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KOL375 | Mentally Unscripted Ep55 – Why IP Laws Destroy Innovation and How Creatives Can Profit Without Them

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Kinsella on Liberty Podcast, Episode 375.

This is my appearance on Ep.55 of Mentally Unscripted. Recorded Feb. 8, 2022; released Feb. 10, 2022.

Transcript below.

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From their shownotes:

This week, Stefan and Scott welcome Stephan Kinsella to Mentally Unscripted.

Stephan is a brilliant, articulate libertarian legal scholar who explains why the mainstream notion that intellectual property spurs innovation is wrong. He dives in by telling us why IP laws are simply government-issued monopolies that actually impede innovation. He explains why removing IP laws would make us more prosperous. And closes by discussing other innovative ways creators can profit without protectionist laws.

As always, we’re building a community around Mentally Unscripted. So, share this episode with your friends and interact with us at MentallyUnscripted.com.

And remember, the conclusion you reach is less important than the process you follow to get there.

Guest Information

  1. Stephan’s Website
  2. Kinsella on Liberty Podcast: Libertarian Theory and Applications
  3. Center for the Study of Innovative Freedom

Top Takeaways

  1. Intellectual Property (IP) is a body of law whose stated purpose is to protect a specific type of private property, such as inventions and creative works but is really a grant of monopoly power by the state.
  2. Instead of spurring innovation and creativity, the monopolistic nature of IP laws stifles new creative output.
  3. IP laws could be repealed today, and entrepreneurs would fill the void with new, innovative ways to earn money from their creations.

Comments or Questions on this episode? Join the conversation at the Mentally Unscripted Substack.

TRANSCRIPT

“Transcript: Why IP Laws Destroy Innovation and How Creatives Can Profit Without Them”

Stephan Kinsella, Mentally Unscripted (Feb. 10, 2022)

00:00:15

SCOTT GRAYSON: Hi there, everybody.  My name is Scott Grayson, and you’re listening to Mentally Unscripted, the podcast where my cohost, Stefan, and I inspire you to think more clearly and have better conversations about the world.  When you ride along with us, we’ll take you on a journey that will show you there’s always more than one way to look at an issue.  You’ll learn to think critically about what you see and hear and how to challenge the narratives that those in power want you to believe.  You won’t always agree with us, but that’s the point: to learn that we can have deep conversations and learn from each other no matter how different we are.

00:00:48

This week, I find myself outnumbered by Stephans as we welcome Stephan Kinsella to Mentally Unscripted.  Stephan in a brilliant, articulate, libertarian legal scholar who explains why the mainstream notion that intellectual property spurs innovation is wrong.  He dives in by telling us why IP laws are simply government-issued monopolies that actually impede innovation.  He then explains why removing IP laws would make us more prosperous, and he closes out the podcast by discussing other innovative ways creators can profit without protectionist laws.  As always, we’re building a community around Mentally Unscripted, so share this episode with your friends and interact with us at MentallyUnscripted.com.  And remember, the conclusion you reach is less important than the process you followed to get there.

00:01:35

All right, everybody, this is Episode 55 of Mentally Unscripted, and this is a very special episode because I never thought in my entire life that I would be outnumbered by Stephans, and yet I am here.  I’ve got two Stephans on the call with us.  First is Stefan cohost.  Stefan cohost, how are you doing?

00:01:54

STEFAN: I’m doing well, can’t complain.  I feel a little bit of competition here with the name, but I’ll survive.

00:01:59

SCOTT GRAYSON: Awesome, and the other Stephan on the call or on the podcast here with us is Stephan Kinsella.  Mr. Kinsella is someone I am very thrilled to have on.  He is a libertarian legal scholar, a prolific writer, prolific podcaster, prolific podcast guest.  He’s all over the place.  I heard you, Mr. Kinsella—I don’t know—three or four years ago on the Tom Woods Show, heard you talking about how you’re an anti-IP attorney, and I just thought that was great.  I loved it, and also the director of the Center for the Study of Innovative Freedom, so happy to have you here.  Anything else to the—you want to add to the bio there?

00:02:40

STEPHAN KINSELLA: No, that covers it.

00:02:42

SCOTT GRAYSON: Awesome.  I wanted to have you on because I’ve been—like I said, I’ve been reading your stuff for a while, and I’m really interested in this idea of IP law.  Now, I’m an attorney, but I don’t know a lot about IP.  I know just enough to probably give people bad advice, and that’s it.  But I really like the idea—I’m really into the idea of how we can function in a society where we limit the amount of involvement of the state.  And I think IP law and the way that you’ve been writing about it and talking about it I think is an excellent way of showing people just how we can limit the reach of the state while still maintaining an orderly society and still allowing people to profit off of their hard work without us degenerating into some Mad Max-style, dystopian movie-type thing.  So let’s just kick it off for—I think, most of our listeners probably are not legal experts, so what is IP law just generally?

00:03:39

STEPHAN KINSELLA: It’s a specialty area of law, which includes patent law and copyright law and also trademark law and a few other things, which are not as well-known like trade secret and some other areas but primarily patent and copyright.  So patent is the type of law that gives inventors some kind of rights in their inventions, which are like practical processes or machines.  And copyright is a law that gives authors the rights in original creative works like novels or paintings or movies or songs, so that’s what IP law is.

00:04:16

And it originates in two statutes in the US, in the federal statutes, which were first enacted right after the Constitution was ratified in 1789, I think, around 1790 or ’91, the first two laws.  And they traced their origins back to some practices and statutes in Europe such as the Statute of Monopolies in Britan in 1623 and the Statute of Anne, and the Statute of Monopolies was kind of the origin of modern copyright law—I’m sorry—modern patent law.

00:04:47

And you can see even in the title, the British Parliament understood that patents were monopoly grants, which is one reason that we libertarians should oppose them, and the people that call them property rights are being a little bit dishonest and disingenuous.  And copyright comes from the Statute of Anne of 1710, and the purpose of that—well, that flowed from the attempt of the government and the church to stop people from printing works that they didn’t want them printing after the printing press came out.

00:05:18

So the origins of copyright are in censorship by the state and the church, and the origins of patents are in the grant of monopoly privileges by the state.  So they’re both rooted in total un-libertarian and unjust state practices and policies, so it’s kind of ironic that so-called advocates of the free market and private property rights support them under this label of intellectual property.  Originally, these laws weren’t called property rights at all.  They were never understood to be property rights.  Even people that were somewhat in support of them understood that they were derogations from the free market and private property rights and natural property rights.

00:05:56

But they thought they were necessary for a certain purpose like to incentivize innovation or something like that, but they were under no illusions that they were anything but a temporary grant of monopoly privilege by the state.  And when the free market economists in the 1800s started criticizing these laws saying, what the hell are we doing granting these monopoly privileges?  We should just get rid of them because they are contrary to the free market and private property rights and contracts and all this.

00:06:20

The defenders—by then, there had been entrenched industries that had grown up that were dependent upon these laws like the publishing industry, book publishers, and an increasing number of manufacturing industries depended upon patent laws.  So they said, no, no, no.  We don’t want to abolish these laws.  They’re not monopoly privilege grants.  They’re property rights.  And everyone said, well, how can they be a property right?  They don’t attach to any physical or tangible or material or corporeal, and they expire after 28 years or 14 years or whatever, and property rights don’t expire.

