Supreme Court On Patents, Copyright, Monsanto, etc.

Ron in Vegas sends me this report in which Max Keiser spends a half hour on Monsanto, copyrights, patents, etc see below.  But first some background, here is the case and the question at issue.

11-796 BOWMAN V. MONSANTO, ET AL.DECISION BELOW: 657 F.3d 1341CERT. GRANTED 10/5/2012QUESTION PRESENTED:

Patent exhaustion delimits rights of patent holders by eliminating the right to control

or prohibit use of the invention after an authorized sale. In this case, the Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose-namely, for planting. The question presented is:

Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?

In essence, Monsanto needs a win on this to continue its work in seeds and pesticides. Monsanto will win this case because it represents the powerful over the weak.  There was a time when Bowman would have won, but that was two centuries ago.  Things have changed, and you will find a case by case audit of this change in the fundamental text for understanding USA law, by Morton Horwitz.



This case is critical because it truly decides the future of USA and the powers that be.  Without this basis neither fascism nor empire can stand in USA.  So the case is absolutely critical.  The usual suspects are all in for Monsanto, including sadly, Apple Computer.  Monsanto has quite a history of modern living through chemicals, and charmed immunity.  No doubt the USSupreme Court will find that patents are a fine, not a tax, so some such whimsical ruling designed to mock those who still vote.

Max Keiser has 18,000 views in 2 days, so he has pull.  It is unfortunate that it falls to him to cover this news, because he is not the one to do so.  I love Russian English TV if nothing else than for its infobabes are absolutely world class.  No drunken Diane Sawyers in their studios!

But Max is descending fast...  here he is dressed like a sailor and talking like one too.  He is throwing out charges that should be substantiated.  But it gets worse, he interviews a fellow on the topic of copyrights.  The idea is Max is against copyrights, and he brought in Eric Hilton of some earnest bourgeois duo to take the pro-IPR side.  Max made the nice analogy between the war on drugs going after the wrong people and the war on intellectual piracy going after the wrong people.

Eric had sent Max an email wherein Eric proclaimed Max a hero but wrong on IPR.  So on the basis of Eric's admiration, Max invited Eric to debate and converted Eric to Max's position.  Watch the tape yourself, I am not making this up.  And Max's anti-IPR position happens to be pro-IPR, just not a whole bunch.  Both Max and Eric agree there should only be enough IPR to benefit Max and Eric.  Well, we all love a system that works for us.

No discussion whatsoever as to whether IPR is inherently wrong.  Whether it is inherently wrong that has 4th parties taxing fifth parties to prosecute third parties for selling something to second parties that a first party claims to own.  Violence masquerading as law. Eric insisted "artists" had become serfs because people who work hard were making money and Eric wants more money and technology is cool and like, um...  well, you know...

So downhill Max goes, heading to the status of Moscow Rose.

Max, clean up your act, debate some tougher people on these topics, like me.  O... and I really, really like you, Max.



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Designer Martha Stewart Charges 4% Royalty

To start you need massive amounts of specific information about your industry.  We once had to move into a library to gather up this info, and a test of the joy we find in working on solutions was the fact we'd prefer a library to a sunny day.

Now we can sit in the sun and research.  One question I often get is what is the royalty rate in X industry paid to designers.  Well, I dunno.  I know what I've paid in my industry, but no idea about yours.  So eery start up has to do some existential research.  And here, compliments of Ergin, is an example of what you will find:

10:26 AM | Her royalty payment with Macy's was 4 percent — an increase every year.

Read more: http://www.businessinsider.com/live-martha-stewart-takes-the-stand-2013-3#ixzz2MyFHA48d

Now this is buried in a twitter feed attached to an article on a Martha Stewart lawsuit. Sure saves time over going to public records and looking up the lawsuit transcripts.  The internet has lowered the cost of research, and thus improved transparency, making competing on design all the more critical.

And did you know Martha Stewart picked up some pocket money while in school modelling?  Caution, you'll fall in love!

