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Source link: http://archive.mises.org/1745/antitrust-as-protectionism/

Antitrust as Protectionism

March 24, 2004 by

Part of the problem with using U.S. antitrust laws to shake down domestic corporations is that the same strategy can be used by foreign countries to implement trade protectionism and increased taxation against those same companies–as is evidenced by the current European attack on Microsoft.

{ 49 comments }

Paul D March 24, 2004 at 11:49 am

No offense, Brian, but you’re not seeing the whole picture.

The problem is that huge tech companies like Microsoft rely *entirely* on patents and copyrights – i.e. government regulation and artificial scarcity – for their business model. That allows them to charge, for example, whatever price they want to computer manufacturers (OEMs) for Windows, and to double or triple that price if the OEMs also sell competitors’ products. Competition is nil since competitors can’t 1. redistribute or repackage Microsoft code in new ways (due to copyrights), or 2. make software that functions similarly to Microsoft’s products (due to patents).

The critical part of the European anti-trust decision is not the cash payment (pocket-change for Microsoft), but the fact that they have to disclose how the Windows interface works, and allow OEMs to sell whichever media software they want without paying extra Microsoft tax.

It is true that the proper response of the European regulators would be to remove that copyright and patent protection in Europe, and to let capitalism take its course, but if they did that, they would be violating some lousy treaties and have a certain trigger-happy administration all up in arms.

Anti-trust proceedings may not be the correct libertarian response, but it still is a fix of sorts to a problem brought on by anti-capitalist, un-libertarian laws. Also note that this decision has nothing to do with protectionism. A quick look at recent anti-trust suits in Europe shows that 90% of them involve companies from within the EU.

My point is that if you’re all for software patents and copyrights, and special government protection of certain businesses, but you’re against this anti-trust action, then you’re not a libertarian. You have an inconsistent view of the world.

Peter White March 24, 2004 at 1:19 pm

Mostly true, the exception being that there are alternatives. Linux can be copied without restriction. And every month or so, more desktop software becomes available to run in Linux. And the very existence of Linux is due to what many see as the monopolistic business practices of Microsoft! Programmers donate thousands of hours of coding simply because they don’t like Bill Gates, and refuse to buy his products. So, the free market is providing an alternative to Microsoft and their state granted patents.

And let’s face it, what Microsoft charges for software is peanuts compared with what software used to cost prior to the mid 1980s, when the PC became popular for business. If the special priviledges that Microsoft and others receive truly resulted in monopolies, Windows would undoubtedly cost a few thousand dollars a copy, and I wouldn’t be able to run my entire business on an office suite that costs about $500. (word processor, spreadsheet, email, relational database, etc).

Even the existence of Apple with its 10% market share must keep Microsoft’s prices in check. They can’t really charge whatever they want, since people who already have computers can decide not to upgrade, and those who don’t, or think Micosoft is overpriced, can buy Apple or one of many varieties of Linux systems.

The free market still rules in the computer world.

Paul D March 24, 2004 at 2:27 pm

Peter, I myself am a Linux user, so I agree with everything you say.

However, just look at the direction patents are taking. Want to watch a DVD with open-source software in Linux? Want to watch a Windows Media-encoded movie on Linux? These and a dozen similar things are easy to do, but they’re also illegal in the US because of patent laws, copyright laws, and the Digital Millennium Copyright Act. In fact, any hardware or software that could be used to by-pass the “lock” on proprietary formats belonging to MS and other companies is made illegal and criminal (!) by the DMCA, even if these technologies have other uses.

And just waited till “trusted computing” comes out, where computer hardware will contain BIOS locks to prevent you from using your own software as you wish, or from installing un-trusted OSes (like Linux).

In the near future (and arguably in the present), patent and copyright law *will* give Microsoft the ability to shout out competitors at will. Who can even afford to fight a lawsuit against a company with $50 billion in the bank? IMHO, the European anti-trust case is heading this scenario off at the pass, begining with Windows Media.

Skip Oliva March 24, 2004 at 4:08 pm

Antitrust is never a proper response to alleged abuses of patents and copyrights. If it were, the EU would not have imposed a $600 million fine. That money will not go to compensate any of Microsoft’s alleged “victims,” but to the EU’s central treasury, where it will support a host of anti-capitalist policies and agencies.

Remember, most antitrust cases do not involve intellectual property issues, but the ability of private parties to contract.

