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KOL012 | “The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism,” Austrian Scholars Conference 2008

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Kinsella on Liberty Podcast: Episode 012.

This is my Rothbard Memorial Lecture at the Mises Institute’s Austrian Scholars Conference (2008),  “The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism” [Originally entitled Rethinking IP Completely”]  (Ludwig von Mises Institute, Auburn AL, March 13, 2008; PowerpointSlideshare.net PresentationPDF versionVideo). [Mises audio]

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The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism,”

the Rothbard Memorial Lecture at the Ludwig von Mises Institute’s Austrian Scholars Conference (Ludwig von Mises Institute, Auburn AL, March 13, 2008;

by Stephan Kinsella

00:00:03

STEPHAN KINSELLA: Thanks, Joe.  For some reason, all of a sudden, I feel a little bit like I’m at a Lawyers Anonymous meeting.  Hi.  I’m Norman.  I am an intellectual property attorney.  Jeff had titled this the—Rethinking IP Completely, and I came up with a little bit more descriptive title here, and it will come up in a little bit.  But I spelled out what IP means.  Apparently, a lot of people don’t even know what IP is.

00:00:30

So what I’m going to talk about is we live in an age of technological marvels as we all know.  I won’t elaborate that.  We have laser pointers, airplanes, computers, the internet, plasma televisions.  We have abundance of the arts, movies, film.  Now, we libertarians would say this is because individual creativity in an unhampered free market, or free enough, has led to this.  But many people say that’s not sufficient.  There’s something else that’s necessary for these intellectual creations to have occurred, which is intellectual property law, primarily patent and copyright law.  Even libertarians have tended to accept this idea.  After all, it’s intellectual property, and we support property rights.  It’s a type of property.  So is it?  Well, I’m going to focus primarily tonight on patents and copyrights.  Patents and copyrights, also mask works, trademarks, and trade secrets are considered to be types of intellectual property.

00:01:34

There are three types of patents: utility, plant, and design patents.  There’s copyrights, and there are sort of related legislative rights like databases, which are pending, and boat hull designs, which are, of course, very important.  Design patents are similar to copyright, but no one really knows exactly how.

00:01:55

So I’m going to just give a little bit of a background on what they are without boring you too much, and I’ll give some—plenty of examples in a minute to make it a little bit more interesting.  But because most people, from what I’ve seen, especially on the pro-IP side, don’t really know what IP is.  I’ll see trademark, copyright, and patent confused all the time.  That’s fine.  It’s a specialized discipline, and yet they’re in favor of this, even though they don’t really know the difference.

00:02:21

So a copyright protects original works of authorship that are fixed in a tangible form of expression—songs, lyrics, novels, paintings, MP3 files.  It’s not just the right to copy.  It’s a bundle of rights—the right to reproduce or prepare derivative works or to perform the work publicly and some other works as well.  Now, the term of copyright nowadays is very long, 70 years after the life of the author, so it’s practically infinite nowadays.

00:02:49

One thing that’s commonly misunderstood, and we’ll talk about this in the panel tomorrow, copyright is secured automatically upon creation.  You don’t have to put a copyright notice on it.  You don’t have to register it.  These are totally irrelevant.  In fact, I have a copyright in this page right now, and it’s self-referential, as you can see.

00:03:11

So what it means is you can’t copy this without my permission, and copyright is a noun, not a verb.  You can’t copyright something.  You just—once you write something original or created something original, federal law gives you a copyright whether you want it or not.  This is just a background of—I showed Jeff this the other day.  This is a flowchart for figuring how long a copyright lasts.  As you can see, this is clearly the product of natural law.

00:03:41

[laughter]

00:03:47

Patents—we have utility plant design and plant patents, and plant and design patents can mostly be ignored.  Utility patents are what everyone thinks of.  It’s for inventions, things that have usefulness or utility.  Now, you have to obtain this by filing a patent application with the Patent Office, a government agency.  It’s examined by an examiner and then later issues as an issued patent if you’re lucky.  And what it does is it gives you the right to stop other people from making, using, selling, importing, or offering for sale whatever is claimed in that patent.  It doesn’t give you the right to do it; the right to stop others.

00:04:23

Now, I’m just going to give you one quick example, a part of an actual issued patent so you can see what they look like.  This is one I did for my company.  It’s on a spatially coherent, surface-emitting, grading-coupled, quantum cascade laser with an unstable resonance cavity.  Unstable is the key part.  So this is the front page.  It shows the title, the inventors, the company that owns it, patent lawyer, the examiner, the patent office, a typical figure.

00:04:49

And then there’s several figures that illustrate the invention, and you have a detailed description that explains it.  Then it terminates in claims.  This is where the property right is right here.  Claim one is the first claim—what is claimed is, and it’s a sentence starting with the word “a” or “the”.  That’s just the way it works.  So this is a unipolar, surface-emitting laser blob that has the following features.  It ends in a period.  This is what a property—this is the metes and bounds of a patent, again, clearly natural law.

00:05:20

This is just some more—this is an example of what steps you go through when you prosecute a patent.  Prosecuting is what you call going back and forth with the patent office to get a patent.  This is an example of a flowchart.  We can self-determine whether a computer-implemented invention is patentable.

00:05:35

Now, I’m going to give some examples of some patents just so you can see what is the outcome of this process, of the government issuing patents.  This is a patent for a Bible-shaped bumper hitch.  Otherwise, you better not rear-end me.  This is a toe puppet, not a finger puppet, a toe puppet.  Peanut butter and jelly sandwich with no crust, pumpkin-shaped garbage bags.  This is—now, if you ever swing on a swing and you go sideways instead of back and forth, you’re infringing this patent.  This is a Santa Claus-shaped Christmas watering tree stand.  It has two purposes: decorative and—this is a way to initiate someone into Harvard.

