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Source link: http://archive.mises.org/14065/costs-of-the-patent-system-revisited/

Costs of the Patent System Revisited

September 29, 2010 by

In my 2007 post What Are the Costs of the Patent System? (discussed in “Reducing the Cost of IP Law“) I tried to estimate the cost of the patent system (see also my reply to David Friedman in the thread to “Volokh’s David Post: The High Cost of Copyright”; Yet Another Study Finds Patents Do Not Encourage Innovation; and There’s No Such Thing as a Free Patent).

I concluded there is at least a $31 billion a year net loss to the US economy from the patent system. Take a look a this fascinating graphic from Anatomy of a Patent Litigation. It estimates about $31 billion a year as the cost of patent litigation in the US. These cost estimates are not astounding. What is astounding is that anyone thinks this mercantilist statist monstrosity is libertarian or free market.

Update: Note, my previous estimate was based on a conservative assumption that patent litigation costs $20B a year. The more recent statistics as indicated in the chart is $11B higher. That means my original estimate of $31B net loss should be more in the $42B net loss per year range.

Update: As noted in Patent Trolls Cost The Economy Half A Trillion Dollars since 1990, recent patent troll cost studies have led me to revise my estimate of annual patent losses from $42 to $100 billion–and that’s still conservative.

{ 86 comments }

Manuel Lora September 29, 2010 at 3:48 pm

Silas, LNS weep (but in their own original, independently-created tunes, to avoid theft).

North September 29, 2010 at 5:25 pm

Bahahahaha! I just finished reading the comments on the other post. Too funny

Bruce Koerber September 29, 2010 at 4:36 pm

“What is astounding is that anyone thinks this mercantilist statist monstrosity is libertarian or free market.”

Is that the reason for the flood of comments when IP is the issue? It seems obvious that the invisible realm where ideas come from cannot be designated as exclusive which means that ideas are destined to be put into the service of humankind in the quickest way possible.

Silas Barta September 29, 2010 at 4:41 pm

Well, I guess you’ve basically conceded the utilitarian side. If the cost of the patent system is only $31 billion, that’s probably a lot less than the total consumer surplus resulting from goods that were created specifically to patent and put into use. Or is there a line in your calculation where you netted this out?

Thanks for the evidence.

Old Mexican September 29, 2010 at 5:10 pm

Re: Silas Barta,

Well, I guess you’ve basically conceded the utilitarian side. If the cost of the patent system is only $31 billion, that’s probably a lot less than the total consumer surplus resulting from goods that were created specifically to patent and put into use.

More likely the total amount consumers have to spend MORE (instead of less) to obtain those very products.

Silas Barta September 29, 2010 at 6:00 pm

Consumer surplus is the benefit to the consumer *net* of having to pay those costs.

Old Mexican September 30, 2010 at 10:29 am

Re: Silas Barta,

Consumer surplus is the benefit to the consumer *net* of having to pay those costs.

That makes no sense. What’s “consumer surplus”?

Silas Barta September 30, 2010 at 12:11 pm

Would you like an Econ 101 textbook reference, or …?

Old Mexican September 30, 2010 at 4:14 pm

Re: Silas Barta,

Would you like an Econ 101 textbook reference, or …?

YOUR definition of “Consumer Surplus” will suffice.

Silas Barta October 1, 2010 at 3:35 pm

Okay. The one in the Econ 101 textbook.

North September 29, 2010 at 5:37 pm

It’s like you only read this post and didn’t partake in a debate on the last post. Intriguing.

I’m not hoping to get into a utilitarian debate here but “costs” are subjective, Silas. The post above highlighted the objective dollar cost of litigation. It’s a blog entry and I didn’t see any attempt to quantify subjective opportunity costs or other associated costs of IP. You’ve countered an argument that was not even made by assuming away subjective costs. Like I said, not wanting to get into a utilitarian debate here, but dude “those in glass houses…”

The links appear well chosen and are likely to prove useful for anyone wanting to understand the itopic in greater detail. Care to join a few of us in that camp?

Silas Barta September 29, 2010 at 6:04 pm

North, I don’t see how you find my comment irrelevant or unhelpful. An IP opponent is going to have to show costs of the patent system as being MUCH higher than $31 billion to have a shot at showing it’s a net loss. (And not that IP proponents defend the specific, inefficient system that exists, which would be like expecting property proponents to defend a despotic regime that claims to enforce “property rights”.)

You see, it’s not enough to have citations. They have to be *relevant* citations, and you need to know *why* they’re being cited. If it turns out that they’re irrelevant to the issue at hand, then it doesn’t help you much to follow them, now, does it?

(And incidentally, I already did a comparison of the costs of the patent system to the costs of the property system to show the fruitlessness of the whole exercise. See my comment from the previous discussion.)

Stephan Kinsella September 29, 2010 at 6:11 pm

Silas, we don’t defend real property rights based on some cost-benefit. But you utilitarians do defend IP on such grounds. So you open yourself up to have your assertions questioned. Basically, we are showing that you have not satisfied any burden of proof.

Alexander S. Peak September 29, 2010 at 7:22 pm

Mr. Kinsella writes, “But you utilitarians do defend IP on such grounds.”

More and more, this seems to be the case. They see the economic benefits of patents to certain firms the same way conservatives see the economic benefits of war to certain industries and the same way autarkists see the economic benefits of tariffs to certain industries. But they completely miss the unseen: what people would have done with their scarce resources were it not for statist interventions into the market, statists interventions that direct scarce resources toward the state’s favoured enterprises.

Let’s say someone at company Z invents a better mousetrap than any that have hitherto been invented. If company X can make the better-mousetrap at a lower cost to consumers than company Y, which in turn can make it at a lower cost than company Z, then it is foolish, at least on utilitarian grounds, to give one of the companies a patent. All the patent ensures is that the privileged company no longer needs to compete directly with the other companies.

Since company Z will be first to the market with the better-mousetrap even without patent protectionism, it will still be able to gain profits from its sale of the product. It won’t be until companies X and Y come to the market with their own versions that company Z’s profits will diminish, which, depending upon how popular the better-mousetrap is, might be a couple of months, or might be a couple of decades, down the line.

So, let’s say there are patents and consumers can only buy the invention from company Z. Because Z has this mercantilist privilege, it can charge consumers above market value. Consumers have no choice but to pay the exorbitant price. Company Z profits, and this is what IP protectionists see. What they don’t see is what consumers would have done had they been permitted to buy the better-mousetrap from company X instead. Being less costly, consumers would had have more left over. Perhaps they would have used this extra money to buy some other invention, thereby encouraging inventors to keep coming up with new ideas. Perhaps they would have invested the extra money in capital. Perhaps they would have done something else productive with their money. But because of the patent system, they have no alternative but to give their money to an inefficient company should they wish to legitimately acquire the better-mousetrap.

Yours,
Alex Peak

Silas Barta September 30, 2010 at 9:16 am

@Alexander_S._Peak:

Let’s say someone at company Z invents a better mousetrap than any that have hitherto been invented. If company X can make the better-mousetrap at a lower cost to consumers than company Y, which in turn can make it at a lower cost than company Z, then it is foolish, at least on utilitarian grounds, to give one of the companies a patent.

