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Source link: http://archive.mises.org/16700/the-wicked-work-of-medical-patents/

The Wicked Work of Medical Patents

April 29, 2011 by

Patents are one of many driving forces behind rising medical costs. It is not just MRI machines. FULL ARTICLE by Jonathan M. Finegold Catalan

{ 114 comments }

RG April 29, 2011 at 9:31 am

Be more careful than that, Jonathan. You’re participating in conflationism as Dr. Long’s speech from the Chicago circle reprinted here yesterday stated.

http://mises.org/daily/5226/How-to-Reach-the-Left

Yeah, patents (and all IP) are bad. But, so are the obstacles to manufacturing put in place by the same government that grants and protects IP.

Jonathan M. F. Catalán April 29, 2011 at 10:48 am

Without trying to sound glib, I don’t understand what point you’re trying to make. This article is on a very specific historical episode.

Matthew Swaringen April 29, 2011 at 1:23 pm

I guess he’s saying that GE was only able to create a superior product due to the influence of government?

Jonathan M. F. Catalán April 29, 2011 at 1:30 pm

That might be the case. I’m not trying to absolve GE of any relationship with the state (that’s why I included a similar parenthetical point in the article).

RG April 29, 2011 at 1:47 pm

…but you failed to address their relationships as even an indirect influence in this particular case.

The “big” corporations used the state as a hammer to indirectly prevent him from successfully manufacturing MRIs. He used the state directly to hammer them back.

Whether the state is used directly or indirectly is of little consequence.

Jonathan M. F. Catalán April 29, 2011 at 1:52 pm

What relationship did I fail to address? It’s a relationship you’re implying, but I have no evidence of.

RG April 29, 2011 at 2:25 pm

I agree that GE or any organization should be allowed to attempt to meet consumers’ wants if they desire and if they develop a method that puts another organization out of business that’s good for all of us. Their resources could be better utilized elsewhere in the market.

But, you can’t separate the noble aspects of one organization and set them against the immoral aspects of another when both use the state as leverage.

“…(this is not to suggest that in other cases General Electric does not itself exploit government to its benefit). General Electric’s actions served the consumer by providing a better product. Damadian used government to secure his earnings at the expense of the consumer.”

This is conflation. GE couldn’t provide a better product without first using the government to secure earnings at the expense of the consumer.

Jonathan M. F. Catalán April 29, 2011 at 3:11 pm

RG,

That’s a very strong, and obviously unsupported, assumption to make.

RG April 29, 2011 at 4:43 pm

That is hyperbole.

Wikipedia page on GE uses “patents” in the second sentence of the history section.

Frank April 29, 2011 at 6:23 pm

YOU’RE KIDDING, RIGHT?

My bro’s a Harvard MD/PhD. Could go work for OweBama-ites @ $300,000/year and do nothing useful. Or risk 10 years of career-time and $1MM compensation and invent something that saves lives and taxes — only with patent protection.

Young sir, you really need to know something about medical research before keyboarding. No one with a brain would invent anything if they thought GE/Siemens/Fujitsu would steal their hard work.

Good luck.

Stephan Kinsella April 29, 2011 at 8:58 pm

How do you “steal” someone’s “work”?

Frank April 30, 2011 at 5:30 am

Try writing a best-seller book, which can take years. Don’t do anything, when the Chinese and Swedes re-publish WITHOUT paying you for your efforts.

That’s stealing.

With thinking like this, the world would still be in caves.

Peter Surda April 30, 2011 at 6:13 am

Frank,

Try writing a best-seller book, which can take years. Don’t do anything, when the Chinese and Swedes re-publish WITHOUT paying you for your efforts. That’s stealing.

That’s not stealing, that’s an unprofitable business plan. It is also, of course, the labour theory of value.

Stephan Kinsella April 30, 2011 at 11:08 am

Doesn’t stealing mean taking something away from someone so that they no longer have it? You know, like if you steal my bicycle, I no longer have it?

You referred to “steadling” someone’s “hard work”. Obviously this is not possible. In fact it makes no sense.

I think what you must mean is that if the Chinese publish a copy of your novel, you might make less profit from customers, so that what they have “stolen” from you is the money owned by customers that the customers might have otherwise given to you in an exchange. Right? But you don’t have a property right in customers’ money, do you? If you don’t, how can it be stealing?

Frank April 30, 2011 at 11:28 am

YOUR BUDDIES @ WSJ

Try taking op-ed material about Mises from “The Wall Street Journal” and publishing it, and not paying WSJ a USPTO royalty. Your WSJ buddies will sue you so fast, your head will spin off your neck.

Get real, or go live in a cave. Or find work that people will pay you for.

Stephan Kinsella April 30, 2011 at 11:45 am

what’s a “uspto royalty check”? And the fact that they can sue for copyright does not answer the question I asked you: how can you steal someone’s “work”?

Jonathan M. F. Catalán April 29, 2011 at 9:07 pm

Yet, Damadian did.

Frank April 30, 2011 at 5:27 am

How?

Frank April 30, 2011 at 5:35 am

How? Do you know anything about the law? What it takes to have someone arrested?

Then, if you think someone has — why don’t you have them arrested? GE, Siemens, Fujitsu would like that.

You guys need to stop keyboarding and actually try to work for years in a research lab. You’d find out what work is really about — like OweBama is.

Thanks for laughs. You funny. Good luck.

Jonathan M. F. Catalán April 30, 2011 at 1:51 pm

I’m sorry, but I don’t even know what you’re talking about anymore.

Frank May 1, 2011 at 11:03 am

Try finding a job in a research lab that cures disease. Good luck.

Frank April 30, 2011 at 5:46 am

LOL FUNNY

Neil Young, like so many singers, believes in socialism. Then he was asked about the Chinese and Swedes, STEALING his intellectual property (music CDs). “Oh, you have to pay for that,” Young said.

Like the old “Bert & I” skit about the Maine cattle-farmer who is for socialism. Until he finds out that means the government will take, without compensation, 50% of his herd.

Four legs bad, two legs good, guys?

Good luck, trying to make a living, letting others steal your property. You said you don’t want me to stop them — happy to oblige.

RG April 29, 2011 at 1:30 pm

I understand what inference you’re trying to make, but you forgot to mention that GE, J&J, and Emerson gained their manufacturing advantage by using the same tool(s) Damadian used to fight them off.

The point we must continue to drive home is that the state creates the dog eat dog situation often blamed on the unfettered market, it doesn’t protect us from it. You just picked a particular dog in the fight as more worthy of victory.

Freedom Fighter April 29, 2011 at 9:54 am

It’s not just a question of patents and stopping competition. Rising health care costs also come from regulations, the FDA approval scheme, the war on drugs, controlled substances schedules, advertisement regulations and all other government involvement that prevents businesses from selling the health care they want and consumers from buying the health care they want.

They even prevent certain surgical procedures and consumers have to travel abroad to get the health care they are being denied here. Then, they vehemently slander medical tourism publicly and claim it’s not safe, it’s not moral etc. Especially in socialized countries. Doctors often refuse to follow patients which have been found “guilty” of medical tourism.

High health care costs is all about government getting in the way, it has nothing to do with business nor profits.

Jonathan M. F. Catalán April 29, 2011 at 10:53 am

Right, this article isn’t on rising health care costs. I didn’t mean to imply that IP laws are the only cause of rising medical costs. For what it’s worth, I’ve written on increasing insurance costs here and here.

High health care costs is all about government getting in the way, it has nothing to do with business nor profits.

Well, to a degree it does have to do with business and profits. Like the article suggests, it has to do with businesses earning profits through government monopoly, as opposed to earning profit through the market. Profit-seeking does have a lot to do with it, but I had hoped that I made it clear in the article that I wasn’t suggesting that all profit-seeking is bad (in fact, I wrote that we’re all profit-seekers in our actions).

Freedom Fighter April 30, 2011 at 4:30 pm

Your article is very clear and I understood it well. But my point is that IP laws are the least important when it comes to decreased accessibility to health care.

My point is that even without patent laws, suppose they didn’t exist, there would still be a lot of surgical interventions, medicines and diagnostic technologies that would not be available or would be extremely expensive only because of government regulations preventing those advances to ever reach the market in the first place.

FDA approval red tape is the number one reason why medication is so expensive. After going through all the expenses of complying with the FDA, companies want patents to protect their medications.

Abolish the FDA, abolish the Surgeon General, abolish the AMA, abolish the NIH and companies will have every incentive to be the first to market a medication. Their incentive will be placed on development instead of protection.

Josh April 29, 2011 at 10:21 am

“Medical patents ultimately hurt the consumer.” – The seen and unseen my friend. Rewarding entrepreneurs for work incentivizes more entrepreneurship.

Yes, IP monopolies are bad, but compulsory licensing does away with the problem of monopoly while still giving creators rights to their ideas.

Jonathan M. F. Catalán April 29, 2011 at 10:55 am

I take a different stance on the notion of ‘rights’ than most other libertarians do. I don’t have any intentions towards entering in a prolonged discussion on the topic, but basically I don’t believe that anybody has any type of ‘natural right’. You have legal rights as established over time in the market; an example is the right to property that we enjoy. I’m sure that entrepreneurs will search for ways of internalizing the benefits of their ideas, but I don’t think that government monopoly is a credible solution (especially since it operates outside of the market).

Matthew Swaringen April 29, 2011 at 1:26 pm

How does compulsory licensing work on 3rd parties? Or are you saying it’s compulsory for everyone, in which case I fail to see the difference between this idea and the monopoly.

Alpheus May 27, 2011 at 10:36 am

“Rewarding entrepreneurs for work incentivizes more entrepreneurship.”

Patent defenders keep saying this, but they never cite studies, nor provide logic, demonstrating that this is the case, and that other innovation isn’t harmed.

How many mathematics theorems remain unproved, for example, because you can’t–and shouldn’t–patent them? Who’s to say that the world wouldn’t be a better place, because we encourage people to be inventors by giving them patents, and thus, by default, discourage them from mathematical pursuits? (After all, time is scarce!)

And no, you shouldn’t patent mathematics, and I doubt that patents would be useful anyway. It often takes decades, if ever, to find application for a given theorem, and by then, the patent period would have expired anyway.

Tony Fernandez April 29, 2011 at 10:22 am

What’s amazing to me is that genes are patented. In fact, I think the BRCA gene, which is a major determinant of the risk of breast cancer, is patented by one of the research companies. Any drugs that could potentially target that gene need the approval of the company for development. It’s amazing and it’s horrifying.

Freedom Fighter April 30, 2011 at 4:34 pm

To patent genes is as absurd as to patent star constellations in the sky.

To patent genes is like being the first one to take a picture of mount everest and then patenting mount everest and charge money to anyone who wants to take a picture of mount everest in the future.

zaq.hack May 2, 2011 at 6:39 am

This should fail in court under “prior art.” The company can show no merit to having “invented” such a gene, no original work toward the creative process, and a 2-bit patent lawyer could get this knocked down. Pharma companies have an irrational system of dealing with drug creation due to other restrictions of government. They get 20 years on any given patent, but the government often forces researchers to “prove” a wide array of very expensive tests often taking 10 years and more. To “game the system,” they now submit patents for anything they think will be interesting 10 years from now so that they can try to get more profit from their research.

There is definitely a libertarian angle, here.

The abolition of intellectual property is not the proper direction.

Wildberry April 29, 2011 at 10:26 am

Jonathan,

I know nothing more about this case than you report, so on those facts, let me ask you the following:

If the parties here had known in advance everything that was going to happen in litigation, what would have been the rational outcome, and what would have been economically efficient?

If Damadian’s property rights in the patented technology was absolutely known, then one would presume that Damadian would license it to GE for some price. If that price was greater than he expected to gain under his own manufacturing prowess, then he would likely accept. If GE would pay less to him than they would have paid to develop the technology on their own, set up manufacturing, and sell the product for a profit, they would have gladly paid Damadian.

Instead both parties spent considerable sums disputing each other’s claims in court, and the entire litigation costs became externalities to both parties. In the end, they both paid more than they otherwise would have.

David Friedman calls this a bilateral monopoly, where neither side can afford to abandon their claim and an inefficient outcome results.

Isn’t it possible, therefore, to look at the same facts and determine that under perfect property rules, GE would have licensed the technology for $128M or so, and both parties would have been better off, and the technology would have been introduced perhaps sooner, but certainly without the considerable external costs?

Property rules do not exist for the direct benefit of consumers, and it is a strange basis for your argument. Property rules exist for the benefit of their owners, and to facilitate the accommodation of efficient market operations.

When property rules are ambiguous or when a party believes he can obtain an unfair advantage from the courts or government, and invests time and money accordingly, everyone is worse off. It is simply a form, when viewed from this perspective, of mercantilism.

Isn’t this story just an example of what happens when property rights are not clearly defined, or are contested by someone who determines it advantageous to try to ignore or defeat them?

The fact that the property rights were a result of patent laws seems almost immaterial. There is nothing in your article to indicate what GE’s basis was for assuming that they would win this case, which they did not. If we assume that Damadian’s title to his invention was good, on what basis would GE or you conclude that he is, or should be subject to a competitive use of his property without license?

To claim that he should be subject to direct competition by free access to his property is no more logical that it would be to argue that it would be reasonable to allow you to rent out rooms in my hotel in the name of competition and that by so doing, the needs of consumers are better met.

Jonathan M. F. Catalán April 29, 2011 at 10:59 am

Property laws aren’t about internalizing costs, they’re about internalizing benefits. Like I wrote in a comment above, I’m sure that in a market entrepreneurs will try to find ways of internalizing the benefits of their ideas, but government monopoly is not a credible solution.

To claim that he should be subject to direct competition by free access to his property is no more logical that it would be to argue that it would be reasonable to allow you to rent out rooms in my hotel in the name of competition and that by so doing, the needs of consumers are better met.

The two aren’t the same thing, and it’s the typical conflation that most pro-IP people make. Your hotel is your property out of legal rights developed on the private market, not an alleged natural right to property. These types of rights have not been developed for ideas, largely because of the difficulty in doing so.

In any case, without going off further on the same topic, our disagreement basically boils down to the notion of ideas as someone’s natural property.

Wildberry April 29, 2011 at 11:37 am

@Jonathan M. F. Catalán April 29, 2011 at 10:59 am

I share your apparent desire not to go down another rat hole here, but I’ll just make a couple of brief points.To be more precise, property laws are one approach (compared to say, liability rights) to internalizing both external benefits and costs. Good laws generally produce economically efficient outcomes. This is the basis for Coase’s work, in addition to the observation that the common law generally produced economically efficient outcomes.

Second, whereas you claim that the analogy fails on the basis of a distinction of natural rights, I think it succeeds because it does not depend on a theory of natural rights.From my perspective both objects of property rights are identical in the sense that their existence is a matter of law.

Property rights in land do not exist because of natural rights, but rather because of legal institutions that define and protect them.That fact that these laws have some basis in ethical principles to confirm their legitimacy is equally true in both cases; certainly you would not deny the ownership of the invention by the inventor prior to disclosure. It is only when disclosure is required or desirable that property rights become relevant.

In the case of the hotel, my ownership of the hotel, which prevents you from renting rooms, is defined and protected by property laws. In the case of patent, the property rights in the invention are defined and protected by patent laws.

In the balance between the rights of consumer and the rights of inventors, it is obvious that you side overwhelmingly with consumers, but a free market is based on free trade and competition.

Part of your error here is to conflate the two connotations of monopoly, as Mises pointed out in Human Action. All property rights are a monopoly, and are all around us. Economic monopolies, however, lead to price monopolies, and even if they exist, it is difficult for them to persist.Books and inventions, both product monopolies, must compete with all other products.

In this case, MRI must compete with all other methods of detecting cancer. Hotels must compete with all other hotels. Books must compete with all other books. In no case can the owners create a pricing monopoly, and in every case, the efficiency of the market is insured through competition and bargaining between seller and buyer.

Nothing about this story conflicts with these basic and generalized principles.

Jonathan M. F. Catalán April 29, 2011 at 12:18 pm

I’m not conflating any “connotation of monopoly” (whatever you mean by that); Damadian was trying to monopolize the manufacturing of an entire product (and he succeeded in regards to the new MRI scanners). It’s not just about owning physical property, but the ability to produce something that stems from an idea. I’m sorry, but there’s just no clear-cut distinction that can be made.