00:06:25

[laughter]

00:06:29

This is how you exercise a cat.  You just chase it.  If you ever do this with a cat, you’re infringing this patent.  And you can congratulate yourself for getting such a stupid patent with this one here, paddle-the-back apparatus.  Or if you’re feeling guilty about it, you can kick yourself in the rear.

00:06:45

[laughter]

00:06:48

User-operated amusement apparatus for kicking the user’s buttocks.  This is the Amazon One-Click patent, which they sued Barnes & Noble for about four or five Christmases ago, clicking once to order something instead of twice—genius.  This is something that people around here might like.  It speaks for itself.  And this is the patent attorney who prosecuted that, by the way.  He’s in jail now for mail fraud.

00:07:19

[laughter]

00:07:23

Totally unrelated but interesting.  A pooper scooper on the bottom of a pole.  Who would have thought that one?  For showing some cleavage in your pants.  Now, in the old days, from what I hear, people were buried without being embalmed, and every now and then, they would wake up.  So this device was invented so that in case you wake up, you can pull the string and blow a horn and alert people, seriously.  This is old, 1891.

00:07:52

I could use this one.  This is a way of doing a creative combover.  Anyone golfs here, do not hold your putter like this, or you’re in trouble.  A better way of measuring bra size.  Just measure the breasts directly.  Sorry that I think about this.  This is a design patent, by the way.  This is a patent on the way this looks.  This is—Hans might enjoy this.  It’s a smoking hood.  This is one that bothers me.  This is a method for drafting a patent application.  It’s really good.  I just can’t use it, unfortunately.

00:08:41

Now, my wife has the new MacBook Air.  It’s wonderful.  It has this great little drop-down, flip-down door with the ports, and of course, they have patents on it.  But you know, when I saw this, I thought, it reminds me of the overhead storage compartment on an airplane like we rode today in, so they have a patent on that too.

00:08:59

Okay, and there’s just plenty more ridiculous patents.  I had about ten more pages of these, but we have to stop somewhere.  So the most recent one was just this week.  Gibson says the Guitar Hero violates patents; Activision says no.  Apple has been used for the combination of iPod and iTunes.  And Manuel told me at the Philadelphia—is it Philadelphia airport?  He saw the massage chair with a placard saying patent pending.  I saw that too in the Houston airport today, by the way, too, so they’re everywhere.  Hold on a sec.

00:09:53

Okay, there we go.  Now, let me talk about some of the—what people do with some of these patents.  Again, there’s another example almost every day, so let me just highlight a few.  This is a study I saw as of March 2003.  The top five patent infringement awards range from almost a billion dollars to $200 million and settlements from a billion to $300 million.

00:10:13

There’s a recent judgment against AT&T for $156 million, which might be tripled.  A New Jersey doctor was given $432 million as a royalty against Boston Scientific.  Sprint recently won $70 million, and they settled for more because they were afraid they were going to get shut down by the patent injunction.  Qualcomm has been enjoined from importing chips to help conserve power in cellphones.

00:10:36

This new television design called SED, which is promised to be revolutionary, has been postponed for over a year or two now because of a patent lawsuit.  It may just die on the vine because it’s too late to compete with the other technologies.  BlackBerry paid $600 million about a year and a half ago because of a patent injunction threat even though the patents were being examined and likely to be overturned in the patent office because they could still get an injunction, so they paid that much.  And Microsoft had a $1.5 billion jury verdict award against it in a recent MP3 suit, which was reversed on appeal.  I did an estimate, and others have done estimates.  Patents probably cost on net $31 billion to the US economy alone or maybe more.  This is just from hard numbers, looking at hard numbers.

00:11:19

Now, in terms of copyrights, just a few examples of some apparent abuses of the copyright system.  The RIAA has been pushing for damages that would amount to about $1.5 million if you copy one CD with ten songs.  And this is just a funny example.  Ford recently—there was an enthusiast group of Ford owners, and they were posting pictures of their own cars to each other.  Ford said you can’t do that.  We own the car.  We own the design.  NFL recently prohibited churches from having Super Bowl parties because the TV is more than 55 inches tall.  This is true.

00:11:55

There’s a British proposal to ban you from the internet if you illegally download music.  There was one case where a guy got a cease-and-desist letter, and he posted it, and the company that sent him the letter said, oh, we have a copyright in that letter.  You’ve got to take it down, and the court said yeah.  And finally, there was a kind of infamous case.  There was a $220,000 verdict against Jammie Thomas, this woman who just shared 24 songs.  So it amounted to $9,000 per song.  It could have been up to $3.6 million.

00:12:29

There’s an interesting study out by a guy named John Tehranian, and he just kind of said, look, if you do a typical set of things like we all do every day, no P2P downloading or anything like that, just sending emails to people, sending a few articles, sending a few pictures you find on the internet.  He counted up to 83 acts of infringement with liability up to $12.45 million plus criminal charges, and if you multiply that for the rest of the year, that’s one person.  This is all of us, up to $4.5 billion of damages that you should owe if you’re theoretically sued under all the copyright statutes.  It’s insane.  This is a spoof, a CD liner, which says what you can do with this CD.  It can be difficult to use this and not be arrested, but here’s some things we think are acceptable.  You can listen to it alone with a towel stuffed under the crack in the door, etc.  This is just funny.

00:13:18

So why would anyone favor this?  Well, the typical rationale, as we all know, even for some libertarians, it’s more of a utilitarian or wealth-maximization rationale.  The idea is that if you don’t have IP rights, then IP will be under-stimulated or under-produced, so we need to stimulate innovation, creativity, and art by granting these rights.  The interesting thing to me is that there seems to be almost universal belief on the part of economists who studied this, even from a utilitarian point of view.  Almost everyone concludes that the patent system is either—you can’t prove that it does any good, or it’s a net drain on the economy.

