The post Animal Abuse mentions the state’s use of “DVD-sniffing anti-piracy dogs.”Res ipsa loquitur.

There’s been much talk lately of the imminent death of copyright, due in part to the increasing digitization of information and media, the Internet, large bandwidth, and encryption. Nora Ephron, for example, recently observed, “We’re in the last days of copyright, if you want to be grim about it….” And see The Death of Copyright, Item #241, Encryption, Strong Privacy, and the Death of Copyright, The Death of Copyright, and many other such comments.Imagine a world 150, 200, 500 years from now–when virtually every work of art, every novel, ever movie, song, and recording ever produced until today–and many years after–is public domain. Now imagine you want to play muzak in your elevators, or nice background music in your dental office, or car repair waiting room, or restaurant. Or imagine you want to publish a book (or website) of great paintings. If you want to do these things today, most of the works you’d be intersted in are still covered by copyright. Sure, there are older recordings on scratchy 78 rpm LPs, and musty tomes from the time of the Civil War or earlier–but modern stuff, in color, stereo, hi-fi, with modern acting and special effects–most is still subject to copyright. So to play muzak in your elevator or pipe in nice background music to the ceiling speakers of your waiting room, you have to pay annoying royalties each month.

But even now we are starting to see, with the advent of Google Books, The Internet Archive, and Gutenberg, and so on, increasingly modern books entering the public domain. Imagine 400 years from now, and every movie, song, painting, novel published from the dawn of time, every movie made in the 20th and 21st and 22nd centuries, plus hundreds of thousands or even millions of songs, photographs, paintings, … and the last 100 years or so is still locked up. Now let’s say you want to put up a website the 10,000 great paintings; or stream a music or movie station playing great songs and films–will you pay out the nose for the rights to publish the recent stuff? Well, maybe, but if you have an almost unending cornucopia of great, free stuff to choose from–methinks this might exert a strong downward pressure on the ability of copyright holders to extort much money from you. (And this is disregarding practical problems they face, such as some kid downloading all the world’s media into his petabyte thumb drive in 17 seconds via a totally secure encrypted link.)

Kevin Carson has just released his Intellectual Property–A Libertarian Critique. I haven’t had a chance to read all of it yet, but from a quick skim it looks good, and with a title like this–and given that IP is turning out to be an insidious tool wielded by the state to destroy and re-route wealth–it’s worth looking into.

Thompson & Knight lays off lawyers, staff firmwide notes something we’re hearing more and more about nowadays–law firms laying off attorneys, due to Great Depression II. As the piece notes, the Dallas-based firm recently “laid off for economic reasons 17 lawyers and 25 support staff in all of its U.S. offices, including Dallas, Houston, New York, Fort Worth and Austin. … All of the lawyers are associates — only two of them are first years — who practiced in real estate or other business-related areas that require bank money to operate.”But not all is lost: “not all of the firm’s practices are doing badly by a long shot, [the managing partner] says. ‘There are areas of our firm like IP litigation that are going crazy.’”

As reported on Patently-O, two “inventors” have files patent applications on two “inventions”. The first is for SoberTeen(TM) driving insurance. The application claims

a new auto insurance product where a driver receives a 10 to 30 percent discount in premium in exchange for allowing the insurance company to monitor his or her car to determine if anyone drives it while under the influence of alcohol.

I wonder what MADD would say about the patentee trying to use the courts to stop an insurance company from offering this product without paying a ransom?

The other attempts to claim a monopoly on

A method wherein the life or health risk of a person is evaluated based on information maintained in a Risk Profile Data Base (RPDB) and the result of said evaluation is used for one or both of the following purposes: to offer an insurance policy in an underwriting class determined by the said evaluation; to provide said person with a life or health expectancy report containing suggestions on how said person can improve said life or health expectancy.

Is any comment really needed?

Will Proposed New Post-Grant Review Procedures Invite Abuse? that “The Innovation [sic] Alliance” is opposed to reforming the patent system to allow “post-grant review mechanisms”–that is, ways for potential victims of patent extortion to challenge the validity of issued patents. The group is worried this might permit “repeated frivolous patent challenges”! Got that–not frivolous patents, but frivolous patent challenges! This is like a plaintiffs’ lawyer who files frivolous lawsuits complaining about people defending themselves from it–they ought to just cough up the demanded money and quit finding “frivolous” defenses!Here, people who use the power of the state to unjustly acquire a monopoly that gives them the right to legally extort victims are complaining about “frivolous patent challenges”. Wow, some chutzpah.

The post also notes:

The fear is that such service provides will offer to “creat[e] uncertainty about a problem patent by tying it up in a long reexamination process and effectively nullify the problem patent” to get lower rates during license negotiations “until the uncertainty ends.”

So…. to avoid reducing the amount of extortion holders of “problem patents” can demand, we should just presume patents are valid–even if they might not be–and don’t allow any kind of challenge that could just “cause uncertainty.” Wow.

I don’t know. I prefer justice to certainty. Call me crazy.

I don’t mean the James Bond movie, or Ron Paul, Congress’s “Dr. No.” This wonderful, eye-opening piece by the heroic IP-abuse reporter Joe Mullin, The Fight of His Life (Mullin’s blog, The Prior Art) highlights the appalling ordeal of Dr. Bob Shafer, a bioinformatics expert. Yet another case of patent law victimizing innovation and innocent people.As such stories tend to be, this one is complicated, but it’s crucially important, so bear with my attempt at a concise summary. Dr. Shaffer, an associate professor of medicine and pathology at Stanford University, established the HIV Drug Resistance Database (HIVdb) (wikipedia link) in 1998. As the article reports,

Since then, the database has built a following among HIV researchers and practitioners around the world, attracting some 50,000 unique visitors a month. Those who use it generally fall into three categories: academic researchers, commercial and noncommercial laboratories, and doctors. … The database allows users to enter genetic information for viruses from individual patients or groups of patients, and to retrieve drug resistance information, which can then be used to help devise treatment regimens. Such information is critical to HIV research and drug development, as well as to treating individual patients. HIVdb is especially popular in the developing world not least because it’s freely available to anyone with an Internet connection. In some developing countries, medical practitioners have heard of Stanford University mainly through their interactions with HIVdb.

This is quite obviously a heroic, important, noble and benevolent effort. As the article notes, it’s “a highly regarded free resource that he developed, Stanford hosts, and doctors and scientists around the world rely on.”

However, in January 2007, ABL, a medical software company based in Luxembourg, claimed that the database infringed its patents. Read the article for more details, but in short: Stanford first moved to invalidate ABL’s patents by filing a declaratory judgment suit in California in October 2007; but then later settled with ABL, where ABL agreed not to sue Stanford for patent infringement and Stanford agreed to put a prominent disclaimer on the HIVdb, informing those who used it that, depending on the nature of their work, they might need a patent license from ABL. However, Shafer wasn’t required to sign the agreement with ABL and was not told him about the settlement’s terms until after it was reached.

Shafer at first refused to post the notice, and bully for him. He was afraid it would lead doctors to think they owe money to ABL, “and that the database built mostly with taxpayer-funded National Institutes of Health grants is no longer free.” Finally, under pressure, he did post a notice but he appended his own language arguing the patents are overbroad and invalid. See about halfway down on this page, where Dr. Shafer bravely challenges the validity of these patents. He also launched the site Harmful Patents, where he defiantly and courageously challenges the use of these patents to claim “a monopoly on the very concept of developing software to help physicians make treatment decisions“–absurdly, the patent gives ABL a monopoly on “the science of using computers to enhance medical treatment and decision making.” As one of Shafer’s colleagues notes, “If you read [ABL's patents] literally, anyone who is providing therapeutic options based on the sequence of a pathogen violates their patent, and that goes on in hundreds of contexts. It’s truly a dangerous precedent.”

Although ABL already settled with Stanford, its suit against Sahfer for breach of contract and defamation is ongoing. According to Mullin’s report, Shafer has racked up more than $100,000 in legal bills and his career is in jeopardy, since he’s fighting ABL and refused to cravenly give in, as his employer, Stanford University, arguably did.

I do not know if Shafer seeks or needs or welcomes help, or how it might be done. But I am all in favor of helping this man fight these people, and fight for the principle of “free access to published data” as “an intrinsic part of science and medicine.” Good for Shafer, and for Mullin for bringing this to light.

The Techdirt post Court Rejects Online Terms Of Service That Reserve The Right To Change At Any Time spurred me to post a comment about this, collecting some of the thoughts I’ve had about such matters for a long time.As I note there, my own theory of contract is presented in my article A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability. And while I of course as a libertarian favor freedom of contract, I am leery of too formulaic or formalistic libertarian positions. Partly this stems from my growing aversion to “armchair” theorizing (see my post The Limits of Armchair Theorizing: The case of Threats). But as an example, and as I noted in the contract article, I disagree with putting so much stock in whether a communication is a “promise” or not (Rothbard, e.g., puts a bit too much emphasis on this, in my view). The question is what the parties meant by their communication–even if the word “promise” is used, this could be intended to effectuate a transfer of title. Another is, say, the over-emphasis on the notion of “incitement” by Rothbard and Block (as discussed in Causation and Aggression). They want to rule out “incitement” as a type of aggression in all cases; to my mind, it’s a more context-dependent determination. Maybe it is, maybe it isn’t.

A similar issue arises in the case of contracts. Many libertarians, often with only a crude understanding of the nature of contracts, just assume, Rand-like, some kind of mystical “power” to “bind” oneself by “a contract”. They tend also to equate contracts with a written agreement. They thus tend to think that “if it’s written in ink, it’s binding, no matter what”. To my mind, this is too formalistic. A writing is neither necessary nor sufficient to form a contract. Most contracts are not written. They may be oral. They do not even need to be verbal–I hand you a dollar, pointing to the newspaper; you take my dollar and give me the paper. A sale happens, nonverbally (no oral or written communication). And “what is written” is not necessarily dispositive. To my mind, a written agreement is only evidence of what the parties actually agreed to. But it is rebuttable. The written agreement may be very sparse: in which case in the case of disputes, there is no choice but to resort to “gap-fillers,” default rules, and the like. Or the agreement may contain ambiguities or even inconsistencies–this may require similar construction methods, or even invalidation of the agreement.

The agreement may not even be intended to be binding, such as in the case of a so-called “simulation” (a contract which, by mutual agreement, does not express the true intent of the parties; see my Civil Law to Common Law Dictionary, entry for “Simulation”; Louisiana Civil Code, arts. 2025-27).

Or there may be fraud or deception which nullifies the whole writing or requires certain provisions not to be enforced.

Given all this, in my view we should not just assume that “whatever is in writing” is part of a binding obligation or enforceable agreement. This bears on the issue of fine print, and so-called shrink-wrap and clickwrap agreements (incidentally the law of various countries on this issue is discussed in my book Online Contract Formation–which is not bedside reading, n.b.). Libertarians seem to just assume, too quickly in my view, that all such fine print should be enforceable. These assumptions seem to be made in the absence of the awareness of the nuances noted above.

So one problem with click-wrap agreements, for example, is that there is (arguably) often no “meeting of the minds” on the fine print–and the vendor is fully aware of this. If the customers routinely just click the “I have read and agree to these terms” box but never do read it, and the vendor knows this, then it’s a sort of fiction to assume both sides have actually agreed on these terms. For example supposed buried in fine print for a contract for sale of a $20 software program is the provision, “Buyer agrees to give 50% of his income to Vendor for life.” Is this enforceable? Of course not. Why not? Because there was no agreement to this. So the “hidden” terms have to be in some sense reasonable, at the least. (Here, too, “inalienability” concerns may kick in–even if the party is fully aware he is signing away his life income, or his kidney, or life, say, this may not be enforceable for inalienability concerns–see, on this, the contract article noted above, plus my article Inalienability and Punishment.)

I am not saying that clickwrap and fine print is not enforceable–I’m just saying that the libertarian view on property rights and contracts does not require that we formalistically equate “the contract” with “the writing,” and it does not require we figure all this out from our armchairs. The libertarian view can recognize that contracts about consensual, intentional transfers of title; that manifesting such consent is a matter of communication; that making determinations about the nature of a contract, or title transfer, is necessarily a fact-specific, context-bound inquiry.

by using The Pirate Bay. Just kidding.It’s bad enough they want us to celebate “World IP Day”. But now they are focused on “promoting green innovation.” Groan. Gotta love this state-sponsored propaganda-fest.

