C4SIF.org

I’ve blogged before some recent findings comparing creativity and innovation in Germany and England during a period of time when Germany had little or no copyright law.¹ This concerns a new study by economic historian Eckhard Hoffner that shows that Germany’s lack of copyright in the 19th century led to an unprecedented explosion of publishing, knowledge, etc., unlike in neighboring countries England and France where copyright law enriched publishers but stultified the spread of knowledge and limited publishing to a mass audience. According to Robert Groezinger, “This article in Der Spiegel is all about how the absence of copyright in Germany led to an “explosion of knowledge” in the 19th century. The reason there was no copyright law was that there was no central government until 1871. This contrasts with the UK, where there had been copyright since 1710, and the number of publications was lower by a factor of 10 compared to Germany. Also, the number of copies printed was much, much lower in the UK (hundreds as compared to ten thousand or so). The article claims that this is the main reason that Germany’s production and industry had caught up with everyone else by 1900.”

I’ve come across a recent slide presentation by Hoffner, which he presented at Bournemouth University’s 2009 Symposium on Copyright, Contracts and Creativity; slides are available here, and also below. They are fascinating graphic comparison of the publishing industry under different copyright regimes.

[Mises cross-post]

1. See Frank Thadeusz, No Copyright Law: The Real Reason for Germany’s Industrial Expansion? and the German version, Explosion of knowledge, der Spiegel; Jeff Tucker, Germany and Its Industrial Rise: Due to No Copyright; and my post Innovations that Thrive without IP. [↩]

The recent Freeman article Fashion Design and Copyright by Edward J. López is worth a read. Here’s a summary from The Lighthouse:

Fashion Design and Copyright

Should fashion designs be protected by copyright? Legislation introduced in Congress last August—the Innovative Design Protection and Piracy Prevention Act—would give designers three years of copyright protection against imitators, provided their designs meet defined standards of originality and novelty. Supporters may see the bill as a step toward fairness for designers, but they often overlook the contributions of design copyists in making fashion available to consumers, according to Independent Institute Research Fellow Edward J. López, editor of the Institute’s path-breaking new book The Pursuit of Justice.

Designers who operate at the highest levels—those who create the haute couture modeled on the runways of New York, London, Milan, and Paris during Fashion Week—cater to elite connoisseurs who appreciate fashion at its most abstract. Beneath this echelon are the derivative designers and manufacturers who imitate the higher-level ideas and adapt them for clothing that people can relate to and wear. These design copyists also create something that the top-level designers do not create—short cuts in manufacturing and distribution that help reduce unit costs and thereby make fashion affordable to greater numbers of people, Lopez explains in the December 2010 issue of The Freeman.

The characterization of design copyists as parasites therefore ignores their productive contributions as adaptive-imitative entrepreneurs who make fashion relevant to all segments of society. Granting copyright protections to designers, López concludes, would undercut the useful institutions and practices the design industry has developed over many decades and thereby would harm the lower-level innovators and their customers in ways that most people do not fully appreciate.

“Fashion Design and Copyright,” by Edward J. López (The Freeman, 12/10)

As I’ve mentioned previously, the Anti-Counterfeiting Trade Agreement (ACTA) is pending and is bad news.¹ According to some discussion of this by the folks at Public Knowledge, some of its more objectionable provisions have been watered down. See Rashmi Rangnath’s posts Near Final ACTA Text Released and USTR releases finalized ACTA text: Concerns remain; also see Public Knowledge president Gigi Sohn’s remarks about ACTA in this panel discussion, Federalist Society’s Intellectual Property Practice Group National Lawyers Convention Panel Online, from 1:20:10-end. Sohn explains that normally the subject matter of ACTA would be negotiated in an open manner under the auspices of WIPO; but it was negotiated instead by the USTR as a trade agreement so that it could be done more quickly, and in secret. Sohn says that the substance of ACTA is more benign now, but only because groups like hers and others exerted pressure to open the proceedings up to public scrutiny. This thing is still bad, but a bit less bad, now, thanks to the efforts of these groups. Yet another reason why leaking is good–sunshine is a good disinfectant.

[Mises cross-post]

1. See Stop the ACTA (Anti-Counterfeiting Trade Agreement); other ACTA posts here; also Gennady Stolyarov II, ACTA: The War on Progress, Freedom, and Human Civilization. [↩]

From the Ludwig von Mises Institute Canada:

The Wikileaks Copyright Cables: Confirmations Not Revelations

Last weekend, I posted that I suspected the KIPR tag on U.S. diplomatic cables being released by Wikileaks represented cables involving intellectual property issues.  Sure enough, the first batch of KIPR cables have been released in Spain, confirming U.S. pressure on that country to reform its copyright laws.  The release – which come from El Pais – has generated considerable commentary with BoingBoing proclaiming that it reveals that the U.S. wrote Spain’s proposed copyright law.  That headline led others to speculate what the remaining KIPR cables might reveal, particularly the 65 Canadian ones (there are also 84 WIPO tagged cables and nearly 2,500 KIPR tagged cables overall).  There has been one releaseon copyright law in France, with officials discussing U.S. industry support for its three-strikes approach. [continue reading…]

Blog post from Public Knowledge:

Supreme Court Poised To Move In The Right Direction On IP

By Ben Doernberg on December 3, 2010 – 1:20pm

While Net Neutrality has grabbed the headlines this week, that doesn’t mean things have been quiet on the intellectual property front. The scales of justice have often tilted too far in imposing excessive restrictions through IP, but it appears the Supreme Court may be looking to restore some balance. This Monday the Supreme Court decided which cases it will be dealing with this year, and consumers and innovators should be encouraged by the results.

Continue reading »

I’ll be a panelist on the “Intellectual Property Law and Policy” panel of the Symposium: “Plain Meaning in Context: Can Law Survive its Own Language?”, New York University School of Law/Journal of International Law and Politics (February 18, 2011):

The Journal of Law and Liberty is excited to announce our Spring 2011 Symposium entitled “Plain Meaning in Context: Can Law Survive Its Own Language?” will take place on February 18, 2011, Vanderbilt Hall, 40 Washington Square South.  The Symposium will consist of three panel discussions and a keynote speech, which will be given by one of the Journal‘s advisers, Richard Epstein.  The first panel will be a generalist panel meant to create a rich discussion on this subject under a philosophical framework.  The second panel will be a include a discussion on the influence of language in Administrative Law. The final panel will debate the ramifications of language and interpretation in the context of Intellectual Property Law.

From TUAW:

Apple expands lawsuit against Motorola

by Sam Abuelsamid (RSS feed) on Dec 6th 2010 at 7:00AM

Perhaps the only department at Apple that works longer hours than engineering these days is legal. The most recent legal dust-up in Cupertino has just expanded, as Apple has amended a patent lawsuit against Motorola to include 12 more claims. This particular fracas began in October when Motorola sued Apple, claiming infringement of 18 patents relating to hardware and services.

Apple subsequently counter-sued, claiming that Motorola’s Android phones infringed on a number of Apple patents, mostly covering multi-touch technology. The filing last week adds 12 more patents to the mix, including nine phone patents and three patents that cover set-top box and DVR technology. These patents will probably also get added to Apple’s complaint before the International Trade Commission.

Read more>>

Update: The published piece is here: The Forgotten Costs of the Patent System.

From my Mises blog post in 2005:

[To be published without footnotes in IP Law & Business, a trade publication for IP attorneys (now IP Insider); this version includes references and links. Note: I here took for granted the utilitarian criterion normally used to argue for IP rights, without directly challenging that entire flawed approach. For a more elaborate version of the material in this short piece, see my There’s No Such Thing as a Free Patent, Mises Daily (Mar. 7, 2005)]

In “Don’t Believe the Hype” (Feb. 2005, IP Law & Business), authors Benassi & Gillespie argue that our patent laws continued to “foster innovation.” But the benefits that flow from the patent system are only half the story, since the system also comes with costs. We must compare the costs to the benefits to know whether the system is worth having at all.

If costs are not taken into account, there are no limits to what could be done to encourage innovation. Some, for example, have proposed replacing the patent system with a federal commission that gives taxpayer-funded rewards to inventors deemed worthy.¹ This would no doubt “foster innovation,” but would the marginal innovation thereby stimulated be worth the cost?

Measures could also be taken to strengthen patent rights. The patent term could be extended to 100 years, for example. The promise of four decades of additional monopoly profits would arguably stimulate even more innovation by pharmaceutical companies. Patent infringement could be made into a criminal offense, punishable by jail or even capital punishment; or treble damages could be awarded more frequently. The doctrine of equivalents and the scope of means-for equivalents could be legislatively expanded. Each of these changes, viewed in a vacuum, make patents more valuable and thus establish additional incentives to invest in R&D. Why not adopt all these innovation-encouraging measures, and more?

If the patent system is to be a net benefit to society, the gains it provides (the extra wealth and innovations the system stimulates) should be greater than its costs, according to standard “law and economics” “wealth-maximization” reasoning.

And there are clearly costs to the system. Indeed, some of the purported “benefits” cited by Benassi and Gillespie may really be costs. They note, for example, that venture capitalists insist on a strong patent portfolio. But this is, in part, because such portfolios are necessary to defend against other companies’ portfolios. If there were no patent system, one would not need to defensively spend money building up a mountain of patents to use in counterclaims or cross-licensing negotiations, and perhaps they would not be so important to VCs.

Other costs can also be noted. Companies pay patent attorney salaries, patent filing and maintenance fees, and significant litigation costs, as well as higher insurance premiums due to the risk of being involved in patent infringement litigation. Some even argue that innovation is diminished by a patent system: perhaps companies would have an even greater incentive to innovate if they could not rely on a near twenty-year monopoly.² Also, patents can be obtained only for “practical” applications of ideas, but not for more abstract or theoretical ideas. This skews resources away from theoretical R&D and toward practical gizmos and applications,which surely has some cost as well.³

I am not here claiming that the patent system costs too much. But I do believe it is incumbent on those who claim the patent system bestows benefits on society to be forthright in acknowledging the costs of obtaining the desired results. They should enumerate the costs, and the benefits, and explain why it is clear that the latter exceeds the former. This is, unfortunately, something patent advocates never do. They simply assume that the amount of wealth or innovation or other social benefit proxy that the patent system facilitates is necessarily much greater than the (obviously non-zero) costs of such a system. Why this assumption? To my knowledge, studies do not conclusively established that the benefits of the patent system outweigh its costs.⁴ It is just assumed. Should it be?

Stephan Kinsella, BSEE, MSEE, JD, LL.M., former partner in the IP Dept. of Duane Morris, and author/editor of numerous books and articles on IP law, international law, and other legal topics, is General Counsel and VP-Intellectual Property for Applied Optoelectronics, Inc., in Houston. Website: www.KinsellaLaw.com.

1. See “Intellectual property and its discontents,” Tom Giovanetti, Washington Times, 14 Oct. 2004; also Rewards Versus Intellectual Property Rights, Steven Shavell & Tanguy Van Ypersele, Journal of Law & Economics, vol. XLIV (October 2001), p. 525. [Update: see also: Re: Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation, Mises Blog (Dec. 28, 2006) and Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation (Sept. 19, 2006); Stallman: An Internet-Connectivity Tax to Compensate Artists and Authors; $30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution; Tabarrok’s Launching the Innovation Renaissance: Statism, not renaissance; The Economist: Copyright Is An Antiquated Relic That Has No Place In The Digital Ages.]  [↩]
2. See especially the section “Costs of the Patent System” in Julio H. Cole, Patents and Copyrights: Do the Benefits Exceed the Costs?, Journal of Libertarian Studies, v. 15, no. 4 (Fall 2001), pp. 79–105 for further examples. [↩]
3. See on this Arnold Plant, “The Economic Theory Concerning Patents for Inventions,” in Selected Economic Essays and Addresses (London: Routledge & Kegan Paul, 1974), p. 43 (originally published in Economica, New Series, vol. 1, no. 1, Feb., 1934, 30-51) . See also Murray N. Rothbard, Man, Economy, and State, scholar’s ed’n (Auburn: Mises Institute, 2004) , ch. 10, sec. 7: “It is by no means self-evident that patents encourage an increased absolute quantity of research expenditures. But certainly patents distort the type of research expenditure being conducted. . . . Research expenditures are therefore overstimulated in the early stages before anyone has a patent, and they are unduly restricted in the period after the patent is received. In addition, some inventions are considered patentable, while others are not. The patent system then has the further effect of artificially stimulating research expenditures in the patentable areas, while artificially restricting research in the nonpatentable areas.” [↩]
4. See, e.g., Petra Moser, “How Do Patent Laws Influence Innovation? Evidence from Nineteenth Century World Fairs,” NBER Working Paper 9099 (August 2003) (examines innovations exhibited at World’s Fairs during the 19th century and concludes that countries with patent systems do not have a higher rate of innovation per capita, but that patents affect the industries in which different countries make their innovations); Cole, Patents and Copyrights: Do the Benefits Exceed the Costs?; Lawrence Lessig, The Future of Ideas (2001); The Economics of Intellectual Property: A Review to Identify Themes for Future Research, Padraig Dixon and Christine Greenhalgh (November 2002); Fritz Machlup, U.S. Senate Subcommittee On Patents, Trademarks & Copyrights, An Economic Review of the Patent System, 85th Cong., 2nd Session, 1958, Study No. 15; Fritz Machlup and Edith Penrose, “The Patent Controversy in the Nineteenth Century,” Journal of Economic History 10 (1950), p. 1; Roderick T. Long, “The Libertarian Case Against Intellectual Property Rights,” Formulations 3, no. 1 (Autumn 1995); Stephen Breyer, “The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs,” Harvard Law Review 84 (1970), p. 281; Wendy J. Gordon, “An Inquiry into the Merits of Copyright: The Challenges of Consistency, Consent, and Encouragement Theory,” Stanford Law Review 41 (1989), p. 1343; and Jesse Walker, “Copy Catfight: How Intellectual Property Laws Stifle Popular Culture,” Reason (March 2000). [↩]

[From my Webnote series]

• Renaming Intellectual Property
• Intellectual Poverty

From the Mises blog; archived comments below.

Update: Adam Mossoff, “Intellectual Property and Property Rights”:

The first reference to “intellectual property” is by Justice Levi Woodbury (1845): “it is well settled … that a liberal construction is to be given to a patent, and inventors sustained … [because] only in this way can we protect intellectual property, the labors of the mind, productions and interests as much a man’s own, and as much the fruit of his honest industry, as the wheat he cultivates, or the flocks he rears.”¹

As I noted in Ideas Are Free: The Case Against Intellectual Property, statists used to be much more honest. The federal government used to have a Dept. of War. In 1947, its named was changed to the Dept. of Army of the “New Military Establishment,” and in 1949, to the Department of Defense. Europeans are usually more honest than Americans. Socialists in Europe admit they are socialists, or even communists. In America, they call themselves “conservatives” or “liberals.”

On the IP front, many pro-IP libertarians get upset if you describe patents and copyrights as monopolies. If you point out that the first modern patent statute was England’s Statute of Monopolies of 1623, you can expect to hear a lot of strained arguments–or silence. The more honest defenders of IP readily admit the monopolistic aspect of patent and copyright. (See my post Are Patents “Monopolies”?)

In fact, state-granted privileges like patent and copyright were not originally called property at all. This was a latter innovation, used for propaganda purposes. This was observed by Fritz Machlup and Edith Penrose in two seminal studies:

Those who started using the word property in connection with inventions had a very definite purpose in mind: they wanted to substitute a word with a respectable connotation, “property”, for a word that had an unpleasant ring, “privilege”.

[Fritz Machlup & Edith Penrose, “The Patent Controversy in the Nineteenth Century,” Journal of Economic History 10 (1950), p. 1, 16 (shamefully, and ironically, not online)]

While some economists before 1873 were anxious to deny that patents conferred “monopolies”–and, indeed, had talked of “property in inventions” chiefly in order to avoid using the unpopular word “monopoly”–most of this squeamishness has disappeared. But most writers want to make it understood that these are not “odious” monopolies but rather “social monopolies”, “general welfare monopolies”, or “socially earned” monopolies. Most writers also point out with great emphasis that the monopoly grant is limited and conditional.

[Fritz Machlup, U.S. Senate Subcommittee On Patents, Trademarks & Copyrights, An Economic Review of the Patent System, 85th Cong., 2nd Session, 1958, Study No. 15 (text excerpt)]

We live in an age of euphemism, metaphors, and doubletalk. Taxes are “voluntary”. The state is a result of a “social contract.” War is defense. Murder is collateral damage. And state-granted censorship, protectionism, privilege and monopoly are now “property.”

We live in an age of lies. The state is the great liar. I used to say that the state is good at one thing only: destruction. But it is also good at lying and propaganda. (See my post The State, Destruction, and Propaganda.)

Update: Don’t Copy That Floppy; Feds produce over-the-top anti-piracy films; Don’t copy that jalopy!; Youtube’s “copyright school“.

See: Fritz Machlup, The Patent Controversy in the Nineteenth Century (1850–73), in Stephan Kinsella, ed., The Anti-IP Reader: Free Market Critiques of Intellectual Property (Papinian Press, 2023):

Free market economists began to object to the patent system in the mid-1800s, leading some countries to repeal or delay adopting patent laws. The primary criticism was that protectionist patent grants are incompatible with free trade. However, the “Long Depression” starting in 1873 turned public opinion against free trade, leading the anti-patent movement to collapse and for modern patent systems to eventually become dominant world-wide.²

See also Film group backs antipiracy curriculum for schools.

For other possible terms to use to more accurately describe the dishonestly-named “intellectual property,” see Intellectual Poverty and Renaming Intellectual Property.

Update: The MPAA wants schools to teach first-graders the dangers of digital piracy

See also Mike Masnick, If Intellectual Property Is Neither Intellectual, Nor Property, What Is It?

See also Wendy J. Gordon, “Intellectual Property,” in Oxford Handbook of Legal Studies (Peter Cane & Mark Tushnet ed., 2003; https://perma.cc/59GP-HRD8), § 1.1.4 (p. 621–22): “IP concerns similitude among patterns. … Plaintiffs in a trademark, copyright, patent, right of publicity suit are usually suing because someone has made, sold, or employed a pattern that in essential ways is similar to something the plaintiffs made or something associated with them. … I suggest it is the role of similitude that has led the courts and the academy to see the various doctrines now known as Intellectual Property as belonging together.”

[Mises blog cross-post]

Archived comments:

J Cortez December 6, 2010 at 2:16 pm

I have to say this in reference to the picture accompanying your post:

In USA, you download communism.

In Soviet Russia, communism download you.

REPLY

Silas Barta December 6, 2010 at 3:35 pm

How do supporters of physical property react when you mention the warlord- and privilege-infested history of private property? Do they say how that doesn’t somehow taint private property as such?

Well, then you probably know how your opponents feel.

REPLY

Stefan December 6, 2010 at 4:35 pm

Warlord- and privilege-infestation is antithetical to private property. Are you saying that because someone has plundered and stolen and proclaimed others’ property to be his own, the confidence of those who recognize private property should be weakened?

REPLY

Tristan Band December 6, 2010 at 5:17 pm

The question raised doesn’t mean a rejection to property as such; just the justice of the current distribution.

REPLY

Matt C. December 6, 2010 at 3:50 pm

“We live in an age of euphemism, metaphors, and doubletalk. Taxes are ‘voluntary’. The state is a result of a ‘social contract.’ War is defense. Murder is collateral damage. And state-granted censorship, protectionism, privilege and monopoly are now ‘property.’”

