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Intellectual Nonsense: Fallacious Arguments for IP (2012)

As noted in this podcast episode, KOL236 | Intellectual Nonsense: Fallacious Arguments for IP (Libertopia 2012), at Libertopia 2012, I delivered a 45-minute talk , “Intellectual Nonsense: Fallacious Arguments for IP,” the slides for which are below. I spoke for 45 minutes—well, 40, then the last 5 were taken up by a question from J. Neil Schulman—but only covered the first 25 slides. I covered most of the remaining 41 in a separate recording, Part 2: KOL237.

A lightly-edited transcript of Part 1 is below; see also the transcript for Part 2.

Libertopia 2012: Intellectual Nonsense

by Stephan Kinsella

Edited transcript of a talk delivered at Libertopia 2012 (San Diego, Oct. 12, 2012) [transcript for Part 2]

STEPHAN KINSELLA: Okay, let’s get started.  Good morning everybody.  My name is Stephan Kinsella.  I’m a patent attorney in Houston, and I’m a long-time libertarian, writer, thinker, etc.  And I am a strong opponent of intellectual property, which some of you may know, even though it’s what I do for a living.  So I give a lot of talks on this topic, and I’ve approached it different ways.  Today is going to be a little bit different.  What I wanted to do is just lay out the basic argument against IP, just take a couple of minutes because the case is pretty simple actually.  And then what I want to do is just go through one at a time all the arguments I’ve heard over the last, say, 17 years, and I think I’ve heard them all.  And I think explaining what I believe is wrong with these arguments will help you understand the case against IP in a deeper way.

00:01:00

So today’s talk is entitled “Intellectual Nonsense: Fallacious Arguments for IP.”  I do have a PowerPoint I provided.  I’m not going to show it.  I will put it on my website later.  You can go to c4sif.org for more information on what I talk about here, more articles on intellectual property.  If you want to go deeper, talk to me later, email me.  I’d be happy to respond; c4sif.org stands for Center for the Study of Innovative Freedom, and it’s basically a website which I call a think tank.  So – and I want to point out one thing that Roger had mentioned to me, which is ironic, is that this speech is being given in the Lysander Spooner room, and when Spooner who is fantastic on almost every issue except intellectual property.  So it’s a little bit ironic that it’s in this room, but so be it.

00:01:51

W: Excuse me.

00:01:52

STEPHAN KINSELLA: Yes.

00:01:53

W: Could – do you have a mic on?

00:01:56

STEPHAN KINSELLA: I do.  Test, test.

00:01:56

M: The mic is for the recording…

00:02:01

STEPHAN KINSELLA: Oh okay.  I’ll speak up then, all right.

00:02:03

W: Can’t hear you very well.

00:02:04

STEPHAN KINSELLA: Okay.  Did everyone hear what I said so far?  I’m going to lay out the case against IP very quickly.  Then I’m going to respond to common arguments I’ve heard for intellectual property over the last 17 years that I’ve been an IP abolitionist basically.

00:02:20

So I would say that the basic argument against intellectual property, aside from the fact that it’s a state-legislated law, which couldn’t exist in a free society with no government, is that it basically is totally incompatible with private property rights and individual rights.  The basic libertarian position as I understand it and believe is basically a set of principles: self-ownership, which means each person owns his own body; and second of all, the basically Lockian idea of homesteading, which is that for any scarce resource in the world, that is, any tangible item, anything that exists over which there could be conflict, over which there could be dispute, the libertarian solution is property rights are assigned in that scarce resource in accordance with whoever first used it or whoever acquired it by contract from a previous owner.

00:03:14

So basically the libertarian argument is that every scarce resource in the world can be identified as having an owner, and that’s either the person in the case of a body or the person homesteaded it.  And the problem with intellectual property rights is this.  It takes awhile to understand this because there’s several types of intellectual property.  There are patents, copyrights, trademarks, trade secrets, boat-hole designs, database rights, moral rights, semiconductor mask work protection, defamation law if you count that, which I do, as a type of IP, and it’s a highly specialized and arcane field of law, which only certain specialized lawyers really understand.  So it’s hard to get an understanding of what is really in common between these types of rights.  Why are they called intellectual property for example?

00:04:01

And I think the best way to think of it is what I’ve come to, and let’s focus on the two biggest and most egregious types of IP: patent and copyright.  Briefly, patents give an inventor a monopoly right in an invention.  Copyrights give an author, let’s say, of a book a monopoly right in that pattern of information.  Both of these rights I believe should be classified as what we call in the civil law a negative servitude, or in the common law, in a pertinent easement.  So basically they give an owner or the holder of the IP right a veto right over how other people use their own scarce resources.

