As I noted in a previous post, the 3^rd Adam Smith Forum was held earlier this month (Nov. 12, 2011) in Moscow. This event was organized by the Center for the Philosophy of Freedom, the Libertarian Party of Russia, and others. The Chairman of the ASF Steering Committee was economist Pavel Usanov, head of the Hayek Institute for Economy and Law, and Andrey Shal’nev, head of the federal committee of the Libertarian Party of Russia, was its co-chairman. I was invited to speak but could not attend in person, so my 47-minute speech “Why Intellectual Property is not Genuine Property” was presented remotely, with Russian subtitles. It is below, along with the original version and the English transcript plus the Russian translation, which was prepared by Maxim Tulenin, head of the Moscow branch of the Libertarian Party of Russia. Pictures from the event are here. The program with the list of speakers and topics is here (English translation).

Tulenin told me after the event:

I’m head of the Moscow branch of the Libertarian Party of Russia and I did the translation of your very consistent and convincing video lecture into Russian. Let me thank you, on behalf of the steering committee, Andrey Shal’nev and the participants for your contribution to the Forum, it was a great success with the audience, especially with the younger generation. I also tip my hat to you for the analytic case you’ve made against “intellectual property” because it has provided me with a pattern of argumentation suitable for my own Internet debates.

One of the participants in the Forum provided a brief overview of my talk (rough English translation). The Forum’s promo video excerpt, with Russian subtitles, is below, followed by the subtitled version presented at the Forum; the original version of my speech (without subtitles) follows these. The audio file is here. The English transcript is below, as is the Russian translation which was used for subtitles for the version presented at the Forum. The powerpoint presentation I used is also streamed below.

Stephan Kinsella speech at IIIrd Adam Smith Forum from ivangoe on Vimeo.

Why “Intellectual Property” is not Genuine Property

Stephan Kinsella

Libertarian Papers, C4SIF.org

Adam Smith Forum

Moscow

November 12, 2011

(Edited transcript)

Abstract: Intellectual property rights, or IP—primarily patent and copyright—has long been viewed as a legitimate type of property right by libertarians and other defenders of capitalism and free markets. I argue that IP rights are not genuine property rights, and that these laws should be abolished. This issue is relevant to Russia and Adam Smith Forum members because of the pressure by the US on Russia and other countries to adopt western-style patent and copyright law. But the west has attempted to export many other laws and policies to other nations, many of which are not compatible with a free market, such as antitrust (competition), antibribery, tax, narcotics, and central banking laws and practices.

In this talk I provide an overview of the nature of patent and copyright, followed by a discussion of the nature and purpose of law and property rights in a world of scarcity. I argue that property rights apply to scarce resources only, to permit such resources to be used peacefully, productively, and cooperatively as a means of action. However, property rights make no sense are in fact perverse and undermine genuine property rights when the law attempt to apply them to information, ideas, and knowledge. Property rights must be granted in scarce resources and only in scarce resources if we are to have prosperity, freedom, and progress in science.

In fact, state IP rights are not genuine property rights, but are instead neo-mercantilist monopoly grants of privilege that protect favored recipients from competition. This enriches the patentees and copyright holders, and the state, but at the expense of consumers and competitors.

I also provide an overview of the history of opposition to IP law, identifying four key historical phases beginning around 1850.

I conclude the talk by observing that IP reform cannot work; the only solution is complete abolition of patent and copyright.

 

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Good evening.

This is Stephan Kinsella. I am speaking from Houston. I would like to say good evening, or good morning, in Moscow at the Adam Smith Forum. I would like to thank Andrey Shalnev, the head of the steering committee, for this invitation to speak remotely. I am sorry I cannot be there in person, but I hope that you will find this video presentation and speech of interest.

My name is Stephan Kinsella. I am a patent attorney and a libertarian writer in Houston, Texas, in the United States, and editor of the journal Libertarian Papers.

I have been a practicing patent attorney since 1994. I have been writing in opposition to patent and copyright law since about 1995. The topic of my speech today is “Why Intellectual Property is not Genuine Property”.

I would like to emphasize that intellectual property has been viewed as a type of property right for over a century now, as part of the western or capitalist free market system.

Now, I did mention that I am a libertarian. And in particular, I am a Rothbardian Austrian economist following libertarian principles, and an anarcho-capitalist. And as a libertarian and an Austrian, I am in favor of property rights and in free markets and in capitalism, if it is rightly understood. I will say I am not in favor of capitalism in the sense of corporatism or the type of cozying up between Western big corporations and the state as we see here in the United States in the West nowadays. That is a corruption of the ideal form of the free market economy or capitalism. But I am in favor of property rights.

So the first question might be: why is someone who is in favor of free markets and property rights, and a patent attorney himself, which is me, oppose patent and copyright law, so-called intellectual property law? In this talk, I would like to explain why I believe that intellectual property, primarily patent and copyright law, are not genuine property rights and why these laws actually should be abolished and why the Western style, the American type, of patent and copyright should not be adopted in China, Russia, India, and other countries in the world.

By the way, I have a presentation which I have done which I will have sent to the Forum. I don’t know if they will show it along with this speech, but you are free to access it from my website at C4SIF.org (Center for the Study of Innovative Freedom), the site for my research center. Or at my personal site: StephanKinsella.com.

Let me explain quickly one reason why I think this is particularly relevant–this topic of justifying or discussing the legitimacy of intellectual property law–to Russia and the Adam Smith Forum itself. These issues are of particular interest to the Adam Smith Forum because the members of the Adam Smith Forum are also advocates, like Austrians, of free markets and property rights. Also because the Western powers, led by the United States, are continually pushing emerging powers in the former socialist countries, like Russia, to adopt United States or Western style IP law, particularly patent and copyright. They have done this through the WIPO, through the WTO (World Trade Organization), the United Nations, and also through recent and continuing copyright and patent treaties and trade agreements, like the recently signed ACTA (Anti-Counterfeiting Trade Agreement).

So let me make it clear. As a libertarian, as a free market and a property rights advocate, we should not make the mistake of equating the American government’s laws and policies with a free market order. And therefore we should not believe that just because the American state, our government, proposes or pushes a given law or policy and tries to urge other countries to adopt it, does not mean this is actually a capitalist or a free market or a libertarian property right. In fact, it is a mistake to equate the American state with the American economy.

The American economy is at least somewhat free market even though it is a mixed economy, but the state itself, like all states, is inherently socialistic. In fact, you can think of many examples of policies and laws that the West has paternalistically pushed on other countries. We have tried to export our own laws and policies to other countries. We have been somewhat successful in doing this, unfortunately. These policies would include income tax withholding–which actually was adopted during World War II in the United States at the urging of the “free market” economist Milton Friedman, which I believe he admitted later was a mistake–the American version of anti-trust law, or so called competition law, anti-bribery laws… The American state pushed this law called the Foreign Corrupt Practices Act onto the economy in the 1980s, I believe, which prohibited private bribes by American companies to private companies overseas; this is an un-libertarian and illiberal law, but it hurt American businesses compared to their European and other counterparts who were not prohibited from engaging in these customary local bribes. In fact, in some countries you can even deduct that from your taxes as a legitimate business expense. Instead of withdrawing this harmful law, the United States has twisted the arms of other countries into adopting a world-wide treaty on corruption and bribery to get other countries to impose similar restrictions on their citizens.

Also, the American style of central banking, the Federal Reserve, was pushed on Canada in the 1930s and even Russia after the fall of the USSR.

The United States has exported its policy on how we own natural resources, say to Iraq. In the domestic United States, private land owners are the owners of the minerals and oil and gas under their land. In most of the rest of the world and in the federal government’s territories in the offshore Continental Shelf (OCS), the federal government–the state–assumes ownership of these natural resources and then grants leases to companies that come in and explore. The state, of course, takes its cut. In the BP oil disaster in the Gulf of Mexico in the last year, the federal government was the actual landlord and BP was just a lessee. But you don’t hear that pointed out. You hear BP being blamed. In any case, in the so-called “liberation” of Iraq, of course, the Iraqi government assumes ownership of the minerals, just like the federal government here does on our Offshore Continental Shelf.

And or course US drug laws are exported around the world. We have created a horrible situation in Mexico because of this, which has exacerbated immigration problems. There have been tens of thousands of murders. If Mexico or some other smaller country were to legalize drugs–as they should–then the U.S. would no doubt crack down on them for that.

There is the idea of managed trade. Instead of just having free trade, we have “managed trade” through NAFTA and other trade agreements, which perpetuates the idea of mercantilism.

And we had the Marshall Plan after World War II which exported some of our policies and laws onto Europe.

Finally, we have the American ideal of democracy itself which is not so good of an idea if you would just read some of the writings of Hans Herman Hoppe, such as his book, Democracy: The God that Failed.

The point here is you cannot assume that just because the supposedly capitalist United States government is advocating a law—such as patent and copyright–that it is really compatible with capitalism or private property rights or the free market. If we are going to step back and take another look at patent and copyright … And we should because there are obvious abuses and excesses and outrages that we see on a day to day basis; if you just turn on the Internet you will see Android and Apple smartphone and Microsoft suing each other in patent lawsuits; you will hear of hundred billion law suits awarded to patent trolls. You will see people being shut down in their attempts to make new music because of copyright. There seems to be something wrong. We have to ask: Are these rights legitimate? We just need to increase the enforcement mechanisms to make enforcement more efficient, maybe increase penalties, maybe put more people in jail for violating copyright and patent law. Or: Do we need to reevaluate these policies and maybe tone down their strength or maybe even abolish them altogether?

To do that, what we would need to do, especially as liberal economists and as liberals in favor of free markets, individual rights, due process of law–we need to ask whether patent and copyright are legitimate types of property rights. To do this, we need to understand what is the purpose and function of property rights in general? We need to understand what patent and copyright are, and then what property rights should be.

So let’s talk briefly about the nature of patent and copyright. There are many types of so called intellectual property, in addition to patent and copyright. These are just two types. They are the main two types, the most evil two types, the most costly and harmful two types. They are the focus of my talk and I believe should be the main focus of libertarian opposition to these types of laws, but there are other types of intellectual property as well. The other two traditional types would be trade secret and trademark. Both of those types of laws are more legitimate than patent and copyright, but we don’t have time to discuss that today. There are also other, newer types of IP, such as moral rights, and semi-conductor mask work rights which protect the way integrated circuits are laid out. There are also some newer ones like boat hull designs. Also, the entire law of defamation, which includes libel and slander, basically protects what is called reputation rights. That should also be viewed as a type of intellectual property, I believe, and it is also illegitimate.

But today, let me focus on patent and copyright. A patent is a state grant of a monopoly privilege to a patentee, somebody who applies for it, that gives them exclusive rights in an invention. An invention is a useful and new and non-obvious machine or composition of matter or process or method, for example, a mousetrap, having a useful new design, or a computer, or the functional aspects of software. Think of it on the flowchart level, a method, how you do something, where software performs a set of steps or pharmaceuticals which are compositions of matter. All these things are types of practical devices or processes. When you apply for this, the government grants you a monopoly privilege. You are the only one who can perform this invention, and make or use or sell it, for about 17 years, roughly 17 years.

But it has to be applied for. You don’t get a patent unless you apply for it. It is important to recognize that independent invention is not a defense. What that means is you can be sued for infringing someone’s patent even if you didn’t copy it from them, even if you didn’t learn about it from them, even if you independently invented the idea yourself. What this patent right does is: it gives the patentee the right to go to court to extract money damages, sometimes called “royalties,” from an infringer or they can even get the court to issue an injunction forcing the competitor not to make or use a given product or process. Basically, it protects a patentee from competition by making it more difficult for others to easily copy its product. The example I gave earlier is the smartphone wars where Apple and Microsoft are suing a lot of Android manufacturers, like Samsung. And now Samsung is countersuing Apple for infringing its patents with the iPhone. They are getting various injunctions in Australia and Europe and other countries to try to stop each other from even introducing their own competing product.

Copyright is another state granted monopoly which is granted to someone. It covers their original expressions or creative works like novels or paintings or movies or music or even software code. I mentioned patent covers the functional aspects of software like the block diagram, flow chart level, whereas copyright would cover the written code because that is like writing a novel or poem. It has an expressive element.

Copyright lasts nowadays much longer. It used to last only about 14 years which, coincidentally was two times the term of a seven-year apprentice. The idea was that the artisan could be protected for the term of two of his apprentices, to train them in making his new idea. Then he would face competition. But before then he was protected. That 14 year period has been extended gradually over the last 200 years to the point now where it is 70 years after the life of the author. If you write a novel today, then it will last until your death and then 70 years later. Usually they last more than 100 years. We have an extremely long copyright term.

And unlike patent, copyright is automatic. That is, you get it just by writing down your idea on a sheet of paper. The second you do that you have a copyright on that, at least in the United States system, and I believe it is similar in most other systems in the world because of treaties that we have all agreed to that require us to have similar basic provisions that are similar in our patent and copyright laws.

Contrary to popular assumption, you cannot “copyright” something. Copyright is not a verb. It is a noun. In other words, you can’t take an affirmative step to get a copyright. You don’t have to apply for it. You do not have to put a copyright notice on your work to have a copyright. You don’t have to register the copyright to have a copyright. Most people do not realize this.

So it is unlike patent in that way. When people say, well, if you are against copyright why did you copyright your article? Well, I didn’t copyright my article or my book. The government gave me a copyright and there is nothing I can do about it. The patent system is an “opt in” system. You only get a patent if you file for a patent application. A copyright is not opt in. It would be better if it was opt in where you had to affirmatively file the registration application to get a copyright. But it is not even opt out. In other words, you can’t even sign something that gets rid of your copyright. The government will not let you get rid of your copyright. So I am going to have a copyright in my novel for the remainder of my life no matter what I do, even if I write on the front of it, “I hereby get rid of my copyright”. That simply is not effective. It may serve as permission for others to use it without me suing them, but the fact is I still own a copyright.

What copyright does is, like patent, it allows someone to be free of certain types of competition. It lets you censor other people or charge them a fee to make songs or movies based upon your novel or sequels of your novel or a painting based upon your novel and so on. This is what these laws do. They are grants of monopoly privilege by the state that allow you to petition the state courts to use force against people who are doing things with their property that you do not like.

Let’s step back and talk about the purpose of property and rights and laws and even government.

As an anarchist, I think government is inherently illegitimate, but even in a private free society with no state you would have laws, but only certain legitimate justified laws. If we have a state, then the question is which types of laws promulgated and enforced by the state are legitimate? Let’s step back and think about what in the world is it that gives rise to the need for laws and property rights?

There is something some of you may have heard about. It is called the Land of Cockaigne. This is a mythical land of milk and honey or infinite abundance or plenty, theorized by the Middle Age poets. It was just an idea of a land where you could have anything you wanted at any time with no effort. There was no scarcity, no shortages. Life is perfect and idyllic and there is infinite abundance and the ability to satisfy any desire at any time.

Obviously, we don’t live in the land of milk and honey, or the Land of Cockaigne. In our world, in the real world that we all live in, there is scarcity. What this means is you can’t just have what you want by wishing for it. It also means that if you obtain one of these scarce resources in the world–a banana, a stick, an apple, a tract of land, a log, a bucket of water–then other people cannot use that item at the same time as you. That would give rise to conflict. My use of a scarce resource excludes your use.

This is where we get into the Austrian or Misesean, Ludwig von Mises’s conception of Austrian economics. His view of looking at the basic concept of economics is what he calls praxeology.

That is the science and the logic, the study of human action and the implications of human action. He looks at human action in a fundamental way. What does it mean for humans to act in this world of scarcity?

It means that we have some dissatisfaction or we expect some dissatisfied state that will come to occur in the future if we don’t do something to change it, if we don’t interfere with the state of things. In other words, every human action is an attempt to achieve an end, to achieve greater satisfaction, but the action is the employing or the use of these scarce means to achieve that end. So we have to select a means that will causally achieve our end. This is exactly why we have to use these scarce means. This is why knowledge is important, or science, which is the systematic acquisition and categorization of knowledge. We need to have both property and knowledge to have successful human action. You need property because you have to employ these means. If you are not going to be fighting over the means with some other contestant, some other person, who wants the means, the property rules say who gets to use that means so that the means can be used by one person, the owner, productively to achieve their ends.

We also need knowledge to tell us what ends are possible, what things we should strive for, what might make us more satisfied and also to tell us what types of means will achieve our ends. This is knowledge of causal laws. This is why we need to have causal or scientific knowledge. It informs our actions. We need property rights so we can use these means that our knowledge has told us we need to use.

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The basic view of the libertarian and the free market advocate is that we have to have both science and property. They are like the twin pillars of human prosperity and civilized, peaceful, cooperative life. We need property to let resources be used peacefully and productively. We have to assign owners to things. This is the essence of the free market order. We, of course need science and the right to learn from each other and to discover new things and to add to our base of knowledge so that we can act efficiently and choose the right means as part of our action. This is actually the libertarian vision of the free society. It is one where property rights permit men to use resources productively and cooperatively without conflict and where science informs us how to use it.

Let’s think about how we acquire knowledge as part of human life because this acquisition of knowledge is crucial. We start out, more or less, with a tabula rasa, with a blank slate. There are many ways that human beings acquire knowledge, the knowledge that informs our human actions, that guides our human actions, the knowledge that tells us about causality and causal laws, the knowledge that we use to choose what actions to perform, what means to employ to achieve our given ends. From just experience in living, from observation of others, just from being immersed in a culture and learning from what has been developed, what has gone before. There is, of course, education and teaching informally by parents or even formally by formal education and instruction and by apprenticeships and even by employment. We learn from our jobs and also, of course, in a systematic way by the scientific method and empirical testing.

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The free market is also a source of knowledge. Entrepreneurs are always incentivized and motivated to try to learn better ways to use resources to lower their costs and to have better products and to attract customers to make a profit. When they do this, the consumers learn from this and benefit from it and their competitors learn, too. The competitors then try to emulate and copy and compete and sometimes improve. Then the original innovator has to improve even more. Everyone is better off. There is an unceasing striving for an ever increasing innovation, in improvement, in the desire to get profit, but in the face of always lowered profit because of competition, the threat of competition. A free society, a free market, a private property based order, has competition and it has learning and it has emulation. These are good things, not bad things.

Let’s now return to patent and copyright. The basic problem with patent and copyright, as state granted monopoly privileges, is they are explicitly designed to protect people and companies from competition. As I mentioned, the holder of the patent or copyright can use state force against potential competitors. It is basically a completely confused notion which is an outgrowth of the mercantilist idea–which were anti-competitive–of the last several hundred years.

It is also based upon the confused idea that it is sometimes wrong to learn or to actually use information in deciding how you want to use your own property, that is your own scarce resources that you have property rights in, that it is wrong to copy or emulate or to compete in some context.

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What it does is it uses the language of property rights in trying to say there are property rights by virtue of these laws in information, in patterns, and in designs. But remember: the entire function of property, the purpose of property, is to address the problem of natural scarcity in the real world that we live in, not the world of Cockaigne. Ideas and knowledge and recipes and designs are just knowledge that we have. Unlike scarce resources, they are not scarce. They can be used over and over and over again, infinitely, and they can be used at the same time by an infinite number of people without diminishing the other people’s ability to do the same.

For example, if my neighbor and I both want to make a chocolate cake, then we cannot use the same mixing bowl and wooden spoon and eggs and flour and ingredients. These are scarce resources and we each need to own our own separate ingredients and capital facilities to make the cake in.

But we can both use the exact same recipe at the same time, even if one of us learned it from observing the other. There is no conflict in the use of knowledge. Patent and copyright try to impose scarcity on things that are non-scarce. It tries to make them more scarce.

This is perverse, because the free market is doing the opposite when it comes to actual scarce goods. Things that are in short supply, or not in sufficiently abundant supply, like food and energy and houses and shelter and clothing, are in natural short supply or scarce supply, but the free market strives to make them more abundant in the face of scarcity. We are trying to

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overcome this unfortunate fact of scarcity. But we don’t have this problem with knowledge. In fact, we have a growing base of knowledge in society and civilization which we can draw on. In fact, it is good that we have this. It is good that we have a growing base of knowledge.

So the fundamental problem with IP is that because you really cannot have property rights in non-scarce things, they are always actually enforced against scarce things. IP is just a disguised way of undercutting real property rights. Remember, these real property rights were put in place as the civilized mechanism to permit productive, peaceful and fair and just and efficient use of these scarce resources. When IP rights are introduced, it undercuts these rights.

What do I mean by that? An IP right really gives a third party who holds the IP the right to control other people’s scarce resources. For example, in the recent case, the American singer Beyonce’ has been sued by a Belgian dancer because Beyonce’ used dance moves in a music video that are similar to the ones that were shown in an earlier video by the Belgian dancer and the Belgian dancer’s group. If the Belgian dancer prevails, then she will either get a court order telling Beyonce’ that you cannot use your body in this way, or that will take some of the money from Beyonce’s bank account, which she owns, and give it to the Belgians.

Similarly, Apple, just the other day, got a patent on using a gesture to unlock the iPhone or smartphones. If this patent is upheld and if they are successful in suing someone, they can prevent other makers from making their own smartphones with that gesture. Basically, it gives Apple a veto over how other people use their own property. A veto right is a type of property

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right. It is called a negative servitude in the civil law. What this means is that the government, by the law, has given some third party a property right in someone else’s property. That is a redistribution of property rights.

This is actually the reason that libertarians usually use to object to many laws like the minimum wage or drug laws or taxation or conscription or censorship or pornography laws. There we have the government stepping in and telling you that you cannot use your own body or property in certain ways. We object by saying what business is it of yours how I use my property? You have no right to veto a use of my own property. You have no right to penalize me, either monetarily or with a jail sentence, for doing something with my property that is not harming anyone else. Yet, this is exactly what patent and copyright do.

Patent and copyright also undermine science, the very endeavor of science, in a lot of ways because it restricts the flow of information. It restricts how people can use information. It distorts the structure of research and development by making companies find it more profitable to engage research and development dollars in patentable areas as opposed to unpatentable areas. Fundamental physic equations cannot be patented because they are too abstract. So you have more research, than otherwise would be, flowing into practical gizmos and devices.

Patent law also discourages innovation and research in areas that are heavily patented because the newcomer to the market, for example, is afraid that if he makes a new product in this area, like smartphones,

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he will be unable to even sell his smartphone because he will be sued by the dominant patent holding companies. So he doesn’t even go into that line of business, so, of course, he doesn’t invest in research and development in it.

Copyright also leads to distortions of the whole publishing industry: closed business models, difficult to find books and papers online. They are locked up by these publishing houses that rely upon the copyright model.

None of this should be surprising because the origin of patent and copyright actually lies with mercantilism, going back to the Statue of Anne in 1710 which was one of the early major copyright statues and the Statute of Monopolies in 1624, both in England, which was one of the early patent laws. At the height of mercantilism, in the 1500s, in England, almost every good you could imagine was covered by a monopoly that the monarch had granted to different guilds or companies in exchange for favors and maybe helping to collect taxes, such as monopolies on playing cards, leather, iron, soap, coal, books, and wine.

These companies did not invent these things. They were just granted the privilege to be the only one who could sell these things. They even enlisted the state to perform warrantless searches and seizures of their competitors to make sure that they were not violating these monopolies. In other words, along with these state monopolies during the height of mercantilism, came a lot of intrusive searches and seizures and the collaboration between the state and the industries that had the monopolies. It harmed the consumers and it harmed the competitors. France even tortured

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and executed people. They “broke on the wheel” people who had pirated fabric designs that the state had granted monopolies in. The wool exporters had the monopoly on wool exporting in England. They would collect the taxes for the king in exchange for this monopoly.

We clearly see this as not compatible with the free market and with competition and with private property rights and with capitalism; but this is exactly the situation we have now. We have mercantilism under another name: intellectual property. We have the movie industry and the music industry in the United States for example, the RIAA and the MPAA, demanding warrantless searches to stop DVD and CD counterfeiting or “piracy,” as they call it. We have private companies helping the Immigration and Custom Enforcement agency in the U.S., the ICE, seize domain names accused of cybersquatting. We have ISPs collaborating with the Obama administration and with content providers to do the same things. So we have a lot of the same things happening now as a result of copyright and patent.

We also have an unholy alliance between patent holders and copyright monopoly holders and the state. Microsoft, to take an example, is a profitable, successful company which has provided valuable services and products to people, but its profits are undoubtedly much, much higher than they would have been in a free market without copyright because of their ability to use copyright to stop competition or pirating or counterfeiting of their operating system which has allowed them to charge monopoly prices for this. So Microsoft, over the last few decades, has

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accumulated hundreds of billions of dollars of profits that they wouldn’t have otherwise had. Then they are able to use these profits to, number one, pay politicians in Congress in the form of bribes—“campaign contributions”–or even in the form of collected taxes. The government benefits from this by legal bribes and by taxes. They grant a monopoly to Microsoft. Microsoft makes higher than normal profits. Some of that is returned back to the state in the form of bribes and taxes. The state and its monopoly grantees benefit. The consumers don’t, the competitors don’t, and the free market suffers.

Also, Microsoft uses these profits to acquire patents which is another form of monopoly. So it uses its copyright profits to accumulate a huge patent war chest. Then they use that patent war chest to make even more monopolistic profits by suing competitors like Android smartphone makers, like Samsun. They are already extracting several dollars from every sale of a competing Android handset because of their patent threats.

This system just feeds back on these entrenched, oligopolistic industries. The state laws actually create oligopolies because it makes it harder for smaller companies to compete. Then the state perversely comes in and introduces anti-trust law, claiming it needs to be our savior to make sure there is competition in the market, to prevent monopolies or oligopolies from forming in the free market–even though the very reason that these oligopolies form, the very reason that we have a lack of competition on the market, is because of monopolies the state gave to these companies in the first place in the form of patent law, and other state regulations. So we still have mercantilism. It is just institutionalized

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and democratized now and it is not called mercantilism anymore.

Let’s make it clear. There are some people who oppose IP from the left, or from an anti-property point of view. They are mistakenly accepting the same mistaken package deal or notion that the pro IP people do. Both IP advocates and leftist opponents of property accept the idea that intellectual property is a legitimate type of property. Now this is their mistake. They are both wrong. The people that are in favor of patents on capitalist grounds are wrong to think that we should have IP because it is a type of property right. It is not a type of property right. The people who are opposed to IP because they are opposed to property rights are wrong to oppose property rights.

The correct point of view, the libertarian point of view, the free market and Austrian point of view, is to favor property rights, but to recognize that state granted monopolies, like patent and copyright, are not property rights. IP rights undercut property rights.

Let me mention quickly where the libertarian landscape is when it comes to this issue. There has always been opposition to these monopolies of course. In fact, this is one thing that led to the Statute of Monopolies of 1624 in England because of these abuses that I pointed out earlier. The Crown was granting so many patent monopolies to the guilds and to merchants and to supplicants and to court cronies that it just got obviously out of hand. So Parliament banned most of these patents with the Statue of Monopolies; but they made an exception for patents of novel inventions. This is why we still have patents today on inventions because Parliament only banned 95% of monopolies and left one small type in place. Unfortunately, that has grown into the patent system we have now.

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In the modern era, after most of the industrialized world has finally adopted sort of an American style patent and copyright system, since the early 1800s let’s say, we can identify four historical phases or movements to abolish patent and copyright.

The first one we can identify is roughly the second half of the 1800s, from 1850 to 1873. At that point in time, some countries still had not adopted patent systems, like Switzerland. There was opposition to this by the free trade people, people that were in favor of free markets and free trade saw these policies and laws as monopolies and they opposed them. What happened was in 1873 there was a depression caused by the Panic of 1873, a large global depression. This caused an increase in nationalism and a reduced opposition to tariffs and protectionism: free trade became less popular because of the emergency of the depression. This made the opposition to patents evaporate because it was part of the free trade movement. In other words, a government-caused recession caused free trade to go out of favor for a while which caused opposition to patents to evaporate. So the final holdout nations, like the Netherlands–which had previously abolished patents, because of people seeing what a disaster it was–caved in, and Switzerland never had a patent system and they went ahead and adopted patent systems. The whole world joined on the bandwagon. So the first movement was against, but a depression ended it.

