[From my Webnote series]
- Kinsella, “Rothbard on Intellectual Property” (April 21, 2026)
- Kinsella, “Law and Intellectual Property in a Stateless Society,” in Legal Foundations of a Free Society (Houston, Texas: Papinian Press, 2023), Part III.C
- Kinsella, “The Problem with Intellectual Property,” Part III.C.2
- Kinsella, “The Non-Aggression Principle as a Limit on Action, Not on Property Rights” (Jan. 22, 2010)
- Kinsella, “IP and Aggression as Limits on Property Rights: How They Differ” (Jan. 22, 2010)
- David Gordon on IP (Jan. 8, 2025)
- Bionic Mosquito: Intellectual Property Brouhaha (2013) (IP as contract; Kinsella v. Wenzel)
Kinsella, “The Problem with Intellectual Property,” Part III.C.2:
Others argue that some form of copyright or patent could be created by contractual techniques—for example, by selling a patterned medium (book, CD, etc.) or useful machine to a buyer on the condition that it not be copied or revealed to others. It is argued that this could somehow bind not only the parties to the contract but even third parties, thus producing restrictions similar to those of patent and copyright law. But this argument is deeply flawed.
Keep in mind property rights are in rem rights good against the world, as opposed to contract rights which are in personam rights only—rights as between the parties to the contract. It is illegal for you to attack my body, invade my home, or steal my car not because we have an agreement but because my property rights are in rem—good against the whole world. By contrast, as I have pointed out before, “Obligations that flow from binding agreements, or contracts, only bind the parties to the contract. The relationship between parties to a contract is like a private law that applies only to them, not to the world at large.”[74] A contract is the “law between the parties” and does not bind third parties, who are not in “privity” with the original seller.[75]
For a contractual scheme to emulate IP rights such as patent or copyright, the contract would have to bind not only seller and buyer, but all third parties as well. The contract between buyer and seller cannot do this—it binds only the buyer and seller. Rothbard argues otherwise, using the following example.
suppose that Brown allows Green into his home and shows him an invention of Brown’s hitherto kept secret, but only on the condition that Green keeps this information private. In that case, Brown has granted to Green not absolute ownership of the knowledge of his invention, but conditional ownership, with Brown retaining the ownership power to disseminate the knowledge of the invention. If Green discloses the invention anyway, he is violating the residual property right of Brown to disseminate knowledge of the invention, and is therefore to that extent a thief.
… A common objection runs as follows: all right, it would be criminal for Green to produce and sell the Brown mousetrap; but suppose that someone else, Black, who had not made a contract with Brown, happens to see Green’s mousetrap and then goes ahead and produces and sells the replica? Why should he be prosecuted? The answer is that, as in the case of our critique of negotiable instruments, no one can acquire a greater property title in something than has already been given away or sold. Green did not own the total property right in his mousetrap, in accordance with his contract with Brown—but only all rights except to sell it or a replica. But therefore Black’s title in the mousetrap, the ownership of the ideas in Black’s head, can be no greater than Green’s, and therefore he too would be a violator of Brown’s property even though he himself had not made the actual contract.[76]
Rothbard’s argument is flawed. First, it presupposes knowledge can be owned, which is question-begging and also simply false. As argued above (see Part II.B and Part III.A.3), all property rights are rights in scarce, conflictable resources. The means of action are distinct from the knowledge that guides action. Rothbard himself, as quoted in Part III.A.3, clearly recognizes the importance of knowledge in guiding actions; without technological ideas, plans, or “recipes,” the actor could not act to transform “iron into steel, wheat into flour, bread and ham into sandwiches, etc.”[77] He observes that he uses his knowledge and technological ideas to tell him how to use and rearrange scarce means.[78] But, as Mises pointed out, “[m]eans are necessarily always limited, i.e. scarce, with regard to the services for which man wants to use them.”[79] But this is not true of knowledge that guides action.[80] There can be no property rights in knowledge.
Let us grant that Green uses his knowledge of Brown’s mousetrap to make replicas, and that this somehow imparts to Black the knowledge of the mousetrap’s design: either he buys a copy from Green, or he observes Green’s replica, or perhaps Green just tells Black or posts the information on the internet.[81] Rothbard says that “the ownership of the ideas in Black’s head, can be no greater than Green’s.” But Black does not need to “own” ideas to use them; in fact, ideas and knowledge cannot be owned; knowledge only guides action. In this case, it could guide Black in making his own mousetrap. Not only does Black not have a contract with Brown (or even Green), he might not even have ever bought or even touched a copy of Green’s replica. He might only have observed it. Or maybe Green told White, and White told Black. When Black uses knowledge he possesses (but does not own!) to make a mousetrap, he in no way violates any contract or property rights of Brown.
As another example I have given before to show the absurdity of the IP-by-contract argument, suppose an author sells physical copies of his books on Amazon, and Amazon requires any buyer to agree not to use or copy the book that he buys, and further, to agree to make any subsequent buyer of the book sign a similar agreement. It is hard to imagine such a practice being viable, for a couple reasons. First, to ensure compliance, the contract will have to impose some kind of penalty payment on the buyer in the event he breaches the contract.[82] Now if it is small penalty, such as one dollar, then many buyers will simply pay the “fine” and copy the book. So the penalty needs to be large to deter buyers from making copies.
But few buyers would pay $20 or so for a book and also obligate themselves to potentially millions of dollars of liability if they copy or impermissibly use the book. Instead, in a world without copyright, where “pirated” books are readily available, the buyer would simply avoid Amazon and its onerous contract and just obtain a cheaper or free copy online or from some other publisher. Obviously, this kind of business model is impractical.
But let’s assume the business model somehow works and there are many buyers of the book who have agreed not to copy it. Still, if one of them copies it an uploads a copy to the internet, third parties could download the file and print and sell copies of it, since (a) they have no contract with Amazon or the author (or the buyer) and (b) they do not need anyone’s permission to do this since knowledge and information cannot be owned.
In rem intellectual property rights cannot flow from contracts.
***
Also: Penner on Intellectual Property, Monopolies, and Property: recognizes IP rights as protected by law are “not rights in personam, but rights against the whole world“—i.e., in rem rights.
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