In this case, MRI must compete with all other methods of detecting cancer. Hotels must compete with all other hotels.

Right, but the two cases aren’t comparable. It would be more comparable to where the idea of a ‘hotel’ was monopolized, and thus only one person could produce hotels and provide the service.

Like I said, I’m sure that people will try to internalize the benefits of their ideas in a free market. But, it doesn’t mean that the outcome will be the same as government provided patents and copyrights; entrepreneurs opt for these options precisely because they can’t garner the same types of privileges on the market.

Wildberry April 29, 2011 at 2:27 pm

@Jonathan M. F. Catalán April 29, 2011 at 12:18 pm

I’m not conflating any “connotation of monopoly” (whatever you mean by that);

I’m sorry, I think you are. See Mises, Human Action SE page 277.

Damadian was trying to monopolize the manufacturing of an entire product (and he succeeded in regards to the new MRI scanners).

Well, I suppose you could define the product in such a way that what you say is true. You could say that my hotel, located at the corner of 1st and Broadway, is a monopoly of all hotels at that location. It is also possible to describe a hotel as a monopoly in a district, a municipality, or a state or nation, or world for that matter.

Here we are talking about a particular imaging technology invented by a single person. It must compete with imaging devices invented by others. If you deny the principle of ownership in that invention, then the market calculations of both buyers and sellers will have to adjust based upon the defined conditions. It is not reasonable to speculate that the conduct exhibited under a scheme of patent rights will not change under some other scheme. The entire question of how GE gained access to the invention is begged in the presentation of facts in your article.

It’s not just about owning physical property, but the ability to produce something that stems from an idea. I’m sorry, but there’s just no clear-cut distinction that can be made.

You are simply repeating the “ideas are free” argument as if it was some immutable fact. Of course you ignore the distinction between ideas and protectable IP that is embodied in the law, as one example.

If in fact “ideas were free”, in the sense I understand you to mean, then the entire invention/disclosure process would evolve under those conditions. You cannot speculate about the “wrongness” of IP under the property rights provisions of the law, and not speculate about the “rightness” of IP under the disclosure/access provisions of that same law. This is how anti-IP advocates smuggle in their assumptions about availability and incentives for innovation not being affected by the absence of IP.

Right, but the two cases aren’t comparable. It would be more comparable to where the idea of a ‘hotel’ was monopolized, and thus only one person could produce hotels and provide the service.

This is in fact true under the concept of trade mark/trade dress, where a particular “idea” for a hotel is expressed in terms of design, atmosphere, furniture, etc. At some level of detail, the “idea” of a particular hotel is deemed protectable, especially where misrepresentation is involved. There is a protectable distinction between Chilly’s and TGIF, but they both compete not only with each other, but with all other restaurants, home cooking, fasting, etc.

MRI competes with all other technologies, including CAT scan, Xray, Ultrasound, etc. It is up to the consumer to determine if the price for MRI is worth the added benefit. It is up to the owner of MRI to determine the offering price is beneficial, and which eventually approaches the marginal cost of production, like all other products. Whether it is successful as a product depends on the subjective value perceived by consumers, just like all other products.

Like I said, I’m sure that people will try to internalize the benefits of their ideas in a free market. But, it doesn’t mean that the outcome will be the same as government provided patents and copyrights; entrepreneurs opt for these options precisely because they can’t garner the same types of privileges on the market.

I respectfully suggest you reconsider your assumptions. You are right that people will continue to seek profit, and outcomes will not be the same under one set of assumptions and another.

But options (for patent) exist for the same reasons all property rights exist; to facilitate market operations in a way most likely to produce efficient economic outcomes. You fail to offer any justification for why you think your assumptions, i.e. no patent rights, would produce a more efficient result.

You seem to hold a vague belief that somehow consumers will benefit, but you assume that the production of innovations, transaction costs for trade, enforcement costs, etc. will not change if rights to what an inventor makes are not defined and protected by rules of law. What is the basis for this set of assumptions?

Jonathan M. F. Catalán April 29, 2011 at 3:22 pm

Wildberry,

I’m not ‘conflating’ anything regarding monopoly. Fonar owns a monopoly on the production of MRI scanners within the physical boundaries of its factory. Fonar owns a monopoly over the use of machinery within that factory. Okay, but this was never in question. What’s in question is the ability for others to produce the same, or similar, machine on their own factory grounds.

The entire question of how GE gained access to the invention is begged in the presentation of facts in your article.

I don’t know about GE, but it is mentioned that J&J developed their own MRI scanner before Damadian put into production his own through Fonar. Whether J&J’s scanner is based on Damadian’s research, I don’t know, but limiting somebody based on who did what research is borderline absurd. If it wasn’t, then I probably should be disallowed from writing this article, since a lot of the concepts have been borrowed from other peoples’ work.

You are simply repeating the “ideas are free” argument as if it was some immutable fact. Of course you ignore the distinction between ideas and protectable IP that is embodied in the law, as one example.

I’m not repeating the “ideas are free” argument; please re-read what I wrote.

In regards to your second sentence, I have no idea what you’re trying to say.

If in fact “ideas were free”, in the sense I understand you to mean, then the entire invention/disclosure process would evolve under those conditions. You cannot speculate about the “wrongness” of IP under the property rights provisions of the law, and not speculate about the “rightness” of IP under the disclosure/access provisions of that same law.

Tangible property rights in the United States developed in the free-market (see de Soto’s The Mystery of Capital), and similarly in Europe during the late Middle Ages. So, here the conflation is on your part. Intellectual property laws did not develop in the free market, precisely because they are so difficult to protect. IP laws are a product of using the state as a way of enforcing them, because only the state had the sufficient force to do so.

Like I keep on repeating (and you keep on ignoring), I have always agreed that in a free market people will try to internalize benefits. This includes internalizing the benefits of one’s ideas, but the way that they’ll be able to do this will be radically different than how it’s done now, because in the hypothetical free market there is no monopoly on force to enjoy and exploit.

MRI competes with all other technologies, including CAT scan, Xray, Ultrasound, etc.

You’re still making an inaccurate comparison. It would be like a hotel vs. a motel vs. a hostel. Not hotel vs. hotel.

But options (for patent) exist for the same reasons all property rights exist; to facilitate market operations in a way most likely to produce efficient economic outcomes. You fail to offer any justification for why you think your assumptions, i.e. no patent rights, would produce a more efficient result.

Because your own case is based on the assumption that without patents nobody would develop ideas. The notion is absurd, and is even disproven in the case of Damadian who continued to develop the technology despite having to “suffer” from competition that based itself on his own ideas.

What is the basis for this set of assumptions?

Empirical evidence.

Wildberry April 29, 2011 at 6:43 pm

@Jonathan M. F. Catalán April 29, 2011 at 3:22 pm

I’m not ‘conflating’ anything regarding monopoly. Fonar owns a monopoly on the production of MRI scanners within the physical boundaries of its factory. Fonar owns a monopoly over the use of machinery within that factory. Okay, but this was never in question. What’s in question is the ability for others to produce the same, or similar, machine on their own factory grounds.

OK, we agree on your first two points, but why do you stop there? How are you supposing that GE had the MRI technology?

Either it was disclosed (required under patent law), it was legitimately reverse engineered (under trade secret), or it was simultaneously invented. What other alternatives are there?

Only that it was placed in the public domain by the inventor. No rational producer would give away his products, yet that is what you are supposing should have happened here, which is what would have happened if 1) the inventor was mistaken about his property rights and disclosed it under the conditions of his misinformation and/or 2) There was no existing apparatus for the inventor to assert and protect those rights, even if they “existed”. Of course without the ability to successfully defend rights, they can’t exist.

If any of these things occurred under your assumptions of non-IP, then it is likely that events would have unfolded differently, since the actors would have been acting under different (unknown?) assumptions about the market rules.

You cannot assume disclosure UNDER IP rules, and then assume ACCESS under some other rules.

If you assume non-property rights of an invention, then you have to speculate about disclosure. If you assume property rights of an invention, then you have to recognize it as property during and after disclosure. Why would you assume something to be property before it is disclosed, and not property simply because it was disclosed?

Under the conditions of exclusive use, the owner has every right to exclude other users. Under these conditions, property monopoly does not equate to pricing monopoly. To equate them is to equate the different connotations of monopoly in order use economic monopoly to argue against property monopoly. That is the conflation of meaning that allows you to make your argument that Damadian was using the state to enforce his “monopoly”. To show how you are conflating, substitute “hotel” and you see your fallacy.

I don’t know about GE, but it is mentioned that J&J developed their own MRI scanner before Damadian put into production his own through Fonar. Whether J&J’s scanner is based on Damadian’s research, I don’t know, but limiting somebody based on who did what research is borderline absurd. If it wasn’t, then I probably should be disallowed from writing this article, since a lot of the concepts have been borrowed from other peoples’ work.

These are rather relevant facts, aren’t they? If you knew that GE sent in a clandestine spy to steal the design, and there was no other plausible explanation for GE’s possession of the design, would that change your conclusion? Under a non-IP scheme, the inventor would have no recourse at all unless he could prove theft, but theft of what? You can’t steal something that is not owned, so for the damages of mere trespassing, GE could raid inventors all day long? That is competition that you favor?

I’m not repeating the “ideas are free” argument; please re-read what I wrote.

Perhaps you don’t recognize it as your underlying theme.

“Ideas are free” is an argument which asserts that ideas and IP are the same thing, that IP is simply a form of idea. Since ideas are free and inexhaustible, they cannot be owned, and therefore IP cannot be owned. Once an IP “idea” is disclosed, it is in the public domain and can be used by anyone freely. Therefore there can be no property interest in IP, because “ideas are free”.

You criticize the inventor for using the state to protect his “monopoly” property interest, which you object to because…state granted rights in IP is “wrong”; ideas are free and are not property, so using the state to gain them and defend them is also wrong. What is right? Something you call competition, but you use that term to mean market operation in the absence of property rights, which makes utterly no sense in the context of any other form of private property.

This is the “ideas are free” line of anti-IP argumentation.

In regards to your second sentence, I have no idea what you’re trying to say.

If in fact “ideas were free”, in the sense I understand you to mean, then the entire invention/disclosure process would evolve under those conditions. You cannot speculate about the “wrongness” of IP under the property rights provisions of the law, and not speculate about the “rightness” of IP under the disclosure/access provisions of that same law.

To paraphrase Kinsella, inventors (or authors) can keep their invention secret, but if they fail to do so, then there can be no whining about other people using it.

If those are the rules that you are going to assume, then you have to assume how producers of such unprotected “goods” would take them to market, or in fact whether they would bother, especially in the context of the small, undercapitalized inventor.

That is a little bit like speculating what life would be like if we were Cu based instead of C based organisms. The consequences cannot simply be brushed away by saying that “the market will figure it out”, or as you say, people will continue to seek profit. Life would no doubt find a way to evolve either way, but it is a bit presumptuous to assert that you can accurately speculate about the outcomes. You certainly have scant to no empirical data to back up your assertions. Your assumptions contain a universe of possibilities.

Tangible property rights in the United States developed in the free-market (see de Soto’s The Mystery of Capital), and similarly in Europe during the late Middle Ages. So, here the conflation is on your part. Intellectual property laws did not develop in the free market, precisely because they are so difficult to protect. IP laws are a product of using the state as a way of enforcing them, because only the state had the sufficient force to do so.

If you are arguing that tangible property is old and IP is new and so IP is not legitimate, or that it would have developed earlier if it was easier to protect, I think this might you might be confusing correlation with causation. The emergence of contemporary Patent law coincided with the industrial revolution specifically because of the explosion in inventions and the economic benefits derived from them.

This implies that the nature of advanced technology, which didn’t exist in the Middle Ages might have something to do with the evolution of IP laws. As to what did and did not develop in the free market, I would say that this is simply assumption built upon assumption.

First, at what point in the Middle Ages do you suppose existed a “free market”. Second, what historical data do you have that illustrates that it was tried but was too difficult to enforce? Or that it was thought of and not tried? Or that it was not thought of because it wasn’t needed? I think the presumption of a historical “free market” as a basis for determining what is right and what is wrong is nothing more sophisticated than presuming that human rights evolved from a Crusoe device. In neither case can we prove that we are right or wrong. It is just a mental device for performing thought experiments.

If you meant to imply that we only have IP because we have the state, then you have to apply that reasoning to all other forms of property. How would you protect your land in the absence of the state? Private means? What if someone with greater means than you meant to displace you? This all seems like a scenario that leads escalating costs and perhaps considerable human suffering. Of course since we are assuming things, we can assume that all men are angles. Problem solved.

Finally, the free market arguably created the state itself. With the existence of government enforcement powers, enforcement became much more certain and cost-effective, meaning that rights could be enforced without access to a private army. That also changed a few things, don’t you think?

Like I keep on repeating (and you keep on ignoring), I have always agreed that in a free market people will try to internalize benefits. This includes internalizing the benefits of one’s ideas, but the way that they’ll be able to do this will be radically different than how it’s done now, because in the hypothetical free market there is no monopoly on force to enjoy and exploit.

As I keep saying and you keep ignoring, you cannot selectively apply your assumptions to one dependency and not others. If I said, “in the hypothetical free market there is no monopoly on force to enjoy and exploit” in the context of private property in land, what would I be implying? That property monopoly would not exist because you could not defend these rights even if you asserted them?

Let me explain it this way. I have a right to prevent trespass because I own the land. Yet I can decide to invite all comers. I can open an amusement park. Have I abandoned my ownership of my property rights, even though I am foregoing my rights to exclusive use? What if I change my mind? Do I still have the right to exclude all those I had invited in?

Just because I may decide to adopt a certain strategy for use of my property does not negate the legitimacy of my private property rights. I decide to do something based on what I know. If I know that once I invite people in, I can no longer exclude them, I might calculate the subjective value of that act to a different conclusion than I would otherwise.

You’re still making an inaccurate comparison. It would be like a hotel vs. a motel vs. a hostel. Not hotel vs. hotel.

This would the equivalent of a “full body scan” MRI and a portable package for field diagnostics, or one based on high frequency oscillations and one with lower scan rates, or whatever. Within two inventions, there can be overlap, there can be improvements which are not derived from the prior art, etc. They’re all still imaging devices, just like in your example of categories of sleeping accommodations which are rented instead of purchased. Each has their own advantage and disadvantage, and must compete for consumers along with all other products in the category of “products for people looking for a place to stay the night”.

No one owns the idea of using “electromagnetic phenomena for the purpose of medical imaging applied to diagnosis.” As you can plainly see, such an idea is not in any way equivalent to a functioning MRI machine that can in fact generate medical images that are useful for diagnosis.

Because your own case is based on the assumption that without patents nobody would develop ideas. The notion is absurd, and is even disproven in the case of Damadian who continued to develop the technology despite having to “suffer” from competition that based itself on his own ideas.

I didn’t actually say that. What I said was that you don’t know what the impact would be, and either do I. We are speculating, which is fine as far as it goes. But despite what you say below, there is no empirical evidence that I’m aware of. What we can surmise, based on experience, is how property rights operate in a number of contexts, one being IP. Since you cannot run an experiment that eliminates IP to see what happens, you don’t know and you cannot not test your assumptions empirically.

But you can make assumptions and then speculate as to how society and markets would deal with those assumptions. That is what you are doing and nothing more.

Empirical evidence.

Please show me.

Peter Surda April 30, 2011 at 6:29 am

Wildbery,

In the case of the hotel, my ownership of the hotel, which prevents you from renting rooms, is defined and protected by property laws.

Although I complained about this several times already, you are repeating the same error. The core issue is not the laws of men, but the laws of nature. Two people simultaneously renting out the same room is impossible. Even if you declare it legal, it’s still impossible. The actions are mutually exclusive,, or, to put it into different perspective, they revolve around the same scarce good. So, logically, if the reason for rights is to determine which actions are legal and which not, at least one of the people in the example is doing something wrong.