Anything goes – Cole Porter
http://www.youtube.com/watch?v=P5wcLl13a8s

REPLY

Robert December 6, 2010 at 3:56 pm

. . . and this blog is no exception. Taxes are “theft.” Human beings are “scarce goods.” Normal non-fanatics are “statists.” And so on and on.

REPLY

Stephan Kinsella December 6, 2010 at 4:02 pm

Taxes are theft. Human beings’s *bodies* are scarce goods. It is not “fanatical” to oppose theft. And so on.

REPLY

Robert December 6, 2010 at 5:16 pm

. . . or so your propaganda would have us believe. Personally, color me skeptical.

REPLY

nate-m December 6, 2010 at 8:00 pm

Try not paying your taxes for a few years and get back to us on this.

Involuntary surrender of wealth under threat of force is a good definition that equally applies to both armed robbery and taxation. The difference between them is rather abritrary and in most countries the real difference between the two is that the government is the one with bigger guns.

Now in the USA you may decide that since we have a republic (a form of government that is not above the law) then that makes taxation more legit then in most places. That the elected officials are put there to represent us and they have our interests in mind when spending our money.

But it is pretty obvious when you think about it for a while that people are forced to pay taxes whether their views are represented or not. We still have a significant problem of ‘tyranny of majority’. That a ideal democracy, which is what we should be aiming for, is one were people voluntarily support the government because it is in their own best interest to do so. It’s certainly more ideal to have more then your individual vote when your dealing with government officials. When you still control your pocket book and you choose to give money then that will help to greatly ensure that your best interests are honored.

Then the next step, of course, is to say that people with more money will have a unfair advantage. That is true only if the government forces it’s laws on you. So the next step to a more ideal government is one were people can choose to be governed or not. Certainly there are limitations, but when you can ‘opt out’ of governance then you can be sure that the government will remain just and useful to you so you have real reason to be governed.

So that is were we arrive a ideal democratic government. One were you can choose to honor and participate with your vote and your taxes, voluntarily. You can choose to have the government ran schools, government ran health care, government ran roads, government ran police, government ran etc etc etc. Or you can choose to live elsewhere and have a go at it without that particular government. Maybe you choose another one.

And, of course, there are going to be severe practical limitations to individual choice in government. But the closer we can get to real democratic government the better.

REPLY

Matt C. December 6, 2010 at 4:20 pm

Robert thinks that he can rise above the issues by refusing to discuss them. We are supposed to accommodate his vague intuitions about some center of a spectrum without him presenting the logical consistency of his own ideas.

REPLY

Robert December 6, 2010 at 5:20 pm

I just laughed out loud. “[R]efusing to discuss them”? I’ve engaged every remotely cogent idea put to me, and discussed everything prolifically. You’re projecting. It is rather the orthodox on this site that have refused to engage with the implications of their own claims, refused over and own to provide evidence for shrill dogmatic assertions like “taxation is theft.”

I’d be happy to lay out my philosophy. No one’s asked.

REPLY

Phinn December 6, 2010 at 5:35 pm

>>>I’d be happy to lay out my philosophy. No one’s asked.

I suggest you spend some serious alone-time pondering why people find you so uninteresting.

REPLY

Robert December 6, 2010 at 5:55 pm

. . . And Phinn’s childish tantrum jumps threads.

Maybe you just need to sack up?

REPLY

Seattle December 6, 2010 at 7:19 pm

See that “literature” button? Thousands (if not tens of thousands) of pages of FREE material on Austrian Economics and Anarcho-Capitalist political philosophy. Given that anyone who cares to be informed can very easily and accessibly do so, and you’ve very clearly shown your lack of interest in reading that material, it’s no surprise the people here are hesitant to bother writing up a long explanation of libertarian principles which will likely also go unread.

REPLY

Sione December 7, 2010 at 12:41 am

Robert

You have been asked. You consistently evade.

Still, while the opportunity presents itself, do go ahead. Explain your “philosophy”.

Sione

REPLY

Phinn December 6, 2010 at 4:22 pm

Human beings are scarce goods. If you understood what you were talking about, you would realize that what this means, in an economic sense, is that you, your body and each of its parts can only be in one place at one time, and can only be controlled by one person at one time. Invading it against your will by injury or restraint is rivalrous with the uses and state of affairs that you would prefer. Rivalry is kind of like saying that two outcomes are incompatible. I’ll try to break it down even further, to the level of Sesame Street terminology, if you want.

“Statist” is a descriptive term — it refers to people who promote or defend the authority of some organization’s right to exercise a monopoly on the use of force as to all persons within an arbitrary territory. An opposing term, if a true opposite exists, might be “anarchist.”

As for debating whether taxation is theft, that is at least more in the ballpark of an intelligent comment. Theft is a legal conclusion. In a basic, literal sense, both taxation and theft consist of the forcible, non-voluntary extraction of goods (usually money) from another. The important question is whether taxation is morally cleansed (i.e., justified or excused) when it is done pursuant to the tax-collector’s unilateral proclamation of his authority to do so (i.e., “statism”). Use of the term “theft” merely strips away the layer of justification that is applied on top of the literal act, since taking someone else’s property without justification is theft. So, the issue is one of justification, not euphemism.

REPLY

Robert December 6, 2010 at 5:15 pm

Human beings are not goods, scarce or otherwise. One of the implications of that argument is human slavery . . . since in a free market, one can buy and sell anything as long as there is a buyer and seller, logically, a person who was indigent or in debt could be forced into slavery.

I don’t want to live in the slave society you are implying we should accept. People aren’t goods, and shouldn’t be treated as if they are.

REPLY

Stefan December 6, 2010 at 5:56 pm

The thing is that discussing things like slavery and force is only meaningful if we acknowledge ownership in our bodies to begin with. Without rights in our bodies, slavery or force would merely mean something opposed to some instinctive wish to be left alone, opposed to the irrational whims of a brute.

And our bodies are scarce resources and that is the very reason why property rights in them are necessary. You cannot have your arm and simoultaneusly have me cut it off. If that was possible, me cutting “your” arm off wouldn’t be a problem and there wouldn’t be any need for anyone to label his arm and all possible repilcations of his arm “his property”. Now that we know this we engage in a few exercises of rational thinking and come to the conclusion that every man is the sole owner of his body.

You are deliberately misunderstanding the concept of scarcity and human bodies in order to present it as absurd. Stop it.

REPLY

Robert December 6, 2010 at 6:05 pm

I think you are advancing circular logic by treating all rights as stemming from ownership. My right to be free of violence, not to be assaulted, need not derive from the idea that I am a piece of property. It is a right that I have as a human being.

The idea that human beings are property is absurd if you examine it critically and look at what follows logically from that belief. I am not playing at devil’s advocate when I say that the right to be free of violence is totally different from the limited, positive “right” of ownership.

REPLY

BioTube December 6, 2010 at 6:13 pm

Occam’s Razor tells us that, in absence of proof one way or the other, the less complex explanation should be preferred. The self-ownership axiom reaches the same conclusion as the “people are special” axiom does without special cases. Unless you can explain why self-ownership creates an unsatisfactory conclusions under the nonagression principle, Occam’s Razor leaves it as the superior axiom.

Stefan December 6, 2010 at 6:29 pm

Ownership is not a positive right, nor is it limited in any sense other than limited to what is just in relation to the equal right of every human being.

Zorg December 6, 2010 at 7:36 pm

The term “self-ownership” here means that each individual has a right to their own life. You say this is reducing people to “a piece of property,” but the whole point is to say that no one owns you; you own yourself. My body, my self, is my property in the sense that I alone may control and direct it. Ownership is a perfectly fine paradigm within which to express the concept of rights vis-a-vis other self-owners in society.

Perhaps you are mistaking libertarianism for a full-fledged moral philosophy or religion. It’s not supposed to be that, and it’s a mistake when people naively take that view. Libertarianism is giving you an ethical standard of how to *not* relate to others in society. It is not telling you about God or the meaning of life and what you *should* do to reach perfection, happiness, or heaven.

For Christians, we might consider the libertarian non-aggression principle as living the Golden Rule. But that is only one aspect of the life of a Christian, or anyone else for that matter.

You just have to understand the context. To say that all rights reduce to property rights when we’re talking about how a society of individuals should relate to each other even as they all have widely varying philosophies of life, is perfectly fine. I would agree with your concerns if you were trying to say that the property/ownership paradigm is not fit to describe man qua man as created by God or something. Obviously, Christian philosophy is going to transcend the narrow field of developing a workable universal ethic of behavior in a pluralistic society. These are two different approaches which overlap. They don’t need to be in conflict at all. Others may have different underlying philosophies and moralities, yet they can agree that your life is beyond their rights because the concept of ownership is universal.

Is that what you were driving at, that it’s wrong or incomplete to use terms like ownership and property because you are drawing from some deeper explanation of man’s existence and purpose?

Matt C. December 6, 2010 at 8:15 pm

“My right to be free of violence, not to be assaulted, need not derive from the idea that I am a piece of property. It is a right that I have as a human being.”

So the state would not drag you off to jail if you did not pay your taxes?

Stephan Kinsella December 6, 2010 at 7:55 pm

I must say I do not comprehend the “libertarian” objection to self-ownership. I think it’s just muddle-headed liberal arts majors or something.

REPLY

BioTube December 6, 2010 at 5:59 pm

Robert, you’re coming to that conclusion because you’re ignoring/not aware of a fairly basic axiom that passes for basic knowledge here: every human is conceived as a self-owner; his body is his own property. Arguably, contract work is a form of slavery since an individual is bound to its terms instead of his will alone, but contracts are voluntarily entered into, so they’re completely justified(duress is nigh-universally accepted as voiding a contract).

Even ignoring the above, economics isn’t ethics; while human beings might well be “goods” in an economic sense(there’s no good reason for special-casing them in this context), that doesn’t mean they are ethically.

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Robert December 6, 2010 at 6:08 pm

I am neither ignoring it now unaware of it; I regard it as silly and have shown the absurdities in which it involves those who believe it — it implies a slave society, for one thing.

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BioTube December 6, 2010 at 6:15 pm

Only if an individual sells himself or creates a debt he cannot repay any other way(and is secured as such, of course) – and even in the latter case, he is only “enslaved” until his obligation is worked off.

iawai December 6, 2010 at 6:24 pm

Umm, no, it doesn’t “imply a slave society”. It expressly recognizes why slave societies are unjust: the Masters denied that the Slaves owned themselves. They did not recognize them as actors. It seems that your “I have rights because i have rights” is closer to replicating this horrible situation that the Austrian position that all men are self-owners.

Peter Surda December 6, 2010 at 8:03 pm

Robert,

you poor thing. You don’t want to live in an alleged slave society (which you somehow derived from relatively simple scientific realisation), yet you wholeheartedly advocate the submission to government.

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Anthony December 7, 2010 at 8:29 pm

Debt slavery need not exist even in a fully Libertarian society… the person loaning funds must accept the risk that the person accepting the loan may not be able to pay it back. Hence an inability to repay a loan could lead at most to a confiscation of property, never slavery.

Rothbard dealt extensively with this issue, and it is a significant one. No one can “sell” their body (self-ownership is inalienable), so a person is free to withdraw from any contract that requires them to perform a specific action. Maybe that person would be required to pay a financial penalty, but no one has a right to force them to perform the contracted act.

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Fephisto December 6, 2010 at 4:17 pm

I’m guessing the ‘properganda’ is meant to be a pun, but aside from that, I felt I should note:

used to a -> used to have a
chagned -> changed

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Andras December 6, 2010 at 5:09 pm

Stephan,
You are the government on this website. Did you run out of arguments?

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Anthony December 7, 2010 at 8:31 pm

A website is not a place. Nor is anyone “on” the website using force against anyone else, so Stephen is in no way a government.

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Phinn December 6, 2010 at 6:38 pm

A msn who is entitled to keep 0% of his productivity is a slave. If his master increases that number to 1%, is he still a slave?

At what percentage less than 100 does he cease to be a slave? Perhaps Robert could disclose the magic number, and more importantly, explain and justify it.

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Artisan December 6, 2010 at 7:07 pm

Humans are defined through free will. Free will is a denial of slavery. So what? The scarcity of the body is just a working definition related to the concept of property, a paraphrase of the free will idea, if you want… let’s not be snobbish.

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Johnny Kramer December 6, 2010 at 7:25 pm

Phinn,

Please email me; I’d like to discuss something with you privately.

(My apologies to everyone here for disrupting the thread, but I don’t see another way to contact users whose handles don’t link to any contact info.)

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J. Grayson Lilburne December 6, 2010 at 9:10 pm

That looks like a poster “Stranger” might design.

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Wildberry December 6, 2010 at 10:50 pm

Stephan Kinsella said,

“If you point out that the first modern patent statute was England’s Statute of Monopolies of 1623…)

In Kathleen Touchstone’s book, Then Athena Said, is the following passage on page 165-166. (2006, University Press of America)

“The notion of intellectual property has been around for some time. In his book, Property and Freedom, Pipes stated that patents are thought to have originated during the fifteenth century in Venice. Robert Lowie credited primitive peoples with customs reminiscent of today’s rights that protect intellectual property. Covered were “intangibles” such as magical spells, songs, stories and designs…”

Good title to property entails a monopoly of possession and use by the owner. Since a monopoly, meaning the right to exclude others, is a fundamental attribute of property ownership, the fact that IP rights also create a monopoly right should not cause libertarians a problem, it appears to me.

It seems at least possible that such concepts of ownership in intangible things, and the right of an author to attribution for such work, could have arisen from the so-called “natural state”. It appears equally probable for these to have arisen as for those in other forms of more tangible property rights.

Although this leaves open to discussion the issues of the legitimacy of IP ownership and a system of ethics within which it might exist, I see no purpose other than a rhetorical one to try to argue against IP on the basis that it entails a monopoly, or that it has some history connected to English common law, which is also true of a good proportion of all American common law.

So, I wonder if anyone can explain the purpose of forming such a rhetorical context as this, as a point of departure for further discussion?

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David C December 6, 2010 at 10:51 pm

I imagine that before democracy was common, kings didn’t maintain their power by soothing the popular mob, so it was much more natural to call things what they were. A patent is a monopoly. It took several years for modern governments to learn how to effectively butter things up.

There is one good thing about calling information monopolies a property though, it allows companies to play killer tax dodging games by selling IP back and forth between countries.

Anyhow, imagine the year is 2050, and I take a pill, and that pill genetically modifies my brain to store perfect information, and allows my brain to communicate with other peoples brain with no information distortion or loss so I cam communicate with them without even talking.

Well, when I go see a movie, is someone going to assert a right to control my brain? are they going to assert a right to monitor my brain to make sure it has the proper info? are they going to assert a right to fine me, fee me, or punish me if it the info in it is unauthroized? are they going to assert a right to monitor my brains communication with other peoples brains, and a right to cut off my communication with other people if I don’t communicate information that is “approved”? I mean, this isn’t far fetched, technology is integrating with the body more and more every day while storage and communication technology advance rapidly.

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Gil December 6, 2010 at 11:10 pm

Cool pic! 

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Phinn December 6, 2010 at 11:33 pm

>>>Since a monopoly, meaning the right to exclude others, is a fundamental attribute of property ownership, the fact that IP rights also create a monopoly right should not cause libertarians a problem, it appears to me.

The reason you don’t see a problem is that you have conveniently defined it away. A monopoly includes an element of exclusivity, but not everything that has some exclusivity is a monopoly. A monopoly is the purported exclusive right to sell a particular product to all buyers. It is an exclusivity that is specifically targeted at controlling the buyer-seller relationship.

Property doesn’t work that way. Property controls the use that anyone might make of a particular item, but does not purport to control two people unrelated to him and whether they want to trade with each other.For example, let’s sat I own a car. Someone takes it, and sells it to a willing buyer. Property principles say that the act of depriving me of the car is the wrong. IP says that the act of selling it to someone is the wrong. Property is the exclusivity of use. Monopoly is the exclusivity of a market.

The only way to justify IP is if you own your customers in some way, not just the article. Owning people, as exclusive customers, is a very 15th and 16th century idea, and came naturally to them, since the Western world was run by imperial colonizers and slave-traders at the time.

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Wildberry December 7, 2010 at 12:59 am

Phinn,

“A monopoly is the purported exclusive right to sell a particular product to all buyers. It is an exclusivity that is specifically targeted at controlling the buyer-seller relationship.”

I was recently discussing this here: http://blog.mises.org/14729/ideas-are-free-the-case-against-intellectual-property/comment-page-1/#comment-742611

I pulled a discussion of monopoly from Mises, Human action p.277-278, which is in part: “…the mere phenomenon of monopoly is without any significance and relevance for the operation of the market and the determination of prices.”
He was referring to the copyright holder, and “non-essential” goods. He was distinguishing connotations of the word “monopoly”.

“The only way to justify IP is if you own your customers in some way, not just the article.”

I don’t see this. I specifically don’t own customers in any sense of the word. I just have exclusive ownership rights in things that are my property, or a monopoly in these specific rights to specific property.

The fact that I own the reproduction rights to a book does not interfere with your freedom to decline to buy it. You equivocate when you connect the meaning of monopoly, as in “a global monopoly on the production of wheat”, and “the reproduction rights of a book”. Mises didn’t seem to think these were the same thing.

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Rick December 7, 2010 at 1:05 pm

Wildberry,

If I may,

“The fact that I own the reproduction rights to a book does not interfere with your freedom to decline to buy it. ”

The reality is you shouldn’t be a sole owner of any rights. Thats the monopoly. Yes, I have the freedom to decline to buy it but I do not have the freedom to use a character in your novel as a centerpiece in mine. Nor do I have the legal freedom to scan your book and use it in a classroom enviornment. That is where my rights are taken away from me. (thus the point)

The problem with IP law is, like most laws that do not have a definitive line drawn in the sand, you create a slippery slope of sorts.

Is it ok for me to take digital copies of your book, copy a few chapters in word or PDF and then print out 30 copies to sell to my students who don’t want to spend $24.99 on your book – at least so I can recover my costs for my time and paper? Not in today’s world.

Is it ok if handed out just a few pages from the book? Technically speaking, – I shouldn’t do that either, right? – why because a magical number of pages, words, or sentences were reproduced?

Now, what if I decided to write – word for word – your book on the chalk board. Am i liable in that situation? Lets say I even charged my classroom a nickel a piece for all the chalk I used to write it out.

At what point is it “theft” and at what point are your words and your ideas no longer your property? At what point is one allowed to profit soley on their means of distribution rather than sole ownership and distribution?

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Wildberry December 7, 2010 at 9:32 pm

Rick,
You may. I appreciate the courtesy of your response.

“The reality is you shouldn’t be a sole owner of any rights. Thats the monopoly.”

Sorry, I just don’t know how to square such a comment with the concept of property. If I don’t have a right to possess and use to the total exclusion of others, what is the meaning of ownership? On the other hand, does this mean I have the personal right to own, for example, all of the wheat production in the world. I would argue no, probably because it is hard to imagine how that could happen in a free market, but Mises says even there, wheat has to compete with other commodities, and a monopoly only exists, in the common meaning of the word, if the price curve takes on a partilar shape. On a smaller scale, certainly you would have to say I have monopoly rights to my own body. No one else can “sell” my labor, don’t you agree?

