There is nothing in the world that some man cannot make a little worse and sell a little cheaper, and he who considers price only is that man's lawful prey. --John Ruskin (1819-1900)
When AOL bought Time Warner last January, it paid $147 billion to form the world's largest media concern. But the accounting value of Time Warner's assets was only about $51 billion. What was the other $96 billion for? It was the premium AOL paid for scores of brands, trademarks and other so-called intangible assets. The value of this stuff - called goodwill - now sits on the asset side of the balance sheet of the combined AOL Time Warner. In the magical world of accounting, all assets, from factories to machinery, fall in value. The process can take anywhere from four years (at tech companies) to 40 years (old-line factories), depending on the asset's expected usefulness, and is accounted for in a quarterly expense to the income statement. In AOL's case, this amortization of goodwill, as the expense is called, currently subtracts an astonishing $1.5 billion a quarter from the bottom line, leading the company that owns the publisher of MONEY to post a near-billion-dollar net loss in the third quarter. [Source: "The Goodwill Games." By Pablo Galarza. Money 30 (13): 61. In ABI/INFORM.]
Every business has “intangible assets” and it’s long been a problem in accounting for them. Realize, though, that there are intangibles and “intangibles.” Is a promissory note, an IOU, more “tangible” than a trademark? Apparently, as the former is considered a “financial asset,” while the later is called an “intangible asset.” That doesn’t keep companies from trading in trademarks, however.
A trademark is part of a company’s “good will,” the respect (or, in some cases, fear) that a firm possesses in the marketplace. In “the good old days,” trademarks and brand names were a sign of the quality of the goods, and that still has some relevance. Almost everyone shows a certain degree of brand loyalty, and the most common and useful form of it is, “These guys haven’t screwed me yet. They do good work.” The trademark as an indicator of quality makes “counterfeiting” a real crime, akin to fraud, trying to pass off something inferior as something of superior quality.
Still, there are, if not exceptions, at least some interesting variations on the theme. Those guys on the street selling $20 Rolexes, I mean, I doubt that anyone thinks they are genuine (and anyone who does, also believes they are receiving stolen goods). So it might be said that there has been a strange “counterfeit Rolex” brand that has been established. Illegal, sure, but not as immoral as one might think at first.
The quality assurance part of trademark doesn’t look a lot like intellectual property. It really does look like a reification of true “good will,” the respect that customers have for the quality of an enterprise. It’s hard work to establish and it’s so very easy to lose. The story goes that when Sarah Lee was sold, the contract stipulated that the purchasing company not change the recipes in any manner. When they tried anyway, the founder took them to court and refused a monetary settlement; only adherence to the original terms would do. “I named this company after my daughter,” he explained. “I’m not going to sell out my daughter’s name for mere money.”
Harlan Sanders made the mistake of not getting such a clear-cut contract. He spent the last years of his life bad-mouthing the product that bore his name.
Some brands try to hook into image and identity, to varying degrees of success. Harley-Davidson was a huge comeback story. The original Harleys were bikes that were just perfectly suited to garage modification into “choppers,” highly individualized bikes. Then came the Japanese imports, better bikes, but not as easily customized. After years of languish, the owners began emphasizing the customization, and took out magazine ads that just showed a highly muscled arm, with a Harley-Davidson tattoo, and the words “When was the last time you felt this strongly about anything?”
It didn’t hurt that they also began a stringent quality control program at about the same time.
But there is no idea so good that human beings can’t find a way to overdo it, and so we come to the “famous brands,” “brand extension” and “brand dilution.”
Let me give an example of a reasonable use of the idea of protecting “brand extension.” A while after the introduction of “V-8” the vegetable juice, someone introduced a brand of vitamins called “V-8 Vitamins.” Since one of the marketing points of V-8 Juice was that it contained vitamins, a court held that there was a real possibility of confusion on the part of the consumer and the vitamin makers were ordered to change the name. And, of course, if V-8 Juice were to actually introduce a line of vitamins, that would be an obvious bit of “brand extension.”
But then you head toward “lifestyle” branding, and Harley-Davidson shows up again, along with Nike, Apple, Abercrombie and Fitch, Gucci, Star Wars, and the New York Yankees. These are “famous brands,” things that might show up on almost anything. Star Wars toothbushes? Absolutely. Gucci golf clubs? Why not? Nike baby carriages? I wouldn’t be a bit surprised.
