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The Ledger Federal Reserve Bank of Boston’s Economic Education Newsletter In this issue The Loud Noise Over “Free” Music 1 The Loud Noise Over “Free” Music Robert Jabaily Associate Editor, Federal Reserve Bank of Boston 5 Whose Words Are They? 8 High School Students May Enter Two FedSponsored Competitions 10 Patents in America: Over 350 Years of Ingenuity 14 Worth a Thousand Words Fall 2000 Napster is both the name of a software program and the name of the company that developed it. The A teacher walks into a classroom and says, “Today software is free. Once you download it, you can browse we’re going to discuss intellectual property rights.” the Napster database to see if other users have the Students react by: music file (song) you’re looking for. Then you can a) yawning store the file on your computer’s hard disk and listen b) tilting back their heads to the song whenever you like. Some people store c) stretching out their legs dozens, or even hundreds, of music files on their com- d) all of the above. puter’s hard disk. The correct answer is all of the above. (And that’s on a good day!) The files are known as MP3s, which is shorthand for MPEG audio Layer-3. MP3 technology makes it Of course, there are days when no matter what a possible to compress all the digital information on a teacher does, students don’t feel like talking. No one is music CD into a file that’s relatively quick to download to blame. It’s just a fact of life. — with little loss of sound quality. But when a topic captures their imagination — MP3 files have been around since the early 1990s. AND they are in the mood to talk — students will open What Napster did was to make it easier for individual up. And when that happens, there’s a sense that some- users (or peers) to share files via the Internet. That’s thing very special is taking place in the classroom. where the term P2P comes into play. P2P is shorthand Can that happen even when the subject is economics and the topic is intellectual property? Yes! And the challenge isn’t as tough as it seems. Just mention the word “Napster” to a classroom full of middle school or high school students, and you’re for peer-to-peer sharing. Napster users aren’t downloading music files from the company’s server. They are sharing files directly with one another and using Napster software to simplify the process. likely to trigger a passionate exchange of ideas, or at least a passionate expression of opinions. And from there, it’s not much of a stretch to get everyone talking about intellectual property, enforcement of This issue of The Ledger focuses on economic issues embedded in the current over sharing copyrighted intellectual property controversy music via the Internet. – how the concept evolved and What Is Napster? how it affects our Napster, MP3, P2P — it’s hard to keep them all straight. So, let’s review some lives. property rights, incentives, and all the other of the basics. Eighteen Months That Shook the Music Biz In just over 18 months, the marriage of MP3 technology and Napster software dramatically changed the relationship between music listeners and the recording industry. January 1999: Shawn Fanning, a 19-year-old college freshman, decides not to go back for second semester. He’ll spend the next few months finishing up a software program called Napster. When he’s done, even technically challenged Internet users will be able to swap MP3 files and listen to music — much of it copyrighted The Ledger Bob Jabaily, Editor — without paying a cent to anyone. It’s a music lover’s dream — a cross between the ultimate record collec- Public and Community Affairs Department Federal Reserve Bank of Boston P.O. Box 2076 Boston, MA 02106-2076 Or phone: (617) 973-3452 tion and a magic radio that will play almost any song you want, whenever YOU want to hear it. January 2000: Unless you’re a college student, the name “Napster” still doesn’t mean much to you. Is it a This newsletter is published three times a year as a public service by the Federal Reserve Bank of Boston. The reporting of news about economic education programs and the materials contained herein do not necessarily reflect the views of the Federal Reserve Bank of Boston or the Board of Governors. mattress? A recliner? A slacker? Who knows? Who cares? But things are about to change. August 2000: Napster has become a full-fledged phenomenon, and Shawn Fanning’s picture is showing up on the cover of Business Copies of this newsletter and a catalog of other educational materials and research publications may be obtained free of charge by writing: Publications Public and Community Affairs Department Federal Reserve Bank of Boston P.O. Box 2076 Boston, MA 02106-2076 internet: www.bos.frb.org Week and Time. Anywhere from 15 to 30 million people are sharing music with one another via the Net. Napster users consider it a technological marvel. But record companies and some very highprofile recording artists consider it piracy, and their lawyers