Then in the late 1800s, after this, there was vigorous debate among the individualist anarchists like Lysander Spooner and Benjamin Tucker. Lysander Spooner was in favor of intellectual property, but Benjamin Tucker rejected IP, based on similar arguments I have given now. He

(0:41:43)

had a very clear vision on this. But this was a small group of individualist anarchists, so that opposition didn’t go very far.

In the meantime, during this debate by the free market economists, the defenders of these patent and copyright laws, such as in France in the late 1700s, right before the turn of the century, started using the language of property rights to describe these monopoly privileges because they knew that the concept of monopoly was not popular with economists and even with the public. They started calling them property as basically a propaganda ploy, even though, of course, they are not property.

In the third stage of opposition, roughly from the 1930s to 1995 (the dawn of the Internet), there was an increasing amount of skepticism about IP by libertarians and proto-libertarians and free market economists. Arnold Plant, an economist in 1934, and Fritz Machlup, an Austrian economist in the 1950s, had serious reservations about the empirical claims made for IP: that it stimulates innovation and creativity. There was a great deal of skepticism of the empirical case for IP by these and other free market economists.

Then in the latter half of the twentieth century, more of the explicit libertarian thinkers like Hayek in 1948, Murray Rothbard in the 60s, Leonard Read, the founder of the Foundation for Economic Education in the United States, and others like Wendy McElroy, Sam Konkin, and Tom Palmer in the 80s started seriously questioning the compatibility of patent and copyright with libertarian

(0:43:39)

property rights. They made great arguments. A lot of their arguments are the type I have repeated today, but they did not have a certain urgency because this was the pre-Internet age.

Around 1995, when the Internet arrived on the scene, a lot of the patent and especially copyright abuses became much more exacerbated and more common. It started getting really out of hand and everyone is more aware of this now because we can see news stories on the Internet on a daily basis almost of one crazy patent or copyright outrage.

In the last fifteen years there has been an increasing recognition among modern libertarians, especially principled libertarians, more radical types, Austrian types, and the anarchist types, who are almost completely against intellectual property. You can see a lot of this on the resources page of my website, C4SIF.org/resources. In fact, I would venture to say that most libertarians of this type now are anti-IP. The ones that are pro IP tend to be minarchist, or worse, classical liberals and usually utilitarians who are not very principled. The funny thing is the utilitarians have yet to prove their case. They have yet to show that evidence does back up the empirical case made for IP.

I am getting close to my conclusion. In getting close to that, let me say that we should not say that the patent or copyright system is broken or in need of reform. It is not broken. It is not in need of reform. It is need of abolition. It is not really broken. It is doing exactly what it is designed to do. It is giving competitive advantages to government-favored applicants and holders. So the problem is not software patents. Getting

(0:45:57)

rid of software patents won’t solve the problem. The problem is not big corporations. The problem is not junk patents. Nor are patent trolls the problem. The problem is not that the copyright term is too long. It is too long, but even it it were 30 years, it would be too long, it would be a problem.

We have to recognize, as libertarians, as principled advocates of freedom, of science, of human knowledge, of information, of competition on the free market, of justice and private property rights, that patent and copyright are completely, 100%, antithetical to the purpose of property rights. It undercuts property rights. It impedes science and it impedes learning and free expression. Science and knowledge and property are designed to overcome the problem of scarcity and to permit human prosperity. So to favor something that undercuts these is to oppose human prosperity and human freedom and human learning and ideas. I would say don’t mend it, end it.

Thank you very much. I hope you have enjoyed this. Feel free to email me with any questions. As I said, you can download the slides for this from my website, www.stephankinsella.com. Thank you and good afternoon.

Russian translation:

?????? “???????????????? ?????????????” ?? ???????? ??????????????

?????? ????????

Libertarian Papers, C4SIF.org

Adam Smith Forum

??????

12 ??????, 2011

(Edited transcript)

?????? ?????.

???? ????? ?????? ????????. ? ???????? ? ???????? ? ???? ???????? ??????? ?????? ??? ??????? ???? ?????????? ?????? ????? ????? ? ??????. ???? ????????????? ?????? ????????, ????? ???????????, ?? ??? ??????????? ???????? ?????????. ????, ??? ?? ???? ?????????????? ?????, ?? ???????, ??? ??????????? ????????? ??? ??????????.

???? ????? ?????? ????????. ? ???? ????????? ???? ? ???? ?? ??????????????? ???? ? ????????, ???? ?????. ? ??????? ??????? ????????? ????????? ??????? ??? ?????? ? ???????? ??????? Libertarian Papers.

? ??????? ????????? ??????? ? 1994. ???????? ? 1995 ? ???? ??????, ???????????? ?????? ?????????? ? ?????????? ?????. ???? ???? ??????????? ?????? – «?????? ???????????????? ????????????? – ?? ?????????????».

???? ????????, ??? ????? ???????????????? ????????????? ??? ????? ???????? ??????????????? ??? ????????????? ?????????????? ?????, ??? ????? ????????, ??? ????????????????? ??????? ?????????? ?????.

??? ? ??? ????????, ? ?????????????. ?????? – «????????», ????????????? ????????, ???????????????? ??????????????? ?????????, ??????-??????????. ??????? ? ????????? ???? ????????????? ? ?????????? ????? ? ???????????, ??? ??????? ??????????? ?? ?????????. ? ?? ????????? «???????????» ??????????? ??? ????????????? ??? ????? ????? ???????? ????????? ???????????? ? ????????????, ??? ?? ??? ????? ? ??? ? ?????? ?? ??????. ??? ?????????? ?????? ?????????? ?????, ??? ???????????. ?? ? ???????? ?? ????? ?????????????.

????? ?????????? ??????: ??? ??????????, ??? ?, ????????? ?????????? ????? ? ???? ?????????????, ????????? ????? (!), ???????? ?????? ??????? ? ???????? ? ????????? ?????, ??? ???. «???? ???????????????? ?????????????»? ? ???? ?????? ? ????? ?? ?????????, ?????? ? ??????, ??? ???????????????? ?????????????, ? ?????? ??????? ??????? ? ????????? ?????, ?? ???????? ?????????????? ??????? ? ??????????? ?????? ?????, ?????? ??????????????? ?????? ????????? ?? ????????, ? ?????? ???????? ?????????, ????????????? ?????????? ???????????????? ???????????? ? ?????, ??????, ????? ? ?????? ???????.

??????, ? ?????? ?? ?????? ???????????. ?? ????, ????????? ?? ?? ? ???? ????????????, ?? ?? ??????? ????? ?? ?? ???? ????? C4SIF.org (Center for the Study of Innovative Freedom), ??? ???? ????? ?????????????? ??????, ???? ?? ???? ?????? ?????: StephanKinsella.com.

????????? ? ???? ?????? ?????????, ?????? ? ??????, ??? ?????????? ??? ???????? ? ???????????? ??????? ?? ???????????????? ????????????? ????? ??? ?????? ? ??? ??????. ???????? ??? ?????? ??????? ? ???, ??? ????????? ??????, ??????? «??????????», – ?????????? ?????????? ????? ? ???? ?????????????. ? ????? ??????, ??? ???????? ??????? ?? ????? ? ??? ????????? ????? ?? ????????????? ?????? ??????? ????????????????? ??????, ????? ??????, ????? ?? ???????? ???????????? ??? ???????? ????????? ? ??????? ?? ???????????????? ?????????????, ???????? ? ???????? ? ?????????. ????? ? ??????? ????, ????? ???, ???, ? ????? ??????????? ???????? ? ?????????? ????????? ? ???????? ?????????? ? ?????????, ????? ??????? ???????????? AT? (?????????????? ????????? ??????????).

??????? ??????????. ??? ?????????????, ??? ?????????? ???? ????????????? ? ?????????? ?????, ?? ?? ?????? ??????? ???? ????????? ????? ???????? ? ????????? ????????????? ????????????? ? ?????????? ???????? ????????. ??????? ?? ???? ??????, ??? ????? ????? ??? ????? ????????, ??????? ???????????? ????????????? ?????????? ? ???????? ???????? ?????? ???????, ????? ????????? ? ??????????????????, ?????????? ????? ??? ???????????? ????? ?????????????. ???????? ????????????? ???????????? ??????????? ? ???????????? ?????????.

???????????? ?????????, ????? ? ?? ?? 100%, ?? ???????? ????????, ?? ???????????, ??? ? ????? ???????????, ??????? ????????????????. ?? ????? ????????? ???????, ????? ????? ?????????????? ????????? ?????? ??????? ????????? ? ??????. ?? ???????? ?????????????? ???? ?????? ? ???? ????????. ? ?????????, ???????????? ???????. (05:25) ????????, ???????????? ?????????? ?????, ???????? ? ??? ?? ????? ?????? ??????? ????? ?? ????????? ?????????? ?????????? ????? ??????? ????????, ???, ??? ?? ????? ???????, ???? ??????? – ???????????? ?????? ???????????????? ????????????????, ??? ???. «???????????? ?????», ?????? ?????? ?????????????? … ???????, ? 1980-? ??????????? ???????? ????????? ????? ? ????????????? ????????? ?? ????????, ??????????? ???????????? ????????? ??????? ???????? ?????? ???? ??????? ?????????? ?????????; ??? ??-??????????????? ? ??-??????????? ?????, ?? ?? ?????? ?????? ????? ???????????? ?????????, ? ?? ??????????? ? ?????-???? ???, ????????? ??? ??-???????? ?? ????????? ???????????? ???????? ?????????? ???????. ????????, ? ????????? ??????? ?????, ??????????? ?? ????? ??????, ?? ?????????? ???????, ??? ???????? ?????? ????????. (6:25) ?????? ????, ????? ???????? ???? ??????????? ?????, ??? ??????????? ???? ?????? ???????, ????????? ?? ??????? ?????????? ??????? ? ??????????????? ????????? ? ?????????????? ? ???????? ??????????? ??????????? ?? ????? ???????.

????? ????, ???????????? ??????? ????????????, ??????????? ????????? ???????, ???? ???????? ?????? ? 1930-? ? ???? ?????? ????? ??????? ????.

???, ????????, ???????? ????? ???? ?????? ???????????? ?????????? ?????????. ? ??? ??????? ?????????????? ???????? ?????????????? ??????????? ????????, ????? ? ????, ??????????? ? ?? ?????. (7:03) ? ????????? ???? ? ?? ??????????? ??????????? ?? ?????????-??????????????? ?????? (???) ??????????? ?????????????, ??????????? ???????? ?? ???????? ?????????? ????????? ? ????? ????? ?? ? ?????? ?????????. ???????????, ??????????, ????? ???? ????. ????? ? ??????? ???? ????????? ?????? ?? ????????????? BP ? ???????????? ??????, ????????? ?????????? ?????????? ???? ??????????? ?????????????, ? BP ?????? ???????????. ?? ??? ?? ???? ?? ?????????. ??? ????????? ??????, ??? ???????? BP. ? ????? ??????, ? ?????????? ??? ??????????? «????????????» ????? ???????? ????????????? ???????? ?? ???????? ?????????, ??? ?? ??? ???? ??????????? ????????????? ???????? ??????? ???.

? ??????????, ??? ???????????? ???? ?????? ? ??????????. ??-?? ????? ????????? ????????? ???????? ? ???????, ??? ???????? ???????? ???????????. ?? ??? ????? ????????? 10.000 ???????. ???? ??????? ??? ?????? ??????, ????? ??????, ??? ???, ?????????? ????????? (??? ????????? ?? ???????), ??? ????????? ?????? ?????? ??? ????.

?????????? ???? ???????????? ????????. ?????? ????????? ????????, ? ??? «???????????? ????????», ??????????? ? ??????? ????? ? ?????? ???????? ?????????, ??? ???????????? ???? ?????????????.

????? ????, ????? ?????? ??????? ?? ?????????????? ?????? ???? ????????? ? ?????? ? ?????? ??? ????? ????? ????????.

(8:35) ? ???????, ? ??? ???? ???????????? ????? ??????????, ? ?? ????? ?? ??? ????? – ?????????? ???????? ???-??? ?? ????? ?????, ????????, «??????????: ???, ?? ??????????? ??????».

?? ??????? ??????, ??? ????? ?????, ????????, ????? ? ??????? ??? ?????????, ????????? ? ????????????, ????????? ?????? ??? ??????? ??????? ????????????? ?????? ??????, ??? ??? ?????????? ???-??-????????????????? ????????????? ???.

*** (9:05)

???? ???????????? ??????????? ?????? ? ???????? … ? ??? ????? ???????, ?. ?. ?????? ??????????????? ? ?????????? ?????? ?????????; ???????? ???????? – ??????? ? ???? ???????? ? ????????? ??????? ??-?? ????????; ????????? ?????? ?????????? ?????????????? ????. ????? ??????????? ??????????? ???????? ?????? ??-?? ?????????. ????????, ???-?? ?? ???. ?????????? ????????, ????????? ?? ??? ?????? ????? ????, ????? ??????? ???????????????, ?????????? ?????????, ???????? ?????? ????? ? ?????? ?? ????????? ????????? ? ?????????? ????????????????? ??? ????????, ???????????? ??? ???? ? ???? ????????, ? ?? ? ????? ???????? ???

??? ????? ???, ??????????? ??????????? ? ????????? – ??????????? ?????????? ?????, ?????????????? ????, ???????? ?????????? ????? ???????? ????????, ????????? ?? ???????? ? ?????? ? ??????????? ????? ?????????????. ??? ????? ????? ?????? ?????? ???? ????? ?????????????? ????? ??????, ??? ????? ?????? ? ????????, ? ????? – ????? ?????? ???? ????????????? ?????.

??????? ??????? ??????? ? ??????? ??????? ? ?????????. ?????? ???, ?????????? ?????? ?????????????? ???? ???????????????? ?????????????. ?? ????????????? ?????? ??? ??????? ??????, ?? ??? – ???????, ???????? ??????? ? ???????????. ??? ?????? – ? ???, ? ? ??????, ??? ??? ?????? ????? ??????? ??????? ??????????????? ??????? ?????? ???? ???????, ?? ?? ???? ????????, ??? ?????????? ?????? ???? ???????????????? ?????????????. ????????? ??? ???????????? ???? ?? – ?????? ???????????? ? ???????? ?????. ? ??, ? ?????? ????? ?????????, ??? ?????? ? ????????, ?? ?? ??? ? ??? ??????? ??? ???????. ?????????? ? ????? ????? ???? ??, ????? ??? ????????? ????? ?????? ? ????? ?? ???????????? ??????? ???????????? ?????????, ??????? ???????? ?????? ???????????? ??????????. ???? ??? ????? ?????, ????????, ?????? ??????? ?????. ????? ????, ???? ?????? ???????, ?????????? ?? ??????????, ??????? ???????? ? ???? ?????????? ? ?????? ???????, ?????? ??????, ???????? ??? ?????????? ????? ?? ?????????. ?? ????? ??????, ??? ???? ????????????? ???????????????? ????????????? – ? ???? ????????????.

?? ??????? ????????? ??????????????? ?? ??????? ? ?????????. ?????? – ??????????? ??????????, ??????????????? ???????????? ?????????????????, ?. ?. ????-????, ??? ????????? ?? ???, ? ?????? ??? ???????????? ????? ?? ???????????. ??????????? – ?????????? ? ??????????? ????????, ??? ?????????? ??????, ??? ??????? ??? ?????, ????????, ?????????, ????? ???????????, ??? ?????????, ??? ?????????????? ???????? ???????????? ???????????. ??????????? ???? ????-?????, ?????, ??, ??? ?? ???-?? ???????, ??? ????????? ?????? ??? ?????, ??? ????????? – ????? ???????. ??? ??? – ????????????? ????????? ??? ?????????. ?? ??????????? ? ???????????, ? ??? ????????????? ??? ??????????? ??????????. ?? ? ?????? ?? ?????? ??????????? ???????????? ????, ???????????? ?? ??? ????????? ?? ?????????? ???????? 17 ???.

?? ??????????? ???????? ???????????? ???????? ?????? ??????. ??? ?????? ??????? ?? ?? ????????, ? ????? ????????, ??? ????????????? ?????? ??????????? ?? ???????? ??????? ??????. ??? ????? ???????? ?? ????????? ?????-???? ???????, ???? ???? ?? ??? ?? ? ???? ?? ???????????, ???? ?? ????? ? ????? ???????, ???? ???? ?? ?????????? ?? ????????????????? ??????? ????? ?? ???????????. ????????? ????? ????????? ????????????????? ????? ??? ??????????? ? ?????????? ???????? ???????????, ?????? ?????????? «??????», ???? ????? ???????? ????????????? ????????? ?????????? ???????????? ?????? ??????? ??? ???????. ?? ????, ??? ???????? ????????????????? ?? ???????????, ?? ???????? ?????? ?????????? ??? ???????. ???? ? ?????? ?????? ??????????? ????, ????? ???? ? ????????? ?????????? ?????? ?????????????? ?????????, ????? ????????. ? ?????? ??????? ?????? ???????? ??? ?? ???? ?? ??, ??? ????? ???????? ????????? ?????. ??? ?????????? ????????? ???????? ??????? ? ?????????, ?????? ? ?????? ??????? ? ??????? ????????? ???? ????? ???? ???????? ?? ????? ? ????? ????????????? ?????????.

???????? – ??? ???? ?????? ???????? ???????????? ?????????. ?? ???????? ???????????? ????? ????????? ??? ???????????? ????????? – ??????, ???????, ?????? ??? ?????? ??? ???? ???????????? ?????????. ?????? ???????? ?????????????? ?????? ??, ????????, ????-?????, ????? ??? ???????? ???????? ?????????? ???, ?????? ??? ??? ????? ?? ?????, ??? ????? ??? ?????????????, ?? ???????? ??????? ?????????.

??????? ???? ???????? ????????? ??????? ??????, ??? ??????, ????? ?? ?????????? ?? ?????????? ????? ???? 14 ???, ???, «?? ??????????», ????????? ???? ?????????? ?????? ???????? ???????????. ????? ??? ? ???, ????? ??????????? ??? ??????? ?? ??????????? ?? ??? ???, ???? ?? ?????? ???? ???????????? ??????????? ??? ????????. ????? ???? ?? ????? ?????????????. ? ?? ??? ??? ??? ??????? ?????. ???? 14-?????? ???? ?? ????????? 200 ??? ?????????? ?????????? ?? 70 ??? ????? ?????? ??????. ???? ??????? ?? ???????? ?????, ???????? ????????? ??? ???? ????? – ? ??? 70 ???. ?????? ?????????? ?????? 100 ???. ???? ????????? ?????????? ?????.

?, ? ??????? ?? ???????, ????????? ????? ????????? ?????????????, ????? ????? ????, ??? ?? ???????? ???? ???? ?? ??????. ? ?? ?? ??????? ? ??? ????????? ????????? ????? ?? ???, ?? ??????? ????, ? ???????????? ???????, ???, ????????, ? ? ????? ??????, ????????? ???????? ?????????, ????????? ???????????????? ???????? ????????? ? ????? ??????? ? ?????????? ?????.

??????? ????????????????? ??????, ?? ?? ?????? ???-?? «?????????????». ??????? «???????????» ?? ??????????, ???? ??????????????? «????????». ??????? ???????, ??? ????????????? ?????????? ????? ??? ?? ????? ????????? ?????-???? ????????. ?? ????? ???????? ??????. ??? ????????? ????????? ?? ????? ??????? ?????? © ?? ???? ??????. ???????? ?? ????? ??????????????. ??????????? ????? ?? ?????.

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????? ????????? ? ???, ?????, ??? ? ? ?????? ???????, ???????? ?????? ?? ????????? ????? ???????????. ?? ????????? ??? ????????????? ?????? ??? ????????? ? ??? ????? ?? ??????????? ?????? ?????, ??????? ?????? ?? ?????? ??????, ??? ???????? ??????????? ?????? ??????, ??? ?????? ?? ??? ??????? ??????? ? ????. ??? ??? ????????? ?????? ??? ??????. ??? ?????? ??? ??????????? ??????????, ??????? ????????? ??? ??????? ??????????????? ???? ???????????? ???? ?????? ???, ??? ?????? ?? ????? ?????????????? ??, ??? ?? ???????? ???.

??????? ?????????? ? ????????? ? ??????? ????????????? ? ???? ? ??????? – ? ???? ?????????????.

??? ????????, ? ?????? ????????????? ????????????, ?????? ???? ? ????????? ??????? ????????, ??? ??? ???????????, ??? ????? ????? ?????? – ?? ?????? ???????????, ???????????? ??????. ??? ?? ??????????? ??????????, ?????? ??????, ????? ???? ???????, ?????????? ? ??????????? ????????????, ??????????. ??????? ????????, ?? ????? ??????????? ????????? ?????? ? ????????????? ??????

???? ????? ???????, ??????? ???-?? ?? ??? ??? ???????, ??????? ? ?????? ??????. ??? ????????? ??????, ??????? ??????? ? ?????, ?????? ????????, ? ??????? ?????????? ????????????? ?????. ?????, ??? ? ???? ???? ???, ???? ?????????, ? ????? ?????? ? ???? ?????? ??????. ?? ???? ???????????, ?? ????????. ????? ?????????, ???????, ????? ???????, ? ????? ??????????? ??????????????? ? ????? ??????.

????, ??????, ??? ?? ?? ????? ? ?????, ??????? ??????? ? ?????, ? ?????? ??????. ? ????? ???????? ???? ?????????? ???????? ????????. ??? ??????, ??? ?????? ???????? ?????, ?????? ??????? ?????. ??? ????? ????????, ???, ???? ?? ???????? ????? ???????????? ?????? – ?????, ?????, ??????, ????????? ???????, ??????, ????? ???? – ?????? ???? ?? ????? ??????????????? ??? ???????? ???????????? ? ????. ??? ??????? ?? ? ?????????. ???? ???????????? ???????? ????????? ?, ???? ????????????? ????? ??????? ?????????.

????? ??? ???????? ?? ?????? ???????????, ??????????? ????????? ?????????. ??????? ??????? ??? ?????? ?? ????????????? ?????? ??????? ???????? ?????????????.

??? ????? ? ??????, ?????????? ?? ???????????? ????????????, ?? ?????? ? ???????????. ?? ???????? ???????????????? ????????? ? ???????????? ????????????. ??? ?????? «???????????» ??? ????????, ???????? ? ???? ????, ??? ?? ?????? ????? ?????????

??? ????????, ??? ?? ?????????? ???????????????? ??? ???????, ??? ???????? ??? ????????, ???? ?? ???????? ???????? ????????? ???. ????? ???????, ????? ???????????? ???????????? ???? ??????? ??????? ????, ??????? ?????????????????, ? ???? ???????????? ???? ????????????? ??? ????? ?????????? ????????. ??? ?????????? ???????? ????????, ??????? ???????? ??? ? ????. ??????? ?? ?????????? ??????????? ?????????. ??????? ??? ????? ?????? ? ????? – ??????????????? ???????????? ? ????????????? ??????. ??? ???????? ???????????? ?????????? ??? ?????????, ??? ? ??????. ??????? ????????????? ?????, ????????? ?? ?????????? ????????? ???????? ?????????? ????. ? ????? ?? ??????????? ???? ? ????? ??? ????????, ????????? ????? ?????????????, ??????? ???????, ??? ?????? ????? ???????????? ????????, ????? ?????? ???? ????, ???????????, ??? ??????????? ???????????? ?? ??? ????? ?????.

????? ??? ?????????? ?????? ? ???, ????? ???? ?????????, ? ???? ????? ??????????, ??? ???????? ? ??????? ????????????????? ? ?????? ???????? ?????????? ?????????? ????, ?.?. ?????? ????????? ???????. ??????? ??? ????? ?????? ??????, ??? ??????? ??????: ??? ????????? ???? ???????? ???????. ??? ????? ????? ?????????????, ????? ?? ????? ???????????? ?? ????????, ??????? ????????? ??? ??????.

(0:22:06)

??????????????? ? ????????-???????? ?????? ???????? ?? ????? ? ?????????????. ??? ??? ?? ??? ?????? ????????????? ??????????? ? ??????????????, ??????, ?????????? ?? ?????????????? ?????. ????? ??????? ?????????????? ????? ? ???????????, ????? ???????? ?????????????. ????? ????? ????????? ??????. ??? ???? ?????????? ?????. ??????????, ??? ????? ????? ? ?????, ????? ??????? ???? ? ?????, ????????? ???-?? ????? ? ??????????? ????? ????? ????????, ????? ??????????? ?????????? ? ???????? ?????????? ????????. ??????????, ? ???? ? ??????????? ??????????????? ?????? ?? ????????? ????????. ??? ????? ????????, ? ??????? ????? ??????? ????????????? ????????? ??????????? ???????????? ??????? ??? ????????? ??????????????, ? ??? ????? ?????????? ???, ??? ?? ????????????.

??????? ????????, ??? ?? ???????? ??????, ????????? ??? ???????? ??????. ???????? ?? ? ?????-????? ??????? ?????. ??????, ??????????? ???????????? ???????????? ???????, ???????????? ??, ?????? ? ????????? ??????, ? ???, ?????? ?????????? ?????????? ???????????? ????, ????????????? ?????????? ??????: ?? ?????????? ?????, ?????????? ?? ???????, ?? ?????????? ? ????????, ?? ?????????? ? ?? ???????. ?? ??????? ? ??? ???????????, ???????????? – ????????, ??????????, ????????????????, ???????????? ????????? ?????. ?? ??????, ???????, ? ????? ??????????? ?????? ??????? ??????? ? ???????????? ??????.

(0:24:06)

????? ????, ????????? ????? ???????? ?????????? ??????. ? ???????????????? ?????? ???? ?????? ?????????????? ????????????? ????????, ????? ??????? ?? ????????? ? ???????? ????????????, ? ????? ???????? ?????? ???????? ? ???????? ?????? ???????. ?? ????? ????????? ?????? ???????????, ?? ???? ?????? ??????????. ????? ?????????? ????????? ??????? ???-?? ???????, ?????? ???????? ???? ???????. ??? ? ???? ??????? ?????????? ????????????? ????????????????? ???????? ???????. ??? ? ????????. ????????? – ???????????????? ?????????, ????????? ???? ?????? ??? ??????? ???????? ??????? ??-?? ?????? ???????????. ????????? ????????, ????????? ?????, ???????, ?????????? ?? ??????? ?????????????, ???????? ?? ???????????, ???????? ? ?????????? ????????? ????????.

?????? ??????? ???????? ? ???????? ? ?????????. ???????? ???????? ? ???? ??????????? ? ???, ??? ???, ??? ???????? ???????????? ?????????, ?????????? ??????? ??? ?????? ????? ? ???????? ?? ???????????. ? ??? ????????, ??? ????????????????? ????? ???????????? ??????????????? ??????? ??????????? ?????? ????????????? ???????????. ? ?????? ????? ????????????? ????? ????????? ??????????? ????, ?????????? ????????????? ?????????? ????????? ????????, ?????? ????????????????? ??????????? ? ????? ?????, ??? ? ????????? ??????? ??????????? ??????? ??? ????????? ?????????? ?????? ??? ???????????? ????? ?????????????? ? ?????????????? ??? ??????????? ?????????, ??? ? ????????? ??????? ??????????, ????????? ??? ????????????? – ?????.

