I always find astonishing our ability to see only what we want to see.  In a 1954 study by Albert Hastorf & Hadley Cantril, students from Princeton and Dartmouth were asked to review a film of a football game between the two schools and to count the number of penalties by each side. The Princeton students found that the Dartmouth team committed twice as many flagrant penalties and three times as many mild penalties as the Princeton team. On the other hand, the Dartmouth students found that the two teams committed an approximately equal number of penalties. The study concluded that it was as though the two sets of students "saw a different game."

Commentary on yesterday's healthcare summit follows this predictable, but still remarkable pattern.  Take a look at any blog discussion of the summit, and you will see commentary that appears to review entirely different events.  Online comments on the WSJ's unsurprisingly negative op-ed is one example.   The LA Times comments start from the opposite side I don't doubt the sincerity with which democrats and republicans view their side as the "winner."

Regardless of positions on healthcare refore, I have to admit that I find it hard to see how President Obama's performance and command of the event could be considered anything other than extraordinary; he would certainly make an exceptional mediator.   In the face of aggressive and emotional criticism, he responds calmly and (for the most part) in a manner that invites deescalation.  He acknowledges the validity of diverse perspectives and doesn't reject the view of opponents simply because of their source.   (e.g., He left John McCain speechless when he agreed that the healthcare reform should not include special deals for different states).  He also recognizes that sometimes there is simply too wide a gap between the parties.

Here is a link to an article I wrote for StartupNation on planning for and managing business disputes.  StartupNation provides educational materials and resources for entrepreneurs.  Next month I will be doing a podcast and article on tips for negotiation for the site.

The Administration has posted President Obama's proposal, which is based on the Senate Bill but excludes a public option, here. More later...

In addition to the Nokia v. Apple/Apple v. Nokia patent lawsuits, patent suits in court or in the USITC have also been filed by:

• Motorola v. RIM (i.e. Blackberry)  (Although Motorola recently lost a similar case in the UK)
• Kodak v. RIM and Apple
• Kokak v. LG and Samsung (This started last January and settled a few weeks ago).

These costly pissing contests will of course make promote innovation and make us all better off.  Part of me wishes that the USITC finds in favor of all of the complainants in these cases, which would enable them to ban imports of infringing smartphones into the US.  (If only Samsung and LG had not settled, the perhaps the USITC could simply ban all smarphone made outside the US--i.e., all of them).

As reported in Business Week, and elsewhere, Apple (iPhone) and Nokia (world's largest cell phone maker) have begun suing each other both in federal court in Delaware and at the US International Trade Commission (USITC).  Nokia claims that the iPhone infringes Nokia patents.  Apple claims Nokia is now copying the iPhone and infringing iPhone patents.  For good measure, Apple clams, in effect, even if the iPhone infringes Nokia's patents, Apple  is entitled use the technology in Nokia's patents for a low cost, because Nokia persuaded an international group that set standards for wireless communications to use Nokia's technology (and agreed that the technology would be made available for a low cost).

Apple's "Sixth Defense" to Nokia's claims asserts:

Nokia's false representations to SSOs [Standard Setting Organizations] that it would license the patents it declared essential on FIRAND [one such organization's] terms, and Nokia's assertion of its wrongly obtained monopoly power against Apple in demanding non-FIRAND license terms, constitute patent misuse and render them unenforceable. In addition, Nokia's demand for a reciprocal "grantback" license to Apple's non-standard essential patents as a condition for licensing Nokia's purported essential patents at a FIRAND royalty rate constitutes misuse of Nokia's purported essential patents.

In arguing that Nokia has a monopoly of some kind, Apple asserts:

As reported in Business Week, Apple (iPhone) and Nokia (world's largest cell phone maker) have begun suing each other both in federal court in Delaware and at the US International Trade Commission (USITC).  Nokia claims that the iPhone infringes Nokia patents.  Apple claims Nokia is now copying the iPhone and infringing iPhone patents.  For good measure, Apple clams, in effect, even if the iPhone infringes Nokia's patents, Apple  is entitled use the technology in Nokia's patents for a low cost, because Nokia persuaded an international group that set standards for wireless communications to use Nokia's technology (and agreed that the technology would be made available for a low cost).

