Is Intellectual Property the Key to Success?
The repeal of intellectual property legislation would do nothing to remove from business its capacity to create, innovate, advertise, market, and distribute. 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. FULL ARTICLE
Comments (81)
The problem with the article presented here is that each argument about the market implications of "no IP laws" is equally true about the market implications of "no physical property laws". Yes, people would still produce and even sell things in the absence of property laws -- but who would be so cavalier about their abolition?
As for the "IP isn't scarce" argument, even Stephan doesn't endorse that anymore because he recognizes it doesn't help his case. See here and go to the post at October 11, 2006 12:56 PM and surrounding. Any claim of "IP rights" can be equivalently expressed in terms of claims on indisputably scarce goods. You may certainly disagree with the merit of such claims, but they certainly are claims to scarce goods.
Published: July 5, 2007 8:54 AM
Person, I think you missed this in the article:
"But what you are not permitted to do in a free market is use violence in the attempt to create an artificial scarcity, which is all that IP legislation really does."
Published: July 5, 2007 9:07 AM
No, I didn't.
Published: July 5, 2007 9:31 AM
When you think about it the arguement for no IP is basically Marxist or fascist depending on the society you live in. Soviet Union...no IP...NAZI Germany...burning books...Mussolini...do for the state and the state will do for you by taking somebody elses hard work and giving it to you etc. Why should work of the mind be less protected than work of the hands. And why should land which was here long before and long after one walks the earth. Work of the mind is protected only for a period that involves the life of an inventor, aurthor, business etc. Will I spend all of my savings and pass up a good living to work on an invention if I think I have no way to protect it from P&G? Hell no. Will I go out and plant corn on in my field if I can't protect it from Cargill?
Published: July 5, 2007 9:52 AM
Its not often I take issue with anything said in articles posted on mises.org. But in todays case, I'm not sure that the distinct concepts of copyright, patent and trademark should be conflated quite so breezily. Granted, I have sympathy for the view that a lot of IP issues are murky at best, and they lend themselves to monopolistic and opportunistic abuse, but the particular issue of copyright is the one I wish to address here.
your comment on the literary classics glaringly glosses over an important point. In bringing fresh editions of these works to market, the publishers and printers earn revenue from from this enterprise, and that is as it should be. But the authors themselves (long dead) earn nothing from these initiatives.
WIth such a time lapse, theres probably nothing wrong with say Penguin and anyone else printing current editions of these works as such. But what of the modern author, ( still alive, or one who is recently dead with defined heirs to his estate), whose work is published by house X with his permission, granted in exchange for royalties for him or his estate in keeping with the sales of the work.
If house Y then uplifts a copy of the published work, reproduces it and sells it in the market, in competition against house X, and wothout even asking the author, the author himself is deprived of the pecuniary fruits of his creativity. To the extent that house Y gains revenue from these sales and gives him no compensation, house Y is engaging in theft of his property.
That remains theft by any standard, no different from a manufacturer who steals raw material from his suppliers without their consent. And that is an anathema to the spirit of Austrian ( and libertarian) thinking, IMHO.
Published: July 5, 2007 9:56 AM
On the author question, it is the publishers who hold copyright, typically for a certain time, and thereby earn all the revenue and dish it out to authors based on sales. As experienced authors can tell you, there are very few who make money at this, while the publishers do just fine.
In a copyright-free world, the author simply makes a contract with a publisher on whatever basis he or she wants, while no one in particular can claim exclusive right to posses the unownable: the particular configuration of letters that go into making sentences, paragraphs, and books. Authors still make money based on their marketing decisions. They become nothing less than entrepreneurs with all the attendant risks and rewards.
In any my point is that the benefits to authors under the current copyright arrangement are wildly exaggerated. At least in a copyright-free world, the author would be free to distribute and market his or her work as he or she sees fit.
Published: July 5, 2007 10:05 AM
As a former consultant in IP law to WIPO, I take issue with many of the glossy platitudes offered by the author, which show evidence of misapplication, or misconception, as to the roots of IP. There are certainly too many to list each.
However, please bear with me.
TRADEMARK Law:
Tucker claims, as to the trademark step:
"meaning that it now enjoys the monopoly on the use of the name Georgia Cream"
FALSE: the company could prevent another ICE CREAM from being used, if his or her TM was approved at USPTO. But s/he would have to prove, against use of 'Georgia Cream' as a Skin Cream, or as real 100% dairy cream by any other firm, that his substantial reputation would be besmirched by competition.
NB: if 'Georgia Cream' ice cream is made in Portland, Oregon, with cream from Washington State, this TM is not allowable, as it is deceptive.
CORRECTION: a trademark grants some exclusivity to ID the Source to the Consumer, and to prevent confusion, etc. I do not want to buy False 'Georgia Cream' ice cream: I want the one and only, made by the manufacturer who holds this TM.
COPYRIGHT:
I'll just say that there are aspects in the presentation of this 'monopoly' aspect of copyright that mislead. Copyright protects, not IDEAS, but expressions of ideas. A published recipe for Peach Pizazz ice cream could be shared in a cooking class, under the Fair Use exception.
You can send it to Mom without the 'publisher' seeking your scalp.
PATENT:
"...special quality of its ice cream is due to its mixing technique,so it applies for and achieves a patent on that."
IF:
Georgia Cream has invented a NOVEL mixing technique, which is NON-obvious and BENEFICIAL to society, it can with the State (USPTO) 'trade' for a temporal grant of exclusivity (which never prevents Licensing same to 3rd parties), for DISCLOSURE of the patented process.
NB: I would, if a practicing attorney, advise GC NOT to patent, but to hold as a Trade Secret, my 'secret mixing process' (the Coca-cola formula modus operandi), with severe NON-disclosure agreements, and perhaps segmented production processes.
ZENmud
PS: name of my blog comes from a famous Property law essay: "Crystals and Mud"... Google it!
Published: July 5, 2007 10:15 AM
To the extent that house Y gains revenue from these sales and gives him no compensation, house Y is engaging in theft of his property.
In your example, what is his property, exactly?
The intangible "creativity" that you refer to is only "property" in a metaphorical sense. It is not real.
Let's say that you and I are neighbors, each of us is tilling his little patch of soil. You keep your land, and the fruits thereof, and I keep mine. The land and the crops are property, obviously.
But what if I figure out a way to till my soil in a slightly different way? I have a slightly modified technique. You see me doing this, across the fence. And as a result, my harvest is twice as productive as yours. My family gets fat and rich. Yours is near starvation.
Can you not copy my technique? Or put differently, if I see you using my method, do I have the right to enter your land and physically prevent you from using your property in a way that copies my behavior?
What "property" right can there really be in one's actions?
Published: July 5, 2007 10:20 AM
Jeffrey: You seem to be missing the forest for the trees. Sure, there's a large spread between what the publisher gets and what gets passed on to the author. There's also a large spread between what *any* employer sells a product for and what it pays the worker to produce it. Only a socialist sees this as evidence of the injustice of property rights. I'm sure authors would be happy little entreprenuers in the absence of IP -- but then, their would would also be freely copyable whether they want that or not. And on top of that, they'd no longer be able to outsource the marketing and distribution. Oops.