No, because the mousetrap wouldn’t even exist if company Z didn’t expect to be able to patent it, leading to to X having nothing to improve on to begin with!

Seriously, can you guys not see costs like this? You seem to think that new ideas rain down like manna from heaven.

Stephan Kinsella September 30, 2010 at 9:35 am

Silas: “the mousetrap wouldn’t even exist if company Z didn’t expect to be able to patent it”

There is no reason to assume this. The mousetrap may well exist anyway. Or it may be even better if Z didn’t have to design around existing patents. Or it may have been invented a bit later, or maybe by someone else. In fact there may be other mousetraps that we do not see, because they were not invented because of IP law’s effects.

You’re really displaying how simplistic typical arguments for IP are! Sad.

Silas Barta September 30, 2010 at 10:08 am

In the example as posited, the mousetrap required a patent to be worth the effort. And you can’t deny that *some* works wouldn’t exist but for IP rights.

Moreover, IP advocates want IP rights to be aligned, as closely as possible, with those cases in which the invention would not have been created *but for* the expectation of patent rights, and there are many such inventions. Moreover, they regard independent invention as a valid defense.

So much of your objection doesn’t even apply, and it fails to show how Alexander_S._Peak was right to completely *ignore* the possibility that there would be no mousetrap to improve upon in the first place. You just wave your magic wand and hope that stuff will get invented anyway, assuming away the very basis people might have for disagreeing with you.

Alexander S. Peak September 30, 2010 at 12:48 pm

Dear Mr. Barta,

You write, “No, because the mousetrap wouldn’t even exist if company Z didn’t expect to be able to patent it, leading to to X having nothing to improve on to begin with!”

Imagine you’re living in a world where the state never got around to creating protectionist policies like the patent system. There’s a fairly free market in which individuals and organisations buy and sell goods and services.

Naturally, people will continually come up with new ideas. They know (A) that they can make money off of their new ideas, but they also know (B) that they cannot use aggression to prevent others from making identical products. What would the people in this society do?

Would they simply say, “I’m going to forego the money I could be making because I know I’ll be unable to prevent others from also making money”?

Or, will they go ahead and create their new inventions, realising that it’s better to make five thousand dollars than zero dollars?

Figuring out how the invention process would work sans patents is very simple when we apply the lessons of Austrian economics.

Let’s say company L makes a smell-o-vision TV set, but that the product is not very popular with consumers. Naturally, company L will not end up making a killing off of the product. And, therefore, we will not see other companies rush into also selling smell-o-vision TVs. Even without a patent, company L is the only company making money off of smell-o-vision. And, all profits go to company L until, perhaps decades later, some other company happens to decide, for whatever reason, that it, too, wishes to produce smell-o-vision TVs.

Let’s say, on the other hand, that smell-o-vision is wildly popular with consumers. At first, company L will be the only company selling the product, and it may make a couple million dollars in the first month alone. Other producers will see that the product is popular and, wishing to cash in on the phenomenon, will rush to also produce smell-o-vision televisions. Let’s say that it takes company M six weeks to produce its own smell-o-vision TV. For those first six weeks, company L has no competition, and therefore can charge a large price. When company M enters the market, suddenly consumers have a choice, and the competition will then bring the cost down. Perhaps companies N and O will also enter the market, providing even more competition. None of these new companies will be able to make as much selling the new invention as company L had in those few months where it had no direct competition, but as long as they all believe they can continue profiting from the sale of the invention, they will continue to produce.

Needless to say, on of these two scenarios must play out. Either, the product will be a failure, or it will be a success. If it is a failure, then the inventing company won’t make much, but they also won’t face much competition. If it is a success, then the inventing company will face competition, but it will also gain windfall profits initially.

And, either way, your prognosis is wrong. Inventors will still have an incentive to invent new products even in a society without patents. And why? Because people want to profit.

Respectfully yours,
Alex Peak

Silas Barta September 30, 2010 at 1:05 pm

@Alexander_S._Peak:

Would they simply say, “I’m going to forego the money I could be making because I know I’ll be unable to prevent others from also making money”?

Yes, if they can’t more-than-recoup investment costs in the absence of patents, which we know will be true for many cases. (Though in that case, they of course won’t be profiting.)

You’re just assuming away the very existince of the kinds of potential Pareto improvements that IP facilitates and then just assuming that everything will be better and good ideas will just rain down from the sky. Not gonna happen.

Peter Surda September 30, 2010 at 1:06 pm

No, because the mousetrap wouldn’t even exist if company Z didn’t expect to be able to patent it, leading to to X having nothing to improve on to begin with!

You can make the same argument about any intentional competition: company Z spends money on market research in order to determine what goods to offer and to what customers, but subsequent competitors do not need to do this, because they see what is Z selling to whom. So, according to the logic of IP proponents, intentional competition reduces utility and should be outlawed, because otherwise companies would not spend money on market research.

The utilitarian arguments are of course based on normative claims, so from the view of positive economics they need to be rejected. However, still some utilitarian arguments are ridiculous while others are merely unsubstantiated.

Alexander S. Peak September 30, 2010 at 1:22 pm

Dear Mr. Barta,

You write, “Yes, if they can’t more-than-recoup investment costs in the absence of patents, which we know will be true for many cases. (Though in that case, they of course won’t be profiting.)”

They don’t know empirically whether their new invention will be popular or not until after they’ve brought it to market. There’s a degree of risk in any inventment.

If they believe there is a likelihood that the invention will be popular, they will proceed to make the new product. But if you invent something and you can’t find even a single company that thinks it’s worth investing in, I’d suspect your product is not very marketable.

Your point is simply that companies are more likely to recoup their losses with bad products if there is a patent system than if there isn’t. But, I think your point undermines your broader point. The only products, it would seem, that the patent system helps bring to market that wouldn’t be brought to market otherwise are those products that are not likely going to be popular anyway. If the invention, by contrast, is likely to be successful, then it would still be marketable to bring it to market even without the patent system, no?

Let me know if you believe I have misunderstood anything in this analysis.

Sincerely yours,
Alex Peak

Silas Barta September 30, 2010 at 2:40 pm

@Alexander_S._Peak:

They don’t know empirically whether their new invention will be popular or not until after they’ve brought it to market. There’s a degree of risk in any inventment.

And people don’t know empirically whether a counterparty will honor a contract until they make it. There’s a degree of risk in any business venture.

What’s your point?

If they believe there is a likelihood that the invention will be popular, they will proceed to make the new product.

Does not follow. As everyone who’s spent more than a few seconds thinking about the IP issue has realized, popularity (or indeed, quality by any metric in any level to anyone) does not suffice to justify making the product; if they can’t sell enough before competitors copy them, it won’t be made — despite the production of the good (including design costs) being a Pareto improvement, even after taking into account the restriction on copying.

Your point is simply that companies are more likely to recoup their losses with bad products if there is a patent system than if there isn’t.