00:04:44

Okay, so if I have a patent on sliding to unlock an iPhone, I can sue Samsung, use the government force to say you are not able to use your own property in a certain way, so it’s a veto right.  Now, there’s nothing wrong with having these veto rights.  This is commonly done in, say, restrictive covenants or in neighborhood association.  You can think of it this way.  You own your home.  Your neighbor has a co-ownership right in your home with you to the extent that he can veto your painting your house purple, let’s say, if you have an agreement.  So there’s nothing wrong with these types of divided ownership if they’re done consensually and voluntarily.  That is, if you sign an agreement.

00:05:25

But in the case of patent and copyright, the owner of property, who now is subject to a veto right from another person, never did sign a contract for the government just grants this negative servitude, which is a property right, to someone, which gives them a property right in other people’s property, and that’s basically the problem with intellectual property.  It’s completely contrary to free markets, competition, private property rights, and the libertarian understanding of homesteading.

00:05:53

Now, I find Mises’ praxeology, his way of looking at human action, to be sort of the most helpful way to understand the role of property rights.  The basic idea is that humans act, which means we employ scarce means in the world to try to change the course of events.  To do this, we need knowledge as well.  You have to understand the laws of cause and effect.  You have to understand what means will achieve the end you desire.

00:06:20

So successful action requires the exclusive control of scarce resources, and it requires knowledge or information.  Knowledge or information is not a scarce resource.  So if you just take a simple example, someone wants to bake a cake.  They need a recipe.  That’s knowledge.  And they also need ingredients and capital equipment—a bowl, an oven, a place to stand.  Only one person can use that bowl and those ingredients at the same time.  That’s why we have property rights in those scarce means so that it can be used peacefully and productively.

00:06:54

But the knowledge can be shared and used by a million people at once.  You could have a million people in their own homes using the same recipe at the same moment.  This is fundamentally why it makes no sense whatsoever for there to be property rights in information, and as I just mentioned, the only way to assign property rights in information is really to give someone a partial ownership right in other people’s already owned scarce resources.  So that’s the short argument against intellectual property.

00:07:22

Now, over the years, I have heard so many arguments.  I will go through a few of the really outrageous, stupid, absurd ones first that are kind of amusing.  And by the way, let me mention, in my understanding, in my impression, it seems to me that in the last, say, ten years, the tide has really turned among libertarians on the IP issue.  Most libertarians that I’m familiar with are strongly anti-IP now, and they also understand what an important issue it is because of the threat to internet freedom with SOPA/PIPA, things like this, extraditing foreign students to face federal prison for linking to the wrong websites, etc.  And I think this is especially true in my experience among Austrians and anarchists and left libertarians to their credit.  The holdouts would be sort of utilitarians and Randians.

00:08:19

So here are some of the – just to get going before I get to some more serious arguments.  This is what a patent attorney – his name is Gene Quinn.  He’s just a notorious patent shill, and what he wrote was, “Thank goodness the Swiss did have a patent office.  That’s where Albert Einstein worked, and during this time as a patent examiner, he came up with the theory of relativity.”  So we need patents to have patent offices to employ potential geniuses so they have spare time to work on physics theories.

00:08:52

Here’s one.  This is from William Shughart who’s an economist with the Independent Institute, a libertarian outfit.  He says, “It’s true that other means do exist for creative people to profit from their effort other than copyright.  In the case of copyright, authors can charge fees for reading their works to paying audiences.  Charles Dickens did this, but his heavy schedule of public performances in the US, where his works were not protected by copyright, arguably contributed to his untimely death.”  So if we don’t have copyright, authors may speak themselves to death to get fees.

00:09:27

This is a troll on the Mises list.  “If you are not for IP, you have to also be in favor of pedophilia.”  Another troll on the Mises list: “If you oppose IP, you’re basically advocating slavery.”  And other one: “Song piracy and file sharing are the cause of these recent stage collapses at rock concerts.”  Insurance companies are blaming copyright piracy for collapses of concerts.  And other guy said, “The copyleft” – this is a commentator with Techdirt, which is a great site for IP – “Copyleft advocates are like homophobic, anti-gay-marriage bigots.”  And finally, “If IP is not legitimate, then it would be okay to steal other people’s babies.”  Not really the most persuasive.

00:10:21

All right, onto some more serious arguments for IP, although honestly I have yet to hear a good argument for IP.  Most of the arguments are either rights-based or deontological or principled we might say, but most are utilitarian or empirical or welfare maximizationist.  My view—they’re both flawed, and I’ll go through some of those today.

