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Thoughts on Private IP Cartels

See my comments in the last post at the end. Thoughts? Very speculative, but the kind of ideas I’ve been mulling over for some time:

http://blog.mises.org/13370/seinfelds-elaine-is-anti-ip/comment-page-1/#comment-705228

Jay Lakner July 26, 2010 at 11:24 pm

Ok let’s try this again, but with a different approach.

An author, let’s called him Adam, wishes to sell his book but he only wants official copies to be in circulation.
His intent is to prevent people from duplicating his book.
The means by which he tries to achieve this intent is by selling each copy with a contract whereby the buyer is prohibited from performing actions that duplicate the book.
A careful study of cause and effect demonstrates that if nobody violates the contract, then his intented aim will be fulfilled.
One of the buyers of the book violates the contract and spreads copies out to others.
A third party, who I’ll refer to as Patrick, finds one of these copies in his possession.

Patrick knows that the only reason this copy exists is because of a previous violation of contract.
Patrick knows that Adam’s intent in forming the contract was to prevent free copies from circulating.
Patrick knows, through cause and effect, that had no violation of the contract originally occurred then Adam’s intent would have been realised.
Patrick knows, through cause and effect, that if he were to further duplicate this copy, the result would be in violation of Adam’s intent.

With all this knowledge of the situation, is Patrick allowed to duplicate his copy?

An otherwise peaceful action can be illegal if the actor has knowledge of certain criminal actions that preceded it. The intent to copy is not illegal. However the intent to copy, in knowledge of the contract violations that preceded it, could very well be considered illegal.

Stephan Kinsella July 27, 2010 at 12:42 am

“The means by which he tries to achieve this intent is by selling each copy with a contract whereby the buyer is prohibited from performing actions that duplicate the book.”

There are two ways to view a contract: 1. it’s not a prohibition. It’s just a title trasnfers, where the buyer agrees to pay damages to the author Adam IF he copies the book. 2. Adam retains ownership of the book and only leases it to , or gives parital ownership of, to the buyer, retaining most rights, so that it’s trespass (a crime) if the buyer uses the physical book still owned by Adam, in ways that Adam does not consent to.

“A careful study of cause and effect demonstrates that if nobody violates the contract, then his intented aim will be fulfilled.”

Unrealistic. First, suppose Adam reads the book in his living room and across the street, a neighbor with a telescope photographs every page. well here the buyer didn’t “duplicate” it, so he is not in breach, and the neighbor has no contract.

Second, no author just wants to stop mere literal duplication; this is why derivative works are included in the copyright statute and why copying covers more than literal duplication but also the general plot, characters, etc. So suppose the Buyer is discussing the plot with someone, or maybe does a book review. this is not duplication. Yet now the info is out there sufficient to enable third party to make a sequel, which would violate copyright, but would not be any contract breach.

Your example is so sterile that at most it achieves something fairly useless for authors–that’s why they insist that the law cover not only literal copying, but duplication more broadly considered as well as derivative rihgts.

I would say that according to interpretation 2 of the contract Patrick knows he holds in his hands property of Adam and that he is not permitted to do X Y and Z wiht it. So he may not duplicate it.

However, this is not a good hypo. A better one is if the Buyer puts the information on the internet. If Patrick sees it then, he is not committing trespass on Adam’s property because he is not handling the book. And it only takes one person to do this and the genie’s out the bottle. Furhter, as I said, all this only goes to literal copying but I assure you the pro-IP fascists do not want this limited right only. It’s not sufficient for their copyright monopoly schemes and they know it.

Further, if Patrick first saw information in the book before being aware of who owned it, then any information he already got, he is free to use, since he did not get this by trespass.

Reply

Jay Lakner July 27, 2010 at 1:26 am

“Unrealistic. First, suppose Adam reads the book in his living room and across the street, a neighbor with a telescope photographs every page. well here the buyer didn’t “duplicate” it, so he is not in breach, and the neighbor has no contract.”

I’m first only looking at the most extreme and simplified case. If I can find a justification for preventing third parties from duplication in a simple case, then and only then will I bother to look at more complicated examples.

