’t engage in proper oversight, it is our job to change them and make them do that job.

    Congress is not performing its oversight role. The response isn’t to tear down the system, it’s to replace Congress and get rid of the fossils that aren’t doing their oversight jobs. Roll back the copyright and patent law changes that were put into place to benefit the Monsantos and Disneys, and go back to the founder’s concept.

    This country was supposed to be about self-governance. A disengaged electorate isn’t self-governing, it’s acquiescing to whatever the ruling class decides.

  133. >This country was supposed to be about self-governance. A disengaged electorate isn’t self-governing, it’s acquiescing to whatever the ruling class decides.

    You won’t get a engaged electorate because there’s no fricking incentive to be smart and rational. http://www.amazon.com/Myth-Rational-Voter-Democracies-Policies/dp/0691129428

    That’s why democracies are about two wolves and one sheep deciding what to eat for dinner. That why we get disgusting results like more and more people are going to jail each year because of moronic voters who elect heavy handed “tough on crime” politicians.

  134. Brian,

    So if 51% of the “chaotic evil” people, elect 535 other “chaotic evil” people to oversee the actions of a “chaotic evil” executive branch commanding a military full of “chaotic evil” people with guns and sundry law enforcement agencies full of “chaotic evil” people in funny suits with guns and pot metal shields we will have nirvana? I’m confused….Will the angelic SCOTUS save us…Dred Scott anyone????

    You are espousing a conservative attitude, a sentiment I can identify with, and actually once shared. You will never catch me advocating violent revolution. I read history, I know violent revolution is a very bad idea. I wish I knew where I read the following thought: “If the current system is not allowed to change through evolutionary means, then it will surely be changed by revolutionary means.” Something I very much would like to avoid. The problem is there are so many entrenched interests driving the centralization of power I’m afraid that is exactly what we will eventually get. The entire IP system is only a subset of this issue.

    >Roll back the copyright and patent law changes that were put into place to benefit the Monsantos and Disneys, and go back to the founder’s concept.

    Who do you suppose writes those multi-thousand page laws? Barney Frank? No the Monsantos and the Disneys, and to think voting will change that is to be not paying attention. The founders conceived the structure in a time when high speed information transfer was a courier on horse back with a letter. Don’t you think we might want to revisit things now? If you read their writings even they thought that the structure would evolve. They put procedures in place to allow it to evolve. We ignore all that now.

    >This country was supposed to be about self-governance.

    It would be nice to give it a try don’t you think?

    I doesn’t matter anyway. The government will just become more and more dysfunctional and irrelevant until even you will give up on it. I give you <2 years before you change your mind.

  135. Agriculture produces much more food from a given area of land than hunting/gathering, but for it to function, the person who works to plant and tend the crops must be able to trust that someone else won’t come along and “gather” up the fruit of his labors. The Code of Hammurabi, one of the earliest written legal codes, a provision guaranteeing that the person who cared for crops would get to benefit from his work. This is the just theory of property rights. The correlation between property rights and prosperity is so strong that it takes a university education to be able to write “property is theft” with a straight face.

    As Western Europe emerged from the Dark Ages, rediscovering lost knowledge and building on it with new knowledge, governments started recognizing the advantage of enshrining in law a similar protection for inventors. These early laws only gave the inventor a royalty for a year or several. The British law abolishing the prior system of Royal favors in the form of Letters Patent provided for a term of 14 years; the growth of technology in Britain (and later in the United States, which started with exactly that same term) as compared to other countries suggests that term worked pretty well with physical inventions. Since then, the term has increased to 20 years, but there isn’t any strong correlation between that increase and more innovation.

    Unfortunately, the people who write laws seem to think that they scale linearly. In the real world, there is almost always a diminishing return. The trick is to find the “sweet spot”, and stop there.

    Now we’ve moved beyond granting a term of exclusivity over a tangible invention, to patents over processes, methods, and algorithms. If doing so encourages such inventions (and I suspect that it doesn’t), there is no particular reason to believe that the sweet spot for them will be the same as experience has shown beneficial for inventors of physical devices.

    But let’s not make the opposite error and throw out the physical patent baby with the bathwater of software patents.

  136. >But let’s not make the opposite error and throw out the physical patent baby with the bathwater of software patents.

    The abolitionists are well aware of the history. We just don’t think it hold. Not for steam engine, agriculture, fashion, or software. Beside government didn’t grant these to protect inventors. That’s nonsense. They did it as a favor.

    Copyright isn’t some benevolent law designed to reward people either. It was invented as a tool of censorship.

    The whole idea of economic intervention creating more wealth come later.

  137. About this isue of Google for example Dalvik is based on Java SE, Android is an OS for PC, netbook, Laptop or smartphone. Everything is based on OpenJDK so Java is GPL with the classpath exception, Why Google needs a license with Oracle?, Cause dalvik is based on Harmony? but I think Dalvik already using OpenJDK stuff so it complains to the GPL plus dalvik is open source you can get a copy of the source. Also I was reading somewhere that Oracle patents Google is infringing cant be applied anymore so it means all this thing is bullshit and Oracle did an auto FUD to their own platform as some people said they shoot their self in the foot. This is dumbest thing Oracle ever did or any company, Even Microsoft is not that stupid, Oracle does not have a case and Java is FREE is GPLed. Oracle does not have the capacity to control Java and Java the ecosystem and also they suck big time driving opensource. It was a joke Oracle was at the last Linux show they dont know the spirit of opensource, they just know to make money but not with innovation they just buy other companies and cash cow everything. Like a Virus.

  138. >Not sure about the chamber, but certainly WAY too much time with lawyers. Patent lawyers are an interesting subspecies. Almost to a man (and I have never even seen a female patent lawyer) that are all frustrated engineers who couldn’t hack it in physics, and so got a law degree instead. But, YMMV.

    Patent lawyers have a tendency to defend their system and sprout the same kind of brainwashed IP rhetoric about patents and technological progress that I seen everywhere. It’s a pervasive meme that infected almost everybody that debated IP, except the abolitionists.

    The only exception that I seen is Stephen Kinsella, who happens to be a market anarchist. Eventually, he convinced most anarchists(thus, libertarians) to turn against patents. The anti-IP crowd is probably already the majority now with the fact that Ludwig von Mises Institute published a couple of anti-IP articles. It’s practically a revolution. You don’t see it almost anywhere else.

    Now, if I can get ESR, who’s currently siting on the border to accept, than the revolution is complete.

    But to me, the most interesting thing is, that libertarian mindset open to you to stranger and more sophisticated technological ideas such as ciphernet and cryptocurrency. This has already happens when the cryptocurrency bitcoins was introduced. The extropians were originally David Friedman type anarchists. The seasteading movement is an especially good example of this observation.

  139. Kiba,

    Thanks for mentioning Thingiverse I did not know about it. I have been watching the baby steps of personal RP tech with great interest. I’ve been using RP professionally for a long time.

    This whole discussion has got me thinking very hard about a business I’m currently working to launch. It involves IP and a real product. I am not sure it will succeed as a retail commercial product. If it doesn’t I’m going to port it over to open source, or I may simply do that with one of the earlier versions. Unfortunately I have obligations to see it through to failure. If it were up to me I’d just port it to open source and move on. It’s a long complicated story, but it may yet have a happy ending. Thanks again

  140. @kiba – so you advocate abolishing patents and replacing them with trade secrets secured with encryption that will date centuries to break? And this by you is progress?

    @TMR – I was at 535 trees and 2 miles of rope a decade ago. The Founders never anticipated a permanent political class that made careers out of being in government. We were supposed to be a loosely-federated republic with elected citizen-representatives who would serve a term or two and then go home. Now we have people who have served their entire adult lives in Washington DC. Our republic has been replaced with a de facto oligarchy.

    When only property-holders could vote, you better believe they were engaged, and had a distinct interest in keeping government small. When the vote was given to everyone, then the rent-seekers and grievance mongers who have nothing to lose and everything to gain became a precious commodity to be exploited by the political class.

    And so our government has gone from managing the borders and international trade to stealing money from producers to buy the votes of the freeloaders. When we get to 51% of the population having no tax bite, change becomes impossible.

    All I ask is that the system stay semi-stable for another 40 years, then I won’t be alive to witness the fall.

  141. @kiba – it occurs to me that your argument for abolishing patent is akin to changing the water pump on a seized engine. Sure, the water pump’s may be bad, but the engine’s shot, so why are you wasting time fixing one part of a completely defective machine?

    Rebuild the engine before you worry about that water pump.

  142. >@kiba – so you advocate abolishing patents and replacing them with trade secrets secured with encryption that will date centuries to break? And this by you is progress?

    If the patent system never actually disclose hard secrets, than yours is entirely a delusion. (Well, the same goes for me. It cross both ways)

    At the end of the day, people have the right to keep secrets and people have the right to their own property, as much as we don’t like it as wealth maximizing individuals.

    That all I have to say as a libertarian and market anarchist. As a person engaged in this economic discussion, I am certain that the IP regime is much worse than the absence of one.