Apple's "Sixth Defense" to Nokia's claims asserts:

Nokia's false representations to SSOs [Standard Setting Organizations] that it would license the patents it declared essential on FIRAND [one such organization's] terms, and Nokia's assertion of its wrongly obtained monopoly power against Apple in demanding non-FIRAND license terms, constitute patent misuse and render them unenforceable. In addition, Nokia's demand for a reciprocal "grantback" license to Apple's non-standard essential patents as a condition for licensing Nokia's purported essential patents at a FIRAND royalty rate constitutes misuse of Nokia's purported essential patents.

In arguing that Nokia has a monopoly of some kind, Apple asserts:

The relevant markets in which to assess Nokia's conduct, therefore, are markets for technologies that - before the standards were implemented - were competing to perform the functions covered by Nokia's purported essential patents for the GSM standard (the "GSM technology markets"), the GPRS standard (the "GPRS technology markets"), the EDGE standard (the "EDGE technology markets"), the UMTS standard (the "UMTS technology markets"), and the WLAN standard (the "WLAN technology markets") (collectively, the relevant "Mobile Wireless Technology Markets").

In economic terms, this is pretty unintelligible.  Each of these technologies competes with each other as well as other communications technologies.  Not surprisingly, Apple's complaint makes no allegation as to Nokia's market share in these multiple alleged "Mobile Wireless Technology Markets."

Further and interesting (to me at least), despite making factual allegations of "wrongly obtain[ing] monopoly power against Apple," Apple's countersuit does not assert an antitrust claim in any of its 39 counts.  Apple doubtless recognizes that the phrase "obtaining monopoly power against Apple" is meaningless.  In the absence of a contractual obligation, which Apple alleges elsewhere, a firm has no obligation to license technology to competitors.  Apple, of course, is well aware of this principle, having defended against antitrust claims asserted by Paystar (based on Apple's refusal to permit Paystar to make clone Macs).

So... the antitrust/monopoly allegations seem simply about PR and adding  complexity to cases that have more than enough complexity related to technical patent issues.  The patent/technology issues may be too difficult for the court or ITC to resolve on the merits, so the false antitrust issue will allow for some good name calling.

On a somewhat amusing note that demonstrates how technology litigation devolves to the lowest common denominator rather than seeking or expecting any kind of resolution on the merits, both Nokia and Apple have included "admissions" of each other's willingness to copy good ideas:

Nokia's complaint to the USITC states:

Apple's unauthorized use of Nokia's inventions is consistent with a long-standing Apple corporate tradition. In 1996, Apple founder and CEO Steve Jobs appeared in the PBS documentary, "Triumph of the Nerds," and freely acknowledged Apple's use of other's ideas."Picasso had a saying," Jobs stated in the interview, "'good artists copy, great artists steal.'" Jobs then added, "and we have always been shameless about stealing great ideas."

Not to be outdone, Apple's counterclaim in Delaware states:

Nokia chose to copy the iPhone, especially its enormously popular and patented design and user interface. As Anssi Vanjoki, Nokia's Executive Vice President and General Manager of Multimedia, stated at Nokia's GoPlay event in 2007 when asked about the similarities of Nokia's new offerings to the already released iPhone: "If there is something good in the world, we copy with pride."

Of course, these statement have nothing to do with the merits of the respective counterallegations, but they make good soundbites.  If these cases were ever to go to trial, which is unlikely, each side would offer a host of such provocative but meaningless statements.  Because like incomprehensible but nasty sounding antitrust allegations, this is what litigation is all about.