00:06:52

And so then the guys said, oh, well, they’re a special type of property right.  They’re intellectual property rights because they cover things that are created by the product of your intellect.  And just like you work hard on your farm to grow crops and you get the rewards—you get to reap the rewards of your labor and your efforts and your hard work if you also spend hard work coming up with a new machine design or a novel that pleases people or a painting, you should have a property right in that too because we should—the purpose of law I guess is to reward effort and to make sure people have the right to a profit, which, of course, is all nonsense.

00:07:31

The purpose of law is not to reward people or to give—even to give incentives, certainly not to guarantee that you have an income from your hard work because lots of times you work hard in the free market, and you make no profit.  You fail.  No one has a guaranteed right to a stream of income or to customers or to profit.  So the whole theory is flawed.

00:07:51

But anyway, that’s roughly what I—so IP law is basically intellectual property law, which includes patent and copyright, which are modern statutory schemes, which I think are in complete opposition to private property rights, competition, and innovation actually.  I think they actually stifle and distort and corrupt artistic creativity and practical innovation.  So they make us all poorer because they reduce the amount of innovations that we have, which is really what has made us richer in the last 200 years is the accumulation of technological knowledge.  And if patent law distorts that or impedes it, it makes us more poor.

00:08:30

SCOTT GRAYSON: So how does patent and copyright impede innovation, restrict creativity?

00:08:36

STEPHAN KINSELLA: Well, let’s take copyright first.  So copyright—I won’t say copyright makes us more poor because copyright is about artistic creation.  In my view, patent law is worse because it harms the human race in a more material way, which we’ll get to in a second.  Copyright is worse in another way because it lasts for longer in today’s law.  Originally, they both lasted about 14 years.  And then patent law gradually changed, morphed to about 17, roughly, years.

00:09:03

Copyright was 14 years, and you could renew it once for up to 28, and the idea of the 14-year term originally was based upon this arbitrary idea that if you’re an artisan and you’re a skilled artisan, and you make something and you have these apprentices.  And these apprentices have seven-year terms, so when your apprentice becomes free to go out and compete with you, he can use your ideas and compete with you.  So the idea was, well, let’s give the artisan two apprentice terms of breathing room so he can be free from competition for up to two apprentice terms.  I mean, it’s totally arbitrary, but that’s where it came from.  But over the years, the copyright lobby has gotten stronger and stronger, especially in the 20th century with the music industry and the movie industry.

00:09:49

And they’ve lobbied over and over and over and over again to keep extending the terms, and then we joined the Berne Convention, which is an international copyright treaty, in the 1980s.  And basically that made copyright easier to get.  It made it to be automatic.  You don’t have to file—most people that talk about copyright don’t know what the hell they’re talking about.  And this especially annoys me when they’re in favor of it, and they don’t even know what they’re talking about.

00:10:12

They don’t even understand the law that they’re in favor of.  They don’t understand the difference between patent and copyright and trademark, which I understand.  They’re complicated.  But if you don’t know what you’re talking about, don’t speak in favor of it.  So copyright is now automatic, so people say, well, hey, Kinsella, you’re a hypocrite because you copyright your own works.  It’s like, you don’t know what the hell you’re talking about because I don’t copyright my works.

00:10:32

No one copyrights their works because ever since the Berne Convention it’s automatic.  As soon as you write something down, you have a copyright that the federal government grants you whether you want it or not.  You don’t have to apply.  You don’t have to put a copyright notice on it.  You don’t have to register it.  It’s just automatic.  And you can’t even get rid of it.  It’s basically inalienable.  There’s no way to get rid of it easily.  So when people blame people like me for hypocrisy for having copyright, that’s like saying, hey, Kinsella, you’re a hypocrite for opposing taxes and being subject to the tax laws.  It’s like, no, I’m against the tax laws.  I can’t help it that I have to abide by the tax laws because they’ll put me in jail if I don’t.

00:11:06

In any case, copyright lasts right now for the life of the author plus 70 years, which is over a century in most cases.  And also, copyright, what it does is it distorts culture because it makes people do things that they can do, and it makes them avoid things they can’t do.  So like remixing or reusing things or like if I wanted to write a sequel to a novel, I couldn’t do it.  The court could give an order and block me from doing it, like they did with the Catcher in the Rye sequel, or if there was a sequel to the Star Wars movies, you couldn’t do that without permission.  Courts would ban that.  The courts banned the movie Nosferatu, an early black-and-white movie, because it was held to be a derivative work of the Dracula novel by Bram Stoker.

00:11:52

So actually, copyright law literally leads to the banning of books and art, which facially violates the first amendment, which says Congress shall make no law abridging freedom of the press, and copyright law clearly violates freedom of the press.  And my view is that means copyright law is unconstitutional because the copyright law is based upon the copyright clause in the 1789 constitution, but the Bill of Rights with the first amendment was enacted in 1791 by a different congress.

00:12:21

And to the extent that there’s conflict, then the later provision always governs under legislation and constitutional interpretation.  And the Supreme Court has actually recognized that copyright law and the first amendment are in tension, they call it, or in conflict.  But instead of saying, well, that means that copyright law has to fall to the extent that it violates the first amendment, they say, well, we have to balance them.  So everyone says that America has strong first amendment protections and that you need a compelling government interest to violate first amendment rights.  That’s not the case in copyright.  So you need a compelling state interest, or you need a copyright law, I guess.

00:13:02

So copyright—it reduces the amount of remixing and artistic works that would involve copyright, and so copyright impedes the—some documentaries can’t be made, or they have to be cut because they have photographs or pictures of buildings or people’s faces or works.  So it totally hampers artistic creativity and distorts it.  I would say it distorts it.  Also, it’s being used now as a threat to internet freedom because the internet is the world’s greatest copying machine, and so there’s rampant piracy.

00:13:34

And so you have all these six strikes and—six-strikes laws and the Digital Millennium Copyright Act and various websites are taken down all the time.  YouTube videos—I think there’s a million YouTube videos taken down every month or every three months or something because of robotic—automatic robot takedown notices claiming copyright infringement.  And even if it’s not an act of copyright infringement, the YouTube and Google have to take it down because, if they don’t take it down, then they lose the safe harbor of the DMCA, which would otherwise mean that they are subject to contributory copyright or secondary liability for the infringing acts of their users as if they were a publisher, and they would just be shut down.  So it’s led to literal censorship.  Millions of YouTube videos are taken down all the time because of copyright, and websites are taken down all the time by the federal government.  Go ahead.

00:14:26

STEFAN: So a question about that just to make this really concrete.  I think someone who doesn’t have a perspective on this who’s just kind of raised in this system that hears patents are good.  They protect the individual creator, same with trademarks.  Maybe an example of something said like, well J.K. Rowling writes this book, Harry Potter, and someone else gets a copy of the transcript.  And they have better relationships to publishers.  Can they now go and get this published and reap all the rewards where they basically write an equivalent book word for word, and they have a—I mean, I guess that’s just photocopying, right?  But is that a material concern?  Are they thinking about it?  I sense they may be thinking about it the wrong way.