    >@TMR – I was at 535 trees and 2 miles of rope a decade ago. The Founders never anticipated a permanent political class that made careers out of being in government. We were supposed to be a loosely-federated republic with elected citizen-representatives who would serve a term or two and then go home. Now we have people who have served their entire adult lives in Washington DC. Our republic has been replaced with a de facto oligarchy.

    That what happen when you give government the power to tax people at gunpoint. Without the ability to extort money from the people, all they can do is beg for people to pay for their services. It’s all downhill from here at the moment you deviate from that model.

  143. > @kiba – it occurs to me that your argument for abolishing patent is akin to changing the water pump on a seized engine. Sure, the water pump’s may be bad, but the engine’s shot, so why are you wasting time fixing one part of a completely defective machine?

    >Rebuild the engine before you worry about that water pump.

    The patent system itself is a vector for corruption and regulatory capture. Eliminate it and you don’t have to worry about corruption forever. Have the fewest laws as possible so there are less loophole to exploit. Don’t use the law as a tool for everything, especially concerning economic interventions. Laws are weapons, treat it as such.

    Too many laws will create too many criminals. This create chaos. Then they will create more laws to pacify the chaos.

  144. >All I ask is that the system stay semi-stable for another 40 years, then I won’t be alive to witness the fall.

    I don’t think we are going to have that luxury. In my hopeful moments I think we can reign in the circus and bring power back to the states. In my dark times…..I worry.

    Ask yourself how likely you think it is you will get the mass of people out there to go back to that pre-civil war/16th/17th amendment world?

    Sure it would be great, and you would even have my support, but how likely?

    And if you did convince the guests of the Jerry Springer show to go along, how will you convince the entrenched parasite class? I’m afraid old Alexis D was on to something.

    I went through hell after I fell down the rabbit hole. Rebooting my bios was a real bitch. So watch where you step ;-)

  145. @Otengim:

    Dalvik isn’t based on OpenJDK, AFAIK. It’s a from-scratch JVM implementation built on a register-based machine rather than a stack machine, which is what most JVM implementations are based on. Furthermore, as you note, Dalvik’s class library is based on Apache Harmony.

    So, the GPL license, classpath exception or no, doesn’t apply Dalvik, which itself is open source licensed under the Apache 2.0 license.

    The issue at hand isn’t Java and has nothing to do with OpenJDK, but rather the complaint addresses techniques in use by Dalvik that are likely in common with J2ME (Java 2 Micro Edition) and allegedly violate patents held by Sun/Oracle. Whether those patents are even valid is the most pertinent question at hand, I think.

  146. @brian: “And there ARE industries which would simply fold up and die without patent protection. I know it’s unpopular to support the pharmaceutical industry, but there is a massive amount of money that goes into R&D for ideas that don’t pan out, and companies rely upon profits from drugs that do succeed to cover those costs. If the patent laws go away tomorrow, then the instant a drug hits the market anyone can reverse-engineer it, and make it for nothing more than the cost of reverse engineering, materials, and labor. Meanwhile the company that sunk $2 billion into testing and development and FDA certification doesn’t get squat.”

    No, this is untrue. Someone who reverse engineers the drug would still have to go through the FDA certification process, including the expensive phase 3 trials and it would still take take a number of years to do so. The difference would be that the copycats would be certain of the results. While this is no mean advantage, it is not as good as people may think.

  147. Morgan,

    It’s worth clarifying that Dalvik is not a JVM. It is its own VM with its own bytecode. There is an additional translation step in the build of an Android package that involves recompiling JVM .class files to a classes.dex file in the Dalvik instruction set.

  148. @TMR – absent the repeal of the 16th and 17th amendments, there is no hope at all in reigning in the federal government. And the only people that CAN repeal them are the least likely to do so, because that’s like a junkie voting to cut off his supply of free drugs.

    If we can turn back some of the more odious policies of the present administration, we might be able to go through a “lost decade” and perhaps recover later. If we cannot, then sovereign default looks like the only way out. And I don’t like where that leads – WW4.

  149. # Morgan Greywolf Says:
    > You have far too much faith in lawyers and judges.

    Hey!!! That is a pretty mean thing to say! I assure you I have absolutely no faith in lawyers and judges. :-)

    However, let me just point out the history of this case (Teliflex vs KSR). The district court ruled in favor of KSR, the Federal Circuit Appeals Court reversed them, then the USSC reversed the appeals court. I’m not sure if the district court was a bench trial, but for sure the Appeals court and the Supreme court apparently greatly disagreed with each other (I believe both decisions were unanimous.)

    Consequently, unless you think that the Federal Circuit Appeals Court judges and the US Supreme Court justices also have a dog in the fight, it is apparent that very senior legal minds differ over the meaning of “obvious”, and so my point stands.

    It seems to me that disagreeing over the meaning of “obvious” is such a delightful irony that only God himself could have created it.

  150. If we can turn back some of the more odious policies of the present administration, we might be able to go through a “lost decade” and perhaps recover later. If we cannot, then sovereign default looks like the only way out. And I don’t like where that leads – WW4.

    Nah. China will buy our debt and then we’ll all be thralls to Beijing. :)

  151. RFC 86.0 is refered as an authentication method common on Unix shell, which someone proves he is really “he”. Patent 6192476: Controlling access to a resource is about access control, who can do (ie read, write, exectute etc) what (file, program etc). These are two different things.

    To control access, first step is to authenticate the identity. Without authentication, there is no way to control the access to resources. This is the relationship between authentication and access control.

  152. Jeff – China’s out of money to buy our debt with. That money was really just the trade surplus – which they are now subsidising.

    This doesn’t end well.

  153. >If we cannot, then sovereign default looks like the only way out. And I don’t like where that leads – WW4.

    Oh Man! it’s too late for you! you’re hanging by your fingernails on the edge of the rabbit hole….you might as well just let go. I did. Take the reasoning to its final conclusion. It will be a very difficult process. After you have replaced all that crap infecting your boot sector and re-flashed your bios you will eventually reach a state of calm. You will be able to look at the situation, see the cause and effect and realize the inevitable. The internal cognitive dissonance will quit eating at you. You will get out of /0 hell trying to make sense of the current system. The fear will go away.

    When I first heard The Soviet Union had collapsed, I thought I’d see a mushroom cloud somewhere within 48 hrs. Instead they just turned inward and the power devolved to the provinces. What caused their collapse…….?

    WW4 is not inevitable unless we continue on the current path. Sovereign default may actually help prevent it. The army field manual always said that parasites will leave a cool carcass. If the Jerry Springer guests don’t get too out of control…….. Nothing is certain, but I’m in a hopeful mood today.

    Anyway, after replacing my brain’s OS I’ve been trying it out where smart people tend to hang out, hoping they could somehow dislodge my new logical system. So far no matter what the debate it always winds up where we are now. The original subject seems to have no effect on the outcome. Sometimes they all just throw rotten tomatoes at me but that just bounces off the firewall. Poo flingin’ monkeys do what they do.

    I’m relatively certain the hacker community will play a large role in giving Jerry’s kids the tools they need to quit being so dependent on uncle sugar.

    My apologies to ESR and everybody for meme spamming all over the discussion, it’s a rather selfish personal experiment I’ve been conducting lately.

  154. >It seems to me that disagreeing over the meaning of “obvious” is such a delightful irony that only God himself could have created it.

    I’m pretty sure it was Beelzebub JD Esq. in a power suit.

  155. >Meanwhile, his confederates at Halliburton have actually, in all seriousness, attempted to take out a patent on patent trolling.

    Actually, that may quite possibly be one of THE most brilliantly devious things I have ever seen.

    How better to stop the trolls than to own the patent on their process. Now you can sue them into oblivion.

    Classic case of turning an opponents strength into a weakness.

    See……you just have to turn your mind inside out and drop lawyer acid and it will make sense.

    merely reinforces everything I think I know about this crazy game.

  156. “[0012]The inventor and the assignee of this patent have no intention of applying the techniques described herein offensively but instead intend to use the patent defensively to discourage patent trolls and the like from extortionist practices. “

  157. How better to stop the trolls than to own the patent on their process. Now you can sue them into oblivion.

    This has been a joke on Slashdot for a cat’s age. “Oh yeah? Well I just patented the technique of obtaining spurious patents so now Amazon owes me royalties!”

    It got funny when someone actually tried it.

  158. > sovereign default looks like the only way out

    Thought experiment:

    What happens when the most powerful country & economy in the world defaults on its massive international debts and realizes that its voting public cares more about food on the table than it cares about its international credit rating and reputation?

  159. >This has been a joke on Slashdot for a cat’s age. “Oh yeah? Well I just patented the technique of obtaining spurious patents so now Amazon owes me royalties!”

    Hey, can’t blame em for trying, you never know when you might get lucky. It’s just a game after all.

  160. >Thought experiment:

    I can scare myself to death with scenarios….what do you guys think?

  161. # techtech Says:
    > What happens when the most powerful country & economy
    > in the world defaults on its massive international debts

    Very unlikely. Why? Because nearly all US government debt, both to foreign bond holders and obligations to citizens is denominated in US dollars. The US government is at liberty to print as many US Dollars it likes, so it can always pay its debts.

    What becomes a problem though is if the US government does devalue the dollar in this way, then it makes it very hard for them to borrow any more money, meaning that they have a hard time continuing to run deficits.