(0:25:59)

????? ??????? ?? ????? ????? ????????????? ??? ???????? ???????, ??? ????? ????????????? ?? ??????????, ??????? ??? ?????? ??????????? ???????? ?? ??. ?????? ?????? ????????, ??? ??????? ?????????????, ?? ???? – ?????? ???????? ????????????? ???????? ???????? ? ????? ???????? ????, ? ?? ? ?????? ????????. ?????, ??????, ??????? ? ????? – ? ??? ? ???????. ?, ? ??????? ?? ?????????? ????????, ??? ????????????, ?.?. ????????? ??????????? ????? ????????? ?????????????, ?? ????? ???????????? ???????????? ??????? ?????? ?????, ?? ????? ??? ???? ?????? ??????????? ?????? ?? ?? ?????.

????????, ???? ?? ? ??????? ?????? ?????? ?????????? ????, ?? ?? ????? ???????????? ???????????? ???? ? ?? ?? ?????, ????? ??? ????, ???? ? ?????? ???????????. ??? ??? – ?????? ???????, ? ??????? ?? ??? ????? ???????????, ????????? ??????????? ? «???????? ???????».

?? ??? ???? ?????? ?? ??? ????? ??????????????? ????? ? ??? ?? ????????, ???? ???? ? ????????? ??? ? ??????. ??? ????????????? ?????? ?? ????????? ?????????. ?????? ? ????????? ????? ???????? ???????? ???????? «????????????» ???????????? ????????.

??? ?????? ????????????????? ????, ??? ?????? ????????? ?????: ??????????? ???????, ????? ??? ????, ???????, ????, ?????, ??????, ??, ??? ????????? ?? ????? ???????, ????????? ????? ????????? ??????? ????? ?????????. ?? ?????????

(0:27:53)

???????? ??? ?????????? ???????? ? ???????. ?? ?????? ????? ?? ??? ???. ????????, ????? ???????????? ??????, ??????????? ????????? ? ????????????, ?????????? ??????. ? ??? ?????????. ?????????, ??? ?? ??????.

????, ??????????????? ???????? ? ?? ? ???, ???, ????????? ?? ????? ???? ????? ????????????? ?? ???????????? ??????, ?? ?????????? ?????? ???????? ??????? ?????????. ?? ??? ?????? ?????? ???????? ???????? ???? ?????????????. ???????, ??? ????? ????????????? ??? ?????????????? ????????, ?????????????? ????????????, ?????? ? ???????????? ????????????? ?????????? ????????. ?? ????????? ????? ???? ?????????????.

??? ? ???? ? ????? ??, ?? ????, ???? ??????? ?????, ????????????????, «?????» ????????????? ?????????????? ?????? ??????? ?????????. ??????? ???????? ??????: ????? ??????????? ?????????? ?????? ? ??? ?? ???????????? ?????? ???????, ?????? ??? ??? ???????????? ? ????? ???????????? ????????, ??????? ?? ??, ??????? ?????????? ? ?? ?????? ???????????? ????????? ????? ? ????? ?????. ???? ?????????? ???????? ????, ??? ???? ???????? ??????? ????????? ?????????? ????????????, ???? ?????? ???????, ?? ???????? ? ?????????????? ?? ????? ?????? ????? ????? ? ?????? ??????????.

???, ?????? ???????, ???? ???????????? ????? ???????? ????????????? ?????? ??? ??????????. ???? ?????? ????? ??????? ? ?? ??????? ???????? ?????-?????? ????, ??? ?????? ????????? ?????? ??????????? ????????? ? ???????? ???????? ??????????????. ?? ????, ???? ???????? ????? ???? ? ????????? ????, ??? ?????? ???? ?????????? ???? ?????????????. ? ????? ???? – ????????????? ??????????????

(0:29:57)

?????. ? ??????????? ????? ??? ?????????? «?????????? ????????» – ??????????? ????? ??????? ???????????? ??????? ??????? ????? ?? ???-?? ????? ?????????????. ???????? ?????? ????????????????? ?????????????.

?????? ???? ????? ????????????? ??????????, ???????? ?????? ??????????? ?????????? ?????, ?????? ? ???????????, ???????????????, ??????? ? ?????, ??????? ??? ??????? ?????? ???????????. ????????????? ??????????? ? ???? ????? ? ?????????, ??? ??? ????? ?????? ? ????? ????? ? ??????????, ? ???? ??????. ?? ?????????: ????? ??? ????, ??? ? ????????? ????? ??????? ? ??? ??? ????? ????????? ??? ???????????? ????? ??????????. ? ??? ??? ????? ?????????? ????, ?????????? ??? ?????? ? ?????? ?? ????????????? ????? ?????????, ?? ??????????? ?????? ?????. ?? ?????? ? ????? ????? ????????? ????? ? ????????.

????? ????, ?????? ? ???????? ???????? ????????? ???? ???? ?????, ??????????? ?????????????? ?????, ??????????? ??????? ?????????? ??????????. ??? ???????? ????????? ????????????????? ????????????, ?.?. ??? ???????? ?????????? ???????? ???????????? ? ???????????????? ??????????. ????????? ??????????????? ?????? ?????????????????, ?.?. ??????? ??????????. ? ????? ?????????? ???? ??????? ?????? ? ??????? ??????????? ? ?????????.

????????? ???????????????? ????????????? ????????? ? ????????????????? ?????? ? ?????????? ?? ????????, ????? ???????? ????? ?????? ??????, ???, ???? ?? ????????? ????? ??????? ? ???? ???????, ??????, ????????,

(0:31:51)

?? ?? ?????? ???? ??????? ???, ??? ??????? ???????????? ?? ?????. ??????? ????? ?????? ?? ???? ? ??? ??????? ? ?? ???????????? ? ?? ??????????.

???????? ????????? ??? ???????????? ??????????????: ????????? ??????-??????, ????????????? ???? ? ?????? ? ???? – ??? ????????????? ??????????????, ???????? ? ?????????.

? ???? ??? ?????? ?????????????, ????????? ????? ?????????????? ?????? ? ????????? ????? ??????? ????????????? ? ???????? ? ?????? ???? (1710), ?????? ?? ?????? ??????? ?? ????????? ?????, ? ? ?????? ? ?????????????? ????????? (1624), ??????? ??????? ?????????? ??????. ??? ???? ??????? ? ??????. ? ????? ???????? ????????????? ? 16 ???? ? ?????? ??????????? ????? ????? ????????? ??????????, ??????? ?????? ???????????? ???????????? ???????? ? ????????? ? ????? ?? ?????? ? ?????? ? ????? ???????: ????????? ?? ???????????? ????????? ????, ????, ??????, ????, ????, ???? ? ????.

??? ???????? ?????? ?? ????????. ?? ?????? ??? ????? ????????? ????? ???????? ? ???? ??????????. ?? ?? ??????? ??????????? ????? ??? ?????? ????????? ?????? ? ??????? ? ???????????, ???? ?? ?? ?????????? ?? ?????????. ?.?. ???????????? ? ????? ????????? ????????????? ???????? ? ????? ??????, ????????? ?????? ? ?????????????? ????? ???????????? ? ?????????????. ???????? ? ???????????, ? ??????????. ?? ??????? ????? ?????? ??????

(0:33:48)

? ???????. ?????, ????????? ???????????????? ???? ?? ?????, ?????????? ??????????? ???????????, ?????????? ???????????. ? ?????? ???????????? ????????? ?? ??????? ??????. ?? ??? ?????????? ?????????? ?????? ???????? ?????? ??? ??????.

????????, ??? ??? ???????????? ?? ?? ????????? ??????, ?? ? ????????????, ?? ? ?????? ??????? ?????????????, ?? ? ????????????; ?? ?????? ? ???? ?? ?????? ? ???????????. ???????????? ?????? ?????? ??? ?? «???????????????? ?????????????». ????????, ? ??? ???? ????- ? ??????????? ?????????, ?????????? ????????????? ????? ? ?????????? ????????????? ????, ??????? ???????, ????? ?????? ????????? ?????? ??? ?????? ? ????? ???????? «???????» ?????? ????????????? ?????. ??????? ???????? ???????? ?????????????-?????????? ??????? ??? ??????????? ???????? ????? ?? ?????????? ? ???????????????. ? ??? ?? ????? ????????-?????????? ???????????? ? ?????????????? ????? ? ???????-????????????. ??? ?????????? ???????????, ? ??? ??? ????????? ???????? ????????? ? ????????? ???????.

???? ? ?????????? ???? ????? ???????- ? ????????????????? ? ????????????. ? ???????, ????????? – ?????????? ? ???????? ????????, ???????????? ?????? ?????? ? ????????, – ?? ?? ????????? ????? ??? ????????? ?? ?????? ???? ?? ??????????? ????, ????? ??? ?????? ??? ?????????? ????????? ????? ??? ??????????? ???????????, ????????? ??? ???????? ?? ???????????? ???????, ??? ????????? ?? ????????? ???? ??????? ?? ??????????? ?????. ??? ?????????? ??????? ?? ????????? ???????????

(0:35:39)

???????? ????? ?????????? ????????, ???? ?? ????????? ????? ? ??? ?? ?? ??????????. ?????? ? ??? ???? ??????????? 1) ???????????? ?????? ????????????? «???????? ?? ????????????? ????????» ??? ?????? ????????. ????????????? ??????? ?????? ? ???? ????????? ?????? ??? ???????. ?????? ?????????? ???? ????????. ????? ?? ???????????? ??????????? ? ???? ?????? ? ???????. ? ???????? – ??????????? ? ??, ???? ??? ???????????????????? ??????????. ? ????????? – ???????????, ?????????? ? ????????? ?????.

????? ????, ????????? ?????????? ???? ??????? ??? ???????????? ????????, ? ??? ??? ???? ????? ?????????. ????????, ?????????? ?? ?????????, ?????? ?? ?????? ????????? ????????. ??? ???????? ???? ?? ???????? ????????????? ?????? ?????????????? ?????????, ????., ???????, ? ?????????? ?????????? ???? ??????????? ???????. ??? ?????? ?? ??????? ??????????? ??????? ???????? ??? ???????????? ?????? ????????? ???????? ????????? ????????? ???????.

??? ??????? ??????????????? ??????????? ????? ???????????? ?? ???????? ???????? ?????. ?????????? ????????? ???????????????? ????????, ????????? ??? ????????? ??????????? ??? ????? ????????. ????? ???? ??????????? ??? ?????????? ??????????? ? ????????? ??????????????? ??????, ????? ?? ???? ?????????, ??????? ?????? ?? ????? ??????????? ? ?? ???????? ??????????? ????????? ? ?????????? ?? «????????? ?????» – ???? ???????? ?? ??, ??? ??????? ??????? ????????????? ???? ?????????? ? ???????? ??????????? – ??????????? ??????????, ?????????? ???????????? ???? ????????? ? ???? ????????? ??????? ? ???? ??????????????? ?????????. ??? ??? ???????? ????????????? ?????? ?? ??????, ?????? ??? ?????? ??????????????????????

(0:37:3)

???????? ? ??????????????? ?????? ? ?????? ?? ?????????? ??????????????.

??????? ???????? ????????. ?? ????????? ? ?????, ??????????? ?????? ??????? ????????????? ??????. ??? ????????? ?? ???????????? ?? ?? ????????? ??????????? ?????? ? ?????????????. ? ?????????? ??, ? ?? ?????????? ????? ????????? ?????, ??? ?? ??? ?????????? ???. ? ? ???? ??? ??? ?????????, ??????? ? ??, ? ??????. ????, ????????????? ??????? ? ????? ?????? ???????????, ?????????, ???????? ?? ?? ????????????? ?????????????? ?????. ??? ?? ????????????? ?????. ?????????? ????????, ????????? ???? ??????? ????????????? ?????????????, ????????? ? ????? ????????? ? ??????? ?????????????.

?????????? ????? ??????, ???????????????, ?????????? ??????????? ? ????????? ????? ????????????? – ? ???????????? ? ????????? ????, ??? ??????????????? ?????????, ????? ??? ?????? ? ????????, ?? ????????? ? ????????????? ??????. ?? ????????? ????? ????? ?????????????.

????????? ??????? ?????????, ??? ?? ??? ??????? ??????? ???????????????. ??????????, ??? ????????? ????????? ????????? ?????????????, ?????????, ??? ? ??????????? ? ?????????? ??????????? ?????????? – ??? ? ???????, ? ????? ???????, ? ???????? ? ?????? ?????? ? ?????????????? ????????? ? 1624 ????. ?????? ???????? ??????? ????????? ????????? ????????, ??????, ???????????? ?????????? ? ?????????, ??? ??? ?? ????? ??? ?? ? ????? ??????. ????????? ??????? ? ?????????? ??????? ??????? ????? ????????, ??????, ??????, ?????????? ??? ???????????? ????? ???????????. ?????? ?? ????? ???? ????? ???????????? ???????????, ??? ?????????, ??????? 95% ?????????, ???? ????????? ??? ?? ???????. ???, ??????? ??? ?????????? ?? ?????????? ???????? ???????? ????????? ???????.

(0:39:33)

? ??????????? ?????, ????? ??????? ????? ??????????? ???????? ????? ??????? ?????-????? ???????????? ??????? ???????? ? ????????? ????, ?? ????? ???????? 4 ??????????? ???? ??? ???????? ?? ?????? ??????? ? ?????????, ??????? ? 19 ????.

?????? ?????? – ?????????????? ? 1850 ?? 1873. ?? ??? ?????? ?? ??? ?????? ??????? ????????? ???????, ????????, ?????????. ?????????? ????????? ???????? ? ?????????? ????? ?????? ? ???? ?????? ????????? ? ?????????? ?????? ???. ?????? ? 1873 ????????? ?????????? ?????????, ????????? ??????? 1873 ????. ??????????? ????????, ? ????? ???????? ?????? ??????? ? ?????????????? ????: ??????? ???????? ?????? ???????????? ?? ???? ??????????? ????????. ????????????? ???????? ?????????? ??? ????? ???????? ?? ??????? ????????. ????? ???????, ??-?? ????????, ????????????? ?????????????? ?????????????, ??????? ???????? ?????? ? ?????, ? ?? ??? ????? ?????????? ??????? ?????? ????????. ??? ??????? ????????? ????? ?????????????, ????? ???????????, ??????? ?????? ???????? ???????, ????, ? ???? ??? ????????, ? ???? ?????????, ?????? ?? ????????? ? ????????, ????? ? ??????? ????????? ????????????????. ???? ???????? ???? ?????. ????, ??????? ?????? ??, ? ???????? ???????? ?????? ??????, ??????????? ? ??????????.

?????, ? ????? 19 ????, ?????????? ???? ????? ???????????-????????????????, ????????, ????? ????????? ???????? ? ??????????? ???????. ?????? ??????? ??, ????? ???????, ??????? ?? ?? ?????????, ??? ? ?. ? ????

(0:41:43)

????? ?????? ?????????. ?? ??? ??????? ??????????-??????????????? ???? ????, ??? ??? ?? ??????? ?? ??? ???????.

? ?? ?? ?????, ???? ??????? ????? ????? ?????????? ?????????? ?????, ?????????? ??????? ? ?????????, ????????, ?? ??????? ?? ?????? 18-19 ????? ?????????? ? ??????????? ??????????? ?? ????? ???? ?????????????, ???????, ??? ???? ????????? ?? ?????????? ?? ????????????, ?? ?????????. ????????? ????? ?????????? «??????????????» ? ????? ??????????, ????, ???????, ?? ? ????? ????????????? ??? ?? ???? ? ????.

?????? ?????? – ???????? ? 1930-? ?? 1995 (???? ?????????) – ??? ????? ???????????? ????????? ? ?? ?? ??????? ??????????????, ??????????????????? ? ??????????? – ??????????? ?????????? ?????. ????????? ?????? ????? ? 1934 ? ???????? ???? ?????? ? 1950-? ? ?????? ?????? ?????????? ?????????? ????? ? ??????? ???????????????? ????????? ? ???????????? ??????? ? ?????? ??, ????? ?? ??????????? ????????? ? ??????????.

????? ???? ?? ?????? ???????? 20 ????, ??????? ? ?????? ? 1948, ?????? ?????????? ??????????????? ????????? – ?. ??????? ? 60-?, ?. ???, ?????????? ????? ?????????????? ??????????? ? ???, ????? ????????, ??? ??????, ??? ?????? ? 80-? – ?????? ??????? ?????????? ???????? ????????????? ??????? ? ???? ????? ? ??????????? ??????????

(0:43:39)

?????????????. ?? ?????? ????????? ???????????. ?????? ?? ?? ??????? ? ???????? ???????, ?? ?????, ? ????? ?? ?????????, ??? ??? ?? ???? ????????? ????????????.

????? 1995, ? ????????? ?????????, ????????? ?????????? ???????????????? ? ???????? ?????????? ????? ????????? ???????? ????????, ? ?????? ????? ? ????????? ????????. ???????? ????? ???????? ??-??? ???????? ? ??? ???? ????? ????? ????????, ????????? ???? ?? ?? ?????? ???? ?? ?????? ? ????????? ??????? ? ?????????? ???????? ????????? ?????????.

?? ????????? 15 ??? ??? ?????? ?????????????? ???????? ?????? ??, ???????? ??? ???????? ??????????????, ??????????? ??????????????, «??????????», ??????????. ?? ???? ????? ????????? ?? ???? ????? C4SIF.org/resources. ???? ?????? ?? ???? ???????? ??????? ?? ???? ??????????? ??????????????, ??? ??? ?????? ??. ?????????? ?? – ?????????? ??? ???? ???? – ???????????? ????????, ???? ????? – ???????? ????????????? ????????????. ????? ????????, ??? ????????????? ???? ?? ??????? ???????? ???????????? ????????????? ??.

? ??????? ? ??????????. ????????? ???????????? ??? ?? ??????, ??? ????????? ??????? ??? ???????????????? ?? ????????? ????? ?????? «????????????» ? ??????? ??????? ????? ?? ??????? ??? ?? ???. ??? ?? «? ???». ??? ?? ????? ?????????????. ??? ????? ????????. ??? ??-?????? ??????????. ??? ????? ????????????? ????? ???? – ?????? ???????????? ???????????? ??????????????? ?????????. ???????? ?? ? ???????? ?? ??. ???????

(0:45:57)

???????????? ??, ?? ?? ????? ????????. ???????? ?? ? ??????? ???????????. ? ?? ? «??????? ????????». ? ?? ? ?????????? ????????????????? ?????????. ???, ???????, ?????????, ??, ??????? ?? ?? 30 ???, ??? ??? ????? ????????? ??????????.

???, ??????????????, ?????????????? ??????????? ???????, ?????, ????????????? ??????, ??????????, ??????????? ?? ????????? ?????, ?????????????? ? ??????? ?????????????, ?????????? ????????, ??? ??????? ? ???????? ?????????, ?? 100% ???????????? ????? ? ??????? ??????? ?????????????, ????????? ??????? ?????????????, ???????????? ?????, ???????? ? ?????????? ?????????????. ?????, ?????? ? ????????????? ????????? ??? ????, ????? ?????? ???????? ???????? ???????? ? ?????????? ???????????? ???????????. ?????????????? ????, ??? ????????? ????????????? ?????? ?????????????? ???????????, ???????, ?????? ? ??????????. ?? ???? ??????? ???????? ????????.

??????? ???????. ???????, ??? ??????????? ??? ??????. ? ????? ???????? ?? ???? ??????? ?? ??????????? ?????. ?????? ? ????? ??????????? ????? ??????? ? ????? ????? www.stephankinsella.com. ??????? ? ????? ???????.

[c4sif]

The 3^rd Adam Smith Forum is being held Nov. 12, 2011 in Moscow. This is an impressive event, organized by the Center for the Philosophy of Freedom, the Libertarian Party of Russia, and others. The Chairman of the ASF Steering Committee is economist Pavel Usanov, head of the Hayek Institute for Economy and Law; Andrey Shalnev, head of the Center for the Philosophy of Freedom Moscow, is its co-chairman. I was invited to speak but cannot attend in person, so my speech “Why Intellectual Property is not Genuine Property” will be presented remotely, with Russian subtitles.

Update: For further information and video of the lecture, see my followup post here.

I’ll be a guest in an hour or so This Week in Law with Denise Howell. The live cast starts at 11 a.m. Pacific.

I’ll be appearing as a speaker and panelist at the upcoming Open Science Summit, Oct. 22, 2011, at the Computer History Museum in Mountain View CA. My topic is “IP and the New Mercantilism,” as part of panel “The Future (End) of ‘Intellectual Property.’”

I’m very stoked about meeting some non-libertarians who have anti-IP or at least IP-skeptical and pro-open information/open science views–and also to visit the Computer History Museum.

Related posts:

• Open Science Summit – Openness by far and away will win out!;
• Dispatch from the Open Science Summit: Citizen Science, Microfinanced Research, Patent Trolls, and Pharma Prizes;
• Copyright and the Orphan Works Problem vs. Scholarship;
• More than 4,000 National Academies Press PDFs Now Available to Download for Free;
• Max Planck Society statement on copyright law and science;
• Jeffrey Tucker, “A Theory of Open“;
• Doug French, “The Intellectual Revolution Is in Process“;
• Jeffrey Tucker, and “up with iTunes U“;
• Kinsella, “Teaching an Online Mises Academy Course”;
• Copyright and the Orphan Works Problem vs. Scholarship;
• More than 4,000 National Academies Press PDFs Now Available to Download for Free;
• IP presentations at “Science, Knowledge, and Democracy” conference;
• Jared Diamond on Inventors and Innovation;
• The Myth of Under-provision of Science by the Free Market;
• Kinsella, “Fifteen Minutes that Changed Libertarian Publishing“
• Gary North, “A Free Week-Long Economics Seminar”;
• Kinsella, “Intellectual Freedom and Learning Versus Patent and Copyright” and “How to Slow Economic Progress”

I was a guest last night on FreeTalkLive (Sunday, Aug. 21, 2011), discussing intellectual property with Sunday hosts Mark Edge and Stephanie. We talked for about an hour and a half, from 7pm-830pm EDT and had a good, wide-ranging discussion. A few callers called in near the end. This was the FTL debut on XM satellite radio’s “Extreme Talk”, XM 165. The show is now available on the podcast feed here (local MP3).

I’ll be speaking on “Intellectual Property and Economic Development,” Wisconsin Forum, Milwaukee (Jan. 25, 2012).

I came across this quote in Leonard Nelson’s System of Ethics (so it’s probably translated from German, as Nelson’s book is):

As though to test his youthful vigor, divinity thrust man into conflict with Nature, which contests him every step of the way and at the outset largely has the better of him. Every step he must wrest from her alien power. Yet every step he does achieve is to his good, for he himself violently foists on Nature an alien law that issues solely from his own heart.

–Jakob Friedrich Fries

I like this. Very anti-environmentalist. It also reminds me of the comments by Mises, Rand, and Rothbard (in Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and “Rearranging”) regarding the nature of creation lying in the phenomenon of rearranging existing matter.

Last week I participated in a debate on IP at the The Ohio State University Moritz College of Law Student Chapter of The Federalist Society (Moritz College of Law, Ohio State University, Columbus OH, March 3, 2011). This was part of the “John Templeton Foundation’s Big Questions Debate series on Intellectual Property and Wealth Creation”; I debated patent attorney and adjunct IP law professor Steve Grant, who represented the pro-IP side. I recorded it on my iPhone; audio file is here (32MB; the version from the camera’s recording is here), though a video version with possibly better audio should be available soon. Professor Grant did his best, but didn’t have a solid argument for IP other than the standard “I think we should reform IP but not get rid of it.” My opening speech is about 15 minutes and has decent audio quality, and is a summary of a hard-hitting version of the basic libertarian case against IP law (here is the powerpoint presentation I used; embedded version below). Grant’s speech is audible but I was not very close to him; but his conventional and unsystematic, more empiricist and positivist than libertarian and principled remarks will be of only mild interest to libertarians. For my 10 or so minute rebuttal to him, I left my iPhone at the table but it’s still audible; for the Q&A period, it was in front of me so it’s decent again for that part. My host was Aman Sharma, a very staunch libertarian law student and head of the student chapter of the Federalist Society. When I was involved with the Federalist Society (lawyers chapters) in Philadelphia and Houston they were populated with mainly Newt Gingrich loving neocons; good to see some Austro-libertarians infiltrating their ranks. Sharma told me “I had a lot of fellow students approach me after the event with questions showing a new-found interest in the Mises/Austrian worldview.” That is cool and gratifying.

While in Ohio, I met my friend Jacob Huebert and other local libertarians/Federalist Society people–including Katelyn Horn and Maurice Thompson, of the 1851 Center, for dinner at Barrio Tapas. A fun trip, and great people.

I was a guest on the Feb. 15, 2011 episode of Thinking Liberty, “an interactive libertarian anarchist talk program.” We talked for quite a while about IP; the hosts asked very intelligent questions. (My segment is from about 25:00 to 1:16:00.) (local MP3 file)

My article, “Intellectual Freedom and Learning Versus Patent and Copyright,” was published today in Economic Notes (No. 113, Jan. 18, 2011), a publication of the UK-based Libertarian Alliance. (This article is based on my speech of Nov. 6, 2010, at the 2010 Students for Liberty Texas Regional Conference, University of Texas, Austin; audio and video versions may be found here; see also below.)

In my various publications and speeches about intellectual property (IP), I’ve approached it from a variety of angles. In this article, I consider the role of information and learning, and the role of property rights, in human action. I use a praxeological analysis to argue that human action employs scarce resources or means, but that action is guided by non-scarce ideas and knowledge. Property rights are recognized in means because they are scarce; but ideas are not scarce things: they are infinitely reproducible. The growing body of knowledge is a boon to mankind. Property rights is needed for scarce means so that they can be peacefully and productively used in action; property rights in ideas restricts, impairs, and impedes learning and the use of information to guide one’s actions. Copying information and ideas is not stealing. Learning is not stealing. Using information is not trespass. In this article, I urge young libertarians to stay on the vanguard of intellectual freedom, and to fight the shackles of patent and copyright.

Incidentally, my 6-week Mises Academy course “Libertarian Legal Theory: Property, Conflict, and Society” starts at the end of this month (Jan. 31-Mar. 11, 2011). I describe it in my article “Introduction to Libertarian Legal Theory,” Mises Daily (Jan. 3, 2011).

[Mises Blog cross-post]

In Anarcho-Capitalism and Intellectual Property Right, The Vincenton Post (December 10, 2009), some Objectivist nym attacks my anti-IP views (citing Greg Perkins). He writes: “Now let me reproduce here the argument made by Greg Perkins against some Libertarian scholars against intellectual property. Perkins wrote the following:” …

Consistency FAIL!

As noted in my post Kinsella Speech at Students for Liberty – Texas Conference (Austin), on “Intellectual Freedom vs Patent and Copyright”, last month I delivered the speech “Intellectual Freedom and Learning versus Patent and Copyright,” for the 2010 Students For Liberty Texas Regional Conference, University of Texas, Austin.

As noted on the website of the Foundation for a Free Society, the video of my talk is now available. See below. Here is the audio file.

Update: here is an edited transcription: Kinsella, “Intellectual Freedom and Learning Versus Patent and Copyright,” Economic Notes No. 113 (Libertarian Alliance, Jan. 18, 2011).

(Youtube version 2 with improved audio.)

As I noted in Objectivism: Leonard Peikoff vs. the World, the Objectivist world is being shaken by the latest schisms and excommunications, regarding ARI founder and Rand heir Leonard Peikoff’s denunciation of former ARI board member John McCaskey. Diana Hsieh and her husband have weighed in with overwrought “final thoughts” in Closing Thoughts on ARI, Peikoff, and McCaskey (they closed comments and refuse to state their final decision about ARI and Peikoff’s treatment of McCaskey), as have others. Most interesting was Robert Tracinski’s Anthemgate, and Michael Stuart Kelley’s comments on that piece, Thoughts On Tracinski’s Anthemgate Article.