00:15:21

STEPHAN KINSELLA: Well, I think it’s a mistake.  I have a talk I did a few years ago.  It’s called something like Locke’s Big Mistake, like it was a mistake from the very beginning.  It was basically the labor theory of value and the labor theory of property, which I think have corrupted the entire world of political philosophy and legal philosophy.  John Locke’s argument, which is roughly right in its conclusions, is that if there’s an unowned resource in the world, which is a type of thing we use as a means, a scarce means of action, a thing over which there can be conflict, which is a rivalrous resource—a physical object or a piece of land or your body, we have property rights in those things to settle who has the right to control it.  That’s what property rights are.

00:15:59

And the two primary rules that we determine who owns a resource when there’s a dispute is original appropriation or first use, like who owned it first, who started using it first because the first user has a better claim than late-comers.  That’s what property rights mean, that the existing owner can’t be ousted by someone that comes later.  And the very first user has to have a better right than a second person because otherwise no one would be able to use resources in the world that were unowned in the first place.

00:16:25

So sort of like Mises’ regression theorem for money.  You have to go back, and there has to be a right to use things that are unowned because no one owns it, and so they don’t have a right to complain if you start using it.  And if you didn’t have that right, then we would all die.  So people have to have the right to use things, and once you use it, you’re the first owner, and you have a better claim than a late-comer.  So that’s original appropriation of Locke.

00:16:45

And then the second principle would be contract.  If you’re the owner, then you can give it to someone else by contract.  So just those two principles alone basically can tell you who owns everything.  I mean, that’s all you need.  But people assume that creation is one of those principles because they say, well, if you create something, you’re the owner.  And the reason they say that is because of Locke’s argument.  He says, well, you own your body because God gave it to you, and therefore, you own your labor because that’s what your body does.

00:17:09

And therefore, if there’s an unowned thing in the world and you mix your labor with it like by transforming it or putting a fence up or building a farm or whatever, then you have mixed your labor with that thing, and you own your labor as a substance like.  And if you don’t own the thing you mix it with, you would lose ownership of your labor because they’re mixed in together.  So the presupposition there or the metaphor is that labor is a thing that you—it’s a substance that you own that exudes from your body and that you own and that goes into other things, and you maintain ownership of it.

00:17:42

And that is like a completely non-rigorous, confusing, and false metaphor, and it’s very similar to Marx, Adam Smith, Ricardo, Karl Marx labor theory of value, which is that the reason objects have a value, and it’s sort of an objective or an intrinsic value is the labor that the worker put into it, which is what underlies the communist idea that employers are exploiting their workers if they make a profit because they’re taking some of that surplus value of the labor.  And the whole thing is all confused.  So I think that what you said earlier, it’s like copyright protects the creator.

00:18:18

It does protect the creator, but what does it protect him from?  It protects him from competition.  But the natural free market, libertarian, private property state of affairs is this.  You live in a world, and if you have private property rights, no one has the legal right to use a resource that you have a right, and that’s a scarce resource.  And you can determine that right by those two principles, by original appropriation or first use, and contract.

00:18:42

So if you have a resource that you bought from someone who owned it or that you found yourself and transformed it, then you’re the owner, and that’s it.  But if you have information that guides your actions that you find useful, like you know how to grow crops; you know how to raise animals; you know how to build a house or build a farm or make machines or devices that you sell to people.  You know how to do this.  This is useful knowledge.  You can keep the knowledge to yourself if you want to.

00:19:09

But sometimes you might need to reveal it to the world.  If you write a novel, you’re not going to make any money unless you sell it, but when you sell it, you’re telling people, hey, here’s a useful combination of words that you might find pleasing.  Or if you tell them, I discovered oil over here, or here’s how to make a log cabin, if you tell people that or if you show them how to do it by building a log cabin that’s publicly visible or you start selling the logs to make log cabins, you’re revealing information to people.

00:19:34

So when you reveal information to people, you can’t complain that they use that information.  This is how the human race advances, by people learning things from observing other people or hearing other people say things.  So basically copyright and patent protect the creator of useful knowledge from competition, but you don’t have the right to be protected from competition because competition just means people see what you do, and they emulate it to some degree, or they learn from it and make an improvement, or they may copy it exactly.  But in either case, they’re only doing it because you chose, by your actions, to make this information public, and once you do that, you can’t complain.

00:20:10

But just to quickly circle back to the earlier thing, and then if you want to ask me about either one of these.  I mentioned copyright is problematic because it distorts culture, and it censors speech, and it also is a threat to internet freedom, which is a problem for libertarians because the internet is a great tool we have to fight state surveillance and state laws, to spread information about what the state is doing.  And so anything that restricts internet freedom is a problem for libertarians, and copyright law does that because it prevents people from saying what they want to say quite often.  Patent law I still think is worse even though it doesn’t last as long because it actually impedes innovation.  It impedes innovation because let’s suppose you come up with a useful machine or process, and then you apply for a patent.

00:20:51

And by the way, no one does this because of patents.  They just do it because they need to solve a problem or to make a better product.  But then once they have the right to apply for patent, they do it because once they get that patent, they can use that to stop people from competing with them for 17 years.  So once you have a useful new product and you have a patent on it, your incentive to keep improving is reduced because you have no competition for 17 years.  So your innovation goes down because you can just charge monopoly prices for 17 years and get monopoly profits, so you don’t have as much of an incentive to keep innovating.

00:21:24

And by the same token, your would-be competitors never come to existence because they don’t bother to take your new mousetrap or your new plough or your new printing press or whatever it is you have a patent on, a phonograph, light bulb, whatever, airplane, genetically altered seed, whatever, because they can’t sell that, and they can’t—so they don’t bother to learn how to do it, and they can’t make an improvement because the improvement would also, in most cases, be covered by the patent.  So it reduces the amount of innovation by would-be competitors as well.

00:21:54

So the original inventor, his innovation is reduced, and his competitors don’t compete as much, and therefore, they don’t innovate as much in his space.  So there is no doubt that innovation is reduced by the patent system, and it is also distorted.  It’s distorted because you tend to innovate in areas where you can get a patent on it, that is, practical gizmos, but you can’t get a patent on laws of physics or mathematical theorems because they’re too abstract.  So the incentive to do those things is relatively reduced.  So it distorts everything.

00:22:24

So when you distort innovation and when you reduce innovation, you reduce the cumulative knowledge that we accumulate as a human race over time.  And that knowledge is what makes us more efficient at using the scarce resources at our disposal.  And that is what makes us richer, learning more and more ways to manipulate the world.  It’s not that—we’re not richer now than the Romans were because we’re smarter.  We’re probably stupider because of welfare and the evolutionary—the idiocracy effect.

00:22:55

But we have more technological knowledge that has cumulatively developed that we can—we have at our disposal.  I think that’s why we’re richer.  So anything that slows down the pace of the increase of human technological knowledge impoverishes—relatively impoverishes the human race.  Who knows?  If we hadn’t had patent law for the last 100 years, we might have flying cars by now and Mr. Fusion DeLorean cars in our garages.  But we don’t know because that has been killed by the state.  It’s the unseen cost of state regulation.  But anyway, go ahead.  I’ll let you guys.

