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Trademark Ain’t So Hot Either…; Trademark and Fraud; Discussion with George Reisman

I posted the following on the Mises blog and the Against Monopoly blog a couple years ago. See also here for other posts on trademark; both of these are discussed extensively in episode 93 of the excellent Complete Liberty podcast.

For other material on Trademark:

Trademark Ain’t So Hot Either…

David–sure, it is understandable why you are “much more favorably inclined towards trademarks than other forms of intellectual property.” As you say, “It seems to me a good thing that it is possible to tell who you are doing business with, and no downside monopoly”. As I noted here, the primary justification for trademark rights is based on the notion of fraud–that the “infringer” is defrauding his customers by misrepresenting his identity and the source of the goods being sold (see pp. 43-44 of my Against Intellectual Property, pp. 59-63 of Reply to Van Dun: Non-Aggression and Title Transfer, p. 34 of A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability).But this analysis would give a cause of action to customers, however, not to the holder of the mark, who is not defrauded. Moreover, it would protect the customer only when there is fraud. For example, neither the customer (nor Rolex) should be able to sue Rolex knock-off companies, because people who buy fake Rolexes for $10 are not being defrauded. They know they are buying a cheap knock-off. But trademark law does give trademark holders–not customers–the right to sue infringers, regardless of whether there is really fraud to the consumer.

So while we can condemn fraudulent sales to customers, this is not what modern trademark law prevents. Modern state-run trademark law is almost as bad as cpoyright and patent, even if it has a less-objectionable core or origin. The fundamental problem with trademark law is that it is state law–it is created and administed by the state, which is a criminal organization. To expect justice from the state is like expecting a cat to bark.

Thus we have trademark rights granted to trademark holders, instead of to customers, the real victims of fraud. Thus we have a statutory scheme establishing an arbitrary, artificial legal system and an inept bureaucracy to construe and enforce it. Thus we have ridiculous extensions of trademark to cover “anti-dilution” rights, much as the term and scope of copyright and patent are gradually increased over time. And thus we have the government’s courts used like trademark’s more infamous cousins, copyright and patent, to stifle competition and squelch free speech. See, e.g., A Bully-Boy Beer Brewer, Straight Talk9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After AllTrademarks and Free SpeechBeemer must be next… (BMW, Trademarks, and the letter “M”)Hypocritical Apple (Trademark); ECJ: “Parmesian” Infringes PDO for “Parmigiano Reggiano”Engadget Mobile Threatened For Using T-Mobile‘s Trademarked Magenta.

Clearly, this is just another example highlighting why the state is worse than useless; it is a harmful criminal organization.

And in fact, US trademark law is unconstitutional. While the US Constitution, to the extent it is legitimate and not just the de facto result of a successful coup d’etat, unwisely authorizes Congress to enact copyright and patent law, no provision is made for trademark law. Instead, trademark law is based on an unconstitutionally expanded reading of the Interstate Commerce clause. As James J. Kilpatrick noted in The Sovereign States: Notes of a Citizen of Virginia, in describing the Supreme Court’s illegitimate expansion of power under the guise of the Constitution’s interstate commerce clause:

 

It was an insidious process, conducted with the care of the cat that stalks her prey – now creeping forward, now pausing to sniff the air; now advancing, now lying still as the bird takes alarm; then edging forward again, and so, step by inexorable step, moving to the ultimate seizure.

But it started at the very beginning of the United States. Tom Dilorenzo, in The Founding Father of Constitutional Subversion, explains:

“Hamilton was also likely to be the first to twist the meaning of the Commerce Clause of the Constitution, which gave the central government the ability to regulate interstate commerce, supposedly to promote free trade between the states. Hamilton argued that the Clause was really a license for the government to regulate all commerce, intrastate as well as interstate. For “What regulation of [interstate] commerce does not extend to the internal commerce of every State?” he asked. His political compatriots were all too happy to carry this argument forward in order to give themselves the ability to regulate all commerce in America.”

So don’t stop with copyright and patent: abolish the unconstitutional Lanham Act, and its unjustifiable grant of trademark rights to trademark holders instead of defrauded customers, and maintain the link to fraud (knockoffs are fine; no anti-dilution law).

[Posted at 07/24/2008 09:11 PM by Stephan Kinsella on Trademark  comments(4)]

Update: See also this thread from the old Mises Yahoo Group, a discussion between me and George Reisman about trademark:

From: mises@yahoogroups.com [mailto:mises@yahoogroups.comOn Behalf Of Stephan Kinsella
Sent: Thursday, November 29, 2007 8:24 PM
To: Mises-Group
Subject: [mises] Re: Further Reply on Intellectual Property

George, some of my replies are below, preceded by SK3.

On Nov 12, 2007 10:11 PM, George Reisman <g.reisman@capitalism.net> wrote:

George, thanks for your thoughtful and polite comments.

Thank you, Stephan. I’m enjoying and learning from this discussion.

 

In this post, following your lead, I’ll use GR2 to identify my new comments.

 

In your post of Nov. 10, you wrote:

 

SK2: George, I was thinking earlier today that by your reasoning of the necessity of reputation and trademark rights, one could maybe even argue that lying is some kind of crime–merely being dishonest–because of the importance of identifying truth in dealings with others. Now it seems to me I may be right, given your comments about dishonesty above (although your comments are contextual, I grant, not unlimited).

 

GR2: I do not believe that lying per se is a crime. What I think is a crime is “trickery,” as you aptly put it, when used as the basis of a violation of individual rights. The use of trickery is not confined to obtaining others’ property, i.e., to fraud. As my examples of the scholar and of “Good Soup” showed, it can also be the basis of violating the right to the pursuit of happiness, which includes, as I explained, “the right to earn a living by means of producing and selling ¼ products to willing customers.” You are right in saying that there is no fraud committed against “Good Soup,” but his right to the pursuit of happiness is violated by trickery. And the trickery began with the theft of his intellectual property in the form of his label, which allowed “Bad Soup” to claim to be “Good Soup.”

 SK3: George, we may be coming to an impasse here, because I am not sure how to respond to all of this.  For instance, it seems to me you are sliding too easily from the particular to the general. I explained in fairly concrete terms exactly how and why lying can be part of an act of fraud, precisely because it is a means of obtaining the property of another without that owner’s genuine consent. I would not say this establishes that “lying [or trickery] is the basis of a violation of individual rights,” because this is too amorphous and imprecise, and can be used to deduce other rules that are not the same as the underlying (uncontroversial) case of regular fraud.  In the standard case we would agree upon, two putative traders each own their bodies and their property. None of this is in dispute, I think.  Because one of them owns his property, he may refuse to grant the other permission to have, or to use it; or, he may grant permission to the other, or even give it a way. He may also make this loan or giving conditional. If the other party is not satisfying the condition, then the consent is not effective. This is why fraud can be a species of theft, or trespass.  But to go from this fairly simple, concrete, and uncontroversial outcome of a straightforward application of notions of property and consent, to the idea that there is some “right to the pursuit of happiness” that is “violated by trickery” seems to me to be a complete non sequitur.

I am not quite sure what “the right the pursuit of happiness” implies other than property rights in one’s body and in scarce resources one has homesteaded or acquired from another owner.  I think it has to be merely another way of describing this. If it goes beyond it to truly be some other right, then it seems to me that, like intellectual property itself, it would violate rights to property. The reason is the same reason that liberals are wrong to believe that there is no cost to adding more and more rights to the standard natural rights.  The liberals think, why not add a right to be free from discrimination? To be free from fear or want or hunger? If some rights are good, the more, the better, no?  The problem is they do not realize that every such false right necessarily eats into the territory of, and dilutes or weakens, real rights.  Proliferating rights has a cost in terms of real rights. It’s like rights inflation.

Likewise, if IP, or the “right to pursue happiness,” is something other than rights in property and to control our bodies, it necessarily shrinks the domain of these rights, by coopting them.

SK2:  If I understand you right, Bad Soup may be sued by its customers for fraud, *and* by Good Soup, for loss of business.  This seems like double dipping to me.
GR2: When I first read this, I thought that you were probably right and that there was “double dipping.” I was comfortable with that, however, on the grounds that it would serve as a form of deserved punitive damages. However, upon further reflection, I’ve come to the conclusion that there is no double dipping. This is because in a free market both parties to an exchange gain from it. There are thus two separate, distinct gains. Therefore it should not be surprising that when a free-market exchange is prevented, as it is in this case, there are two separate, distinct losses. The buyer loses his money, because he does not get the good he wanted. The seller, “Good Soup” loses receipt of the buyer’s money because it goes to “Bad Soup.” “Bad Soup” is doing damage to both parties and should thus compensate both parties.

 SK3:  I see your point, but I am not persuaded by this.  First, imagine that the buyer who is defrauded does get his money back from Bad Soup, and then commences to spend it on the can of Good Soup he originally wanted. Now, GS has both the profit he was going to get from the purchase by the buyer; plus, he gets a “windfall” from Bad Soup. I just don’t see what “damage” is done to GS if Buyer recovers his money, and then uses it to buy the can of Good Soup he was originally planning to buy.

And if Buyer chooses now not to buy, why is this “damage” to GS? It seems to me that calling it damage implies that GS is entitled to have Buyer spend his money on the can of Good Soup.  I see only one victim here: Buyer. Buyer is free to buy from Good Soup, or not, as he sees fit.

