In a memo to “Candidates, Interested Parties,” subject line: “Public Policy and the Entertainment Community: Five Important Things to Know About the Impact of the American Film and Television Industry on the US Economy” (available at MPAA Tells Candidates That Anti-Piracy Legislation Remains A “Critical” Priority; h/t Skip Oliva), the MPAA repeats a confusing mishmash of propaganda to keep the fascist copyright system strong.

First, the memo tells us of all the money the television and film indusry pours into the national and local economies:

Film and TV production takes place in all 50 states across the country. … The American film and television industry is a massive contributor to the US economy, generating $42.1 billion in wages from direct industry jobs and distributing $37.4 billion in payments to nearly 278,000 businesses around the country in 2010. … When shooting on location, major motion pictures contribute an average of $225,000 daily to the local economy.

Fine. But this doesn’t justify copyright law!

… Now, take $300m CGI summer blockbuster films: if the producers of these things are to be believed, the ongoing capacity to produce glitzy, big budget productions demands that services like YouTube be shut off (see, for example, Viacom’s lawsuit against Google over YouTube).If this is true – I’m no movie exec, maybe it is – then we need to ask ourselves the “balance” question: YouTube’s users produce 29 hours of video every minute and the vast majority of it is not infringing TV and movie clips, it is independently produced material that accounts for more viewer-minutes than television. So, the big studios’ demand amounts to this: “You must shut down the system that delivers billions of hours of enjoyment to hundreds of millions of people so that we can go on delivering about 20 hours’ worth of big budget film every summer.”

To me, this is a no brainer. I mean, I love sitting in an air-conditioned cave watching Bruce Willis beat up a fighter jet with his bare hands as much as the next guy, but if I have to choose between that and all of YouTube, well, sorry Bruce.

A recent Economist article, Apple v Samsung: iPhone, uCopy, iSue (“Not every innovation deserves a patent. Not every copycat deserves a punishment”) exemplifies today’s widespread unprincipled approach to policy. Few people want to abolish IP, even though they can find no good arguments for it and can see only damage. They only want to “reform” it. The Economist buys into the romanticized propaganda in favor of the patent system:

It is useful to recall why patents exist. The system was established as a trade-off that provides a public benefit: the state agrees to grant a limited monopoly to an inventor in return for disclosing how the technology works. To qualify, an innovation must be novel, useful and non-obvious, which earns the inventor 20 years of exclusivity.

But there is no evidence that there is a “public benefit” (see Boldrin and Levine: The Case Against Patents). Ah, wel, who cares? We can’t be “extreme” now, can we?

Then the “newspaper” (i.e., magazine) recognizes the problems of patents:

A proliferation of patents harms the public in three ways. First, it means that technology companies will compete more at the courtroom than in the marketplace—precisely what seems to be happening. Second, it hampers follow-on improvements by firms that implement an existing technology but build upon it as well. Third, it fuels many of the American patent system’s broader problems, such as patent trolls (speculative lawsuits by patent-holders who have no intention of actually making anything); defensive patenting (acquiring patents mainly to pre-empt the risk of litigation, which raises business costs); and “innovation gridlock” (the difficulty of combining multiple technologies to create a single new product because too many small patents are spread among too many players).

So: there are obvious costs and harms of the patent system. And no apparent benefits. Yet we should not abolish this abomination; we should “reform” it:

Some basic reforms would alleviate many of the problems exemplified by the iPhone lawsuit. The existing criteria for a patent should be applied with greater vigour. Specialised courts for patent disputes should be established, with technically minded judges in charge: the inflated patent-damage awards of recent years are largely the result of jury trials. And if patents are infringed, judges should favour monetary penalties over injunctions that ban the sale of offending products and thereby reduce consumer choice.

They conclude:

A world of fewer but more robust patents, combined with a more efficient method of settling disputes, would not just serve the interests of the public but also help innovators like Apple.

The assumption here is that if we get rid of the “bad” patents, the “junk” patents, and patent trolls, and software patents, etc, and somehow make the “system” more “just” and “serve the interests” of the “public” and “innovators”—like Apple, ha!—then all would be better. They do not realize that even if you get rid of patent trolls, “low quality” patents, and have only “robust” patents left: this is still anti-competitive and anti-free market. It still allows “robust” patent owners to use these state-granted patent monopolies to squelch competition, reduce innovation, increase prices to consumers. We do not want to reform the patent system so that we only have “high quality” or “robust” patents left; robust patents are the problem, just like an efficient and effective DEA or IRS is a bad thing, not a good thing.

