The Lady Libertarian on IP and SOPA

Against Intellectual Property

It seems like the Internet is up in arms today, protesting SOPA and PIPA.  Wikipedia is going on a 24-hour blackout, and even WordPress here seems to have put up “censored” versions of peoples’ blogs.  I’m all for it, frankly.  Protest the heck out of this thing.  I can’t decide whether or not SOPA/PIPA is really about intellectual property issues, or whether it’s about control.  I suspect the latter, but the government seems to be touting it as a blow in favor of the former.  I thought you all might appreciate a post on intellectual property and why it might not be such a great idea, given the current goings-on.

Most all libertarians espouse a firm belief in property rights.  Libertarianism is firmly rooted in property rights, in fact.  Property rights, according to the core libertarian ideals, include tangible things, such as security of your person, your home, your land, your car, etc.  Intellectual property rights include the rights to intangible things.  According to author Stephan Kinsella, these are divided into ideas expressed as copyrights or as patents, which represent practical implementation.  So what’s wrong with protecting your ideas?  Don’t you have the right to do that?  Not every libertarian might agree on this point, but I am here today to argue against intellectual property and therefore the foundations upon which the government is trying to control portions of the Internet.

Copyright comes into effect the minute something is put onto a tangible item, such a book, movie, or script.  The copyright lasts for the duration of the author’s life, plus seventy years after his/her death.  In the case of an employer owning the copyright, it would last an additional ninety-five years.  (I have no idea why it would last longer in the latter case.)  Patents are property rights on inventions, and they will typically grant the individual who owns them a limited monopoly on manufacture, use, and sale of the item in question.  Interestingly, according to Kinsella, the patent actually only grants rights of exclusion and doesn’t actually grant the patentee the right to use the invention. Patents last twenty years from the date of the original filing.  Things such as “natural phenomena,” “laws of nature,” and “abstract ideas” may not be patented, though why people honestly need the Supreme Court to tell them this is beyond me.  Patents can be disadvantageous to trade secret holders, since a person or company that independently discovers a trade secret held by another person or company can patent it and exclude the other from using it.

Trademarks differ from the two forms of IP mentioned above in that they use a symbol, word, or phrase to identify the company.  For example, the “half-eaten fruit,” as my husband calls it, has become a well-known symbol for Apple computers.  Trademark basically prevents rival companies from copying identifying symbols of another company and attempting to pass it off as their own.  A good example of trademark infringement might be seen at the cheap Asian markets I like to frequent, where guys and gals can buy any number of knockoff designer items that range from ridiculous to excellent in quality.  Though they weren’t made by Louis Vuitton or Chanel, they do a pretty darn good job of looking the part, but they weren’t manufactured by the actual company.

In any case, intellectual property rests on the notion that not only does the creator own the idea, but they also own the tangible forms of the idea.  Kinsella provides a novel as an example.  The author holds the copyright to the novel and everything contained in every printing of the book.  (Hence the word “copyright.”)  That means that even if another person buys a copy of the book, they don’t own the novel – the pattern of words – contained therein, and they have no right to copy any part of that book using their own computer, pen, paper, etc.

There are a lot of ways that libertarians could choose to look at intellectual property.  The first is from the perspective of natural rights.  Simply put, a person subscribing to this system would believe that because a person owns his body and the instruments used to create the idea, that the idea is his.  He/She would be entitled to own their own creations.  That seems reasonable enough.

The utilitarian ideal sets forth the supposition that it creates more wealth or utility to have IP laws.  More creative, artistic endeavors lead to more wealth.  It also states that if there are no copyright laws, there are fewer profits reaped, and therefore it is beneficial to have IP laws.  Utilitarians will usually hold that restricting an individual’s complete freedom to do with his property has he wants is justifiable because of the wealth created by preventing him from exercising his will.

Kinsella argues that this is faulty reasoning.  One could redistribute part of group A’s wealth to group B and argue that the net wealth increases, though this would not actually be the case.  The amount of wealth is the same, but it is merely being stolen from group A and given to group B.  Nothing about this transaction implies the creation of greater wealth.  Kinsella further argues that the goal of law of not wealth maximization but rather justice – “giving each man his due.”  That means that wealth generation does not give a moral pass to limitation of personal rights.

The most important thing to consider, though, from a utilitarian standpoint, is whether or not IP actually provides a net increase in wealth.  Are patents and copyrights really necessary to foster innovation and creativity?  Do the immense costs of implementing IP law outweigh the comparatively marginal cost of innovation?  Is is possible that companies would have a greater incentive to innovate without twenty years’ reliance on patents?  What if companies had to constantly continue improving their products in order to stay on top of the market?  Would consumers lose out in such a situation?

Economically speaking, it has never been proven that IP laws result in net gains in wealth.  What we do know for certain is that companies and individuals seeking copyrights, patents, and trademarks must spend an awful lot of money employing lawyers to navigate the often murky waters of IP law.  Could this money not ultimately be put to better use in R&D.  In any case, it is unsound to argue that increasing wealth is a legitimate reason for depriving others of their rights.