00:23:27

SCOTT GRAYSON: So how would you respond to the argument though that without intellectual property protections, we wouldn’t have any—there would be no incentive to innovate in the first place?  So any reduction in innovation that comes from these laws is just a tradeoff we have to make to get the original innovation in the first place.

00:23:47

STEPHAN KINSELLA: Well, several responses.  One response is, first of all, it’s not an argument.  It’s just a question posing as an argument.  It’s a loaded question.  And the assumption of a loaded question is that even though—even if they acknowledge my claim that there’s obvious distortions and impediments to innovation and mammoth costs to the patent system, let’s say—lawyer’s fees like mine and lawsuits and increased insurance costs and all these kinds of things because of lawsuits, hamper free trade because of the International Trade Commission blocking imports because they violate patents, all those kind of things.  Then what they—their comeback is, yeah, but the patent system also makes some innovations possible because some innovations you couldn’t recoup your costs because of the competition.

00:24:35

So now you can because you have—you can recoup your costs because you charge a monopoly price for 17 years.  So what they’re saying is, okay, yeah, we reduce some innovation, but we have more innovation on the other side.  But then they would have to argue that the difference is still positive.  Like we impose $75 billion of net loss on the economy because of lost innovation.  But we have $88 billion in increased innovation, so the net is $13 billion, so we’re all better off.

00:25:04

Well, they’d have to come up with these numbers and prove it, which they never even attempt to do and which is impossible to do if you’re an Austrian economist who believes value is subjective and not interpersonally comparable.  But—and not only that, all of the evidence is in my favor, so it’s just a net loss overall.  But the fundamental argument is that the purpose of law is not to give these incentives because there’s no end to that.  The purpose of law is to do justice by respecting property rights.

00:25:31

You lay the ground rules for who owns what, and then you let people compete and innovate and interact with each other on a commercial and non-commercial and civil society and scientific and artistic basis however they want.  And whatever happens is what happens in society.  The purpose of law is not to sit there and have some committee analyzing the market for market failures where the market, a pure free market that doesn’t have these artificial incentives breaks down and has an underproduction of innovation, and we’re going to tweak the market by fixing this, by having the government grant these monopolies, which we can never measure anyway.  The whole thing is ridiculous.

00:26:07

If you really believe that the whole purpose of law is to maximize innovation, then we should tax people at 98% and reward innovators with a prize every year.  I mean, there’s no end to how much because let’s say that they’re right that we have X innovation without patents.  And, by the way, no one can, with a straight face argue there’s zero innovation without patents or zero artistic creation without copyrights because there’s always been innovation and artistic creation throughout history before these modern laws.

00:26:34

There would all—and their argument is not that.  Their argument is that you have no creation without IP.  Their argument is you have—you won’t have enough.  So they have in their mind that the free market would have some innovation, but there’s an optimum amount that’s above that and that we’re—so the market is suboptimal.  There’s market failure in effect.  And so what they’re saying is if you introduce these artificial government grants of monopoly privilege, you can raise the natural amount of innovation up closer to the optimal amount, something like that.  They have no evidence for this whatsoever, by the way.  This is just their theory.

00:27:09

But even if they’re right, then the amount of innovation you have incentivized with your patent system still might be suboptimal because their might still be some pharmaceuticals that you could—that would take $10 billion to produce that you still can’t recoup even with a patent monopoly for 17 years.  So the government needs to give you $10 billion on top of that.  There’s just no stopping point to this logic.

00:27:32

Or put it this way.  Instead of having a 17-year patent term, why don’t we make it 38 years?  Let’s double it, or let’s triple it, or let’s make it infinite, or let’s make the penalties not be merely the payment of monetary damages.  Let’s make it criminal like copyright law is criminal.  You can go to jail if you download—or if you upload a movie onto the internet.

00:27:54

Some guy went to jail for a year for uploading the Wolverine movie a few years ago.  I mean, there are criminal penalties for copyright.

00:27:59

So why not have—there was a grad student in Britain, Richard O’Dwyer, several years ago who had a website with hyperlinks to pirated copyright material.  He didn’t post them himself.  He just had hyperlinks, which is basically giving people information saying, hey, if you want to find pirated information, you can go to this website.  And the United States tried for several years to extradite him to the US to face federal criminal—to go to federal prison in the US.  He was a grad student.  His life was ruined.  He was fearing going to prison in America for just having a website.  I mean, it’s insane.

00:28:34

So the point is you could have criminal punishment for patent infringement if you really want to incentivize innovation, and why not—why just criminal punishment?  How about capital punishment?  You could execute people for doing it, which, by the way, was done in France.  When people would have buttons that weren’t approved, they would torture them to death.  I mean, IP law is a serious thing.  So that’s another issue.

00:28:58

STEFAN: I was thinking the real crime is that he was hosting Wolverine and not a better movie, but I guess we can move beyond that.

00:29:04

STEPHAN KINSELLA: No, you’re confusing—Richard O’Dwyer was hosting links.  There was a guy in America who uploaded the Wolverine movie.

00:29:13

STEFAN: Okay, but that’s—if it had been The Godfather, maybe that year would have been worth it.  The other thing I was thinking about, the equivalent of having the hyperlinks is the equivalent of being somewhere and saying that’s the neighborhood that you go to if you want to buy drugs.  That’s—I mean, maybe with a few more instructions, but that’s the analog.

00:29:33

STEPHAN KINSELLA: Correct.  That is an analog.

00:29:35

STEFAN: It’s pretty insane that someone—I mean, you go to—like right now in San Francisco, I see—everyone can tell you if you want to go get high and get crazy, you go to the Tenderloin, right?  No one is thinking you’re going to arrest them for sharing that information.

00:29:48

STEPHAN KINSELLA: No, although there are some laws that outlaw drug paraphernalia and things like, so even things that are not themselves illegal, if they’re too much of a causal factor in people doing things that the government has also arbitrarily made illegal.  Look, for copyright, the law has evolved in the Supreme Court so that there’s a certain amount of fair use so that suppose you licensed a copy of a movie or a song, so you have a licensed copy, so you’re not infringing copyright.  But you want to make a backup copy at home.  This is back in the old days before streaming.  You want to make a backup copy.

00:30:27

Some court decisions say I think it’s established law that if you make a personal, private backup copy for noncommercial use just as a backup because you already paid for it, that is not infringing copyright, although it’s technically a copy, but it’s a fair use.  It’s called a fair use.  However, the DMCA said that if a copyright holder embeds digital rights management copy protection in the medium that they sell like a DVD, a Blu-ray for example, and it’s designed to prevent people from copying things.  Even when they have the right to copy it under fair use—it’s designed to do that—if you sell or buy a device like a computer that can circumvent that copyright protection mechanism, the DRM, that itself is illegal even if using it would be legal.

