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Source link: http://archive.mises.org/15634/fashion-and-copyright/

Fashion and Copyright

February 10, 2011 by

Whenever I give talks on IP, I use the now-common example of fashion as an industry that is super-profitable, super-competitive, super-innovative very fast moving and yet is not governed by the IP, which is to say that it lives and thrives in a free market. But I’ve variously pointed out too that if IP were suddenly available, we could fully expect that the largest players (or what are now called “industry stakeholders”) in the market would probably grab on to it in celebration. The big players are always happy for a monopoly granted by the state. It turns out that this point is not entirely unrealistic, given the continuing threat of the Innovative Design Protection and Piracy Prevention Act, which seems dormant for now but could reappear at any time. This is a sure way to destroy an industry as we know it. (Thanks David Kramer.)

{ 76 comments }

augusto February 10, 2011 at 9:43 am

“This is a sure way to destroy an industry as we know it.” – the key to understanding this sentence is “as we know it”. The fashion industry will not disappear, jobs will not disappear, no chaos will ensue. What will happen is that there will be less freedom to inovate, less choice for consumers, and more control by the by players…

J. Murray February 10, 2011 at 10:56 am

Jobs will disappear. Smaller designers will end up being driven out of business due to high legal costs of IP challenges.

Ohhh Henry February 10, 2011 at 9:49 am

One of the things I find remarkable about the fashion industry is the ridiculous plastering of logos all over items. Presumably this is because the appearance (design, colors, patterns) of fashion items won’t be protected from competitors by the government, but if it’s covered with trademarked symbols, voila.

Practically anyone who isn’t the mental age of a teenager can understand how stupid and gauche this is.

This was the undoing of Paris Hilton recently when she was caught with a government-proscribed substance in her purse. She claimed that the purse was her friend’s, but it turned out that she had previously bragged about the same purse on twitter. The game was given away by the “chanel” logos covering every square inch of the purse.

Stephan Kinsella February 10, 2011 at 4:02 pm
Joseph Merkel February 10, 2011 at 9:57 am

That’s your argument against IP? That the fashion industry is innovative? When its innovation consists purely of competing to show you have the newest clothes? Where clothing is regarded as good mainly because of who designed or wears it rather than whether it satisfies a pre-existing desire?

Who will care in 100 years about the new fashions created today, like they care about inventions or writings? In what sense is my life enhanced because people wear new designs more often and I have to replace my wardrobe more frequently?

I admit that IP lovers can go overboard in what the want to restrict, but fashion isn’t exactly what I’d want as a poster child, ya know?

J. Murray February 10, 2011 at 10:54 am

And who will care about a microwavable hanging bacon rack in 100 years? Or the “Dad Saddle”, a toolbelt with stirrups so kids can ride Dad. Or the “Gerbil Shirt”, which is plastic tubes that you wear so gerbils can run around on your chest. Or the “Baby Butt Art Kit”, which is a set of paints that you drop your baby’s hind end in and then dab it on paper. Or the “Snake Walker”, a leash for snakes? Or the patent for “A Stick”, which is called a pet toy. Or a pair of underpants specifically for hospital gowns that neither the inventor or patent office realized do tie shut back there. Or how about the motorized ice cream cone because of how hard it apparently is to eat down the cone to get to the ice cream.

We don’t have to use the fashion industry to demonstrate how patently retarded the entire patent and IP system is.

Seattle February 10, 2011 at 11:09 am

Sadly it’s basically the only creative industry that doesn’t have IP protection. But the fashion industry illustrates an important idea: IP believers claim that if there were no IP, creators would have no incentive to make new things, and instead they would just make new copies of old things forever. The example of the fashion industry shows this clearly isn’t true: The existence of copiers gives creators the incentive to make better innovations at a higher pace!

Stephan Kinsella February 10, 2011 at 4:32 pm

Joseph, the use of the state to help one stop competition is apparently inexorable. We are saying it’s bad enough; why expand it? Unless you agree with its expansion your criticism is inexplicable.

Stranger February 11, 2011 at 8:58 pm

As Hans Hermann Hoppe often reminds us, competition in the production of bads must be limited and ultimately eliminated.

We do not want a competition in counterfeiting to find the best counterfeiter. We want only competition in production to find the best producers.

Peter Surda February 12, 2011 at 4:52 am

Stranger,

We do not want a competition in counterfeiting to find the best counterfeiter.

But that’s a decision that the buyer, rather than the author, has to make.

Stephan Kinsella February 12, 2011 at 9:45 am

this argument is disingenuous and relies on equivocation. A “counterfeit” is not a “bad” in Hoppe’s sense. Take a knock-off Chanel purse. Why is it a “bad”? It’s a valuable, desired product that serves some use for some people. It’s not a “bad” at all–even if it’s cheapier and shoddier than an original, so what? A toyota is not a Bentley either but it’s also a valuable thing, not a “bad.”

Stranger February 12, 2011 at 11:09 am

It’s a bad because it rewards the counterfeiter and punishes the producer, thus promoting high time-preference and decapitalization.

Peter Surda February 12, 2011 at 2:49 pm

It’s a bad because it rewards the counterfeiter and punishes the producer

All competition rewards competitors and punishes encumbents. I don’t think there is an encumbent that welcomes competition. Is then all competition bad?

thus promoting high time-preference and decapitalization.

This is a non-sequitur. Merely because the rise of a competitor increases pressure on the encumbents does not mean that banning competition has positive effect on either time preference or capitalisation.

Robert E. Lee February 10, 2011 at 9:59 am

Aren’t the logos themselves (trademarks) a form of IP? I think many would agree that the logo is often the biggest draw in the fashion industry. So, to say that the fashion industry is “not governed by the IP” is disingenuous at best.

