Article I Section VIII (H) Copyrights & Patents

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo  (Original Message) Sent: 2/11/2003 3:42 PM

The Constitution of the Confederate States of America.

In framing the Constitution of the Confederate States, the authors adopted, with numerous elisions and additions, the language of the Constitution of the United States, and followed the same order of arrangement of articles and sections. The changes made in this adaptation of the old Constitution are here shown. The parts stricken out are enclosed in [ ] brackets, and the new matter added in framing the Confederate Constitution is printed in italics.

Article I

SECTION VIII.

The Congress shall have Power


(H)  To promote the progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
 

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 2/11/2003 3:45 PM
 
Attached is an article to consider regarding copyrights and, by implication, patents. Dennis
 
Misinterpreting Copyright

by Richard Stallman

http://www.gnu.org/philosophy/misinterpreting-copyright.html

------------------------------------------------------------------------

Something strange and dangerous is happening in copyright law. Under the U.S. Constitution, copyright exists to benefit users -- those who read books, listen to music, watch movies, or run software -- not for the sake of publishers or authors. Yet even as people tend increasingly to reject and disobey the copyright restrictions imposed on them "for their own benefit," the U.S. government is adding more restrictions, and trying to frighten the public into obedience with harsh new penalties.

How did copyright policies come to be diametrically opposed to their stated purpose? And how can we bring them back into alignment with that purpose? To understand, we should start by looking at the root of United States copyright law: the U.S. Constitution.

Copyright in the U.S. Constitution
 
When the U.S. Constitution was drafted, the idea that authors were entitled to a copyright monopoly was proposed -- and rejected. The founders of our country adopted a different premise, that copyright is not a natural right of authors, but an artificial concession made to them for the sake of progress. The Constitution gives permission for a copyright system with this paragraph (Article I, Section 8 ):

[Congress shall have the power] to promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
 
The Supreme Court has repeatedly affirmed that promoting progress means benefit for the users of copyrighted works. For example, in Fox Film v. Doyal, the court said,
 
The sole interest of the United States and the primary object in conferring the [copyright] monopoly lie in the general benefits derived by the public from the labors of authors.

This fundamental decision explains why copyright is not required by the Constitution, only permitted as an option -- and why it is supposed to last for "limited times." If copyright were a natural right, something that authors have because they deserve it, nothing could justify terminating this right after a certain period of time, any more than everyone's house should become public property after a certain lapse of time from its construction.

The "copyright bargain"

The copyright system works by providing privileges and thus benefits to publishers and authors; but it does not do this for their sake. Rather, it does this to modify their behavior: to provide an incentive for authors to write more and publish more. In effect, the government spends the public's natural rights, on the public's behalf, as part of a deal to bring the public more published works. Legal scholars call this concept the "copyright bargain." It is like a government purchase of a highway or an airplane using taxpayer's money, except that the government spends our freedom instead of our money.

But is the bargain as it exists actually a good deal for the public? Many alternative bargains are possible; which one is best? Every issue of copyright policy is part of this question. If we misunderstand the nature of the question, we will tend to decide the issues badly.

The Constitution authorizes granting copyright powers to authors. In practice, authors typically cede them to publishers; it is usually the publishers, not the authors, who exercise these powers and get most of the benefits, though authors may get a small portion. Thus it is usually the publishers that lobby to increase copyright powers. To better reflect the reality of copyright rather than the myth, this article refers to publishers rather than authors as the holders of copyright powers. It also refers to the users of copyrighted works as "readers," even though using them does not always mean reading, because "the users" is remote and abstract.

The first error: "striking a balance"

The copyright bargain places the public first: benefit for the reading public is an end in itself; benefits (if any) for publishers are just a means toward that end. Readers' interests and publishers' interests are qualitatively unequal in priority. The first step in misinterpreting the purpose of copyright is the elevation of the publishers to the same level of importance as the readers.
 
It is often said that U.S. copyright law is meant to "strike a balance" between the interests of publishers and readers. Those who cite this interpretation present it as a restatement of the basic position stated in the Constitution; in other words, it is supposed to be equivalent to the copyright bargain.

But the two interpretations are far from equivalent; they are different conceptually, and different in their implications. The balance concept assumes that the readers' and publishers' interests differ in importance only quantitatively, in "how much weight" we should give them, and in what actions they apply to. The term "stakeholders" is often used to frame the issue in this way; it assumes that all kinds of interest in a policy decision are equally important. This view rejects the qualitative distinction between the readers' and publishers' interests which is at the root of the government's participation in the copyright bargain.

The consequences of this alteration are far-reaching, because the great protection for the public in the copyright bargain -- the idea that copyright privileges can be justified only in the name of the readers, never in the name of the publishers -- is discarded by the "balance" interpretation. Since the interest of the publishers is regarded as an end in itself, it can justify copyright privileges; in other words, the "balance" concept says that privileges can be justified in the name of someone other than the public.

As a practical matter, the consequence of the "balance" concept is to reverse the burden of justification for changes in copyright law. The copyright bargain places the burden on the publishers to convince the readers to cede certain freedoms. The concept of balance reverses this burden, practically speaking, because there is generally no doubt that publishers will benefit from additional privilege. So unless harm to the readers can be proved, sufficient to "outweigh" this benefit, we are led to conclude that the publishers are entitled to almost any privilege they request.

Since the idea of "striking a balance" between publishers and readers denies the readers the primacy they are entitled to, we must reject it.

Balancing against what?

When the government buys something for the public, it acts on behalf of the public; its responsibility is to obtain the best possible deal -- best for the public, not for the other party in the agreement.

For example, when signing contracts with construction companies to build highways, the government aims to spend as little as possible of the public's money. Government agencies use competitive bidding to push the price down.

As a practical matter, the price cannot be zero, because contractors will not bid that low. Although not entitled to special consideration, they have the usual rights of citizens in a free society, including the right to refuse disadvantageous contracts; even the lowest bid will be high enough for some contractor to make money. So there is indeed a balance, of a kind. But it is not a deliberate balancing of two interests each with claim to special consideration. It is a balance between a public goal and market forces. The government tries to obtain for the taxpaying motorists the best deal they can get in the context of a free society and a free market.

In the copyright bargain, the government spends our freedom instead of our money. Freedom is more precious than money, so government's responsibility to spend our freedom wisely and frugally is even greater than its responsibility to spend our money thus. Governments must never put the publishers' interests on a par with the public's freedom.

Not "balance" but "trade-off"

The idea of balancing the readers' interests against the publishers' is the wrong way to judge copyright policy, but there are indeed two interests to be weighed: two interests of the readers. Readers have an interest in their own freedom in using published works; depending on circumstances, they may also have an interest in encouraging publication through some kind of incentive system.
 
