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Is a bazaar economy based on innovative technology?

By Lawrence B. Ebert, Esq.

A thread at the 271blog, titled Revisiting the Presumption of Validity, and seemingly directed to Alan Devlin's 2008 law review article in Southwestern University Law Review, has re-channeled into a discussion of "why" Germany is the world's leading exporter.

The last post by one "MaxDrei" stated the following:

"As to exports, Germany is slightly ahead of China."

Germany is also ahead of China, I might add, on cost of labour, per hour. Remind me Lawrence (as you know all the stats) how much does a production line worker cost i) in socialist Germany and ii) in communist China and iii) in the flexible labour market of the USA? And nevertheless, German goods are outselling the rest!? It can't be the price, can it. Maybe the quality?

IPBiz notes, as to exports, that Germany is slightly of China, which in turn slightly ahead of the US. Why Germany? MaxDrei would have us believe it's about the innovative technology of Germany:

Germany is still "export Weltmeister" isn't it? Somebody still wants to buy innovative technological products that carry the "Made in Germany" tag.

If you advocate a system in which Applicants for patents should, in their own self-interest, "be careful what they ask for", then I agree with you. My perception of the present system in the USA is that it is one of "gamekeepers and poachers" each trying to be one step ahead of the other (like in tax law). If you can bamboozle the PTO you can then blackmail the rest. But, unlike in tax law, one can make patent law much simpler, on the basis of "OK, if that's what you want, you can have it. But you might regret it later, in court". Then you arrange that, in court, the loser pays, and if there is one invalid claim in the patent, the patent owner loses. To be fair, you have to give the patentee an equitable chance to amend, by excision of the bad claim, for example when previously unknown prior art emerges, but the American way of litigationg can easily manage that.

Some people have a different opinion. From eurointelligence.com:

According to the 2005 theory of Hans-Werner Sinn, Germany export success is not the result of an innate strength but a pathological phenomenon, as it reflects a persistent rise in the value-added of German exports accounted for by intermediate imports. Germany has thus developed into a bazaar, where most of the goods are imported, a relatively minor amount of value-added applied, and exported at a profit. What appears to be a competitive export market is in reality nothing but a reflection of Germany's industry's increasing use of oursourcing and offshoring. With this theory, Sinn also tried to explain why there has been negative employment growth in Germany's manufacturing industry despite the rise in exports.

IPBiz reminds readers of the interesting patent applications of IBM, Bank of America, and others on aspects of outsourcing.
Perhaps they (and Germany) have seen the future, and it has something to do with a giant sucking sound.

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As to MaxDrei's Germany, from eurointelligence:

According to the 2005 theory of Hans-Werner Sinn, Germany export success is not the result of an innate strength but a pathological phenomenon, as it reflects a persistent rise in the value-added of German exports accounted for by intermediate imports. Germany has thus developed into a bazaar, where most of the goods are imported, a relatively minor amount of value-added applied, and exported at a profit. What appears to be a competitive export market is in reality nothing but a reflection of Germany's industry's increasing use of oursourcing and offshoring. With this theory, Sinn also tried to explain why there has been negative employment growth in Germany's manufacturing industry despite the rise in exports.

As to the initial theme of the 271Blog post, there is no evidence that the degree of deference of courts to the USPTO has a significant impact on most patent cases. The papers of Lemley and Devlin are thus not relevant to real world problems.

Full post as published by IPBiz on August 20, 2009 (boomark / email).