00:14:00

I’m not aware of any study that concludes conclusively that the patent system is a net benefit.  Everyone just seems to believe it.  That’s their argument.  But they don’t know.  This is Machlup back in 1958.  He even said we can’t know for sure.  It would be irresponsible to implement a patent system right now if we didn’t have one.  French researchers have concluded that even now, we don’t know anything more than we did back in the ‘50s.

00:14:23

Recent professors, Boston Law School professors and economists, and they have a book coming out I think this month.  They concluded that the patent system discourages innovation on average.  Some studies by economic historian,  Eric Schiff.  He studied.  He said when Switzerland and the Netherlands abolished patent law back in—I think the ‘50s for a while, they actually measured that innovation was increased.  There was more competition for the companies that had previously relied on the patent monopoly.

00:14:53

And Petra Moser did a study of some World’s Fair exhibits, and she concluded that countries without patent systems innovate just as much or more than those with patent systems.  And these aren’t conclusive, and they are utilitarian, but even by the utilitarian standards, all the studies seem to say it’s just a big mess.  No one knows.  If you ask someone, why are you in favor of the patent system—well, it encourages innovation.  It helps to benefit the economy.  You say, well, what does it cost?  What are the benefits?  What’s the difference?  They don’t—they have no idea.  They don’t know.  This is some more studies.  A little—just some more studies.  Everyone concludes the same thing.

00:15:29

Now, what about libertarians who reject utilitarianism?  Why do we favor it?  How do we get started down this road of including intellectual property as a legitimate part of property rights?  I’m calling this Libertarian Creationism.  I think it stems from the notion that it snuck in the back door that creation is a source of rights.  And this is sort of mixed up with the idea of labor and the Lockian idea of homesteading.

00:15:56

So basically, if you believe the kind of simplistic idea that whatever you create with your labor is yours, then, well, what’s a whatever?  Well, it could be anything.  You can recreate a poem.  You can create a field.  You can create a house.  So you own all those things, right?  So the Lockian idea, we own our labor, and even Rothbard says this, and therefore, we own resources we mix our labor with.

00:16:18

Now, to my mind, there’s always been a problem with this.  There’s the idea that if you spit in the ocean, you own your spit, but then you lose the spit.  You don’t own the ocean.  So just because you mix something you own with something else doesn’t necessarily mean you own the thing you mix it with.  But even if you did, do you own your labor actually?  I’ll get back to that in a second, but let me just—let me show how the objectivists really take off on this.  As Ayn Rand said, IP protects a man’s right to the product of his mind.  And a recent quote from an objectivist law professor, Mossof: Property is the right to acquire, use, and dispose of the things that one has created through one’s labor.  Every person has a right to enjoy the fruits of his labor.  So you see there’s this focus on labor, creation.

00:17:07

Okay, now, let’s think about what Rothbard said.  Do we really own our labor?  What did Rothbard say about free speech rights, for example?  Is there really a right to free speech, standing alone, an independent right to free speech?  No.  There’s a right to property.  You can do what you want on your own property.  So really, the right to own property is sufficient to let you speak on it if you want or not speak on it.  But you don’t have some independent free speech right that would let you speak on someone else’s property, although enshrining it as a right in the Constitution has, in a way, led to this because the courts say that a private shopping mall has to let people speak.

00:17:43

So in a way, holding these things that are derivatives of real rights as independent rights infringes the rights that they’re supposed to derive from.  So what is—do we own labor?  I think it’s similar to the free speech idea.  Labor is just an action.  It’s what we do with our bodies.  You own your body.  That’s enough to give you the right to decide what to do with your body, to dispose of your labor, to sell it if you want, to bargain with it, to withhold it, to profit from it.  But you don’t own your labor.  To say that is misleading.  It’s an overuse of a metaphor.

00:18:17

You can say it as long as you’re aware that it really just means you own your body.  It’s not an independent right from your body.  Oh, speaking of labor, this is one more patent.  This is a patent on having a child by centrifugal force.  Just imagine spinning around here.  It’s a—that was Manuel’s idea to keep that one in here.

00:18:56

Okay, so then why would we own—if we don’t own our labor, why do we own things that we homestead?  Well, we own it because, when we appropriate it first, we have a better claim than anyone else because, with respect to us, they are a latecomer, as Hoppe shows extensively in his Argumentation Ethics.  This is—in fact, in my view, is the distinct libertarian view.  Everyone believes in property rights.  Socialists believe in property rights, a communist.

00:19:20

They just have a different view of who owns it.  The state owns it, or the people own it, or the poor people who have a right to a claim on part of your money, but it’s always a dispute over a particular piece of property.  The question is who gets to own it?  The libertarian view, what is distinct about it, is we believe that property rights are going to be recognized in the first user to permit conflict-free use of scarce resources.  Okay.  This argument does not rest upon the assumption that we own our labor.  It just rests upon the assumption that if you use or transform or emborder or appropriate a scarce resource that is unowned first, you have a better claim than anyone else because, with respect to you, they’re a latecomer.

00:20:05

Now, what about creation, this idea that whatever you create is yours?  Actually, it’s not true.  It’s sort of commonly said that if you—you can acquire ownership in things by appropriating it from the unowned state or by buying it from someone else, contract, or by producing.  But this is actually a little bit misleading.  Actually, producing is not an independent source of rights.  To produce, you actually already have to own the factors that you’re producing the new thing from.  Producing just means transforming the property that you own already.  So, for an example, this is a simple example to show that creation is not sufficient or necessary for rights.