The only way, as I see it, to say that GS is damaged is to hold that GS has property rights in things other than its own property. To essentially hold that GS has a property right in what other people do, or in the “value” of things. As I believe I have explained in previous posts (quoting or linking to Hoppe’s explanation of the fallacy of believing in a property right to value of one’s things), I disagree with this. It seems to me that in your granting some right to “pursuit of happiness” that is “violated” by a third party’s tricking a potential customer of yours, you are in effect doing this.

SK2:  Let’s take an example. Customer A pays $2 to Bad Soup for a can of mislabeled soup. Now, if A can sue Bad Soup–as I think he can–then in theory he can recover his $2. Suppose he now spends the recovered $2 on a can of Good Soup’s soup.  Meanwhile, Good Soup sues for the $2 it “lost” in sales it was “entitled” to.  So BAd Soup pays $2 to Good Soup in damages, and $2 to Customer A.  Good Soup receives $4 total, for a $2 can of soup. Why is this just? And le’ts say A gets her $2 back and chooses not to spend it on Good Soup now. But Good Soup recovers the $2 for the “lost” sale from Bad Soup anyway.  Why should it? In other words, A has the primary (and, I would say, only) right to sue Bad Soup. If A spends the recovered money on Good Soup, Good Soup is not harmed. If A does not spend the recovered $2 on Good Soup, this shows Good Soup did not lose a sale after all, and again is not harmed.

 

GR2: Stephan, I’m willing to put aside for the moment all of the very real practical difficulties I see in the way of such an example ever being real, and will accept your description of the case.

 SK3: I agree this example is very simplistic and even unrealistic in some ways, and there must be better hypos, but my imagination or time was wanting. I think probably more realistic (but more complex) exmaples could be come up with, but I do think this illustrates the double dipping problem.

If it existed, you would be right in stating that “Good Soup” ends up with $4. But that money would not be for one can of soup. It would be $2 for the can of soup he sells now, plus $2 compensation for the can of soup he would have sold in the past but was prevented from selling by “Bad Soup’s” fraud. However, it is very questionable that “Good Soup” would receive $2 from a customer who had been defrauded. That customer would have good reason to judge “Good Soup’s” product on the basis of her unpleasant experience with “Bad Soup” posing as “Good Soup,” and therefore might very well not buy it. Your statement at the end of the last paragraph that “If A does not spend the recovered $2 on Good Soup, this shows Good Soup did not lose a sale after all, and again is not harmed” is, I’m afraid, the exact opposite of the likely truth of the case. This absence of a sale is proof precisely of the harm to “Good Soup,” not lack of  harm.

 SK3: I agree that in some cases, the buyer may be so turned off by the experience, that he shuns both Good Soup and Bad Soup. But for purposes of my example, we only need to be able to conceive of a case where this does not happen, to illustrate the injustice of the double dipping. Once you isolate this, it highlights the problem with thinking the defrauder violates the property rights of Good Soup * merely by the act of defrauding a potential customer of Good Soup*. I suppose we can find a better example: a guy wants to buy a $1000 De Beers diamond engagement ring for his fiance. Toohey pretends to be a De Beers agent and sells the guy a non-de Beers diamond (or maybe a cubic zirconium).  So the guy is out his $1000 and doesn’t have what he bargained for; and De Beers is out a sale of a $1000 diamond.  Fine. Now, the guy realizes he’s been had and one night sees Toohey and nabs him, and gets his $1000 back.  After this chain of events, he proceeds to the local De Beers rep and buys the ring he had his mind set on. De Beers does not even know what had transpired in the meantime. So why should they have a right to sue Toohey now? For how much? What is their damage? They made their $1000 sale.

It seems to me that in this case, you either have to grant that De Beers has no right to sue, or that they do. If they do not, then it illustrates precisely that the victim of the fraud was *only* the buyer.  If they *do*, then on what basis? How much can they sue for? What are the grounds?

It is for these considerations that I believe only the customer is the victim of fraud committed against him, not his putative seller.

 

SK2: In my mind, the case specified above is a type of fraud, and would be actionable by customers. Therefore, I do not think this type of fraud can be very successful or pervasive in a free market.  Even if the trademark holder (Good Soup) has no independent right to sue Bad Soup, Bad Soup still faces liability from its customers.  Moreover, grocery stores would stop carrying Bad Soup’s falsely labeled soups to avoid complaints of their customers. So I do not understand why there is any concern about genuine cases of fraud like this proliferating on the free market, unless the trademark holder himself has a cause of action. The cause of action on behalf of defrauded customers, and the market shunning that would occur, would marginalize such producers, it seems to me.

GR2: I n reality, an individual customer would almost certainly not sue Bad Soup, because the sum involved is too small. The same would probably often be true even if we substituted large-screen TV’s or even automobiles for cans of soup. A class-action suit might succeed, but that would entail major costs in terms of attorney’s fees and court costs. In the case of a can of soup, the individual buyer might be lucky to come out with the equivalent of a stick of chewing gum if the suit were successful.

 SK3: I agree; there are non-real aspects to the hypo, but I think we merely need to find a case where the buyer does recover, and then uses his recovered money to go ahead and buy what he intended to originally buy, to show that the genuine seller is not harmed by the fraud committed against the buyer. Only the buyer is harmed.

 

Moreover, and more importantly, contrary to your statement that “grocery stores would stop carrying Bad Soup’s falsely labeled soups to avoid complaints of their customers,” the more likely outcome would be that they would stop carrying “Good Soup’s” soup, in response to their customers’ complaints about “Good Soup.” Please remember, the customers are buying “Bad Soup” in cans labeled “Good Soup.” The complaints that “Bad Soup” deserves for the poor quality of its product will be directed against “Good Soup,” in the customers’ conviction that they’ve bought “Good Soup.”

From what I know of how trademark law actually works, and extrapolating to a world where only defrauded buyers can sue, I do not believe that this would usually be the case.  I think rather that grocery stores would have an incentive to verify the authenticity of goods they carry precisely to cater to customer demand; and that means that the store would itself be defrauded if it bought from some seller misrepresenting goods, and the store could then take legal action against the defrauder.

In any event, I grant that in some cases, something like what you describe may happen.  But it seems to me that describing this as actionable damage to Good Soup is question-begging, since you are assuming rights in reputation, which is really what is behind the trademark rights at issue.

The only means that I can see for avoiding this type of outcome is to enable “Good Soup” to sue “Bad Soup” for a sum of money equal to its damages plus the costs of the suit. This is the kind of arrangement needed to marginalize producers like “Bad Soup.” Additionally, “Bad Soup” should be subject to criminal penalties for stealing “Good Soup’s label.”

 SK3: The latter statement again appears to me to be question-begging, since if you call it stealing a label, you imply there are property rights in trade names, which is what is in dispute. As for your setting up some kind of system where, a la class action suits, the trademark holder has the right to sue “on behalf of” the defrauded customers of Bad Soup (and presumably would-be customers of the trademark holder, Good Soup), if you do this, it seems that to avoid double dipping the customer has to lose his right to sue (as individuals can lose their right to sue if they are part of a “class” in a class action).

But let me say this, George. My main disagreement with IP is with patent and copyright.  With trademark law, my main disagreements are (a) federalizing it, since it’s unconstitutional (unlike patent and copyright); (b) expanding it with things like anti-dilution rights; and (c) suits against knockoffs *where there is no fraud* ( e.g. cheap Rolex watches).

It seems to me your main concern is with letting there be some real, practical mechanism for the bad guy to get caught for his defrauding activities. If modern trademark law merely allowed trademark holders to sue on behalf of their putative customers, as a sort of efficiency thing or even based on tacit consent of the dispersed defrauded customers, I would have almost no objection. But this justification for trademark would not justify anti-dilution rights, or even suits where there is no fraud. So, for example, Good Soup sues Bad Soup as sort of the “agent” for all those dispersed customers who were defrauded by Bad Soup.  And puts BAd Soup out of business. I have little problem with this (only the niggling one that Good Soup is receiving money that the defrauded customers are entitled to; but the reality in most cases, as you note, is that they could never sue, so they are really out nothing, and probably most would be happy if Good Soup “stood in their shoes’ to sue Bad Soup, thus justifying a presumption of tacit consent for GS to be their agent).

Since you indicate below you are much less sure of the knockoff case, I think we really don’t disagree much. It’s just that our bases or rationales are somewhat different for arriving at a similar conclusion. If you believed Rolex could sue Fancy Watch for selling cheap fake Rolexes to people who are in no way defrauded, then we would have a more significant disagreement.

 

SK2: ¼Your reasoning here seems to apply only to cases where Bad Soup is actually deceiving its own customers (Good Soup’s prospective or thwarted customers).  I cannot see how it could possibly apply to cases of cheap knockoffs of trademarked items, such as $10 “Rolex” watches being sold by a street vendor in China.  Do you view such a sale as actionable by the trademark holder, even though the customer is not defrauded and Rolex is not deprived of a sale?

 

GR2: This is a case that I need to think more about. My inclination is to say that no crime is present if Rolex’s name is not used and the design is of long standing. But, as I say, I need to think more about cases of this kind.

 SK3: Let’s be clear: the Rolex name IS used, clearly.  There is a little cheap $10 watch that resembles a Rolex, has the Rolex name and symbol, but it has fake gold, cheap movement, etc. The customer knows it’s not real. So he is NOT defrauded at all. It’s hard to even assume  that he “would have” bought a real $5,000 Rolex if not for Fancy Watch’s fake Rolexes. So even by your argument, I’m not see how Rolex is “damaged”; the customer is not defrauded, nor damaged; and Rolex doesn’t “lose a sale” necessarily.  So the only argument left would be to argue Rolex owns a trademark right in its name–which is what we are debating.