No, not at all; my defense is not of “bad products”; see the above reasoning about why the correlation between profitability and efficiency breaks down in the absence of property rights, just as it would break down for any other good: If there were no property rights in lumber, then no one would profitably invest in it, but this wouldn’t mean that lumber is somehow an inherently bad product.

If the invention, by contrast, is likely to be successful, then it would still be marketable to bring it to market even without the patent system, no?

Nope, see above, or spend three additional seconds thinking about the issue.

Let me know if you believe I have misunderstood anything in this analysis.

Done.

Stephan Kinsella October 1, 2010 at 12:33 pm

Silas

“Would they simply say, “I’m going to forego the money I could be making because I know I’ll be unable to prevent others from also making money”?

Yes, if they can’t more-than-recoup investment costs in the absence of patents, which we know will be true for many cases. (Though in that case, they of course won’t be profiting.)

Well: it takes a state to implement IP, to increase the returns so as to permit greater investment costs. But the state necessarily and invariably harms inventors in other says, for example taxes and the cost of regulations alone. Even if the IP rationale is correct, how do its advocates know that the benefits to inventors (increased profits due to temporarily monopoly) is greater than the other costs imposed on them by the existence of the very state itself that is required to grant these IP monopolies? If, for example, it’s clear that prospective inventors would be much better off in a free market (even without patent monopolies) than in a welfare state, why argue for more monopolies and statist mercantilist interefence by the same state that harms us, rather than calling for abolition of said criminal state?

Silas Barta October 1, 2010 at 3:33 pm

@Stephan_Kinsella:

Well: it takes a state to implement IP, to increase the returns so as to permit greater investment costs. But the state necessarily and invariably harms inventors in other says, for example taxes and the cost of regulations alone.

*sigh* Do I have to turn this into an equivalent “argument” against physical property rights *again*?

J. Murray September 29, 2010 at 8:14 pm

I’ve been called a utilitarian that happens to agree 100% with the libertarian philosophy, including the opposition of IP and patents. It’s not utilitarianism that’s the problem, it’s the use of faulty data that leads to thinking IP and patents are positive concepts in society.

It’s the utilitarians that are the most likely to provide the most devastating ammunition to battle the opponents of libertarianism. Few people make life choices on philosophy but on practicality. It’s best not to insult those who can easily demonstrate the practical benefits of a libertarian society to those concerned with losing their government subsidy.

Russ the Apostate September 29, 2010 at 8:23 pm

“I’ve been called a utilitarian that happens to agree 100% with the libertarian philosophy…”

There’s no contradiction between utilitarianism and libertarianism, because, contrary to what a lot of people believe here, there is no single libertarian philosophy. You can get to libertarianism from more than one way. Just ask David Friedman.

I happen to be a rule utilitarian libertarian. I think that we need laws, and those laws which happen to be the best are those that correspond with a natural rights approach. So, even though I don’t necessarily agree with the foundations of a natural rights approach, I believe that if we set up our society as if we have rights, then we will be better off.

“It’s the utilitarians that are the most likely to provide the most devastating ammunition to battle the opponents of libertarianism. Few people make life choices on philosophy but on practicality.”

I believe most people make life choices on gut feelings, and rationalize it afterwards. But I agree that those who are not “natural” libertarians, but are open to evidence, are more likely to be persuaded by a utilitarian approach than by a metaphysical approach such as natural rights.

Alexander S. Peak September 30, 2010 at 12:57 pm

Russ the Apostate writes, “There’s no contradiction between utilitarianism and libertarianism, because,…”

I’d say there is virtually no contradiction between natural law theory and utilitarianism because defending natural rights is in itself utilitarian. But, I’d be more inclined to call myself a natural law guy than a utilitarian, with that said. :)

Here’s an interesting quote from pages four to five of Radicals for Capitalism (2007) by Brian Doherty:

“Libertarianism believes either or both that people have a right to be mostly left alone to conduct their own affairs inasmuch as they don’t harm others, or that things will on balance work out best for everyone if they are. They define “work out best” to mean creating the most varied and richest culture and economy. In a sense, that very freedom is part of what constitutes “best”—people will flourish and be happiest to the extent that they are free to choose their own life plans and pursue them as best they are able. In that pursuit, the libertarian believes, people will discover new ways of living, new ways of meeting what it means to be human, that will enrich us all.

“Libertarianism combines appeals to practicality and the way the world really works, through its reliance on economic logic to dissect the efficacy of state economic intervention, and a burning call to a higher justice, with its sense that there are certain things one human should not be able to force another human being to do, even if it is allegedly for her own good. Libertarianism thus provides an ideological package that is intended to resonate with both mind and heart. Some libertarian thinkers claim to rely more on freedom’s good consequences in judging it right; some rely on a more purely moral argument about rights and justice. In fact, most of them rely on a combination, sometimes smooth, and sometimes rough, of both ideas, since their vision of rights tends to be rooted in what is best for human flourishing. Rights and consequences get linked, then, in happy congruence.”

Cheers,
Alex Peak

Russ the Apostate September 30, 2010 at 4:46 pm

Alexander S. Peak wrote:
“But, I’d be more inclined to call myself a natural law guy than a utilitarian, with that said.”

I understand. I don’t like to be associated with pure utilitarians myself; it’s been used to justify too many terrible things. That’s why I prefer to call myself a rule utilitarian or even a “natural rights consequentialist” instead.

Silas Barta September 30, 2010 at 9:13 am

Right, Stephan_Kinsella — and when you deign to use utilitarian arguments that *fail* to show IP bad on utilitarian grounds, it stuffices to point this out in order to show the lack of a utilitarian anti-IP case — even if you don’t care about utilitarian justifications.

Stephan Kinsella September 30, 2010 at 9:32 am

Silas, IP advocates are slippery, squirrelly: you come up with one justification after another, each full of holes.

Incidentally, see my update to the post: my previous estimate was based on a conservative assumption that patent litigation costs $20B a year. The more recent statistics as indicated in the chart is $11B higher. That means my original estimate of $31B net loss should be more in the $42B net loss per year range.

Silas Barta September 30, 2010 at 10:10 am

@Stephan_Kinsella:

Silas, IP advocates are slippery, squirrelly: you come up with one justification after another, each full of holes.

That’s nice, but it’s not what’s going on here. You’ve regarded utiltiarian justifications of IP as wrong on their own terms, and so you try to tabulate the costs to show this. But you’ve failed to do so. The fact that IP proponents are “slippery” is no defense.

Dan September 29, 2010 at 7:21 pm

Come on Silas, you honestly are going to claim a cost of patents being $31 billion a year is proof of a net benefit? If it is so obvious that $31 billion proves a benefit then it should be easy for you to show a study or produce one that proves the utilitarian case. Yet, no study can be found that supports that claim and in fact most say the exact opposite. So if you are going to make a utilitarian argument then the burden of proof is on you. If you can’t prove your case then you shouldn’t support the position.