J. Murray February 10, 2011 at 10:54 am

That’s a trademark. It’s actual fraud to tell someone that a product was manufactured by a specific individual or organization when it wasn’t.

Stephan Kinsella February 10, 2011 at 4:03 pm

IP advocates usually don’t know the difference between trademark, copyright, and patent. Ignorami statists.

Peter Surda February 10, 2011 at 4:36 pm

Don’t you know? There is only one IP. The true one. :-)

Wildberry February 10, 2011 at 7:54 pm

Stephan,

I don’t know why you say things like this. IP advocates are just a bunch of dummies that can’t distinguish a trademark from a patent? Therefore, IP must be bad to be supported by such “ignorami statists”?

An unprotected garment design can incorporate a trademark, which can be protected.

So?

Stephan Kinsella February 10, 2011 at 8:46 pm

Wildberry, I don’t undersatnd your question. I say these things b/c I think they are true–there is widespread ignorance of IP law among its defenders.

As for your penultimate statement, I don’t understand what your point is.

Tcostel February 10, 2011 at 9:27 pm

His point is simple. Why does it matter that clothing can have trademarked designs?

Wildberry February 10, 2011 at 9:54 pm

Stephan,

Do you think there is less ignorance of IP law by opponents?

Name calling is immature and discourteous. I wish you would stop.

As to my point, see below. Apparently some people get the point easily.

At least you, Stephan, are not ignorant of IP law, so it is disappointing to me that you so often take the low road in your opposition. Not everhthing that has evolved in American society is there beceause we are all blind and stupid and always have been.

IP laws still exist because at the foundation of the ethics that support them, which can easily be understood by common sense, there appears to be a metaphore with stealing that resonates with people. Not everyone that holds that view is an “ignorami statist”.

J. Murray February 11, 2011 at 7:30 am

A design can’t be trademarked. The trademark is merely an identifier to distinguish the origin of the product. That’s the Gucci label for instance. The whole bag isn’t trademarked because people don’t confuse the physical design itself with the name on the label.

Peter Surda February 11, 2011 at 7:59 am

Wildberry,

no amount of referring to common sense is going to fix the self-contradiction, or fill the gaps in the IP fairy tales.

Stephan Kinsella February 11, 2011 at 11:15 am

Wildberry:

Do you think there is less ignorance of IP law by opponents?

Name calling is immature and discourteous. I wish you would stop.

I do think there is less ignorance of IP by opponents. MOst of them become anti-IP by realizing its pernicious effects in a given area, so are keenly aware. In any case, they have no duty to learn up on IP since they are not advocating for it.

It is not ad hominem at all. IT is pointing to weaknesses in their arguments caused by confusion as to what it is they are even advocating–and chastising them for making arguments for some legal policy when they have not done their homework. It’s irresponsible.

I agree that not everyone who is for IP is an ignorami statist. Some are just unprincipled and willing to sellout for personal benefit–I have had libertarians and fellow travelers–say, authors–defend IP on the grounds that “I benefit from copyright law since I’m an author.” Well by that standard you can be in favor of social security if you are old, etc.

Wildberry February 11, 2011 at 1:05 pm

Stephan,

“I do think there is less ignorance of IP by opponents.”

It would be interesting to see you describe the basis for that belief.

“MOst of them become anti-IP by realizing its pernicious effects in a given area, so are keenly aware. In any case, they have no duty to learn up on IP since they are not advocating for it.”

As you know, I disagree with this position. If one is arguing that a given law reaches an unjust conclusion in its operation, it is not reasonable to make one’s case by misrepresenting the facts of that very operation.

I think the way I have phrased this in the past is that it is not reasonable to oppose the law for doing that which it specifically seeks to avoid. For example, I believe you and others have asserted that IP laws in general attempt to regulate access to ideas, which you know to be inaccurate.

“…and chastising them for making arguments for some legal policy when they have not done their homework. It’s irresponsible.”

Would you agree that this applies to both opponents and proponents?

“I agree that not everyone who is for IP is an ignorami statist.”

Thank you.

“I benefit from copyright law since I’m an author.”

Well, you wouldn’t criticize a shoe-maker for saying “I benefit from property laws because I own the factory”, would you? I would likewise expect the beneficiary of the economic rights of copyrights to be appreciative of having them.

“Well by that standard you can be in favor of social security if you are old, etc.”

Yes, that is true.

Of course you couldn’t have a very meaningful discussion about the desirability of social security as the means to achieve some particular end, if you only asked those who were too old to make any other arrangements and had been paying into the plan for their entire working lives whether they would support its abolition so they can die in a state of poverty and neglect.

That would introduce some distorting biases into the discussion, don’t you agree?

Peter Surda February 11, 2011 at 1:21 pm

Wildberry,

although I’m not Stephan, I hope he wouldn’t mind me adding my own opinion.

Well, you wouldn’t criticize a shoe-maker for saying “I benefit from property laws because I own the factory”, would you?

While I might not be morally outraged at that claim, I would object to that being an argument for physical property laws. If however, A advocated a theft of B’s factory with the justification that this benefits A, I would both object from theoretical point of view as well as be morally outraged.

So, what is your actual argument?

Michael A. Clem February 10, 2011 at 12:39 pm

The brand is the draw in the fashion industry–the logo is merely a way of displaying and promoting the brand.

nate-m February 10, 2011 at 12:56 pm

The fashion industry has put a lot of work into integrating trademarks into their designs. I think the result is horrendously bad tasted, but it does have the advantage that it makes it illegal to copy those designs closely.