If you look at Rand’s take on natural rights, she essentially cosigns on the idea that certain philosophical and scientific discoveries cannot be copyrighted, since certain truths have always existed, even if people don’t realize it.  She argues that only things created by the individual in question could fall under IP law.  Of course, if you take this down to its minutiae, nobody creates matter; they just manipulate it according to their will and skill.  Kinsella also presents an interesting conundrum whereby a scientist discovers a scientific theory or principle that was previously unknown to mankind.  This individual would not be rewarded for his/her creative thinking and intellectual ideas, but the engineer who uses that law to create a new invention would be.  Hmm.  Doesn’t it seem a bit silly to reward Beyonce for writing “Single Ladies (Put a Ring On It)” but not reward Einstein the theory of relativity?

At the end of it all, we also come to the conclusion that IP laws are essentially monopoly grants.  My husband made the point to me that IP laws protect the “little guy” from big competition, but I argue the opposite.  In fact, IP laws create barriers to entering the competitive market.  For example, if a young entrepreneur/inventor comes up with an idea, it would be relatively simple for big business to copy it.  Big businesses know this and do it.  The fact of the matter is that they can claim that they invented it first, and they have the resources to drain the inventor in an IP suit.  This effectively eliminates the competition, for the big business in question doesn’t even have to win the case; they merely have to wait until the little guy runs out of cash to fight the legal battle.

You can continue by pointing out that a big business could steal the idea once the idea has been presented to them by an inventor.  Kinsella has argued that this can be solved with non-disclosure agreements.  I am not a lawyer, but I can see how the same issue might come into play, at this point: if the entrepreneur sues the big company, the company is able to win by playing the waiting game.  I would certainly welcome further thoughts and comments on this end of the subject, since I haven’t come up with what I would consider to be a final and useful answer on this matter.

However, all things considered, at the end of the day, the cross-licensing and defensive patenting that is rampant in business today effectively amounts to serious barriers to entry for potentially budding companies.  It has come to the point that, because businesses are so happy to suit for infringements on their IP, that other businesses will actually file “defensive patents” to keep the lawsuits at bay.  Nobody really profits from this except lawyers and government – the lawyers because they are garnering outlandish fees and the government because it is revenue that doesn’t come from taxation.

Let’s take a look at the situation with SOPA/PIPA.  The government has created this intellectual property legislation to prevent people from downloading music, movies, etc. for free on the Internet.  It would effectively give the government the ability to shut down unwanted sites that allow pirating.  There are several points to make about why this legislation is misguided.

The first is that it will not solve the problem.  Firefox is already talking about making a SOPA-proof platform.  Basically, the software developers will write into the code a way to avoid SOPA software detection.  It will contact the website via an offshore server – in Europe, Asia, Australia, or wherever – and users will automatically be redirected to that website.

The second problem is that this act is essentially propping up an outdated business model.  The entertainment industry has been lobbying hard for Washington to do something about all this pirating.  What the industry doesn’t seem to realize is that the people who pirate files online also tend to buy more of these same music or movie files than those who don’t pirate the files.  Another flaw in this thinking is assuming that those who pirated, say, a movie file would have bought the movie, were it not for pirating.  This is hardly a foregone conclusion.  When the entertainment industry argues that they are losing money, they are making an assumption that may not, in fact, be true.  I have some friends who rip movies and shows, and let me tell you, I haven’t run out and bought a single one of those TV shows or movies.  Not a one.  Why?  Simple.  They weren’t entertaining, and I wouldn’t pay money for them.  Does it really make sense, from a free market standpoint, to prop up entertainers, music, and shows that suck?

The final issue that is quite interesting is the potential of this act to create a black market for Internet rips.  Look at the drug war and the black market for drugs in America today.  Making drugs illegal has done nothing more than lead to extremely high prices for black market drugs, which in turn leads to massive drug-related violence, both in the US and south of the border.  I’m not saying that violence would be the ultimate result in this case, but it certainly has the potential to increase profits for purveyors of the desired good – that is, free music, movies, books, etc.

One last point that I might make is that, for the music industry, most of the profits are made on tours, anyway.  Most of it is made from things like merchandise sales.  Besides that, for struggling artists and those looking to enter the marketplace, free downloads are a great way to get their music heard.  I will honestly admit that if I hear something I genuinely enjoy, I don’t mind paying for it.  I want to see my favorite artists succeed.

Ultimately, I see SOPA/PIPA has yet more government regulation that we don’t need.  It will harass the people who least deserve it, and will fail to meet its supposed goals.  Besides that, I just can’t get behind intellectual property, at least not 100%.  You be the judge, but speaking for myself, I believe that we stand to benefit the most from a free exchange of ideas, and it would pain me to see the Internet falling under government control.  I love the Internet if for no other reason than there is a vast amount of information and ideas available right at my fingertips, and that is something that is truly incredible about this point in history.  I would hate to see the government attempting to turn back the clock on so great an innovation.

If you are interested in reading and hearing more from Stephan Kinsella on intellectual property law, check out these links:

How to Slow Economic Progress
SOPA, Piracy, Censorship, and the End of the Internet? – Freedomain Radio w/ Stephan Kinsella
The Case Against IP: A Concise Guide
The Fight Against Intellectual Property
Against Intellectual Property (PDF)