are suing Napster Elvis, 1956 for copyright infringe- Back then, anyone who wanted to hear “The King” had only two real choics: buy his records or turn on the radio and wait. ment. In late July, a federal judge rules that Napster is e-mail: encouraging widespread robert.jabaily@bos.frb.org copyright infringment and Credit: Prints and Photographs Division, Library of Congress issues an injunction to stop the company from aiding Piracy or Peer-to-Peer Sharing? in the exchange of copyrighted music. Within two Copyright battles are nothing new. Copyright days, another federal court lifts the injunction, but protection is a well-established legal principle. Here’s the lawsuit against Napster continues to move how a circular from the United States Copyright Office through the courts on a relatively fast track. The describes it: company’s long-term survival may well depend on “Copyright” literally means the right to copy. . . . The how a panel of three federal judges decides to inter- owner of copyright has the exclusive right to reproduce, dis- pret copyright laws. tribute, and, in the case of certain works, publicly perform or display the work; to prepare derivative works; or to li- cense others to engage in the same acts under specific case is extremely complicated, but at the risk of over- terms and conditions. simplifying, here are the two opposing positions: Sounds fairly straightforward: You can use • The way the music industry sees it, musicians someone else’s work only if they give you permis- and record companies are not being paid for the works sion. And if you are going to profit from using it, they created. Are they saying that Napster is directly vi- you have to cut them in on the action. But like olating copyright? No. Rather, they’re contending that most things that sound straightforward, copyright Napster is making it possible for millions of Internet law is open to more than one interpretation. users to violate copyright. It’s called “tributary” or “con- The music industry and Napster ended up in tributory” copyright infringement. federal court because of a disagreement over what • Napster takes the position that its users are en- actually constitutes copyright infringement. The gaging in noncommercial sharing of music, an activity they say is permitted under the “fair Technology and the Protection of Intellectual Property Technology has made it possible for singers and songwriters to reach a much wider audience, but it has also made it harder for them to control access to the work they’ve created. And the pace of technological change is raising new issues that are forcing everyone to re-examine established ways of doing business. 1850 Jenny Lind, “The Swedish Nightingale,” captivates American audiences. With P. T. Barnum as her promoter, Ms. Lind performs 150 concerts in 19 U. S. cities. The tour is an artistic triumph and a financial success. Anyone who wants to enjoy Jenny Lind’s beautiful voice has only one option: buy a ticket. 1878 Thomas Edison patents the phonograph. The invention will ultimately make it possible to hear the world’s most talented and popular singers without ever leaving home. But recording artists and promoters still control access to their product because consumers must pay to buy records. 1920 The first American commercial radio station – KDKA in Pittsburgh – goes on the air. Music comes to listeners’ homes via the airwaves. And it’s free! But there’s a catch: You have no direct control over what you hear. You can listen to the radio all day and still not hear your favorite song. 1975-1985 Cassette players and VCRs give consumers the capability to copy their favorite music and movies. Not only that, but they can also share the copies with their friends. But the sharing takes place on a fairly limited scale. Most people are sharing the tapes only with family and friends. 1999 Napster makes it possible for consumers to swap free music on a massive scale. Users are downloading free music files off the computers of complete strangers. use” provisions of copyright law. Then there are other parties, who don’t necessarily even care about music, but are concerned that a successful attempt to shut down Napster could slow the adoption of new technology and perhaps lead to greater restrictions on sharing information via the Internet. Hilary Rosen, president and CEO of the Recording Industry Association of America, says the case “has never been about technology. Rather it is about Napster’s abuse of peer-to-peer technology for its own commercial benefit.” Napster counters that it would be willing to charge users a subscription fee and provide up to 80 percent of the revenue to record companies. The initial amount mentioned – $4.95 a month – failed to generate much enthusiasm from major record labels. 