Stephan Kinsella February 11, 2011 at 11:19 am

This is another distortion caused by IP law. Since there is no copyright and patent on fashion then the manufacturers twist an aspect of trademark law to gain protection from competition. If trademark law did not contain its unlibertarian aspects–that is, if it gave ONLY a right to sue for FRAUD–then they could not use it this way and the whole fashion industry would not have been distorted as it has been by them putting their trademarks into the design-they would have no reason to. The reason is that if I knock off your Gucci bags, and reproduce the Gucci trademark all over it, there is usually no fraud involved–the customer knows he is buying an el-cheapo knockoff. So there would be no crime or claim. So there would be no reason to slap trademarks all over things, since whether the clothing or purse etc. has the trademark on it or not, it would not be fraudulent to copy it and knock if off (not per se, anyway).

So, this is jsut another example of how state laws distort the market–and IP laws distort fashion and culture. The solution is not to add more IP law but to take it away.

Stephan Kinsella February 10, 2011 at 4:40 pm

trademark law is also unlibertarian–there is a part of it that is libertarian, the part based on consumer fraud; but this is only a subset of state trademark law; and even that is distorted in that it gives the right to sue to the competitor rather than to the consumer-victim. and this has led to distortion of fashion itself, unsurprisingly. See http://blog.mises.org/13442/leveraging-ip/

Wildberry February 10, 2011 at 8:04 pm

Stephan,

This because the injured party is the producer whose customers are likely to abandon the producer based on the shoddy quality of the knock-offs if the consumer can’t tell they aren’t authentic. Also, they are in a better position to enforce their rights than a diverse group of consumers who probably have many other consumer choices.

Finally, imagine a world where courts had to entertain millions of individual consumer actions across all trademark suits. Doesn’t sound too efficient.

My point is that you imply utter stupidity where in fact there is a rational basis, which you well know.
Do you have positive bone in your body? Is everything you see always all bad and all wrong?

Sometimes I wonder how you think such a stupid populace could survive at all…

Stephan Kinsella February 10, 2011 at 8:48 pm

“the injured party is the producer whose customers are likely to abandon the producer based on the shoddy quality of the knock-offs if the consumer can’t tell they aren’t authentic.”

“injured” is a loaded term. I “injure” someone by competing with them and taking their customers, too. The question is whether it’s a property rights violation. It is only this if the producer has a right to his customers’ business. He doesn’t. If they choose not to come to him, that’s their right. For whatever reason. If they are deceived, maybe they have a cause of action. Not the “producer.”

” Also, they are in a better position to enforce their rights than a diverse group of consumers who probably have many other consumer choices.”

So?

“Finally, imagine a world where courts had to entertain millions of individual consumer actions across all trademark suits. Doesn’t sound too efficient.”

So?

Tcostel February 10, 2011 at 9:30 pm

“The question is whether it’s a property rights violation. It is only this if the producer has a right to his customers’ business. He doesn’t. If they choose not to come to him, that’s their right. For whatever reason.”

So if I steal a car and sell it, deceiving the buyer into thinking I own it, it should be perfectly fine. The property is the copied work the copier is selling, not customers.

Peter Surda February 11, 2011 at 8:15 am

So if I steal a car and sell it, deceiving the buyer into thinking I own it, it should be perfectly fine. The property is the copied work the copier is selling, not customers.

Well, first of all, you have not defined copying. Second of all, you have not explained how an author can have rights in copies without expropriating physical property of the copyer.

Wildberry February 10, 2011 at 10:11 pm

Stephan,
This is what I mean. You know full well what this term of art means, so to respond otherwise makes it appear that you are making something out nothing.

Also, it is ironic that you would complain of the ignorance of IP law, and then mistate its operation so shamelessly.

For those who are trying to follow along, the injury am referring to is not competition, but using a trademark to fraudulently misrepresent the origin of a product. That is “bad” for reasons which you know full well.

If consumers are deceived, they suffer low quality products which they incorrectly associate with a brand which in fact did not produce them. Depending on the nature of the consumer’s injury, they may well have a legal claim against the fraud; products liability for instance.

However, the trademark infringement also injures the trademark holder in ways which I described and you well understand. IP law 101. So to pretend we are not communicating appears dishonest. I have raised this issue with you before, as you may recall.

Nonetheless, such conduct does nothing to ground this discussion on a fair reading of the law, which one would presume you would be interested in.

As public policy, it makes good sense to give the cause of action to the trademark holder, since it would be in the public interest to protect consumers against false attribution to one producer when in fact it is being produced by another, who is trading on the quality reputation that he has not earned. Because this perpetrates a fraud on all consumers, both current and future, it makes good sense to invest the cause of action in the trademark holder. It is a utilitarian argument for redress for injury.
Both consumers and holders are injured by trademark infringement. Therefore, it is rational to legitimize a cause of action for this injury in both consumers (negligence, product liability) and producers (trademark infringement).

So?

Jay Lakner February 11, 2011 at 6:23 am

Wildberry can you please stop spewing nonsense.

As I already explained to you once before, these discussions are about what the law should be, not what the law currently is. I am sick and tired of seeing you post volumes and volumes of utter crap accusing people of misrepresenting the law, when they in fact are discussing “should” rather than “is”.

The only important issue here is whose property rights were violated and who was the one committing the violation. A third party, whose name/logo/whatever was present when the fraud was committed, SHOULD be completely irrelevant to case.

This is pretty much Stephan’s position. It is so extremely logical and simple that it completely baffles my mind that you were able to completely misunderstand it the way you have.

Peter Surda February 11, 2011 at 8:17 am

Wildberry,

you are stuck in a fairy tale of metaphors and cannot provide a clear and coherent argument.

Shay February 11, 2011 at 10:44 am

For those who are trying to follow along, the injury am referring to is not competition, but using a trademark to fraudulently misrepresent the origin of a product. That is “bad” for reasons which you know full well.

If consumers are deceived, they suffer low quality products which they incorrectly associate with a brand which in fact did not produce them. Depending on the nature of the consumer’s injury, they may well have a legal claim against the fraud; products liability for instance.

