Kinsella on Liberty Podcast, Episode 159.
This is my seminar, Practical Solutions to the IP Trap, delivered to Liberty.me members on May 19, 2014, based on my monograph Do Business Without Intellectual Property (Liberty.me, 2014). This discussion, moderated by Matt Gilliland, provides an overview of IP and the issues faced by people in their careers and lives and offers suggestions as to how to ethically and practically navigate challenges posed by the existing IP system.
- Profiting without IP
- “Conversation with an author about copyright and publishing in a free society” (Jan. 23, 2012)
- Do Business Without Intellectual Property (Liberty.me, 2014)
- “Innovations that Thrive without IP,” StephanKinsella.com (Aug. 9, 2010)
- “Examples of Ways Content Creators Can Profit Without Intellectual Property,” StephanKinsella.com (July 28, 2010)
- “The Creator-Endorsed Mark as an Alternative to Copyright,” Mises Economics Blog (July 15, 2010)
- Diomavro, Avengers endgame or do movies need copyright?
- Creators SHOULDN’T Own their Creations
Liberty.me Seminar: Practical Solutions to the IP Trap
Liberty.me, May 19, 2014
STEPHAN KINSELLA: Let me briefly define the background, the topic, and if I say anything that is confusing or anyone has questions, feel free to raise your hand, and Matt can let me know and I’d be happy to address something that I go over too quickly or that needs more elaboration. Intellectual property, in the modern, capitalist, 21st century age, is an entrenched part of the western legal system, America, Europe, etc. and other countries as the west tries to push it and gets it entrenched in those countries. It is considered widely to be part of the capitalist, property rights system. In fact, patent and copyright, trademark and trade secret and other types of intellectual property are called intellectual property for a reason.
It was for a propaganda reason to try to get these things thought of as a property right. Originally, they were thought of as privileges or policy tools by the monarch or the state, but under attack by free-market defenders, the proponents of IP started calling them property rights. So this is where we are now. We have a system where patent law, copyright law, trademark, trade secret, and other types of IP, which I can go into, are basically part of the landscape.
Now, the libertarian position, which I’ve argued for over a decade now, almost two decades now – the libertarian position is that patent and copyright law and other types of IP law are completely, 100% incompatible with free markets, competition, freedom of expression, freedom of speech, and individual property rights. So I’m totally opposed to patent and copyright law. I don’t think we should reform it. That would be a good step. But I think we should totally abolish it. I believe that patents impose hundreds of billions of dollars of damage on the economy of the US, let’s say, every year.
I believe copyrights also impose damage and cultural distortion, and it represses and suppresses freedom of speech, freedom of expression, and it arms the state to come up with excuses to regulate the internet and restrict internet and digital freedom. So there’s basically nothing whatsoever good about patent and copyright and other forms of intellectual property like trademark and trade secret. But they are definitely entrenched, so that’s a fact of the modern world.
And I’ve talked at length on this. I’ve got tons of podcasts and lectures and articles, and so do other people, which I have collected at my website, C4SIF.org. So the background is that we live in a world with lots of non-free-market, non-libertarian interventions and measures and policies and practices and institutions like the drug war, taxation, minimum wage law, regulations, immigration restrictions, war itself, conscription lurking in the background, all these things. They’re there. They’re un-libertarian. We don’t like them, and intellectual property. So the question is what do we do about them?
Well, the political answer is that we should work to abolish them, but this course is more about practical ways that, as a person living in the real world, what do you do about it? So my way of looking at it is that there’s different approaches. Number one, there’s the moral approach. So if your question is, what do I do as a moral person, in particular, as a libertarian, how do I act in the world? Is it legitimate or moral for me to take part of the given system? Can I drive on public roads? Can I take part in the patent and copyright system, etc.? So that’s one type of question.
And then there are other practical questions that relate to this. For example, if I don’t want to use intellectual property, how can I avoid it? Or is it a good idea for me to avoid it or to use it? So all these issues arise. So let me focus really quickly on the two main types of intellectual property, which is patent and copyright. Patent law governs inventions. Copyright governs creative expressions, artistic works.
These are the two big things. So let’s take copyright first. In a way, the question is a little bit moot because the way copyright works is it’s automatically granted ever since 1989 in the United States after acceded to the Berne Convention, which eliminated formalities, which was previously you had to register a copyright, and they put a copyright notice on a work to get a copyright. Now, those requirements are eliminated. So under the current law, ever since 1989, copyright is automatically granted. So every time you write something down, make a painting, write a software program, you instantly have a copyright granted by the federal government whether you want it or not, and it’s almost impossible to get rid of it.
Okay, so the first thing to do is to recognize what the landscape is, what the threats are, what your rights are, what your options are, and the same thing is true for patent law. So for copyright, the question would be what should you do? What can you do? Now, one of the approaches I think you can take is most of the things that people author, we want the word to get out there. And so because the copyright automatically attaches to these things, it is a restriction on what others can do with it.
So for most people, as Cory Doctorow, for example, says, if people don’t know about your works, obscurity is going to doom you. You want your works to be spread. So one thing you can do is try to release your works into the commons as much as possible. There’s both a moral and a practical reason for this. The moral reason is because copyright is totally unjustified and illegitimate. So that’s the moral reason. The practical reason is that you want people to spread your ideas and your work, and you cand o this in today’s world by means of using the creative commons licenses.
Now, the one I recommend that people use is the creative commons attribution only. That’s CC-BY. I would prefer CC0, which is basically making it almost public domain. I’m just concerned that the way the law works, that that is not an effective, legally enforceable license, and that means that people that read your works or want to use your works can’t rely on the license because they don’t trust it, and it’s like it’s copyrighted still. So I think the most safe license would by the CC-BY, which is what I try to use as much as I can.
Now, practically, how does that help or hurt you? It helps you because it helps get the – it makes your work easy to copy and spread. And does it really hurt you? I don’t think it does. There is lots of ways you could profit from your writing, and we have to recognize most people don’t write or create for profit. They do it for other reasons, or if they profit, they profit without the benefit of copyright law. So in the cases where you would profit monetarily, having a CC-BY license wouldn’t really hurt you at all. You’d get your reputation out there. You’d get known more, and you – so one blog post I have is an example.