There is, however, no such phenomenon recognisable when dealing with non-scarce goods. Therefore, there is no requirement to determine which action regarding is legal and which not. Furthermore, as you ignored repeatedly, the only way for non-scarce goods to exist is as representations of scarce goods, so the laws would need to contradict.

So stop making up stuff. Admit your error or confront your opponents.

zaq.hack May 2, 2011 at 7:12 am

Since in this discussion we are long on assumptions and short on evidence (though behaving conversely), let’s say that Damadian does not make his idea known. Instead of trusting the patent law to protect his idea, he keeps it to himself. It cannot then be gained “freely” by external parties in much the same way as two people cannot rent the same room (unless someone can read his mind).

In this case, the best way for Damadian to profit is to produce exactly ONE machine and to charge patients for its use.

So unless another company spends the money and resources for parallel development or unless Damadian lets his idea spread some other way, is this not a bigger waste of resources and the most harm to consumers (short of no machine being produced at all)?

Peter Surda May 4, 2011 at 4:09 am

Dear zaq,

In this case, the best way for Damadian to profit is to produce exactly ONE machine and to charge patients for its use.

Well, that depends on the elasticity. But a clever business strategy might make even more profit.

So unless another company spends the money and resources for parallel development or unless Damadian lets his idea spread some other way, is this not a bigger waste of resources and the most harm to consumers (short of no machine being produced at all)?

Now, this requires interpersonal utility comparisons, which the Austrian School does not like very much. But even then there is no reason for alarm. The costs spent by subsequent companies for independent discovery will probably be lower. For starters, they know that such a machine exists, so the problems they might have are solvable. They also know that if competition existed for the pioneer, they would be able to reap a significant revenue too. So it just becomes a race between costs and the price difference. These change all the time.

Wildberry May 4, 2011 at 8:46 am

Zaq.hack

Don’t worry about Peter. He will prattel on this way endlessly without ever saying anyting comprehensible or useful. He can’t help himself…

Peter Surda May 4, 2011 at 11:02 am

Wildberry,

I provide falsifiable theories (or at least try to), and always reformulate upon request. On the other hand, you have yet to provide a coherent argument for anything (even topics unrelated to IP). You evade a debate at all costs, have been demonstrated to propagate outright lies and show no interest in a scientific inquiry. Your motivation for participation is for others to praise you for your faked qualities.

I don’t care if IP is “right” or “wrong”. These are ethical questions and have nothing to do with economics. What I care about is science. Ethics does not beat logic.

So stop making up stuff. You have no credit here anymore.

Peter Surda April 30, 2011 at 6:21 am

Wildberry,

Property rules do not exist for the direct benefit of consumers, and it is a strange basis for your argument. Property rules exist for the benefit of their owners, and to facilitate the accommodation of efficient market operations.

Property rules do not exist for either of those purposes. These are only secondary effects. The primary reason is to distinguish which actions are in accordance with them and which in violation of them.

When property rules are ambiguous or when a party believes he can obtain an unfair advantage from the courts or government, and invests time and money accordingly, everyone is worse off.

That sounds familiar. Wasn’t it me, a while ago, referring to Roy Cordato’s concept of catallactic efficiency, and then even before I read his book, saying that IP proponents are unable to define IP, so it should be rejected outright? You too, after months of writing long posts, have not been able to define what it is.

How about instead of making up new stuff all the time you address the errors in your claim that have already been pointed out in the past?

Isn’t it possible, therefore, to look at the same facts and determine that under perfect property rules, GE would have licensed the technology for $128M or so, and both parties would have been better off, and the technology would have been introduced perhaps sooner, but certainly without the considerable external costs?

Isn’t it also possible to look at the same facts and conclude that Damadian tried to steal from GM? You know, because it follows from the concept of property rights, rather then random stuff people make up?

vcif May 1, 2011 at 9:53 am

@wildberry

Isn’t the real issue here that Damadian’s company is unable to produce these machines as efficiently as GE?

He is basically saying, “I thought of this, but I can not actually compete in the marketplace. I am going to use government force to extract my due. Now pay me!” Otherwise, he would just produce and sell them, like WD40 is produced and sold.

The “eternalities” that you speak of are a direct result of the interference of government in the production of goods. There is only one “rule” that would suffice to obviate these costs- no patents. Any other “rules” are arbitrary, frankly undiscoverable, and subject to endless dispute with ever increasing costs and protectionist lobbying.

What really seems “strange” is the idea that “[Intellectual] Property rules exist … to facilitate the accommodation of efficient market operations.” IP rules exist to extract otherwise unattainable profits from the consumer and actually make “market operations” less efficient, as you yourself point out.

vin

Wildberry May 1, 2011 at 11:45 am

@vcif May 1, 2011 at 9:53 am

First, it is property rules that allow market operations to proceed efficiently. You would not presume that the market could operate with no private property rights, you only assume that the market would operate more effeciently wtihout IP.

Second, under what theory do you assert that the rule of property is that property belongs to the one who can utilize them more efficiently? Utilization presupposes ownership, which means exclusive use and/or possession. A person who can use your property more effeciently does not acquire it from you on that basis, right?

What you may mean is that the market efficiently allocates resources through market operations. If your goal is to make a profit, and one channel of manufacturing is more cost-effective than another, why wouldn’t a rational entrepreneur choose that channel? Only if, in so doing, he looses the right to the economic benefits of his property.

Or perhaps if the manufacturing partner tries to use intimidation or threat of legal challenge in order to get a licensing fee that is otherwise unacceptable. All things being equal, rational actors will choose the most profitable course of action.

How do you suppose the government intereres in the production of goods? Would you say that if you came into my factory and utilized my means of production without consent, and I used government enforcement powers to protect my interests, this is an example of “government interference”?

These are not the externalities I a referring to. I am refering to the disconnection of income from output. If someone else takes the benefit of my production, the benefits are an externality to me, and I am for the most part producing for an external economy.

Everyone here seems to agree that before disclosure, the inventor or author owns what he has made. It is only during and after disclosure that IP opponents declare that prior ownership is lost to the public domain. This is not consistent with property rights in any other context, yet you seem to have not problem breaking this continuity for IP. Why?

Profits are unobtainable in the absence of a private property rule. Under such a theory, the mere offer for sale would amount to a cost-free transfer without compensation.

You would not assert such an absurd rule in any other context of property, yet you find this somehow logical in the context of IP.

Peter Surda May 4, 2011 at 3:48 am

Wildberry,

It is only during and after disclosure that IP opponents declare that prior ownership is lost to the public domain.

Stop repeating this false claim. Disclosure does not alter any rights. IP proponents claim that it does.

Alpheus May 27, 2011 at 10:43 am

I don’t know the specifics of the case, nor am I going to look them up right now, but I will throw out this question: was GE guilty of “willful infringement”? If not–and engineering companies often take great pains to make sure they aren’t guilty of willful infringement–then they developed the technology independently of the inventor.

In which case, by enforcing the patent, the inventor is preventing GE from recouping the costs of their own labor and research. In which case, how can you justify granting the inventor exclusive rights to their work, just because he managed to solve the puzzle first?

Mitch April 29, 2011 at 10:30 am

RG (from Catalan’s conclusion): “This is what sets apart the profit-seekers at General Electric from Damadian in the case of the MRI scanner (this is not to suggest that in other cases General Electric does not itself exploit government to its benefit).”

Catalan doesn’t seem to praise the medical goods and services markets for being free—except for IP. He is just pointing out one case where the competitors against patents happened to be large corporations.

See his comment from a few months ago over at his site (http://www.economicthought.net/2011/02/government-of-the-people-against-the-people/comment-page-1/#comment-4910): “If something needs a monopoly on force (a coercive institution) to protect it then I don’t think it’s existence is justified.”

Catalan does not suffer from right conflationism. He is not praising GE as a company—just the company’s particular stance as opposed to the MRI inventor in this case.

With that said: great article. An excellent introduction to medical patents. As you mentioned, pharmaceutical companies also illegitimately benefit from patents. Perhaps another article will address that industry a bit more in-depth?

RG April 29, 2011 at 2:01 pm

“General Electric’s actions served the consumer by providing a better product. Damadian used government to secure his earnings at the expense of the consumer.”

But GE couldn’t provide a better product without securing earnings at the expense of the consumer.

That is conflation.

Anthony April 30, 2011 at 2:54 pm

“But GE couldn’t provide a better product without securing earnings at the expense of the consumer.”

Prove it… how do you know the exact extent to which the totality of government interventions combine to effect the production efficiency of each company?

Besides which, what do you mean “securing earnings at the expense of the customer”? If I willingly buy a GE product for a price that I am willing to pay, how could their earnings possibly have come at my expense. The exchange was mutually beneficial in every sense of the term… if it were not I would not have made the exchange in the first place. Even in a full monopoly situation all voluntary exchanges are still mutually beneficial, just not as beneficial to customers as they could be.

If you meant “at the expense of the tax payer” I would be more inclined to agree, but in that case the problem isn’t GE in itself but in government interventions preventing competition. The state is the one costing the consumer, not GE.

Ethan April 29, 2011 at 12:33 pm

I was just reading the interesting interview with Hans Hoppe, (http://mises.org/daily/5163) where he briefly touched on intellectual property in a concise but thorough way. Here I quote from the middle:

“DAILY BELL: Where do you stand on copyright? Do you believe that intellectual property doesn’t exist as Kinsella has proposed?
“In fact, the entire world can copy me,
and yet nothing is taken from me.”

HOPPE: I agree with my friend Kinsella that the idea of intellectual property rights is not just wrong and confused but dangerous. And I have already touched upon why this is so. Ideas — recipes, formulas, statements, arguments, algorithms, theorems, melodies, patterns, rhythms, images, etc. — are certainly goods (insofar as they are good, not bad, recipes, etc.), but they are not scarce goods.

Once thought and expressed, they are free, inexhaustible goods. I whistle a melody or write down a poem, then you hear the melody or read the poem and reproduce or copy it. In doing so you have not taken anything away from me. I can whistle and write as before. In fact, the entire world can copy me, and yet nothing is taken from me. (If I didn’t want anyone to copy my ideas I only have to keep them to myself and never express them.)

Now imagine I had been granted a property right in my melody or poem such that I could prohibit you from copying it or demand a royalty from you if you do. First: Doesn’t that imply, absurdly, that I, in turn, must pay royalties to the person (or his heirs) who invented whistling and writing, and further on to those, who invented sound making and language, and so on?

Second: In preventing you from or making you pay for whistling my melody or reciting my poem, I am actually made a (partial) owner of you — of your physical body, your vocal chords, your paper, your pencil, etc. — because you did not use anything but your own property when you copied me. If you can no longer copy me, then, this means that I, the intellectual property owner, have expropriated you and your “real” property. Which shows: intellectual property rights and real property rights are incompatible, and the promotion of intellectual property must be seen as a most dangerous attack on the idea of “real” property (in scarce goods).

DAILY BELL: We have suggested that if people want to enforce generational copyright that they do so on their own, taking on the expense and attempting through various means to confront copyright violators with their own resources. This would put the onus of enforcement on the pocket book of the individual. Is this a viable solution — to let the market itself decide these issues?

HOPPE: That would go a long way in the right direction. Better still: more and more courts in more and more countries, especially countries outside the orbit of the US-dominated, Western-government cartel, would make it clear that they don’t hear cases of copyright and patent violations any longer and regard such complaints as a ruse for big Western-government-connected firms, such as pharmaceutical companies, for instance, to enrich themselves at the expense of other people.”

Wildberry April 29, 2011 at 1:39 pm

@ Ethan April 29, 2011 at 12:33 pm

Wildberry March 28, 2011 at 8:48 am
I wouldn’t hang my hat on this comment from Hoppe; it is simply an “ideas are free” argument, which treats all IP as if it was proposing to protect ideas along all other intangible components of human thought and expression.

See the discussion on that interview here:

http://blog.mises.org/16245/hoppe-best-interview-ever/comment-page-1/#comment-768388

Freedom Fighter April 30, 2011 at 4:45 pm

Certain research are not even allowed in the USA, like stem cell, cloning, specialized surgical procedures, genetic doping (especially sport doping) etc.

It’s not even a question of patents or intellectual property, it’s outright interdiction of research and development. This means that there are a lot of surgical procedures, genetic procedures and medicines that are not available and that would be available if the government did not forbid them.

It’s not just a question of how much more it costs or how inferior the treatment is because of IP rights. It’s a question that it is simply not available no matter how much money you are ready to spend on it.

For those types of treatments that are forbidden in the USA, you have to travel abroad. The first step in reducing health care costs and making health care more accessible is to stop government intervention in medical affairs.

We need free market capitalism in health care. We need self-medication freedoms. Doctors must be advisers not gate keepers.

The only thing allowed in the USA is to develop medications, therefore companies focus on developing medications and must go through all the hoops and red tape to get their medicines approved. This is lengthy and expensive, of course they will want to protect their medicines with a patent after that.

We should look to reduce the importance of patents by making it cheaper to develop new medications, new technologies and new surgeries. The easiest way to make it cheaper would be to allow the research and development in the first place and to let the market approve of medications, not the FDA.

Also, the AMA and the war on drugs is forcing people go consult a doctor prior to get their medication and to ask for a prescription. All this dramatically increases health care costs.

If customers could readily go to the pharmacy and buy their medications directly, with a few advices from the pharmacist, this would greatly reduce the cost of health care. This is not about patents in this case, it’s about government outlawing self-medication and forcing you to go see a doctor for every little things.

My take is that it’s this war on drugs and on self-medication and the lack of medical freedoms that truly drives the cost of health care up. Patent laws are really just small contributors to the problems of high health care costs.

Robert May 1, 2011 at 11:21 am

How about the government sanctioned monopoly in healthcare that fixes supply in everything from the number of doctors to the “allowable” protocols for diagnosis and treatment (ICD and CPT codes). Oh yeah, let’s not forget that physicians often collude with state appointed “experts” to privatize gains and socialize losses through legislative fiat. A true recipe for perpetuating total dependence upon the nanny (or nurse Kratchit) state.

Andy May 2, 2011 at 3:33 am

Fighter

Research counterfeiting cancer drugs and see if you have the same opinion afterward.

zaq.hack May 2, 2011 at 6:29 am

The best case of this is highlighted in “Wired” this month. The article on vascectomy documents 40 years of frustration for a cheap, reversible, effective, male contraceptive.

zaq.hack May 2, 2011 at 6:24 am

This is the first article on Mises.org which I have disagreed with since a friend turned me on to the site about a year ago. I hear “IP is bad” in the comments and “innovation” or “distribution” would have been better if a large corporation could have sold the product.

This is insanity.

As someone who creates and applies technology FOR A LIVING, I can think of no greater dis-incentive than not participating in those profits which my ideas bring about. Today’s patent law is a mess, to be certain: It is archaic, it is fraught with loopholes in court, the appeals court in Texas upholds well over 50% of cases for the patent owner, etc. It needs reform, badly.

Reform is different from abolition.

It is obvious to me that the author of this article has invented nothing, has never tried to market such an idea to a company which may or may not buy, has never walked the line of showing enough to interest a patent buyer without giving away the whole idea, has never had to market against the likes of AT&T or Apple or Pfizer, and never plans to.

Abolition of patent law is license of unfettered THEFT of individual work by both government and private enterprise. We no longer work in an agrarian society where it is easy to see MY livestock, MY wheat and corn, or MY land. We work in a digital society where ideas have power and value. To say that somehow, these ideas are less the product of my work, less my contribution to the economy, less of a commodity to be bargained with than a bushel of corn is rubbish.

If such value, if such individual effort cannot be preserved through patent law, then how? Or is theft of ideas just fine as long as theft of silver and gold (gained often by ideas) is still outlawed?

Alpheus May 27, 2011 at 10:55 am

As someone else in the field of developing ideas, I am well aware of independent discovery of new ideas. If I independently developed an idea on my own, and try to market it, what gives you the “right” to force me to pay a royalty to you, for my own independent work? Or for that matter, why should you have the “right” to keep me from profiting from my work altogether?

It is MY idea, after all, even if I didn’t come up with it first!