The word "balance," in discussions of copyright, has come to stand as shorthand for the idea of "striking a balance" between the readers and the publishers. Therefore, to use the word "balance" in regard to the readers' two interests would be confusing -- we need another term.

In general, when one party has two goals that partly conflict, and cannot completely achieve both of them, we call this a "trade-off." Therefore, rather than speaking of "striking the right balance" between parties, we should speak of "finding the right trade-off between spending our freedom and keeping it."

The second error: maximizing one output

The second mistake in copyright policy consists of adopting the goal of maximizing -- not just increasing -- the number of published works. The erroneous concept of "striking a balance" elevated the publishers to parity with the readers; this second error places them far above the readers.

When we purchase something, we do not generally buy the whole quantity in stock or the most expensive model. Instead we conserve funds for other purchases, by buying only what we need of any particular good, and choosing a model of sufficient rather than highest quality. The principle of diminishing returns suggests that spending all our money on one particular good is likely to be inefficient allocation of resources; we generally choose to keep some money for another use.
 
Diminishing returns applies to copyright just as to any other purchase. The first freedoms we should trade away are those we miss the least, while giving the largest encouragement to publication. As we trade additional freedoms that cut closer to home, we find that each trade is a bigger sacrifice than the last, while bringing a smaller increment in literary activity. Well before the increment becomes zero, we may well say it is not worth its incremental price; we would then settle on a bargain whose overall result is to increase the amount of publication, but not to the utmost possible extent.
 
Accepting the goal of maximizing publication rejects all these wiser, more advantageous bargains in advance -- it dictates that the public must cede nearly all of its freedom to use published works, for just a little more publication.

The rhetoric of maximization

In practice, the goal of maximizing publication regardless of the cost to freedom is supported by widespread rhetoric which asserts that public copying is illegitimate, unfair, and intrinsically wrong. For instance, the publishers call people who copy "pirates," a smear term designed to equate sharing information with your neighbor with attacking a ship. (This smear term was formerly used by authors to describe publishers who found lawful ways to publish unauthorized editions; its modern use by the publishers is almost the reverse.) This rhetoric directly rejects the Constitutional basis for copyright, but presents itself as representing the unquestioned tradition of the American legal system.

The "pirate" rhetoric is typically accepted because it blankets the media so that few people realize that it is radical. It is effective because if copying by the public is fundamentally illegitimate, we can never object to the publishers' demand that we surrender our freedom to do so. In other words, when the public is challenged to show why publishers should not receive some additional power, the most important reason of all -- "We want to copy" -- is disqualified in advance.

This leaves no way to argue against increasing copyright power except using side issues. Hence opposition to stronger copyright powers today almost exclusively cites side issues, and never dares cite the freedom to distribute copies as a legitimate public value.

As a practical matter, the goal of maximization enables publishers to argue that "A certain practice is reducing our sales -- or we think it might -- so we presume it diminishes publication by some unknown amount, and therefore it should be prohibited." We are led to the outrageous conclusion that the public good is measured by publishers' sales: What's good for General Media is good for the U.S.A.

The third error: maximizing publishers' power

Once the publishers have obtained assent to the policy goal of maximizing publication output at any cost, their next step is to infer that this requires giving them the maximum possible powers -- making copyright cover every imaginable use of a work, or applying some other legal tool such as "shrink wrap" licenses to equivalent effect. This goal, which entails the abolition of "fair use" and the "right of first sale," is being pressed at every available level of government, from states of the U.S. to international bodies.

This step is erroneous because strict copyright rules obstruct the creation of useful new works. For instance, Shakespeare borrowed the plots of some of his plays from other plays published a few decades before, so if today's copyright law had been in effect, his plays would have been illegal.

Even if we wanted the highest possible rate of publication, regardless of cost to the public, maximizing publishers' power is the wrong way to get it. As a means of promoting progress, it is self-defeating.

The results of the three errors

The current trend in copyright legislation is to hand publishers broader powers for longer periods of time. The conceptual basis of copyright, as it emerges distorted from the series of errors, rarely offers a basis for saying no. Legislators give lip service to the idea that copyright serves the public, while in fact giving publishers whatever they ask for.

For example, here is what Senator Hatch said when introducing S. 483, a 1995 bill to increase the term of copyright by 20 years:

I believe we are now at such a point with respect to the question of whether the current term of copyright adequately protects the interests of authors and the related question of whether the term of protection continues to provide a sufficient incentive for the creation of new works of authorship.

This bill extended the copyright on already-published works written since the 1920s. This change was a giveaway to publishers with no possible benefit to the public, since there is no way to retroactively increase now the number of books published back then. Yet it cost the public a freedom that is meaningful today -- the freedom to redistribute books from that era.

The bill also extended the copyrights of works yet to be written. For works made for hire, copyright would last 95 years instead of the present 75 years. Theoretically this would increase the incentive to write new works; but any publisher that claims to need this extra incentive should substantiate the claim with projected balance sheets for the year 2075.

Needless to say, Congress did not question the publishers' arguments: a law extending copyright was enacted in 1998. It was called the Sonny Bono Copyright Term Extension Act, named after one of its sponsors who died earlier that year. His widow, who served the rest of his term, made this statement:

Actually, Sonny wanted copyright to last forever. I am informed by staff that such a change would violate the Constitution. I invite all of you to work with me to strengthen our copyright laws in all ways available to us. As you know, there is also Jack Valenti's proposal to last forever less one day. Perhaps the committee may look at that next Congress.

The Supreme Court has agreed to hear a case that seeks to overturn the law on the grounds that the retroactive extension fails to serve the Constitution's goal of promoting progress.
 
Another law, passed in 1996, made it a felony to make sufficiently many copies of any published work, even if you give them away to friends just to be nice. Previously this was not a crime in the U.S. at all.

An even worse law, the Digital Millennium Copyright Act (DMCA), was designed to bring back copy protection (which computer users detest) by making it a crime to break copy protection, or even publish information about how to break it. This law ought to be called the "Domination by Media Corporations Act" because it effectively offers publishers the chance to write their own copyright law. It says they can impose any restrictions whatsoever on the use of a work, and these restrictions take the force of law provided the work contains some sort of encryption or license manager to enforce them.

One of the arguments offered for this bill was that it would implement a recent treaty to increase copyright powers. The treaty was promulgated by the World Intellectual Property Organization, an organization dominated by copyright-holding and patent-holding interests, with the aid of pressure from the Clinton administration; since the treaty only increases copyright power, whether it serves the public interest in any country is doubtful. In any case, the bill went far beyond what the treaty required.