    (Note there is a non trivial technicality here which is that it is the independent Federal Reserve that prints the dollars, but that fact doesn’t make too much difference in this situation, and for sure, in a pinch, the Fed can be nationalized.)

    Here is a curious thing to think about. Why, given that the fed has printed huge amounts of money, are we not suffering inflation? After all, if you have significantly more dollars valuing a smaller economy, then the dollar is worth less, and therefore it should take more of them to buy the same stuff, which is to say, there should be massive inflation.

    Here is part of the reason: the banks aren’t lending money. The banks aren’t lending money because government politics has both demonized them, and government policy is extremely uncertain, with a negative outlook for banks in general. When businesses don’t know the future they become very conservative. Since banks aren’t lending money, the infusion of currency is more than offset by the massive fall in commercial money. Lending ratios, which have been running at 3% are now running at 8%. Less commercial money means less money overall, and hence we don’t have inflation, in fact we even have mild deflation.

    So the stability of the economy today relies on the banks not lending, and business not investing, if they start doing that, inflation will go nuts. Curious that the badness of the economy is brought about by the very behavior the politicians are railing against.

  162. (Note there is a non trivial technicality here which is that it is the independent Federal Reserve that prints the dollars, but that fact doesn’t make too much difference in this situation, and for sure, in a pinch, the Fed can be nationalized.)

    ISTR that when the federal reserve act was passed, it contained a clause enabling Congress to buy back the fed at any time for a fixed price.

    It’s time we invoke this clause. Giving bankers control over our currency is bad news for reasons which should be obvious.

  163. >Giving bankers control over our currency is bad news for reasons which should be obvious.

    I’m in complete and utter agreement, but…..

    You trust Congress to manage the money supply?

  164. > It’s time we invoke this clause. Giving bankers control over our currency is bad news for reasons which should be obvious.

    That’s the hard way out, We wouldn’t make a dent. It requires ton of political support and popular understanding of money.

    The technolibertarian way is to hack together a new currency that marries encryption tech with P2P paradigm. You can start with a few cryptoanarchist and expand the currency to new markets that would need such a currency, such as MMORPGs. New markets beget acceptance, and acceptance begets more use of the currency,

    It’s one of the most brilliant idea that I ever seen in a long time.

  165. It’s worth clarifying that Dalvik is not a JVM. It is its own VM with its own bytecode.

    yes. I misspoke.

    @alex68:

    PAM does both authentication and authorization, though arguably it was built for the former. The architecture has many similarities to the ’476 patent, however

  166. >It’s one of the most brilliant idea that I ever seen in a long time.

    I have pondered this problem at length….the money supply issue was a personal roadblock…they seem to have solved that sticky wicket. The proposed solution is brilliant. I don’t feel too bad since several noble laureates failed to solve the same problem and I am not an economist. It was actually rather hubristic of me to try.

    A competitive market in currency will settle the issues….IIRC there was a provision in the recent banking reform bill allowing banks to issue currency……hmmmm

    The banks aren’t going to give up such a lucrative racket without a fight. TPTB will certainly not willingly yield this power, or the control of information. I think they have miscalculated, and in an effort to install their desired solution, they will empower competition they do not for-see.

    Seems to me the “plan” is in a race with tech. Or it could just be tech is driving evolution of the form.

    As I said…I’m in a hopeful mood today.

  167. >I don’t feel too bad since several noble laureates failed to solve the same problem and I am not an economist.

    Well, from what I have learned so far, cyrptocurrency is an interesting problem within the world of cryptography. So it just might be a historical inevitability that libertarians would see the benefit from a viable cryptocurrency.

    Heck, this is what happened to me too. When I saw the concept, with not much knowledge about crypto-anarchism and ciphernet, I immediately recognizes it potentials. I was not alone.

  168. @kiba

    I wish I was capable of more contribution to this cause….but I am simply an artisan amongst architects. I can at least appreciate what is being done and admire it. Perhaps I may even give a word of encouragement or a nudge here and there and run interference at the margin.

  169. >I wish I was capable of more contribution to this cause….but I am simply an artisan amongst architects. I can at least appreciate what is being done and admire it. Perhaps I may even give a word of encouragement or a nudge here and there and run interference at the margin.

    You don’t have to be a cryptographer to contribute to the cause. All you have to do is sell your goods and services for bitcoins. I imagine you can do that on the side.

  170. You don’t have to be a cryptographer to contribute to the cause. All you have to do is sell your goods and services for bitcoins. I imagine you can do that on the side.

    I am no cryptographer…but I am a product designer. I can promise you this will not work until Jerry’s kids can use it with no effort….that’s the real challenge.

    along with encrypted P2P communications with no central structure….

  171. Morgan Greywolf,

    I agree with you PAM handles both authentication and authorization. I forgot the second part yesterday when writing my comment.

    I am not very familiar with patent law. But to my basic knowledge, the patents right are classified in certain field/sareas or practices. For example, if there is a patent in area A, you can still apply the same patent in area B, if A & B are not overlapping or dont conjunct. On the other hand, even Java’s patents seem applicable to broader fields, sun had not taken the advantages in the past. Neither does Oracle in the future. It is about the bottom line of business ethics。Oracle is now defending its very right for Java ME, which was not part of open source, that was hurt, in term of revenue and profits, by Google’s competing open source project and product.

    All these are why I don’t see Java/Oracle would have real challenges with the ’720 patent, which seems kind of prior-art in Emacs, and of ‘476 patent, which RFC 86.0 PAM gives probably ground for an obvious challenge.

  172. Jessica Boxer Says:
    > The US government is at liberty to print as many US Dollars it likes, so it can always pay its debts.

    I should have thought of that.

    It’s not debt default that’s coming, it’s hyperinflation.

  173. # techtech Says:
    > It’s not debt default that’s coming, it’s hyperinflation.

    Again, you are mistaken. Hyperinflation is the result of printing money to pay debts denominated in a foreign currency or other asset you don’t control. If your debts are denominated in a currency you control, printing money deflates the currency and both gives you more money to pay for them and the valuation of your debts decreases at the same time. So, for example, you have more money to pay social security benefits, and the social security benefits are worth less.

    If you are paying debts in a foreign currency exactly the opposite effect takes place, and so hyperinflation. This is what happened in, for example, Germany in the 1930s, Argentina in the 1970s, and Zimbabwe in the 2000s.

    No, what printing all this money is doing is bringing about stagnation in the economy, not inflation. If someone takes off the brakes, you will see significant inflation due to an increase in commercial money, and interest rates will go nuts as our bonds become harder to sell. But hyperinflation is very unlikely.

  174. @Jessica Boxer:

    but that fact doesn’t make too much difference in this situation, and for sure, in a pinch, the Fed can be nationalized.

    The last guy who tried to tried to strip the Fed of power was shot near a grassy knoll. Just sayin’….

  175. If your debts are denominated in a currency you control, printing money deflates the currency and both gives you more money to pay for them and the valuation of your debts decreases at the same time.

    This is absolute nonsense. Inflation is caused by an increase in the money supply relative to the goods/services in the economy. Those additional dollars will be spent on something, bidding up the prices for those goods/services.

    The deflation that produced the Great Depression was caused by the Fed allowing the money supply to fall precipitously when the runs on the banks hit.

  176. # Morgan Greywolf Says:
    > The last guy who tried to tried to strip the Fed of power was shot near a grassy knoll. Just sayin’….

    Don’t know about that, but for sure the national bank of the United States in its various guises has been one of the few things that has been a significant political issue ever since George Washington. Plus ça change, plus c’est la même chose.

  177. The Monster Says:
    > This is absolute nonsense.

    You need to read what I wrote more carefully. The subject is hyperinflation, not inflation, the subject is not goods and services, it is existing debt. Your statements are largely correct, but they are not relevant to the matter under discussion.

  178. # The Monster Says:
    > What part of “printing money deflates the currency” did I misread?

    Perhaps my writing was a little sloppy, printing money deflates the value of each individual dollar.

    Here it is in simple terms. You and I live on a desert island. I am in charge. There are 100 bananas available. We use certified pebbles for currency. There are a total of 100 pebbles available, so each banana is valued at 1 pebble. I promise you a pension of 10 pebbles, which you think means 10 bananas. However, I dig up and certify 100 more pebbles. Now the 100 bananas are represented by 200 pebbles, so each banana is valued at two pebbles. So now your pension of 10 pebbles only buys you five bananas, not ten. So the value of your pebble has decreased considerably.

    By certifying more pebbles I have more money to pay your pension, and your pension is worth less. Of course inflation is rampant, in fact 100%, but that doesn’t affect my pre-existing agreement with you.

  179. http://golang.org/ 4tw?
    time for google to eat their own dogfood?
    Sadly, i’m afraid oracle will soon put the final nail in java’s coffin.
    Which makes me a little sad…

  180. Perhaps my writing was a little sloppy, printing money deflates the value of each individual dollar.

    Ergo, creates inflation, as you point out. So why would printing enough money to pay off government debts not create hyperinflation?