00:10:48

So the first one I’d like to approach is I think is the fundamental reason why people have been – found it difficult to understand this issue and to get it straight in their own heads and why the libertarian movement even was confused for decades on this topic.  It’s what I call creationism or libertarian/propertarian creationism.  And the argument is basically, well, don’t you own what you create?  Isn’t that part of Lockian homesteading?  Isn’t that part of libertarianism?  And if you create a valuable idea or pattern, I mean who else should own it other than the creator?

00:11:23

So the one problem with this argument is that it assumes that ideas or patterns are ownable.  So if you assume that, you say, well, ideas are ownable, well then the answer – well, of course, the creator should be the one who owns it.  But the problem is this is a confusion about the proper role of homesteading in acquisition of property rights.  In other words, it confuses the role of wealth creation with property acquisition.  So people will say there are three ways of acquiring property.  You can create it, you can find it, or you can buy it from a previous owner by contract.  But this is actually incorrect.  There are only two ways.  One is to acquire an unowned resource, which is by appropriate or homesteading, and the other is to acquire it by contract from someone else.  That’s it.  Those are the only ways to acquire property rights.

00:12:18

Now, it is true that creation or intellectual effort or labor is a way of increasing wealth, but wealth is just making something that you already own more valuable.  So if you labor on some physical resource like you shape metal into a sword, now you don’t own the sword because you shaped it into a sword.  You owned it because you already had to own the raw materials that go into it, the factors of production.  If you didn’t own it, you wouldn’t have had a right to manipulate it to turn it into a sword in the first place.  So no ownership comes out of the act of creation in that sense, but you do increase the sum total of wealth in the world and for yourself because you make the object that you own more valuable to you, which is the same thing as saying you increase wealth.

00:13:05

Okay.  And I think one reason this mistake was made was some sort of metaphorical – overly metaphorical sloppiness on Locke’s part where he talks about when you mix your labor – well, he says we own ourselves, so therefore we own our labor, which right off there’s his first mistake.  We do not own our labor any more than we own our actions, or to say that is double counting because if I own my body then of course I can use it to act, but to say I own my action would be like saying I own my jogging.  It just makes no sense.  But his argument goes, we own ourselves.  Therefore, we own our labor, like it’s some kind of mystical substance that you pour onto the world, and when you mix it with something unowned, you’re binding part of your ownership or your patrimony with some scarce resource, and therefore, you acquire that scarce resource.

00:13:55

But I think that part of Locke’s argument is totally unnecessary.  You don’t need to say you own labor to justify the ownership of an object that you’ve mixed your labor with.  By mixing your labor with it, you have become the first one to visibly emborder it or appropriate it, thereby establishing a better claim to it than anyone else just because you were first.  So that part of Locke is confusing.

00:14:18

Also, Rand – Ayn Rand also has a sloppy, overly metaphorical way of talking about values.  She talks about man’s – man has to create values.  Well, value is a subjective thing.  If you own an object, you might value it, or you might demonstrate that you value it.  So you do create wealth, but all that means is you’re transforming something to making it more valuable to you.  We don’t literally create entities called values that float around that you can homestead or own.

00:14:49

So that is – in fact, Ayn Rand should have recognized this just like Mises and Rothbard who did recognize this.  Ayn Rand had a statement where she recognized that – I’ll quote it here.  “The power to rearrange the combinations of natural elements is the only creative power that man possesses.  It’s enormous and glorious power, and it is the only meaning of the concept creative.  Creation does not and metaphysically cannot mean the power to bring something into existence out of nothing.  Creation means the power to bring into existence an arrangement or combination or integration of natural elements that had not existed before.”

00:15:28

So you see here Rand is actually recognizing the essence of production, of creating wealth is to own some existing factors, transform them through intellect, creativity, and your labor into something that is a new shape, a new arrangement.  If Rand is stuck with this line of reasoning, she would have realized that it was totally incompatible with her arguments for patent and copyright, which are sort of a strange mixture of utilitarian and allegedly principled arguments because she’s favoring 17-year patent terms and, I guess at the time, seven-year, so your copyright terms and trying to justify this arbitrary, finite length of time.  No natural rights expire in 17 years.

00:16:13

00:16:18

And this focus that Rand has on creating values and then you own the values that you create leads them to sort of minimize or dismiss the importance of scarcity.  I had a debate with David Kelley I think in 1995 in his newsletter about this, and he basically wrote back to my criticism of Murray Frank’s pro-IP views.  He basically admitted scarcity is important, but it’s not the only source of rights.  So what he says is that there are two conditions required – this is what Kelley says.  “Two conditions required in order to appropriate things in nature and make them your property: (1) you must put them to some productive use, and (2) that productive use must require exclusive control.”  So far I agree.  “Condition (2) holds only when the resource is scarce.  But for things that one has created, such as a new product, one’s act of creation is the source of the right regardless of scarcity.”