However, the trademark infringement also injures the trademark holder in ways which I described and you well understand. IP law 101. So to pretend we are not communicating appears dishonest. I have raised this issue with you before, as you may recall.

I think your first two paragraphs are exactly what Stephen was saying in the first place, that it’s fraud and thus the buyer is the one in a position for compensation. Why did you stop explaining in the third paragraph, and resort to hand-waving? That was the part that’s in dispute!

As public policy, it makes good sense to give the cause of action to the trademark holder, since it would be in the public interest to protect consumers against false attribution to one producer when in fact it is being produced by another, who is trading on the quality reputation that he has not earned. Because this perpetrates a fraud on all consumers, both current and future, it makes good sense to invest the cause of action in the trademark holder. It is a utilitarian argument for redress for injury.

What about buyers who specifically want a product that looks just like the real thing (Rolex watch, iPhone, etc.) and are not being deceived when they buy such things for a fraction of the price of the real thing? They are not being defrauded since they know these aren’t genuine (their purpose is to gain social status by displaying them, because others will think they are the real thing). But because the producer of the real thing can sue, consumers lose out. This is anti-competition, government-created monopoly. What defense do you have for preventing buyers from being able to buy knock-off products in this case?

Wildberry February 11, 2011 at 11:51 am

Jay,

“The only important issue here is whose property rights were violated and who was the one committing the violation. A third party, whose name/logo/whatever was present when the fraud was committed, SHOULD be completely irrelevant to case.”

Why would you say this? We are discussing a legal dispute here, therefore it is important and relevant to identify the injured parties.

Stephan has asserted that the law is wrong, because it SHOULD only vest a cause of action in the consumer.

I disagree, and support the current law (which is why I refer to it as a point of reference to my position), which ALSO vests a cause of action in the trademark holder, for the reasons I stated.

That is so simple I fail to see how I’ve earned your insults.

Peter Surda February 11, 2011 at 12:17 pm

Wildberry,

Why would you say this?

Because Jay, unlike you, wants clarity.

We are discussing a legal dispute here, therefore it is important and relevant to identify the injured parties.

If that’s your approach, then my retort is that if you want to punish copying, you need to injure the copier. I don’t want him to be injured. End of story.

Stephan has asserted that the law is wrong, because it SHOULD only vest a cause of action in the consumer.

I find no meaning in this claim. Stephan claims that the law is wrong because it involves theft.

I disagree, and support the current law (which is why I refer to it as a point of reference to my position), which ALSO vests a cause of action in the trademark holder, for the reasons I stated.

Well, then I can say that I promote the law which straps you to frame and whips you until you start arguing, because that would benefit people who want to debate. However, that requires a violation of your rights, so if I claimed that I have a theory to support that position, I would be contradicting myself.

That is so simple I fail to see how I’ve earned your insults.

You pretend you are arguing. That’s the reason.

Stephan Kinsella February 12, 2011 at 9:58 am

Wildberry: “This is what I mean. You know full well what this term of art means, so to respond otherwise makes it appear that you are making something out nothing.”

I disagree. You are engaging in equivocation by using a fuzzy word like “Injured”–it’s broad enough to cover actual aggressive harm, so in that meaning we agree it’s aggression; yet it covers other things too, such as non-aggressive injury that causes b/c of competition, say. So you establish ti’s a type of injury in the latter sense then slip into the first sense which is equivocation.

That is what is shady, not my calling you on it or refusing to be snookered by it.

“Also, it is ironic that you would complain of the ignorance of IP law, and then mistate its operation so shamelessly.”

I don’t think I’ve mistated IP law’s operation at all. What are you jabbering about. What.

“For those who are trying to follow along, the injury am referring to is not competition, but using a trademark to fraudulently misrepresent the origin of a product. That is “bad” for reasons which you know full well.”

It’s not a “bad” at all–to the trademark holder–since he has no right to his customers’ business. (Further your hypo is bizarre–why can’t the customer determine which is authentic and which is fake, if the fake ones are as you say “shoddy”?)

Think of it this way. I’m driving to Taco Bell to get a taco. On the way, a FedEx truck negligently hits me, putting me in the hospital. Now, I’m damaged, and I sue and win money from FedEx. By your argumet, TAco Bell can also sue FedEx because after all they didn’t get that dollar from me that they “would have” gotten. This is clearly ridiculous; they don’t have a claim on the dollar. The dollar was repaid to me by FedEx when they made restitution to me and made me whole; where I choose to spend it now is my business. If FedEx has to compensate Taco Bell then there’s double dipping–ti’s paying twice: it pays me for the dollar I lost and it pays Taco bell for the same dollar I didn’t spend there. Now imagine I go and spend the dollar that FedEx gave me, at Taco Bel, after I recover. And Taco Bell has already sued FedEx too. When I buy the taco they are in the same position they would have been–they have the dollar I spent there AND the one FedEx had to pay them. they have a windfall. lucky for them. This is clearly absurd. This shows that if a potential customer is damaged the damage is only to them; any “injury” to a prospective seller is not legally cognizable. This is why an act of fraud done by a knockoff company to a customer is a legally cognizable injury only to the customer, NOT to the original manufacturer.

Furthermore: even if we let the trademark holder have the right to sue for acts of fraud (on behalf of the defrauded customers, say), this is NOT what trademark law is used for now: it is very rare for a knockoff artist to actually defraud anyone. The people buying $20 “rolex” watches are not defrauded!

“If consumers are deceived, they suffer low quality products which they incorrectly associate with a brand which in fact did not produce them. Depending on the nature of the consumer’s injury, they may well have a legal claim against the fraud; products liability for instance.”

Yes, the consuer should have a fraud claim, but this is very rare anyway. This is NOT what people want TM law to cover. IP advocates want it to cover even NONfraudulent acts like selling a knockoff to a (fully aware) customer.

