Antitrust law is as thoroughly unlibertarian as IP law is, though my guess is patent and copyright do more damage to property rights, freedom, the free market, and the economy.1 The perverse thing is that the state helps to create monopolies by its various policies (patent, copyright, FDA regulations) and then it turns around and uses its antitrust regulations to punish companies for acquiring these monopolies.2 And, also perversely, the use of antitrust law itself can limit the abilities of private actors to deal privately with “piracy,” competition and knockoffs, which then supports the argument that IP is needed (and then the IP rights, once granted, get the companies in trouble with antitrust law if these IP monopoly rights are “abused”). (As an example: antitrust law has been used against the fashion industry, and the movie chain system, making it harder for these industries to engage in private measures in response to knockoffs and “piracy”.)
And yet, as bad as antitrust is, and as schizo as federal policy on antitrust and IP is, there are times when one can almost support the use of antitrust. Case in point is an example I mentioned in a previous post, Price Controls, Antitrust, and Patents, where I suggested that use of price controls and/or antitrust reasons to limit the monopoly prices charged by patentees and/or to restrict their patent monopoly grant, might be a not-bad result.
And here we have a law professor observing that the “six strikes” arrangement to enforce copyright might itself violate antitrust law, since it goes beyond the rights copyright law itself gives holders, has due process issues, and so on. I have no problem with the copyright enforcement rights of Big Media being restricted, even if odious antitrust principles are used to do it. Of course a simpler and better solution would be to get rid of state-granted monopolies like copyright and patent in the first place, leaving the state with no good excuse for needing antitrust law either…
Op-ed: Imminent “six strikes” Copyright Alert System needs antitrust scrutiny
Internet providers will soon deliver “strikes” to US subscribers accused of …
With the “Copyright Alert System” going into operation over the next few months, major American ISPs will start sending out “strikes” to users accused of infringing copyrights online. Sean Flaim, who has just completed extensive research on the topic, argues that the system has real benefits—but it needs close supervision. The opinions expressed here do not necessarily represent those of Ars Technica.
Eight months ago, content owners and Internet service providers (ISPs) agreed to the Copyright Alert System, a “six-strike” plan to reduce copyright infringement by Internet users. Under the system, ISPs will soon send educational alerts, hijack browsers, and perhaps even slow/temporarily block the Internet service of users accused of online infringement (as identified by content owners). At the time it was announced, some speculated that the proposed system might not be legal under the antitrust laws. Were they right?
Recently, I completed a draft research paper where I explored the potential antitrust aspects of “six strikes” even further. There, I concluded that while the system has some promise for reducing online infringement, its private nature, combined with a lack of government oversight, raises significant antitrust concerns. It will require careful monitoring by regulators.
One of the authors of this recently-published paper, “Generation–C: creative consumers in a world of intellectual property rights,” sent me a copy (by Jan H. Kietzmann & Ian Angell, International Journal of Technology Marketing, December 09, 2013), which has an interesting thesis. From the Abstract:
Generation–C is a generational movement consisting of creative consumers, those who increasingly modify proprietary offerings, and of members of society who in turn use the developments of these creative consumers. It is argued that their respective activities, creating and using modified products, are carried out by an increasing number of people, everyday, without any moral and legal considerations. The resulting controversies associated with existing intellectual property rights are discussed, and suggestions put forward that the future can only bring conflict if such legislation is not changed so that derivative innovations are allowed to flourish. The article concludes with important messages to organisations, intellectual property rights lawyers, owners of property rights, governments and politicians, suggesting they reconsider their respective stances for the good of society.
From the Conclusion:
In this article, we introduced Generation-C as a generational movement, consisting of everyone who embraces all things digital: creative consumers and their respective audiences. We argue that their combined activities, modifying offerings and consuming these, are signs of the times. The trend towards increasing curiosity and creativity in a community that values openness and sharing, and acts without moral considerations or deliberations of IPR, is gaining momentum, and the future can only bring conflict if IPR legislation is not changed so that derivative innovations are allowed to flourish.
Patents are often used as indicators for economic and innovative progress.1 The assumption is that many patents represent innovation, and also that many innovations are patented. Patent records thus correlate with innovation.
A fascinating new paper, “Reassessing patent propensity: evidence from a data-set of R&D awards 1977-2004,” by Roberto Fontana, Alessandro Nuvolari, Hiroshi Shimizu, and Andrea Vezzulli (Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon, Working Papers series number 2013/09; Mar. 2013), carefully examines this issue. The authors studied the innovations from the “R&D 100 Awards” competition organized by the journal Research and Development, which, since 1963, “has been awarding this prize to the 100 most technologically significant new products available for sale or licensing in the year preceding the judgments.” I.e., this is a list of important and “technological breakthrough” innovations over almost 3 decades.