00:20:44

So if you have a big hunk of marble and you carve a statute in it, you already own the statute because you own the marble.  So you don’t have a new property right.  You just have transformed your marble.  On the—so that means creation is not sufficient—not necessary, sorry.  If you create—if you carve a statute in your neighbor’s marble without his permission, you don’t own the statute.  It’s still his statute, so creation is not sufficient, so it’s neither one.

00:21:09

Okay, so again, there’s only two ways to acquire property—appropriation or contract.  That’s it.  You can increase your wealth by producing, that is, by transforming products you own already, but it presupposes this.  Back to the objectivists, this sort of overreliance on an imprecise metaphor and on the idea of creation as a source of rights and on the idea that you own labor has led the objectivists, for example, to believe in reputation rights, libel and defamation law, intellectual property rights, the state, legislation, bureaucracies because these things are all necessary for all these things.  You create your reputation right, inventions, and art, and it has value to you.  This is another thing.

00:21:55

Another confusion that a lot of these—they mix up value, labor, and creation.  They believe that value is sort of an independent, objective thing that—you don’t create a value.  You create a thing that has value to people, subjectively valued by different people.

00:22:08

Here, David Kelley, someone I respect and admire, wrote: The essential basis of property rights lies in the phenomenon of creating value—you see this emphasis here—for things that one has created such as a new product.  One act of creation is the source of the right regardless of scarcity.  Now, he said this trying to argue that IP rights are justified.  Now—but for tangible things, the creation actually is not the source of the right.  He already owned the tangible thing, so he’s wrong, so creation is not necessary for that.  For intangible things, I think he’s just begging the question.  That’s the question.

00:22:42

So, as Rothbard has argued and Hoppe has elaborated, there are no property rights in values.  You have a property right in the physical integrity of your property.  To have a property right in the value means you have a right to what other people believe or assess or feel about your own property.  You don’t have that right. It’s the same reason Rothbard denies reputation rights, and it’s the reason that Randians uphold reputation rights.  So you don’t have the right to what someone else thinks about you, so you don’t have a right to your reputation, not directly.

00:23:16

Now, in my opinion, patent and copyright, and from practicing from the inside, I mean, I’m astounded when people think it could have arisen from the common law system.  It’s literally inconceivable to me literally.  I mean, no more than the Americans with Disabilities Act could have arisen on the free market.  It’s just—I mean it’s probably easier for monkeys to type Shakespeare.  So think about what it would require anyway.  It requires a state.  It requires legislation, which is artificial law, and it would also require a government agency or bureaucracy to administer this program.

00:23:50

I had a debate with an objectivist attorney, Murray Frank, and I made this point, and he said, no, no, no.  He goes, I think they could arise on the common law, but even if they couldn’t, there’s no reason—there’s nothing wrong with legislation.  In fact, the same judges that make wise common law choices can use the deductive reasoning, blah, blah, blah, to legislate laws that legislate universal laws.  I mean, I don’t know if this even needs a comment.  I mean, look at our government.  These guys are supporting what the legislation does.  This is a recent one too.  This is just kind of a side point.  Another objectivist had something of a—producers deserve to be rewarded handsomely for their efforts, again, this focus on labor/reward.

00:24:33

Now, it makes you think, well, if labor deserves a reward, if you labor to create a statue or a book like some objectivist book or something that doesn’t sell enough, I mean, what if the copyright is not enough to give you enough profit?  What if the patent is not enough to stimulate—what if you can’t sell your bird-flipping symbol with a patent monopoly?  But it’s ingenious.  You should be rewarded.  So there’s going to be an underproduction of labor.  So actually, there have been—I’ve seen four or five proposals in the last couple of years.

00:25:05

The government should establish a board, which has a panel of experts, which uses taxpayer-funded money to give awards to people that have ingenious inventions.  It’s sort of like a government MacArthur Award or something like that.  I mean, Stiglitz suggested this literally just in the last couple of years.  A medical prize fund to give large rewards for cures or vaccines that could be funded governments in advanced industrial countries.  So I think that this focus on rewarding labor leads to all kinds of statist measures.  Now, how did my time go?

00:25:39

Okay, my suggestion for reform would be to abolish the patent and copyright system.  I’ll just flip through a few more modest reforms.  If you could do a few things that would reduce the harm the most, I would say reduce the patent term.  That would be the first thing.  It’s 17 years approximately now.  Go down to five or seven years.  Amazon CEO, Jeff Bezos, even proposed a three- to five-year term for business method and software patents.  Remove patent injunctions.  This is a little inside baseball because you have to understand why it’s a bad thing.  But if you’re sued for a patent infringement, you can be shut down, not just forced to pay royalties.  To me, it’s bad enough to have to pay royalties, but at least if it was just a tax, you could pay the tax.  It would hamper the economy a little bit, but you wouldn’t be shut down.  And remember, that’s why I said that the BlackBerry maker was shut down.

00:26:26

I had some other proposals too.  This is going to be in another paper I’m working on right now, but there should be a prior use and independent inventor defense too.  Under the current law—and this is where Ayn Rand got this wrong, by the way.  She was defending something—she misunderstood the patent system, and she was at pains to defend what she misunderstood.  She thought we had a first-to-file system, which most countries do.  The first one to the patent office beats another guy who came up with the same idea.  Actually, in the American system, it’s the first to invent who wins.  So she came up with all kinds of reasons why it makes sense for the American system to reward the first to file, which we don’t do.

00:27:02

But under the current system, someone who invents something first in secret, however, and never files a patent on it, or if you invent it independently later, you can be shut down by someone with a patent.  So I think this should—this could be provided for with a prior use and an independent inventor defense.  This is inside baseball a little bit.  Right now, when you publish—when you file a patent application, it’s published at 18 months after you file it if you don’t promise not to file it internationally, some exception.  The idea is that, in fact, the patent system was meant to encourage inventors to publish their ideas, not necessarily to invent but to publish.  So the idea is there’s a bargain.  We’re going to give you a temporary monopoly, and you have to publish everything to the world.

