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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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What You Need to be Solid on IP

From a Facebook thread, in which I was pinged to explain how Rothbard erred on intellectual property–my comment, edited somewhat:

 

  • We stand upon the shoulders of giants. Rothbard was such a monumental figure and genius, and did so much for libertarian theory and to advance Misesian Austrian economics. Even so, there are some gaps in his framework, and a couple of missteps. I’d say the gaps include a fully developed rights framework (which he basically admitted in his comments on Hoppe’s argumentation ethics), and his lack of attention to and emphasis on the importance of scarcity to human action and property rights. Hoppe’s own focus on this feature is why Hoppe was able to easily see the truth about IP, without even much reflection, apparently, when it takes others (including me) several years to finally see the IP issue properly.

    Another thing is that most Misesians, somewhat surprisingly, even if they accept praxeology, mostly ignore the “knowledge” part of action, and they analyze only the “scarce means” or “economic goods” aspect–even though in praxeology these two factors of action each have deep significance: in acting, we are guided by knowledge of causal laws, in choosing which scarce means to employ, to achieve our ends. Both knowledge and the scarce means are essential to human action but most Austrians and economists focus on the latter only. Rothbard was no exception to this. If he had drilled down into the knowledge side of praxeology more deeply, perhaps he would have realized more easily that IP is incompatible with property rights: that property rights apply to the scarce means part of action but not to the knowledge/recipe part of human action. Ironically, some people do focus more on knowledge–Hayek, people like George Gilder–but they do so not from a praxeological framework, and therefore, this insight is not as easy to obtain for them. The insights about IP have to come from a combination of (a) praxeological awareness, (b) deep analysis of the nature of and distinction between the roles of knowledge and scarce means in the structure of human action, including (c) extensive analysis into the role of knowledge in guiding human action; (d) a searing focus on the connection between economic scarcity, conflict, cooperation, and ownership-property rights. It also helps to have a (e) Rothbardian-Lockean type understanding of property rights and politics. (f) An awareness of actual legal systems, in a sophisticated sense, helps, too. Hoppe basically had all of these factors to one degree or the other, even if he was a bit light on (b), and not extremely deep on (f), he was deep enough into them due to his foundations (Rothbardian and Misesian and other) and wide reading and frankly systemic genius. That is why he was able to see the answer to the IP issue instantly, in 1988, in response to a random audience question. Rothbard did not go far enough into (b) and (c) and (d) to arrive at the right answer. (I am frankly a bit confused as to why Mises did not. He seemed to have all factors covered sufficiently, except perhaps, for (b) and (e). But the main problem is that he did not turn his attention to IP. Nor did Rothbard.

    Rothbard’s mistake on IP is a bit surprising given his trenchant analysis of defamation law–which is a type of IP law. He did not extent this analysis to other types of IP. (In this, he is similar to Rand, who had somewhat schizophrenic strands in her thought: on the one hand, she recognize we cannot metaphysically create anything; that we rearrange material to make it more useful. This line of thought ought to lead one to recognize that IP is incompatible with normal property rights. But she didn’t.)

    Incidentally, none of this is to criticize Rothbard at all. He could not do everything or be infallible! I am quite confident that had Mises and Rothbard really realized what IP would be come, they would have revisited the issue and had they analyzed it closely, they would have come to the position Hoppe and I hold.
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Pro-IP “Anarchists” and anti-IP Patent Attorneys

Two sets that you would think are exceedingly rare. Over the years I’ve noticed when someone falls into either group. My notes are not comprehensive, to be sure, but here is what I’ve gathered so far.

As for the second category: I collected them previously here: Patent Lawyers Who Oppose Patent Law. They include me, my friend Tony Diehl, and a few others. However, to be honest, of everyone I’ve listed—as far as I know only Tony and I qualify as as (a) being actual practicing, registered patent attorneys who are also (b) completely opposed to the patent system. As far as I know we are the only two people in the whole world who actually understand IP and oppose it completely and on private property grounds. Everyone else either only understands IP incompletely (non-registered patent attorney) or is in favor of “reform” but not abolition or is against IP on leftish grounds. Well, two out of 7 billion people—that’s a start. I guess. But it’s always shocking to me someone can pose as a radical anti-state libertarian, and then turn around and argue for state-granted monopoly rights. Amazing.

