Feds Investigate Theft of Intellectual Property by Chinese Nationals

(p. A10) BOSTON — Zaosong Zheng was preparing to board Hainan Airlines Flight 482, nonstop from Boston to Beijing, when customs officers pulled him aside.

Inside his checked luggage, wrapped in a plastic bag and then inserted into a sock, the officers found what they were looking for: 21 vials of brown liquid — cancer cells — that the authorities say Mr. Zheng, 29, a cancer researcher, took from a laboratory at Beth Israel Deaconess Medical Center.

Under questioning, court documents say, Mr. Zheng acknowledged that he had stolen eight of the samples and had replicated 11 more based on a colleague’s research. When he returned to China, he said, he would take the samples to Sun Yat-sen Memorial Hospital and turbocharge his career by publishing the results in China, under his own name.

. . .

Mr. Zheng’s case is the first to unfold in the laboratories clustered around Harvard University, but it is not likely to be the last. Federal officials are investigating hundreds of cases involving the potential theft of intellectual property by visiting scientists, nearly all of them Chinese nationals.

For the full story, see:

Ellen Barry. “Chinese Man Is Accused Of Smuggling Lab Samples.” The New York Times (Wednesday, January 1, 2020): A10.

(Note: ellipsis added.)

(Note: the online version of the story has the date December 31, 2019, and has the title “Stolen Research: Chinese Scientist Is Accused of Smuggling Lab Samples.”)

Art Carden Praises “Openness to Creative Destruction”

Economist Art Carden has written a fine review of my Openness book under the title “New Ideas Are the Key to Economic Development.” The review is fair, mostly positive, and well-written. His main reservation is that he sides with many other distinguished libertarians, but against me, on my argument that the patent system should be reformed rather than abolished.

Here is the final paragraph of Carden’s review:

I am glad to see Openness to Creative Destruction appear in print. It strikes a fine balance between detail and a big-picture perspective that, I think, can be read profitably by specialists and students alike. Anyone who wants to understand how the world grew rich and, importantly, what will sustain our enrichment would do well to have this book on the shelf.

“Authors Need to Eat, Too”

(p. A23) Authors need to eat, too, and we get by (or not quite, these days), by showing up at our writing places at a designated time day after day and staying there till we have fretted out our quota of words, to be sent off, after a time, to a publisher, in the hope that, two or three years down the road, a few pennies may come trickling back under the ludicrously grandiose name of “royalties.”

. . .

“There are people out there that just want everything to be free,” says Mary Rasenberger, the executive director of the Authors Guild (where I am a member), “and it’s like a religion to them.” Some piracy sites, she says, even advise users how to buy a digital copy of a book, strip out the digital rights management (D.R.M.) intended to protect the author’s rights, upload the book to a file-sharing site, and then return the book for a refund, “so they don’t even have to pay for the original.” Some sites are so insanely bent on copyright piracy that they offer their followers wedding vows, in which the couple solemnly commits to support the copying culture. “They don’t understand that writers need to get paid, and publishers are not going to publish books if they can’t make money on them.”

Since 2009, when eBooks and book piracy became a phenomenon, income for authors has declined 42 percent, according to a 2018 Authors Guild income survey, with the median income from writing now so low — just $6,080 a year — that poverty level looks like the mountaintop. By contrast, a 2017 Nielsen survey found that people who admitted to having read a pirated book in the previous six months tend to be middle class, educated, female as well as male, between the ages of 30 and 44 — and with an income of $60,000 to 90,000 a year.

For the full commentary, see:

Conniff, Richard. “Steal This Book? There’s a Price.” The New York Times (Monday, September 16, 2019): A23.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Sept. 16, 2019, and has the same title as the print version.)

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.

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.”)

Huawei “Spent All Their Resources Stealing Technology”

(p. B1) On a summer evening in 2004, as the Supercomm tech conference in Chicago wound down, a middle-aged Chinese visitor began wending his way through the nearly abandoned booths, popping open million-dollar networking equipment to photograph the circuit boards inside, according to people who were there.

A security guard stopped him and confiscated memory sticks with the photos, a notebook with diagrams and data belonging to AT&T Corp. , and a list of six companies including Fujitsu Network Communications Inc. and Nortel Networks Corp.

The man identified himself to conference staff as Zhu Yibin, an engineer. The word on his lanyard read “Weihua”—an accidental scramble, he said, of his employer’s name: Huawei Technologies Co.

. . .

(p. B6) A review of 10 cases in U.S. federal courts, and dozens of interviews with U.S. officials, former employees, competitors, and collaborators suggest Huawei had a corporate culture that blurred the boundary between competitive achievement and ethically dubious methods of pursuing it. Continue reading “Huawei “Spent All Their Resources Stealing Technology””

Patent Troll Is Bankrupt After Victims Fight Back

(p. B5) Shipping & Transit LLC sued more than 100 mostly small companies in 2016, making it the largest filer of patent lawsuits that year. But when the Florida company recently declared bankruptcy, it valued its U.S. patents at just $1.
Its demise followed three cases where companies fought back and were awarded legal fees after Shipping & Transit decided not to pursue the patent claims against them. Judges in the cases awarded a total of more than $245,000 in attorneys’ fees and costs to businesses in 2017.
Shipping & Transit doesn’t sell tracking systems or anything else. Instead, it claims to own patents “for providing status messages for cargo, shipments and people,” according to court filings. The company typically demanded licensing fees of $25,000 to $45,000 from companies it said were infringing on its patents. Most agree to pay small amounts to avoid costly litigation.
. . .
In one ruling, a U.S. district judge in Santa Ana, Calif., called Shipping & Transit’s patent claims “objectively unreasonable” in light of a 2014 Supreme Court decision that held that certain kinds of abstract ideas weren’t patentable.
. . .
Patent assertions by companies that don’t make products and are primarily focused on making money off of patents have declined since the Supreme Court decision, but still “remain extremely high,” said Shawn Ambwani, chief operating officer of Unified Patents, which specializes in challenging these types of assertions.
In another of the cases from 2017, a federal magistrate judge in West Palm Beach, Fla., said Shipping & Transit’s actions suggest that the company’s “strategy is predatory and aimed at reaping financial advantage from defendants who are unwilling or unable to engage in the expense of patent litigation.”.

For the full commentary, see:
Ruth Simon. “Company That Filed Patent Suits Derails.” The Wall Street Journal (Monday, Dec. 17, 2018): B5.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 16, 2018, and has the title “Pushback Derails Company That Thrived on Patent Lawsuits.”)