David C September 30, 2010 at 12:26 am

If govt regulations doubled the price of my food, sure I’d be willing to pay twice the cost to eat, and sure somebody would be making a lot of money from it, but only an idiot would say that “conceded the utilitarian” benefit of those regulations. Yet somehow a govt micro-regulation that controls how people use inventions, called patent, elicits that exact response.

Silas Barta September 30, 2010 at 9:20 am

@David_C:

Higher food prices would mean lower consumer surplus. I am not relying solely on the fact that people pay more to buy things that are patented; the relevant comparison is to how much they *would* pay, minus what they have to pay.

Given a patent-dependent invention, the consumer surplus is higher, even with the “patent premium”, because without it being patented, you wouldn’t be able to buy it at any price — not much consumer surplus there.

So these aren’t the same cases at all, and you are being imprecise in equating them. Please treat this issue with more care.

J. Murray September 30, 2010 at 9:24 am

I guess every invention before the advent of the patent system in the 18th century would never have existed then.

Oh, wait…

Silas Barta September 30, 2010 at 10:12 am

So, J._Murray, like every other IP opponent you can’t do any better than attack strawmen. Of *course* some inventions would exist whether or not there’s IP. No one disputes this. The fact that some inventions only exist because of IP does NOT imply that there have never been IP-independent inventions.

And look at that, you’ve forced me into a quadruple+ negative construction!

Alexander S. Peak September 30, 2010 at 1:08 pm

Dear Mr. Barta,

(1) How many inventions have only been invented because of IP; (2) how can you be sure epistemologically; (3) is the amount more or less than the amount of inventions that have, because of IP, never been invented; and (4) assuming you believe the number of inventions that result solely from IP is creator than the number of inventions that were never invented because of IP, how can you be epistemologically sure that you have the proportions right?

Before answering, please see my thought experiment above regarding smell-o-vision televisions.

Best regards,
Alex Peak

Silas Barta September 30, 2010 at 2:29 pm

Dear Alexander_S._Peak,

(1) How many goods have only been produced because of physical property rights; (2) how can you be sure epistemologically; (3) is the amount more or less than the amount of goods that have, because of physical property, never been consumed; and (4) assuming you believe the number of goods that result solely from physical property is greater than the number of goods that were never produced/consumed because of physical property rights, how can you be epistemologically sure that you have the proportions right?

Before posting, make sure your arguments don’t work equally well against your own position.

Best regards,
Silas_Barta

Scott D September 30, 2010 at 2:57 pm

Typical Silas. First you justify IP on utilitarian grounds. Then when an argument comes along showing some of the costs, you declare that the benefits are much higher and obviously outweigh those costs. When someone asks you to justify your statement, you use your tiresome trick of avoiding the argument by changing trying to show that it does not hold for “physical property rights”.

One teensy problem there, Silas. Alexander never made the argument for property on utilitarian grounds. YOU did. Therefore the burden of proof is on YOU. If you can’t show that the benefits accrued outweigh the costs, then your utilitarian argument is based on faith, not logic. Maybe it is becoming clear to you why the utilitarian angle is a dead end?

Alexander S. Peak October 1, 2010 at 5:53 pm

Dear Mr. Barta,

In response to my asking how many inventions have only been invented because of IP, you respond by asking, “How many goods have only been produced because of physical property rights[?]”

In answer to your question, I would say that virtually all goods that are produced have been produced because of rights to naturally-scarce physical property, and I would say that this is reasonable to believe because human survival requires that humans consume, and human consumption is exclusive. You and I cannot eat the same apple, so we must decide either (1) to let me eat all of it, (2) to let you eat all of it, or (3) to split it. Even when we split it, however, we have to decide who gets what half; it’s impossible for us to both consume the same exact atoms (unless we do some disgusting stuff not worth going into here). Since human survival depends upon exclusive control to justly-acquired alienable goods, it stands to reason that humans would see little reason to produce were it not for the very property rights that allow them to use their produce in order to sustain life. This isn’t to say that no production ever occurs for charitable reasons; undoubtedly, some percentage of goods have been produced beyond the amount produced solely because of physical property rights, although I suspect that a far larger proportion of goods that have been produced or human consumption have been produced because of physical property rights.

It seems the exact opposite is the case with regards to intellectual “property.” I’d suspect that only a tiny percentage of the inventions ever invented were invented because of patents. Thus, I don’t see how my arguments work equally well against my own position. While physical property rights are naturally necessary for human survival, intellectual “property” is not.

My point in previously asking my four-part question is that, even if you’re correct that many good inventions are only invented because of IP, you have no way of being sure that, from a utilitarian stance, whether IP is a bigger asset or a bigger liability. Your counter-point is not very strong because it is far easier to imagine a world with no property rights than to imagine how a world would play out with physical property rights yet without intellectual “property rights.” Without any physical property rights, existence would be dog-eat-dog, or perhaps tribe-eat-tribe, and life would be poor, nasty, brutish, and short.

Sincerely yours,
Alex Peak

Peter Surda October 2, 2010 at 5:38 am

Dear Silas,

How many goods have only been produced because of physical property rights

I see your preconceived biases continue to plague you (alternatively, you could be just plainly dishonest, but I’ll give you the benefit of doubt). I thought you agreed that IP does not increase the scope or coverage of property rights, merely redistributes them? That would of course mean that the difference between a system of physical property rights and a system with a mix of physical property and IP is in the distribution, rather than in something “missing”. Well then, what is the system that represents the third one you are comparing to, the one without physical property rights? What rules are used for distributing the coverage? Or, let me guess: you “forgot” that there is nothing “missing”, and neglected to update your arguments based on that.

Alexander S. Peak September 30, 2010 at 1:02 pm

Mr. Barta writes, “because without it being patented, you wouldn’t be able to buy it at any price.”

I reject this view, as I explain above. See above.

Sincerely yours,
Alex Peak

Silas Barta September 30, 2010 at 1:08 pm

You reject it without reasoning, thinking that I don’t understand why the first mover has an inherent advantage. In reality, I understand that perfectly, and simply note that it’s far from sufficient to justify the investment in many good ideas, such as cancer cures and Viagra. But we’re just missing the “unseen” … right?

Use a different photo, please.

Matthew Swaringen September 30, 2010 at 5:14 pm

How do you know it’s far from sufficient? How do you know that there aren’t other methods to reach the same objective that don’t rely on aggression?

Gil September 29, 2010 at 8:23 pm

Gee, if there were no real property rights there would be no real property rights disputes either.

J. Murray September 29, 2010 at 8:26 pm

That’s the thing, there is nothing real about IP or patents. They aren’t fungible, the inventor’s utility isn’t being reduced. No one is stealing the product itself. No materials are being lost. The only “loss” is the assumption that all future individuals which wish to use the product *MUST* patron him or simply do without. They are unable to produce the product for themselves or purchase the product from some other provider.

Granting a patent or copyright to one individual violates the tangible property rights of everyone else who isn’t a patent holder by dictating what they can and can’t do with their own property. IP doesn’t protect property, it violates it.