00:31:17

So it’s like the paraphernalia, which would be the anti-circumvention.  And, by the way, that used to be a specialized piece of hardware perhaps, but now it’s just a computer.  Maybe it’s an iPhone because they’re so smart now.  So any general-purpose computer is basically illegal because it could be used to circumvent DRM.  The absurdities that come from copyright and patent law, because they are not objective and they attempt to give rights in things that cannot be the subjective of property rights, which is information, they’re—it’s like when you divide by 0 you can get any result.

00:31:47

If you make information illegal—I’m sorry—if you make information ownable, then you’re necessarily going to get absurd results, which is what annoys me is when people object—they sort of take my side and they say—or they don’t take my side, but they say, oh, we agree with you, Kinsella.  We need to reform patent and copyright because there’s all these abuses.  No.  There are no abuses of patent and copyright.  The law works as it’s supposed to work.  It’s just that the law is inherently absurd.  Every good—the best possible example you can give me of a patent or a copyright is itself still absurd in my view.

00:32:19

STEFAN: So is it fair if I was just going to be layman’s simpleton kind of expressing this, the principle is that the creation of these new works and this identification of new knowledge is not actually property.

00:32:33

STEPHAN KINSELLA: Well, I would be more precise about it.  I think the word property, technically speaking, should be restricted to the relationship between a human actor or a person and a resource.  So if I have a television, people say that’s my property.  But the right way to say it is I have a property right in the television.  It’s not property.  But you know what I mean.  And the reason is once you put it the way you put it, then people start asking the question, hey, are you saying that ideas aren’t property?  No, I’m not saying ideas aren’t property.  I’m not saying a television is property.  What I’m saying is a television is a type of thing over which there can be conflict and dispute.

00:33:11

And so property rights are assigned in those things to avoid the dispute or the conflict, to make conflict be avoidable.  I would say there are certain things that we can identify with our concepts and our words in the world that are just not the types of things in which there can be property because a property right is always enforceable by a law.  The word “enforce” is in there—force.  Physical force means the legal system and human actors can use physical force to grapple with and to control and to sanction and to try to stop these things.  Force can only be applied to physical things in the world.  These are causal actions against causal things.

00:33:44

So all laws are always applied laws that are enforceable by physical force, and physical force can only be applied to tangible, scarce, rivalrous things, the things that can be owned.  So it’s nonsensical.  You literally—it’s not that I think that it’s wrong to have a property in an idea.  It’s impossible to have a property right in an idea because the law can only affect things that it can affect.  So, for example, if I have a copyright, I don’t really have a copyright—I don’t really have a property right in an idea.  Rather, the notion that I should have some protection over my ideas is the motivation for the law.

00:34:18

But the law itself is really a property right in other people’s physical stuff because I can use my copyright to get a court order enjoining someone from using their factory to print a book.  So I’m really being given by my property right a property right in other people’s ink and paper and printing press, which I never—it’s a transfer of property rights from them to me.  So the problem with it is that now the property right in that printing press is being identified not by the two principles of original appropriation and contract but just by government decree.  It’s the government decree of a negative servitude or negative easement.

00:34:55

And a negative easement, which is when one person has a veto right over how you can use your resources, perfectly legitimate if it’s done consensually by contract.  This is the basis of homeowners’ associations or restrictive covenants.  Like I can grant my neighbor the right to keep me from using my house as an airport or a pig farm or something like that or painting it orange because I gave it to them.  But just like a girl who consents to sex is not being raped, but if she doesn’t consent, she is.  Consent is what makes the difference.

00:35:25

So if I consent to this right over my property, like I grant it by contract, it’s fine.  But in patent and copyright, the government just grants that negative easement to my neighbor or to some other guy who files a paper with the government saying I came up with this idea first.  The government gives them a negative easement over everyone else’s property even though those people didn’t consent to it.  That’s the fundamental problem with patent and copyright.

00:35:46

STEFAN: So Scott, I know we have a lot of other questions, but I have one that’s very future-facing.  Can I explore it?

00:35:54

SCOTT GRAYSON: Yeah, keep going.

00:35:55

STEFAN: So I think there’s certainly an idea—I’m imagining your solution to this would be to abolish these rules, these laws.  Is that fair?

00:36:07

STEPHAN KINSELLA: Absolutely.

00:36:08

STEFAN: There is no replacement.  It’s just take them out.

00:36:10

STEPHAN KINSELLA: Yeah, especially patent and copyright because they are purely creatures of statute.  They didn’t evolve, and they could not evolve on the private common law like trademark did.  I would abolish trademark law too, but it did evolve on the common law based upon a similar mistake, by the way, the idea that you can own a reputation, which is the idea behind defamation law, which we also would abolish.  But patent and copyright, yes, I would abolish them.

00:36:30

Look, there are some government programs that you could make an argument that we shouldn’t abolish them immediately because of the repercussions like, for example, I don’t know, the Federal Reserve or maybe social security or something like that.  But some laws, there’s nothing redeeming about it whatsoever like the drug war or IP law.  And, by the way, I would put patent and copyright law up there with the other five or six evils that libertarians always point to as being the worst things the state does like public education, welfare, the drug war, war itself, and the central bank and inflation and Federal Reserve, that kind of stuff.  Patent law is up there because it does impoverish us.

00:37:14

STEFAN: So—and this is where I’m thinking about this.  So I imagine a world, and if you just bear with me for a minute, you have a system right now which incentivizes the enforcers of said laws not to repeal them, right?

00:37:28

STEPHAN KINSELLA: Correct.

00:37:29

STEFAN: And so where could that change?  You could imagine a benevolent actor or set of actors are able to take over.  Maybe there’s a set of other type of scenarios.  But one—if I could just explore one that I think is going to be happening sooner rather than later is what do we do about the works that are created by machines directed by actors?  Because, for example, I was coming across a service that does—it uses machine-learning technology just to create brand new songs.  Well, that, in theory—if you—let’s say you harness all of the cloud computing power out there and you just set it in a direction for 30 days and said create every single song you could ever imagine.

00:38:14

It could, in theory, create most of the works that are going to be created by humans in many different ways over the next so many years.  And if it’s already given protections, would that computer have developed—created a bunch of stuff that’s already protected, now the humans who are theoretically coming up with new stuff.  So there’s an explosion of content created by machines to the point everything is copywritten to the point where you’re constantly having to deal with this conflict.  Does that force our lawyer—the law system to change?

00:38:47

STEPHAN KINSELLA: Well, so I think what’s happening is that, like I said, if you divide by 0, anything is possible.  And when you have these laws, which are unnatural, you’re going to have absurd results, and this is—as technology develops, you’re going to have answers that are—things that are unanswerable and that the law even—there’s—the answer a court is going to give is going to be arbitrary.  So they’ve slowly dealt with some of these things.  Originally, the question was is photography, for example, an artistic creation?  Because you’re just recording facts.

00:39:15

You’re pointing a lens at something, and you’re recording facts.  Over time, they said, well, the photographer has a certain skill, the way he aims it, the way he lights it, whatever.  But that’s led to absurd results.  For example, there are some famous photographs, and photographs are covered.  And, by the way, the photographer is the author of the photograph, which means if you hand your camera to a stranger or your phone to a stranger at Disney to take a picture of you and your family, the stranger owns the copyright.  So you, theoretically, can’t even copy it anymore without getting his permission, and you don’t know who he is because he’s long gone.