00:27:46

So why is there an 18-month delay?  It makes no sense.  I think they should be published instantly.  Give people notice that they’re stepping into a minefield if they’re infringing on your patent.  Right now, there’s willful damages.  You can damage—damages can be as much as tripled if it’s willful infringement.  I think that should be abolished because it’s punitive and other requirements too.  And there are some similar reforms I would suggest for copyright in addition to abolishing it.  Reduce the term from infinity to five to ten years, and require active registration.  Right now, like I said, it’s automatic.

00:28:23

So it’s impossible to determine who owns a copyright, whether there is a copyright quite often, especially for orphaned works, which the Mises Institute deals with this problem quite often.  So these are some reforms I would suggest.  Also, get rid of the Digital Millennium Copyright Acts of criminalization of anti-circumvention technologies, crazy.  People copy, not machines.  So—and one other reform I would suggest, I think we should change the name of intellectual property.

00:28:54

Intellectual property is a little too glorifying.  I remember when I first started working in a law firm in Philadelphia.  This old attorney got on the elevator with me, and he said, intellectual property.  We’re all intellectuals, something like that.  I was like, okay.  You IP guys aren’t so smart.  He was crusty.  But—okay, so intellectual is a little bit of a positive term, so let’s get rid of that.

00:29:22

Property also has positive connotations.  Now, there’s an IP advocate named J. Neil Schulman, which most of you probably know of.  He has an idea called logo rights.  I think it’s a little bit extreme on the wrong side, but the term is interesting, logo from the Greek meaning pattern.  We don’t want to use a Greek word.  Rights has positive connotations.  So I think what gets at the essence of what IP rights are, especially for patent and copyright is it’s a government-granted privilege that protects patterns, the pattern, the way your machine is designed, the steps you take to create something such as a recipe, or the pattern that describes a painting or a book or a music performance.  So basically, what IP is, it’s a state-granted pattern privilege.  So in conclusion, I would say down with the state.  Down with state law.  Down with legislation, and down with pattern privileges.  Thank you.  So we have some time for questions.

00:30:36

M: We have some time for questions, so Stephan will take questions.

00:30:38

00:30:41

STEPHAN KINSELLA: Yeah.

00:30:41

M: You were saying you don’t own your own body, and you don’t own your own labor [indiscernible_00:30:54].

00:30:57

STEPHAN KINSELLA: Well, what I mean by that is labor is not an ownable thing.  Your labor is just what you do with your body.

00:31:04

M: With the help of the government, does not the Constitution give us the right to our own—the right to be paid as [indiscernible_00:31:14].  I don’t know of the importance [indiscernible_00:31:20].

00:31:20

STEPHAN KINSELLA: No because you own…

00:31:21

M: [indiscernible_00:31:22]

00:31:24

STEPHAN KINSELLA: Well, exactly because you own your body.  I mean I would just say it’s not an independent right just like free speech is not an independent right.  Free speech is something you can do with your property.  If you own property or your body, then you can do what you want with it.

00:31:37

M: [indiscernible_00:31:37] the right to do something [indiscernible_00:31:45] choose not to labor and if you choose to labor [indiscernible_00:31:52].

00:31:53

STEPHAN KINSELLA: I agree, and that’s because you own your body.  For example, I don’t have a right to stand on this stage right now.  I mean, worded like that.  I have the right to do anything as long as it’s not violating anyone else’s rights.

00:32:04

M: [indiscernible_00:32:05]

00:32:14

STEPHAN KINSELLA: In my opinion, the right to control your body gives you the right to control your labor.  It’s just not independent.  Yeah.

00:32:21

M: What do you think about the interplay of contract law [indiscernible_00:32:28].  Like if I create a song that I wrote, and I put it on a compact disc, and I sell it to people with the explicit—you can buy this from me if you promise not to copy it or sell it to anybody else or if they promise not to copy it or [indiscernible_00:32:53].

00:32:53

STEPHAN KINSELLA: I think things like that can be done.  They’re not done too much now because of the pervasiveness of copyright law.  They’re done to an extent with shrink-wrap agreements, but in a way, shrink-wrap agreements, for example, which is what that would be a type of or click-wrap or something, if it goes beyond or broader than what copyright grants, courts are probably going to strike it down anyway.  So in a way, copyright law is preventing innovation and contracts.  Now, I do think it would be difficult to ensnare third parties who are not in privity with the contracting parties.

00:33:28

And that’s one disagreement I have with Rothbard.  He gives an example of—he tries to use an idea of a mousetrap, but he calls it copyright because mousetrap is really an invention.  It’s not copyright.  It’s a confused example, and it relies, in my opinion, on the idea that you own your ideas, or you own information.  And I think that’s a mistake in is his idea there that—because information is not an ownable thing.  It’s a pattern.  Yes.

00:33:51

M: Wasn’t Rothbard [indiscernible_00:33:55] he says basically [indiscernible_00:34:05] and that if we had a free society, it would quite probable to [indiscernible_00:34:14] the possibility would that it might be.

00:34:19

STEPHAN KINSELLA: I think that’s right.  He was trying to suggest a contractual way that you could simulate some aspect of this.

00:34:25

M: It wasn’t fundamental.

00:34:26

STEPHAN KINSELLA: No.  It wasn’t.  I agree it wasn’t fundamental.  Yes.  You, yes.

00:34:30

W: [indiscernible_00:34:31] the ultimate justification for the idea that I own my own body because I have a right to my body.