Published: July 5, 2007 10:23 AM
Also, Jeffrey, an authors today is already "free to distribute and market his or her work as he or she sees fit." They simply choose to sell the rights to a publisher. Does action not reveal preference anymore?
Published: July 5, 2007 10:28 AM
There is no logical distinction between intellectual property and non-intellectual property. If intellectual property should be free, then everything should be without price. The truth of our world is that knowledge and skill are far scarcer commodities than the tangible forms of property - land and objects - that the author would allow the law to continue to protect. Medications that have more than a placebo effect are so comparatively rare that they require billions of dollars in pure research (excluding the costs of patent applications, FDA licensing and trials). It is a conceit of people who ostensibly make their living entirely by talking and writing but do not, in fact, have to sell their words that they should have absolute right to copy what others have made. I look foward to receiving my free copies of the texts of all the Mises publications as an attachment to the author's next email.
Published: July 5, 2007 10:41 AM
I would first say that Trademarks are more justifiable than patents and copyright, since they give consumers a very real signal and can possible be a help in preventing fraud.
About modern authors, so is it possible that a publishing house could make a claim that the artist gets a certain amount of money for each copy, or has some more complicated deal, but generally gets money from the publisher. A seperate quality mark, would be that they has an explicit permit from the author to publish the work (this might be more interesting in the case of music or movies, since it is possible that someone who sells a bootleg album would like to give a part of the income to the artist that made the recording, but that the artist isn't happy with the recording and would rather see the work unpublished). A label that some money goes back to the artist, would in most cases have a positive value (the exception would be if a consumer thought that this book was good, but that the author had peaked and shouldn't release anything new), a label that a work was approved by the artist would probably also be positively valued, but maybe not as often as that they get money (and collectors would probably want both authorized releases and non-authorized). It is then up to the authors and publishers to sell books and music and movies at such prices and with such labels that would maximize profit. Some authors could get more per book than others, since they have more loyal fans or richer fans or more "moral" fans. Is it really that hard to imagine people paying $7 for a paperback where $1 goes directly to the author, than $5 for a version where nothing goes to the author?
Published: July 5, 2007 10:53 AM
Stefan - "I look foward to receiving my free copies of the texts of all the Mises publications as an attachment to the author's next email".
You are free to download them off the Mises website anytime you like! If you want a printed copy then you can either go to the expense of having one printed and bound or to save you the effort buy it from Mises, Amazon or wherever.
This last incredible sentence of yours basically destroys any validity your argument before it may have had.
Published: July 5, 2007 11:19 AM
I liked the rule proposed in an earlier thread on this (much discussed) topic:
If you can't pee on it, you can't own it.
Person, you claim that the 'scarcity objection' is irrelevant in IP debates generally, which is untrue. You may choose to phrase a pro-IP position while positing that only physical goods are scarce, but most IP advocates do not do so.
Thus, you write:
and these claims that you speak might fail, but if they do it will be for different reasons. The "case against IP" generally speaking, however, is relative to the claims made by the advocates. It doesn't make sense to say that the scarcity objection is irrelevant unless you follow that with "against my version" -- or something like that.
Published: July 5, 2007 11:19 AM
you claim that the 'scarcity objection' is irrelevant in IP debates generally, which is untrue. You may choose to phrase a pro-IP position while positing that only physical goods are scarce, but most IP advocates do not do so.
Well, first of all, the alternative expression I referred to did *not* require claiming that only physical goods are scarce. Second, it doesn't matter if IP advocates do or don't phrase their position one way or another. If a mere rephasing of a claim, that says the same thing, destroys the counterargument, that counterargument is invalid, whatever the characteristics of the original advocate.
and these claims that you speak might fail, but if they do it will be for different reasons.
Right -- the scarcity argument is therefore irrelevant, as I elaborate above.
The "case against IP" generally speaking, however, is relative to the claims made by the advocates. It doesn't make sense to say that the scarcity objection is irrelevant unless you follow that with "against my version" -- or something like that.
The case against IP, however, doesn't apply to any advocates claims. The good they are claiming is indisputably scarce. That good is "ability to control access to information", not access to the information itself. The claim that "information isn't scarce" therefore is inapplicable.
Published: July 5, 2007 12:00 PM
Person wrote:
"Also, Jeffrey, an authors today is already "free to distribute and market his or her work as he or she sees fit." They simply choose to sell the rights to a publisher. Does action not reveal preference anymore?"
Another ZENprecision:
Careful how to say 'they sell the rights to a publisher': there are 'Copyright and related rights' to discuss.
There are 'economic and moral rights' to discuss.
Suggested English reading:
http://www.wipo.int/export/sites/www/copyright/en/activities/pdf/basic_notions.pdf
Authors don't usually sell the author's (or authors') right; and I'd say they CONTRACT the right of distribution to an outfit that agrees that their work has publishing merit (thus INCOME to all), and has demonstrated, to the author's satisfaction, their savoir-faire in marketing, etc.
Guess that's why lawyers make so darn much money...
ZENmud
Published: July 5, 2007 12:04 PM
ZENmud, I'm not sure I follow the relevance of your post.
Published: July 5, 2007 12:20 PM
Person, your use of the terms "says the same thing," or (earlier) "equivalently expressed" seems ambiguous to me, then.
Most IP arguments do seem to rely on an ownership-of-ideas principle, or at least the advocates themselves argue such, so I'd have to see the rephrasing that you are claiming to have and hear an argument for why it should be considered equivalent (and in what sense you mean "equivalent" or "the same thing").
Published: July 5, 2007 12:23 PM
DC: My use of "says the same thing," or "equivalently expressed" is not at all ambiguous. "A" is an equivalent expression of "B" iff A and B have the same implications. When I claim to "own an idea", that has the exact same implications as the claim to "own all objects to the extent that they instantiate that idea". So, I consider them equivalent expressions. Since one of them is immune to the "non-scarcity" charge, both are.
It doesn't matter that IP advocates refer to "owning an idea". All that matters is the substance of their claims, i.e. what they actually mean, which we we pretty well understand. In discussion, we typically use a type of "verbal shorthand" for simplicity and brevity. Some people (and i'm not going to name any names) have a hard time with this because they want to take it too literally, but when you unfold what is really meant by this terminology, the anti-IP argumetns fall apart.
Published: July 5, 2007 12:39 PM
If true law, like language or custom, is not actively made by the State or Man but emerges spontaneously through the process of social evolution, then it would doubtlessly be meaning to talk of IP law!
Published: July 5, 2007 1:08 PM
The last part was meant to read "meaningless to talk of IP law."
Published: July 5, 2007 1:10 PM
Property rights are natural rights. Generally, when someone steals property from me, I no longer have it, and my right to ownership is violated. In contrast, "intellectual property" such as ideas, or their particular expression, can spread freely from one person to another without any loss from one person to the next. Modern technology makes this diffusion of knowledge particularly efficient. Try doing that with your car or house!
So-called "intellectual property rights" (i.e., copyright, patents, trademark, etc.) have not always been around. Unlike common law property rights, they arose in modern times as government grants of monopoly privilege based on government policy decisions. These decisions derived from such concerns as censorship of certain religious publications, "bringing order to markets," and encouraging "diffusion of knowledge." Whatever the rationale, such grants, once made, are backed ultimately by government force.
I believe the question to be whether the government should provide such monopoly grants and, if so, to what end and for how long. It's interesting seeing how libertarians split on this question.