Celebrate World Intellectual Property Day

Today [April 26, 2009] is World Intellectual Property Day and this year WIPO’s focus is on promoting green innovation as the key to a secure future.According to WIPO, most people are aware of intellectual property (IP) but many still view patents, copyrights and trademarks as business or legal concepts with little to no relevance to their own lives. To address this gap, WIPO’s Member States decided in 2000 to designate an annual World Intellectual Property Day. They chose April 26, the date on which the Convention establishing WIPO originally entered into force in 1970.

Each year, WIPO and its Member States celebrate World Intellectual Property Day with activities, events and campaigns. These are an attempt to increase public understanding of what IP really means, and to demonstrate how the IP system fosters not only music, arts and entertainments, but also all the products and technological innovations that help to shape our world.

WIPO issues a message from the Director General each year, broadcasts a short publicity spot on international television channels, and dispatches posters and other promotional materials to IP offices and organizations.

In EE Times: Opinion: Engineers should stage a patent strike, I noted an op-ed by Rick Merritt in EETimes, “Opinion: Engineers should stage a patent strike.”A Mr. J. C. Cooper, of Pixel Instruments Corp., replied with a letter to the editor in defense of the patent system. My reply is reprinted below:

***

Mr. Cooper writes:

“Your articles in the April 20 edition of EE Times ["Dealing with Mad Patent Disease"] which portray the U.S. patent system as broken and worse seem terribly biased. I wonder where you are getting your information. Surely you don’t have any direct experience with patents, e.g. using a patent to protect a money making invention, or you would be able to formulate a more balanced viewpoint.”

I’d like to respectfully disagree with some of Mr. Cooper’s contentions. As a preliminary matter, I disagree that only those with a lot of experience in patenting are entitled to have an opinion, or ought to be accused of being “biased” if they dissent on the mainstream viewpoint on IP rights. that said, I am a practicing, registered patent attorney, with BSEE and MSEE degrees. I’ve represented many clients and obtained hundreds of issued patents over the last 15 or so years.

Mr. Cooper writes,

“The patent system could use some tweaking but it is far from the “mad patent disease” you describe. The U.S. needs a stronger patent system, not weaker …. The only way that innovation, and its industry, can be protected is with intellectual property, i.e. patents. To weaken the patent system at the urging and benefit of a few large multinational corporations (most of which have been found guilty in court of stealing the property of others) runs the risk of destroying that one remaining thriving U.S. industry.”

There are a few problematic assumptions and chains of reasoning here. I agree that innovation is good, but Mr. Cooper’s assumption that “The only way that innovation, and its industry, can be protected is with intellectual property, i.e. patents” is unwarranted. There are of course other ways–exclusion methods; first-to-market; trade secrets, and so on. And there are other methods discussed extensively in Boldrin and Levine’s Against Intellectual Monopoly. No one can seriously argue there would be no innovation without patents. At most, you can argue there is more innovation under a patent system.

But the patent system obviously has costs. So the argument that we need a patent system to encourage more innovation assumes that the value of the extra innovation induced by a patent system is greater than the costs of the patent system. But as I note in my article “There’s No Such Thing as a Free Patent” (links below to this and others mentioned here), no one has ever been able to show this. In fact, most studies and analyses I’m aware of conclude that if anything, the cost of the patent system is greater than the value of any extra, marginal innovation stimulated. Some analyses even conclude that there is less innovation overall under a patent sytem, than there would be without one–so that added to the undeniable cost of the patent system is the cost of the lost innovation.

If Mr. Cooper is aware of information no one else seems to have–what is the net value of the patent system (i.e., what is the value of the extra innovation induced by the patent system, minus any lost innovation, minus other costs of the patent system), I and others would love to see this data.

Mr. Cooper implies that those opposed to IP rights are biased, or not “balanced,” or are mainly “a few large multinational corporations (most of which have been found guilty in court of stealing the property of others).” But surely individuals and even companies are entitled to their viewpoint. It can easily be argued that those who can profit from the patent monopoly granted to them by the state are also biased, and are willing to argue in favor of the patent monopoly system–that they do not really care whether the system is a net benefit to the economy overall–that they are happy to have it exist so long as they benefit from it, even if this is at the expense of overall innovation and growth. Certainly, the deafening silence of advocates of IP to provide any data that supports their contention that patents indeed spur innovation worth more than the cost of the system, casts suspicion on their sincerity. (And is it really that surprising that patent attorneys are almost uniformly pro-IP rights?)

Mr. Cooper’s aside that most of the “large multinational corporations” complaining about patents “have been found guilty in court of stealing the property of others” begs the question of whether IP is, or should be, recognized as a legitimate form of property rights, by calling it “stealing” of “property”. The question is whether patterns of information are, or ought to be ownable as property. In my view, not only does the patent system cause overall economic damage in the billions of dollars, but patent and copyright are not legitimate forms of property rights–in fact, patent and copyright are contrary to, and undermine, private property rights. As I argue in my book Against Intellectual Property, a free market relies on private property rights being respected, which means scarce resources are owned by the original homesteader of the property, or that person’s descendant in title. But to grant a patent to someone who finds a new way to use their own property, is to grant that person some rights in how other people use their own property–this is redistribution from owners, to outsiders. As an example, if the state granted me the right to prevent Mr. Cooper from using his car to transport passengers–if I had this type of veto right–then I could demand he pay me a royalty for my permission to let him carry passengers. I would be a partial owner of his car–where before, he was the full owner, now he is only a part owner. This would be a type of theft of Mr. Cooper’s rights in his car, a transfer from him to me. This is what the patent system does, and it is ethically unjustified and contrary to the sanctity of private property rights.

It is understandable that technology companies take advantage of the state’s patent system; they have virtually no choice, if only for defensive reasons. And it is understandable they become used to this model, and cannot imagine how their business model would change if the state did not intervene in the market with IP law. But this does not mean IP law is justified.

For those interested in further reading on this (and for links to some of the sources mentioned above), I recommend:

1. The superb new book Against Intellectual Monopoly, by economists Boldrin and Levine.

2. Jeff Tucker’s excellent commentaries on Boldrin and Levine.

3. Some of my material, many on Mises.org. Such as: my little book, Against Intellectual Property, my article “There’s No Such Thing as a Free Patent,” and my presentation, “Rethinking IP Completely,” all available here.

4. Mike Masnick’s frequent and excellent anti-IP commentary on Techdirt.

There are many other excellent anti-IP pieces, but this is a good starting point.

I have been repeating the following to people in emails of late, in response to queries about the free-market opposition to intellectual property, so below I provide a concise list of links for some good material explaining the libertarian/free-market case against IP:1. The superb new book Against Intellectual Monopoly, by economists Boldrin and Levine.

2. Jeff Tucker’s excellent commentaries on Boldrin and Levine.

3. Some of my material, many on Mises.org. Such as: my little book, Against Intellectual Property, my article “There’s No Such Thing as a Free Patent,” and my presentation, “Rethinking IP Completely,” all available here.

4. Mike Masnick’s frequent and excellent anti-IP commentary on Techdirt.

There are many other excellent anti-IP pieces, but this is a good starting point.

Looks like Great Depression II has helped forced the parties to a gargantuan, long-standing patent battle to the negotiating table. From The American Lawyer: Litigation Daily:

Looking back, we knew this day would come. For the last four years, Broadcom and Qualcomm have been litigating against each other with the chess-match strategic intensity of Cold War rivals, as we learned when we spent a few months in the fall of 2007 reporting and writing an American Lawyer cover story on the epic litigation. Trust us, these companies don’t like each other. But we knew they couldn’t sustain the pace and expense of litigation that literally spanned the globe. Qualcomm, which seemed to get beat up in case after case by Broadcom, simply could not justify paying hundreds of millions of dollars to the likes of Cooley Godward Kronish, DLA Piper, and Cravath, Swaine & Moore.

And so, on Sunday night, the two announced they had reached peace, agreeing to drop all litigation against each other. That’s going to leave a gaping hole in the dockets of the International Trade Commission, the federal district court in Santa Ana, Calif., the European Commission, and the Korea Fair Trade Commission. The deal includes a multiyear patent agreement and requires Qualcomm to pay Broadcom $891 million over a four-year period. … Qualcomm insists that nothing in the Broadcom settlement agreement will affect its highly profitable business model of licensing its technology. “We will be able to continue to operate as in the past,” Qualcomm’s general counsel, Don Rosenberg, told The San Diego Tribune. “But we’re not standing around here thumping our chests.”

Rosenberg said cutting legal costs was “clearly a factor” driving settlement talks. According to one estimate, Qualcomm was spending $100 million annually in its fight with Broadcom. … “It’s not unusual in a case like this, as you get near settlement, for there to be negotiated reductions in legal expenses,” French said. “It’s a natural course. If a company does not get its optimum desired result, needless to say, it is looking for how to minimize its total financial exposure.”

Hundreds of millions of dollars down the rathole, and hundreds of millions more to be paid in the future–what a productive use of resources the patent system “stimulates”. And to think–some pro-patent types want to foist this system on China — one patent hawk raves: “The quality of patents issued in China is also improving. Revisions to the patent law that take effect in October strengthen the requirement for a patent’s novelty, bringing it up to global standards. Stronger patents are easier to enforce, opening the door to more lawsuits.” And that’s a good thing? China, do not listen to Americans! on Tax policy, antitrust, or IP!

From zenhabits: Feel the Fear and Do It Anyway (or, the Privatization of the English Language)Post written by Leo Babauta.

Today I received an email from the lawyers of author Susan Jeffers, PhD., notifying me that I’d infringed on her trademark by inadvertently using the phrase “feel the fear and do it anyway” in my post last week, A Guide to Beating the Fears That Hold You Back.

The phrase, apparently, is the title of one of her books … a book I’d never heard of. I wasn’t referring to her book. I’m not using the phrase as a title of a book or product or to sell anything. I was just referring to something a friend said on Twitter.

Her lawyers asked me to insert the (R) symbol after the phrase, in my post, and add this sentence: “This is the registered trademark of Susan Jeffers, Ph.D. and is used with her permission.”

Yeah. I’m not gonna do that.

I find it unbelievable that a common phrase (that was used way before it was the title of any book) can be trademarked. We’re not talking about the names of products … we’re talking about the English language. You know, the words many of us use for such things as … talking, and writing, and general communication? Perhaps I’m a little behind the times, but is it really possible to claim whole chunks of the language, and force people to get permission to use the language, just in everyday speech?

What if this were taken to an extreme? What if some billionaire (say, Bill Gates) decided to start trademarking thousands and thousands of phrases, so that he could charge us for each use, or so that we’d have to link back to the Microsoft homepage with each reference? The language, in this scenario, could be entirely privatized if we allow this sort of thing.

So, while this post is probably ill-advised (and yes, I realize that I’m actually giving publicity to Ms. Jeffers), I have to object. I think we have a duty, as writers and bloggers and speakers of the English language, to defend our rights to … words. Free speech is a bit of an important concept, I think.

As an aside, I think the idea of jealously protecting copyright and trademarks, in this digital age, is outdated and ignorant. You want your ideas to spread, and you should encourage people to spread your ideas, not put up all kinds of boundaries and restrictions and obstacles to that being done. This blog, for example, is Uncopyrighted, and will always be free, because I want people to spread my posts and ideas. I think it’s actually good for me as a writer, and it’s (not insignificantly) better for the writing community in general if we can share each others’ work freely. I’m hoping that with posts like this, and the good work of thousands of other like-minded people, the old mindset of fencing off ideas and language will slowly change.

So, no, I will not be adding a Registered Trademark symbol to the previous post. And no, I won’t be adding a phrase of legalese to the post. And no, I won’t even attribute the phrase or link to her book, as I wasn’t referring to the book. And no, I won’t remove the phrase.

I’d rather be sued.

Oh, and I’m not going to change the title of this post either. You’ll have to remove it from my cold, dead iMac.

On a side note: You may feel free to use the title of my book, The Power of Less, in any of your blog posts, on Twitter or even (gasp) everyday conversation.

[Cross-posted at Mises blog]

So argues David Bollier in the post Et tu, Obama? Open Government Suffers Another Blow. An excerpt:

A government cannot be held accountable if there is a cloak of secrecy around its core deliberations and citizens are excluded from the process. … So what gives with the Obama administration’s refusal to share the most basic documents about a pending intellectual property treaty that are widely available among corporate lobbyists in Europe, Japan and the United States?