The authors searched the patent records for all of these innovations to determine which of them were patented or not, and conclude “a relative low number of important innovations are patented“. In particular, they found that only about 10% of “important” inventions are patented (this number varied a bit based on the industry). This implies that most important innovations are not patented. For most innovations, the innovating companies rely on trade secrecy, lead time/first to market advantages, or other strategies, instead of on the patent system.
One obvious conclusion to be drawn from this study is that patents are not a significant driver of most innovation, if 90% of important inventions are never patented in the first place. Proponents of the patent system often claim that patents are necessary to provide an incentive to innovate; some even (ridiculously) claim that without patents, all innovation would grind to a halt (the truth is the opposite: if patents were made universal and had a perpetual term, all human life would grind to a halt; no offense Galambosians). But even if the 10% of innovations that are patented would never have resulted without the incentives provided by a patent system (an absurd assumption), the great bulk of technological innovations and breakthroughs in modern times would still have come about. [continue reading…]
(Stephan Kinsella, a patent attorney in Houston, Texas, is Executive Editor of Libertarian Papersand Director of the Center for the Study of Innovative Freedom (C4SIF). A registered patent attorney and former adjunct professor at South Texas College of Law Houston, Kinsella has published numerous articles and books on IP law, international law, and the application of libertarian principles to legal topics and has lectured all over the world on these topics. He received an LL.M. in international business law from King’s College London, a JD from the Paul M. Hebert Law Center at LSU, and BSEE and MSEE degrees from LSU. Kinsella has made an international name for himself as a leading exponent of libertarian theory and as an outspoken critic of patents and intellectual property. He recently spoke with BAMSouth.com Publisher Jack Criss from his home in Houston about why he believes the concept of intellectual property is one of the most dangerous threats to freedom and progress in the world today.)
BAMSouth.com: First, define for us what Intellectual Property really means—and how is it primarily used by and for businesses?
Kinsella: Intellectual property is a term used by lawyers to refer to laws that protect the products of the intellect, for example copyright (which gives authors a right in original works such as novels or paintings), patent (which gives inventors rights in practical inventions, like a mousetrap), trademark (which gives companies rights in names used to identify products, such as “Coca-Cola”), and trade secret. Trademark is said to have its basis in protecting consumers from deception and fraud by unscrupulous vendors who falsely use others’ names and reputations.
Patent and copyright became more prominent in Western countries about two hundred years ago, and emerged from older mercantilist practices where the crown would grant monopolies to court favorites (patent, which is rooted in the Statute of Monopolies of 1624), and censorship of prohibited books (copyright, rooted in the Statute of Anne of 1710). Free market economists were suspicious of or even hostile to these laws, so defenders of patent and copyright started referring to them as “intellectual property” to appeal to the pro-property sentiments of legislators and the populace. But in truth patent and copyright are state-granted monopoly privileges, not natural property rights, though they are widely called “intellectual property” now. The term “industrial property” is more commonly used in Europe. [continue reading…]
A friend wrote me recently to ask my thoughts about Ayn Rand’s The Fountainhead—in particular about Roark’s implicit invocation of intellectual property when he defends himself in the courtroom scene for his actions in dynamiting Cortlandt Homes. As a refresher: Roark had made a side-deal with Peter Keating to be Keating’s ghost-architect, since Keating had little talent: Roark would provide the designs to Keating; Keating would pass them off as his own to build this Cortlandt Homes projects. During Keating’s later negotiations with the developer, he agreed to modify the designs, even though he had promised Roark he would not do this. Roark was unhappy with the way the builder-owner “ruined” “his” designs, so he destroyed the entire complex in an act of sabotage, with dynamite. In his defense, he argued that he was entitled to do this since he “owned” “his” architectural designs. Some cockamamie theory like this. My friend thought this suggested that ideas can be owned, and that you could enforce this in a court situation without the involvement of state legislation. He also said that when he writes something on his own initiative—not copying it—he considers it “mine” unless he relinquishes rights to it, just as with a table or home he may have built.
My responses, lightly edited, are below.
***
I agree, and this is one reason I have become more negative about The Fountainhead. I recently re-read Atlas and enjoyed it, but do not think I would ever re-read The Fountainhead. Roark basically demolishes someone else’s property, on IP grounds, even though his contract claim is tenuous. It’s almost an example of IP terrorism. To my mind, The Fountainhead demonstrates what is wrong with the IP idea.