Published: July 5, 2007 1:11 PM
Nor is this subject merely an academic debate. I recall many years ago seeing the cops in D.C. rough up a bunch of merchants on the streets for selling pirated and fake handbags and scarves and things. My first thought was: this is an outrage! Then I considered the IP question and wondered whether the police were right. So it's taken many years for me to think through this.
Published: July 5, 2007 1:18 PM
For much of American history copyright law was rather confused. For example, both Dickens and Tolkien found it practically impossible to enforce copyright in the United States.
However, American writers continued to write books - and copyright law was no different for them than it was for writers overseas.
In the computer industry I must confess to a bias, as so many of the top computer business people support leftist political causes (from Bill Gates down) I can not say I would be wildly upset if they did lose money by the end of copyright law. However, personal dislike is not a good basis for law.
An odd thing about copyright and patents is that they last for a certain number of years (a period of time set by government, that varries from nation to nation). One would have thought that either ideas are property (in which case the copyrights and patents should last for ever), or they are not (in which case they should not exist). But I am certainly not an expert in this field.
However, it is all somewhat of a moot point as such governments as the Chinese are not going to really enforce American patents and copyrights (whatever they say they will do). So companies had just better keep their production secrets secret (rather than rely on patents), and as for copyrights - as they say in New York forget-about-it.
American companies are just going to have to lower their costs (i.e. make sure they are nonunion, and vastly lower taxes and regulations), rather than rely on "intellectual property" to compete with enterprises in China. By the way this is not a matter of low wages and bad conditions of work - after all American manufacturing dominated the world at a time when American wages and conditions of work were the best in existance (it is tax and regulations - including pro union regulations) that are the problem - not high pay or good conditions of work as such.
As for keeping secrets.
Of course if a drug company is forced (by government) to say exactly what is in its products and how they are made it is going to have problems (as the cost of developing the drug will not be recovered before competitors arise). However, the cost of developing drugs is vastly increased by F.D.A. regulations in any case (these "for the good of the consumer" regulations have killed tens of thousands of people and are continuing to do so).
Published: July 5, 2007 2:22 PM
Person, suppose someone named Blake makes this argument:
I own the idea of the spring-powered mousetrap. Now, when I claim to "own the idea", what I really mean is that I "own all objects to the extent that they instantiate that idea".
The inevitable question when Blake makes this claim is "Why?", in which case he seems to have only a couple of options:
(1) I own those idea-instantiating objects because that's the claim that I make (circular)
(3) I own those objects because they instantiate my idea (problematic)
(let me know if I'm missing a 3rd, 4th, etc.)
Blake can't own the scattered particulars categorically unless he can lay some claim to what they have in common. If what they have in common is unrelated to Blake, then his ownership claims are unjustified.
I own all of the cars in my garage iff I traded for them justly; I own all of that cropland behind my house iff I homesteaded the land; etc. I can't own all of the apples in the grocery store because it's Tuesday (i.e., I own all of the apples in the store to the extent that they are there on a Tuesday).
"The fact that they are all spring-powered mousetraps makes them mine," if true, necessitates some exclusive connection between Blake and the mere idea of a spring-powered mousetrap, as that's his medium to owning a particular. Since that connection can't be justifiably exclusive without implying ownership, either he fails against the scarcity objection or his claims are arbitrary, circular, and unjustified anyway. Or so it seems to me.
Published: July 5, 2007 2:28 PM
DC: First of all, you're missing the point. Even if Blake can't come up with a justification for his idea-ownership, the fact remains that non-scarcity of ideas has nothing to do with why his justification is flawed (if indeed it is flawed). That was the point I was trying to make. That is why a large portion of Stephan's paper is flawed (by irrelevance) and that is why he already conceded the point months ago. Yes, you might be able to refute blake on other grounds -- but not non-scarcity!
Second, Blake *does* have an objective connection to the "scattered particulars"! He was, after all the first person to form a mousetrap in this manner (by supposition of a case where IP advocates would support him). And he's not claiming that the owns those objects outright because someone formed them into the mousetrap he designed; rather, he's claiming the right to compell to them move the assembly of objects back to a different, non-infringing form. (And again, you may very well object to the "first to form equals right to expel others' possessions from use of that form" ... but it wouldn't be on grounds of non-scarcity!)
Finally, the hidden assumption in your posts is that in applying ownership, it must be applied FULLY to one person, for each object. Obviously, this is false. Libertarians recognize, for example, that the owner of an object call sell certain usage rights to others, without transferring full ownership. For example, in renting an apartment. By forcing ALL property rights specifications to conform to the standard of "100% ownership to one person" you violate libertarian principles and are inconsistent.
Published: July 5, 2007 2:51 PM
ZENmud:
However, please bear with me.
TRADEMARK Law:
Tucker claims, as to the trademark step:
"meaning that it now enjoys the monopoly on the use of the name Georgia Cream"
FALSE: the company could prevent another ICE CREAM from being used, if his or her TM was approved at USPTO. But s/he would have to prove, against use of 'Georgia Cream' as a Skin Cream, or as real 100% dairy cream by any other firm, that his substantial reputation would be besmirched by competition.
This is pettifogging and bad logic. Tucker is right: the trademark does give the trademark holder a monopoly on the mark. OF course it is limited in some respects. Tucker didn't imply otherwise and that's not essential to his point.
More pettifogging. The particular example is not relevant. Tucker's point stands.
Much more than that: "anti-dilution" rights, etc. Even the purpose of TM law in preventing consumer confusion is not adhered to; there are crazy examples all the time of one company using trademark to prevent someone else from using a similar mark even when there is no consumer confusion-such as the dispute between Apple Computer and Apple records; and Apple's ridiculous use of TM law to stop people from using "pod" etc.
While there is nothing wrong with part of the idea of common law trademark--that it can be fraud to deceive a consumer as to the nature of source of the goods sold--the problem with trademark law is (a) the right is given to the original user of the mark, as oppose to defrauded customers of the knocking-off competitor; and (b) government is handling this, leading to inevitable inefficiency, arbitrariness, unfairness, and unjust extrapolations such as anti-dilution rights.
That is why it is only the consumer's rights that are violated if a seller defrauds him as to the nature of the goods he buys. The rights of competitors, however, are not violated.
So what? The fact that copyright does give the author of the recipe-as-written some state-enforced monopoly protection. That it is not absolute or without limit or exception is beside the point. Tucker's point stands.
Several problesm with Mr. WIPO expert's reasoning here.
First: The standards for obviousness (as well as others such as novelty, utility, patentable subject matter) are arbitrary, unscientific, non-rigorous, vague, and unpredictable, and they are always in flux as a result.
Second: the PTO routinely grants patents that "should not" be granted by any reasonable reading of the obviousness and other requirements. This may be because the Examiner does not find prior art that is out there, that would show the invention to be obvious; or it may be just stupidity or capriciousness or laziness on the Examiner's part. So it is not true that you can only get a patent that is non-obvious.
Third: Zenmud's comment here, like his others, simply do not contradict Tucker's conclusion or reasoning: Even if Zenmud is correct that you can only get a patent for a useful, non-obvious invention--so what? Tucker simply said that Georgia Cream could obtain a patent for its mixing technique. He is quite correct.