Here are the first few lines from the Introduction to The Case Against Patents, a draft paper [now published in the Journal of Economic Perspectives] by Michele Boldrin & David Levine, authors of Against Intellectual Monopoly:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless the latter is identified with the number of patents awarded – which, as evidence shows, has no correlation with measured productivity. This is at the root of the “patent puzzle”: in spite of the enormous increase in the number of patents and in the strength of their legal protection we have neither seen a dramatic acceleration in the rate of technological progress nor a major increase in the levels of R&D expenditure – in addition to the discussion in this paper, see Lerner [2009] and literature therein. As we shall see, there is strong evidence, instead, that patents have many negative consequences.

We can only conclude, at this point, that people who favor patents on “utilitarian” grounds are either ignorant or dishonest. They are much like the leftists in Sowell’s Vision of the Anointed: Self-Congratulation as a Basis for Social Policy, or those derided by Charles Murray in Losing Ground, or an analog of Isabel Paterson’s humanitarian with a guillotine. Or maybe they are just misanthropes or Luddites.

Update: See more posts on Internet freedom.

As noted in ars technica, For Dems, “Internet freedom” means “vigorously” protecting copyrights:

Both major US party platforms endorse “Internet freedom”—but for both parties the phrase comes with important caveats. Last week, the Republicans called for “vigorous enforcement of current laws on all forms of pornography and obscenity,” as well as the preservation of the ban on online gambling. The Democrats are silent on pornography and gambling, but they make the case for “vigorous” copyright enforcement efforts.

… “The administration is vigorously protecting US intellectual property,” the new Democratic platform declares, through “better enforcement and innovative approaches such as voluntary efforts by all parties to minimize infringement while supporting the free flow of information.” That’s a reference to things like the “graduated response” system in which ISPs would penalize their users if they were accused of copyright infringement six times. (The White House helped brokered the deal between major ISPs and Hollywood.)

Another policy that fits the theme of “vigorous” enforcement (though it isn’t named specifically) is Operation In Our Sites. Under that program, the federal government has seized hundreds of allegedly infringing domain names before the site owners had a chance to be heard.

President Obama also has his party’s backing on the use of trade negotiations as a lever to pressure other countries to adopt American-style copyright and patent laws. While it doesn’t mention the controversial ACTA treaty, the Democratic platform promotes the Trans-Pacific Partnershipagreement and praises “free trade” agreements with Panama and Colombia for “protecting labor rights, the environment, and intellectual property.”

So… the Republicrats and Demopublicans want to restrict Internet Freedom, to stop gambling, pornography, copyright infringement, … in the name of Internet Freedom. Talk about obscenity! As Cory Doctorow has noted (2), the Internet is the world’s biggest copying machine … of course, it facilitates copying. If you have a war on copying, this is a war on the Internet.

See also: Down with Gatekeepers: Hillary Clinton and the Obama Administration vs. Internet Freedom, discussing the hypocrisy and ludicrousness of the people who are attacking the Internet claiming to be for Internet Freedom.

PetaPixel reports: Patent Shows That Nokia is Working on Graphene-Based Camera Sensors. But a company need not ever make a working model or ever sell a product embodying patented inventions. (See How to Improve Patent, Copyright, and Trademark Law for a suggestion to add such requirements.) Quite often companies file patents on ideas they will never pursue; an engineer might come up with it during a brainstorming session, and file it to get the patent bonus; the company files it to add to their stack of patents that they might be able to use defensively or for licensing purposes someday. (The “Productivity” of Patent Brainstorming; The Patent Defense League and Defensive Patent Pooling.)

I get that people don’t understand patent law. Not many people do. Not the engineer jury foreman in the Apple v. Samsung patent trial recently, apparently (Apple/Samsung Jurors Admit They Finished Quickly By Ignoring Prior Art & Other Key Factors). All the more reason that they should not be in favor of IP law—never favor a state law or policy that you don’t understand. At least be skeptical.

A recent Volokh post on Blackmail discusses the perennial question of when speech becomes constitutionally unprotected blackmail. The idea here is that there is a “tension” between blackmail law and free speech rights. And even though we know blackmail law suppresses free speech, most people are in favor of it anyway. Volokh calls this dilemma “one of the thorniest conceptual questions in all of jurisprudence” and summaries what is “sometimes called the Blackmail Paradox”. The blackmail paradox observes that A is generally free to publish embarrassing information about B, or to keep quiet about it; and A is free to ask B for money to do or refrain from doing something within A’s rights. Yet

if I ask you for money or a service in exchange for my not revealing embarrassing information about you, then that’s a crime.