Silas Barta September 30, 2010 at 9:23 am

And broadcasting radio waves at a given frequency doesn’t stop you from broadcasting at that frequency either, so I guess there’s no loss there, too. Granding an EM spectrum right dictates what *I* can do with *my* transmitter on *my* property, and what EM waves going through *my* property I can desctructively interfere with.

What freaking socialism.

J. Murray September 30, 2010 at 9:26 am

I’ve never dealt with someone so dense that they’ve forgotten the concept of homesteading on four separate occasions. Further, the EM spectrum IS tangible ownership because it DOES fit the mold of property. Another individual attempting to use it DOES impede the ability of the original claimant to utilize the spectrum. Thus it is a violation of ownership. Inventions cannot be taken away because another individual producing the same product, either for self or sale, does NOT impede on the ability of the original inventor’s ability to make the same product. It only changes what the individual can trade for the invention. Property rights =/= profit rights. Profit rights do not exist.

Socialism is using government force to TAKE something from someone else to distribute it to others. Tell me how making something that someone else invented, of my own accord, with my own materials, without any force involved, is socialism. It fails since neither government nor force are involved. Thus, it is not socialism.

Silas Barta September 30, 2010 at 10:17 am

@J._Murray:

First, drop the insults.

Another individual attempting to use it DOES impede the ability of the original claimant to utilize the spectrum.

That’s my very point! Everything depends on *which* use you consider relevant. Just as you can dismiss IP claims by saying, “hey, *you* can still use the idea”, I can likewise dismiss EM spectrum claims by saying, “hey, you can still make waves at that frequency” — it’s just as irrelevant.

Oh, what’s that? You say you *want* to be able to transmit *information* through the aether, and can’t do that when others are using “your” frequency? Well, what entitles you to the right to transmit information, which requires a claim on the tangible property of others?

Seriously, read my actual case before making these arguments. You can start here.

Property rights =/= profit rights. Profit rights do not exist.

Well then it’s a good thing that IP rights are not a right to profit, don’t you think?

Ryan September 30, 2010 at 4:25 pm

EM frequencies are a candidate for property rights because they are scarce and therefore use of them is physically exclusive. Ideas, once transmitted, may reside in scarce medium (RAM, disk, brain, etc) but themselves are not scarce; their use is not physically exclusive by definition. Granting property in ideas does not resolve a conflict over the use of an idea since an idea was not physically exclusive to begin with (such as an idea to use a computer to store ideas). Worse, it introduces a new conflict over the use of the scarce physical medium in which instances of that idea reside (RAM, disk, brain, etc).

Peter Surda September 30, 2010 at 1:35 pm

Silas, I refuted this argument like a year ago, several times actually, yet you repeat as a mantra. Your argument requires that the right to radio broadcasts is based on the pattern of the wave. But you can make the argument for rights to radio broadcasts without referring to pattern, for example through the right of not having your physical property (receiver) tempered with. Sure, it would probably result in a different distribution of ownership, but still would still cover the same scope. Therefore, you cannot make an argument that ownership of patterns is necessary in order to prevent people from broadcasting in a certain way.

Silas Barta September 30, 2010 at 2:26 pm

@Peter_Surda:

But you can make the argument for rights to radio broadcasts without referring to pattern, for example through the right of not having your physical property

Sure, and as *I’ve* said, if that’s your argument, then you must believe you have the right to deliberately impede EM waves passing over your land, and the right to stop light waves from bouncing off of e.g. billboards, trees, etc., and onto your property. Which is stupid.

If you don’t accept those arguments, then you can’t defend EM spectrum rights on the basis of “receive property rights”. Understand?

Peter Surda September 30, 2010 at 3:32 pm

Why is it stupid? Are you claiming that you do not have the right to block others emitting EM radiation onto your property? Really? Laser? Gamma rays? Well then I don’t need to argue with you. I’ll just “homestead” gamma radation “patterns”, assert them throughout your apartment and pooof! The issue is gone. And then I’ll take your computer too because it contains “patterns” that I “created”.

Plus, since when does Silas’ opinion that something is stupid fix logical fallacies?

Besides, I did not say that “I believe” in this or that. My arguments are that of a proper falsificationist, I point out errors in my opponents theories without making any assumptions myself.

If you don’t accept those arguments,

Which arguments? Those of you claiming something is stupid? Or did you mean that even though I actually said that indeed it would mean that you have a right to block EM radiation from passing the physical property, that does not count, because … something? You now switched from ignorance to denial?

Jay Lakner October 1, 2010 at 2:54 pm

Silas Barta,

Did you not digest any of the arguments I made on this subject the last time we discussed it?
I’ll try and go over it again step by step just in case any of it sinks in this time.

The EM problem results from the concept of property being technically incompatible with reality.

Every (and I mean EVERY) action is technically a property rights violation. This is because everything that exists is causally related to every other thing that exists. It is IMPOSSIBLE to perform an action that does NOT interfere with every single chunk of matter in the universe.
The beating of your heart vibrates the entire earth, altering its gravitational field ever so slightly, making tiny alterations to the orbits of the planets and the orbit of the solar system around the galaxy, also slighly altering our galaxy’s spacial relationship to every other galaxy in the universe.

So, since all actions are property rights violations, how do we overcome this problem?
We make the assumption that very small violations do not exist. This greatly simplifies the situation and allows society to solve the problem of how to most efficiently utilise its resources.
This is how we are able to talk to each other. The very act of communicating demonstrates that we are ok with the unavoidable physical violation of our bodies (caused by talking) because this violation is so very small.
But there is an unavoidable arbitrariness to this solution. How do we define “very small”? Sure talking is ok, but yelling is often not ok. I consider someone yelling in my face to be a violation of my property rights. So what volume is acceptable? Whatever decision we reach is arbitrary. The problem is very clear in the case of sound waves.
And we also have the problem of two people talking at the same time. The sound often distrupts one another and listeners may not be able to decipher what you’re saying. The norm that has developed in society is that you do not speak while other people are speaking. If you need to interrupt, you often wave your hand or touch them on the shoulder or start speaking in a louder voice with an immediate apology for interrupting.

Are there any other areas where the arbitrary definition of “very small” also becomes immediately obvious? Why yes there is. EM broadcasting.
I’m quite ok with you broadcasting radio waves over my property. The violations of my property rights is so incredibly small that I consider them not to exist. I might object if I was running super-sensitive science experiments in my back shed that radio waves would disrupt. But as it happens, I’m not. It seems everyone in society agrees that your radiowave broadcasts are making such negligible impact to their property that they should be allowed to continue. By what if you started gamma radiating everyone’s property in society? I’m sure they’d object. And bright green light? I think people would consider that too big a change too. An arbitrary line, somewhere below red light, has been drawn.

Also, similar to sound waves, we have the problem of broadcasts interfering with one another. Let’s look at what is actually happening.
EM waves are different to sound waves or water waves because they do not require a medium. They are energy (with a mass component). They are tangible entities. If I’m broadcasting radiowaves, they belong to me. They are my physical property. I am sending them out into society where they alter other people’s property. But this is ok because the alterations are so small they are considered non-existent. They are on the ‘safe’ side of the arbitrary line.
Now another person sends out radiowaves at the exact same frequency. These new radiowaves, which would normally be considered ‘harmless’, are now causing harm. These new radiowaves are causing a majorly unwanted change in my property. Whether you want to look at it as them altering my radiowaves, or them altering my receiver (which now can’t clearly read my broadcasts) is not really important. What is important is that the first person to broadcast at an acceptable frequency is causing no harm. Each subsequent person is causing harm.