So what? The fact that some companies may choose to use trade secret instead of patent in some cases is irrelevant to the argument that there should be no patent option for the company to resort to.
Moreover, you are incorrect that in such a situation as Tucker used GC should never, or would never, file a patent. First, if you keep it as a trade secret there is always the risk it can be stolen by an employee or that others will independently invent it. Even worse--*because* there is patent law, there is an incentive NOT to keep mixing techniques secret. Why? Because if Louisiana Cream independently invents the same mixing technique and patents it, THEN it can actually stop GC from using its own trade secreted technique, even if it's been using it for years. So if you keep something secret you risk being forced to stop using your own process years later by someone who gets a patent on it. So what are you jabbering about?
Published: July 5, 2007 3:07 PM
Person: "As for the "IP isn't scarce" argument, even Stephan doesn't endorse that anymore because he recognizes it doesn't help his case. See here and go to the post at October 11, 2006 12:56 PM and surrounding. Any claim of "IP rights" can be equivalently expressed in terms of claims on indisputably scarce goods. You may certainly disagree with the merit of such claims, but they certainly are claims to scarce goods."
Oh, Person, stop being silly. I've explained this many times. The basic rule of a private property society is that the first user of an unowned scarce resource is the owner. The problem with trying to grant property rights in non-scarce resources is that enforcing the property rights uses force--against scarce resources. Therefore granting property rights in non-scarce things is in effect a grant of property rights in scarce things--and the grant is a re-allocation in violation of the basic libertarian homesteading principle. It's really not that complicated.
Published: July 5, 2007 3:11 PM
Stephan_Kinsella: You have again arbitrarily added in the non-scarcity of ideas to your argument, despite its irrelevance. If you want to claim that the homesteading principle has already assigned rights to all objects, and that IP claimers contradict this principle, fine. But it doesn't have anything to do with non-scarcity of ideas. It simply has to do with the fact that you consider the homesteading principle superior.
Of course, even as you've phrased the argument just now, the are some obvious flaws: what is a "resource"? If it means a physical object, why must all rights be expressible in terms of physical objects?
I thought your original case for the homesteading principle was based on the scarcity of goods. "Exclusive ability to prevent others from using idea X" is a good and in fact, a scarce one. People today pay quite a bit for this good. Why are all goods of this type invalid?
Published: July 5, 2007 3:28 PM
Person, you write:
Not to that exact claim as you have just written it -- at least, not at first. My first objection would be, "Well, why should I think that?", as that principle is a rash claim.
And, as I've argued in my post above, the answer to that will either be circular and unjustified, and therefore worthy of dismissal, or it will be rooted somehow in idea-ownership. Then the scarcity objection applies (and, in my opinion, is decisive). Is there another justification for Blake and his scattered mousetraps that I'm missing?
Published: July 5, 2007 3:30 PM
Despite being good Austrian economists, it seems we are mistakenly ignoring the laws of supply and demand. In the absence of copyright protection, intellectual property is free. A quick look at the demand curve reveals that in this situation the demand would be infinite but the supply will be zero.
Don't believe me? What part of the law of supply and demand doesn't apply to intellectual property? How many books, plays, songs, or movies to you plan to produce knowing that everyone can copy them and pay you nothing? Sure, there will always be a few artists who use their genius whether they make money at it or not, but even they will have to limit output while working a day job to make ends meet.
Profit motivates all endeavors. If there is no protection for intellectual property, there is minimal value to producing it. That translates to minimal amounts being produced.
There will still be books, music, and video produced in the absence of copyright laws. The question is whether you will be happy with the amount and quality being produced? Patrons of the arts may fund artists of their liking, and the government will always pay for propaganda. You get what you pay for. In the end, I wonder whether we small time consumers will really have the product we want for free?
Published: July 5, 2007 3:35 PM
Person: "why must all rights be expressible in terms of physical objects"
All rights are property rights.
For property to be real, it must be ownable. To be owned, property must be physically measurable.
Published: July 5, 2007 3:59 PM
David Spellman: "Despite being good Austrian economists, it seems we are mistakenly ignoring the laws of supply and demand. In the absence of copyright protection, intellectual property is free. A quick look at the demand curve reveals that in this situation the demand would be infinite but the supply will be zero."
As I recall, the law of supply and demand indicates that over time the price will approach the point at which supply and demand are equal. You can't have infinite demand, because demand is measured in terms of goods offered in exchange, and those goods are by definition scarce. Supply of new content might be zero, but only if the demand for new content is below the opportunity cost of producing it. Supply of existing content would be infinite, assuming no distribution costs.
Published: July 5, 2007 4:17 PM
Kevin B.: "To be owned, property must be physically measurable."
This seems a bit artificial to me. Scarcity is really the key, I think. For something to be scarce means that two people -- who each know nothing of the other's existance -- cannot both use the resource at the same time toward their own ends without interfering with each other. At any given time one or the other must be able to exercise ultimate control over the resource, to the exclusion of the other, or neither will be able to use it effectively. Property rights are the principles by which that ultimate control is allocated. They are unnecessary, however, with regards to anything that is not naturally scarce, including ideas and so-called "IP" in general. Any one person's use cannot interfere with another's by definition.
Published: July 5, 2007 4:23 PM
At the risk of repeating what may have already been said (I didn't have time to read it all), I just wanted to put this idea out there:
If you like IP protection, would you be willing to pay for it along with all the others who also like it? If you don't like it, would you be willing to argue that you shouldn't be expected to pay for it? Would you peacefully resist those who did you violence for not helping to pay for IP protection?
This, to me is one of the fundamental insights that Austrian Economics provides. We needn't agree on whether or not something should exist. Those who like it ought to be those who pay for its existence. And as for a lack of violence in the free market, I'm all for that and would be willing to help pay for it, but if the market is to be free, as I understand it philosophically, I would argue that we can't expect or force others to help pay for the prevention of violence.
I'm against violence, but I'd gladly pay to have a thief tripped and sat upon. Even if his thievery was of creative work I made, I may still be happy to pay for tripping and sitting on him. That is an admission that IP is valuable to me. Nothing, however, is valuable enough to expect and/or force others to help me pay for it.
Published: July 5, 2007 4:56 PM
Jesse,
I have noticed the use of "scarce resources" by various people from time to time. By your definition of scarce, all resources would be scarce, resources being property or potential property. Although your definition seems quite logical to me, there are the definitions of scarce meaning "rare" or "not abundant" which seem to be an obstacle of communication.
Person posed a question worth noting, "what is a resource?" There is a problem in that some people are defining abstracts as resources. Of course there will be misunderstanding and disagreement with this sort of confusion! The fact rarely paid attention to in this case is that an abstract idea cannot exist apart from physical property. Read carefully, an idea isn't anything but physical property. To force any ownership beyond the physical is to force imaginary rights which, in fact, measurably violate real property rights.
Published: July 5, 2007 6:16 PM
I was using "read carefully" in the past tense.
Published: July 5, 2007 6:18 PM
What you state here is incorrect. If the price of an item is zero, supply of that item need not also be zero. And profit (I assume you mean monetary profit) does not motivate all endeavors. What motivates all endeavors is an increase in (psychic) satisfaction. The promise of monetary profit usually increases the satisfaction someone gains from doing something, which is why such profit is so effective in getting things done. But it is the increase in personal psychic satisfaction, and not the profit itself, that actually motivates people.
