Author: Art Diamond

Evidence That Patents Do Not Holdup Innovation

(p. A17) The trade war has highlighted the competitive advantage of reliable patent rights in driving innovation, prompting a bipartisan effort in Congress to strengthen patents.

. . .

Yet the FTC doesn’t seem to have received the message. It continues to push regulatory policies and undertake enforcement actions based on the story that bad actors licensing their patents somehow are stopping companies from making new innovative products and are harming consumers with higher prices. This idea that “patent holdup” raises prices and stifles innovation is based entirely on an academic theory first proposed in the Texas Law Review in 2007 by professors Mark Lemley and Carl Shapiro.

In contrast to the theory, extensive empirical research since 2007 has failed to find any of the predicted harms of stifled innovation or higher prices, and has in fact found the opposite. “An Empirical Examination of Patent Holdup,” published in 2015, found that industries like smartphone design with patents on foundational technologies have the fastest quality-adjusted price reductions in consumer products. A 2016 George Mason Law Review study also found consistent reductions in consumer prices, increased research-and-development spending, and incredibly fast technological innovation driven by patent licensing of key technologies in the smartphone industry.

For the full commentary, see:

Adam Mossoff. “The FTC Joins Huawei on a Misguided Troll Hunt; The commission’s lawsuit against Qualcomm threatens to undermine American innovation.” The Wall Street Journal (Saturday, Jan. 27, 2019): A17.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date and title as the print version.)

The 2016 George Mason Law Review study, mentioned above, is:

Mallinson, Keith. “Don’t Fix What Isn’t Broken: The Extraordinary Record of Innovation and Success in the Cellular Industry under Existing Licensing Practices.” George Mason Law Review 23, no. 4 (Summer 2016): 967-1006.

The 2015 paper mentioned above, is:

Galetovic, Alexander, Stephen Haber, and Ross Levine. “An Empirical Examination of Patent Holdup.” Journal of Competition Law and Economics 11, no. 3 (Sept. 2015): 549-78.

A related 2017 paper, is:

Galetovic, Alexander, and Stephen Haber. “The Fallacies of Patent-Holdup Theory.” Journal of Competition Law and Economics 13, no. 1 (March 2017): 1-44.

Rosenwald Philanthropy Aimed at Self-Help More Than Social Change

(p. A15) At the beginning of the 20th century, three figures dominated the rapidly expanding world of American philanthropy. Two—Andrew Carnegie and John D. Rockefeller—are still remembered, mostly because of the foundations they established. But the third—Julius Rosenwald—is largely forgotten. No foundations, and few buildings, bear his name. If his approach to giving was more modest in spirit, it was no less influential and effective in its day.

. . .

. . . , Rosenwald invested in a catalog sales company that needed capital: Sears, Roebuck. He gradually became more involved in the business and, when co-founder Richard Sears resigned in 1908, took over its leadership.

. . .

Because the rise and fall of Sears, Roebuck is already well-chronicled, Ms. Diner, a professor of American Jewish history at New York University, concentrates on what Rosenwald did with the status and fortune he accumulated. By one estimate, he donated, in today’s dollars, close to $2 billion before he died in 1932, as well as considerable time to the causes he cared about.

Many of these centered on his hometown of Chicago. Rosenwald’s gifts helped to create the city’s Museum of Science and Industry, build the University of Chicago, and support the settlement houses run by Jane Addams and others. He also underwrote a wide range of Jewish organizations, including cultural institutes, theological seminaries and, most notably, the American Jewish Joint Distribution Committee, a fund that was set up during World War I to aid Jewish refugees and that has continued to do so ever since.

The most striking part of Rosenwald’s philanthropy may well be his funding of African-American education in the South. Influenced by Booker T. Washington, he developed a program to construct elementary and secondary schools in any black community that wanted such support. Over a 20-year period, nearly 5,000 schools opened.

. . .

For both Jewish immigrants in the slums of Chicago and black sharecroppers in the rural South, Rosenwald’s philanthropy sought to promote practical efforts at self-improvement, not ambitious plans for social change.

