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The “Austrian Economics Center,” which claims to advocate “the ideas of the Austrian School of Economics” and to promote “a free, responsible and prosperous society,” “has joined the Property Rights Alliance (PRA) in an open letter to WIPO Director Dr. Francis Gurry in support of strong protections for all types of IP”.

A letter from Barbara Kolm, the Center’s Director, announcing this, stated:

As we consider free markets and economic growth in Europe we must reflect on the importance of Intellectual Property (IP) rights. We strongly feel IP is key to fostering global innovation, creativity and competitiveness, particularly in today’s knowledge-based economy.

Risk is the lifeblood of creative and innovative economies. IP rights encourage entrepreneurs and creators to push for new advances and contemplate new creations in the face of adversity. Intellectual property is the engine of economic growth and competitiveness, and helps generate breakthrough solutions to global challenges.

In both the United States and European Union, IP-intensive industries support tens of millions of jobs and contribute trillions of dollars to annual GDP. For example, in the EU alone, IP-intensive jobs contribute to 26% of employment and 39% of GDP. Numerous studies have found that countries with strong IP protection programs have up to 13 times higher GDP than those that do not.

That is why we joined 85 think tanks and institutions globally in signing a letter to global leaders
 that articulates a framework and guidelines regarding intellectual property. As these issues are discussed in various forums around the world, these guidelines will be a helpful resource.

Advanced societies have long understood that by protecting the proprietary rights of artists, authors, entrepreneurs, innovators, and inventors, they are promoting greater public welfare. The continued protection of these fundamental rights is essential to global innovation, creativity and competitiveness.

The comment that “IP-intensive industries support tens of millions of jobs and contribute trillions of dollars to annual GDP” appears to be lifted from a ridiculous “study” by the Commerce Department that is transparently false and flawed—see USPTO/Commerce Dept. Distortions: “IP Contributes $5 Trillion and 40 Million Jobs to Economy”. As for her comment, “Numerous studies have found that countries with strong IP protection programs have up to 13 times higher GDP than those that do not.”—this makes the obvious error of confusing correlation with causation. (See Intellectual Property as a cause of American Prosperity?)

Also signing the letter are other supposed libertarian, free market, liberal, or Austrian groups, such as the F.A. v. Hayek Institute, Austria; Hayek Institute Romania; Ayn Rand Institute Europe (unsurprisingly); Libertarian Club Libek, Serbia; Liberty Forum of Greece; Italian Students for Individual Liberty; The Liberty Institute, India; Digital Liberty, USA; and many others.

To their credit, none of the Mises Institutes that are part of the Mises Global network, nor the Cato Institute, nor the Cobden Centre, signed this letter. Indeed, American groups seem under-represented on this list, perhaps because this letter concerns IP in Europe, and also perhaps because of the growing awareness over here among free market libertarians that IP is monstrous and utterly incompatible with liberal principles.

But it is especially distressing that the soi-disant Austrian groups (the Austrian Economics Center and the two aforementioned Hayek Institutes) are coming out explicitly in favor of IP, despite the fact that many prominent Austrians, such as Bohm-Bahwerk, Mises, Hayek, Rothbard, Kirzner, and Hoppe have expressed extreme skepticism or outright hostility to IP (or to the empirical/utilitarian approach implicitly being advanced here), plus a number of fellow travelers such as Plant, Machlup and Leonard Read. For example, see:

Intellectual Property is completely contrary to private property rights, free markets, competition, and liberal principles. All Austrian and free market/libertarian groups should strongly oppose IP, not promote it. If these institutions choose to be wertfrei that is fine, but then they should take no policy positions. Once they enter the field of making policy pronouncements they open themselves up to criticism in this arena. (On a slight tangent: as I concluded in New Rationalist Directions in Libertarian Rights Theory:

Under the three theories outlined above—argumentation ethics, estoppel theory, and the self-contradictions of rights-skeptics—we can see that the relevant participant in discourse cannot deny the validity of individual rights. These rationalist-oriented theories offer, in my opinion, very good defenses of individual rights, defenses that are more powerful, in a sense, than many other approaches, because they show that the opponent of individual rights, whether criminal, skeptic, or socialist, presupposes that they are true. Critics must enter the cathedral of libertarianism even to deny that it exists. This makes criticism of libertarian beliefs hollow: for if someone asks why we believe in individual rights, we can tell them to look in the mirror, and find the answer there.