“Yes, I have the freedom to decline to buy it but I do not have the freedom to use a character in your novel as a centerpiece in mine. Nor do I have the legal freedom to scan your book and use it in a classroom environment. That is where my rights are taken away from me. (thus the point)”

No, the issue you raise can be explained with a little common sense. I own a piece of land. My rights to that land are clear and good. My neighbor puts up a fence, and I think it is on my property. If it is, he is violating my rights of ownership. If he is right, I am defending boundaries that aren’t actually mine.

If this dispute is successfully resolved (it matters not how) then not only is the conflict (i.e. dispute) resolved with my neighbor, but also for any buyer or seller that follows. We can say that ownership establishes the issue of rights, but boundaries are potentially ambiguous and invite refinement in their definition.

If I own a book, then the boundaries of that ownership right are subject to interpretation and conflict, as you describe. If that dispute is resolved in a way that a general rule can be formulated such that future, similar disputes (conflict) are avoided, then it is, in essence, the nature of the mechanism operating in the evolution of common law.

“The problem with IP law is, like most laws that do not have a definitive line drawn in the sand, you create a slippery slope of sorts.”

Yes, I agree. It is a slippery slope, and such is the nature of common law. It evolves by resolving specific, unique disputes in some general way that establishes legal precedent. If an error in judgment is made along the way, that error tends to be carried forward. This is the nature of the doctrine of Stare Decisis. Eventually, one hopes, the unintended and undesirable consequences of such prior error gets corrected and precedent gets overturned, and laws are refined. It is a somewhat messy, imprecise process of evolution, much like natural evolution. But unlike natural evolution, “rational” minds make the selections, hopefully in the direction of improvement, but sometimes not.

“At what point is it “theft” and at what point are your words and your ideas no longer your property? At what point is one allowed to profit soley on their means of distribution rather than sole ownership and distribution?”

These are all good questions, and if you were so inclined, you could discover how current law resolves some of the questions you raise. The point is that new cases come up all the time, and the thinking about how to handle them is advanced, (or not).

I would like to see more effort applied to this endeavor, discriminating between desirable and undesirable outcomes here on mises.org. Too much time and effort are being expended on the issue of whether there ought to be any IP rights at all. The most prominent spokespersons seem to have a single mind on that subject. I personally can’t see it.

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Rick December 8, 2010 at 11:55 am

Thanks for the reply Wildberry.

I’ll try to copy and paste some of your thoughts and then attempt to defend my position by doing so. While I cannot gaurantee you’ll agree with my view point at least I hope you’ll understand it.

a.) “The reality is you shouldn’t be a sole owner of any rights. Thats the monopoly.”

Sorry, I just don’t know how to square such a comment with the concept of property
****************************************
The point is exactly that. The reason why you cannot “square such a comment with the concept of property is because “ideas” and/or the specific arrangement of matter (whether it be sketchings, drawings, words, or material goods such as lumber to create a chair) is NOT property. Property is tangible. Land, Wheat, Goods, your own body, etc.. the concept of something easily duplicated – is not. Thus, a “concept” in itself – is not tangible and therefore cannot be viewed at as property.

b.) Your “owning a piece of land” statement can be explained in a.)

c.) You stated…

“If I own a book, then the boundaries of that ownership right are subject to interpretation and conflict, as you describe. If that dispute is resolved in a way that a general rule can be formulated such that future, similar disputes (conflict) are avoided, then it is, in essence, the nature of the mechanism operating in the evolution of common law.”

Under my view, which I believe is shared by most who feel IP shouldn’t exist, the boundaries of ownership right of your book begin and end w/ the physical & tangible characteristics of your book.

Theft would include my stealing of your hard drive that contains your book or software. It would also include stealing your books or printed sheets of code. \ What is NOT considered theft though, is when I obtain access to those words, letters, characters, etc… [through means of purchase or gift or whatever arangmenet was made] and then decided to sell, share, or duplicate the concept on materials that I purchased or had access too. [Whether it be a CD, Chalk board, hard drive, etc..]

d.) “The problem with IP law is, like most laws that do not have a definitive line drawn in the sand, you create a slippery slope of sorts.”

Yes, I agree. It is a slippery slope, and such is the nature of common law. It evolves by resolving specific, unique disputes in some general way that establishes legal precedent

I’m glad you agree and while I’m not sure you agree with my stance on what I’m about to say or not, I have yet to find out but it is to my understanding that the only laws worth the paper or stone they’re written/chiseled on are laws that are definitive and black and white.

If you have to bother using words like “evolve” “unintended consequences” & “Slippery slope” then chances are the LAW in itself is flawed and therefore – should have never become such.

But thats just me.

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Wildberry December 9, 2010 at 3:35 pm

Rick,

“Thus, a “concept” in itself – is not tangible and therefore cannot be viewed at as property.
So, what you are saying is that there is nothing that can be owned unless it is tangible?
That concept in itself defeats the very purpose of IP law. If you dig a little into what the laws actually are, you will find that IP law protects the intangible aspects of a tangible fixation of those intangibles. The right is in the intangible, but the property right is only created when it is fixed. Once fixed, the standard property rights of torts, property and contract law can be applied. If it is not fixed, it is not protected. If you wait too long to fix it (and thereby deprive society of your innovation) you lose your rights of protection. If you fully disclose your innovation to the public and disseminate it in the market, you get rewarded with limited protections. That is the bargain, and the laws are an attempt to optimize the results. It doesn’t always work out that way, I agree.
If you eliminate all intangibles form property, then there is no need for IP law at all. You seem to support this idea. But the question is what are the consequences of a market with no IP laws? Whether you like IP or not, you have to fairly address this question. This is the slippery slope, because it is not black or white, but a tradeoff between conflicting social interests.

“Under my view, which I believe is shared by most who feel IP shouldn’t exist, the boundaries of ownership right of your book begin and end w/ the physical & tangible characteristics of your book.”

See my discussion with Phinn. Mises deals with this as producing for an external market. This has its own consequences. Kinsella dismisses them, but others, don’t. Since the scheme is built on balancing conflicting interests, the finer the point of distinction, the more problematic, and the more problematic, the more room for abuse. What else is new?

“only laws worth the paper or stone they’re written/chiseled on are laws that are definitive and black and white.”

Ah, if life were only that way. The fact is that almost all laws are based on a general rule that everyone can see and agree with, and then a series of exceptions. Think about homicide. Everyone agrees that the “killing of a human being by another human being” is wrong. Then you have all the exceptions; first degree, second degree, voluntary manslaughter, involuntary manslaughter, self defense, public danger, insanity, etc.

The history of common law is a history of dealing with the exceptions required by a specific set of facts. That is the nature of the beast.

“If you have to bother using words like “evolve” “unintended consequences” & “Slippery slope” then chances are the LAW in itself is flawed and therefore – should have never become such.”

This clarifies the point, and is also an analogy for the nature of many discussions here. Rarely are things so clearly black and white. Even the conduct of humans is not so clearly defined, even considering just one at a time. Should you reject something because it reflects the grey zones that characterize what it means to be human?

IP law is no different in this regard. It strives to optimize conflicting social interests. Sometimes it fails miserably. It is much more difficult to attempt to sort that out than it is to simply reject the entire problem. I choose to take the scenic route.

“But that’s just me.” Ditto.

Wildberry December 7, 2010 at 1:14 am

Lest you think I missed your point:

“Property is the exclusivity of use. Monopoly is the exclusivity of a market.”

What if my desired use of my property is to sell it in the market? “property” and “monopoly” appear to be an identity in this case. Your argument is circular. “Property” is “exlusive use” is “monopoly” is “property”.

Right?

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Phinn December 7, 2010 at 4:55 pm

Yes, you are missing the point. The distinction I am making between property violations and monopoly violations is that they address injuries that are defined in entirely different ways.

Under property rules, it’s entirely irrelevant if your desired use of the owned article is to sell it in the market, or use it as a door-stop. The law of property governs your relationship with someone who is interfering with your use of some owned thing. The injury occurs when someone interferes with your use of something. It doesn’t matter if you or the thief were planning to turn around to sell it to a third party. The locus of the injury is that you had exclusive use of something, and someone interfered with that use.

The law of monopolies, in contrast, governs your relationship with someone who is interfering with your POTENTIAL SALE of something to one or more third parties. There are three people involved in a monopoly violation — the owner, the infringer, and the hypothetical purchaser or potential purchaser that would have bought the article from the owner, if the monopoly had been respected. The existence of this third person is the key difference. The problem is that this third person is usually absent, hypothetical, or presumed, and not often acknowledged. But he is essential to showing that an owner of a monopoly has been injured. Without this third party, abstract though he may be, there can be no monopoly injury.

The crux of a monopoly injury occurs when an alleged infringer interferes with an owner’s sale, or potential sale. The alleged injury is that the infringer is coming between the owner and his customers, or his potential customers, as opposed to coming between an owner and the thing that is owned. The injury is that the owner made one less sale than he might have made.

(Incidentally, that potential customer might be the infringer himself, if for example he copies something for his own personal use. The IP owner’s complaint is that by copying it, the infinger extinguished a market demand that he might have otherwise satisfied by buying a copy.)

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Wildberry December 7, 2010 at 10:32 pm

Phinn,

“Under property rules, it’s entirely irrelevant if your desired use of the owned article is to sell it in the market, or use it as a door-stop.”

Agreed.

“The law of property governs your relationship with someone who is interfering with your use of some owned thing.”

Wouldn’t property rights affect this issue of outside interference in a couple of ways? If there was an invasion (or infringement), it would imply injury and damages. But if these rights were understood by both parties negotiating a trade, the economic calculation could proceed. It cannot proceed rationally as long as these rights were uncertain. These rights must be clearly established before the free market can freely operate.

Also, there is a deterrence effect. If retaliation is certain, there is less probability I will be invaded. If you try to sell something that I own without consent, I will retaliate. These are legitimate functions of property rights, don’t you agree?

“The injury occurs when someone interferes with your use of something. It doesn’t matter if you or the thief were planning to turn around to sell it to a third party. The locus of the injury is that you had exclusive use of something, and someone interfered with that use.”

Agreed.

“The law of monopolies, in contrast, governs your relationship with someone who is interfering with your POTENTIAL SALE of something to one or more third parties.”

I don’t buy this one. A monopoly is an ability to affect pricing. Traditionally, monopoly has been contrasted with competition. The section I cited from Mises addresses this distinction. What is it that you disagree with him about?

“There are three people involved in a monopoly violation — the owner, the infringer, and the hypothetical purchaser or potential purchaser that would have bought the article from the owner, if the monopoly had been respected. “

I’m not sure I follow this. If there is a way to infringe with impunity, I’m not sure it is a monopoly. If I own all the rights in the world to sell wheat, and you grow some in your back yard and sell it at the farmer’s market, what happens? If I can manage to take your wheat off the market, then it will have some nominal effect on pricing. Compared to the whole world of wheat, and your pittance, though, it wouldn’t be much. Maybe you could claim I have a “virtual monopoly” on wheat because my control of the means of production has a controlling effect on wheat prices. On the other hand, wheat competes with corn, soybeans, rice, etc. This is an important distinction.

If you could sell my labor without my consent, I wouldn’t have a monopoly on my body, right?

But if I sold my labor in a free market, I would be competing with other laborers. Do I still have a monopoly in the same sense as my rights to my own labor? No, because I have to compete, and I can’t control prices. How about a book?

“The existence of this third person is the key difference. The problem is that this third person is usually absent, hypothetical, or presumed, and not often acknowledged. But he is essential to showing that an owner of a monopoly has been injured. Without this third party, abstract though he may be, there can be no monopoly injury.”

I don’t get this one either. I have rights. I have them whether someone infringes upon them or not. I call this a negative right, the right not to be “invaded”. However, this negative right integrates the positive right to retaliation. Without the right to retaliation, how can I say I have a negative right to something? Rothbard seems to think that all natural rights are negative, and positive rights are derived rights. I think what I said fits with that.

The function of property rights is to give parties notice of how things are going to go down. This is a necessary precondition for the economic calculation; rights must come before trade.

“The crux of a monopoly injury occurs when an alleged infringer interferes with an owner’s sale, or potential sale.

I’m not sure I can agree that monopolies are injured. Monopolies operate against competition in a particular good. Competition operates against monopolies in a particular good.

“The alleged injury is that the infringer is coming between the owner and his customers, or his potential customers, as opposed to coming between an owner and the thing that is owned. The injury is that the owner made one less sale than he might have made.”

What does this mean? If I attempt to sell something that belongs to you, is your claim that I’m coming between you and your customers? I think the more direct injury is taking dominion and control of property that is not mine, and attempting to convert it for my benefit instead of yours, the rightful owner. These types of infractions of property rights are fundamental to basic property, tort and criminal law.

“(Incidentally, that potential customer might be the infringer himself, if for example he copies something for his own personal use. The IP owner’s complaint is that by copying it, the infinger extinguished a market demand that he might have otherwise satisfied by buying a copy.)”

This may or not be true. If no one is going to buy my book anyway because it stinks, well I don’t have much of a claim for injury. However, I may have a claim for property right infringement if copying for any purpose is proscribed. But it would be hard to enforce in a practical sense. That’s pretty much the way things work now, right?

I think this is a convoluted way to look at something that is otherwise simple. You are raising the issue of replication, or copying. How can I make a copy of something you own without your consent? You either own it or you don’t. The fact that something is impossible to copy (land) or easy (photocopying) is not the material issue, although many opponents to IP try to make a big issue of this.

Legally, the issue is one of notice. If you have notice that something is owned by another, then it is presumed that you also know you do not have the right to its use. If you don’t have notice, you are a bona fide purchaser, and you are “innocent” because you didn’t have notice that you were purchasing something from someone that doesn’t own it. In such a case, the seller, who has such notice, must make whole both the BFP and the owner. Otherwise, the seller would be unjustly enriched. These are all very basic legal concepts going back hundreds of years.

I think you are simply confused about how these clear principles might apply to complex issues of IP in a world with strong enabling technologies. Patent, copyright and trade secret law all have this concept of “unjust enrichment” incorporated into them. The basic test is whether someone gets the market benefit of something without having to employ the same investment resources applied by the originator. This is the common-sense reason why misappropriating trade secrets are unjust. The “free rider” gets the benefit without having to pay the costs. Does that seem just to you? See, common sense.

Here is a quiz: A manufacturer has developed a process that is killer. He is building a plant to go into mass production. A potential competitor gets wind of the new plant, and before it has the roof installed, rents a plane and flies over the new factory, takes pictures, and deduces the trade secrets of the developer. The developer sues under trade secret laws. Who wins? Who should win?

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Phinn December 7, 2010 at 11:34 pm

>>>I don’t buy this one. A monopoly is an ability to affect pricing.

No, a (claimed) right of monopoly is a (claimed) right to exclude people from offering competing goods to your customers or potential customers. It can vary in terms of the scope of the goods it covers or the location or identity of the customers.

>>>If there is a way to infringe with impunity, I’m not sure it is a monopoly.

I am talking about a (claimed) legal right to a monopoly, not whether someone can actually enforce one in practice.

(I happen to think that all claims of a right of monopoly are illegitimate, much like all claims of a right of ownership in slaves, wives and children. I am merely describing the legal theory and mechanics behind a purported monopoly right.)

>>>However, I may have a claim for property right infringement if copying for any purpose is proscribed.

No. That’s your basic error. A proscription against copying can never be an example of a property right. It is, at most, a claim of monopoly right.

And monopoly rights are indefensible.

>>>If you could sell my labor without my consent, I wouldn’t have a monopoly on my body, right?

You don’t have a monopoly right as to your body. You have a property right in it. It’s the right to the exclusive use of it, regardless of whether the infringer is trying to sell your labor not. The property violation as to your body occurs when he interferes with your exclusive use of it in any way. Whether his ultimate aim is to sell your labor, or is something else entirely, is irrelevant.

>>>How can I make a copy of something you own without your consent? You either own it or you don’t.

You can make a copy because you own your body and you own the materials you use to make the copy with. No one has the right to interfere with your use of them. Therefore, your act of copying could not possibly interfere with someone else’s right to the exclusive use of those materials, since those rights belong to you.

The complaint by the author of the original item is that your act of copying deprives him of his monopoly right in the production (and thus the potential sale) of that item, anywhere, to anyone, including to you. That’s an example of a (claimed) monopoly right, and as I said, claims of monopoly rights are indefensible. Therefore, there is no such thing as a right to prevent others from copying something.

>>>What does this mean? If I attempt to sell something that belongs to you, is your claim that I’m coming between you and your customers?

No, that’s a property violation, and it occurs at the moment you interfere with my use of it, not by your attempt to sell it. Your attempt to sell it is irrelevant. You are interfering with my property right to the exclusive use of an article whether you attempt to sell it or not.

>>>Legally, the issue is one of notice.

No, it isn’t. Property rights are not contingent on notice. If you take my bicycle innocently thinking it’s yours, and purport to sell it to some third person, and you can show with 100% certainty that you had no notice whatsoever that you were taking my bicycle, you have still violated my property right in that bicycle. Title never passed to you, and thus could never pass to anyone through you, including a good faith purchaser.

>>>Here is a quiz: …

There is no such thing as a right to prevent others from copying something.

REPLY

Wildberry December 8, 2010 at 10:23 am

Phinn
“No, a (claimed) right of monopoly is a (claimed) right to exclude people from offering competing goods to your customers or potential customers. It can vary in terms of the scope of the goods it covers or the location or identity of the customers.”

As I’ve tried to indicate a couple of times now, Mises disagrees with your treatment of the concept of monopoly. Your treatment allows an equivocation that appears to support your conclusion.

So the connotations of language are important here. I am asking you to start from the definition used by Mises to discuss this issue, and explain how you come to a different conclusion then he on the use of the concept of monopoly. In the Scholars Edition of Human Action, refer to page 277. I mean, if I can’t appeal to Mises to clarify the analyses we are discussing, what scholar can I use??

Here is another relevant passage: “The second connotation of monopoly…describes a state of affairs compatible with conditions of a market economy.” And later, “…the exclusive control of the supply of a definite commodity.” Please respond to that with your arguments about why you think Mises was wrong. I’m agreeing with his analysis. If you don’t please state why.

“(I happen to think that all claims of a right of monopoly are illegitimate, much like all claims of a right of ownership in slaves, wives and children. I am merely describing the legal theory and mechanics behind a purported monopoly right.)”

To equivocate this connotation of monopoly with slavery, etc. is offered for its rhetorical impact? If I think Mises is correct, then I advocate slavery? I know you don’t actually mean that.

“No. That’s your basic error. A proscription against copying can never be an example of a property right. It is, at most, a claim of monopoly right.”

Copying is a use. If the use involves my property, then it is an infringement of those rights of “exclusive control of supply”. You cannot copy something unless you have the original or another copy. Causality flows from cause to effect.

“And monopoly rights are indefensible.”

Mises disagrees with you. You must defend your position starting from his point of departure. Otherwise you are equivocating on my use of the word by applying your own meaning.

“You don’t have a monopoly right as to your body.”

I don’t have a right to exclusive control of supply for “my body”? That seems to contradict fundamental libertarian concepts of natural property rights.

“You have a property right in it. It’s the right to the exclusive use of it, regardless of whether the infringer is trying to sell your labor not. The property violation as to your body occurs when he interferes with your exclusive use of it in any way. Whether his ultimate aim is to sell your labor, or is something else entirely, is irrelevant.”