As for the former. It’s always surprising to me when someone who claims to be an anarchist—and a libertarian anarchist, no less—still supports IP…. even though IP is a state-granted monopoly, requires the state, requires legislation, and is utterly incompatible with free markets, libertarian property rights, etc. Prominent examples include:

(I am not even including here non-anarchist and utilitarian libertarians, since so many of them have been horribly wrong on IP, namely Ayn Rand, Jan Helfeld, and … most others.)

Libertarians who were surprisingly good on IP before the Internet era include:

(In the post-1995/Internet era, more libertarians starting paying attention, and getting it mostly right, namely me, Roderick Long, Jeff Tucker, Sheldon Richman, and a few others—collected here.)

And honorable mentions:

For more, see: The Origins of Libertarian IP Abolitionism and The Four Historical Phases of IP Abolitionism.

  1. KOL 038 | Debate with Robert Wenzel on Intellectual Property. []
  2. KOL076 | IP Debate with Chris LeRoux ; Can you own ideas? Chris LeRoux debates Daniel Rothschild. []
  3.  “Locke’s Big Mistake: How the Labor Theory of Property Ruined Economics and Political Theory,” Liberty in the Pines Conference (March 2013) ; []
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As discussed on this Facebook thread.

Conversation with a student (this happens pretty frequently). (some formatting has been lost)

Student:

“Hi Mr Kinsella,

My name is []. I’m a student journalist from the University of [], Australia. I’m currently researching a story on file sharing, particularly focussing on a proposed anti-piracy code the Australian federal government has recently endorsed. I wanted to get the perspective of those opposed to copyright laws, and, as you are a prominent academic opponent of intellectual property, I was wondering if you would agree to provide some comments regarding the libertarian (and your) position on these issues? I just have a couple of questions about intellectual property and copyright in general that I could send through if you are willing.

As a budding libertarian myself, I’m in sympathy with libertarian critiques intellectual property, which is why I wanted to include your perspective in the piece if possible. I’d really appreciate your contribution.

Hope to hear back from you,

Thanks,
[click to continue…]

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Liberty Rejects my 1996 Anti-IP Article

Just came across this old letter from Liberty (and my now-friend Timo Virkkala) rejecting an anti-intellectual property piece I submitted to Liberty in 1996. A brief history: my first anti-IP writing also appeared around 1995.1 Here’s the text of the rejection letter:

June 27, 1996
N. Stephan Kinsella
Suite 3600
1600 Market Street
Philadelphia, PA 19103-4252

Dear Mr. Kinsella:

I am very sorry for taking such a long time to get back to you regarding your proposal for an article on contract theory and intellectual property rights. We’ve been kicking around the idea, and have decided that it is probably not our fare—though interesting.

In reviewing your proposal, I notice that your argument resembles that of Williamson M. Evers “Title Transfer Theory of Contract,” which appeared in JLS early on. Are you familiar with Evers’ argument?

Thanks for thinking of us. I’m glad Wendy McElroy suggested us to you, and I hope you will consider us again.
Sincerely,

Timothy Virkkala

Interestingly, in the meantime, IP has become of intense interest among libertarians, and, in 2009 I published “Intellectual Property and Libertarianism” in Liberty.2  As for the Rothbard/Evers contract theory, in 2003 I published “A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability” in the Journal of Libertarian Studies 17, no. 2 (Spring 2003), which elaborates and expands on their views.

Update: On Facebook I mentioned “The weird thing was you guys sent me a couple of rejections of other people’s articles — a weird mismatch.” Here is what I meant. See below, from earlier correspondence to Liberty (the Bank of England submission was published; see here):

Monday, March 1, 1993

Timothy Virkkala, Assistant Editor

Liberty

P.O. Box 1167

Port Townsend, WA 98368

Dear Mr. Virkkala,

In your letter of February 25, 1993, you inform me that my essay, “The Hard-Core Juvenile Defender,” has not been selected for publication in Liberty. However, I did not write nor submit such an article. I did submit, in a letter dated December 18, 1992, an essay entitled “The Perpetual Federal Budget Surplus?”. If I recall, I also submitted some time thereafter a copy of my recent article “Estoppel: A New Justification for Individual Rights,” published in the latest issue of Reason Papers, along with a proposal to write a shorter, more popular version of the article for you. I would appreciate it if you would check your records and inform me of your decision on these two submissions.