Bottom line: for cases of genuine customer fraud, you won’t find me griping about the defrauder being sued by the trademark holder instead of (not being sued by) an amorphous and diffuse group of defrauded customers. If trademark law was limited to this, I’d be hunting bigger elephant–like patent and copyright law.

 

* * * * *

 

I turn now to the various questions I asked you.

GR2: I asked, “Do you believe that an individual has the right to sell others’ credit card numbers, bank account numbers, online passwords, and the like? …. ”

SK2: In my view, obtaining or using the property of another (say, money from a bank account) without the owner’s consent, is a form of theft or trespass, regardless of the means employed. It is the unconsented-to use of another’s property that is the crime, not the use of secret information as a means. But the use of the bank account number, say, is a means to commit a crime.

In my view also, aiding and abetting someone in committing a crime is also a crime.  The aider/abettor is causally responsible for the ensuing crime.

Therefore, supplying the bank account number to someone in this context, makes both the buyer of the information (who uses it to commit theft) and the seller of the information guilty of a crime against the victim.

 

GR2: It seems to me that you are saying here that the use of secret information as a means to commit a crime is not a crime [paragraph 1, sentence 2], and yet is a crime [the remainder of your three paragraphs]. You conclude by clearly saying that the seller of the [secret account information] is guilty of a crime.

 

Now I ask, is the printer who prints “Good Soup” labels for use by “Bad Soup” not guilty of the same kind of crime?

 

Finally, how is it possible that these crimes— i.e., violating property rights in the use of account numbers, passwords, and labels—are not crimes with respect to intellectual property😕 For these are all rights not in the use of  physical things but in the use of information. I know you may say that they are merely means to the commission of crimes, i.e., the actual taking of funds. But then would you say, for example, that the police can arrest the buyer of stolen credit-card information only when he actually uses it? Can they arrest a bomber only when he detonates his bomb or when he assembles it?

 

I look forward to your reply.

 

Sincerely,

George

 

P.S. Please expect a post from me within the next day or so on the subject of intellectually created property and copyrights.

 

Update: See also archived comments for the initial post above:

Comments (39)

  • TLWP Sam
  • Once again the question remains – what constitutes fraud? If (as this article implies) someone who buy a $10 ‘Rolex’ watch and complains he was ‘defrauded’ then it would pointed out “at what point did you think you could get a Rolex for $10?”. Fraud doesn’t seem to have a great history of enforcement as most people would say the ‘victim’ didn’t engage in any due diligence or wanted ‘something for nothing (or at least on the cheap)’. Hence Homer’s “it takes two to lie – one to lie and one to listen” seems to paraphrase W. C. Field’s “you can’t cheat an honest man”.
  • Published: July 25, 2008 1:36 AM

  • William H. Stoddard
  • The objection to property rights as “created by the state” strikes me as ill-considered, because it applies more broadly than its proponents seem to think. Intellectual property is created by state action? Well, what about property in land? A farmer can’t physically occupy all of his farm at once, or physically defend it against every intrusion. Squatters who have built houses tend to stay home as much as possible, for fear that someone else will move in and dispossess them. Hernan de Soto’s recommended cure for this has been to set up a title registry for each area, with a single clear record of who owns what land. But resolving such questions seems to be a characteristic activity of the state; the oldest historical records from the Near East already show legal decisions being made about land title, whereas tribal societies have no such procedures. So there seems to be just as good ground for doing away with ownership of land as for doing away with ownership of content. But I don’t see many libertarians advocating this.As to the enforcement of trademark by the trademark holder rather than the customer, that seems to be mainly a matter of administrative convenience. A parallel case would be broadcasting rights. If you broadcast on a frequency I’ve been using, the actual physical property that’s being interfered with is the radio receivers of people who listen to my broadcasts and are now prevented from doing so; it’s their property rights, and not mine, that are being directly violated. But the enforcement costs are vastly lower if your interference can be shut down by one big legal action from me, rather than nibbled away by a long series of legal actions from my listeners, any one of whom may well decide that the costs of suing you are worse than just putting up with the interference. Surely a sound legal regime will structure rights to make them convenient to enforce?
  • Published: July 25, 2008 9:26 AM

  • William H. Stoddard
  • The objection to property rights as “created by the state” strikes me as ill-considered, because it applies more broadly than its proponents seem to think. Intellectual property is created by state action? Well, what about property in land? A farmer can’t physically occupy all of his farm at once, or physically defend it against every intrusion. Squatters who have built houses tend to stay home as much as possible, for fear that someone else will move in and dispossess them. Hernan de Soto’s recommended cure for this has been to set up a title registry for each area, with a single clear record of who owns what land. But resolving such questions seems to be a characteristic activity of the state; the oldest historical records from the Near East already show legal decisions being made about land title, whereas tribal societies have no such procedures. So there seems to be just as good ground for doing away with ownership of land as for doing away with ownership of content. But I don’t see many libertarians advocating this.As to the enforcement of trademark by the trademark holder rather than the customer, that seems to be mainly a matter of administrative convenience. A parallel case would be broadcasting rights. If you broadcast on a frequency I’ve been using, the actual physical property that’s being interfered with is the radio receivers of people who listen to my broadcasts and are now prevented from doing so; it’s their property rights, and not mine, that are being directly violated. But the enforcement costs are vastly lower if your interference can be shut down by one big legal action from me, rather than nibbled away by a long series of legal actions from my listeners, any one of whom may well decide that the costs of suing you are worse than just putting up with the interference. Surely a sound legal regime will structure rights to make them convenient to enforce?
  • Published: July 25, 2008 9:27 AM

  • Person
  • THANK YOU, William H. Stoddard. I couldn’t have said it better myself. Maybe since you said it instead of me, Stephan will be more likely to listen.***Actually, I will add one thing: how far do you take the concept of fraud? Can’t it go well beyond the sale of the fake Rolex? To give a humorous example:Let’s say I buy a Rolex knock-off. And then let’s say a woman decides to sleep with me, based in large part on believing I was wealthy enough to afford a real Rolex.Stephan claims that fraud is a rights violation under libertarianism because (basically) it involves the taking of something that wasn’t actually consented to. In his example here: If I buy a fake Rolex, thinking it’s real, then what I have consented to is “give $X for real Rolex”. By giving me a fake one, he has taken money from me that I didn’t actually consent to giving him.Simple enough.But let’s go back to my example. What the woman REALLY consented to was “sexual use of my body by gentleman wealthy enough to afford a real Rolex”. But wait! I *wasn’t* such a gentleman, so the woman didn’t REALLY consent to sex with me. oops!

    Did that count as a aggression, Stephan?

  • Published: July 25, 2008 10:09 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:27 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:28 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • No, that is not an exchange.
    There is no implicit contract to violate.
  • Published: July 25, 2008 10:30 AM

  • scineram
  • Oh, shit.
  • Published: July 25, 2008 10:31 AM

  • Inquisitor
  • Stoddard, how about you independently, of the state’s claims, justify IP, eh, and stop regurgitating Person’s harebrained nonsense? Kinsella argues IP cannot be justified by argument in the way property otherwise can be. So deal with that, and not a strawman.
  • Published: July 25, 2008 10:33 AM

  • Person
  • Well, scineram, despite saying it 15 times, you’re wrong. There WAS a contract: the woman was giving “access to body for sexual activities” to “man wealth enough to buy real Rolex”. And despite accessing her body, I was NOT such a man, and so she never granted me permission for use of her property. Ergo, it was aggression.Looks open and shut to me.
  • Published: July 25, 2008 11:47 AM

  • Lode
  • _If_ she said that she ‘only’ wanted to have seks, because he is “man wealth enough to buy real Rolex”, then I would say there is a contractbreach. (It could be that he, in fact, is rich enough. That doesn’t mean that that rolex _has_ to be fake, though. But let’s ignore that fact.) If she, however, didn’t say such a thing – i.e. she didn’t stipulate any ‘conditions’ – then I say ‘haha’ to her. She has, imo, no legal claim for what so ever.
  • Published: July 25, 2008 11:56 AM

  • Kevin B
  • Person: So pay her the penny your promise to be a rich man is worth.
  • Published: July 25, 2008 12:07 PM

  • Stephan Kinsella
  • Silas:

    “Let’s say I buy a Rolex knock-off. And then let’s say a woman decides to sleep with me, based in large part on believing I was wealthy enough to afford a real Rolex.

    Stephan claims that fraud is a rights violation under libertarianism because (basically) it involves the taking of something that wasn’t actually consented to. In his example here: If I buy a fake Rolex, thinking it’s real, then what I have consented to is “give $X for real Rolex”. By giving me a fake one, he has taken money from me that I didn’t actually consent to giving him.

    Simple enough.

    But let’s go back to my example. What the woman REALLY consented to was “sexual use of my body by gentleman wealthy enough to afford a real Rolex”. But wait! I *wasn’t* such a gentleman, so the woman didn’t REALLY consent to sex with me. oops!

    Did that count as a aggression, Stephan?”