What’s the explanation? Legal scholars have debated this for decades, and to my knowledge have not come up with a perfectly satisfactory answer.

I disagree with Volokh. The answer is simple: blackmail law is incompatible with individual rights and should not exist, as argued by Walter Block and Murray N. Rothbard.¹ The paradox only arises when you try to justify free speech and a law that undermines it. Yes, there is a “tension” between such law and free speech; it should be resolved not by finding the right “balance,” but by rejecting the unlibertarian law altogether.

Intellectual property, in its various forms—including patent and trademark, but most especially copyright—also limits, chills, and suppresses freedom of speech and of the press. And thus in these cases too, mainstreamers and statists, who think we “must” have these laws, but who recognize the tension between them and civil liberties, fall back on the confused and utterly unprincipled “we must find a balance” approach. As Ayn Rand might say, you don’t want to find a balance between nutritious food and poison.

As noted, trademark and even patent, and ohter types of IP such as publicity rights, undermine freedom of speech.² But the most pernicious in this respect is copyright, which threatens not only freedom of the press and freedom of speech, but Internet freedom itself.³ In the name of copyright, books are censored and suppressed and chilled.⁴ As noted, this is a vivid illustration of a situation where libertarians and classical liberals are forced to try to adopt a “balance” between fake, positive-law rights and libertarian rights. Once an artificial, non-libertarian right is enshrined in law, it necessarily invades the turf of real, negative rights, much like printing more money dilutes the value of existing money by way of inflation.

Even the courts recognize that copyright (and defamation) laws are incompatible with free speech and the First Amendment. This is actually an argument that these and related laws are unconstitutional. After all, federal legislation on trademark and defamation (libel)is not even authorized in the Constitution. So such laws are doubly unconstitutional: they are not authorized, and are hus ultra vires, and they are incompatible with the First Amendment. Copyright law, by contrast, is authorized in the Constitution. However, the Copyright Act is clearly incompatible with the First Amendendment. What is one to do, in the case of such a conflict? Well in this case, the First Amendment was ratified in 1791, two years after the Constitution and its copyright clause (1789). Therefore, to the extent of any conflict, the later-ratified provision takes precedence. In other words, the First Amendment makes copyright uconstitutional. Not that the courts see it that way, of course. But still.⁵

The point is: libertarians and others who believe in civil liberties, Internet freedom, freedom of speech and of hte press, should oppose positive state laws that are inconsistent with theese rights, including blackmail, defamation, trademark, and copyright law.

Addendum: Another “tension” in federal law is that between antitrust and trademark law. The former purports to oppose monopolies, while the latter grants them. See Pro-IP Libertarians Upset about FTC Poaching Patent Turf; State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law. In this case, both IP and antitrust law need to go: IP law, because it forms monopolies that antitrust law claims to oppose; antitrust law, because it focuses on private companies, which cannot form true monopolies, and ignores the real monopolies formed by the state itself.

[TLS]

1. See Rothbard, “Knowledge, True and False,” in the Ethics of Liberty; and various articles on blackmail on Block’s publications page (including our co-authored piece The Second Paradox of Blackmail), Defending the Undefendable, ch. 6, and Block’s Legalize Blackmail (Straylight, forthcoming 2012). [↩]
2. Trademark as Censorship: Newspaper Claims Satirical Blogger Mentioning Its Name Is Trademark Infringement; Copyright and Free Trade; Patents and Censorship; Patents Threaten To Silence A Little Girl, Literally; Cato/Reason/CEO brief opposing medical diagnostic process patents as violating freedom of speech; Wilt Chamberlain’s Family Tries To Block Film About His College Years, Claiming ‘Publicity Rights’; Michael Jordan Sues Grocery Stores for Hall of Fame Congratulatory Ads. See also “Types of Intellectual Property.” [↩]
3. See Where does IP Rank Among the Worst State Laws?. [↩]
4. Howard Hughes, Copyright, and Censorship; The Patent, Copyright, Trademark, and Trade Secret Horror Files; Should Copyright Be Allowed to Override Speech Rights?; Libraries: Prepare to burn foreign books, courtesy copyright law; Paramount Trying to Ban “Godfather” Sequels with Copyright; Federalist Society Asks: What’s the Right Amount of Censorship?; other posts. [↩]
5. Copyright Censorship versus Free Speech and Human Rights; Excessive Fines and the Eighth Amendment; Copyright is Unconstitutional. [↩]

My monograph Against Intellectual Property is now available in a Large Print edition, from the Large Print Liberty site. Thanks to Skyler Collins.