Additionally, I would like to propose to you an idea for an article or perhaps for a “Guest Reflection,” which I would be happy to write if you think you would be interested in considering it for publication. The essay would concern the following:

I spent last year in London. On the pound notes, for example the £5 note, is the language: “BANK OF ENGLAND: I promise to pay the bearer on demand the sum of five pounds.” Well, since there is no longer any metal standard, I wondered what this could mean. The note is five pounds; what could it mean to promise to pay the bearer of it five pounds? This promissory note language is a facade, a completely illusory promise. I decided to visit the Bank of England, located in downtown London, in the Financial District, to call their bluff, to make them make good on their promise. What would they do, I wondered—hand me back another five-pound note in exchange for the one I offered?

I made it there, and was stopped at the door by security, and I could not get past the main front desk without having a three-piece suit and “official business.” In other words, the doors of the Bank were not even open to all the holders of notes which promised them that the Bank would give them five pounds “on demand” upon presentation of their “note”. I explained that my note said the Bank would give me five pounds upon demand for my note, and that I was hereby demanding that the Bank fulfill its obligations under the note. The man behind the front desk had little patience and told me that perhaps I’d find some information if I went to the Bank of England Museum around the corner.

So I left and went to the Museum, which is quite nice, actually. I explained to a curator what had happened, and that I was interested in finding out exactly what the language could mean, since obviously it didn’t function as an actual promise to pay me five pounds—they wouldn’t even let me in the door! She went into a back room, and finally dug up an old photocopy, from God knows what source, which attempts to explain the meaning and evolution of the “I promise to pay the bearer” language. I took the pages home, and tried to understand them. Apparently, the Bank is contending now that the language only means, and only ever meant, that the Bank has an obligation to replace old, out-of-circulation pound notes with new, in-circulation ones. Right. That’s what “I promise to pay bearer on demand the sum of five pounds” means.

If you would be interested in this essay idea, please let me know and I will be happy to submit a finalized version, which would contain more elaboration on the nature of money and the “legal tender” language in the U.S., to you for your consideration. If you have any questions or comments, please do not hesitate to call or write.

and:

Friday, May 7, 1993

Timothy Virkkala, Assistant Editor

Liberty

P.O. Box 1167

Port Townsend, WA 98368

 

Dear Mr. Virkkala,

I have previously submitted to you several pieces for your consideration for possible publication in Liberty. These include:

A. In a letter dated December 18, 1992, an essay entitled “The Perpetual Federal Budget Surplus?”;

B. a copy of my recent article “Estoppel: A New Justification for Individual Rights,” published in the latest issue of Reason Papers, along with a proposal to write a shorter, more popular version of the article for you

C. in a letter dated March 1, 1993, a proposal for an article concerning my visit to the Bank of England and my attempt to collect on the ten-pound note’s “I promise to pay bearer on demand the sum of ten pounds” language.

I am still awaiting word from you regarding these items. If you recall, we did have a mixup where, after submitting item 1 above, you, in your letter of February 25, 1993, informed me that my essay, “The Hard-Core Juvenile Defender,” had not been selected for publication, although I did not write that article.

I would like to submit some further articles and items for publication in your magazine. They are enclosed with this letter and a description of them is provided below.

1. A poem entitled “Big Enough”;

2. a short story entitled “The Subjectivist’s Lament”; and

3. an article entitled “Freedom vs. Government”, which was published in July 1989 in an obscure underground LSU student newspaper called The Wonderland Times.