This is also an equivocation. Property rights and the expression of those rights are not two separate things. The right to use flows from the right to own. Ownership rights to property MEANS that my use is exclusive to others. Any use (that doesn’t violate the rights of others).

“You can make a copy because you own your body and you own the materials you use to make the copy with. No one has the right to interfere with your use of them. Therefore, your act of copying could not possibly interfere with someone else’s right to the exclusive use of those materials, since those rights belong to you.”

You could not defend this argument if you start a consistent application of property rights and exclusive use. You may own paper, a copying machine and your body. But what are you copying? Isn’t that the issue?

It is not the act of copying, it is the nature of the thing copied. Some things are impossible (land) and others easier (books, stories, simple ideas). However the relationship between ownership rights in property and non-exclusive use does not change just because replication makes one possible and another not.

There appears to be a lot of confusion on this point. See Tuckers article on how property rights are a function of replication and scarcity. In fact the opposite is true. Things that are impossible or impractical to copy (land, cars) in any realistic competitive sense don’t require much protection. Easily replicated property, however, might.
“The complaint by the author of the original item is that your act of copying deprives him of his monopoly right in the production (and thus the potential sale) of that item, anywhere, to anyone, including to you. That’s an example of a (claimed) monopoly right, and as I said, claims of monopoly rights are indefensible. Therefore, there is no such thing as a right to prevent others from copying something.”

If you return to your original assertion, I think you can see how your equivocation allows this conclusion. Straighten out the language, and this conclusion is unsupportable.
“No, that’s a property violation, and it occurs at the moment you interfere with my use of it, not by your attempt to sell it. Your attempt to sell it is irrelevant. You are interfering with my property right to the exclusive use of an article whether you attempt to sell it or not.”

Agree. This is the nature of property ownership rights; exclusive use.

“No, it isn’t. Property rights are not contingent on notice.”
I didn’t say they were. I said assignment of guilt for infringement is a function of culpability, and notice is a fundamental legal device for assigning culpability.

“If you take my bicycle innocently thinking it’s yours, and purport to sell it to some third person, and you can show with 100% certainty that you had no notice whatsoever that you were taking my bicycle, you have still violated my property right in that bicycle. Title never passed to you, and thus could never pass to anyone through you, including a good faith purchaser.”

This is confusing. Is it my bicycle or not? If so, you can’t take it whether you have notice or not, or whether you really couldn’t tell it was mine. What’s mine is gone without my consent. You sell it to a third person. It’s still mine. I want it back. The third party has no notice it was mine, so he deserves to be made whole. I own it, so I deserve to be made whole. The person to took it says he didn’t know, but he clearly (as determined after the fact) does not have title, and the buyer can’t acquire better title than the seller. That’s how the law would sort this out. Basic property law. A buyer without notice is a bona fide purchaser, indicating he has no reason to know that the seller didn’t have title. If he knew he was buying my bike, he would be assigned culpability along with the seller. That’s the way it works.

“There is no such thing as a right to prevent others from copying something.”

I think I have shown you that this is false. You never have unlimited rights to use of your own property. I used the example of my car and your bat in another post. There is no such thing as “total freedom”. Unless you live on a desert island alone, and then your only limitation is survival. So even there, you have limits. Such is life.

Phinn December 8, 2010 at 2:22 pm

“As I’ve tried to indicate a couple of times now, Mises disagrees with your treatment of the concept of monopoly. Your treatment allows an equivocation that appears to support your conclusion. So the connotations of language are important here. I am asking you to start from the definition used by Mises to discuss this issue, and explain how you come to a different conclusion then he on the use of the concept of monopoly. In the Scholars Edition of Human Action, refer to page 277. I mean, if I can’t appeal to Mises to clarify the analyses we are discussing, what scholar can I use??”

You are confused. In that passage, Mises was talking about the “phenomenon of monopoly.” Mises was talking about the real-world situation where someone (or some company), relying on ordinary property rights, ends up owning some set of goods that, in practice, constitutes a de facto monopoly.

In contrast, what I am talking about is a legal RIGHT to a monopoly, and whether such a legal claim is legitimate. This type of monopoly right was purportedly granted by the British Parliament via the Statute of Monopolies of 1623, as stated in the original post.

Mises was talking about economic reality. I am talking about laws. He was talking about how de facto monopolies may or may not exist in the real world. I am talking about the legitimacy of de jure claim of a monopoly right, i.e., whether some legal claim that someone enjoys a monopoly over the sale of some class of goods to some group of buyers is legitimate.

I do not know what Mises’s legal opinion was regarding the legitimacy of a claimed RIGHT OF MONOPOLY, or whether he considered copyright or patent rights to be an example of a monopoly right, or if he considered copyrights and patent rights to be actual property. If he thought they were defensible on the grounds that they were actual, literal property, he was wrong. But, in any event, none of the passages you are quoting even discuss Mises’s position on the legal theory behind legal monopolies.

“To equivocate this connotation of monopoly with slavery, etc. is offered for its rhetorical impact? If I think Mises is correct, then I advocate slavery? I know you don’t actually mean that.”

As I said, Mises and I are talking about two different things. Maybe he defended the legitimacy of copyrights somewhere else. I don’t know.

In any event, what I am saying is that a claimed RIGHT OF MONOPOLY is a form of partial slavery. It is less complete than the usual idea of total slavery (i.e., chattel slavery). There are, however, degrees of slavery. Serfdom is less than 100% enslavement, and indentured servitude is even less so, but they are still a form of slavery. The income tax is, I submit, a form of partial slavery (taking someone’s income on the grounds that the State has a prior claim to your productivity means you are a slave to the portion of your income taken.)

Likewise, a RIGHT OF MONOPOLY is a form of partial slavery. Such a claimed right means that the monopolist, in effect, holds the exclusive right to sell the type of good in question to the customers in question. The monopolist is, in effect, saying that the potential customers are NOT FREE to go out and buy that good from some other willing seller. Potential sellers are likewise partially enslaved, in that they are prevented from making or selling the good in question, for their own use or to sell it to a willing buyer, merely because the monopolist purports to be the only one who can do so. A monopoly right is a kind of negative slavery — prevention from engaging in a form of economic activity that you should be allowed to do. In that sense, it is like being barred from entering an occupation on some arbitrary grounds.

“Copying is a use. If the use involves my property, then it is an infringement of those rights of “exclusive control of supply”. You cannot copy something unless you have the original or another copy. Causality flows from cause to effect.”

The issue is not whether copying is a use. The issue is whether the act of copying by one person INTERFERES with someone else’s use of goods that he owns.

The act of copying a book by one person does not in ANY WAY interfere with the author’s actual, literal use of his original book, or with anyone’s use of any other copy.

Please read that sentence a couple of times. It’s important.

“I don’t have a right to exclusive control of supply for “my body”? That seems to contradict fundamental libertarian concepts of natural property rights.”

Your question makes no sense. You do, however, have a property right in your body that is broader, more thorough, and more defensible than a right to merely control the supply of your labor to a buyer. You have the right to the exclusive use of your body for all purposes.

“This is also an equivocation. Property rights and the expression of those rights are not two separate things. The right to use flows from the right to own. Ownership rights to property MEANS that my use is exclusive to others. Any use (that doesn’t violate the rights of others).”

The right to use is the right to own. Ownership is the right of exclusive use.

Preventing others from copying, however, is not based on such a property right. Someone’s act of copying in no way interferes with your use of the good in question.

Instead, copyright (or a patent right) arises from the claim that you (as author or patent-holder) have the right to prevent everyone else in the world from engaging in the production of a particular type of good. The reason for this prohibition is to prevent them from selling their products to other people, or from satisfying their demand for that type of good by getting it without paying the copyright or patent holder for it. This claim fits the definition of a claimed monopoly right. That’s why copyrights and patents used to be openly called “monopoly rights,” before its defenders decided that calling them “intellectual property” sounded better.

But merely calling it ‘property’ doesn’t make it so.

“You could not defend this argument [that copying is acceptable if you own the copier and the paper] if you start a consistent application of property rights and exclusive use. You may own paper, a copying machine and your body. But what are you copying? Isn’t that the issue?”

You are copying a pattern, which is un-ownable. My use of a pattern in no way interferes with anyone else’s use of it. It does, however, interfere with their intended SALE of the goods based on that pattern, in the market. But you don’t have the right to exclude me from entering a market, because you don’t own me or your potential customers, not even a little.

“There appears to be a lot of confusion on this point. See Tuckers article on how property rights are a function of replication and scarcity. In fact the opposite is true. Things that are impossible or impractical to copy (land, cars) in any realistic competitive sense don’t require much protection. Easily replicated property, however, might.”

Do you have a link?

You can’t legitimately prevent someone from copying something until you first have a right in property that makes such an act legitimate. But, there is no such thing as a property right to a pattern, because my use of a pattern can never interfere with your use of it. My use might displace one of your potential SALES of a copy, but not with your use.

“This is confusing. Is it my bicycle or not? If so, you can’t take it whether you have notice or not, or whether you really couldn’t tell it was mine. What’s mine is gone without my consent. You sell it to a third person. It’s still mine. I want it back. …”

Yes, it’s your bicycle, all the time. The good faith purchaser must get his money back from the seller, if he can, not you. You get your bike back regardless.

“I think I have shown you that this is false. You never have unlimited rights to use of your own property. I used the example of my car and your bat in another post. There is no such thing as “total freedom”. Unless you live on a desert island alone, and then your only limitation is survival. So even there, you have limits. Such is life.”

No, you have misunderstood what I have been talking about. I am not talking about whether someone can, through the application of ordinary property rights, manage to acquire a de facto monopoly over something. I am talking about whether a legal claim that one enjoys a legal monopoly is ever defensible. I say it is not.

I also say that copyrights and patents are examples of monopoly rights. Calling them “property” rights is a misnomer, and they are indefensible as a species of property. They are only property by metaphor, and not a very apt one.

They are monopoly rights, because by definition, they are based on the claimed right to be free from interference in the SALE of a certain class of goods to potential customers, not the right to be free from interference in the use of something.

Wildberry December 9, 2010 at 2:35 pm

Phinn,
“You are confused.”

Indeed I am. That passage was part of his analysis of “Markets”, and appeared in the section called “Competition”, in which he discusses the connotations of the use of “monopoly” at it relates to economic analysis. He makes specific reference to copyright as an example of this connotation of monopoly relative to competitive forces. In the next section he relates this to Freedom. I think this is highly relevant to your assertions about what “monopoly” really means. Based on my understanding of his meaning, you and he cannot possibly both be correct. If you think, after reading this, that your use of the term is correct, well…show me.

“In contrast, what I am talking about is a legal RIGHT to a monopoly, and whether such a legal claim is legitimate.”

If you have a right in property, it is a market monopoly. Mises main point is that this need not mean that a monopoly price for the subject good necessarily follows. This is particularly important in the discussion of property rights in IP, which is why he refers to copyright. But he also illustrates his point by referring to the monopoly rights a given hotel has on renting rooms in that particular hotel. He concludes by saying that this type of monopoly is everywhere in the market.

“I am talking about the legitimacy of de jure claim of a monopoly right, i.e., whether some legal claim that someone enjoys a monopoly over the sale of some class of goods to some group of buyers is legitimate.

Yes you are. My view is that if you deny the legitimacy of a monopoly control of the means to produce a given good, then you must also deny that property can be owned. This absurd conclusion is not supportable, though you may try.

“I do not know what Mises’s legal opinion was regarding the legitimacy of a claimed RIGHT OF MONOPOLY, or whether he considered copyright or patent rights to be an example of a monopoly right, or if he considered copyrights and patent rights to be actual property.”

This is why I referred you to his writing. If you read this, you would know what I’m talking about. If you want me to understand what you’re talking about, either build on existing scholarship, or send me a copy of your book.

“If he thought they were defensible on the grounds that they were actual, literal property, he was wrong.”

This is a bold statement, and one which should be backed up by some argument.

“Maybe he defended the legitimacy of copyrights somewhere else. I don’t know.”

OK. I believe he did, but it is not relevant to this discussion. He certainly defines the problem in his discussions of property.

“In any event, what I am saying is that a claimed RIGHT OF MONOPOLY is a form of partial slavery.”

I know of no basis for this conclusion. What follows this statement is incomprehensible by me. I presume you mean slavery as opposed to freedom.

Well, again referring to Mises, there is no such thing as total freedom. Even on a desert island, man must submit to the laws of nature or perish. Once he enters a system of society, he makes tradeoffs, all of which compromise some aspect of his freedom for some benefit.

“In that sense, it is like being barred from entering an occupation on some arbitrary grounds.”

People are “barred” from entering certain markets, but the grounds are not arbitrary. They are a function of property rights, competition, and the sovereignty of the consumer, i.e. the market function.

“The issue is not whether copying is a use.”
OK, we can agree, it is a use; but a use of what?

“The act of copying a book by one person does not in ANY WAY interfere with the author’s actual, literal use of his original book, or with anyone’s use of any other copy.”
Please read that sentence a couple of times. It’s important.

This is the fallacy of your position. Notice you now injected the concept of “original”.

For there to be copy of something, there must be an original. Causation flows from original to copy. It is the property right in that original that is at issue. If you say you own the copy, then you must also own the original. How can you justify this position based on any theory of the title transfer of property? At what point does the legitimacy of ownership depend upon whether the “original” exists after the “copy” is made?

“The right to use is the right to own. Ownership is the right of exclusive use.”

Again, we can agree.

“Preventing others from copying, however, is not based on such a property right. Someone’s act of copying in no way interferes with your use of the good in question.”

I am familiar with the scarcity and the “free good” arguments concerning the nature of ideas. The application of this concept to conclude a legitimacy of copying the property of another is unsupportable.

As Mises points out, in the absence of property rights in the output of a production process, the producer is supplying an external market. Not receiving the benefit of one’s production IS a useful definition of slavery.

“That’s why copyrights and patents used to be openly called “monopoly rights,” before its defenders decided that calling them “intellectual property” sounded better.”

I cannot avoid the blunt statement that this is a completely inaccurate rendition of either the public policy goals of IP laws, or the history. This is rhetoric concerning the mean, tyrannical origins of a legal convention, offered for its prejudicial utility. It is merely being promoted by the intellectual leaders of this site for reasons of “consistency” with an ideology, and repeated by people like you.

That fact that patent law creates a monopoly is a statement of fact. It creates property rights in the intangible aspects of a tangible fixation, or “good”. It operates fundamentally to balance competing interests of society; the competitive nature of markets, and the dissemination of innovations to society. As Mises points out in HA, a bias towards either of these poles creates a problem. The goal of IP laws, in their simplest forms, attempt to strike a balance between these competing objectives.

The fact that it fails to adequately address certain other negative aspects is beside the point in precisely the same way that pointing to the obvious “wrongness” of the Federal Government in specific areas requires one to conclude that all government is also wrong.

“But merely calling it ‘property’ doesn’t make it so.”

No, but establishing property rights by legal convention, and enforcing those right does make it property. You are arguing that it “shouldn’t” be. You are offering nothing substantial to prove why that is the case. You may take me at my word that if you could offer something persuasive, I would be the first to jump on board.

“It does, however, interfere with their intended SALE of the goods based on that pattern, in the market.”

As you can now see, you must deal with the property issue before you can discuss interference.

“But you don’t have the right to exclude me from entering a market, because you don’t own me or your potential customers, not even a little.”

I don’t suppose I have to point out that I am not proposing that I own you are consumers. That is not the way the market works, and I suspect you actually know that. I own property. I may use that property to produce things. If they are useful, I may sell them for a market price. A monopoly in my productive output does not mean that I can sell them at monopoly prices. Competition with other goods is still a factor in setting the price. We have gone full circle back to Mises, p. 277 et al.
“Do you have a link?”
http://mises.org/daily/4630/

“You can’t legitimately prevent someone from copying something until you first have a right in property that makes such an act legitimate. But, there is no such thing as a property right to a pattern, because my use of a pattern can never interfere with your use of it. My use might displace one of your potential SALES of a copy, but not with your use.”

Like I said, I am familiar with this argument. What you neglect to consider is the cost of production. You act as if the cost of the copy is equivalent to the cost of the original. Obviously it is not. To whom should those costs be assigned? If the costs are being assigned to the originator, and the benefits are being assigned to the copier, how does that square with anything related to your concept of property rights, competition or free markets?

Mises described this as producing for an external market. It is a practical definition of slavery, although the producer can just decide not to be a slave, since there is no incentive to be one. Kathleen Touchstone, who I suspect you have not heard of, calls this a unilateral transfer, like charity.

Read this paragraph twice. It is important.

“No, you have misunderstood what I have been talking about. I am not talking about whether someone can, through the application of ordinary property rights, manage to acquire a de facto monopoly over something. I am talking about whether a legal claim that one enjoys a legal monopoly is ever defensible. I say it is not.”

Got it. Disagree. I have company.

REPLY

Phinn December 9, 2010 at 4:10 pm

I like Mises’s example of having a “monopoly” in hotel rooms, but I would not call it an example of monopoly in the same sense I am discussing (although it makes some sense to use that term in the context of hotel rooms, because hotel rooms exist for no other real purpose, and have no other common USE, other than to be offered for sale on the market).

I would submit that that the renting of hotel rooms is not properly categorized as a form of “monopoly,” for the simple reason that we already have a term for the kind of control that the owner of the hotel has over the letting of rooms — it’s his property. He’s the owner. He has full control of the building, which includes the right to sell (or rent) it, but that right is not dependent on the actual transaction of renting for his rights to exist. He is injured by any interference with his use, and has the right to prevent any such interference, regardless of whether it interferes with an existing or potential sale.

I have been using the term “monopoly” to describe the kind of chartered, government-sponsored decrees that have been granted throughout history — the right to be the sole importer of wheat for X country, or of cotton out of some port. By this term, I am referring to the supposed right to own all of the trade, by anyone, in whole classes of goods — which renders people unable to sell stuff they may otherwise own! The East India Trading Company was frequently granted these privileges, for example.

>>>My view is that if you deny the legitimacy of a monopoly control of the means to produce a given good, then you must also deny that property can be owned.

What is the “given good”? In the case of copyright, the claim is that it is that everyone on planet earth (or at least in the places that are reachable) cannot produce anything that even resembles the pattern of some other object. That is not a prohibition on interfering with someone’s use of a “given good.” That is a prohibition on the production and sale of a class of goods.

>>>As you can now see, you must deal with the property issue before you can discuss interference.

No, I don’t. I think this may be your root error.

You seem to think that property rights exist between an owner and an object. I know people often say that the thing owned is “his property,” but that’s a bit sloppy. A right of property does not exist between the man and the thing. The right concerns the relationship between man and other men, with regard to using some thing. The distinction is subtle, but important.

In the case of ordinary property rights (i.e., owning a bicycle or a hotel), the right of ownership is the right to exclude all other persons in the world from interfering with whatever use that you, as owner, want to make of it. The owner’s use can be anything that does not interfere with anyone else’s use of anything that THEY own.

You do not, therefore, have the right to control the behavior of other people, other than to prevent them from causing interference with your use of your stuff, because to control them in any other way necessarily means that you are interfering with their use of their bodies, which they own.

Now, you can call this right of ownership of your stuff a “monopoly,” and in a sense it sort of is, but that’s a conflation that blurs the distinction between true property and copyright/patents (which are false or metaphorical property). It is sufficient, and thus more accurate, to say that one has the right of ownership of all of one’s goods, even if that means that, in practice, you end up owning most or all of the supply of some good that you own for the sole purpose of selling. The mere fact you own all or most of the supply does not, in itself, defeat your basic right of ownership that you have otherwise justly acquired in those goods (i.e., through homesteading, other labor or trade).

