As we noted in the context of antibiotics, it's well recognized that financial incentives cause the pharmaceutical industry to engage in research that tends to maximize profits rather than maximizing the health of the public. But a widely-circulated article in the Washington Post reveals another kind of bias that may stop us from adopting better ways of keeping people healthy that would also reduce healthcare costs.

This flows from the fact that countries with advanced healthcare systems are no longer dealing mainly with infectious diseases like turberculosis, as they once did, but with chronic ones like heart disease, diabetes, AIDS and many cancers. The key here is how best to manage the disease, particularly among elderly patients, and for that, doctors in hospitals aren't necessarily the best way:

Medicine has been so focused on what doctors can do in the hospital that it has barely even begun to figure out what can be done in the home. But the home is where elderly patients spend most of their time. It's where they take their medicine and eat their meals, and it's where they fall into funks and trip over the corner of the carpet. It's where a trained medical professional can see a bad turn before it turns into a catastrophe. Medicine, however, has been reluctant to intrude into homes.

One company, Health Quality Partners, has focused on doing precisely that:

The program enrolls Medicare patients with at least one chronic illness and one hospitalization in the past year. It then sends a trained nurse to see them every week, or every month, whether they're healthy or sick. It sounds simple and, in a way, it is. But simple things can be revolutionary.

The results certainly are:

According to an independent analysis by the consulting firm Mathematica, HQP has reduced hospitalizations by 33 percent and cut Medicare costs by 22 percent.

And yet Medicare is planning to shelve this pilot program, citing various bureaucratic reasons why it can't continue. Although some supporters of the home-based system maintain that it would be possible to overcome these problems, there remains a more fundamental obstacle to rolling out the Health Quality Partners approach more widely:

Hospitals make money when they do more to patients. They lose money when their beds are empty. Put simply, Health Quality Partners makes hospitals lose money.

So again we seem to be confronted by perverse incentives at the heart of our current healthcare. The better and cheaper way would mean scaling back key parts of the system by instituting regular home visits by nurses, thus reducing the number people sent into hospitals to be treated by physicians. That implies taking on very profitable and thus very powerful business interests, including the doctors themselves. Given that resistance, and Medicare's apparent reluctance to force change by backing the Health Quality Partners system, it seems likely that we will be stuck with an inferior, more costly approach to treating chronic diseases despite knowing what looks like a much better way to do it. Some might call that pretty sick.

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With the possibility of comprehensive copyright reform in the US in the air, we warned that lobbyists from all sides were about to be very, very busy on Capitol Hill, and it has already begun. We've heard from very reliable sources that the MPAA has basically been blanketing Congress with the attached document, visiting as many offices as possible and leaving it behind as their talking points on why copyright is just freaking awesome.

Of course, since this is the MPAA, the document is all sorts of misleading. Let's dig in a bit, shall we?

From the printing press, to motion pictures, to recorded sound, to the Internet, for its entire history, copyright law has evolved and developed in response to new developments in technology and the marketplace.

Well, that's one way to look at. Another would be, from the player piano, to radio, to TV, to the photocopier, to cable TV, to the VCR, to the MP3 player, to the DVR, to internet video, the entertainment industry has flipped out and used copyright law to try to block the development of new technology and marketplaces, often against their own best interests. Given that, you'd think that we'd know by now to take the entertainment industry's claims about copyright law and new technologies with a rather large grain of salt.

The result is that today the U.S. copyright system is a cornerstone of a vibrant creative economy that is unparalleled in the world – adding $631 billion and over 7.5 million direct and indirect jobs in 2010 [Department of Commerce, IP and the U.S. Economy study], and making the United States a world leader in creativity, technological innovation and economic growth.

It wouldn't be the MPAA if it didn't come chock full of bogus stats. First up, the Commerce Department report -- also known as the grocery store report, because it counts all 2.5 million employees of grocery stores as being the single largest employer in the "IP intensive industry." Because, you know, without strong IP laws, that checkout bagger wouldn't have a job. Of course, this highlights why the whole Commerce Department report is useless. It first broadly defines "IP intensive industries" in ways that are simply not credible (see above: Stores, Grocery), and then, ridiculously, suggests that all of the jobs in those industries exist because of existing IP laws, despite no proof of any causal link.

