I find this such a uniquely frustrating issue. To people like myself it seems so ridiculously, painfully obvious that IP laws are bullshit. It’s just another completely self evident thing. Like: OF COURSE murder is a crime; similarly OF COURSE IP is bullshit.

Trying to come up with an argument to illustrate this is pretty tough but let me try my hand at it with a stylized thought experiment.

Take the universe and build an impenetrable wall down the middle of it, effectively creating two completely isolated, independent universes. Now put a person on either side of it and let them invent away for an infinite amount of time, resulting in each coming up with every possible idea, invention, process, expression of idea, etc., completely independently, but in different sequence, so the chronology of invention is different on each side.

Natural law by definition being universal, the presence or absence of a partition down the middle of the universe is irrelevant to its application. Assuming IP law is natural law and thus applying it universally, each person is seen to be in violation (because one or the other will have precedence on a given invention). But neither has nor could have contact with each other.

So what we have are actors operating in completely isolated universes, each guilty of a crime against natural law of which he has no foreknowledge, no possibility of awareness ever. Does this seem right?

It’s not a question of the practicality of enforcement but a pure question of right and wrong – has either of them actually done WRONG?

But remove the wall and suddenly the pro-IP position seems reasonable. The wall should be irrelevant, but somehow it is not. The universal application of a supposedly natural law fails because it is curcumstantial in whether or not the actors do or even can interact with each other.

This is directly the point about the rivalrousness of the ‘good’ being protected, and why it’s relevant to the IP discussion.

My counterpart has an idea and lives in a country with no patent law. His idea will cost $5 million to develop and a major company will certainly be able to recreate what he has done as soon as it is public? Would you like to consider an investment? Will we ever see his invention become a reality?

Just because the government has not issued any patent laws does not mean the the people in your theoretical country could not find another solution to the incentive problem that you bring up. For example, the company that first develops the product can require all purchasers to sign a contract saying that they agree not to reproduce the item they are purchasing and that they will require everyone they show the item to to agree to the same contract as well.

Just because the government has not issued any patent laws does not mean the the people in your theoretical country could not find another solution to the incentive problem that you bring up. For example, the company that first develops the product can require all purchasers to sign a contract saying that they agree not to reproduce the item they are purchasing and that they will require everyone they show the item to to agree to the same contract as well.

That would still be IP but in terms of actually protecting it well explain your thoughts to the politburo or the mob. I’m sure they would love to hear it. The arguement isn’t about patent but about IP (ownership) we have just found that the one function of government that is typically considered important is the defense of property rights.

Jean Paul: Great comments. Re your “universe” approach–yes, I quite agree. This is already present in the fact that patent law is territorial, which makes no sense whatsoever if invention-rights are some kind of natural right. In fact, as I’ve noted to people before, there could be older civilizations in outer space who have already invented most of the things we have re-invented–so we are trampling their property rights–and they don’t even know it!

ridiculous.

I’m probably the only professional inventor in this forum, and I’d like to tell everyone who believes that IP “stimulates” invention – that’s total bullshit.

People invent things because they have some problems at hand, not because they contemplate future rewards from selling patents.

Anyone who thinks it is possible to make a decent living off patents clearly never saw what patent litigation looks like. The only party winning is lawyers. One needs to have really deep pockets to play this game – and even if you win, that comes years later, and meanwhile instead of doing things you like (tinkering with technology) you piss off your life on depositions and conferences with lawyers. Notice how all those patent lawsuits are either gangs of marauding lawyers vs successful businesses or corporate harrasment of competitors (which inevitably ends up as cross-licensing settlements). The small businesses of the entrepreneur inventors invariably get screwed.

And most inventions are done by lowly engineers in the course of their employment – meaning that they don’t get anything more than a lukewarm “attaboy”; they are forced to sign all rights to their future inventions when they are hired.

In fact, I had patents in my name bite me in the ass when I changed jobs. I cannot go independent and pursue some of my best ideas because I was stupid enough to get them patented – and my former employers killed the projects or simply went belly up with patents ending up in the hands of patent sharks (who wouldn’t hesitate to sue shirt off my back if I go and actually make a product based on my own idea). So I got smarter and stopped patenting things. Prior art is way better protection for the actual inventor than the patents.