For the full review, see:

Leslie Lenkowsky. “BOOKSHELF; A Catalog of Generosity; His approach to philanthropy sought to promote practical efforts at self-improvement, not ambitious plans for social change.” The Wall Street Journal (Monday, Oct. 30, 2017): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date Oct. 29, 2017, and has the title “BOOKSHELF; Review: A Catalog of Generosity; His approach to philanthropy sought to promote practical efforts at self-improvement, not ambitious plans for social change.”)

The book under review is:

Diner, Hasia R. Julius Rosenwald: Repairing the World. New Haven, CT: Yale University Press, 2017.

A Resource Is a Weed You Have Figured Out How to Use

(p. A1) With its warts, a messy sap that can sicken livestock and a tendency to grow in tall, mangy clumps that crowd out other plants, milkweed doesn’t enjoy a history of immortalization in oil paint.

. . .

(p. A10) Some makers of winter clothing are touting the white wispy floss in milkweed pods as a plant-based insulating material. Some forecasters say milkweed could yield $800 an acre this year, which Vermont farmers say is better than they get for most commodities.

. . .

Jaunty enough for the city and practical enough for the weekend cabin, he says, the “refined Canadian parka” sells for $850, the same as Quartz’s duck-down jacket. He says down is still popular but milkweed attracts customers intrigued by a “plant-based” insulator. “We were shocked by the interest we got.”

. . .

Milkweed’s sartorial use harks at least to World War II, when overseas supplies of kapok, an insulating fiber, were cut off. As a wartime substitute, the U.S. rallied civilians to pick milkweed pods for life jackets, says Gerald Wykes, a historian at the Monroe County Museum in Michigan.

After the war, for the most part milkweed went “back to its roots” as a humble weed, he says, because the ornery plant proved challenging to tame as a crop that could be grown in rows and harvested mechanically. The handpicking that went on in the war “wasn’t terribly efficient,” he says, and the rising use of synthetics lessened interest in all natural fibers.

Recently, says Ms. Darby, farmers have improved machinery that is designed to gently pick off milkweed pods without damaging the whole plant.

And milkweed has recently sprouted back into favor in some quarters because of its role not just as a green stuffing option but also as the key source of food for caterpillars of the embattled monarch butterfly.

For the full story, see:

Jennifer Levitz. “This Winter’s Hot Fashion: Parkas Stuffed With Vermont Weeds.” The Wall Street Journal (Thursday, Sept. 28, 2017): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 27, 2017, and has the same title as the print version.)

“Charging Scooters Is a Great Job for Independent-Minded Entrepreneurs”

(p. 1B) Downtown Omaha resident Rob Luhrs spends his early mornings and late nights hunting for scooters.

Luhrs, 41, is a “juicer” of Lime scooters (“Lime juicer” — get it?) who charges scooters and then sets them out again around town. He said he makes about $60 a day, seven days a week, doing the work. During the College World Series, he said, he was making between $80 and $90 a day.

Luhrs also is an instructor of Brazilian jiu-jitsu and a part-time real estate broker who works for a grocery delivery service. But he said he hopes to make charging scooters his primary source of income.

(p. 2B) “I want to work when I want to,” he said. “When I want to take a day off, I don’t want anybody complaining about it, and if I work extra hard, I want to get paid more. I can’t just go apply to somewhere and get that job.”

. . .

Luhrs said charging scooters is a great job for “independent-minded entrepreneurs.”

“For me personally, I’m willing to spend time during the day picking up scooters and make it a full-time gig,” he said. “I see other people out there, during the daytime, picking up scooters, so I know that they’re trying to make it a full-time gig, too.”

For the full story, see:

Adam Cole. “Lime ‘Juicer’ Doesn’t Feel Squeezed by Late Hours Charging Scooters.” Omaha World-Herald (Thursday, Jul 4, 2019): 1B-2B.

(Note: ellipsis added.)

(Note: the online version of the story has the date Jul 3, 2019, and has the title “Unorthodox working hours don’t steer Lime ‘juicer’ away from job charging scooters in Omaha.”)

When Swedish Furniture Makers Boycotted Ikea, Kamprad Found Furniture Makers in Poland

(p. A9) To encourage frugality in his workers, Mr. Kamprad was happy to offer himself as an example. He was known for reusing tea bags, flying economy class and taking public transport to airports. Even as a billionaire, he dickered over vegetable prices at farmers markets.

