A Conversation Wendy McElroy

Posted on October 22, 2013 by Bad Quaker

In the latest episode of the BBC podcast Start the Week (14 Oct. 2013; go to about 31:30 to start) there is an interesting discussion with Nicholas Lovell, author of The Curve: How Smart Companies Find High-Value Customers Hardcover, about how authors and others can and must adapt to the digital generation to find ways to profit in the face of copying and file sharing.

Related posts:

• “Conversation with an author about copyright and publishing in a free society” (Jan. 23, 2012)
• “Innovations that Thrive without IP,” StephanKinsella.com (Aug. 9, 2010)
• “Examples of Ways Content Creators Can Profit Without Intellectual Property,”StephanKinsella.com (July 28, 2010)
• “The Creator-Endorsed Mark as an Alternative to Copyright,” Mises Economics Blog (July 15, 2010)

Libertarians and Internet-freedom advocates cheered when we defeated SOPA and PIPA—the attempt by the US government to limit Internet freedom in the name of protecting the insidious, false property right known as “copyright”.¹

But did we really defeat it? Soon after, similar provisions popped up in other international agreements being negotiated like the Anti-Counterfeiting Trade Agreement (ACTA) and the Trans-Pacific Partnership (TPP), as discussed in the latest This Week in Law. (I’ve talked about it previously, in my post SOPA II? Obama’s Transatlantic Trade and Investment Partnership.)

Concern over ACTA abated when some countries bowed out, but as Professor Michael Geist explains in the afore-linked episode of TWiL, it still might be passed. And even if it’s not, the TPP is being negotiated in secret and is rolling ahead full-steam. It seems like it will be ratified by year-end by a number of countries. This is being billed as an attempt to “harmonize” free trade laws, but as Geist says, it’s more like an attempt to “Americanize” by imposing US-style copyright terms and penalties (such as our insane, draconian statutory damages) on other countries.

As an example, the Berne Convention requires member states to have a minimum copyright term of life of the author plus 50 years; the US has added 20 years to this (life plus 70), and now seeks to twist the arms of other countries, via the TPP, to adopt this term.² If you want the benefits of free trade with us, you need to put people in jail for “pirating” our Hollywood cronies’ movies, see?

This is just another act of IP Imperialism that the US is so known for. I fear they will get away with this, and maybe even ACTA. SOPA is not really dead after all, I guess.

Update: Cato inexplicably has come out in favor of the TPP, despite its horrible copyright fascism, without a mention of this aspect. See Cato’s article The Transatlantic Trade and Investment Partnership: A Roadmap for Success. Now, I’ve myself endorsed multilateral trade agreements before, in the past (“An International Framework for the Protection of Investment,” Philadelphia Lawyer, p. 20 (Fall 1997)), but we cannot support an increase in IP protection as the price to pay for increased free trade. Not a fair trade.

See Glynn Moody on techdirt: TPP IP Chapter Leaked, Confirming It’s Worse Than ACTA

Update: From one of my Facebook posts:

I’ve mentioned before that Cato scholars have inexplicably come out in FAVOR of the horrendous, fascist, IP-pushing TPP, in an article by Daniel Ikenson.

People have told me that just b/c they have one scholar in favor of something does not mean it’s an institutional position. MMhhmm.

Check out this Democracy Now “debate” about the TPP, between Bill Watson, a trade policy analyst at the Cato Institute, and Lori Wallach, director of Public Citizen’s Global Trade Watch. (TPP Exposed: WikiLeaks Publishes Secret Trade Text to Rewrite Copyright Laws, Limit Internet Freedom) Now what is disheartening for the libertarian listening to this debate (which starts around 11:00) is that almost everything Wallach says is correct and on the libertarian side. She notes that the TPP is not about free trade at all; only a small number of its (still secret) chapters even purport to deal with free trade; the major portion leaked so far is on IP and is pure American company special interest rent-seeking: attempting to lock stronger and longer copyright and patent law into US law via treaty and to export it to the rest of the world; that is, to increase the monopoly privilege of patent and copyright, to reduce internet and artistic freedom, to increase the prices of pharmaceuticals, etc. She is 100% correct to oppose the TPP on her anti-IP grounds, and she is right to condemn patent and copyright as monopolies that benefit special interests and harm the public and consumers.

Inexplicably, Cato’s Bill Watson defends the TPP and fast track even though he seems to agree with Wallach that the IP chapter is “problematic” (he nowhere seems to condemn it as monopoly and bad, in as clear terms as she does, however).