Oh, and for God’s sake, stop calling it “intellectual property”. That clouds reason to no end. Patents, copyrigths, trademarks are not property at all – they are government grants of temporary monopoly privileges, nothing more.

“Good, I’m not the only one who talks trash around here.”

To your credit, at least you realize that you do so.

Ouch. Looks like there is only one way to make losta money i.e. be productive. When an inventor comes with a new product, it’s a one-off event. Whereas for someone to build a company around a product that distributes it to millions daily then he gets the dough. Take the Coca-coca example. Some guy comes up with the recipe, doesn’t know what to do with it and sells to some guy who can use it. The Coca-cola inventor did a one-off productive performance and a one-off transaction and got a one-off payment for his trouble. The store owner on the other hand, mass-produces the elixir, bottles it and transacts with many buyers, therefore his mass productive activity realises mass money income. Hooray!

Therefore, at the end of the day, production is the hallmark of Capitalism, not invention. It’s not good enough to create a new product and have it put in a corner because the inventor doesn’t know what to do with. I suppose if someone wants to invent something that’ll make him millions of dollars he should look at how to build a mass production business first.

“Therefore, at the end of the day, production is the hallmark of Capitalism, not invention.”

Invention provides opportunities for future production. They are thus both inextricable features of the capitalist system.

Sheesh, where do I start? I’ll go through the article sequentially.

For this reason, they defend intellectual property as if it were the very lifeblood of their business operations. They fail to give primary credit where it is due: to their own ingenuity, willingness to take a risk, and their market-based activities generally. This is often an empirically incorrect judgment on their part, and it carries with it the tragedy of crediting the state for the accomplishments that are actually due to their own entrepreneurial activities.

No, I think they recognize that their success is due to themselves, otherwise their intellectual property or the fruits of their intellectual property wouldn’t be valuable in the market. They just use the legal system to enforce their rights.

Under this assumption, the history of American enterprise is less a story of heroic risk and reward and more a story of the decisions of patent clerks and copyright attorneys.

I don’t think anyone other than the author is making this assumption. Most seem to recognize that the creators are creating the value, they just try to use the IP law system to protect their rights.

The texts therein are “public domain,” which isn’t a legal category as such: it only means the absence of copyright protection….But they sell. They sell well. And no, the authors are not misidentified on them. The Bronte sisters are still the authors of Jane Eyre and Wuthering Heights. Victor Hugo still wrote Les Miserables. Mark Twain wrote Tom Sawyer. The much-predicted disaster of an anti-IP world is nowhere in evidence: there are still profits, gains from trade, and credit is given where credit is due.

That the public domain books sell so well after so long is only a testament to the value and scarcity of the intellectual property they contain. If the authors were still alive they would have a right to profit from it. There may even be arguments that their heirs still should as well. The heirs of other kinds of fortunes profit for longer periods in other cases.

Why is this? Quite simply, the bookstore has gone to the trouble of bringing the book to market. It paid the producer for the book and made an entrepreneurial decision to take a risk that people will buy it. Sure, anyone could have done it, but the fact is that not everyone has: the company made the good available in a manner that suits consumer tastes. In other words, with enterprise comes success. It is no more or less simple than that. IP has nothing to do with it.

No – IP has everything to do with it. The book publishers and booksellers are just packaging the property of others for sale. If intellectual property isn’t scarce, why do they bother printing the property of these old authors? Any other property should do just as well. They print it because it is valuable (because it is scarce) and because of the laws it is now free.

So it would be in a completely free market, which is to say, a world without IP. But sometimes businessmen themselves get confused.

This doesn’t follow. If the incentives, profits, and rewards for creation, innovation, and invention changed its hard to believe that the levels of these human actions would remain the same.

So this company now has three monopolies all sewn up. Is that enough to ensure success? Of course not. It must do good business, meaning that it must economize, innovate, distribute, and advertise. The company does all these things and then goes from success to success.

Monopoly is a very misleading word in this context. One would be free to create an infinite variety of peach-based ice creams similar to the one in question without following the exact same recipe. Note this is the basis for the cola wars – no one’s stopping anyone from having a similar tasting product, so they try to differentiate their product by advertising, etc.