When you look specifically at "copyright," you see they lump in all sorts of stuff that would be made without copyright -- including advertising, public relations, scientific services, performing arts companies, newspaper reporting, "internet sites" and computer system design. Yes, some of those probably involve the use of copyright, but how much? The MPAA doesn't care, it counts them all for its team.

Second, note the claim that these are "direct and indirect jobs"? This is a standard trick of the MPAA. For years they go around citing "2.1 million jobs" implying that's how many the movie industry employs. Except, it's not. The actual number is 374,000. So they started adding in a hell of a lot of "indirect jobs," taking credit for the florists and hairdressers and food delivery folks and all of that. As if "copyright" had anything to do with any of that.

As for the US being "the leader" in this arena, as recently noted, many of the biggest entertainment companies are actually foreign owned, meaning that a significant portion of any profits is likely flowing out of the US.

MPAA member companies welcome a continuation of the ongoing discussion of the importance of copyright. We welcome a discussion based on facts, experience, and rational analysis.

Coming right after the bogus numbers and claims, that's a pretty rich statement.

And we are confident that such a discussion will result in a renewed affirmation of the benefits to all of a copyright law that encourages and rewards creativity and breakthrough innovation, promotes distribution and enjoyment of America’s most beloved stories and characters, and takes a firm stand against the criminals who would rob us of those.

I'm still waiting to see where copyright rewarded breakthrough innovation. I can give you a long list of where it hindered it. It's also not at all clear that today's copyright "encourages and rewards creativity." It clearly rewards some aspect of creativity, but as we've seen a decline in respect, and an increase in infringement, we've also seen a massive increase in content created. That, at the very least, suggests that there are other incentives at play. Furthermore, we reported on a recent study showing musicians making approximately 6% of their revenue from efforts that directly involve the sale of copyrighted works -- suggesting that there are numerous ways of "rewarding creativity" that have little to do with copyright. In fact, a strong argument can be made that with a focus on copyright, you end up with many fewer creators rewarded. But when you focus on other methods of supporting artists, the numbers go way up.

Also, really, if we're going to be talking about a discussion based on "facts" and "rational analysis," we really could do without the bogus and misleading use of words like "criminals" and "rob" for actions that are most frequently civil law issues, at best, and are potentially about infringement, not stealing. It's the little things like this that determine whether the debate will be an honest one or pure propaganda.

Copyright Empowers Creativity, Innovation and the Dissemination of Knowledge
The promise of the opportunity to make a living doing what they love is what gives a creator incentive to transform his or her new ideas into reality and to take that new creation to the public. Creators deserve to be secure in the knowledge that they have a fair chance to earn a wage from their work and investment -- the works that contribute both to our shared culture and our national economy. The Constitution itself recognizes that the public’s interest in creativity and the dissemination of knowledge is best served by the incentives that result from recognizing authors’ and creators’ rights. If our creative sector is to remain the envy of the world, the law must ensure these public-interest purposes of copyright are not undercut.

The promise of the opportunity to make a living gives creators an incentive to create and distribute their works. But just one incentive. And there's fairly strong evidence that it's actually fairly far down the list of incentives that lead to the creation and distribution of creative content. We have a pretty big wide internet filled with content that was created for no direct remuneration. For many, many people, the incentive to create is not because of money, but because they can't not create.

Second, this entire paragraph assumes -- wholly without support -- that copyright is the only way to make money from creation. That's ridiculous, and easily shown to be false (as noted above with the 6% number). Lots and lots of people make money via their content without ever needing to make use of the power to exclude granted to them under copyright.

As for creators deserving a "fair chance to earn a wage from their work and investment," that's absolutely true, but what does that have to do with copyright? After all, under the "old" system that the MPAA used, the vast, vast, vast, vast, vast majority of people who wanted to become filmmakers had no chance at all to earn a wage from their work, because the only way to make a movie was to have one of the MPAA gatekeepers grant you permission. The fact is that most people who want to earn a living making content have failed at it. This has always been the nature of the content business -- and it's a point that the MPAA and other copyright maximalists never want to admit. Also, considering that thanks to the infamous practice of Hollywood accounting, we're told that most films lose money, then, it seems that the existing system isn't working to the level that the MPAA claims is necessary.