  181. @jessicaBoxer: Additional point: your analogy presupposes a finite supply of goods and services, rather than most liberal arguments, which often presuppose a finite supply of money. The reality is that we have neither a finite supply of goods and services nor a finite supply of money. IOW, economics is not a zero-sum mathematics.

  182. # Morgan Greywolf Says:
    > Ergo, creates inflation, as you point out. So why would printing
    > enough money to pay off government debts not create hyperinflation?

    Lets extend my desert island analogy.

    On the other side of the island, Morgan lives with his little tribe. Morgan being a creative guy creates little wooden carvings out of bamboo, and uses these for his currency. This currency is rather more stable because wooden carvings are more work than digging up pebbles.

    Now Morgan’s tribe produces coconuts. And, for simplicity, we will assume that people value one coconut about the same as they value one banana. I happen to like coconuts, so I want to buy some. In a barter economy I’d offer Morgan five bananas in exchange for five coconuts, but we are using a currency economy here, so I sell him five bananas for five carvings, and then buy five coconuts with the five carvings. This works great.

    However, I am a little short on cash. So I borrow five carvings from Morgan, and promise to pay him back. And then I buy my five coconuts. I don’t have any bananas to cover my debt to Morgan, so I dig up some pebbles, and buy them off The Monster. Since the pebble is now worth less, Monster demands ten 8 pebbles for his bananas rather than the previously going rate of five. I pay him off with funny money. Then I pay off Morgan’s debt with my bananas. (More precisely I sell the bananas for carvings, and pay off the debt with carvings.)

    Now I repeat the process. This time, since I dig up more pebbles even more, Monster demands ten pebbles. Then fifteen, then twenty, and so the cycle continues into hyperinflation. Why does this hyper inflate? Why is it different than the original? Because I have to pay my debt, ultimately, in carvings, and I don’t control the production of carvings. One carving buys one banana, but as I add more pebbles, one pebble buys less and less bananas. Every time I pay off the debt, I make it harder to pay off the debt next time, and I increase the size of carving denominated debt that I already have, which results in an exponential spiral. And this — exponential spiral — is pretty much the definition of hyperinflation.

    Now the situation is different locally. Monster has been promised a pension of ten pebbles. It doesn’t matter how many pebbles I dig up, Monster still gets ten of them. So, he is out of luck. Consequently, the act of digging up more pebbles does not increase my debt, it stays the same (in fact it decreases in value). For sure, more pebbles causes inflation, but that inflation does not increase my debt, and so the feedback loop is not the same. Here the inflation is multiplicative, not exponential.

    The real world situation is more dynamic and complicated. But the bottom line is that if a debtor can adjust your exchange rate then he is in a much stronger position to demand payment at a rate of value rather than a rate of money. If all you do is print more fake money, then the debtor who controls the exchange rate simply changes his exchange rate so that your fake payment doesn’t decrease your debt obligation. (Of course this occurs automatically by the market in a floating exchange rate system.)

    So if C is the number of carvings owed, and the present exchange rate is P0 pebbles per carving. If I pay off c1 carvings in debt with funny money, then the market adjusts the new exchange rate P1 so that:

    C x P0 = (C-c1) x P1

    If you do not control what dollar means, and you signed up to accept dollars, then you are SOL, you have no exchange rate to adjust. Of course, you might not believe the promises in future, or you might demand more interest to believe the promises, but that is an entirely different matter.

  183. Now the situation is different locally. Monster has been promised a pension of ten pebbles. It doesn’t matter how many pebbles I dig up, Monster still gets ten of them. So, he is out of luck.

    But the Island Association for Retired People has successfully lobbied for my pension to be indexed to the CPI, which means I get a COLA. Either that, or your head on a spear.

  184. Jessica, there may be some validity to what you’re saying in the short term, but at some point the foreign creditors will simply refuse to purchase dollar-denominated securities with fixed interest rates. We have been able to get away with printing extra money to a certain extent because other economies have been willing to soak up some of the extra money for foreign exchange. In fact, I argue that the existence of the budget deficit is what makes the “trade deficit” possible. If those foreign trading partners didn’t believe there was value in holding our securities, then the money they get from selling us cars etc. would have to come back to us eventually, as the exchange rate between the respective currencies adjusts, rebalancing the trade by reducing the value of the dollars we spend to buy the foreign goods, therefore raising the prices in dollars we must spend to buy them.

    What happens when people abandon the USD as the reserve currency?

  185. # The Monster Says:
    > What happens when people abandon the USD as the reserve currency?

    Then the battle is joined. If the US Government can’t borrow any more money then they will have to spend less of it. And that is a good, if potentially explosive, thing. I doubt it will be an inflection point though. It will be a slow developing thing. There is a great deal of elasticity in the system.

    However, my main point, something badly under reported in my opinion is the situation with commercial money. The structure of the economy is either we remain stagnant or we suffer all the pent up pain that President Obama has claimed he is saving us from. Our politicians are giving business a hard time because they have, supposedly, two trillion dollars in uncommitted capital. What they don’t seem to realize, or at least acknowledge, is that the release of that capital will send the economy into a tailspin as the chickens come home to roost. It’s not like these business guys have two trillion dollar bills under the mattress.

  186. > Then the battle is joined. If the US Government can’t borrow any more money then they will have to spend less of it. And that is a good, if potentially explosive, thing. I doubt it will be an inflection point though. It will be a slow developing thing. There is a great deal of elasticity in the system.

    Does this mean that the power of the US Government will be seriously weakened? If that is so, then there is tremendous opportunities at that time period.

    I am reminded of tax collectors going door to door just begging for some kind of payment in the Great Depression.

  187. >Then the battle is joined. If the US Government can’t borrow any more money then they will have to spend less of it.

    I think your previous argument was correct. China will stop buying and want to purchase Ag commodities instead. TPTB will monetize the debt, inflation will go up to about 10% or so. They will lie about it. Anybody on SS or government pension will get a pay cut. The check will show up but it won’t buy much. Over the course of a decade or so the debts will be unwound. They will probably nationalize IRA’s and force you to buy government securities…for your protection of course. They will put capital controls in place to punish “unpatriotic” people who dare to try to save the purchasing power of their savings. They will put windfall profits taxes on any resource or commodity company. Taxes across the board will be raised. They will continue to blame the private sector for the increasing problems. This ain’t gonna be yo daddy’s stagflation. Business climate will suck. Eventually we end up being like Mexico and the well connected with hard currency can buy up our assets for pennies on the dollar….that’s the stable outcome. The question is can they keep a lid on things while doing all that.

    I don’t think they can. I think they believe their own BS. I know that people where I live will not put up with that. In fact the majority of the country outside the east coast, the left coast and a few urban areas will never go along with any of this. The conditions in those locations as this plays out will cause even them to reconsider. It will be interesting for sure.

    I have never wanted to be so wrong about anything…ever. But so far my bets are paying off. I have been wrong about the time it would take for things to play out but not the outcome.

    If I didn’t have family that I can’t leave….I’d up n

    R-U-N-N-O-F-T

  188. Our politicians are giving business a hard time because they have, supposedly, two trillion dollars in uncommitted capital.

    When any investment you make can, at the stroke of a pen, be stripped away from you and given to support some favored political interest, regulated away by a bill so complicated that even the people who voted for it don’t know what it says, or simply taxed to death at a rate yet to be determined, who in their right mind would “commit” any capital?

  189. >who in their right mind would “commit” any capital?

    Indeed. Our political class seems to be doing its best to make “Atlas Shrugged” look like a prophecy.

  190. # The Monster Says:
    > who in their right mind would “commit” any capital?

    Perhaps someone who realized that if they don’t invest their money to make it grow that it will rot away to zero anyway due to inflation, taxation, and other depredations?

    However, as I said, when the political, regulatory and tax environment is very uncertain, businesses become hyper conservative, which is exactly what we are seeing right now. Interestingly this fact is hiding the true level of inflation by keeping debt artificially low. So, in a sense we have truly traded unemployment and stagnation for low inflation. I suppose that is better than Jimmy Carter did.

  191. >>who in their right mind would “commit” any capital?

    >Indeed. Our political class seems to be doing its best to make “Atlas Shrugged” look like a prophecy.

    My clients declared all stop about 6 months ago. Even projects that were very near completion. All dead in the water. I’ve got one project I’m halfheartedly taking to completion knowing full well it will probably fall flat on its face because of the economy.

    I have the carrot patch and the workshop.

    Since they are making noises about removing the mortgage deduction I figure I’ll just do some corporate work and pay it off in a year. That’s about the only worthwhile capital deployment I can see at this point. I may stock up the machine shop with material and tooling. Might buy a new tractor.

    Then it’s me and the cockroaches watching the show…..Shrug.

  192. So, in a sense we have truly traded unemployment and stagnation for low inflation. I suppose that is better than Jimmy Carter did.

    Given time, I’m sure stagflation will follow.

  193. A couple of other things about money that I think about: take it for what it is worth.

    A friend of mine had a grandfather who was a doctor during the 1930s in rural Alabama. Sadly he has passed away, however, he used to tell me stories about what it was like living in that time. One theme that came up a lot is the barter economy. A local farmer needed some sort of treatment, perhaps setting a broken bone, or stitching up a wound. However, he had no money. So, instead of money, the farmer would offer the doctor a chicken, some eggs, or perhaps digging a drainage ditch. (After the arm had healed of course!!)