“Wasting resources is a mortal sin at IKEA,” he wrote in a guidebook for employees. “We do not need fancy cars, posh titles, tailor-made uniforms or other status symbols.”

He knew about global supply chains long before they were the norm. Rival retailers in the 1950s pressured Swedish furniture makers into boycotting the disruptive IKEA. So Mr. Kamprad visited Poland in the early 1960s and found primitive factories that, with training and tools from the Swedes, could make wooden furniture at much lower prices. (One problem: Some trees harvested in Poland still contained bullets from World War II.) Poland and China became two of the company’s main suppliers.

. . .

He assured his employees they had a noble mission: helping the masses afford comfortably furnished homes.

For the full obituary, see:

James R. Hagerty. “IKEA Founder Built Retailer by Keeping It Simple.” The Wall Street Journal (Saturday, Feb. 3, 2018): A9.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date Feb. 2, 2018, and has the title “Ingvar Kamprad Made IKEA a Global Retailer by Keeping It Simple.”)

James Knott Exposed the EPA’s Doctoring of Water-Test Results They Used to Indict Him

(p. A9) James Knott helped build a better lobster trap.

Though the world didn’t beat a path to his door in Northbridge, Mass., Mr. Knott eventually persuaded most manufacturers of lobster traps to use his product—plastic-coated wire mesh—rather than wood to make their devices.

. . .

He built a business, Riverdale Mills Corp., that employs more than 150 people and has withstood price competition from China and a 1997 raid by pistol-packing agents of the Environmental Protection Agency. Then came an indictment alleging Mr. Knott violated the Clean Water Act by dumping acidic wastewater. He fought back, providing evidence that the EPA had doctored water-test results. The charges were dropped.

“What am I supposed to do—lay down and get stomped on?” he asked in a 2001 interview with the television news show “60 Minutes.”

. . .

When he was indicted by a federal grand jury in the water-pollution case in 1998, Mr. Knott faced a possible prison term of six years. He hired a retired FBI handwriting analyst, who found EPA test records had been altered to show an illegal degree of acidity in the wastewater. The government soon dropped its charges.

Mr. Knott fought a long and ultimately fruitless battle to require the government to reimburse him for his legal costs.

For the full obituary, see:

James R. Hagerty. “Entrepreneur Helped Create a Better Lobster Trap.” The Wall Street Journal (Saturday, Aug. 24, 2018): A9.

(Note: ellipses added.)

(Note: the online version of the obituary has the date July 27, 2018, and has the title “James Knott Pioneered Modern Lobster Traps and Fended Off the EPA.”)

Patenting a Better Vacuum Tube as Semiconductors Emerge

After his disappointing improved-vacuum-tube invention (see below), Kates did not give up. He went on to make important contributions in coordinating traffic lights to ease traffic flows.

(p. A9) When he demonstrated a computer tic-tac-toe game called Bertie the Brain in 1950, Josef Kates thought he was on the verge of making a fortune. The game, introduced at the Canadian National Exhibition, featured streamlined vacuum tubes invented by the Austrian-born Dr. Kates, who came to Canada in the 1940s as a refugee from Nazism. He hoped the tubes would revolutionize computing.

His timing was off. The rise of semiconductors was about to render vacuum tubes obsolete as computer components. “I got the patent, but the patent was useless,” he said in an oral history. “Okay, so on goes the world.”

For the full obituary, see:

James R. Hagerty. “Refugee Crunched Data to Unsnarl Traffic Jams.” The Wall Street Journal (Saturday, July 28, 2018): A9.

(Note: the online version of the obituary has the date July 27, 2018, and has the title “Josef Kates Found Ways to Unsnarl Traffic and Solve Business Problems With Computers.”)