    The reason fraud is a rights violation is it is a means of committing a type of theft or maybe “conversion”–using someone’s property without their consent. It primarily refers to exchanges of title. So the title to my gold coin transfers to the apple seller ONLY if the seller is not knowingly defrauding me as to their quality. This is a condition to the coin title transferring. IF the condition isn’t filled, the title doesn’t trasnfer, so the seller is now in possession of my coin. If he doesn’t return it, he’s trespassing.

    I am not sure if this could apply as well in the case of personal interaction or services. The woman does not give title to anything; she just consents to teh man having sex with her body. Is the consent genuine? Hard to say. In a sense yes, even though she relied on a lie. In the case of an exchange based on fraud, I think the key is that the title transfer is contractually impeded by a fraudulent act. This is why the seller is holding property he has no title to and must return it. NOt sure if there is a direct analogue here.

  • Published: July 25, 2008 12:15 PM

  • Person
  • Lode: Okay then, go back to the store example:”Hey, *I* didn’t ever explicitly say that the Rolexes here were real. I just happen to have a bunch of signs around the store that say these are genuine Rolexes. Hell, I don’t even know who put them there. If you fell under the impression that I was giving you a real Rolex, that’s not my fault.”How is that different?***@Inquisitor: Stephan *tried* to show how IP cannot be justified. He failed to do so for numerous reasons I have cited on this blog and elsewhere, the clearest of which is this argument:If you accept property rights in radio waves, you accept a kind of property rights in the formation of a specific pattern, which is all that transmission of a radio wave is. Yes, radio waves are “different” in that they “interfere” with others who transmit the same frequency, but your characterization of it as “interference” only exists because of a value judgment you made (i.e. that you LIKE the situation resulting from non-interfering transmissions, that situation being the possibility of EM spectrum use for data transfer) — and the VERY SAME value judgment can be made for IP. Specifically, another use of an idea “interferes” with one kind of use, which people may consider beneficial in the same way that frequency rights are.Game. Set. Match.

    ***

    @Stephan: If your theory of contracts can’t handle cases of granting temporary usage rights to property, that is a deficiency in your theory, not in my argument.

    Consent to use of one’s body must be genuine, or the use is aggression. Just as consent to the transfer of an apple can be false (since the actual apple was not the one the buyer had in mind) consent to use of one’s body can be false (since the person granted permission was no the one the consenter had in mind).

  • Published: July 25, 2008 12:20 PM

  • Michael A. Clem
  • “Hey, *I* didn’t ever explicitly say that the Rolexes here were real. I just happen to have a bunch of signs around the store that say these are genuine Rolexes. Hell, I don’t even know who put them there. If you fell under the impression that I was giving you a real Rolex, that’s not my fault.”How is that different?Store vs. personal home, Sale (transfer of money for value) vs. intimate relations. Really, it’s an entirely different situation.
  • Published: July 25, 2008 12:55 PM

  • Person
  • Okay Michael, so you can apply different labels to the different situations. GREAT!But what I was looking for was a substantive, relevant distinction, not whether you can generate labels. Give it another go, k?
  • Published: July 25, 2008 12:59 PM

  • Michael A. Clem
  • The differences aren’t self-evident? Okay, “Consent to use of one’s body must be genuine, or the use is aggression. ” Guess what? I agree with that statement. However, since an exchange of value was not made (she wasn’t a prostitute, he wasn’t selling her the fake Rolex), the fraud involved isn’t a crime punishable by law, but merely by social sanctions (she blabs about his fake Rolex and never dates him again, for example), whereas, the store selling fake Rolex’s with signs saying they are genuine has committed a fraud that is punishable by law and the person thinking he was getting a real Rolex deserves to get his money back (restitution).
  • Published: July 25, 2008 1:08 PM

  • Person
  • Michael: The lack of an exchange of value implies no-punishment-via-law because ______?If I say, “Hey, anyone can dump non-radioactive material on my Plot #5”, I have granted a kind of permission. If then someone dumps radioactive material on Plot #5, *he has aggressed*, even though there was no “exchange of value”. It is aggression because he did not have permission for the act he performed — the permission was only for non-radioactive material.Similarly, in the rape case, if the woman consented to, “sexual use of my body, but only the gentleman I just met who is wealth enough to afford real Rolexes”, and I proceed, I have done the same thing: made use of property for which I wasn’t granted permission.
  • Published: July 25, 2008 1:32 PM

  • Chad
  • The Mises position on the validity and enforcement of trademarks is something on which I am still not perfectly clear, so allow me to inquire about a real-life example that varies a bit from the scenario in which someone is paying $10 for a “Rolex” they know beforehand is a blatant fake. Note that I am trying to -learn- by posing this scenario, not be difficult.Unopened (Mint In Sealed Box or Mint On Sealed Card) vintage toys demand very high prices (hundreds or thousands of dollars) among collectors in the secondary market as they are fairly rare. After all, how many kids in the 70’s and 80’s never opened their toys? I know I did.Some Chinese companies have tried to cash in on that fact by producing extremely convincing replicas (i.e., forgeries) of those vintage toys and fraudulently marketing them as official, vintage items with the associated high prices. Quite a number of collectors have ended up being burned by these schemes, paying hundreds of dollars for something it is ultimately worth far less once its true nature has become known.The only way that some have even recognized these as forgeries is by comparing them in detail to the original items and finding minute discrepancies; just seeing a photo of the item in-box on eBay is not sufficient. To reiterate, the real thing is worth a lot of money while a forgery is not as would be the case with old paintings.As a result, eBay and Hasbro have started cracking down via trademark infringement on the sellers in China of these unlicensed, vintage toy forgeries that are spreading throughout the secondary market. If nothing else, Hasbro does not want products floating around bearing their company logo and brand names which have not been subjected to their safety tests (lead paint hazard, inferior plastic quality, etc.), possibly opening them up to legal liability.So, is Hasbro pursuing the correct course of action in this situation, possibly on the part of duped purchasers of the forgeries? Does the company have a rightful claim against the toy forgers for using their brand name and trademarks without permission? If so or if not, why?
  • Published: July 25, 2008 2:33 PM

  • Michael A. Clem
  • Michael: The lack of an exchange of value implies no-punishment-via-law because ______?Because we’re talking about fraud, not trespass or an initiation of force. So tell me, in your example, what is the “appropriate” punishment for having sex because a guy wore a fake Rolex? She takes him to court and expects a judge and/or jury to award her ____?
  • Published: July 25, 2008 2:35 PM

  • Brainpolice
  • “Intellectual property is created by state action? Well, what about property in land?”Yes, historically the state has granted property titles in land as a legal privilege to a small few who do not actively labor upon that land. I think the problem is that you’re conflating property rights with property titles. Property rights are a particular standard, but the current allocation of property titles does not necessarily reflect property rights. In fact, it blatantly violates them.
  • Published: July 26, 2008 12:11 AM

  • TLWP Sam
  • “As a result, eBay and Hasbro have started cracking down via trademark infringement on the sellers in China of these unlicensed, vintage toy forgeries that are spreading throughout the secondary market. If nothing else, Hasbro does not want products floating around bearing their company logo and brand names which have not been subjected to their safety tests (lead paint hazard, inferior plastic quality, etc.), possibly opening them up to legal liability.” – ChadThe bigger question is – does a company have a right to its name and logo and others idenitifers? Is it perfectly valid for another toy company to call itself ‘Hasbro’ and use the same logo and colour and so forth that Hasbro uses to identify itself? Or can ‘Hasbro 2’ argue that ‘Hasbro 1’ has not right to own ‘words’, ‘colours’, ‘patterns’, ‘symbols’, etc., and it’s up to the comsumer to guess which company is which by buying the produce?
  • Published: July 26, 2008 12:37 AM

  • William H. Stoddard
  • “Yes, historically the state has granted property titles in land as a legal privilege to a small few who do not actively labor upon that land. I think the problem is that you’re conflating property rights with property titles. Property rights are a particular standard, but the current allocation of property titles does not necessarily reflect property rights. In fact, it blatantly violates them.”I don’t think that’s a sufficient answer. It’s not evident to me that there is any system of property rights in land that is not created by a state. State-created property titles cannot be called a distortion of property rights if the property rights have no independent existence apart from the property titles.
  • Published: July 26, 2008 2:28 AM

  • Chad
  • “The bigger question is – does a company have a right to its name and logo and others idenitifers? Is it perfectly valid for another toy company to call itself ‘Hasbro’ and use the same logo and colour and so forth that Hasbro uses to identify itself?”Personally, I would answer in the negative to that second question even if doing so was not considered illegal. It almost seems like a deliberate act of corporate “identity theft,” especially since companies pour so much money into establishing their unique identities in the market.”Or can ‘Hasbro 2’ argue that ‘Hasbro 1’ has not right to own ‘words’, ‘colours’, ‘patterns’, ‘symbols’, etc., and it’s up to the comsumer to guess which company is which by buying the produce?”I might be wrong, but it seems to me that some would argue that Hasbro #2’s argument is correct. However, that would leave discriminating consumers open to fraud. How could they ever know if what they were purchasing was an official product from Hasbro #1 or just a clever forgery by a competing company such as Hasbro #2?I am not saying that a company should be able to exclusively trademark a common color (ex. purple) or a common pattern (ex. stripes), but they have to have -some- way of uniquely identifying their products visually from those of copycat competitors. Trademarking an uncommon word as a company name (ex. “Hasbro”) or an uncommon word as a product name (ex. “Stratego”) seems reasonable enough to me; it does get a bit less clearcut, though, once you start talking about trademarking common words like (Nike) “Air” or (Ford) “Focus.”Perhaps, I just perceive trademarking as a form of helpful consumer fraud prevention while others just perceive it as the arbitrary, exclusive ownership of words, shapes, patterns, or colors. I am not sure exactly how to balance the two properly.
  • Published: July 26, 2008 4:21 AM