    This is a fairly common picture of the depression years. However, I think the significance of these events are often lost on people. The reason why this happened was 100% entirely due to a failure of money. The farmer had something of value to offer — a chicken, or his labor. The doctor had something of value to offer — his medical services. The purpose of money is to provide a means of exchange to smooth out this transition of values from one person to another. However, during the depression, the Fed so badly screwed up money that money failed in its most basic function — the ability to act as a currency of trade. For those with eyes to see, it illustrates the most basic fact about the depression: it was almost entirely the responsibility of government policy and the failure of the federal reserve.

    A further point to demonstrate this is the fact that the Federal Government did everything it could during this time to eliminate private types of currency. The classic tyranny in that respect was FDR’s actions to make private ownership of gold practically illegal, in what is perhaps the most outrageous taking of private property in the history of the United States. (With “just” compensation, of course.)

    This used to be a controversial position, but today it really isn’t. It is accepted as at least partly true by most economists I have read. But the chicken and ditch digging makes it plainly obvious that money completely failed during the depression, and this along with other bad things, was the source of nearly all the pain.

  194. One final thing: since I have been complaining on here, let me offer a simple proposal to fix this problem. The problem of money is not all that complicated. The issue is that we have lots of smart people who think that their smartness overwhelms the combinatorial smartness of the whole public, which it doesn’t. In this particular instance we have the experts at the fed trying to decide how much new money to release to keep the economy flowing and keep inflation low.

    The reason, of course that we need new money is that the new money represents growth in the economy. As the economy grows the stock of money has to grow too, or else we end up with deflation (the same dollars representing less value means that each dollar is worth more.) It is widely believed that deflation is bad. Why? Because deflation means that if you sit on your money you get more value out of it. It means people save rather than spending and investing. Apparently, according to economists, this is bad. I’m not sure I agree. FWIW, the world of computers is a classic deflationary economy: wait a year and you get a lot more for your money. I’m not sure that that is a bad thing.

    Nonetheless, if we accept that deflation is not something to be sought, then I propose a solution. Specifically, every month, the fed prints a batch of new money, such that the total annual growth in the money supply is exactly 4%. Each year, there is 4% more money. No more, not less, always exactly 4%.

    Some years that will cause mild inflation, some years it will cause mild deflation. But in neither case is it enough to be a big deal. It is premised on the principle that the economy grows about 4% per year. If it grows more, the money supply will be deflationary, which will put a brake on an overheating economy, if it grows less, it will release more cash into the economy, encouraging growth. So in a sense it is self correcting.

    However, the biggest advantage of this system is simply that it is free of control by anyone. That means that it has the one feature that is most important to most businesses for future planning: namely that it is entirely predictable.

    So that is my proposal to fix the money supply policy. Print enough cash smoothly through the year to produce a 4% growth annually in the money supply.

    Fixing commercial money in banks is another important matter, which I won’t address here.

  195. oh, crap. ESR, please delete the previous comment.

    As the economy grows the stock of money has to grow too, or else we end up with deflation (the same dollars representing less value means that each dollar is worth more.)

    I think you mean to say “the same dollars representing lessmore value means that each dollar is worth more.) ” Because those dollars are worth more, prices denominated in dollars go down.

    Because deflation means that if you sit on your money you get more value out of it.

    Yes, it does, and that’s bad, because “sitting on your money” isn’t actually producing any more value. When you use your money to buy a machine to make things, that is producing value.

    The proper monetary policy produces neither inflation nor deflation; the money supply grows to keep the value of money stable if the economy grows. The problem with your 4% approach is that it simply assumes that economic growth will be constant, and there’s just no good reason to believe that. The advantage of your approach is that all the players will know what the policy is, and be able to make long-term plans based on it.

    I like the idea of currencies backed by something of value other than the currencies themselves. There’s a reason why the words for “money” in many languages are closely related to “gold” and “silver” (Geld, d’argent). A currency issuer who guarantees to redeem its scrip for a specified quantity of something of value is thereby constrained not to issue so much that too many people will exercise that option.

  196. # The Monster Says:
    > I think you mean to say “the same dollars representing lmore value

    Yes, thanks for the correction.

    > The problem with your 4% approach is that it simply assumes that
    > economic growth will be constant,

    Actually, it doesn’t assume that at all. It assumes that economic growth will be about that number on average, and the money supply is elastic enough to accommodate deviations from that precise number. (The elasticity coming from private sources not the Fed.) And most important, it assumes that the value of a predictable economy vastly outweighs the benefits of the money supply exactly tracking the economic growth levels.

    Economic growth much larger than 4% is too much anyway, it causes the economy to over cook. So the self correction mechanisms of the precisely 4% solution keeps the growth in a nice comfortable band.

    I should add that an additional powerful feature that should be added is to tear down barriers to private currency. This would provide an outlet valve should greater elasticity be required. With the widespread use of credit cards that should be much easier than it used to be.

    > I like the idea of currencies backed by something of value
    > other than the currencies themselves.

    Why is gold worth as much as it is worth? For exactly the same reason the dollar is worth a dollar. Gold does have intrinsic value: it is resistant to corrosion, it is very ductile, it looks pretty etc. However, its trade value is way higher than its intrinsic value. This should be obvious from the fact that its dollar to gold exchange rate has gone ballistic the past few years. Gold didn’t suddenly become prettier.

    The reasons that gold is valued the way it is is because gold is treated and regarded pretty much the same way we treat fiat currency, its value is based on our faith and trust in the community beliefs about its value.

    And the production problem is even worse with gold. How much new gold should we add to the economy? Supply and demand do offer some ability to track this against economic growth, but it is a very inexact match. Additionally, gold has extremely high transaction costs compared with paper money. You have to dig it out the ground, you have to move it around and store it, you have to test its validity.

    So the only advantage gold really has is that it is not subject to the capricious issue of fiat currency like the dollar and other modern currencies. That can be solved by dis empowering the people who issue the currency.

    So frankly, I think gold is a terrible idea for a currency, though, it is probably a bit better than what we have now.

  197. However, its trade value is way higher than its intrinsic value. This should be obvious from the fact that its dollar to gold exchange rate has gone ballistic the past few years. Gold didn’t suddenly become prettier.

    No, the dollar suddenly became uglier.

    And the production problem is even worse with gold. How much new gold should we add to the economy?

    We don’t add gold. We add units of a currency which is backed by the guarantee that it can be exchanged for gold You don’t have to have more gold; you just have to have enough value in the economy such that the value of the currency compared to gold remains stable.

    But it doesn’t have to be “gold” per se. A currency issuer might come up with a formula like this: I hereby define one KiloMonstermark (KMMk) as being redeemable for one troy ounce of gold, 64 troy ounces of silver, and 16 barrels of crude oil (I’m feeling binary). At current prices, that adds up to about $3600, making MMk 1 ~ $3.60. While any individual component of this simple example of a basket of commodities may go up or down sharply in value due to non-monetary phenomena (oil price affected by drilling ban), that affect will be moderated when it is but one component. OTOH, if all of the components move in the same direction at the same time compared to some other unit of currency, it is far more likely to reflect something about that currency rather than the commodities in question.

    Do you think that the government of Iran might find the MMk to be a better currency in which to sell its oil than USD?

  198. # The Monster Says:
    > No, the dollar suddenly became uglier.

    Along with every other currency? You believe their value actually fell to 25% of what it was in a couple of years? Come on, lets be reasonable here.

    > We don’t add gold. We add units of a currency which is
    > backed by the guarantee that it can be exchanged for gold

    That is like digging up more pebbles to represent the same number of bananas. Congratulations, you have just invented fiat currency. FWIW, the US Dollar is hedged by a small amount of gold held by the Federal Reserve. I presume you are not satisfied with that, because, what? The multiplier isn’t correct? Because you can’t redeem your bills in metal? I assure you you can redeem your bills in metal, there are many companies that would be happy to help you out.

    And here is the basic problem: if you add more units of currency, you can’t make that guarantee anymore. If you have 1000 kilograms of gold, and you issue 1 million notes, each representing a gram of gold, then you can redeem them. However, if you follow your course and issue 1000 more notes, now you cannot make a promise to redeem the notes because you have issued more notes that you have gold. You have obligations of 1001 kilograms of gold, and only 1000 kilograms of gold. Your only hope is that not everyone decides to redeem their notes at once. Did you ever see “Its a Wonderful Life”?

  199. Your only hope is that not everyone decides to redeem their notes at once.

    But Jessica, you have the same problem today with fractional reserve banking. The only difference is that your hope is that not everyone decides to pull their money out of the banks at the same time.

    What was supposed to stop people from doing that was the FDIC, which makes your money “backed by the full faith and credit of the United States Government.” Only thing is, these days, people don’t have as so much full faith and the United States Government doesn’t have such good credit.

    Why do you think that terms like “too big to fail” were floated around in conjunction with the buyouts? If large financial institutions had been allowed to go belly up, how much faith would people have had in the banking system? Why do you think the FDIC ran television ads advising people not to pull all their money out of the bank? Because if enough people had, the entire financial system as we know it would have totally collapsed.