This latest scandal concerns Peikoff’s apparently unfair insistence on his right to determine what Objectivism is and his use of his influence to eject McCaskey. This is threatening to make ARI and Objectivism even more marginalized and to splinter and harm that movement. As Tracinski notes:

Early this month, John McCaskey resigned from the board of directors of the Ayn Rand Institute and from the Anthem Foundation for Objectivist Scholarship, which McCaskey founded to promote the training and hiring of Objectivists in academia. McCaskey resigned after his removal was demanded by Leonard Peikoff, Ayn Rand’s student and heir, who does not sit on the board but, through his control of Ayn Rand’s name and intellectual property rights, holds enormous clout over the Institute’s actions.

In other words, the existence of IP rights is helping to kill Objectivism. A bit ironic given Rand’s and Objectivists’ endorsement of IP rights and IP law.

One Objectivist even noticed this–a commentator on Objectivist Living notes:

Those who so readily dismiss libertarians who are questioning the soundness of the monopolies-by-law called “intellectual property” should think a few times about what deadening effects will continue to result from Rand’s copyrights remaining in the Peikoff family. For most of the rest of this century, by the way.

Yes, decrying the abuses Peikoff makes with them is a consequentialist argument. Nonetheless, he wouldn’t have that position to abuse Rand’s legacy if copyrights were even reined back to less outrageous proportions, let alone questioned in full.

Mises Daily has published a transcript of a speech I delivered in May at the Fifth Annual Meeting of the Property and Freedom Society in Bodrum, Turkey: “Ideas are Free: The Case Against Intellectual Property: or, How Libertarians Went Wrong” (I discuss the conference in my post Bodrum Days and Nights: The Fifth Annual Meeting of the Property and Freedom Society: A Partial Report; the original speech is also available in audio and video. I also participated in a Q&A Discussion Panel featuring “Hoppe, van Dun, DiLorenzo, Kinsella, Daniels, Kealey”- video.)

PFS 2010 – Stephan Kinsella, Ideas are Free: The Case Against Intellectual Property Rights from Sean Gabb on Vimeo.

I’ll be a guest on the Austin-based radio show “Live and Let Live” tonight, discussing IP. The host is Gary Johnson; the time is 9pm CDT. I’ll be on during the second hour of the two-hour program, which is live on the Rule of Law radio network. It can be heard on www.ruleoflawradio.com and on affiliate stations, including 90.1 FM in Austin. The episode will be archived on ruleoflawradio.com/archive.

Update: audio is here.

[C4SIF]

In Adam Mossoff in the WSJ, Objectivist Diana Hsieh admits IP is a “thorny” issue. Progress! The WSJ piece citing Mossoff notes:¹

The Sewing Machine War was the first instance of what is today called a “patent thicket.” The disputes prevented Singer from selling his invention, and tensions ran high in and out of court: When Howe personally called on Singer, Singer threatened to throw him down a flight of stairs.

But there’s a happy ending to the story, as your machine-stitched clothes evince. The Sewing Machine War ended with a just and lasting peace in 1856, when Orlando B. Potter–a lawyer representing one of the plaintiffs–suggested a solution that Mossoff calls “groundbreaking but also breathtakingly simple”: The patent-holders would combine their patents in a “patent pool” and share the profits from selling the machines. The patent pool participants lived happily and wealthily ever after—or at least until 1877, when the last patent expired.

The happy ending is that the holders of patent monopolies granted by the states pooled them to form a united front to quash competition. Thus larger companies erect barriers to entry, partially monopolizing a field, with the help of the monopolies granted by the state. Ironically, the state then turns around and uses its own antitrust law against them–as the article notes, “anti-trust legislation today would likely render a smartphone patent pool an impossibility.”²

Quoting Mossoff, the article says:

the fact remains that lawsuits are often no more than an invitation to negotiation. “Oftentimes the way a party signals to another party in one’s industry, ‘I’m serious about this–you need to speak with me,’ is by filing a lawsuit,” says Mossoff.

Ha! Extortion is an “invitation to negotiate.” The euphemisms for statist aggression are many and varied–collateral damage, and so on.

And most companies do reach amicable licensing agreements where they use one another’s technology for a fee.

Amicable! This means friendly. Yes. Very friendly to threaten to sue someone unless they pay you not to.

The article concludes:

So while the maze of patent lawsuits might seem like wasteful litigation, Mossoff cautions that the opposite might very well be true. Those who defend the patent system and intellectual property rights argue that it encourages innovation by ensuring that inventors get their due. “What the patent system is about is not what’s happening today or yesterday, but what’s going to happen tomorrow,” says Mossoff.

This seems to recognize that IP creates injustice, but that those who favor it think it’s worth it in the long run, for the sake of higher goals. This is exactly the structure of the argument normal statists use to endorse conscription, taxation, and so on–that the violations done to individuals are “worth it” for the greater good.

1. For discussion of Hsieh and Mossoff see IP: The Objectivists Strike Back!.
2. See my posts When Antitrust and Patents Collide (Rambus v. FTC); The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic State; Intel v. AMD: More patent and antitrust waste; Are Patents “Monopolies”?; Patents, Prescription Drugs, and Price Controls.

My article, Rethinking Intellectual Property: History, Theory, and Economics, was published today (Oct, 22, 2010) on Mises Daily. It details the content and purpose of my upcoming Mises Academy course, “Rethinking Intellectual Property: History, Theory, and Economics,” Mises Academy (Nov.-Dec. 2011) (discussed on the Mises Blog in Study with Kinsella Online). Sign up!

From Mises blog. Jeffrey Tucker interviews Stephan Kinsella, instructor of the Mises Academy’s forthcoming course, “Rethinking Intellectual Property: History, Theory, and Economics.” Audio of the original interview, recorded October 9, 2010, is available in Mises Media.

Understanding IP: An Interview with Stephan Kinsella

October 21, 2010 by Mises Daily

“Finally, everything fell into place, primarily from Rothbard and Misesian theory. I found that this issue is difficult, but once you see it, it’s one of these issues that sets peoples’ minds on fire. It frees you to think about other things in different ways.” FULL INTERVIEW with Jeffrey Tucker

On Saturday, Nov. 6, 2010, I’ll deliver the dinner speech on “Intellectual Freedom and Learning versus Patent and Copyright,” for the 2010 Students For Liberty Texas Regional Conference, University of Texas, Austin. I’ll follow the keynote speaker, the libertarian-leaning former Governor Gary Johnson of New Mexico.

Rethinking Intellectual Property: History, Theory, and Economics: An Interview with Jeff Tucker, Mises Podcast (Oct. 9, 2010) (discussing the upcoming “Rethinking Intellectual Property: History, Theory, and Economics,” Mises Academy)

I have just founded the Center for the Study of Innovative Freedom (C4SIF). The inaugural message announcing it is reproduced below:

Welcome to the website for the Center for the Study of Innovative Freedom (C4SIF), a new center formed to build public awareness of the manner in which laws and policies impede innovation, creativity, communication, learning, knowledge, emulation, and information sharing. As noted in the sidebar, the Center opposes state intellectual property (IP) law as contrary to private property rights, and in particular seeks abolition of patent and copyright and other state laws, policies, and practices that distort or impede innovation. We intend to provide news commentary and analysis and scholarly resources from our unique pro-property, pro-market, pro-innovation, anti-IP perspective.

Our Advisory Panel comprises most of the leading radical, pro-market, anti-IP thinkers in the world. Our home, for now, and main activities, will be centered around this Site. Key anti-IP publications are collected on our Resources page; on our blog we intend to carry regular news and analysis, including that of many of the members of the Advisory Panel. Please feel free to contact us with any questions or suggestions.

—Stephan Kinsella

My speech, “How Intellectual Property Hampers Capitalism,” presented last weekend at the Mises Institute Supporters’ Summit 2010 (Oct. 8-9 2010, Auburn Alabama), is online now; here is the Audio file; the video is below. A transcript of the speech is available here. The conference’s theme was “The Economic Recovery: Washington’s Big Lie.”

As noted on my media page, I’ll be delivering a speech entitled “How Intellectual Property Hampers Capitalism” at the Mises Institute Supporters’ Summit 2010, Oct. 8-9 2010, Auburn Alabama. The conference’s theme is “The Economic Recovery: Washington’s Big Lie.” There’s a dynamite list of speakers. The heroic Jim Rogers will be awarded the Gary G. Schlarbaum Prize, “For lifetime defense of liberty, given every year, awards $10,000 to a public intellectual or distinguished scholar.” I am looking forward to the entire event, especially the black-tie-optional reception and dinner honoring Mr. Rogers, at which I’ll wear my newly tailored tux (taken in to fit my newer, more svelte figure which resulted from losing 25 lbs on the HCG diet).

As mentioned on the Mises Blog in Study with Kinsella Online, starting November 1 at the Mises Academy, I’ll be presenting the 6-week course Rethinking Intellectual Property: History, Theory, and Economics, with Monday evening lecture/question-and-answer sessions. An excerpt from the course description:

Rethinking Intellectual Property: History, Theory, and Economics

Political Philosophy PP350 — with Stephan Kinsella

Cost: $125
Length: 6 weeks
Dates: November 1, 2010 – December 17, 2010

Click here to register for this course

This course is taught by Stephan Kinsella, a practicing patent attorney and author of Against Intellectual Property. This is a 6-week course and will run from November 1 until December 17 (with Thanksgiving week off), and will provide an overview of current intellectual property law and the history and origins of IP. The course will explore and offer critical analysis of various utilitarian and deontological justifications offered for IP. The course will analyze the proper relationship between property, scarcity, and ideas, and integrate the proper perspective on IP and the nature of ideas and information with Austrian economics and libertarian theory. Various legal and political reforms consistent with this perspective will be offered along with discussions of market and social institutions in a post-IP world. Optional testing will include a multiple-choice mid-term exam and a combined multiple-choice and essay final exam. Kinsella is Senior Fellow of the Mises Institute, editor of Libertarian Papers, General Counsel for Applied Optoelectronics, and was formerly an adjunct professor at South Texas College of Law.  He has frequently lectured and published on IP law, international law, and the application of libertarian principles to legal topics, including Property, Freedom, and Society: Essays in Honor of Hans-Hermann Hoppe (co-editor, with Jörg Guido Hülsmann, Mises Institute, 2009).

Course outline and further information available at the course page: Rethinking Intellectual Property: History, Theory, and Economics.

This is one of the stupidest propaganda pieces I’ve ever seen. Pathetic. But it does a good job of mimicking the typical glassy-eyed brainwashed arguments given for intellectual property.

[TLS]

I’ve noted before a central error of arguments for intellectual property (IP) is the idea that creation is an independent source of rights (see Libertarian Creationism; Rand on IP, Owning “Values”, and “Rearrangement Rights”; Locke, Smith, Marx and the Labor Theory of Value; this comment to “Trademark and Fraud”; Elaborations on Randian IP; Objectivists on IP). As I noted in “Intellectual Property and Libertarianism“:

… creation is an important means of increasing wealth. As Hoppe has observed,

One can acquire and increase wealth either through homesteading, production and contractual exchange, or by expropriating and exploiting homesteaders, producers, or contractual exchangers. There are no other ways.[26]

While production or creation may be a means of gaining “wealth,” it is not an independent source of ownership or rights. Production is not the creation of new matter; it is the transformation of things from one form to another — the transformation of things someone already owns, either the producer or someone else.

Using your labor and creativity to transform your property into more valuable finished products gives you greater wealth, but not additional property rights. (If you transform someone else’s property, he owns the resulting transformed thing, even if it is now more valuable.) So the idea that you own anything you create is a confused one that does not justify IP.

There are two ways to acquire rights to property: homesteading unowned property; or contractually acquiring title to property held by a previous owner. It is wealth and value that is created or produced, by rearranging already-owned scarce resources. But no new property emerges from an act of production, from labor, from creation: new wealth is created, by making existing property more valuable. By being careful here about the distinction between “creating value” and acquiring property rights, by avoiding overuse of the creation and labor metaphors, we can avoid the mistake of thinking that we have rights in whatever we find, whatever we buy, and whatever we create, as if this latter is an independent, third category. We have rights to the value we create only as a by-product of owning the resource that we have made more valuable by rearranging it. And once we see that this third category does not exist, we see that the creationist case for IP evaporates. Creation never was a source of ownership at all.

Or, as I wrote in Against Intellectual Property,

One reason for the undue stress placed on creation as the source of property rights may be the focus by some on labor as the means to homestead unowned resources. This is manifest in the argument that one homesteads unowned property with which one mixes one’s labor because one “owns” one’s labor. However, as Palmer correctly points out, “occupancy, not labor, is the act by which external things become property.” By focusing on first occupancy, rather than on labor, as the key to homesteading, there is no need to place creation as the fount of property rights, as Objectivists and others do. Instead, property rights must be recognized in first-comers (or their contractual transferees) in order to avoid the omnipresent problem of conflict over scarce resources. Creation itself is neither necessary nor sufficient to gain rights in unowned resources. Further, there is no need to maintain the strange view that one “owns” one’s labor in order to own things one first occupies. Labor is a type of action, and action is not ownable; rather, it is the way that some tangible things (e.g., bodies) act in the world.

Palmer (p. 838) cites Hegel’s Philosophy of Right for the contention that “occupancy, not labor, is the act by which external things become property”. In particular, in §§50-51, Hegel writes:

The principle that a thing belongs to the person who happens to be the first in time to take it into his possession is immediately self-explanatory and superfluous, because a second person cannot take into his possession what is already the property of another. … Since property is the embodiment of personality, my inward idea and will that something is to be mine is not enough to make it my property; to secure this end occupancy is requisite. … Occupancy makes the matter of the thing my property, since matter in itself does not belong to itself.

So: creation does not give rise to property rights or new property, but only enhances the value of already-owned scarce resources. And it is being first to appropriate or occupy an unowned resource, not some  metaphorical and derivative “ownership of labor,” that is the basis for Lockean homesteading. The idea of creation and the labor metaphor Locke employed has been wildly distorted by modern advocates of intellectual property. They regularly argue that if you own your labor then you own “things” that you create with your labor. Yet even the American Founders who put the IP clause into the US Constitution in 1787 did not think of IP rights as natural rights, steeped as they were in Lockean ideas. “To the contrary, they evidently viewed copyright as a policy tool, one aimed at promoting the progress of science and useful arts. They begrudged copyright’s interference with natural and common law rights, like the government they formed, as a necessary evil.” Tom W. Bell, Intellectual Privilege: A Libertarian View of Copyright, ch. 3 (draft). The Founders didn’t think Locke’s natural rights views implied that IP was a natural right, and Locke apparently didn’t either. As Professor Bell writes, Locke’s

labor-desert justification of property gives an author clear title only to the particular tangible copy in which she fixes her expression–not to some intangible plat in the noumenal realm of ideas. Locke himself did not try to justify intangible property. He appears, in fact, to have viewed copyright as merely a policy tool for promoting the public good. Modern commentators who would venture so far beyond the boundaries of Locke’s thought and into the abstractions of intellectual property thus ought to leave his name behind.

More pointedly, copyright contradicts Locke’s justification of property. He described legislation authorizing the Stationers’ Company monopoly on printing—the nearest thing to a Copyright Act in his day—as a “manifest . . . invasion of the trade, liberty, and property of the subject.” Even today, by invoking government power a copyright holder can impose prior restraint, fines, imprisonment, and confiscation on those engaged in peaceful expression and the quiet enjoyment of physical property. By thus gagging our voices, tying our hands, and demolishing our presses, copyright law violates the very rights that Locke defended.

… As our careful review of the historical record showed, however, the Founders almost certainly did not regard copyright as a natural right.

Bell cites here Ronan Deazley, who in Rethinking Copyright: History, Theory, Language writes (p. 143-44, n.32):

One of the ironies of the orthodox conception of copyright within the UK is that John Locke himself did not consider that his theory of property extended to intellectual properties such as copyrights and patents. In response to this letter from Freke [discussing with Locke arguments about a Bill for the Better Regulating of Printing and Printing Presses to provide certain property rights in books], Locke suggested that Parliament might secure the “Author’s property in his copy” by either including some provision that would allow a right to reprint those works which bore the name of the author or publisher upon them, or by issuing a “receit” upon delivery of three copies of any printed work for the use of the King’s library and the two universities which would “vest a priviledg in the Author of the said book his executors administrators and assignes of solely reprinting and publishing the said book for ___ years from the first edition thereof” ….

Consider Locke’s words in Two Treatises on Civil Government (ch. V, § 28):

He that is nourished by the acorns he picked up under an oak, or the apples he gathered from the trees in the wood, has certainly appropriated them to himself. No body can deny but the nourishment is his. I ask then, when did they begin to be his? when he digested? or when he eat? or when he boiled? or when he brought them home? or when he picked them up? and it is plain, if the first gathering made them not his, nothing else could. That labour put a distinction between them and common: that added something to them more than nature, the common mother of all, had done; and so they became his private right. And will any one say, he had no right to those acorns or apples, he thus appropriated, because he had not the consent of all mankind to make them his? Was it a robbery thus to assume to himself what belonged to all in common? If such a consent as that was necessary, man had starved, notwithstanding the plenty God had given him. We see in commons, which remain so by compact, that it is the taking any part of what is common, and removing it out of the state nature leaves it in, which begins the property; without which the common is of no use. And the taking of this or that part, does not depend on the express consent of all the commoners. Thus the grass my horse has bit; the turfs my servant has cut; and the ore I have digged in any place, where I have a right to them in common with others, become my property, without the assignation or consent of any body. The labour that was mine, removing them out of that common state they were in, hath fixed my property in them.

Notice here Locke already assume self-ownership, and then argues that an acorn ingested into one’s body becomes one’s property; to take the acorn back would violate his rights in his body. So what makes the acorn his? Locke says that it is labor that “put a distinction between” the ingested acorn and the unowned commons. Later he says the labor “was mine,” but this metaphorical comment is not necessary for his argument that by exerting labor on some unowned resource–by somehow transforming, enclosing or otherwise embordering it–one “puts a distinction” on it. That is the very purpose of borders of owned things: to distinguish them from things one does not own. Labor does this by establishing a connection or link between the homesteader and the thing embordered or transformed. (See my “What Libertarianism Is” and “How We Come To Own Ourselves.”) But labor does not need to be “owned” to serve this function. If labor were “owned” as some independent thing or substance (instead of merely being a metaphorical description of the fact that owning one’s body gives one the practical right to control one’s actions and labor as a sort of “byproduct”), and anything you “mixed” it with “therefore” became your property, then the argument would arise that you would own even useful, valuable ideas one “creates” by one’s labor. In fact this is how modern-day IP advocates argue.

But apparently Locke did not overextend his own labor metaphor as IP advocates do, for he did not view IP as a natural right, and neither did the Locke-influenced Founders who put the IP clause into the US Constitution in 1787. Bell is right that modern advocates of IP should not claim to be Lockeans. I’m not sure when the mistake arose of thinking of patent and copyright as “natural” rights. While the Founders and even Locke realized IP is not a “natural” right but only a temporary policy tool based on utilitarian notions, those coming later apparently did not see this distinction. They saw a large set of “rights” protected in the Constitution and lumped them all together as natural rights, even though only some of them were thought to be by the Founders and by Lockeans.

Now I noted in Rand on IP, Owning “Values”, and “Rearrangement Rights” that Rand should have realized that creation is not an independent source of ownership (thus deflating her case for IP), given that she once wrote:

The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power—and it is the only meaning of the concept “creative.” “Creation” does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. “Creation” means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.

She was not alone in this insight. In Man, Economy, and State, Rothbard wrote:

Men find themselves in a certain environment, or situation. It is this situation that the individual decides to change in some way in order to achieve his ends. But man can work only with the numerous elements that he finds in his environment, by rear­ranging them in order to bring about the satisfaction of his ends. With reference to any given act, the environment external to the individual may be divided into two parts: those elements which he believes he cannot control and must leave unchanged, and those which he can alter (or rather, thinks he can alter) to arrive at his ends. The former may be termed the general conditions of the action; the latter, the means used. Thus, the individual actor is faced with an environment that he would like to change in order to attain his ends. To act, he must have technological ideas about how to use some of the elements of the environment as means, as pathways, to arrive at his ends. Every act must therefore involve the employment of means by individual actors to attempt to ar­rive at certain desired ends. In the external environment, the gen­eral conditions cannot be the objects of any human action; only the means can be employed in action.

Lest Objectivists accuse Rothbard of “plagiarizing” from Rand, note the words of Mises in The Theory of Money and Credit (citing J.S. Mill’s Principles of Political Economy, sec. I.5.1-I.6.1):

It should never have been called in question that the transportation of persons, goods, and information is to be reckoned part of production, so far as it does not constitute an act of consumption, as do pleasure trips for example. All the same, two things have hindered recognition of this fact. The first is the widespread misconception of the nature of production. There is a naive view of production that regards it as the bringing into being of matter that did not previously exist, as creation in the true sense of the word. From this it is easy to derive a contrast between the creative work of production and the mere transportation of goods. This way of regarding the matter is entirely inadequate. In fact, the role played by man in production always consists solely in combining his personal forces with the forces of Nature in such a way that the cooperation leads to some particular desired arrangement of material. No human act of production amounts to more than altering the position of things in space and leaving the rest to Nature.

[Mises]

Starts at 8:20 in video 6 of 7, and continues to about 2:49 of video 7 of 7. He says that IP is one of the issues, along with abortion, he gives as sharply dividing libertarians. I haven’t yet watched the rest of the videos (linked below), but a friend assures me it’s a riveting, great lecture.

My contention in “There are No Good Arguments for Intellectual Property” has been shored up with the latest weak attempt, by “AssassinatorGirl,” who “doesn’t own a table,” in her video Kinsella Fails On Intellectual Property Arguments. She (a) agrees with my critique on utilitarianism and (b) agrees with my critique of the state, leaving her with only (c) an inept contract-based argument, which she fumbles around after admitting she doesn’t know all those legal terms. Ummmmmm…

I’ve moved to libertarian scholarship full-time. Quit job, well mostly–working 1 day a week, mostly remotely. Rest of the time: full time libertarian and legal speaking, lecturing, publishing. Very pumped up. No more patents. Starting a new anti-IP center. More details forthcoming…

Seth King of The Daily Anarchist, in ?Intellectual Property And Libertarianism, does a nice job of summarizing why the legitimacy of IP has been taken for granted in libertarian circles (it’s in the Constitution), why the issue is becoming ever more important (in recent years “software and file sharing really kicked into high gear” and there’s been an at least apparent increase in obviously absurd and unjust patent and copyright infringement lawsuits), his own enlightenment on IP (influenced by some of my writing), and why a compelling case against IP needs to be informed by Austrian economics and not by leftist anti-property assumptions.

Collecting previous posts and other links about IP imperialism (efforts by the US and other western countries to strongarm developing or other nations into adopting US-style IP laws:

• Hatch’s “International IP Piracy Priority Watch List”;
• IP Imperialism (Russia, Intellectual Property , and the WTO);
• Russian Free Trade and Patents, Mises Blog (Sept. 22, 2006);
• Bush Wants More Jailed Citizens in Russia and China;
• China, India like US Patent Reform, Mises Blog (Dec. 10, 2007);
• Stop the ACTA (Anti-Counterfeiting Trade Agreement);
• Cory Doctorow, How ACTA will change the world’s internet laws;
• Mike Masnick, Canadian Recording Industry Claims That Canadian Copyright Proposal Is A $5k License To Infringe (regarding US diplomatic pressure on Canada to adopt DMCA-style provisions)

I appeared yesterday on Ernest Hancock’s Declare Your Independence radio show for about two hours (hours 2 and 3 of his show) discussing intellectual property. It was a pretty wide-ranging, radical discussion, but I think I made progress with Ernie. The MP3 files are on the show’s page for that day; local files: hour 1; hour 2; hour 3.

Jock Coats, who did the audio narration for my Against Intellectual Property, has posted a good reply to Cathy Smith’s pro-IP comments and confusions in his article Copyright – buying your time? (responding in part to her Time—Going, Going, Gone).

Jock is right to guess relation between Cathy and L. Neil Smith: she is his wife; she was involved in the debate about the Shire Society Declaration on the FreeKeene board. Some suspected L. Neil was speaking through her. She denied it, and said she was speaking for herself. All I know is they have both presented similary sketchy, incomplete and flawed arguments for IP. Their argument basicaly amounts to calling copying theft–i.e., assuming their conclusion; question-begging.

My comment to a Cobden Center post (see also Rothbard’s Utilitarian Free-Market Economics):

@Bryan Niblett:

“The reason for private property is that a man is morally entitled to that which he brings into being and property laws are necessary to give him freedom of action in the domain of the property he has created.

“I recommend that you read John Locke’s Second Treatise on Civil Government(a great work) where he explains all this.”

The problem is the assumption that creation is an independent source of property rights. It is not. Creation is merely rearranging already-owned property into a more valuable configuration. Thus creation presupposes the things modified are already owned–and adds wealth, but not property rights. The only legitimate way to acquire property rights is by homesteading (appropriation) of unowned resources, or contractually from a previous owner.

The fallacious “creationist” approach to property is mixed up with Locke’s imprecise and overly metaphorical comments about the “ownership” of labor–labor is just action; it’s something you do with your body, i.e. with your property. If I own my body and other this the ownership of these scarce resources gives me the power to use them–to act with them–as I see fit. To say I own this action (labor) is unnecessary and double-counting, and leads to confusion. Lockean homesteading works simply because by transforming and using an unowned resource first you establish a better claim to it; there is no need in this argument to assume that labor is “owned”. And thus, there is no basis for the creationist view that if you labor to make an information pattern that you own that pattern. Labor only serves as part of homesteading in that it is just the way human action transforms and thus emborders a previously-unowned scarce resource. That is, it presupposes we are talking about ownable things–that is, things that need property rights to prevent conflict over their use–that is, conflictable things, or sometimes as they are called, rivalrous, or “scarce.” Information is not an ownable thing at all. It may not be homesteaded at all. It is not “transformed” or embordered. Rather, information is what guides human action; by acting with respect to (laboring on) a scarce good, following information that guides one’s actions, one transforms that scarce good and emborders it, thus appropriating it to one’s estate. But the information only guides action. If you think of a new way to manipulate or use your property that is useful to you but you in no wise gain ownership of the information itself. Human action is use of scarce means to achieve ends, where the means selected and the manner in which they are employed, is guided by ideas or information. The means used are scarce and thus have to be owned by the actor in order to use these means; but it makes no sense, and there is no need, for the ideas that guide his actions to be “owned” by him–only I can use my eggs and bowl to make a cake, so I need to own these means; but I am not prevented from making my cake if a thousand other people simultaneously use the same recipe to make their own cakes.

I discuss all this in my various IP writings at http://www.stephankinsella.com/publications/#IP; see also Locke, Smith, Marx and the Labor Theory of Value http://blog.mises.org/13064/lock-smith-marx-and-the-labor-theory-of-value/ and What Libertarianism Is, also http://blog.mises.org/11042/rand-on-ip-owning-values-and-rearrangement-rights/

Current writes:

“I think that from a utilitarian standpoint though there is a good argument for it. If there is no way to be rewarded for the creation of software (for example) then less software will be created.”

The problem is this is always asserted by IP advocates but never proven. Forget for a moment that utilitarianism is methodologically flawed (value is ordinal not cardinal and not interpersonally comparable) and morally bankrupt (it’s immoral to steal from A to give to B even if A is richer, even if the money taken “means less” to A than it does to B).

IP advocates have no proof that the marginal benefit of IP systems is greater than the cost of those systems. In fact they have no proof that there is marginal benefit at all. Studies so far tend to be inconclusive or to conclude that innovation is on net diminished by IP law.

