By Jeff Tucker, from Laissez Faire Today:

Violating Rights in the Name of Property

Jeffrey Tucker · January 19, 2012

You know that anti-piracy video you sometimes see at the beginning of movies? It explains how you wouldn’t steal a handbag, so neither should you steal a song or movie by an illegal download. Well, it turns out that the guy who wrote the music for that short clip, Melchoir Rietveldt, says that his music is being used illegally. It had been licensed to play at one film festival, not replayed a million times in DVDs distributed all over the world. He is demanding millions in a settlement fee from BREIN, the anti-piracy organization that produced the thing.

Interesting isn’t it? When you have hypocrisy that blatant, criminality this rampant, practices called piracy this pervasive – it reminds you of the interwar Prohibition years – you have to ask yourself if there is something fundamentally wrong with the law and the principles that underlie the law. Yes, people should keep to their contracts. But that’s not what we are talking about here; this case is being treated not as a contract violation but a copyright violation, which is something different. We are dealing with a more fundamental issue. Is it really stealing to reproduce an idea, an image, or an idea? Is it really contrary to morality to copy an idea?

The verdict here is crucially important because ever more of the state’s active intervention against liberty and real property is taking place in the name of intellectual property enforcement. The legislation SOPA could effectively end Internet freedom in the name of enforcing property rights.

If people who believe in liberty do not get this correct – and it no longer possible to stand on the sidelines – we will find ourselves siding with the state, the courts, the thugs, and even the international enforcement arm of the military industrial complex, all in the name of property rights. And that is a very dangerous thing at this point in history, since IP enforcement has become one of the greatest threats to liberty that we face today.

Another case in point to consider here. This week a judge in Nevada, acting in a case brought by the luxury Chanel, ordered the takedown of some 600 websites that he alone was guilty of trafficking in pirated products, that is selling fake Chanel products. There was no extensive research done; the claim of the company was enough. The judge then issued an order that went beyond the parties to the lawsuit itself and ordered the complete de-indexing of such site by GoDaddy, Facebook, Google, Twitter, Yahoo and Microsoft. Meanwhile, there is legislation before Congress that would permit similar takedowns of any website regarded as a violator of intellectual property.

Every time one of these cases comes along, I’m reminded a scene from the streets of Washington, D.C. that I saw years ago. Some immigrant families were doing a brisk business in knock-off fashion goods and watches. A new convert to the cause of free enterprise, I stood there in admiration of their entrepreneurial skill. They weren’t ripping anyone off. The good looked very much like the real thing but with a few difference, and the consumer was not defrauded in any way. All buyers knew exactly what they were getting, and they were also aware that they were getting their goods at a tiny fraction of the price they would pay for the real thing at the department store.

I recall thinking: isn’t the market grand!

A few days later, the Washington Post carried a story about how those very vendors were arrested for trafficking in fakes and violating trademarks. A judge issued the order and their property was confiscated. And so it was. The bustling businesses was now shut down by the police. Consumers and producers were thereby denied a chance to trade peacefully to their mutual benefit. And this was all because some third parties complained, invoking a government regulation.

But wait a minute? If you own a trademark, isn’t it stealing for someone else to come along and make your product, hocking it as a great knockoff but selling it at a fraction of the price? If so, can the judge’s order be seen as the enforcement of property rights, and isn’t property rights enforcement exactly what we free enterprisers are supposed to favor?

Let us grant that trademark – which is what is being enforced here – is the most intuitively plausible of all forms of intellectual property protection. Trademark concerns a federal registration of a name or logo, one that forbids competition from using those protected things in commerce. I don’t think that is compatible with free enterprise, but much less defensible forms of IP are copyright and patent. They both stand the competitive principles of free enterprise on their heads, and illustrate just how contrary to free markets IP really is.

The idea of competition is that you are free to emulate the success of others, improve on the product or process involved in making or marketing it, and chip away at the market share held by another producer. Because of this freedom, every producer must constantly innovate and cut costs in service of the consumer, and there is constant change taking place among the firms that seek to profit from enterprise.

With patent protection, however, a single company owns a government-protected monopoly on a product or process, and can thereby exclude all competition. This is a variation of the old “infant industry” fallacy for protectionist policies. One company is effectively sheltered by law for a period of time from the demands of competitive commerce. It doesn’t really matter if another firm stumbled on an idea independently. The patent forbids anyone from becoming a competitor to the privileged firm.

With copyright, everyone in society is bound for a very long period of time from producing any words or making any image that would seem to reflect a learning process used a copyright holder as an example. We have a similar granting of monopoly privilege here but instead of having to seek out protection, it is granted automatically. This might seem to be a benefit to the creator, artist, composer, or author, but the reality is that these people nearly always sign away their rights to the production company, the publisher, the filmmaker or whatever, and this most often occurs for the lifetime of the copyright. Even the creator, then, must beg or pay in order to use his or her own material. The law has been expanded and internationalized so that the monopoly lasts 70 years after the death of the person who wrote the song, drew the picture, or wrote the book.

If you look at the origins of these two institutions, we can see the essence of what is going on. Copyright originated as a government restriction on printing during England’s religious wars. As it developed, it had nothing to do with individual rights and everything to do with protecting dominant publishing firms against competition. It is the same with patent, which grew out of the mercantilist experience of Europe in which the prince would grant one producer rights against all competitors. Both are designed to slow down innovation and drag out the process of economic development with government restrictions. For this reason, the idea that IP somehow creates an incentive to innovate is completely wrong; in fact, the reality is precisely the opposite.

The advent of the liberalism of the 18th century gradually wiped out most of these antique institutions and replaced them with competitive capitalism. But in the world of ideas, these protections remained and became worse, especially in the latter part of the 20th century. They are remnants of a precapitalist age.

In the digital age, when ideas can be multiplied by billions of times in a matter of seconds, the notion of IP protection becomes ridiculously outmoded. And it is for that very reason that enforcement is being stepped up and now threatens free speech and the freedom to innovate. Ultimately, a consistent enforcement of IP would shut down free enterprise as we know it.

This is not an easy subject and it does take some serious thinking to sort out all of the issues. But here is one clue about where people who love freedom should come down on the question. When the state is totally dedicated to using its enforcement arm to harm so many businesses and so many free associations, and it does it in the name of private property, you have to wonder if something has gone terribly wrong. The state is the least trustworthy institution when it comes to defending our freedoms; there is no reason to suppose that this gang of thieves has been converted to the cause of real property rights just because that is what it claims to be defending.

[This article is based on a speech I gave at the University of Alabama, Birmingham, December 5, 2011.]