If you think about J.K. Rowling, the author of the Harry Potter novels, who is now the first or second-most rich woman in England – she’s a billionaire because of the movies and the merchandising and the novels from the Harry Potter series. Take her, for example. If she had released Harry Potter on Amazon Create Space, the first novel, and it had become popular, she would have made some money because the books are $1 or $2 or $3 each. In a copyright-free world, let’s say, maybe she would have been pirated right away, but she still would have sold many copies. She would have made a good sum of money, but she would have established her name as the author of a very popular series.
She could have, for example, said I’ve got book number two and three written already, and I will release it as soon as 100,000 or a million of my fans pledge $10 each to buy the book. I guarantee she could have done that. That’s $10-$20 million right there just for the next book or two. So she easily is already at a 10-or-20 millionaire after one or two or three books, and she wrote seven, by the way. So we can already see she’s approaching $100 million of value in a copyright-free world.
In a copyright-free world, anyone could have made a movie on the Harry Potter series. But if there’s one or two or three studios trying to make the first Harry Potter movie, someone would have an incentive to approach her and get her cooperation, advisor, executive producer status, and endorsement to make the movie be the most popular one. The Harry Potter fans are going to flock to the movie that is endorsed and authorized by the author of the books.
So we could easily see a profit-sharing arrangement where she makes another $10-, $20-, $30-, $40-, $50 million. So already we can see that, in a copyright-free world, someone who has a popular work like a J.K. Rowling can easily become a multimillionaire. So I see no reason why we can’t have authors of very popular works reworded. So that’s one thing you can do.
Another thing, let’s take the patent field. The patent field is a case of inventions. What do you do? Well, there’s a couple things you can do. I’m not saying no company should ever – should never apply for patents. Sometimes you need to in today’s world. You need to, to acquire an arsenal of patents that you can use defensively. But most smaller companies don’t have the resources to acquire enough patents that would really be effective defensively in most cases against competitors. And in any case, patents are never defensive against trolls, patent trolls because you can’t countersue a troll.
I mean the whole purpose of having a patent arsenal is to have a weapon stash that you can use to countersue someone who sues you for patent infringement, so a competitor usually. So if a competitor sues you for infringing one of their patents, you look through your stack of patents, and you try to countersue them back. That is a useful technique. It’s a big deadweight loss on society in innovation, but I can see why companies do that. However, patent trolls don’t make anything themselves, so they’re not vulnerable to a countersuit. So one of the big threats of patents is patent trolls, and acquiring patents doesn’t help you with that.
Moreover, like I said, having a patent stash doesn’t guarantee that you’re going to have an arsenal that you can use to defend yourself because there’s no guarantee that the person suing you can be countersued for one of your patents. Moreover, these patents are expensive, and in any case, it’s extremely expensive to engage in a patent battle with a large competitor.
And so it’s – one approach some companies could take is, instead of wasting money acquiring patents and acquiring an arsenal of patents that they could never use in the first place, and they could never afford to defend because the attorney’s fees are so high, just make a decision never to use patents. In fact, you could do what Twitter did and what Google has kind of quasi-done. You could announce we have an anti-patent policy. Twitter actually tied its own hands by agreeing with all of its engineers that they have kind of a co-ownership right in its patents so that it cannot cert its patents aggressively but only something defensively.
So what you could do is you could make a strategic decision not to ever use patents, not to even waste money acquiring patents. And you could announce this to the world. You could save money, and you could avoid getting locked into the trap of chasing a product design or something like that just because you happen to have a patent on it. You could just be free to follow the innovation where it takes you. Now, what about the danger of someone else patenting the same design that you’ve come up with?
Well, you could take advantage of the current law, which ever since the 20 – I think ’11, the America Invents Act under Obama. If you just simply publish like on a blog or a website or a journal, if you publish your idea, then it prevents – it would serve as a prior art defense against someone else patenting the same idea later. So you could just be totally open. You could publish your ideas and say here’s what our ideas are. We plan to pursue some of these. The rest of them we don’t, and now these ideas are public, and so anyone in the world can use them, even our competitors.
But any patent that’s filed after this date would be challengeable as being invalid. So those are some of the techniques that you can use. There’s a whole strategical mindset to trying to get along in the world without intellectual property and patents and copyrights. You could talk to lawyers like me, although most patent attorneys and copyright attorneys you talk to are going to be baffled by the idea that you don’t want to use these laws to your advantage, that you want to find a way to not use them.
But in the software industry, for example, this has been going on for 20 years, the GNU movement, the open-software movement. There’s a growing free-culture movement, which is similar. There’s a growing use of creative commons licenses among the artistic community. Companies like Wikimedia, they provide open-source images and things like this people can use. And so, of course, documentary makers and website designers are going to these sources instead. If you design software, you’re going to use open-source software. So there’s an increasing advantage to being part of the growing openness movement and advertising. If you’re going to do it, advertise it, I would say.
You do have to sometimes use intellectual property. Sometimes people get confused about what intellectual property means. So, for example, people think that unless you have a patent on an idea, you can’t use it. That’s not true. The patent is only necessary if you want to prevent other people from using it. The primary advantage of a patent – well, there are three ways you could use a patent on an image. Number one is to sue competitors to try to extract royalties or rents from them. If you think that’s too extensive or immoral or not your business model, that’s not really a concern, and I think it, by and large, should not be a concern.
Number two, you could use it defensively. But as I said, it’s only a rare situation where you are going to be able to find a patent in your arsenal of patents if you’re a small company, let’s say, that happens to apply to a competitor’s products. And it’s also a rare situation when you have the funds available to afford the $3 million or whatever it’s going to take to pay attorneys to fight back against a patent attacker in the first place, so it’s really just a huge waste.
For a startup company, let’s say, it is true that if you start looking for funding from investors and venture capitalists, they will often ask you what your intellectual property situation is. Their main concern, especially for a small startup company, they don’t – they’re not really betting that you’re going to become a patent troll and take your one or two or three or five or ten patents and sue competitors and make a trillion dollars. That’s not what they’re betting on. They realize that it’s too expensive to assert your patents. They understand that the primary purpose of patents is defensive, to defend your rights.