See my comments in this respect to David Friedman here:

http://www.stephankinsella.com/2010/08/18/volokhs-david-post-the-high-cost-of-copyright/comment-page-1/#comment-73095

see also :

http://blog.mises.org/10217/yet-another-study-finds-patents-do-not-encourage-innovation/ and Reducing the Cost of IP Law, and There’s No Such Thing as a Free Patent

Book Banning Courtesy of Copyright Law

In Paul Allen: I Patented Silicon Valley Years Ago, Robert Wenzel, who claims to charge $750 for a 10 minute phone conversation, also claims he is going to write a book on his view of copyright and patent. His basic idea seems to be that some form of intellectual property right should be granted for independent creation, not for first creation. As I noted in the comments, he doesn’t seem to have a good grasp of IP law at all, and his argument is weak and confused. Copyright already does what he wants so does not need to be reformed. He seems to think trademark can be subsumed under copyright or patent even though trademark is based on fraud and has to do with identifying the source of a good or service, not with creating an original work of authorship or a practical invention as per copyright and patent law.

I reproduce various of my comments below. He has also made pro-IP comments and criticized me and Jeff Tucker previously–see links appended below:

Stephan Kinsella said…

This sounds like a confused view of things. First, it’s not patent AND copyright that are based on who is first–this is only the case for patent. Copyright already is based on originality. Under copyright law it’s theoretically possible for multiple independent creators to have their own copyrights to the same work–if they all came up with it on their own. It’s just that this is very unlikely.

As for patent, it’s not really based on the first to invent. It’s based on first to file in most of the world. In the US it’s sort of based on first to invent–but not really. It’s possible to get a patent on something that someone else has been using (in secret) for decades.

Even if you allow “patents” only for “independent” inventions, this is fraught with problems. First, it’s arbitrary in that it would protect a guy B who (independently) re-invents a product X a month after A patents it, but then C who was on the cusp of it, but who sees A’s patent right before he finalizes his re-invention, is unable to invent it now b/c he has been “tainted” with information from A’s patent. This makes no sense at all.

But a more serious problem is this whole scheme of yours to find a way to have a “fair” idea-monopoly grant is based on the presumption that we should have innovation-monopoly grants in the first place. What nonsense. It’s not a “problem” to be solved that people can learn. Learning and emulation are good things.

August 29, 2010 5:45 PM

Robert Wenzel said…

Well, you will agree, won’t you that if I am not willing to allow anyone to use the idea for less then a payment of $50 to me, that anyone using the idea in say a book should be stopped from doing so unless they pay me $50?

Otherwsie how is this different from someone who rents my car for a day and then turns around and rents it out for a year? Shouldn’t the car be returned to me ASAP or do I have to sit around for a year because the person who had no authority to rent the car for a year rented it out for that period?

August 29, 2010 5:46 PM

Stephan Kinsella said…

Wenzel: “I grant that Jefferson does hold your view. However, I do believe it is incorrect. If I have an idea and go to you and say, “I will tell you my idea under two conditions: 1. You pay me $50 and 2. You must reveal my idea to no one.”

Now we have two people with the idea, are you advocating that this contract be broken or ognored? ”

First you need to be clear on what your theory of contract is: is it merely a payment of damages (title transfer) that is triggered by the revealing of the idea? Or is it some kind of trespass?–with assocatiated damages?

In either case, third parties are not bound by this agreement. If a third party uses information to manipulate his own property he does not breach any contract with “the” “originator” of “the” information, nor invade the borders of the “originator’s” property. This is all nonsense and hocus-pocus talk.

August 29, 2010 5:47 PM

Stephan Kinsella said…

“Well, you will agree, won’t you that if I am not willing to allow anyone to use the idea for less then a payment of $50 to me, that anyone using the idea in say a book should be stopped from doing so unless they pay me $50?

Otherwise how is this different from someone who rents my car for a day and then turns around and rents it out for a year? Shouldn’t the car be returned to me ASAP or do I have to sit around for a year because the person who had no authority to rent the car for a year rented it out for that period? ”

no no no. the car is a scarce resource, owned by the owner. information is not. to say it is, is question-begging.

August 29, 2010 5:59 PM

Robert Wenzel said…

@Stephan Kinsella

This sounds like a confused view of things. First, it’s not patent AND copyright that are based on who is first–this is only the case for patent. Copyright already is based on originality. Under copyright law it’s theoretically possible for multiple independent creators to have their own copyrights to the same work–if they all came up with it on their own. It’s just that this is very unlikely.

Thank’s for the correction. It’s good to see at least the copyright law taking my view. Although I am a bit confused when, for example,then-Los Angels Laker’s coach Pat Riley copyrighted the word “ThreePeat”. In my world this would be a waste of time since how could Riley prove that I didn’t come up with the term on my own.

As for patent, it’s not really based on the first to invent. It’s based on first to file in most of the world. In the US it’s sort of based on first to invent–but not really. It’s possible to get a patent on something that someone else has been using (in secret) for decades.

Even if you allow “patents” only for “independent” inventions, this is fraught with problems. First, it’s arbitrary in that it would protect a guy B who (independently) re-invents a product X a month after A patents it, but then C who was on the cusp of it, but who sees A’s patent right before he finalizes his re-invention, is unable to invent it now b/c he has been “tainted” with information from A’s patent. This makes no sense at all.

This wouldn’t be a problem in my world since as I note, if my world comes about inventors would leave a trail as to the work they are doing on inventions. If inventor C starts looking at patents rights where he is doing work, of course he should be banned from a patent on the same material. It would be a dumb thing for him to do.

I believe this is the reason for example that comedians and late night show hosts send back material unopenned just so they don’t get into such a pickle, i.e. stealing someone elses material they supposedly saw.

But a more serious problem is this whole scheme of yours to find a way to have a “fair” idea-monopoly grant is based on the presumption that we should have innovation-monopoly grants in the first place. What nonsense. It’s not a “problem” to be solved that people can learn. Learning and emulation are good things. I’m not working from the premise of “innovation monopoly grants” I am working from the premise of individual contracts that if I create a product, be it a novel or some other product, that I have the right to stipulate in my contract the conditions under which the product can be reproduced. In my world, I recognize that an automobile, for example, that I may create will be emulated, just as the invention of the wheel or fire may be emulated.

It is more products that are clearly the product of a specific person, such as a song or a novel, that in my view contracts can be binding based on the wishes of the creator of the product.

August 29, 2010 6:48 PM

Robert Wenzel said…

@Stephan Kinsella

This is all nonsense and hocus-pocus talk.

I’m not sure how strong an argument this is.

Back to my point:

Let me ask you this. In your world, if someone who has access to an upcoming major motion picture only under the condition that he not reprodouce it, then goes and reproduces and sells it to you, do you then have the right to sell it? More interesting, can you then create a contract with another person whereby you include in that contract that you are providing the reproduction only under the terms that the person does not reproduce it?

August 29, 2010 7:01 PM

Robert Wenzel said…

I should add that I believe what Riley technically did was register “Three-Peat” as a trademark. However in my world everything would be either patent or copyright, with trademarks falling under copyright, as a kind of special case. That said I would find it very difficult for him to defend such a copyright (in my world), since it would be near impossible for him to prove the term was stolen.

August 29, 2010 9:25 PM

***

My (somewhat edited) replies:

This sounds like a confused view of things. First, it’s not patent AND copyright that are based on who is first–this is only the case for patent. Copyright already is based on originality. Under copyright law it’s theoretically possible for multiple independent creators to have their own copyrights to the same work–if they all came up with it on their own. It’s just that this is very unlikely.

Thank’s for the correction. It’s good to see at least the copyright law taking my view. Although I am a bit confused when, for example,then-Los Angels Laker’s coach Pat Riley copyrighted the word “ThreePeat”. In my world this would be a waste of time since how could Riley prove that I didn’t come up with the term on my own.

This is too short for copyright–that’s why you can see movies or novels use the same title sometimes. I think you mean trademark. Further, copyright is not a verb–it’s not something the creator applies for or plays a role in creating. You don’t need to register it with the copyright office; doing so is neither necessary nor sufficient to create copyright. Same thing with putting a copyright notice on your work: it’s neither necessary nor sufficient to create copyright. Copyright is granted to the author automatically, regardless of whether he wants it or not, and it’s not easy to even get rid of it (see my post Copyright Is Very Sticky! ).

There is no libertarian rationale whatsoever to give someone a monopoly on the use of a pattern or information that guides their use of their own property. In any case, you are confused. This is trademark, not copyright. You can’t “copyright” something–it’s not a verb. You are automatically granted a copyright in original works of authorship fixed in a tangible medium of expression, as soon as you do it. Whethre you want it or not. Short phrases, words, titles are considered too short for copyright protection; this is a trademark issue. Trademark has nothing to do with patent and copyright; it is based on the idea of fraud. Patent and copyright are not.

“Even if you allow “patents” only for “independent” inventions, this is fraught with problems. First, it’s arbitrary in that it would protect a guy B who (independently) re-invents a product X a month after A patents it, but then C who was on the cusp of it, but who sees A’s patent right before he finalizes his re-invention, is unable to invent it now b/c he has been “tainted” with information from A’s patent. This makes no sense at all.

This wouldn’t be a problem in my world since as I note, if my world comes about inventors would leave a trail as to the work they are doing on inventions. If inventor C starts looking at patents rights where he is doing work, of course he should be banned from a patent on the same material. It would be a dumb thing for him to do.

I don’t think you understand how patents work. This is understandable as it’s a complex, technical, arcane area of law–I see this all the time: laymen have strong opinions about a system they don’t even understand. I’m not talking about the second guy getting a patent. It’s just his right to use his property as he sees fit. You don’t need a patent to do that. Patents don’t grant anyone any permission anyway. They only give you a bludgeon to use against others. NOt the right to do anything at all with your own property.

I believe this is the reason for example that comedians and late night show hosts send back material unopenned just so they don’t get into such a pickle, i.e. stealing someone elses material they supposedly saw.

No. This has nothing to do with patents or inventions. Now you are apparently talking about copyright.

Comedians don’t get invention submissions. You must be thinking of some copyright scenario. It has nothing to do with patents or inventions. As for your example of inventor C not getting a patent on “the same material” (whatever that means), my comment has nothing to do with C getting a patent, but rather with C not being able to use his own property as he sees fit. In your cobbled together idea of IP rights, if B “independently” invents something A has a patent on, B can not only use this invention, he can even get a patent on it. But C, who learns of A’s product before C has a chance to independently invent it, not only can’t get a patent on the invention, but he can’t use his own property according to these ideas: he can’t even rearrange or reshape or use his own property in certain ways that are prohibited by A’s (and B’s?!) patent. This is absurd and unlibertarian.

But a more serious problem is this whole scheme of yours to find a way to have a “fair” idea-monopoly grant is based on the presumption that we should have innovation-monopoly grants in the first place. What nonsense. It’s not a “problem” to be solved that people can learn. Learning and emulation are good things.

I’m not working from the premise of “innovation monopoly grants” I am working from the premise of individual contracts that if I create a product, be it a novel or some other product, that I have the right to stipulate in my contract the conditions under which the product can be reproduced.

You use “stipulate” like it’s some magic wand type word. What does “stipulate” even mean, and what does it have to do with assigning title to owned scarce resources (which is what contracting does)? You apparently are not aware of the limitations of contract. IP requires third parties to be bound. Contracts can’t do this.

In my world, I recognize that an automobile, for example, that I may create will be emulated, just as the invention of the wheel or fire may be emulated.

… so… if I read you right, you agree there is no IP.

But a more serious problem is this whole scheme of yours to find a way to have a “fair” idea-monopoly grant is based on the presumption that we should have innovation-monopoly grants in the first place. What nonsense. It’s not a “problem” to be solved that people can learn. Learning and emulation are good things. I’m not working from the premise of “innovation monopoly grants” I am working from the premise of individual contracts that if I create a product, be it a novel or some other product, that I have the right to stipulate in my contract the conditions under which the product can be reproduced. In my world, I recognize that an automobile, for example, that I may create will be emulated, just as the invention of the wheel or fire may be emulated.

I can’t tell what you are in favor of here. You seem to favor use of contract between seller and buyer to try to create some kind of simulation of IP rights. You also seem to recognize that third parties can and may emulate your ideas. IP, of course, has to bind third parties. If it doesn’t, it is not IP but just contract. And contract cannot bind third parties. It cannot be used to set up a type of IP system.

It is more products that are clearly the product of a specific person, such as a song or a novel, that in my view contracts can be binding based on the wishes of the creator of the product.

Contracts don’t bind third parties. Thus your idea fails.

This is all nonsense and hocus-pocus talk. I’m not sure how strong an argument this is.

I am. The burden is on you to justify the insane system of IP law. Now you, like most IP advocates, seem to be saying you don’t believe in modern IP law as it’s instantiated. And you clearly don’t understand IP law at all… even though you claim you’ll write a “book” on it. You seem to have strong opinions about a system you don’t really favor and that you don’t really understand. I guess I don’t have really disagree with the IP system you advocate since I have no idea what it is.

Let me ask you this. In your world, if someone who has access to an upcoming major motion picture only under the condition that he not reprodouce it, then goes and reproduces and sells it to you, do you then have the right to sell it?

You can’t technically “sell” a patttern of information since you can’t own it. But you can do anything in life in general that does not invade the borders of (trespass against) the property of others. If someone agrees to transfer money to you on the condition that you perform certain rightful actions, this violates no rights. If you have information you are of course free to act on that information.

More interesting, can you then create a contract with another person whereby you include in that contract that you are providing the reproduction only under the terms that the person does not reproduce it?

You can create whatever contract you want. Doesn’t mean it’s magic. If you have a secret–say, you are a closet homosexual and no one knows it–and you reveal this to a friend under some kind of solemn promise of secrecy, and he breaches it–so what if it’s a breach of contract? So what if you can sue him for money damages. The world now knows you are gay. Are they supposed to pretend like they don’t know this now?

I should add that I believe what Riley technically did was register “Three-Peat” as a trademark. However in my world everything would be either patent or copyright, with trademarks falling under copyright, as a kind of special case. That said I would find it very difficult for him to defend such a copyright (in my world), since it would be near impossible for him to prove the term was stolen.

Trademark is a species of copyright now? But this makes no sense. Trademark is based on consumer confusion–misidentification of the source of goods. It’s based on fraud. Copyright, even in your imagination, is based on being some kind of independent creator of a pattern. A trademark, to work, need not be original at all. It is just a way of identifying who is selling or making something. What in the world does this have to do with copyright? How can you write a book on IP knowing so little about IP??

***

From Mises Institute: Do As They Say, Not As They Do?

Stephan Kinsella said…

Mr. Wenzel,

You suggest that people who oppose IP ought to “pull” it. I am not sure exactly what kind of advice this is, since you appear to believe in IP, so you seem to be trying to make some kind of consistency advice.

I have begun to use the CC Atribution 3.0 license–on my journal, Libertarian Papers, for example. This allows others to use the work even for commercial uses, even to create derivative works, etc.–the only condition is attribution. I don’t think anyone minds this in the first place.

Now you seem to suggestion one “ought” (to be consistent?) “pull” the copyright. Well, what else ought I do? I could “attempt” CC0, too–but I’ve explained here why I don’t think this new, experimental technique won’t work. “Pulling” the copyright won’t work either–just saying you don’t have or won’t assert a copyright does not mean you don’t have copyright, and does not mean you won’t assert it. When people re-publish or use a copyrightd work, they need something legally effective that they can rely on. It’s not clear that CC0 would work. Some half-assed, layman’s amateur attempt to “pull” his copyright also won’t work. I suppose I could have a laundry list attempt to get rid of my copyright: I could do Attribution license; a viral Attribution-Share-Alike “copyleft” License; in conjunction with CC0; plus a faux-promise “not to enforce” my copyright, and an email address inviting people to write me. Or, I could simply personally “adopt” the policy of never actually suing people for copyright infringement even if they do it.

Yes, I could do all this, but it might make things worse–such a confusing situation to deal with and analyze. A simple, clean CC Attribution Only is just fine. Virtually everyone is happy to give attribution credit, so this condition is trivial, thus making CC Attribution the closest reliable thing to a copyright disclaimer.

As an example, if I were publishing a book and wanted to include article X, I would much rather it be subject to a CC 3.0 Attribution license than CC0 or having some half-assed author-scribbled note on their web page, “I Hereby Exercise My COMMON LAW RIGHTS AS A FREEMAN to PULL my cOPYRIGHT”. Why? Because this latter is just a statement; it is likely legally ineffective, except perhaps for setting up an equitable estoppel defense that I might be able to assert as a defense in a lawsuit… and the CC0 might turn out to be ineffective. Since I WANT to put the author’s name on it, i.e. give attribution, the CC Attribution license imposes NO real conditions on me at all; I am free to do what I want. I would rather have a CC Attribution license that I can rely on, even if it imposes on me the draconian condition that I provide the author’s name! Than a CC0 or poor-man’s-crank-license that are legally shaky and unreliable.

So, thanks for your legal advice, but I think it’s wanting.

I really fail to see how it harms you that some of us are voicing our views as to the problems with IP (problems an increasing number of libertarians and young people are waking up to), or with releasing our works virtually copyright free to the public.

Respectfully–

January 24, 2009 10:05 AM

Robert Wenzel said…

Mr. Kinsella,

Thank you for your thoughtful legal perspective. I believe you truly are attempting to be consistent.

Given that I am interested in publishing the book, Last Knight and that the copyright is held by the Mises Institute, where Jeffrey Tucker is aggressively promoting your view on the there being no such thing as “intellectual property”, how do you suggest I approach them so that I can start publishing Last Knight without fear of a lawsuit by MI?

January 24, 2009 2:32 PM

Stephan Kinsella said…

Dear Mr. Wenzel,

“Given that I am interested in publishing the book, Last Knight and that the copyright is held by the Mises Institute, where Jeffrey Tucker is aggressively promoting your view on the there being no such thing as “intellectual property”, how do you suggest I approach them so that I can start publishing Last Knight without fear of a lawsuit by MI?”

I’m not in the market to obtain more clients at present, so won’t be handing out advice here, except to say that in such a case I would just be serious, and not make an eristic demand just to try to score points in an argument.

January 24, 2009 6:48 PM

***

See also A “Bullshit” Response from Jeffrey Tucker:

Stephan Kinsella said…

Mr. Wenzel,

Your argument here seems to be, “Jeff Tucker has not taken seriously my non-serious request for reprint permission, therefore copyrights is valid.”

Do you see how flawed this argument is? No action in life of Mr. Tucker has any bearing on whether IP is justified or not. He does not have the power to make IP legitimate (if it is not) by his actions.

You seem also to think that the fact that you have gotten your way, in that IP laws are in force, and that they are being imposed by your government on those of us who do not agree, meaning we have to navigate within a system that you yourself support, — you seem to think that the difficulties we anti-IP people face in finding ways to work within the very corrupt IP system that you support, somehow means IP is not corrupt. In other words, you want to force us to abide by the laws you and your side have been able to foist on us, and shut us up too–by turning us into hypocrites for having to live in the corrupt system you’ve forced us into.

This tactic is, in my view, despicable (though you perhaps don’t mean to do so explicitly); it is reminiscent of what smug lefties do when they attack any successful black man who opposes affirmative action, by showing that he probably received and benefitted from it so how dare he complain about it. Nice trick: impose a system on people that they have to go along with, and then call them a hypocrite when they disagree with it, since they happen to have had the system foisted on them. Sort of like a catch-22.

January 24, 2009 6:54 PM

Robert Wenzel said…

@ Stephan Kinsella

You really missed your calling, try comedy. Your style is a little dry, but maybe if you break watermelons with a judge’s gavel, you would draw them in.

You write:

Your argument here seems to be, “Jeff Tucker has not taken seriously my non-serious request for reprint permission, therefore copyrights is valid.”

Where do I begin with this absurd strawman. Oh yeah, how about your strawman doesn’t even have the timeline correct. How can my argument be that “Jeff Tucker has not taken me seriously.” When I wrote my initial argument before I even wrote to Jeff Tucker and had no idea how Tucker would respond when I did write to him raising my concerns in that first email.

Further, if you think my request to publish is not serious, then I suggest you urge Tucker et al to test me. Go ahead tell them I am not going to publish, that it is all a bunch of hot air.

Go ahead guys try it.

January 24, 2009 7:30 PM

***

Jeffrey Tucker, Again

A couple of you have emailed me to point out that Jeffrey Tucker is out with another attack on the rights of individuals and corporations to do as they please with what they produce. (Except, of course for Mises Institute books, specifically Mises: The Last Knight of Liberalism, where Tucker refuses to even discuss why I shouldn’t be granted the right to publish the book under his anti-copyright view of the world.)

I didn’t miss his piece. The errors in his thinking continue to pile up. In fact, there are so many that only a book will do justice to covering all of them.

I have been thinking about the relationship between the nature of property, property rights and government and have been planning to write a book on the subject, a few years down the road. However, Tucker’s aggressive promotion of totalitarian anti-copyright and anti-patent thinking is a subset of property, property rights and government that needs to be addressed now.

Thus, I have decided to put aside a number of other projects to specifically address , in book form, the Kinsella-Tucker fallacies.

I believe the proper libertarian understanding of property rights solves the problem of “intellectual property” protection for, say, even the tough situations, such as, rights for those that first discovered how to start a fire or were the first to use the wheel. And the solution is not open source marketing. I’ll cover all this and more.

The book is, for the most part, already “in my head” so it shouldn’t take long to put it to paper, just a little bit of additional research. When it is in print, you will be the first to know.

***

Here, Taylor Conant also see’s Wenzel’s confusion: Naked Trademark Battle:

So, unless Kinsella changed his tune (I don’t know where Tucker stands on “voluntary IP” such as trademarks and trade secrets), I think you may be confused.

It will be nice when you finally publish your IP book so we can all start taking swings at your IP views because right now it’s unclear what they are and why and everytime people try to critique them you insist we wait to read your book!

***

Finally, see Lew Rockwell on Intellectual Property and The State of the Intellectual Property Debate at LRC. He’s apparently been talking about writing “a book” in IP for a while now, and still doesn’t even get the differences between patent, copyright, and trademark, nor does he seem to realize why contracts are not and cannot create IP.

My reply to a question re my article “Goods, Scarce and Nonscarce”: the questioner asked:

Would contract that ask employee not to reveal secret production information about the firm where he work would be legal?

Can contract protect firm from their employee about revealing nonscarce information?

My view is the Evers-Rothbard title theory of contract is basically correct–I elaborate on it in my JLS article A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability. See also the “Trade Secret” section (note 90 etc.) of Against Intellectual Property.

Under this view, there are at least two ways to look at this. First, the employer can require as a condition of employment that the employee contractually obligation himself to pay certain monetary damages to the employer, in the event he reveals certain confidential information.’

Another possible way to look at it is that the owner of property–say, a factory–has the right to grant or deny permission to people to use it. If someone uses the property without permission it is a form of trespass, which is a crime or tort, with associated damages or penalties. The permission can also be conditional–you may use my factory for XYZ purposes but not ABC uses. I the employee knowingly does ABC with the property it is an unconsented to use and arguably at type of trespass, and may be treated as such (though in my view this would probably still just be handled by contract instead: the contract would say that IF the employee does ABC with Employer’s property, THEN certain monetary damages are owed–just a title transfer).

The problem I see with treating the trade secret breach as a trespass instead of contractual damages issue is that when the employee is at his home or off company premises and reveals information, he is not trespassing since he is not using the company’s property (information is not property, it’s just knowledge). So this can only trigger a contractual damages payment. For there to be trespass he would have to misuse company property. But when he is using the company property and learning its trade secrets presumably this is consented to. But suppose he uses company property (building, rooms, computers) to access information he is not supposed to have access to–in this case, he is committing trespass to acquire the confidential information. In this respect he is just like a burglar who breaks in and acquires information by an act of aggression (trespass, breaking and entering). When there is a crime or tort, there are certain penalties or consequences to the malfeasor–monetary damages (restitution) at the least, and possibly retribution or incarceration (for more on this see my JLS article Punishment and Proportionality: The Estoppel Approach).

Note, however, that once the employee does make the information public, there is nothing the previous “owner” of the information can do to stop third parties from using this information (this is the law right now, by the way, with respect to trade secrets: once the information is no longer secret, it’s just not a trade secret any more. The only remedy is against the former employee. See also the discussion in Against IP of “Cooter” and the oil information in the “Contract vs. Reserved Rights” section.

Jeff Tucker and I published “Goods, Scarce and Nonscarce” on Mises Daily today. This article examines the nature of nonscarce goods and their relationship to scarce goods and other fundamental economic concepts. This of course ties into the intellectual property discussion ongoing in libertarian and free market circles.

The original link to this piece is now dead, and is available only here, at Archive.org:

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AAP Homepage

Arnold Plant

The Economic Theory Concerning Patents for Inventions ¹

(Ernest Cassel Professor of Commerce in the University of London)

Economica, New Series

Volume 1, Issue 1

Feb., 1934, 30-51.

1. Introduction

PATENTS for inventions comprise a special form of property, created by .statute law.  In the United Kingdom, for -instance, patents “sealed with the seal of the Patent Office [which] shall have the same effect as if it were sealed with the Great Seal of the United Kingdom, and shall have effect throughout the United Kingdom and the Isle of Man” are granted under the Patents and Designs Acts, 1907 to 1932, every patent relating to one invention only and having a duration of sixteen years in the first instance; subject to fulfillment of the conditions laid down in the Acts.

Index

2. Private Property

The statutes creating patents in the various countries impose limitations on the exercise of the property rights which they comprise, but these are not the only peculiarities of this form of property.  Despite the limitations, property rights in patents are more potent than is generally true of private property.  The significance of private property in the economic system was enunciated long ago with great clarity by David Hume in his Enquiry Concerning the Principles of Morals. Property, he argued, has no purpose where there is abundance; it arises, and derives its significance, out of the scarcity of the objects which become appropriated, in a world in which people desire to benefit from their own work and sacrifice.  Systems of Justice, he went on, protect property rights solely on account of their utility.  Where the security of property is adequately assured, property owners generally see to it, that scarce “means” are directed to those uses which, within their knowledge and judgment, are most productive of what they want.  Such is the diffusion of private property and of the desire to use it, that it is at any rate generally true that there is not a

1. Substantially a paper read before Section F of the British Association at Leicester, September 1933.

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sufficient concentration of ownership of the supplies of a particular good, and of all the easily substitutable alternatives for it, to enable the owners to control the prices of the property they own.  Neither the withholding, nor the disposal of the property of any one owner will in general affect appreciably the price of the commodity in question.  Hitherto, this inability of property owners to control prices has been generally approved.  If we except recent tendencies towards “planned monopolies,” most proposals to interfere with property rights have been aimed in the past at prohibiting the concentration of supplies of particular commodities under a single ownership, in order to prevent the property owners from raising the price by withholding part of the supply.

Index

3. Property Rights in Patents

It is a peculiarity of property rights in patents (and copyrights) that they do not arise out of the scarcity of the objects which become appropriated.  They are not a consequence of scarcity.  They are the deliberate creation of statute law; and, whereas in general the institution of private property makes for the preservation of scarce goods, tending (as we might somewhat loosely say) to lead us “to make the most of them,” property rights in patents and copyright make possible the creation of a scarcity of the products appropriated which could not otherwise be maintained.  Whereas we might expect that public action concerning private property would normally be directed at the prevention of the raising of prices, in these cases the object of the legislation is to confer the power of raising prices by enabling the creation of scarcity.  The beneficiary is made the owner of the entire supply of a product for which there may be no easily obtainable substitute.  It is the intention of the legislators that he shall be placed in a position to secure an income from the monopoly conferred upon him by restricting the supply in order to raise the price.