8 x 10 inches, 72 pages, Large Print Edition.
Purchase at CreateSpace or Amazon for $8 $6.

This is a fantastic, solid analysis of the problems with IP and with applicability to the recent Apple vs. Samsung patent lawsuit, Russell Lamberti. This was published on TechCentral, and originally published at Mises Institute–South Africa.

But, Apple, copying isn’t theft

Apple’s “victory” over Samsung Electronics last week is really a victory for illegitimate, state-granted monopoly privilege over dynamic, competitive enterprise. By Russell Lamberti.

Added by Russell Lamberti on 28 August 2012.
Saved under Opinion, Russell Lamberti, Top
Tags: Apple, Russell Lamberti, Samsung, Stephen Kinsella

Russell Lamberti

Last week a US court ruled that Samsung Electronics had to pay US$1bn to Apple for patent infringement. Samsung made a cool $6bn profit in the second quarter of 2012 on revenue of nearly $50bn, so $1bn, in the final analysis, is pretty manageable. But that’s not the point.

The Apple-Samsung patent war, which — sadly — is probably far from over, raises once again the broader question over the basic efficacy and legitimacy of intellectual property law. Is patent and copyright protection socially beneficial? Is it even legitimate property right? Although this is a divisive issue, most people regard intellectual property (IP) rights, specifically patent and copyright, as legitimate property rights. Most people are wrong, and below I’ll show why.

Before I continue, let me point out that my ramblings on IP rights are a distant second best to the expositions of a true specialist, Stephen Kinsella. Kinsella, an attorney in Houston, is a regular contributor on Mises.org, director of the Center for the Study of Innovative Freedom, and editor of Libertarian Papers. More importantly, he is the author of a seminal work on IP rights which can (and must!) be read here (only 50 or so short pages and free).  You can also get into his short summary articles here and here which also have extensive links to further reading.

IP rights are a suite of privileges granted by the state to successful applicants trying to secure patent, copyright, trademark or trade secret protection. In the case of patents and copyright, people are essentially granted property rights over ideas or patterns of ideas. Patents, for example, grant an inventor a limited monopoly on the manufacture, use and sale of his invention or process. Copyright is granted to creators of “original” works and grants exclusive right to the creator to reproduce, sell, and perform those works publicly.

The supposed legitimacy of patents and copyright in IP policy discourse essentially rests on two core pillars:

1. That creation is sufficient basis for property rights; and
2. That higher levels of investment (time and resources) in innovative and creative processes can be achieved if innovators/creators are granted the opportunity to earn exclusive monopoly profits for a period of time.

It is relatively easy to demonstrate that proposition 1 is logically false. If I break into my neighbour’s garage, steal some items belonging to him, and fashion a product from those items, is the product I created my property? Of course not — once caught I would immediately have my creation confiscated and the component parts returned to my neighbour. Creation is clearly therefore not a sufficient condition for property ownership. Moreover, creation is also not a necessary condition for property ownership since property — say, land — can come to be owned by acquisition in voluntary exchange (gift or purchase) or by first possession (original homesteading).

“Property rights” granted exclusively on the basis of creation are therefore illegitimate.

What then is the correct basis for determining property rights? To get to an answer to this we must ask another question: why do any property rights exist at all?

Read more>>

Let me note that the Apple-Samsung case turned not only patent infringement (both utility and design patents), but also “trade dress dilution” (of the iPhone, not the iPad). Trade dress is a type of trademark, and “dilution” is a relatively new trademark cause of action (added legislatively by Congress in 1995. So this case highlights the danger of trademark, as well as patent.

I was interviewed yesterday by Jeff Tucker of Laissez-Faire Books about the Apple v. Samsung patent decision. Video below.

Intellectual Property (primarily: patent and copyright; but also others, like trademark) has become one of the most significant state threats to liberty in our time. My estimate it’s now in the top 5 or 6 among the most evil and destructive statist laws and policies.¹ It drains hundreds of billions of dollars worth of productivity and innovation from the US economy alone each year.²

And thankfully, since the Internet’s rise to prominence in the mid-90s, and the increasing threat IP poses to Internet freedom, libertarians have been waking up. They are increasingly for the abolition of IP, especially among anarchists and Austrians.³ Utilitarian libertarians are being pulled along too by the overwhelming empirical evidence of harm done by IP.