Concerned Friend May 2, 2011 at 1:05 pm

The general feel or idea (don’t worry you guys can use it too lol) I am getting from both this article and the accompanying discussion is that state intervention, regardless of whether property rights (in the traditional sense) and IP can be justified on the same or differing grounds or at all, tends to distort the boundaries between right and wrong, from what is fair and unfair, from what is economically efficient or inefficient, or what is justified and what is unjustified. Just a comment.

zaq.hack May 2, 2011 at 5:31 pm

I certainly see this point and agree. Our current patent system was engineered at a time when protecting Eli Whitney and Thomas Edison was important to the economy.

Patents in today’s world should expire within 5 years of a “commercial sale.” If you haven’t made money in 5 years, you probably won’t, and that idea and those resources may be better served in other places.

However, the notion that a “free market” without such patent rules would lead to better health care, more widespread use of ANY advanced procedure or machine, or more innovation in general is (pun intended) patently false. One need look no further than John Galt’s marvelous motor to understand that people would protect their ideas jealously – they would not bring them to a market for sale. They might rent the use of a machine, create a hospital which specializes in a particular procedure, becomes the only place to administer certain drugs, etc. Patent law protects the inventor so that a market for the idea can exist AT ALL. This was understood by such “statists” and “government intruders” as Thomas Jefferson and Benjamin Franklin.

As an alternative to government intrusion, I could see private enterprise in “patent insurance.” Pooled money could buy enough civil legal force to create a private system whereby an inventor could, for a fee, purchase legal representation to chase down idea thieves. Certainly, this would have possibilities for fraud or other abuses, but just as surely, it would likely evolve into a more “market correct” system than the current government-enforced legal miasma.

A final note: It is referenced above that ideas are not “scarce resources.” No one who has invented or worked toward an original hypothesis thinks this way. There is truly nothing as rare as original thought. I work in an industry where my mind is the field and such ideas the corn. The harvest is slim every day, every year. It is difficult, taxing, and patient work. To suggest that stealing my harvest is less a crime than stealing a harvested bushel of corn is simply mad.

Concerned Friend May 2, 2011 at 8:42 pm

My only issue that is while the idea is scarce in the sense that it is original, the inventor still needs to pull together the necessary capital and labor to bring that idea to fruition, something anyone with the same idea can do with enough business savvy and luck. I still don’t agree with patent law, but I always tend to think that they would be unneeded in a “real” free market, as behemoths such as GE and J&J would probably (speculating) never have had the massive capital and or access to capital (particularly cheap credit) to be able to pull the resources and labor together to copy and outproduce the original inventor of said innovation. Of course we will never know until we try, but alas, the idea of economic experimentation is unpopular, and in some ways impossible (unless it’s done by the FED or some other act of state intervention, because we all know that in those cases, it is for the “greater good”). But I digress.

zaq.hack May 2, 2011 at 10:18 pm

Realize that patent law was originally designed to help the “little guy” get his stuff together. If you have a patent, it is much easier to raise venture capital (something I’ve been part of four times, once as a board member). The patent is a bond between the inventor and the government; there is typically some value to that patent, laying aside that this is an artificial construct of force. This means that the inventor is free to (1) raise capital by sharing his idea with others without fear of them stealing it, (2) hire employees with some degree of trust that they cannot steal from him, (3) sell the product with some certainty that buyers cannot reproduce it for some period of time.

Jefferson was very opposed to patents early in his life and held similar anti-IP positions that I have seen in this article. However, after serving as Secretary of State and administrating the patent office, he said that the system worked better than he could have imagined. We have distorted this original intent into the swampy home of patent trolls and prohibitive cost (barrier to entry) for the individual.

I maintain that in the absence of some form of patent system, ideas become secrets – closely held so that they maintain the most scarcity and the most value. Goods that would be available for purchase today would become the property of the manufacturer under rental agreements. Perhaps none of us would have personal computers; we would all think it normal to have to go to a library or coffee shop to access our e-mail because Mr. Jobs and Mr. Gates have to maintain strict control over the spread of their “ideas.”

Again, I hearken to Atlas Shrugged: Think of the doctor who invents a procedure which prevents stroke. He refuses to share it with a world that would force him to perform it without compensation. He refuses to use it on anyone outside the valley. The best research in medicine would not be for sale as we know, today, but it would be purchased at private clinics with a variety of specialties.

Any number of ANTI-consumer and ANTI-market outcomes of ANTI-patent law can be predicted, as well. I think Mr. Catalan views the world and the mind of inventors a bit more rosy in color than they are. If sharing an idea makes it “free,” then the ideas will cease to be shared. If keeping them secret would generate profit, they would be kept secret. There would be a vast increase in parallel development. It would be an extremely drastic change from our current state far beyond his current imaginings.

Peter Surda May 4, 2011 at 2:12 am

Dear zaq,

Think of the doctor who invents a procedure which prevents stroke. He refuses to share it with a world that would force him to perform it without compensation. He refuses to use it on anyone outside the valley. The best research in medicine would not be for sale as we know, today, but it would be purchased at private clinics with a variety of specialties.

If one person invented it, another person may do that just as well, independently. As the scope of human knowledge and technology available progresses, chances are it will become less costly and more likely. If the doctor decides to hoard his invention, he is risking exposure to competition from independent inventors. Competition is the driving force which mitigates the risk you are describing. Conversely, monopoly (e.g. IP), is a force that makes it more likely to occur.

Peter Surda May 4, 2011 at 3:09 am

Dear Zaq,

It is referenced above that ideas are not “scarce resources.” No one who has invented or worked toward an original hypothesis thinks this way.

Whether they think like that or not is not relevant. What is relevant is whether the thinking is backed by a scientific theory or a metaphor.

To suggest that stealing my harvest is less a crime than stealing a harvested bushel of corn is simply mad.

What you present is the labour theory of value. It is the theory that because you perform an activity, people who act in a way that is causally related to that activity owe you something. However, that is not a proper theory. It’s incoherent.

The reasoning of IP opponents (well, at least those who matter) is not that there is some obscure metaphysical reason to deny some people the right to earn money. First of all, that is not even the correct description of the effect of a society without IP. More importantly though, the reason why they object to IP is the same as they object rights in other abstract concepts, such as right to job, healthcare, racial purity and so on. They contradict the concept of property rights in scarce goods. Since it is not possible to implement a self-contradictory theory, from practical point of view it logically leads to the redistribution of property (i.e. theft).

I recommend you read Stephan Kinsella’s posts and his Against Intellectual Property.

Wildberry May 2, 2011 at 6:46 pm

@ zaq.hack May 2, 2011 at 5:31 pm

I first want to say that it is great to hear such a clear voice in support of the concept of IP.

Second, I agree with your sentiment that to support the concept of protection for intellectual works is not to support unequivically the entire mercantilist infrastructure of our federally enforced system of patents coyprights. Merchantilsts attempts to capture (successfully) the political means of government enforcement mechanisms and to bend the legislation to nefarious ends dos not undermine the fundamental concept that a person should be able to keep what he makes.

As you have clearly articulated, making that distinction is not beyond some of us here.

Well done.

zaq.hack May 2, 2011 at 7:01 pm

@Wildberry – As you may note, this is a topic close to my heart. I believe that the US economy would lurch forward with only the following three reforms (which I expect to never happen):

(1) Reform of patents such that typically an “idea” has 5 years “on the market.” As articulated previously, in 2011, if you haven’t made money in 5 years, your chances are pretty slim. Additionally, existing infinite or 20-year patents (as in pharma) cause unnecessary gamesmanship and stifle competition. The process of “patent trolling” has suppressed untold innovation in the telecom space alone: From Blackberry to eFax, the whole space is a minefield through which an inventor must pony up $30,000 for good patent searches to even have a prayer of realizing an idea. But I digress.

(2) Abolishment of minimum wage. If that sounds too harsh (then you shouldn’t be on this web site – lol), then an intermediary might be something like abolishing it for companies of fewer than 25 employees. Combined with the first, cheap labor to make something new would allow for real innovation and NEW INDUSTRY in the stagnant swamp of the Bush/Obama economy.

(3) The “Frivolous Act” whereby the winner of a civil suit may additionally claim damages equal to their legal fees. This is different from “loser pays” in that it is not axiomatic payment. Not all cases are frivolous; a judge and jury can decide that just as surely as they would the winner or loser of the suit itself. The chilling effect of lawsuits on innovation cannot be overstated, even beyond those of patent claims.

Those three things would cause the economy to explode into a new strength. Smart people might try to use it to return to the gold standard and other sane monetary policy. But then again, few engineers get elected to office, these days … it’s mostly the slacker class, not the problem solvers.

Daniel May 3, 2011 at 10:16 am

That would be just the beginning, getting rid of deadweight such as the FDA, SOX, the USDA, and a whole slew of other agencies, departments and laws would really bring America back basically overnight.

Peter Surda May 4, 2011 at 3:20 am

Wildberry,

(to zaq)

I first want to say that it is great to hear such a clear voice in support of the concept of IP.

However, just like all the other ones, he did not provide a theory to accompany his support. To his credit however, it looks like he is attempting to make impartial claims and merely making unfounded assumptions rather than being a blinded fanatic like the majority.

More importantly though, it is clearly visible here how you think. You divide the debaters into two groups: for and against. For you, it is not the arguments that matter, but biases. You often support people who you contradict with regards to the some core concepts of IP (Stranger and Schulman come to mind).

I wonder, if I said that I’m going to become a supporter of IP because I think theft is good and don’t care about having a coherent economic theory, would you then suddenly become my “friend” too?

Ethan May 3, 2011 at 7:59 am

I am very new at this so I will only posit a few conjectures here. It seems to me that the Austrian paradigm provides some of the greatest insights when an altered collection of incentives is theoretically played out over time. If this valuable exercise is dismissed out of hand as purely theoretical or in-demonstrable this seems to be little more than a thinly veiled appeal to fear of the unknown. Austrians embrace theory and theoretical exercises. I am enjoying this interchange a great deal, by the way. It occurred to me that if one were to remove the heavy handed and ongoing activist state intervention in the marketplace, in regards to IP, profit margins would shrink dramatically. This would seem to reduce the incentive for devoting a lot of resources to reverse engineering or “corporate espionage” right off the bat, ironically giving a meaningful first-mover advantage. At a snapshot in time the customer benefits from lower prices. What of the inventor or the author? Much is focused on what they wouldn’t produce now, but consider all the improved derivative works and inventions, the incrementally improved designs and tweaks that would now be available to the thinking creative mind, unhampered by the almost continuous current threat of litigation. In my opinion it is a wonder that so much gets invented, developed or improved in such a hostile environment. In our current environment the cost barriers to entry are far higher from regulation and legal costs alone, with the edge invariably given to the established or well connected. Consider that a truly inspired inventor short on cash might sell his patent and now bar himself from improving on the very thing he created. There is intriguing evidence that the collective wisdom, mood and appetites of a time conspire to conjure up simultaneous inventions. IP, by requiring that a winner be legally chosen (instead of the market doing what it already does best) seems ludicrous, except of course from the perspective of the vultures taking their cut through the legal process.

One more thing. Just as a rule of thumb observation when determining what should be considered real property and what should not; when society and the market place tends to support the protection of physical ownership and use and government seldom needs to actively intervene, the voice of the culture seems to have spoken. If government threat of punishment and huge bureaucracy is continuously brought to bear in what is essentially a definitional exercise, the stench of special interest manipulation increases dramatically. I leave the hardcore axiomatic reasoning to you experts. I love following these fabulously reasoned discussions. Thank you, gentlemen.

zaq.hack May 3, 2011 at 8:39 am

Is it moral for a man to seek profit from his own innovation? Should an inventor have a reasonable expectation to personal gain from his invention? I think it is therefore unreasonable to expect all inventors to release all innovations to the public domain. Therefore, a reasonable system of patents allows inventors to expect protection for their work for a time to allow them to develop gain from it.

I am a fan of worthy thought experiments – even assertion-based teaching methods. However, I think far more is known about what would happen without patents than newcomers to the topic may think. We need only look to invention prior to the enlightenment period to see what would happen. The notion of intellectual property arose during this time as invention began to blossom into the industrial revolution. I do not think you get Thomas Edison or Henry Ford or Steve Jobs if there is no patent law. Certainly, any of them would have been considerably less influential. Ben Franklin did not share some of his inventions and yet gave away others to the public domain knowing that he could not produce them efficiently.

Americans sought to undo the heavy-handed guilds of Europe (which we have since rebuilt as Unions, but that’s another story). They placed value on the effort of the individual. If we would return our legal system and government toward that ideal, and not just “he with the most lawyers wins,” a great many of these thought experiments would be unnecessary. :-)

Ethan May 3, 2011 at 9:05 am

You make very good points, I am especially struck by the idea that we wouldn’t have Thomas Edison, Henry Ford or Steve Jobs. Assuming we still got their inventions (a big assumption I know) I suspect they would have been developed instead in a more incremental fashion, perhaps in a collaborative shop style. And manufacturers certainly wouldn’t lack the need to have inventions, despite the absence of possible big payout from an idea alone, it would seem that certain firms would want to offer cushy environments to coax out creative ideas. I will say the entire economic landscape would look very different noting the key roll invention and entrepreneurship plays. I guess I am never willing to leave well enough alone in imagining a society without heavy handed state intervention in the marketplace (when it comes to thought experiments at least). Because something is difficult to imagine doesn’t mean it isn’t interesting to try.

Daniel May 3, 2011 at 10:13 am

I’ll have to disagree regarding entrepreneurship and patents. In fact, businesses gain more from lead time and secrecy than from patents¹.

To quote from another book²:

The free rider problem as it pertains to scientific research is as follows:

Company A spends $100K on developing a product, but company B can spend $10K and copy it, having the exact same product. Thus research and development is punished on a free market. That’s the theory.

Edwin Mansfield, the late economist at the University of Pennsylvania came to the conclusion that in OECD countries, across all industry it costs $65 dollars to copy $100 worth of research. Or 65%. But that’s just direct cost.

In order for a company to copy research, they have to have smart people. An example would be in the drug industry. If I gave you a Viagra pill, would you be able to reverse engineer that? No, a company needs to have smart people who can do that, with the equipment, on hand if they want to copy. So there are sunk costs involved if a company wants to copy research. This isn’t just copying your neighbor’s Scantron answers.

Also it takes time to reverse engineer a product, and in that window the company that made the original product enjoys a monopoly. The more complex the innovation, the more difficult it tends to be to reverse engineer, and the longer that company enjoys a monopoly.

Given the advantage of the temporary monopoly of the originator plus the sunk costs needed for copiers to be able to copy, copying research and doing original research tend to come out as equally profitable strategies. Private firms in OECD spent about 3% of the budget on research.

That said, all firms engaged in research both copy and do original research themselves. Because in order to copy, you must have smart people doing original research in that field, you’ve got to have guys in the know, and when one company makes a breakthrough, everyone else rushes to copy.

The reason copying a product and originating a product tend to be equally profitable is basic economics. Products are only released by firms if it’s revolutionary enough to earn a profit that makes up for the cost of development. And in order to make a profit, it must be difficult enough to provide a period of monopoly for those costs to be recuperated.

Products which are only slightly revolutionary aren’t as expensive to develop as products which are extremely revolutionary, but also tend to be easier to reverse engineer, resulting in a shorter monopoly period.

1. Against Intellectual Monopoly, Boldrin, M. & Levin, K., pp. 69-70
2. For an Emergent Governance, Faulk, R., pp. 119-120

zaq.hack May 3, 2011 at 10:53 am

Interestingly, I see this exact quote as proving my point. In a patent system, a pill or a device is available for sale because secrecy need not be maintained. Secrecy, we agree, is profitable: But it is not necessarily best for the consumer.

To hearken back to the Viagra example, imagine a company seeking the most profit while trying to keep the substance itself secret. I could envision a clinic/resort which allows folks a retreat to a beautiful location, administers them magic blue pills along with their meals and cocktails, and has romantic style in each room. The profit margin of such a venture would be enormous: Those who could afford a getaway AND wanted to be able to recapture some sexual healing could be willing to pay enormous amounts of money to do so if it were the only way to get the drug. Other “black markets” tell the tale of tea houses and opium dens where established “entrepreneurs” offer services as well as access to drugs. Moral quandaries and business risk aside, this is typically considered a high profit business.