00:39:47

SCOTT GRAYSON: Can we demand the phone from them then and say I’m keeping your phone because it’s got my copyrighted material on there?

00:39:53

STEPHAN KINSELLA: I think you would say he’s giving you an implicit license to get your phone back and to have the photograph he took, but what the license terms are, who knows?  But there was a case where there’s a famous photograph.  Some guy went to the Grand Canyon, and he took a shot, which is a famous photograph, and if you—and everyone wanted to make prints of it, but they had to pay royalties to do that.  So some guy went to the Grand Canyon on the same day of the year or the same weather conditions, the same exact spot, the same framing.  He took his own photograph, and that was held to be copyright infringement.

00:40:26

It was held to be a derivative work of the original photograph even though it was its own original photograph.  So is that the right answer legally?  There is no right answer because the law is not—legislation is usually non-objective, and it doesn’t make any sense.  It’s always absurd.  And you’ve had these cases where someone—some ape—I think a Macaque or whatever this ape was, a few years ago stole someone’s camera and took a bunch of selfies.

00:40:49

So the question is, who owns the copyright, or is there a copyright in it?  Or if you have a surveillance camera outside your 7-Eleven, I mean, who’s taking that?  Because you can say, well, the guy who placed the camera is doing what a photographer does, or if you throw these cameras—there’s these three-dimensional cameras, not three-dimensional, but they have—that steers, right?  You throw them up in the air, and it takes a picture.  I mean, it’s ridiculous, right?  Or what about NASA satellites?  They’re up in outer space, and they’re taking pictures.  The government owns them.  Plus, they’re an international—outside of international.  They’re up in outer space, and there are outer space treaties, by the way, that deal with copyright, which is ridiculous.

00:41:22

And when it comes to AI, things like that—in fact, there was a stupid stunt pulled a few years ago by this—I think Damian something.  I’ve got it on my website.  What they did was they had a supercomputer generate all the possible melodies within a certain set of parameters like eight-note melodies with a certain bit resolution, so they have 17 petabytes of songs.  And within there is basically every new melody anyone could ever think of in the next 50 years, and it’s like—but the problem is that stunt proved nothing because, for patents, you can’t get a patent if there’s an invention that is already well known and publicized.

00:42:06

So if you could have an AI generate every possible invention and publicize it, maybe that could anticipate every invention and make patenting obsolete.  But for copyright, you don’t have to be the first originator of something.  It’s just that if Ayn Rand writes Atlas Shrugged, no one is going to make the same—or Great Expectations or whatever.  It’s very unlikely someone will originally independently create the same thing, but if they did, they would have their own copyright in it.

00:42:33

So in the case where you have a machine exhaustively do these melodies and someone happens to independently come up with the same melody in their song later, they would not be blocked by that, so the stunt proves nothing.  In fact, they would be able to make derivative works, and they would be able to sell their own melody because they came up with it originally and independently, so it proves nothing.

00:42:56

Now, what I do think has happened is in the world, because copying has become so easy with digital technology and with the internet and torrenting and all this kind of stuff, piracy has become so rampant that copyright is almost impossible to enforce except on a big, institutional level like across CBS and HBO and the big media companies.  They have to abide by it, but any of us can go get a book or a song or a movie any time we want by going on the internet.

00:43:24

So basically, I don’t see copyright changing because it’s too entrenched, and the error that identified, this labor theory error, is so entrenched in everything we talk about.  It permeates all the law in the world and all the political thinking.  I don’t see it changing by legislation.  However, it’s being changed by technology.  And for patents, I do think 3D printing, if it ever matures to a point where we go from the dot matrix stage to the color laser printer stage equivalent of that 50 years from now, people will be able to print whatever devices they want in their own basement without anyone knowing because they’ll get the file from an encrypted server, the design.  So I do think technology is the only way to finally do it and run around these ridiculous laws.

00:44:08

STEFAN: So if I could summarize, these laws may just become completely unenforceable to the—and that’s kind of what you’re saying is already existing today at many levels of resolution.  Like with pirating, you can get it.  There’s some trepidation I have when I hear about companies trying to sequence genomes or do other types of processing, and then they want to put some protection rights about the work that they’ve done.  As a layperson, I kind of think that, and it does trouble me.  I’m going, well, if we’re going to have designed babies, am I going to have to buy a certain type of patent from somebody who just identified something that was already existing in there naturally?

00:44:51

STEPHAN KINSELLA: One of my friends is David Koepsell.  He’s not a libertarian exactly, but he’s kind of a—he’s an IP skeptic, and he’s a specialist on this.  He’s written some stuff on the dangers and the problems of patenting of genetic information, which is being done.

00:45:07

STEFAN: It’s terrifying.

00:45:08

STEPHAN KINSELLA: It’s a horrible danger, but these unnatural laws become—it’s like the drug war.  The drug war is hard to enforce, although that’s going after physical things, so they can do some damage.  The good thing about the informational realm is it’s harder and harder to police, I think.

00:45:26

SCOTT GRAYSON: So if we were to obliterate the IP laws, would you favor just leaving the void wide open and telling entrepreneurs…

00:45:32

STEPHAN KINSELLA: Yes, absolutely.

00:45:33

SCOTT GRAYSON: … to figure out how to profit?

00:45:34

STEPHAN KINSELLA: I would not be in favor of a grace period or a transition period whatsoever because I think it does nothing but destruction.  There’s literally nothing good about IP, and there are no good arguments for IP in my view.  The same thing with the drug war.  I mean, you wouldn’t favor a phasing out of the drug war.  For other things, you could argue whether there should be a phase out for public schools maybe, for America policing the oceans.  Maybe you don’t want the collapse to be worse than the problem but not for patent law.  I think patent and copyright do nothing but evil in the world.

00:46:05

SCOTT GRAYSON: So then you would just leave it up to the entrepreneurs and the authors and artists to figure out how to profit off of their works however they would?

00:46:13

STEPHAN KINSELLA: Which they’re having to do now, by the way.  Musicians can’t make as much money selling CDs and LPs like they used to.  They’ve gravitated towards other business models: merchandise or performances, concerts, streaming rights, crowd funding.  People have to be creative in the face of the realities of the world.

00:46:33

STEFAN: Can you clarify a point?  So let’s say the J.K. Rowling one—she writes this book.  If there were no property rights at all, would a studio then be able to create a movie?

00:46:46

STEPHAN KINSELLA: Yes, absolutely.

00:46:48

STEFAN: And she would have no say over that.

00:46:49

STEPHAN KINSELLA: Well, I don’t know if she’d have any say over it.  Maybe she would.  Maybe—I mean, I’ve posited—so, for example, she writes her first book.  She self-publishes her first Harry Potter book.  She doesn’t expect it to be popular, but hey, 20 million kids around the world read it.  All of a sudden, she’s popular, which is what happened.  So hey, she knows, and she makes 10 million bucks off of it, but then competitors swoop in right away, so her profits go away, let’s say, which I don’t think would happen, but let’s say that happened.  So now she knows she can write six more books and make lots of money, so she could do a pre-sale, like all my fans, you pay me 10 bucks each or 5 bucks each, and then I’ll release it or whatever, so she can make a lot of money that way.