I think this was the point Mises was getting at — that property rights are inviolate, and if the extent of your ownership amounts to a monopoly of the supply of something in practice, then so be it. He made this point to rebut the indefensible argument, often made, that if you own enough of something to amount to a de facto monopoly, then somehow your property rights don’t exist any more — that the point at which someone achieves a monopoly status, even through just and proper means, was also the point when his property rights ended. Mises rejected that, and defending the idea that If you own it, you own it, even if that means you own all of it.

This is all very different question from the issue of patents and copyrights, which is whether the pattern of ink (or construction materials) can, itself, be owned, apart from the goods themselves.

I submit it cannot, because doing so means that you are asserting an indefensible legal right to monopolize not just the goods you own, but an entire CLASS of goods, over which you have no prior right of ownership, and the use of which can cause no interference in your use of your goods.

So, let’s separate property and monopoly. A claim of property is that you can control others to the extent they interfere with your use of something. A claim of monopoly is that you can control others to the extent they interfere with your SALE of a CLASS of something.

These are two entirely different forms of interference. When you assert a claim of ordinary property (e.g., in a bicycle) you are asserting the right to control other people if they interfere with your use of the owned thing. However, when you assert a monopoly right, you are asserting the right to control other people if they interfere with your sale of a CLASS of goods to any potential buyer out there. Not just one pile of wheat, but ALL wheat. Not these 8 tons of iron, but all iron.

Therefore, property rights are defined by the nature of the interference. I do not have to deal with property first, then interference. It is the interference that defines the property rights.

If I own a stack of clean paper and a typewriter in front of me, I can use them however I want in the privacy of my room, and I can sell the pages to anyone who wants to buy them. That’s because I own the paper, and I own the ink. Copyright asserts that if I make marks on the paper that form a pattern that is too similar to someone else’s marks, then I can’t use my paper and ink in that manner, and even if I am allowed to mark up my own paper, I certainly can’t sell it. Why? Because someone claims the right to all of the sales of that class of good — books about X.

>>>What you neglect to consider is the cost of production.

The cost of production is irrelevant. Just like Mises was saying about being such a good businessman that you end up with a de facto monopoly of something, the right of ownership is superior to what one market participant sees as an excessive cost. The market effects do not defeat, or limit, the right in property.

If that means that producers who get copied have to build that cost into their calculations when deciding what to produce and how to produce it, then so be it.

Chefs and fashion designers get copied all the time. They adapted their business models to deal with that, without (until very recently) crying to the State to grant them a monopoly privilege over every type of thing they claim to invent.

Wildberry December 9, 2010 at 7:02 pm

Phinn,
“…because hotel rooms exist for no other real purpose”

“…we already have a term for the kind of control that the owner of the hotel has over the letting of rooms — it’s his property.”

I don’t know that purpose is the test for property or monopoly. Not sure what difference this is supposed to make. I think you are blending meanings across property, purpose and monopoly rights. It is confusing.

Property is owned. Owned means exclusive control and use. If you own the means of production, you have an exclusive interest it the output. If you own something, then you also own the exclusive right to dispose of it, through sale, gift, destruction or abandonment. If you want to sell it, you have the exclusive right to do so. No one else can make it available to the market because you represent a monopoly on the source of that particular product or good. This is a monopoly, by its simple meaning. Having a monopoly does not necessarily imply monopoly pricing. Why? There is an explanation. Mises gives it. Simple.

“He’s the owner. He has full control of the building, which includes the right to sell (or rent) it, but that right is not dependent on the actual transaction of renting for his rights to exist. He is injured by any interference with his use, and has the right to prevent any such interference, regardless of whether it interferes with an existing or potential sale.”

Isn’t what I’ve said above just a restatement of this by you? You seem to be focused on sale, but that is only one aspect of ownership rights. You can keep it. You can burn it. Why? Because you own it and it is yours. Simple.

“I have been using the term “monopoly” to describe the kind of chartered, government-sponsored decrees that have been granted throughout history — the right to be the sole importer of wheat for X country, or of cotton out of some port.”

This is precisely the distinction Mises is describing. If I have a monopoly on some essential commodity, then I can demand monopoly prices. Why? Because your choice to trade or not is driven by the necessity to have it. You cannot do without it. This is the type of monopoly you are attempting to describe. This generally does not apply to the subject matter of IP, except in some rare cases where the result is arguably unsatisfactory.

“By this term, I am referring to the supposed right to own all of the trade, by anyone, in whole classes of goods — which renders people unable to sell stuff they may otherwise own!”

You seem to be making a different distinction here; between controlling the source of a good (How could you have stuff to sell if I own the only source of that stuff?) and the distribution of a good (How could you buy stuff from any other source than me, if I’m the only one to have the stuff?)

Perhaps these are two ways to enforce a monopoly, but they seem like just different aspects of the same thing, to me. I cannot distribute something I don’t have. I cannot buy something from someone else if there is only source of it. What’s the diff?

“In the case of copyright, the claim is that it is that everyone on planet earth (or at least in the places that are reachable) cannot produce anything that even resembles the pattern of some other object.”

That is a very gross generalization that has no basis in reality. IP case law is filled with specific examples of how the distinction is made, given a VERY SPECIFIC FACT PATTERN. If there were only a couple of sets of facts, decisions could be made once and for all, and no further litigation would ever be required. The reality is that new fact patterns constantly emerge which requires a refinement of the distinctions between what can be protected and what cannot.

Pure ideas receive no protection. Ideas that are not “fixed” in a tangible medium are not protected. Nothing is protected forever; protection is always limited. The nature of the intangible content of a good must meet certain criteria for “originality” and “uniqueness”.

In addition, if you try to hoard your innovations you also are not protected, because one of the features of IP law is to encourage dissemination as quickly as possible, so that society can benefit sooner rather than later. We (society) make a deal with innovators (society) to get the benefits sooner by trading for some market protections. Generally, it’s a good deal. Specifically, there are big problems.

“You seem to think that property rights exist between an owner and an object.”

No I don’t. That is absurd. Rights exist in relation to other’s rights relative to the subject property. Anything that can be owned must be owned by someone, eventually. In the absence of scarcity or other people, property rights are meaningless.

“The right concerns the relationship between man and other men, with regard to using some thing.”

See? We seem to agree.

“The owner’s use can be anything that does not interfere with anyone else’s use of anything that THEY own.”

Obviously.

“You do not, therefore, have the right to control the behavior of other people, other than to prevent them from causing interference with your use of your stuff, because to control them in any other way necessarily means that you are interfering with their use of their bodies, which they own.”

Are you arguing for my side now?

“Now, you can call this right of ownership of your stuff a “monopoly,” and in a sense it sort of is, but that’s a conflation that blurs the distinction between true property and copyright/patents (which are false or metaphorical property). “

What the heck is “true property” as opposed to “false property”? It is or it isn’t. If it is, there are rights associated with owning it. If it isn’t, no one can own it.

Exactly like real property, I own it if I can exert dominion and control over it. If I can’t, then I don’t own it, at least for long. This is getting pretty close to the real issue you (and other) have with the concept of IP. I will try to explain it in a few words.

There are only a couple of ways I can protect my property from conquest. I can be the biggest and baddest dude around. I can hire the local mafia to come when I call. I can hire a private “court”, but as even the Murray the king of Ancap says, to do that there would have to be a common agreement on a code of laws. That starts sounding like government to me, but let’s ignore that for the moment.

Or I can take that last, fatal step and VOLUNTARILY GRANT A MONOPOLY IN RETALIATION (ENFORCEMENT) TO A GOVERNMENT AGENT IN EXCHANGE FOR THE IMPARTIAL RULE OF LAW FOR BOTH THE VICTIM AND THE ACCUSED. That definitely IS government. Or I can let this government run wild and I have arrived at the ultimate boogey man, THE STATE!

All of these solutions require either the rule of violence or the rule of law. If you deny the rule of law, then you deny everything except violence. If you deny violence, then you accept the rule of law, no matter how you enforce it. I

f you accept the rule of law, you are going to be hard pressed to deny government, because a group of private agencies that agree on a common code of law is pretty close to government. But if you think all governments eventually become States, no matter what, well then, you can’t have that. Solution: Anarchism. No law, no state, no problem.

Kinsella said these two things: “We have IP because we have a state.”, and “You don’t have to be a consistent libertarian (anarchist) to understand that IP is nonsense, just consistent enough.”

Do you see my point?

“This is all very different question from the issue of patents and copyrights, which is whether the pattern of ink (or construction materials) can, itself, be owned, apart from the goods themselves.”

Do you see how you (and others) equivocate? Do you really think a novel is just a pattern of ink on paper? If that was the case, monkeys could write books, and books would be worthless. Is that reality? Of course not, but stating the case this way makes it seem more sensible to defend your right to misappropriate the production output of someone else, without making the same investment in the production process that the producer made. By so doing, you make the producer your slave. It seems absurd when put in those terms, but that is exactly your conclusion.

IP law specifically distinguishes this issue in the determination of trade secret misappropriation. One of the tests for misappropriation concerns the issue of reverse-engineering, which is allowed specifically in acquisition of a protected trade secret on the theory that the reverse-engineer is investing in the process at an “equivalent” level to the original holder, and therefore he is free to use the secret without liability. If you fly over the factory and take a picture, you have not, and you are liable for misappropriation.

“not just the goods you own, but an entire CLASS of goods…”

My copyright of a book gives me no rights in ALL books. My patent of a mousetrap does not give me rights in ALL mousetraps. My trade secrets in a manufacturing process give me no rights in ALL manufacturing processes. Right?

“A claim of monopoly is that you can control others to the extent they interfere with your SALE of a CLASS of something.”

You arrive here by paths unknown and unexplored.

“If I own a stack of clean paper and a typewriter in front of me, I can use them however I want in the privacy of my room, and I can sell the pages to anyone who wants to buy them. That’s because I own the paper, and I own the ink.”

Are you really suggesting that anyone is going to buy paper from you with random, meaningless marks on them? Good luck.

“Copyright asserts that if I make marks on the paper that form a pattern that is too similar to someone else’s marks”

Whereas I have heard that given enough time, even a monkey could write the Encyclopedia Britannica, 1954 edition, it hasn’t happened yet. By the same token, what is the probability that your random marks, which are in such demand, are going to resemble any other page of random marks. When you give this argument the sniff test, it stinks.

However, what is the chance that your marks would be identical to mine if you used a photocopier? Why would you want to copy my random marks? Why not make your own, since they are only random anyway? I’m sure your random marks would be just as important to society as say, those in Human Action.

“The cost of production is irrelevant.”

The absurdity of this comment can be illustrated by simply asking, “What was the cost of production for Mises, in order to get his marks on the pages just so?” Do you still think that the costs of production are irrelevant? Do you think that the costs were merely the cost of buying some paper and a pen?

What shall we call these cost? What shall we name them? Let’s agree that it is the “intangible aspect of the tangible written work entitled Human Action by L.V. Mises”.

“Chefs and fashion designers get copied all the time.”

Copyright in fashion and recipes is a category of good which is treated uniquely by case law. There are many categories of goods that receive different treatment form IP laws. It is difficult to make cross comparisons, so let’s leave that one for another time.

It is a pleasure talking with you. Thank you for your interest.

Peter Surda December 10, 2010 at 6:21 am

Wildberry,

VERY SPECIFIC FACT PATTERN

Patterns are something people make up in order to make sense of the world. It is not something that exists in the same sense that for example a rock exists. Any object features an infinite number of patterns. Depending on our goals, we use some of them and ignore others. If we assume that the pattern has some relevance to property rights, we logically need to ask ourselves which of those infinite number are the relevant ones and on what level (e.g. is “book” a relevant level, or “language”, “characters”). We also need to ask if causality should be relevant (i.e. does independent discovery create a new identity or not).

Obviously, since the questions are based on utilitarianism anyway, they are not economic questions. The other issue is that not even the proponents thereof attempt to answer those question, instead creating a horribly convoluted nonsense.

I recall you were wondering previously why I say that attributes cannot be property. You said something like ink+paper+idea = book. That’s a metaphorical representation. The “idea” is just a interpretation that exists in peoples heads, it’s not a separate component, it’s an attribute of the ink and paper. If you take away the ink or paper, there is no idea anymore. Also, if you ask yourself how to remove the idea without removing the ink or paper, you’ll realise that that’s a nonsense. Just like “value” does not add a new, separate component into objects, ideas and patterns don’t do it either. All they are is our perception. That does not mean they useless. To us, it’s very useful. But that does not mean they has a separate existence.

(slowly processing through backlog)

Wildberry December 10, 2010 at 12:25 pm

Peter,
Good to hear from you. I go through phases of activity here, too. Day job and all…
Phinn, this is a continuation of our discussion also.

Peter, your post was very existential. Allow me to continue with this approach.

Humans are rational and conceptual. We use pattern recognition, symbols, language and visualizations to create and process data. We seem to agree about all that.
What are ideas? Are they like pornography; i.e. it’s hard to explain but you know it when you see it?

As humans, you know and I know they exist. They exist in our minds, ultimately. We also know that humans act, and one of these actions is communication. We also build things. I don’t think you are disputing the fact that before a human can act (except in very non-abstract ways that involve the autonomic nervous system), we must think. Ideas are the “things” we use to think. Ideas can be strung together to form complex thoughts, stories, formulations, descriptions, and all the other attributes of language that make communication about complex subjects, like this blog, possible.

So, we know ideas exist, but how can we actually prove they exist? You and I can’t point to one as we do with a tangible item of reality, yet we agree they must exist in order for me to strike these keys and communicate something comprehensible by you.

So we could say, we know ideas exist when they become fixed in some tangible medium. Communication is a tangible event, and causes changes in the natural world of tangible objects, cause and effect. This communication process is a result of cause and effect, and hopefully, me causing my ideas to be encoded into of patterns of sound, light, or motion, allow you to experience the effect; i.e comprehension.

Causality should be relevant. Communication, like all actions, follows a direction of causality. Just as effect must always follow cause, comprehension always follows expression. I must cause the patterns to exist before you can comprehend them and share my idea. These particular patterns must be created first, then fixed in some medium, and then you may receive them through your own human faculties, and finally comprehend them. I doubt you have any problem so far.

So, one way to prove that ideas exist is to look to the fixation of them in a tangible item. The person who causes these ideas to be fixed is the author of them. This is the method that IP law uses to deal with the intangible nature of ideas. The laws do not recognize any property attribute in ideas until they are fixed in some tangible medium, because before that time, there is no way to deal with them as property. However, once they are fixed, they can be dealt with in exactly the same way as any other tangible item; as chattel, subject to the laws of tort, contract, and property.

You raised the issue utility. Utility is an economic question, because it includes the concept of goods. A good has value in the market if it offers some form of utility to the person who does not own it. The desire to own it creates demand. This is the basis of economic trade, and requires that the issues of property and ownership of that property is known in advance by both parties. Mises discusses this issue as a relationship between a “free goods” and “economic goods” (HA, Schol. Ed. p. 93). A free good has no value because it is abundant and needs no economization, and therefore there is no price mechanism available for economic calculation.

An economic good is the subject of economics, because it has utility, and is is limited in availability. It has become common to refer to scarcity to explain this difference. Some argue that ideas are not scarce, just as letters of the alphabet are not scarce. My use of letters to communicate with you in no way limits your access to all the letters you may desire. In this sense, they are a free good.

All tangible things are scarce. However, limited access is not sufficient to create demand for a thing. There must be utility as perceived by a person who does not already own it. If this condition exists, then it can be described as an economic good. A good which directly satisfies this desire for utility is called a consumer, or first-order good. If its utility is as an input for further production, it is a producer good, or higher-order good.

A book is a consumer good. It is authored by someone. The author fixes his ideas on paper by use of letters and words. These words, taken as a whole, convey complex ideas. These form a pattern which is comprehensible by other humans. If it is a random pattern, it would have no utility, and therefore no demand, even though it is scarce. If it has utility, then it must be something non-random about the pattern that other humans find of value when comprehended. An expectation of receiving this value is apparently sufficient to create demand for it, as most people who buy books pay for them before they actually read them.

Imagine I am an author of a book, and it is the only one that exists with my pattern in it. If I burn the book before anyone else has a chance to read it, what happens to the ideas? They still exist in my head, but they cannot exist in yours (at least not the ones caused by reading my book). But they are no longer fixed, and have no importance in an economic sense, and also in relation to IP laws. It is only when they are fixed that they can be objectively (and legally) said to exist. Existentially, they still exist as long as I do.

Finally, humans act because they are rational, in a economic or praxeological sense. This requires that humans use their abilities to perceive and conceptualize in order to establish goals. Humans act to achieve those goals. Those goods which serve these goals have value, and this value is reflected by prices. That is the nature of an economic good. (dare I say “attribute” of an economic good?)

If you subtract the ideas from a book, the book no longer has value beyond the meaningless patterns on a page. These patterns can be perceived, but they have no utility. Therefore, it is the fixation of the ideas in that book which creates the utility, value, and price.

Causality is a feature of the natural world, and of economics. Cause comes before effect. Production comes before consumption. An exchange of utility is an exchange of goods; something for something, goods for goods, value for value. A producer creates output. Output equals income. If the price for a given output does not result in income for the producer, then the producer is producing for an external market. Producing for an external market is slavery. If one has a choice in the matter, since slavery has no utility, it will not be of value. One does not normally choose slavery for themselves. It is a rip-off.

If a producer chooses not to produce, consumers must do without consumption. Therefore, consumers prefer production. This preference is reflected in the willingness to exchange value for value. This is the nature of the economic calculation and free markets. Free markets are disrupted by the intervention of external market forces because they disrupt the relationship between producers and consumers.

This relationship is not determined on the basis of the cost of replication of a given good. Common sense and IP law both recognize this. We could think about this in terms of a marginal cost of production.

In any production process, there is a cost that is sunk into the production of the first finished good. This is a capital investment. The marginal cost of producing the second finished good is much lower. Prices paid by the consumer in a free market, reflect both the capital cost and the marginal cost of production. If the consumer could acquire the good for the price of the marginal cost, there would be no reason to invest capital in a production process where only marginal costs could be recovered. However, if the entire capital cost had to be paid by the first consumer, it is not likely to be perceived as a fair value for value, and trade is unlikely. Therefore, prices reflect some distribution of capital costs among a larger number of consumers. The capital component is not zero, and it is not identical. It is somewhere in between, based on the size of the market, the number of consumers potentially having demand, etc.

Copyright opponents take the position that an author’s capital investment has no real value, and the consumer should only be required to pay the marginal cost of production, which may be roughly estimated as the cost of the process used for duplication. For example, somewhere between $.01-.05 a page if you use a photocopier. Digital reproduction is much less. Even this price is not income for the author. This price is paid to acquire the technological capability of reproduction. It does not result in income for the author’s output.

Therefore, such a position concludes that authorship is production for an external economy, and this is somehow consistent with a cohesive theory of free markets. It is not.

You may argue that this relationship between producer/consumer can somehow be restored through non-governmental means. Perhaps, but unless it is based on a theory of property that supports production/consumption for internal markets, it is anti-free market theory.

The irony of all this is that some of the most important spokespersons’ of the Mises Institute are, in the final analysis, against free markets. Many others simply repeat their conclusions.