MacDonald’s has sued any number of small, family owned restaurants into changing their names (or out of business if they tried to resist). There used to be a coffee shop in Berkeley called “Fat Albert’s;” it’s “Fat Apple’s” now.
Disney has trademarked just about every character that paraded through a Disney movie, including some that were originally public domain. You can use Frankenstein in your work, but he’d better not have rivets in his neck; Universal owns those. Tarzan? The Burroughs estate is very litigious. Better use some other jungle man; maybe have him raised by elephants.
Now realize, an awful lot of this has nothing to do with “confusion in the public mind.” There was zero chance that the Air Pirates’ version of Mickey and Minnie Mouse were going to be mistaken for anything other than an underground comix parody. No, this heads over toward toll-taking, barratry, and, in many cases, legal departments making work for themselves, to no real corporate benefit whatsoever.
Well, that does depend on whether “control” counts as “good will.” I’ll certainly agree with the “will” part of it. I certainly do.
Showing posts with label tolls. Show all posts
Showing posts with label tolls. Show all posts
Tuesday, May 15, 2007
Monday, May 14, 2007
Playing the Rent IV—Patently Obvious
Word derivations contain a lot of history. The word “patent” comes from the Latin verb patēre, to be open via French, lettre patent, meaning “open letter. The “letter” was from the King. In short, a patent was a Royal Edict, and there are land patents, also known as land grants, as well as patents on inventions and processes.
So patents were, from the beginning, a form of patronage, and industrial patents were by no means limited to the inventors of an industrial process. In 1589, the English Gunpowder Patent was awarded to a man named George Evelyn, who invented neither gunpowder nor any particular process for its manufacture. However, Queen Elizabeth I (and her advisors; I’m going to go out on a limb here and conjecture that there were some substantial links between Evelyn’s family and the advisors to the Crown) believed that the manufacture of gunpowder would be more efficient if centralized in the form of a private monopoly.
Ah, there’s a question for libertarians: how much do you think times have changed?
The granting of patents in exchange for disclosure of trade secrets and other information about an invention is a very clever idea, and also has a long history. It makes very good sense, from almost everyone’s perspective, and it protects against the loss of vital information is a few critical people die without proper documentation of a process. Giving the patent a limited span is also a very good idea.
But we shouldn’t make the mistake of thinking that a patent is anything other than what it is: the use of the power of the state in service of a monopoly power. It can be considered “property” in the same sense that any other legal grant can be property. A long term supply contract has value, can be marketed, and so might be considered property. Financial obligations are also property, in a legal sense. But they are not the same as real estate or chattel property.
The patent on an invention gives someone control over all expressions of that invention for a period of time. That includes control over anyone who might independently come to the same invention, even if they had no knowledge of the prior invention. In fact, “priority” of invention is mostly a product of U.S. patent law; elsewhere it is more the custom to give priority to the first to file for the invention.
So what we have here is another example of “winner take all,” and what the winner gets is another example of toll-taking, the ability to block someone else’s use of an invention, even if that someone independently invented it.
There is a myth that a Commissioner of Patents by the name of Charles H. Duell once resigned or recommended that the patent office be closed because “everything that can be invented has been invented.” He said no such thing, but the number of Google hits for the mythical quote much larger than the number of hits on those who debunk it. To be fair, the highest ranking on Duell’s name does lead to a debunking site, with a guess as to its origin:
While that statement makes good fun of predictions that do not come to pass, it is none the less just a myth. Researchers have found no evidence that any official or employee of the U.S. Patent Office had ever resigned because there was nothing left to invent. A clue to the origin of the myth may be found in Patent Office Commissioner Henry Ellsworth’s 1843 report to Congress. In it he states, "The advancement of the arts, from year to year, taxes our credulity and seems to presage the arrival of that period when human improvement must end." But Commissioner Ellsworth was simply using a bit of rhetorical flourish to emphasize the growing number of patents as presented in the rest of the report. He even outlined specific areas in which he expected patent activity to increase in the future. –The Charles Duell Rumor (see also Sass, Samuel. "A Patently False Patent Myth." Skeptical Inquirer 13 (1989): 310-312).
I have heard, but have been unable to confirm, that Duell did once write a report where he suggested drastically curtailing the number of patents awarded, and the ease of obtaining a patent, not because “everything has already been invented” but rather because corporations had taken to using patents to suppress innovation rather than to advance it.