If the price of a good is zero, the monetary profit to be received from selling that good must necessarily be zero. However, monetary profit is not necessarily equal to psychic satisfaction. This is why such products as GNU/Linux, Mozilla Firefox, and OpenBSD have been created despite the price of such products being zero. Richard Stallman spent years of his life aiding in the creation of GNU/Linux because doing so increased his psychic satisfaction not because he makes monetary profit by selling GNU/Linux.
If the price of a good is zero, the supply will be determined by how much satisfaction people receive from supplying that good. This may or may not be zero, but is certainly must not necessarily be zero.
Published: July 5, 2007 7:17 PM
Do you not consider the homesteading principle superior? If not, why not?
Published: July 5, 2007 7:22 PM
With all due respectd, sir, I find your commentary at odds with many aspects of your Institute's mission:
... In this cause, the Mises Institute works to advance the Austrian School of economics and the Misesian tradition, and, in application, defends the market economy, private property, sound money, and peaceful international relations, while opposing government intervention as economically and socially destructive...
Do you defend private property (tangible or intangible) or don't you?
Your article a premised on a gross oversimplification of intellectual property principles. I don't have time to point out all faults here; suffice it to say that the preceding blog comments do a fair job.
What incentive would an economic actor have to invest in creating an invention, brand or artistic work if such were not regarded as private property protected by law?
I would like to use your institutes name and logo for my blog on economic philosophy. Are you saying that you would permit such?
Published: July 5, 2007 7:42 PM
Person:
My claim is that we believe in property rights in scarce resources only (where scarce means rivalrous); adn that they should be assigned in a certain way (basically the idea of Lockean homesteading).
So, scarce resources are property, but non-scarce things--ideas--are not. But what is wrong with just extending property rights protection also to non-scarce things, even though they are not property? Why can't we just make them property? Well, because making something property means using physical force against some physical/scarce resources to enforce the property right. You can never use real force against a non-scarce thing, like a recipe or idea. It can only be enforced in the tangible world. Therefore, we can see that the only way to extend property rights to non-scarce things is to encroach into, to eat into, the already-defined property rights of scarce things.
So, because property really extends only to scarce things, and because we are libertarians and believe in just and non-arbitrary property rights allocation rules (as opposed to the rule of the thief--I get to take it if i can; or the rule of the socialist--the state gets it and can redistribute it to the poor)--in particular the Lockean homesteading rule--we oppose a rule that takes already-assigned property rights in a given scarce thing (presumably assigned to its first user or his assignee) and gives it to someone else who did not find it or acquire it from a previous owner.
That is just the problem with IP, Person, and it is why IP's lack of scarcity is relevant. If IP were scarce, it could be property-and assigning rights in it would not take away property rights that had already been assigned to someone else. I'm sorry you have a mental block and just cannot see this, Person, but as Johnson said, "Sir, I have found you an argument; but I am not obliged to find you an understanding."
I quite agree, Person, that if the libertarian idea of how to allocate property rights in the only things that property rights can apply to--scarce resources--is wrong, then the case against IP evaporates. So waht? We are libertarians. Of course I base my opposition to IP on my libertarian property rights principles.
So the question, Person, is: do YOU believe in the libertarian idea of homesteading? Or are you a socialist? If you do accept this, why don't you explain why it's not violated by IP?
A scarce thing is a rivalrous one. Why must rights be expressible in terms of physical objects? Well, this is easy to see: that's what all disputes are about, and over; and all you IP types want to use real, physical force (punishment of the law), against real, physical things (people's bodies or homes or money). Tell you what--if you think IP is "just as real" as real things, then why don't you enforce IP rights with some kind of non-physical "force". Keep it all in that ideal, intangible realm.
But no. You people want to dip down into the real, physical world of physical force and physical goods to enforce your IP rights, and then turn around and say, "what's so special about physical reality?" How hypocritical. It's like the preacher who rails against worldly goods yet really wants that money from his flock so he can buy a gold nugget ring and a nice car. It reminds me of the line by Rand, I think, where she said that if you hear someone criticizing materialism, hold onto your wallet, because they're coming for it.
Spellman:
Let's consider an analogous argument. If you have a jewelry store but don't have a roof over it or doors with good locks, then if it rains your inventory is ruined; or at night, bad peole will just waltz in and steal all your stuff. So my lord, how can there be anyone selling jewelry?
Oh, I have an idea--how about they factor in as a cost of business the costs of protecting their products and of being able to sell it? Like a roof to stop rain; and doors with locks to keep out crooks. But these things costs money, right? It's a cost of exclusion. All enterprises have costs, including costs of exclusion. If costs are too high the business is not viable. This gives entrpeneurs an incentive to try to be creative and find cheaper or better ways to exclude free riders and criminals, etc.
So there are costs of exclusion for the free riding problem with, say, software or music. So that means the idea-seller has to find a way to capture an audience and to exclude enoogh free riders. So what? This problem is faced by all businessmen.
Published: July 5, 2007 7:46 PM
"Tell you what--if you think IP is "just as real" as real things, then why don't you enforce IP rights with some kind of non-physical "force". Keep it all in that ideal, intangible realm."
Yes, I will gladly pay in imaginary dollars. I'm quite rich in Narnia, actually.
Published: July 5, 2007 7:58 PM
Here is the essence of the point: believers in IP hold that property rights -- that is, justifiable use of factors of production -- can be established by the fact of being the first to have some idea. So, e.g, if I am the first to conceive of a particular technology, I become in essence the owner of certain factors of production, such that I may justifiably use force to prevent others, who may have previously homesteaded these factors (i.e., removed them from a previously unowned state), from using these factors in such a way that they manifest my technological idea.
As Stephan has pointed out, this position clearly conflicts with what most libertarians hold regarding property rights. So I ask: has Person or any of these other fiends bothered to defend the position I have just laid out? I am unaware they have. Well, at least we haven't had to see any Randian rubbish about "flourishing," or crap like that.
Published: July 5, 2007 8:13 PM
Person, if I understand you correctly, this is what you are saying:
Both sides agree that ownership rights to ideas are not scarce
Arguing over something that we agree on introduces irrelevancies into the debate
Arguing about scarcity introduces irrelevancies into the debate
If I have misrepresented your argument, please correct me.
The problem with the above argument is that just because both sides agree that ownership rights to ideas are scarce does not mean both sides agree on all issues regarding scarcity. Thus, a logical conclusion might be "Arguing about the scarcity of ownership rights to ideas introduces irrelevancies into the debate." However, it is a non sequitur to conclude that arguments about scarcity per se are irrelevant.
DC's argument has nothing to do with the scarcity or non-scarcity of ownership rights to ideas. He is arguing:
Only scarce items should be property
Ideas are not scarce
Ideas should not be property
Ownership rights to ideas are not any part of his argument. Discussing scarcity is relevant even though we agree that ownership rights are scarce.
Published: July 5, 2007 8:13 PM
Stephen Kinsella,
If Georgia Cream had been using a secret technique for years before someone else tried to patent it, how would that someone else actually know what Georgia Cream is doing? There might be many ways to come up with an identical taste. Also, Georgia Cream could blackmail the patenting firm by disclosing that the patent is NOT novel, and that the patent is therefore invalid.