The arbitrary definition of a “very small alteration of an individual’s property” depends on the use of that property. I think this is the point that you have failed to take into account.
The first person to broadcast at any given frequency is causing such small changes to the property of others that no property violation is considered to exist. The next person to broadcast at that frequency is causing a large change to another person’s property and this IS considered a property violation. Once one person is broadcasting at a given frequency, other’s broadcasting at that exact same frequency greatly alter the first person’s property, in the context of the use of that property.

Now, it should be clear to everyone that none of this has anything at all to do with patterns and ideas. I recall your astonishingly incoherent comeback being something along the lines of ideas being exactly the same as waves. When I tried to point out to you that one does not “broadcast” ideas, that ideas are not physical things that you “shoot” at other people or property, you evaded and ran. This is the first I’ve heard from you since on the subject. And it seems you haven’t learnt a thing!

Your EM argument is dead Silas. You can argue for IP on utilitarian grounds all your want. I have no problems with that. What I have a problem with is you making an argument that you already know to be utterly refuted. Knowing it’s false and then arguing it anyway is nothing more than propaganda.

David C September 30, 2010 at 12:18 am

Having worked in a number of high tech start-ups, the liability costs of patents are annoying, but they are small compared to other costs.

The real big one, IMHO, is having a staff of high paid high talent engineers invent something that has already been invented, but that they can’t use because of copyright or patent. Even worse, instead of these engineers aiming to make the optimum design, they aim for the kludge design that has all this odd unnatural ancillary crap in it which may not be optimal, but serves to get around some patent or copyright restriction. Even having things that look like a competitors, or engineers who have seen a glimpse of the competitor code can be a liability. So instead, many places just invent a poorer version of the wheel from scratch all over again. Not to mention, this talent could be used on something so much more productive otherwise, so the opportunity costs are huge.

Also, there are scale costs. IMHO, every vendor having incompatible, non standard, and unworkable parts with every other vendor is not a normal part of a free market. IMHO, in a normal free market, companies would gravitate to standardized interchangeable parts that would be easy to migrate and upgrade. Imagine that there are 100 million cars, and non competitive parts adds $3000 to the price of the car, and non standard parts adds $3000 to the costs of repairs over the cars lifetime, that’s 600 bln with cars alone. Not to mention that planned obsolescence won’t work without patent, because some 3rd party vendor could always come in and undercut. Also, not to mention the disposal and waste costs from the inability to upgrade or repair older models.

There is also a lot of time wasted just making patents that are not needed to provide a service or a product, but to get into a cross license agreement or to use as lawsuit insurance.

Stephan Kinsella September 30, 2010 at 12:46 am

David, you are so right. I’ve seen things like this and other perverse distortions so many times over the years. Yet outsiders who cheer on the patent system have some kind of utopian vision of how it works (maybe they were influenced by this video), and rarely have a clue about what really goes on.

Silas Barta September 30, 2010 at 10:18 am

Yeah, man, you agree with my conclusion, so everything you said in support of it must be 100% correct, I bet a poorly argued video totally convinced everyone to see the light on this issue and make your 100% correct arguments.

(???)

North September 30, 2010 at 12:04 pm

Silas, has someone ever answered you wave question? Someone would have had to, can you do a bullet list of the responses you’ve been given (like we often do about the pro-ip arguments we’ve heard from you etc)?

Someone would have had to of covered homesteading (likely would have covered it every time they’ve responded to your “iron clad” objection) similar to the post above. Are waves physical and cna you control them and “occupy” them? Are wave different than particles that can be controlled and occupied? The right to pollute your own property can be homesteaded, the right to pollute someone else’s property cannot be homesteaded it can only be permitted by the owner. I’m sure theoreticians other than us comment posters have already covered the homesteading of radio waves. Because you have emitted a wave in a particular frequency are you really concluding that no one can ever do that again? My farts vibrate at a particular frequency (actually a range of frequencies), am I stealing from you if my farts are too similar to yours?

The patents are different than homesteading and this is why everyone keeps bringing it up, I’m sure you understand this; you do right? It it that you disagree with homesteading as a means to legitimately appropriate property?

Patents are not homesteading, a patent involves you doing something on your own property (or in your mind) and then filing a paper with the gov to declare that no one in the country to do what you have just done. Even in cases where the other person thought of the idea on their own. I believe it was the telephone that was a perfect case of this happening and software programming yields many more examples where “obvious solutions” are now illegal because someone divined the solution first making the act of solving any programming problem illegal unless you’ve cross checked the full patent portfolio of every other software programmer in the country. Anything less puts every programmer at risk of being a dirty thief without even knowing it (by your definition of IP). You mention you don’t necessarily agree with the current system, is this what you mean? If so then we may have some things in common. Let’s talk about those for a while, then we can put smilies in our posts and avoid name calling

and seriously, that whole mousetrap thing? Are you honestly telling me that mouse infestations were impossible to solve until someone invented the patent system? Then, and only then, did trapping begin? I’m so glad the British brought with them patents to North America. I’m baffled that the Natives were able to catch any food at all without patents to let them invent trapping. What skills they must have had to be capable of doing everything by hand using patent free techniques. But how could they even do this by hand? Wouldn’t they have been thieving the hand use technique?

And further, how many “ideas” are you thieving (by your definition) every time you mention something on this board that a person (live or dead ) has already mentioned? By our moral philosophy this is permitted, by yours it is frobidden.

Silas Barta September 30, 2010 at 4:33 pm

@North: I’ve gone over the argument in sufficient depth here and here.

Note: Stephan_Kinsella “isn’t sure” whether there should be property rights in EM waves. What does that tell you?

North September 30, 2010 at 5:33 pm

But what about my farts? and other points?

North September 30, 2010 at 5:56 pm

I read your post. You seem to understand the general idea behind wave but you use homesteading too loosely, and incorrectly.

You can homestead the right to do something, but when it comes to the inverse you say in your comments section that you assume away the most critical piece:

“And on the issue of gongs, I was assuming away the nuisance issue. If necessary, assume it’s a special kind of gong that you have to deliberately listen for, which makes it just like radio waves: you don’t hear their content by default, you have to set a radio to decode it (via dial settings).”

The nuisance issue, if properly demonstrated or figured out or however you want to phrase it, is the only way to justify not letting others gong away. If you have a right to have them not gong, it it not because you gonged first, it’s because the their “gonging” affects your physical property in a way you don’t want it to. The only reason you’re allowed to gong in the first place is because you homesteaded the right to do it and affect “unowned” property only. You did not homestead the right if the sound traveled to “owned” property, in that case you need permission or some form of agreement with the owner (e.g. if they don’t care you can go right a head and gong away).