75% “of All Wealth Is Created Anew in Each Generation”

(p. A17) Despite the liberal background of the author, however, “A Century of Wealth in America” offers comfort and support to those who favor less wealth taxation. A core element of Mr. Piketty’s indictment of contemporary wealth inequality was his claim that inheritance is the major source of wealth; he estimated that, given the slower economic growth that most economists anticipate in the future, inherited wealth would soon constitute 90% of wealth in economies such as that of the United States. But Mr. Wolff finds that, for modern America, wealth inheritance explains a much more modest share of private wealth: In 1989-2013, it was 23% on average. In other words, more than three-quarters of all wealth is created anew in each generation in the U.S. . . .

Even more surprising, inherited wealth is much more important in the lives of those who have relatively little wealth than it is in the lives of the super rich. For the top 1% of wealth holders from 1989 to 2013, inherited wealth accounted for only 17% of their assets. (The 1%, in this analysis, is an overwhelmingly self-made group.) By contrast, for those with assets of just $25,000-$50,000, inherited wealth accounted for 52% of their worth.

As a bizarre consequence of this pattern, African-Americans, who have low levels of net worth on average, are the social group for which inherited wealth represents the largest share of their net worth. Another odd implication is that inheritances tend to make overall wealth-holding more equal. Were inherited wealth to be completely abolished, the wealth of the poor would decline more than that of the rich. Inherited wealth is the great equalizer. Who knew?

. . .

. . . , Mr. Wolff calculates that the rich are not systematically generating higher returns on their assets than more modest wealth holders. The top 1% had a real return on net worth of around 3% over the 30 years from 1983 to 2013—the same return as the average wealth holder.

For the full review, see:

Gregory Clark. “BOOKSHELF; How the Richest Got That Way; In the U.S. more than three-quarters of all wealth is created anew in each generation, and the ‘1%’ is an overwhelmingly self-made group.” The Wall Street Journal (Tuesday, December 12, 2017): A17.

(Note: ellipses added.)

(Note: the online version of the review has the date Dec. 11, 2017, and has the title “BOOKSHELF; Review: How the Richest Got That Way; In the U.S. more than three-quarters of all wealth is created anew in each generation, and the ‘1%’ is an overwhelmingly self-made group.”)

The book under review is:

Wolff, Edward N. A Century of Wealth in America. Cambridge, MA: Belknap Press, 2017.

Manic Energy from Bipolar Disorder May Enable “Heights of Success”

(p. A17) Dr. Ronald R. Fieve, who was a pioneer in the prescription of lithium to treat mania and other mood disorders — while avowing that some gifted individuals, like Abraham Lincoln, Theodore Roosevelt and Winston Churchill, might have benefited from being bipolar — died on Jan. 2 [2018] at his home in Palm Beach, Fla.

. . .

He cited estimates that as many as one in 15 people experienced a manic episode during their lifetimes, and that bipolar disorder — characterized by swings from elation, hyperactivity and a decreased need for sleep to incapacitating depression — was often misclassified as schizophrenia or other illnesses, or undiagnosed altogether.

He cautioned, however, that some highly creative, exuberant and energetic people have derived benefits from the condition because they have what he called “a hypomanic edge.”

“I have found that some of the most gifted individuals in our society suffer from this condition — including many outstanding writers, politicians, business executives and scientists — where tremendous amounts of manic energy have enabled them to achieve their heights of success,” Dr. Fieve told a symposium in 1973.

But without proper treatment, he said, those individuals afflicted with manic depression “more often than not either go too ‘high’ or suddenly crash into a devastating depression that we only hear about after a successful suicide.”

In contrast to antidepressant drugs or electroshock treatments, he said, regular doses of lithium carbonate appeared to stabilize mood swings without cramping creativity, memory or personality.

. . .

Before it was approved to treat depression, lithium was found in the late 1940s to be potentially unsafe as a salt substitute. But Dr. Fieve pointed out that lithium had been found in natural mineral waters prescribed by Greek and Roman physicians 1,500 years earlier to treat what were then called manic insanity and melancholia.

For the full obituary, see:

Sam Roberts. “Dr. Ronald Fieve, Pioneer In Lithium, Is Dead at 87.” The New York Times (Wednesday, Jan. 17, 2018): A17.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary has the date Jan. 12, 2018, and has the title “Dr. Ronald Fieve, 87, Dies; Pioneered Lithium to Treat Mood Swings.”)