Wildberry February 12, 2011 at 12:57 pm

Mr. Kinsella,

“I disagree.”

In a legal dispute, the plaintiff is the injured party. There is no implication beyond that simple meaning. If a party violates the rights of another, it is clear who the injured party is.

If there is no violation of rights, there is no aggression and there is no injury. Competition is not an injury, and I haven’t claimed it is. So, you are trying to make something out of nothing, as anyone can plainly see from the other quote from me below.

“I don’t think I’ve mistated IP law’s operation at all. What are you jabbering about.”

OK, let’s see…

“For those who are trying to follow along, the injury am referring to is not competition, but using a trademark to fraudulently misrepresent the origin of a product. That is “bad” for reasons which you know full well.”

Aren’t you an IP lawyer? Why are you denying the very basis of trademark law, then? It is designed to protect consumers against misrepresentation, and gives both the consumer a cause of action under tort law, and the trademark holder a cause of action under trademark law. Historically,under common law it was called “passing off”.

“It’s not a “bad” at all–to the trademark holder–since he has no right to his customers’ business.”

The basis for trademark cause of action is not a claim to his customers business, as you well know. That is a misstatement of the law.

“(Further your hypo is bizarre–why can’t the customer determine which is authentic and which is fake, if the fake ones are as you say “shoddy”?)”

The basis is the misrepresentation of the origin of a product. The consumer may not be able to detect that a product is a fake. He may just as well believe it is authentic, and make an incorrect association with the legitimate brand, thus falsely associating the quality of that brand with the quality of the knock-off. Thus the legitimate brand owner is injured.

“This is clearly ridiculous; they don’t have a claim on the dollar.”

What sane person would say otherwise? As you well know, there would be no trademark cause of action in your fact pattern. To assert otherwise is a misstatement of the law. That’s two misstatements just in this one post so far.

And thus, all the nonsense about FedEx and Taco Bell is irrelevant. Others may not recognize the straw man, but I do.

“Furthermore: even if we let the trademark holder have the right to sue for acts of fraud (on behalf of the defrauded customers, say),”

The trademark holder does not have a cause of action on behalf of consumers. That’s three.

“this is NOT what trademark law is used for now: it is very rare for a knockoff artist to actually defraud anyone. The people buying $20 “rolex” watches are not defrauded!”

Perhaps, although if they were just cheap watches that look like a Casio, who would by them? Of course, if you use another example, say a pill that is indistinguishable from a real one by sight, it is a different story. That’s four.

“Yes, the consuer should have a fraud claim, but this is very rare anyway. This is NOT what people want TM law to cover. IP advocates want it to cover even NONfraudulent acts like selling a knockoff to a (fully aware) customer.”

Yes, except in rare cases (which I can’t even think of ) the cause of action would be in products liability, not fraud. The consumer already has a cause of action available, if the injury is sufficient great to justify litigation, or widespread enough to justify class action.

What about when the consumer is not fully aware? That five.

Peter Surda February 12, 2011 at 3:09 pm

Wildberry,

In a legal dispute, the plaintiff is the injured party. There is no implication beyond that simple meaning. If a party violates the rights of another, it is clear who the injured party is.

That’s a tautology, not a definition. You seem to be lacking the knowledge of elementary logic.

agdrummer February 10, 2011 at 10:02 am

Mr. Tucker, here’s but another Big Pharma/govt transferance of wealth…it’s almost a monopoly. Google search” Colchicine”.

bobobberson February 10, 2011 at 10:36 am

Wow, a commonly used drug that predated the FDA had a price that went from $.09 cents to $4.85 after ‘marketing exclusivity’ was established.

Crazy!

bobobberson February 10, 2011 at 10:47 am

I wonder why the FTC didn’t attach the FDA for illegally limiting market competition?

agdrummer February 10, 2011 at 1:06 pm

In Addition of the pricing” mechinism” of the colchicine, the FDA halted production WITHOUT the new replacement drug (colcrys) being available to the pharmacies of people suffering from the horriable acute pain of gout. Of course colcrys is manufactered by a different co. that IS getting an FDA approval ( of course).

Tcostel February 10, 2011 at 4:27 pm

What about copyrights on books? I understand the patent argument, but without a copyright on books, people could literally write the exact same story word for word and sell it as their own work, potentially making more money if they have better marketing skills. Is that not a theft of labor?

Shay February 10, 2011 at 6:45 pm

That’s another discussion. But let’s imagine that the fashion industry could copyright/patent their clothing designs. Would we be here saying that without these protections, anyone could copy a clothing design, thus nobody would come up with new designs? If not, why not? If so, why aren’t we making the same error when asking that of books?

Tcostel February 10, 2011 at 7:41 pm

The argument is not that nobody will be able to come up with new designs. The argument is that those that do come up with their own designs/books will not be rewarded for their labor if somebody else can sell the exact same thing without putting in the effort to innovate themselves. People will still innovate with or without copyright, but without it the innovators lose. Innovation is so important to growing an economy, and allowing people to copy the work of someone else and then sell it possibly cheaper is not production but that. Because for every copied work that is sold, at least one less original work will be sold, so the benefit of labor goes not to the innovator but who is best at copying. Its just another example of winners and losers.

BioTube February 10, 2011 at 9:13 pm

Tcostel, the Mises Institute gives away electronic versions of just about every book it publishes – and it’s proven a very successful strategy. As we see in fashion, innovators come out with new designs on a regular basis to outpace copycats.