The Anti-Counterfeiting Trade Agreement, or ACTA, may sound arcane, and certainly its corporate champions must wish to make it seem boring and obscure. But in fact, the misleadingly named treaty could dramatically alter the Internet by allowing the film, music, publishing and other industries to aggressively enforce their IP rights, as they broadly construe them, at the expense of citizens, consumers and creators. All this would be achieved through secret deliberations an international version of the smoke-filled room: another brazen disenfranchisement of citizens and trampling of democratic norms.

No official version of the proposed treaty has been released, but it is known that it seeks to set forth standards for enforcing cases of alleged copyright and patent infringement. The treaty also seeks to provide legal authority for the surveillance of Internet file transfers and searches of personal property. Read more about ACTA here and here.

[Cross-posted at Mises blog]

Ancient Books Go Online reports:”The BBC is reporting that the United Nations’ World Digital Library has gone online with an initial offering of 1,200 ancient manuscripts, parchments and documents. To no great surprise, Europe comes in first with 380 items. South America comes in second with 320, with a very distant third place being given to the Middle East at a paltry 157 texts. This is only the initial round, so the leader board can be expected to change. There are, for example, a lot of Sumerian and Babylonian tablets, many of which are already online elsewhere. Astonishingly, the collection is covered by numerous copyright laws, according to the legal page. Use of material from a given country is subject to whatever restrictions that country places, in addition to any local and international copyright laws. With some of the contributions being over 8,000 years old, this has to be the longest copyright extension ever offered. There is nothing on whether the original artists get royalties, however.”

This excellent Slate piece, My Mythical Online Rental Service for Movies: Why Hollywood is so slow to catch up on offering all of its movies and shows online, provides a good explanation of why it’s going to be AT LEAST 10 YEARS before we have decent online movies on demand–and why bittorrent and movie pirating will only continue in popularity.The article explains that, due to the incredibly confusing, complex, and slow-to-change contractual system that locks up and segments movie rights, “Reed Hastings, Netflix’s founder, told the Hollywood Reporter last month that it’ll be 10 years before we see a streaming service that offers any movie at any time.”

This is all due to a byzantine web of contracts, build up on the foundation of copyright. It’s truly stunning. I would not be surprised if it’s 20 years, or more.

Update: See also Mike Masnick’s excellent post, Would You Rather Renegotiate Your Contracts… Or See Your Business Collapse?

[Cross-posted on Mises Blog.]

Opinion: Engineers should stage a patent strikeRick Merritt (04/20/2009 12:00 AM EDT)

It’s time for engineers to stage an intellectual property strike.

Stop filing patents. Refuse to sign employment contracts that give your employer sole title to your inventions. Don’t participate in any due diligence efforts on patent portfolios.

Engineers need to organize if this IP strike is to be effective. That will require creating a new organization.

Existing lobby groups on patent issues in the electronics industry represent the views of specific sets of companies, not engineers. Even the IEEE is so diversified in its base that it admits it has not been able to form a crisp consensus on issues like patent reform.

Don’t get me wrong. I am not saying engineers should stop work in the midst of a recession of historic proportions. I stand with those who say we design ourselves out of downturns by creating compelling products. What I’m saying is, hands off anything to do with patents.

I admit this is an extreme position and one engineers are unlikely to take up, but that doesn’t mean a patent strike is the wrong thing to do. In fact, it could be very right.

The patent system is broken, and someone needs to call attention to that fact to spark real change. As the creators of the technology, engineers have the power to command that attention, if they choose to use it.

This is a historic moment to send a message that the patent system needs fixing, because influential leaders are listening. Patent reform is front and center in Congress, and an administration that ran on change is poised to appoint a new director for the U.S. Patent and Trademark Office.

Patents are supposed to capture innovations in ways that compel engineers to read them. They are meant to spur designers to creative action, inspiring them to develop novel work-arounds or to license ideas that are too good to pass up.

Sadly, the reality today is just the opposite. Bad policies and practices have coalesced around patents. In this week’s cover story, we call it mad patent disease [].

Corporate legal departments tell engineers which patents they can and can’t read. Sometimes engineers are told not to read patents at all, lest they be accused of deliberately infringing someone’s IP.

Meanwhile, businesspeople of all stripes pressure engineers to file patent applications for every idea. That has spawned a business of litigation and licensing that charges for portfolios by the pound. Companies now wield patents strategically to charge others for the freedom to innovate. In this sick world, patents don’t spark innovation, they inhibit it.

Quantity has replaced quality, and that has created a mess. Legal departments settle infringement cases in part because they can’t afford to pay anyone to provide informed opinions about all the patents asserted against them. Thus, portfolios that contain a lot of junk can still command a premium.

As the premiums rise, more people file more patents to defend against the madness or to get their share of the IP bucks. The result is a patent office up to its ears in a backlog approaching a million applications, sitting in a pile three years deep.

Patents should have a reasonable value for their owners and users. They should be available to all on a timely basis so they can encourage innovation, not stifle it.

Engineers need to speak up in a loud and clear voice about what’s wrong. If they don’t, I suspect the lawyers and corporate managers who have gotten us into today’s mess will continue to build on the upside-down bubble market for patents they have created.

Great review of Against Intellectual Monopoly by the powerhouse libertarian reviewer, David Gordon, in the recent issue of Mises Review.

The March 30, 2009 episode of Free Talk Live discusses this topic (around 00:11:00).Hat tip to Manuel Lora.

Fantastic post by Jeff Tucker at Mises Blog:***

IP Vices and Crimes

March 18, 2009 8:51 AM

The 18 or so articles I’ve written about “intellectual property”–elaborating on a book I consider to be a seminal work of our epoch, Against Intellectual Monopoly–generated floods of email like I’ve never seen on any topic. The thing that gets people going is the conclusion: in a free market, there should be no legal grants of patent or copyright.

What many people do–and this is rather depressing from the point of view of a writer–is seize on the conclusion, ignore the reasoning and arguments, and then attempt an instantaneous, arm-chair refutation.

It always goes something like this: “Oh, you are telling me that I could just steal this article that you wrote, even put my name on it, sell it and take the money, and there would be nothing wrong with doing that?”

Some go even further to actually do this: put their names on it, post it somewhere, and send me the link.

I think precisely what you are thinking: “What a jerk!”

I’m not sure what other kind of response they expect from me. They must really think I will say: “Oh, this is so shocking! I had not considered that someone might actually do this to me if we got rid of the U.S. Copyright Office! My goodness, this kind of thing cannot be tolerated. I was completely wrong in everything I said. I too am grateful to the state for all it does to protect my intellectual creations and my good name.”

Sorry to say, this is not my response. My detailed response actually goes as follows: “If you do that in a free society, you will not be arrested by the police or experience physical coercion blessed by official mandate. However, everyone is free to regard you as a poseur, a wretch, a menace to society, and wholly lacking in credibility. If having a good reputation counts to you, it’s probably not a good idea to pretend to have written something that you have not in fact written.”

The difference here comes down to a wonderful distinction that was made by Lysander Spooner in the 19th century. He was careful to explain the difference between a vice and a crime. A crime involves aggressive force or threat of aggressive force against another person or privately owned property. A vice, however, is a much larger category of behaviors that don’t involve invasion of person or property.

Vices can involve lying, being nasty to others, eating like a pig in public, abusing oneself with drugs or liquor, failing to shower and thereby stinking to high heaven, swearing in public, betraying benefactors, rumor mongering, displaying ingratitude, not keeping commitments, being a shopaholic, being a greedy miser, failing to do what you say you are going to do, making up stories about other people, taking credit for things you didn’t do, failing to give credit where it is due, and other things along these lines.

In a free society, vice is control through decentralized social enforcement of social, ethical, and religious norms. The great problem of statism is that it turns vices into crimes, and then when the law is repealed, people forget that there are, after all, certain social norms that nonetheless need to be upheld and will be upheld once society is managing itself rather than being managed by the state.

Consider the case of classroom plagiarism, for example. A teacher wrote to me with a concern that the repeal of intellectual property law would make it more difficult to punish students for turning in work that claimed to original but was actually copied from elsewhere. I pointed out that the police and courts are not involved in the enforcement of classroom rules now, so why would a change in federal legislation be any different? Plagiarism is still plagiarism.

IP law has really had the effect of distorting our society’s sense of all of these matters. It has made everyone too unwilling to admit our dependence on imitation and emulation as institutions that permit and encourage progress. It has made people too shy to copy the success of others and admit to doing so. Writers, artists, entrepreneurs all live with this weird burden of expectation that everything they do must be completely original and they must never draw from others sources. It’s preposterous!

On the other hand, we are too quick to credit the state for preventing the mass outbreak of old-fashioned vice. Even without copyright and patent, some kinds of behaviors and practices will remain shoddy, unseemly, ungracious, conniving, and social unacceptable. What, for example, would you say about a local author who claim to write a new play that turned out to be written by Shakespeare? Doing this is perfectly legal right now. But the person would be regarded as a lout and a fool for the rest of his life.

Hence, the repeal of “intellectual property” law does not mean some sort of crazed free-for-all chaos in which no one can be entirely sure of anyone’s identity, creations, who wrote what, what company did what, where credit is due, what one’s commitments are, and the like. What we will gain is a great sense of our moral obligations to each other.

And in the absence of the state’s grant of monopoly privilege, we will become ever more vigilant in giving credit where it is due. You still have to be a nice person who acts with a sense of fairness, equanimity, and justice, as conventionally understood. If you don’t, the state will not crack your skull, but you will lose something profoundly important.

In other words, in absence of IP, we gain a greater sense of the distinction between what is vice and what is crime, and a better means for dealing with both.

An ars technica post, Study: free markets superior to patent monopolies, reports:

Our economic system is based on the expectation that markets can provide optimal solutions more efficiently than monopolies, with one glaring exception: patents, which are structured in a “winner takes all” manner. A study appearing in today’s edition of Science suggests that markets might work here, too.

Now, I know, there are many problems with even evaluating an IP system on utilitarian grounds; but the purported innovation-spurring effects of an IP system are what its advocates usually claim in support of having it. So it’s natural to ask: well, where’s the proof? Never is it provided. Study after study concludes that an IP system’s costs are about equal to, or greater than, any benefits it provides. (See my There’s No Such Thing as a Free Patent; What are the Costs of the Patent System?.) So it’s no wonder yet another study concludes this.

[Cross-posted at Mises Blog.]

Google Books On The iPhone and G1 Is Almost Kindle-Like (And Real Mobile Kindle May Be Coming Soon) rightly raves about about the mobile version of Google Books. It works great on an iPhone (and it turns out the rumors about Kindle coming to the iPhone were right; see also my LRC post Kindle v. Netbook v. ePub, Bookworm and Stanza).However, it turns out that you can only see “free” google books in mobile site. For example, on my iPhone I cannot see the 1907 Edith Nesbit book The Enchanted Castle in the mobile-optimized version of Google Books. (Try it even from a regular browser, from that mobile site, you’ll see what I mean.) However, if you go to the regular Google Books site, you can find and read the whole thing–even on an iPhone. You just can’t use the mobile-optimized version of Google Books to view it–even on a computer. So you can read the book on an iPhone, but not in a mobile-optimized format.

I suspect that Google did this because of copyright concerns, as part of their deal with publishers–perhaps it made them carve out something for mobile phones or platforms. It’s amazing how much copyright law distorts our entire economy.

[Cross-posted at Mises Blog.]

In this post, Monsanto’s General Counsel disagrees with Google’s Head of Patents and General Counsel, who had complained about the risks companies like Google face from huge damage awards in patent lawsuits.I am so tired of patent lawyers and companies with vested interests making the tired old argument that we should not “weaken” patent protection because it’s needed to promote and protect innovation–without ever once even alluding to the fact that these purported benefits have an accompanying cost, much less demonstrating that the cost is worth the benefit received. (See my There’s No Such Thing as a Free Patent; What are the Costs of the Patent System?)

I’d much prefer simple, honest calls for protectionism: Monsanto wants patent protection to remain strong, because they think it benefits their own company–regardless of the overall effects or costs on other companies or the economy as a whole. Fine, an honest plea for redistribution of wealth.

Note how Monsant just brushes off Google’s costs and fears:

“I respectfully disagree with the recent blog post by Google’s Head of Patents and General Counsel, commenting on the perceived risks from damage awards in patent cases. Monsanto has faced billion dollar damage claims as a wrongly sued patent defendant and also knows the true benefits from avoiding the encouragement of willful infringement based on a smaller party’s calculated gain in the face of limited risk of a meaningful award of damages if infringement is established. With full knowledge of all these issues and our substantial alignment with Google and the information technology industry over the legitimate need to curtail patent trolls and a myriad of other concerns – we encourage thoughtful reform.”