But if that’s the case, there are other ways to do that, which are cheaper, as I said earlier. You could simply publish your ideas proactively and early on and establish a prior public written record, which prevents other people from patenting the same thing. So if a venture capitalist says what’s your IP strategy? What’s your IP portfolio? You could say, well, we have a bunch of proprietary and good ideas. Some are trade secret. Some are kept secret. And some we publish to prevent other people from patenting them.
And otherwise we don’t want to waste your good investor’s money, hundreds of thousands of dollars a year, on patents that we could never use. Instead, we choose to be nimble and quick and flexible and just use our innovations and our technology as we need to without being locked into a given set of patents. And to protect ourselves, we save our money, and we make sure we don’t infringe other patents, and we publish our ideas as soon as we come up with them to prevent our competitors from patenting them.
So there’s a whole philosophy and strategy there, which is not normal in the business industry because everyone is so linked into this IP mentality. But there are definitely ways to survive in the world without IP and even to save money doing it and to prosper while doing it. I can keep talking about some different examples now that I have in the paper and in other articles and blog posts I have written. But let me see here what the – what questions we have now. Travis – I don’t know if Matt wants to link anyone in. If anyone has a question, feel free to link them in, or I can start – go ahead.
MATT GILLILAND: We’ve got one question here from Wesley Matthew.
STEPHAN KINSELLA: All right, go ahead.
MATT GILLILAND: So how does J.K. Rowling or other authors make money to support themselves to keep writing books, that is, before they become popular?
STEPHAN KINSELLA: Okay, so here’s my response to that kind of question. First of all, I tried to address that already with the actual J.K. Rowling example. How do you support yourself? Let’s first realize what kind of question this is. This is a question – it’s a legitimate question, and quite often the IP or the copyright advocate asks that question in a loaded way. In other words, they don’t really want the answer. They just – they’re shouting the question out at you as a challenge.
They’re saying that – they’re basically saying unless you can show me how authors can make a lot of money in your free market society, I’m not going to be in favor of it. So that’s what they’re saying. Now, I don’t think the questioner here is asking that, but we have to be wary of questions that are really loaded questions or statements posed as questions. And we also have to understand that if you don’t know the answer to a question, it doesn’t mean that the copyright or patent system is legitimate.
The example I give is imagine that you lived in Soviet Russia in the 1970s or ‘80s or ‘60s, and someone was advocating for abolishing the communist system and establishing a free market. And someone says, well, how many brands of toothpaste will there be? How can we guarantee enough toothpaste will be sold? I don’t understand how I’m going to choose between all these different brands of toothpaste that are going to be sold. Even if you don’t know what’s going to happen in a free market, you can’t predict how many brands of toothpaste, what the free market is going to look like.
Just because you don’t have a direct answer to that question because you can’t predict the future doesn’t mean that communism has to be kept in place. So that’s kind of the first answer. The other thing to be aware of is most authors in today’s society, most authors in today’s society, don’t make any money at all, or much money, and there’s several reasons for that. I mean just imagine the typical blog or even everyone’s participating in Facebook chat sessions and commenting. People do this. They don’t do it for money. They do it because they’re interested in doing it for some reason.
Most academic texts or scholarly works are journal articles like in the social sciences, libertarian articles, economic articles don’t get paid a dime. In fact, several journals you have to pay thousands of dollars just to be published there. So most – the bulk of most creative work is done not for money anyway in human history and even in today’s copyright world is done not for profit. And in the cases where it’s done for profit, it’s done for profit primarily of the publishing industry. The publishing industry, the publisher’s, Hollywood, etc., they – or the recording industry, the studios, they have been propped up. The whole system has arisen because of copyright, the whole publishing institution that we have.
Again, most authors don’t make very much money, which is why a lot of authors are self-publishing, are going to CreateSpace on Amazon, things like this now. Most authors, if they make $5-, $10-, $20,000 a year off of something are pretty happy because, for a lot of people, it’s a side hobby or a side pursuit, or it’s something they would pursue anyway. So I think we have to compare today’s situation, which has copyright, to a free market. And you can’t just say there’s no way I can think of that most authors wouldn’t get paid or would get paid in a free market, and therefore, there’s something wrong with this idea because most of them are not getting paid now.
And, in fact, under today’s situation with the state in control of so many things, with so many regulations and taxes, people are made worse off because of that alone. So, for example, to take a silly example, if the government tomorrow reduced the income tax rate by 50%, then most people that are just – they have a regular job doing something, making their money and they write on the side, well, it’s like they’re getting $10-, $15-, $20,000-a-year payment right away. So they could use that to subsidize their creative pursuits.
So if we want there to be more creativity, we have to reduce the size and scope of the state. We have to reduce taxes. We have to reduce the state’s controls, the state’s – we also have to reduce the state’s copyright system in the first place, which causes some works to be impermissible, remixing, borrowing, derivative works, sequels, unauthorized movies, things like this, documentaries which are blocked for years because of the bizarre copyright claims, privacy claims, etc. Allowing the state or counting on the state to prop up the creative process is totally unrealistic and unworkable.
So I just want to lay that out there. It doesn’t really answer the question directly, but it points out that there’s only two really – there’s only two real alternatives. That’s freedom or the state. And the state situation just cannot work. The state solution ends up causing people to be taxed and regulated, put in jail, restricted from using previous works.
There’s a privacy decision just last week in Europe, which is called the Right to be Forgotten, where, if you have a fact about your previous life or your earlier life somewhere on the internet, you can go to a court in Europe, and they will issue an order to Google to remove the link to a search on you, so people can’t find out a certain fact about you in the past. Basically, it’s air-brushing history. It’s Orwellian. This is what totalitarian dictatorships do. They just rewrite the past. So in the name of all these attempts of the state to step in and be guardian of people’s creative works and their privacy rights, it ends up restricting our freedoms.
So the only real alternative is the free market and freedom. So how would authors make money? Well, some would have a job, a regular job, and they would do this as a side hobby. There’s nothing wrong with this. I think Francis Ford Coppola, one of my blog posts on C4SIF.org – if you just search for Francis Ford Coppola, the director, he says what’s wrong with getting up at 3 or 4 or 5 in the morning and writing – working on your play for two or three hours and then going to work during the day in a regular job? So some people would have to support themselves. They would be their own patrons basically.