  1.  Letter on Intellectual Property RightsIOS Journal 5, no. 2 (June 1995), pp. 12-13 ; see also  My IP OdysseyRoderick Long: Bye-Bye for IPRoderick Long Finally Realizes IP is Unjustified; The Four Historical Phases of IP Abolitionism; and The Origins of Libertarian IP AbolitionismMy IP Odyssey.  []
  2. Vol. 23, no. 11 (Dec. 2009), p. 27;   blog postlocal PDF; Liberty‘s online version; see also “Intellectual Property and Libertarianism,” Mises Daily (Nov. 17, 2009); based on speech at Mises University 2009 (July 30, 2009; audio; video); speech podcast on The Lew Rockwell Show, #131, as The Intellectual Property Racket (Aug. 19, 2009). []
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Can you own ideas? Chris LeRoux debates Daniel Rothschild

Amusing “debate” between Daniel Rothschild and perennial pro-IP “libertarian” pest Chris LeRoux (aka Sid “Non Vicious” Leroux, Chris Propertarian, etc. etc.). Rothschild has amazing perseverance trying to penetrate the muddled thinking and confusions and ever-shifting positions of LeRoux, or whatever his name really is.

Background:

There may be some others but I can’t recall them offhand—there are a few perennial pro-IP “libertarian” pests, like Shayne Wissler, Silas Barta (aka “Person,” “John Sharp,” “Richard Harding”).

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Stossel Show on Intellectual Property

Update:

Full episode now available on the official Fox page here:

See also KOL171 | With Albert Lu Discussing Stossel and IP.

Unofficial YouTube version:

stossel-on-ip***

A few weeks ago I was invited to appear on an upcoming episode of John Stossel’s Fox Business News show, Stossel. I flew to New York last Wednesday for a Thursday taping; the show will air this Friday, Jan. 30.  I had a great time. Had dinner with several local libertarian friends (David Kramer, Isaac Bergmann, Evan Isaac, etc.) and my long-time friend Jack Criss, who joined me on the trip. Spent a while seeing New York, with my friend Dante Bayona as a helpful guide. New York was cold, but we still enjoyed it. (Pix from the trip below.)

The taping on Thursday went well—I was nervous but think I did okay. There were five guests altogether. The first segment was a debate between anti-IP anarchist David Koepsell and a conventional IP stossel - it's my ideaattorney; then a magician who was upset about people “stealing” his magic tricks; then me; then Chris Sprigman, about whom I’ve written before. I was a little leery that this was kind of a setup or something, but Stossel and the Fox News staff could not have been nicer or more professional. My impression is Stossel is leaning our way, as indicated in his Reason post, which quote me and Koepsell and criticizes IP (Owning Ideas—An Outdated Idea?; see also his column Owning Ideas). As far as I know this is the first time IP has been examined in such a major, national forum, and from a principled, and radical, free market perspective. Kudos to Stossel.

More on Stossel’s show here. The episode airs 9pm EST this Friday night, Jan. 30, on Fox Business, and apparently re-airs on Fox News Channel Sunday night.

Update:

The full version of the episode is not yet available on the Fox News site, but should be shortly. In the meantime, a “pirated” version of my segment is already online:

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Over the holidays, I was reading a book, and was asked by some family members what I was reading. My reply was, “probably a book that only 3 people in the world have read.” The book is Intellectual Property Rights: A Critical History, by Christopher May and Susan K. Sell (2005). The authors seem so far to be generally averse to IP and clearly recognize IP is not a natural property right, in any case.

I came across a nice passage on pp. 1-2, ch 1. The authors explain that AIDS medicines are too expensive for many patients, especially poor ones in developing nations, because of the premium price that results from the patent monopoly.

“To deal with this problem, in the 1990s Ghana and Brazil tried to import from Indian manufacturers cheaper generic versions of the AIDS-cocktail’s component drugs. This action reflected a long history of nonprotection for foreign pharmaceutical patents in India, where a large generic manufacturing sector had developed since independence. this competition from generics prompted some multinational pharmaceutical companies to offer discounts on their AIDS drug treatments…

“The use of generic substitutes for patented drugs also spurred legal action on behalf of Merck and others by the United States against Brazil at the World Trade Organization (WTO), however. The US Trade Representative (USTR) argued that the production and use of generics were directly in contravention of international law and that there could be no justification for the appropriation [sic] of US companies’ (intellectual) property. This was theft, and the USTR vigorously protested that it helped no one. Despite being subsequently dropped owing to political pressure, this action reveals much about the overall attitude of the office of the USTR [U.S. Trade Representative]: whatever the human costs, intellectual property rights (IPRs) must be upheld.