Atlas has a few aspects of this—the patent on Rearden Metal being “expropriated” by the state (even though the state granted the patent), and the bizarre situation of Dagny and Rearden trying to reverse engineer Galt’s Motor prototype, without his consent, which would seem to violate IP rights—but it is overall far superior; IP does not dominate Atlas, but it is a main aspect of Fountainhead. At this point I cannot say I like or would recommend The Fountainhead. It has the horrible IP terrorism motif, and the main character, besides being odd and quasi-raping Dominique (yes, yes, I know it was “by engraved invitation”; but still), he doesn’t want to do what his clients pay him to do. Hunh?
So, yes, Fountainhead exemplifies Rand’s illiberal IP views quite nicely, by having Roark dynamite Cortlandt Homes. It shows that IP is ultimately incompatible with property rights and free markets.
I also disagree that “an architect’s ownership of his designs” can be settled without states and legislation, merely with “a background of courts where disputes can be adjudicated”. You might as well say that the right to a job or to not be discriminated against can be settled in the courts instead of with the Civil Rights Act or the Americans with Disabilities Act. An architect literally cannot own his “designs.” If you make information public, others learn from it, imitate it, incorporate that knowledge into their own plans and knowledge. They might even compete with you; I remember when competition was not a bad word in libertarian circles. The architect, in enforcing his so-called ideal rights, always really seeks to use real, physical force, against real, physical property: e.g. he wants to use physical force to take some money away from the defendant or, as Roark did, to use physical explosives to physically demolish the physical resources of the owners of Cortlandt homes. It’s always a question of who owns the rivalrous resource/scarce means in question. The IP issue is trotted out as a justification for the state or legal system transferring property rights in already-owned property from the current owner, to the IP holder. But this just means that IP is a means of taking or redistributing existing property rights. That’s how I see it, at least. I find it hard to there is any libertarian justification for destroying Cortlandt, except maybe an anarchist one (since it was a government project), which the IP advocates usually also reject.
And as should be clear by now: if I take scarce resources that I own and use information at my disposal to rearrange these materials into a more useful configuration, then I “consider” the rearranged resource to be “mine” unless I relinquish rights to it. As Rand wrote:
The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power—and it is the only meaning of the concept “creative.” “Creation”does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. “Creation” means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.
So if I own some raw material because I homesteaded it or purchased it by contract from a previous owner, I am free to rearrange it into a new configuration that might be more useful or valuable to me, or to a customer. When I act on my resources, and employ causal means to do so, I have to consult knowledge I have about reality–causal laws, etc. That knowledge guides my choices, and the better it is, the more creative or valuable may be the end product of my action. But I own the end result because I already owned the factors. The end result is more valuable than before because of my knowledge but that does not mean I own the added-value, as some separate thing.
If you say you “consider” your “writing” to be “yours,” this can only mean that you are asserting a right to use force to stop me from using my own body and my own resources (paper, ink etc.) in certain ways. I cannot see how this cannot but lead to conflict between those who advocate such a theory, and those who essentially believe in a libertarian-Lockean grounding of property rights in scarce resources. The guy who says “I own that novel” is really seeking to stop me, with force, from using my owned scarce resources as I see fit. That is obviously a huge conflict. The libertarian answer, to the question: who owns that resource (e.g. that printing press) is: the owner. Not the outsider/novelist.
Interesting article on LRC by Kevin McKernan noting that “The genome sequence has initiated a new economic frontier and it is as impactful as the potential for alternative or competitive crypto currencies like Bitcoin.”
Why is this as profound as Bitcoin? Since money is half of every transaction in human experience, Bitcoin has the potential to radically change the world through its use of incorruptible truth as currency.
The ability to read ones genome is the ultimate libertarian liberation as it provides the most powerful freedom from the medical grid clutching in on us today. This grid dictates life or death. Knowing your genome will allow you to personalize your diet and pharmaceutical choices. It will provide insights on potential health hazards so they can be acted on in a cost effective preventative manner as opposed to a reactionary retrospective diagnostic odyssey. It is the ultimate freedom from socialized medicine.
As powerful as crypto currency is, your freedom of transactional currency is somewhat less relevant without health. We are frequently witnessing bed-ridden children being sequenced, properly treated and brought back to school. This is happening at such a rapid pace that it is a technological force that will overwhelm the negative economic effect of attempting to slowly socialize medicine. This socialization is happening in the wake of the most personalized medical revolution in evolutionary history. Patent thickets obstruct this revolution and our entropic mission is to bend right around them.