RTR March 24, 2004 at 4:13 pm

I agree, Microsoft is the quintessential government created monopoly. It’s absolutely amazing the number of patents they apply for every year. They are in the top five in that regard, and maybe higher. They cherry pick others’ ideas like Netscape’s internet browser and Real Networks media player and then add them to their patented windows operating system. What potentially should be the cheapest component of the computer is now the most expensive (bundle windows, office, and every other such program) and in my opinion comparatively lagging further behind in technological innovation every year (amd and intel processors).

It’s the same with the pharmaceutical industry as well. The main argument advanced is that patents spur technological innovation. I suspect this could be one of the greatest economic fallacies yet to be exposed. Without patents, almost all for sale ideas would be much less profitable because everyone could sell the same thing. Consumers (everybody) would benefit enormously. Any profits to be had would have to come from more efficient delivery.

But it is argued that there wouldn’t be any economic incentive to invest, the costs of which are huge, to discover new technology. For example, it’s cited that it costs $900 million to bring a new drug to the market. I think just the corporate structure would change though. Anyone with cancer has the highest incentive to find a cure and collaborate freely with others. Instead of one big concern (or a few) investing enormous sums to innovate you would have an enormous number of concerns each investing little sums (sounds much more economically efficient to me).

Then the objection goes why wouldn’t everyone wait for someone else to do the work and free ride on it. If that logic held though, the wheel would never have been invented and copied by others who saw its utility. There would be no reason to wait for new ideas to free ride on as there are a constant influx of new ideas. Currently, patents can stem innovation for decades, which I would argue computer operating systems are the latest case in point.

If msft eventually prevails against the EU courts you can kiss a lot of companies goodbye; sun microsystems, real networks etc., and eventually there will be a msft toll for everything to do with telecommunications: cell phones, cable tv, console and pc games. There will be no competition, no innovation, as what incentive would msft have to innovate when they can lazily collect their government created monopoly tolls. Monopolies maximizing profits spend minimal risk and that leads to minimal innovation. Nobody would be a fool to waste investment on any concern that msft could potentially connect itself to.

Patents are anti-free market big government protectionism. Free trade has huge economic benefits. There’s no reason to not think free trade of ideas wouldn’t have a similar effect.

Wild Pegasus March 24, 2004 at 5:14 pm

I don’t see the big deal with Microsoft using the state to secure its property. Everyone else does it. As an ancap, if someone breaks into my home, I’m calling the state’s cops (to remove the offender’s body). Microsoft is simply moving to secure its property like anyone else.

- Josh

Tom Dougherty March 24, 2004 at 5:58 pm

Paul D,

“The problem is that huge tech companies like Microsoft rely *entirely* on patents and copyrights – i.e. government regulation and artificial scarcity – for their business model.”

Copyright and patent protection is a protection of private intellectual property rights. Infringing on one’s intellectual property is theft. If I steal your car, you call the cops and have me arrested. If I steal your intellectual property why, then, is this different? Government protection of property rights may be considered a form of government regulation, but it does not create “artificial scarcity”. Economic goods would still be scarce with or without property rights. One could easily argue that goods would be even scarcer without property rights (including copyright and patent protection) because the incentive to produce goods would be greatly diminished if there were no claim to ownership.

“That allows them to charge, for example, whatever price they want to computer manufacturers (OEMs) for Windows, and to double or triple that price if the OEMs also sell competitors’ products.”

Monopoly and competitive firms both are free to charge whatever price they wish. Monopoly and competitive firms, also, do not charge the highest possible price; they charge a price that is a profit-maximizing price. And, monopoly and competitive firms will both maximize profits where marginal cost equals marginal revenue. As long as there are no barriers to entry in an industry there will be competition. Some people may not like it, but competition may lead to a result where there is one dominant firm who out competes its competitors.

“Competition is nil since competitors can’t 1. redistribute or repackage Microsoft code in new ways (due to copyrights), or 2. make software that functions similarly to Microsoft’s products (due to patents).”

I like “[c]ompetition is nil since competitors can’t….” Think about it. Competition would be nil if there where no competitors. That fact that there are competitors means there is competition. If one company is able to serve consumers better than others can and becomes the dominant firm, then that is merely the outcome of the competitive process.

“My point is that if you’re all for software patents and copyrights, and special government protection of certain businesses, but you’re against this anti-trust action, then you’re not a libertarian. You have an inconsistent view of the world.”