Utterly bizarre, when we true free-trade, anti-IP libertarians, find more in common with “Public Citizen’s Global Trade Watch” than with an allegedly free-trade, libertarian organization.

People often tell me that I should not harp on IP so much, or make it a litmus test; that even if I am right about IP, reasonable libertarians can disagree. Well this is an example of why it’s important to get this very important issue right. It is in fact one of the most important libertarian issues (https://c4sif.org/2012/03/2012/01/where-does-ip-rank-among-the-worst-state-laws/), and getting this issue wrong leads people to error on other important issues. As an example, a few years back, several Cato scholars explicitly opposed free trade in drug reimportation in the name of upholding American companies’ pharmaceutical patent monopoly pricing model; unbelievable (see footnote 1 https://c4sif.org/2011/09/objectivist-worried-obamacare-may-weaken-patent-rights/#footnote_1_2629; footnote 4 of https://c4sif.org/2011/08/pro-ip-libertarians-upset-about-ftc-poaching-patent-turf/#footnote_3_2434).

Cato’s forums on IP are invariably about IP reform. Only one time can I remember someone for IP abolition, which was Tom Bell, and that (IIRC) only on the issue of copyright (not patent). Their former scholar Tom Palmer was one of the early IP abolitionists but his work was never highlighted there and indeed he seemed to backpeddle a bit in later years on pharmaceutical patents (as mentioned here:  see: http://tomgpalmer.com/2005/09/19/alive-thanks-to-pharmaceutical-profits/#comment-3642 and http://tomgpalmer.com/2005/06/10/healthy-profits-to-help-sick-people/#comment-2619 )

One wonders if Cato has lots of pro-patent big business/big pharma donors, and the quasi/former Objectivists in their ranks (https://c4sif.org/2012/08/does-catos-new-objectivist-ceo-john-allison-presage-retrogression-on-ip/) which leads them to continually favor IP and downplay the IP abolition case.

Sad when libertarian groups are bad on this issue (https://c4sif.org/2013/09/canadas-free-market-fraser-institute-urges-strengthen-intellectual-property-law/). It’s as bad as being bad on taxes, slavery, free trade, the drug war. Down with IP.

1. See my posts “SOPA, Piracy, Censorship and the End of the Internet? Kinsella and Stefan Molyneux on Freedomain Radio”; “SOPA is the Symptom, Copyright is the Disease: The SOPA Wakeup Call to Abolish Copyright,” “Death by Copyright-IP Fascist Police State Acronym”; “Where does IP Rank Among the Worst State Laws?”; “Patent vs. Copyright: Which is Worse?” [↩]
2. See Japan Considering Copyright Term Extension, Canada Next?; Trans-Pacific Partnership Talks Headed For Finish Line Amid Official Secrecy; REPLAY: What is the Trans-Pacific Partnership?; U.S. Copyright Lobby Takes Aim at Canadian Copyright Term Through Trans-Pacific Partnership; Decoding the Trans-Pacific Partnership: The Free Speech Implications. [↩]

Very cool projetc: Musopen, whose goal is to re-record public domain classical music and putting the recordings in the public domain, among other things. As the site explains its goal is to:

Interesting new paper by Kevin Rahbar, “The Abolition of Man Through Intellectual Property,” which argues that ideas are not goods and cannot be property, that IP is incompatible with Christianity and the free market.

The Oddness of Copyright

From the National Security Agency Act of 1959 (2; 50 USC Ch. 47):

“Sec. 15. (a) No person may, except with the written permission of the Director of the National Security Agency, knowingly use the words ‘National Security Agency’, the initials ‘NSA’, the seal of the National Security Agency, or any colorable imitation of such words, initials, or seal in connection with any merchandise, impersonation, solicitation, or commercial activity in a manner reasonably calculated to convey the impression that such use is approved, endorsed, or authorized by the National Security Agency.” (( See also Defense Visual Information: Intellectual Property Restrictions. Military Department and other DoD Component names, insignia, seals, symbols, and similar marks may be protected as trademarks or service marks and may not be used in commerce without prior written permission. DoD Component Trademark Licensing Office contacts may be found at https://www.defense.gov/Resources/Branding-and-Trademarks/. ))

This seems like a sui generis IP right I have not seen before. It’s similar to trademark, I suppose. The types of intellectual property keep expanding.

For an example of the application of this sui generis IP right, see The parody shirt the NSA doesn’t want you to wear. The demand letter to the company making the shirt even refers to the rights infringed by the shirt as “intellectual property.”