Now look at where we are with Viagra, today: Even my wife gets email for the “best stuff from Canada.” It is mass produced, lowering the supply cost and granting access to ever wider economic circles. It is not necessary to keep “secret,” though having a compound is a long way from marketing a pill (these processes are almost always kept secret).

Similarly, “Products which are only slightly revolutionary aren’t as expensive to develop,” and I would argue the iPad is such a product. As a Tablet PC user for years, the iPad is much more evolutionary than revolutionary. Not having appeared from thin air, the iPad is built on earlier work, and this trend is present in the Moto XOOM as well as Blackberry and HP’s forthcoming tablets. There is nothing inherently “patent-able” about the iPad that HP or Toshiba could not claim with some of their previous devices. This is the concept of “prior art” in patent law which (should) preclude frivolous patents.

To sum up, I believe that you are saying “secrecy is more profitable than patents.” Okay, I believe you. I also believe that greater secrecy hinders the spread of ideas, promotes rental/leasing agreements over individual ownership, and stifles the ability of others in the marketplace to engineer a better solution (because they are less exposed to new ideas). As an engineer, I would hate to keep everything I do secret for all time … it is burdensome to me as an individual. It’s tough enough to keep a secret until a product release date, and often impossible in a large organization, even today.

Peter Surda May 4, 2011 at 2:06 am

Dear Zaq,

Should an inventor have a reasonable expectation to personal gain from his invention? I think it is therefore unreasonable to expect all inventors to release all innovations to the public domain.

This is a false dilemma. The two choices (absent IP) are secrecy versus exposure to competition. Or do you think that competition is bad?

zaq.hack May 4, 2011 at 9:28 am

I’m going to combine multiple responses here. Thank you for you taking the time to respond (even if it is mildly arrogant in tone).

However, just like all the other ones, he did not provide a theory to accompany his support. To his credit however, it looks like he is attempting to make impartial claims and merely making unfounded assumptions rather than being a blinded fanatic like the majority.

I do not live in the economic theory community – I live in a world of innovation, competition, patents, and lawsuits. I may not be able to quote Austiran theories chapter and verse; as I mentioned, I’ve only been coming to this site for about a year, and this is the first time I’ve seen something with which I’ve disagreed. I am a keen observer of actors in the world of high tech and have had both success and failure to draw upon for experience. This, admittedly, does create a particular bias. As someone engaged in a handful of startup companies, I can tell you a lot more about the thought processes and human nature that goes into building a profitable business plan than I can tell you about market elasticity.

To suggest that stealing my harvest is less a crime than stealing a harvested bushel of corn is simply mad.

What you present is the labour theory of value. It is the theory that because you perform an activity, people who act in a way that is causally related to that activity owe you something. However, that is not a proper theory. It’s incoherent.

Should an inventor have a reasonable expectation to personal gain from his invention? I think it is therefore unreasonable to expect all inventors to release all innovations to the public domain.

This is a false dilemma. The two choices (absent IP) are secrecy versus exposure to competition. Or do you think that competition is bad?

Please note: Nowhere have I suggested that this is a “right.” Also of question, “Is monopoly immoral?” Is there really any such thing as zero competition? I contend that the market eventually rights these wrongs; that monopoly is a temporary aberration in the market. I believe I have read such things at other times, both here and elsewhere.

I am not presenting the labor theory, here. I’m suggesting that my idea is mine until shared. Based on the complexity of that idea, there is a risk associated with sharing it with others. If something is sufficiently complex (e.g., an MRI machine), as noted above, “stealing” the idea is quite difficult, even if it has been shared. We have all seen an iPad, by now; few of us would have the means to reproduce, en masse, the same device.

My theory originates from human behavior. People will typically seek to benefit themselves as much as possible from their work. They will negotiate for higher pay. They will seek additional benefits from an employer. In general, we all strive for more than we have. So a man with a new idea, freshly harvested, has a secret: An epiphany that he can altruistically bestow upon the world without gain for himself (the Franklin stove) or he can try to make a profit. If he chooses the latter route, he will seek to gain the most possible from the idea. (I am not sure what theory this is based upon, but I assure you it is true.)

It is referenced above that ideas are not “scarce resources.” No one who has invented or worked toward an original hypothesis thinks this way.

Whether they think like that or not is not relevant. What is relevant is whether the thinking is backed by a scientific theory or a metaphor.

Galileo poignantly suggested that “All truths are easy to understand once they are discovered; the point is to discover them.” What you are engaging in here is to say, “I have no corn, therefore, I shall appropriate the corn of my neighbor.” It is easy for those who do not innovate for a living to look at the innovators and say, “Give us your ideas for free” as a sluggard says, “Give me your corn, I am hungry.” These are equivalent thought processes: You did nothing to produce the corn, much like you did nothing to produce the idea. The owner of the corn may give you some. He may sell you some because the corn has intrinsic value. The owner of an idea may willingly share it. However, most often, he is going to seek profit for himself.

If one person invented it, another person may do that just as well, independently. As the scope of human knowledge and technology available progresses, chances are it will become less costly and more likely. If the doctor decides to hoard his invention, he is risking exposure to competition from independent inventors. Competition is the driving force which mitigates the risk you are describing. Conversely, monopoly (e.g. IP), is a force that makes it more likely to occur.

Note: I do not find anything wrong with these natural forces and I believe you are correct. I believe your interpretation of the impact on society is incorrect.

Business models today allow for patents and protected intellectual property. Companies spring up to sell their new gizmos every day. People with ideas will seek to maximize their profits, as we all do. The monopoly of patent would be replaced by the monopoly of secrecy: Some ideas would not be sold. Some ideas would be kept secret. Many business models would change from “let’s sell as many gizmos/pills/procedures as possible” to “how do we make as much money as we can until someone else starts doing the same thing.” Not every idea and not every invention would go that direction – but between “some” and “many” would. Startups will always try to maximize their monopoly.

Removing patent law is not removing government intrusion in the same vein as removing SOX or HIPPA or the Fed (the removal of all of which I heartily support, I might add). It would fundamentally change how innovation is brought to market and has been brought to market for over 150 years. Suggesting that such a change would be net positive and then citing only the reasoned conclusions which support a positive outcome is ALSO bias. I am simply bringing to this discussion the possibility that it could have a net negative outcome in many cases. I personally believe abolishment of patent would be a net negative the world over.

The original article suggested that GE or other actors would make better use of the idea. Perhaps so. However, in the absence of patent law, my contention is that GE may never be exposed to the idea in the first place and that there are more incentives for Damadian to keep it secret. If you only rewind the story to after the innovation is shared, it is logically flawed to the conclusion. Damadian’s first choices of what to do with his idea would likely be different in a world without patent law. You cannot have it both ways: To assume innovators will continue to behave as they do now AND that others should be free to copy their ideas. Certainly, I know at least one that would change his behavior …

zaq.hack May 4, 2011 at 10:00 am

Corollary: A corn grower who expects theft of his corn will behave differently than one who does not expect to be stolen from.

Peter Surda May 5, 2011 at 1:58 am

Zaq,

I’m going to combine multiple responses here

That is fine.

even if it is mildly arrogant in tone

I apologise if it sounded so. I normally only become arrogant after the other party discredited themselves.

I do not live in the economic theory community – I live in a world of innovation, competition, patents, and lawsuits.

I am not a professional economist either, although I have a bit of formal education in that area. I’m a software engineer.

I may not be able to quote Austiran theories chapter and verse; as I mentioned, I’ve only been coming to this site for about a year, and this is the first time I’ve seen something with which I’ve disagreed.

I find this a bit odd, since there are articles about IP about once a week. Surely you must have noticed some of them.

This, admittedly, does create a particular bias.

Yes, it does. But that should not stop a curious mind in the search for truth.

As someone engaged in a handful of startup companies, I can tell you a lot more about the thought processes and human nature that goes into building a profitable business plan than I can tell you about market elasticity.

My objection was not exhaustive. In general, I address specific arguments. Certainly, there are other influences. But you made the claim that the maximum profit would be reached with one machine. That however is only the case if the price demand is inelastic. So the argument is unsubstantiated.

Nowhere have I suggested that this is a “right.”

You refer to copying as theft, so that kind of does it.

Also of question, “Is monopoly immoral?” Is there really any such thing as zero competition? I contend that the market eventually rights these wrongs; that monopoly is a temporary aberration in the market. I believe I have read such things at other times, both here and elsewhere.
In the Austrian view, monopoly refers to the use of force to prevent competition rather then the number of market participants. I will not address this because it does not seem to be relevant for our debate.

I am not presenting the labor theory, here.

You are asking rhetorical questions from the perspective of a labour theory of value, i.e. that because you perform some action (publish invention), someone owes you (e.g. money).

I’m suggesting that my idea is mine until shared.

This is a metaphor.

Based on the complexity of that idea, there is a risk associated with sharing it with others.

But this affects all activities whatsoever. There is nothing special from the perspective of so called “innovation” or “ideas” on this.

If something is sufficiently complex (e.g., an MRI machine), as noted above, “stealing” the idea is quite difficult, even if it has been shared. We have all seen an iPad, by now; few of us would have the means to reproduce, en masse, the same device.

I don’t understand what this has to do with the topic. It actually seems to support the side against IP, in that copying also carries costs, so the pioneer, while he may need to charge a lower price than in a monopoly, can still make profit, as long as the copiers can too.

My theory originates from human behavior.

Ok, I get that. But it represents only a partial view of the problem. You need to take into account the unseen too (as Bastiat would say).

People will typically seek to benefit themselves as much as possible from their work.

Let us start from this point and agree that IP creates some benefits. However, because it is merely a redistributive policy, these need to be offset by detriments of the same physical scope. Just like it will increase some revenues, it will also increase some costs. In addition to that, because it is based on vague (typically also self-contradictory) theories and implementations, it will increase the law compliance and enforcement costs.

What you are engaging in here is to say, “I have no corn, therefore, I shall appropriate the corn of my neighbor.”

I however am able to provide a coherent property rights theory that represents this as theft. IP proponents have, so far, not presented the equivalent. In fact, if they agree with me that taking corn (and other scarce resources) without asking the owner is illegal, if they add any IP into the mix, they will need to contradict themselves.

Some ideas would not be sold. Some ideas would be kept secret.

But this happens anyway to some extent. If this is your objection, then the question must be about the optimal amount of secrecy and sales. Again without interpersonal utility comparison, this is impossible to judge. Furthermore, as I said above, this is offset by other phenomena, which also would have to be evaluated. So there is no scientific way of telling whether the result is “good” or “bad”.

It would fundamentally change how innovation is brought to market and has been brought to market for over 150 years.
Even if it did fundamentally change it, why is that bad? Again, this would be accompanied by other effects anyway, so you would need to evaluate these too.

Suggesting that such a change would be net positive and then citing only the reasoned conclusions which support a positive outcome is ALSO bias.

I don’t necessarily claim that the change would be good. That would require a normative scale. The only one I am prepared to make is the concept of catallactic efficiency as explained by Roy Cordato: IP makes the definition of property rights less clear.

IP proponents often claim that IP provides a net benefit, yet fail to accompany this by a method of evaluation and data. Since IP requires an infringement of property rights, I would say that this is a failure.

The original article suggested that GE or other actors would make better use of the idea.

The article suggested that force was used to prevent competition, so market was prevented form providing goods to customers. Whether that is “better” or “worse” is a normative question.

However, in the absence of patent law, my contention is that GE may never be exposed to the idea in the first place and that there are more incentives for Damadian to keep it secret.

How do you know there was no independent discovery? The article actually suggests it was. Would that influence the validity of your claims?

You cannot have it both ways: To assume innovators will continue to behave as they do now AND that others should be free to copy their ideas.

If IP laws had no effect on the behaviour of people, they would be redundant. So at least we seem to agree on this point. I never claimed that presence/absence of IP does not influence the behaviour of people. The issues I am pointing out are other:
- you point out the advantages but neglect to evalute the disadvantages. Just like people might be more motivated to invent if they could have higher revenue, they could also be demotivated if their costs were higher (both direct input costs as well as law compliance costs). I know, for example, that I’m demotivated by beaureucracy.
- you fail to address the problem that if you support property rights in scarce goods, IP is logically theft. This is my core objection.
- you fail to define what IP is. If you can’t define it, how can it be enforced, and how can people predict which actions are legal and which not?

In general, I understand what you’re trying to say and you’re not often not entirely wrong. However, I maintain that you only see a part of the problem rather then the whole.

zaq.hack May 5, 2011 at 8:24 am
I may not be able to quote Austiran theories chapter and verse; as I mentioned, I’ve only been coming to this site for about a year, and this is the first time I’ve seen something with which I’ve disagreed.

I find this a bit odd, since there are articles about IP about once a week. Surely you must have noticed some of them.

I suppose I have, but I am not reading in-depth on every article every day. This is the first one I have felt contained a deep logical fallacy (which I stated before).

But you made the claim that the maximum profit would be reached with one machine. That however is only the case if the price demand is inelastic. So the argument is unsubstantiated.

Fair enough. This was hyperbole on my part. The main premise is that you cannot change the environment of the actors and expect the same behavior from them. I am bringing up possibilities where this is a negative consequence, such as Damadian’s choice to build only one machine. Certainly, he could choose to do the exact same thing, as well as dozens of other possibilities. My experience says that Damadian will do what Damadian feels will maximize Damadian’s profit … and that this would likely be a different course of action without IP protection.

I’m suggesting that my idea is mine until shared.

This is a metaphor.

Really? If not to me, to whom does it belong if it is my secret? God? Unless you know some mind readers, this seems fairly set. Yes, there are cases of parallel development, but as noted, that is the exception and not the rule. Hence, when someone else has the same thought or says the same words at the same time, we make a note of it: It is unusual and not the norm.

Nowhere have I suggested that this is a “right.”

You refer to copying as theft, so that kind of does it.

What you are engaging in here is to say, “I have no corn, therefore, I shall appropriate the corn of my neighbor.”

I however am able to provide a coherent property rights theory that represents this as theft. IP proponents have, so far, not presented the equivalent. In fact, if they agree with me that taking corn (and other scarce resources) without asking the owner is illegal, if they add any IP into the mix, they will need to contradict themselves.

Upon further examination of my position, which this discussion has forced, I view IP protection only as an incentive to invent. Perhaps “theft” is too much of a hyperbole. A “right” cannot be removed; it is not temporary. I have stated elsewhere that I believe this incentive should be limited in nature and granted only under certain conditions. “Rights” have no such limitation. I have admitted from the beginning that patent is an artificial construct.

If IP laws had no effect on the behaviour of people, they would be redundant. So at least we seem to agree on this point. I never claimed that presence/absence of IP does not influence the behaviour of people. The issues I am pointing out are other:
- you point out the advantages but neglect to evalute the disadvantages. Just like people might be more motivated to invent if they could have higher revenue, they could also be demotivated if their costs were higher (both direct input costs as well as law compliance costs). I know, for example, that I’m demotivated by beaureucracy.

I loathe bureaucracy, as well. I have done nothing but agree that present-day patent law is a nightmare, stifles innovation through cost-of-entry barriers, etc. I am not neglecting the disadvantages, I assure you.
However, to the extent that technology and innovation are “good,” patent provides an additional incentive for innovation (higher profits). If you tax a thing, you have less of it; if you grant incentive, you have more. Removal of IP protection would logically give us less innovation by removal of the incentive.

- you fail to define what IP is. If you can’t define it, how can it be enforced, and how can people predict which actions are legal and which not?

Fair criticism. I’ll think about that.

Wildberry May 5, 2011 at 11:07 am

@ zaq.hack May 5, 2011 at 8:24 am

As a public service to you, let me warn you about going down the rat hole with Peter.

IP is already well defined, as anyone who has actually looked at the law can plainly see. Peter will not refer to anything outside of his own head to debate you. He will twist your words and meaning until they are absurd, and then demand that you prove that he is “wrong”.

As you and many others here realize, the fundamental concept of IP is it total keeping with libertarian thought and Austrian economics. The fact that there are some aspects of the implementation of IP laws, like all laws, which suffer from the effects of mercantilism, does not touch the fundamental principle that a producer is entitled to the exclusive use of what he makes. If you explore the entire body of IP laws, you will find that it is entirely consistent with that principle.