That has some truthiness to it, doesn’t it?
Patents are often used as weapons in the epic struggle of corporations, after all, and it is seldom innovation that comes out the winner. Corporations also use other things to similar purposes, one famous example being the duel between Philo Farnsworth, the actual inventor of television (more precisely, the orthicon tube), and David Sarnoff and RCA. RCA used its market dominance to try to suppress Farnsworth, and tried to “invent around” Farnsworth’s patent. RCA failed in the latter attempt, but had substantial success in the former endeavor, with the result that the battle, plus the advent of WWII, essentially delayed the introduction of television for at least a decade, and maybe twice that. And RCA propaganda credited Vladimir Zworykin with the invention of television long afterwards.
Recently, the Supreme Court has decided to make it more difficult to obtain a patent, or, more accurately, easier to claim “obviousness” in a patent challenge, in order to make it more difficult to patent such things as “buying groceries over the internet.” So maybe a little more sense is creeping in.
I have a friend who got a patent on what amounts to “machine based telepathy,” based on MRI imaging of the brain. He observes that it will probably be 20 years or more before MRI technology advances to the point where it would have any practical applications at all, and by then, the patent will have expired. That, in fact, was exactly his purpose: to make sure no one tied up the technology and delayed it longer than the natural advance of engineering would take.
So patents were, from the beginning, a form of patronage, and industrial patents were by no means limited to the inventors of an industrial process. In 1589, the English Gunpowder Patent was awarded to a man named George Evelyn, who invented neither gunpowder nor any particular process for its manufacture. However, Queen Elizabeth I (and her advisors; I’m going to go out on a limb here and conjecture that there were some substantial links between Evelyn’s family and the advisors to the Crown) believed that the manufacture of gunpowder would be more efficient if centralized in the form of a private monopoly.
Ah, there’s a question for libertarians: how much do you think times have changed?
The granting of patents in exchange for disclosure of trade secrets and other information about an invention is a very clever idea, and also has a long history. It makes very good sense, from almost everyone’s perspective, and it protects against the loss of vital information is a few critical people die without proper documentation of a process. Giving the patent a limited span is also a very good idea.
But we shouldn’t make the mistake of thinking that a patent is anything other than what it is: the use of the power of the state in service of a monopoly power. It can be considered “property” in the same sense that any other legal grant can be property. A long term supply contract has value, can be marketed, and so might be considered property. Financial obligations are also property, in a legal sense. But they are not the same as real estate or chattel property.
The patent on an invention gives someone control over all expressions of that invention for a period of time. That includes control over anyone who might independently come to the same invention, even if they had no knowledge of the prior invention. In fact, “priority” of invention is mostly a product of U.S. patent law; elsewhere it is more the custom to give priority to the first to file for the invention.
So what we have here is another example of “winner take all,” and what the winner gets is another example of toll-taking, the ability to block someone else’s use of an invention, even if that someone independently invented it.
There is a myth that a Commissioner of Patents by the name of Charles H. Duell once resigned or recommended that the patent office be closed because “everything that can be invented has been invented.” He said no such thing, but the number of Google hits for the mythical quote much larger than the number of hits on those who debunk it. To be fair, the highest ranking on Duell’s name does lead to a debunking site, with a guess as to its origin:
While that statement makes good fun of predictions that do not come to pass, it is none the less just a myth. Researchers have found no evidence that any official or employee of the U.S. Patent Office had ever resigned because there was nothing left to invent. A clue to the origin of the myth may be found in Patent Office Commissioner Henry Ellsworth’s 1843 report to Congress. In it he states, "The advancement of the arts, from year to year, taxes our credulity and seems to presage the arrival of that period when human improvement must end." But Commissioner Ellsworth was simply using a bit of rhetorical flourish to emphasize the growing number of patents as presented in the rest of the report. He even outlined specific areas in which he expected patent activity to increase in the future. –The Charles Duell Rumor (see also Sass, Samuel. "A Patently False Patent Myth." Skeptical Inquirer 13 (1989): 310-312).
I have heard, but have been unable to confirm, that Duell did once write a report where he suggested drastically curtailing the number of patents awarded, and the ease of obtaining a patent, not because “everything has already been invented” but rather because corporations had taken to using patents to suppress innovation rather than to advance it.
That has some truthiness to it, doesn’t it?