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Italian Nepotism & TSA

The BBC has a tsk tsk article on Italian nepotism.  This explains why Italy is in economic trouble.  Or not.

As an example, the article focusses on schools and how so many on a faculty have the same name.  Is the BBC aware of how many people within a USA university are related to others within a University? And since the state is starving the classroom to save money for war, college professors are finding that to live the spouse better be tenured.

What I would want to know is whether nepotism is a problem.  When we have countless pointless positions, like TSA agent, they Italians may have none.  Nepotism in a real job surely is less damage then meritocracy in pointless make-work.



And speaking of the TSA, they will now allow retractable blades less than 2" long on airplanes.  You mean like boxcutters, the weapon used on 9-11?  Are they mocking us?  Or just trying to not be so different than the rest of the world.  How is that first knife different from boxcutters?

 The decision to permit certain items in carry-on luggage was made as part of TSA’s overall risk-based security approach and aligns TSA with International Civil Aviation Organization Standards and our European counterparts.

Visiting USA has been declining due to USA treatment of visitors.  Anyone travelling overseas finds no where near the airport nonsense we have in USA.  (Except when they figure out you are an American, then what goes around comes around. I've been pulled aside for abuse by officials whose countrymen were abused in USA.)

I don't think we have anything to learn from Italy, but we do need ot make protecting airliners an airline problem, not a state problem.

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Valve, Steam, Anarcho-Syndicalism

If you have an hour, you would do well to listen to this excellent discussion on a company called Valve, which produces video games, which Callum forwarded to me.  It has flat management, and some admirable organizational features.  There is a transcript, but it is hard to read, so give it a listen.

The economist refers to anarcho-syndicalism, which is critiqued here.

 Many anarcho-syndicalists also subscribe to a doctrine known as "mutualism." According to prominent mutualist Kevin Carson, mutualists "believe in private property, so long as it is based on personal occupancy and use."[1]

Exactly.  Use it or lose it.  There needs to be a way to redistribute land away from the unproductive to the productive, from those who amassed wealth through state-backed violence of usury, and those shut out of the state-controlled markets.  Problem is we are stuck in a false dilemma:

For Mises, the only two thinkable systems were socialism and capitalism, and only the latter was realizable, whether in hampered or unhampered form.

Now, there is also anarchy.  As great as Von Mises was, capitalism allows usury, and thus affirms the abominable practice of a very few aggregating all power unto themselves.  English common law makes provision for redistribution in what we call adverse possession, or use it or lose it.  Islamic law goes much farther, with the ease of the innovators to take unused land.  With adverse possession, you do not have to buy property, you can just take it.  The state serves to maintain unjust structures with violence, so common law has ways to get around it.

Only in anarchy can we have the spontaneous order and economic justice we need.  Everyone who realizes this tries to have it both ways, for example the Miseans today call themselves anarcho-capitalists and the trade union anarchists anarcho-syndicalists.  How about just anarchist?

Notes on the tape:

This economist got an email from the Valve CEO and almost deleted it.  Folks, please, if the note is important, write a letter and mail it!  First class USA mail is like 47 cents and int'l is $1.10.  Don't use email for important introductions.

Part of the discussion gets to where the customers are producing more goods and better than the employees, and how the company deals with this.  Fascinating stuff.

There is an academic discussion of capital vs labor, which is seen as not holding in the online video game world.  I'd say the dichotomy is false in all fields, not uniquely false in the video game field.

Valve has no management anyone would recognize, and from this comes some interesting points:

Valve has 300 employees and over a billion in sales.  New hires have to be indoctrinated in how to work without supervision or management.  Some people cannot hack it.  Another aspect is the idea that once a person is infected with worker/manager disease, they cannot be cured.  I wonder about this.

I think people can rebel in place, and I've bogged on thinking like an independent contractor.

Valve has a house full of creative designers.  Valve has employees of other game houses creating for Valve and making more money on the side with Valve than with their full-time employment.

Just as Apple created the optimum method of distributing music, Valve has done so with video games and what it calls Steam. Some 70% of all videos games are traded on Steam.