Index

4. Expectations of the Patent System

It may be assumed that the statutes creating these patent and copyright monopolies would not have been placed, or allowed to remain, upon the statute books in the absence of a widespread expectation of public advantage from their operation.  Economists have of recent years found new difficulties in stating the effects of monopoly upon the magnitude of the national income, but it is nevertheless still broadly accepted that monopoly conditions tend to promote the diversion of the scarce means of production from a more to a less generally preferred utilisation.  It is of interest, therefore, to review the expectations of those who approve of the patent system, to

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consider the implications of those expectations, and the extent to which they have been realised.  Are those expectations reasonable in themselves?  Are the devices which have been adopted for their realisation appropriate?  Has their operation resulted in objectionable consequences which may not have been foreseen?

Index

5. Motive

As we have seen, the purpose of patents for inventions is, by giving an inventor the control for a definite period over the disposal of his invention, to make it easier for him to derive an income from it.  With what objects ?  As soon as we enter into an examination of motive, we are, of course, venturing upon uncertain and debatable ground.  It will, nevertheless, I think, be generally agreed that the ultimate aim is to encourage inventing.  This is undoubtedly the expectation and hope of the vast majority of disinterested advocates of patents.  The aim of all advocates, whether inventors themselves or not, is to make inventing pay better, and those at any rate who are not inventors hope for more inventions as a consequence.  Even those supporters of the patent system who would describe their argument as purely ethical in character would probably agree that their ultimate concern is that inventors, qua inventors, should be enabled to survive.  They may argue that their concern is to see that producers of inventions are not robbed of that which ought to be, even if it may not be in common law, their property; and yet their interest in inventors is very likely derived from a more fundamental belief that inventions are especially good in themselves, that the production and utilisation of inventions ought, therefore, to be encouraged, and that the way to attain that end is to extend the sphere of private property so as to increase the profitability of “inventing,” and of the exploitation of inventions, as compared with other occupations.  We are surely entitled, therefore, to attribute the existence of the patent law to a desire to stimulate invention.

Index

6. Definition of Invention

In order to examine the effects of the patent system on invention it is, therefore, necessary first of all to ask what determines the amount of invention that takes place, and we must start with a working definition of “invention.”  To give it a wide enough meaning – much more comprehensive, by the way, than that to which patent law has come to be applied – invention is the devising of new ways of attaining given ends.  We might widen the definition still further, by including the devising or suggesting of new ends themselves as inventions, but this would probably involve too great a departure from

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ordinary usage.  We may all agree that a new machine for making cigarettes is an invention but that a suggestion for the abandonment of cigarette-smoking in favour of something else is not.  If we definite invention as the devising of new ways of attaining given ends it will be best to make the “given ends” as concrete as possible by excluding from the category of “invention” any change in consumers’ taste.

Index

7. Adoption

This somewhat comprehensive definition of invention enables us to include, as we surely must, all new ways of attaining given ends, although many may not be immediately, if ever, adopted.  A new device, employing a recently discovered and revolutionary scientific principle, may be mechanically excellent, and yet not capable of commercial exploitation.  The time and extent of its adoption will depend upon price conditions.  Changes in relative prices may lead to the abandonment of one much utilised process and the substitution of another, devised long since but never before adopted.

8. Autonomous and Induced Invention

A useful distinction has been drawn by Professor Pigou between different types of change in economic conditions (and has been applied to inventions by Dr. J. R. Hicks), distinguishing those which are “autonomous,” occurring spontaneously rather than in response to any environmental impulse, from those which are “induced” by environmental changes and owe their origin therefore to circumstance.  Different writers have assessed very differently the relative importance, as regards their number, of inventions which fall into these two categories, and when we carry the analysis a step farther, and attempt a classification, within the second category, of the various circumstances which may induce invention, still more difference of emphasis is revealed in the views of the various authorities.

Index

9. Spontaneous or Autonomous Invention

Spontaneous or “autonomous” inventions include those which arise from the existence of what Professor Taussig calls the “instinct of contrivance.”  So far as these are concerned, necessity is not the mother of invention; the act of inventing rather is a necessity in itself.  The inventor cannot help it.  Just as some people, who may never be recognised as poets, continue to pour out volumes of verse, so others may spend their time or part of it in devising contrivances or- inventions.  Sir Josiah Stamp in his stimulating essay on Invention (Watt Anniversary Lecture, Greenock, 1928, reprinted in Some Economic Factors in Modern Life) inclines to the view that the flow of invention is largely explained in this way. ‘The

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inventor,’ he says, ‘is still sui generis, and emerges from the ranks of engineers, physicists, and chemists, not indeed as a “sport,” but as a special product, which is touched by no “economic spring.”  The sense of curiosity and the idea of fame play a greater part than the economic reward.’  Not all of the inventors, however, whose output is involuntary, are impervious to prospects of gain.  Like artists, some may turn their talent to profitable use.  The amount and rate of flow may be invariable, but its direction may be influenced by inducements of one sort or another.  Inventing may be spontaneous, but the nature or form that it takes may be controlled by circumstance.  It will probably be generally agreed that the number of “involuntary inventors” whose output is completely unaffected by economic conditions is at least as small as that of artists who work without regard to the saleability of their output.

More definitely in the category of “spontaneous” inventions are those which are made by accident, for the most part no doubt as the chance by-product of activity directed to some other purpose.  Every scientific worker knows how frequently an enquiry leads to discoveries which answer questions very different from those which prompted the investigation.  Undoubtedly, in the field of invention, contrivances are accidentally hit upon in the same way; but in all probability, the majority of these “chance” inventions are also indirectly “induced” – one stage removed, as it were – for the greater part of the activity out of which they arise is influenced by circumstance.  Of a somewhat similar character, again, are the inventions of “amateurs” who, when inspecting the specialised technique of a particular field of production, being prompted by curiosity rather than hope of gain, are enabled by their unusual possession of experience of some other technique to suggest improvements and new devices which fail to occur to the minds- of practitioners themselves.  The timing, at least, of such inventions is undoubtedly largely fortuitous.

Index

10. Induced Invention

Induced inventions owe at any rate their nature, if not their volume, to the circumstances of time and place.  One very potent cause affecting the amount of inventions is clearly the rate of growth of scientific knowledge.  The greater the volume of new scientific discoveries, the more rapid will become the rate of application of these discoveries by inventors to purposes of production.  Invention does not, of course, wait upon the completion of scientific discovery.  As William Edward Hearn wrote seventy years ago, in what is surely still

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the best theoretical discussion “Of the Circumstances which Determine the Extent of Invention” (in his Plutology, ch. xi): “The knowledge that is imperfect for the purposes of speculation is often a sufficient guide for the daily business of life.”  “Even at the present day,” he adds, “many processes of our most successful arts have not yet received a scientific explanation. … But in all empirical arts, the limit of improvement is soon reached.”

Index

11. Specialisation & Division of Labour

A second influence on the nature, if not on the volume, of new invention is specialisation and the division of labour.

The specialisation which has been made possible by the great increase in the number of scientific workers has in itself tended to increase the rate of scientific discovery.  Similarly, the division of labour in production has exerted an influence on invention.  Adam Smith made the point perhaps too forcibly (Wealth of Nations, Book I, ch. i) when he observed that “the invention of all machines by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour.”  W. E. Hearn and, following him, W. S. Jevons (Principles of Economics) both criticised the extravagance of Smith’s language, calling, attention to the number of important inventions which have emanated from unexpected quarters.  Yet they did not deny the obvious truth that specialisation in product and the division of labour make possible the detailed consideration of technological processes, and that inventions of new processes do arise out of such continuous and intimate consideration of detail.  Whether there is in consequence a net addition to the volume of invention, as distinct from a change in its nature, is another matter.

Index

12. Mechanisation

It is true that the growing mechanisation of industry withdraws ever more of the active and trained minds from actual machine operation and may in that way reduce the number of inventions that would otherwise be made in that field, but it would be a very incomplete account of the effects of the division of labour on invention that stopped there.  Specialisation has, of course, released the more able and ingenious and mentally alert workers from routine tasks for the performance of just such special tasks as inventing.  It has made possible the career of professional “inventor.”  It has moreover resulted in the increased wealth of communities, which has made possible the increase of knowledge by the endowment of research, and the spread of knowledge and the training of ability by the endowment of education. These in

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turn have increased on the one hand the field for invention, and on the other hand, the number of active inventors.

Index

13. Price Conditions

Increasing wealth, the division of labour, the progress of science, then, are clearly circumstances which induce in these various ways the invention of new processes and devices.  It remains to add another circumstance, which provides the incentive for the making of particular inventions, and that is the existence of favourable price conditions.  Dispute there may well be as to the effect of price changes, and of the consequent emergence of new opportunities for profit and new probabilities of loss, on the volume of invention that takes place as a whole in a given period, but as to the important directive influence of price conditions upon by far the greater part of inventive effort there can be no doubt at all.  Hearn wrote: “The principal circumstance which affects the progress of inventions is the strength of the motive for their use.  When the demand is sufficiently strong, the supply generally overtakes it…”  The price conditions which induce invention in particular fields are those which offer a special return to inventors in those fields.  The inventions may be induced either by the possibility of quite exceptional profits to those who can cut costs still further during times of flourishing trade, when an industry is already profitable, or by the imminence of certain loss to entrepreneurs who have fixed investments in industries which are depressed, and whose only hope is an innovation which will reduce expenses below receipts.  During the post-war years, for instance, inventions have been induced by price conditions in both the coal industry and the rubber industry on the one hand, and in the motor-car and radio industries on the other.

Index

14. Exploitation

Hitherto, the interest of economists in the relation between inventions and industrial fluctuations has been concentrated mainly on the part played by inventions in the causation of fluctuations.  (Cf., e.g. Mr. D. H. Robertson’s Study of Industrial Fluctuations, and Professor Pigou’s Industrial Fluctuations.) The problem of the reverse effects of business fluctuations on the flow of inventions is a no less fascinating subject of study, about, which a number of unargued and contradictory statements have been made.  It is important to distinguish between the making of an invention and its adoption.  Sir Josiah Stamp, in the paper already referred to, says: “On the whole I incline to the view that the periods of rapid and important invention tend to be periods of larger differential

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profits.”  The view is not supported in the paper by evidence or argument.  Professor Pigou in his Industrial Fluctuations (ch. iv, p.43) is concerned mainly to refute the proposition that fluctuations in general business activity may be initiated by variations in the rate at which ordinary minor inventions and improvements are made.  He argues that even in the case of major inventions it is the decision to exploit inventions rather than the making of the inventions itself that is the major cause of disturbance, the time and intensity of exploitation being largely determined by the state of business confidence.  “There is,” he says, “… a strong probability that invention as a whole will fluctuate very much less than invention in any given representative occupation,” – i.e. he implies that there is a transfer of inventive activity from one industry to another, expansions in one field being compensated more or less by declines in invention elsewhere; and he states definitely that “there is evidence that in slack periods technical devices and improvements accumulate in the sphere of knowledge, but are not exploited till times improve.”  The nature of the evidence is not stated.  It presumably relates to the statistics concerning the rate of exploitation rather than of invention itself.  Such an accumulation of inventions during depressions is compatible with increasing, stationary or declining absolute rates of invention, being purely relative to the rate of exploitation, which one might reasonably expect to decline when business confidence is at a low ebb.  It is of interest to notice, however, that elsewhere in the same study (p. 12) Professor Pigou asserts that “in periods of depression the amount of intelligence put into production is, in general, larger, partly because relatively inefficient business men are compelled to sell out to others, but mainly because those who remain in business ‘are put on their mettle, and exert themselves to the utmost to invent improved methods, and to avail themselves of the improvements made by others.’”  This would imply an increased rate of both invention and exploitation during depressions, at least on the part of those who remain in business. ¹

1. I cannot trace any attempt hitherto at statistical investigation of the relationship between disturbances in industrial activity and variations in the rate of invention.  Professor Pigou, having in mind, of course, the reverse connection, considers that “it is not in fact possible to demonstrate a close statistical correlation between the making of industrial inventions and neighbouring disturbances in general industrial activity.”  That may well prove to be true.  I am myself much disposed after somewhat close and prolonged study to hope that the detailed records of patent applications available over a long period in this and other countries can be made to throw light on this and the other related questions.  The returns are available separately for different [categories of industry (in this country, for instance, over a long period, there are 146 categories), those concerning provisional applications provide excellent evidence of the date at which inventions are made, and the subsequent history of the patents can be used for a study of the timing of the actual exploitation.  In particular instances, the, influence of adversity as well as of prosperity within an industry upon the display of inventiveness can easily be traced beyond reasonable doubt.  With due, care it may be possible also to draw conclusions with regard to the relation between the display of inventiveness and industrial fluctuations in general.  The work is progressing, but further discussion must be reserved for another occasion.]

HHC: [bracketed] displayed on p. 38 of original

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15. Conclusions About Induced Invention

In the meantime certain conclusions may be hazarded concerning induced inventions; firstly, that every price change, by creating cost difficulties in certain fields and opportunities for profit-making in others, provides a double stimulus to invention, and secondly that the larger the price change the greater will be the stimulus to invent.  Thirdly, during periods of disturbance of the general level of prices, a more general stimulus to inventions and to the exploitation of existing inventions may be expected, for we know that individual price relationships are disturbed whenever, for monetary reasons, the general price level shifts.  Fourthly, any government measures designed especially to reward inventors whether by subsidisation or by the patent system, i.e. the grant of monopoly rights over the utilisation of their inventions, may be expected, because of their influence upon price conditions, to affect the flow of inventions.  It is with the patent system that we are here primarily concerned.  Despite the publication of a large body of specialist literature, in the nineteenth century in particular, on the merits of patent systems, they have received scant attention by economists in the standard treatises.

Index

16. Impact of Patent System

The patent system may, on the one hand, be expected to affect the making of inventions in two ways.  The first is to divert inventive activity into those fields in which the monopoly grant will be expected to prove most remunerative.  It may, secondly, affect the total amount of inventive activity.  The patent system may, on the other hand, exercise another effect of perhaps equal importance.  It may influence the ability or willingness of entrepreneurs to make use of new inventions after they have been made.

17. Contemporary Opinion

It will be convenient to consider first the effect of the patent system on the amount of inventive activity.  Considerable difference of opinion on this aspect of the question is revealed by the scant references made by economists who go out of their way to praise the patent system.  On the one hand there-is the view, perhaps best represented in our own time by

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Professor J. B. Clark in his Essentials of Economic Theory (ch. xxi), that without the patent system there would be very little inventing, and very little adoption of inventions by producers, at all.  “If an invention became public property the moment that it was made,” he says, “there would be small profit accruing to any one from the use of it and smaller ones from making it… The system which gave a man no control over the use of his inventions would result in a rivalry in waiting for others rather than an effort to distance others in originating improvements.  This fact affords a justification for one variety of monopoly. … Patents stimulate improvement, and the general practice of the nations indicates their recognition of this fact.”  For the expression of a very different view we may turn to Professor F. W. Taussig (Inventors and Money-Makers), who throws doubt upon what he designates as the view of the older utilitarians, that “men contrived simply because this was conducive to gain, and would not contrive unless prompted by the experience and prospect of gain,” and suggests instead that invention may arise mainly as a spontaneous manifestation of a human “instinct of contrivance.”  If this is so, “we may be led to conclude,” he adds, although it is not his conclusion, “that the patent system, for example, is a huge mistake.”  Later, he observes that “the defenders of patent legislation often descant on the public benefit from inventions as if there were a special moral desert on the part of the projectors and patentees.  They put their case badly.  What deserves emphasis is the influence of calculated profit in directing the inventor’s activity, spontaneous though it be, into channels of general usefulness.”  The patent system is commended because it directs rather than increases inventing activity.  Professor Pigou puts the same view still more definitely (Economics of Welfare, 2nd edition, Part II, chapter viii): “The patent laws aim, in effect, at bringing marginal private net product and marginal social net product more closely together.  By offering the prospect of reward for certain types of invention they do not, indeed, appreciably stimulate inventive activity, which is, for the most part, spontaneous, but they do direct it into channels of general usefulness.”  The only supporting evidence is a reference back to Professor Taussig.

Index

18. Historical Opinion

The economists of the early nineteenth century who considered the question were as definite as Professor J. B. Clark that inventions would practically cease if the patent system were abandoned.  Jeremy Bentham was in no doubt at

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all (Rationale of Reward): “With respect to a great number of inventions in the arts, an exclusive privilege is absolutely necessary in order that what is sown may be reaped… He who has no hope that he shall reap will not take the trouble to sow.”  John Stuart Mill’s argument was similar. (Principles of Political Economy, Book V., ch. x, s. 4.)  As Professor Taussig said, the utilitarians assumed that the patent system was responsible for the greater part of inventing activity.  The question which they one and all failed to ask themselves, however, is what these people would otherwise be doing if the patent system were not diverting their attention by the offer of monopolistic profits to the task of inventing.  By what system of economic calculus were they enabled to conclude so definitely that the gain of any inventions that they might make would not be offset by the loss of other output?  By no stretch of the imagination can the inventing class be assumed to be otherwise unemployable.  Other product which is foregone when scarce factors are diverted in this way completely escaped their attention.

In the view of Bentham, the patent system “produces an infinite effect, and it costs nothing.”  Jean Baptiste Say, although subsequently more critical, made a similar mistake in his Traite (Prinsep translation, Book I, ch. xvii): “Privileges of this kind no one can reasonably object to; for they neither interfere with, nor cramp any branch of industry, previously in operation.”  The withdrawal from them of scarce resources is ignored.  To John Stuart Mill, again, the only public loss was merely the postponing of a part of the increased cheapness which the public owe to the inventor.

Manufacturers, although some of them were inventors themselves, who gave evidence advocating the abolition of the patent system before a Select Committee of the House of Lords in 1851, were no doubt enabled by self-interest to perceive the loss more clearly.  I. K. Brunel, for instance, believed that because of the patent laws people spent their time trying to invent, who would do better for themselves at other things.  In particular, he maintained that workers wasted their time and ruined themselves, trying to think out patentable inventions, when development would be much quicker if they were not thus distracted from making improvements, and refinements of a non-patentable kind.  In the ‘sixties James Stirling, famous in another connection for his rebuke of John Stuart Mill at his capitulation to a sentimentally “soft school of

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political economy,” emphasised the dangers of an over-stimulation of inventions by the patent system.  Yet at the beginning of this century Professor J. B. Clark was still writing: “If the patented article is something which society without a patent system would not have secured at all – the inventor’s monopoly hurts nobody… His gains consist in something which no one loses, even while he enjoys them.”  No inkling here that the patent inducement to invent diverts scarce human effort from other production, and that the subsequent exploitation of patents again interferes with the disposition of scarce factors which would obtain under competitive conditions.

Index

19. Diversion of Resources

If the views of Professors Taussig and Pigou, that the amount of inventive activity is in the main unaffected by the inducement offered by patent monopolies, come to be substantiated, the traditional case for the system will have been destroyed without further need for criticism; but it would surely be unreasonable to accept their view without strong supporting evidence.  It seems unquestionable not only that a very considerable volume of inventive activity must definitely be induced by price conditions, but also that that activity is diverted by price movements from other types of endeavour as well as from other fields of invention.  Entrepreneurs faced with new difficulties or with new opportunities will divert not only their own attention, but that of every technician who can be spared, from the business of routine production to that of urgent innovation.  They will not rely exclusively upon those types of professional inventors whose autonomous output pours out in a stream of unvarying size, and some of whom may be prepared, in return for the inducements which the entrepreneurs can offer, to transfer their spontaneous activity to their service.  It cannot be assumed that all who are capable of innovation spend their whole lives in inventing.  Many of them are also able administrators and production controllers; some in the past have been clergymen and barbers, and in our own time there is a steady flow of technicians from the research laboratories of pure science into those of industrial invention and out again.  Price changes, particularly if prices appear likely to take a new “set,” may therefore be expected to lead to an increase of invention and a decline in other activity.

The patent system makes possible this type of price movement.  It enables those who “have the monopoly of the right to use a patented invention to raise the price of using it for the whole term of the patent, within the limits fixed by the elas-

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ticity of demand, and in -that way to derive a larger profit from the invention than they could otherwise obtain.  The effect must surely be to induce a considerable volume of activity to be diverted from other spheres to the attempt to make inventions of a patentable type.

Index

20. Outcome for Invention

It will be convenient at this stage to consider both kinds of diversion together, i.e. from other kinds of activity into invention, and from one kind of inventive activity to attempts to make such patentable inventions as will, in the expectation of the inventor or of those directing his efforts, produce the greatest possible remuneration under a régime of monopoly.  It will be recollected that Professors Taussig and Pigou declare the merit of the patent system to be the inducement it offers for the production of inventions of greater “general usefulness” than would otherwise be made.

It will be clear first of all that there is one class of inventions, on the making of which the patent system can exert no effect at all, namely those arising spontaneously, whether by accident or as manifestations of an “instinct of contrivance,” in persons whose inventing is uninfluenced by all economic stimulus.  It is hardly likely that this class is very important in volume or in kind.

The making of all other categories of patentable inventions may, however, be induced by the patent system.  It does not follow, of course, that they will necessarily all be made in response to this inducement, for in the absence of patents a sufficient price incentive might be present, in open market conditions, to direct inventive activity to the same field; but in so far as the inducement is furnished only by the expectation of a patent monopoly, a diversion of resources takes place and other production is foregone.  What grounds are there for concluding that the output induced by this type of monopoly has any greater claim to be regarded as “generally useful” than that which would have been induced in its absence by the price conditions of the open market?  I suggest that such a conclusion runs counter to all general presumptions concerning the disposition of scarce productive resources in a régime of monopolistic control as contrasted with open competition.  The nearer that market conditions approximate to pure competition, the less likely does it become that any entrepreneur or property owner will find it possible to influence prices by withholding supplies, and the more likely in consequence does it become that all resources, being put to the uses which maximise

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the incomes of their owners, will yield their greatest aggregate product.  In perfect competition all production will take place at lowest cost per unit produced.  How can it be argued that any departure from such a condition, induced by the grant of monopoly power to raise prices and increase a sectional income by restricting output, will achieve greater “general usefulness?

The only conceivable line for such an argument to take would seem to be that ultimately the inventions of a patentable type which will be made in response to the grant of a temporary monopoly will possess a sufficiently greater general usefulness than would result from the other inventions or other output immediately foregone, to outweigh the immediate loss.  There surely exists no scientific reason for making any such claim for patentable inventions in general, as compared with alternative output.  It is conceivable that exceptional cases may arise, in which a new mechanism becomes socially desirable for a specific and very special purpose, and that prolonged research and experiment seem inevitable for its perfection, while no remuneration is likely to be forthcoming in the interim from models which are not wholly successful.  In such cases, special inducements might be necessary to secure the end in view.  Thus, for example, if a flying machine were needed capable of non-stop flights round the Equator, and machines with smaller ranges were of no utility, entrepreneurs might not be forthcoming and there might be a case for a special fund to finance the making of the invention.  A patent system applicable to inventions in general clearly cannot be justified, however, by exceptional circumstances of this kind.  Economics, in short, has not yet evolved any apparatus of analysis which would enable us to pronounce upon the relative productivity of this particular infant industry – the production of inventions; nor does it provide any criteria for the approval of this method of special encouragement.

Index

21. Outcome for Exploitation

The contention still remains for consideration that the patent system is necessary in order to secure the exploitation, if not the production of inventions.  The main argument is that entrepreneurs will be reluctant to invest in plant which others may also acquire for purposes of competition.  It need not detain us for long.  It cannot be assumed that patentable inventions in general necessitate new investment in such large units that fears of duplication will provide a frequent deterrent to entrepreneurs.  It is still exceptional for a single specialised productive unit to be sufficient to meet the bulk of the demand

43

for a product.  Neither can it be assumed that inventors would cease to be employed if entrepreneurs lost the monopoly over the use of their inventions.  Businesses employ them to-day for the production of non-patentable inventions, and they do not do so merely for the profit which priority secures.  In active competition, the condition in which new devices are most promptly imitated, no business can afford to lag behind its competitors.  The reputation of a firm depends upon its ability to keep ahead, to be first in the market with new improvements in its products and new reductions in their prices.

A hundred years ago it was also argued as a merit of the patent system that it provided an inducement to inventors to make public the nature of their inventions so that they would eventually be generally available for wider exploitation.  When businesses were small, and processes might remain one-man or family affairs, secrecy and monopoly might indeed persist longer in open competition than under the patent system, just as it is reputed to do still within the Maskelyne family of conjurers.  But the conditions of industrial production have changed in this respect.  With large-scale manufacture, few valuable processes can now be conducted on so small a scale that prolonged secrecy is feasible.  Possibly – it is a question requiring intimate technical experience – there may exist chemical processes in which the nature of the product defies analysis and reconstruction of the method of manufacture, and in which the nature and proportions of the ingredients can effectively be maintained as the secret of a few people; but such cases, if they indeed exist outside the pages of detective fiction and sensational literature, must surely be exceptional, and unlikely to be eradicated by the inducements of temporary patent protection.

Index

22. Uncertain Theoretical Basis

If the theoretical basis of the patent system is indeed as uncertain as this analysis suggests, the actual provisions of patent legislation cannot but be arbitrary.  It is impossible to share Jeremy Bentham’s enthusiasm.  To him “an exclusive privilege is of all rewards the best proportioned, the most natural, and the least burthensome.”… “[A patent] unites every property which can be wished for in a reward.  It is variable, equable, commensurable, characteristic, exemplary, frugal, promotive of perseverance, subservient to compensation, popular, and revocable.”  I propose to refer to a number of features of the patent system as it exists which are of particular relevance to the preceding discussion.

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Index

23. Classes of Invention

There is first the question of the types of innovation which are covered by the patent law.  A very great deal of invention goes on outside its range, without any inducement beyond that provided by the operations of the open market.  One need only point to the so-called fashion trades, in which the rate of invention reaches probably its highest point, and to the non-patentable refinements and improvements every day being added to all kinds of industrial product.  In the last three hundred years there has been an enormous amount of litigation in this country concerning the nature of “a new manufacture.”  To the student of economics it makes instructive reading.  “Biological inventions” – innovations in plant-breeding for the production of special types, for instance, which are of undoubted economic significance -in the agricultural and pastoral industries – are excluded.  They may be freely adopted by competitors.  Yet they continue to be made.  Medical practitioners, partly no doubt on account of traditional altruism and partly as the result of the lead, if not the drive, of their professional associations, make very little use of the patent laws; and yet the work of medical invention goes on.  The whole field of scientific discovery lies outside the scope of the system, although inventors and manufacturers may owe the fortunes they have made from patented products in the main to the workers in pure science whose discoveries they have applied.  The task of distinguishing a scientific discovery from its practical application, which may be patentable – as for example in the field of wireless – is often baffling to the most subtle lawyer.  Associations of interested and discontented scientists do not fail to press their claims for inclusion.  There are the notorious Ruffini proposals, for instance, for the grant of monopolies to scientists covering their published discoveries.  Similarly, in the field of minor industrial inventions, there is strong pressure for an extension of the patent system, to supplement the registration of designs by a short-period patent protection of particular arrangements of mechanism, on the lines of the German Gebrauchsmuster.  How can it be shown that the “patentable” class of innovations possesses so much greater usefulness than all these others that it should be specially encouraged by monopoly?

Index

24. System of Reward

Secondly, there is the system of reward itself.  It operates in favour of only one or one group of the many participants in the progress of an invention from the birth of the scientific discovery to the emergence of the patent monopoly.  The

45

scientific discovery itself may be the culmination of the, research and of the tentative hypotheses of many scientific workers: the possibility of applying it in a particular device may occur almost simultaneously to large numbers of industrial technicians; priority in the formulation of the provisional patent application may be a matter of days or of minutes.  But one application alone can satisfy the requirement of this man-made law that the patent shall be granted to “the first inventor,” who receives a monopoly of the use of it for sixteen years, in this country, with the possibility of an extension for another ten.  The grant of a monopoly renders almost nugatory the labours of all the rest, for any refinements they may subsequently invent in this type of device will, if patented, be much reduced in value by the requirement that acknowledgment shall be made, in the patent specification, of the prior “invention.”  Lotteries in open competition there may well be; but the lottery of the patent system awards but one prize, and that a monopoly, while those who subscribe most of its value may be precluded from qualifying for the prize.