I think it is consistent for one to support private property rights and to support private intellectual property rights. What is inconsistent is to support private property rights but not to support private intellectual property rights.

Tom Dougherty

Paul D March 24, 2004 at 6:17 pm

Tom,

“Copyright and patent protection is a protection of private intellectual property rights.”

Absolutely not. Go through this very site (mises.org) and read those free book chapters about what property is.

“Infringing on one’s intellectual property is theft. If I steal your car, you call the cops and have me arrested. If I steal your intellectual property why, then, is this different?”

It is absolutely different. Property is a scarce good; it’s something that I am deprived of, if someone else steals it. Ownership is exclusive, and because I made it or bought it, I am the owner.

An idea is not scarce. You can’t own it, lock it up, or guard it with a shotgun. Ideas – that includes facts, science, information, and creative concepts, can be used freely by others, without depriving you of anything.

The very notion of “intellectual property”, besides being legally meaningless (copyrights, patents, trademarks, and trade secrets are all completely different), is absurd. It suggests that once I have an idea or a thought, I get to control everyone else to make sure they don’t use the same idea or thought. You’re trying to own other people’s intellects. It’s an artificial exclusivity, and it cannot be accomplished without onerous government regulations and coercion.

Sure, it’s a common and quaint notion that we “have to use laws to protect and control ideas”, otherwise creativity and invention will die or some such nonsense. You’re free to think this, but it’s a decidedly un-libertarian and un-Austrian notion, and creativity has occurred – nay, flourished – for millennia without such government interference.

Like someone mentioned above with pharmaceutical patents, how can you “own” a scientific fact? A molecular structure? You can’t, unless the government’s willing to imprison or kill anyone else who tries to use this knowledge. A company’s right to “own” an idea certainly does not come before the rights of an African AIDS victim to do whatever he can to live, including the purchase of immitation drugs. “Oh oh but those drugs might not be invented without patents”. Know what? I’ll take freedom over a bunch of what-ifs any day.

You might as well argue that slavery was good, because it promoted industrial production and provided food and housing for all negroes. In fact, I’m sure people used that very argument 150 years ago.

You can have your world where Government decides who can think what and own what ideas, where the strong survive and the weak are regulated into oblivion and the masses feed on the crumbs that are left over. I’ll continue dream about a libertarian world where I can use whatever ideas and knowledge available to me, where artificial limitations on my intellect don’t exist.

Tom Dougherty March 24, 2004 at 7:48 pm

Paul,
(Tom: “Copyright and patent protection is a protection of private intellectual property rights.”)

(Paul: “Absolutely not. Go through this very site (mises.org) and read those free book chapters about what property is.”)

Absolutely. In Man, Economy and State Rothbard says, “It is true that a patent and a copyright are both exclusive property rights and it is also true that they are both property rights in innovations.” (p.653) No less an authority than Rothbard himself says that copyrights and patents are private property.

(Tom: “Infringing on one’s intellectual property is theft. If I steal your car, you call the cops and have me arrested. If I steal your intellectual property why, then, is this different?”)

(Paul: “It is absolutely different. Property is a scarce good; it’s something that I am deprived of, if someone else steals it. Ownership is exclusive, and because I made it or bought it, I am the owner.”)

Property is a legally created right. Copyrights and patents also are legally created rights given to the original owner and creator. The original owner and creator of a book may sell you his book, but with limitations. The limitations being that you are not allowed to reproduce the book and sell to others. This is a legally created right enforced by the government. If you do not agree to the terms of the original owner and creator, then do not buy the book or suffer the consequences for violating the copyright. No one is forced to buy copyrighted music, books, ect….

(Paul “The very notion of “intellectual property”, besides being legally meaningless (copyrights, patents, trademarks, and trade secrets are all completely different), is absurd. It suggests that once I have an idea or a thought, I get to control everyone else to make sure they don’t use the same idea or thought.”)

Intellectual property is not legally meaningless; just ask those prosecuted by the record industry for copyright infringement of music. Again, property is a legally created right. As far as copyright goes, if one independently comes up with a copyrighted idea or thought, then one has not violated copyright laws.

(Paul “You’re trying to own other people’s intellects. It’s an artificial exclusivity, and it cannot be accomplished without onerous government regulations and coercion.”)

Again, if one independently comes up with a copyrighted idea or thought, then one has not violated copyright laws. One is simply not allowed to steal the ideas of others and sell them as one’s own. Libertarians should favor private property rights and not encourage the theft of other peoples property.