2000 According to the Pew Internet & American Life Project’s Online Music Report: • “78% of Internet users who download music don’t think it’s stealing to save music files to their computer hard drives.” • “21% of online music consumers say they have ended up buying the music on a CD or cassette ‘most of the time.’” But the question of subscription fees also raises another issue at stake in the Napster controversy: ultimate control over the online distribution of digital music. Will the recording industry maintain sole • “26% of music downloaders say they have ‘never’ bought a CD or cassette of the music they have captured online.” control, or will record companies share control with companies such • “The number of files per user library on Napster has been steadily increasing since our June 2000 report. At that time there were approximately 100 songs per user library. The current average [September 2000] is 140 songs per user library.” as Napster? continued The Ledger • Fall 2000 3 Things to Think About • A 37-year-old Napster user told The New York • Here’s a question that everyone seems to be Times that he downloads digital files of songs that he asking in one form or another: Why is it that people bought in the 1970s but can’t listen to because he no who would never dream of stealing a CD from a longer owns a turntable: “I bought the right to listen to record store seem so untroubled by downloading King Crimson 15 years ago. I’m just making a digital copyrighted music? copy of what I have in my closet.” • What impact has Internet/digital technology What do you think? had on the enforceability of copyright laws? • If copyright laws become tougher to enforce, Resources some singers and songwriters could end up making 1. How Stuff Works is a web site that delivers just less money. What effect would that have on their will- what its title promises: clear explanations of how ingness to create new works or to continue applying things work. Napster, MP3 – it’s all there. their talents? www.howstuffworks.com Patents, Trademarks, Trade Secrets, and Copyright 2. It’s almost impossible to look at a magazine or newspaper without seeing an article about the online music controversy. For those who want more detail, The New York Times web site carries an Article I, Section 8 of the United States Constitution gives Congress the power to “. . . promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Those “Writings and Discoveries” are what we now refer to as intellectual property, and federal law provides four ways to protect various forms of intellectual property: extensive collection of articles. http://forums.nytimes.com/comment/ index-tech.html 3. The Pew Internet & American Life Project’s Online Music Report www.pewinternet.org 4. United States Copyright Office http://lcweb.loc.gov/copyright/ • Patents grant exclusive rights for up to 20 years on inventions, useful processes, certain agricultural innovations, and certain types of ornamental or distinctive designs. • Trademarks protect words, names, symbols, sounds, or colors that distinguish a product or service. Registered trademarks can be renewed forever. • Trade secrets protect information that gives companies an advantage over competitors. (The formula for a certain wellknown soft drink is an example of a trade secret.) • Copyright protects “original works of authorship,” including the works of writers, composers, filmmakers, dramatists, sculptors, and photographers. (Even pantomime can be protected by copyright!) Copyright protection lasts for the life of the author plus 50 years. (Excerpted from What Is Intellectual Property?, United States Office of Patents and Trademarks, www.uspto.gov) 4 Fall 2000 • The Ledger 5. United States Copyright Office A Brief History and Overview www.loc.gov/copyright/docs/circ1a.html 6. U.S. Patent and Trademark Office Museum www.uspto.gov/web/offices/ac/ahrpa/opa/museum/ 7. Thomas A. Edison Papers, a web site hosted by Rutgers University, offers an interesting look at an inventor who knew a thing or two about protecting his intellectual property rights. http://edison.rutgers.edu/taep.htm Whose Words Are They? Internet Churns Up Copyright Waters Scott Guild sites whose sole purpose was to make essays and term Director of Economic and Museum Education Federal Reserve Bank of Boston papers available on-line to students. The individual Visit the Internet today, and you’ll find a multitude of sites offering students information, essays, and web sites had as few as one hit per day to as many as 437. As of August 1, 2000, the total number of hits for these 30 sites ranged from 101 hits to 180, 267. term papers they can submit unaltered and uncited as their own work. The proliferation of these sites draws new attention to the age-old problem of taking personal credit for the work of others. Arguably the worst scholarly infraction that can be committed, plagiarism is simple to define: 1. The act of plagiarizing or appropriating the ideas, Copyright and Fair Use One of the most alluring aspects of the Internet is its capability to promote the free exchange of ideas. No less a person than Thomas Jefferson has expounded eloquently on the merits of a free exchange of ideas. Imagine if he could have foreseen the Internet! writings or inventions of another without due acknowledge- Interestingly, copyright laws both rein in the ment; specif. the stealing of passages either word for word or Internet’s free exchange of ideas and facilitate it. in substance, from the writings of another and publishing them as one’s own. 2. A writing, utterance, or invention stolen from another. 