When the law (or courts) are dealing with an uncertain issue, they almost always follow the causality of the capital investment to determine who is being unjustly enriched. In most cases it is consistent with the principle that if you can compete because you are relieved of the capital investment, you are unfairly competing with real producers, and being unjustly enriched. We do benefit by rewarding those who take the production of others without compensation. It is really that simple.

In order to avoid the issue of producing for external economies, an issue which Mises himself writes extensively on, and applies directly to the issue of IP (which has not been addressed here by Kinsella, much less his student, Peter Surda), opponents must assume, as you have correctly pointed out, that the existence of the works and inventions they want to have “free access” to will be equally available to the public in the absence of IP protections. There is no basis or empirical evidence that this will be the case. It is an absurd assertion that undermines the very fundamental premise of praxeology. Humans act to achieve goals perceived to be in their self-interests. This will not change either with or without IP. Producers will adapt to do the best they can under the circumstances in which they exist. Change the circumstances, change the actions.

Therefore the argument begins with the act of disclosure. As you say, that act will not be calculated to the same conclusion in the absence of something like IP laws to guarantee producer rights to their production.

Another gap in the argumentation here is a complete lack of acknowledgement of the competing objective of IP laws to producer rights; to maximize public access and to protect the integrity of the public domain. This is the economic policy rationale for a limited term. In general, I agree with your earlier comments that under conditions of modern technology, the velocity of innovations, and the rapid economic adoption of new products, in many cases the terms is currently too long. The so-called “Mickey Mouse Protection Act”, otherwise known as the CTEA, is just an example of those who stand to make the greatest short-term gains from an extension of copyrights that were about to expire, hijacking the political system to achieve their short-term goals: Mercantilism pure and simple.

Keep up the good posts. You are part of a growing community of Austrian Libertarianism whose thoughts are grounded in common sense and a grasp of reality. Good on you.

Wildberry May 5, 2011 at 11:10 am

We do benefit by rewarding those who take the production of others without compensation. It is really that simple.

Should be: We do NOT benefit by rewarding those who take the production of others…

Peter Surda May 6, 2011 at 5:58 pm

zaq,

I’ll reply to your post in the next couple of days, just in advance a reaction to Wildberry’s

As a public service to you, let me warn you about going down the rat hole with Peter.

Let me warn you about Wildberry. He will pretend to be your friend merely because you voiced support for “IP”. The details of your arguments are irrelevant to him, he may well contradict you on any core issue that you might present. What he wants is for you to recognise his faked objectivity and erudition. To achieve this, he will avoid making any clear statements and has been shown to perpetrate deliberate outright lies.

Wildberry,

IP is already well defined, as anyone who has actually looked at the law can plainly see.

Which country’s law and at what time? You also regularly say that that law is not representative when it is pointed out to you that current law leads to undesirable outcomes (as shown below). You can’t have it both ways, so you contradict yourself.

Furthermore, what does it have to do with economics? The law(s) taxatively list activities which are illegal. That is not an economic definition.

He will twist your words and meaning until they are absurd, and then demand that you prove that he is “wrong”.

No Wildberry. You twist words. I demand clarity, you wriggle and avoid answers. Especially the avoidance of answers is a solid proof of your intellectual dishonesty.

As you and many others here realize, the fundamental concept of IP is it total keeping with libertarian thought and Austrian economics.

The fundamental concept of IP is based on a self-contradiction. Until that is resolved, it is pointless to muse about whether it is in accordance with libertarianism and Austrian Economics.

The fact that there are some aspects of the implementation of IP laws, like all laws, which suffer from the effects of mercantilism…

Yet, just a couple of paragraphs above you say that laws represent the correct definition of IP. Now you contradict it.

does not touch the fundamental principle that a producer is entitled to the exclusive use of what he makes.

Yet another repetition of a vague claim. This is so typical of you Wildberry. I explained several times what is problematic about this claim, yet you ignore it.

In order to avoid the issue of producing for external economies,

As I said several times already, avoiding producing external economies is impossible (apart from exotic cases like one person owning everything and everyone else owning nothing, than that one lucky guy does not produce external economies). Yet you repeat your erroneous claims and fail to address the objections. Externalities are omnipresent. See Block’s writings.

an issue which Mises himself writes extensively on

Mises wrote about 5 pages about it. Other Austrians spent significantly more time on it, Roy Cordato wrote a whole book about it and Walter Block writes exquisite reductio ad absurdum examples. Apart from missing the obvious possibility that Mises might have been wrong or Wildberry is misrepresenting him, I found it curious how someone can seriously argue with 5 pages and ignore volumes written by others and somehow present this as an objective viewpoint. You’re a fake, Wildberry, and I’m not going to let you trick people anymore. Your con is over.

opponents must assume, as you have correctly pointed out, that the existence of the works and inventions they want to have “free access” to will be equally available to the public in the absence of IP protections

Nobody must assume any such thing, nor can I recall any of the IP opponents making such claim. On the contrary, if someone made such a claim, the correct conclusion of that claim would be that IP is redundant rather than harmful or self-contradictory.

There is no basis or empirical evidence that this will be the case.

Maybe because noone is making such an argument. Rather, you are guilty of a straw man fallacy.

It is an absurd assertion that undermines the very fundamental premise of praxeology.

What is rather absurd is that you can keep up this charade for so many months.

Humans act to achieve goals perceived to be in their self-interests. This will not change either with or without IP. Producers will adapt to do the best they can under the circumstances in which they exist. Change the circumstances, change the actions.

This is one of the occasions where you present a tautology. However, the problem with tautologies is that they do not make the weigh of the argument swing either way.

Therefore the argument begins with the act of disclosure.

At least we seem to agree on a very tiny speck. So, I’ll build upon it to refute your position, Wildberry.

What is an act of disclosure? It is when others become aware of what you’re thinking. But this has nothing to do with IP, property rights, truth or even existence of the thought. It can occur in all 16 combinations of these (with/without goods covered by IP on one axis, in accordance / in violation of property rights on the other axis, truthful/false awareness on another axis, existing/nonexisting references on the last one).

So, you’re stuck again without any argument whatsoever.

As you say, that act will not be calculated to the same conclusion in the absence of something like IP laws to guarantee producer rights to their production.

Another deceptive statement. IP does not guarantee rights to production, rather it prevents others from production (and, since it affects the input side too, you might be prevented from producing as well if it requires something which other people patented).

Another gap in the argumentation here is a complete lack of acknowledgement of the competing objective of IP laws to producer rights; to maximize public access and to protect the integrity of the public domain.

So, provide a normative scale and a method of measuring “public access” and “integrity of the public domain”. On a side note, do you think that privacy should be protected too? Well, if yes, then that contradicts your objective of “public access”. It also contradicts the objective of supporting producers, because that requires the limiting of “public access”. So obviously you can’t even make up your mind in what IP is supposed to do.

The so-called “Mickey Mouse Protection Act”, otherwise known as the CTEA, is just an example of those who stand to make the greatest short-term gains from an extension of copyrights that were about to expire, hijacking the political system to achieve their short-term goals: Mercantilism pure and simple.

Yet, since according to you, the law correctly defines what IP is, it is simultaneously beneficial. Same contradiction all over again.

Wildberry, your fraudulent pretense of knowledge is a disgrace for any critically thinking person.

Peter Surda May 12, 2011 at 5:31 am

Zaq,

This is the first one I have felt contained a deep logical fallacy (which I stated before).

The fallacy you refer to is a misunderstanding or misrepresentation of the postion. IP is not required to earn money by mental labour.

The main premise is that you cannot change the environment of the actors and expect the same behavior from them.

I have no problem with this, and I fail to see how that supports your position.

I am bringing up possibilities where this is a negative consequence, such as Damadian’s choice to build only one machine.

While that is a possibility, it is also unlikely for the reasons I outlined. Furthermore, it can still happen with IP, arguably even more likely, since IP is based on restricting production.

My experience says that Damadian will do what Damadian feels will maximize Damadian’s profit … and that this would likely be a different course of action without IP protection.

Of course. However, restricting competition leads to a decrease of output anyway. So why does this support your position?

Really? If not to me, to whom does it belong if it is my secret?

You are using metaphors and avoid more formal representations of the problem. What is an idea? It is merely a specific state of one’s brain. But based on the property rights in scarce goods, people already own their brains regardless of the states thereof. So by saying that an idea belongs to you, you are at best double-counting (your own brain), and at worst contradicting property rights in scarce goods (other people’s brains).

Does your job belong to you? Does “stealing” it violate your rights? Of course not. These are merely reinterpretations of the contractual relationship between you and your employer. The reinterpretation does not create new rights.

Upon further examination of my position, which this discussion has forced, I view IP protection only as an incentive to invent.

This is a very courageous reaction. Apparently you realised that indeed the argument for IP as a natural right is flawed, so you shifted to the utilitarian one.

But the utilitarian one requires a normative scale and a method of evaluating it.

I am not neglecting the disadvantages, I assure you.

You seem to be able to comprehend the disadvantages from empirical point of view, at least. You however seem to concentrate on the indirect disadvantages, and see them as specific to the current system.

First of all, because IP contradicts property rights in scarce goods, the indirect disadvantages is inherent in the system.

Furthermore, there are also direct disadvantages. The additional revenue that comes from selling goods covered by IP represents costs for people who are buying goods covered by IP. You, as an inventor, are also one of those people. Just like the additional potential revenue may influence your behaviour to produce more, the additional costs may influence your behaviour to produce less. Just like it is possible that a product would only be produced with IP due to insufficient revenue otherwise, it is also possible that a product would only be produced without IP due to overwhelming costs otherwise.

Also, the costs as well as revenues fluctuate all the time. Typically on a free market, the costs decrease over time, so you can at best argue that IP causes some products to be produced sooner. But because all products require scarce resources, this needs to be offset by other products being produced later or at decreased quantity. Why is this beneficial? From the point of view of a proponent of property rights in scarce goods, it leads to waste.

Removal of IP protection would logically give us less innovation by removal of the incentive.

Removal of IP also reduces the costs. So logically, in order to draw a conclusion whether the net result is less or more innovation, you need a normative scale to compare the advantages and disadvantages.

Ethan May 4, 2011 at 4:17 pm

I didn’t find this arrogant at all. As an infrequent poster but a frequent reader I really appreciate your civil and respectful tone. I think the concerns you reference are very compelling, and your experience as an inventor certainly gives you a good reference for voicing those concerns. I’d like to say a bit about where I am coming from as I would be interested to hear your further opinion on the subject. I am very attached to the libertarian principle which abhors the initiation of force. While I am in favor of the legitimate rule of law in society; the kind which protects people from the invasive actions of other parties both foreign and domestic, I am very opposed to any extra legislation which goes beyond this narrow definition. I prefer local rule to state or federal power generally, as I think it more closely approximates the organic law that would emerge in the absence of a national territorial monopoly with an arbitrary political boarder. In any case when it comes to laws protecting private property, I can see the legitimate function they perform when it comes to physical possessions. It is clearly apparent that the police and courts which succeed in restoring my property when someone has stolen or damaged it, are basically acting in accordance with the organic law I expect would emerge in a libertarian paradise. When it comes to patent law, however, the enforcement itself seems to be the aggressor almost by definition. The police officer or court, in the case of recovering my lawn mower or at least some money from the thief, is reacting to an initiation of aggressive force against me, and until I get it back I can’t mow my lawn any more. With the enforcement of patent law, the enforcers become the aggressive party; it is not just an industrial thief who gets taken to court, or even a receiver of the ‘stolen’ ideas, anyone who is using (knowingly or not) an idea or process similar enough can be successfully found guilty of patent infringement. And in all cases the aggressive enforcement cannot be carried out without initiating a violation of another person’s private property. This seems to hold in some form for all IP situations. And while society in general seems to support and even participate in the enforcement of physical property, adding some organic legitimacy to defining property in this way, the enphorcement of IP seems to be continuously at war with the societal and market forces arrayed against it.

Now I am sympathetic for the amount of adjustment inventors and entrepreneurs would have to go through if IP enforcement was abolished, a great deal would change in the way people did business and developed ideas, but that is a different consideration I think. There have been other institutions which have only survived because of an external aggressive government force being almost continuously applied, slavery comes to mind, though feudalism and mercantilism also come to mind. After these institutions collapsed market solutions developed and in hindsight the anxiety that many felt about changing the familiar can be seen as naive at best. Based on the assumption (and this is a big assumption for me, I admit) that aggressive forced interaction when compared to voluntary interaction has extra costs associated with it, I am at least theoretically comfortable in always assuming that given time the market solution will yield a higher standard of living and an improved society and culture. I have a faith, a confidence, until the proof is unassailable, that the free-er, less hampered economy is the better one.

From a slightly different angle, I know that the process of inventing and the position of the inventor would be very different in this theoretical world. I think stuff would still be invented if for no other reason than that people want better and cheaper solutions to the same age old problems, still it could be a very different process. Then simply from the cost paid by society perspective, there would be one less intrusive force interfering with the continuous market drive towards higher living standards. What of the inventor and his livelihood without protection? What if we got rid of the BATF, the EPA and the IRS, some of these people might need to find other lines of work just like the buggy whip and harpsichord manufacturer. I would be really interested in your thoughts here, I have several successful inventors that I know, and this has nagged at me a great deal over the years, but to have it fly in the face of well founded theory bothers me too.

Ethan May 4, 2011 at 4:33 pm

BATF, EPA and IRS jobs being lost was not a good example, so if you were to end the IRS as an unnecessary government intrusion in the market place, many H&R Block employees would need to retrain there skills for a different type of work, as would Lawyers specializing in estate planning. But saving those jobs alone wouldn’t be an adequate argument for keeping the IRS. Is this even germane to the discussion? I don’t know.

zaq.hack May 4, 2011 at 4:58 pm

My political standpoint is best stated as the following: If the government wasn’t doing ____ by 1801, it should probably stop doing ____, today. I am a smart guy, but I’m a new student in the Austrian School. I have found this debate pretty engaging and have learned quite a bit, myself.

If you look at your examples, you talk about the police; the concept of a police force is Good, yes? However, there are corrupt police departments, there is over-reaching in the case of TSA, and there are other negatives surrounding the enforcement of laws which we would consider not “organic” in origin. One theory could be that we should privatize the police department and do away with government enforcement altogether; another would be to strictly limit the powers of government to perform on a minimal basis (likely more practical).

I believe that representative democracy is a good system of government; we have dealt poorly with what we have inherited from our forefathers. We are on the verge of losing it. I do not think this is because our founders gave us a bad system; to the contrary, we have corrupted it at every opportunity.

I agree that our current patent system is a mess. However, the concept of patent and intellectual property is not as simple as other flavors of government enforcement. Economists assume innovation because humans are inherently curious and like to build things. Growth in the economy, the ability to attack a monopoly, real job creation, and many other forces require innovation and the spread of ideas and markets. Changing the fundamental thought process that inventors go through once they have something new is not a one-dimensional lever.

… while society in general seems to support and even participate in the enforcement of physical property, adding some organic legitimacy to defining property in this way, the enphorcement of IP seems to be continuously at war with the societal and market forces arrayed against it.

I disagree with this. There are certain factors which require market correction and IP owners are sometimes resistant to this. MP3′s come to mind. Everyone was ripping off music because they wanted to have portable, digital copies. The music industry, through monopoly practices, had artificially inflated the value of a “song” or “album.” People were using Napster to get songs for free, not because they were mostly scheming thieves, but because there was no legitimate channel to get digital copies at the song’s value. Apple’s iTunes changed all that: They brought a large enough library of music, easily made available to customers, and at a price that people were willing to pay. The longer this market continues, the more we see the death of “digital rights management” schemes. People want to own movies and music: The companies producing these goods simply wanted (and many still want) an arbitrary and too expensive price for them.

zaq.hack May 4, 2011 at 5:09 pm

By the way, IP “property rights,” if I am to imagine my own Utopian world, would last approximately 5 years. In another 100 years, when we all have 3D printers which fabricate stuff for us instead of forcing us to go to Wal-Mart, that period may be reduced to 1 or 2 years. I do not believe you “own” an idea forever – this is both impractical and “inorganic,” as Ethan would say (my brother’s name is Ethan, for what it’s worth).