Libraries were a key source of opposition to this bill, especially to the aspects that block the forms of copying that are considered "fair use." How did the publishers respond? Former representative Pat Schroeder, now a lobbyist for the Association of American Publishers, said that the publishers "could not live with what [the libraries are] asking for." Since the libraries were asking only to preserve part of the status quo, one might respond by wondering how the publishers had survived until the present day.

Congressman Barney Frank, in a meeting with me and others who opposed this bill, showed how far the U.S. Constitution's view of copyright has been disregarded. He said that new powers, backed by criminal penalties, were needed urgently because the "movie industry is worried," as well as the "music industry" and other "industries." I asked him, "But is this in the public interest?" His response was telling: "Why are you talking about the public interest? These creative people don't have to give up their rights for the public interest!" The "industry" has been identified with the "creative people" it hires, copyright has been treated as its entitlement, and the Constitution has been turned upside down.

The DMCA was enacted in 1998. As enacted, it says that fair use remains nominally legitimate, but allows publishers to prohibit all software or hardware that you could practice it with. Effectively, fair use is prohibited.

Based on this law, the movie industry has imposed censorship on free software for reading and playing DVDs, and even on the information about how to read them. In April 2001, Professor Edward Felten of Princeton University was intimidated by lawsuit threats from the Recording Industry Association of America (RIAA) into withdrawing a scientific paper stating what he had learned about a proposed encryption system for restricting access to recorded music.

We are also beginning to see e-books that take away many of readers' traditional freedoms -- for instance, the freedom to lend a book to your friend, to sell it to a used book store, to borrow it from a library, to buy it without giving your name to a corporate data bank, even the freedom to read it twice. Encrypted e-books generally restrict all these activities -- you can read them only with special secret software designed to restrict you.

I will never to buy one of these encrypted, restricted e-books, and I hope you will reject them too. If an e-book doesn't give you the same freedoms as a traditional paper book, don't accept it!

Anyone independently releasing software that can read restricted e-books risks prosecution. A Russian programmer, Dmitry Sklyarov, was arrested in 2001 while visiting the U.S. to speak at a conference, because he had written such a program in Russia, where it was lawful to do so. Now Russia is preparing a law to prohibit it too, and the European Union recently adopted one.

Mass-market e-books have been a commercial failure so far, but not because readers chose to defend their freedom; they were unattractive for other reasons, such as that computer display screens are not easy surfaces to read from. We can't rely on this happy accident to protect us in the long term; the next attempt to promote e-books will use "electronic paper" -- book-like objects into which an encrypted, restricted e-book can be downloaded. If this paper-like surface proves more appealing than today's display screens, we will have to defend our freedom in order to keep it. Meanwhile, e-books are making inroads in niches: NYU and other dental schools require students to buy their textbooks in the form of restricted e-books.

The media companies are not satisfied yet. In 2001, Disney-funded Senator Hollings proposed a bill called the "Security Systems Standards and Certification Act" (SSSCA)[1], which would require all computers (and other digital recording and playback devices) to have government-mandated copy restriction systems. That is their ultimate goal, but the first item on their agenda is to prohibit any equipment that can tune digital HDTV unless it is designed to be impossible for the public to "tamper with" (i.e., modify for their own purposes). Since free software is software that users can modify, we face here for the first time a proposed law that explicitly prohibits free software for a certain job. Prohibition of other jobs will surely follow. If the FCC adopts this rule, existing free software such as GNU Radio would be censored.

To block these bills and rules requires political action.[2]

Finding the right bargain

What is the proper way to decide copyright policy? If copyright is a bargain made on behalf of the public, it should serve the public interest above all. The government's duty when selling the public's freedom is to sell only what it must, and sell it as dearly as possible. At the very least, we should pare back the extent of copyright as much as possible while maintaining a comparable level of publication.

Since we cannot find this minimum price in freedom through competitive bidding, as we do for construction projects, how can we find it?

One possible method is to reduce copyright privileges in stages, and observe the results. By seeing if and when measurable diminutions in publication occur, we will learn how much copyright power is really necessary to achieve the public's purposes. We must judge this by actual observation, not by what publishers say will happen, because they have every incentive to make exaggerated predictions of doom if their powers are reduced in any way.

Copyright policy includes several independent dimensions, which can be adjusted separately. After we find the necessary minimum for one policy dimension, it may still be possible to reduce other dimensions of copyright while maintaining the desired publication level.
 
One important dimension of copyright is its duration, which is now typically on the order of a century. Reducing the monopoly on copying to ten years, starting from the date when a work is published, would be a good first step. Another aspect of copyright, which covers the making of derivative works, could continue for a longer period.

Why count from the date of publication? Because copyright on unpublished works does not directly limit readers' freedom; whether we are free to copy a work is moot when we do not have copies. So giving authors a longer time to get a work published does no harm. Authors (who generally do own the copyright prior to publication) will rarely choose to delay publication just to push back the end of the copyright term.

Why ten years? Because that is a safe proposal; we can be confident on practical grounds that this reduction would have little impact on the overall viability of publishing today. In most media and genres, successful works are very profitable in just a few years, and even successful works are usually out of print well before ten. Even for reference works, whose useful life may be many decades, ten-year copyright should suffice: updated editions are issued regularly, and many readers will buy the copyrighted current edition rather than copy a ten-year-old public domain version.
 
Ten years may still be longer than necessary; once things settle down, we could try a further reduction to tune the system. At a panel on copyright at a literary convention, where I proposed the ten-year term, a noted fantasy author sitting beside me objected vehemently, saying that anything beyond five years was intolerable.

But we don't have to apply the same time span to all kinds of works. Maintaining the utmost uniformity of copyright policy is not crucial to the public interest, and copyright law already has many exceptions for specific uses and media. It would be foolish to pay for every highway project at the rates necessary for the most difficult projects in the most expensive regions of the country; it is equally foolish to "pay" for all kinds of art with the greatest price in freedom that we find necessary for any one kind.

So perhaps novels, dictionaries, computer programs, songs, symphonies, and movies should have different durations of copyright, so that we can reduce the duration for each kind of work to what is necessary for many such works to be published. Perhaps movies over one hour long could have a twenty-year copyright, because of the expense of producing them. In my own field, computer programming, three years should suffice, because product cycles are even shorter than that.