1 Getting away with plagiarism used to be more difficult because resources available for student research were somewhat restricted. Students based their research on the writings of a limited number of He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density at any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. — Thomas Jefferson experts in a particular field or discipline. Teachers Copyright laws offer protections to authors so authors were generally quite familiar with the work of these are willing to make their materials available and to let experts. Either they had read the works cover-to- others use them — up to a point. cover themselves, or they were at least familiar with When Thomas Jefferson and other creators of the major ideas and concepts contained in these the Enlightenment designed the system that became materials. This familiarity made it difficult for stu- American copyright law, their objective was to assure a dents to pass off others’ intellectual work as their own. widespread distribution of thought. Being able to profit Today, with the Internet, sources of informa- from the sale of one’s book was seen as the fuel that tion have grown exponentially. The resulting free would carry ideas into the minds, libraries, and book- exchange of ideas, instant access to information, and stores of the Republic. lower barriers between disciplines have created a re- Copyright laws exist for three basic reasons: search world not only of almost unlimited sources (1) to reward authors for their creative work; but also of tempting opportunities for shortcuts in (2) to encourage the availability of the work to the completing assignments. In researching this article, I came across a web page that identified 30 separate general public; and (3) to facilitate access to, and use of, the work in 1 Funk and Wagnalls New Standard Dictionary (1921). The Ledger • Fall 2000 5 Help from the Cause appropriate public situations. With the advent of copy machines, faxes, and com- Copyright and fair use rules do not puters, educators would seem to be putting themselves begin to address all the problems regarding into a compromising situation when simply seeking to appropriate use of digitized property. provide their students with current and accurate infor- Ironically, the very tool that has en- mation. Teachers and professors regularly copy pages abled such “piracy” of others’ ideas is also and segments of books in an attempt to provide their stu- beginning to provide the means for com- dents with timely resources for study. bating such activity. There are now web Fortunately, educators have sub- sites that can assist teachers and professors stantial latitude with the limits of in identifying papers from Internet term copyright. The “fair use priv- paper mills. Similarly, there are useful web ilege” covers most photo- sites to assist students in avoiding plagia- copying that educators rism and any potential academic impro- do. An authority in priety. Here are some of these web sites: C this area is Duane • Plagiarized.com: The Instructors Goehner, a Seattle- Guide to Internet Plagiarism at www.pla- based consultant in giarized.com provides online training, re- computer search advice, and examples of “dead give- tech- nology, web design, and anti-piracy/copy- Whose Words Are They? Fall 2000 • The Ledger It was developed by Gregory Senechal. right. In a paper pre- • The University of California at sented at a 1997 conference Davis has a web site, Avoiding Plagiarism, and available on his web site, http://sja.ucdavis.edu/sja/plagiarism.html, Mr. Goehner observes, “Without the designed to help with just that. It is dedi- ‘fair use’ privilege, copyright would not serve cated to assisting students in “mastering the its constitutional purpose ‘to promote the Progress of art of scholarship.” It provides citation Science and useful Arts.’” 2 methods and guidelines for avoiding pla- To determine fair use, four factors are considered: giarism. It states that ignorance of what (1) the purpose and character of the use, including plagiarism is does not excuse a violation. whether such use is of a commercial nature or is for non- 6 away” cheating. profit educational purposes; • The Columbia Guide to Online Style, developed by Janice R. Walker and available at http://www.co- (2) the nature of the copyrighted work; lumbia.edu/cu/cup/cgos/idx_basic.html, provides a (3) the amount and sustainability of the portion guide to citation of online documents in both hu- used in relation to the copyrighted work as a whole; and manities and scientific formats. Her work in this area (4) the effect of the use upon the potential market has been cited in Internet News, USA Today, and the for, or value of, the copyrighted work. Chronicle of Higher Education. All four factors are considered when trying to de- The above list is far from exhaustive. It is, how- termine if a use of copyrighted material is fair. ever, representative of the type and quality of web as- According to Mr. Goehner, as long as the intent of sistance available to help teachers and students make teachers and professors is for “productive” or “intrinsic” wise academic use of the web. purposes (such as for criticism or scholarship), then their copying of the material is protected and legal. What is not protected is use of the material by the teacher for commercial or financial purposes. 