Patents are often used as weapons in the epic struggle of corporations, after all, and it is seldom innovation that comes out the winner. Corporations also use other things to similar purposes, one famous example being the duel between Philo Farnsworth, the actual inventor of television (more precisely, the orthicon tube), and David Sarnoff and RCA. RCA used its market dominance to try to suppress Farnsworth, and tried to “invent around” Farnsworth’s patent. RCA failed in the latter attempt, but had substantial success in the former endeavor, with the result that the battle, plus the advent of WWII, essentially delayed the introduction of television for at least a decade, and maybe twice that. And RCA propaganda credited Vladimir Zworykin with the invention of television long afterwards.
Recently, the Supreme Court has decided to make it more difficult to obtain a patent, or, more accurately, easier to claim “obviousness” in a patent challenge, in order to make it more difficult to patent such things as “buying groceries over the internet.” So maybe a little more sense is creeping in.
I have a friend who got a patent on what amounts to “machine based telepathy,” based on MRI imaging of the brain. He observes that it will probably be 20 years or more before MRI technology advances to the point where it would have any practical applications at all, and by then, the patent will have expired. That, in fact, was exactly his purpose: to make sure no one tied up the technology and delayed it longer than the natural advance of engineering would take.
Wednesday, May 9, 2007
Like a Dog in the Manger
Nobody knows anything. –William Goldman
Come in here, dear boy, have a cigar.
You’re gonna go far, fly high,
You’re never gonna die,
You’re gonna make it if you try;
They’re gonna love you.
Well I’ve always had a deep respect, and I mean that most sincerely.
--Pink Floyd
William Randolph Hearst was a man of extraordinary power and influence. Some credit him with launching the Spanish American War. His newspapers set styles, boosted political candidates, and ruined careers.
Marion Davies was one of the standout comediennes of the early Silent Era. She began as a “Follies” girl, then graduated to films and became substantially popular. Then she met William Randolph Hearst, fell in love (or some reasonable simulation thereof), and became his mistress. Over the next several years, the Hearst newspapers did everything in their power to boost Davies’ career.
The attempt was close to disastrous. Despite amassing a sizable body of work, her career has generally been overshadowed by her relationship with Hearst. Worse, Hearst liked putting her in costume dramas, whereas her main talent was for light comedy.
Of course, Davies was already a woman of accomplishment before Hearst took a shot at elevating her still further. There are innumerable other actors, singers, models, musicians, comedians, writers, etc., who have been hyped as The Next Big Thing, only to slide quickly into obscurity.
John Gilbert was also major star of the Silent Era, rivaling Valentino and sharing the screen with Garbo. His career came to a screeching halt with the introduction of sound. One legend holds that Louis B. Mayer, with whom Gilbert was often at odds, ordered his sound technicians to use a high-pass filter on Gilbert’s voice to make it high pitched and squeaky (his natural voice was tenor). Current conventional wisdom in the critical community is that it was merely ludicrous scripts that did in Gilbert’s career. Either way, Gilbert became an Object Lesson.
I made you and I can break you just as easily. –The Rocky Horror Picture Show
The entertainment industry has two important characteristics, mass production and personalized appeal. Printing was close to the first example of mass production (I’ll allow grain milling as old #1). The economies of scale can produce gigantic jackpots. H. G. Wells once said, "I went to bed one night a fairly well-to-do man and woke up the next morning wealthy beyond dreams of avarice." Similar things have happened to other writers, actors, singers, athletes. And these success stories are each individual, idiosyncratic. They don’t happen to large groups of people, any more than an entire town can hit the lottery.
The connections between the performer and the audience are personal, magical. They are inherently hard to predict, because there are too many factors involved.
"Weird Al" Yankovic has said that his movie UHF had one of the most successful test screenings in its studio’s (Orion Pictures) history. Unfortunately, it came out at the same time as Lethal Weapon 2, Batman, and Indiana Jones and the Last Crusade. Oops.
But Goldman’s “Nobody knows anything,” quote only applied to the upside of the market. Every motion picture studio knows how to bury a film. Every publisher can insure poor sales of a book. Every record label has lawyers available to tie up anyone who has signed with them in endless litigation if they wish to Make a Point.
So it is that the gatekeepers take their tolls. Toll taking is not facilitating a journey; it’s ability to extract payment comes from the ability to deny the journey.