Do you see what is happening here? A small change that would threaten the very life of the business is indirectly being credited, by implication, for being the very life of the business. If that were true, then it would not be business prowess that made this company, but government privilege, and that is emphatically not true in this case. The repeal of intellectual property legislation would do nothing to remove from the business its capacity to create, innovate, advertise, market, and distribute.

It is still business prowess that make the product, businesses are just using the law to enforce their rights. And creation and innovation would change because the incentives for them would change.

The repeal of IP might create for it an additional cost of doing business, namely efforts to ensure that consumers are aware of the difference between the genuine product and impersonators. This is a cost of business that every enterprise has to bear. Patents and trademarks have done nothing to keep Gucci and Prada and Rolex impersonators at bay. But neither have the impersonators killed the main business. If anything, they might have helped, since imitation is the best form of flattery.

The author is cherry-picking an example here. Luxury watches are not easily reproducible because of how expensive many of the inputs – materials, labor, etc. are. Other easily reproduced products can be devastated by “impersonators” because in many cases they can sell a near-identical product.

Big companies spend millions building up warchests of patents that they use to fight off or forestall lawsuits from other companies, then agree to back down and cross-license to each other after spending millions on attorneys. And no surprise, just as with minimum wage or pro-union legislation, the IP laws don’t really hurt the larger companies but rather the smaller businesses, who can’t afford million-dollar patent suit defenses.

So change the system so its easier for the individual or small business to patent and protect those patents. That’s very libertarian.

The Internet age has taught that it is ultimately impossible to enforce IP. It is akin to the attempt to ban alcohol or tobacco. It can’t work. It only succeeds in creating criminality where none really need exist. By granting exclusive rights to the first firm to jump through the hoops, it ends up harming rather than promoting competition.

It may be harder to enforce IP, but it isn’t impossible. And violating the property rights of others is certainly tortious, if not criminal.

The author’s comment about the first to “jump through the hoops” is curious, because it seems many anti-IP people have no problem with the homesteading model in regard to physical property.

Doing away with IP would reward theft and discourage innovation, so in the end you would likely be left with the biggest players who could afford to steal everyone else’s technology and wait until the competitors died. I’m not sure how that would “encourage competition”.

But some may object that protecting IP is no different from protecting regular property. That is not so. Real property is scarce. The subjects of IP are not scarce, as Stephan Kinsella explains. Images, ideas, sounds, arrangements of letters on a page: these can be reproduced infinitely. For that reason, they can’t be considered to be owned.

You’re confusing individual reproducibility with scarcity. Ideas are scarce, that’s why the market reproduces some of them at substantial cost for great profits. If intellectual property wasn’t scarce it wouldn’t be valuable and therefore no one would want to reproduce individual ideas.

Merchants are free to attempt to create artificial scarcity, and that is what happens when a company keeps it codes private or photographers put watermarks on their images online. Proprietary and “open-source” products can live and prosper side-by-side, as we learn from any drug store that offers both branded and generic goods inches apart on the shelves.

Merchants aren’t creating artificial scarcity. Sometimes generics are nearly identical to the brand names, sometimes they are not. No one is stopping anyone from creating competing products, the IP laws are just preventing some from using other people’s ideas in some cases. The author’s agenda betrays his argument – if intellectual property wasn’t scarce and therefore valuable one wouldn’t need to take other people’s protected property.

Raymond,

In the non-copyright world, selling copies of Human Action with your name on the cover (posing as the author) is fraud.

“Are you 100% sure that in the future technology will not evolve to protect from pirated downloads?”

I do not think you have much experience in this area. You are working against millions of young people with nothing better to do than to work around every pitiful new copyright “protection.” If you can see it or hear it, then you can share it.

Raymond,

I think it is too much to say that Jeffrey is arguing that misidentifications of authors won’t occur under a contractual society, for really they would – and they do now anyway. Just as one who argues for a contractual society doesn’t believe there will be no crime – but the odds will be for less.

For the second point, technology would have to be pushed back for copyright protection to be more easily enforced. As I said, I can easily copy everything I see and hear, and I can just as easily share it – thanks to technology. Visit Best Buy one day and drop by the computer section. The only way to stop digital reproduction is by taking away all the neat devices that make it so easy. Cameras, video recorders, microphones..computers! Consumers want to be able to see movies and hear music. Well, if they can see it or hear it, they can copy it.