2 “An Ethical Edge in Education: Cognizance of Copyrights and Copy Wrongs.” Duane Goehner. Paper presented at international conference, Seattle, Washington, October 1997. Available at http://goehner.com/copyright.htm. Paradigm Shift: New Resource from FRB I n many ways, the Internet allows for the disintermediation of — replacement of — the traditional role of the teacher/professor. The student is able to access information without going through the screen of the instructor. Though efficient, this immediate and ubiquitous access to information may not be as effective as the traditional route, since it requires students to do the screening process previously performed by the teacher or professor. There are two potential challenges and one significant drawback to this approach: • The first challenge is for students to become more critical readers and to be more selective in the information they use. • The second challenge is for teachers to spend more time nurturing critical thinking rather than information transfer. • The drawback is that, if these challenges are not both met, the result could be role confusion and weak scholarship. The best of all possible worlds would be to use technology to shift the paradigm and change the existing ratio of one teacher to a classroom of students to one student to a network of experts. Such a paradigm shift is currently under development at the Federal Reser ve Bank of Boston. Through our ResearchNet, which is in the early stages of development, students doing primary economic research will be supported by a network of experts and other resources brought together for this specific purpose. Using guidelines similar to those for the National History Day competition, students will research their community’s economic history. They will then choose from a variety of formats — videotape, audiotape, a poster exhibit, a publication, a web site — to produce a final project. For more information on ResearchNet, please contact Scott Guild, director of economic and museum education at the Boston Fed, at 617/973-3639. The Ledger • Fall 2000 7 High School Students May Enter Two Fed-Sponsored Competitions maintain or alter (and to what degree) the current course Rob Wedge Economic Education Specialist Federal Reserve Bank of Boston of monetary policy. Following a team’s presentation, the judges lead For the sixth consecutive year, the Federal the team through a 15-minute question-and-answer ses- Reserve Bank of Boston will offer the Fed Challenge sion. The judges’ questions range from issues raised in to high school students. This competition asks stu- the team’s presentation to requests for clarification of dents to simulate the roles of Federal Reserve mone- data to student interpretation of recent economic events. tary policymakers. It encourages the development of The competition consists of three rounds: a pre- important skills such liminary round held at several locations in New as research, deci- England; a New England district final held at the sion-making, Boston Fed; and a national final at the Board of argument for- Governors in Washington, DC. A box accompanying mulation, this article provides more information on dates and lo- and effective cations for the various rounds. communication. For the second A Fed Challenge orientation session for teachers in the First District will be held on Friday, January 26, 2001, at the Federal Reserve Bank of Boston, from 8:00 a.m. to 2:00 p.m. year in a row, Since the first competition in 1996, the Fed the Boston Fed will Challenge has caught the attention of the business world. offer the Economics Challenge. Broader in scope than It has received various corporate recognitions: the Fed Challenge, this competition asks students to • Citibank has established the Citibank draw on their knowledge and understanding of all as- Scholarships and Grants for the Fed Challenge. As a pects of economics. result, the team that wins the National Championship will be awarded $40,000, composed of $25,000 in Fed Challenge Each five-member Fed Challenge team makes a 15-minute presentation before a panel of judges at grant to set up an in-school economics laboratory. Each of the three other national finalist teams will Market Committee, the Federal Reserve’s monetary take home a total