Finally, the Constitution says no such thing. It makes no claim that the public's interest is "best served" by copyright. All it does is allow Congress to create monopoly privileges such as copyright if it believes those serve the public. That's it.

Take Digital Rights Management technology, for example. Without the protection of effective DRMs, the business incentive to develop new and innovative distribution models, like UltraViolet, across multiple devices and platforms is lost. The technological and legal protections provided by current law allow content to be portable, enabling consumer flexibility on how to access it. Under current copyright law, the choice and cost curves are both bending in the consumer’s direction.

Try to hold back the laughter here. After all, we're having a discussion based on "facts, experience and rational analysis." And, yes, the MPAA is trying to argue that DRM itself is a form of innovation, and they're highlighting Ultraviolet, a crappy DRM system that no one wants, that tries to enable a tiny portion of the benefits that everyone else on the internet figured out how to get for themselves a decade earlier. That's not innovation. No one needed UltraViolet DRM to distribute content "across multiple devices and platforms."

Limiting what consumers can do is never innovation. It's about trying to limit the impact of actual innovation.

Copyright Benefits Consumers by Promoting Free Markets and Competition
Copyright as it is reflected in both the Constitution and in current law recognizes that the public benefits from a competitive environment in which clearly-defined property rights enable the market to drive the creation and dissemination of creative woks. These rights foster competition because they incentivize creators to take risks. They encourage economic development and economic diversity. That’s good for the consumer and good for the economy.

Yet another trope. As was aptly discussed in Derek Khanna's report for the Republican Study Committee, copyright is the antithesis of promoting a free market. The problem, here, is that the MPAA is pretending that any monopoly makes sense as "property" to create a market. But any competent economist will tell you that's hogwash. We can create all sorts of artificial monopolies to create markets to prove how ridiculous this is. For example, how about we put a pricing mechanism and the ability to exclude people from accessing air to breathe? We've now created "property rights" and a "market" for air -- and I'd imagine it would be quite a lucrative one, given the demand.

And, of course, that would create "a competitive environment" that would "foster competition" by "incentivizing air creators to take risks."

But, of course, most sensible people would recognize that creating such an exclusionary right for something that is abundant is not a form of a free market, but rather is a massive inefficiency in a functioning free market.

The MPAA can argue, perhaps with (or perhaps not) reasonable support, that a system of artificial limited scarcity is a better net result, but it's not a free market by any means. They really should stop pretending it is one, because it really takes away from their point. They should be arguing the facts: that copyright is basically a mercantilist system of monopolies, emerging from the mercantilist era of protectionism. They can then make the argument for why that works better than an actual free market, and that would be an interesting debate. But pretending that the exact opposite of a free market is a free market is just silly.

Enforcement of existing copyright laws is also essential to ensure that illegitimate websites that profit from the illegal sale of content do not have an economic advantage over the innovative platforms that our companies develop to deliver high-quality content to consumers. Undermining copyright law would serve as a disincentive for future technological development and would harm consumers.

As has been shown time and time again, infringement is generally a leading indicator of innovation. The reason that there are so-called "illegitimate websites" that are succeeding is based on one factor alone: the industry's own failure to provide convenient services that consumers want. So they seek other convenient services. If the industry focused on providing more value (as they grudgingly do over time) they'd easily compete with and beat those illegitimate sites and many more people would pay. That is, enforcement has been shown to do very little in terms of encouraging technological development. Infringement, on the other hand, has had a major role in driving many key innovations that are incredibly consumer friendly.

Look, for example, at the music industry. The labels fought any digital distribution for years, as newer, more innovative and increasingly convenient "unauthorized" offerings showed up. Left to their own devices, the labels created two of the worst music distribution services imaginable, MusicNet and PressPlay, which no one bothered to use. It was only when pushed by competition from better online offerings that the industry finally allowed innovation to happen, leading to increasingly innovative solutions, including things like Spotify today, which owes its history to things like Napster.