Now, you have to admit, that’s funny right there. I don’t care who you are… (In conformance with the provisions of copyright laws, that joke is attributed to Larry the Cable Guy.)

Phinn December 10, 2010 at 1:00 pm

Wildberry,

I don’t have the time at the moment to go through your last post point-by-point, as we have been doing, but I picked up on these points for now, and will try to get back to the discussion later.

>>>So, one way to prove that ideas exist is to look to the fixation of them in a tangible item.

You are making this far more complicated and abstract than it really is.

Ideas only exist inside the brains of men. They exist as a highly intricate, complex set of neurons, and their respective electro-chemical components and impulses. The combinatorial complexity of this organ is massive, to say the least. The ideas experienced by a brain are only “real” in the sense that they consist of the components of this organ.

Once communicated, these ideas become replicated as impulses inside the brain of the recipient. My position (and I believe Peter’s as well) is that these impulses and neurological components are wholly owned by the person in whose brain they reside. He can do with them what he wants, unless he previously agreed (via a contract) not to do something with them, or in the act of expressing them, he interferes with someone else’s use of his property (e.g., writes them on the side of someone else’s building).

It’s impossible to interfere with someone’s use of his ideas, unless you interfere with his brain somehow.

The process of creating changes in external, physical objects based on these ideas (e.g, speaking, or writing a book, or painting a picture) is a form of use of those objects. If you are writing on paper owned by someone else, you are interfering with that owner’s use of that paper.

However, merely copying someone else’s paper is not a form of interfering with the author’s property, because you are not interfering with his idea (which exists only in his head), or his book (because the author does not typically own all copies of his book, particularly after he sells them).

I am not saying that good ideas do not have value, nor that people would not pay to hear or read them, nor that there is not a capital investment necessary to create and communicate the expressions of them. That’s all obviously true.

I am saying that the mere fact the expression of good ideas has value does not mean that all expressions of that idea, wherever they may be found, are owned by the one who first uttered them. The ideas themselves are mere electro-chemical impulses, and become the property of the person who hears the song or reads the book. The expression of those ideas, in physical formcannot be owned by the creator of the idea, because that would, in effect, create a property right belonging to the author, in either the brains of everyone who hears his song or reads his book, or a property right in their paper, canvases, etc. Those things are previously owned by others.

Wildberry December 10, 2010 at 3:14 pm

Phinn,

Yes, if there were only more hours in the day. The addictive nature of these discussions is killing me in my day job…

“I am saying that the mere fact the expression of good ideas has value does not mean that all expressions of that idea, wherever they may be found, are owned by the one who first uttered them.”

So, we agree, and so does IP law. Just expressing an idea is not sufficient for establishing property rights. For example, giving a speech is not sufficient to create rights, it must be recorded or written down. TV broadcasts are not protected unless they are recorded simultaneously with broadcast.

Also, the uses you describe would not fall in either a logical framework or the framework of IP law. That tends to focus on commercial uses. So you have to give a commercial use to follow the argument here. It is not reasonable to create an example of non-commercial use to make your case.

However, it is in fact that attribute of ideas that you are describing which creates the difficulty in defining rights in IP. Ideas and letters of the alphabet share similar attributes in this regard. Neither, at this level of fundamental usage, are subjects of IP law. However, when it becomes a “fixed embodiment”, it take on attributes of chattel (property), and can be dealt with according to well established principles of law.

This difficulty in drawing the bight line is why it has grown into a system far beyond any measure of utility or fairness, in many cases, especially in patents, but also in digital copying. The low cost of copying is challenging our ethics and morality regarding the boundaries of property theory. There is no doubt reform is called for. But we can’t go there because we disagree on whether there is EVER any justification. I am finding that a good deal of disagreement is actually based on imprecise use of terms and misunderstandings about what the law actually says and tries to do.

I am serious about trying to work my way to a solid conclusion about this, and I intend to remain consistent to classical liberalism as I understand it. I am searching for contradictions in my position relative to libertarian and Austrian scholarship. That is why I value these very in-depth discussions with the likes of you and Peter. Thank you.

Phinn December 10, 2010 at 5:25 pm

I would like to try to sort out some of the overlap and conflation of the ideas of property and monopoly, as I have been using them. This issue comes up in these discussions from time to time.

The word “monopoly” refers to a “single seller,” or something similar. “Polein” (πωλειν) specifically references the act of selling. This is distinct from the act of using, which is broader, and may or may not involve an attempt to sell the res, or thing owned. That’s why I made a distinction between rights in property that depend on selling something, as opposed to a right of ownership that may be just to use it (with or without selling).

I think there are two (2) parameters of monopoly we should consider — (a) its scope, and (b) its source. We have been bumping up against both of these parameters — scope and source — in talking about monopolies, and the rights of ownership. I’ll try to be more clear.

As for scope, Mises was addressing this issue in the passages you quoted (about the hotel owner having a monopoly on his hotel’s rooms, but not on all hotel rooms in town). The short answer is that a monopoly is only as big as the scope of the goods it purports to encompass. You have a monopoly on your body, but you do not have a monopoly on the labor of other people’s body. You may have a monopoly in a particular ton of wheat without having a monopoly on all wheat produced by anyone in X County in the Year Y.

The other parameter of a monopoly is its source. What Mises was also referring to (as to the hotel owner) is that he presumed that this hotel owner had a just and proper source of his right of ownership in that particular hotel. He is the sole owner, and owner of all property rights in it. (Property rights are divisible in many ways, especially with real property, but let’s stick with a man who owns the building 100%, or in fee simple, as they say).

Now, this owner has 100% of the property rights in the building. This includes BY DEFINITION the right to be the sole seller (or monopolist) of the rooms in that hotel, on whatever terms he chooses to make with willing buyers. Or, he could live there himself. Or he could keep it empty and wander through the halls from time to time. Or use it as a modern art piece. Whatever. It makes little sense, in my view, to call him a “monopolist” of the hotel, even though he is, because his right of total ownership NECESSARILY includes the right to be the sole seller of it, or any part of it.

The way I have been using the term “monopoly” is not to refer to someone who has a broad scope of control (i.e., controlling this particular hotel, as opposed to controlling the renting of all hotel rooms in town). When I say “monopoly right” I am referring to the historical form of monopoly privileges, which were in the form of a governmental decree (typically monarchical, but not always), that someone (or some company) had the supposed right to control all of the selling of some class of good, to or from some particular place.

This type of monopoly charter or privilege comes from a completely different SOURCE than our hotel owner. We (and Mises) presumed the hotel owner acquired his ownership of the hotel in some proper way. A monopoly privilege, however, granted by a monarch, is not a legitimate source of property rights. I think we can all agree on that.

What is so wrong about these monarchical monopoly privileges? They deprive everyone else of the full measure of their property rights! If one company gets a monopoly privilege handed to him by Queen So-and-So, that means that everyone else in the affected area suddenly finds that, with regard to the relevant objects they might own (wheat, tea, silver, spices, whatever), or once owned, or might think about owning, they no longer fully own it. It means that they may own it for some uses, but they DO NOT own it (according to the Queen) to the extent that they may try to sell it. That’s not full ownership any more.

In other words, the monopoly privilege granted to one person functions as a violation of the property rights of all others. (The Queen thinks she has the power to define property rights, but I think we all agree that she doesn’t.) Whatever rights the monopolist gets, that’s what everyone else has lost.

The problem with this kind of monopoly is not its scope, but rather its source — the monopolist got it as the result of the exercise of raw power, not homesteading or trade.

What Mises was describing is that some people object to anyone having a monopoly whenever its SCOPE starts to get too big for their comfort level. In some market area, somebody might get a de facto monopoly on some type of good, through completely legitimate means. For example, let’s say that some guy (Owner A) owns a Widget factory, and there’s a second Widget factory on the other side of the county, owned by someone else (Owner B). Then Owner A buys or inherits Factory B. Even though he acquired both Factory A and B rightfully, he now has a local monopoly on Widgets. This, Mises was saying, is not a real economic problem. To Mises, the main issue was that the source of property rights be legitimate, and that the monopolists legitimate property rights be respected, along with everyone else’s. It is not economically sound to say that Owner A does not (or cannot) own both factories simply because there are only 2 locally. What matters is the source of those property rights, not their scope. People will adjust. The monopoly will not last. If we look to a slightly larger scope, competition will still be found to exist. A property-respecting solution will be found, even if (in the short run) the Owner A tries to hike his prices up.

My argument is that (in terms of both source and scope) a copyright or patent functions more like the monopoly privileges that monarchs used to hand out to insiders. They do not operate at all like ordinary (non-copyright, non-patent) property principles, in which people acquire rights through homesteading of unowned goods, or by trade, gift, etc.

The main reason that copyrights and patent rights are a form of monopoly privilege is that they focus on someone being the right to be the sole seller. A copyright or patent right cannot be grounded on defining someone as the sole USER, because patterns are infinitely replicable without altering any other copy in any way. One person’s copying of a book does not affect any other book anywhere in the world. There is no possibility of rivalry of uses of a pattern. Therefore, a copyright or patent is ONLY concerned with who gets the exclusive right to sell objects that are based on that pattern (or approximately similar to that pattern).

If we stop looking at ideas as this metaphysical thing that can be owned, and can be considered “stolen” when it is merely repeated, and instead focus on what property really means — protection against rivalrous, interfering uses — then copyrights and patents are easily recognizable as merely a re-packaging of the age-old monopoly privilege, not a legitimate form of property right.

And, like all monopoly privileges, the instant they arise, they deprive everyone else of some measure of their rights of property that they had the moment before.

Wildberry December 10, 2010 at 8:33 pm

Phinn,

This is excellent. Thank you. With just a little more of your indulgence, I think we can close in on the key issue.

I agree with everything you say right up to here, and you have demonstrated that you and I are on exactly the same page with regards to the meaning of monopoly. Then you say this:

“A monopoly privilege, however, granted by a monarch, is not a legitimate source of property rights. I think we can all agree on that.”

Let’s explore that statement. We are talking here about the legitimacy of the source of monopoly privilege. We have agreed that these privileges take the form of property rights, and are limited by the boundaries of the property. So the hotel owner “owns” the hotel, and his monopoly rights are limited to that particular hotel. That is the nature of property ownership. Agree?

You are saying that Mises’s treatment in the cited passage assumes that the acquisition of this property depends on the legitimacy of his title of ownership. Agree?

We just had a post from Mises dealing with this very issue, here. http://mises.org/daily/4718 I commented here: http://blog.mises.org/14940/private-property/#comment-743623

Here is the important issue this raises. NO property in the normal sense of the word, (real property or chattle) was actually acquired by homesteading by a first occupier. Even if it ever was, it was likely expropriated by someone later on. This is a major flaw in the homesteading principle. Imperishable property (land and other natural resources) has a chain of custody that reaches far back into history. As Mises points out, and as I have said elsewhere on this site, the homesteading aspect of the Rothbardian definition of ownership and ethics is completely useless.

What is important from an economic perspective, is the exchange of title from an uncontested owner to a prospective owner by operation of a free market. It is not really that important how the seller’s owner/ancestors “originally” acquired the property. At some point in time, often by royal decree, title was established. Since that time, to the extent that a free market (or something close to it) existed, title to real property was transferred by sale, gift, adverse possession, or abandonment.

From an economic perspective, what was that “royal decree”? It was merely the human device operating at some time in antiquity that established uncontested title in land. It is equivalent to a legal convention concerning property ownership. More importantly, from that moment on, property rights were a settled issue, and market operations proceeded in an orderly fashion. (I realize I am taking some historic simplifications, but for the sake of allowing me to make the point, grant me poetic license).

Therefore, I am asserting that the source of acquisition is not as important as the conventions we establish to enable an orderly and free market. In order for the markets to be free, we must not create rules of intervention concerning the operation of that market. Those rules are in essence, I personally believe, something very close to Austrian Economic Theories.

I think this is precisely where we see things differently. Now stay with me.

Rothbard says that ownership in property can only be acquired legitimately if it was 1)homesteaded or 2) acquired legally from someone who did. He employs this “human device” of property because he is an anarchist. To be an anarchist, you cannot construct your ethics from something like “legal convention”, because a legal convention implies laws, and laws imply enforcement, and enforcement implies government.

He crosses himself up on this point because when discussing Ancap theories of private enforcement agencies, he concedes that they must all agree on a common code of law. I would suggest that a group agencies, private or otherwise, that all agree on a common code of laws, and which evolve such that 100% of the citizenship is covered, starts looking a good deal like government. This is a major, significant inconsistency. I have discovered others, like Touchstone’s argument concerning why children and the disabled cannot receive protection under anarchy.

Unless you grant the legitimacy of property rights that are established by legal convention, then you cannot really show that ANY OWNER has legitimate title of ownership. To Mises’s point, in a free market, no matter how you start off, consumers allocate ownership rights by way of their consumer preferences.

So the issues are two: 1) what are the legal conventions we will accept as a basis for property ownership, and 2) how do we prevent interventions which interfere with the operations of a free market.

If you are an anarchist, you are compelled to avoid conflicts with that ideology. This is done by defining terms, such as rules of ownership, which avoid conflict with the social need for legal convention and third-party (government) enforcement of laws.

In my limited experience, I have come to believe that this requires a process of assuming conclusions and constructing rules of ethics which define away these conflicts. The result is an internally consistent logical construct that clashes with reality (i.e. history, social convention, legal conventions) at the margins.

The real objection to IP laws, when you strip away all of the misunderstandings, misstatements, and rhetoric, is that it implies government, which is equivocated with State. Therefore, one who disavows the State, and therefore government, must oppose IP.

Your arguments reflect this bias:

“The problem with this kind of monopoly is not its scope, but rather its source — the monopolist got it as the result of the exercise of raw power, not homesteading or trade.”

By this logic, none of us could legitimately own our property. None of us can show that we acquired it by homesteading, or trading with someone who did (or can show they did).

If we do legitimately own our property, it is because we have accepted the legal convention that ownership, once bestowed, will be respected. If it cannot, or was not bestowed by a proven act of homesteading, why can we be said to own anything? How can we call it legitimate ownership? By the same token, legitimate ownership today follows free market principles; you cannot own something unless you trade with someone who “actually” owns it.

This leads you to reach a conclusion that is in direct conflict with your earlier assertions in this very post:

“And, like all monopoly privileges, the instant they arise, they deprive everyone else of some measure of their rights of property that they had the moment before.”

And from above:

“Now, this owner has 100% of the property rights in the building. This includes BY DEFINITION the right to be the sole seller (or monopolist) of the rooms in that hotel, on whatever terms he chooses to make with willing buyers.”

How can these both be true? Because you are assuming that the hotel owner’s title is legitimate and the other monopolist’s is not? How so? If you cannot resolve this conflict for real property, how can you expect to resolve it for intangible property? One is the simpler case, one the more complex. If you cannot resolve it for the simpler case, how can you do so for the more complex?

With all due respect, and believe me it is considerable (you are intelligent, articulate and very well educated), I will be amazed if you recognize and admit the circularity of logic that is required to do this. You, like many here, have invested much time and energy in formulating an d memorizing this position. What a shame it would be to find it wasted time.

If you could, we could move on to an equally interesting topic, and one of more practical import; What, exactly, should be changed about IP law?

Respectfully yours,

Peter Surda December 12, 2010 at 4:49 am

Wildberry,

Peter, your post was very existential. Allow me to continue with this approach.

Actually, that was not my intent. My point was to show the difference between real world and interpretation thereof.

Causality should be relevant.

Ok, but causality extends to infinity. Everything that happens is caused by everything that happened before (well, I don’t recall if the question of the speed of gravity waves has been solved, so there might be a small proportion of actions which do not influence each other due to their distance being too big with relation to the time of the occurrence). The only difference is that people consider some of these causal relationships for more relevant for predicting what will happen in the future. While driving, for example, I see other cars. That sight influences my brain and becomes a part of all the future actions I do. However, apart from mentioning it as an example, it is not helpful in predicting how future develops.

If you assume that causality should be relevant even if it does not involve damage to property, that still leaves an infinite number of infinite layers of causality. How is that a helpful approach?

By the way, I congratulate you in recognising that the concept of causality is often used by IP proponents to argue for IP, although they cannot formulate it like that themselves.

Therefore, it is the fixation of the ideas in that book which creates the utility, value, and price.

Wow, you seem to be doing very well today. That’s right, altering of physical matter is how the value of goods is increased. But that does not mean that this act is an independent source of property rights, especially if such an act is covered by physical property rights anyway.

Copyright opponents take the position that an author’s capital investment has no real value…

No. Copyright opponents (at least those on this site) take the position that the author’s capital investment is not an independent source of property rights, because all the resources involved are already covered by physical property rights. Changing value of something does not create a claim, unless previously covered by a contract.

such a position concludes that authorship is production for an external economy, and this is somehow consistent with a cohesive theory of free markets. It is not.

All actions whatsoever have some effects that change the value or utility of property of other people, i.e. all actions whatsoever cause externalities. Authorship is just a specific interpretation of a very small subset of this phenomenon. The only problem from economic point of view would arise if some effects involved goods that have not been homesteaded. But that is not the case with IP. Just like the concept of ownership of value is mutually exclusive with the concept of ownership of physical property, the concept of owning patters is also mutually exclusive with the concept of ownership of physical property. If you want to have both, you contradict yourself.

Wildberry December 13, 2010 at 1:39 am

“Ok, but causality extends to infinity.” “If you assume that causality should be relevant even if it does not involve damage to property, that still leaves an infinite number of infinite layers of causality. How is that a helpful approach?”

Well, I’m not sure what you mean here. Whereas causality may stretch to infinity in either direction, past or future, for the present, legal theory uses the concept of “proximate cause” to deal with relevance, or in your terms, to figure out what is “helpful”.

It is helpful in sorting out the issues of property rights. The issue is the relationship between creation and production. That is a causal relationship. I’m familiar with Kinsella’s arguments against creation as a justification for IP, but I’m not arguing here that I create hydrogen atoms.

When determining liability for an event, for example the events leading up to the actual injury are traced back in time following the chain of causation. Since “injury” is an effect, there must be a cause; an act or an omission to act. If the cause is “proximate” to the effect, it is relevant, if not, the chain of causality is said to be broken, and liability cannot be assigned on the basis of causation. (that’s a very rough summary of the concept).

The issue with IP is whether there is a causal relationship between an act and an effect, and if so, how does this causal relationship affect the concept of “better title” to a tangible good from production that has both tangible and intangible components.

Let’s use a concept of “goods” to explore this. A person buys, by “legal” means, the means of production to produce a good, including all the inputs. If he owns the means and the inputs, then he would also own the good produced. This means of production has tangible and intangible attributes. (I don’t need to deal with scarcity at the moment.) How do I know this? A pile of inputs do not spontaneously assemble themselves into a good. Neither does the random application of labor, heat or water. We have to break down the production process into its tangible and intangible attributes.

According to Mises, “Production is not an act of creation; it does not bring about something that did not exist before.” (HA VII.4 p 140) This must mean that a good must “exist” in some form before it can be produced.

Also, “Only the human mind that directs action and production is creative. … We call it creative because we are at a loss to trace the changes brought about by human action farther back than to the point at which we are faced with the intervention of reason directing human activities. Production is not something physical, natural, and external; it is a spiritual and intellectual phenomenon. Its essential requisites are not human labor and external natural forces and things, but the decision of the mind to use these factors as means for the attainment of ends. What produces the product is not toil and trouble in themselves, but the fact that the toilers are guided by reason. The human mind alone has the power to remove uneasiness.” (ibid p. 141)

So, before a good can be produced, it must exist in the human mind. If I could simply sell you what is in my mind, I wouldn’t need to produce it. So, even though it exists in my mind, it is not a good until I produce it. Production produces goods (output) and goods can be sold (input). Goods are the subject of economics, praxeology and catallactics.