Nostradamus never met Generation X.

averros> So I got smarter and stopped patenting things.

Your post reminds me of what Don Lancaster has wrote countless times. Amusingly, he copyrighted the work, but gives it away: Case Against Patents.

To Jim, 3 above.
A person’s time Is scarce and a person may invest decades of his life into a piece of IP and he Can keep the item he makes even in an IP free world.

No one is saying he doesn’t own it outright and can do what he wants with it. He never has to share it to anyone.

Now, if you want to make money with your art you are going to have to distribute it. There’s the rub. Let’s consider some examples.

Profits from a sculpture or painting are safe, because everyone always wants the original, and the value remains with the original which the creator can touch and own and sell.

How about easily copyable material like a song, book, or a computer program.

A song is safe in an IP free world for several reasons. First it is most valuable coming out of the mouth of the creator – you would rather hear the Rolling Stones play “Start me up” than any stones tribute band. The more the song is “ripped off” the greater the popularity of the band, the more they can charge for tickets and t-shirts.

Profits from a book could be secured as follows. I’m JK Rowling and I write the next Harry Potter novel. I go to the publisher and say, “Hey, I wrote this book. To take a look at it’s gonna cost ya, big.” Now why would they want it in an IP free world, when they know that if it’s any good, some other publisher is going to buy a copy, take it to the shop, and print his own coppies for distribution and sale, but why would he do that if some other publisher is just going to buy a copy, take it to the shop, print his own coppies, ad infinitum. Why would anyone take the trouble? Because for a short time it would work. Most fans will buy the book quick, thus the first publisher who has the stock will sell well. Coppiers will invest Their labor in the distribution process. Coppies will be distributed faster in an IP free world, and the profit curve will drop off rapidly, until the cost of the book is just a little more than the price to make it. Why would Anyone buy the book when they could read it online for free? Because it’s worth Something to have a book. Not everyone wants to read everything on a computer.

What about a computer program? Aside from the initial sales incentives described above, there is the added protection of encryption. I know hacker will make short work of breaking the codes, but until you find said hackers distribution site, it will pay to buy it. You yourself recognize that it takes some action to download the IP. The companies that make it easier for you will find a profit.

It recently became easy to copy and distribute electronic media. The work that was formerly done in copying and distribution has been reduced drastically. The profits realized by Sony, RCA, Capital Records and such are no longer viable. Why should they be paid for work that is no longer hard?

They had the same problem when the printing press was invented. Suddenly scribes everywhere were out of work. Sounds bad, until you realize this is just technology pulling the market forward and freeing up those people to do other valuable things.

A couple other points. Once everyone is employed ripping everyone else off, there will be a labor shortage in the rippoff area. That is, only the stuff with a high profit margin is going to be worth ripping off.

R&D will continue as it will still pay to come up with new stuff, just maybe not so much.

Distribution of all products would boon. Artists want to be widely known. Labor costs would rise for successful creators.

Numbers in your bank account are just a representation of your actual money. You can’t touch the numbers, but you can touch the money.

Legal force is a dangerous thing and should be reserved to where it is essential. Real Property Requires force to defend it because it is used up in the possession of it. IP can be replicated ad infinitum and so it needs no protection. Actual stuff is still protected: CD’s, books, posters, computer disks, but the content need not be, except by contract.

Jim,

When I say someone can contract to protect the value of their work, what I mean is they can form a contract with a publisher to look at the work so the publisher can copy it for sale.

Now, you might point out that why would anyone pay anyone for a look at something when they can simply wait for some sucker to do it, then go buy a single copy (at less than the contract price) and copy it themselves. But this begs the question “why would the sucker do it knowing the same thing?” Is the sucker really a sucker if the second guy is going to buy the copy to reproduce it? How many “second guys” are there to buy it to copy? If there are enough, then the first sucker is no sucker at all and makes money. In reality, it’s worth paying a buck or two to view a piece now, rather than having to wait a day or two for someone to make it cheaper or free. If the cost were just $1, a lot of people wouldn’t wait.