Tom

Peter White March 24, 2004 at 7:57 pm

OK Tom,

Let’s say that I discover that 1 teaspoon of sugar mixed with 1 teaspoon of waxy yellow buildup taken daily cures cancer. And let’s say that you discover the same thing. But let’s also say that I make it down to the patent office 10 minutes before you do.

So, I get the patent for a cancer cure. That means that anyone using that cure has to get my permission, for which I charge $1,000.

Now, if someone tries to use my cancer cure without paying me the $1,000 fee, the government, which has granted me a patent, will send out armed men and force you to stop. THAT’S WHAT A PATENT MEANS! The government will use any amount of force, up to and including killing you, in order to make you stop using my cancer cure, unless you pay me whatever fee I decide to charge. The fee could be $1,000, or it could be $15,000,000. It’s whatever I decide to charge, for whatever the patent period is.

So, my question is, what right do I have to use whatever amount of force is required to prevent you from using this cancer cure? Ingesting one teaspoon of sugar with one teaspoon of waxy yellow buildup is not a violent act (though it may not be very pleasant). That act in no way prevents anyone else from acting in any way whatsoever. How do I justify the use of force against you, even to the extent of killing you, in order to make you stop? How did my discovery, ten minutes before your discovery, give to me exclusive use of this knowledge?

Paul D March 24, 2004 at 8:22 pm

“Property is a legally created right.”

No it isn’t. Ownership of property (which is, by definition, scarce) exists whether there is a legal framework or not. I don’t need a government to guard my own property.

“Copyrights and patents also are legally created rights given to the original owner and creator.”

You’re correct that they’re artificial, legal creations. But they’re not rights, they’re exclusions. “I’ve come up with this idea, no one is allowed to copy it on pain of incarceration/death.”

“if one independently comes up with a copyrighted idea or thought, then one has not violated copyright laws.”

Actually, they have, whether they knew it or not. You can innocently create something and be sued because someone else created something similar before you. Especially true with patents.

“One is simply not allowed to steal the ideas of others and sell them as one’s own.”

This is a very simple concept, so I’ll repeat it one more time. PROPERTY IS SCARCE. IDEAS ARE NOT SCARCE. IDEAS ARE NOT PROPERTY. Think about this for a while. I used to share your misconceptions until I actually thought about the problem.

Here’s another no-brainer. If I still have it after you’ve stolen it, THEN YOU DIDN’T STEAL IT. Copyright infringement, whether you agree with it or not, isn’t theft.

All you’re left with is arguments that “things are better” with copyrights and patents. Just like I can argue that things were better with slavery. That doesn’t make either notion right. And the fact that “intellectual property” can’t exist without government intervention and coercion is a big tip-off that something’s wrong.

Peter, thanks for the great illustration on drug patents.

Brian Macker March 24, 2004 at 9:04 pm

I think that it is possible for intellectual property rights to exist without the state. One can certainly sell or rent ones developments with the proviso that the intellectual content not be divulged. What one cannot do and what the state does do is to prevent someone who had independently come up with a similar or the same solution from using it. I haven’t read Rothbard on this in a while but I believe that he was of the opinion that copyright laws are fine. Are you saying Rothbard is not a consistent libertarian? I think the issue is quite debatable.

I find most of the arguments against Microsoft to be a matter of sour grapes. Most of the lawsuits have been brought by competitors who were trying to gain by government intervention what they could not in the market.

What makes you think that under a Libertarian society one would not be able to sell something with the proviso that one cannot sell a competitors product? Producer and distributor certainly could do that.

I think that some people are mistaken about exactly how “free” a libertarian society would be. In many ways I would think that certain freedoms we take for granted would be more restricted.

I also tend not to get too upset about the government enforcing laws that I think would be in force under a libertarian system. For instance, I assume that private roadway owners would set speed limits and require licenses. Thus for the most part copyright and patent law doesn’t bother me.

I compete with Microsoft and for the most part I think they have done an excellent job. I remember having to write my own printer drivers for different kinds of printers under the old Apple systems. Microsoft did away with all that. In a way they “put me out of a job”. Luckily there was plenty of other work to be done. Besides, each company writing drivers for their own software is wasteful.