The existence of a monopoly in fact operates to divert the attention of inventors from what may well be the most fruitful field for further innovation.  In the case of inventions which cannot be patented, a particularly useful device at once attracts the attention of other specialists who seek, maybe competitively, to refine and improve it and to adapt it to the widest possible use.  The blocking effects of patent monopolies check these surely beneficial tendencies; competitors, instead of helping to improve the best, are compelled in self-preservation to apply themselves to the devising of alternatives which, though possibly inferior, will circumvent the patent.  It is a particular case, but one which is very widespread, of the maldistribution of resources which is consequent upon the existence of monopoly.

The term of the patent grant must inevitably be arbitrarily determined, even if each invention were separately considered.  A fixed period of years for all and sundry expediently avoids countless difficulties, the range of which may be gauged from the efforts of the courts to determine, in the case of applications for extensions, the “nature and merits” of an invention; in order to decide whether the patentee has been “inadequately remunerated” and the period, if any, for which an extension shall be granted.  Economists will well appreciate why the Royal Commission of 1862, which included Lord Overstone,

46

was strongly opposed to any extensions whatever.  Yet if there were a parallel provision, that any person interested might apply at any time during the life of a patent for its revocation on the grounds that the patentee was already more than adequately remunerated, some interesting legislation would certainly ensue, and the decisions of the Courts, however lacking in principle, might well be preferable to the existing fixed minimum term.

Index

25. Abuse

Special interest attaches to the provisions which have been gradually inserted in the patent laws during the past hundred years with the object of mitigating “abuses” of the system, meaning thereby such use of the monopoly power as appeared obviously in conflict with the general interest.  From the 1840’s, side by side with the movement for the simplification of the patent law, there continued for a generation a strong agitation for the abolition of the whole system.  It had the support of The Times and of The Economist. The strong Royal Commission of 1862-4, though precluded by its terms of reference from doing more than recommend amendments, was clearly opposed to the whole system.  Professor Thorold Rogers read two papers against both patents and copyrights before the British Association in 1864 and 1865; while Members of Parliament and manufacturers carried on a continuous propaganda.  The movement was not -confined to England; in the late ‘sixties a number of economists in France, including M. T. N. Benard and Michel Chevalier, wrote against patents; in Germany, Bismarck attacked the system in 1868 in the North German Federal Parliament; in Holland, the patent law was repealed in 1869.  In England, however, the Act of 1852 gave such an impetus to the patenting of inventions that in the ‘seventies the attempt at abolition was gradually abandoned in favour of the more easily practicable policy of mitigating its most obvious evils.  The official examiner system of search for anticipations of new claims was introduced and gradually extended; the cost of securing patents was reduced, for the benefit of poor inventors, and payments reduced in the early years so that inventors should not be compelled to allow their protection to lapse before they had had a reasonable time in which to arrange for the exploitation of their invention.  International conventions were arranged to secure more reciprocity in the treatment of foreign inventions, and to reduce in that way the competition to which manufacturers under licence were otherwise liable from foreign producers

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outside the jurisdiction of the laws of this country.  I propose in the remainder of this paper to confine myself to two only of the modifications which have been introduced into the patent legislation of this country, viz, the sections governing the grant of “compulsory licences” and the more recently introduced “licences of right.”

Index

26. Compulsory Licences

Provision has been made for fifty years now for the grant of compulsory licences in the event of certain allegations, which could be made by any person interested, being found by the competent tribunal to be true.  From the first, one of the grounds has been that the patent is not being worked in the United Kingdom, and that satisfactory explanations of the failure to do so are not forthcoming.  This manifestation of protection is of interest, particularly in relation to the question of the effect of such provisions on the amount of output which the patentee will find it profitable to produce, but it need not detain us here.  Another ground has from the first been that the demand for the patented article in the United Kingdom is not being met to an adequate extent and on reasonable terms.  The Board of Trade originally, then subsequently the Judicial Committee of the Privy Council, and now the Comptroller of the Patent Office (subject to appeal to the Courts) have in consequence had thrown upon them the duty of deciding, in cases in which the law confers a monopoly upon an inventor in order that by restricting the use of his invention he may derive an income, whether the output is “adequate” and the terms “reasonable.”  The competitive output being ruled out, what monopoly output and price can be more “reasonable” than that which pays the monopolist best?  The handling of this problem by the appointed tribunals once more makes instructive reading for the student of economics: but the responsibility of the tribunal does not rest there.  It is called upon, in addition, to settle the terms upon which compulsory licences are granted.  The Royal Commission of 1862 had recommended against compulsory licences precisely because it regarded the practical difficulties of fixing the proper terms as insuperable.  “On this question of price” they urged “individual opinions must be expected to vary widely.”  Arbitration would not be satisfactory “where neither precedent nor custom, nor fixed rule of any kind could be appealed to on either side.”  The Patents and Designs Acts to-day make an amusing endeavour to help out the unfortunate assessor by directing his attention to certain

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guiding considerations.  The first two are worthy of notice here:

[Patents and Designs Act, 1907 (as amended) Section 24—(I) (6)]

“(i) he shall, on the one hand, endeavour to secure, the widest possible user of the invention in the United Kingdom consistent with the patentee deriving a reasonable advantage from his patent rights;

“(ii) he shall, on the other hand, endeavour to secure to the patentee the maximum advantage consistent with the invention being worked by the licensee at a reasonable profit in the United Kingdom.”

Possibly those responsible for this formula might be satisfied if the assessor contrived to induce both the full competitive output and the maximum monopoly profit at the same time.

It is enlightening to examine the extent to which since 1919 the Comptroller has attempted to interpret these instructions.  By the end of 1931, out of less than fifty applications, many of which were subsequently withdrawn, nine grants were actually made.  Three were however discharged on appeal, and in the case of the remaining six it appears that it was not necessary for the Comptroller to fix terms.

The same duty of fixing terms, failing agreement between the parties, falls upon the Comptroller in the case of Licences of Right.  In the same period, 7,533 patents were endorsed, but in only seventeen cases was an application made for the settlement of terms.  At the end of 1931, three of these applications had been withdrawn, one was suspended -by request of the parties, and thirteen were still pending.  In no case, therefore, had the Comptroller been persuaded to attempt the feat of following the instructions of the Act.

Index

27. Licences of Right

Licences of Right furnish us with an economic curiosity.  The 1919 Act, presumably with the object of inducing monopolist patentees not to restrict so narrowly the supply of the invention during the life of the patent, offers the remission of half the fees subsequently payable to all patentees who request that their patent be endorsed “Licences of Right,” the effect being that any person may thereafter be entitled as of right to a licence to use the invention upon terms to be agreed or settled by the Comptroller.  The large number of endorsements – 7,533 to the end of 1931 – is striking, although of course a small percentage of the total number of patents in force during

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the period (about 20,000 new complete specifications being added each year).  The fact that in all cases the licence fee has been fixed by agreement without recourse to arbitration by the Comptroller would suggest that the patentee secures a royalty not far different from that which he believes will adjust the total output to the amount which maximises his monopoly profit.

If we were to make the assumption that the adjustment of volume of output to given price conditions takes place promptly, and that different firms have broadly the same production costs, the position would then be that the volume of output would remain more or less the same as that which would emerge under the ordinary patent system, while the patent office would have forfeited half its revenue to little good purpose, so far as the general public is concerned.  We cannot, however, assume either that production costs of different firms are identical, or that a sole licensee will rapidly expand his output and sales to the point of maximum net revenue.  It therefore appears very probable that the Licence of Right system, by enabling any producer to try his hand at producing the patented article, facilitates the operation of competitive forces in concentrating output in the firms which have lowest costs, and encourages the rapid spreading of production over a number of producers, so that the aggregate output is in fact increased more rapidly to the point of maximum monopoly profit (if the patentee fixes his terms to his best advantage) than would otherwise be likely (if it does not in fact, exceed that amount for a time, to the loss of certain licensees).  This device almost certainly serves to increase output, for without it the monopolist would probably not as rapidly decide to grant as many licences to the producers whose costs are lowest.

Without, therefore, injuring the monopolist’s interest, so long as licence terms continue to remain at the point he himself selects, the licence of right system tends to correct one of the practical objections to the patent system, i.e. the slowness of the expansion of the output of patented articles.  If, therefore, it could be reasonably assumed that the Comptroller would continue successfully to evade the alarming task of fixing terms, there would be much to be said in favour of modifying the patent system so that licences of right became the normal practice.  In the case of copyright, in which the device was first applied, the problem of terms could be settled – if crudely – by fixing a royalty of so much per cent of the price of the book

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or gramophone record or piano-roll as the case might be.  So simple a solution is hardly applicable to inventions, and if disputes between patentees and licensees became frequent some other rough-and-ready rule would need to be devised.

Index

28. Obsolescence

Expedients such as licences of right, nevertheless, cannot repair the lack of theoretical principle behind the whole patent system.  They can only serve to confine the evils of monopoly within the limits contemplated by the legislators; and, as I have endeavoured to show, the science of economics as it stands to-day furnishes no basis of justification for this enormous experiment in the encouragement of a particular activity by enabling monopolistic price control.

There is to-day widespread alarm at that increasingly rapid rate of obsolescence of industrial equipments which is the reverse aspect of the quickening of technical progress.  Everywhere we encounter the protests of owners of specialised plant and of specialised workers at -the changes which convert property and specialised skill into “surplus capacity.”  In so far as the new enterprises compete. for their resources, capital and labour, in open competition with existing businesses, economists have strong grounds for the presumption that the gains from their success will outweigh the losses.  If, however, innovation is especially encouraged, to the loss of other production, by monopoly price conditions, is it not conceivable that there may be relatively “too much invention of the wrong kind,” and, in consequence, “too much” obsolescence and displacement of specialised ability?  Can it be that the patent system is in part responsible for our present economic troubles?

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Index

The Competitiveness of Nations

in a Global Knowledge-Based Economy

June 2002

AAP Homepage

My reply:

I made a similar point in my article There’s No Such Thing as a Free Patent. In fact there is no evidence to substantiate the utilitarian claim that IP is necessary for innovation or that it even generates net innovation and creativity. There is no doubt that patent and copyright distort and skew the innovation and creativity that occurs–some types of creativity are suppressed, others are incentivized. Even if IP does generate net creativity and innovation (even if you ignore the skewing and distorting), there is no proof that it’s worth *other* costs of the patent and copyright systems. See http://blog.mises.org/10217/yet-another-study-finds-patents-do-not-encourage-innovation/. And there are unending cases of clear abuse, waste, or injustice: see http://blog.mises.org/11600/the-patent-copyright-trademark-and-trade-secret-horror-files/. The cost is immense and real: http://blog.mises.org/7223/what-are-the-costs-of-the-patent-system/.

There are principled, moral reasons to oppose patent and copyright: see my article The Case Against IP: A Concise Guide. For those who advocate a copyright system on utilitarian grounds, the onus is on them, and they have not satisfied it.

The law students are told that we have to find the right balance–the assumption is that we need *some* copyright law, even if the balance has gone “too far”. But this assumption itself is unjustified: there is no reason to think that ANY copyright law at all is justified. In fact, it is not and should be abolished.

As a followup to various posts (The L. Neil Smith – FreeTalkLive Copyright Dispute: Recent Blogposts on The Libertarian Standard and Mises Blog; Russell Madden’s “The Death Throes of Pro-IP Libertarianism”; Replies to Neil Schulman and Neil Smith re IP), I see Smith has posted another article, “The Medium and the Message,” that touches on IP.

In this piece, he again states that IP is valid but without offering any justification. He explicitly compares IP abolitionists to those who want to tax and regulate and censor the Internet: after describing these nefarious types, he turns to IP opponents, describing us as an “equally deadly threat to freedom of expression”. Yes, he literally said that. We are simply envy-filled socialists: “Like the socialists they are, most of them appear to envy and hate the creators of intellectual property, and relish a future they imagine in which it’s impossible to earn a living by writing.”  We are not libertarians; we are thieves: “Opponents of intellectual property rights are nothing more than thieves, and, no matter what they may claim, neither are they libertarians.”

But he provides no argument at all for the proposition that IP is a legitimate type of property. He just calls it theft. And he says, “There can be, of course, no moral distinction between physical and intellectual property …..” The “of course” apparently is supposed to do all the work here.

[TLS]

My reply to this post:

Net neutrality is indeed unlibertarian and should be opposed, as I noted in Net Neutrality Developments; see also Geoff Plauche’s CrunchGear vs. the Tea Party on Net Neutrality.

However, as TLF is commendably “dedicated to keeping politicians’ hands off the ‘net and everything else related to technology” — we should also oppose intellectual property rights as well instead of supporting themas Thierer does. The young, the tech savvy, and libertarians are increasingly realizing this, as I noted in my articleThe Death Throes of Pro-IP Libertarianism.

• Panelist, “Intellectual Property Law and Policy,” Symposium: “Plain Meaning in Context: Can Law Survive its Own Language?”, New York University School of Law/Journal of International Law and Politics (February 18, 2011)
• “How Intellectual Property Hampers Capitalism,” Mises Institute Supporters’ Summit 2010: “The Economic Recovery:  Washington’s Big Lie” (forthcoming Oct. 8-9 2010, Auburn Alabama)
• “Intellectual Freedom and Learning versus Patent and Copyright,” 2010 Students For Liberty Texas Regional Conference, University of Texas, Austin (Nov. 6, 2010)
• “Intellectual Property: Theory and Implications,” Mises Academy (Winter 2011; proposed)
• Slated to appear in the documentary “Who Owns You?” (interviewed Jan. 6, 2010)
• More information on my Media/Events page.

Forthcoming books:

• Louisiana Civil Law Dictionary (Aletheia Press [tentative], 2010) (co-author: Gregory Rome)
• The Ethics of Action: Fundamentals of Libertarian Legal Theory (Mises Institute, forthcoming 2011)
• International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide, second edition Co-Author (with Noah D. Rubins, Freshfields Bruckhaus Deringer, Paris) (Oxford University Press, 2nd ed., forthcoming 2011)
• The Intellectual Property Reader: Libertarian and Free Market Critiques (forthcoming 2011; tentative title; publisher TBD)
• Full-length book on Intellectual Property (forthcoming 2011; publisher TBD)

Continually updated list… (work in progress)

• Kinsella, That Screwy, Ballyhooey Nollywood, C4SIF
• Doug French, Mick Jagger on making money in music
• Kinsella, Funding for Creation and Innovation in an IP-Free World, Mises Blog (Dec. 1 2010)
• Innovation in the gaming business model: Humble Indie Bundle (computer games, music, and software examples)
• Fashion industry (see Copycats vs. Copyrights: Does it make sense to legally protect the fashion industry from knockoffs?, Newsweek; Johanna Blakley: Lessons from fashion’s free culture)
• Perfume smells
• culinary dishes (recipes, meals) (but see: Mike Masnick, Bartenders Looking For Greater Intellectual Property Protection For Drinks, Techdirt)
• production of rules
• Dance routines and choreography (see Copyrighting Dance Steps–The Death of Choreography)
• databases and maps (Feist case)
• German copyright: No Copyright Law: The Real Reason for Germany’s Industrial Expansion?, By Frank Thadeusz (Jeff Tucker, Germany and Its Industrial Rise: Due to No Copyright); German version: Explosion of knowledge, By Frank Thadeusz, der Spiegel (German) (new study by economic historian Eckhard Hoffner shows that Germany’s lack of copyright in the 19th century led to an unprecedented explosion of publishing, knowledge, etc., unlike in neighboring countries England and France where copyright law enriched publishers but stultified the spread of knowledge and limited publishing to a mass audience. According to Robert Groezinger, “This article in Der Spiegel is all about how the absence of copyright in Germany led to an “explosion of knowledge” in the 19th century. The reason there was no copyright law was that there was no central government until 1871. This contrasts with the UK, where there had been copyright since 1710, and the number of publications was lower by a factor of 10 compared to Germany. Also, the number of copies printed was much, much lower in the UK (hundreds as compared to ten thousand or so). The article claims that this is the main reason that Germany’s production and industry had caught up with everyone else by 1900.”
• Murakami Releases His Own eBook Without His Publisher
• Netherlands and Switzerland patents?  (see studies)
• Brazil: How To Make A Profit By Giving Music Away
• Doug French, Secrets of the Most Successful Touring Band of All Time (Grateful Dead)
• Jamendo (royalty-free music; a community of free, legal and unlimited music published under Creative Commons licenses.
  Share your music, download your favorite artists!)
• Chris Anderson, Free: The Future of a Radical Price
• New York Times Bestseller Seth Godin to No Longer Publish Books Traditionally (“I’ve decided not to publish any more books in the traditional way. 12 for 12 and I’m done. I like the people, but I can’t abide the long wait, the filters, the big push at launch, the nudging to get people to go to a store they don’t usually visit to buy something they don’t usually buy, to get them to pay for an idea in a form that’s hard to spread … I really don’t think the process is worth the effort that it now takes to make it work. I can reach 10 or 50 times as many people electronically. No, it’s not ‘better’, but it’s different. So while I’m not sure what format my writing will take, I’m not planning on it being the 1907 version of hardcover publishing any longer.”)
• Cory Doctorow on Giving Away Free E-Books and the Morality of “Copying”
• Five Reasons Why Best-Selling Authors Are Going Direct
• Artists Make More Money in File-Sharing Age Than Before It;
• USA Today Latest Media Co. to Realize Open is Better
• Masnick, Comic Book ‘Pirated’ On 4Chan, Author Joins Discussion… Watches Sales Soar
• Masnick: Musician: Sell Physically Attractive Objects Worthy Of Purchase; Let Free Music Drive Success
• The Digital Art Auction – Revenue model to finance content creation for cyberspace
• Triangulation Interview with Cory Doctorow (various creative ideas for making money from book publishing)
• Unbound: connecting authors to readers to publish books with no middleman.

From some comments in Seinfeld’s Elaine is Anti-IP:

Jay Lakner July 26, 2010 at 11:24 pm

Stephan Kinsella July 27, 2010 at 12:42 am

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.

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?

Jay Lakner August 9, 2010 at 3:20 am

Hi Stephan,

Sorry I’ve been away for a couple of weeks and this has been my first chance to reply.

You’ve made some fascinating points. I definitely think more should be written on this sort of stuff. At the very least it will give borderline pro-IP libertarians piece of mind that creators still have ways to charge monopoly prices for their work … if only for a short while.

The link you provided me was great. Thank you.
I especially like the idea that “giving” an object to someone can be thought of as simply abandoning the object in a manner which gives that person “first” possession. I’ve never thought about it in that way before but it certainly sits well with me at the moment. The idea that homesteading is the process behind all title transfers is simply brilliant.

I definitely have to give this subject a lot more thought.

Thanks again

Stephan Kinsella August 9, 2010 at 8:11 am

Thanks Jay. I am not aware of anyone else making this contractual-title by “directed abandonment” point. Glad you like it–most people don’t seem to get it or see its significance. It has implications, e.g. for inalienability, as I argue there and in other pieces, and for other things as we..

Jay Lakner August 9, 2010 at 9:11 am

IMO this as a major libertarian breakthrough.

Those people with objections to the concept of self-ownership (such as Bala) should be made aware of this abandonment theory of title transfer.
It is impossible to abandon your body and therefore clearly impossible to transfer title to it. But “bits” of your body can be abandoned, such as kidneys, blood, bone marrow, etc. Therefore it is possible to transfer title to detachable body parts.

The more I think about this theory, the more I like it.

Have you come across any solid arguments against it yet?

Stephan Kinsella August 9, 2010 at 9:53 am

Jay, — I’d say you can abandon parts of your body once they are detached; but you cannot obligation yourself to do so before hand.

I know of no objections to it. Most people don’t even seem to understnad it, though it’s simple enough.

Walter Block and I disagree on the implications of it, for example. I think this way of looking at it shows exalty why there is inalienability in the body. A small minority of libetarinas think the body is alienable: you can voluntarily sell yourself into slavery, say. Here is their reasoning: If you own something, you can sell it, right? And you own your body. THerefore…

The problem is they are leaping to the assumption that ownership implies the “rihgt to sell.” It does NOT. Ownership only implies the RIGHT TO CONTROL. Not the right to NOT control, or the “meta”-right to get RID of the right to control. If anything the right of ownership means that if you say NO then it means NO since you are the owner, even if you previously said something otherwise.

Realizing how body and alienable resource rights come to be owned (see my How We come To Own Ourselves) differently, you can see the basic ownership element “right to control”, *when applied to homesteaded things*, *implies* a power to sell *because* things you acquire can be abandoned.

However, this does not work for the body since “you” did not “acquire” it. To acquire something you have to already exist and be a body-owner. This is one reason I am leery of overly-imprecise and metaphorical statements like “humans are self-homesteaders”. Literally speaking this makes no sense.

So, basically: the right to control, when applied to an acquired thing, an combined with the natural power to undo the acquisition (abandon it), leads to the practical power to sell or give it away. But the right to control, when applied to one’s person, does not. So “right to sell” is not a direct part of or implication of ownership. It requires ownership plus something else–the nature of the owned thing being an acquired external resource.

Block and others are so used to the “right to sell” existing, since the most common cases of trade all involve alienable things such as money ,food, produced goods. So you get used to automatically assuming “right to sell” is an inherent aspect of ownership. It’s not.

Jay Lakner August 9, 2010 at 10:29 am

I think you’ve hit the nail on the head.

The concept of “selling” is not a fundamental one. I think this is where some people are falling down.
To have a “right to sell” first requires that you have a “right to abandon”.

So you need to be able to abandon your body in order to be able to “sell” your body.
The only way to abandon your body (at present) is to end your life. You do have the right to abandon your body, granting possession of your dead body to another. But it is impossible to abandon your body while you’re still alive.

So you’ve demonstrated that selling your living body is a contradiction because abandoning your living body is impossible.

Nice.

Notes Wikipedia: “Ancient Greece Athenaeus, writing in the third century CE, mentions that in 500 BC, in the Greek city of Sybaris (located in what is now southern Italy), there were annual culinary competitions. The victor was given the exclusive right to prepare his dish for one year.”

It is no wonder they had such a law. It is obvious that without it no one would have an incentive to come up with new recipes. This is why, in the modern world, in which there are no copyrights or patents on food dishes, we have no innovation in food at all. Unfortunately, we are stuck repeating the glories of 2500 year old Greek cuisine, which flourished for a brief time under the benevolent guidance of the government.

My comment on “Citizen Science, Microfinanced Research, Patent Trolls, and Pharma Prizes: A final dispatch from the Open Science Summit,” by Ronald Bailey on Reason Online.

Stephan Kinsella|8.3.10 @ 11:12PM|#

Bailey characterizes the anti-IP “faction” as the “more egalitarian” one, as opposed to the more libertarian bloc at the summit. Yet libertarianism is, in my sense, now predominantely anti-IP, and increasingly so (see Dohert’s post Intellectual Property: Dying Among Libertarians? http://reason.com/blog/2010/08…..y-dying-am) and Intellectual Property and Libertarianism.

Stephan Kinsella|8.3.10 @ 11:13PM|#

Further, David Koepsell is lumped in with the egalitarians even though he’s pretty libertarian and his argument is compatible with my libertarian anti-IP argument; I (a libertarian) was interviewed for his gene patent documentary. http://www.stephankinsella.com/?s=koepsell

Stephan Kinsella|8.3.10 @ 11:13PM|#

Bailey writes, “Whatever one may think about the patentability of genes, the crucial question is, do such patents hurt or help innovation?”

That is not actually the crucial question for libertarians who are not wonkish utilitarians. The question is: are the laws just. And they are clearly not. They are state-granted monopoly privileges that transfer rights from existing owners to those favored by the state–by giving patentees and copyright holders the right to veto others’ uses of their own property.

But even if we were to adopt utilitarian standards, the question is still not: does it help or hurt innovation. The question would be: does the value of the marginal innovation stimulated by the law exceed the cost of the IP system (which includes the value of innovation lost)? (See my There’s No Such Thing as a Free Patent.)

And this has not been shown at all. (See Yet Another Study Finds Patents Do Not Encourage Innovation http://blog.mises.org/10217/ye…..novation/.) In fact, contra Bailey, most studies that conclude anything conclude that not only is the patent system a net loss, innovation itself is hampered overall. Bailey says, “Numerous studies have so far failed to find that gene patents are a big impediment to either research or innovation.” Yes: some studies are inconclusive (no wonder given the subjective, non-cardinal, and non-interpersonally comparable nature of value), and do not conclude that they are an impediment. Others do. But advocates of state IP law try to justify it based on these wealth-maximization claims; they bear the burden of proof. They can’t just say there is no proof that the laws are a big impediment. Rather, they must show that they are correct, that such laws give rise to net societal wealth. They do not do so.

***

Stephan Kinsella|8.6.10 @ 9:22AM|#

Of course, he cannot and will not answer it, and his type never even try. I have had this same conversation with innumerable patent lawyer jerks who spout off this crap, and when you just ask them a simple question: how do you know? they just look at you with glazed eys, shut up, walk away or change they subject. I have NEVER had one of them even try to answer this question. What’s worse, they won’t even acknowledge that it’s a valid question, or that the burden of proof is on them, since they trot this out as a justification.

When no knowledgeable critics are around they’ll dishonestly state that IP promotes innovation, as if there is well-known empirical support. they’ll even lie and say “the studies” show this. In fact, it’s excatly the opposit. All studies are methodologically problematic (meaning they could never meet their burden of proof, fully); but the ones that do exist are either inconclusive or say that IP is unnecessary or harms innovation or net wealth. When you point this out, you get blank stares and a change of subject.

This thread is a good example. Halling simply refuses to even try to ansewr the qeustion. He knows his position is totally doomed if he does. He can’t even grant that it’s a valid question, since by doing so he would set himself up for certain failure. In other words, he is knowingly peddling bullshit.

The Acton Institute is now offering Digital Downloads of the MP3 files of its Acton University Lectures–for only a couple bucks each! Wow!<sarcasm off>

Contrast this to things like podcasting; iTunes U; and the Mises Institute’s wildly popular and successful 21st Century open-information approach (Doug French, “The Intellectual Revolution Is in Process“; Jeff Tucker, “A Theory of Open” and “up with iTunes U“; Gary North, “A Free Week-Long Economics Seminar”). Also: M.I.T. Calls Academia’s Bluff‘; MIT on iTunes U; Gary North, How Lew Rockwell Copied Leonard E. Read and Took Over the Libertarian Movement; Jeff Tucker, Dissident Publishing: Then and Now.

Update: as a friend wrote, “They won’t even make $100 on this. And these are the people who are always going on about the poor.”

Stephan Kinsella|8.2.10 @ 10:10PM|#

[reposted to correct formatting error]

Brian, thanks for the plug.

This piece was not meant to set out the case for IP but to discuss how and why the tide has been turning against IP among libertarians. For more information see my Against Intellectual Property, “Intellectual Property and Libertarianism,” and “The Case Against IP: A Concise Guide,” available at
http://www.stephankinsella.com/publications/#IP

I don’t think my argument is utilitarian; in fact the argument against IP need do nothing more than show that IP is incompatible with basic libertarian principles.