    People compare this recession to the Great Depression, in the words of BTO, they ain’t seen n-n-nothin’ yet.

  200. Morgan Greywolf Says:
    > But Jessica, you have the same problem today with fractional reserve banking.

    See Morgan, the answer to that question is a very long essay. Because it mixes up a lot of different things. So let me give the short answer on my thoughts about FRB.

    There is a big difference between currency money and commercial money, which are traditionally called M1 and M3, though the definitions of these things are never all that tight. The difference is in the level of certainty with which you get your money back. If you are using currency, then you should be pretty sure that it holds its value, a concern that Monster tries to address, unsuccessfully in my opinion, with gold backing. The guarantee that we need from our currency is that the government who issues it doesn’t inflate it beyond the economic activity it represents. (Hence my fixed rate growth, eliminating political control.)

    However, when you deposit your money in the bank you are making a rather different deal. You are saying to the bank: here is my money, please invest it conservatively and give me a small return on my investment, and pay me part of the return in kind by providing me with certain services. If you do that, your expectation of getting the money back should be lower, since any investment, even investment by proxy, is a risk. It shouldn’t be a big risk, and that risk should be managed by competitive pressures between banks, but still a risk. You don’t get something for nothing.

    This is the reality of banking, however, people live in a delusion about banking that it is the same as putting money under the mattress, only you get free stuff too. That isn’t true.

    Additionally, our banking system is kind of screwed up by the presence of the FDIC. What the FDIC says basically is that you should treat M3 money with the same level of trust as M1 money. And to do that, the FDIC guarantees your M3 money can be redeemed in M1 money if the bank does a bad job. The trade is that the bank must submit to regulation by the federal reserve to make sure it isn’t too risky in its investment decisions. (After all, the FDIC has taken on all the risk downside and the bank keeps the risk upside.)

    So, my answer to your question is that in banking in general you shouldn’t expect the same level of confidence in banking deposits (that is to say, you should have the same demand expectations) as you do with currency. But that isn’t really true today because the FDIC messes the whole thing up.

    So, my take on banking is simply that we should eliminate the FDIC and banks should provide the option of insurance from private companies, such as Lloyds if customers so desire. Otherwise, we should recognize that depositing money in the bank is kind of like buying a low risk mutual fund, with certain services tack on as well.

    It is also worth pointing out that there are many societies, including some today, which use fully funded banking, without the use of fractional reserve at all. Take the downside risk out of banking, as the FDIC does, and such a system can’t exist because its primary benefit — zero risk — has been stolen away by government regulation.

    The lesson of the FDIC and the recent banking crash is that if you take away the consequences of poor decisions and bad actions, they you will get more poor decisions and bad actions. Unfortunately, all indicates are that this lesson has not been ignored.

  201. Excuse me, I meant all indications are that the lessons have been ignored.

    Would that my first attempt at this sentence were correct.

  202. Because you can’t redeem your bills in metal?

    Not literally.

    Let me try this again, because you have a fundamental misunderstanding of what I’m suggesting.

    Suppose you have some property someone wants to rent from you for the next 30 years. At current prices, let’s say you want $3600 a month. But you don’t want to sign a lease that could leave you stuck taking worthless money. So you and your tennant agree that instead of a fixed rate in dollars, you’ll accept the current price of the commodities. The tennant isn’t going to give you gold, silver, and oil. They are going to give you enough money to buy those commodities at current market prices. Nobody had to go out and actually get them; you just agreed that pricing your rent in MonsterMarks made more sense than pricing it in USD.

    You don’t have to have a 1:1 ratio between commodities held in a vault somewhere and the basis for guaranteeing the value. You just have to have something of value that you can use to back up the currency you issue.

    At one time, if you had $35, you could exchange it for a troy ounce of gold. Now, there is absolutely no guarantee of what $35 will be worth tomorrow. The only thing we know for sure is that it can be used to pay your taxes.

  203. The Monster Says:
    > The tennant isn’t going to give you gold, silver, and oil.
    > They are going to give you enough money to buy those
    > commodities at current market prices.

    Your process assumes that the particular basket of commodities you use are an accurate proxy of the size of the economy as a whole. I know of no reason to believe that to be true. In fact, the value of gold, silver and oil relative to other goods and services has varied very widely over its history. So, perhaps your ideas might make for a nice futures contract, and maybe in some cases it might even be useful for particular transactions, but it assumes facts not in evidence as a useful macro economic currency. In truth there is plenty of good reasons to believe your assumptions are wrong.

    There might be some validity to trading with a much broader commodity base, for example, I can see using an ETF such as NASDAQ:SPY as a currency, though that has a whole bunch of practical problems too.

  204. Money is perhaps the greatest invention of mankind. The original P2P medium. The first network. It allows me to cooperate with a Chinese person I have never met on the other side of the world. It is the ultimate medium of information exchange. It allows the measure of my efforts. Whether they are beneficial to mankind or not. Savings is the measure of my contribution vs my consumption. An honest monetary system aligns the interest of the individual with the society at large.

    Deflation is not a constraint on economic growth. Money is fungible. In the digital age it does not matter to what degree you must divide the unit of account. Under a constant money supply and a growing economy the natural state is deflation as productivity and efficiency increases. Velocity is of course a factor. You must also separate the two functions of money, unit of account and a store of value.

    @Jessica

    The idea of constant monetary growth was proposed by none other than Milton Friedman. It is a monetarist view. So you can count your reasoning among the very best.

    Monster is arguing from the hard money camp.

    Fractional Reserve Banking requires an ever expanding money supply (inflation). Deflation results in collapse of the system. There are not enough pebbles to pay back all those debts. Fractional reserve banking is an inherently unstable system.

    If we had sound banking you would have to pay a fee for storage of demand deposits. You could only get interest on certificates of deposit which could only be withdrawn under specified contractual terms. This money would be lent out with the bank acting as a fiduciary and taking a management fee. The only source of income for the bank is the management fees for loaning out your money, and storage fees for holding demand deposits.

    This is of course far less profitable for a bank than creating deposits from thin air and collecting principle and interest…..

  205. Technically I misspoke about deflation under constant money supply and growing economy. Deflation is a decrease in money supply. What I should have said is decreasing price level. This is not technically deflation. The meaning of the word has been corrupted in popular usage….and that is no accident. The fog of confusion is thick.

  206. TMR Says:
    > The idea of constant monetary growth was proposed by
    > none other than Milton Friedman.

    Do you have a citation?

    > Fractional Reserve Banking requires an ever expanding money supply (inflation).

    That isn’t true. The “ever expanding money supply” doesn’t have to be provided for by inflation, it can also be provided for by the creation of real value. For example, I invest some money in a science lab. Most of it is borrowed money from the bank, which is to say commercially created money from a fractional reserve bank. The science lab discovers the transistor. Massive value follows greatly disproportionate to the initial investment. More money is added to the economy to represent this new value. This is not inflationary.

  207. Your process assumes that the particular basket of commodities you use are an accurate proxy of the size of the economy as a whole.

    Not even remotely. The point of the basket of commodities is precisely that of the CPI or any other method of measuring general price increases. The size of the economy is not what is measured by any of these indices. And the point is not that there’s anything magical about the three commodities I chose for the simplistic mythical MonsterMark; it’s that many such baskets could be chosen.

    In my hypothetical, if you wrote your lease terms to index the monthly rent to CPI, you would be in effect creating a new denomination of currency. Let us call it the “RealDollar”. In structuring long-term obligations to be paid in RD instead of USD, you are insulating yourself from the Fed’s shennanigans, while also protecting against a wild fluctuation in the price of any one of the constituent commodities.

    Monster is arguing from the hard money camp.

    Not “hard money” per se. I’m arguing that a currency pegged to some “hard” measure will be forced to maintain a stable value, whereas fiat currency allows monetization of debt. There is nothing preventing a bank from issuing currency that it promises to redeem for some other measure(s) of value while still operating a fractional reserve.

    You don’t have to have a vault full of pebbles, gold, silver, or oil. You just have to make sure that all of the loans you make are properly collateralized so that there is some value to back the currency.

    Technically I misspoke about deflation under constant money supply and growing economy. Deflation is a decrease in money supply.

    No, it isn’t. Deflation is a decrease in money supply relative to the goods and services in the economy which causes a general decrease in price levels. A growing economy needs a larger money supply to keep the value of each unit of that money stable.

    Imagine for a moment that the German central had allowed the former East German Laender to join the Bundesrepublik without increasing the money supply. That would have caused deflation, because even though it was not an absolute decrease in money supply, it would have been a relative decrease.

  208. The Monster Says:
    > it’s that many such baskets could be chosen.

    Ah, so your proposal is that we should eliminate currency and simply use a whole disparate set of different futures contracts, perhaps with built in repeating renewals. That doesn’t seem a very practical type of money at all. In fact one of the core features of money is that it is a fungible currency with low transaction costs, and well known, culturally accepted value. Lots of different types of future contracts doesn’t seem to fit with that requirement.

    Economists will tell you that money has three basic functions: a currency of exchange, a store of value and a unit of accounting. Your scheme certainly provides a store of value, but not so much on the other two.