But as we see in the world today with the internet, we’re having an emerging set of institutions and practices that enable – there’s something called – I think it’s called Patraon – P-A-T-R-A-O-N, A-E-O-N. I may be misspelling it. Patraon – it’s patron. There’s Indiegogo. There’s other things like this where – Kickstarter, where people can find ways to get supported by their fans or by people who support their works. So the ultimate answer is an entrepreneurial one. It’s basically how do you find a way to get supported or to support a project that you want to engage in either for profit or not for profit?
It’s really an entrepreneurial question, and there’s lots of suggestions about this. On my blog, C4SIF.org, I have some posts about how can innovators get – make – get rewarded without intellectual property. And there’s different techniques people use. I’ve mentioned some of them already tonight. There’s Indiegogo campaigns. There’s patron support. There is – you can do what Louis C. K. did, which he sold one of his – he had a website where he sold one of his comedy performances for $5 a download, totally open source, DRM-free, and he made several million dollars in just a week, way more than he needed to, to cover his costs. And then he gave his staff $200,000 bonuses for Christmas and all this. It was great.
And so maybe it petered off after a while, but so what? It’s better than it would be in a copyright-controlled society. So the ultimate answer is we don’t know exactly how you can make money in any endeavor in the free market. But there’s lots of ideas about how you could, and there’s lots of reason to believe that there are things you could do absent copyright and patent to make money, and not only that. Remember this: There are more ways to make money absent copyright because your restrictions that tie you down are now gone. So lots of companies and producers and creators that are now restricted by copyright would be freed.
So they would also lose the ability to go around suing people for royalties. That’s true. But they would also be free to use whatever they wanted. If you want to have a Michael Jackson hologram at a concert, you can do that. If you want to perform someone’s song and do it in a better way like the Canadian astronaut performing the David Bowie song, you can do it. I don’t know if you guys know what I’m talking about, but just like last week, David – there was a David Bowie song performed on the space station by a Canadian astronaut a year ago.
And he took the time to get a copyright license from David Bowie’s representative, but he could only get it for a year. And so he performed some kind of acoustic rendering in space of a David Bowie song, and it was very popular on YouTube. I actually never saw it, but I read about this. Well, just a couple days ago it had to come down because the one-year license expired. So those are just examples of the ways that copyright stifles freedom of expression, freedom of speech, and experimental artistic uses, which would flourish absent copyright. It would be more of a challenge to find a way to make a profit, but there would be more ways to make a profit as well.
MATT GILLILAND: All right, so we’ve got another question here from Bern McCarty. Regarding the defense where you try to establish prior art by publishing your idea, what minimum level of publishing is recommended?
STEPHAN KINSELLA: Okay, so in the past, there was a practice of – let’s say before the internet age, companies like IBM, one of the biggest, most prolific patentors in the world, and the most prolific, innovative companies in the world would also make it a strategic decision every year about which ideas they had that they wanted to patent and which ones they did not want to patent. The ones they did not want to patent, they would publish – they would often publish a little short paper by the engineers in a journal that they published.
It was like the IBM Technical Journal or something, and they did that solely to establish a record, a prior-art record. With the advent of the internet – excuse me – it’s a little bit easier. And, by the way, there are other ways you can do it too. There is something you can do on the – you can go to the USPTO.gov. That’s the United States Patent and Trademark Office website, USPTO.gov. And instead of hiring a patent attorney to file a patent application, which takes thousands of dollars, you could do something called an SIR, statutory invention registration. There’s a small fee involved. I think $100-$200, something like that, and that would be a way of publishing it too.
But you don’t need to go to that expense. In today’s world, you could really simply just publish it on a blog. Make sure the blog is going to be around for a few decades, and just publish the idea. What’s key is that you have to disclose the idea in sufficient technical detail. So this is a case where I wouldn’t worry about being boring or verbose or being overly technical. More is better, so just publish everything you can think of. Have a long post, or put a paper that you can link to in a blog post, which has all the details that you can think of.
You basically have to enable – you have to have an enabling disclosure. An enabling disclosure means you have to provide enough written details and a written description sufficient to enable someone skilled in the art to make and use your invention without undo experimentation. Now, that’s a lot of technical legalese, but that’s basically the criteria.
From a practical standpoint, what that means is you want to have a good technical disclosure, which explains how your idea works and that, if you imagine someone else in a similar technical field that read it for the first time, they would read the paper and they would say, oh, I get this idea. And they would be able to go out and go in their garage or their workshop or their laboratory, and they would be able to make this eventually because you gave them enough details. So if you disclose that level of detail, then on the day you publish it, from that day forward, no one else – well, I won’t say they won’t be able to patent it because they could patent it because the patent office doesn’t find that disclosure.
But even if they were patenting it, then that reference that you had published would be there and could be used to invalidate the patent later. So – and by the way, let me just make clear. This changed – the law changed when Obama changed the patent law a few years ago in the America Invents Act. Before that point in time, there was a one-year grace period. So if you published a paper on day one, then there was a still a danger that in the next year someone else could still patent it. They couldn’t patent it if they’d learned about it from your paper because they wouldn’t be the inventor, but if they independently invented it, they could still file a patent on it.
But under the Obama America Invents Act, that changed. And so from the day you publish it, it serves as a – what’s called an absolute statutory bar. There’s what’s called an absolute novelty requirement now. In any case, the quicker you publish it and the more detail you give, the better. Now, the danger is that you’re going to let your competitors know what you’re doing, and they can start competing with you.
But realistically, if you have a real product, that’s going to happen anyway if you don’t have a patent. If you start selling a product that’s popular, you’re going to advertise its features, and/or its features and secret sauce will be able to be discerned by reverse engineering anyway. And competitors will start reverse engineering this and making knockoffs, which means competing with you, very soon anyway. So you’re really not out anything by publishing it. So that’s the answer to that question.
MATT GILLILAND: All right, for our next question, we’ve got Travis, The Green Guy, who would like to come on air to ask.
TRAVIS: Yes. If you don’t mind, I have two questions. One, how would you deal with trademark specifically? For example, if Coca-Cola has a trademark on their symbol, the whole nine yards, what would it – it would be relatively easy to make another can with the exact same symbol with the exact same – maybe even the same product, especially if that product ingredients got released, what protection would there be, and how would that work in a free society without trademark?