00:17:19

So he’s saying when you say regardless of scarcity, that lets you talk a little bit sloppily and loosely about these values that you create.  I created a value.  It’s out there somewhere.  Who cares if it’s scarce or not?  It has value.  It is of value, whatever that means, so of course the creator is the one who gets to own it.  So they’ve lost the connection to scarcity, which is the only reason we need property rights in the first place.  If we lived in the Garden of Eden, there would be no need for property.  In fact, the idea would make no sense whatsoever.

00:17:47

00:17:50

Oh, here’s one I hear all the time, and this is probably our fault for using the word scarcity, which has multiple meanings.  People will say – I’ll say, well, you can’t own ideas because they’re not scarce resources, and they’ll say, well, I don’t know.  Good ideas seem pretty scarce to me.  So this is their argument.  It’s just – a quip is their argument.  So I’ll say, well, as we carefully define in our argument, scarcity for us means basically rivalrous, a conflict – a good that can have conflict over it.  So if you change the argument to say ideas are not rivalrous, then they can’t come back and say, I don’t know; good ideas are pretty rivalrous.  It makes no sense.

00:18:31

Here’s another one.  This is more of a legal – sort of a legal positivist-type argument, which I’ve heard made by Adam Mossoff who’s a pro-IP objectivist, law professor, and Richard Epstein, who is a somewhat pro-IP kind of utilitarian libertarian law professor.  And their argument is that how do you classify property?  Sorry.  How do you classify intellectual property or patent and copyright?  And they have these arguments that, as a lawyer or as a legal scholar, we classify different types of writings.  They have a long argument about why you can classify patent and copyright as property rights.

00:19:13

Yes, you can.  So what?  People can be property too.  It’s called chattel slavery.  So the fact that you can – a legal system can classify something as property is completely irrelevant to the case about whether it should be property or whether it’s just.  And furthermore, I think their argument is wrong.  They should not be classified as property, as I think Professor Bell has argued, but as privileges.  And, in fact, as Professor Bell who is here pointed out in a really clever blog post, there is – the danger of treating patent and copyright as property rights is that some of the doctrines that rule this arcane body of law, which are purely statutory, and so, for example, there’s fair use doctrine in copyright law.

00:19:56

The reason we need the fair use doctrine is because copyright is so hideously unjust that we have to blunt its sharp edges so that people don’t rebel against it.  So you have all the exceptions to keep it from being too terribly harsh in some of its effects.  So the danger is that you take these artificial exceptions or doctrines that apply to patent and copyright, and they would contaminate real property law.  In fact, there is a scholar who analogizes property land, let’s say, to copyright and argues that just like copyright has a fair use exception, there should be a fair trespass exception so that you’re entitled to using other people’s property as long as it’s fair use like in copyright.

00:20:40

And there’s a current case pending right now before the US Supreme Court, which some of you may be aware of, in which the doctrines of copyright law are actually starting to contaminate property in physical things.  And this is the case – it’s about a foreign student who imported, I think, John Wiley textbooks from Thailand or some Asian country where their books are sold legally by the publisher but for a much cheaper price and on thinner paper.  And he got his family members to send him the books to the US, and he just – it’s arbitrage.  He just sold them for a discount here.  He made a couple million dollars, and then he got sued for copyright infringement.  Now why?  In copyright, there’s something called the first sale doctrine.  That is the idea that the person who holds the copyright, the publisher, only gets one bite of the apple.

00:21:28

They make their money, their artificial monopoly price, when they sell the book the first time, and after that someone who owns the book – now, they don’t have the copyright in the book, so they can’t make a copy of the book, but they can sell that book.  Otherwise, the publisher could say I didn’t give you permission to sell that book.  You’re giving my copyrighted work to a third party, and you can’t do that.  Well, the defense has always been first sale doctrine.  Well, in this case, in the lower courts, the court said that in this case the problem is that the books were sold overseas or made overseas.

00:22:04

And the first sale doctrine, if you read the copyright statute closely, the first sale doctrine arguably is only triggered when the first sale is in the US.  Now, what that means is that these books don’t have the first sale doctrine, and what it means is that they can’t be resold here.  Now, if the Supreme Court upholds this ruling, this affects not only books but – that would be bad enough.  Millions of books that are resold on Amazon, leant out by libraries, you’re going to have to have two types of books now.  You’re going to have to have the ones that have the mystical, invisible tendril back to Europe, and then you can’t resell those or even lend them out maybe.