Therefore, let’s assume that the contract stipulates that the buyer may only view the book in an enclosed windowless room. Also let’s assume that the contract stipulates that the buyer may not discuss the book with anyone.

“I would say that according to interpretation 2 of the contract Patrick knows he holds in his hands property of Adam and that he is not permitted to do X Y and Z wiht it. So he may not duplicate it.”

It seems I didn’t make the situation clear enough. My apologies. In my example, Patrick holds an illegitimate copy of the book. I’m asking whether he can duplicate this copy … even with full knowledge of the crime committed to bring this copy into existence and full knowledge of the contractual agreement between Adam and the buyers.

“Further, if Patrick first saw information in the book before being aware of who owned it, then any information he already got, he is free to use, since he did not get this by trespass.”

Like I said, Patrick hold an illegitimate copy of the book but he has full knowledge of who the original author is and full knowledge of the original contractual arrangement between Adam and the buyers.

“However, this is not a good hypo.”

Like I said, I’m presenting a very extreme, yet simplified case. I’m trying to discover whether it is at all possible, even in extreme cases, to justify preventing third parties from copying a book.

Reply

Stephan Kinsella July 27, 2010 at 7:41 am

I’m first only looking at the most extreme and simplified case. If I can find a justification for preventing third parties from duplication in a simple case, then and only then will I bother to look at more complicated examples.

The problem is that the simple case is not enough, since all you need is one way out and then the game is over.

Also let’s assume that the contract stipulates that the buyer may not discuss the book with anyone.

Ahhh, but this is not a use of the book. This is something the buyer does afterwards. This is an attempt to control his actions by contract. This can only be contract type 1 that I specified above, not contract type 2. That is, the buyer can agree to pay money damages to Adam IF HE discusses it with someone. But technically speaking his discussing it with a third party is not any type of trespass (I discuss this in detail in http://www.mises.org/journals/jls/17_2/17_2_2.pdf ).So, this is one huge problem. In fact if buyer has a photographic memory there is no way to prohibit him from writing down a copy of the book using his memory. All you can do is impose a fine on him for doing so. It cannot be regarded as trespass. (This is assuming rights are inalienable, as Rothbard said, and that contracts are merely transfer titles to alienable proper rather than “enforceable promises”.)

It seems I didn’t make the situation clear enough. My apologies. In my example, Patrick holds an illegitimate copy of the book. I’m asking whether he can duplicate this copy … even with full knowledge of the crime committed to bring this copy into existence and full knowledge of the contractual agreement between Adam and the buyers.

Okay, I did miss that. I didn’t read closely enough. I thought it was the same copy C1 purchased. Okay: So Adam sells legitimate copy C1 to Buyer B1. Buyer B1 slaps it on a photocopier and makes bootleg copy C2. Patrick finds C2.Okay, there are two ways now to interpret this.

First, let’s assume that the copying was an actual prohibited use of C1. This means it was like a type of trespass. I suppose–and here I’m being generous in your favor–we could assume that Adam and B1 have various subsidiary title transfers, one of which is something like this: “B1 has no right to use Adam’s book C1 except to read it; he may not duplicate it; if B1 attempts to duplicate C1, this is regarded as trespass, and further, B1 hereby transfers to Adam the title to any bootleg copy thereby produced.”

[one problem here is that B1 could use Patrick’s property to make C2, so that the title transfer back to Adam would not work. But skip this for now.]

Then B1 is in possession of two physical objects, C1 and C2, each of which is owned by Adam. So then Patrick is in possession of C2, and we resume where I left off earlier just as when Patrick was handling C1.

The other way to interpret it is that by making C2, B1 owes money damages to Adam, but C2 is not Adam’s property. In this case, there are no restrictions whatsoever on Patrick [unless we assume that in addition to money damages, B1 agrees to a type of title transfer whereby he retains ownership of C2 and only grants patrick readin-rights, etc., and/or C2 is transferred in title to Adam… but this is like the above case.]