Amazing that he just says he “disagrees” with Google’s perception of risks from high damage awards in patent cases–even as it admits Monsanto has faced billion dollar damage claims in wrongful patent suits. Does it occur to this gentleman that perhaps not every company is comfortable facing the risk of wrongful billion dollar patent claims?

[Cross-posted at Mises Blog]

Patent Baristas has a Book Review of the new book Driving Innovation. It’s interesting to me that patent lawyers seem to be beginning to begrudgingly acknowledge that the patent system has costs:

“The duality of intellectual property is that it is a source of wealth and a source of an equal and opposite cost. That is, IP brings wealth only through a hidden tax whether on competitors or consumers. So it is with IP rights, they inherently set up a tension between the pharmaceutical company enforcing rights and the patients wanting greater (read: less costly) access to medicine. A technology company wants to build and market a product but is forced to pay licensing fees to a patent holder.”

What is bizarre here is the blithe assumption that the costs of IP are “equal and opposite” to its benefits. First, they can never be equal, due to the subjective, ordinal, and interpersonally incomparable nature of value. Second, even if they can be compared, there’s no reason to think that they are equal–one is likely to be greater than the other. Third, even if you assume they are equal–then why have an IP system? I mean why even bother, if it all balances out? (See my There’s No Such Thing as a Free Patent; What are the Costs of the Patent System?)

But even though they acknowledge the system has costs that might offset or even exceed the purported benefits, do they want to probe into whether IP is legitimate or should exist? No, explicitly not: “This book is not about what the IP should be or how it could be changed but is about how to survive in a global system when IP rights have developed.”

Ah well, baby steps.

[Cross-posted at Mises Blog.]

Some here might be interested in the remarks on IP by the greatest economist of all time (though Boldrin and Levine will no doubt disagree with this characterization!), Mises:In this comment on a post here, I was accused of hiding or avoiding mention of one of Mises’s comments about copyrights and patents. I suppose the commentor was unaware of my extensive quotes of Mises in this comment on another thread, which quoted a large deal of Mises’s remarks on IP, including the one in question. So much for suppression. Since this extensive comment is buried on a thread, I reprint it below as a standalone post.

As I noted in Against Intellectual Property (n. 38), “Mises expressed no opinion on the issue, merely drawing the economic implications from the presence or absence of such laws.”

Here are Mises’s words:

The External Economies of Intellectual Creation

The extreme case of external economies is shown in the “production” of the intellectual groundwork of every kind of processing and constructing. The characteristic mark of formulas, i.e., the mental devices directing the technological procedures, is the inexhaustibility of the services they render. These services are consequently not scarce, and there is no need to economize their employment. Those considerations that resulted in the establishment of the institution of private ownership of economic goods did not refer to them. They remained outside the sphere of private property not because they are immaterial, intangible, and impalpable, but because their serviceableness cannot be exhausted.

People began to realize only later that this state of affairs has its drawbacks too. It places the producers of such formulas–especially the inventors of technological procedures and authors and composers–in a peculiar position. They are burdened with the cost of production, while the services of the product they have created can be gratuitously enjoyed by everybody. What they produce is for them entirely or almost entirely external economies.

If there are neither copyrights nor patents, the inventors and authors are in the position of an entrepreneur. They have a temporary advantage as against other people. As they start sooner in utilizing their invention or their manuscript themselves or in making it available for use to other people (manufacturers or publishers), they have the chance to earn profits in the time interval until everybody can likewise utilize it. As soon as the invention or the content of the book are publicly known, they become “free goods” and the inventor or author has only his glory.

The problem involved has nothing to do with the activities of the creative genius. These pioneers and originators of things unheard of do not produce and work in the sense in which these terms are employed in dealing with the affairs of other people. They do not let themselves be influenced by the response their work meets on the part of their contemporaries. They do not wait for encouragement.[13]

It is different with the broad class of professional intellectuals whose services society cannot do without. We may disregard the problem of second-rate authors of poems, fiction, and plays and second-rate composers and need not inquire whether it would be a serious disadvantage for mankind to lack the products of their efforts. But it is obvious that handing down knowledge to the rising generation and [p. 662] familiarizing the acting individuals with the amount of knowledge they need for the realization of their plans require textbooks, manuals, handbooks, and other nonfiction works. It is unlikely that people would undertake the laborious task of writing such publications if everyone were free to reproduce them. This is still more manifest in the field of technological invention and discovery. The extensive experimentation necessary for such achievements is often very expensive. It is very probable that technological progress would be seriously retarded if, for the inventor and for those who defray the expenses incurred by his experimentation, the results obtained were nothing but external economies.

Patents and copyrights are results of the legal evolution of the last centuries. Their place in the traditional body of property rights is still controversial. People look askance at them and deem them irregular. They are considered privileges, a vestige of the rudimentary period of their evolution when legal protection was accorded to authors and investors only by virtue of an exceptional privilege granted by the authorities. They are suspect, as they are lucrative only if they make it possible to sell at monopoly prices. [14]. Moreover, the fairness of patent laws is contested on the ground that they reward only those who put the finishing touch leading to practical utilization of achievements of many predecessors. these precursors go empty-handed although their main contribution to the final result was often much more weighty than that of the patentee.

It is beyond the scope of catallactics to enter into an examination of the arguments brought forward for and against the institution of copyrights and patents. It has merely to stress the point that this is a problem of delimitation of property rights and that with the abolition of patents and copyrights authors and inventors would for the most part be producers of external economies.

and here:

The Creative Genius

Far above the millions that come and pass away tower the pioneers, the men whose deeds and ideas cut out new paths for mankind. For the pioneering genius [12] to create is the essence of life. To live means for him to create.

The activities of these prodigious men cannot be fully subsumed under the praxeological concept of labor. They are not labor because they are for the genius not means, but ends in themselves. He lives in creating and inventing. For him there is not leisure, only intermissions of temporary sterility and frustration. His incentive is not the desire to bring about a result, but the act of producing it. The accomplishment gratifies him neither mediately nor immediately. It does not gratify him mediately because his fellow men at best are unconcerned about it, more often even greet it with taunts, sneers, and persecution. Many a genius could have used his gifts to render his life agreeable and joyful; he did not even consider such a possibility and chose the thorny path without hesitation. The genius wants to accomplish what he considers his mission, even if he knows that he moves toward his own disaster.

Neither does the genius derive immediate gratification from his creative activities. Creating is for him agony and torment, a ceaseless excruciating struggle against internal and external obstacles; it consumes and crushes him. The Austrian poet Grillparzer has depicted this in a touching poem “Farewell to Gastein.” [13] We may assume that in writing it he thought not only of his own sorrows and tribulations but also of the greater sufferings of a much greater man, of Beethoven, whose fate resembled his own and whom he understood, through devoted affection and sympathetic appreciation, better than any other of his contemporaries. Nietzsche compared himself to the flame that insatiably consumes and destroys itself.[14] Such agonies are phenomena which have nothing in common with the connotations generally attached to the notions of work and labor, production and success, breadwinning and enjoyment of life.

The achievements of the creative innovator, his thoughts and theories, his poems, paintings, and compositions, cannot be classified praxeologically as products of labor. They are not the outcome of [p. 140] the employment of labor which could have been devoted to the production of other amenities for the “production” of a masterpiece of philosophy, art, or literature. Thinkers, poets, and artists are sometimes unfit to accomplish any other work. At any rate, the time and toil which they devote to creative activities are not withheld from employment for other purposes. Conditions may sometimes doom to sterility a man who would have had the power to bring forth things unheard of; they may leave him no alternative other than to die from starvation or to use all his forces in the struggle for mere physical survival. But if the genius succeeds in achieving his goals, nobody but himself pays the “costs” incurred. Goethe was perhaps in some respects hampered by his functions at the court of Weimar. But certainly he would not have accomplished more in his official duties as minister of state, theater manager, and administrator of mines if he had not written his plays, poems, and novels.

and here:

The special conditions and circumstances required for the emergence of monopoly prices and their catallactic features are: … 11. The monopolized good by whose partial withholding from the market the monopoly prices are made to prevail can be either a good of the lowest order or a good of a higher order, a factor of production. It may consist in the control of the technological knowledge required for production, the “recipe.” Such recipes are as a rule free goods as their ability to produce definite effects is unlimited. They can become economic goods only if they are monopolized and their use is restricted. Any price paid for the services rendered by a recipe is always a monopoly price. It is immaterial whether the restriction of a recipe’s use is made possible by institutional conditions–such as patents and copyright laws–or by the fact that a formula is kept secret and other people fail to guess it.

The complementary factor of production the monopolization of which can result in the establishment of monopoly prices may also consist in a man’s opportunity to make his cooperation in the production of a good known to consumers who attribute to this cooperation a special significance. This opportunity may be given either by the nature of the commodities or services in question or by institutional provisions such as protection of trademarks. The reasons why the consumers value the contribution of a man or a firm so highly are manifold. They may be: special confidence placed on the individual or firm concerned on account of previous experience[15]; merely baseless prejudice or error; snobbishness; magic or metaphysical prepossessions whose groundlessness is ridiculed by more reasonable people. A drug marked by a trademark may not differ in its chemical structure and its physiological efficacy from other compounds not marked with the same label. However, if the buyers attach a special significance to this label and are ready to pay higher prices for the [p. 365] product marked with it, the seller can, provided the configuration of demand is propitious, reap monopoly prices.

The monopoly which enables the monopolist to restrict the amount offered without counteraction on the part of other people can consist in the greater productivity of a factor which he has at his disposal as against the lower productivity of the corresponding factor at the disposal of his potential competitors. If the margin between the higher productivity of his supply of the monopolized factor and that of his potential competitors is broad enough for the emergence of a monopoly price, a situation results which we may call margin monopoly[16].

… In the long run such a national cartel cannot preserve its monopolistic position if entrance into its branch of production is free to newcomers. The monopolized factor the services of which the cartel restricts (as far as the domestic market is concerned) for the sake of monopoly prices is a geographical condition which can easily be duplicated by every new investor who establishes a new plant within the borders of Atlantis. Under modern industrial conditions, the characteristic feature of which is steady technological progress, the latest plant will as a rule be more efficient than the older plants and produce at lower average costs. The incentive to prospective newcomers is therefore twofold. It consists not only in the monopoly gain of the cartel members, but also in the possibility of outstripping them by lower costs of production.

Here again institutions come to the aid of the old firms that form the cartel. The patents give them a legal monopoly which nobody may infringe. Of course, only some of their production processes may be protected by patents. But a competitor who is prevented from resorting to these processes and to the production of the articles concerned may be handicapped in such a serious way that he cannot consider entrance into the field of the cartelized industry.

The owner of a patent enjoys a legal monopoly which, other conditions being propitious, can be used for the attainment of monopoly prices. Beyond the field covered by the patent itself a patent may render auxiliary services in the establishment and preservation of margin monopoly where the primary institutional conditions for the emergence of such a monopoly prevail.

and here:

Another popular fallacy refers to the alleged suppression of useful patents. A patent is a legal monopoly granted for a limited number of years to the inventor of a new contrivance. At this point we are not concerned with the question whether or not it is a good policy to grant such exclusive privileges to inventors.[14] We have to deal only with the assertion that “big business” misuses the patent system to withhold from the public benefits it could derive from technological improvement.

In granting a patent to an inventor the authorities do not investigate the invention’s economic significance. They are concerned merely with the priority of the idea and limit their examination to technological problems. They deal with the same impartial scrupulousness with an invention which revolutionizes a whole industry and with some trifling gadget, the uselessness of which is obvious. Thus patent protection is provided to a vast number of quite worthless inventions. Their authors are ready to overrate the importance of their contribution to the progress of technological knowledge and build exaggerated hopes upon the material gain it could bring them. Disappointed, they grumble about the absurdity of an economic system that deprives the people of the benefit of technological progress.

and here:

The convincing power of the productivity argument is in fact so irresistible that the advocates of socialism were forced to abandon their old tactics and to resort to new methods. They are eager to divert attention from the productivity issue by throwing into relief the monopoly problem. All contemporary socialist manifestoes expatiate on monopoly power. Statesmen and professors try to outdo one another in depicting the evils of monopoly. Our age is called the age of monopoly capitalism. The foremost argument advanced today in favor of socialism is the reference to monopoly.