of $15,000, composed of $10,000 in policy arm. Presentations include, but are not limited scholarship money ($2,000 per student), a $2,000 to, the following: achievement award (for the teacher), and a $3,000 grant of the day of the competition; to set up an in-school economics laboratory. • The New York Times Newspaper-in-Education 2. Predictions about economic, financial, and in- Program will provide newspapers to Fed challenge par- ternational conditions in the near term that would be ticipants in areas served by The New York Times delivery of special significance for the development of monetary services and a special gift to the teacher and members of policy, such as inflation, unemployment, real GDP each Federal Reserve District champion team. growth, and other economic policy indicators; 3. Explanation of issues that should receive special attention in formulating current monetary policy; 4. Recommendations to the Federal Reserve to Fall 2000 • The Ledger achievement award (for the teacher), and a $10,000 a mock, modified meeting of the Federal Open 1. Analysis of current economic conditions as 8 scholarships ($5,000 per team member), a $5,000 • The McGraw-Hill Companies will sponsor a recognition dinner in Washington, DC, for all students and teachers of Federal Reserve District champions. • The Fed Challenge has been endorsed by the Wharton School at the University of Pennsylvania, the National Academy Foundation, and The Conference Board. If you are in the First District and have questions about the Fed Challenge, please contact the Boston Fed at the following toll free number: 1-800-409-1FED (or 1333) Within the 617 area code, call (617) 973-3639. Or check out our Fed Challenge web address: http://www.bos.frb.org/educate/fedchal/fedchal.htm. If you are outside the First District and would like more information, please contact the Federal 2001 Fed Challenge Schedule Teachers Orientation Friday, January 26 — FRB Boston 8:00 a.m. to 2:00 p.m. Preliminary Rounds March 8 — FRB Boston March 22 — FRB Boston March 23 — northern New England (site to be determined) March 27 — FRB Boston March 28 — FRB Boston March 30 — University of Connecticut, West Hartford New England District Final April 3 — FRB Boston National Final April 28-30 — Board of Governors, Washington, DC Reserve Bank in your District. 2001 Economics Challenge Schedule Economics Challenge Each Economics Challenge team consists of three to five members. Each team member answers a Preliminary Rounds in Each State April 23-27 — locations to be announced First District Finals May 3 — FRB Boston 20-minute, written test consisting of 15 multiple-choice questions. The sum of the top three individual scores on each team represents the team score. The test covers the following six areas: microeconomics, macroeconomics, international economics, current events, financial literacy, and economic history. Schools are divided into two groups: (1) college preparatory and honors classes, and (2) advanced placement or college-in-the-schools program. The top three teams from each group advance to the team final. The top three individual scorers from each group move on to the individual final. The individual and team finals are college-bowl style competitions, with the first to the buzzer having the opportunity to answer the question. Contestants in each final are asked 30 open-response questions picked randomly from the six areas. A maximum of 15 minutes is allowed for each final. Previous First District Fed Challenge Winners 2000: 1999: 1998: 1997: 1996: Gorham High School — Gorham, New Hampshire Choate Rosemary Hall — Wallingford, Connecticut Choate Rosemary Hall — Wallingford, Connecticut Gorham High School — Gorham, New Hampshire Hyde Park High School — Boston, Massachusetts 2000 Economics Challenge Winners Team Winners 1st Place: Mississquoi Valley Union High School — Swanton, VT 2nd Place: Boston Latin School — Boston, MA 3rd Place: The Bromfield School — Harvard, MA Individual Winners 1st Place: Michael Sharrow — Mississquoi Valley Union High School 2nd Place: John Abrashkin — Northampton High School, Northampton, MA 3rd Place: Brook Wilson — Mississquoi Valley Union High School Following the finals, there is an awards ceremony at which individual and team prizes are awarded. Because of the tremendous response to the 2000 Boston Fed at the following toll free number: 1-800-409-1FED (or 1333) pilot competition, the Boston Fed will conduct the Within the 617 area code, call (617) 973-3639. 