  • Mike
  • My wife bought me an “Ipod” off of ebay for what seemed like a decent price, yeah I know what was she thinking. When it arrived it even looked legit (identical packaging, apple logos, etc). As soon as i turned it on, it was obviously a fake. However, she also used PayPal to pay for the item. She disputed with PayPal and within a week had all of her money back. Why do some people act as if the market can’t solve the problem of two companies using the the same name and logo? The argument is no better than the one that we would all just sit around stranded and helpless if the government didn’t build roads.
  • Published: July 26, 2008 10:12 AM

  • Brainpolice
  • “I don’t think that’s a sufficient answer. It’s not evident to me that there is any system of property rights in land that is not created by a state. State-created property titles cannot be called a distortion of property rights if the property rights have no independent existence apart from the property titles.”I don’t consider property rights to be a system, it’s an ethical standard. If you follow your own logic here, it is you who’s claiming that property rights are a product of the state. I disagree, but I’m sure you’ll find plenty of Marxists who agree with you (albiet from a different angle). From my perspective, state-created property titles are not property rights and are irreconcilable with a free market.
  • Published: July 26, 2008 1:50 PM

  • Chad
  • Mike, the PayPal refund procedure you described is likely abused by unscrupulous buyers nearly as often as it is used legitimately, potentially freezing an honest seller’s entire account rather than just the amount of money involved in the original transaction, so it is still does not solve the problem.Personal identity theft is someone fraudulently pretending to be you. Business/corporate identity theft is a competitor fraudulently pretending to be your company and/or fraudulently marketing its products as yours. The bottom line is that I do not see how the former can be roundly condemned but the latter be considered acceptable.
  • Published: July 26, 2008 4:24 PM

***


Comments

But trademark law does give trademark holders–not customers–the right to sue infringers, regardless of whether there is really fraud to the consumer.

Despite my dislike for the way trademarks are currently being used, there is some argument to be made against allowing certain cheap knock-offs to use the markings of a well-known brand. The one I have in mind is cheapness. If a fake Rolex breaks at a dinner party, perhaps the wearer will be outed, but if not, it is possible for others observing the breakdown to reduce their opinion of the Rolex brand. “Rolex isn’t what it used to be,” they might say.

I would agree that, in the case of a perfect replica, there is no argument to be made for trademark dilution because there is no damage. There is also no misrepresentation if each seller properly identifies it as a fake (or a circumstance in which a buyer would easily infer), and it would be even better for the device to have some discrete but visible marking to that effect.

[Comment at 07/24/2008 10:07 PM by Mark]

Trademark holders also have a claim against those who defraud customers. The trademark holder’s reputation can suffer harm by the actions of the perpetrator. The previous commetor makes much the same point.

[Comment at 07/25/2008 10:36 AM by Anonymous]

Mark:

“Despite my dislike for the way trademarks are currently being used, there is some argument to be made against allowing certain cheap knock-offs to use the markings of a well-known brand. The one I have in mind is cheapness. If a fake Rolex breaks at a dinner party, perhaps the wearer will be outed, but if not, it is possible for others observing the breakdown to reduce their opinion of the Rolex brand. “Rolex isn’t what it used to be,” they might say.”

So what? Don’t people have a right to form whatever opinion they want of Rolex, based on however shoddy evidence?

Anon: “Trademark holders also have a claim against those who defraud customers. The trademark holder’s reputation can suffer harm by the actions of the perpetrator. The previous commetor makes much the same point.”

This all ties in together. Sure, if there are reputation rights, you can justify parts of trademark law; but reputation rights are just as illegitimate as copyright, patent, and modern statutory trademark law. See on this Rothbard, Ethics of Liberty, chapter 16, “Knowledge, True and False”, pp. 126-128.

[Comment at 07/25/2008 02:23 PM by Stephan Kinsella]

Reputation rights are needed for as long as people are easily swayed by simply repeating a falsehood enough times AND people have unequal access to the ability to market (and defend) themselves through hiring their own PR agency or similarly.Otherwise, the poor are disadvantaged and can easily be destroyed by any enemies that decide to gang up and publicly vilify them, as they’ll be unable to reply with anything like the reach and volume of their attackers. Basically, they are at a disadvantage in any shouting match, and sooner or later there will be one.

[Comment at 07/28/2008 05:00 AM by Nobody nowhere]

***

Trademark and Fraud

NOVEMBER 7, 2007 by 

An edited excerpt from my comment in an email discussion:

It seems to me that the primary justification for trademark rights is based on the notion of fraud–that the “infringer” is defrauding his customers by misrepresenting his identity and the source of the goods being sold (see pp. 43-44 of my Against Intellectual Property, pp. 59-63 of Reply to Van Dun: Non-Aggression and Title Transfer, p. 34 of A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability). This would give a cause of action to customers, however, not to the holder of the mark, who is not defrauded.Now just as some a “class representative” is given the right to sue on behalf of the whole class in a class action lawsuit for efficiency/incentive reasons, the more law-and-economics minded types might say that the right to sue for such consumer fraud ought to be transferred from the diffuse group of defrauded customers, to the trademark holder himself. That is, the trademark user can sue infringers, but his right to do this is based on the right of customers’ fraud cause of action.

There are problems, to my mind, with transferring the customers’ rights to the trademark holder, but even if you were to do this, the trademark holder should not be able to sue an infringer unless there is clear fraud of the customer. For example, Rolex could not sue Rolex knock-off companies, because people who buy fake Rolexes for $10 are not being defrauded. They know they are buying a cheap knock-off. But trademark law–both statutory and common law–does give trademark holders the right to sue infringers, regardless of whether there is really fraud to the consumer.

This is my main problem with current trademark law–that in transferring the customer-fraud-based right to trademark holders, the fraud basis is lost over time, as the trademark right is conceived of as a right of the trademark holder. Then it gets broadened and extended, as all IP law does, just like money is continually debased and rights are continually diluted–for example, now trademark law has the horrendous “anti-dilution” cause of action, which does not even require “consumer confusion,” which at least standard trademark infringement claims do.

***

 

From earlier comments in the same email thread:

Identity theft is usually a form of fraud. But the concept of fraud, like that of IP (as well as “labor” and “creation” etc.) is bandied about imprecisely. To my mind, “fraud” is a type of crime not if it’s merely “being dishonest,” but if it’s one way to gain unconsented-to use of another’s property. Just as sex with a child is effectively rape, because the child has no capacity to consent–no effective consent is given–so the transfer of possession and title to a good based on false representations made by the recipient is one where no effective consent is given. In other words, it’s a way of stealing property; it’s “theft by trick.” If you give me your pig, for my bucket of (good) apples, but my apples are all rotten or fake, then title to the pig does not pass to me, and I know it. My right to have and use your pig is conditioned on my not tricking you about the quality of the apples made in payment. So if you give me bad payment, you know you have my pig without my effective consent. And what is theft or trespass but the use of others’ property without consent?

But what is important to realize here, and in the case of fraud, is that it is the party actually being defrauded who is the victim. If you try to base trademark, or reputation rights, on fraud, it fails. In the case of trademark, the company using the mark is held to be infringed. If it were really based on a fraud claim, then the buyers of fake Louis Vuitton purses are not defrauded (they know they are buying a fake $10 purse), so there would be no trademark infringement; yet there is.

To address some of Professor Reisman’s particular points:

“Is identity theft, about which so many people are concerned, some form of mirage or is it a real phenomenon”

Identity theft describes a real phenomenon, one in which fraud is almost always involved. For example, I lie to a bank and persuade them I am Reisman, and they hand over Reisman’s gold to me. I am in possession of gold I do not own and have no right to control. I have defrauded, and stolen from, at least Reisman or the bank. I see no reason to invent “IP” to describe this.

“If it is a real phenomenon and identities are actually being stolen—as many thousands of victims of identity theft are prepared to swear, and as the banks and credit card companies of these victims also swear—then does it not follow that identities are a form of property? For nothing can be stolen that is not first owned by someone.”

I do not think it implies identity is a form of property. It only implies that you only have a right to use others’ property if they consent to it.

“If identities are a form of property, are they not intellectual property, since they consist entirely of words and symbols, not the physical persons of the people to whom the identities refer?”

I think it is not “intellectual property,” since the property at issue is always real property. The question is who is controlling it. If someone uses it or takes or controls it without the consent of its owner, it’s a form of theft or trespass.

“If individuals do have a property right in their own identities, do they not also have a property right in the words and symbols that uniquely identify their products and services? And, by extension, do not voluntary associations of individuals, such as business partnerships and private corporations have a property right in the words and symbols that uniquely identify them and their products and services? Thus, for example, does not General Motors have a property right in its name and logo and in the names and logos of its various individual products and services? In other words, are not brand names and trademarks legitimate forms of intellectual property?”

If I claim to sell a Mont Blanc pen, but it’s a knockoff, then the buyer is defrauded, unless he knows what is is buying is a fake. The company “Mont Blanc” is not defrauded in either case, as far as I can see.

“Are trademarks and brand names not essential for the operation of free competition, in which better producers benefit from their record of past good work and poorer producers suffer from their record of past poor work?”