00:47:29

So then let’s say the first book is so popular, and some movie studio starts to make a Harry Potter movie based upon her novel.  There may be two or three doing it at the same time because there’s a free-for-all.  One of them says, you know what?  We’re going to partner with J.K. Rowling because then she’ll give us the blessing.  And then her fans will go to the—we will sell more tickets than our competitors because we’re the authorized official version.  So they say, hey, J.K. Rowling, you be a consultant for us.  You review us, and you give us your input, and you give it your final blessing when you think we’ve done a faithful production of your book.

00:48:05

And we’ll release this saying J.K. Rowling, the original author, is saying this is the one that my fans should see, and we’ll sell three times as many tickets as our low-level competitors, and we’ll give you a cut of the ticket sales.  So she very well could have a say in the authorized production, and that could help them sell more tickets.

00:48:25

SCOTT GRAYSON: That’s basically the creator-endorsed mark.

00:48:30

STEPHAN KINSELLA: Exactly.

00:48:30

SCOTT GRAYSON: And so I actually read your older article.  I think it was from 2010 about the creator-endorsed mark this morning as I was going through and doing some research for this podcast.  And explain—I think this is really interesting.  You touched on it earlier, but explain how a creator could prevent a movie studio from duplicating their mark and misrepresenting to the public that the creator has endorsed the movie.

00:48:58

STEPHAN KINSELLA: Yeah.  So then you’ll have people say, well, if you’re relying upon this private, alternative, creator-endorsed-mark idea, then you need trademark law to back that up, right?  That’s the idea.  So, first of all, let me explain this.  When people say, tell me exactly how people are going to make money in a free society, it’s like—I mean, my first answer is I don’t know.

00:49:20

It’s like, in the Soviet Union, if you told people we need to get rid of government grocery stores and government-manufactured shoes and belts, and they said, well, how many brands of underwear will there be in a free market?  I mean, I don’t know.  Maybe there will be three, 10, 20.  I can’t predict exactly unless I see another free society.  I can guess based upon—but the point is you don’t say, well, unless you can predict exactly what a free society is going to look like, we’re going to keep the restrictions in place.

00:49:48

All we know is that restrictions are unjust and they’re causing distortion, and when you release them, things will change because distortions are real, and these laws have an effect, so things will change, and people will have to adapt.  So I don’t—I sometimes don’t like to answer these questions because these people want a guarantee.  They want me to say, well, I’m not going to favor the repeal of IP law unless you guarantee that every poet in the world is going to be able to make a living.  It’s like, well, I can’t guarantee that, and I don’t know how they’re going to do it.

00:50:13

It’s the same thing with welfare.  It’s like, when we say we should abolish welfare and the welfare state and says, well, can you guarantee that every poor child is going to get food and every poor child is going to get an education in this private education system you favor?  It’s like, well, I have some idea of how it will work, and we’d all be better off, and it’s unjust what we’re doing right now.  But I’m not going to give you a guarantee because that’s the whole point of the socialist system is you want guarantees.

00:50:35

And, by the way, the socialist systems don’t give a guarantee anyway because they always go bankrupt.  I mean, social security recipients don’t have a guarantee they’re going to get paid in 30 years.  The whole thing is ridiculous, right?

00:50:44

When you have socialized medicine, people have queues, and they die because they can’t get a heart transplant or whatever because there’s no guarantees in the world.  So my system can’t guarantee it either.  The creator-endorsed mark is just one—and the thing I gave you with Rowling is just one guess as to what might happen.  There are probably lots of other creative things people would do.

00:51:02

But now, back to your question.  Let’s suppose you did this creator-endorsed mark, or let’s just take the example I gave.  J.K. Rowling says, I’m going to give my endorsement to movie number one, and let’s say movie number two comes out, and they actually lie and they say, oh, we also have J.K. Rowling’s endorsement.  So that’s just a factual matter.  I mean, the world doesn’t need intellectual property law to know facts, which some IP advocates say, which is ridiculous.  If movie studio number two actually puts out this Harry Potter movie and says this is endorsed by J.K. Rowling, she’s just going to come online on YouTube and deny it, and they’re going to look like idiots.

00:51:41

I mean, this happens all the time with movies.  Like when you have a movie, they put the quotes of the critics up on the movie poster.  They’ll say, oh, Roger Ebert says this is the best movie ever.  Now, if a horrible movie came out and Roger Ebert gave it a zero-star review—now, he died a few years ago.  This is old.  Who’s a modern movie critic?  I don’t know.  I don’t know if there’s even movie critics.

00:52:02

STEFAN: The Critical Drinker on YouTube does some really good stuff.

00:52:05

STEPHAN KINSELLA: Okay.  The Critical Drinker says the new Jackass movie—I give it one star out of five.  It just sucks.  And then Jackass producers start advertising and saying the best movie ever by The Critical…

00:52:20

STEFAN: Critical Drinker, Critical Drinker.

00:52:22

STEPHAN KINSELLA: The Critical Drinker.  I mean, he’s just going to post on Twitter saying they’re fricking lying, and everyone is going to know that the movie is not only bad, but they’re dishonest.  It just doesn’t work.  You can’t—basically, people have the right to lie, and people have the right to listen to lies, but if you lie, you’re going to be caught.

00:52:41

STEFAN: Well, it makes—I constantly think about this idea that we solve solutions for 20th century problems, but we’re living in the 21st century.  What are the changes?  What are the dynamics?  I mean, to your point, Scott and I were talking offline about The Rock.  The Rock has a publication machine.  The guy has his own constellation of what he does for social media, and you can see what he does on Instagram to be promoting movies.  So when you hire him, you’re not just hiring him for the talent.  You’re not just hiring him for the PR.  He’s got this whole thing that he’s able to bring to whatever project.  Well, the same can go for the fact that any person on the internet allows you—unless you’re in places in which the internet is censored or more heavily censored than what we’re experiencing in the US.  They can speak directly to the audience.

00:53:31

STEPHAN KINSELLA: Correct.  Of course, of course.

00:53:33

STEFAN: They have the path.  And actually, what begs the question then, exactly I think the point you’re bringing up, is we don’t know what those systems could look like if you took off some of these barriers.  How would they evolve to where artists would have the mainline and where they would be able to speak?  I mean, the question comes up.  Hey, Lucas, did you make this other Star Wars movie?  I saw it, and it was garbage.  And he says, no, it wasn’t me, and I’m sorry you had to watch this terrible trash.

00:54:04

STEPHAN KINSELLA: But not only that, everyone would know people—all these fans would be out there.  There’d be websites talking.  Oh, there’s a new Star Wars movie coming out.  It’s not endorsed by Lucas, but let’s see if it’s any good, and it’s fan fiction or whatever.  People overestimate the role IP actually plays today.  So, for example, they mistakenly believe that it’s behind the social prohibition against plagiarism.  It’s not.  It’s got nothing to do with it.  In fact, for example, if you wanted to sell Moby Dick tomorrow under your name on Amazon, that’s not copyright violation because it’s out of copyright.