If gonging had a detrimental effect on your health (shakes something loose inside) you have the same leg to stand on. The right at issue here is not who gonged first, it is whether or not the gonging is violating someone’s physical property.

But seriously dude, you response didn’t even answer one of my questions. I asked what others have said about your EM theory not for a link to your EM theory. I was kind of hoping you would summarize what people have told you and then offer a coherent explanation about why you see them as wrong. I don’t know, I thought you’d have an interesting response or something like that. Instead you just copied link to things you’ve said in the past (which it funny because you are criticizing the links posted in the blog entry for being irrelevant; but I find the original links relevant).

My farts are a crude reference but according to your EM theory I am not permitted to do it. What should I do instead?

Silas Barta October 1, 2010 at 9:59 am

If you have a right to have them not gong, it it not because you gonged first, it’s because the their “gonging” affects your physical property in a way you don’t want it to.

Wrong — the gonging, by stipulation (that you don’t hear it unless you listen for gongs, to make it like radio waves) doesn’t affect your physical property. Except, of course, in every sense that the (off-property) instantiation of intellectual works “affects” your physical property.

No distinction shown, my case stands.

North October 1, 2010 at 11:06 am

If that is the case, then there is no justification for someone else to not gong. Do you see the difference here? Let me explain further.

In the case you present there is only one limited possibility justify restricting someone from gonging (I’m saying there is one possibility given the scenario you describe). in your reply here you state that the nuisance factor is not sufficient justification because the gong is imperceptible. This leaves NO justification to restrict someone else from gonging.

Think of this way. If I think of fractional reserve banking and set up shop I will make money begin the only one doing it. Someone can come to town with hoards of gold and offer 100% reserve notes. They are not touching my physical property and they are not even using my idea. They are however “interfering” with my ability to make a buck by “intercepting” my consumers.

Similar to your EM example, there is NO justification for me to restrict someone else from interfering with my consumers like this. I don’t own the customers. My actions caused them at act in a certain way that benefited me and my competitor acted in a way that caused the consumers to benefit him more.

You don’t own the EM waves. You caused them.

Now, the interesting discussion (and here I think you can make a meaningful contribution to theory, just play nice and ask around here for honest critiques to help refine your thoughts as you investigate further) is whether or not air space can be homesteaded and if so, then how can it be homesteaded and owned?

Just like land, you can own the water on your property (under libertarian law, not Canadian law unfortunately) but you cannot own patterns of waves that appear on your water. You can however, tell others not to put waves on your water because you own it, you own the water that sits on your land. In your gong scenario you would need to demonstrate that you own the airspace and others sending waves through it will impede your use of your property (i.e. impede you ability to use your airspace as you planned to use it). You might have a legitimate case here, but it is vastly different than a case for IP.

North October 1, 2010 at 11:45 am

If you reply to my post above, I think we should be friends (we can still be friends even if we disagree, we probably agree about more topics than we disagree about anyway).

Tell me a little about yourself, where are you from and who’s your favourite author?

I’m Canadian and lately I’ve been enjoying Hoppe’s writing

Silas Barta October 1, 2010 at 11:59 am

I’m not interested in chit-chat, least of all with you.

To answer your question, if you see no reason to restrict someone from gonging, then you see no reason to restrict someone from broadcasting radio waves that interfere with an existing broadcaster, so you don’t believe EM frequencies should be ownable.

If you really believe that, that’s stupid, but at least you’re taking a position, unlike Stephan_Kinsella.

I think you have a lot of learning to do before you can explore this topic, as seen in how you just unknowingly showed that you reject EM spectrum rights.

North October 1, 2010 at 12:59 pm

“Unknowingly”? I believe I quite consciously took a position on that subject. I even used small words, not sure what tripped you up there. I’ll quote myself “You don’t own the EM waves. You caused them.”

You are an amazing person. That’s all I can say.

We’ll by the sounds of it you have much to teach us oh great Weaver of Raveloe. I will wait patiently in anticipation but pray that my stupidity will not prevent you from gracing us with your superior intellect following future IP related posts.

North October 1, 2010 at 1:02 pm

By the way, don’t conclude debates with “If you really believe that, that’s stupid”

Statements like that rank among the least intelligent things you can say in a debate.

I believe we’re done here. ‘Till we meet again.

North October 1, 2010 at 1:27 pm

Wow, have to replay a third time. Your errors have some many layers of incorrectness I don’t want to continue but feel compelled to:

“if you see no reason to restrict someone from gonging, then you see no reason to restrict someone from broadcasting radio waves that interfere with an existing broadcaster, so you don’t believe EM frequencies should be ownable.”

I did cite very specific issues. IF you own the airspace then you can restrict others from gonging or EMing all over it. It’s not the EM waves that are owned. It’s the air space. There’s a very clear and concise reason to restrict someone. Again, I see a very clear reason and you conclude that I “see no reason to restrict someone from gonging”

Conversations working toward unanimity among libertarians about what constitutes ownership of airspace are certainly intriguing discussions. Having no present legal recourse for violations the subject is ignored by many, but not all.

I fail to see how you’ve brought up anything relevant about the “a lot of learning” you so proudly conclude I require for me to keep up a conversation.

Silas Barta October 1, 2010 at 2:21 pm

Okay, so you’re a crank who doesn’t believe in EM spectrum rights. Go join the rest of them.

North October 1, 2010 at 2:58 pm

And you don’t agree that airspace rights can possibly exist? It can’t be both. EM rights or airspace rights are fundamentally at odds with each other.

Crank is such an unscholarly word, please try a new one. As for you, what alternate word would you recommend I use to describe you for not agreeing that airspace rights can and should exist?

Peter Surda October 1, 2010 at 1:48 pm

Let me see. You don’t mind getting your apartment torched by a laser, your organs degrade by gamma radiation and your eardrums blown by loud music, if they match patterns homesteaded by other people. Because, you know, waves do not affect physical property, so surely the damage is imaginary or unrelated to the “broadcast”.

Maybe you can tell me where you live, I will then send a couple of tips to your neighbours in exchange for pictures.

Silas Barta October 1, 2010 at 2:20 pm

Radio waves, Peter_Surda. Radio waves. Not gamma rays. Not seismic waves. Radio waves.

Peter Surda October 1, 2010 at 2:36 pm

Hmm, so you can only homestead patterns of electromagnetic radiation if they have a specific frequency? And you cannot own patterns of sound waves if the volume is too high? I wonder why? Oh, yes, of course, in order for your theory not to collapse. But rest assured, your burnt decayed deaf body won’t have to deal with that contradiction anymore.

North October 1, 2010 at 3:19 pm

Silyas, http://www.consumerhealth.org/articles/display.cfm?ID=19990303201129

http://onlinelibrary.wiley.com/doi/10.1002/bem.10068/abstract

Not agreeing, just pointing out that it’s not an open and shut case.

If they’re proven harmful, do we have any say in whether or not we get pummeled with EM? In the case I presented above the answer is yes, we do have a say. In your analysis the answer is no, we don’t own the waves and have no choice in whether or not we get pummeled with them (only those who own them have a say).