Another dimension of copyright policy is the extent of fair use: some ways of reproducing all or part of a published work that are legally permitted even though it is copyrighted. The natural first step in reducing this dimension of copyright power is to permit occasional private small-quantity noncommercial copying and distribution among individuals. This would eliminate the intrusion of the copyright police into people's private lives, but would probably have little effect on the sales of published works. (It may be necessary to take other legal steps to ensure that shrink-wrap licenses cannot be used to substitute for copyright in restricting such copying.) The experience of Napster shows that we should also permit noncommercial verbatim redistribution to the general public -- when so many of the public want to copy and share, and find it so useful, only draconian measures will stop them, and the public deserves to get what it wants.

For novels, and in general for works that are used for entertainment, noncommercial verbatim redistribution may be sufficient freedom for the readers. Computer programs, being used for functional purposes (to get jobs done), call for additional freedoms beyond that, including the freedom to publish an improved version. See "Free Software Definition," in this book, for an explanation of the freedoms that software users should have. But it may be an acceptable compromise for these freedoms to be universally available only after a delay of two or three years from the program's publication.

Changes like these could bring copyright into line with the public's wish to use digital technology to copy. Publishers will no doubt find these proposals "unbalanced"; they may threaten to take their marbles and go home, but they won't really do it, because the game will remain profitable and it will be the only game in town.

As we consider reductions in copyright power, we must make sure media companies do not simply replace it with end-user license agreements. It would be necessary to prohibit the use of contracts to apply restrictions on copying that go beyond those of copyright. Such limitations on what mass-market nonnegotiated contracts can require are a standard part of the U.S. legal system.

A personal note

I am a software designer, not a legal scholar. I've become concerned with copyright issues because there's no avoiding them in the world of computer networks [3]. As a user of computers and networks for thirty years, I value the freedoms that we have lost, and the ones we may lose next. As an author, I can reject the romantic mystique of the author as semidivine creator, often cited by publishers to justify increased copyright powers for authors, which authors will then sign away to publishers.

Most of this article consists of facts and reasoning that you can check, and proposals on which you can form your own opinions. But I ask you to accept one thing on my word alone: that authors like me don't deserve special power over you. If you wish to reward me further for the software or books I have written, I would gratefully accept a check -- but please don't surrender your freedom in my name.

------------------------------------------------------------------------

Footnotes

[1] Since renamed to the unpronounceable CBDTPA, for which a good mnemonic is, "Consume, But Don't Try Programming Anything," but it really stands for the "Consumer Broadband and Digital Television Promotion Act."

[2] If you would like to help, I recommend the Web sites digitalspeech.org and www.eff.org.

[3] The Internet being the largest of the world's computer networks.

------------------------------------------------------------------------

This essay is available in Free Software, Free Society: The Selected Essays
of Richard M. Stallman.

------------------------------------------------------------------------
Verbatim copying and distribution of this entire article is permitted without royalty in any medium provided this notice is preserved.

Updated: $Date: 2002/12/05 21:04:42 $ $Author: brett $
------------------------------------------------------------------------

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 2/11/2003 3:46 PM
 
Here is a link to an article germaine to the issue of patents and copyrights.
 
The Growth of Intellectual Property:
A History of the Ownership of Ideas in the United States

William W. Fisher III

http://eon.law.harvard.edu/property99/history.html

"How did it come to pass that, in the United States, one can now own the décor of a restaurant, and lawyers argue seriously about exclusive rights to athletic moves? This essay seeks to answer those questions."

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 7/8/2003 4:07 PM

Copied from the General message board.
From: EdRonin Sent: 7/7/2003 2:34 PM

Dennis:

I read the article you posted about copyrights. Am I correct in gathering you agree with the article's stance that the intent of copyright and patent law is to benefit society, and not to benefit the writer/inventor? That exclusivities are "granted" to the creators as a secondary benefit, and not as a right derived from his right to live, take life affirming actions, pusue life affirming values and to keep those values?

Social benefits of any kind, are secondary.

Ed
 
 

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 7/8/2003 4:09 PM

Copied from the General message board.
From: DennisWilson Sent: 7/8/2003 3:06 PM

I neither endorse nor oppose the issues in the article (at this time). 
 
I posted the article under Article I Section 8 (H) Copyrights & Patents to call attention to some current proposals for how this section of the Constitution might be altered and the possible consequences of the proposed changes.
 
The purpose of the discussion threads in the New Constitution message board is to examine such issues and hopefully come to some rational conclusion as to how a particular part of a New Constitution should be worded.
 
Your views are explicitly solicited. 
 

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 12/25/2007 11:14 PM
 
http://www.mises.org/story/1763

There's No Such Thing As a Free Patent


By N. Stephan Kinsella


Posted on 3/7/2005



The conventional defense of the patent system is that it is essential in order to stimulate creativity.[1] For example, in "Don't Believe the Hype" (Feb. 2005, IP Law & Business), patent attorneys John Benassi & Noel Gillespie conclude that our patent laws continue to "foster innovation." This is so even though many observers believe our patent system is "out of control and that overworked patent examiners are issuing overly broad patents."


Costs Must Be Considered


But the benefits that flow from the patent system are only half the story, since the system also comes with costs. Even if we are going to adopt a wealth-maximization criterion (which is, admittedly, problematic),[2] 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, suggest replacing the patent system with a federal commission that gives taxpayer-funded rewards to inventors deemed worthy. "Under a reward system, innovators are paid for innovations directly by the government (possibly on the basis of sales), and innovations pass immediately into the public domain. Thus, reward systems engender incentives to innovate without creating the monopoly power of intellectual property rights."[3]


Other activists, from the free culture movement, cloak a radical agenda beneath their innocuous idea that 'information wants to be free.' They demand that nations (and even individual U.S. states) pass legislation requiring purchase of open-source software. They are uncomfortable with corporations directing investment in research and development and owning their innovations. . . . The activists thus want to radically change how pharmaceutical innovation is accomplished. They propose that governments should nationalize intellectual property, levy new taxes to fund R&D, and then incentivize R&D through prizes administered by new government-sponsored enterprises or, even better, international nongovernmental organizations (NGOs) staffed by technocrats unaccountable to voters.[ 4]


Transferring money from taxpayers to inventors would no doubt "foster innovation," but would the extra innovation thereby stimulated be worth the cost?


Patent rights could also be strengthened in order to provide an even greater stimulus for innovation. The patent term could be extended to 100 years, for example (some IP proponents, such as Galambos, actually favor a perpetual patent term).[5] 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, awarded now only in egregious cases of "willful infringement," could be awarded routinely. The scope of coverage of patent claims could be legislatively broadened to cover a greater range of "equivalents." Each of these changes, viewed in a vacuum, makes patents more valuable and thus establishes additional incentives to invest in R&D. Why not adopt all these innovation-encouraging measures, and more? Where is the stopping point?