00:22:41

And it could affect property like a watch or a piece of furniture or a painting bought overseas so – or how about an iPhone?  Apple has this made in China, so ships to me in the US.  If they make the sale happen in China, which there’s ways they do that contractually, then the first sale doctrine doesn’t apply.  I can’t resell this iPhone.  It would be violating Apple’s copyright if I resell it.  So you’re basically – you see how this veto right I mentioned earlier kicks in.

00:23:11

Basically what’s happening now is, because of copyright, there’s a very real strong potential – a strong likelihood that the original copyright holder, who already got their profit from you when you made the sale, when they made their first sale, they can veto your right to resell property that you own, physical, tangible property.  So we see another danger of treating IP as property.  We need to quarantine it to the legal privileges of monopoly ghetto if not eliminate it altogether.

00:23:42

Now, here’s an argument I’ve heard many times, and I think it’s very insidious, and it’s important to figure this one out.  So the argument is that the IP proponent – they will agree with you that yes, in effect, the patent or copyright gives the holder a sort of property right in other people’s property.  Yes, it’s a limit on what you can do with your property.  But then they’ll say, well, so what?  Property rights are never absolute anyway.  All property rights are limited.  They’ll say, for example, your right to your nose – your right to swing your fist ends where my nose begins, which we all agree with.

00:24:23

So here’s the argument basically.  It’s okay to limit property rights because property rights are always limited.  Well, that doesn’t – first of all, that doesn’t make any sense, even if it’s true that normal property rights could be viewed as a limit on property rights, which right away you can see that makes no sense.  The fact that there are property rights means property rights are not limited.  It’s kind of a weird argument.

00:24:44

But even if that were true, it doesn’t mean any limit is okay.  I mean by this argument you could be the hell out of someone, and then when they start complaining you say what are you complaining about?  All property rights aren’t absolute.  All property rights are limited, so how can you complain that I’m beating the hell out of you?  Let’s just look at your body as being limited.  I mean there’s no argument there whatsoever.  And there’s – one of my favorite quotes is from Atlas Shrugged by Ayn Rand’s Francisco, and I’m reminded of this quote whenever I hear people say property rights aren’t absolute.

00:25:16

When I hear this, I’m thinking hold onto your goddamn wallet because they’re coming after it, and this is – it’s the line, “Run from your life from any man who tells you that money is evil.  That sentence is the leper’s bell of an approaching looter.”  And I agree with that.  So when people start telling you, oh, property rights aren’t absolute, they’re coming after yours.  They’re trying to reduce it.

00:25:38

00:25:47

And here’s the other problem with this argument.  I think it’s actually not true that property rights are limited.  I don’t know what it means for property rights to be absolute.  I don’t know what – they’re not absolute, and they’re not non-absolute.  They’re just the right to use property exclusively.  But property rights are actually not limited by the obligation not to violate other people’s rights.  It’s actions.  Now, you can think of it this way.  Let’s say I have a knife.  Now, you have a right to not be aggressed against from me.  You have a right for me not to stab you without your permission at least.

00:26:21

Now, is that a limitation on my property rights in the knife?  No.  It’s a limitation on what actions I can perform.  I cannot perform the action of aggression, and it’s easy to see this.  Imagine if I don’t own the knife.  I borrowed it from my brother.  Now is it okay?  I mean no.  So it’s – in other words, ownership of the scarce means that you employ to commit aggression is completely irrelevant.  It doesn’t matter whether you own something.  Another way to see this is if you steal my knife and you use that knife to kill someone, does that mean I’m the murderer?  After all, it’s my property that was used.  So really there’s no connection between the ownership of means and the prohibition on aggression.

00:27:00

The prohibition on aggression simply means you cannot perform this action.  All actions have to employ scarce means as Mises said.  So it has nothing to do with whether the means are owned, so there’s another mistake in that whole argument.  So property rights are actually not limited by property rights.  Property rights – actions are limited because of property rights.

00:27:20

This is a little bit of a tangent, but I was reminded of this leper’s bell thing in the property-rights-aren’t-absolute argument with kind of an amusing set of responses to – this was back in the late ‘80s, early ‘90s.  Hans-Hermann Hoppe has an anarchist treatise called A Theory of Socialism and Capitalism, which got a lot of attention in libertarian circles in the late ‘80s.  And Loren Lomasky, who is a Canadian libertarian philosopher, who I had thought was an anarchist, but apparently he’s not, had a very critical book review of Hoppe’s book.