Tcostel February 10, 2011 at 9:23 pm

Yes, but in the case you are referring to, the “copier” and the “creator” are both the same institution. Because the Mises Institute publishes the books, of course it can choose to distribute online versions for free. And once again my point is completely ignored. Let me reiterrate. I AGREE that innovators will still exist and even outpace copycats. I am NOT arguing otherwise. What I am arguing is that copiers have no right to duplicate somebody else’s property and sell it as if it where their own. If I write a book (which once tangible is my property) and I sell it on the market, it is my property until it is bought. Once it is bought, it can be resold in any number of ways because it is no longer my property; I was compensated for it. However, when somebody buys my book and then proceeds to copy it enough to sell 5 copies (although only buying one) those copies are sold at the expense of my own. The producer (author) is being punished, where a nonproducer (copier) receives reward. We might as well allow for counterfeit; after, why can I not make copies of money? The premise is the same.

Wildberry February 10, 2011 at 10:23 pm

Tcostel,

In the first part it sounds like you only intend to sell the one copy of your book. Some here argue that is sufficient compensation or can be somehow controlled by a clever contract or something.

However you make a good point, one which Mises addresses in his discussions of external markets. When you break the connection between production and income, you no longer are producing for internal markets in which you benefit from your production, but external markets, in which case you are a slave. If you have a choice, you’ll stop doing it because being a slave feels like a rip-off.

Of course, just because you have property rights, doesn’t mean you have to use your property in a particular way. If I own my house, I can decide to let people live there rent free if I want. But I can also prevent people from moving in against my will. Proprietors have the option of experimenting with various strategies.

Your analogy about counterfeiting is a good one. Just because it is possible does not mean you are not harming someone. Counterfeiters benefit at the expense of others. Copiers benefit at the expense of others.

Watch out, your common sense is leading you to rational conclusions. The horror!

Peter Surda February 11, 2011 at 8:12 am

What I am arguing is that copiers have no right to duplicate somebody else’s property and sell it as if it where their own.

What does this mean? Can you achieve this without redistribution of physical property? If not, you contradict yourself.

Peter Surda February 11, 2011 at 8:27 am

Wildberry,

please stop misrepresenting Mises. Mises did not say that working for external markets is slavery or other such nonsense. He said that the existence of external economies does not per se mean that there is suboptimal utility, and that it is a question of the definition of property rights. I can see no relation with what you said. Everyone can see what Mises wrote here: http://mises.org/humanaction/chap23sec6.asp

Roy Cordato expanded upon him and said that the only way to avoid suoptimal utility as a result of externalities is to define property rights as clearly as possible (something that IP proponents avoid like plague) and that ultimately the definition is something outside of the scope of economics.

Neither of them said that you can contradict yourself.

Wildberry February 11, 2011 at 12:32 pm

Peter,

“Can you achieve this without redistribution of physical property?”

What does this mean?

Wildberry February 11, 2011 at 12:42 pm

Peter,
I had referred you to this section earlier, which concludes as follows:

“It is beyond the scope of catallactics to enter into an examination of the arguments brought forward for and against the institution of copyrights and patents. It has merely to stress the point that this is a problem of delimitation of property rights and that with the abolition of patents and copyrights authors and inventors would for the most part be producers of external economies.”

I have simply said that being forced to produce for external markets (economies) is a pretty good definition of slavery. If a person has choice in the matter, they will choose not to do it.

This is the essence of the Mises text above the quote copied above. That is the argument I have been making. Deal with it.

Peter Surda February 11, 2011 at 1:03 pm

Wildberry,

What does this mean?

You can’t be serious, Wildberry. It means that you need to show an example of enforcement of IP that does not involve theft of physical property.

I had referred you to this section earlier, which concludes as follows:

Well, now you provided yourself a proof that Mises did not use the word “external market” and there is no connection between what he said and slavery. Furthermore, I pointed out that causality extends to infinity and is therefore unavoidable. You do not address this. The logical conclusion of your claim is then that no matter what you do, you are a slave. Which is a completely useless remark, just like all the other stuff you produce.

That is the argument I have been making.

No. You are not making arguments. You are making evasive maneuvers.

Wildberry February 11, 2011 at 1:58 pm

You need to chill, Peter. You’re getting yourself all worked up over nothing.

Peter Surda February 11, 2011 at 2:08 pm

Wildberry,

regardless of whether I need to chill out, you need to start arguing. Otherwise you shouldn’t be surprised at the reactions you get. Did you address my objections? No.

Peter Surda February 11, 2011 at 7:18 am

Hello Tcostel,

The argument is that those that do come up with their own designs/books will not be rewarded for their labor if somebody else can sell the exact same thing without putting in the effort to innovate themselves.

First of all, the assumption is incorrect. With or without IP, you have the advantage of being the first on the market and of a reputation increase as the author. So you cannot say that you won’t be “rewarded”. Second of all, IP not only affects the revenues, but also the costs. So you could just as well argue that with IP, the costs of innovation would be too high. There is no apriori reason why the one should be higher than the other.

J. Murray February 11, 2011 at 7:48 am

I think the argument is “not rewarded as much.”

The debate over IP, in it’s purest essence (remember, I really, really don’t care what someone says, it’s what someone does is what I’m concerned about), is what amount that reward should be.

Authors get rewarded. It was common in the 19th Century for British authors to sell their works in America, which had an incredibly weak IP law at the time compared to Britain, for a single lump sum for the manuscript to a publisher. The publisher ran huge initial runs of a title and sold it out to higher profits until other publishers were able to engage in the activity.

It’s all about money. A similar argument happened back when printing presses started becoming common in Europe. Monks of the day, who hand copied every manuscript for immense profits, created a whole host of arguments and excuses as to why governments of the day should ban printing presses (none of them ever touched on their own profit margins). That’s what the argument behind the IP is. Why would an author want to continue to churn out work after work every year when all they need to do is write 6 books, sit back, and let billions flow in?

Time and technology makes information cheaper to produce and distribute. Like the monks demanding something be done about printing presses, authors pushed for the concept of IP to fight against a growing technological sophistication to protect profit margins. That’s all it is, the literary, film, inventor, etc communities simply not wanting to put out more effort to retain the same quality of life.