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. As Landes and Posner—deans of the law and economics approach—point out, innovators themselves engage in a similar calculus: "For a new work to be created the expected return . . . must exceed the expected costs."[6]

In other words, the theory is that the innovator will engage in innovating activity only when he believes he can reap a profit. And the very point of a patent system is to make it easier for inventors to earn a profit, so that more of them will invest time and resources trying to innovate.

Likewise, the entire patent system's "gains"—the extra wealth or innovation it stimulates—needs to be clearly greater than the costs of the system if the patent system is to be a net benefit to society. How we are to go about measuring such costs against the benefits, and include the opportunity costs of time, is a crucially important issue. But if one is going to advocate a system on the grounds that it is beneficial, one must attempt to account for costs as well.


What Costs Are There?


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 when evaluating whether to invest in a company. But this is because, in part, patent 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.

The authors also acknowledge that, "Unfortunately, there are companies that make no products and whose only business is to acquire patents in order to enforce them against large industry segments." This may be "unfortunate" in the authors' eyes, but it is a predictable, unavoidable consequence of having a patent system. Such patent holders can no more be said to be "abusing" their rights than are other patent holders. In any event, this is also apparently a "cost" of the patent system, at least according to the authors.


Other costs can also be noted. Companies pay patent attorney salaries, patent filing and maintenance fees, and significant litigation costs (it can easily cost over a million dollars to defend from a patent infringement lawsuit, even if you win), as well as higher insurance premiums due to the risk of being involved in patent infringement litigation. Some patents that should not have been granted, and others whose coverage is ambiguous, plus the unknown existence of some hidden patent lurking in the thousands granted to date, pose significant uncertainty to companies, especially high-tech start-up companies who cannot afford to risk a patent infringement lawsuit from a more established company. They might not even be able to afford to pay tens of thousands of dollars to patent attorneys to examine and issue an opinion regarding every potential patent issue that arises. So the company either forges ahead, risking a lawsuit, or decides to avoid making the product out of fear of 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.[7] Another cost arises from the fact that 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.[8] As Rothbard noted,


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.[9]


Plant, in his excellent paper, notes several costs of the patent system that are typically ignored by advocates of it. For example, he relates (p. 39) the theory of one I.K. Brunel who maintained that patent laws induce people to spend more time and effort trying to come up with patentable inventions, and relatively less time on making "improvements, and refinements of a non-patentable kind," thus wasting resources--and actually slowing down development because the workers are engaging not in the types of innovations they need for their product development but rather in things that satisfy the patent office.

As Julio Cole points out in his superb article:


Apart from the considerable administrative costs and legal expenses associated with patent litigation, perhaps the most obvious economic cost of a patent system is that, in order to create incentives for the production of inventions that otherwise would not have been developed, patents create monopoly privileges over inventions that would have been developed even without the incentive. . . . The existence of patents also induces wasteful expenditure of resources by competitors trying to 'invent around the patent,' i.e., to develop competing products that are sufficiently differentiated so as not to infringe on an existing patent. [p. 89 & 92, footnotes omitted]


Cole also discusses other costs of the patent system, including the way that patents can actually hinder technical progress, such as in the case of Henry Ford and the Wright brothers. Cole also relates (p. 91) that "For nearly a quarter of a century . . . James Watt was able to prevent other engineers from constructing new types of steam engine, even under license from himself." At least one historian argues that the Industrial Revolution did not really take off until 1785, the year Watt's patent expired."


Undeniably, the very existence of a patent imposes significant costs on society.


Conclusion


To note that there are costs is not to claim that the patent system costs too much. In fact, there is no real way to accurately know what these costs are, which is why we should leave it to the market and to entrepreneurs themselves to assess and forecast costs and benefits, and pay the price or reap the reward for their judgment. A pure market in this case would be one that does not award a monopoly privilege to a person or institution merely because a paper is filed with the government.


In any event, 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 have not conclusively established that the benefits of the patent system outweigh its costs.[10] It is just assumed. It should not be.


____________________________

Stephan Kinsella, a registered patent attorney 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. Libertarian website:www.StephanKinsella.com; legal website: www.KinsellaLaw.com. Post comments on the Blog.

____________________________

1  The Constitution, Art. I, § 8, is based on such reasoning, in granting Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Another goal of the patent system is to disseminate knowledge that would otherwise be kept secret. The idea is that, instead of keeping an invention as a trade secret, the inventor, in exchange for the limited monopoly on the invention, makes the information about it public in a published patent, that others can learn from, even if they can't yet use the patented device or process.


2 See, e.g., the section on "Utilitarianism" in N. Stephan Kinsella, In Defense of Napster and Against the Second Homesteading Rule, September 4, 2000, LewRockwell.com; N. Stephan Kinsella, Against Intellectual Property, Journal of Libertarian Studies, Volume 15, no. 2 (Spring 2001): 1–53, at pp. 12–14.


3 See Steven Shavell & Tanguy Van Ypersele, Rewards Versus Intellectual Property Rights, Journal of Law & Economics, vol. XLIV (October 2001), p. 525.


4 Tom Giovanetti, "Intellectual property and its discontents," Washington Times, 14 Oct. 2004.

5 See the discussion of Galambos in Kinsella, Against Intellectual Property.

6 William M. Landes & Richard A. Posner, "An Economic Analysis of Copyright Law," J. Legal Stud. (June 1989) (emphasis added).

7 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.

8 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).

9 Murray N. Rothbard, Man, Economy, and State, scholar's ed'n (Auburn: Mises Institute, 2004), ch. 10, sec. 7.

10 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); Padraig Dixon and Christine Greenhalgh, The Economics of Intellectual Property: A Review to Identify Themes for Future Research (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). Other IP resources are found here.
 

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 12/26/2007 8:47 AM

http://blog.mises.org/blog/archives/001771.asp
 


March 29, 2004
Intellectual Property at Mises.org
Stephan Kinsella

In response to requests from readers, listed below are links to several IP-related articles, most available on Mises.org:

Property/Rights-based Arguments

• Against Intellectual Property, Spring 2001, Vol. 15, no. 2 Journal of Libertarian Studies, Stephan Kinsella
  
• In Defense of Napster and Against the Second Homesteading Rule, September 4, 2000, LewRockwell.com, Stephan Kinsella (summary version of some of the arguments presented in "Against Intellectual Property")
  
• Murray N. Rothbard, Man, Economy, and State and Power and Market, Scholars Edition, liv, 745-54, 1133-38, 1181-86
  
• Murray N. Rothbard, The Ethics of Liberty, pp. 123�24.
  