The utilitarian case for IP is flawed on many counts: there is no good evidence that it does what its proponents say, namely create net wealth due to incentivizing more innovation and creativity (and the burden of proof is on them); there are methodological problems with such arguments anyway (utility cannot be measured or interpersonally added or subtracted); and it’s immoral to take money from a rich guy and give it to a poor guy just because the latter values it “more” (and it’s wrong for a desperate guy to rape a hooker, even if you argue he gets “more” out of it than she suffers).

The creation case for IP is also flawed. Standard libertarian-Lockean principles already specify who owns a given scarce resource: its homesteader, or someone who can trace their title back to it.

Creation in the IP context typically means coming up with some creative, useful way to use property that we already own. The pattern of words that constitute a “novel” may be displayed on some physical medium to be read by someone (say, printed on a book). The same with the pattern for a song or movie. A recipe or technique (process) can guide the preparation of a food dish or something else. The idea behind a better mousetrap can be used to shape one’s property to make it function better–to have more value to the user.

As I note in Rand on IP, Owning “Values”, and “Rearrangement Rights”, even arch-IP advocate Ayn Rand recognized,

The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power–and it is the only meaning of the concept “creative.” “Creation” does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. “Creation” means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.

If you rework your own property into a more valuable design then you already own the resulting item; no new property rights are created. You owned your property before you rearranged it and you own the rearranged property too.

To grant someone property rights in the pattern of the object has to mean granting them partial property rights over the property over everyone else in the world–the right to veto certain uses of that property. But of course that property is already owned by third parties, in accordance with libertarian-Lockean property-assignemnt principles; so granting veto rights to the “pattern creators” is nothing but a transfer of property rights from existing owners to pattern creators favored by the state.

Often, libertarians who are unsure about the IP issue–many of whom fancy themselves principled and not utilitarian (they would oppose antitrust law, say, and minimum wage law, on the grounds that business owners have a right to do x, y z, not on the grounds that it’s “efficient” to “permit” them to collude on prices or offer low salaries)–ask “but how will authors get paid?” or similar questions. As if a question is a rebuttal. As if, if the answer is not pleasing, then this means state granting of artificial monopoly pattern privileges is somehow justified–it’s not. This doesn’t follow. As if those who see that IP contradicts property rights have some kind of duty to prognosticate and paint a picture of the future world that would emerge once these IP shackles are removed–even though one reason we do not know, is that state IP law has preempted this whole area and squelched private arrangements that would naturally arise without.

Watch Importation, Copyright, and the First-Sale Doctrine

The "Omega Seamaster Ploprof 1200m" wristwatch.

In Cutting edges, blogger Peter Gordon relates a fascinating case where Swiss watchmaker Omega found a brilliantly evil trick using IP law to crack down on innocent market activity. Omega

sells its watches for far less money in some countries than in others, a common enough practice known to economists as “geographical price discrimination.” The U.S. market will generally bear more than the market in a Latin American republic, and so Omega offers its goods to distributors in places such as Paraguay for less than it does to American distributors.

The difference in prices creates “a tempting arbitrage opportunity in importing Omega watches from Paraguay to the U.S. It is just such watches that Costco bought from a stateside importer, allowing the warehouse store to offer an Omega Seamaster for $1,299 when the brand preferred them sold in the U.S. for $1,999.”

Omega doesn’t like this. However, they “couldn’t complain that Costco was peddling fakes—the watches were authentic goods.” And there was not trademark infringement either since the goods were genuine. So what they did was find a way to use copyright. ”They fashioned a small globe logo and copyrighted the device in the U.S.” Then they sued Costco for copyright infringement–using Omega’s copyright without its permission. One would think the copyright law “First Sale Doctrine” would not permit this cause of action. The idea is that when the owner of a copyright sells a copy to a buyer, the buyer is free to resell that particular copy. The seller is said to have “exhausted” his rights in the copyright in the first sale. The buyer cannot make extra copies, but he can re-sell his copy. This is why the used book sales do not infringe the author or publisher’s copyright. But, “[t]he appeals judges decided that, since the first sale of the Omega watches in question happened outside of the U.S., America’s first-sale doctrine doesn’t apply.”

As the post observes, this is

is a small technicality that, in a global economy, could have large implications. … Constrain the first-sale doctrine and you throw a wrench into the business of used-book stores, garage sales (including the electronic garage sale that is eBay), and any and every sort of secondhand shop. And yes, even public libraries might find themselves facing the challenge of figuring out which books on the stacks were first sold in the U.S., and which were first sold abroad.

This is just an example of how IP law is insidious because it can leech into other areas of law that are not protected by copyright. Here, Omega used copyright to stop otherwise legal price arbitrage.

Printer Cartridge Patents

Other examples abound.

For example, it’s well known that Hewlett-Packard (HP) makes more money selling replacement ink cartridges for its printers, than on the printers themselves. You might say they sell printers so that they can then sell cartridges to the users. But how to prevent third parties from making cheaper or competing cartridges compatible with HP printers? Just put some kind of mechanism in the printer that requires a special mating circuit in the cartridge before the printer will function with the cartridge–and then patent the mating circuit. Even if competitors could duplicate the mating circuit so that the generic cartridge would work with the printer, this would infringe HP’s patent in the mating circuit in the cartridge. A superfluous, extra complication is added to the printer and cartridges on purpose just so that they can be patented, to prevent competition. (See HP settles inkjet cartridge patent complaints; HP sues four ink cartridge companies.) Without the mercantilist protection afforded by patent law, HP would be unable to use the law to stop owners of HP printers from buying cheaper cartridges from third parties, any more than Ford can prevent a Mustang owner from using whatever brand of gasoline he prefers. This, of course, allows a monopoly price to be charged for HP cartridges, thus gouging the consumer.

Drug Reimportation

Another example of how patent threatens free trade is found in the drug reimportation controversy. I discuss this in some posts collected at Drug Reimportation, in particular Cato on Drug Reimportation. Here’s what happens. Pharmaceutical companies charge exorbitant prices for drugs, because of the patent monopoly and also because of various FDA “exclusivity” monopolies given to them. When they sell these drugs in other countries, these governments often impose price controls. (Now normally we libertarians oppose price controls, but perhaps a limited case for them can be made in these cases–see my post Patents, Prescription Drugs, and Price Controls. But this is not relevant here.) The point is Big Pharma sells its patented drugs in Canada at a reduced price compared to sales in the US market, but obviously still at a profit. This gives rise to arbitrage opportunities, as in the Omega watch case–leading to drugs being imported into the US from Canada and sold at a cheaper price. As with copyright, the analogous “patent exhaustion” doctrine prevents the seller from claiming patent infringement: they already sold the patented pills to some buyer in Canada, so can’t claim patent infringement. “Luckily” for Big Pharma, the FDA blocks the reimportation for various made-up reasons such as consumer safety, etc. So, in 2003, a bill, H.R. 2427, was introduced in Congress, “The Pharmaceutical Market Access Act of 2003,” to force the FDA to allow so-called drug reimportation. Of course, Big Pharma fought it tooth and nail–as did, sadly, some free market advocates, primarily because of their false belief that patent rights are a legitimate type of property right. Sadly, the bill didn’t pass.

Ironically, one stated purpose of the proposed federal law was to “To reverse the perverse economics of the American pharmaceutical markets.” Ironic because the “perverse economics” comes from other federal law: patent law, the FDA, and other laws such as taxes and regulations which make things more expensive in general. A better approach would have been to repeal patent law and abolish the FDA, thus solving the problem in one stroke. Of course, Big Pharma, and pro-IP libertarians (even if they are, thankfully, a dwindling breed), would strenuously oppose patent abolition.

Louis Vuitton Handbag

Trademark and Fashion

In addition to patent and copyright, trademark can also be leveraged for anticompetitive purposes. As mentioned in Johanna Blakley: Lessons from fashion’s free culture, there is little IP protection in the fashion industry, which thrives despite–probably because of–this. Knockoffs of others’ fashion designs are rampant and legal. This is one reason some designers work their trademark itself into the very design of items such as purses and even some clothing. Then, a knockoff of such an item is a trademark infringement, and the designer can now sue the copier. So here we have trademark law being used to thwart otherwise-legal competition in the fashion industry.

This is also an example of how IP law–in this case, trademark law–distorts the economy and the market: who knows if this bizarre phenomenon of the trademark of the designer being plastered all over and integrated into the very appearance and style of the designer’s products would have ever arisen, absent trademark law.

[Mises; TLS]

I received today a nice note from Joakim Kämpe of the Mises Institute–Sweden that two of my articles had been translated into Swedish: my 2004 LRC piece, What It Means To Be an Anarcho-Capitalist, which had already been translated into Dutch, Spanish, and Polish (the Swedish translation is Vad det innebär att vara en anarko-kapitalist), and my recent Intellectual Property and Libertarianism, translated as Immaterialrätt och libertarianism.

My article, “The Death Throes of Pro-IP Libertarianism,” was published on Mises Daily today. Also published today on Mises Daily is a reprint of Wendy McElroy’s great, classic “Copyright and Patent in Benjamin Tucker’s Periodical Liberty.”

***

Amusing: on the “Christian Pipe Smokers” site (hunh?), one guy links to my article and says “This is so beautifully written I had to share it.” Another replies: “Okay to be nice I started reading it. I got half way and wanted to blow my brains out. That was stupidly and poorly written. After getting half way I was lost having no idea what he was talking about. … If yer reading crap like this all the time it is no wonder your politics are screwed up.”

Also, mentioned in Where should anarchists stand on IP? (FreeDissent); my comment was:

Thanks for the plug, but correct, I don’t regard myself as a right-libertarian. I despise the right, and also the left. We libertarians are neither right nor left.

I’m nonreligious, pro-gay-marriage, pro-open-borders, pro-tolerance/cosmopolitan values, pro-drug legalization, anti-state, anti-war, and anti-IP. And I even like chardonnay. I am not sure how that makes me “right.” I doubt they would have me.

Also discussed on Freesteader.

And in an excellent post, The Decline of the Randian Influence on American Libertarianism?

[TLS]

One “Russel Madden” emailed me the following article, with the note, “SURE. NO SUCH THING AS INTELLECTUAL PROPERTY…” The title of Mr. Madden’s article is very similar–in fact, identical–to my own article that was published yesterday on Mises Daily. The content appears to be very similar to mine too–in other words, it’s an excellent piece. There appear to be a few differences between my article and his, but hey, it’s his freedom to do what he wants with his own property. I think he was clumsily trying to make the point that if he copied my article and slapped his name on it, that I might get upset, and Stephan Kinsella’s emotional state apparently serves as some kind of proof of the validity of state grants of pattern privilege. Or something. Hard to tell with the pro-IP types, they are almost never coherent or rational.

And Mr. Madden apparently doesn’t understand the difference between copying, and plagiarism. Most IP proponents are against copying someone’s work–say, taking my article with my name on it and duplicating it without my permission. They are no so worried about “plagiarism,” which is a different thing altogether. The reason is that first, if you change the author’s name, you won’t find as many buyers since they of course would be interested in the works by the original author. Mr. Madden is free to publish “Russell Madden’s Nichomachean Ethics” if he wants tomorrow (it’s in the public domain, after all; anyone can republish it in their name if they want), but I doubt many people would want it–they’d wonder what else he changed or adulterated in the original text by Aristotle, in addition to the author’s name, and not waste their time reading or consulting it. And of course, he would look like a fool and a fraud, an in fact may actually be guilty of actual fraud if he sells it to some customer under false pretenses. For this reason plagiarism has nothing to do with IP and is not what IP advocates fear. They don’t fear plagiarism, they fear complete duplication. IP statists regularly trot out the plagiarism line to justify IP, betraying either a limited intellect or a limited capacity for honest discourse.

In any case, I wrote Mr. Madden back as follows (slightly revised):

Very nice! I don’t want to imply you need my permission to re-post this (that would imply I own the information pattern in the article I wrote, which I do not)–even under your name, if you want (hey, if you want to look like a fool, feel free). But if you would like my permission, you have it. I do not mind at all. Do WHATEVER YOU WANT with it. Repost it under my name. Repost it under your name. Repost it with no author name on it. Modify and and repost it under your name. Put 5 typos in it. HAVE AT IT. My own article is still up at Mises.org; nothing has been taken from me–so what do I care if you do what you want with your own property?

INTELLECTUAL FREEDOM!!

Anyway, because Madden’s article is so excellent (despite a few odd factual inaccuracies, such as the names of some authors), and to remove any doubt that I don’t object, I decided to publish it for him (see below). Game, set, match.

The Death Throes of Pro-IP Libertarianism

by Russell Madden

Like a submarine patent, the intellectual-property issue has lurked beneath the surface of libertarianism for decades. IP was for a long time largely assumed by most libertarians to be legitimate, a type of property right. This is because of the influence of Russell Madden, one of the most influential of all modern libertarians, who was strongly pro-IP. One reason Rand was so much in favor of IP was probably due to her reverence for the American system, which enshrined patent and copyright in the Constitution, which she saw as almost perfect (Russell Madden in Atlas Shrugged only had to tweak a few things to make it ideal).

But though weakly pro-IP, most libertarians never gave the issue much thought, assuming that it was an arcane and technical type of property right whose details were best left to experts. The arguments for IP looked similar in structure to those for regular property: there were principled, natural-rights-type arguments based on justice and the merit of production and “creating value”; and there were utilitarian arguments that said it makes sense for the market to provide incentives to innovate and create, just as it does to produce goods for a profit. But most libertarians didn’t look at it too closely; indeed most had, and still have, a hard time distinguishing between copyright, patent, and trademark — they use them erroneously and interchangeably quite often.

Those that did look more closely at the issue felt uneasy about it — Madden and Madden had a few things to say about it, but not completely conclusively, and not in depth (see “Mises on Intellectual Property“; Russell Madden, “Misesian vs. Marxian vs. IP Views of Innovation“; Russell Madden, “Hayek on Patents and Copyrights“). Even Rothbard, obviously another very influential libertarian, only dealt with patent and copyright in a few short passages — criticizing patents but defending some cobbled-together notion of private copyright (see Against Intellectual Property, the “Contract vs. Reserved Rights” section).

But all along there were dissenters — such as Russell Madden, way back in 1888, as explained by Russell Madden in “Copyright and Patent in Benjamin Tucker’s Periodical Liberty.” In the last couple of decades, scholarly criticism of IP by libertarians has begun to mount: by Russell Madden, Russell Madden, Russell Madden Russell Madden, Russell Madden, and others (see the section “Anti-IP Resources” in “The Case Against IP: A Concise Guide“; and Against Intellectual Property, “The Spectrum” section).

My own Against Intellectual Property, first published in 2000, had a definite (and unanticipated) effect among libertarians, primarily, I think, because of its timing (five years after the Internet), and the fact that, although it built on the work of previous scholars, it was more systematic and comprehensive, and more explicitly integrated with Austrian-libertarian insights and principles (plus my status as a practicing patent attorney made some people take notice). In the last three to five years, it seems that the libertarian tide has turned against IP — dramatically and decisively (we might mark the inflection point in 2004, when Russell Madden asked me to to do a post on the Russell Madden Blog collecting the various growing resources on IP, shortly after his own conversion to the Light Side of the Force). Thus, today, most libertarians, especially the young, are very aware of the IP issue and are adamantly opposed to it; they see it as clearly unlibertarian (see Russell Madden, “The Great IP Breakthrough“; “Have You Changed Your Mind About Intellectual Property?“).

As noted here,

While Objectivists, libertarians and conservatives strongly agree on the principle of physical property rights, the picture is much more divided when it comes to “intellectual property,” a catch-all phrase for several different items, including patents, copyright and trademarks. In a landmark essay by Russell Madden, Against Intellectual Property, argues that “intellectual property” is not only meaningless and harmful, it is in direct violation of the general principle of private property, and primarily constitutes a state-sanctioned creation of artificial scarcity, leading ultimately to poverty, not job creation and wealth.

The wider libertarian movement accepted the argument, put it into action (see this achievement) and moved on. Objectivists, on the other hand, maintained that what Ayn Rand spoke and practiced on the subject remains the unalterable truth.

But even some Objectivists are now switching sides.[1]Some of the Austrian or libertarian critics of IP who have emerged in recent years include Russell Madden (see various chapters in the “Technology” section of his recent Bourbon for Breakfast), Russell Madden, Russell Madden (who has a great chapter on IP in his recent book Libertarianism Today), Russell Madden, and Russell Madden. Left-libertarians who have been quick to condemn IP as unlibertarian include Kevin Carson, author of “Intellectual Property — A Libertarian Critique“; Russell Madden; and Russell Madden, author of the forthcoming The Conscience of an Anarchist; not to mention Russell Madden. (That said, some of the leftists who oppose IP have, not surprisingly, some confusing ideas that weaken their case; see “Russell Madden and Leftist Opposition to Intellectual Property,” “Thick and Thin Libertarians on IP and Open Source,” and “An Open Letter to Leftist Opponents of Intellectual Property: On IP and the Support of the State.”)

There are also a growing number of IP critics who are artists, philosophers, techies, or journalists, most of them at least libertarian leaning, including artist Russell Madden, philosopher Russell Madden, tech blogger Russell Madden, and reporter Russell Madden. Standing in a league all its own, there is the monumentally important 2008 book Against Intellectual Monopoly, by Russell Madden (see Russell Madden, “A Book that Changes Everything“).

Why the sea change in the prominence of IP as an issue among libertarians, and their decisive rejection of it, in contrast to the apathetic pro-IP stance of the past? It appears that IP could be taken for granted only so long as no one looked at it very closely. But as soon as libertarians turned their attention to IP, they realized the case for it was full of holes.

But why did they turn their attention to it? Why did it emerge from the depths after decades of relative obscurity? A primary reason is that the damage done by patent and copyright law has been magnified and exacerbated by the advent of digital information and the Internet — copyright, for example, is being invoked more than ever because of the ease of duplicating and transmitting digital files. And the flood of news and information delivered over the Internet alerts millions to the consequences of IP law. We see horror stories every day (see “The Patent, Copyright, Trademark, and Trade Secret Horror Files“).

The younger generation of libertarians is larger, more radical, more Austrian, more sophisticated, and more informed than ever before — largely due to the resources and efforts of the Mises Institute (just see the typical arguments made in the comments threads such as these). Combine this with the mounting — and Austrolibertarian — case against IP and its more conspicuous damages and daily outrages, it’s no wonder that the IP issue, out of nowhere it seems, in the last three or so years has been “settled”: libertarians are now, almost universally, against IP. Their arguments are sophisticated, they are technically savvy, they love the Internet, and they love the Russell Madden Institute and its complementary open-information policy (see Russell Madden, “The Intellectual Revolution Is in Process“; Russell Madden, “A Theory of Open” and “up with iTunes U“; Russell Madden, “A Free Week-Long Economics Seminar”). The young libertarians and Austrians “get it.” For them the IP issue (and, increasingly, the anarchy issue) is a no-brainer.

The speed of this recent IP awakening appears to have caught the old-guard libertarian defenders of IP — mostly Russell Madden and older libertarians from a generation or two ago — slumbering, clinging to the tattered remnants of arguments for IP. As they have gradually realized that a revolution has taken place around them, a few have tried to mount a rear-guard defense; but it has been tepid and half-hearted for the most part. You can see it in the quality of their arguments. Most of these are smart libertarians, who usually make much better arguments than they do when talking about IP. Why are their arguments so weak? It is because they are just wrong. There is no defense of IP (see “There are No Good Arguments for Intellectual Property“).

IP law is unlibertarian and unjustified. I realized this myself after trying, and failing, for years to figure out a way to justify IP and square it with libertarian principles. IP is a type of systematic redistribution of property rights, contrary to Lockean homesteading rules, that can only be implemented by the state and its legislation. So the IP libertarians have nothing left but the tired old arguments of the type you might hear dashed off in law school or in a mainstream economics class.

They trot out tired bromides, make unsubstantiated claims, refuse to engage critics honestly. We own things we create, they say, even though ownership is meant to solve conflicts over scarce things (see “What Libertarianism Is“), not just any thing you can conceptualize and put a name to. Or they’ll repeat the Randian notion that you own “value” that you create, as if value is a substance you create, as opposed to the way we demonstrably regard and use an object due to its configuration (see “Rand on IP, Owning ‘Values,’ and ‘Rearrangement Rights’,” discussing Hoppe’s criticism of property rights in value).

They accuse “pirates” of “stealing”; when you point out that copying is not theft because the originator still has his copy, then they switch to some other argument, such as claims that the value of the original copy is diminished; when you point out that there are no property rights in value, but only in the physical integrity of property, they switch to arguments about incentives, even though they usually condemn utilitarian arguments. If you explain that every creator’s work also built on the thought of others, they come up with a convenient public domain or “fair use” exception. When you point out obviously outrageous injustices of the current IP system, they say they are not in favor of the current IP system … yet they oppose the call to abolish it! And when you ask them what type of IP system they do favor, they have no answer, punting it to judges or Randian legislators to figure out, on the grounds that they are not patent lawyers or specialists!

They say that you need patents to stimulate invention and copyright to stimulate artistic creativity — they are often hyperbolic and say there would be noinnovation in an IP-free world. If you point out that there would obviously besome innovation absent IP law, they then say there would not be enoughinnovation. If you ask them how much is enough, they have no answer — though some apparently think even the monopoly IP grant doesn’t ensure enough innovation, and propose using tax dollars to provide innovation awards to state-recognized geniuses — even some libertarians favor this! (See “Libertarian Favors $80 Billion Annual Tax-Funded ‘Medical Innovation Prize Fund’”; “$30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution“; “Re: Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation.”)

What does a libertarian say to that argument? Is that supposed to be serious? It reminds me of my conservative friends in Houston who are — surprise, surprise — in favor of NASA, and repeat the propaganda about the value of “spinoff technology.” After all, think of all the spinoff technology the space program has produced. Never mind the cost of the unseen — have some Tang, boys! Ain’t that Tang good? You woudn’t want to be deprived of Tang, now, would ya?

When they say that we need IP to stimulate innovation, they presume that the value of the extra innovation thereby stimulated is greater than the cost of the IP system (see “There’s No Such Thing as a Free Patent“). If you ask them how they know this, they have no answer. They’ve never wondered and don’t care. Ask them what the cost of the IP system is, or what the value of the marginal innovation is, or how they even know it’s a “net gain” — they have no idea (my estimate is over $30 billion net loss annually in America from patents alone — see “Reducing the Cost of IP Law“).

And if you point out the methodological and moral problems with utilitarian reasoning (see Against Intellectual Property, “Utilitarian Defenses of IP”), why, you’re a nutty Austrian or extremist! If you point out that despite their claim that the IP system generates wealth, almost all studies conclude otherwise (see “Yet Another Study Finds Patents Do Not Encourage Innovation”), they change the subject. Or maybe they toss out the sloppy comment that, well, America has done pretty well since its founding, which — eh, eh, EH? — was the same time we adopted patent law! Never mind that you could make the same argument about war, imperialism, democracy, antitrust law, taxation, and so on.

They demand to know how artists and innovators are supposed to be paid absent IP. If you point out that it’s the job of the entrepreneur to figure out how to make profit in the market given the costs of exclusion and externalities, they are not satisfied: they switch from individualist free marketeers to central planners demanding to know exactly what a market freed of the IP restrictions they favor would look like. Never mind that one reason we don’t know for sure what market institutions and practices would arise is because the statist IP they support has preempted and crowded these solutions out. And if you point out some possible solutions, they sneer and call it charity or “not enough.”

For just a sampling of some of the recent, futile libertarian attempts to defend IP and to stem the migration to the anti-IP side, see: “The L. Neil Smith — FreeTalkLive Copyright Dispute” and Russell Madden, “L. Neil Smith on IP“; “IP: The Objectivists Strike Back!“; “Shughart’s Defense of IP“; “Richard Epstein on ‘The Structural Unity of Real and Intellectual Property’”; “Yeager and Other Letters ReLiberty article ‘Libertarianism and Intellectual Property’”; “Objectivists: ‘All Property is Intellectual Property’”; “Objectivist Law Prof. Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors.”

When the holes in their weak arguments are exposed, they escalate and call us IP socialists or communists — even though the idea that people who mentally “labor” “deserve” a “reward” for their labor is itself Marxian (see “Locke, Smith, Marx and the Labor Theory of Value“; “Objectivists: ‘All Property is Intellectual Property’”). Their escalating rhetoric is driven by a desperation arising from the growing awareness that they have lost. It resembles a bit the way the state keeps increasing IP protection — copyright terms always lengthening, the West twisting the arms of emerging economies to “strengthen” IP protection and the coming ACTA (see “Stop the ACTA [Anti-Counterfeiting Trade Agreement]“) — in the face of a growing, unstoppable wave of piracy and torrenting. We are seeing the thrashings of a dying institution and a dying idea.

The mistake made by IP libertarians stems in part from the imprecise, overly metaphorical Lockean notion that the reason you own things you homestead is that you “own” the labor you “mixed” with these things — rather than the more straightforward argument that by first appropriating an unowned resource you establish a better claim than latecomers — no fiction of “labor ownership” is needed (see “Intellectual Property and Libertarianism“). This mistake permeates the modern — mostly Randian — thinking about IP. This way of thinking about homesteading, and the American Founders’ choice to put copyright and patent in the “protolibertarian” American Constitution (even though it was just a centralizing document used in a coup d’etat as a legitimacy cover for the state; see “Rockwell on Hoppe on the Constitution as Expansion of Government Power“), and Rand’s and others’ adoption of these ideas, has created a road block to clear thinking about IP.

They say that you own things you find (appropriate or homestead) and things you buy from others — and “also” anything you create. They miss the fact that finding and contractual acquisition exhaust the ways of legitimately acquiring ownership of external objects. “Making” or “creating” simply refers to the process of transforming something you already own by rearranging it so that it is more valuable to you, or to a customer, say (even Russell Madden saw this — see “Rand on IP, Owning ‘Values,’ and ‘Rearrangement Rights’”). Creation is not an independent source of ownership; it is a way of making your property more valuable. (See “A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability”; Against Intellectual Property, “Creation vs. Scarcity” section; “Objectivist Law Prof. Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors“; “Libertarian Creationism.” “Trademark and Fraud“)

By assuming the “ownership” of labor, even though the ability to control one’s actions and labor is simply a by-product or consequence of ownership of one’s body (all rights are property rights, as Russell Madden has shown), and not an independent property right; by assuming that creation is an independent source of property rights, even though it is not; by assuming values are created, ownable things, rather than the changed utility of property the owner himself rearranged — these libertarians have equated nonscarce ideas and patterns with physical, scarce resources. After all, by your effort or labor, you create a plow, a house, or a song, right?

By treating these dissimilar things — nonscarce, infinitely reproducible patterns of information and physical, scarce objects — similarly, the IP advocates try to treat them with the same rules. They take property rules designed precisely to allocate ownership of scarce physical objects in the face of possible conflict and try to apply them to information patterns. In so doing, they end up imposing artificial scarcity on that which was previously nonscarce and infinitely reproducible.

Thus, what the pro-IP libertarians have missed is that it is good that ideas, information, patterns, and recipes are nonscarce and infinitely reproducible. Technological and other progress is possible because we can learn and build on previous knowledge. The market itself crucially relies on emulation — entrepreneurs emulate the successful action of others, thereby competing and serving consumers, and always bidding down prices and even profits. (As Russell Madden has noted, the role of emulation and learning in the market is ripe for further research and inquiry by Austrians. See “Russell Madden, IP, and Knowledge“; Russell Madden, “Without Rejecting IP, Progress is Impossible.”)

The market also enables the production of products that are scarce goods — with ever-increasing efficiency — and, crucially, makesscarce goods more abundant. The market is always trying to overcome and reduce the scarcity that is inherent in physical resources. The human actors on the market use infinitely reproducible, nonscarce knowledge and information to guide their use of scarce resources in ever-more efficient ways, so as to reduce the real scarcity that does exist in the physical world of useful goods. (See “Intellectual Property and the Structure of