In his NYT blog, economist Uwe Rheinhart expresses serious doubts as to the effectiveness of Republican costs control measures.  He writes:

,,, replace the term "cost control" ... with "constraining and possibly reducing the future incomes of doctors, hospitals, pharmaceutical companies, medical device companies and so on."

Given our system of governance, in which political favors can be purchased retail, the task of constraining or reducing the incomes of American health care providers will be a long and arduous battle with powerful, moneyed interest groups. American voters will have to become yet more desperate over the cost of health care before any politician will vigorously confront this powerful armada.

He further explains that tort reform, small business alliances, interstate insurance competition, and pricing transparency would have little effect on overall costs.

Medicare private insurance premiums are increasing from 14 to 31.2 percent.

In a February 10 Op Ed in the Wall Street Journal, Curt Levey  of the "Washington-based Committee for Justice" argued that healthcare reform should be opposed, because it will increase wasteful litigation.  This  argument is now spreading around the  blogosphere.

The problem with this theory is that it  is like saying that hospitals should be closed to save electricity. There is no doubt that litigation is far too wasteful and needs reform (in healthcare and all other fields). The notion, though, that a speculative risk of incremental lawsuits should forestall efforts to address exploding medical and insurance costs (98 percent of which have nothing to do with litigation) and provide coverage to at least some part of the now more than 50 million uninsured Americans is ridiculous.

For example, Mr. Levey expresses concern about the cost of "court battles [that] will focus on the constitutionality of requiring individuals to buy health insurance." In addition to the fact that such lawsuits would be utterly meritless--(have you ever heard of compulsory auto-insurance?)--the cost of such cases, however inflated, would not even rise to the level of insignificant in comparison to national healthcare costs.

Last week, we learned that healthcare now accounts for 17.3 percent of the GDP, and more than half of healthcare costs will soon be paid by government programs. Meanwhile, one of the nation's largest healthcare insurers is increasing some rates from 30 to 39 percent, which will doubtless force more of its subscribers to drop coverage (and lead to still higher rates for those that can afford to continue). At this rate, we will eventually end up with a near single-payor healthcare system--evenin the absence of reform--but one that is incapable of meeting increased demands of an ever-more impoverished public."

P.S.  Having never heard of the Committee for Justice, I checked out their website.  During the Bush years, the organization bemoaned procedural delays affecting republican judicial nominations.  Now, the group is applauding Republican filibusters.  Draw your own conclusions.

The president of AHIP (the American Health Insurance Plans) issued a statement today blaming everyone else for the high cost of health care and declaring the need for comprehensive health reform.  Among other things, the statement reiterates the premium death spiral (i.e., Health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy) and bemoans the health plans relatively small profit margins (relative to other segments of the market).

The first problem is that the profit margin numbers are pretty meaningless, because they are not adjusted for risk.  Given the ability to raise prices every year to cover actuarial changes, its far from clear that this margin is low.  Second, this is the group that brought us "Harry and Louise" who helped sink the Clinton reform efforts and doubtless prevented the Senate from adopting an entirely reasonable plan to drop the age for Medicare eligiblity to 55.

AHIP has a seat at the table simply because it can spend enormous sums on lobbying.  The notion that the Healthplans are somehow powerless victims is a bit hard to take.

The president of AHIP (the American Health Insurance) issued a statement today blaming everyone else for the high cost of health care and declaring the need for comprehensive health reform.  Among other things, the statement reiterates the premium death spiral (i.e., Health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy) and bemoans the health plans relatively small profit margins (relative to other segments of the market).

The first problem is that the profit margin numbers are pretty meaningless, because they are not adjusted for risk.  Given the ability to raise prices every year to cover actuarial changes, its far from clear that this margin is low.  Second, this is the group that brought us "Harry and Louise" who helped sink the Clinton reform efforts and doubtless prevented the Senate from adopting an entirely reasonable plan to drop the age for Medicare eligiblity to 55.

AHIP has a seat at the table simply because it can spend enormous sums on lobbying.  The notion that the Healthplans are somehow powerless victims is a bit hard to take.