    Not to say that using futures contracts to hedge currency fluctuations isn’t useful. It just doesn’t seem to me useful as money. How much does a mocha latte cost in your scheme?

  209. Do you have a citation?

    http://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule

    According to Milton Friedman “The stock of money [should be] increased at a fixed rate year-in and year-out without any variation in the rate of increase to meet cyclical needs.” (Friedman 1960) Giving governments any flexibility in setting money growth will lead to inflation according to Friedman. The main policy to be avoided is countercyclical monetary policy, the standard Keynesian policy recommendation at the time. For this reason, the central bank should be forced to expand the money supply at a constant rate, equivalent to the rate of growth of real GDP.

  210. >Do you have a citation?

    Google Milton Friedman K-percent rule

    Your argument confuses changes in the money supply and the general price level. Inflation and deflation are rigorously defined as an increase or decrease in the money supply. They are not the same as an increase or decrease in general aggregate price level. Supply and demand, productivity, velocity, and money supply all affect prices.

    Yes productivity increases can absorb the increased inflation while maintaining a stable price level. The problem is there is no feedback loop for the cost to borrow savings. There is no information about the need to save or to lend. Instead we are reliant on a human institution that is subject to all manner of political influence to decide the cost of borrowing. If you want to understand this issue in depth study the Austrian theory of the business cycle.

    In addition the productive increase of which you speak is an interesting issue. In a free market monetary system this productivity would be stored in accumulated profits as capital savings. Due to increases in productivity the purchasing power of savings would increase relative to time. The rate of decrease in general aggregate price is the rate of interest you get for your savings. Instead in our current system this wealth is siphoned off by those first in line to receive your “counterfeit” commercial money. The fact that the price level has remained somewhat stable is a testament to the massive increase in productivity our society has created. You can view the difference between the lower price level for all goods we would normally see under stable monetary supply and the level we have now as the amount of wealth sucked out of the system by the banks and their beneficiaries. How do you think the government funds its actions?…not by the income tax. Do the math.

    While I am enjoying this conversation as it is a particular interest of mine, this is pretty far from the OT. I am also new here and don’t know the local conventions regarding thread hijacking. The IP arguments were at least in the same vein. They are all connected on the basis of the use of force, but this may be straying a bit far.???

  211. > it’s that many such baskets could be chosen.

    Ah, so your proposal is that we should eliminate currency and simply use a whole disparate set of different futures contracts, perhaps with built in repeating renewals. That doesn’t seem a very practical type of money at all.

    No, it isn’t. My proposal is that the US could choose a basket, Canada could choose another, the United Kingdom a third,… but also that PayPal might choose something different from the basket the USD is based on

    Not to say that using futures contracts to hedge currency fluctuations isn’t useful. It just doesn’t seem to me useful as money. How much does a mocha latte cost in your scheme?

    That depends on the basket that was chosen to define the value of the currency. I don’t buy mocha lattes myself, but The Bride of Monster does. If I recall what I saw on the receipt correctly, it would, coincidentally, cost about MMk 1.00 for the large size. But remember that the MMk was deliberately a very simple basket, just to illustrate the idea.

    Interestingly, the CPI basket is already very commonly used in long-term contract “escalation” clauses, and there is a helpful guide to doing so. I think that the computing power we now have should make it trivial for point-of-sale equipment and e-commerce servers to be able to perform an on-the-fly conversion from RealDollar nominal prices to the actual sale price based on the most current CPI-U data.

    I don’t think there should be any legal impediment to a store prominently displaying at the entrance a sign saying that prices are posted in, say, 1982-84 dollars (because CPI-U uses that as the “100″ basis), and that the most current CPI-U of 217.965 means that all prices will be multiplied by 2.17965 to arrive at the price in paper dollars.

    So RD 1.65 for that latte sounds pretty close.

  212. >No, it isn’t. Deflation is a decrease in money supply relative to the goods and services in the economy which causes a general decrease in price levels. A growing economy needs a larger money supply to keep the value of each unit of that money stable.

    I stand by my original statement. This is all about Linguistics and Praxeology in the end. The definition you are positing is an invention to justify the current system. Remove that definition and replace it with the one I used and re-examine the system. It will be an enlightening exercise.

    Why do you want the unit to remain stable?

    You must examine your first principles.

  213. >Because unstable units of measure aren’t worth much.

    EXACTLY!!

    So I ask you which is better?

    A system with natural damping built into it and a unit of account which may increase in value slightly over time.

    Or an unstable system where the unit of account is guaranteed to swing wildly over time and possibly occasionally hit zero.

  214. Or an unstable system where the unit of account is guaranteed to swing wildly over time and possibly occasionally hit zero.

    I don’t see this at all. Of course, the very word “swing” implies “compared to ____”. When you say it’s guaranteed to swing, by what measure are you comparing it?

  215. The Monster Says:
    > No, it isn’t. My proposal is that the US could choose a basket, Canada could choose another,

    OK, so now I am confused. If this is true then we are back to the previous point which is that the basket you choose has to be representative of the economy as a whole. Lets take a simple example. Lets say we base our currency on the future price of oil. During the 2000s the price of oil relative to other goods and services doubled or tripled. So if I had on oil dollar in 2000, it would buy my cup of coffee. However, in 2010 that same oil dollar buys three cups of coffee. That is massive deflation. All those saved dollars went way up in value. Now lets say the price of oil (relative to other goods) goes up by 50% in the following year. I bought a house in 2010 for $100,000 oil dollars. Since the price of oil (relative to other goods and services) is now half the value, then my house is priced at $200,000 oil dollars. That is massive inflation. All those saved dollars went way down in value.

    Pick a more stable commodity if you like. Bottom line is that you are basing prices on something that is largely outside of your control, which is both good (because it is not subject to political manipulation) and bad (because it makes for very unstable, unpredictable prices.)

    Sorry, I think that commodity based money, whether it is by futures contracts or by actual assets, is a terrible idea.

  216. >When you say it’s guaranteed to swing, by what measure are you comparing it?

    That is the foundational question and the answer is:

    Real wealth.

  217. Lets say we base our currency on the future price of oil

    How many times do I have to say that I deliberately chose a basket of only three commodities for demonstration purposes only, and that a successful currency would probably need to include a more diverse basket, before you’ll stop with the single-commodity-price-fluctuation strawman?

  218. >When you say it’s guaranteed to swing, by what measure are you comparing it?

    That is the foundational question and the answer is:

    Real wealth.

    Non-responsive. How are you measuring “real wealth”? Pick a unit of measure.

  219. >Sorry, I think that commodity based money, whether it is by futures contracts or by actual assets, is a terrible idea.

    While not ideal, terrible is a bit harsh. Historically it seems to work better than a politically controlled fiat system. Since money is an abstraction it can be whatever is accepted in exchanging value. The problem comes when somebody grabs control of that something and uses it for their own ends.

    Why should I work if I have a pebble making machine and all I have to do is push the button and new pebbles pop out? Where can I get one of those?

  220. >Non-responsive. How are you measuring “real wealth”? Pick a unit of measure.

    As I said…linguistics.

    How do you personally define wealth?

  221. Wealth is the ability to create a surplus of resources.

    This is the definition I prefer. Your persistent idea that we must “pick” a unit of measure is where we are at odds. The unit must be elastic for the system to function. Attempts to control and manipulate the unit only destabilize the system. While the constant inflation argument or the negative income tax are improvements and would at least allow for business to plan it does not eliminate the “theft” issue. I would still much prefer either of these two arrangements to the current one.

    You and Jessica seem to be arguing different sides of picking the size of the unit. Let it float. Interest rates then become a feedback signal for savings, not a lever to yank around. Price is a measure of the amount of resources needed to create something and profit a measure of your efficiency in meeting the wants of the economy.

  222. Your persistent idea that we must “pick” a unit of measure is where we are at odds.

    In order to have an economy beyond the barter level, we have to have such a unit.

    The unit must be elastic for the system to function.

    I just don’t see any basis for that statement. But if you insist on defining “inflation” and “deflation” in terms of absolute money supply change, then you have to also argue that “inflation” to keep pace with a growing economy is necessary, as the Bundesbank was forced to “inflate” the DM when the Osties came aboard.

    The purpose of currency is to allow me to buy medical services from the doctor without having to directly perform a service for him. For that to work, the doctor has to believe that the currency I pay him will retain its value when he spends it…. A currency unit that “floats” does not meet that standard.

  223. >I just don’t see any basis for that statement. But if you insist on defining “inflation” and “deflation” in terms of absolute money supply change, then you have to also argue that “inflation” to keep pace with a growing economy is necessary, as the Bundesbank was forced to “inflate” the DM when the Osties came aboard.

    They had to do it to maintain the stability of THE BANKING SYSTEM. Fractional reserve banks are insolvent by definition. Unless the money supply grows at a faster rate than the economy the system becomes unstable.

    You have got to separate the banking system from the economy. The economy does not care what the quantity of money is as long as it is infinitely divisible and fungible. 1 oz of gold can act as the money supply for the entire world economy no matter how big or how small it gets. Money supply = 1/x

    >A currency unit that “floats” does not meet that standard.