Utilitarian Considerations

• Patents and Copyrights: Do the Benefits Exceed the Costs?, Fall 2001, Vol. 15 Num. 4 Journal of Libertarian Studies, Julio H. Cole
  
• On the Abuse of Patents as Economic Indicators, Winter 1998, Quarterly Journal of Austrian Economics, Pierre Desrochers
  
• Ludwig von Mises, Human Action 3rd rev. ed. Chicago: Henry Regnery (1966), chap. 23, section 6, pp. 661�62; see also pp. 128, 364
  
• George Reisman, Capitalism, pp. 388-89 & 417-20; also 40, 96, 187, 216, 233.
  

Mises Daily

• Rethinking Patent Law, July 18, 2000, Mises.org, Gene Callahan,
  
• Patent Wrongs, March 29, 2001, Mises.org, Ilana Mercer
  
• Cipro Shortage: An Invented Scarcity, October 25, 2001, Mises.org, Ilana Mercer
  

Further reading

• Links to other IP articles, pro and con, can be found at www.StephanKinsella.com/ip

Posted by Stephan Kinsella at March 29, 2004 10:53 AM

Trackback Pings
TrackBack URL for this entry:
http://blog.mises.org/mt/trackback/1706

Comments
Thanks for bringing all this material together in one place. I'll be linking to some of the articles on the "Recommended Reading" section of my site.

Posted by: Kevin Carson at March 29, 2004 02:00 PM

What a coincidence! I've an essay on Patents and Copyrights due in two weeks. Thanks.

Capitalism also has a section on intellectual property.

Posted by: Alastair Jardine at March 29, 2004 03:13 PM

Stephan, can I infer from these articles that
someone has the right to link his website to,
say, the LRC blog?

Dan


Posted by: Dan Mahoney at March 30, 2004 07:12 AM

Im having difficulty understanding how one can believe that intellectual property is not something that can be owned, and at the same time believe that plagiarism is immoral.

Can anyone help me with the moral difference between the two?

Posted by: Dan Simonson at March 30, 2004 02:17 PM

The difference between not recognizing expression as property and plagiarism is that a plagiarist misrepresents himself to consumers, constituting a fraud.

The plagiarist does not harm the original creator of a work (since he had no right to income or value), so someone who is plagiarized has as much recourse to compensation as someone whose reputation is slandered or whose stock is brought down by FUD: none.

However, someone who consumes intellectual resources on the condition that the person selling it is the actual creator of that resourse is defrauded when that is not the case.

So, in short, not recognizing copyrights is a matter of natural rights superceding monopoly rights, while plagiarism is a matter of defrauding a consumer. Copyright 'violators' seldom misrepresent the work as their own; in fact, they would be better able to distribute by making sure the real producer is known to the consumer (i.e., no one is interested in "Man, the Economy, and State" by Anthony Bongiovanni; but the same book will sell well under its correct author).

Duodecimal March 30, 2004 at 5:01 pm

    The difference between not recognizing expression as property and plagiarism is that a plagiarist misrepresents himself to consumers, constituting a fraud.

    The plagiarist does not harm the original creator of a work (since he had no right to income or value), so someone who is plagiarized has as much recourse to compensation as someone whose reputation is slandered or whose stock is brought down by FUD: none.

    However, someone who consumes intellectual resources on the condition that the person selling it is the actual creator of that resourse is defrauded when that is not the case.

    So, in short, not recognizing copyrights is a matter of natural rights superceding monopoly rights, while plagiarism is a matter of defrauding a consumer. Copyright ‘violators’ seldom misrepresent the work as their own; in fact, they would be better able to distribute by making sure the real producer is known to the consumer (i.e., no one is interested in “Man, the Economy, and State” by Anthony Bongiovanni; but the same book will sell well under its correct author).
---Comment removed 2013-02-11 because the commenter is a belligerent lawyer concerned with "respect" for his "reputation"....dlw---
Artisan June 7, 2006 at 4:47 pm

    I guess you’ll have to find the answer for yourself, by reading the opinion of copyright defendants on this site too (that is not so easy though as they are … scarce). The rational is important not the quantity of voices on one or the other side though.

    Rothbard was in favour of copyright.

    I consider copyright to be genuine too, yet I’m rather dubious about patent justification for certain reasons…

    It’s a long story.

Paul Edwards June 7, 2006 at 6:32 pm

    Thomas,

    “Does being an advocate of Intellectual Property diqualify (curtly) one as an Austrian?”

    Nope. Not even Austrians are perfect. (That’s humor).

    But, no it doesn’t disqualify you. As Artisan mentioned, Rothbard advocated copyright, and he was and is one of the most prominent Austrians ever, and so I’m sure many or at lease some other prominent Austrians advocate it as well, although it just occurred to me that, aside from George Reisman (I think), I do not know which ones that would be.

    I think Kinsella is the most outspoken of the Austrians against IP, and I think he takes first place for notoriety outside of the Mises blogs for doing so. You’ll see a lot of discussion on the topic on this site, on threads usually started by him.

Steve July 16, 2006 at 8:27 am

    Gee, I wonder if Isaac Newton should’ve applied for a patent/copyright (there’s a difference?) on his “Laws of Motion” and his “Law of Gravity”. How dare all those scientists out there use HIS Laws for their own work? Methinks the Newton estate will be owed billions after an appropriate lawsuit.

    When a scientist discovers a new principle, it’s HIS/HER “intellectual property” don’tcha know?

Sandton Property March 17, 2011 at 4:55 am

    @Paul Edwards lol at the perfect part. and i agree with you on Kinsella is the most out spoken one.


 

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 12/26/2007 1:17 PM

THIS absurdity is where government monopolistic policies ALWAYS culminate:

http://news.bbc.co.uk/1/hi/world/middle_east/7160057.stm
 
Egypt 'to copyright antiquities' 
 
 
"Commercial use" of the sphinx will be controlled under the law

Egypt's MPs are expected to pass a law requiring royalties be paid whenever copies are made of museum pieces or ancient monuments such as the pyramids.

Zahi Hawass, who chairs Egypt's Supreme Council of Antiquities, told the BBC the law would apply in all countries.

The money was needed to maintain thousands of pharaonic sites, he said.

Correspondents say the law will deal a blow to themed resorts across the world where large-scale copies of Egyptian artefacts are a crowd-puller.

Mr Hawass said the law would apply to full-scale replicas of any object in any museum in Egypt.

 
Las Vegas' Luxor complex mimics Egyptian monuments

"Commercial use" of ancient monuments like the pyramids or the sphinx would also be controlled, he said.