Now, it is true that the emergence of monopoly prices (not of monopoly as such without monopoly prices) creates a discrepancy between the interests of the monopolist and those of the consumers. The monopolist does not employ the monopolized good according to the wishes of the consumers. As far as there are monopoly prices, the interests of the monopolists take precedence over those of the public and the democracy of the market is restricted. with regard to monopoly prices there is not harmony, but conflict of interests.

It is possible to contest these statements with regard to the monopoly prices received in the sale of articles under patents and copyrights. One may argue that in the absence of patent and copyright legislation these books, compositions, and technological innovations would never have come into existence. The public pays monopoly prices for things it would not have enjoyed at all under competitive prices. However, we may fairly disregard this issue. It has little to do with the great monopoly controversy of our day. When people deal with the evils of monopoly, they imply that there prevails within the unhampered [p. 681] market economy a general and inevitable tendency toward the substitution of monopoly prices for competitive prices. This is, they say, a characteristic mark of “mature” or “late” capitalism. Whatever conditions may have been in the earlier stages of capitalist evolution and whatever one may think about the validity of the classical economists’ statements concerning the harmony of the rightly understood interests, today there is no longer any question of such a harmony.

Note from a reader (see also my post Copyrights and Dancing):Dear Mr. Kinsella,

I have yet to read your book or the Boldrin and Levine book, but just reading your blog posts [e.g. There are No Good Arguments for Intellectual Property; What's Wrong with Theft?] and the discussions they generate has convinced me of your position. It seems to me that the only question worth considering is Are ideas property? If an IP proponent could give a good answer to this question, we could have a good debate. But the replies to your argument seem desperate and incoherent. I’m an amateur choreographer so I know that IP is not necessary for creation. Dancers take movement where ever we can find it. The first person to get a copyright on walking would own the dance community and the world, in fact. The first routine I put together used movement from several other performers. If IP were to apply to dance, all dance communities would die the next day. The dance community is experiencing the wrath of IP regarding music, however. We have had problems with the music that we use. Promoters who videotape our performances are reluctant to sell the DVDs because the artists might sue the promoters if their music is used. YouTube is censoring videos in which it can recognize the music in the background. I find this ridiculous. If I have already paid my $0.99 for your song and created a visual expression of the music, from whence do you get the right to now “own” my expression of your song? I think that my dance experience instilled in me a skepticism about IP, but still I find your intellectual arguments indisputable.

Yours,

[C.E.]

[cross-posted on Mises Blog]

There are some decent arguments out there that argue in favor of a state, welfare rights, war, democracy, drug laws, and so on. They are all flawed, since libertarianism is right, but there are coherent, honest arguments that we libertarians have to grapple with.But it is striking that there are no decent arguments for IP–as Manuel Lora remarked to me, “You know, I haven’t seen a good pro IP article ever.” This is true. One sees the same incoherent or insincere claims made over and over, such as:

1. It’s in the constitution (argument from authority; legal positivism)
2. Intellectual property is called property! (argument by definition?)
3. No movies would be made and kids would die without medicine (artworks and medicine have been produced for ages without IP law; and where’s the evidence?)
4. If you “create” something you own it (despite all the exceptions, and despite the fact that creation is neither necessary nor sufficient for ownership; despite the fact that you either limit these rights in scope or time arbitrarily, or you extent them to infinity, choking off rights in real things and forcing life and commerce to a screeching halt)
5. It generates net wealth–more value than its cost (no evidence, ever, for this contention–just assumptions; not to mention the problem of utilitarian summing of values)
6. IP infringement is “theft” (even though the owner still has his property and ideas, and even though IP infringement is just learning and emulating)
7. People “could” create variants of IP via private contracts… therefore artifical patent granting bureaucracies legislated by a criminal state are … justified?)

There are other arguments, I suppose, but they are so incoherent as to defy description. They often involve crankish initial caps, like Property and Rights, the Internet equivalent of crayons.

I have truly never seen a coherent, good argument for IP. The advocates are either utilitarian, with all the problems that accompany that (not to mention they never have any evidence for their claims); or the advocate a more “principled”, rights-based type of IP that, if taken seriously, would completely undermine all real property rights and make life on earth impossible, so they retreat from this and impose arbitrary, senseless limits on it. What a kluge.

In a recent discussion, What’s Wrong With Theft?, one of the IP advocates, when pushed into a corner, ended up arguing that rights to own property include the right to control all “access to” and “interactions with” one’s property–and that “interactions” include observing or knowing about or learning facts about the things owned by someone, and that when you use this knowledge you are “interacting with” the property, and thus “stealing” it (even though the owner still has it). So here we have it: IP means “interaction rights.” Wow. This is how kooky all IP arguments ultimately are.

As I noted in Copypats, many non-specialists and proponents of IP erroneously believe that copying is an element of patent infringement–they conceive of the typical patent infringer as some bad guy who knocked off, or “stole,” the patentee-inventor’s idea. They are usually unaware that proving copying is neither necessary nor sufficient to prove patent infringement. It’s not necessary because even an independent inventor can be guilty of patent infringement. It’s not sufficient because the patent may be invalid, or the copier may make changes to “design around” the patented invention (which is encouraged by patent policy–that’s one reason the patent is published).But it is common to charge the patent infringer, especially the idea copier, with theft–he stole the idea, it is said. But if we think about standard cases of theft that we all agree are criticizeable, what is it about them that we object to? Is it that the thief now has a bicycle? Or is it that the owner now doesn’t have his bicycle?

Of course it is the latter. If you have a bike, or car, or log cabin, or corn crop, and I could gaze at it from afar, blink my eyes, and conjur up a similar bike, car, cabin, or crop for myself, I do not steal your things. But if I take your bike or car from you, or oust you from home and farm, you no longer have the things you formerly possessed and owned. That is the damage done to you by theft. This corresponds nicely to the very nature and function of property rights: the need for them arises when people need to use scarce resources as means to act in the world, and appropriate unowned ones. The scarce nature of these things is such that use by one person excludes that by another; the goods are rivalrous. (More on this in How We Come to Own Ourselves; Defending Argumentation Ethics; Owning Thoughts and Labor.)

But copying or emulating someone else’s idea is not “taking” it from them; it is not theft. The originator of a given pattern still has his idea, and is free to use it in guiding his action and using or transforming his own property. This is why all arguments in favor of IP (and reputation rights) ultimately end up falling prey to the notion that there are property rights in the value of property, rather than in its physical integrity. But this view is fallacious, as shown by Hoppe and others.

Lincoln the Patentee.

I’m reading a great book, Einstein’s Mistakes (google version), by Hans Ohanian. Extremely intelligent physicist and fun writer–very opinionated and spins great narratives of Galileo and Newton as a prelude to discussing Einstein. The book is about all the mistakes Einstein made in his discoveries and papers, how he made his great insights sometimes despite the mistakes, and even sometimes because of them.Ohanian acknowledges Isaac Newton as “the greatest physicist of all times” and “the greatest genius the world has ever known”, albeit a “mad scientist” and “the most awesome and the most aful physicist of all times.” I was struck by this fascinating account of Newton’s views on credit for scientific discoveries (pp. 62-63):

Newton held the odd notion that whenever he discovered some new result in physics or mathematics, it became his personal property, which he was entitled to keep as a secret for as long as he chose, without any need to publish it to establish his priority. If another scientists later made the same discovery independently and published it first, Newton regarded this as trespass and as theft, and he would indignantly refuse to allow such a scientist any share of the credit. … In Newton’s days, the criterion for credit for a discovery was not yet rigidly established. Claims for unpublished discoveries were sometimes accepted, especially if the scientist had the vociferous support of influential friends and patrons–sometimes the early bird got the worm, and sometimes the squeaky wheel got the grease.

Newton’s secretiveness about his discoveries led him into many silly but savage disputes with other scientists about what they knew and when they knew it. Driven by his intense paranoia about his scientific accomplishments, he accused Robert Hooke, Gottfried Leibniz, and other scientists and mathematicians of stealing ideas from him. In his treatment of these scientists he was vicious and vindictive. Hooke was a talented scientist, best known for his investigations with microscopes, but he was a dwarfish man, with a stooped back. When Hooke asked for an acknowledgment that he had anticipated some of Newton’s investigations of the colors in sunlight, Newton wrote a sarcastic refusal, in which he made an oblique reference to Hooke’s diminutive size: “If I have seen farther, it is by standing on the shoulders of Giants.”

The German mathematician and philosopher Leibniz discovered the calculus independently, and, in contrast to Newton, he published his discoveries–by the modern criterion, Leibniz would have had full credit for the calculus and Newton none. But when Leibniz asked a committee of the Royal Society to prepare an impartial report judging his share in the invention of the calculus, Newton not only packed the committee with his cronies, but he also wrote the report himself, and then wrote a favorable anonymous review of the report. In his private journal he gleefully recorded that he had bested Leibniz and “broke his heart.”

As can be seen from these remarks, Ohanian is delightfully opinionated. For other examples, see his snarky coments on Aristotle (pp. 39-40), where he says that Aristotle was popular because middle ages scholars confused quantity with quality–he ridicules Aristotle’s misconceptions about the animal kingdom, and his assertions about the speed of falling bodies being proportional to their weight, without ever simply dropping two different weight objects from his hands to test out this theory. On p. xii, he acerbically criticizes botched translations of Einstein’s German writings; on p. xi, he refers to the mistakes “misguided souls imagine they perceive in [Einstein's] theories of special and general relativity”; on p. 9 and elsewhere he skewers Creationists as adherents of “delusional pseudoscientific theories”; and on p. 59 he refers offhandedly to “the usual eccentricities of Englishmen.”

And I love this comment about Galileo: according to Ohanian, “Galileo had a talent for making enemies–as Koestler said, he provoked ‘the cold, unrelenting hostility which genius plus arrogance minus humility creates among mediocrities.’” (p. 40)

I think we can all now agree that copyright and patent are evil and should be abolished (hey, if they can say we are all Keynsians now…).But what about other forms of IP, such as trademark? One problem is that IP is not really property at all, and is just an umbrella term linking distinct, mostly artificial, positive rights created by the legislature out of thin air–”legally recognized rights arising from some type of intellectual creativity, or that are otherwise related to ideas.” (Against Intellectual Property, p. 9.)

Thus patent gives a monopoly to a way of using, or configuration of, practical, useful devices (inventions); while copyright gives a monopoly to certain uses of original creative patterns of information (works of authorship like novels or paintings). While trademark protects a set of rights clustered around one’s reputation (but then, so do defamation laws); and trade secret is more like a type of contractual right to keep people from revealing secret information.

Bad Connections

From what I’ve seen, it is clear to most activist-opponents of IP that copyright and patent are terrible. But it is not so clear what is wrong with other types of IP, such as trade secret and trademark. What about these, and other rights, such as various other trademark-related rights (rights against “trademark dilution,” certain forms of cybersquatting, and various “unfair competition” claims); mask work protection available for semiconductor integrated circuit (IC) designs, boat hull designs, and (proposed) rights in databases, or collections of information? (See Against Intellectual Property, p. 13, summarizing various types of IP.)

The “intellectual” part of IP improperly lumps together conceptually distinct types of laws; and “propery” improperly begs the question. So these must be treated in turn. Mask work, boat hull, and database rights are very similar to copyright at least in what is problematic about them; so they, too, like patent and copyright, are obviously unjust.

As for trade secret–I deal with this in a short section (pp. 56-57) of Against Intellectual Property, as the bulk of the article deals with copyright and patent, and trade secret law is not nearly as problematic.

Trademark

So we come to trademark. I deal with this on pp. 58-59 of Against Intellectual Property, and also in some detail in Reply to Van Dun: Non-Aggression and Title Transfer (esp. pp. 59-63). In my view, the new-fangled extensions of trademark law–rights against “trademark dilution” and cybersquatting, etc.–are obviously invalid. Further, federal trademark law is problematic since it is not authorized in the Constitution (copyright and patent are, but not trademark; trademark relies on the Interstate Commerce Clause, and thus the federal trademark law only covers trademark connected to interstate commerce, and does not preempt state law, so that state trademark law still governs many intra-state situations).