If not for such infringement, consumers would still be living in the dark ages, with the labels trying to keep any serious digital distribution from happening at all.

Copyright Supports an Internet that Works For Everyone
There are those who would place the value of the Internet at odds with copyright. We reject that false choice. Freedom of expression is at the bedrock of both the Internet and the creative community. In considering policies surrounding the Internet, we need to recognize what the Supreme Court has stated repeatedly – that copyright is itself an “engine of free expression.” Not only does copyright itself promote creativity, but creative content has plays an important role in helping to promote the growth of the Internet. As we look at policy affecting the Internet, we must advance policies to promote an Internet that reflects the values that have been fundamental to us for hundreds of years, including freedom of expression, property rights, and protection of the rights of individuals. Good policy stays true to these values, resisting efforts that would pit one against another and recognizing instead that these values are mutually reinforcing.

I don't think that copyright is at odds with the value of the internet. It seems to me that it's the MPAA setting up a strawman here. However, certain aspects and uses of copyright almost certainly do go against the values of the internet, which can be seen in the way people use the internet to inadvertently infringe all the time. Just look around at how many YouTube videos say "no copyright intended" while clearly infringing on someone's copyright.

As for "the engine of free expression," just because the Supreme Court says something, does not make it a reality. If we look at the last 100 years of history, and look at how much "expression" was created because of copyright, and compare it to how much "expression" was created because of technology (or, hell, limit it to just the internet), the technology/internet will win by a long shot.

The internet is, at its core, a tool for expression. That is undeniable. And, if we're going to talk about "property rights" and "protection of the rights of individuals" it needs to start with our rights to express ourselves, along with our rights to own what we legally posses. Copyright has gone against those rights in so many ways. It stops us from actually owning the music we thought we'd "purchased." It stops us from modifying our phones or video game consoles. It stops us from shifting a movie we purchased on DVD to our computer. So, sure, if we're going to protect "property rights" and the "rights of individuals" let's actually do that.

The reality, of course, is that's not what the MPAA is asking for at all. They want to to protect copyrights, not actual property rights. And they want to protect the exclusionary privileges of the large copyright holders, not the rights of individuals. However, if they're going to claim that they want to support free expression, property rights and protection of the rights of individuals, then I agree. I just doubt they'll agree with what that really means.

Copyright Provides Creators with Modern Protections
Copyright law evolves over time. The last major overhaul of copyright law was the result of decades of Congressional work, much of it focused on fashioning a law that would be flexible enough to accommodate future technological change. But technology and the marketplace often evolve faster than the law. Fortunately, copyright law also provides the space for the private sector to collaborate to develop more immediate solutions. Content creators and intermediaries can and do engage in meaningful conversations about how to protect a secure, legitimate online environment for both creators and audiences. Any discussion of copyright law must include recognition of the critically important role that voluntary agreements play in ensuring the content and tech industries can both remain nimble in a rapidly-changing world.

The whole basis for this point is misleading. The role of any system of copyright should not be about protections, but about what creates the greatest overall benefit. The overall incentives should be aligned. The public wants great creativity, and creators want to create. So let's focus on what leads to that result, rather than jumping to the conclusion that "protection" is the key. Protectionism is often a way of limiting markets, rather than helping them grow to their full potential. So, why aren't we looking at what will incentivize the most innovation and creativity, rather than what will do the best job of protecting and locking things up?

As for flexibility -- we agree that any law needs flexibility to adapt to changes in technology, but it's laughable to think that's true today, given how often we've seen the MPAA flip out about changes in technology, and run screaming to Congress that the law isn't working for them. 15 new anti-piracy laws in the past 30 years? That's not a flexible system. A flexible system is one that doesn't insist that every bit of content must automatically be put under a copyright regime. A flexible system is one that doesn't mean a generation never got to see new works enter the public domain. A flexible system is one that doesn't tell people that downloading 24 songs may make them liable for over a million dollars. That's a broken system.

Copyright Provides for Incentives and Accountability
The public interest in the creation of and dissemination of creative and innovative products cannot be served in an environment in which some are free to build businesses based on the infringement of the rights of others. As infringement grows more widespread, sound copyright policy must recognize that the solution to such problems is in society’s broad interest. Any review of copyright must focus on whether the system as a whole provides for meaningful accountability on the part of those who infringe the rights of others, and whether there are adequate incentives for cooperation and accountability among other stakeholders.