It is perhaps essential that people be able to identify themselves, and communicate, but this does not mean there are property rights in identifications or ways of communication (languages or words). I see no reason to believe that absent IP there would be no records or reputations, or no ways to prevent or penalize fraud.

And let’s face it: who publishes public domain works now, under false names? Who claims to be the new author of the Nichomachean Ethics? Any serious businessman wants to establish his own name, not pirate others’.

“I want to say that I recognize that we live in an age of intellectual disintegration, in which philosophers, lawyers, and judges have proved themselves capable of corrupting practically any concept. As a result, it should not be surprising that there are corruptions of the concept of intellectual property and its application. One that comes readily to mind is Ralph Lauren’s ability, according to John Stossel, to appropriate the word “Polo,” to the point that even organizations of actual polo players cannot use the word without being held guilty of violating an alleged intellectual property right of Lauren’s. The truth, of course, if Stossel is right, is that Lauren’s appropriation of the word “Polo” is a violation of their intellectual property rights.”

In my view, this is the inevitable and predictable result of entrusting the state with the production and adminstration of law.

“I’ve deliberately avoided any discussion of patents and copyrights here because my purpose has been simply to establish the legitimacy of the concept of intellectual property as such.”

As far as I can see, there is no legitimacy to this concept. To the extent it’s legitimate, it’s just the application of principles of fraud and property. To the extent it goes beyond these things (e.g., giving the right to sue to the trademark user instead of to the customer) it’s not legitimate.

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***

Archived comments to “Trademark and Fraud,” Mises Economics Blog (Nov. 7, 2007)

{ 22 comments }

Yancey Ward November 7, 2007 at 2:02 pm

I am looking for Person, is he here yet?

 

Person November 7, 2007 at 2:47 pm

Person here, reporting for duty.

Stephan_Kinsella: I’ve long held the distinction between a customer vs. producer right to sue about trademark misappropriation is meaningless.

Let’s say for a moment that only customers can sue. So what? Then the trademark owner can send people out to buy the stuff and then say, “Oh wait! I thought I was buying a genuine McDonald’s burger — that sign out front looks so much like the real thing!”

Then he’d have the right to sue, he would get class action status, and we’d be right back to the situation where trademark holders had the right.

Now, about identity theft: I agree with you that on the issues George_Reisman raised, there is no need to reference “intellectual property”. However, personal information privacy is a problem you and all other IP opponents. Specifically: why, under your property rights theory, would it be illegal for me to sell other people your PIN number? Let’s say I hack into your computer and get your passwords. I can understand (for the sake of argument) how that’s trespassing. However, you have always held that even if I obtained information from trespassing, I still have the right to use that information, as long as I made good on the trespassing tort.

In that case, your only libertarian objection to distributing someone’s authentication information (including helping them modify their face, voice, etc.) is that it makes you an “accessory to fraud”. Is that accurate, or is there another reason why you object to giving away people’s PINs?

And then on top of that, what if say, I took pictures of your children in the bathroom? Okay, I have to trespass to do that. But then nothing in your property rights theory prevents me from distributing the pictures. Whatever reason you use, comes down to form of IP.

 

Don November 7, 2007 at 3:49 pm

“Specifically: why, under your property rights theory, would it be illegal for me to sell other people your PIN number?”

Because that’s part of the bank account, which is someone else’s property.

 

“Let’s say I hack into your computer and get your passwords. I can understand (for the sake of argument) how that’s trespassing.”

And, necessarily, a property rights violation. So you’ve answered your own question. QED.

 

“However, you have always held that even if I obtained information from trespassing, I still have the right to use that information, as long as I made good on the trespassing tort.”

You can, and then how many people will continue to deal with you?

 

Stephan Kinsella November 7, 2007 at 5:14 pm

Person:

Stephan_Kinsella: I’ve long held the distinction between a customer vs. producer right to sue about trademark misappropriation is meaningless.

Let’s say for a moment that only customers can sue. So what? Then the trademark owner can send people out to buy the stuff and then say, “Oh wait! I thought I was buying a genuine McDonald’s burger — that sign out front looks so much like the real thing!”

Then he’d have the right to sue, he would get class action status, and we’d be right back to the situation where trademark holders had the right.

Except the notion of class action is problematic too. Plus, you’d not be back where you started before–here, the TM owner could sue ONLY for fraud. He could NOT sue a knockoff artist who admits to the customer he’s selling a cheap knockoff.

Now, about identity theft: I agree with you that on the issues George_Reisman raised, there is no need to reference “intellectual property”. However, personal information privacy is a problem you and all other IP opponents. Specifically: why, under your property rights theory, would it be illegal for me to sell other people your PIN number?

Well, let me think. For them to use my PIN number would be akin to theft–it would be unconsented-to access to my property (my bank account, whatver). And you are aiding and abetting them.

Let’s say I hack into your computer and get your passwords. I can understand (for the sake of argument) how that’s trespassing. However, you have always held that even if I obtained information from trespassing, I still have the right to use that information, as long as I made good on the trespassing tort.

I merely say that using information is not a violation of anyone’s rights per se, since information is not owned. But you don’t have the right to commit trespass–whatever means you want to employ. And if you use my PIN to take my money, you are gaining access to my property (money) without my permission–that’s theft.

In that case, your only libertarian objection to distributing someone’s authentication information (including helping them modify their face, voice, etc.) is that it makes you an “accessory to fraud”.

Accessory to conversion/theft/misappropriation, actually.

And then on top of that, what if say, I took pictures of your children in the bathroom? Okay, I have to trespass to do that. But then nothing in your property rights theory prevents me from distributing the pictures. Whatever reason you use, comes down to form of IP.

No, if you did that, I can stop you from distributing the pix, b/c I have hte right to punish you for committing trespass. The punishent could include restricting your actions. BUt if you had already leaked the pix, to third parties, I think there’s nothing I can do to stop them from using or distributing the pix.

 

Person November 7, 2007 at 5:48 pm

Stephan_Kinsella:Except the notion of class action is problematic too. Plus, you’d not be back where you started before–here, the TM owner could sue ONLY for fraud. He could NOT sue a knockoff artist who admits to the customer he’s selling a cheap knockoff.

So you’re referring to a situation where someone sells a purse with a Gucci logo but says, “ah nah, don’t worry about that, it’s not really Gucci, just an imitatation”? That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”

Just as you would not like for people act like that while impersonating you, Gucci would not like people to wear stuff that says “this is Gucci” when it’s really not. So if you object to one, you have to object to the other. Does your property rights theory stop me from imitating you like I described above?

Well, let me think. For them to use my PIN number would be akin to theft–it would be unconsented-to access to my property (my bank account, whatver). And you are aiding and abetting them.

Right — just like if I gave them a computer or internet access or a lockpick or a gun …

No, if you did that, I can stop you from distributing the pix, b/c I have hte right to punish you for committing trespass. The punishent could include restricting your actions. BUt if you had already leaked the pix, to third parties, I think there’s nothing I can do to stop them from using or distributing the pix.

First of all, how does the right to punish me for committing trespass give you the right to restrict my transfer of information?

Second, if you really don’t believe this distribution can be legitimately restricted, I don’t know what to tell you. Few people, even libertarians, want to live in that kind of world.

 

Stephan Kinsella November 7, 2007 at 7:25 pm

Person/Silas:

Stephan_Kinsella:Except the notion of class action is problematic too. Plus, you’d not be back where you started before–here, the TM owner could sue ONLY for fraud. He could NOT sue a knockoff artist who admits to the customer he’s selling a cheap knockoff.

So you’re referring to a situation where someone sells a purse with a Gucci logo but says, “ah nah, don’t worry about that, it’s not really Gucci, just an imitatation”? That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”

Surely, Silas, you are familiar with the phenomenon of cheap knockoffs. People buy fake $10 LV purses because they are cheap, and they konw they are fake. They are not defrauded. Do you agree?

How about wearing the purse? Is that “defrauding” anyone?

Just as you would not like for people act like that while impersonating you,

Who cares what I “like”?

Gucci would not like people to wear stuff that says “this is Gucci” when it’s really not.

Who cares if they don’t “like” it? So? Blockbuster does not “like it” when a HollyWood Video opens up across the street, either. So what?

So if you object to one, you have to object to the other. Does your property rights theory stop me from imitating you like I described above?

I don’t see how it does, as a general matter.

SK: Well, let me think. For them to use my PIN number would be akin to theft–it would be unconsented-to access to my property (my bank account, whatver). And you are aiding and abetting them.

Right — just like if I gave them a computer or internet access or a lockpick or a gun …

It’s not the point how you aid and abet someone. Just b/c you help them do something does not mean the way you help them is necesarily property, if tha’ts what you’re getting at.

SK: No, if you did that, I can stop you from distributing the pix, b/c I have hte right to punish you for committing trespass. The punishent could include restricting your actions. BUt if you had already leaked the pix, to third parties, I think there’s nothing I can do to stop them from using or distributing the pix.

First of all, how does the right to punish me for committing trespass give you the right to restrict my transfer of information?

I can use my right to punish in a variety of ways. I can say I will wield my right to punish if you release the picture. Think creatively dude.

Second, if you really don’t believe this distribution can be legitimately restricted, I don’t know what to tell you.

Oh, thank goodness.

Few people, even libertarians, want to live in that kind of world.

Nice argument!