I’m using the entertainment industry here because it’s an egregious example of an industry where dog-in-the-manger tactics are rampant. The other obvious example of it is politics, where the jackpots are even bigger, and the faces uglier. The tactics are pretty much the same though; straight out of the Protection Racket. It’s SOP to hang somebody up, just to show that you can do it. If you do it often enough, then you become important, and that’s were the money is made. Because all it takes is a little piece of a jackpot to change your life forever.
Everyone who calls wants to know one thing.
They want me to say yes to them and make their movie.
If I say yes, they think that come New Year's...it will be just them and Jack Nicholson on the slopes of Aspen.
That's what they think.
--The Player, screenplay by Michael Tolkin based on his novel.
Come in here, dear boy, have a cigar.
You’re gonna go far, fly high,
You’re never gonna die,
You’re gonna make it if you try;
They’re gonna love you.
Well I’ve always had a deep respect, and I mean that most sincerely.
--Pink Floyd
William Randolph Hearst was a man of extraordinary power and influence. Some credit him with launching the Spanish American War. His newspapers set styles, boosted political candidates, and ruined careers.
Marion Davies was one of the standout comediennes of the early Silent Era. She began as a “Follies” girl, then graduated to films and became substantially popular. Then she met William Randolph Hearst, fell in love (or some reasonable simulation thereof), and became his mistress. Over the next several years, the Hearst newspapers did everything in their power to boost Davies’ career.
The attempt was close to disastrous. Despite amassing a sizable body of work, her career has generally been overshadowed by her relationship with Hearst. Worse, Hearst liked putting her in costume dramas, whereas her main talent was for light comedy.
Of course, Davies was already a woman of accomplishment before Hearst took a shot at elevating her still further. There are innumerable other actors, singers, models, musicians, comedians, writers, etc., who have been hyped as The Next Big Thing, only to slide quickly into obscurity.
John Gilbert was also major star of the Silent Era, rivaling Valentino and sharing the screen with Garbo. His career came to a screeching halt with the introduction of sound. One legend holds that Louis B. Mayer, with whom Gilbert was often at odds, ordered his sound technicians to use a high-pass filter on Gilbert’s voice to make it high pitched and squeaky (his natural voice was tenor). Current conventional wisdom in the critical community is that it was merely ludicrous scripts that did in Gilbert’s career. Either way, Gilbert became an Object Lesson.
I made you and I can break you just as easily. –The Rocky Horror Picture Show
The entertainment industry has two important characteristics, mass production and personalized appeal. Printing was close to the first example of mass production (I’ll allow grain milling as old #1). The economies of scale can produce gigantic jackpots. H. G. Wells once said, "I went to bed one night a fairly well-to-do man and woke up the next morning wealthy beyond dreams of avarice." Similar things have happened to other writers, actors, singers, athletes. And these success stories are each individual, idiosyncratic. They don’t happen to large groups of people, any more than an entire town can hit the lottery.
The connections between the performer and the audience are personal, magical. They are inherently hard to predict, because there are too many factors involved.
"Weird Al" Yankovic has said that his movie UHF had one of the most successful test screenings in its studio’s (Orion Pictures) history. Unfortunately, it came out at the same time as Lethal Weapon 2, Batman, and Indiana Jones and the Last Crusade. Oops.
But Goldman’s “Nobody knows anything,” quote only applied to the upside of the market. Every motion picture studio knows how to bury a film. Every publisher can insure poor sales of a book. Every record label has lawyers available to tie up anyone who has signed with them in endless litigation if they wish to Make a Point.
So it is that the gatekeepers take their tolls. Toll taking is not facilitating a journey; it’s ability to extract payment comes from the ability to deny the journey.
I’m using the entertainment industry here because it’s an egregious example of an industry where dog-in-the-manger tactics are rampant. The other obvious example of it is politics, where the jackpots are even bigger, and the faces uglier. The tactics are pretty much the same though; straight out of the Protection Racket. It’s SOP to hang somebody up, just to show that you can do it. If you do it often enough, then you become important, and that’s were the money is made. Because all it takes is a little piece of a jackpot to change your life forever.
Everyone who calls wants to know one thing.
They want me to say yes to them and make their movie.
If I say yes, they think that come New Year's...it will be just them and Jack Nicholson on the slopes of Aspen.
That's what they think.
--The Player, screenplay by Michael Tolkin based on his novel.
Subscribe to:
Posts (Atom)