A meaningful system recognizes that infringement is not the problem -- a failure to serve the public with what they want is the problem. A meaningful system recognizes that spending time, resources and efforts on stopping the unstoppable -- especially when it has little long term impact on the bottom line -- is not a sound or reasonable policy. The public's interest is being served all the time -- in large parts by innovation that is often driven by these services that the MPAA hates so much.

And, again, this is the same MPAA that argued that the public's interest would be harmed by the VCR. And by TV. And by the DVR. And by YouTube. So it is hard to take these claims seriously.

Hopefully, most of the folks in Congress receiving this particular document will do some research on what's being said, and will realize that the MPAA's position is not one to take seriously. It is not one based on facts, experience or rational analysis. It is, instead, based on self-interest of a small sector of the economy -- a few large movie studios with a history of exploiting content creators for their own benefit. If we're going to have a real discussion on copyright reform, it has to be based on actual facts, not MPAA-style theatrics.

The European Patent Office (EPO) is a curious body. Despite its name, it is not the patent office for the European Union (EU) in the same way that the USPTO handles patents in the US. As its history page explains:

In addition to all 27 EU member states, Albania, Croatia, Iceland, Liechtenstein, the Former Yugoslav Republic of Macedonia, Monaco, Norway, San Marino, Serbia, Switzerland and Turkey belong to the European Patent Organisation.

This gives it an independence from the European Union that is problematic for patent law there. For example, back in 2005, the European Parliament voted definitively not to allow software patents in Europe. And yet as an excellent analysis published on the IPKat site explains, the EPO has continued to move steadily towards granting more and broader software patents in Europe.

Given the largely uncontrolled way the EPO has been issuing patents, this story in Intellectual Property Watch is noteworthy:

The European Patent Office Administrative Council in December agreed to award a controversial bonus of tens of millions of euros to EPO staff at the end of 2012, with 24 positive votes and 8 negative votes. Several stakeholders had protested the proposal and encouraged contracting states in the Administrative Council to vote against the measure.

The reason for the bonus? Because of all the extra money the EPO had made recently as the result of granting so many patents. But as a letter written to representatives of the 38 EPO contracting states in the Administration Council, and obtained by Intellectual Property Watch, pointed out (doc):

[The bonus] contributes to adverse incentive structures and conflicts of interest for the employees of the EPO. In linking the staff's wallet to the Office's surplus, it undermines the efforts to raise the bar in patent examination and fosters a mentality to increase fee revenues for the EPO by granting applications of low quality.

The bonus is effectively rewarding the fact that the EPO's employees issued a particularly large number of patents in 2011. Human nature being what it is, the danger is that this will encourage them to issue even more patents in the hope of receiving another similar bonus.

As the letter goes on:

The EPO should not celebrate increases in patent filing rates as a success story but react to the worldwide critique of a global overheating of the patent system jeopardizing innovation and the proper functioning of the social contract with society upon which the patent system rests.

That is, rather than implicitly making the false equation that more patents automatically mean more innovation -- something that Techdirt has written about several times -- the EPO should strive to reduce the number, but increase the quality, and maybe offer bonuses for those who achieve that.

Sadly, it's in the EPO's interests to have more patents issued, regardless of their quality, since this will encourage yet more companies to apply for patents so as not to get "left behind" in the Great Patent Race. And that will produce yet more surpluses for the EPO, and presumably more bonuses for its staff. Everyone wins -- except, of course European businesses and citizens who have to suffer the knock-on effects of yet more unjustified intellectual monopolies.