00:28:01

And Hoppe’s response, and I’m going to read Rothbard’s response too.  Hoppe is quoting Lomasky.  “It is,” Lomasky laments, “No less than a manifesto for untrammeled anarchism.”  And Hoppe says, “So be it.  But so what?”  And then Hoppe explains anarchism is just a system respecting property rights, etc. absolute self-ownership, the right homestead, the right to contract.  And then Hoppe concludes, “Only someone advocating the trammeling of private property rights would take offense, as does Lomasky with my attempt to justify a pure private-property economy.”  This is not really on the IP topic, but it’s the same idea that if someone is opposing untrammeled property rights, they must want to do some trammeling.

00:28:47

And here’s what Rothbard wrote, and this is in Liberty Magazine 1990, about a year after Hoppe’s book came out.  Lomasky “is shocked and stunned that Hoppe is not simply a defender of existing capitalism.  His book is ‘no less than a manifesto for untrammeled anarchism.’  Well, heavens to Betsy!  Anarchism.  One wonders where Lomasky has been for the last 20 years!  Perhaps the knowledge has not yet penetrated to the fastnesses of Minnesota, but anarchism has been a vibrant part of the libertarian dialogue for a long time, as most readers of liberty well know.”

00:29:17

Okay, let’s talk about another argument for IP.  How much time do I have?  15 minutes?  15?  Okay.  By the way, I’ve 66 slides, and I’m on 17, so I’m not going to finish.  There’s a lot of bad arguments.  However, I will put this PowerPoint on my website later, and I’m going to add some more links, so there will be tons of links if anyone wants to look this over.

00:29:48

So there’s an argument that – so most advocates of copyright, let’s say – let’s stick with copyright for now.  They recognize that copyright can have a chilling effect, to put it mildly, on freedom of speech, freedom of press.  And, in fact – so they admit this.  Their arguments would need to have a balance, so this is the typical utilitarian, squishy, unprincipled balancing bullshit.  Now, the roots of copyright lie in censorship, the Stationer’s Company in 1557 was given the monopoly over what books could be printed, and it was to suppress the wrong kinds of books being published that the church or the state didn’t want published.

00:30:34

That evolved into the Statute of Anne in 1710, which is sort of the genesis of the modern copyright system.  So the origins of copyright or in censorship and at least censorship today literally – it has literally in our lifetimes led to people being put in jail for publishing their own books, books being seized and burned, movies being seized and burned by the state literally.  Now, I had quoted William Shughart awhile ago from the Independent Institute.  Here’s another quote of his.  He’s pro-IP, and he says, “To paraphrase the late economist, Joan Robinson, patents and copyrights slow down the diffusion of new ideas for a reason: to ensure there will be more new ideas to diffuse.”  Well, thanks for being honest.

00:31:22

00:31:26

So their idea is that we need to have a balance, and this is what the courts do.  So we need innovation and creativity, which we have to have copyright and patent to induce, but it’s got a chilling effect on free speech.  Now, actually I’ve got an argument that I believe that there’s a good argument that copyright law is unconstitutional because, even though it’s – even though the constitution, when ratified in 1789, has a copyright and patent clause – well, first of all, the clause arguably has a limit, which says that, to promote the progress of science and the arts, Congress can pass these limited monopolies.  And there’s been – as I’ll get to in a few minutes, there had been no statistical proof whatsoever in the last 230 years that art and creation is promoted.

00:32:16

So arguably, the law is unconstitutional by its own clause, but even if we forget that, if you remember, in 1789 the constitution was ratified.  It’s got the copyright clause in there, so arguably Congress has the authority to pass copyright law, which they did a year later; 1791 the Bill of Rights is added to the constitution.  The Bill of Rights has the first amendment, which prohibits the federal government from infringing on freedom of speech, freedom of press.  Now, the courts acknowledge – proponents of IP acknowledge that copyright law infringes freedom of speech.  So the reason they try to balance it is they treat the first amendment and the copyright clause as on par with each other.  They’re kind of conflicting provisions in the constitution, but we have to balance them because they’re both in there.

00:33:00

However, one was passed two years later, and the way it works is the later statute or the later amendment takes precedence, which is why we can have a drink right now.  Prohibition was ended because the constitutional amendment that undid prohibition came after the one that caused prohibition.  The most recent one counts.  So two years later the copyright – the first amendment was enacted, and in my opinion they’re completely incompatible.  There is no way to have a copyright statute that doesn’t significantly infringe on freedom of speech.  So I think it’s clearly unconstitutional.

00:33:34

And I also believe that the statutory damages and the insane penalties people have to pay, which has no bearing whatsoever to the actual so-called damage of piracy, let’s say, is probably a violation of the eighth amendment’s ban on excessive fines.  I mean it’s basically completely outrageous, and it’s a penalty.  And I think the eighth amendment also is a reason why copyright should fall.