There was no discussion of IPR. which in video game design must be an issue.  I don't know how much evidence people need that there are far better ways of rewarding innovation and assuring creativity than IPR (which in any case has only bad results.)  But with Steam, here we go again.  It is a human trait to be willing to die for a system that promises to reward you, even if you know that cannot be true.

Recommended listen...

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Macys, Penney & Martha

It's up to me to make clear what is going on, the AP writer apparently cannot think.

Macy's has argued that Penney breached its long-standing contract when it signed a deal in December 2011 to open Martha Stewart mini shops in most of its stores this spring. Macy's, which has been the exclusive carrier of some Martha Stewart products including towels and pots since 2007, is trying to block Penney from selling those products. It also wants to stop Martha Stewart from providing any designs to Penney - whether or not it carries the Martha Stewart label.

What?  Macy's and JCPenney have a contract?  No.  Macy's & Martha have a contract.  So it would be Martha breaching the contract, not JCPenney.  Yes, Macy's wants an injunction to keep JCPenney form hurting Macy's business, but Macy's & JCPenney have no contract to breach.

There is more...

Mark H. Epstein, representing Penney, argued that a decision to block the department store from selling goods like towels and bedding that don't carry the Martha Stewart label would be devastating because the company doesn't have a substitute.

Yes, it does.  The factories that would be producing the Martha Stewart stuff for JCPenney may no longer be doing so.  Excess capacity.  So hire another designer to do something else in those same factories.  Kathy Ireland would probably kill for it.  Or hit a home run:  Karl Lagerfeld.

That lawyer part is not bad writing on the part of the AP writer, but it is bad business thinking (or just legal posturing) on then part of the lawyer.  The JCPenney guy is ex-Apple.  Steve Jobs made plenty of last minute huge changes.

Call Karl.  He worked for H&M. He'd whup Martha.

***John Spiers will be offering an all-day seminar on small business international trade start up at Orange Coast College, Los Angeles Area, June 29, 2013.  Full info here...***

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Importing Housewares

As a veteran of housewares imports, to read about this new opportunity is exciting, for it gets the old juices flowing again.

Macy's was at the right place at the right time and made the right move, first in NYC and then in SF and so on, with its Macy's basement store, which featured housewares back in the 1970s, and rode the kitchen craze that went of for 30 years, and lifted Sur La Table as well as countless kitchen stores.

An Apple exec has take over JCPenney's, and although he has had some fasle starts, his strategy os to use the kitchen store to bring in better paying customers.  Who knows, he built Apple retail.

But eh article is about a lawsuit, so it is full of juicy details...

Home is not the sexiest of categories. It is things like sheets, towels, pots and toasters that are broadly available, low-margin and slow selling. Both Mr. Johnson and Mr. Lundgren said home goods rang up remarkably few sales per square foot. Mr. Johnson said that the category made $185 per square foot in 2007, but now made less than $80. And Mr. Lundgren said that at Macy’s, home was “generally the least profitable part of the store.”

OK... so you only have to beat $80 a SF to get either retailers attention.  Good to know.  Also, they have rediscovered "compete on design" so this is good for the start-up.

“The competitive advantage really lies with private label brands,” Mr. Brown said. “What drives consumers to a physical store is, is there something different?”

You only have to beat Martha Stewart's designs.  That may not seem like much, but she knows what she is doing.  Or maybe not...

Ms. Stewart is the biggest vendor to Macy’s home department, and Mr. Lundgren said that Macy’s had nothing lined up to replace her line.

There is a lawsuit, which can go either way...

As much as he was eager to have Ms. Stewart’s products, Mr. Johnson testified, it was Martha Stewart’s company and not Penney’s that came up with the idea that the store-within-a-store setup would let Penney’s carry products in the categories exclusive to Macy’s.

Either way, JCPenney is looking for new designs... and of the two, either way the case goes, I'd bet JCPenney wins...  sell to JCPenney, ignore Macy's.  That would be my bet.