Property rights need to be consistent, not “contingent” on possibly emerging findings about harmful side effects.

Silas Barta October 1, 2010 at 3:25 pm

Ionizing vs. non-ionizing radiation guys. Ionizing vs. non-ionizing radiation.

And the spelling of my first name *is* an open-and-shut case, which does not resolve in favor of spelling it Silyas.

Peter Surda October 1, 2010 at 3:55 pm

I would not complain about misspelling names if I were you. More importantly though, why is the ionising factor relevant? Electrons moving by conductivity produced by the antenna connected to a receiver are ok, but if they move too far (ionsation) it’s a no-no? I guess it is redundant to point out how you keep making stuff up to cover the holes in your theories.

And how does it affect the issue of music volume?

nate-m October 1, 2010 at 3:09 pm

I read your ‘gonging’ post, but your understanding of how radios work and how communication works is deeply flawed and thus is coloring your conclusions massively.

The type of ‘radio broadcast’ your thinking of is extremely limited in utility and essentially antique technology. That only allows one-way communication. That is your assuming that one person must be a broadcaster and that everybody else must passively listen to make effective effect use of that particularly useful piece of radio spectrum.

This is indeed how ‘radio’ and ‘television’ broadcasts work, but they are hardly the only form of useful wireless communication and are, very rapidly, becoming completely obsolete.

Your ignoring a very common type of radio… all of the people here are probably using right now:

The digital packet switching network. This is the type of signalling commonly used in things like ethernet and wireless networking as well as many others. Like any technology it was not developed by a single person, but as a gradual evolution of human thought and developments that have cumulated together into modern radio technology.

If you want to see the technical details of how this works then you can take a look at:
http://en.wikipedia.org/wiki/ALOHAnet

This sort of networking, instead of depending on a single broadcaster who dominates the particular spectrum, depends on the voluntary protocols shared between a large number of individual devices all of who have the ability to transmit and receive signals at the same time on the same frequencies.

Take a look at a modern coffee shop. You have people with their blackberries, laptops, tablets, netbooks, cash registers, music juteboxes, and a whole host of other devices using ‘Wifi’, bluetooth, and other similar technologies. These things use radios and they communicate on the radio spectrum. Each of them broadcast and each of them receive. All at the same time and all on the same frequencies.

How does this work?

Here is how:

All of them broadcast radio signals whenever they feel like it. That’s it. They just broadcast at random whenever they have something to say. And it works out. Is this magic, is this illusionary?

When multiple devices broadcast simultaneously and they interrupt each other this is called a ‘collision’. When they collide then, obviously, the information is scrambled and of little use. But then they just pick a random amount of time and then broadcast again. The chances of them having another collision is very small.

And this is how it works. They take turns broadcasting, voluntarily according to established protocols that they all agree to, and then they all can broadcast and share the same frequencies with everybody.

Sure there are limits to how far you can push it. With a large amount of radios broadcasting in a small area on different wifi networks you still run into problems. But then people that operate in that area move to different frequencies or use different technologies (such as wired ethernet) so now it’s extremely difficult to find a place were wifi is not still useful.

This is how the tiny amount of microwave spectrum handed to the public to be used freely (somewhat because it was considered largely worthless since there are all sorts of other devices that emit radiation along the same frequency (such as Microwave ovens)) with the least amount of restrictions actually has created the most utility and is the most useful and most valuable portion of the spectrum there is.

A 802.11G network transmits information at about 54Mbps. Out of that about 50% goes into protocol overhead to maintain the system.so you get about 20-25Mbps worth of useful information.

Good quality audio uses about 128Kbps. Talk-show Radio broadcasts can get away with 32-64Kbps without really impacting their ability to communicate and be entertaining and telephony-style encodings can reduce that even further to 8Kbps or so.

So using this approach of voluntarily cooperation and sharing of bandwidth you can have well over a thousand telephone conversations, a hundred music streaming stations, several hundred talk show radio stations, or a few dozen television quality broadcasts. All of which can originate from anybody.

And with newer stuff like 802.11n, Wimax, HSPA, etc etc it’s even faster and more reliable.

Versus exclusive use of a particular portion of the radio spectrum being used for 1 broadcast one-way.

Which do you suppose is a more efficient then? Exclusive use or sharing of the spectrum?

Silas Barta October 1, 2010 at 3:29 pm

@nate-m: You haven’t told me anything true which I didn’t already know.

You don’t seem to get that none of the points you brought up are in any way relevant to my case.

Yes, there are lots of great communication protocols out there. Rockin.

It doesn’t change the fact that the information transmission capacity of radio waves is finite (see Shannon’s Noisy Channel Coding Theorem), which necessitates assigning rights to transmit at specific frequencies and times (even if these vary based on a protocol) once you hit the limit. Hence, there need to be property rights in order for the EM spectrum to be useful as a communication channel.

And if you accept this as sufficient justification for EM spectrum rights, you should regard the isomorphic justifications for IP as sufficient to justify IP rights. QED.

Peter Surda October 1, 2010 at 4:00 pm

Hence, there need to be property rights in order for the EM spectrum to be useful as a communication channel.

No Silas, you don’t. You can use a different demarcation criterion to cover the same scope. You know this, because I explained it to you already. So stop pretending you have an argument and admit you are making stuff up on the fly.

nate-m October 1, 2010 at 5:32 pm

which necessitates assigning rights to transmit at specific frequencies and times (even if these vary based on a protocol) once you hit the limit. Hence, there need to be property rights in order for the EM spectrum to be useful as a communication channel.

Well, no. That’s the point. There is no ‘ownership’ of the particular spectrum that is used by Wifi. There are FCC regulations, but those only really limit your transmission power and the frequencies that are free to be used. The rest of everything is decided between the corporations through extensive testing, shared engineering, and contractual obligations.

Silas Barta October 4, 2010 at 1:29 pm

And those are property rights.

North September 30, 2010 at 12:05 pm

haha “forbidden” not “frobidden”…I don;’t really proof read these things

Walt D. September 30, 2010 at 1:01 pm

“It estimates about $31 billion a year as the cost of patent litigation in the US.”
After prohibition was ended, organized crime moved into gambling, prostitution and drugs.
If patents were abolished, the patent attorneys would not disappear. The tick will find another host. The cost will be imposed on another part of the economy.

J. Murray September 30, 2010 at 1:23 pm

Organized crime only moved into other artifically restricted markets. Much of organized crime DID die after the end of prohibition. Today’s gambling/prostitution/drug crime organizations are much smaller and less influential than the ones back in the days of alcohol prohibition. The goal is to continue cutting off the sources of nourishment and with each successive removal, a number of them will die out. An attorney exists almost purely because the State exists. Just follow where the attorneys go and systematically shut down the corresponding State organization and eventually they’ll all die out.

North October 1, 2010 at 5:07 pm

I have to go now. Silyas it’s been great. We’ll chit chat again next time. Enjoy the weekend

North October 1, 2010 at 5:13 pm

That’s inappropriate. I know the spelling is Silas.

Silas, enjoy the weekend.

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