I read about something years ago that relates to this argument. An author was commissioned to write a history of the Coca-Cola company, and accidentally came across 'The Formula' for Coke. He mentioned to the guide that if he could do it, someone else might also stumble across it. The guide said something like, "What are you going to do? If you tried to start up a competitor, you'd have to start from scratch, just to put out a product that tastes like coke, but with a different name, and probably more expensive, since we're quite efficient at cost-cutting." Quite a good argument about the benefits of being first, if the product is good.
Published: July 5, 2007 8:19 PM
John R., you want to use our logo and name for a blog? We might ask for a link. I might send a nasty or a nice note depending on the content. What I would not do is call the police or otherwise unleash leviathan.
In any case, images from this site are everywhere on the web. If I had to police that I would be doing nothing else. In any case, it turns out to be good advertising.
Published: July 5, 2007 10:21 PM
RE: Stephan's remarks about businessman facing an inability to exclude others from using their ideas absent patentability - I made the point on this blog months ago, it's like Person has been frozen in the "non-scarcity" amber while I have been getting on with other things. Patents are unnecessary, period.
And look at their mischief - there is a very good case, for example, to be made for the notion that Alexander Graham Bell took advantage of access to patent application materials to steal Antonio Meuci's invention and patent it as his own - which we now know as the telephone;
http://www.libertyguys.org/home/detail.asp?ArtID=242
And don't forget the bitter patent fight between the Wright Brothers and Glenn Curtiss over control of airfoil surfaces by two very different techniques, which consumed millions of dollars and many years, and ended up in the two companies merger anyhow. The fight wasn't about intellectual property, it was about which set of crooked investors would have monopoly access to the coffers of the US military.
Patents are bullshit, arbitrary, capricious, unsoundly judged by technical midgets, flawed beyond economic utility, as Stephan has amply demonstrated, except as a kind of extortionate killer of rival businesses, see the Blackberry case and Verizon vs. Vonage. It's basically a tool of corporate fratricide.
At least copyright has some kind of specificity to it, even if it ultimately is undefendable as a true property right in current form, and has been perverted by recent (unconstitutional) lawmaking until it is unrecognizeable even from its state of art 20 years ago.
Published: July 6, 2007 12:00 AM
Pure logic of choice doesnt work in the IP issue;
many great Austrian economists have resorted to utilitarian arguments when arguing for IP laws or against making big changes in these laws.
Mises, Hayek and Machlup have done that.
Published: July 6, 2007 7:20 AM
Nick Gray:
Nick, this is not the way patent law works. First: the patent's novelty is measured against prior art, not against what GC was doing in secret. If the competitor, LC, independently invented the mixing technique then it would be possible to patent it, quite validly. There is nothing for GC to blackmail them with. In fact, if this was a possibility, it simply would mean that GC has a defense--patent invalidity--and thus does not have to worry at all. However, this is not the case. People who hold processes secret do in fact risk being barred from using it by later patentees.
As for how the patentee would know GC is using the technique, this is another matter. If you are suggesting that in some cases you can surreptitiously "get away with" patent infringement--sure. So what? But as a matter of fact, when you have a multi-million dollar operation running, based on a trade secret, and you find out that a patent has issued that covers your processes, you don't just say, "whew, glad they don't know what we are doing!" Instead, there would be panic for several reasons. First, now GC is willfully infringing, so treble damages are now likely when they are finally sued. I mean maybe an employee will leave and spill the beans. Who knows. More than that, usually people in an industry are aware of competitors--it's highly likely LC knew GC had some good result (more efficiency, better taste, whatever) and once they duplicate it with their own patented technique, they infer that GC might have this too. So, what do they do? They file a suit for patent infringement against GC saying that "upon information and belief" GC is infringing LC's patent; and then they do discovery and force GC to provide information--i..e, LC uses the discovery process to go "fishing" and they will find out.
But let's not get bogged down by irrelevant technical details.
Published: July 6, 2007 7:44 AM
This is one of those common situations where there's potential for abuse and corruption in either direction. But doing away with intellectual property laws altogether, more than anything else, removes incentive for inventors and innovators to work hard on making important breakthroughs because, more than likely, they'll not reap much reward from it. Why work harder than any other cog in the system if no special reward is likely? Most progress is made by people working extra hard in the hope of extra reward. Take that away and yes, we can all live in a nice, equal, commune-like society...and stagnate there with virtually no further progress forever.
Published: July 6, 2007 8:53 AM
I guess the Mises Institute wouldn't have a problem with Communist Party USA posting the Mises logo and name as propaganda for support of a free for all society as apposed to a free market society. It is an oxymoron to propose rules for a free market without the concept of ownership. It doesn't bother me to let people come onto a piece property I own to access the beach or play football. But I like the idea of being able stop people from doing things that could materially impact me. Land squatters have done a lot of good as well as pirates but that’s not an argument of stripping away property rights. All of the nuances of how people feel they should be able to use other peoples intellectual creations or physical property are not fundamental arguments for or against free markets but are issues to be played out as business decisions that occur within free markets. As the human population grew and division of labor started taking people from the fields to become thinkers, writers, inventors, etc the concept of intellectual property was first defended by individuals through secrecy and/or through forming guilds much like their ancestors had first defended their farms. Later, in a similar fashion to government enforced land rights IP rights were created. IP owners were happy with this because it removed some of the burden of having to defend against pirates and the government was happy with this because it tied the IP to the life span (or a fraction of the lifespan) of the inventor, author, etc and subsequently required the creator to educate the masses with their knowledge. And if the inventor was willing to be more charitable or saw away to benefit from a ‘non-profit’ use of their IP then he or she could grant free access to their ideas as is done from time to time. The primary function of a patent or copyright in the eyes of the government is to promote education. i.e. For a patent to be valid it must instruct others so that they to can recreate the process or in the case of copyright authors are justly compensated for sharing their knowledge or artistic creation or the enjoyment of others. So within a very short period of time (20yrs/life of the author) this information will become fully accessible to the public or it is immediately available to anyone willing to pay the patent/copyright/trademark holder a fair price to use the property or provided a platform for another inventor to create a variation on the technology. If corporations use the patent to hold off competition then that is a function of the free market but remember that the patent is credited only to the inventor who then chooses to assign or license that to the corporation. This is no different from prime real-estate. If a geothermal power plant controls the land covering the entire energy source then until somebody is willing to pay up or come up with another solution then they have no direct competition in that area but of course this could go on for much longer than 20 years or the life of the author and they are not required to educate the next generation on how they worked the property. Authors and inventors through the copyright and patent system are forced by the agreement with the government to eventually turn their property over to the public. Trademarks are similar in that they must continue to be used or they become abandoned. I lot of what I think people see as the argument for the repeal of IP is exactly opposite of what is actually the issue and that is IP law is overly restrictive in the way it works. i.e. I can do a lot of different things with a piece of land or a building but with a patent I have 20 years (if somebody doesn’t work around it) to get back mine and my investors capital through either selling the patent, licensing the patent, or going into business for myself. If the IP law allowed for more variations on how a patent gives protection then I think a lot of these nuances would be moot. An example could be with pharmaceuticals. Currently the US consumer is subsidizing much of the world who refuses to may full market price for a drug. The developing company needs to get a full price for their product to continue to apply their trade (or if you prefer they could give their product away and ask the government to fund them). Well, the patent law limits the way in which they can service the consumer (20 years to hopefully get their money back as well as make up for all they lost on the drugs that never make to market). If we had a system that lets say allowed the inventor to pick a patent that made his invention open to the entire market from day 1 but in return extended for 50 years and required all users of the technology to pay a set fee based on some metric like sales or volume then many of the arguments for the lack of competition (over a very short 20 years or life of the author) would be quieted. But these are political issues and not economic principle. Our society in general has a problem with multidisciplinary thinking and a lack of combined economic, scientific, artistic and political reasoning. For some reason everybody wants to function in a vacuum. It is the same with land, many economist and politicians can’t see the difference, extended impacts and deflection of business costs to not participating parties by the use of land and materials that serves a scientifically proven ecological function. This is comparable to the patent office granting patent that are to broad or not truly novel. It’s not a free market issue it’s a system issue created from ignorance. If you want to defend the masses by arguing against the wealth producer that’s your right. But for your grandchildren’s sake be careful what you wish for because they might get it.