00:34:45

STEPHAN KINSELLA: I didn’t get into that today.  I was talking more about—I was assuming that we already own our bodies and saying that if you own your body then we, body-owners, can go around homesteading unowned, inanimate, not self-owned things in the world.  I do have an opinion on why we own our bodies, and it’s basically in line with Hans-Hermann Hoppe’s Argumentation Ethics.  But it’s basically the idea that—it would take too much time to explain, but basically the idea is that for the same reason that you have ownership of something that you homestead, which is because you have a better claim to it than anyone else because with respect to you, they’re a latecomer.

00:35:20

In the same sense, you have a better claim to your body than anyone else for that and for other reasons as well.  In other words, you have the first possession of your body with respect to anyone else except perhaps your parent, your mother.  But you also have other connections to your body that give you a better claim than anyone, but I think that’s beyond the scope of—yes.

00:35:43

M: Under today’s law, if you would claim that [indiscernible_00:35:46] are you still—can you be liable?

00:35:53

STEPHAN KINSELLA: Yes.

00:35:54

M: Also, can you [indiscernible_00:35:54]

00:36:02

STEPHAN KINSELLA: So the question was can you be liable for damages in a copyright or patent lawsuit if you don’t profit from it.  The answer is yes.  There are statutory damages for copyright, number one, which is what Jammie Thomas, the woman in the example, $9,250 I think was near the bottom of the statutory range.  And for patents too, you can be—there’s any number of theories you can be sued for.  Creative commons license—I think there’s a number of these open source-type movements and things that are trying to find a private way to overcome the—sort of the limiting effects of all these copyrights, especially with respect to software and music and arts like that.

00:36:39

But all those are sort of hybrid systems that exist in a world of copyright law because they all rely on the idea of copyright itself because basically, they’re a license.  And what a license is, is a license is permission.  Now you don’t have to get permission unless someone has the right to stop you, and that’s what copy—so copyright law gives someone the right to stop you.  And that owner says, okay, I’m going to not stop you.  I’ll give you permission or license, and that’s what creative common is built upon—licenses.  So really there’s sort of a—it’s piggybacked on top of the copyright monopoly anyway, so I think it’s, in a way, problematic.  Yes.

00:37:17

M: [indiscernible_00:37:18]

00:37:38

STEPHAN KINSELLA: Well, first of all, as I pointed out, all the studies I’m aware of, none of them conclude that.  There’s a couple that conclude that if IP has a case for patents, it’s stronger in the pharmaceutical area, but from what I can see, it’s actually the opposite.  As typical with government legislation, it’s usually done at the behest of and for the benefit of large corporations.  Small companies are at a terrible disadvantage.  Start-up companies like the one I’m at face unimaginable threats.

00:38:08

There’s probably a million United States patents issued and pending right now.  We’re all constructively on notice of the existence of those, just like you’re constructively on notice of what the law says, which is why ignorance of the law is no excuse.  And if a small company is sued by a larger company, even if they’re innocent, they would have to spend $1- or $2- or $3 million to defend themselves.  They can’t afford to do that, so they cave in, or they just don’t compete in the first place, or they stop competing, or they get bought up for a song by the big company.

00:38:40

Big companies have a lot of profits.  They can afford to engage in a lawsuit, which is why one of the reforms I suggest is the loser pays, but even that wouldn’t help enough.  So I think right now the patent system helps the large companies much more than the small companies.  I think the small companies are—can be just terrorized by the large companies.  Small companies typically can’t afford to defend a patent lawsuit.  Larry.

00:39:03

LARRY: Real quickly [indiscernible_00:39:05] and I was trained as [indiscernible_00:39:12].

00:39:18

STEPHAN KINSELLA: I retract the boat hull disparagement.

00:39:20

LARRY: But one other thing more serious though.

00:39:23

STEPHAN KINSELLA: You guys have a powerful lobby.

00:39:24

[laughter]

00:39:30

LARRY: On a more serious note, you said you can’t imagine how this would evolve in a truly free market.

00:39:34

STEPHAN KINSELLA: Right.

00:39:35

LARRY: [indiscernible_00:39:35]  What do you see as—what would you envision as evolving in a truly free market in this sense?  Would it evolve only into prohibitions against fraud and deception in some form, or if you—if I literally copied something that you produced and pretended it’s my own?

00:39:58

STEPHAN KINSELLA: Well, I mean I think—okay.

00:39:59

LARRY: Is that what [indiscernible_00:40:00]

00:40:01

STEPHAN KINSELLA: For the patent system, I mean, the patent system is run by a huge government bureaucracy, so it’s literally inconceivable.  So I don’t even know what it means to have a patent.  Copyright—I guess you could imagine judges starting to say that someone published something.  There was a common law copyright doctrine, but all it said was if you have something that’s secret, not published yet, and someone steals it from your desk drawer, then you can stop them from publishing it first, something like that.  It was more of a private property right against trade secret theft, kind of something like that.

00:40:33

But I think that people are confused all the time.  They’ll say, well, if you don’t have copyright, I could just publish Aristotle’s books or Mises’ books or your books with my name on it.  I’m like, well, I mean, you could publish Aristotle’s books with your name on it now.  It’s not illegal.  It’s out of copyright.  No one does it because they’d look like an idiot, and no one would buy it.  And as for—I hereby give anyone permission to—go ahead.

00:41:07

LARRY: Try a living person.

00:41:08

STEPHAN KINSELLA: So a living person I think—so I think it would be the same thing.  I mean who’s going to take their time to—I mean, why are you doing it?  Are you doing it to make a profit off of a popular novel or something, or are you doing it for an academic reason?  It makes no sense to publish it because you’d just be a laughingstock.

00:41:28

As for a novel, if you publish it, it’s either going to be a knockoff under the author’s name, or it’s going to be a knockoff with your name.  Now, with your name on it, I think the buyers have a potential fraud claim because you’re lying.  You say I—if they bought it because they wanted to buy what you wrote, and you’re misrepresenting that, that’s just a fraud claim.