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One of the areas of economics I'm most interested in is focused on incentives. While it's a simplification of things, there are so many areas where people seem to naturally gravitate towards negative reinforcement as an incentive system -- that is, punishing people for things they believe are wrong. While that does work in some cases, it's amazing just how frequently positive reinforcement to nudge behavior in a better direction works much, much, much more effectively. Aaron DeOliveira points us to an interesting example of a company focusing on positive reinforcement in an area where most people have long-assumed that punishment was the only possible option: dealing with the annoyance of people texting during a movie. The first response that many theaters (and theater goers!) have, is to "punish" this behavior by outlawing it. They set up rules and put up signs. They have silly commercials before the show about how annoying it is. But it's all based on the idea of negative reinforcement: punishing or shaming those who engage in the behavior. But, quite frequently, that does little to actually get people to stop.

So, it appears that the Cinemark chain of theaters is trying a system of positive reinforcement. Within its normal movie app for iOS and Android is a separate "mini-app" allowing users to put their phones into "CineMode." It automatically makes the screens on the phones dim, and puts them into vibrate mode -- sort of like an equivalent to airplane mode. But here's the kicker: since the app knows what you're doing, it can keep track of whether or not you actually follow through and leave CineMode enabled throughout the entire flick. For the users who do that, they get rewarded:

When the movie ends and the guest exits CineMode, Cinemark will automatically send a reward (digital coupon) through the app and store it in the Rewards section.

Who knows how well it will work in practice, but it's great to see people realizing that technology can help enable this kind of positive reinforcement, rather than always doubling down on the negative reinforcement/punishment.

We've written about Dan Pink's last work, Drive before. It's a fascinating book that explores some counterintuitive concepts about how money incentivizes people. His new book, To Sell is Human appears to build on these concepts, as it specifically relates to salespeople (who many people assume are only incentivized by money). An HBR article appears to summarize the thesis:

Some things in life we know are true. The sun rises in the east and sets in the west. A body in motion will remain in motion unless acted on by an outside force. And the best way to motivate salespeople is by offering them commissions.

But what if we’re wrong, at least about that last one? What if paying salespeople commissions is rooted more in tradition than logic? What if it’s a practice so cemented into orthodoxy that it’s no longer an actual decision? That’s what a handful of companies have begun discovering. To the surprise of many, these firms are showing that commissions can sometimes do more harm than good—and that getting rid of them can open a path to higher profits.

Either way, it should come as little surprise that Pink is also trying unique ideas for the selling of his own book, including recruiting a "launch team" made up of 96 people who promise to share the ideas in the book (and, no, I'm not a part of that). He's offering up "rewards" for people who are willing to do this:

• Advance galley copy of To Sell is Human – there’s only a couple hundred of these ever printed.
• Signed 1st edition hardcover of To Sell is Human.
• A public Thank You on my blog along with links to your website and Twitter.
• Exclusive access to me – and each other – via a private Facebook group.

It's that last one that I find most interesting. It's not all that different than some of the offerings we've put together for people on Techdirt as well, who wish to support the site, and can get greater access in exchange (which has been really fun in practice!). It will be interesting to see how well this works (and hopefully Pink will report back on the success or failure of the program as it goes on).

What do people have to do in order to be included? Well, first they have to apply (and applications close tonight at midnight eastern) and be chosen. But then, it's pretty straightforward:

• Spread the word about the book on your platform during the weeks before and after publication.
• Leave a short, honest review of To Sell is Human at Amazon.com or BN.com on December 31.
• Join us in the Facebook group to brainstorm and share ideas on how we might spread the word about To Sell is Human.

I would imagine that, under current FTC rules, anyone in this program would actually need to disclose their participation in the program whenever they talk about the book -- which hopefully Pink is telling those who sign up for this. I also wonder if those who don't get "in" to the program will walk away feeling negative about it. Hopefully not. Either way, it's an interesting experiment and hopefully he'll share how well it works. I've always been a big fan of "access" to content creators as a possible unique form of "reward" -- and it's the kind of experience that can't be copied, which is what makes it so valuable.

From SOPA/PIPA to the Digital Economy Act to ACTA to the DMCA, there's no shortage of bad legislation built to serve various copyright-driven industries. But just when you thought you'd seen the very edge of how far legislators were willing to go, someone comes along and tops it.

Technollama brings news that Panama is attempting to raise/lower the "bad legislation" bar (not sure which direction the bar would actually be traveling...) with its Proyecto 510-2012 bill, dealing with copyright and related rights.