00:54:35

But no one does that.  It’s not a problem.  Why does no one do it?  Because it would be pointless because no one’s going to buy Moby Dick by Stephan Kinsella because they know I didn’t write it because there’s a social fact that people already know that Melville wrote it.  I mean, it’s just pointless.  And likewise, all these endorsements by The Rock and other people that happen right now, all these social media influencers, they’re just doing this as a phenomenon in the world.  It’s not protected by copyright or patent really or even trademark.  They just—they actually go online or somewhere and they say, I endorse this makeup product or whatever.

00:55:09

I mean, Oprah Winfrey has a book club, and she says, I recommend this book this month.  You could have someone publish a book tomorrow, and they could put on the back cover, Oprah Winfrey endorsed this book, and they could lie.  Well, why don’t—but that’s not a copyright infringement to do that, and it’s not a trademark infringement.  It probably is something.  She could find something to sue you for, but it’s not IP law.  It’s something else.  It might be contract breach.  It might be fraud.  It might be a right of publicity, which is a type of IP, which I think we should get rid of.  But the point is, it’s not a rampant problem that we have to combat, and when it happens on occasion, everyone knows it.  If you go to China and you buy a car that looks like a Mercedes, you pretty much know it’s not a Mercedes.  If you buy an iPhone knockoff, you know it’s not a real iPhone.  If you buy a fake Rolex for $35 in New York City in an alley, you know it’s not a real Rolex.

00:56:00

STEFAN: When the apple is upside down, you know that it’s not a real iPhone if you need markers.  Just be on the outlook.

00:56:08

STEPHAN KINSELLA: And people say things like, well, a trademark law, you could have people just—anyone can use the name of a—so let’s say you go to a grocery store and you buy Crest toothpaste, and it turns out to be knockoff Crest.  Well, you’ve got to buy it from some grocery store.  Let’s say it’s a Kroger, a big, national chain.  And it turns out that Kroger is supplying knockoff Crest.  What do you think is going to happen?

00:56:29

The word is going to get out.  People are going to quit going to Kroger, so Kroger has an incentive to only buy Crest toothpaste from the original manufacturer of Crest, not some Chinese knockoff.  I mean, these problems are not real problems because they’re just not real problems, and IP law doesn’t solve them now.  They don’t need to solve them now, and it wouldn’t solve it anyway.  So people come up with all these fake arguments for IP like, oh, so you must be in favor of plagiarism.  You must be in favor of fraud.  I guess it’s okay if I just take your intellectual property book and put my name on it and make a million dollars.

00:56:58

Well, it’s just retarded.  I mean, I didn’t make a million dollars off my IP pamphlet.  I made almost nothing because this is a—it’s just a stupid—I mean, nonfiction books don’t make that much money.  But if you could actually take my book and put your name on it and make a million dollars, please do so because I’d love to learn that technique.  Do you know what I mean?

00:57:14

STEFAN: I question—I think about places with what we could maybe call weak intellectual property rights.  I’m thinking about Africa.  You mentioned Asia and being able to go there.  But—so I grew up in Saudi Arabia, and this was in the ‘80s, ‘90s, and there was a lot of—you see some movies.  There’s Son of Rambo.  I’m not sure if you know that movie, but it’s like them recreating Rambo scenes as kids.

00:57:41

And then there’s these posters that you would see in restaurants.  There are these great ones in Egypt where it’s like Stallone standing up, but they’ve had to—because they couldn’t actually get the posters, they had to draw them out.  And everyone was always talking about this is a bad thing.  They’re not property rights.  We should have all the right posters.  But I guess a question I have is in areas like this where maybe the property rights aren’t enforced, do we see more creation, more creativity?  Africa comes to mind more than authoritarian regimes like you may see in Saudi Arabia where they would clamp down.  But do you see more proliferation of ideas?

00:58:21

STEPHAN KINSELLA: Oh, that’s interesting.  Well, probably not, but I would say that the west is a bigger innovator because of our wealth and our technology and our history.  People often say—the essential claim there is the fallacy of mistaking correlation with causation.  So the west is richer than the south or whatever you want to call the developing countries.  And we started getting richer with the Industrial Revolution around 1800, which is when the US started and when we started having copyright and patent laws.

00:58:55

So therefore, that must be the reason.  There is no doubt that we’ve had more technological innovation in the UK and in Europe and in America in the last 200 years.  But to say that it’s because of patent law is just assuming that there’s causation when there’s correlation.  I mean, there’s any number of things you could correlate.  You could correlate it with imperialism and with western colonization and with tariffs and with central banking and with having a war every ten years, which we’ve done for 200 years and with high taxation the last 170 years or whatever.

00:59:28

There’s no reason to think these things are the cause of that, and there’s every reason to think that we would have more innovation without it.  But, again, if you make justice your loadstone where the purpose of law is to recognize, identify, and enforce property rights to do justice so that people can live and navigate within this kind of stable system and then figure out their lives, that’s the purpose of law.  It’s not to just pick some arbitrary goal like, okay, the goal is to have everyone have a PhD in physics.  We could do—that could be our goal, I guess.

00:59:59

You could pick an arbitrary goal.  The goal is to have school vouchers.  Okay.  The goal is to land on the moon.  That was a goal.  The goal is to land on the moon.  Okay.  Or the goal is to only have 1.8 degrees Celsius global warming in the next 75 years.  You could pick whatever goal you want that’s an arbitrary goal that the government is going to bend and contort every law and every right to achieve.  But it could also be maximize innovation or optimize, but why?  Why not—why shouldn’t the goal be justice, which is the whole purpose of law in the first place?  And justice is giving someone their due, and their due depends upon what their property rights are.  The way we determine that is the classical principles of Locke.

01:00:41

SCOTT GRAYSON: Excellent.  I think that is a great example of how the market can manage all of this without the need for government being in the middle of everything, the market just essentially police itself.  So we’re a little over an hour here, and we committed to keeping it for an hour, so, Paul, do you have anything else?

01:01:01

STEFAN: No.  I thoroughly enjoyed this conversation and hearing these ideas I’ve read about in the past, but it’s great to hear an expert talk about it, so I really appreciate the time and everything you shared.

01:01:11

SCOTT GRAYSON: And that was just barely scratching the surface.

01:01:15

STEFAN: I’m sure.

01:01:15

SCOTT GRAYSON: So if people wanted to find out more about this topic about IP law and about your thoughts on it and why it’s a terrible thing and it destroys innovation and anything we talked about here, what are two or three places they could go to find out more information?

01:01:31

STEPHAN KINSELLA: Well, my general stuff is at stephankinsella.com, but I’ve kind of moved a lot of the IP—intellectual property stuff onto C4SIF.org.

01:01:39

SCOTT GRAYSON: Okay, and we will go ahead and link to all of that.  And anything else before we close out?

01:01:43

STEPHAN KINSELLA: No, that’s it.  I appreciate it, good questions, guys.

01:01:46

SCOTT GRAYSON: Awesome.  This was a real pleasure, really appreciate you being here.

01:01:50

STEPHAN KINSELLA: Thanks a lot.

01:01:50

STEFAN: Cheers.

01:01:51

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