In any production process that produces goods, carries along the chain of causation, property rights of ownership in the means and the output; they are both the property of the producer. Output equals income. This income is attributable to the producer and no one else.

Upon both the means of production and the goods thereby produced, the owner has a monopoly of possession and use. By such monopoly, which are “compatible with the conditions of a market economy” (HA XV, 5 p. 277), he has “exclusive control of the supply of a definite commodity” (Ibid.) This monopoly is a manifestation of his property rights. However, a monopoly in “possession and use” does not imply monopoly prices, which are antithetical to a free market, so and in this sense “…monopoly is everywhere on the market.” (Ibid p. 277)

If ALL production yields goods, and if the means of production are privately owned, then the output of that production are also privately owned in the form of monopoly property rights, even using the homesteading/transfer theories of property ownership attributable to Rothbard; no one can have better title to them.

However, this monopoly only applies to that property attributable to that particular producer. A monopoly in “my goods” does not extend to a monopoly of “all goods”. For example, “Under copyright law, every rhymester enjoys a monopoly in the sale of his poetry. But this does not influence the market. It may happen that no price whatever can be realized for his stuff and that his books can only be sold at their waste paper value.” (Ibid 278)

How do we determine ownership of the outputs (goods) produced by the subject means of production? This can be done by tracking the production process backwards along the lines of causality. Goods exist after production. Prouduction comes aftrer acquiring the means. The means come after assembly of the compoents, including machinery adn inputs. Assembly of components on comes after creation. Creation comes after the “intervention of reason directing human activities”. At what point along this arrow of proximate causation, do these goods become “my goods”?

One could say that if the means of production can be owned, then the output of that production can also be owned. If production has both tangible and intangible components, is it rational to say that ownership is destroyed by virtue of the presence of intangible components?

Since all production is essentially directed by “creative” human action, then all production has intangible components integrated within them. Since we know that production output can be owned, then we know that the intangible components of this output must also be ownable. This is a very complex path to follow, only to arrive at the obvious. Certainly the baker owns his loaves, if he owns his ovens, flour and recipe.

Let’s use a book and copyright as another example to explore this further. What is different about a book? A book with random marks and letters is incomprehensible and of little value. A book that contains detailed instructions on how to compile software would have value to someone who wanted to do that. What is the difference between one and the other? Obviously there is a difference, right?

The production of a useful book, one which has marginal utility, is the product of someone’s production. All production is composed of both tangible (paper, ink, letters and words) and intangible components, i.e. the “intervention of reason directing human activities.” Why should ownership of this good be subject to different rules of property and ownership than a table or loaves of bread?

Since a good is not just the ideas that led to its production, why would a book be granted only the attributes of ideas, implying they are free goods, like letters of the alphabet?

Why would this blog be assigned only the attributes of tangible letters and words? They also have meaning, and that meaning was directed into being by me, the author. It was me who stuck the keys and hit “send”. These are my actions. They are attributable to no one other than to me. It would be an infringement of social norms of decency (immoral) to claim they are yours, just as it would be immoral to take my goods and sell them as your own. Both are an infringement of rights, a moral breach, and an unjustifiable intervention in of the principles of a free market.

How does this intervene in the free function of the market?

Output equals income. If the output of a producer does not result in income attributable to him, he is producing for an external market, and he is a slave. If human action is motivated by a desire and calculation of betterment of his current situation through available means, why would he voluntarily be a producer for an external market? Of course, he would not. An activity which results in an inability to capture the income from his output, will quickly be discontinued. Human actions which benefit only others is a definition of slavery.

Property rights are a human device. They exist for the purpose of enabling cooperation. Cooperation is fundamental to the division of labor. A division of labor requires an ability to freely exchange with others, and free and orderly exchange depends upon pre-defined property rights. If you want shoes, you must adhere to an ethics which recognizes the right of the producer of shoes to own them right up until the point at which he receive payment. No rational producer of shoes will continue to produce them if his output does not equal his income. Why produce shoes for an external market?

“Copyright opponents (at least those on this site) take the position that the author’s capital investment is not an independent source of property rights…”

I agree, capital investment alone does not create property rights, yet no investor would commit capital to a project serving only an external economy. Capitalists demand a return. Output equals income. No rational engineer will take the time and effort to produce a technical manual if, once produced, could be freely copied by anyone who acquires it. Such ethics would establish a system that supports welfare, slavery and impoverishment. This is an ironic position for those who are otherwise advocates of free markets.

“The only problem from economic point of view would arise if some effects involved goods that have not been homesteaded. But that is not the case with IP. Just like the concept of ownership of value is mutually exclusive with the concept of ownership of physical property, the concept of owning patters is also mutually exclusive with the concept of ownership of physical property. If you want to have both, you contradict yourself.”

As I have said before, arguing property rights from the standpoint of “homesteading” is an empty exercise in futility. Even so, based on what I’ve said above, one could make a pretty strong case based on “better title” that no one has a better claim to title to his property than the author or the producer of goods from his own private means of production.

It is the transfer of privately owned goods that make the economic world go around. How they come to be “owned” is much less important than establishing a device for starting out and then allowing the market to assign ongoing ownership based on sovereign consumer preferences.

If, as Kinsella and Hoppe say, the purpose of property rights is to avoid potential conflicts over ownership, then how that originally happens is much less important than making sure there are acceptable conventions among cooperating humans, i.,e. society.

Crusoe alone on a desert island does not a society make. Likewise, homesteading, in any realistic or practical sense, is immaterial. It is a construct, and nothing more. Better to stick with the private ownership of property, and let the markets work.

And notice, for 99.999% of real property transfers taking place at this moment, there is no conflict or dispute (excepting the foreclosures mess by big banks at the moment!). Of those where there are, they are handled non-violently and by rule of common law, IP disputes notwithstanding, especially copyrights, trade secrets, and to some extent, even patents. Of the three, patents are clearly most dysfunctional, but what else is new? Thought about banking lately?

Phinn December 13, 2010 at 4:25 pm

>>>Since all production is essentially directed by “creative” human action, then all production has intangible components integrated within them.

This is a purely metaphorical and metaphysical assertion.

Property is either in things that are tangible (i.e., in things for which rivalry of use is at least a possibility, if not an immediate reality), or if it is intangible, then it is based (at its origin) on a right of contract, such as a bond, a corporate share, a promissory note, or an option to buy something at a certain price. Such a right may be memorialized in a written document, but it is the intangible right that can be treated as though it were a form of property.

I do not see how a property right can arise in any other way, other than when it is ultimately grounded on either: (a) a rivalry over use (which can only be in tangible things), or (b) a contract (which can only be applied to those who’ve consented to be so bound).

IP does not depend on either tangibility (only this metaphysical notion of “mixture of tangible and intangible), nor does it arise from any contract, which obviously would require an explicit agreement with a particular person, unlike property rights, which apply to everyone regardless of their consent.

>>>Property rights are a human device. They exist for the purpose of enabling cooperation.

Your suggestion that property rights are a “human device” strikes me as an unprincipled rationalization for claiming that rights can be defined in any way that you (or we, or some unspecified person) wants them to be. It is an assertion that is ultimately based on utilitarianism.

One of the reasons I cannot agree with you is that you keep switching between this utilitarian rationale, and a principle-based, moral, natural-rights rationale (e.g., when you say that being unable to own the entirety of one’s intellectual output makes you a slave). You appeal to principle and morality to make some of your basic points, but then you fall back on utilitarianism to close your circle, and defend the contradictions and holes in your argument.

I think this problem is also relevant to your argument that I am making inconsistent assertions that (a) a decree of monopoly privileges deprives everyone who doesn’t get the privilege of some measure of their property rights, and (b) that a hotel owner is a 100% holder of all rights in the building, including the monopolistic right to sell the rooms.

You claimed that I would require more integrity and intelligence than most people are capable of exhibiting if I were to understand this contradiction. I have been mulling it over all weekend, but for the life of me, I do not even understand why you think these points are in contradiction with one another.

Yes, I believe the hotel owner is presumed to have good title to his building, and that is the source of his rights as a monopolist in that building, which, as I say, is implied as one component of his right of total ownership.

I contrast this situation to a company getting a piece of paper from a king that says that Company X has the exclusive right to buy and sell all of the wheat in some territory, which has the effect of giving Company X a larger measure of property than it had the moment before the decree was issued. Likewise, everyone affected by the decree of monopoly to Company X loses a measure of the property that they had the moment before the decree was issued — namely the right to sell wheat out of that location. Any wheat that anyone may have owned, or planned on owning, is no longer salable there, except through the monopolist. I believe this transfer of property right, although done in the name of the law, is basically a form of theft, benefiting Company X at the direct expense of everyone else.

I do not believe that being concerned over the source of title defeats my anti-IP position. Even in a legal regime where people believe in such a thing as IP, it is possible to also be concerned with basing one’s non-IP rights on a claim of good title. The two don’t strike me as incompatible. (It is not necessary, in practice, to trace one’s title all the way back to pre-history (or time immemorial, as they say), in order to show good title. Like other property rights, title is relative — it is only necessary to show that your title is better than someone else’s.)

I do, however, still stand by my position that one of the ways that someone can acquire title is through homesteading, which is the conversion of unowned objects into property through use. That still happens today. This homesteading principle doesn’t apply only to land, incidentally, since movable objects can be abandoned, and thus become unowned, and then owned again by the first new user.

Wildberry December 13, 2010 at 7:34 pm

Phinn,

This is a good post and I intend to give my full attention. Thank you.

Phinn December 13, 2010 at 8:37 pm

My pleasure. I found your discussion of the true nature of production to be excellent. I responded to the part I disagreed with, but overall I found it to be very well-written and well-reasoned.

Wildberry December 14, 2010 at 2:10 am

Phinn,

*****”This is a purely metaphorical and metaphysical assertion.”

This may be true, but it is not my metaphor or my metaphysics. I pulled directly from Mises. (see also my response to Peter; HA p. 141) But you do raise a couple of important issues; What are intangible goods, and what is the relationship between a contracts and laws?

******”Property is either in things that are tangible (i.e., in things for which rivalry of use is at least a possibility, if not an immediate reality),”

Tangible means capable of perception by the senses. Tangible property is subject to the legal theories of tort, property and contracts. In other words, since we can see and touch it, we can develop rules to deal with it. I think you agree.

*****…”if it is intangible, then it is based (at its origin) on a right of contract, such as a bond, a corporate share, a promissory note, or an option to buy something at a certain price. Such a right may be memorialized in a written document, but it is the intangible right that can be treated as though it were a form of property.

Intangible means the opposite; they are not perceptible by the senses. But this does not mean they don’t exist, or that they have no function. You seem to agree with that, given the examples you have used to demonstrate the nature of contracts affecting intangible goods. These intangible goods have enforceable rights in the same way that real property has enforceable rights. We can generalize both tangible and intangible rights as “property rights” whose ownership is enforceable through a theory of contracts “law”.

Now I don’t know how much you actually know about the operation of IP laws, and at this point I claim nothing more than perhaps slightly more than the average layperson, but IP law, especially patents and copyrights, operate in exactly this way. Although they create rights in the intangible, these rights are only manifest when the intangible is “fixed” in a tangible good that makes them perceptible by humans.

So, Mises in his treatment of production, and IP law in its treatment of intangible goods, recognize that it is not necessary to solve the “metaphysics” of the intangible goods. It is only necessary to recognize that they exist, and their existence can be perceived when they become an integral part of tangible goods; Mises referred to “production” and IP law refers to “expression”. When intangible goods are expressed by “creating” tangible goods which express them (make them perceptible, i.e. tangible), then and only then can the attributes of property rights be affixed. This is handy, because we already know how to deal with tangible goods and property rights therein.

*****”I do not see how a property right can arise in any other way, other than when it is ultimately grounded on either: (a) a rivalry over use (which can only be in tangible things), or (b) a contract (which can only be applied to those who’ve consented to be so bound).”

Let’s go with your premise; these are the only two ways property rights can arise. Tangible goods present the potential for conflicts over ownership, i.e. exclusive possession and use. These rights are fixed by way of “good title”. If one has good title in a tangible good, he has a monopoly property right in it. Rules (dare I say “laws”?) are based on contract, property and tort law.

Property rights in intangible goods can arise by contract. Contracts require an offer, acceptance and consideration. When a contract is devised to cover an intangible property right, the concept of property and title transfer is required, otherwise there is no way to enforce what is agreed upon. So, if contracts can transfer title in intangible goods, such title must exist and must be owned before a transfer can be accomplished, or a promise to transfer can be enforced upon default.

Acceptance of an offer establishes consent to the terms of transfer of consideration, say a certain intangible good for a certain amount of money. Only those in privity (i.e. parties to the contract) are bound. Parties to a contract cannot bind a third party who is not “privy” to the contract.

I think there is some consensus even among IP opponents that parties to a contract may transfer title to a good, comprised of both tangible and intangible goods, on condition that only certain rights of property are being transferred. In the case of real property, for example, the title to the land may be transferred, while the title to an easement crossing that land is not. Or the surface of the land may be transferred, but the mineral rights may not.

How does this affect third parties not in privity to the contract? Well, it doesn’t. Someone that is not in privity to the contact has no interest in what is being transferred. Not being a party means he has no standing to claim rights to the property being transferred. So, anyone “inside” the contract is bound, and anyone “outside” has no standing.

The fact that he later trespasses on the property does not given him any rights he did not have before he trespassed. He cannot claim any rights of property in the land, mineral or otherwise. This lack of standing has nothing to do with what is being transferred by the parties. If it is a gold watch instead of land, and the watch is left on a park bench, and the watch has the name and address of the owner inscribed on the back, this does not make it his watch. The watch belongs to the owner, until sold or abandoned.

*****”IP does not depend on either tangibility (only this metaphysical notion of “mixture of tangible and intangible), nor does it arise from any contract, which obviously would require an explicit agreement with a particular person, unlike property rights, which apply to everyone regardless of their consent.”

First, IP law does depend on tangibility. Although the property rights are concerning the intangible aspects, they are only manifest when the intangible is “expressed” by way of a tangible good. As Peter keeps saying, tangible goods are already covered by property rights. Maybe this is what he means. But the INTANGIBLE aspect is only recognized by contract, following your premise above.

Contracts in fact create property rights. That is exactly their function. They can create rights in anything, tangible or intangible. As Mises has argued, anything that is not naturally occurring, i.e. a natural resource is the output of a production process.

Production is put into motion by the intangible actions of human “creativity”, meaning whatever happens as the result of human action prior to the act of production. It is not necessary to nail down exactly what this is. You know and I know that production does not spontaneously manifest goods. It is a human action, and requires human rationality, which is intangible. If a human body is the tangible good, the rational capacities of human action are their intangible component. One is merely an aspect of the other. They are inseparable and fully integrated.

***** “Your suggestion that property rights are a “human device” strikes me as an unprincipled rationalization for claiming that rights can be defined in any way that you (or we, or some unspecified person) wants them to be. It is an assertion that is ultimately based on utilitarianism.”

Would you agree that contracts are a human device? If contracts can create property rights in intangible goods, then how is this “unprincipled rationalization”? However, they cannot be defined anyway “we” want. By the nature of a contract, there must be mutual consent. Mutual consent implies a mutual acknowledgement of “justice”. When one party to a contract can force the other to sign, it is called “adhesion”. Contracts formed under such unfair circumstances are void. In the absence of this type of coercion, there is presumed consent. Mutual consent with consideration makes for an enforceable contract. Once in place, the parties can be said to have mutually acknowledged the property rights inherent in the deal.

One who has property rights has a monopoly with regard to all other claims to that specific property. These property rights did not arise through an act of homesteading. They arose through the mutual agreement of the parties to a contract concerning the transfer of title. Because such a contract is a “human device”, the subject matter of that contact, respective property rights, are also a human device. Such human devices as contracts and property rights enable trade, which is in itself an act of cooperation. Without a prior agreement on the boundaries of the property being traded, no such contract would be possible. This is the true nature property rights. They arise for the purpose of human cooperation and trade under express or implied contract.

If a contact was not enforceable in a legal sense, it would still be immoral if breached. (I know Rothbard disagrees, but only in terms of “human will” and the consequences of breach) It is immoral to take a good and refuse payment for it. Morality is the essence of legality. Legality does not create morality. At least in the case of common law, there is a casual link between morality and legality, and it flows in a direction from ethics, to morality, to legality. This causal chain between ethics, morality and legality has utility to the enterprise of human cooperation. Human cooperation is the essence of the theory or the division of labor, and this is the foundation for economic systems. Economic systems are the in the nature of society. Laws encompass the domains of contracts, property and torts.

*****”One of the reasons I cannot agree with you is that you keep switching between this utilitarian rationale, and a principle-based, moral, natural-rights rationale (e.g., when you say that being unable to own the entirety of one’s intellectual output makes you a slave). You appeal to principle and morality to make some of your basic points, but then you fall back on utilitarianism to close your circle, and defend the contradictions and holes in your argument.”

I don’t understand why this confuses you. Utility is a foundation concept of economics. Marginal utility is the cornerstone of economic calculation. Value is a function of utility. We seek things that have utility. Utility is considered desirable, and motivates human action. Humans act to relieve some sense of discomfort. The utility of this relief is relative to the disutility of labor.

Humans are rational. Rationality is intangible, but it is real, and is the source of subsequent human actions. Cooperation has utility. Conflict is antithetical to cooperation. Therefore, humans devise ethics and morality in order to facilitate cooperation and avoid conflict. Morality is a code of conduct. Failure to follow this code is a breach of utility. Morality and utility are intertwined in human society.

*****”I think this problem is also relevant to your argument that I am making inconsistent assertions that (a) a decree of monopoly privileges deprives everyone who doesn’t get the privilege of some measure of their property rights, and (b) that a hotel owner is a 100% holder of all rights in the building, including the monopolistic right to sell the rooms.”

If (b) is true, then it is ethical. If others conduct themselves in conformance with these ethics, they are moral. If moral conduct facilitates cooperation, it has utility. Property rights are moral because they have social utility. They would not have this utility if they were immoral. That is, if the ethics from which they arise were “unjust”, people would be unwilling to conform their conduct to them. Whether justice is established by royal decree or by Crusoe’s good fortune to have arrived before Friday, what difference does it really make in the final analysis? This is precisely the point Mises is making in his discussions of property. Even if the distant origins of title are somehow unjust or illegal, in a free market, continued ownership is a function of the free market, and the sovereignty of the consumer. To hold otherwise is to contradict the economic forces of a free market.

*****“I contrast this situation to a company getting a piece of paper from a king that says that Company X has the exclusive right to buy and sell all of the wheat in some territory,”

You are correct if you are saying that if “His Highness Obama” decreed that from today forward, all selling and buying of wheat will be the monopoly privilege of “Lady Hillary”, that there would be moral outrage. However, you seem to be equivocating this with the morality of contemporary property ownership rights. Such a decree would never survive today.

If you are suggesting that IP law is such a decree, then let me offer this: What is the difference between a contact which establishes property rights, and a law that does the same?