Tom Dougherty March 24, 2004 at 9:49 pm

Peter,

Let’s say that there is no patent protection for inventors and you develop the cure for cancer. In order to make any profits from your miracle cancer curing drug, you will have to keep the formula secret. In order to keep it secret, you certainly couldn’t mass market it for fear of someone reverse engineering your miracle cancer-curing drug. So you keep tight control over the drug. You personally administer the drug in very small quantities. Because the drug will only be issued in very limited supplies, you only offer it to the super rich who will pay millions to cure their cancer. Unfortunately, you are unable to administer it to the huddled masses for fear of losing control over the formula. You keep the formula in you head for fear of spy’s getting hold of your simple miracle formula. And you decide that before you die you will release the formula. Unfortunately, you have an untimely death and you take the miracle drug that could save millions to your grave.

But what if the government had decided to offer patent protection for 20 years for your formula. Now, in order to get your patent, you must provide the formula so anyone will be able to produce it. With your intellectual property protected by the government, you decide to market your drug to the masses. You know that the road to riches is mass production for the masses. You set a price that will maximize your profits. This is not the highest possible price, but the profit-maximizing price. Millions and millions of people are able to purchase your drug. Charities are set up to purchase the drug for those with cancer who cannot afford it. You become a billionaire and a hero of mankind. After you die, the miracle cure lives on to save mankind from the curse of cancer.

Alex March 24, 2004 at 10:12 pm

Nice hypothesis, Mr. Dougherty, except it doesn’t stand up to economical theory and the real world.

Lets say I start up a gas station. Lets say that I realize that I have the only formula for making gas in the world. I realize that once I start selling this gas, I can no longer make any profit from it, so I keep the gas to myself, and decide to release the formula only when I die. Unfortunately, I die an untimely death, and everyone is forced to continue making their way to the supermarket via buggies and bicycles.

Of course we can see immediately that this is not the case. There are massive companies that sell products right now that are basically just derivatives of each other – gas being just one example. The idea of ‘not being able to make a profit at all’ is against how the world works right now. Going by what I seem to think is your line of thinking, we would have exactly no cross-over industries in the world; one company would sell only one thing, and that would be the only place to get it, because it would be unprofitable to do otherwise. Clearly this is not the case.

Competition in selling what is an essentially similiar good (gas) also increases the quality of said good. Would we be better off is Chevron was the only gas seller in the world?

Patents artificially raise the price of goods through government interventionism and exclusion of competition. This so called miracle cure for cancer, if released on a patent, could have an extremely high price, and all things being equal, would be more costly than if it was offered through a free market system. Fewer people could get ahold of this cure, and have less money available to buy other goods after they purchased it. Does this sound ethical to you?

Furthermore, let me give you a more sombering idea; a mega corporation invents the cure for cancer, declares a non-libertarian IP on the formula, and then sells the drug at an extremely high price, or at a price high enough that many are excluded from purchasing said drug. The altruistic fellow who invented the drug was a mighty fine fellow, but his son decided that people shouldn’t be allowed to copy ‘his’ idea of a cancer drug, and so, people suffer, and grow terribly angry at this perceived menace; big company capitalism. Sound familiar to whats going on these days?

There is no, and should be no, patent or intellectual property right laws. Property should be only in things that are scare; trying to list property rights in abstract things is meaningless and literally impossible as we cannot, even if we wanted to, physically own ideas, thoughts, and yes, even formula’s to cancer.

Peter White March 24, 2004 at 11:32 pm

Tom,

With all due respect, so what? If I discovered a cure for cancer, and refused to either divulge it and to even administer it, every person with cancer would be no worse off than they would have been had I not discovered the cure.

By not giving or disclosing the cure, I have harmed nobody.

If I sell it only to the super rich, those whom I choose not to sell it to are no worse off than they would be if I didn’t even exist!

RTR March 25, 2004 at 9:55 am

The fact that patent protection exists for only 20 years shows that it is suspect. If it was truly property it should be able to be owned indefinitely.

Contracts were brought up to justify the existence of patents in a libertarian society. The seller will not sell to a buyer unless the buyer agrees to not disclose the intellectual property or resell it to another (so called End User License Agreements EULA’s). Is this a valid contract? Marriage is a contract agreed to for life. Would divorce be outlawed? Could a husband demand sex from a wife (as that’s one of the basic consents the marriage contract permits), thus essentially justifying rape? Could a wife who no longer wants to be married to her husband be charged with theft? Would that be justified by saying nobody was forced to get married?