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The Galambosians strike back

For Intellectual Property: The Property Ideas of Andrew J. Galambos,” by Richard Boren, was recently published in The Voluntaryist.

Many IP advocates get upset when you accuse them of holding the view that ideas are property—that they think there should be property rights in “ideas”. Nonsense, they say—they are only in favor of property rights in “logos” or “instantiated ideas” or “inventions” or “works of authorship” but the notion that they favor property rights in ideas is ridiculous, a straw man.

Not according to the Galambosian. He frankly admits: “I am in favor of treating ideas as property.”

***

A few comments. In Boren’s piece, he says: [click to continue…]

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How Henry Ford Zapped a Licensing Monopoly

Nice article in The Freeman (from 2001) illustrating the pernicious effects of patents. Here, a patent on an early automobile design was used by the Association of Licensed Automobile Manufacturers (ALAM) to restrict competition in the auto industry. For a related episode, see Boldrin & Levine’s discussion of “how the Wright brothers used their patents to try to block the emergence of a US aircraft industry. Interestingly, this pattern of behavior continued. In 1972 the US government charged the aircraft industry with an antitrust violation, basically because they kept using their patent pool and cross licensing to prevent entry. IP-inefficiency at its best.” (ch. 4, Against Intellectual Monopoly).

How Henry Ford Zapped a Licensing Monopoly

All Ford Wanted Was the Opportunity to Compete Freely in the Market

Melvin Barger is a retired corporate public relations representative and writer who lives in Toledo, Ohio.

More books have been written about auto pioneer Henry Ford than any other person in the car business. Though he had critics, the judgment of history is that he put the world on wheels with his famous Model T. But less well known is the fierce independent streak that led him to wage a lone and heroic battle for the right to run his own business. It was a struggle against the kind of people who think they should have the power to determine what’s best for the rest of us. They were private businessmen, but they were also smug social planners who counted on the assistance of the state.

One of the persistent delusions nourished by social planners everywhere is that elitists in high places can divine who will be the winners and losers in any developing industry. Sometimes called “industrial policy,” this was touted as the secret of Japan’s economic success until that country’s fortunes went sour in recent years. Whether done by government officials or private firms with policing powers, any such planning is a bad idea.

But we don’t have to go to present-day Japan for proof of such failure. [click to continue…]

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Killing people with patents

From the Against Monopoly blog:

Killing people with patents

Michele and I have long pointed out the human cost of pharmaceutical patents during the AIDS crisis in Africa (and were hardly the first to do so). Via Andy Neumeyer a new film documenting just how bad it was. Trailer here

See also:

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Great new article by Matthew McCaffrey in The Freeman, “Are Markets Ruining Video Games? Or is intellectual property the real culprit?” (May 12, 2015).

Capitalism is ruining video games. So says game producer Lorne Lanning, creator of the Oddworld series, who recently sparked controversy by blasting economic developments in the gaming industry.

Lanning blames “capitalism” for gaming’s recent financial and artistic troubles, especially its emphasis on commercial success over artistic creativity. His basic claim is the same one levied against the film industry: major studios have been squeezing out their smaller competitors, taking advantage of market dominance to produce an endless stream of big-budget, artistically uninspiring sequels and spin-off franchises.