2001 Economics Challenge in two rounds. State com- Or go to our Economics Challenge web address: petitions will take place in each state during the week http://www.bos.frb.org/educate/html/econcha.htm. of April 23. The winners in the two groups, AP and (And if you are interested in taking last year’s multiple- non-AP, will advance to District finals at the Federal choice section, check the same location.) Reserve Bank of Boston on May 3. For more information about the Economics Challenge for the First District, please contact the If you are outside the First District and would like more information, please contact the Federal Reserve Bank in your District. The Ledger • Fall 2000 9 Patents in America: Over 350 Years of Ingenuity Michael Stewart Jenks learned all the skills necessary to practice his Economic Education Specialist Federal Reserve Bank of Boston chosen trade, sword-making. After practicing his trade for several years in England, Jenks left for a fresh Patents are one of many ways to protect intel- start in the New World. By the mid lectual property. Today, anyone who “invents or dis- 1640s, he had already set up a black- covers any new and useful process, machine, manu- smith shop in Maine and moved facture, or composition of matter, or any new and on to a new venture in useful improvement thereof, may obtain a patent.” Massachusetts. Patents grant the holder the right to “exclude others On May 10, 1646, from making, using, offering for sale, selling or im- Joseph Jenks applied to porting the invention.”1 the What does all this mean? It means that a person Massachusetts General Court for a who comes up with a design for a new invention or a patent to “Build a new way of doing something, so long as it is original Mill for making and useful (useful meaning that your invention or of Sithes; and process actually works), can, in fact, exclude all others alsoe a new from making, using, selling, or importing that design Invented or process. Economically speaking, patents grant their S a w holders a monopoly. Mill, Intellectual property has been getting a lot of press and lately, but the concept of intellectual property goes back hundreds of years. Great Britain holds the record for the longest continuous patent tradition. British patents date back to the fifteenth century, when Henry VI granted John of Utynam a 20-year monopoly on a process for making stained glass windows in 1449. This is the earliest known British patent. The British patent system was in turn carried over to the North American colonies. The first industrial patent in America was granted over 350 years ago to a man named Joseph Jenks in what is now Saugus, Massachusetts. At 16 years of age, Jenks, like other seventeenth century English artisans, was apprenticed to a master craftsman for a period of seven years. During that time, 1U.S. Patent and Trademark Office. http://www.uspto.gov 10 Fall 2000 • The Ledger Something to Think About 1. In the history of the United States, only one President has been granted a patent. Which President was this, and what was the patent for? (answer on page 16) 2. Pick one idea you have had that you think is worth protecting from others and see if you think it meets the criteria for a U.S. patent. To find the criteria for design patents, go to the U.S. Patent and Trademark Office web site at www.uspto.gov and click on “A Guide to Filing a Design Patent Application.” divers other Engines for making of divers sorts of edge tools.” Jenks claimed that he had “knowledg in Making, and Erecting of Engines of Mills to goe by water for the speedy dispatch of much worke by few mens labour in little time.” By this time, Jenks had nearly 30 years’ experience as a cutler. He had a variety of skills that were rare in the colonies. His aim was to protect himself and his intellectual property from “free riders.” “Grant mee this privledg; and to order that noe other person shall sett upp or use any such In 1646, Joseph Jenks received America’s first industrial patent to operate a mill in what is now Saugus, Massachusetts. Photo Courtesy U.S. Dept. of the Interior National Park Service, Saugus Iron Works National Historic Site new Why are ticket prices so high? Is anybody worth that much? 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Click on f m ic s o p o r t s E c o nroo Te a m S P ts Peanu erjacksston ckrve Bank of Bo Crara l Rese & Ec o P rn o m o T ics e a of m Sp o Fede &PCeanuts Fed mics: Econo us. around ll It's a eball ur bas Play o web e th n o game ore. m t d ou and fin rg os.frb.o www.b eanuts rjacks P n Cracke click o Eco &C u rac ts ke rja cks s ts cksston nu kerjaank of Bo a Pe racserve B Ceral Re & Fed : us. ics om ound n o r all a Ec seb all ba web It's r f u o m ic smo S p o rt s the ore. yo E co nro P Te a Pla e on ut m o m g ga find .or frb ts d . ks s n o a u jac ston w.b Pean cker k of Bo rve Ban ww on &Cra ral Rese e d k Fe clic s Peanut jacks k c Cra er & ics: Econom s. round u a It's all all r baseb Play ou eb w e n th game o more. t u o d and fin rg os.frb.o www.b ts u n a e P s ckerjack click on &Cra rac lR It's nomi cs a Pla ll aro : un yo du ga m ur b s. an e on ase b df a t h l i nd ew l ww o clic w.bo ut m eb o s.fr ko b.o re. n r Pe g an & t of o r cs Sp mi eam o n T E c oP r o era ese Peanuts & Crackerjacks rts ke rve rja Ba nk cks of Bo sto n invention or trade for the space of fowerteene yeeres without my licence; . . . least after your petitioner have expended his estate, study, and labour, and have brought things to perfection; Another