Eliminating IP will dry up inventions and novels? Hardly. Those inventors and writers don’t know how to make a living in other ways. They’ll now be forced to write more, and higher quality, to maintain a lifestyle they’ve become accustomed to.

Wildberry February 11, 2011 at 12:29 pm

J.Murray
“I think the argument is “not rewarded as much.”
The debate over IP, in it’s purest essence (remember, I really, really don’t care what someone says, it’s what someone does is what I’m concerned about), is what amount that reward should be.”

I don’t think so. I agree we are talking about acts; economic acts. It has little to do with “sufficient” consideration for the protected works, it has to do with the economic rights an “owner” has for use of property.

In the example you give concerning the 19th century, that very thing happens today. When a well know author writes a book, he negotiates with a publisher, who invests in production and promotion for agreed consideration.

The only difference is that today, the cost of copying is much lower, and distribution channels are much more efficient. This is particularly important for a new author with little leverage to get a good deal and the required capital form a publisher. The business case would have to be based on a one-shot publication and then it would be over, in the absence of protection of property rights.

The issue at hand is if and why the author should have any property rights to protect and bargain with.

“They’ll now be forced to write more, and higher quality, to maintain a lifestyle they’ve become accustomed to.”

I don’t know that anyone is saying that we need to come up with something to force someone to write more. I’m not.

However, I think there might be some merit in the idea that the term of limited rights should be tied to economic activity. For example, Salinger’s heirs would enjoy a shorter term because he refused any opportunity to exploit his work, while say a prolific author who licenses in ways that results in widespread dissemination of his work might have a longer term, since many others are also profiting and the public is benefiting from access.

Peter Surda February 11, 2011 at 1:09 pm

Wildberry,

I agree we are talking about acts; economic acts.

What’s the difference between economic acts and other acts? Can economic acts occur without altering the physical world?

The only difference is that today, the cost of copying is much lower, and distribution channels are much more efficient.

It’s called an increase of productivity. Those who stick to inefficient methods of satisfying customer’s needs will be outcompeted and may even go bankrupt. Why is this bad?

The issue at hand is if and why the author should have any property rights to protect and bargain with.

No. The issue is whether force should be used to shield unprofitable business models from competition, and if not liking something justifies theft. The answer to both is no.

Wildberry February 11, 2011 at 11:57 am

Peter believes that after writing a book, you get one shot in time to economically exploit your work. Of course if you are an unknown author, you might as well give it away (produce it for an external market) because once you put even a single copy in the market, you no longer have any economic rights to it.

Being first to the market is of little value when the cost of copying is so low. Also, it is hard to imagine how a reputation would help feed you while you are waiting for it to grow.

It is easy to understand why this is an injury, if viewed from the author’s point of view.

Peter Surda February 11, 2011 at 12:28 pm

Wildberry,

Peter believes that after writing a book, you get one shot in time to economically exploit your work.

Well, strictly speaking, this is a misrepresentation of my position. This is the conclusion, rather than the assumption, of my position, and it’s not my argument. My argument is that you are contradicting yourself. Like here. You say you don’t want to ban competition, but you also disagree that author should be exposed to it. So which is it? To be or not to be? Will you finally make up your mind or do you prefer to live in Contradictionland?

Being first to the market is of little value when the cost of copying is so low.

That’s an empirical problem and has nothing to do with IP.

It is easy to understand why this is an injury, if viewed from the author’s point of view.

It’s easy to understand why people with stupid business plans dislike competition. But that’s not an argument. There are tons of things people dislike yet they are not a violation of their rights. I for example dislike that you pretend to argue. But the use of force to change the situation into one that I like would require the violation of your rights. I suppose you would not be very happy if my approach was to beat you instead of attempting to argue with you. For the same reason, you should oppose IP.

Wildberry February 11, 2011 at 1:46 pm

Peter, Peter, Peter…

“You say you don’t want to ban competition, but you also disagree that author should be exposed to it.”

If this is your example of contradiction, I understand why you are frustrated.

I did not say that copyright should protect an author from ALL COMPETITION, any more than I would say that a hotel owner should be protected from all competition from other hotels. But I do say that a particular hotel owner has an EXCLUSIVE MONOPOLY in the economic rights of HIS HOTEL. Do you see the difference?

It is not a contradiction, unless you think that Mises makes the same error, which he discusses on pages 277-78 of Human Action.

In relevant part I quote: “It would be a serious blunder to deduce from the antithesis between monopoly price and competitive price that the monopoly price is the outgrowth of the absence of competition. There is always catallactic competition on the market.”

Lest you claim this is somehow irrelevant, from the same page; “Under copyright law every rhymester enjoys a monopoly in the sale of his poetry. But this does not influence the market.”

Of course I have pointed all of this out to you before. Deal with it.

“That’s an empirical problem and has nothing to do with IP.”

You are mistaken. IP (copyright) deals with economic rights to a work. So the operation of economic activity is relevant.“It’s easy to understand why people with stupid business plans dislike competition. But that’s not an argument. There are tons of things people dislike yet they are not a violation of their rights. I for example dislike that you pretend to argue.”

I’m not sure what you are trying to accomplish with this tirade, but I am not arguing that IP is legitimate because I like or dislike it. That would be infantile, don’t you agree?

If so, then the rest of your comments are irrelevant.

J. Murray February 11, 2011 at 2:02 pm

No, if we extrapolate IP out to the real world, it would ban other people from opening hotels because one guy had the idea of opening one. A hotel IP would justifyably block others from building hotels for a specific time period, meaning only the original builder has any rights to a hotel.

It was his idea to open a hotel in City X, therefore we should reward his foresight with protection from people copying the idea of opening a hotel in City X.