To gain a patent or copyright, a work of art or technology would have to be sufficiently unique to pass Jefferson’s rigor. Most of the things we patent today would not qualify for a patent in my Utopia. Probably 99% of “process patents” would get thrown in the shredder. The practice by pharmaceutical companies of patenting every molecule and gene should be done away with. Most “evolutionary” new ideas would have a hard time getting patents; truly “revolutionary” items are what an IP system should protect.

zaq.hack May 5, 2011 at 11:35 am

@Wildberry – There is one distinction I believe has been cleared up for me in all this “thinking about it.” As I said, I’m much more a student here than a professor. I am not sure that intellectual property can be conferred “rights” in the same way as a bushel of corn. The reasoning for this is that ideas are not subject to exclusive use. Consumption of an idea is done by either applying it (a machine that does X) or copying it (reading a book makes an imperfect copy in your mind). Consumption of other goods means that they are not available for consumption by others. Also, we agree that intellectual property protection should be term limited. No natural “right” would have that same limitation.

However, we do agree that it is critical that such a construct exist. As you said earlier, property rights are generally accepted, but must also be enforced. I believe the the incentive to profit by selling or publishing the idea is much stronger with copyright and patent than it otherwise would be. My only “proof” is history: How much did we invent before patents came to be and how much have we invented afterward? Although I would not suggest that the concept of intellectual property was the cause, the number of patents achieved by Thomas Edison alone and reverence with which society looked upon inventors at the time imply that it had a key role.

I think Peter’s notions are tainted by his background in software. In that world, ideas are represented by batches of bits which can be easily copied. That a “theft” of such an idea could be so easy makes it seem unnatural to protect. However, I would suggest that regular theft is pretty simple, also, in most cases. Bits of candy can be stolen from a store, lots of things could be removed from your neighbor’s yard, etc., without much risk of getting caught. I hearken back to iTunes and Apple: Most people with MP3′s were “stealing music” back in the late 1990′s. Today, it is highly unusual and most people seem just fine with downloading music. I maintain that this would have been the natural evolution of the technology and music industry, even without the DMCA.

Wildberry May 5, 2011 at 12:33 pm

@zaq.hack May 5, 2011 at 11:35 am

Good response. I would like to pick up on your comments regarding the non-scarcity of ideas.

I have categorized one line of anti-IP argument here as the “ideas are free” equivocation. It is just as erroneous on both sides of the argument. I believe it is important to make a distinction between “ideas” used in the general sense, and “original works of authorship” in copyrights. This distinction is clearly reflected in the Copyrights Act itself by specifically excluding ideas from the subject matter of copyrights.

Allow me to comment on the implications of that regarding your recognition of the non-scarcity of ideas. By analogy, this is similar to the non-scarcity of the letters of the alphabet. Although it is possible to describe an original work as a “pattern of letters”, that completely misses the importance of one pattern over another; the meaning conveyed by a particular pattern of use.

Think of a book comprised of random letters, and compare that to the pattern of Huckleberry Finn. In both cases, the serviceability of the letters is inexhaustible and therefore non-scarce. But the particular pattern that is Huck Finn is extremely scarce, and required a capital investment by the author in order to create the one manuscript from which all subsequent copies are made.

The idea of two boys from diverse cultural backgrounds floating down a river while having adventures and discovering the commonality of their humanity, is not the same as that particular book by Mark Twain, although another, completely different pattern of letters could express the very same ideas, and comprise a completely distinct expression. There is no limit to the serviceability of the ideas.

If these concepts, ideas and original work, are equated, then you can use the obvious truth that
“ideas are free” to argue against IP. This is a fallacy of equivocation.

Second, I argue that property, in the context of economics and law, is a human device, which is a phrase borrowed directly from Mises. The explosion of inventions was not the result of IP, but the cause of its growing importance. As the industrial revolution became explosive, the need to internalize benefits of invention through property rights in the invention became more important. Therefore, there was a co-evolution, which was reflected in the Constitution. We employed the concept of property rights in order to achieve economic policies of reward for production to producers.

To think about the world before copyrights, think of the time when books had to be hand-lettered, and the original was carefully guarded behind the walls of privilege. The reading and writing of books was the endeavor of only the most privileged. Illiteracy was common in part because the opportunity and need to read was nearly non-existent.

The fact that current technology makes copying cheap does not change the basic right of producers to benefit from their production. In a world where secrecy and benefit are tightly coupled, the economics of production and disclosure follows a different course than where benefits are enhanced through widespread disclosure.

Finally, laws do not always adapt to changes as fast as the markets, in fact rarely do. However the basic principles remain somewhat constant. You raise the example of iTunes, which is a good one. The market has arrived at a solution that facilitates widespread public access, while preserving the fundamental principle that the producers have a right to internalize benefits of production.

I think you are right about Peter. For software engineers, the “correct” operation of the world is a binary function, and conduct can be coded by selecting the right pattern of 1s and 0s. I look forward to your future posts.

Peter Surda May 12, 2011 at 4:53 am

Wildberry,

I believe it is important to make a distinction between “ideas” used in the general sense, and “original works of authorship” in copyrights.

As I pointed out many times, this is a metaphysical distinction without economic significance, as it is impossible to interact with ideas without the use of a medium.

Stop making up stuff. Your arguments were refuted. Ignoring your opponents does not fix the logical errors you are committing.

For software engineers, the “correct” operation of the world is a binary function, and conduct can be coded by selecting the right pattern of 1s and 0s. I look forward to your future posts.

On the other hand, maybe software engineers have a better understand of logic. We understand that the propagation of information is merely encoding, transmission and decoding, rather than colourful metaphors. We understand what data is and how it can be processed to make it more useful. Whether the processes are more formal (closer related to math) or more casual (closer related to social funcions) does not influence the nature of them. It merely makes it more apparent and exposes the limits of the metaphors.

Peter Surda May 12, 2011 at 4:36 am

Zaq,

finally I backtracked to your posts.

I think Peter’s notions are tainted by his background in software. In that world, ideas are represented by batches of bits which can be easily copied.

This may or may not be true. However, my main arguments have nothing to do with software, or even IP. My main arguments are:
- IP proponents contradict themselves
- IP proponents cannot provide a coherent explanation of their position

Without addressing the issues, it is pointless to muse about whether copying is easy or how it differs across industries.

zaq.hack May 12, 2011 at 7:30 am

Peter’s main arguments are:
- To ignore the coherent explanations of IP positions above
- To have the final post on the topic and therefore “win”

I’m done. You “win.”

Peter Surda May 12, 2011 at 8:29 am

Zaq,

I thought you were genuinely interested in analysing the concept of IP. Apparently, you are not. We both lose.

zaq.hack May 12, 2011 at 10:12 am

I believe IP is a key incentive for innovation. You do not. You believe your stance is rationally superior. I am not willing to dedicate the effort required to refute this belief. When you refuse to see a difference between a secret and a publicly shared idea (or simply dismiss the notion as contradictory), we have nothing left to discuss.

Peter Surda May 12, 2011 at 11:23 am

Zaq,

I believe IP is a key incentive for innovation. You do not.

What you or me believe is irrelevant. My point is that your arguments are flawed. Beliefs do not fix flawed logic.

You believe your stance is rationally superior.

I believe my take is a coherent, falsifiable claim. That does not make it correct, but it makes it superiour vis-a-vis an incoherent, unfalsifiable one. I explained multiple times, on multiple occasions (albeit maybe not directly towards you), how my arguments could be refuted, should they be incorrect.

When you refuse to see a difference between a secret and a publicly shared idea (or simply dismiss the notion as contradictory), we have nothing left to discuss.

I never said that. You have not taken the sufficient time to analyse my claim. My claim is not that there is no difference, but that you fail to explain why the difference is relevant from the point of view of property rights.

In a more abstract take, IP contradicts property rights in scarce goods. It is IP proponents who claim that they should be valid simultaneously. You said, for example, that taking crops is theft. Then, logically, IP is theft too, because all it does is expropriate media. To disprove this, you would need to show a way of interacting with ideas without the use of media.

For my argument’s validity it is completely irrelevant which of the two claims takes precedence. Even if I, for example, argued that book writers should have a right to prevent other people from copying them (while not explaining the rest of my theory of rights), you would still be contradicting yourself.

Wildberry May 12, 2011 at 11:20 am

@ zaq.hack May 12, 2011 at 7:30 am

I have now witnessed this precise outcome from over a half-dozen posters here so far, including me. It is pointless. To add yet another unnecessary example, consider this:

Peter says:

What is an idea? It is merely a specific state of one’s brain.

If this were true, then of course it would be pointless to distinguish between a “good” idea and a “bad” one, “useful” or “worthless”, etc. After all, an idea is simply one state of brain matter compared to all the infinite states that are possible.

To reduce language to a meaningless, absurd, nothingness makes it possible to say everything is a contradiction. In such a meaningless world, anything that appears to carry meaning is a contradiction to this meaningless state.

It is somewhat like trying to communicate with a drunken monkey. The best strategy is don’t try. There are plenty of people here who can be rational and coherent, like you.

Peter Surda May 12, 2011 at 1:21 pm

Wildberry,

If this were true, then of course it would be pointless to distinguish between a “good” idea and a “bad” one, “useful” or “worthless”, etc.

This is a non-sequitur. Actually, that are two non-sequiturs. The second one is the implied assumption that the distinction good/bad or useful/worthless is relevant from the point of view of property rights. Yet again, you are making up stuff on the fly.

I think you are yet again confused by thinking that reinterpreting a phenomenon from a different point of view proves that there are two distinct phenomena.

If you want to disprove my claim, then show me an example of an idea that is not embedded in one’s brain. Logic, rather than emotions, is the foundation of a scientific discourse.

To reduce language to a meaningless, absurd, nothingness makes it possible to say everything is a contradiction. In such a meaningless world, anything that appears to carry meaning is a contradiction to this meaningless state.

On the contrary, Wildberry. If one uses vague claims, like you do, then it is pointless to debate, due to principle of explosion, as I elaborated earlier. I also demonstrated it recently, where you claimed that if you make something, then it is yours, but neglected to notice that this can be interpreted in a way that the copy belongs to the copier.

It is somewhat like trying to communicate with a drunken monkey. The best strategy is don’t try. There are plenty of people here who can be rational and coherent, like you.

You have yet to provide a coherent claim, after many months. You ignore the flow of the debate and repeat misinterpretations and refuted claims. You complain that you don’t understand, yet never explain what exactly you don’t understand or ask for a clarification. And, now you appeal to emotions and metaargue. Yet again you have exhausted your repertoire, leaving the last available act for the finale, which is cowardly running away.

zaq.hack May 12, 2011 at 1:41 pm

@Peter: A greater propensity for verbosity is not an argument. In the end, you will have the last word because you feel the “flow” of your arguments un-refuted in the penultimate post.

I have already shown a willingness to learn, grow, and have changed my opinion on this topic in this very thread. To that end, it has been an excellent experience. However, to the extent this is a high school debate which has now centered on semantics, I take my leave.

If we are to continue a rational discussion of unique ideas, then how about this: Based on your logic above, should it be permissible for a masters or doctorate student to copy the work of another and present it as his/her own? If the creator of an idea has no “ownership” or no unique imprint upon it, why is Einstein’s theory of relativity important to attribute to him? Why can’t I just write “energy equals mass times the square of the speed of light” and present it is as my own idea? After all, it does no monetary harm to Einstein, right? Or, if ideas are just the varied states of our brain, why have a Mises Institute? Why is attribution of an idea worth keeping if copyright is not? Or is it?

Wildberry May 12, 2011 at 3:50 pm

@ zaq.hack May 12, 2011 at 1:41 pm

I think you ask excellent questions here.

There is a fascinating concept that comes out of David Friedman’s book, “Law’s Order”, which discusses this issue in the context of deriving economically efficient legal rules.

If you think about all the kinds of disputes that can come up between humans, you can put them into buckets along a logical continuum based on the way society and the legal system handles them.

For example, at the top you have crimes, which are punished by “paying” the state in fines or imprisonment or even execution. Then you have torts (trespass, nuisance, etc.) where the penalties are paid to the victim in terms of damages. Then contracts, which are enforced based on the intent and expectations of the parties.

Crimes are a public form of enforcement, while and torts and contracts are privately enforced.

At the other end of the spectrum, in the private enforcement realm, there is enforcement of a social norm. For example, I invite you to dinner and you say you’ll come then don’t. I cannot enforce that in contracts, or torts. But I can refuse to invite you to future dinners based on how I feel about you as a result of being snubbed.

Sometimes enforcement by social norms can displace the courts as a form of conflict resolution. The author uses a study done on a group of ranchers in Shasta County, California involving cattle, fences and trespass by your neighbor’s cows. Conflicts that could be enforced through the courts were enforced very effectively by a well-established set of rules concerning what ranchers are expected to do when their cows trespass, and what happens to people who don’t follow the established rules. Apparently, this is one kind of evidence that there are offenses and enforcements in society that never rise to the level of entailing a legal remedy, but they are important and effective nonetheless.

Some legal scholars say that no law can persist unless it has some support or foundation in social norms. If you start from the cows/ranchers and work your way up the continuum to say, murder, you can see that in every case there is an underlying principle in social norms, in addition to the legal system of prosecution and remedy/punishment. In some cases, as in the Shasta case, norms appear to be sufficient. In other cases, the offense is too minor to warrant legal remedy. But as the offense becomes more important, say where significant economic loss or individual safety is at stake, then the legal system may kick in to peacefully resolve conflicts.

Sorry, but I said all of that to say this: You raise the issue of attribution, and that we still attribute E-mc2 to Einstein, though we don’t legally have to even under copyrights principles. Yet we do; why?

To understand one possible explanation, let’s turn things around by asking this; how do we feel about someone who takes the work of others and attributes it to himself? The answer is obvious. Most of us, especially those of us who have a need or desire to be viewed as honest and respectful, do not want to be viewed as someone who is trying to benefit unfairly or unjustly from the work of others by claiming it for ourselves. Someone who does such things suffers a stigma placed on him by others. He is not to be trusted, he is trying to deceive us into thinking he is more than he actually is, or has accomplished more than he actually has. These are not traits that we generally value highly in our fellow human beings.

This is the social power of morality at work. One way we can test if something is morally wrong in the nominal sense of existing social norms, is to ask how we feel about someone who rips someone else off, even if their offense does not rise to the level of civil or criminal offense in the legal sense.

We seem to hold, as a society, that we should take responsibility for what we make of ourselves in this life, but that we should give credit and homage to the accomplishments of others. This principle insinuates itself throughout the continuum of human conflicts over property, including conflicts between those who produce original works of authorship and those who desire to benefit from them.

I think this is a least a clue for why the notion of abolishing any and all systems for enforcing that principle in the realm of copyrights and patents, meets such passionate resistance. It just seems wrong.

I happen to believe that our feelings about that are correct and just, in principle. If our existing legal system for dealing with that issue produces undesirable or unexpected outcomes, then revision is called for. But to sever the relationship between the maker and the user, violates some moral principle that we intuitively understand to be important.

As it happens, there are very important economic reasons for the rules too, but those rules are consistent with, not opposed to, our fundamental sense of what is moral and what is not.

zaq.hack May 12, 2011 at 4:21 pm

@Wildberry: IP opponents suggest there is no “natural law” that we can point to which supports the position. I think you are starting to zero in on it, here.

However, I still maintain that IP protections in a legal/public enforcement construct should have a time limit. This in and of itself negates copyright as a “natural right.” Even if every new idea a particular inventor had was released to public domain, we would attribute the “best” ideas to that inventor (assuming we knew they were his/her original idea). We still refer to the “Franklin Stove,” although he did not directly profit from it. This tells me that humans naturally put value on unique and particularly useful original ideas.

Earlier, I asked if an inventor should have a reasonable expectation to monetary reward for his invention. This is not a right or an entitlement question. You are answering, “Yes, I believe an inventor has a reasonable expectation of profit from a new idea or invention.” That is also my answer. Peter’s reply above is to construct a “scarce goods” analogy, explain that I have a mistaken view of labor, and otherwise not answer the question he deems irrelevant.