 

David Bratton November 7, 2007 at 9:06 pm

Person:That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”

What if it was your identical twin?

 

Robert M. November 8, 2007 at 1:43 pm

David:
Well it depends, who was born first?

 

Person November 8, 2007 at 1:57 pm

Yeah, that Holocaust deal — it’s all a myth. XD

 

Kevin B November 8, 2007 at 2:02 pm

*takes off Person costume*

Fooled you!!! (in Dark Helmet voice)

 

Michael A. Clem November 8, 2007 at 2:02 pm

That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”
Um, that doesn’t sound equivalent to me. Now suppose someone who looked like Stephan but told people his real name, and that he wasn’t Stephan, then that would be equivalent. See the difference?

 

George Reisman November 8, 2007 at 5:19 pm

Dear Stephan:

Thank you for your answers to my various questions. Not surprisingly, your answers raise further questions.

1. You appear to reduce the concept of identity theft to fraud, at least insofar as you think that the complaint is legitimate. So let’s deal with cases in which no fraud is involved in the sense of someone’s obtaining someone else’s wealth by means of deception. Let’s deal with cases in which one person assumes another person’s identity for the purpose of maligning him. Thus, for example, imagine that a scholar publishes articles under another scholar’s name, articles which support views that that other detests, signs his name to petitions of a like nature, enrolls him in organizations he despises (at the same time paying the dues for such enrollments), and finally perhaps, arranges to have his target’s name appear on a list of registered sex offenders. Imagine, for example, that Oskar Lange, or some other Communist, did such things to von Mises.

My understanding of your position is that no crime is present in any of these or like instances because no right of the victim—namely an exclusive right to the use of his own name in presenting himself to others—is being violated because no such right exists. Am I correct in my understanding of your position?

2. Now back to wealth being involved in the misrepresentation. My understanding of your position here is that the use of another’s brand name or trademark may represent an instance of fraud against the buyers of the products involved but no crime is committed against the seller.

So let’s imagine two soup companies, “Good Soup” and “Bad Soup.” The company producing “Good Soup” is careful to produce a soup that is always good tasting and untainted. The company producing “Bad Soup” doesn’t mind if an occasional fingernail is found in one of its cans. In a free market, business will tend to be good for “Good Soup” and bad for “Bad Soup.” But as I understand your position, if the producers of “Bad Soup” exactly duplicated the labels affixed to cans of “Good Soup” and affixed them to their own cans of “Bad Soup” and then sold the latter as though it were “Good Soup,” the only parties able to claim the status of victims of a crime would be the buyers of the mislabeled cans of soup.

This strikes me as incredibly unjust. The damage to the buyer of a can of soup is the dollar or two that he paid for it. The damage to the seller may be many millions of dollars in sales revenues that he is prevented from earning because of the damage to his reputation. Indeed, all supporters of the doctrine of opportunity cost must regard his loss in this instance as being fully as real as the loss of millions already in his pocket and thus as being on all fours with his being the victim of fraud. (As you may know, I oppose the doctrine of opportunity cost, and so I would not go this far. I am content to say that it is a deprivation of wealth that the seller otherwise almost certainly would have had, and that, being the result of deliberate deception, it too should be punishable by law.)

3. Continuing with point 2, if it is legal for “Bad Soup” to duplicate the label and all the other possible external identifying characteristics of “Good Soup,” how can there be any basis for claiming fraud against “Bad Soup” in the first place?” On what basis should the buyers expect that only “Good Soup” would be labeled “Good Soup”? Shouldn’t they know that when they buy “Good Soup,” it may just as easily be “Bad Soup” as “Good Soup”? If they have no reasonable expectation of a product being one thing rather than another, how can they claim to be deceived when it is one thing rather than another?

4. You wrote, “It is perhaps essential that people be able to identify themselves, and communicate, but this does not mean there are property rights in identifications or ways of communication (languages or words). I see no reason to believe that absent IP there would be no records or reputations, or no ways to prevent or penalize fraud.”

It is indeed essential that people be able to identify themselves, and communicate. Life in a division of labor-society absolutely requires it. Such a society requires the constant interaction of people and their ability to discriminate between the good and bad performance of others and to reward and penalize accordingly. They can do this only if they know the exclusive, unique identities of those others, so as not to confuse the good with the bad or the better with the worse. This knowledge is secured by the legal recognition of property rights in such things as trademarks and brand names and in one’s own name and identity insofar as one is represented to others.

I invite you to explain how in the absence of the legal recognition of such rights, the necessary discriminations could be made in any effective and economical way. I think I have offered reasons why they could not be.

Sincerely,

George

 

Kevin B. November 8, 2007 at 5:51 pm

George Reisman,

2. What kind of reputable store stocks its shelves with a new soup that is obviously trying to defraud its customers?

3. Why should customers expect to find soup inside cans labeled, “Soup”?

 

Peter November 8, 2007 at 6:37 pm

My understanding of your position is that no crime is present in any of these or like instances because no right of the victim—namely an exclusive right to the use of his own name in presenting himself to others—is being violated because no such right exists. Am I correct in my understanding of your position?

I should hope so. Nobody has exclusive rights to “their” name. I know of at least five other people that share my name (well, four now; one died a while back). I can’t stop those people from signing my name on petitions, etc.; what difference does it make if someone who doesn’t share my name signs my name on a petition? (How do you even distinguish between signing my name and signing the name of the moderately-well-known architect who has the same name as me?)

 

Stephan Kinsella November 9, 2007 at 12:23 am

Reisman:

Thank you for your answers to my various questions. Not surprisingly, your answers raise further questions.

1. You appear to reduce the concept of identity theft to fraud, at least insofar as you think that the complaint is legitimate. So let’s deal with cases in which no fraud is involved in the sense of someone’s obtaining someone else’s wealth by means of deception. Let’s deal with cases in which one person assumes another person’s identity for the purpose of maligning him. Thus, for example, imagine that a scholar publishes articles under another scholar’s name, articles which support views that that other detests, signs his name to petitions of a like nature, enrolls him in organizations he despises (at the same time paying the dues for such enrollments), and finally perhaps, arranges to have his target’s name appear on a list of registered sex offenders. Imagine, for example, that Oskar Lange, or some other Communist, did such things to von Mises.

My understanding of your position is that no crime is present in any of these or like instances because no right of the victim—namely an exclusive right to the use of his own name in presenting himself to others—is being violated because no such right exists. Am I correct in my understanding of your position?

George, I think this is basically correct. I think the reasoning of libertarians like Rothbard who oppose rights in reputations is right, e.g. as Rothbard argues here.

Now back to wealth being involved in the misrepresentation. My understanding of your position here is that the use of another’s brand name or trademark may represent an instance of fraud against the buyers of the products involved but no crime is committed against the seller.

So let’s imagine two soup companies, “Good Soup” and “Bad Soup.” The company producing “Good Soup” is careful to produce a soup that is always good tasting and untainted. The company producing “Bad Soup” doesn’t mind if an occasional fingernail is found in one of its cans. In a free market, business will tend to be good for “Good Soup” and bad for “Bad Soup.” But as I understand your position, if the producers of “Bad Soup” exactly duplicated the labels affixed to cans of “Good Soup” and affixed them to their own cans of “Bad Soup” and then sold the latter as though it were “Good Soup,” the only parties able to claim the status of victims of a crime would be the buyers of the mislabeled cans of soup.

Yes, I think this is basically right.

This strikes me as incredibly unjust. The damage to the buyer of a can of soup is the dollar or two that he paid for it. The damage to the seller may be many millions of dollars in sales revenues that he is prevented from earning because of the damage to his reputation. Indeed, all supporters of the doctrine of opportunity cost must regard his loss in this instance as being fully as real as the loss of millions already in his pocket and thus as being on all fours with his being the victim of fraud. (As you may know, I oppose the doctrine of opportunity cost, and so I would not go this far. I am content to say that it is a deprivation of wealth that the seller otherwise almost certainly would have had, and that, being the result of deliberate deception, it too should be punishable by law.)

I understand your position here, but your position appears a bit question begging. Whether it’s unjust or not, in the political sense, depends on whether there is a property right, which is the question. Merely causing “damage” is not enough; with a loose enough conception of “cause damage”, the HollyWood Video that moves in across the street from a BlockBuster, thus “taking” some of “its” business, also “causes damage”–but this is entirely rightful. The reason is the Hollywood Video is not entitled to be patronized by customers. Likewise, I would argue that Good Soup is not entitled to have any of its customers buy soup from it. That is up to the customers. If the customers choose, for *whatever reason*, not to buy from Good Soup, this does not violate any property right of Good Soup. This is so even if the reason is that the customers choose to rely on the false information spread by Bad Soup. At most, it is the customers who have been harmed (defrauded), but since Good Soup is not entitled to their purchase of its soup in the first place, I do not see how its rights are violated if the customers do not make the purchase.

Let’s take a simple, but stark, example. I murder some lady on her way to the store, where she was planning to buy a can of Good Soup’s soup. Now, the purchase does not take place. Did I “damage” Good Soup by murdering the would-be customer? I think not; my act of wrong is fully exhausted by the crime against the victim. It’s not as if Good Soup is married to the victim and has some separate right of recovery for my crime against her. It’s just a crime against victim.