Patents could theoretically be extended to anything. Record companies could own patents on musical notes and scales and thus extract fees from musicians per note played no matter what infinite combinations they might be played in. A record company could then claim to legally own any music whatsoever since it was composed of patented notes. Could that be justified by saying nobody is forced to play music? That situation is much closer to Microsoft owning programming code than realized. Its competitors cannot truly compete because they have been outlawed by patent protection out of the market for delivering operating systems that contain some exact patterns of 1s and 0s that Microsoft uses.

Duodecimal March 25, 2004 at 11:01 am

I thought it was pretty obvious that patents, copyrights, and trademarks clearly violate natural rights.

Basic property rights are abridged because I could not use materials I owned to create products covered by patents – even though that production did no damage to the patent owner short of offering competition.

Then there’s the threats to freedom of speech and association, especially in the technical industries, where admitting to just reading copyrighted code or trade secrets puts you in grave danger of being unable to find employment due to the risk of your future employer being sued by the likes of SCO, Rambus, RealNetworks, Adobe, and Microsoft. The stifling of the expression of ideas, and the effect this has on further division of labor (longhand for progress), should be obvious.

We have farmers being sued by Monsanto because patented GM pollen landed in their fields through no fault of their own.

Maybe it doesn’t impress anyone that patents and copyrights are statutory rights. To argue that they are valid, however, is to argue that someone has a right to an income, or the right to a market, to the coercive exclusion of others.

Yes, coercive, since that’s the only way these ‘rights’ can work. Private contractual arrangements are fine, but that is very different from law that imposes restrictions on human action on parties uninvolved with such private contracts.

I don’t see any room for patent and copyright law in any sort of consistent libertarian philosophy.

Brian Macker March 25, 2004 at 6:06 pm

No one has convinced me that I was mistaken in my original post to the blog. This is for several reasons. Firstly I do not believe in bringing false charges against an entity in order gain some measure of overall karma. In this I agree with Skip. In no way do I feel the fine fixes anything. Also I do not believe a fine of close to a billion dollars is chump change regardless of the size of Microsoft. In fact I find the idea of fines being proportional to wealth offensive. Should Bill Gates be fined $100 million if he jaywalks? I totally disagree that Microsoft is a government created monopoly. That’s just ridiculous. Microsoft did not pay some government official a bribe to get the exclusive right to create operating systems in this country. They actually created something that apparently you feel the right to indiscriminately copy.

Beyond the subject of my post, which had nothing to do with intellectual property rights, I think that you have not thought about intellectual property rights quite enough.

I also don’t find your argumentation some of the other issues convincing. None of you have given any specific patents or copyrights that Microsoft holds that wouldn’t hold as valid intellectual property rights. I think there is no question that patents, as implemented, do not properly enforce intellectual property rights. However the same can be said for physical property rights, which are currently protected with a regime of taxes. The fact that they are not perfect is no fault of Microsoft. The fact that you lump Microsoft in with companies like SCO who are clearly using anti-free market methods does not bolster your case. I don’t think the fact that say, Amazon holds what is essentially an invalid intellectual property right for “one click” makes every conception of intellectual property rights invalid.

Some of you are also conflating copyright, patent, and intellectual property rights. Microsoft’s intellectual property rights rest mainly on copyright law and not patent law. In addition there is the bringing in inappropriate analogies. The trespass of Monsanto pollen into the corn field of neighbors is not a proper example of intellectual property rights. No more so than if I used a laser to cut a copy of my copyrighted manuscript into the side of your house and then claimed to own it. This is in no way analogous to Microsoft windows. Are you having problems with Microsoft windows cross pollinating your Linux? No. The analogy might work with SCO to a certain degree but not really. The case of SCO they are claiming ownership of something that was already put in the public domain by IBM. The alleged accidental cross-pollination never occurred. It was an intentional injection of IBM owned code into Linux.

Your claim that all forms of intellectual property rights are inconsistent with libertarianism is pure unadulterated hubris. You have no idea what I think or whether I have a consistent view at this point because I have not stated it. Your lack of imagination on this subject in no way restricts me.

David Heinrich March 25, 2004 at 6:52 pm

quote:
——
I totally disagree that Microsoft is a government created monopoly.
——

With due respect, you are wrong. Microsoft, and all software companies, have been granted monopoly rights by patent and copyright laws, which create non-natural property rights in things which are *not* scarce. Property rights are only valid for things which are scarce; furthermore, IP “rights” violate the natural property rights of others. IP laws prevent me from shaping my property in a given form (of information), thus infringe upon my property rights.