One stubborn IP holdout are the Objectivists, since Rand geared so much of her moral and property theory around this idea, going so far as to (ludicrously) claim that “Patents are the heart and core of property rights.”⁴ And though an increasing number of Objectivists are deviating from Rand’s pro-IP⁵ and pro-government script, most of them are still strongly for IP.

So it is troubling that the Cato Institute has named as CEO John Allison, a former Ayn Rand Institute board member. As he said once about Cato’s strengths and weaknesses to a gathering of fellow Objectivists:

They are a mixed bag: healthcare policy research excellent; foreign policy bad; intellectual property mixed but not too bad.

This obviously means Cato is too anti-war and anti-interventionist and not pro-IP enough.⁶ And though not all Cato scholars are openly anti-IP,⁷ Cato scholars have done great work in this area, e.g. Tom Palmer, in his articles Intellectual Property: A Non-Posnerian Law and Economics Approach and Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects.⁸

So let’s hope that under the new CEO’s leadership, Cato does not shy away from criticism the outrages of statist war and statist IP.

1. See Where does IP Rank Among the Worst State Laws?; Masnick on the Horrible PROTECT IP Act: The Coming IPolice State. [↩]
2. Costs of the Patent System Revisited. [↩]
3. The Death Throes of Pro-IP Libertarianism; The Origins of Libertarian IP Abolitionism; The Four Historical Phases of IP Abolitionism. [↩]
4. Quoted in Ideas Are Free: The Case Against Intellectual Property. [↩]
5. An Objectivist Recants on IP; Yet another Randian recants on IP. [↩]
6. Objectivists on War and the State. [↩]
7. Some are for limiting pharmaceutical reimportation—i.e. free trade—in the name of IP, see Intellectual Property and Think Tank Corruption. [↩]
8. Although in recent comments here and here he seems to be retreating somewhat from his previously principled opposition to the wealth-maximization arguments for patents, as noted in The Case Against IP: A Concise Guide. [↩]

I was interviewed a couple nights ago by Redmond Weissenberger, Director of the Ludwig von Mises Institute of Canada. We discussed the Apple v. Samsung patent decision and related matters. In Part 2, we discussed a variety of matters related to intellectual property, including Steve Jobs and Ayn Rand, Quentin Tarantino, China, J.K. Rowling and the Soviet Union.

For background on some of the issues discussed, see my posts:

• Intellectual Property Charts, Graphs, Graphics, Diagrams;
• Harvard Business Review: Who Cares If Samsung Copied Apple?;
• Forbes: Apple (Mostly) Isn’t to Blame for the Patent Mess;
• Doug French: From Innovation to Rent Seeking;
• Apple Secures Win Against Motorola Over ‘Slide-to-Unlock’ Patent;
• Nortel Patents Sold for $4.5 Billion to Consortium Which Includes Apple;
• Samsung, Apple continue patent dispute;
• Patent Trolls Cost The Economy Half A Trillion Dollars since 1990
• Apple accuses Motorola, Samsung of monopolizing markets with patents–or, you’ve got to be kidding me
• Apple vs. Microsoft: Which Benefits more from Intellectual Property?

I was interviewed a couple weeks ago by Redmond Weissenberger, Director of the Ludwig von Mises Institute of Canada. We had a long-ranging discussion on the issue of net neutrality, and we touched on other issues as well including various ways the state impinges on Internet freedom, such as in the name of IP (SOPA, ACTA), child pornography, terrorism, online gambling, and so on.

For background on some of the issues discussed, see my posts Net Neutrality Developments; Kinsella on This Week in Law discussing IP, Net Neutrality; Against Net Neutrality.

Now podcast at KOL205.

[TLS]

Not a surprise for someone whose political principles appear to stem from the criminal document crafted by white racist politicians, the “Constitution,” now lionized by confused individualists and libertarians. From the mis-named Center for Individual “Freedom,” or CFIF. Paul’s mistake is to assume something is or ought to be protected as property just because the word property is used to sell it. Black Americans were slaves because the law classified them as property. What the positive law says is obviously irrelevant to justice and right. The mentally limited commentator at this site says: “Senator Paul’s comments reveal that not only do some libertarians get IP wrong, but that all property needs protection and enforcement thereof.” Yes. All property needs protection. That does not mean informational patterns ought to be considered property. This is question-begging on a grand scale.

Senator Rand Paul Proclaims the Need to Protect Intellectual Property

Posted by Jeff MazzellaPrintEmail