It’s unclear what Lanning (or anyone, really) means by capitalism, but he seems to be condemning the largely corporate world of game design and marketing. For instance, he mentions bureaucratic corporate structure, the quest for constant growth, and the need to appeal to mass markets as problems undermining the industry. [click to continue…]

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Courtesy of Andrew Torrance, mentioned in his 2011 Open Science Summit talk,1 a quote from this book: Patents in the Knowledge-Based Economy, Cohen & Merrill, eds. (2003) (Google books):

There are theoretical as well as empirical reasons to question whether patent rights advance innovation in a substantial way in most industries. …The literature on the impact of patents on innovation must be considered emergent. One reason is that the effect of patent policy has many dimensions … and these continue to challenge scholars both theoretically and empirically.

Discussed by Torrance here. See also Yet Another Study Finds Patents Do Not Encourage Innovation; and Torrance and Tominlson, PATENTS AND THE REGRESS OF USEFUL ARTS.

In other words, people who say patents encourage innovation do not know what they are talking about and have no clear evidence to back it up.

This reminds of similar conclusions and comments by other researchers, as discussed here:

A hundred and fifty years after the first US patent law and the Founders’ “hunch” that copyrights and patents might “promote the Progress of Science and useful Arts2

As economist Fritz Machlup concluded, in an exhaustive 1958 study prepared for the U.S. Senate Subcommittee On Patents, Trademarks & Copyrights:

No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society. The best he can do is to state assumptions and make guesses about the extent to which reality corresponds to these assumptions. … If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one.” ((Fritz Machlup, An Economic Review of the Patent System 79-80 (1958), c4sif.org/resources; Fritz Machlup, An Economic Review of the Patent System 79-80 (1958); see also my post The Economist on the American Patent System. ))

 

 

And the empirical case for patents has not been shored up at all in the last fifty years. As George Priest wrote in 1986:

[I]n the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or of other systems of intellectual property.3

Similar comments are echoed by other researchers. François Lévêque and Yann Ménière, for example, of the Ecole des mines de Paris (an engineering university), observed in 2004:

The abolition or preservation of intellectual property protection is … not just a purely theoretical question. To decide on it from an economic viewpoint, we must be able to assess all the consequences of protection and determine whether the total favorable effects for society outweigh the total negative effects. Unfortunately, this exercise [an economic analysis of the cost and benefits of intellectual property] is no more within our reach today than it was in Machlup’s day [1950s].4

More recently, Boston University Law School Professors (and economists) Michael Meurer and Jim Bessen conclude that on average, the patent system discourages innovation. As they write: “it seems unlikely that patents today are an effective policy instrument to encourage innovation overall” (p. 216). To the contrary, it seems clear that nowadays “patents place a drag on innovation” (p. 146). In short, “the patent system fails on its own terms” (p. 145).5

And in a recent study, economists Michele Boldrin and David Levine, authors of Against Intellectual Monopoly, conclude:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless the latter is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. This is at the root of the “patent puzzle”: in spite of the [enormous] increase in the number of patents and in the strength of their legal protection we have neither seen a dramatic acceleration in the rate of technological progress nor a major increase in the levels of R&D expenditurein addition to the discussion in this paper, see Lerner [2009] and literature therein. As we shall see, there is strong evidence, instead, that patents have many negative consequences.6

See also Legal Scholars: Thumbs Down on Patent and CopyrightThe Overwhelming Empirical Case Against Patent and Copyright.

  1. See KOL101 | The Future (the End?) of Intellectual Property (Open Science Summit, 2011) . []
  2. U.S. Const., Art. I, Sec. 8, Cl. 8), there was still no evidence to back up this assumption. (( Eric E. Johnson, “Intellectual Property’s Great Fallacy” (2011): “The monopolies now understood as copyrights and patents were originally created by royal decree, bestowed as a form of favoritism and control. As the power of the monarchy dwindled, these chartered monopolies were reformed, and essentially by default, they wound up in the hands of authors and inventors.” []
  3. George Priest, “What Economists Can Tell Lawyers About Intellectual Property,” 8 Res. L. & Econ. 19 (1986). []
  4. François Lévêque & Yann Ménière, The Economics of Patents and Copyrights 102 (2004). []
  5. James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (2008, excerpts available at researchoninnovation.org/dopatentswork/). []
  6. Michele Boldrin & David K. Levine, “The Case Against Patents”  (June 29, 2012 draft; available at http://levine.sscnet.ucla.edu). []
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How can you be an anti-IP patent attorney?