“Although it seems obvious that the AIDS crisis in Africa is an exceptional public health emergency, it took considerable effort to negotiate the 2001 Doha Declaration on the TRIPs Agreement and Public Health as well as the subsequent agreement on implementing paragraph 6 …. Although this agreement contains provisions for compulsory licenses in exceptional circumstances [i.e., generics could be manufactured without consent of the patent holder], under pressure from the US government and specifically the USTR, the provision has been largely disregarded since 1995. In protecting the interests of its national companies, the USTR has argued that protecting the IPRs of the large pharmaceutical companies that produce many of the AIDS-related drugs used in treatments around the world is imperative. Thus, for instance, despite its severe AIDS problem, at the end of the 1990s when Thailand acceded [sic] to the TRIPs agreement, the Thai government specifically undertook not to implement Article 8 (on compulsory licensing) for HIV/AIDS treatment.”

For more on this, see:

See also my Facebook post here:

I’ve mentioned before that Cato scholars have inexplicably come out in FAVOR of the horrendous, fascist, IP-pushing TPP, in an article by Daniel “Ikenson” (http://c4sif.org/…/longer-copyright-terms-stiffer-copyrigh…/).

People have told me that just b/c they have one scholar in favor of something does not mean it’s an institutional position. MMhhmm.

Check out this Democracy Now “debate” about the TPP, between Bill Watson, a trade policy analyst at the Cato Institute, and Lori Wallach, director of Public Citizen’s Global Trade Watch. Now what is disheartening for the libertarian listening to this debate (which starts around 11:00) is that almost everything Wallach says is correct and on the libertarian side. She notes that the TPP is not about free trade at all; only a small number of its (still secret) chapters even purport to deal with free trade; the major portion leaked so far is on IP and is pure American company special interest rent-seeking: attempting to lock stronger and longer copyright and patent law into US law via treaty and to export it to the rest of the world; that is, to increase the monopoly privilege of patent and copyright, to reduce internet and artistic freedom, to increase the prices of pharmaceuticals, etc. She is 100% correct to oppose the TPP on her anti-IP grounds, and she is right to condemn patent and copyright as monopolies that benefit special interests and harm the public and consumers.

Inexplicably, Cato’s Bill Watson defends the TPP and fast track *even though* he seems to agree with Wallach that the IP chapter is “problematic” (he nowhere seems to condemn it as monopoly and bad, in as clear terms as she does, however).

Utterly bizarre, when we true free-trade, anti-IP libertarians, find more in common with “Public Citizen’s Global Trade Watch” than with an allegedly free-trade, libertarian organization.

People often tell me that I should not harp on IP so much, or make it a litmus test; that even if I am right about IP, reasonable libertarians can disagree. Well this is an example of why it’s important to get this very important issue right. It is in fact one of the most important libertarian issues (http://c4sif.org/…/where-does-ip-rank-among-the-worst-stat…/), and getting this issue wrong leads people to error on other important issues. As an example, a few years back, several Cato scholars explicitly opposed free trade in drug reimportation in the name of upholding American companies’ pharmaceutical patent monopoly pricing model; unbelievable (see footnote 1 http://c4sif.org/…/objectivist-worried-obamacare-may-weak…/… ; footnote 4 of http://c4sif.org/…/pro-ip-libertarians-upset-about-ftc-po…/…).

Cato’s forums on IP are invariably about IP reform. Only one time can I remember someone for IP abolition, which was Tom Bell, and that (IIRC) only on the issue of copyright (not patent). Their former scholar Tom Palmer was one of the early IP abolitionists but his work was never highlighted there and indeed he seemed to backpeddle a bit in later years on pharmaceutical patents (as mentioned here: http://mises.org/daily/3682 see: http://tomgpalmer.com/…/alive-thanks-to-pharmaceutical-pr…/… and http://tomgpalmer.com/…/healthy-profits-to-help-sick-peop…/… )

One wonders if Cato has lots of pro-patent big business/big pharma donors, and the quasi/former Objectivists in their ranks (http://c4sif.org/…/does-catos-new-objectivist-ceo-john-all…/) which leads them to continually favor IP and downplay the IP abolition case.

Sad when libertarian groups are bad on this issue (http://c4sif.org/…/canadas-free-market-fraser-institute-ur…/). It’s as bad as being bad on taxes, slavery, free trade, the drug war. Down with IP.

 

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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.