This is not to say that, in a free market, there could be no contracts regarding software or processes. A company, like MS, which creates a program could very well have a contract which anyone who buys it, or uses it, must agree to. This would be an enforcible contract in property rights.

However, because MS (and any other company which has “intellectual property”, be it copyrights, patents, or trademarkets) has been granted artificial monopoly priviledges, we *do* know that they are therefore pricing at monopoly prices.

Rothbard did *not* defend copyright laws, nor patent laws. Rothbard defended the private creation of something analagous to copyright via *contracts*. If MS sells you software which you must sign a contract to use, then you have to abide by that contract; otherwise, you have no right to use the software. Likewise, if I discover a new drug, I can sell it to people, with the contract that they not reverse-engineer it. That is also perfectly valid. However, the difference between that and what we have now is that IP laws are State-created monopolies, not privately agreed-upon contracts. Furthermore, the abridgement of them is a civil, not criminal, matter.

Stephan Kinsella makes a good argument on this in *Against Intellectual Property* at http://mises.org/journals/jls/15_2/15_2_1.pdf

duodecimal March 25, 2004 at 8:27 pm

“None of you have given any specific patents or copyrights that Microsoft holds that wouldn’t hold as valid intellectual property rights.”

None of them need to be singled out. All assertions of intellectual property rights are invalid.

“I think there is no question that patents, as implemented, do not properly enforce intellectual property rights. However the same can be said for physical property rights, which are currently protected with a regime of taxes.”

There is a major difference that you haven’t answered between protecting intellectual property and protecting physical property.

When you act to protect physical property, it is because someone has aggressed against it. Any defense of physical property is against an initial coercive act, such as violence, vandalism, trespass, or theft. An attack on physical property materially changes the quality of your ownership of that property or your ability to exclusively control the use of that scarce resource.

I was greatly amused that you view taxation as any sort of means to the end of physical property protection; taxes are inimical to the protection of property in exactly the opposite way that patents protect intellectual property.

When you act to defend intellectual property it is absolutely necessary to violate someone’s physical property rights. This is inescapable. By asserting control over intellectual property, you violate someone’s independent will to speak, sing, write, build, create, or serve.

If I were to have a barbership quartet hum Sravinsky’s ‘Rite of Spring’, or Holst’s ‘Mars, Bringer of War’ to a theater audience, the holders of those copyrights are not harmed (wait, it’s 2004… did the Stravinsky copyrights finally expire last year?)

However, to prevent me from using this intellectual ‘property’, my ability to use my theater, or my audience’s desire to sit somewhere and listen to my favored selections, and my quartet employees, are all restricted.

This is the litmus test. Defending physical property requires an initiating act of coercion against which to defend. Defense by definition is not the first aggressive act; however, ‘defending’ intellectual ‘property’ requires such preemptive threats and coercion.

And lumping copyrights and patents together isn’t necessarily a sign of ignorance. Authors and singers have no more an exclusive right to income or exclusive use than programmers or mousetrap makers of their designs and expressions.

Everyone’s free to their own thoughts and their own bodies. But to demand control over ideas that you voluntarily allowed to escape into humanity’s meme pool is a coercive act against the freedom of everyone else – a trespass on the mind of others just as Monsanto’s GM crops trespassed on neighboring farms.

Tom Dougherty March 25, 2004 at 9:55 pm

In Man, Economy, and State, Rothbard does defend copyrights as being consistent with the free market: “The copyright is … a logical device of property right on the free market.” (p.654) And, “copyright is a logical attribute of property right on the free market….” (p.655)

But he assails patents as being inconsistent with the free market: “The patent is incompatible with the free market precisely to the extent that it goes beyond the copyright.” (p.655)

How would Rothbard change patents? Instead of patenting an invention, an inventor would “mark his machine copyright, and then anyone who buys the machine buys it on the condition that he will not reproduce and sell such a machine for profit.” (p.654) The key difference between current patent law and his version would be that if someone independently created the same machine it would not be in violation of the law to sell this independently created machine.

Rothbard would eliminate the patent, everything would be copyrighted, and that copyright would never expire.

How would this apply to Microsoft?

Every copyright Microsoft holds are consistent with a free market. Further, Microsoft’s copyrights would never expire. To be consistent with a free market, every patent Microsoft holds would now be called copyrights. These copyrights would never expire. Any independent creation would not be an infringement of the copyright.