when hee seeth it, maketh the like; and soe I loose the benefitt of that I have studies for many yeeres before.” Jenks was granted this monopoly for a period of 14 years. This 14-year limit was in accordance with the Statute of Monopolies of 1624, which made unlawful all monopolies except those “for the term of 14 years or under hereafter to be made of the sole working or making of any manner of new manufactures within this Realm to the true and first inventor.” Jenks successfully set up his “new Invented . . . Mill” on property owned by the Company of Undertakers of the Iron Works in Lynn (today this location is part of Saugus Iron Works National Historic Site). Jenks used water diverted from the tailrace of one of the Company’s seven or so water wheels to power three water wheels for his own operation. He operated a saw mill and produced edged tools, among other things. Jenks went on to apply for other patents as well. In 1655, he was granted a seven-year monopoly for the Patents in America: Over 350 Years of Ingenuity production of an “engine . . . for the more speedy cutting of grasse.” Historians are not sure whether this monopoly was for a new type of scythe or a new scythemaking process. In 1672, he petitioned the General Court for permission to mint coins, but the petition was denied. Jenks lived a long and relatively prosperous life. He died in 1683, just shy of his 84th birthday. By granting exclusive intellectual property rights, patents protect and promote individual and corporate investment into research and development. In this way, patents have aided in the economic development of the United States. To learn more about Joseph Jenks and the first industrial patent in America, visit the “Birth Place of America’s Iron Industry,” Saugus Iron Works National Historic Site, 244 Central Street, Saugus, Massachusetts 01960, or visit the Saugus Iron Works web site, www.nps.gov/sair. The phone number is 781/9412372. Saugus Iron Works NHS is open every day except Thanksgiving, December 25, and January 1. Sources 1. Stephen P Carlson, Joseph Jenks Colonial Tool Maker and Inventor. Eastern National Parks and Monuments Association, 1985. 2. Petition of Joseph Jenks. Massachusetts Archives, vol. 59. Office of the Secretary of the Commonwealth. Boston, Massachusetts. 3. Saugus Iron Works: Official Map and Guide. National Park Service, U.S. Department of the Interior, 2000. 4. Patents. U.K. Patent Office. http://www.patent.gov.uk 5. General Information Concerning Patents. U.S. Patent and Trademark Office. http://www.uspto.gov Worth a Thousand Wo ords Worth a Thousand Words uses the camera’s eye to revisit moments in New England’s past when economics and history converged. Before Napster,There Was Fiedler Free music is not a new concept. The Boston Pops Orchestra, which began in 1885 as an offshoot of the Boston Symphony, has been treating audiences to free outdoor concerts for generations. Conductor Arthur Fiedler began the tradition on July 4, 1929. And nearly 50 years later, on July 4, 1976, he was at the podium when the Pops and more than 400,000 revelers celebrated America’s 200th birthday with a memorable concert on the banks of Boston’s Charles River. Today, the free Independence Day performances continue to draw hundreds of thousands of listeners, many of whom start showing up at sunrise to stake out prime spots for the evening’s festivities. The program always includes Sousa’s “Stars and Stripes Forever” and Tchaikovsky’s “1812 Overture.” And everyone always goes home happy. It’s truly a “people’s concert,” complete with spectacular fireworks, blazing howitzers, and lots of flag-waving. Arthur Fiedler and the Boston Pops in 1929, the orchestra’s first season of free outdoor concerts. Photo courtesy of the Boston Symphony Orchestra Archives For more on the history of the Boston Pops, visit the orchestra’s web site at www.bso.org, where, among other things, you will learn that the Pops was originally founded to provide summer employment for musicians of the Boston Symphony. Which U.S. President Was It? answer to question on page 10 Abraham Lincoln was granted a patent for a “new and improved manner of combining adjustable buoyant air chambers with a steamboat or other vessel for the purpose of enabling their draught of water to be readily lessened to enable them to pass over bars, or through shallow water, without discharging their cargoes.” In Our Next Issue... The next issue of The Ledger will focus on the economics of sports: • Why the WWF became a smash success. • The business of women’s pro football. • The life and times of Major Taylor, the 19th century bicycle racer who was one of America’s first sports superstars. • Preview of Peanuts & Crackerjacks, the Boston Fed’s new Internet-based unit on the economics of pro team sports. • And more.. The Ledger Public and Community Affairs Federal Reserve Bank of Boston 600 Atlantic Avenue P.O. Box 2076 Boston, MA 02106-2076 Change Service Requested First Class U.S. Postage Paid Boston, MA Permit No. 59702