    Yes it does, as long as the value is not decreasing over time which is what we have now. Rational money must be infinitely divisible and fungible. We do not have that situation now by fiat.

    Which would you rather trust? The ability of the economy to produce excess resources or what we have now?

  224. The Monster Says:
    > How many times do I have to say that I deliberately chose a basket of only three commodities

    Either I’m really stupid or you are not explaining your idea very well. Every time you post it seems to change a little. It doesn’t matter if it is a basket of items or one item. What you need to demonstrate is that whatever basket you choose has the desired properties of money. In particular that total value fluctuates in some reasonable harmony with the economy as a whole and that it cannot be capriciously expanded. From what I understand of your changing solution it sounds like I can sell the contract on the same items multiple times, essentially giving me the ability to be a fractional reserve bank with no regulation until I meet Bernie Madoff in prison. That doesn’t seem a good idea. But I probably just don’t understand what you are talking about.

    You choose a “demonstration” basket, and I point out why the demonstration won’t work. So the solution is not to yell at me for attacking a straw man, when it was you yourself who stuffed the straw into the clothes, and hung him up on a post. The solution is to actually propose a working solution that is falsifiable, rather than an approximation, where, any criticism can be waved off as due to the approximation of the model.

  225. The economy does not care what the quantity of money is as long as it is infinitely divisible and fungible.

    History tells us otherwise. It was the massive deflation of the money supply that created the Great Depression. It was the massive inflation of the money supply that produced the Weimar hyperinflation.

    The USD is divisible unto the hundredth of a dollar in currently-circulating coin. I imagine that’s “infinite” enough to satisfy the condition (although not literally so; there has never been any kind of money that is infinitely divisible in the mathematical sense, because there is a discrete number of atoms in any coin which cannot be subdivided whilst remaining the same element). It is also fungible; it can be used to purchase other currencies, and various commodities that are produced in consistent quality, which have historically been considered good stores of wealth.

    Fractional reserve banks are insolvent by definition.

    I don’t think we are using the same language here.

    I find these definitions of insolvent:

    1 a (1) : unable to pay debts as they fall due in the usual course of business (2) : having liabilities in excess of a reasonable market value of assets held b : insufficient to pay all debts c : not up to a normal standard or complement : impoverished

    A fractional reserve banking system holds enough assets to offset its liabilities, and in the usual course of business has no problem paying its debts…. provided that it has strict rules about how much currency to issue

  226. Either I’m really stupid or you are not explaining your idea very well. Every time you post it seems to change a little. It doesn’t matter if it is a basket of items or one item. What you need to demonstrate is that whatever basket you choose has the desired properties of money.

    It “changes” because it was deliberately and explicitly a simplified example of combining only three commodities into a basket, (with the implication that a real-world value standard would be more complicated) which would still be too sensitive to fluctuations in value of any one component. That you seized upon its narrowness forced diversion into minutiae.

    From what I understand of your changing solution it sounds like I can sell the contract on the same items multiple times,

    That’s how little you understand it. The issuer of the currency must have sufficient assets to back up the currency it issues, but those assets do not have to be the specific commodities in the basket. They only need to be worth more than the basket would be worth.

    I really don’t understand why it’s so hard to grasp a description of the very system that was used for the a substantial part of our country’s history, with the sole difference being that, rather than the Fed promising to pay off a certain quantity of one or another specific commodity, it is promising to pay off a diversified basket of many commodities.

    It is no coincidence that the government outlawed private ownership of gold and took the USD off the gold standard when they started massive deficit spending. The two big objections to the gold standard are:
    1) Gold prices fluctuate too wildly
    2) There isn’t enough gold to back all that money.

    I’m trying to convey that a diversified-basket-based monetary standard solves the first problem, and the second is a red herring in any event, because the currency issuer need not actually convey the commodities themselves; they only have to demonstrate the capacity to repay the value represented by those commodities.

    The last step that may not be crystal clear is that decisions on issuing more currency need to be made according to firm rules requiring sufficient assets. We did that for a long time before FDR stopped it. We can do it again, but only if the law constraining the currency issuer is in place to do so.

  227. The solution is to actually propose a working solution that is falsifiable, rather than an approximation, where, any criticism can be waved off as due to the approximation of the model.

    OK. Let’s play it your way.

    Forget everything else and focus on the RealDollar as defined by the CPI-U. According to the latest statistics, RD 1.00000 = USD 2.17965.

    If a bank were to record all its depositors’ and borrowers’ transactions in USD and immediately convert to RD, promising to pay interest on CDs in RD, converted back to USD at the rate on the date of redemption, and charging (a lower rate of) interest to borrowers on the RD balance, it would have effectively created a “currency”. As I specified before, businesses might choose to price their goods in RD and do the conversion at the cash register, obviating the need to adjust their prices upwards when inflation makes the USD worth less. Employees might enjoy having their wages expressed in RD so that they get automatic COLA.

    The really fun part of this is that none of these people cranked up a printing press to make a piece of paper called a RealDollar. But what if someone did? What if the PRC decides to peg the value of the Yuan to CPI-U, so that its value is very stable? What if Venezuela and Mexico start selling oil in Yuan? or all of OPEC?

  228. # The Monster Says:
    > Forget everything else and focus on the RealDollar as defined by the CPI-U.

    I looked at the link and all I saw was a table, containing data that obvious in meaning. My guess is that it is the buying power of a dollar at different times relative to sometime in 1983, but I am not really sure. It didn’t give any information on how the table was calculated, and it isn’t real clear to me how it relates in any way to what you have been talking about. So color me confused.

    I might add that these sort of statements like, “in 1910 I could buy a dollars’ worth of stuff for 10c” are pretty bogus. It might be true for some things, such as gas or candy, but it is certainly not true for other things, like electricity, phone service or computers.

  229. Sorry, what I meant to say was the the table data was not obvious in meaning.

  230. Money is that thing which people will always accept in trade (because they know that it is money). The value of money is whatever you can trade it for. There are certain advantages to keeping the value of money constant; perhaps by ensuring that you will always sell a certain amount of gold for a certain price. The advantage of gold is that it holds its price very well.

  231. the table data was not obvious in meaning.

    Are you saying you’ve never heard of the Consumer Price Index before?

    I might add that these sort of statements like, “in 1910 I could buy a dollars’ [sic] worth of stuff for 10c” are pretty bogus. It might be true for some things, such as gas or candy, but it is certainly not true for other things, like electricity, phone service or computers.

    That’s because you don’t seem to grasp the difference between fluctuations in individual price levels and the general price level. The entire point of using a “basket” of commodities to measure the changes in the general price level is to make that distinction.

    When we see one thing rise or fall in prices compared to the rest of the economy, that conveys information about the interplay of supply and demand of that thing, but when we see (nearly) all prices rising or falling together, that tells us about the supply and demand for money. I’m arguing for a money supply that is regulated to maintain stable general price levels, rather than by the a priori assumption of x% annual growth in M1 or whatever. If the issuer of the currency is legally pledged to convert it into the buying power represented by a basket of commodities, it serves as an enforcement mechanism to assure the stability of the general price level.

    I’m using the CPI-U here only because there is a standardized method for calculating it, and it’s been used for so long that we have such detailed monthly figures, which shows the mythical RealDollar’s exchange rate with USD over a long time.

  232. # Russell Nelson Says:
    > The advantage of gold is that it holds its price very well.

    What exactly do you mean by “price” here Russell? If the price is denominated in US Dollars, that statement is not true, the price of gold has fluctuated wildly over the past few years, up, primarily. But you might be using price to mean something else that a USD price, so I thought I’d ask.

  233. The Monster Says:
    > Are you saying you’ve never heard of the Consumer Price Index before?

    Ah, so now your currency is one unit of CPI? Is that the plan? I’m sorry, but you are not really explaining your plan very well. Perhaps you should actually write a detailed explanation with worked examples, rather than expecting me to divine it from a few comments here. If you do, write it up, post a link to the article. I’d be delighted to read it.

  234. Perhaps you should actually write a detailed explanation with worked examples, rather than expecting me to divine it from a few comments here.

    I can lead you to water, but if you refuse to drink, I can’t be responsible for that. I’ve been quite clear as to what a RealDollar is, every time I used the word in this thread. But instead of engaging in a discussion of the merits of using an inflation-proofed currency unit, you’ve chosen to quibble about the deliberately simplistic example of a three-commodity basket, and to play dumb about the CPI-U.

    If you can’t follow how financial institutions would use the RealDollar to express interest, how landlords would structure leases in RD to remove uncertainty about future inflation, how employees would like implicit COLA by having their pay denominated in RD, how other countries might eventually choose an RD basis for selling their goods on the global market… then I don’t know how much more I can do to explain it to you.

  235. If the price is denominated in US Dollars, that statement is not true, the price of gold has fluctuated wildly over the past few years, up, primarily.

    And that’s because people don’t believe the USD will hold its value with all the insane deficits being run up.

  236. I’m not sure PAM is really prior art to 6192476. The claims describe “permissions associated with a plurality of routines in a calling hierarchy”. It seems more like the MULTICS security model, where shared libraries can run at a higher permission level than the code that called them.

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