Published: July 6, 2007 10:56 AM
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.
Published: July 6, 2007 11:50 AM
I have an idea for an invention that will cost $20 million to develop. I live in a country where I can obtain a patent. Would you like to consider an investment? A major company that has already been identified will be able to turn this technology into a major success within 6 six months of it becoming public. Will we see this invention become a reality?
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?
Which nation and its citizens will prosper the most?
Published: July 6, 2007 12:59 PM
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.
Published: July 6, 2007 1:53 PM
These issues of natural law etc were long ago incorporated by fair competition. Patent do not automatically cover the universe. They cover nations. If I want to patent an invention in the USA and some guy in Japan is or has already worked on the same invention I can patent it in the USA but would be stopped from patenting in Japan. The key to determining whether I will be granted a patent or not depends on whether or not the information has been conveyed, translated etc from Japanese to English prior to my filing. I am obligated to disclose any information that I took from the public domain and if it is shown that I had knowledge of or that the English speaking world had knowledge of the Japanese invention then I would be barred from obtaining the patent and if the Japanese inventor had not filed for protection in the USA by filing the proper educational patent with the USPTO then it would be fair game for anyone to make or sell in this country even while it was under patent in Japan. Secondly, invention is considered an art and natural laws and theories are not patentable. The ultimate goal of free markets is to make life better. Ownership is the first step to free markets as markets require property to trade. The closer man can come to allocating rights to the source of the hand and mind that creates wealth the more efficient we'll become in allocating our resources and the more lives will be saved and the standard of living will rise. The philosophical evolution deals with the markets guiding the government in what is fair and what is not. IP is allocated based on the heart beat of a human being. Once that heart stops beating (or roughly a period of time that represents that life, 20year) there is no moral claim other than what is determined by the market. Michelangelo’s 'David' is only claimed to be property because he sold it to someone. But if it was stolen by armed force then the armed force would own it. But no one other than Michelangelo and possibly his initial investors have a moral claim to the artwork. It is and always will be Michelangelo’s work. He had to decide on whether he wanted to create the David and whether or not he could afford to do so. If he had never sold David it would have been morally his until his death. But the skills and principles that allowed him to create such a statute are natural principles and free for anyone to use. If I replicate the David I can not morally sell it as Michelangelo’s David. Patents don't come close to extending that far. So is it immoral to claim artwork as ones IP which is exactly what it is.
In conclusion IP is not some extreme all incompassing control of an idea. The markets and the evolution of mankind and free thinking has delt with this and will I'm sure continue to refine these issues. Communication and free trade is the key and with out a doubt governments can muck it up by moving ahead of the market. 2000 years ago we societies covered region that covered much smaller areas. Today geography takes a back seat to other bounderies such as communication channels such as databases, journels, treaties and the like. Man needs to move ahead my protecting those who have certain roles to fill instead of sending those people back to the rice patties and wheat fields. Those in the Ivory tower would love for nothing more than these artistic people to become their slaves by offering up all they risk to the community based on the intellectuals terms rather than by the markets terms. Start with the individual and then with the free market. Not with society and the free for all mentality.
Published: July 6, 2007 2:32 PM
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.
Published: July 6, 2007 2:40 PM
Which nation and its citizens will prosper the most?
The freer one.
Published: July 6, 2007 3:59 PM
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.
Published: July 6, 2007 4:06 PM
Thank you for this article! As I've pointed out elsewhere on the net, great minds think alike. I don't know how many times I've had a great idea, only to see someone else come up with the "rights" to it. Where is it written that only one person at a time can come up with the same idea?
Published: July 6, 2007 6:47 PM
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.
Published: July 6, 2007 9:05 PM
Wow, I'm impressed. Seriously. Clap your hands. Now, mises dot org, why was Hollywood founded in Hollywood, California (as opposed, to say, some other place?)? That's right, oh the irony, to *escape* intellectual property laws (of that motion picture patent claiming fewl, Edison, if I'm not mistaken). Where's the article on this? Wait, I see a future homework assignment article for Jeffrey Tucker ...
Jeffrey Tucker: "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."
You forgot, *by definition*.
Jeffrey Tucker: "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."
No, trade. That which is received is valued more than that which is given away in exchange, without exception. Yeah, every verbal or written expression too (with or without payment)!
Jeffrey Tucker: "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."
And how does anyone ever get "home"? Does it "cost" to say "no", to "refuse"? Is every thought worth at least a "penny"? (What, I'm supposed to demonstrate all the quality stuff?)
Jeffrey Tucker: "In any case, the costs associated with keeping an eye on imitators exists whether IP is legally protected or not."
Ooooh, oooh, /raises hand. "Institute 'paradox'"?
All action only occurs because that action by definition brings one to a state of lesser dissatisfaction from a state of greater dissatisfaction. True for savings. True for uncertainty. True for eating your vegetables before eating your dessert. (Hehe, who's the cherry on top?)
Jeffrey Tucker: "The Internet age has taught that it is ultimately impossible to enforce IP."
Omg, don't 'cheer-up' or something. Next thing you know you'll be quoting Mises saying there is no "State", there are only acting individuals ... And then where would we be?
Jeffrey Tucker: "It only succeeds in creating criminality where none really need exist."
Minus eleven points for use of the Marxist "need". Hey, a B+ ain't too shabby.
Jeffrey Tucker: "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."
Wrong. Invalid inferior non proof. Exclusively possessionable versus non exclusively possessionable, by definition of space, by definition of body, by definition of property. But some choose to fill 'er up with 'regular' and others choose to fill 'er up with high-grade 'intellectual' (uh, yeah, that would be "rtr", at least around these parts -- what? is this not a site of devoted praise?).
Jeffrey Tucker: "So consider a world without trademark, copyright, or patents. It would still be a world with innovation — perhaps far more of it."
Perhaps? Nobel Prizes for proof. Oh, where did I leave that one? #6? #7? #9?
Jeffrey Tucker: "And yes, there would still be profits due to those who are entrepreneurial."
Good, I'm not the only one who talks trash around here. The economic definition of profit, equals trade, equals action. Meh, just another N.P. previously emphasized by rtr.