Because I completely agree with you on copyright and patents, but I just don’t – that’s really the only example that I can think of as far as protection that’s needed because, on the internet, it doesn’t matter. You can change a logo. But for companies who invest millions of dollars in creating these logos and creating this brand, it’s almost impossible and very expensive just to flip the switch and change the logo. I was reading some of your podcasts – or listen to your podcasts and reading…
STEPHAN KINSELLA: Explain – why did you mention the ingredients of Coca-Cola? Tell me what the relevance of the ingredients because the ingredients is more about the trade secret, not the trademark. Are you getting at two things here?
TRAVIS: That was me correcting the example. Let’s say if that secret did get out, it’s a product that can be remade and a logo that can be copied. What’s to protect them from – especially if it’s a physical product, not an internet product. If it’s a physical product that can be remade and then the logo can be copied, that’s the only thing I can think of that would throw a hole in this.
Because I completely agree with you, and I’ve listened to your podcasts, and I’ve read some of your essays on this topic. And I think you’re brilliant. It’s just I can’t think of a way the system would protect people in a situation like that where the product can be copied and the logo. How would you differentiate yourself, or how would it be – how would it work?
STEPHAN KINSELLA: Okay. So that’s a good question. Trademark is a confusing issue, especially because libertarians are a little bit sloppy with the fraud concept that they throw out there. So libertarians will often say we’re against the initiation of force and fraud, but then they never quite explain why fraud is part of aggression or initiation of force or exactly what it means.
And then they’ll sometimes use fraud to mean being dishonest, and – which would imply that any time you tell a lie that you’re basically violating someone’s rights, which is not really true. Dishonesty is not a good thing, but it’s not always a rights violation. So this fraud concept of – and not only that, if they support trademark law because they’re against fraud, why do we need trademark law because fraud is already allegedly a crime or a cause of action in a libertarian contract or whatever legal system. So it’s not really clear exactly what they mean.
So here’s what I think would happen. First of all, think about the case of just people and names, like your name, my name, Matt’s name. I mean what’s to keep me from naming my son Matt Gilliland if I wanted to? Or maybe there are 20 Matt Gillilands in the country right now. I don’t know. It could be the case. Now, what’s to keep that from happening? Well, first of all, nothing is going to keep it from happening, and there are probably more than one – my name is a little bit unique, but there’s probably more than one Normal Kinsella in the world. There’s probably more than one Travis in the world, so it’s not really a problem that there’s more than one.
So you could have more than one Mr. Hamburger in the world, and it probably wouldn’t be the world’s biggest disaster. It only gets to be a problem when the reputation gets to be big and you use it as part of your sales pitch and your marketing. So here’s what I think would happen. I do think fraud would be a cause of action in a libertarian society but only in a narrow sense, that is, fraud understood as a type of deceit and theft from a customer by trick or by deception.
TRAVIS: Oh, so you would have the customer basically doing the lawsuit and not the…
STEPHAN KINSELLA: So that’s – part of the problem with trademark law is that the person who holds the trademark is the company using the mark, the trademark holder. So they can sue someone using their mark even though the allegedly wronged victim is not the trademark holder but the customer. And number two, if the customer is wronged, it’s only because they’re defrauded. But if they’re defrauded, they already have a fraud right, so why do they need a trademark right? And in fact, trademark law gives them the right to sue even when there’s no fraud, and in fact, it gives the trademark holder the right to sue, not the customer.
So, for example, take the case of – I just think that this is really not a problem. I do think that the problem of copyright and patent advocates point to is a real problem. Well, I don’t think it’s a problem, but it’s a real phenomenon. It is true that if you start making a new pharmaceutical drug or if you sell a novel, it is true that people without a copyright or patent system will be able to compete with you and copy that. That is true. I don’t think it’s a problem. I think it’s a good thing, but that’s the way it is. But in the trademark case, I think there’s really a non-problem because there’s really two main situations.
Number one, we have a cheap knockoff, which is not fraudulent. So, for example, a fake Rolex watch for $20 being sold by some guy with a heavy briefcase – heavy trench coat full of watches on the streets of New York or a van, kind of one of these shady situations. In that case, there’s no fraud whatsoever going on. The customer has no complaint. The customer knows he’s buying a knockoff watch. So no one’s property rights are being violated whatsoever, and that should not be prohibited.
The other situation would be where, imagine I want to buy a Rolex watch, and I have $5,000 saved up to buy a Rolex watch. I’ve always wanted one for my whole life, and I’ve worked my life, and I’ve saved up. I go to the Galleria here in Houston, the Houston Galleria, and there’s all these nice, posh stores, Louis Vuitton and Zegna and all these nice stores, and I walk into a store with a Rolex label of it, and I buy a Rolex watch for $5,000. Well, then I find out later it was a fake. Well, if that really happened, I suppose I would have a cause of action for fraud against this company, and I do admit that there would be a cause of action for fraud.
It’s hard to imagine that actually happening in real life though because how would this company get set up? How would they actually have a storefront in a Galleria? The Galleria is not going to host a knockoff company that’s getting sued left and right every day for fraud. The company is not going to be able to survive for very long if they’re getting massive lawsuits by one customer after another for fraud.
The fact is that when people start their own companies, and they’re legitimate businessmen, they want their own names on it. They want to distinguish themselves from the customer. Just think of the hamburger industry in the US. It seems like a homogenous thing. Everyone’s got hamburgers. There’s really no difference between McDonald’s, Wendy’s, Burger King, and yet the people that started these companies think there’s a difference. Burger King didn’t say McDonald’s. They said Burger King. Wendy’s called themselves Wendy’s. You have Hardee’s, Wendy’s. You have Krystal Burger. So everyone – any legitimate company is going to want their own name on it. So I just don’t think it’s a real problem. But to the extent there’s a problem, basically fraud law, I think, would cover it.
TRAVIS: But in that situation, you would have the customer doing the legal action and not the company per se.
STEPHAN KINSELLA: Yes, and you could theoretically have class actions. Let’s say there’s thousands of customers defrauded by some company. And you could imagine situations, but almost every trademark case you hear of in today’s world is totally bogus. You have Toyota, which sells Lexus, L-E-X-U-S, cars. I’m sorry. It’s the other way around. You had LexisNexis, L-E-X-I-S, the news service, suing Toyota 15 or so years ago when they came out with their Lexus car because they said that was confusingly similar to customers.