00:34:00

Okay.  As for this balance, there s a good quote by Cory Doctorow, who’s kind of anti-IP.  He’s for openness anyway.  And he’s talking about how there’s these fights right now between the movie industry and Google and YouTube and things like this, and they basically want YouTube severely limited, shut down.  They want to ratchet up this DMCA takedown system we have.  And what Cory says is – he’s saying the big studios are saying you must shut down the system [the internet and YouTube] that delivers billions of hours of enjoyment to hundreds of millions of people so that we can go on delivering about 20 hours’ worth of big budget films every summer.  To me, this is a no-brainer.  I mean I love sitting in an air-conditioned cave watching Bruce Willis beat up a fighter jet with his bare hands as much as the next guy, but if I have to choose between that and all of YouTube, well, sorry, Bruce.”

00:34:56

And speaking of balance, there’s another balance that the courts engage in with respect to patent and copyright and that is anti-trust law, which is another unconstitutional law in my opinion.  However, so we have the federal government passing laws against monopolies, which aren’t real monopolies, but they’re private so-called monopolies and granting monopolies.  So guess what the courts say?  Well, there’s a tension between.  So they have to adopt – they have to come up with this doctrine of IP abuse.  So yeah, we’re giving you a monopoly, but you can’t abuse it.  Don’t use it too much.

00:35:38

And as a law school professor who is pro-IP, Beth Noveck, she was quoted in an article about how to prove the patent system, and she says, “A patent is a pretty significant monopoly, so we want to make sure we’re giving it to the right people.”  I mean I trust the government to give monopolies to the right people.  And speaking of this, you will have IP advocates get indignant when you call it a monopoly.  I mean they just stamp their feet and say, no, it’s just a property right, or they’ll say, well, you’re right in your body is a monopoly.  I mean so – but the problem is clearly they’re monopolies.  And Richard Epstein, who is a pro-IP says, “Patented goods are subject to a lawful monopoly created by the state to induce their creation.”

00:36:21

The Supreme Court refers to a patentee as having a monopoly.  Arnold Plant talks about patents being monopoly grants.  I mean this is common language.  William Shughart from Independent, “Granting a temporary monopoly to the rare breakthrough is necessary to provide the inventor with an opportunity to earn a return on the investment that led to the idea,” blah, blah, blah.  Okay, so let’s not get indignant.  And here’s something interesting I came across a couple years ago.  Thomas Jefferson, in 1789, wrote a letter to James Madison who was, at that time, drafting the Bill of Rights.  Now, you remember in 1789, the constitution had been enacted or was about to be enacted, and there was a copyright clause in there granting Congress the authority.

00:37:04

But the Bill of Rights was being contemplated.  And so Jefferson suggested this article be put into the Bill of Rights, never was.  I don’t know why.  Article 9: Monopolies—again, recognizing them for what they are—remember, we used to have a Department of War.  Now, we call it Department of Defense.  Statists were more honest in the old days.  “Monopolies may be allowed to persons for their own production in literature and their own inventions in the arts for a term not exceeding _____ years but for no longer term and no other purpose.”  In other words, he wanted to put in the Bill of Rights a cap on how long these can be.  It probably would have been 14 or 28 years, which was common at the time, which means Mickey Mouse would be public domain by now.

00:37:49

Copyrights wouldn’t last for about 150 years as they do now.  And some of you may remember.  The story I heard is that when the income tax amendment was being put into the constitution to authorize the income tax system that we have now, there was a suggestion to put in there a cap of 10%, like income tax could not be – but the congressmen were afraid to do that because they thought that as soon as they did that, Congress would right away raise the income tax to 10%.  They didn’t want to give them any ideas.  They were thinking it was going to be 1%, 2%.  But if only they had done that, right?

00:38:23

And finally, the coup de grâce to the stupid argument that IP is not a monopoly, the first modern statute that all patent systems come from was in England in 1623, the Statute of Monopolies.  It makes me want to say McFly.  Here’s another.  Well, liberty is good, but it’s not – I hear this from non-libertarians, not only on the IP issue, but you’ll hear this.  They’ll say, well, I favor liberty like you do, but it’s not our only value.  This is what conservatives say all the time, right?  It’s just one of many values.  Again, the leper’s bell comment.  When you hear someone saying, oh, I believe in liberty, but it’s not my only value, hold onto your wallet because they’re coming for it.

00:39:07

So what they say is we – oh yeah, I – that’s what David Kelley’s argument was basically.  He admitted that scarcity is one criteria for one type of property, but it’s not the only type of property.  So it’s just like positive rights in the welfare state.  I mean liberals say, oh no, I believe in sanctity of property, but I also believe in the right to healthcare.  So they want to keep adding these rights.  What they don’t understand or they don’t care about is that these rights are not inexpensive.  They come at the cost of liberty all of the time.  Just like inflating money drives down the price of money.  Inflating positive rights undermines real rights.  Granting rights in non-scarce things always has to come at the expense of existing property rights in real things.