The method we published is called DREAM PCR and it will enable your genome to be read without any hassles from the multitude of gene patents still enforced on the human genome. The manuscript displaying this technique is unfortunately behind a Nature Biotechnology copyright paywall
In other words, the state taxes tax money to fund general research, then takes out patents on the results in effect patents our bodies; and methods criticizing this and providng workarounds are kept behind a copyright paywall. So we can see how patent and copyright work together to deny us freedom of information over our own bodies’ DNA. Some might even call that a “big deal.” (See my own previous posts on gene patents here.)
The authors ask for help in publicing the link to the paper to help get the message out (though I am not how this will help, as it’s behind a paywall):
These metrics are very much social media and web link influenced. Please help me hyperlink the below paper so we can get a patent free human genome as the number one paper and send a loud message about the freedom to read our own genome. It discusses gene patents, Austrian economics and is the first time Murray Rothbard and Friedrich Hayek are referenced in Nature Biotechnology. Scientists are governed by logic and Austrian economics best showcases the Faustian contract we sign when we allow coercion to fund science.
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.
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.
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.
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:
improv[e] access and exposure to music by creating free resources and educational materials. We provide recordings, sheet music, and textbooks to the public for free, without copyright restrictions. Put simply, our mission is to set music free.
Yet another example of people not only not using copyright in their various pursuits, but actively trying to get around the senseless restrictions imposed by copyright (such as the fact that recent recordings of public domain music still fall under copyright).
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.
Brown has copyrighted his book, On X. Green, in buying, signs an agreement not to copy it. So far so good. Then Black reads Green’s copy of On X book which he left lying on the table.
Rothbard’s position on Black’s rights is as follows.
For suppose that Brown builds a better mousetrap and sells it widely, but stamps each mousetrap “copyright Mr. Brown.” What he is then doing is sellingnot the entire property right in each mousetrap, but, the right to do anything with the mousetrap except to sell it or an identical copy to someone else. The right to sell the Brown mousetrap is retained in perpetuity by Brown. …
A common objection runs as follows: all right, it would be criminal for Green to produce and sell the Brown mousetrap; but suppose that someone else, Black, who had not made a contract with Brown, happens to see Green’s mousetrap and then goes ahead and produces and sells the replica? Why should he be prosecuted?
The answer is that, as in the case of our critique of negotiable instruments, no one can acquire a greater property title in something than has already been given away or sold.
Green did not own the total property right in his mousetrap, in accordance with his contract with Brown — but only all rights except to sell it or a replica. But, therefore Black’s title in the mousetrap, the ownership of the ideas in Black’s head, can be no greater than Green’s, and therefore he too would be a violator of Brown’s property even though he himself had not made the actual contract. (The Ethics of Liberty, 123)
First of all, this particular example sounds more like a patent to me rather than a copyright.
But anyway, let’s replace the mousetrap with a book. Brown writes a book and sells it to Green who signs a “will not copy” or non-copying agreement (NCA).
Black then casually picks up Green’s book, while both of them are talking in a coffee shop, and Green has gotten up to get his order, and leafs through it.
Why have copyright in the first place? Not to impose an arbitrary restriction but to ensure that anyone who reads a book pays for this privilege. Clearly, copyright has failed to make Black pay. If we want to be true to the spirit of copyright, then we must either prosecute Black for reading without paying or prosecute Green for allowing Black to do just that.
The NCA is a weak protection indeed. The spirit of copyright insists that Green be made into a “guardian” of Brown’s ideas, along with Brown himself. He is bound as if by an oath to not even talk about Brown’s book, because that might inform other people of its content in such a way as to reduce Brown’s rightful income. He must actively seek to prevent others from learning from On X or be in violation of a contract. Green is recruited into this sort of servitude to Brown simply by virtue of buying Brown’s book.
And that just seems absurd.
Not consider the implications. If Black’s idea — though he wickedly got for free as a result of Green’s lamentable lack of vigilance — is his rightfully, and he is not duty-bound to forget at ASAP, and if the paper on which prints this idea is also his (nothing unusual here), then why can’t he “copy” this combination of form and matter to his heart’s content?
The only reason is utilitarian: society might be better off when Black’s rights are crudely restricted by our inconsistent notion of copyright than otherwise, etc. But no libertarian principle or natural rights seem to be involved.
“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:
“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:
The Center for the Study of Innovative Freedom (C4SIF) is dedicated to building public awareness of the manner in which so-called “intellectual property” (IP) laws and policies impede innovation, creativity, communication, learning, knowledge, emulation, and information sharing. We are for property rights, free markets, competition, commerce, cooperation, and the voluntary sharing of knowledge, and oppose IP laws, which systematically impede or hamper innovation. IP law should be completely and immediately abolished.
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