Now, who is really going to buy a Lexus automobile and believe that it’s being sold to them by LexisNexis news publishing? I mean no one. So there’s no fraud whatsoever. This is what happens all the time, and in fact, trademark law is used primarily nowadays for censorship and free – to shut down – I think one of the cases – there’s a guy up in Maine or Connecticut, one of these New England states, who was selling – he sells t-shirts that say Eat More Kale, K-A-L-E.
And Chick-Fil-A sued him because they have – their slogan is Eat Mor Chiken, spelled M-O-R, misspelled actually because the cows can’t spell right. And so this poor individual has been defending himself for a couple years now with donations because some giant corporation is just trying to run him into the ground for no reason. There’s no competitive threat whatsoever. There’s no fraud whatsoever. There’s no harm to their market whatsoever.
But trademark law, under the current statutes, gives them the right to do this to him, and I don’t know if they’re going to win or not. I don’t know what actually happened. It may be still ongoing. But even if he wins, he’s going to have spent months of his life and millions of dollars defending himself. So trademark law is not as horrendous I think in its effects as patent and copyright, but it’s 100% completely illegitimate in my view. And so is trade secret law, by the way. Trade secret law is totally unnecessary and illegitimate because you don’t need a law to permit you to keep information secret. You can just do it if you have property rights protected.
What trade secret law does is it gives you the right to go to a court to issue an injunction against third parties to tell them they can’t use information that they got if it’s still pretty much secret, if you have a trade secret in it. Apple has done this, for example. I think they used the cops to bust into some guy’s house about three years ago. Remember that iPhone was left by an Apple employee on a barstool somewhere. And the next day or three or four days later, Apple busted and used the cops to burst into someone’s apartment and to issue – used trade secret law to do this.
Look. It’s their fault that they left the iPhone out. It’s not someone else’s fault that they found the iPhone. Maybe they still owned the actual iPhone. I would say that under property law principles, they could get their iPhone back. I don’t deny that. But if the guy had taken a picture of it or learned something about it and publicized it in the meantime, I don’t think he’s violated anyone’s rights.
MATT GILLILAND: All right, thank you, Travis. I’ve got a question from Max Hill. Does a public disclosure, such as publishing in an academic journal, prevent others from patenting any science disclosed?
STEPHAN KINSELLA: Yes. Well, it doesn’t prevent them because the patent system is not perfectly efficient. So it is – as I said, that would be like saying if you don’t do anything wrong, it doesn’t mean you can’t be sued. No. You can still be sued. It just means you should win. You probably will win if you haven’t done anything wrong. Same thing here. The patent system provides that you should not be able to obtain a patent on an idea that is already public.
That doesn’t mean that the patent office is going to realize that when someone applies for a patent. But what it would do is it would give you a defense. So let’s say you published your paper on day one. And six months or a year or two years later, someone else independently invents this idea and files a patent on it, and let’s say they get a patent because the patent office never sees the – your paper that you had published. Well, you don’t really care if they have a patent. All you care about is that they assert it against you, and if they threaten you with a patent or if they sue you for patent infringement, then you would have a defense.
You could simply say, listen, you have sued me for patent infringement, but I have a paper published before you filed for your patent, which means that your patent is invalid, and I will be able to prove that if you sue me in court, so go away, please. So it would at least give you a defense. Moreover, if you publish the invention in a paper, let’s be clear. The only way you’re supposed to get a patent is if you are the inventor of the patent, of the invention. So unless the person who filed a patent independently invented it, they’re still not entitled to a patent, so there’s two barriers.
So if someone learns of the idea from you, they’re not the inventor. You are. You just chose not to get a patent on it. You published it. You basically released it into the public domain. By the way, there’s no counterpart procedure for this in the copyright system. There’s really no easy way to make your copyrighted works non-copyrighted or in the public domain. It’s almost impossible to do it. There’s CC0, but it has dubious validity, and even that is not easy to do the right way. But patents at least you can. If you just refrain from filing for a patent and if you publish the idea, it basically becomes public domain.
MATT GILLILAND: All right, we’ve got a question from Wesley Matthew. In countries with little or no copyright protection, how does innovation compare to those with copyright?
STEPHAN KINSELLA: In today’s world, most countries have acceded to the modern conventions like the Berne Convention for copyright, the Paris Convention, and the Patent Cooperation Treaty for patents and the WIPO, World Intellectual Property Organization, all these different conventions. So most countries have minimum standards of intellectual property but mostly at the behest of American and the western countries. Primarily America, at the behest of the pharmaceutical industry, the music industry, and Holly wood, have twisted the arms of most other countries in the world to go along with our type of system, even though they are basically harmed by it.
It’s basically a wealth transfer from every other country to the US and to these three industries in the US: the pharmaceutical, the music industry, and the movie industry, Hollywood. So I would say – and so there are some countries with lower copyright protections, but I would say that’s an instance – and they tend to be poorer countries, but I think that’s not an instance of causation and correlation. That’s more of an instance of just – it’s just correlation. You could make other correlations with antitrust law or tax law enforcement. For example, you could say that your typical poor country has more corruption, more bribery, and worse tax law enforcement than the US.
But you couldn’t draw the conclusion that, if you have greater tax enforcement and greater antitrust enforcement and less corruption and bribery that you have more wealth. You couldn’t draw that conclusion. I think the problem is that you have these relatively liberal, free-market economies like the United States, and they become rich because they have relatively free market internal policies, or we have a very large free market here, pretty much an unregulated, free market, capitalist, property rights system.
But the state is there, and the state taxes and survives off the revenues produced by the underlying economy. So you have these states, which become powerful and rich because they’re parasitically taking money off of the underlying economy, and they also tend to expand their own power and authority. They start exerting minimum wage laws, affirmative action laws, anti-discrimination laws. They start becoming more bellicose internationally. They become more imperialistic, more warlike. So you have these things going hand in hand. I would say that the richness of the underlying free-market society is the cause of the non-free-market things that the state that depends upon the society does rather than the other way around.
Now, if you want to take some actual examples, there have been examples in the past of some historical episodes I think in the 1800s or about 50 years. Let’s say Germany had almost no or very lax copyright laws. And the empirical evidence shows that they were out-producing England, which was a comparable society at the time, in the number of published works and things like this. And Italy and Switzerland I think for a good 50 or 100 years had no patents on pharmaceuticals, and yet they were two of the largest producers of pharmaceuticals at that time.