But even if federal trademark law were abolished, as well as modern extensions such as rights against trademark dilution, even common law trademark is problematic, for three primary reasons. First, it is enforced by the state, which gets everything wrong. Second (see First), the test of “consumer confusion” is usually applied ridiculously, treating consumers like indiscriminating idiots. Third, and worst of all, the right at issue is the right of the defrauded consumer, not the competitor. Trademark law ought to be reformed by abolishing the right of trademark “owners” to sue “infringers” (except perhaps as proxy for customers, when consent can be presumed or proved), and treating this as a case of the customer’s right to sue a vendor who defrauds him as to the nature of the good purchased. Some might argue that this is only a minor change, but it is not: such a change would make it clear that “knockoffs” are usually not a violation of anyone’s rights: the buyer of a $10 “Rolex” is almost never defrauded–he knows what he’s getting. Yet by giving an enforceable trademark right to the user of a mark, he can sue knockoff companies even though their customers are not defrauded and in fact are perfectly happy to buy the knockoff products.

By the way, examples of trademark abuse are legion. It’s not only copyright and patent that give rise to outrageous examples of injustice. See, e.g., Chip Wood, A Bully-Boy Beer Brewer; Justin Levine, 9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After All, Against Monopoly (09/26/2007); Kinsella, Trademarks and Free Speech, Mises Blog (Aug. 8, 2007); Kinsella, Beemer must be next… (BMW, Trademarks, and the letter “M”), Mises Blog (Mar. 20, 2007); Kinsella, Hypocritical Apple (Trademark), Mises Blog (Jan. 11, 2007); ECJ: “Parmesian” Infringes PDO for “Parmigiano Reggiano”, I/P Updates (Feb. 27, 2008); Engadget Mobile Threatened For Using T-Mobile’s Trademarked Magenta, Techdirt (Mar. 31, 2008).

Now IP proponents often assume trademark law is unproblematic, and then try to lump types of IP together, so that they stand or fall together. For example it could be argued that if you are for reputation, then you must be for trademark; and if you are for trademark, you must be for “intellectual property”; and thus, you cannot be opposed to IP in principle, so you cannot oppose copyright and patent. (See, e.g., the comments here, making this argument.)

Now one fallacy of this argument is that it relies on the positive law conceptual grouping of different areas of artificial, legislated law to make its point. But there is no reason one has to favor the validity of copyright or patent law, even if one supported trademark law, say. Each has different defects and a different nature.

The other fallacy is the view at work here that there is no such thing as reputation, or even identity, absent trademark law. But this is incorrect. Of course people and firms can have reputations even if trademark law is nonexistent. All that is required is that people be able to identify other people and firms, and communicate. Pro-trademark arguments often implicitly assume that this is not possible, absent state-enforced trademark law, which is ridiculous. For example, how can there be fraud (as in my theory), if the vendor is free to call himself whatever he wants? What if Joe Schmoe sets up a knockoff McDonald’s restaurant? Well, it is McDonald’s–that’s what it calls itself, and the “real” McDonald’s can’t stop it without trademark rights–so why is it fraud? Well, because the consumer is (per assumption) deceived as to the nature of the goods he is buying. As I argued in Reply to Van Dun (pp. 62-63),

“this response would be easy to overcome. It need only be possible for the customer to adequately identify what the condition is. Language is not infinitely malleable, and communication is (undeniably) possible. If pressed, the customer could specify that the purchase is conditioned on the current store he is in being owned by the same [McDonald's] company first started at such and such date and address, and so on. There is no reason it would be impossible to identify a given vendor without traditional trademark law, just as it is not impossible to identify fellow humans, despite the fact that we do not usually have trademarks on our names (in fact often have identical names, e.g. John Smith).

The other thing to realize is that consumers are not stupid. They can spot a knockoff easily. And the trademark frauds are usually going to be marginal low-life types, who could never compete with a legitimate business anyway–the kind of company that makes knockoff Rolexes, which doesn’t fool its customers.

Consider. You have a successful burger joint, let’s call it “Tommy’s.” Now, suppose they have no trademark, and other Tommy’s pop up. So if you want the original Tommy’s, where do you go? You go to the original Tommy’s. Which just calls itself The Original Tommy’s. (A similar phenomenon is in Twitter, where some well-known people and celebrities’ names are taken, like dvorak–so John Dvorak just goes by “THErealDVORAK“. End of problem. No anti-Twittersquatting law needed.)

If some other Tommy’s tries to deceive customers into thinking it’s owned by the same guy that owns the original Tommy’s, then they are eventually going to get sued. Or have only marginal customers as people figure out this new place is run by seedy liars.

The truth is that any legitimate businessman wants to use a unique name. Just like people manage to distinguish their identities, even when they have the same names.

In Patent defendants aren’t copycats. So who’s the real inventor here?, a great post by IP Reporter Joe Mullin, Mullin describes a new study that shows that most defendants in patent cases are never even accused of copying the plaintiff’s patent.I replied:

Joe,

Great post. A few comments.

First, you’re right that the public thinks it’s about copying; and they are wrong. Likewise, most proponents of IP (outside the self-serving patent bar) seem to have no idea about the details of patent law, yet support it anyway.

Second, the reason copying is not alleged is that, as you note, it’s irrelevant. And it does not demonstrate willfulness, nor does willfulness require copying. Willfulness means you made a product that infringed on a patent, even after you knew about the patent. But this could happen even if you independently invented your product yourself, then find out about the patent (say, you get a C&D letter), adn you keep selling your product anyway–you’re willfully infringing from that point on (so that means damages can be trebled for sales made while willfully infringing). So, copying is not necessary to show willful infringement.

It’s also not sufficient. You might have heard about pinch-gestures on a touchscreen and you put that feature in your product, thus infringing apple’s patents, albeit unwillfully, since you didn’t know about the patents.

So, I don’t think you can conclude that most patent suits don’t involve copying just b/c copying is not alleged or proven at trial. There might be copying in 25% of the cases, but it’s only alleged 2% o the time, say. This is b/c when you sue someone for infringement you have to show (a) you have a patent; (b) they are selling a product that contains all of the describd elements in one of the patent’s claims. Copying is irrelevant.

(Still, I agree that copying is probably present in only a small minority of all patent infringement cases.)

Third: your article makes it clear that it’s unjust that there is no independent inventor exception. Your piece does not mention, I think, the fact that the worst injustice of all is that not only is there not an exception for someone (A) who later independently invents the same thing that B invented first and patented first–there is not an exception even if A FIRST invented it. (It’s true that if A invents first and B invents second, and if B files for a patent, then A later files for one, then A wins, in an interference battle or litigation; but if A never files but sells his product using a secret process, say, then after a year he is barred from filing a patent; but B is not.) So if A has a chemical plant using a trade secreted nozzle or mixing method to make some chemical for 50 years, and finally B independently invents the same technique and patents it, he can shut down A even though A invented it first. A general “prior use” defense is what is needed in these cases.

But the prior user defense and independent inventor defense are of limited value for a few reasons. 1. It’s hard to prove, esp. for later invention, that you invented it independently, without being influenced by B’s patent (which is public, and presumed to be “constructively known” by all); which is why some companies employ the “clean room” approach, but this is expensive and not usually feasible.

2. Once you know about B’s patent, you are now unable to invent it on your own, even if you “would have” in the absence of B’s patent. I.e., the independent inventor exception largely evaporates soon after a successful product (such as the iPhone’s multi-touch) because by then everyone is “contaminated” by it (no cleanroom possible any more).

3. If B invents and patents something, and if A also invents it (earlier or later than B), then this by itself ought to show that the invention was probably obvious (an idea whose time had come) and B’s patent should be invalid in general, not just a defense for A.

I just came across an interesting thing I had not known about the effect of state meddling on publishing. See Wikipedia here and here, noting:

Thor Power Tool Company v. Commissioner, 439 U.S. 522 (1979) was a United States Supreme Court ruling which changed the way companies are allowed to depreciate their unsold inventory. Thor’s inventory was overestimated, and was written down to scrap, but it did not immediately scrap the items or sell them at reduced prices. Thor treated the write-down of excess inventory as an adjustment to closing inventory increasing the costs of goods sold and reducing tax due. Reducing tax liability may not have been the drive behind Thor management’s incentive to reduce inventory, but a welcome by-product; new management may have wanted to reduce the previous year’s profits so as to seemingly increase their performance in the following year.An unforeseen side effect of this decision was that it became less profitable for publishers to keep slowly but regularly selling books in print (their backlist). Some argue that this has made it harder for midlist authors to make a living because books tend to be remaindered or pulped and go out of print more quickly.

In other words, a de facto change in the tax laws concerning inventories made it profitable to pulp unsold books earlier and this has had an adverse effect on authors who have slow but steady sales. As Levine noted to me, this ties into the whole issue of digital technology. On the one hand, digital technology makes copyright de facto obsolete, and it can make it harder for creators to recoup their investment because the market may be flooded with cheap copies quickly. This is what the pro-copyright forces argue (so therefore we need draconian copyright laws to overcome all this). The basic facts are true, but there are many facts that go the other direction. This is one of them–by selling electronic or print-on-demand copies directly to buyers authors don’t face “early liquidation” by publishers.

In The Reach of Patent Law and Institutional Competence, one Richard Gold makes an odd argument that “stealth libertarianism” is to blame for some of the problems in patent law. He believes there has been a “clandestine shift in patent law’s normative base from a utilitarian justificatory rationale to a libertarian one; a trend the author refers to as ‘stealth libertarianism.’”Under the “libertarian” (sic) approach, it is assumed “that the social good is always attained by expanding patent rights in all domains,” but courts dress this “libertarian analysis in the commonly accepted language of utilitarianism. This surreptitious adoption of libertarian analysis is particularly disconcerting because it enables courts to avoid addressing the ethical and distributional effects of patent determinations.”

As far as I can tell from a quick read, Gold maintains that a utilitarian basis should be employed, instead of a “libertarian” one; that courts are incompetent to make these utilitarian determinations; and that if utilitarianism is correctly applied, patent law scope would not be expanded as much as it has been by courts applying a “stealth libertarian” rationale.

I can’t figure out if this guy is an ally or not.

In Apple May Use ‘Nuclear Arsenal’ to Delay Palm’s IPhone Rival, Bloombert reports: “Apple Inc., usually on the defensive when it comes to intellectual-property lawsuits, is threatening to use its hoard of patents to quash iPhone competitors.”For shame, Apple, for shame. They appear to be suffering from the delusion pointed out by Boldrin & Levine, as noted by Tucker in Seen and Unseen Costs of Patents:

It is the most common thing in the world for a businessperson who use every market-oriented skill to get a product to market: a good product at a good price that becomes the market leader. At this point, and for some odd reason, the businessperson gets confused. He thinks that it his IP that is the key to his success and ends up fighting for it with all his might, even at his own expense.

Here is the statement by Boldrine and Levine: ” “Being a monopolist” is, apparently, akin to going on drugs or joining some strange religious sect. It seems to lead to a complete loss of any sense of what profitable opportunities are and of how free markets function. Monopolists, apparently, can conceive of only one way of making money, that is bullying consumers and competitors to put up or shut up. Furthermore, it also appears to mean that past mistakes have to be repeated at a larger, and ever more egregious, scale.”

(Cross-posted at Mises Blog.)

On tonight’s FreeTalkLive (from about 1:06:55 to 1:38:22, again from 1:51:52 and following) the hosts discuss and read Jeff Tucker’s entire article Does Innovation Require Property in Ideas? on the air (Tucker’s article discusses Boldrin & Levine’s Against Intellectual Monopoly). A very lively discussion ensues including–surprise!–a patent lawyer who calls in to meekly support patent law (and also some kind of limits on how much money doctors can spend on marketing… hunh?). (HT to Manuel Lora.)(Cross-posted on Mises Blog.)

Interesting blog musings on IP by Vincent McAffrey, in “Newton’s Fig.”I cannot tell whether he is anti-IP or not, but he seems to be leaning that way.

In Patent Law: Global Economic Slowdown Edition, one patent practitioner comments:

“International patent filings under WIPO’s Patent Cooperation Treaty (PCT) grew by 2.4% in 2008, to nearly 164,000 1 applications. While the rate of growth was modest, as compared to an average 9.3% rate of growth in the previous three years, the total number of applications for 2008 represents the highest number of applications received under the PCT in a single year. Continued use of the PCT, a cornerstone of the international patent system, indicates that companies recognize the importance of sustained investment in research, development and innovation to remain competitive even within challenging economic conditions.”

Interesting patent-lawyer spin, in the bolded words–i.e., PATENTING = INNOVATING.