But the answer, for most people, is simply, “Yes.” I am not saying that makes it the correct answer, or that it is even the best answer. As you note above, that’s what “feels” right. I believe that is the conclusion the American Founders came to in setting up a patent system for the early USA. Is it perfect? No. Is it harder to deal with than land titles and concrete goods? Yes. But even IP opponent Thomas Jefferson changed his position after seeing benefits of such an incentive to invent.

Wildberry May 12, 2011 at 7:13 pm

@ zaq.hack May 12, 2011 at 4:21 pm

You are clearly a thoughtful person.

IP opponents suggest there is no “natural law” that we can point to which supports the position. I think you are starting to zero in on it, here.
However, I still maintain that IP protections in a legal/public enforcement construct should have a time limit. This in and of itself negates copyright as a “natural right.” Even if every new idea a particular inventor had was released to public domain, we would attribute the “best” ideas to that inventor (assuming we knew they were his/her original idea). We still refer to the “Franklin Stove,” although he did not directly profit from it. This tells me that humans naturally put value on unique and particularly useful original ideas.

Natural law arguments are merely one way to arrive at the justifiability for something like IP. In any case, I believe, and have tried to explain elsewhere on this blog, that it is possible to “prove” that something like IP is consistent with a natural rights theory on the basis of self-ownership, and owning the products of one’s own means of production. I believe that even Kinsella has conceded this point on the basis of his agreement that an author owns his original manuscript before he attempts to disclose it to others.

From that point forward, you are really shifting to an economic argument, in which I’m currently attempting to engage Kinsella. (see here:http://blog.mises.org/16873/copyright-and-the-end-of-internet-freedom/comment-page-1/#comment-779712)

The point being made by natural rights advocates, as this applied to opposition to IP, is that if IP was a natural right, then the term should be forever, like the right to own land. Of course the problem is that all rights have limits. You do not have a right to life indefinitely. As they say, no one gets outa here alive. Even the sacred cow of property rights in land is not perpetual. You only own it until you die. You can pass it on by operation of will, but there are limits to that too (see Rule Against Perpetuities). So I disagree, it does not negate the natural rights to IP. If there is a natural right to IP, it is the same natural right one has to his own production, and for the same reasons. In my view, they are entirely consistent.

Why limit the term then? That is an economic question, not a moral or “natural rights” issue. In short, as with most laws and social policies, the boundaries between two things in conflict is most often a fuzzy line. In the case of IP, you have the following conflicting claims to deal with; 1) the producer’s expectation to benefit from his own production and 2) the public’s expectation that they have access to the latest and greatest works of creation and innovation, to knowledge and technology and art and literature.

The bargain of IP is public disclosure in exchange for some period of property rights in what is publicly disclosed. If the right lasted forever, the public domain would eventually be privately owned and the public policy of access would be defeated. If the term is zero, the producer’s expectation of benefit for work is destroyed. People don’t work for free on purpose, so if you want more of something you need a profit motive operating in a free market. We can say that the term is therefore somewhere between, but not equal to either zero or infinity.

How long should the term be, and why is it the way it is? My answer is rent-seeking mercantilism driven by a legislative bias. There are some good reasons to say that the current terms are too long in some (or most) cases, given the velocity of the markets and the capabilities of modern technology. Perhaps more on that later.

Earlier, I asked if an inventor should have a reasonable expectation to monetary reward for his invention. This is not a right or an entitlement question. You are answering, “Yes, I believe an inventor has a reasonable expectation of profit from a new idea or invention.” That is also my answer. Peter’s reply above is to construct a “scarce goods” analogy, explain that I have a mistaken view of labor, and otherwise not answer the question he deems irrelevant.

I no longer take Peter seriously. You can make up your own mind. I started out with an open mind. I have no dog in the IP hunt. I’m not a writer or inventor. But I am convinced at this point that the principle of IP rights is fully consistent with libertarian thought and Austrian economic principles. That is not to say that all is well, only that the principles are legitimate and correct in my view.

But the answer, for most people, is simply, “Yes.” I am not saying that makes it the correct answer, or that it is even the best answer. As you note above, that’s what “feels” right. I believe that is the conclusion the American Founders came to in setting up a patent system for the early USA. Is it perfect? No. Is it harder to deal with than land titles and concrete goods? Yes. But even IP opponent Thomas Jefferson changed his position after seeing benefits of such an incentive to invent.

The founders, and especially Jefferson, were not stupid men, so I am always suspicious of those who just dismiss them as mercantilists or statists or whatever. No law that violates the moral and economic principles that run throughout our social, political, legal and economic systems and institutions could long survive. IP has been around for all that time, and has survived longer than say, slavery. You are right, that doesn’t mean it is correct, but that doesn’t mean it is wrong either. That is a distinction that we each individually make.

My approach is a little Reaganesk; trust your instincts, but verify.

zaq.hack May 12, 2011 at 9:30 pm

@Wildberry: Also realize that some of the folks here are anarchists. Any sort of government construct feels “artificial” to them and unworthy of protection.

Clearly, many of our property rights have arbitrary distinctions from many points of view. The earth, clay, grass, and stone under my front yard is pretty much the same as the earth, clay, grass and stone under my next-door neighbor’s. There is no river between our “property.” There is no natural barrier – the barrier is drawn on a map and observed by mankind. The squirrels know no difference. Humans make the distinction between which is my property and which is my neighbor’s. Similarly, if I have a computer identical to another person’s, one is mine and one is not. We have a set of rules for ownership of what is mine and why it is mine and why there is even a concept of “mine.”

And yet, the opponents of IP are unwilling to draw a line between an original work and a copy of it. Is it an arbitrary line? Yes, to the squirrels.

Peter Surda May 13, 2011 at 4:26 am

Zaq,

it looks like you still don’t comprehend the questions I’m asking and the problems I am describing.

Based on your logic above, should it be permissible for a masters or doctorate student to copy the work of another and present it as his/her own?

Most importantly, economics is the study of what is, rather than what should be. This question is outside of the scope of economics and in the realm of ethics.

However, I can explain how to interpret the situation based on the theories developed by Rothbard/Evers/Hoppe/Kinsella.

We need to analyse the following subparts of the situation:
- did the student manufacture the copy in violation of property rights or in accordance with them? For example, did he have trespass or steal the original manuscript, ink, paper, computer? In the typical case, the answer would be no, so there would be no violation of property rights.
- did he violate contractual relationships by manufacturing the copy? For example, did his university’s rules say that plagiarism leads to invalidation of the title or credits or even expulsion? In the typical case, the answer would be yes. While this is not a violation of property rights per se, it leads to the student not being able to achieve the desired outcome.
- did he accurately present the nature of the good to people he was trying to sell it to (other than the university)? In the typical case, this could be either. It depends on whether the seller considers the authorship of the work to be a relevant factor for the good. But let’s for argument’s sake assume that the buyer would consider the authorship to be relevant, in which case the student would be perpetrating fraud.

By merging the three situations into a label “IP” one distracts from the question of property rights.

If the creator of an idea has no “ownership” or no unique imprint upon it, why is Einstein’s theory of relativity important to attribute to him?

Because that is how we communicate. You also say “my job”, “my wife”, “my customers” although there is no right derived from these relationships.

Why can’t I just write “energy equals mass times the square of the speed of light” and present it is as my own idea?

Of course you can do that. Depending on context, it might be entirely legal, or it might be a consequence of trespass/theft, or it can be fraud. There is nothing specific in that claim that would explain why it must be a violation of property rights.

After all, it does no monetary harm to Einstein, right?

Avoiding “monetary harm” is not a right. Again, depending on context, it can be legal or illegal.

Or, if ideas are just the varied states of our brain, why have a Mises Institute?

Because when viewed from a different perspective, some ideas are valuable and/or useful. But this does not mean that that different perspective is relevant from the point of view of property rights. There are no rights in values or usefulness.

Why is attribution of an idea worth keeping if copyright is not? Or is it?

You are mixing together two unrelated points of view. Austrian economics (the dominant views at least) is based on the rights in physical integrity of objects, rather than values thereof.

IP opponents suggest there is no “natural law” that we can point to which supports the position.

A lot of IP proponents, however, claim that there is. After a couple of posts, it turned out that you are not one of them.

Earlier, I asked if an inventor should have a reasonable expectation to monetary reward for his invention.

Since an inventor is able to sell his invention regardless of IP, the question is based on a flawed assumption (like “have you stopped beating your wife”). The best you can do is to claim that with IP, he will receive more. However, since IP is a redistributive policy, there is no apriori reason why this should be the case. Just like a specific inventor in a specific case might have a bigger profit because his revenue increased, another inventor might have a lower profit because his costs increased.

Furthermore, as I said above, economics is about what is rather than what should be.

Peter’s reply above is to construct a “scarce goods” analogy, explain that I have a mistaken view of labor, and otherwise not answer the question he deems irrelevant.

My reply is that you have not presented a coherent set of rules how to evaluate whether a situation is a violation or rights or not. Your argument is based on the labour theory of value. However, you do not seem to advocate the labour theory of value in other situations. So your claim is incoherent.

But the answer, for most people, is simply, “Yes.”

Because the question is vague. I can also demonstrate the opposite propensity by asking people if inventors should be allowed to steal. Intuitively, most people would answer “no”. But that does not prove or disprove IP. It only shows how metaphors are unsuitable for a scientific discourse.

Peter Surda May 13, 2011 at 4:38 am

Wildberry,

I believe that even Kinsella has conceded this point on the basis of his agreement that an author owns his original manuscript before he attempts to disclose it to others.

The author also owns the manuscript after disclosure. So your whole argument is a non-sequitur. Illogical claims like this are the reason why a debate with you is impossible to conclude.

Peter Surda May 13, 2011 at 4:44 am

Wildberry,

To understand one possible explanation, let’s turn things around by asking this; how do we feel about someone who takes the work of others and attributes it to himself?

Exactly my point. In your imaginationland, feelings take precedence over logic. Then fly there and stop posting here.

Peter Surda May 13, 2011 at 6:00 am

I noticed a typo:

It depends on whether the seller considers the authorship of the work to be a relevant factor for the good.

Should be buyer and not seller.

zaq.hack May 13, 2011 at 7:51 am

I wasn’t going to respond again, but …

Most importantly, economics is the study of what is, rather than what should be. This question is outside of the scope of economics and in the realm of ethics.

Oh, please, spare me the “scientific high ground” attitude! This entire discussion is based on an article which posits we would be better off without medical patents (clearly the world that isn’t). Your “logic” in the most recent post purposely and entirely misses the point of what I have said.

Since you spent more time on the question of plagiarism, you can see your own circular logic at work, here: Above, you say that we have no definition of “intellectual property,” but both Wildberry and I have clearly stated that we are talking about “original ideas.” You dismiss this because the definition is just some “particular state of a brain” as opposed to having a mental copy of the idea; it has no intrinsic value because it is not a “scarce good.” If “original work” holds no value, I ask if universities should do away with rules against plagiarism. You attempt to dismiss this as “ethics” and suggest that it is “fraud” to present another’s ideas as your own. Clearly, there is a distinction to be made between original and copied work, and your refusal to see this reality that all humans instinctively recognize is where your “science” falls apart.

Peter Surda May 13, 2011 at 8:57 am

Zaq,

This entire discussion is based on an article which posits we would be better off without medical patents (clearly the world that isn’t).

Personally, I try to avoid debates whether IP is “good” or “bad”. I only address specific claims and the logical errors in them.

Your “logic” in the most recent post purposely and entirely misses the point of what I have said.

It does not. I don’t care whether you personally think that IP is good or bad. The point is that you are using flawed arguments to support your position.

Above, you say that we have no definition of “intellectual property,” but both Wildberry and I have clearly stated that we are talking about “original ideas.”

First of all, “original ideas” is a metaphor, it’s not a scientific definition, because it is impossible to evaluate meanigfully. As I said, idea is a specific state of one’s brain. Let us say that some of them (“originals”) should receive special treatment. So, my question is, why should that have an effect on rights on objects that are outside of human’s brain? Logically, those objects are not the original idea. So, the “explanation” is a non-sequitur.

The implied assumption in the pro-IP argument is that some acts of other people are causally related to that idea (e.g. “copies”, or “derivatives”). Again, my question is: why is this relevant? Plenty of acts are causally related to ideas yet noone argues that they are relevant from the view of property rights.

Furthermore, Wildberry claims that IP is not about ideas, but about expressions of ideas. That would seem to contradict the definition.

You dismiss this because the definition is just some “particular state of a brain” as opposed to having a mental copy of the idea;

Not really, that misses my point. My point is that this contradicts property rights in scarce goods. Since you do support property rights in scarce goods (like crops or people’s bodies), you are contradicting yourself.

… it has no intrinsic value because it is not a “scarce good.

This is a misrepresentation of my argument. I never said that ideas do not have value. Rather, I said they are covered by property rights in human body (brains). If you simultaneously claim that they are covered by other property rights too, the claim is either redundant or contradicts the former claim. Furthermore, rights are not based on values of goods, so the claim is a non-sequitur anyway.

If “original work” holds no value, I ask if universities should do away with rules against plagiarism.

Again, I did not say “original work” holds no value. I cannot speak for universities since I am not one. The rules against plagiarism have nothing to do with “value” of the copied text. Their purpose is to give meaning to the accreditation. If the student was allowed to plagiarise, the accreditation would be less meaningful, the university would be ignored and lose customers. But plagiarism is not the only feature relevant for the accreditation. Passing of exams is as well. But if I pass an exam because I learned from a stolen book, for example, the theft is completely irrelevant to the accreditation.

You correctly realise that it is the university’s opinion, rather than the plagiarised author’s opinion, that determines whether there is a “problem” or not. If you for example correctly cited from a stolen book (including references, attribution and so on), again this would have no effect on the accreditation.

So you have still not provided a coherent explanation of your position.

You attempt to dismiss this as “ethics” and suggest that it is “fraud” to present another’s ideas as your own.

I though I explained my position clearly, but apparently not. Whether the example I mentioned is fraud depends on the agreement between the copier and buyer, rather than the author and the copier. The author’s opinion is, indeed, irrelevant. If the sale is a fraud, it is the buyer, rather than the author, who is defrauded.

Clearly, there is a distinction to be made between original and copied work.

Of course there is. I never claimed that there wasn’t. On the contrary, you could say with a bit of exaggeration that this is the core of my argument. Since there is a distinction between the original and the copy, there is no reason to assume that whoever owns the original has any rights to the copies.

and your refusal to see this reality that all humans instinctively recognize is where your “science” falls apart.

I believe that I have presented a clear, legible and coherent explanation of my position, and explained why you haven’t. Now, I might be wrong. But in order to prove that, you need to refute my arguments.

zaq.hack May 5, 2011 at 1:47 pm

Per my political philosophy, you have to understand what it took to get a patent in early America. You had to prove “original work.” I think this becomes the definition of what can be protected under the law. If we want a Utopian system for doing so, I would suggest Bill James develop it. His system would likely end up as an impartial evaluation into a variety of metrics. If your “original work” measured up to some pre-determined score, you would get a patent. (He has proposed a similar system to replace jury trials, which is both fascinating and impractical. It was recently detailed in WIRED.)

Software folks who champion “open source” are often opposed to all forms of IP. Although the building of a house is “original work” in that each is slightly different and built for a purpose, software is now very similar. The concept of “a house” or “a program” is non-unique. Labor is spent to build a house or a program that serves a particular purpose, often a non-original purpose. He is blind to his own bias, which is why it is called “bias” in the first place. At least I am still willing to learn and adapt as I do so.

nate-m May 6, 2011 at 6:17 pm

In my utopia world people have freedom and are allowed to do what they want without threat of violence as long as they do not harm the physical property of another person (or that persons)

Unfortunately copyrights and patents depend on armed violence to function so… they are fundamentally incompatible with it.

Wildberry May 5, 2011 at 2:15 pm

@ zaq.hack May 5, 2011 at 1:47 pm

Be aware that “original work of athorship” is a term of art for copyrights only. Patents have a different system of qualification, including being novel, useful and non-obviousness within the meaning of the statute.

I tend to argue copyrights more than patents, becasue the general principles involved are a good baseline to explore the basic principles of justification.

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