Imagine…

I own a book. It explains the secrets of life. There are 1,000 people with me on a desert island. I offer to sell copies, but without the right to make other copies. One person agrees. I offer a copy, under contract, for $1,000 dollars. Ouch! We negotiate. What if two people sign the contract? Ok, $600 each. What about 500 people sign up? $2.50/copy. I say no deal. If I sell this book to half of you, it won’t be long before the rest get the secret for free. That makes them free riders. I did not write this book just to give it away to an external market. I will not sign a contact unless all 1000 of you sign it. If you all do, then $1.75/copy.

If 100% of consumers agree to a contract which defines the property rights in my book, then what do I call that type of contract? Law. A contract that covers 100% of the parties is a law that affects everyone equally. The next book that is published will follow the same course. This is an example of universal property rights being established without an act of homesteading, but by an act of law.

*****”it is only necessary to show that your title is better than someone else’s.”

Yes, if you trace this scenario back to the original title holder (me), there is no dispute that I had the better title before any copies were made.

*****”I do, however, still stand by my position that one of the ways that someone can acquire title is through homesteading,”

I agree that an act of homesteading, as conceptualized by Rothbard, would establish “better title” than anyone else. However, I have also demonstrated that title can be established by contract, and 100% coverage of all parties is equivalent to a law. It does not require royal decree. If homesteading is not present, property rights can still exist, and the issue remains one of “better title”.

Therefore, the ultimate challenge is to argue why IP should be subjected to a different property ethics than any other property. I think this is impossible, and in fact to do so by any means would be to create an ethics which endorses production for external markets. Without appeal to morality or utility, I have simply stated that production for external markets is in fact, slavery.

Therefore, as ironic as this may sound, IP opponents find themselves in the curious position of advocating slavery.

Stephan Kinsella December 14, 2010 at 8:54 am

“Wildberry”: “Therefore, as ironic as this may sound, IP opponents find themselves in the curious position of advocating slavery.”

Well, that’s better than pedophilia, I guess. (See Absurd Arguments for IP.)

Wildberry December 14, 2010 at 9:36 am

Stephan,

I’m just curious, did you read through this discussion, or only the last line?

Unlike you, I am not an IP expert. But, out of curiosity, I studied your paper, tried to make it wash with Mises, actual IP law, other legal theories of contracts, property and torts, and common sense.

I did not begin with a set of new ethics that attempted to redefine reality, Rothbardian, Randian or Kinsellian.As I followed the thread of my own reasoning, this is where it led me. When I encountered conflicts between my understanding and experience, the intuition of common sense, I explored it. That’s all.

I did not start out trying to show that you are right or wrong. I was just asking. This is the result of my inquiry.

So I have a question for you.

What do you call production for an external market?

Stephan Kinsella December 14, 2010 at 10:17 am

Wildberry,

“I’m just curious, did you read through this discussion, or only the last line?”

Only the last line.

“I did not begin with a set of new ethics that attempted to redefine reality, Rothbardian, Randian or Kinsellian.”

I don’t understand what this sentence means.

“What do you call production for an external market?”

I don’t understand your question.

Wildberry December 14, 2010 at 12:30 pm

Stephan,

“Only the last line.”

That’s what I had guessed.

“I don’t understand what this sentence means.”

IP law exists. You don’t think it should. You draw on Rothbard’s homesteading principle to support your arguments. You included Rand on your “absurd arguments” list, so I presume you take issue with OE. You create a rationale that is consistent with Rothbard, and particularly Ancap ideology, in your arguments against IP. I call this “Kinsellian” ethics for short.

Ideologies like OE and Ancap attempt to redraw the ethics of society along lines that are sometimes at odds with the status quo. I argue that they are also at odds, on occasion, with Mises’s analysis of economics. I did not start out trying to defend a particular point of view. See?

“I don’t understand your question.”

Well, I tried to explain it. It’s hard to catch the plot of a book if you only read the last line.

Anyway, Mises does a much better job than I. Here is a relevant quote from Human Action:

****It is beyond the scope of catallactics to enter into an examination of the arguments brought forward for and against the institution of copyrights and patents. It has merely to stress the point that this is a problem of delimitation of property rights and that with the abolition of patents and copyrights authors and inventors would for the most part be producers of external economies.*****

Here is the link: http://mises.org/humanaction/chap23sec6.asp

Here is something I said early on in this thread:

“Mises described this as producing for an external market. It is a practical definition of slavery, although the producer can just decide not to be a slave, since there is no incentive to be one. Kathleen Touchstone, who I suspect you have not heard of, calls this a unilateral transfer, like charity.”

Respectfully,

Stephan Kinsella December 14, 2010 at 1:32 pm

Wildberry,

“Only the last line.”

That’s what I had guessed.

Perspicacious nym!

“I don’t understand what this sentence means.”

IP law exists. You don’t think it should. You draw on Rothbard’s homesteading principle to support your arguments. You included Rand on your “absurd arguments” list, so I presume you take issue with OE. You create a rationale that is consistent with Rothbard, and particularly Ancap ideology, in your arguments against IP. I call this “Kinsellian” ethics for short.

Thank-you.

Ideologies like OE and Ancap attempt to redraw the ethics of society along lines that are sometimes at odds with the status quo. I argue that they are also at odds, on occasion, with Mises’s analysis of economics. I did not start out trying to defend a particular point of view. See?

Not quite. I don’t see the relevance of your personal intellectual history.

Well, I tried to explain it. It’s hard to catch the plot of a book if you only read the last line.

That is one possible explanation. Others reading your screed might formulate others.

Anyway, Mises does a much better job than I. Here is a relevant quote from Human Action:

relevant to what?

Mises described this as producing for an external market. It is a practical definition of slavery, although the producer can just decide not to be a slave, since there is no incentive to be one. Kathleen Touchstone, who I suspect you have not heard of, calls this a unilateral transfer, like charity.”

Except that I published her just recently in my journal.
Respectfully,

Wildberry December 14, 2010 at 3:50 pm

Stephan,
“Thank-you.”

My pleasure.

“I don’t see the relevance of your personal intellectual history.”

Why would you? As I’ve said before, I’m a nobody.

“That is one possible explanation. Others reading your screed might formulate others.”

Yes, it was quite long, but the participants seemed to be enjoying themselves at the time. It appears your formulation is not favorable.

“relevant to what?”

Apparently for you, nothing.

“Except that I published her just recently in my journal.”

Yes I know. I probably don’t need to point out that my comment was not directed at you, it was in another thread above this one.

I presumed you would be familiar with her. I was merely pointing you back to how the slavery reference came up, and how she uses unilateral transfer in a way that is consistent with Mises’s description of “external markets”. In both cases, output is not equal to income. That is another way to conceptualize this.

“Respectfully,”

Really?

Brian Drake December 7, 2010 at 12:35 am

38 comments (so far) and no one addresses the most important question? Where’d that image (downloading Communism poster) come from? And why is the mp3 pirate using a 12 year old iMac?

REPLY

Artisan December 7, 2010 at 11:34 am

No kidding, it’s a funny gem.
Let’s see what the evil google has to say about it:

http://www.modernhumorist.com/mh/0004/propaganda/mp3.cfm
and this makes it worse:
http://www.revleft.com/vb/whenever-you-pirate-t129120/index.html?t=129120

REPLY

Stephan Kinsella December 7, 2010 at 12:44 pm

I got it from a google image search. BTW you can use http://www.tineye.com to plug in an image URL to search for it on the web.

1. See Davoll v. Brown, 7 F. Cas. 197, 199 (C.C.D. Mass. 1845) (No. 3,662) (Woodbury, Circuit Justice).  [↩]
2. See also two interesting volumes on the IP debates in the nineteenth century: Robert Andrew Macfie, ed., Recent Discussions on the Abolition of Patents for Inventions in the United Kingdom, France, Germany, and the Netherlands: Evidence, Speeches, and Papers in Its Favour: With Suggestions as to International Arrangements Regarding Inventions and Copyright  (London: Longmans, Green, Reader and Dwyer, 1869; free epub and pdf download and here), and the “sequel”: R.A. Macfie, ed., Copyright and Patents for Inventions: Pleas and Plans for Cheaper Books and Greater Industrial Freedom, with Due Regard to International Relations, The Claims of Talent, the Demands of Trade, and the Wants of the People, vol. II (Edinburgh: T. & T. Clark, 1883), discussed in Kinsella, “Nineteenth Century Criticism of the Patent System” (June 6, 2023). [↩]

[Cross-posted from Mises Blog]

I enjoyed the interview with Mark Zuckerberg last night on 60 Minutes, and especially his dismissive comments toward the Winklevoss Twins and their ridiculous IP suit against Facebook that extracted $64 million from the company. I’ve written about the movie Social Network as a case study of how preposterous it is to claim that parallel invention amounts to an act of thievery.

Sad to say, however, Facebook itself has used IP litigation as a method of shoring up its own market share and crushing potential rivals. It went after a German site. It targeted Teachbook. It hammered a parody site called Lamebook and a porn site too. Innumerable sites could be the subject of IP litigation, including Goodreads and Academia.edu. Such legal action is a threat to the learning and emulative process that free markets inspire. It is a way of short-circuiting the competitive process, giving Facebook an unfair advantage over its rivals, using the state has a weapon.

Facebook might must say that this is merely an eye-for-an-eye form of defensive litigation. After all, some washed up dot com is suing Facebook for IP infringement and some company no one has ever heard of claims that it invented the news feed and wants it back.

How about we just stop the madness and try the free market for a change?

It is commonly said that “the” purpose of patent law is to incentivize innovation. After all, the Constitution’s patent and copyright clause says Congress is empowered to secure “for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”–that is, to set up copyright and patent law–in order “To promote the Progress of Science and useful Arts.” It is promotion of innovation–“useful Arts”–that is “the” stated purpose of patent law, at least as stated in the Constitution. But the Patent Act seeks to accomplish this goal by granting to the inventor a limited monopoly¹ in exchange for disclosure. That is, patent law encourages disclosure of ideas by rewarding it. Thus, in Enzo Biochem, Inc. v. Gen-probe Inc.,² the CAFC wrote:

Such description is the quid pro quo of the patent system; the public must receive meaningful disclosure in exchange for being excluded from practicing the invention for a limited period of time.

Update: In fact, some argue, crankishly, that disclosure is the only purpose of patent law. Patent attorney Lawrence Ebert, for example, in What is the purpose of the patent system?, writes: Now, in your post “What is the purpose of the patent system?”, you write: “Many people try to suggest that the patent system is to reward people who create a commercialized product. It isn’t. The purpose of the patent system is to promote disclosure of inventions. Period.” (I critique Ebert’s views here; collected also in IPBiz’s Ebert: Kinsella way off on patent reform.)]

Further background on this topic can be found in Alan Devlin, “The Misunderstood Function of Disclosure in Patent Law,”³ which notes that the conventional wisdom is:

The patent system brings inventors’ obscure technological feats to the public eye. Without an intellectual property (“IP”) regime, innovators would keep their discoveries safely secured from competitors, consumers, and the general public. Society would be starved of knowledge, science would limp forward, and useful information would be stored in a clandestine fashion.

Devlin argues that:

the patent regime should primarily be construed as a tool for incentivizing the invention and commercialization of easily appropriated technology. This Article argues that disclosure should be treated merely as an ancillary feature of the patent system.

… the larger social purpose of intellectual property is to promote the invention and commercialization of easily appropriated technology …

the goals of disclosure and utilitarian incentives can and do come into tension. Given that the former goal is for most purposes illusory and disclosure follows from the fact of invention itself—independent of the patent document—disclosure must yield to utilitarian incentives when these goals conflict. …

Disclosure, far from being the unqualified goal of the patent system, serves no more than an ancillary role within the larger purpose of the patent regime. …

Effective disclosure confers great benefits, but these asserted gains mask something more fundamental. At its heart, the patent system is a solution to the problem posed by the public goods nature of innovation: that technical knowledge is both easily appropriated and distributed. Without patent protection, the inventors of such goods would be hesitant to devote precious resources to research and development. Disclosure ostensibly sits in a harmonious relationship with the incentive-to-invent rationale of the patent system, but in certain cases these goals come into conflict. Since disclosure is a bonus that follows, usually automatically, from the act of invention itself, incentivizing innovation must be the primary goal of the patent system.

… the system should promote disclosure only to the extent that it does not dilute ex ante incentives.

[See also Frank H. Easterbrook, “Intellectual Property Is Still Property,” Harv. J.L. & Pub. Pol’y 13, no. 1 (Winter 1990): 108–118, pp. 109–110: “The idea that a patent represents an exchange of protection for disclosure makes no sense, except perhaps with respect to process patents. The product itself, not the patent papers, usually discloses things. Inventors want and need patents only when disclosure is inevitable in the absence of protection. When the product can be sold without disclosure, the manufacturer can use trade secret law to protect its contribution, getting even better protection—not only perpetual, but also guarding by secrecy against infringement. Infringement is difficult to detect and penalize; why disclose anything in exchange for what is at best a limit on the duration of your returns? Lawyers use the utmost skill to draft patent applications so that they do not disclose enough to practice the invention, and the omitted details frequently are vital. Patents thus are valuable when the product itself, not the papers filed in the Patent Office, discloses the invention.”]

Now, in my view, to speak of “the purpose” of a statute is a confusion: statutes are cobbled together artificial legislative schemes, usually the result of many compromises. Congress has no “intent” or “purpose”; it’s composed of individual legislators who have their own motivations and purposes. A given legislator may have various purposes, including: rewarding special interest groups to increase the chance of campaign contributions, and so on. But we can hold a law up to its stated purpose, even if the real purposes of the legislators is different.

Update:

Ebert has a followup. My reply is below, following Ebert’s post:

— Some argue, crankishly, that disclosure is the only purpose of patent law —

Within a post related to the “purpose” of the patent system, Stephan Kinsella writes:Now, in my view, to speak of “the purpose” of a statute is a confusion: statutes are cobbled together artificial legislative schemes, usually the result of many compromises. Congress has no “intent” or “purpose”; it’s composed of individual legislators who have their own motivations and purposes. A given legislator may have various purposes, including: rewarding special interest groups to increase the chance of campaign contributions, and so on. But we can hold a law up to its stated purpose, even if the real purposes of the legislators is different.That there may be many subjective intents of legislators does not negate the presence of an objectively determinable functional analysis. The patent statute gives a right to exclude in return for disclosure. That’s it.

Innovation produces a change in the way we live. Most patents don’t yield innovation. Thus, it’s hard to see the purpose of the patent system as one which incentivizes innovation. An issued patent gives an inventor a certain status in the marketplace. Innovation comes later.

posted by Lawrence B. Ebert at 7:12 PM

My reply:

My post, which you didn’t link to, is here: https://c4sif.org/2010/12/the-purpose-of-patent-law/

You say: “That there may be many subjective intents of legislators does not negate the presence of an objectively determinable functional analysis.”

This is a bit too scientistic—taking an engineering or natural sciences approach to a normative discipline, which usually leads to error. For anyone who mistakenly thinks such arbitrary legislative decrees can have an objective or “functional” meaning, I suggest you read John Hasnas’s classic paper, The Myth of the Rule of Law.

“The patent statute gives a right to exclude in return for disclosure. That’s it.”

But the patent “statute” is not isolated. The “law” is what legal rules are enforced in society, and that is a result of the actions of the courts and the legislature, in our system. Courts recognize the incentive effect as do legislators and other policy makers, and it is a common argument in favor of the patent sytem. But I am glad you acknowledge that the patent system does not stimulate innovation:

“Innovation produces a change in the way we live. Most patents don’t yield innovation. Thus, it’s hard to see the purpose of the patent system as one which incentivizes innovation.”

That helps undercut one common argument given by pro-patent people.

So then you are left with incentivizing disclosure as the purpose of patent law. But of course it doesn’t do this very much, since most things disclosed by patent applications would have been disclosed anyway by virtue of selling products embodying the idea; and for really valuable things that can be kept as trade secrets, they are still kept as trade secrets. So we hand out these monopolies and their accompanying huge cost to the economy, in exchange for basically nothing. As Alan Devlin notes in the paper I linked to:

“To a significant degree, inventions of the kind that are appropriate for patent protection are self-revealing. Disclosure comes hand-in-hand with many patent grants. Of course, the extent to which different inventions are self-revealing surely occupies a spectrum.92 But the truth remains that, other things being equal, innovators patent inventions that they believe are vulnerable to reverse engineering. This is true even for some inventions that are not readily self-revealing. If the expected return from trade secret protection exceeds that available through the patent system, a rational inventor will adopt the former course. Thus, the concerns of many commentators that a patent system without disclosure would cause information to remain hidden indefinitely are misplaced.93

“Innovation produces a change in the way we live. Most patents don’t yield innovation. Thus, it’s hard to see the purpose of the patent system as one which incentivizes innovation.”

Update: See also Mike Masnick’s post Can We Get Rid Of The Disclosure Myth For Patents?

Update: See also Machlup & Penrose, “The Patent Controversy in the Nineteenth Century” (1950), pp 25–26 et pass.

1. See my post Are Patents “Monopolies”? [↩]
2. 296 F.3d 1316 (CAFC, 2002). [↩]
3. Harvard Journal of Law & Technology [JOLT] (Spring 2010). [↩]

From Volokh Conspiracy. I can’t tell what this concludes from the abstruse law-professor-y summary, but … fyi:

“Valuing Intellectual Property: An Experiment”

Orin Kerr • December 4, 2010 5:34 pm

Christopher Buccafusco and Christopher Sprigman have a very interesting article, Valuing Intellectual Property: An Experiment, in the latest Cornell Law Review. From the introduction:

In this Article, we present an experiment that demonstrates a substantial valuation asymmetry between authors of poems and potential purchasers of them. As we explain, we created a market for poems modeled after a market for licensing IP. The observed differences in valuation indicate that IP licensing markets may be substantially less efficient than previously believed. Our results suggest that (1) the preferences of IP creators, owners, and purchasers are unstable and dependent on the initial distribution of property rights in creative works, and that (2) large gaps arise between WTP and WTA even though the poems are nonrival property and the contemplated alienation of the property is therefore only partial.

Our findings suggest that private transactions in creative goods may face significant transaction costs arising from cognitive biases. These biases in turn drive the price that creators and owners of IP are likely to demand considerably higher than buyers will, on average, be willing to pay. This discovery does not mean, of course, that transactions in IP will not take place—we see such transactions happening every day. Our research suggests, however, both that IP transactions may occur at a frequency that is significantly suboptimal and that the baleful effect of cognitive and affective biases is likely to be more serious for transactions in works of relatively low commercial value or for which no well-established custom or pattern helps to inform valuation. These results have considerable implications for the structuring of IP rights, IP formalities, IP licensing, and fair use.

From TorrentFreak:

MPAA To Target Pirating College Students and Rogue Universities

Starting tomorrow, the MPAA will send out letters to higher education institutions in the United States, urging them to protect the interests of the six major movie and television studios. In addition, the MPAA will announce that it will start warning college and university students who are illegally sharing motion picture movies on college campus networks. Those who don’t abide will have to face the consequences.

The RIAA is famous for targeting college students with DMCA takedown notices or even full lawsuits. The MPAA however, has never been active on this front.

Individual movie companies have sent thousands of infringement notices but these campaigns have never been led by the MPAA, until now.

This week the MPAA will notify all college and university presidents about this upcoming policy change, and at the same time the movie industry outfit will urge institutions to do whatever they can to stop illegal downloading on their campus networks.

Read more>>