Like I said, I’m presenting a very extreme, yet simplified case. I’m trying to discover whether it is at all possible, even in extreme cases, to justify preventing third parties from copying a book.

I think it is: where the phyiscal object is still owned by the author, and the third party is aware of this. In this case his use of the book in ways not permitted by the owner is arguably a trespass, much like if you rent a Hertz car for normal vacation purposes and then you use it in a way not permitted by the rental contract, this is (or should be) viewed as a type of trespass (misuse) of the other’s property.

I have considered this possible contractual mechanism long ago, and concluded it’s flaccid because there are still too many ways for the information pattern to leak. Once this happens there is no more “hook” to ensnare third parties.I think a better contractual scheme would be to try to get a large swath of society contractually part of some copyright regime. For example all the big media companies band together to do something like this: every DVD, CD, you purchase; every MP3 song you download from iTunes or elsewhere; every movie theater ticket you purchase-they all come with a contract that says: “buy buying this I hereby agree to abide by the rules of the Copyright Regime for life, said rules specified in detail at [URL].”

And then at the site, it tries to set up a set of penalties (damages) if you violate the “private copyright” “rights” of any of the Cartel’s content creators. So, imagine this cartel has signed up 100,000 various creators–artists, musicians, actors, film studios, etc. So every Lady GaGa CD, every Sony movie, etc.–they are all part of this. If you want to EVER buy just one of these services or products of a member of the cartel legitimately–say, go to a movie, buy a licensed Teeshirt, buy a DVD, rent from Netflix, download a movie from pay per view, and so on–you have to agree to the Private Copyright Rules. One you do this (let’s assume the validity of such a contract even though I think it is not obvious that it is valid), now you are stuck. Even if you don’t see Star Wars but are aware of the plot, you can’t make a movie based on the general plot or character because you have now agreed that, IF you do this, you automatically trigger a payment of a million dollars damages to George Lucas. Etc.Instead of Walter Block’s Murder Park, it’s like IP World. The problem is you only need a couple of holdouts who just refuse to partake of any of this cartel’s merchants. Then one of them bootlegs the Lady GaGa song, and puts it on the Internet (assuming the ISP has not also become part of this cartel!). Now, consumer who have not yet signed away their IP freedom by signing the cartel’s contract, can use the bootleg stuff instead. You can imagine the amount of bootleg material available like this, growing over time–just as is happening now if you compare Pirate Bay to legal distribution channels. And thus, there would be less incentive for consumers to join the draconian private IP cartel, and they would get less customers and a reverse snowball would happen; it would shrivel and die.Maybe. And/or, the Cartel would have to impose VERY LIGHT and reasonable restrictions in its IP Contract–maybe it lasts for only a year or five (your membership in it); maybe the IP protection lasts only a year or three; maybe it covers only literal infringing, not all these crazy derivative rights; maybe the damages are reasonable and are tantamount to the price you would pay to purchase the song rather than $10,000 per song as is the case now.

If THIS were the fine print, maybe you would be okay with signing it since it’s minimal and reasonable, temporary etc. Not draconian.I would view this as analogous to the media companies now, lowering the price of song downloads to a nickel, movie downloads to a buck, book downloads to fifty cents, and so on — to rates at which they make about the same profit per copy sold as they did in the past with physical media, assuming increased volume because of the lower price — in effect passing on the savings of the omitted physical media cost to the consumer. If media companies did this now, it would gut the need for piracy. But they are too stupid and dinosaur like to do this. So they feed piracy.

Anyway, I do imagine that various cartels like this would be attempted in a free market and they should be permitted to try–antitrust law should not stop any such collusion, of course. I just don’t think it would work, in the end, to set up any kind of society-wide draconian IP system like we have now. It would have to be limited in reach, time, duration, scope, and penalty, to have a chance of having any traction. but if it was, it could possibly form a little bubble where the content companies make some money off of the set of consumers they have brought into this bubble. I just think it’s better to do it by the power of attraction, like google does with its ecosystem or like Apple does with its ecosystem, say, than by strong arm tactics.

I’ve thought about all this a long time but haven’t written much about it yet since this is so speculative. Thoughts?

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