And this is yet another example of why trademark law, and its cousins and variations, are as unjustified as copyright and patent (though not as harmful). See:

• “Trademark versus Copyright and Patent, or: Is All IP Evil?“, Mises Economics Blog (Feb. 11, 2009)
• “Antitrust vs. Trademark Law” (June 13, 2011)
• “The Velvet Elvis and Other Trademark Absurdities” (MAR. 20, 2011)
• “How to Improve Patent, Copyright, and Trademark Law”

• “Where does IP Rank Among the Worst State Laws?” (Jan. 20, 2012)
• “Patent vs. Copyright: Which is Worse?” 

Says Eugen von Böhm-Bawerk:

“In order to avoid leaving an obvious gap in my treatment I wish to add here a few words by way of mention of the legally compulsive relationships of patronage which are based on a vendor’s exclusive right of sale. This group includes, besides others, such rights as patent rights and authors’ copyrights. Of these the latter have been a source of especial embarrassment to jurists who have been unable satisfactorily to classify them with either objective or personal rights. The conception of authors’ copyrights as intellectual property (the word, property, being used in a strictly legalistic sense and designating an objective right) bears so plainly the stamp of a fiction, resorted to in order to evade the burden of explanation, that it could not possibly prove satisfactory.”

See his “Whether Legal Rights and Relationships are Economic Goods,” reprinted in Shorter Classics of Eugen von Böhm-Bawerk, Libertarian Press: South Holland, IL (1962 [1881]; print; ebook), pp. 165–66.

For views of other Austrian/related luminaries on this topic, see:

• Hayek: see Hayek’s Views on Intellectual Property; also Tucker, “Misesian vs. Marxian vs. IP Views of Innovation“; Tucker, “Hayek on Patents and Copyrights“; Salerno, Hayek Contra Copyright Laws;
• Ludwig von Mises, Human Action 3rd rev. ed. Chicago: Henry Regnery (1966), chap. 23, section 6, pp. 661–62; see also pp. 128, 364; Kinsella, “Mises on Intellectual Property“
• Leonard Read, “On Plagiarism” (1972), reprinted in Kinsella, “Leonard Read on Copyright and the Role of Ideas“
• Murray N. Rothbard, Knowledge, True and False; Man, Economy, and State and Power and Market, Scholars Edition, pp. liv, 745–54, 1133–38, 1181–86
• William Leggett on Intellectual Property;
• LeFevre on Intellectual Property and the “Ownership of Intangibles”
• Cordato and Kirzner on Intellectual Property
• Hoppe on Intellectual Property and Hoppe Interview on Anarchy and Intellectual Property
• Boudewijn Bouckaert’s “What Is Property?”

Joren De Wachter, a European software lawyer and IP strategist, sent me a link to his new book The Wealth of Ideas, subtitled “why we need free trade in ideas, rather than the mercantilist tax on innovation we call ‘intellectual property rights'”. It can be downloaded for free from his site; hard copy and kindle versions are also available. De Wachter “compare[s] IP with mercantilism. It is linked to the idea that ‘freedom of enterprise’ means ‘freedom to copy’.”
It’s great to see more and more people recognizing the need to abolish patent and copyright.

De Wachter also has a TEDx Leuven talk on this, below.

I don’t know much about Canada’s Fraser Institute, but have long assumed it is generally pro-free market and private property rights. After all, it’s published articles by leading libertarian and free market economist thinker Walter Block, it publishes an annual report ranking countries on their level of economic freedom (I think Block used to be a co-editor of this report, back in the day), and its website’s tagline is “A free and prosperous world through choice, markets and responsibility”—somewhat vague and nebulous, but sounds libertarian-ish. And its website says “We depend entirely on donations from people who understand the importance of impartial research and who support greater choice, less government intervention, and more personal responsibility.”

Yet despite being in favor of freedom, prosperity, choice, free markets, and “less government intervention,” Fraser is calling for the Canadian state to ratchet up its patent and copyright laws, in its recent report “Stronger intellectual property for pharmaceuticals would benefit Canada,” promoted on its email newsletter with the comment: “Aligning IP protection with international standards would benefit Canadians.”

As most free market advocates nowadays recognize,¹  these laws are state-granted privileges, in direct contravention to private property rights and free markets. In a brazen display of arrogant imperialism, the US bullies other countries into adopting Western-style fascist IP law and into ratcheting up IP protection and enforcement efforts,² So then we have perverse, bizarre situations such as: countries like Canada impose fascist patent controls which let pharmaceutical corporatist cronies of the US state charge monopoly prices for drugs imposed by various state-supported medical cartels, and then, perversely, to use anti-trust  or price-control type laws to limit the “price gouging” permitted in the first place by the state-big Pharma cooperative complex.³

In other words, America’s lapdog, Canada, goes along with American arm-twisting to impose US-style patent and copyright laws, at the behest of American/Western interests like Big Pharma, entrenched high-tech industries that now rely on IP protection, Hollywood/movies, music, some software/computer game, and so on, and then its “free market” institutions repeat this dreck in the name of free markets. Mistake. Groups like the Fraser Institute should be loudly calling for the state to dismantle patent and copyright, in the name of freedom, free markets, prosperity, and property rights.