Peter Surda February 11, 2011 at 2:37 pm

Wildberry,

I did not say that copyright should protect an author from ALL COMPETITION, any more than I would say that a hotel owner should be protected from all competition from other hotels.

Well, that’s the point. You divide competition, externalities and copying (i.e. causality) into good and bad, but you do not explain how to distinguish between them. Absent the explanation, you are left with a self-contradiction.

But I do say that a particular hotel owner has an EXCLUSIVE MONOPOLY in the economic rights of HIS HOTEL.

But you also say elsewhere that it is impossible to have absolute control. thereby contradicting yourself.

Furthermore, I brought the objection of causality extending to infinity (which you, despite repeated challenges, leave unaddressed). I don’t know what you mean by “economic rights” (it’s probably another term made up on the fly to mask the holes in your arguments), but at least you should be able to explain how to determine which part of competition involves violation of “economic rights” and which doesn’t.

Do you see the difference?

I see you are trying to squeeze out of a self contradiction. You pretend that there is a way of distinguishing “good” and “bad” causality, but fail to explain how to actually distinguish between them.

It would be a serious blunder to deduce from the antithesis between monopoly price and competitive price that the monopoly price is the outgrowth of the absence of competition. There is always catallactic competition on the market.

Unless, of course, the government supresses it, just like it does by enforcing IP. IP is a monopoly not because of prices, but because it involves the initiation of force.

Under copyright law every rhymester enjoys a monopoly in the sale of his poetry. But this does not influence the market.

Again, same problem. You have the argument backwards. The reason why we call such a situation monopoly is not because of the effects it has on the market price or by the number of competitors, but because competition is illegal. It is further complicated by the fact that Mises was using the term monopoly in a different meaning that I do. It might be better then to avoid the term altogether and just say that IP outlaws competition.

Of course I have pointed all of this out to you before. Deal with it.

Of course, I have pointed it out that you are misrepresenting the positions, or using vague terminology. I also pointed out that you are not addressing my objections.

You are mistaken.

On the contrary. Not only that, I was quoting Michele Boldrin, one of the authors of Against Intellectual Monopoly. The fact that some business models might not be profitable has nothing to do with IP. All production faces competition and some methods of production will not be able to sustain it, even more so as the barriers to entry sink. But the economists nowadays, even non-austrians, usually don’t use this as an argument to defend protectionism (=outlawing competition). They typically say that although in some cases protectionism might cause, from their normative perspective, a pareto-improvement, it is generally harmful, so it’s more prudent to avoid it altogether.

I am a software engineer. I also have my own company, and coincidentally give away all software for free. If your argument was true, I would be broke. So why do I object to it? Am I some sort of masochist?

IP (copyright) deals with economic rights to a work.

Please explain what “economic rights to a work” means.

So the operation of economic activity is relevant.

Unless you clarify your position, I have to see this as another attempt to divert attention.

…but I am not arguing that IP is legitimate because I like or dislike it.

So, you did not say that copiers should not benefit without paying the author, and that the reason why IP is good is that copying without author’s approval causes injury? Really?

That would be infantile, don’t you agree?

Yes, I completely argree.

If so, then the rest of our comments are irrelevant.

If so, then your argument that unauthorised copiers are bad and cause an injury to the author is also irrelevant. Which means, just like always, you are left without an argument.

Ben Ranson February 10, 2011 at 4:43 pm

I do not see, “fashion as an industry that is super-profitable, super-competitive, super-innovative very fast moving and yet… not governed by… IP.”

The fashion industry is protected by trademark laws. The government takes these laws seriously. They are, in my opinion, a form of IP.

Phinn February 10, 2011 at 6:07 pm

I find it odd that men’s fashion has become so stagnant. Suiting is not substantially different than it was 90 years ago. There was more change over any 100 year period from the 14th century to the 20th than there had been since 1920. A result of mechanization I guess.

The more I look at IP, the more ridiculous it gets. Copying is at the center of all biology, including how cells work, how offspring are produced, how organisms learn. All of evolution is copying plus variation. The same is true for systems that exhibit evolutionary characteristics, like all of language.

Copying is everywhere, in everything people do, but it makes some people very anxious to point this out.

Wildberry February 10, 2011 at 10:34 pm

Hi Phinn,

Yes copying is everywhere and ironically all IP laws have an explicit purpose in making certain uses free, and making sure that the information or works in the public domain stays there.

Like it or not, that is also part of the IP world, so put that in your pipe and smoke it. It is not copying that is at issue, it is copying protected works, which is a very narrowly drawn concept, despite what you may have heard.

There are issues with all IP laws, but it is not, in my view, with the fundamental concept of limited property rights, it is with the implementations at the margins, and the mercantilism that breeds around government enforcement authority. But of course, we would never get that far from the central point being debated here, which is Rothbardian anarcocapitalism.

Peter Surda February 11, 2011 at 8:28 am

Wildberry,

It is not copying that is at issue…

Indeed. It’s stupidity that’s the issue.

Wildberry February 11, 2011 at 12:43 pm

Perhaps, but whose?

Peter Surda February 11, 2011 at 12:58 pm

Maybe those who continuously contradict themselves?

Phinn February 11, 2011 at 2:25 pm

When the issue is establishing a sound basis for property, the way that legislation is currently written doesn’t particularly matter. It proves nothing, and is afforded no credibility merely because it was approved by some men who call themselves legislators. I could not care less what they think or say.

Furthermore, when evaluating the extent to which legislation violates property rights (real ones, not imaginary ones), it doesn’t particularly matter whether said legislation violates them less than they potentially could. Slavery is not justified merely because it reaches something less than 100% of a person.

Finally, your characterizations of that legislation as “narrowly drawn,” or whatever other adjectives you choose to throw at it to justify it, don’t particularly matter, either. Argument-by-adjective is essentially meaningless.

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