So there are episodes in history where we can point to where there’s been a lack of or much more reduced form of patent or copyright and which we can see that there was still a huge amount of innovation and research and development and artistic creativity being done anyway. And I’ve got some surveys and some studies on my C4SIF.org website to that affect.
MATT GILLILAND: All right, we’ve got a question from – another one from Travis, The Green Guy, which I actually like this question a lot. Can a public disclosure from person A also protect person B from company C’s patent that was filed after the publishing date?
STEPHAN KINSELLA: Yes. Yes. Once it’s public – there is in our – yes. Yes, it doesn’t matter who published it. As long as it’s published, then company C’s patent is potentially invalid. So company – person B would be able to use person A’s publication as a defense and say that person C’s patent is invalid because it shouldn’t have been issued.
Now, there is a unique twist in the law that Obama had passed, which is that company A – in the hypothetical you just gave, person A has one year to file a patent. They can still file their own patent, so person A could disclose their invention on day one. They have up to one year to decide whether they want to file a patent. They have a one year statutory – they have a one-year sort of grace period, we call it. But no one else does. It’s a bizarre situation. So I can’t get into the weeds here, but you could imagine a bizarre situation where person A files on day one. I’m sorry. Person A publishes their invention on day one, and person B publishes – or files a patent on day two.
Now, under the Obama America Invents Act, we changed our priority system to where the first person who files is entitled to the patent. If there’s two competing inventors, the first one who files is entitled to a patent, which is what the rest of the world has in their patent systems. America, until two or three years ago, had a different system where it was the first to invent. That’s one reason they made this change. But because of this change in the publication grace period, a strange twist of this is that if person A invents the invention first and person B invents it later, then person B can still get the patent if they file first.
That’s the basic law right now. But if person A makes it public first, then person B is now prohibited from getting a patent on it. But person A has a year to decide to file – they have a one-year grace period, but it only affects A, not B. So the only example – the only exception to the answer to the question is that B is protected by A’s publication from C’s patent, but B wouldn’t be protected from A’s patent.
MATT GILLILAND: All right, I’ve actually got a question. You said – you suggested using creative commons by attribution license. Now, why would you suggest that instead of creative commons by attribution, share and ShareAlike, which for the audience means that they have to both attribute the work, and they have to release everything they create under the same kind of license, which prevents them from using copyright against others using works that are based on yours?
STEPHAN KINSELLA: So my basic thinking is that I want to release my works from copyright as much as possible. If I could just say this is hereby public domain, that’s what I would do, which is what CC0 tries to get at. I’m just afraid CC0 wouldn’t be legally effective. It might be. It’s not clear. To be honest, I’m not even sure CC-BY or any of the CCs are legally effective, but apparently, they’re being treated that way right now.
The reason I’m not sure any CC license is legally effective is, number one, I’m not clear what the consideration is for the contract. And number two, I’m not sure how the alleged licensee is going to prove he had a license. In a normal copyright license, you and I would have a document we would sign where you pay me some money, or you do something for me in exchange for me granting you a license. So there’s consideration, which is you’re giving me something back, and you have to have consideration to have a binding contract in most common law countries.
And number two, you have proof of it because you have a copy of the contract. So if I ever sued you for copyright infringement, you could simply say what are you talking about? You gave me a license. In the creative commons case, I’m concerned that there’s no consideration, and I’m concerned that the person who might be sued for copyright infringement—the licensee, the user—wouldn’t be able to prove he had a license because – so let’s say I publish a novel on my website, and I put CC-BY on there.
And then, in the meantime, you download it and you start making copies of it. Okay, you’re permitted to do that. But let’s say a year later I just change the – I just update the file on my website, and I change it from CC-BY to copyright, and then I sue you for copyright infringement. Now, you claim – your defense is that you have a license. Well, how do you prove you had a license? When did I grant you this license? Did we negotiate it? Do you have a written, signed copy? So you see there’s a question of proof, and there’s also a question of consideration. Even if you can prove that I had the CC-BY notice on there, so what? Where is the contract? Where is the – what did you give me? What consideration did you pay me as a user to make the contract valid and binding? So I’m concerned about that.
But let’s put that aside. Let’s assume that the creative commons is enforceable. The reason I prefer CC-BY to CC0 is because I think CC-BY has a greater chance of being enforceable than CC0 does, and I’m just going by what the Creative Commons Foundation itself says on their website. They had these warnings that CC0 may not be enforceable in every jurisdiction and all this kind of stuff. So they have some concern that CC0 is not enforceable probably because of what’s called moral rights and also the inalienability of copyright in some countries like in Europe.
CC0 sort of tries to undo what they view as an inalienable human right, which is copyright, or something like that. So that’s my concern about CC0. I would use CC0, and in fact, I try to use it in a creative way on my website just to shut people up who say I’m a hypocrite for not using it even though they don’t understand that it may not be enforceable, but whatever. So I use CC-BY because all it requires is attribution, and I figure that’s a restriction that almost no one minds anyway because, if you copy someone’s work, you pretty much want to say who wrote it because otherwise no one’s going to want to take the copy you made because they don’t have the full copy because the copy includes the author’s name.
Now, the other ones like ShareAlike and also ND, which is no derivative works, and NC, non-commercial use, I don’t like those at all. I certainly don’t like non-commercial and non-derivative because it’s an attempt to use copyright law to prevent people from using your work as they want to use it. If you’re going to NC or ND, no creative works – I’m sorry – no commercial use or no derivative works, you might as well just have a copyright notice and prevent people from using your work.
I don’t really see why you would use CC at all in that case. And in fact, I think they’re vague. I don’t really know what a non-commercial use really means because if I have a “not-for-profit blog” or a hobby blog like I do, but I had Google advertising in the corner of my website, and I copy someone’s CC, NC work, am I using it commercially because it’s helping draw traffic to my website and I’m making some Google AdSense revenue? I don’t know, maybe. But the point is that’s not a good license because it’s restrictive. So I do understand the ShareAlike license. The ShareAlike license is the one that some libertarians and others prefer to use instead of BY, which is attribution only. It’s more similar to what’s used in the copy – in the software case of the open-source-type licenses, which is – I forgot – GNU or something like that where you have to…
MATT GILLILAND: Yeah, the GNU GPL.