The 510 Bill gives new powers to an administrative branch of the Ministry of Commerce and Industry called the General Copyright Directorate (Dirección General de Derecho de Autor, henceforth DGDA). Unlike similar copyright administrative offices around the world, the DGDA will have the power to impose fines on infringers without prejudice of further criminal or civil actions.

It's exactly what it looks like: the Panamanian copyright office is being given the power to chase down filesharers and fine them up to $100,000 PAB ($100,000 USD). In addition, the "without prejudice" portion means that filesharers can still be pursued by rights holders, even if the government has already levied a fine.

The bill goes even further than this astounding bit of rent-seeking:

[T]he DGDA has the power to unilaterally haul any alleged infringer, ask them to mount a defence within 15 days, impose fines of up to $100k USD ($200k for re-offenders), and on top of that this person may still have another civil case against them added to the administrative fine. Adding insult to injury, they also have to pay for the publication of the fine so that everyone knows what a nasty pirate they are.

So, you have a government entity pursuing citizens for copyright infringement (a civil matter, or so it used to be...), an act which opens them up to further civil action from the rightsholders. With this kind of enforcement, the Panamanian creative industries should be rolling in extracted filesharer dough. Or so you would think, if this bit of wording wasn't present in the bill:

The funds accrued by the General Copyright Directorate from the fees for the services it provides and the fines imposed in the exercise of its powers, will be aimed at improving its operational infrastructure and to boost the performance of its officers, complementary to the funds that the State Budget reserves for the operation of the entity[...]. The amounts corresponding to each official, shall not exceed fifty percent (50%) of the total basic salary monthly remuneration.

That's right, none of it goes back to the rightsholders. These fines get fed right back into the system that levied them. Not even back into the government in general, but directly back to the DGDA. Wow. How could that possibly be abused?

This is what I think will happen if the law passes as it stands. The DGDA will immediately try to monitor all torrent use in Panama, be it legitimate or not, and all people identified with IP addresses will be summoned and summarily fined. After all, the institution and its employees will have a direct financial incentive to assume guilt. Then those same people will be sent again and again, as there will be clear incentive to fine re-offenders.

Well, that's sounds like all the fun of copyright trolls combined with the "answer to no one" power of the government all rolled up into big ball of perverse incentives. I suppose the government will turn these filesharers over to the rightsholders once it's drained them of money to toy with the drained corpse through civil proceedings.

Meanwhile, the industries seeking this sort of protection will find that no one has any money left to purchase their products, much less pay off another set of hefty fees. While this may provide the rightsholders with some sort of second-hand vindictive high, it's hard to see how this betters their financial situation in the least.

Technollama calls the legislation "toxic." It is. And more than that, it's completely perverse in every sense of the word. It hooks an agency up to an IV full of money and trusts it not to repeatedly press the "dispense" button. Sure, it may cut down on infringement, but once a government agency is hooked on steady income, it usually comes up with new (and worse) ways to keep the buzz going. The dollar amount of the fines will be ratcheted up and the definition of "infringing activity" will become broader, perhaps encompassing such maximalist wet dreams as embedded video. It's ugly, any way you slice it.

We've written about the ridiculousness of the ongoing auction over Kodak's patents -- the final sad legacy for the once giant company. However, it's getting even more ridiculous. On Monday, a bankruptcy court judge approved about $6 million in "performance" bonuses for execs, including some that are based on how much the company gets from these auctions. Think about the ridiculous incentive structure here. You have executives who are running a bankrupt company, who are set to make millions (in a court approved manner), for handing off the company's patents to trolls, so they can go out and sue the actual innovators.

The execs make out like bandits. The buyers likely make out like bandits after shaking down some companies. The lawyers (of course) make out like bandits. And... who gets screwed? Oh yeah, the companies who are actually innovating successfully in the market and the public (who we thought the patent system was supposed to benefit).

I can't really add to this.

Mike's recent post about OK Go is just crying out for some Mimi & Eunice cartoons. Rather than make him go back and edit it, I'll just illustrate it here:

Actually this miniseries began with this strip, which sums up an argument used by many copyright advocates:

There are lots more new Intellectual Pooperty cartoons to see - please copy them freely.