00:39:47

And if you think about it, every time someone is sued for a patent infringement or copyright infringement, they’re using physical force from the government courts directed against someone’s physical body or their physical property, or they want to take their physical money out of their bank account.  So it’s really always a dispute about scarce things, and we already know who owns scarce things: the first finder or the person who acquired the good by contract.  How much time?  Five minutes?  Okay.

00:40:15

  1. NEIL SCHULMAN: Any Q&A?

00:40:16

STEPHAN KINSELLA: Well, first of all, we’re having a panel tomorrow on IP, so let me – I have a few more things to get through.

00:40:26

  1. NEIL SCHULMAN: This is J. Neil Schulman. Can I have one question?

00:40:28

STEPHAN KINSELLA: Absolutely.  Go ahead, Neil.

00:40:30

  1. NEIL SCHULMAN: Listen, Stephan. I’m not going to argue with you about morality or rights or values or law or any of that other stuff that you speak about (indiscernible_00:40:38). I’m probably 99.5% of the (indiscernible_00:40:41) applications of what you talked about.  I may be more aggressive against the way you’ve been talking with patent laws being used to oppress against rights.  I can probably find even more grievous examples from Monsanto and (indiscernible_00:40:54) and any images (indiscernible_00:40:56).

00:40:56

We’re so – as an anarchist, I am so supportive of what you’re doing in these areas, but there is one fundamental question, which you, over the many years we’ve discussed this, simply cannot answer because it is not a question of rights.  It’s a question of – I know you’re going to start thinking I’m going to Rand here.  I’m not.  I’m going to Aristotle.  It’s about the law of identity, and the question has been raised in various different forums, but I’ll just state it once again like this.  I have here a book.  It says on the cover Alongside Night by J. Neil Schulman.  I sell you this book, and when you open it up and get to chapter one, it says it was the best times; it was the worst of times.  My question is did you get what you paid for?  Now, if you say yes, you’re saying that the pattern of words in the book is irrelevant.  It was only the reductionist physical materials that are on here that have any market utility.

00:41:53

If you say that you’ve got something different than what you paid for, then you’re acknowledging then what you’re calling pattern or composition or whatever term you want to use makes it a different good, a different thing, a different entity, a different thing than what you thought were you buying.  So my question is, if the thing which is being traded can be transferred from various different carriers and is always the same thing, is that a thing or isn’t it?  And I maintain you deny it’s thingness, and that’s a problem because in essence what you’re saying is that which may be unlimited copy does not exist at all as something real in reality.

00:42:37

STEPHAN KINSELLA: Well, I think your argument is a very one of…

00:42:44

M: Can you restate his argument?  I didn’t understand it.

00:42:46

STEPHAN KINSELLA: His argument is that…

00:42:48

  1. NEIL SCHULMAN: And that’s the problem. I’ve been trying to – I’m a great writer, and I’ve been trying to explain this simple concept for 30 years and are really failing.

00:42:57

STEPHAN KINSELLA: I think your argument is basically that there are different types of entities, like Tibor Machan argues this as well, ontologically different types of entities, and scarce material things are not the only types of entities that exist and they’re not the only types of entities that can be owned.  That’s the argument, which I…

00:43:11

  1. NEIL SCHULMAN: I eliminate the word scarce. I’m not even asking about whether it’s scarce or not. I’m simply asking is there a thing which exists apart from the materials on which it is found.

00:43:21

STEPHAN KINSELLA: I have no problem with conceptually identifying things if you want to call them things, like there is a poem.  We can conceptually identify that.  The problem is granting a right in it means you are using physical force, and it’s always directed against some physical thing.  And what that means is to give a right to information or to these things that are not scarce always, always ends up undermining property rights in already owned things.

00:43:44

So you may not have been here in the beginning.  I talked about the right way to classify patent and copyright in probably your logo rights idea is a negative servitude.  Basically, it’s a contractual co-ownership right.  Some other party has a veto right over how you use your property.  The problem is no matter how you spin it, if you’re going to grant rights on these immaterial things, you’re going to end up giving someone a veto right over how they use their own property that’s already owned.

00:44:11

  1. NEIL SCHULMAN: I’m saying there’s a secondary argument to be had at another time, but first we have to establish whether or not there is an independently existing thing.

00:44:19

STEPHAN KINSELLA: We’ll have to disagree on that.  I think the time is up, so thank you very much.  I’ll be happy to talk about this later.

00:44:25

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