"Even if it is for private use, they must have permission from the Egyptian government," he added.

But he said the law would not stop local and international artists reproducing monuments as long as they were not exact replicas.

The Luxor hotel in the US city of Las Vegas would also not be affected because it was not an exact copy of a pyramid and its interior was completely different, Mr Hawass told AFP news agency.

But he said claims by the hotel that it was "the only pyramid-shaped building in the world" could no longer be made.

The announcement came two days after an Egyptian newspaper called on the hotel to pay a share of its profits to the central Egyptian city of Luxor, which administers the ancient Valley of the Kings burial site.
 

[DennisLeeWilson]

From: DennisLeeWilson-Ariz-Wyo Sent: 12/30/2007 7:32 PM
 
In message 5 above on 7/8/2003, I stated: 

• I neither endorse nor oppose the issues in the article (at this time). 
   
  I posted the article under Article I Section 8 (H) Copyrights & Patents to call attention to some current proposals for how this section of the Constitution might be altered and the possible consequences of the proposed changes.
   
  The purpose of the discussion threads in the New Constitution message board is to examine such issues and hopefully come to some rational conclusion as to how a particular part of a New Constitution should be worded.
   
  Your views are explicitly solicited.

This is no longer the case. After thoroughly reading the views of N Stephen Kinsella (not only the article copied here, but as much as I could find) and his critics, I reject the idea of a government granted/enforced monopoly on what is generally (mis)called Intellectual "Property".
 
Your views are still explicitly solicited.
 
Dennis
 

[DennisLeeWilson]

Against Intellectual Monopoly -- A Book that Changes Everything
http://dennisleewilson.com/simplemachinesforum/index.php?topic=325.0

Butter gets thinner as it spreads, IDEAS GET THICKER!

"It is a long and dangerous jump from the assertion that innovators deserve compensation for their efforts to the conclusion that patents and copyrights, that is monopoly, are the best or the only way of providing that reward…"

See Also...
James Watt: Monopolist by Michele Boldrin and David K. Levine
See also: http://dennisleewilson.com/simplemachinesforum/index.php?topic=326.0

A Book that Changes Everything
Daily Article by Jeffrey A. Tucker | Posted on 1/16/2009

At a taped video interview in my office, before the crew would start the camera, a man had to remove my Picasso prints from the wall. The prints are probably under copyright, they said.

But the guy who drew them died 30 years ago. Besides, they are mine.

Doesn't matter. They have to go.

What about the poor fellow who painted the wall behind the prints? Why doesn't he have a copyright? If I scrape off the paint, there is the drywall and its creator. Behind the drywall are the boards, which are surely proprietary too. To avoid the "intellectual-property" thicket, maybe we have to sit in an open field; but there is the problem of the guy who last mowed the grass. Then there is the inventor of the grass to consider.

Is there something wrong with this picture?

The worldly-wise say no. This is just the way things are. It is for us not to question but to obey. So it is with all despotisms in human history. They become so woven into the fabric of daily life that absurdities are no longer questioned. Only a handful of daring people are capable of thinking along completely different lines. But when they do, the earth beneath our feet moves.

Such is the case with Against Intellectual Monopoly (Cambridge University Press, 2008) by Michele Boldrin and David Levine, two daring professors of economics at Washington University in St. Louis. They have written a book that is likely to rock your world, as it has mine. (It is also posted on their site with the permission on the publisher.)

With piracy and struggles over intellectual property in the news daily, it is time to wonder about this issue, its relationship to freedom, property rights, and efficiency. You have to think seriously about where you stand.

This is not one of those no-brainer issues for libertarians, like minimum wage or price controls. The problem is complicated, and solving it requires careful thought. But it is essential that every person do the thinking, and there is no better tool for breaking the intellectual gridlock than this book.

The issue is impossible to escape, from the grave warnings you get from the FBI at the beginning of "your" DVD to the posters warning kids never to download a song to the outrageous settlements transferring billions from firm to firm. It even affects the outrageous prices you pay for medicine at the drug store. The issue of "intellectual property" is a ubiquitous part of modern life.

Some of the police-state tactics used to enforce IP have to make anyone with a conscience squeamish. You have surely wondered about the right and wrong of all this, but, if you are like most people, you figure that copyrights and patents are consistent with the justice that comes from giving the innovator his due. In principle they seem fine, even if the law might be in need of reform.

The first I'd ever thought critically about issues of intellectual property was in reading about it in the abstract many years ago. The Austrian position has traditionally favored copyrights on the same grounds it has favored property rights in general, but has tended to oppose patents on grounds that they are government grants of monopolistic privilege. Machlup, Mises, and Rothbard — as well as Stigler, Plant, and Penrose — have discussed the issue but not at great length and with varying levels of cautious skepticism.

That changed in 2001 with the publication of Stephan Kinsella's article and now monograph "Against Intellectual Property." He made a strongly theoretical argument that ideas are not scarce, do not require rationing, are not diminished by their dissemination, and so cannot really be called property. All IP is unjust, he wrote. It is inconsistent with libertarian ethics and contrary to a free market. He favors the complete repeal of all intellectual-property laws.



The argument initially struck me as crazy on its face. As I considered it further, my own view gradually changed: it's not crazy, I thought, but it is still pie-in-the-sky theorizing that has nothing to do with reality. Kinsella's article appeared just before the explosive public interest in this subject. The patent regime has in the meantime gone completely wild, with nearly 200,000 patents issued every year in the United States, and half a million more in other countries — with 6.1 million patents in effect worldwide — and large firms collecting stockpiles of them.

And the copyright issue has led to a massive struggle between generations: young people live by "pirating" music, movies, software, whereas the old consider this practice to presage the end of the capitalist system as we know it. The music industry has spent billions trying to contain the problem and only ended up engendering consumer embitterment and terrible public relations.

Kinsella's article continued to haunt me personally. It took about six years or so, but I finally worked through all the theoretical problems and came to embrace his view, so you might say that I was predisposed to hear what these authors have to say. What I hadn't realized until encountering the Boldrin/Levine book was just how far-reaching and radical the implications of a detailed look at IP really is.

It is not just a matter of deciding what you believe from a theoretical or political perspective. It is not just a matter of thinking that "pirates" are not really violating moral law. To fully absorb what these authors say changes the way you look at technology, at history, at the ebbs and flows of economic development, and even who the good guys and bad guys are in the history of civilization.

Kinsella deals expertly with the theoretical aspects, while Against Intellectual Monopoly doesn't really go into the theory at great length. What this amazing book deals with is the real-world practice of intellectual-property regulation now and in history. I can make a personal guarantee that not a single objection you think you have to their thesis goes unaddressed in these pages. Their case is like the sun that melts all snow for many miles in all directions.