Why would anyone publish Any book if as soon as they did some other publisher was just going to copy the then released material and undercut them (not having had to pay the viewing contract price)? Why would their need to be publishers at all? Why wouldn’t authors just post their works on-line and people can download and print their own books. Or Kinkos could bind it for you for a small fee, thereby becoming the publisher, skimming off the profits of the former publishers. Of course, authors could sell access to their site, but only until someone has copied it and set up their own site for people to download for free. And so why would anyone write anything knowing that it was just going to be distributed to everyone for free? Because there would still be some value in having the book, and there would still be some value in finding and getting the book. The value of the book is the same. The value of the finding and getting would be less, but it’s still there. One might be tempted to think that high school-aged hackers with nothing but time on their hands would be responsible for the distribution of all e-media, and if all that work could be done by those formerly unemployed hackers, then good. But likely someone would set up a professional, and profitable way to do it, and they would pay the creators.

Let’s consider some other examples. The Stones (and songs). The Stones would pay big money to a songwriter just to hear a song one time, so they could play it on tour, because they can make big money touring. Songwriters would sell views or hearings of their music. The more successful the last song, the higher the price would be to hear new ones. The biggest looser in music would be the studio musician who currently gets a royalty when a song was widely distributed. But consider this, how much work does a studio musician actually do? Is it worth the current royalty? If his work is really indispensable, his wages will be high.

In the case of lithographs and the need for WW distribution to make a profit, you are right, these profits would not be there as high as they are today. Works that require that kind of return on investment might not be made. But to follow your logic, Nobody could copy and sell these lithographs or DVD’s because anyone could copy them for free. What we’re not factoring into this equation is that it actually takes Some time and effort to copy and distribute stuff even today, no matter how small. And That is the work that is rewarded by the small return that people would be willing to pay to have access to this virtually free information. The real wealth of the value of the book is distributed. The former wealth gone from the distributors is saved and passed on to the consumers. If the creator puts work into lithograph reproduction, he can sell all he can before people buy it somewhere else for cheaper, and few people will invest serious time into copying someone’s work just to give it away.

Consider this. If the USA announced today that as of tomorrow there would be no copyrights and patents, what would happen tomorrow. Everyone would wake up thinking “what can I copy?”. People would go to the store, buy a copy of Microsoft Works, go home and post it online for a fraction of the cost. But why would they do that when someone else would do it for less? People would adjust their behavior as you point out. So what would Really happen? Some people actually would do it and some people would actually pay the fraction. Value (less value) would be preserved. Then someone would compile a site of free stuff and charge nothing, but charge advertisers to make money. And That would work for a while, each person making less and less money. Products would be distributed widely and productivity would soar.

Soon everyone would have rooted out every product where the profit margin was sufficiently high and set up shop copying. Now, everyone’s employed. Now a New thing comes up. Without protection, anyone can copy it, but who has the time? Only those things with a high profit margin relative to production cost would be copied.

Sure R&D would be reduced, but only to real market levels. There is a natural level of R&D beyond which investment is a waste. In the current protected market, R&D money can be more highly speculative, and thus wasteful, than in a free market.

Drug companies and software companies would suffer, but people would still invent drugs to use, and people would still produce software to use. Necessity is the mother of invention, not the US patent office. Those that did the work of copying it could be rewarded too.

Every time technology advances, some people lose their jobs or at least get paid less and that’s a good thing. It’s the way wealth gets created.

With internet technology a great leap has been made forward in copying and distributing. Money has to be saved somewhere.

The biggest losers are the publishers of yesterday. They used to have a lot of capital invested in fancy art-reproduction equipment and trucks. All that money can be saved now, but it has to be saved from someone.

“…how would Society / LifeStyles progress / improve, if there were NO rewards as incentives to any ( Initiators ) Innovators / Inventors ?”

im not alltogether sure..maybe like this….oneday i took a tortillia and for the heck of it…threw in some seasoned ground beef and..gosh, some lettuce cheese and salsa.
just for kicks i called it a ‘taco.’
i shared them with a few with friends and the taco was a real hit.
i got a few mobile stands and called it mototaco(tm).

then some homies started basically copying me with
‘zippytaco’(tm).

not cool….so i started passing out lemon mints, handiwipes and made sure the tacoettes(tm) showed cleavage behind the counter.

would this be a way of “Society / LifeStyles progress / improving”
without the incentives you speak of??

Jeffrey – you got a link on crossfit.com!

When libertarianism needs a militia, believe me that is where you will want to hand out the recruiting flyers.

Awesome!

All round well thought out blog post.