One of the little noted benefits of IP is that it can protect inventors from having their ideas expropriated and thereby facilitate trade in ideas. Bob Kearns was dealt a blow by Ford trying to sell the intermittent windshield wiper but eventually got a patent payout. Today, news that an Australian innovator has benefited from this:

Uniloc argued Mr Richardson showed his program to Microsoft in 1993 on the proviso that the computer giant would not try to break the code or duplicate it.

Uniloc claimed that in 1997 or 1998, Microsoft breached this agreement and began using similar software in its pilot programs.

Microsoft denied any breach, arguing it had developed a different system after deciding Uniloc’s software was of no use.

The half a billion dollar payout dwarfs that for the intermittent windshield wiper so I wonder if it will stick. In any case, it shows that there is some recourse.

Regular readers know that I favour parallel importing of books into Australia because I want to encourage reading of them. The Productivity Commission just released its draft report into the issue. It identifies me as one of the chief types of people who would benefit from restrictions on parallel imports (I am an Australian author, whose books are sold overseas and most of the books I sell are educational texts at a currently high price). So my income would go down if parallel importing were allowed. My point being: when I continue to say that I want parallel imports, I say this in the context where it would harm my income.

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I sadly don’t have time to go into the details of the PC’s report but will do so later on. The chief policy recommendation is that parallel imports be allowed 12 months after the publication of the book in Australia. So I have to say, that is an improvement over the current blanket ban.

So who does this hurt? Well, me. My textbooks make their money mostly after the first 12 months of publication. In addition, a book like Parentonomics was published overseas 8 months after its publication in Australia. Let me tell you, no one is printing large volumes of that until after 12 months.

But who does it protect? It protects the predictable best sellers. If you are expected to have a big selling book, you can charge a high price in Australia during the time you expect to sell most of it. Let me tell you: culturally and otherwise, these are not the authors most in need of protection. But let’s not pretend this is protecting the untried Australian authors. It is not. It is a tweak to deregulation so that politicians do not have to answer complaints from noted authors in the press. But then again, if that works to get some form of deregulation, so be it.

The big loss is, of course, to the future. We need an amazon.com in Australia with all that it brings but they won’t set up shop here unless they can sell the bestsellers cheaply to get customers used to online purchasing. So who else does this rule protect? Current bricks and mortar booksellers.

Finally, the Productivity Commission is claiming that it supports evidence based policy making. I cannot imagine many sectors as data filled as bookselling and publishing. Yet, is there is a single bit of quantitative data analysis? No. The whole report is full of recounting the opinions of submitters to the Commission. What is more there is hardly a single academic study – of which there are many – that is cited by the Commission let alone relied upon.

[Update: Actually I am told there was some quantitative work behind this and it will be available soon as a technical appendix. So that last paragraph may need to be qualified.]

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So how can you make money out of innovation without a patent? Take positions in firms or assets that will appreciate (or I guess depreciate) if the innovation is successful. It is an old idea but a new paper by Debrah Meloso, Jernej Copic and Peter Bossaerts in Science tests it out in the laboratory against a patent-like system. I’m not sure what to make of it yet but it is interesting.

[DDET Read abstract]

Because they provide exclusive property rights, patents are generally considered to be an effective way to promote intellectual discovery. Here, we propose a different compensation scheme, in which everyone holds shares in the components of potential discoveries and can trade those shares in an anonymous market. In it, incentives to invent are indirect, through changes in share prices. In a series of experiments, we used the knapsack problem (in which participants have to determine the most valuable subset of objects that can fit in a knapsack of fixed volume) as a typical representation of intellectual discovery problems. We found that our "markets system" performed better than the patent system.

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Now usually when we talk about the lack of open public information, everyone agrees and politicians duck the issue. Following up on the NSW rail timetable issue last week, this story today about a high level non-ducking:

The NSW Premier, Nathan Rees, has jumped into the middle of a spat between RailCorp and mobile software developers and has chosen to side with the developers. …

In a new Twitter message, Rees indicated he would override RailCorp’s decision and force the bureaucracy to meet the mobile software developers and work out a way they can use the timetable data.

“I’ve asked [Transport] Minister [David] Campbell to speak to RailCorp. They will meet with the app developers to negotiate how to use the info accurately,” Rees wrote.

Campbell this morning confirmed he had “asked RailCorp to meet with these developers and see if they can work together on a way forward”.

Excellent. This is progress. Hopefully, it will lead to real change.