1.  “The Four Historical Phases of IP Abolitionism”; “The Origins of Libertarian IP Abolitionism”; see also “Legal Scholars: Thumbs Down on Patent and Copyright”; “The Overwhelming Empirical Case Against Patent and Copyright“.  [↩]
2. See China and Intellectual Property; The Economist on Patents and Innovation in China; Intellectual Property Imperialism;  Free-trade pacts export U.S. copyright controls; Wikileaks cables reveal that the US wrote Spain’s proposed copyright laws.   [↩]
3. See State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law; Hsieh and Mossoff on IP and Sewing Machines; When Antitrust and Patents Collide (Rambus v. FTC); The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic State; Intel v. AMD: More patent and antitrust waste; Are Patents “Monopolies”?; Patents, Prescription Drugs, and Price Controls. [↩]

Because it is using patents to try to keep competitors, like Samsung, from … competing with it. Here, Samsung is being “accused” of “copying.” Or, as free market advocates would call it, “competing.”

Dyson is the latest company to pick a fight with the South Korean giant

By Carmel Lobello | September 10, 2013

It could just be a coincidence… (Samsung, Dyson)

They say imitation is the sincerest form of flattery, but for some reason Samsung has only ended up irritating its competitors.

The South Korean giant is once again on the receiving end of a patent lawsuit — this time over a vacuum cleaner.

British tech company Dyson, which famously “made vacuum cleaners sexy again” in the words ofThe New Yorker, is suing Samsung over the steering system in its Motion Sync vacuum cleaner. Dyson claims it’s a blatant copy of the system in its DC37 and DC39 cylinder models, which supposedly took three years to develop. The steering feature lets the vacuums change direction effortlessly, giving the user more control over the machine.

“This looks like a cynical rip-off by the giant Korean company Samsung,” said Sir James Dyson, the founder and owner of the company. “Although they are copying Dyson’s patented technology, their machine is not the same. Samsung has many patent lawyers so I find it hard not to believe that this is a deliberate or utterly reckless infringement of our patent.”

Read more>>

From Economic Harmonies, ch. 5, “On Value”:

If the reader so desires, he can easily think up for himself other examples of this kind that will convince him that value is not necessarily commensurate with the amount of effort expended. This is a remark that I throw out here in anticipation of later discussion, for I expect to prove that value no more resides in labor than it does in utility.

5.43

Nature has seen fit to make me in such a way that I should die if I did not quench my thirst from time to time; and the spring to which I must go for water is two miles from my village. Therefore, every morning I must take the trouble of going after my little supply of water, for I find in water those useful qualities that have the power to assuage that type of suffering known as thirst. Want, effort, satisfaction—they are all there. I am familiar with the utility I derive from this act; I do not yet know its value.

5.44

However, suppose my neighbor also goes to the spring, and I say to him, “Spare me the trouble of making this trip; do me the service of bringing me some water. While you are so engaged, I will do something for you; I will teach your child to spell.” It happens that this suits both of us. This is the exchange of two services, and we can say that the one is equal to the other. Note that what is compared here are the two efforts, not the two wants or the two satisfactions; for on what basis can we compare the relative merits of having a drink of water and learning how to spell?

5.45

Soon I say to my neighbor, “Teaching your child is becoming a bore; I prefer to do something else for you. You will continue to bring me water, and I will give you five sous.” If the offer is accepted, the economist may say without fear of error: The service is worth five sous.

5.46

After a while my neighbor no longer waits for me to ask him. He knows, by experience, that I need to drink every day. He anticipates my want. And while he is at it, he provides water for other villagers. In a word, he becomes a water-seller. Then we begin to put it this way: Water is worth five sous.

5.47

But has the water really changed? Has the value, which so recently was in the service, now become a material thing, a new chemical element added to the water? Has a slight change that my neighbor and I made in our arrangements been powerful enough to upset the principle of value and alter its nature? I am not so pedantic as to object to saying that water is worth five sous, any more than to saying that the sun sets. But we must realize that both are examples of metonymy; that metaphors do not alter facts; that scientifically, since, after all, we are dealing with a science, it is no more true that value is contained in water than that the sun sets in the sea.