On Strike The Root one “John deLaubenfels” criticizes us IP critics.I’ll comment on one argument here:

Copies of an author’s work can be made virtually for free; therefore they aren’t “scarce”; therefore they have no value that anybody need respect. This line is not heavily stressed by B&L, but it is popular among anti-IP’ers and was apparently originally conceived by their darling, Stephan Kinsella. Nonsense! The actual worth of a work can be calculated as the sum of what each person on earth would willingly pay for a copy, if it could be obtained in no other way. This figure may fairly be said to represent the potential value the author has brought to the world. Subtract the cost of making copies for all purchasers, and we arrive at a return the author may hope to approach in a just society, assuming he’s able to reach all potential buyers and is able to guess how much they’re willing to pay. Note that this second number goes UP, not down, as the cost of making copies decreases. An interesting question for anyone who buys into the Kinsella argument would be: consider a product which requires physical raw materials to produce. Would it be “not stealing” to break into a store, take one, and leave in exchange only the cost of the raw materials and labor needed to produce it? The idea is as absurd as Kinsella’s is for intellectual works.

First, I have stressed repeatedly that property rights are rights in the physical integrity of a resource, not in its value. Libertarianism does not mandate that people “respect the value” of property. Only that they do not invade its borders–use it without the owner’s permission. So it is irrelevant whether a work, or copies of it, “have” a “value”. The question is: are patterns and information ownable things? Are they the type of things that can be, that ought to be, property? The answer to this question does not turn on whether people value the pattern or information or copies or not.

As for the question: consider a product which requires physical raw materials to produce. Would it be “not stealing” to break into a store, take one, and leave in exchange only the cost of the raw materials and labor needed to produce it?”

Property rights are rights to the physical integrity of owned scarce resources. So it’s stealing to take my product without my permission, since I own it. This is true whether or not the object “has value” or not; and it’s true whether or not the thief leaves me partial (or even complete) restitution.

This entire line of reasoning is confused.

(Cross-posted on Mises Blog.)

A great comment by Techdirt’s Mike Masnick that deserves to be highlighted on its own–Masnick just keeps getting better and better on IP issues:***

“Resources are allocated by prices that form in the market after exchanges of private property. If there is no private property, there are no exchanges.”

Shame that someone who claims to understand economics is so woefully wrong.

First off, yes, private property is a key element of a marketplace, but you have to first understand the purpose of private property. This is rather important, and often gets lost in the shuffle. The purpose is to allow for the efficient allocation of resources.

However, when a good is infinitely available, there is no question of the efficient allocation of that resource, because efficiency is easy: anyone who wants a *copy* can get it. This is not socialism, as you imply. It’s pure free market capitalism. Your mistake is confusing the “copy” with the original good. It’s a common mistake.

Thus, it makes little sense at all to apply property rights to infinitely available goods. In that case, all you are actually doing is making allocation INEFFICIENT by putting artificial and unnecessary limitations on things, and actually diminishing transactions, because the infinitely available works cannot be built upon to create new and valuable works.

So you have put the cart way before the horse here in focusing on the marketplace, rather than the efficient allocation of resources. We like markets for scarce goods because they make allocation efficient.

We can have a market for infinite goods, but since the supply is infinite, the price will get set at zero (this is just basic economics).

Now, the real reason given for IP rights is not about allocation of resources, but incentives to create (you seem to confuse these things in your comment). So, your question about “the calculation problem” is actually about incentives to create, which is separate from the issue you later brought up (the market for efficient allocation).

But, once again, here you seem to have a lack of understanding of the facts. There is tremendous evidence nearly across the board that there are significant and workable models to create plenty of new works (or new inventions) in the absence of IP protections. In fact, much of the evidence suggests that the end result would, in fact, be MORE works created, because so many creative and inventive works are actually built off of earlier works.

In other words, both creative and inventive works are an ongoing process of creation, and placing an unnecessary, inefficient and market limiting tollbooth at each stage of the process drastically slows down the incentives for creation.

So, let’s try starting again from scratch. Look at the difference between the allocation problem from the creation problem — and then look at alternative models and the research concerning how those alternative models do. Then, perhaps, you might want to tone down your false statements concerning “socialism” and maybe, just maybe, apologize to those you insulted with your own statements.

Funny interview with Stephen Colbert an Lawrence Lessig, discussing copyright policy and Lessig’s new book Remix.

Lessig is not a perfect libertarian but is for reform at least. I suspect many of Colbert’s mainstream-ish arguments in defense of copyright are partly mocking the standard Republicanoid view on IP. See also the funny video The Colbert Report ::: Remix feat Lawrence Lessig (Eclectic Method Mix)–a “remix” made in “violation” of Colbert’s tongue-in-cheek warning not to (i.e., his invitation).

GREAT post on patents and innovation posted on Mises blog in the comments:

I just finished reading your article A Book that Changes Everything…. Great stuff! I wanted to send along my thoughts on the subject.First, I should confess that I work for a company that has received more patents than any other – for every single year – the last 15 years. Second confession: I co-own several of those IP patents (well, the company is the real owner – I’m just the “inventor” on some of them. I’m a software engineer.).

I’m going to avoid mentioning the company I work for (more corporate regulations), but given the clues you can figure it out fairly easily.

We are slightly different than some of the corporations you mention: “It is impossible to develop software without running into IP problems, and the largest players are living off IP and not innovation”

We do make great money off our patents (I’ll explain what I think is the real benefit though). However, we do innovate, and we make the vast majority of our revenue off of our products – because our product is superior. (Ok, I may be slight biased – but our customers tell us this too)

Anyway, I believe that the real benefit of patents for the company I work for, and other large software firms, is that we trade them – sort of like kids with baseball cards. That is, we’ll allow firms to use certain patents in exchange for the rights to some of theirs. As you can probably figure out, this is not a real option for start ups that do not have the IP portfolio to make this attractive.

We have a huge team of IP lawyers, a bonus structure that makes it attractive to try to patent any possible new inventions, and a management that uses your personal patent portfolio as a factor in determining who to promote. We’ve been told that they’ll patent anything new we come up with – even if it is unrelated to the business (i.e. I’ve seen them patent an exercise device).

We’ll often write papers on items that the business decides not to patent – just to show prior discovery should we be challenged by other corporations. We also get a bonus for this – just not as much.

From an employee standpoint, this is attractive. Hey – it’s a lot of extra money to us, and we are helping out our company. As an employee who happens to be a libertarian, I honestly have no issue with my company taking advantage of the silly IP laws.

That brings me back to the main issue at hand though: should we have IP laws?

Speaking from my own experience, corporations (such as the one I work for) spend a lot of money to innovate. However, I would “press that button” and get rid of IP law immediately, given the chance. I agree completely with the arguements made in the article – as such, I’ll just bring up a few other issues:

I think IP law is incredibly damaging to innovation and competition. In the case of software patents, moreso in that they take resources (primarily money which gets redirected to legal teams) from firms who are forced to research existing patens, and also defend themselves against IP lawsuits.

Many software patents are particularly silly. Many of these are issued for algorithms – the vast majority of the time, these algorithms are only available outside the company via patent! That is, when they are shipped externally, it is in a form that is not readable (object code). Sure – this can be reverse engineered. But for a particularly complex program or operating system, this in itself would be a colossal endeavor. Yet, a patent is issued for it – and the patent describes exactly what the algorithm does!

Another firm could look at the patent and use the invention. In most cases, it would be impossible to tell that they’ve “stolen” anything. Here they are counterproductive.

I should also mention the obvious – the corporation which holds the patent already has a huge advantage! They will ship a product with these innovations before any other corporation can ship its’ product. Quite frankly it will generally be a significant period of time before another product can be shipped which contains these innovations – even if the innovation was immediately obvious and known. This will not generally be the case.

Then you have the patents for user interface – these are just silly. I’ve seen patents issued (granted, this was a long time ago) for using a particular color on a “dummy” terminal.

Anyway, I hope I do not sound like a hypocrit (because I hold IP patents). As I said, it is a part of my job. I also cannot fault my company for taking advantage of whatever silly laws are created. I simply view this as another case of the state interfering with the market, and the market adjusting to exploit the foolishness of the laws.

From Mises Blog, good quote from Hayek:

From Individualism and Economic Order (ironically under copyright), Chicago, 1948, pp. 113-14.

Where the law of property is concerned, it is not difficult to see that the simple rules which are adequate to ordinary mobile “things” or “chattel” are not suitable for indefinite extension We need only turn to the problems which arise in connection with land, particularly with regard to urban land in modern large towns, in order to realize that a conception of property which is based on the assumption that the use of a particular item of property affects only the interests of its owner breaks down There can be no doubt that a good many, at least, of the problems with which the modern town planner is concerned are genuine problems with which governments or local authorities are bound to concern themselves. Unless we can provide some guidance in fields like this about what are legitimate or necessary government activities and what are its limits, we must not complain if our views are not taken seriously when we oppose other kinds of less justified “planning.”

The problem of the prevention of monopoly and the preservation of competition is raised much more acutely in certain other fields to which the concept of property has been extended only in recent times. I am thinking here of the extension of the concept of property to such rights and privileges as patents for inventions, copyright, trade-marks, and the like. It seems to me beyond doubt that in these fields a slavish application of the concept of property as it has been developed for material things has done a great deal to foster the growth of monopoly and that here drastic reforms may be required if competition is to be made to work. In the field of industrial patents in particular we shall have seriously to examine whether the award of a monopoly privilege is really the most appropriate and effective form of reward for the kind of risk-bearing which investment in scientific research involves.

Patents, in particular, are specially interesting from our point of view because they provide so clear an illustration of how it is necessary in all such instances not to apply a ready-made formula but to go back to the rationale of the market system and to decide for each class what the precise rights are to be which the government ought to protect. This is a task at least as much for economists as for lawyers. Perhaps it is not a waste of your time if I illustrate which have in mind by quoting a rather well-known decision in which an American judge argued that “as to the suggestion that competitors were excluded from the use of the patent we answer that such exclusion may be said to have been the very essence of the right conferred by the patent” and adds “as it is the privilege of any owner of property to use it or not to use it without any question of motive.” (Continental Bag Co. v. Eastetn Bag Co., 210 U.S. 405 (1909). It is this last statement which seems to me to be significant for the way in which a mechanical extension of the property concept by lawyers has done so much to create undesirable and harmful privilege.

From Mises Blog, an excerpt from Boldrin/Levine’s blockbuster book:

Was James Watt’s patent of the steam engine a crucial incentive needed to trigger his inventive genius, as the traditional history suggests? Or did his use of the legal system to inhibit competition set back the Industrial Revolution by a decade or two? Here is a case study–by the authors of a wonderful new work on patents and copyrights–in how “intellectual property rights” do grave damage to the market economy. FULL ARTICLE

In Easing the Transition to an Alternative Economy, posted at the Citizen’s Briefing Book at Change.gov by “Mutualist” Kevin Carson (mentioned here at Center for a Stateless Society, and here on Carson’s blog), Carson has a good critique of the damaging and distorting effects of IP. Now, he does mix it in with ideas I find questionable (see 1, 2, 3), such as the leftist hostility to “bigness” and the corporate form of business, the penchant for “localism,” the notion that “road subsidies” somehow favor large companies (which basically, as many “vandarchists” seem to believe, makes them fair game for vandalism and worker appropriation since they do not “really” own their property), and the idea that we should “liminat[e] differential tax exemptions that favor firms engaged in centralized, large-scale, capital-intensive production” (this would just amount to raising taxes–now he does advocate making up for this by lowering overall taxes, but only enough to be “revenue neutral,” which, by my math, does not prevent net taxes from being raised on some companies; a good libertarian opposes all tax increases)–so I bold the parts below that I reall like:

If we want to replace the present centralized economy of waste production and planned obsolescence, it’s an inescapable fact that a great deal of excess manufacturing capacity cannot be saved. In my opinion it’s a mistake to try to prop it up through expedients like the Detroit bailout.Corporate capitalism has been plagued from its late-19th century beginnings with chronic crises of overaccumulation and overproduction, which would probably have destroyed it in the Great Depression (despite the New Deal) had WWII not postponed the crisis for a generation by helpfully blowing up most of the plant and equipment in the world outside the U.S. and creating a permanent war economy for absorbing surplus output. But Europe and Japan rebuilt their industrial capital by 1970, and since then the chronic crises have been back with a vengeance. Before the current downturn, America’s overbuilt industry couldn’t dispose of its full output running at capacity, even with everybody tapping into home equity and maxing out their credit cards to replace everything they owned every five years. And we’ll never see those levels again. So there’s no escaping the fact that much of our plant and equipment, in a few years, will be rust.