00:41:48

LARRY: That’s what I was getting at.

00:41:50

STEPHAN KINSELLA: I think that—but I don’t think that would happen very much, and if it did, I wouldn’t have a problem with it.

00:41:54

LARRY: But that’s the only thing [indiscernible_00:41:55].

00:41:57

STEPHAN KINSELLA: I think so.  Yes.

00:41:59

M: I think your presentation is excellent from a utilitarian point of view.  I think we have to discuss the subject from a [indiscernible_00:42:09] point of view.  This one is still following your rejection of patents.  Does that abolish the crime of stealing?

00:42:23

STEPHAN KINSELLA: Well, I mean, to my mind, stealing is a derivative concept—it depends upon what property is.  I mean, stealing just means taking someone’s property.  So the question is, is intellectual property really property?  And that was the question.  So if intellectual property is not property, then there’s no way to steal it.  I mean, remember, there’s a famous phrase by Thomas Jefferson who was the first patent examiner but also skeptical of the patent system.

00:42:47

And he clearly said it wasn’t a natural right.  It wasn’t a moral right.  It was purely kind of a civil privilege given to stimulate invention.  But he gave the example of, if you have a candle burning and someone else lights their candle, you both have a burning candle now.  You didn’t take the flame of the guy you lit your candle from.  So patterns and things, information, ideas that are infinitely reproducible in a way can’t be stolen.  If I learn something from you, I didn’t take it from you.  You still have it, so it’s not theft.  Everyone agree?  Roderick.

00:43:30

RODERICK:  I was just agreeing.

00:43:41

STEPHAN KINSELLA: Okay, good.  Bill.

00:43:33

BILL: I think if you view all property is [indiscernible_00:43:37].

00:43:39

STEPHAN KINSELLA: Well, I would say it’s rivalrous or scarce, not necessarily tangible, rivalrous or scarce.

00:43:47

M: [indiscernible_00:43:47] intangible [indiscernible_00:43:50].

00:43:51

STEPHAN KINSELLA: Well, I mean, you could…

00:43:52

M: [indiscernible_00:43:53]

00:43:53

STEPHAN KINSELLA: You could conceive of airways like where jets fly or something like that.  It’s part of the three-dimensional time-space continuum.  It’s something that could be fought over.  Only one person can use it at a time.  Two jets can’t be flying together at the same time, so I think it has to have that element.  Whether you call it tangible or not, I’m not sure if the word tangible has to be used.  However, if you think about it, every lawsuit and dispute by people that claim to have property rights, it all really comes down to tangible things.

00:44:22

If I sue you for patent infringement, I want your money, right?  The dispute really is always about a scarce thing or maybe a tangible thing because it comes down to instantiating the idea.  I mean, if I have a patent on a new way to make a law—guys are living in caves, and some guy says, hey, let me make a cabin, a log cabin, the other caveman sees him doing it, well, if the first caveman wants to stop him, he wants to make him not use his own logs on his land to make a house.  So he really wants control over that guy’s logs and physical things.  So that’s where the dispute always comes.  So the libertarian rule is who gets to control these physical things?  The guy who found it, not the guy who thought of a way to use his physical things.

00:45:05

M: [indiscernible_00:45:06]

00:44:08

STEPHAN KINSELLA: Yeah.  Yeah, in back.

00:45:15

M: My understanding is the federal government has authorized [indiscernible_00:45:21] where it says promote the useful arts and sciences [indiscernible_00:45:27] how much of that [indiscernible_00:45:37].  Nobody is going to bother going after somebody [indiscernible_00:45:46].

00:45:52

STEPHAN KINSELLA: Okay, the Constitution does authorize copyright and patent law.  It does not authorize trademark law.  That’s been passed under the Lanham Act based upon the Interstate Commerce Clause.  Just because Congress has the power to do something doesn’t mean they have to do it and doesn’t mean it’s justified in the first place.  The ridiculous examples—I don’t mean to imply that everything that’s patented is not a good invention.  There are some good inventions.

00:46:18

And you’re right.  Most of these inventions will not be—the silly ones I showed are not going to be asserted against someone, but some of them were, the Amazon One-Click patent, and that’s ridiculous in my opinion.  And there’s a lot that are not ridiculous.  Even the ones that are not ridiculous that are good inventions, why should the guy that comes up with it have a right to stop you?  I mean, look.  You don’t have to copy it from them.  Under patent law, like I said, I could independently invent something.

00:46:43

I could independently invent it first, and if you come up later with a patent on it, you can stop me.  This is the danger that large chemical companies face, for example.  They had these nozzle designs.  They usually keep them trade secret, ways of mixing chemicals.  They spend billions of dollars building these plants.  The danger of keeping it secret—the good thing about secret is trade secret can last for decades.  It can last forever theoretically as long as you keep it secret.

00:47:07

Okay.  But let’s say you’re doing it for 40 years, and some guy finally reinvents it on his own, files a patent on it.  If he knows you’re doing it, he can stop you, shut you down even though you didn’t copy the idea from him, nothing.  So I don’t see why that’s just.  I agree that Congress has the authority to do it.  The Congress has the authority to conscript people as well.  I think it’s all unjust.  Yeah.

00:47:31

M: Do you know where—can you briefly explain where Congress—where the [indiscernible_00:47:36] got the idea to give patents and copyright [indiscernible_00:47:42]?