What’s the relevance? Well IP advocates implicitly or sometimes explicitly claim that human action “creates value”—value, as some disembodied thing, an “ontologically” existent substance or ownable thing, which can have an “owner.” They implicitly accept variants of the Marxian labor theory of value because of the error of accepting the labor theory of property. They conceive of labor as an ownable substance, like jam, which, when spread on unowned bread, makes the bread the property of the jam-owner (nevermind that the bread before having jam spread on it is not unowned; this is analogous to the fact that the production of valuable goods simply involves rearranging them to make them more valuable. Production means rearrangement, not creation ex nihilo; rearrangement requires prior ownership of the raw materials that are transformed; they are owned because they were owned already, prior to the labor and transformation. That is, creation is not a source of ownership, contra the confused views of the labor theory of property proponents).

Related:

• On the Danger of Metaphors in Scientific Discourse
• Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors
• Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and ‘Rearranging’

My comments on a Facebook post about this ars technica article, Anti-patent-troll ads launch on radio and in print in 15 states:

Sigh. The problem is never addressed, even by these people. Even if Congress were to somehow get rid of “bad patents” (which is impossible, as the patentability standards are inherently vague and administered by a necessarily imperfect bureaucracy) and to get rid of “trolls” by requiring all patent law suits to be asserted by a patentee who is actually “working” his patent (making an actual product that his own patent claims), and even if Congress were to eliminate software patents (which is difficult to do)—and there is zero chance Congress will do any of these things—it still would hardly put a dent in the real problem.

Here’s why. First, even though it’s expensive to defend against patent lawsuits even if it’s a “bad patent,” at least there is a good chance of winning in such cases. But not all lawsuits from trolls are based on “bad patents”. Many patents asserted by trolls are perfectly valid, under PTO rules. For such patents, there is no defense. However, at least the troll only wants money. If a non-troll—like, a competitor—asserts the patent against poor mom and pop, often they want to seek an injunction to prevent mom/pop from continuing to sell the offending item.

Nor are all “bad patents” asserted by trolls. As noted, often they are asserted by a competitor or a company selling the patented product and keen to protect its monopoly turf.

And even if we got rid of all bad patents, and required all patent lawsuits to be asserted by so-called “practicing entities”: still, mom & pop would face the threat of harsh lawsuits from competitors or other practicing entitied, based on strong patents, i.e. those that cannot be invalidated in a lawsuit. Here, the problem is an existential one faced by the patent victim; it is not a mere royalty that the predator wants, they want to shut down their competition. It is not mere legal fees that is the problem: the problem is that even if you spend a billion dollars on the best lawyers, you’ll still lose—just like some kid caught red-handed selling cocaine is likely going to prison, no matter how much money mommy and daddy pay to white shoe defense attorneys. The problem is not that it’s hard to find good defense attorneys; the problem is the law itself is unjust.

If we reduce the trolling problem and the “patent quality” problem, and even if we reduce software patents, we do nothing to stop the real problem: “good” patents, asserted by non-trolls.

ALL THAT SAID: I am not opposed to incremental reform (see How to Improve Patent, Copyright, and Trademark Law). I just think we should be honest about its significance and not lose sight of the real meat of the issue. I would be in favor of some limitations as proposed by these groups, futile and minor as it might be. To my mind, this would be analogous to the feds announcing that henceforth all midnight drug raids would be double-checked by a second secret federal court to minimize the change of busting into the wrong residence in a drug raid. It would be analogous to a “taxpayer bill of rights” that does not lower the tax rates, but that gives the accused tax evader another layer or two of procedural wrangling the state has to go through before jailing him. It would be analogous to civil asset forfeiture reform that says the state can keep assets it seizes for no more than 10 years without a hearing. Etc. A slight improvement, maybe, but … thin gruel. Meh.

For related posts, see:

• “Patent Trolls” Cost Productive Companies $29 Billion in 2011, Stall Innovation, and Hurt Small Businesses
• “Defensive Patent License” created to protect innovators from trolls; probably won’t work
• Washington Post on Patent Trolls, Software Patents, and Patent Reform
• Patent Trolls Are Preferable to “Practicing Entities”
• HuffPo: Patent Trolls Are Killing People — Literally
• Slate’s Farhad Manjoo: Use Crowdsourcing to Improve Patents and Kill Patent Trolls
• Patent Trolls Cost The Economy Half A Trillion Dollars since 1990
• Ayn Rand on Patent Trolls