The implications are utterly shattering, and every day I've turned the pages in the Boldrin/Levine book I've felt that sense of intellectual stimulation that comes along rarely in life — that sense that makes you want to grab anyone off the street and tell that person what this book says. It helps you understand many things that had previously been confusing. The emergent clarity that comes from having absorbed this work is akin to what it must feel like to hear or see for the first time. If they are right, the implications are astonishing.

Their main thesis is a seemingly simple one. Copyright and patents are not part of the natural competitive order. They are products of positive law and legislation, imposed at the behest of market winners as a means of excluding competition. They are government grants of monopolies, and, as neoclassical economists with a promarket disposition, the authors are against monopoly because it raises prices, generates economic stagnation, inhibits innovation, robs consumers, and rewards special interests.

What they have done is apply this conventional model of monopoly to one of the most long-lasting, old-world forms of mercantilist/monopolistic institutional privilege, a surviving form of mercantilist privilege of the 16th century. IP is like a dam in the river of development, or perhaps very large boulders that impede the flow.

They too favor its total repeal but their case goes far beyond the theoretical. They convince you that radical, far-reaching, uncompromising, revolutionary reform is essential to our social well-being now and in the future.

The results are dazzling and utterly persuasive. I personally dare anyone who thinks that he believes in patent or copyright to read this book and deal with it. For this reason, I'm thrilled that the Mises Institute is now carrying the book to give it the broadest possible exposure.

I'm not sure what aspect of their case is the most powerful. Here are just a few examples:

They show that people like James Watt, Eli Whitney, and the Wright Brothers are not heroes of innovation, as legend has it, but rent-seeking mercantilists who dramatically set back the cause of technological development. These people spent vast resources prohibiting third parties from improving "their" product and making it available at a cheaper price. Instead of promoting innovation and profitability, they actually stopped it, even at the cost of their own business dreams.

The authors show that every great period of innovation in human history has taken place in the absence of intellectual property, and that every thicket of IP has ended up stagnating the industries to which they apply. Think of the early years of the web, in which open-source technology inspired breakneck development, until patents and copyright were imposed with the resulting cartelization of operating systems. Even today, the greatest innovations in digital communications come from the highly profitable open-source movement.

It is impossible to develop software without running into IP problems, and the largest players are living off IP and not innovation. Meanwhile, the most profitable and most innovative sector of the web, the porn sector, has no access to courts and IP enforcement because of the stigma associated with it. It is not an accident that absence of IP coincides with growth and innovation. The connection is causal.

And look at the industries that do not have IP access, such as clothing design and architecture and perfume. They are huge and fast moving and fabulous. First movers still make the big bucks, without coercing competition. Boldrin and Levine further speculate that IP is behind one of the great puzzles of the last millennium: stagnation in classical music. The sector is seriously burdened and tethered by IP.

Other mysteries are answered. Why no musical composition of note in England after 1750? England had the world's most strict copyright laws. Why was English literature so popular in the United States in the 19th-century schoolrooms? It could be imported without copyright restriction — and therefore sold cheaply — whereas American authors used IP and limited their market. And consider the irony that Disney, which relies heavily on IP, got its start and makes it largest profits by retelling public-domain stories!

Examples like this abound. One wonders if the modern history of literature and art needs to be completely rewritten. Examples will occur to you that are not discussed in the book, such as fan fiction. It is technically illegal, so far as anyone can tell, to take a copyrighted character and tell a story about him even if the story is original. And yet Harry Potter fan-fiction sites enjoy tens of millions of hits per month. One hosts 5,000 pieces of fan fiction, some as long as 1,000 pages. Enforcement has been spotty and unpredictable.

And yes, the book covers the poster child of the IP world: pharmaceuticals. They muster plenty of evidence that IP here does nothing to promote innovation and widespread availability and is largely responsible for the egregiously high prices of drugs that are driving the system toward socialization.

The authors explore the very strange tendency of capitalists to misdiagnose the source of their profits in a world of IP, spending far more on beating up pirates than they would have earned in a free market. They further demonstrate that IP is a form of exploitation and expropriation that is gravely dangerous for civilization itself.

In short, they have taken what might seem to be merely a geeky concern and moved it to the center of discussion over economic development itself.

What about the far-flung conclusion that IP should be repealed? The authors take away your fears. The development of IP came about in the 16th century as a mechanism for governments to enforce political control and punish dissenters. The cause of this "property right" was then taken over by individuals in the 18th and 19th century as part of the liberal revolution for individual rights. In the 20th century, it was transferred again, to corporations who become the effective owners through copyright. The creators no longer own anything, and let themselves be beaten and abused by their own publishers and production companies.

Boldrin and Levine's thesis really steps up this issue. It makes you wonder how long authors and creators will put up with the nonsense that some company has a state-enforced exclusive to use the work of others for longer than 100 years. Fortunately, the digital age is forcing the issue, and alternatives like Creative Commons (roughly akin to what would exist in a free market) are becoming increasingly popular. As the tyranny has grown more obvious, the free market is responding.

No, the authors are not really Austrian, and I'm not even sure that they can be called libertarians, but they understand the competitive process in ways that would make Hayek and Mises proud. As I've thought more about their book, it seems that it might suggest a revision in classical-liberal theory. We have traditionally thought that cooperation and competition were the two pillars of social order; a third could be added: emulation. In addition, there is surely work to do here that integrates Hayek's theory of knowledge with the problem of IP.


$30 $27
A book that must be understood and absorbed by every thinking person

If the book lacks for anything, it is precisely what Kinsella provides: a robust theory behind the practical analytics. But since Kinsella has already provided this, the value added of real-world application is enormous. I have a minor nit to pick with them on their passing comment on trademarks, which strikes me as wrong. Otherwise, this book moves mountains.

In the coming weeks I will blog about this book chapter by chapter, and Mises.org plans a series of excerpts from it. For now, let me say that a book like this comes along very rarely. Against Intellectual Monopoly is a relatively small manifesto on economics that absolutely must be understood and absorbed by every thinking person without exception.

Jeffrey Tucker is the editor of Mises.org.

[VIEW THIS ARTICLE ONLINE]

[DennisLeeWilson]

I have collected a number of other articles regarding the copyright and patent issue.

They are under the heading "Living without Copyright, Patent & Trademark monopolies provided by government" on my personal site at the following link:

http://dennisleewilson.com/simplemachinesforum/index.php?board=23.0

There is also an explanatory article by the same name.

Dennis