00:47:43

STEPHAN KINSELLA: I think they were trying to systematize what had been done in a kind of ad hoc way previously as like kind of monarchical privileges being—like you’d have a patent on you’re the only bread maker in the city or something like that.  And it was done in exchange—it was a favor given to this merchant to support you or something like that.  So I think they were trying to do away with the—you have a more democratic system, a less monarchical system, and have a more systematic, bureaucratic way of administering it.  But I think—I don’t know where they got the kind of wealth-maximization idea.  There’s history on that, but I’m not really familiar with it.  Yeah.

00:48:23

M: I’m a musician [indiscernible_00:48:26] all of these utilities in order to make [indiscernible_00:48:35] and then when you go and put it onto digital [indiscernible_00:48:39] it goes out onto the market.  I mean, now with the [indiscernible_00:48:45] it’s literally easier to steal it than it is to purchase it.  I mean, case in point [indiscernible_00:48:49], probably the most popular band in the world, just put their album out for free, and solely by respect for the band, people had the opportunity to pay them whatever they wanted.  So some people paid zero.  Some people paid $26 for it.  A rational person would pay zero.  Why would you pay any more than you have to?  However, the difference is, is that they’re such a huge and popular band, they’re already [indiscernible_00:49:17].

00:49:19

So somebody like me who is nowhere near as popular [indiscernible_00:49:22], there is no incentive for me to go put out my record because instantaneously, as soon as somebody [indiscernible_00:49:31] I lose all control over the sale of my property.  Now, if there’s no intellectual property protection on that, what incentive is there for people like me or for the next big thing, whatever the new product, to create something new if there’s no way to be able to [indiscernible_00:49:47] or B) even sustain a lifestyle or a living from it?

00:49:51

STEPHAN KINSELLA: Well, I mean, my understanding is a lot of independent musicians put their stuff out for free on MySpace and stuff intentionally.  They’re trying to get—they want people to listen to their stuff.  They want to get a name, so I don’t know if your case is…

00:50:03

M: Absolutely.  Certainly there are, but for any independent musician or for anybody out there, their goal is not to give away their product.  Their goal is to make money so that they can keep [indiscernible_00:50:13].

00:50:13

STEPHAN KINSELLA: Well…

00:50:14

M: And the old form of the record was not to [indiscernible_00:50:18] we need to do this to be able to do it again.  And if you go in the hole $10,000 [indiscernible_00:50:22] you’ll never produce another record, whether it’s good or whether it’s bad.  That’s what takes the incentive of making good music [indiscernible_00:50:30].

00:50:31

STEPHAN KINSELLA: I understand.  I don’t have all the answers to that.  We live in a copyright-mired world where we’re used to it.  A lot of institutions and arrangements and creative ways of financing and bundling and all these kind of things, and we can guess at them, and there are some ideas.  We don’t really know what would arise in the absence of copyright law, but I suspect there’s going to be ways to make things.  People will come up with ways to do it.  I mean, maybe touring and live performing will become the predominant way of making money and…

00:51:00

M: It’s not [indiscernible_00:51:03] but if you sold it at a record store and you stole that, then you’d be [indiscernible_00:51:12] but if you take it off the internet, there’s no way to hold people accountable.  And therefore, since everything being [indiscernible_00:51:19] it’s very difficult because I don’t think that I should punish my fans $9,000 [indiscernible_00:51:24] but I’d really rather them spend money and hear it, pass it around to their friends, and come see me perform.  I mean, it’s a very [indiscernible_00:51:32].

00:51:32

STEPHAN KINSELLA: I hear you, and just, in my opinion, the solution is not the state copyright system.  I mean, the concept of copyright, like patent, is inherently ambiguous.  It doesn’t cover just literal copying, which is what your CD would be.  It covers derivative works and all these things, subtle changes.  I mean, all of your work and everyone’s work builds, to some degree, upon what people have done in the past.  So where is the dividing line?  I don’t trust the government to make that decision, so I don’t know what the answer is.  I think people would have to figure it out on the free market, but I don’t think that justifies the copyright system.  Yes.

00:52:04

M: One possible [indiscernible_00:52:07] solution is if you think about the way that, for example, the law merchant was able to secure, agreeing solely to [indiscernible_00:52:16] not to any kind of [indiscernible_00:52:22].

00:52:23

Then it’s possible there will be ways of securing certain kinds of, as it were, copyright protection, not through force but specifically that [indiscernible_00:52:37] that use stuff without paying the artist [indiscernible_00:52:40] rather than just sort of doing spontaneous individual boycotting [indiscernible_00:52:45] legal system says you can bring charges, although it’s [indiscernible_00:52:47] coercive power, but it has [indiscernible_00:52:54] this company doesn’t pay [indiscernible_00:52:58].

00:52:59

STEPHAN KINSELLA: I agree completely, and I mean, look.  A system like that wouldn’t be perfect.  It wouldn’t stop everyone, but even today the system doesn’t.  There’s bootleg copying rampant in China and Asia and even in America.  There’s just enough profit for people to do it.  So they still do it, so a system like that, I think that’s possible too, and I think that could be explored.  Yeah, Jeff.

00:53:16

JEFF: [indiscernible_00:53:16]

00:53:17

STEPHAN KINSELLA: Oh, okay.  One more question.  Yeah.

00:53:20

M: I think there is a situation where [indiscernible_00:53:23] and it maybe an individual [indiscernible_00:53:28] where I think they each have teams of scientists working on their own with [indiscernible_00:53:35].  I think that [indiscernible_00:53:43].  Let’s say there are either six large corporations and [indiscernible_00:53:48] work together for one team to find a cure.

00:53:52

STEPHAN KINSELLA: They might if antitrust law didn’t prevent them from doing that.  That’s true.

00:53:56

M: [indiscernible_00:53:59]

00:54:05

STEPHAN KINSELLA: Could be.

00:54:06

M: Thank you, Stephan.

00:54:07

STEPHAN KINSELLA: Thanks.

00:54:08

[applause]

00:54:11

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