Continuing with point 2, if it is legal for “Bad Soup” to duplicate the label and all the other possible external identifying characteristics of “Good Soup,” how can there be any basis for claiming fraud against “Bad Soup” in the first place?” On what basis should the buyers expect that only “Good Soup” would be labeled “Good Soup”? Shouldn’t they know that when they buy “Good Soup,” it may just as easily be “Bad Soup” as “Good Soup”? If they have no reasonable expectation of a product being one thing rather than another, how can they claim to be deceived when it is one thing rather than another?

I understand this critique; it is basically the point made by Van Dun in Against Libertarian Legalism: A Comment on Kinsella and Block — see, e.g., pp. 68-70. I already replied to this–see pp. 59-63, in particular p. 62-63 of Reply to Van Dun: Non-Aggression and Title Transfer. As I wrote there:

“Van Dun might argue that it is not possible to identify the R-Burger chain if it does not have a trademark right, and that the L-Burger chain can just rename itself Ã’R-BurgersÓ too, so that when the customer asks for an R-Burger ( i.e., conditions the title transfer to the money on it being made and sold by R-Burger), he is actually getting one. He is just getting it from the second R-Burger company, not from the first R-Burger company.

“However, this response would be easy to overcome. It need only be possible for the customer to adequately identify what the condition is. Language is not infinitely malleable, and communication is (undeniably) possible. If pressed, the customer could specify that the purchase is conditioned on the current store he is in being owned by the same R-Burger company first started at such and such date and address, and so on. There is no reason it would be impossible to identify a given vendor without traditional trademark law, just as it is not impossible to identify fellow humans, despite the fact that we do not usually have trademarks on our names (in fact, humans often have identical names, e.g., John Smith).

“Van Dun’s implicit assumption here is really that communication and identification of individuals or entities is literally impossible in the absence of trademark rights. This is obviously absurd.”

Continuing with Reisman’s comments:

You wrote, “It is perhaps essential that people be able to identify themselves, and communicate, but this does not mean there are property rights in identifications or ways of communication (languages or words). I see no reason to believe that absent IP there would be no records or reputations, or no ways to prevent or penalize fraud.”

It is indeed essential that people be able to identify themselves, and communicate. Life in a division of labor-society absolutely requires it. Such a society requires the constant interaction of people and their ability to discriminate between the good and bad performance of others and to reward and penalize accordingly. They can do this only if they know the exclusive, unique identities of those others, so as not to confuse the good with the bad or the better with the worse.

I think this is basically correct, to this point.

This knowledge is secured by the legal recognition of property rights in such things as trademarks and brand names and in one’s own name and identity insofar as one is represented to others.

Yes, it can be protected this way. The question is whether this is justified, or even necessary. I do not think “communication” requires a state-enforced set of reputation and trademark rights.

I invite you to explain how in the absence of the legal recognition of such rights, the necessary discriminations could be made in any effective and economical way. I think I have offered reasons why they could not be.

For one, as noted previously, the consumer himself can sue for fraud, thus penalizing such activity. And I think, as indicated above, and as your comments support, that the view that trademark/reputation rights are required, basically implies that without such rights, communication is impossible. This seems to be a clearly false claim. Consider all the public domain works available now, works with no trademark, reputation rights, or copyright–say, the works of Plato or Aristotle. You are free to sell your new book under the name of “Aristotle”, if you wish; you are free to sell a duplicate of the Nichomachean Ethics under your own name, if you wish. Why does no one do this? I think the reason is because serious people who want to do things with their lives do not want to be viewed as jokes. Same with businessmen: if I start a restaurant I want it to be mine, I do not want to call it McDonald’s. A few may get away with this, and would be loooked on as shady, fly-by-night operators, and sued by customers to boot. Who would lend money, or invest money in, a proposed business which involves knocking off, say, McDonald’s restaurants? If it’s going to be a real consumer fraud, then no one would invest in this –it would be doomed to be sued to death for fraud.

 

Fred Mann November 9, 2007 at 12:46 am

George,
George,
In an world without trademarks, the “Good Soup” company could easily protect itself by saying on the label, “Produced in Factory X by Mr. Y, — Guaranteed fingernail-free since ’93″, or whatever. Anyone copying this would be committing fraud. Also, as Kevin B. suggested, stores could specialize in stocking “originals”, and be very careful about the source of their purchases. These types of product differentiations would be adopted almost immediately and universally upon the repeal of IP laws, since the copying of differentiation techniques would not be forbidden, and the wisdom of doing so would be obvious. Currently, these types of differentiations/divulgences are suppressed to some degree — possibly to our detriment.
The key, of course, would be to incorporate information that is specific enough to prevent copycats, but not so specific as to divulge trade secrets.
One could conceivably differentiate oneself/one’s personal reputation in similar ways — i.e. George Reisman b. 1950 in CO to Harry and Elaine blah, blah, blah. – and might even become common practice in situations where this approach is generally warranted.

 

Fred Mann November 9, 2007 at 12:54 am

George,
(only one “George” this time). Sorry about the slight overlap between me and Kinsella. I didn’t refresh the page before posting. I’m also sorry that I didn’t post first and that you had to read through his long and boring reply before getting to my succinct nuggets of wisdom.

 

Fred Mann November 9, 2007 at 3:46 pm

Just kidding, by the way. I’m a huge Kinsella fan. I have his poster in my bedroom.

 

Stephan Kinsella November 9, 2007 at 4:23 pm

Wladimir Kraus writes:

Putting aside the problem of consequences/utility for the moment, the fundamental question, as it appears to me, is whether the existence of rights to intellectual property constitutes violation of legitimate interests, or rights, of other people. If it were not so, there would indeed exist no grounds to oppose them.

For example, so-called “positive” rights to health care or education ultimately come into conflict with so-called “negative” rights of those who will be forced to provide them. The problem of political philosophy is to establish which one of the two constitutes the actual, legitimate, true rights and which, consequently, must be viewed as a mere violation of true rights.

While I would argue that there’s a conflict between “positive” rights of individual A and “negative” rights of individual B, no conflict exists between “negative” rights of A and B.

For example, the fact that I have a right to my physical body and to products of my labor, directly or via voluntary exchange, does not violate or diminish any rights of other people. The principle is nicely stated in the maxim that if the rational self-interest is the basis of social interactions no conflicts of interests are involved. Indeed, enormous gains to all are to be expected if negative rights of individuals are observed consistently.

Applied to the case of IP rights, it follows that if and only if their inherent harmful nature can be established, then and only then their existence may be condemned.

I believe that at the root of present controversy stand two opposing theories of property rights: the “scarcity” based theory of property as developed by Rothbard, Hoppe et al., on the one hand, and Ayn Rand’s, for lack of a better word, “creationist” theory of property rights, on the other.

It appears that the problem of IP rights is a particularly good instance to test each of the two theories because this particular problem highlights the differences so sharply.

The fundamental question is what is the source of rights? Is it mere scarcity of resources and therefore the need to avoid conflicts that supposedly arise from the fact of scarcity, or is the source rather the recognition of the fact that in order to survive and achieve happiness in the context of interpersonal relationships, i.e. society, man needs knowledge that would tell him what is he to do if his goal is to survive and achieve happiness in society.

I believe that Ayn Rand’s derivation of the concept of right is much more in accordance with the facts of reality and man’s requirements to survive and achieve happiness than the alternative is.

In regards to IP, therefore, the first question we need to answer is whether IP rights belong to the broad category of “positive” or to the category “negative” rights, and why.

Any comments?

Well, let me say that in a way I agree–one source of disagreement lies in differences over whether rights come from scarcity, or from “creation” (Rand’s “man’s needs” type of argument).

I’ve tried to show that it’s a mistake to think of creation as a source of ownership of property. Often it’s said that you can find/appropriate something, create it, or buy/receive it from a previous owner. But “creation” is not really a third way of acquiring ownership. In fact, it’s neither necessary nor sufficient. Appropriation of unowned goods, and contractual acquisition of goods from previous owners, are the only ways to acquire property rights in things. I discuss this in detail in the section “Creation vs. Scarcity” et pass. of Against Intellectual Property. Also, note that if you say that we have property rights to “things we create,” you indeed open the door to a horrible pandora’s box of things that people have monopolistic rights to, which would entangle and ensnare all use of scarce resources, thus leading to the entire human race dying out. See, e.g., the examples of Galambos and Schulman, noted in my article, who advocate protection of a very broad range of mentally “created” patterns, ideas, “logos,” what have you.

Tibor Machan has alluded to this in some of his writings, where he basically wants to say that there are all kinds of “things” that “exist”–poems, trucks, etc.–and since “The tangible-intangible distinction is not a good one for what can and cannot be owned”, then we need to focus on “intentionality”–things we intentionally create or produce, whether they be “tangible” or “intangible”–indeed, intangible things like poems, computer games/programs, novels, songs, arrangements, etc. are more completely “intentional” and “created” than are tangible goods. I.e., Machan’s theory seems to be that any “ontological type of thing” that we can identify, and that was intentionally created or produced by man, is owned by man. For more on this, see: New Working Paper: Machan on IP; also see the criticism and discussion in the comments (e.g., those of Carl Johan Petrus Ridenfeldt at November 30, 2006 4:59 PM); see also Owning Thoughts and Labor [Rothbard and Hoppe on 1988 Panel], Mises Blog (Dec. 11, 2006) and related comment thread; and the comments in The Copyright/Baseball Analogy. I think if you review the criticisms of Machan’s view here (and my discussion of “Creation v. Scarcity” in my longer paper noted above), you’ll begin to see the magnitude of problems that accompany looking at property in this way.

 

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