I started practicing law in 1992, and patent and intellectual property law about a year later, in 1993, and became a registered patent attorney in 1994. Right around the same time, I also became anti-IP around that same time and started speaking and publishing about my anti-IP views around 1994–95.1

At first, I was cautious about revealing my views, as I thought it might hurt me in my career—with colleagues, bosses, or clients. I also thought that my status as a practicing IP attorney might add extra weight to the credibility of my arguments. I was mostly wrong in both. As for the former, it turns out that in over twenty years of being increasingly outspoken in my opposition to IP, I’ve yet to see any client or employer even notice or care, much less object. In fact my prominence on the political aspects of this issue has led to many situations where inventors or others contact me to ask me to do IP work for them. They know I’m against IP but don’t care; they assume I must know my stuff if I have articulate policy views about it. And some want a libertarian patent attorney, because they are libertarians. The only way it might have negatively affected my career is that I refuse to participate in the aggressive (offensive) enforcement of IP rights. But there are enough non-aggressive specialty niches in IP law that this self-imposed boycott is not a big deal: e.g., patent prosecution and counseling, licensing, trademark prosecution, copyright counseling, patentability opinions, and defensive patent litigation support.

I’ve also never noticed that people give my arguments much extra credence just because I’m a patent attorney. This could be because the field is so arcane and specialized that most laymen do not quite understand what it’s about. It also could be because I have always maintained that patent lawyers who are pro-IP have no special policy wisdom on IP, and that any intelligent person is just as able to form normative and policy views about this matter as the Inside-the-Temple “experts”. And I have always studiously tried not to “talk down” to laymen, or to “baffle with bullshit” by rattling off the minutae of legal details just to cow them or shut them up. I think my expertise has helped only insofar as it has helped me to be more aware of the way actual IP works so that my arguments are more legally precise, so that people reading my work don’t think I don’t even understand the system I am pontificating about (which often happens when I read the confused arguments of laymen in favor of IP).

In any case, over the years I keep getting a number of questions and criticisms, such as: “How can you be anti-IP if you are a patent attorney?” “Aren’t you a hypocrite?” “No client should hire you if you are anti-IP!” and so on. I’ve replied to these and others on a number of occasions, and when they recur, I usually repeat myself or find one of my previous replies. So here, I am collecting many of them into one location, in chronological order, so I can just send the link to this very post to people next time they ask! The most relevant ones are bolded.

  1. See Letter on Intellectual Property RightsIOS Journal 5, no. 2 (June 1995), pp. 12-13; also Intellectual Property Legitimate? (local copy), Winter 2000, Federalist Society, based on version previously published in Pennsylvania Bar Association Intellectual Property Newsletter 1 (Winter 1998): 3; Roderick Long: Bye-Bye for IP. []
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Planet Money: The Case Against Patents

Good episode of NPR’s Planet Money, Episode 551: The Cast Against Patents, featuring economists Michele Boldrin and David Levine, authors of Against Intellectual Monopoly and The Case Against Patents, and members of the Advisory Board of C4SIF.  Embedded below. From the shownotes:

Tesla, the electric car company, recently decided to, basically, give up its patents. Anybody who wants to is now free to steal the company’s ideas.

Elon Musk, the company’s CEO said he isn’t really into patents — and, he said, he thinks giving them up is best for everybody.

On today’s show, we take this idea to its logical conclusion. We talk to two guys who say we should get rid of patents altogether. If someone has an idea, anyone else is free to steal it.

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To the extent possible under law, Stephan Kinsella has waived all copyright and related or neighboring rights to C4SIF. This work is published from: United States. In the event the CC0 license is unenforceable a  Creative Commons License Creative Commons Attribution 3.0 License is hereby granted.