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What If No Banks?

I was helping a young artist set up his wares in a gallery when he told me with some satisfaction he was now debt-free, for he had paid off all of his credit cards.  Very good!  Knowing he had a condo, I asked if he had paid that off too.  Chagrined, "No" he answered.  He then quickly calculated he was still a quarter million in debt.

Bur he owns an asset against the debt, that is the condo, and that is some consolation.  He gets nice mortgage interest deductions, so no doubt overall owning is cheaper than renting.  Credit cards you have nothing to show for the debt, except perhaps for memories.

A selling point by the credit card companies to retailers is the customer spends 20% more (or some such) using a credit card.  The flip side is the consumer is not as careful with credit as he is with cash.

Long ago when I started making money, just before credit card use went universal, I carried two wallets.  One to give up in a robbery and one for me to keep.  Getting robbed for cash was far more common back then, since anyone with money usually carried quite a bit of it.  I recall a conversation in Hong Kong with a businessman who told how he finally switched to credit cards if for only to cut his own chances of getting robbed.

Since I was cutting edge, I already had some expired credit cards, and those were in the "give-up" wallet.  This was before there were even ATMs.  But credit cards were easy to use fraudulently, since there was none of the communications means available to track fraud.  A business made a paper impression of the card and in a week or so a bank would know about any fraud.  Cards were better than money.  A thief seeing a wallet full of credit cards would be off like a... well, bandit.  The sooner he gets busy with the cards, the more he gets to keep.

It is funny who things change so much over so little, or so little in spite of so much change.

Money and credit are two different things.  By paying with money, you never get in debt.  By using credit, you get in debt.  The business world has always run on credit, and that is "vendor financing" where since within 30 days of receiving a shipment of dresses a retailer has received enough cash from enough dresses sold at $40 to pay the wholesaler his $15...

since within 30 days of receiving a shipment of dresses a wholesaler has received enough cash to pay the manufacturer his $10...

since within 30 days of receiving a shipment of fabric a manufacturer has received enough cash to pay the fabric house his $5...

since within 30 days of receiving a shipment of yarns a fabric house has received enough cash to pay the yarn dealer his $3...

since within 30 days of receiving a shipment of yarn a yarn dealer has received enough cash to pay the yarn mill his $2...

since within 30 days of receiving a shipment of wool a yarn mill has received enough cash to pay the shepherd his $1...

Until about 40 years ago, anyone who got greedy or miscalculated found himself shoved out of the network and his place taken by someone more reliable.

But note something... so much business, so little cash.  The end-user used cash, which called forth industry from the shepherd to the retailer, all organized around that end-user sale.  It is the end-user who pays for everything, including all interest and taxes.   (Business cannot pay taxes, only end-users pay taxes.  Taxing a business serves only to hide taxes from the end-user, or to destroy the targeted business.)

What changed is banks made all these relationships unnecessary since the bank stepped in and lent the money to each player at each step, easier for those involved, better for those who would otherwise be forced out, and a money maker in terms of interest for the bankers.  And since all transaction are now tracked by banks, much easier to tax by the state, so now you know why the state will always bail out the banks, at least the big banks, and let the small banks die off, as is now the case.

State and bank policy is one, for the benefit of the state.

WE are being treated to sideshows about longer lines at airports, children with no vaccines (I wish!) and unfueled naval vessels for fiscal cliffs and sequestering.  People do not quite get it is already over.  We are falling now.  It all seems so light and airy and easy, and we are making remarkable progress.  This is really not so bad.

Our opinions will change when we hit the ground.  It is coming up fast, indeed faster with each kick of the can down the road.

We have systems that work.  Inviting "banks" into commerce was a huge mistake.  Industry does not need banking.  The state does, but not industry.  Banks make for a concentration of power that crushes the innovators and maintains the zombie.

This system will fail, there is no turning back.  But there are systems that work perfectly fine.  Time to begin exercising those systems again.  They will come in handy when we go back to the future.

Maybe we'll know we are there when we see men buying two wallets at a time.

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