STEPHAN KINSELLA: GPL.
MATT GILLILAND: General public license.
STEPHAN KINSELLA: So if you use someone’s source code, the only condition is you have to release your source code that borrows from it under a similar license. I can understand that idea. I think it makes – I don’t like it even in software, to be honest. I prefer to just open things up and let people do what they want with them. One reason people do that is they have a mistaken understanding of what copyright is. They say, well, if I don’t copyright my works, then someone else is going to run around and copyright it.
Well, first of all, you don’t copyright anything. As I said, it’s automatic, so that’s a mistaken understanding of how copyright works. So I don’t think that’s a good reason to do it. I just don’t like ShareAlike because – let me give you one example. If I have a – like the Journal of Libertarian Papers, which I created and which I’m the executive editor of, we have a CC-BY policy. If we had a CC ShareAlike policy, then – well, under our current policy, any publisher that wants to use one of our articles in one of their books – like let’s say there’s an anthology of articles on a certain topic and they want to take one or two Libertarian Papers articles.
They can do that without asking our permission. They don’t need my permission. They don’t need the journal’s permission. They don’t need the author’s permission. They already have their permission. It’s built into the article under the CC-BY. They can use it, and we want our ideas out there, so that’s a good thing. Okay, so if I can’t find the author, if the author is dead or his widow is around and she’s crazy or whatever, that’s not going to be a hindrance to this idea getting out there.
If it’s CC ShareAlike, most books are being published by publishing companies with fairly standard copyright policies, and they’re not going to have a CC-BY policy or even a CC ShareAlike policy. So they can’t include this article in this book unless they make the whole book CC ShareAlike. So I’m restricting what they can do with it, and it’s like I’m trying to use copyright law to twist their arms to become a libertarian or to have a libertarian policy, and I just don’t like that.
I prefer to have it open and let them do with it as they see fit. The article is still CC-BY even if they include it in their book. Their book may be copyright normally, so someone still couldn’t copy their book, but that’s their decision, not mine. So I don’t feel it’s my obligation to use my copyright leverage to force other people to adopt similar policy in their other published works.
So that’s my reasoning. I respect other libertarians who prefer to use the CC ShareAlike as more of an activist tool, but I think they’re hurting themselves because, as I said, you basically are preventing your work from being used in any other kind of journal or omnibus volume or collected anthology because they just – the CC ShareAlike copyright provision is tantamount to a copyright provision, which means they can’t use it without getting the permission of the author. And the whole purpose of the CC-BY is so that people can use it without having to come to you for permission, so that’s sort of my thinking on that issue.
MATT GILLILAND: All right, one last question before we call it a night. I know there are ton a more questions. That just means that Stephan’s going to have to come back some time.
STEPHAN KINSELLA: I’d be happy to come back. People can email me too, by the way, so that’s fine, but go ahead.
MATT GILLILAND: From Bob Vacanti, could blockchain technology by adapted to record patents as it authenticates Bitcoin transactions?
STEPHAN KINSELLA: I’m trying to think how to answer this. I think patents are completely illegitimate grants of monopoly privilege by the state. So I don’t want to find a way to make them more efficacious. And also, this question gets at a non-problem. I mean patents are – the word patent means open. That’s what it means. They’re, by definition, public, which is why these people that think that there are these secret patents out there that the oil industry has gobbled up and kept 100-mile-per-gallon carburetors and engine designs off the market makes no sense because if they existed, you could find them with a search on the USPTO.gov website.
So, in other words, we already have a record of the patents. It’s the USPTO.gov website and other websites around the world, WIPO websites and the PCT search engines, things like that. So there’s no problem with knowing who has which patent. Every patent as a unique serial number already. It’s already made public. It’s already easily searchable. And believe me, if you’re sued by someone for patent infringement, they will be able to prove they have a patent. So there’s no problem of the – there’s no inability of patent holders right now to prove they have a patent.
I think what the question is getting at is something different. I think they just worded it legally imprecisely. I think what they’re saying is could you have a free-market system, which doesn’t rely upon the state or a state patent office where people could register their inventions and get some kind of protection for them that way. And I think that’s a premature question because you don’t need Bitcoin for that or something like the blockchain for that. That would just make it more efficient. The question is would that make sense in the first place.
I think the Tannehills, by the way, in The Market for Liberty, which is an anarchist book from the ‘70s, Morris and Linda Tannehill, they were basically Randians objectivists who became anarchists. But they still clung to the IP idea, and they proposed in a few paragraphs in that book that maybe you could have some kind of private, free-market system for protecting inventions other than the patent system. What they proposed was that you could register your ideas with some title agency, and you wouldn’t have to rely upon the government to do that.
But once you had it registered, you could use some kind of private legal system to sue people who were using your ideas because you had shown that you were the first one to invent this idea, and you could point to a public record of it. So I guess you could imagine a blockchain-type system would be a more efficient way of recording information like that. I just don’t think information like that is relevant in a free market. In other words, it’s not legally relevant who first came up with an idea because there’s no property rights in ideas in the first place.
So yes. I think the blockchain could be used for that. Probably a more realistic or practical example or use of the blockchain would be registering ideas for credit. Like, for example, Leibniz and Newton – there’s a fight over who came up with calculus first. And Einstein and others had fights over who came up with certain physics theories first. But it wasn’t for legal property or IP reasons or patent reasons. It was just for credit in the scientific community.
So I suppose you could imagine a blockchain being used for that, but that’s totally a private, social convention, which has nothing to do with the law. So I would say because ideas and information cannot be owned and are not the subject of property rights, it wouldn’t make sense to imagine a private record-keeping system, including blockchain, being used to track the authorship of ideas for some kind of property rights purpose in a free society anyway.
MATT GILLILAND: All right, thanks, everybody. And thank you, Stephan. We’ve had a great time here tonight, and we’ll definitely have Stephan back here soon. Tomorrow night at 8 o’clock, we’ve got an author’s forum with Tom Palmer over the new SFL book, Peace, Love, and Liberty. So join us there tomorrow night. Hope to see you there. Thanks everybody for coming, and take care. Have a good night.
STEPHAN KINSELLA: Good night. Thanks.