The goal should be a shift from the present system of overaccumulated, centralized, oligopoly industry, and its business model of planned obsolescence and “push” distribution, to a decentralized economy of small-scale manufacturing for local markets. This means, among other things, a switch from capital-intensive production methods based on product-specific machinery, to production with small-scale, general purpose machinery. It means, in place of the old Sloanist production model, something like the present-day economy of Italy’s Emilia-Romagna region: networked small manufacturers producing for the local market, with a high degree of cooperative ownership. Such an economy, based on a “pull” distribution model with production geared to demand on a just-in-time basis, will be insulated from the boom-bust cycles of the old national “push” economies. And we need a new model of user-friendly, modular product design aimed at cheap and easy repairability and recycling.

Your main focus, in my opinion, should be to ease the transition by eliminating present policies (market-distorting subsidies, privileges, and cartelizing regulations) that impede it and protect the old economy from the new one.

This means, for one thing, eliminating differential tax exemptions that favor firms engaged in centralized, large-scale, capital-intensive production: e.g., the depreciation allowance, the R&D credit, the deductability of interest on corporate debt, and the exemption of stock transactions involved in mergers and acquisitions from capital gains tax). Then lower the corporate income tax enough to be revenue-neutral.

It means, especially, eliminating the biggest subsidy to economic centralization, and to artificially large market area and firm size: i.e., subsidies to long-distance transportation. The Interstate should be funded entirely by weight-based user fees on trucking, which causes virtually all of the roadbed damage. All subsidies to new airports or to expanding old ones should be eliminated, including all federal guarantees of local bond issues.

Perhaps most important of all, it requires radically scaling back the present strong “intellectual property” regime. IP (through patent pooling and exchange, monopolies on current production technologies, etc.) is probably the single most powerful cartelizing force, which enables each industry to be concentrated in the hands of a few players. It impedes the transfer of skills and new technology from the old manufacturing dinosaurs to the kinds of small, local producers we need. It also serves as a powerful bulwark to planned obsolescence, imposing legal restrictions on the manufacture of cheap generic replacement parts.

Scaling back IP law (a good start would be repealing the DMCA, the WIPO Copyright Treaty, and the Uruguay Round’s TRIPS accord) would eliminate the barriers to the diffusion of skill and technology that currently prop up the old corporate dinosaurs of the software and entertainment industries, and facilitate their replacement by networked production on an open source model. Please cut loose the MPAA, RIAA, and Bill Gates, and do so yesterday!

Finally, we need to eliminate all subsidies to large-scale agribusiness. The result will be a flourishing sector of community-supported agriculture, replacing the old agribusiness dinosaurs as fast as new ground can be cultivated.

Often we opponents of socialistic, legislatively-created, utilitarian-based, property-redistributing, artificial, arbitrary, inconsistent, irrational, innovation-hampering, monopolistic, anti-competitive, and wealth-destroying intellectual property laws are accused of hypocrisy when we “copyright” our articles and books.I’ve pointed out to such people innumerable times, to little avail, that copyright is a noun, not a verb–that you don’t “copyright” something–you have a copyright in your original works of authorship as soon as you write them, automatically, courtesy of federal law. No copyright notice is required. No copyright registration is required. You have the right, whether you like it or not.

Well, then, why don’t you just “make it public domain,” some then, a bit unreflectively, retort. The problem is, there is no clear and good way to do this.

If you use a Creative Commons license, you are actually employing the copyright the state grants you–you are putting conditions or limitations on what others may do with your works. Even if you use the least restrictive type, “Attribution,” you are requiring others to do something to avoid being liable for copyright infringement.

Now, some have tried to find ways to let you abandon your copyright, or “dedicate” it to “the public.” Creative Commons has a proposed “Public Domain Dedication“, but: (a) it doesn’t seem easy, at least for the typical user; and (b) there appear to be doubts as to whether it would work–and until it’s clear that it does, it’s worse than a CC license, since publishers would be afraid to rely on it. It is possible that a type of estoppel would apply, preventing the “dedicator” from complaining if someone else relied on his “dedication” to his detriment; but there is “a quirk of U.S. copyright law which grants the author of a work the right to cancel ‘the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright” thirty-five years later, unless the work was originally a work for hire.’” So sayeth Wikipedia; and it outlines other deficiencies of the “public domain dedication.”

Creative Commons seems to recognize the potential problems with their attempt to set up a “public domain dedication”– first, they say, “Please note that the Public Domain Dedication may not be valid outside of the United States.” Well, that’s no good. We do live in a global, um, world. Last time I checked, the Internet was available even outside America! Second, I had to google their site to even find it–it’s not even listed in their Licenses page, or in their FAQ. They provide this method with disclaimers and no guarantees, and they bury it on their site. Hmm, tells you something.

So, what’s a libertarian to do? I tend to think the CC 3.0 Attribution license is the most libertarian–it only requires you to say who wrote it–but most people would do this anyway, so that’s not a huge imposition. The “non-commercial” ones prevent people from using it “for profit”–this is still a use of copyright to force people not to publish. And the “Attribution Share Alike” seeks to use one’s copyright threat to force others to use this license too.

(For example, suppose you have a deal with a publisher, and you want to use a CC share-alike licensed work in your book. But the publisher you are using refuses to grant a “share alike” license. So now, you can’t use the CC licensed work. I.e., if you publish your paper with a CC attribution license, the other guy can use it in his book. But if you do a share alike one, he can’t. He’s prevented by your copyright assertion threat.)

The d*mned government imposes this right on us and does not even provide an easy way to opt out of it or get rid of it. Ridiculous.

***

Update: In my comments to Roderick Long’s post Steal This Journal!, I noted:

Roderick, If I’m not mistaken, “copyleft” is similar to the Creative Commons “share alike” license. Libertarian Papers, however, uses the Creative Commons Attribution 3.0 License. After thinking about this, it seems to me that the “Attribution” license is more libertarian than “Share-Alike” (or copyleft).

Now the new “CCO“, or “No Rights Reserved,” attempt to make one’s work “public domain” seems the most libertarian of all, but its efficacy looks doubtful to me, and it’s still embryonic as far as I can tell.

In response to Charles Johnson’s (Rad Geek) suggestion that Attribution-Share-Alike (a “viral” type of copyright license, a.k.a. “copyleft”) might be preferable or acceptable from a libertarian perspective, I replied:

Rad, I see the argument, but I think the best policy is just to free it up. It’s a bit too paternalistic, rude, untrusting, to force others to do it like you do, to assume they’ll “abuse” their power. And, it might stop the work from being re-published. We want our libertarian ideas spread far and wide. I want an editor of a book considering reprinting one of our pieces to see no obstacles. A “viral share-alike” provision could be. Let ideas be free.

(Cross-posted at Mises Blog.)

The Association of Government Accountants (formerly the “Federal Government Accountants Association”) has awarded the US Patent and Trademark Office its “Fiscal Year 2007 Performance and Accountability Report Award” (which looks oddly similar to the USPTO’s own “red ribbon” patent grant) one of 17 federal agencies to get this award that year.Not only does the USPTO prepare “a well structured, logically organized and easy-to-navigate report” it’s very “productive” too. As it boasts on its website,

Highlights of USPTO accomplishments for the past year include … Increased patent production by an additional 14 percent over 2007 by examining 448,003 applications the highest number in our history. Production has increased by 38.6 percent over the past four years, compared to a 21.3 percent increase in application filings during the same period.

It’s sobering to think how much worse off the US would be in this recession without all this productivity.

For some more interesting patent statistics, see the World Patent Report: A Statistical Review (2008) for example, as of about 2006, there were about two million patent applications filed per years worldwide; about 750,000 patents issued (granted) every year; and about 6.1 million patents in force around the world.

(cross-posted at Mises.org)

Interest post on Squawking Tech–proposes that because of natural (price) deflation,

“With the exception of land and human time, in all areas of society we have been conditioned to expect more for less over time. Yet until just a few years ago, the music industry was increasingly charging more, for the same product. And they were able to do this because copyright law gives them the ability to set prices like a legal monopoly. … When people in aggregate are asked to pay far more than what they think something should cost, they start looking for alternatives. In this case, the alternative comes in the form of P2P technology.”

Intriguing argument: that the failure of music to fall in price along with other technology-related goods is evidence of the pernicious effect of copyright.

Tom Cruise May Face Legal Action Over Hitler Globe reports that the collector who bought the famous “Hitler’s globe” may sue for use of a likeness of the globe in Cruise’s recent film Valkyrie, “the thriller about a real-life plot to assassinate Hitler.” The article reports that in “2007, Pritikin paid $100,000 for the globe and had its likeness copyrighted to keep it from being used in propaganda by sick neo-Nazi groups.” Whew, what a relief!(Cross-posted at LewRockwell.com.)

It can of course be useful to point out harmful consequences of various policies, if only to engage advocates of same on their own turf. Thus in There’s No Such Thing as a Free Patent I point out that those who claim the benefits of patents outweigh the costs never seem to tally up these figures and give us the net. And indeed, whenever anyone ties to do this, they usually conclude that the patent system does more harm than good. For example, Boldrin and Levine’s Against Monopoly, Bessen & Muerer’s work, Julio Cole’s Patents and Copyrights: Do the Benefits Exceed the Costs?, and so on (see my post, What Are the Costs of the Patent System?).And yet, there are severe drawbacks to relying exclusively on the utilitarian approach, as I explained in my Against Intellectual Property. We need to have principled, moral reasons that can cut through the fog of inconclusive utilitarian back-and-forth. Case in point is Rosemarie Ziedonis’s reply to Bessen & Muerer’s On the Apparent Failure of Patents. In her civil and reasonable reply, she argues that Bessen & Muerer provide

little basis for concluding (as the authors assert) that public firms outside the chemical and pharmaceutical industries would be “better off” if patents did not exist. Public firms benefit from the patent system in numerous ways that are not captured by Bessen and Meurer’s “net benefits” calculations, including through information revealed during the patenting process and through growth opportunities provided by startups. More generally, the authors are unable to observe the innovative productivity or financial performance of public firms in an alternative, nonpatent regime.”

What can a utilitarian say when a critic simply replies, “but there are other benefits you are not capturing”? The strongest counter, it seems to me, is to note that the burden of proof is on the proponent of a utilitarian argument favoring a state regulation, but how do utilitarians ever know if they’ve taken all costs, and all benefits, into account? That’s why a principled, property-rights argument is crucial.

A more complete excerpt of Ziedonis’s comments follows:

A second problem with Bessen and Meurer’s “better off” assertion is its implicit assumption that the private value firms reap from owning patents is equivalent to the private value those firms derive from the patent system. Here, it is important to understand what was (and was not) included in Bessen and Meurer’s statistics. While the authors’ “net benefits” calculations allowed public firms to be harmed by patents owned by outsiders through encounters of infringement lawsuits, they did not allow firms to reap benefits from the activities of others. Recall that only the value captured from a firm’s own portfolio was captured in the authors’ calculations. There are several ways in which public firms reap indirect benefits from the patent system. One is through information revealed during the patenting process (i.e., “spillovers”). In addition to enticing investment through the lure of future profits (the “reward theory” of focal attention in Bessen and Meurer’s article), the patent system also aims to foster innovation through the disclosure of information about new inventions (in detailed drawings and descriptions contained in published patent documents) that otherwise might be held secret or be more difficult for outsiders to unravel. …

Although the evidence generated from Bessen and Meurer’s analysis is alarming, it provides little basis for concluding (as the authors assert) that public firms outside the chemical and pharmaceutical industries would be “better off” if patents did not exist. Public firms benefit from the patent system in numerous ways that are not captured by Bessen and Meurer’s “net benefits” calculations, including through information revealed during the patenting process and through growth opportunities provided by startups. More generally, the authors are unable to observe the innovative productivity or financial performance of public firms in an alternative, nonpatent regime. Would opportunities to “outsource” R&D to more efficient performers or to profit from entrepreneurial-firm acquisitions be deleteriously affected? It is highly unlikely, of course, that the U.S. patent system will be abolished. Nonetheless, when assessing the current system’s performance, these indirect effects of patents are important to consider.

Sometimes against their own former clients.As a followup to “Patent Hawk” Sues Microsoft, Former Client, for Patent Infringement (Against Monopoly cross-post), see the insightful Law.com article by the tenacious Joe Mullin, Some IP Attorneys Look to Make Their Mark as Patent-Holders, as well as his blog posts “Patent Hawk” lawsuit was an inside job, says Microsoft and Zilka & Kotab, a.k.a. Aloft Media, file patent lawsuit against Google’s Chrome browser; the latest of many.