Jeffrey Tucker: "Perhaps there would be a bit less profit for litigators and IP lawyers — but is this a bad thing?"
Back to the versus Hobbesian war of all against all case. The weakest rtr N.P. still bothers me.
Published: July 7, 2007 2:36 AM
"Good, I'm not the only one who talks trash around here."
To your credit, at least you realize that you do so.
Published: July 7, 2007 5:11 AM
So are you saying "credit" *can* have positive subjective economic value? Blasphemer!
Published: July 7, 2007 5:16 AM
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.
Published: July 7, 2007 7:49 AM
Two areas of comment:
1) It's interesting how commonly people assume IP is their basic "right," akin to natural rights. Yet the text of the U.S. Constitution gives another rationale altogether as its only stated one for authorizing federal grants of IP:
"Section 8. The Congress shall have 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 [...]."
In a word, utilitarianism. (We can set aside whether utilitarianism is sound principle or doctrine.) Not the (natural) rights of the creative to their intangible works. Simply how society (supposedly, anyway) collectively materially benefits by providing temporary exclusive legal right to those works. (Notice, too, that the "Bill of Rights" adds nothing about this to what's already in Section 8.)
Of course, the governmental practice of IP grants has created a beneficiary class which, predictably, seeks to justify the preservation and expansion of its privileges. One such way is to argue -- ad hoc and ex post facto -- that they have an innate moral right to its intellectual creations. This would have been quite a surprise to those who drafted the Constitution. (Except, perhaps, to that mercantilist/nationalist interloper, Alexander Hamilton.)
2) Tucker is optimistic that technological trends will succeed in undoing IP functioning:
"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."
Yet those privileged by IP are hard at work to take advantage of these very trends:
http://www.eastbayexpress.com/2007-04-25/news/pirates-of-the-web-at-world-s-end/print
It remains to be seen how long society will continue to be constrained by the class of IP-holders and its client State.
Published: July 7, 2007 4:50 PM
"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.
Published: July 7, 2007 5:47 PM
It seems a bit disingenuous that the author left out big Pharm in his set of examples. Without IP, they couldn't afford the research necessary to bring new drugs to market. Europe and Canada are no longer serious players in that game because of lack of IP rights. If you want someone to spend billions to find a cure for AIDS or cancer, you better keep some strong IP laws.
Published: July 8, 2007 12:51 AM
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.
Published: July 8, 2007 12:57 AM
Jeffrey,
Do I read you correctly in your article? Are you implying that in your non-copyright world I would be able to put my name on the cover page of say, Human Action?
You write:
"A clue to the copyright fallacy should be obvious from wandering through a typical bookstore chain.You will see racks and racks of classic books... The texts therein are "public domain," which isn't a legal category as such: it only means the absence of copyright protection...And no, the authors are not misidentified on them."
Further, Jeff you write:
"The Internet age has taught that it is ultimately impossible to enforce IP."
How has it taught us this? Currently, there are pirated downloads of videos and songs. Are you 100% sure that in the future technology will not evolve to protect from pirated downloads?
Published: July 9, 2007 10:59 AM
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.
Published: July 9, 2007 1:43 PM
Kevin B.
You are making my point in the first part of your post. It is fraud. But Jeffrey is making the exact opposite point, that there is no protection for words. And that is why he emphasises the point that current classics carry the authors who wrote the book. He is trying to claim that in a non-copyright world where there is no protection for any writing that misidentifying authors won't occur even if there is no law to stop such. In a backdoor way he is (I think) implying that anybody can do anything they want with any work.
As for the second point you make, I see you fall into Jeffrey's all knowing camp as to future technology. Just how do you know a technology in the future won't be invented that will prevent videos and songs from being pirated? I doubt Nostradamus would go so far as to make that prediction.
Published: July 9, 2007 2:22 PM
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.
Published: July 9, 2007 3:19 PM
A person may exchange decades of the capital of his life (his primary property) to create a novel, song, or work of art. How is that not a scare resource?
To say those individuals who are willing to take the risk of creating art are not entitled to own their creations is ludicrous. How is that substantially different than exchanging your time for an increase in the number on your bank checking or credit account? Numbers aren't scarce and can be arranged in any order, so you can't really own that, right? You can't "piss" on the number on your bank account (although you have my permission to try by bringing your balance up online and pissing on your computer screen), so you can't own it, right?
All property rights are ultimately created by the willingness to use force to defend those rights. IP rights do not require an initiation of force any more than any other property rights. The very fact that you must take some action to download music, book, art, etc. means they are scarce resources. They don't just appear from cosmic rays pounding your hard drive or monkeys pounding on your keyboard. These IP resources came into being by the efforts of people using their time.
I will grant you that the use of today's patent law is so bad that the whole process should probably be scrapped. Most patents that are granted (especially software patents) should be invalid based on the "obviousness" of the invention and the ability of the average person in the field to come up with the "invention." Patents should be extremely difficult to obtain instead of pretty easy, but that doesn't invalidate the concept, just the implementation.
Published: July 9, 2007 3:54 PM
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.
Published: July 9, 2007 8:27 PM
The one difference between IP and Real Property is that Real Property gets used up when you possess it, IP does not. That is, if I have a sandwhich and I eat it, you cannot. If I have a plot of land and occupy it, you cannot. But if I have a song in my head, you can have it in your head too. The fact that Real things get used up is the reason we have legal protection in the first place. IP doesn't need that protection. See http://www.channelcurtis.com/Copyz.html for more.
Published: July 18, 2007 8:42 AM
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.
Published: July 19, 2007 9:18 AM
Curtis> Actual stuff is still protected: CD's, books, posters, computer disks, but the content need not be, except by contract.
That's the rub, you cannot contract for that which you do not own. If you don't own your creations, you cannot contract to exchange that ownership for value.
Your example that a publisher would pay for the rights to an author's story because the publishing of the book would be profitable for a short period of time has numerous flaws.
One flaw is it presumes people are stupid and would not quickly learn that they can wait a few days or even a few hours and buy the same product for a fraction of the cost. After all, much of the basis of this anti-IP argument is you can't protect the information, so it should be "free." In other words, if something is easy to steal, it is thus moral to do so. Technology currently exists to copy books in short order, and that technology is only going to improve. People are not stupid, and they will adjust their behavior in your no-IP world.
Another flaw in your argument is the presumption that books are immediately profitable (Jeez, are there no *actual* business people around here?). Books, movies, and other art forms are often not profitable until the 2nd or 3rd printing, DVD or world-wide sales are often required before movies are profitable, and often the lithographs and printings of a painting are where the actual money is made for the artist. None of these things would be profitable for publishers or creators, and to say this wouldn't stifle creativity is beyond belief.
Also, to your Rolling Stones example. The Stones and many other groups sing songs that OTHER people wrote! Obviously, this is in direct conflict with your example. I guess guys who write songs are just screwed.
Legal force for property rights is one of the few areas where government is actually justified (at least until some anarchist structures can be created, but the functions of property protection must still be in place).
And to my bank example, it was an exercise in abstract thought. You CAN'T actually touch the money. The existence of value is abstract in this case and the exchange of the abstract value for concrete value is by convention. The concept of ownership of money is as abstract concept much like the concept of owning your own intellectual creations.
Published: July 20, 2007 3:51 AM
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 publ