Tom Dougherty

Alex March 25, 2004 at 10:39 pm

Everyone here has made some excellent comments on the fallibility of intellectual property rights.

But I’d like to add two things that I feel have been neglected in this conversation.

The first one is that the lack of intellectual property rights is seen as predatory towards big business or even upstart businesses. But I feel that people are not seeing the flip side of the story here.

Companies can protect the knowledge that lies in their products from reverse engineering and copying by a simple manipulation of coding or encryption. This is a free market way of solving the ‘problem’ of the lack of any legitimate intellectual property rights. But here, we can see developers actually borrowing more and more efficient means of protecting ‘their’ data from copying, without the threat of the bayonnet or the jailhouse. Instead, we can get developers ‘copying’ each others encryption methods in order to protect ‘their’ intellectual property rights.

Ironically, we can see the non-viability of IP actually working to stop other people from copying and reverse engineering ‘their’ IP. I don’t think this point has been made well enough, but it’s a point that I think the free market will move towards.

I think what IP is really about is money. But I don’t think the music industry has crashed since the invention of MP3 file swapping. If anything, it seems to have increased the purchase of a lot of CD’s.

Also, a lot of libertarians who deny IP are very charitable in their donations to institutes like the Mises Institute, even though we can get increasingly more and more books and articles on the site for free.

I think what also riles pro-IP people up about IP is that they feel that people narcissistically have no shame about not patronizing an author, programmer, or musician for his time and the music, games, or articles that he gives them. I can sympathize with this view.

I think that, all things being equal, people should (not a ‘should’ in that we should point the business end of a gun at them to make them do it) patronize artists that they find appealing through the use of file swapping and other anti-IP activities. Sure, IP isn’t legit. But it is a good natured thing to patronize people who have done the business of providing you with something enjoyable.

David Heinrich March 26, 2004 at 10:30 am

Tom,

I believe you are quoting Rothbard out of context. Let me provide the full paragraph as context:

quote:
——
“We have seen in chapter 2 that the acid test by which we judge whether or not a certain practice or law is or is not consonant with the free market is this: Is the outlawed practice implicit or explicit theft? If it is, then the free market would outlaw it; if not, then its outlawry is itself government interference in the free market. Let us consider copyright. A man writes a book or composes music. When he publishes the book or sheet of music, he imprints on the first page the word “copyright.” This indicates that any man who agrees to purchase this product also agrees as part of the exchange not to recopy or reproduce this work for sale. In other words, the author does not sell his property outright to the buyer; he sells it on condition that the buyer not reproduce it for sale. Since the buyer does not buy the property outright, but only on this condition, any infringement of the contract by him or a subsequent buyer is implicit theft and would be treated accordingly on the free market. The copyright is therefore a logical device of property right on the free market.” – Rothbard; Man, Economy, State
——

Rothbard is defending copyright as a contractually created right, not as a State-granted right, or a natural right that is assumed absent contract. Rothbard’s defense of copyright is clearly based on the argument that a contract constitutes an exchange of property, and the violation of it constitutes the violation of property rights.

However, a contract only applies to those who agree to it – no-one else is bound by it. A man cheating on his wife is in violation of contract, of the obligations he agreed to when he married his wife; however, the mistress is not in violation of that contract, as she never agreed to it. In other words, contracts only bind the parties who have agreed to them, and not third parties. State-created copyright laws, however, bind all third parties, as Kinsella noted (Against Intellectual Property). However, with a contract – which would be the only acceptable way to protect ideas/expressions in a libertarian world – you cannot bind third parties who have not agreed to it. You can bind anyone who agrees to it, but no-one else.

Let us consider one of the most famous contracts, the GNU GPL (GNU’s Not Unix General Public License). Summarily, this contract grants the right of anyone to modify, distribute, change, etc the source code, so long as those modifications are distributed under the GPL as well. Let us consider how this contract would work in a completely unhampered free market (assuming it was modified slightly to accommodate; currently, the GPL assumes copyright law, thus does not stipulate many things). This contract is binding upon the person who downloaded the GPL’ed software; if they give that software to others, it’s also binding on them. However, if they violate their contract and post the source code online without attaching the license, an individual who downloaded it, modified it, and distributed the modified version proprietarily would not be in violation of the contract. How could they? They never agreed to the contract, nor did they even know the software was licensed under the GPL.

In such a situation, in an unhampered free market, the Free Software Foundation would have no cause for complaint against those third parties. However, it would be able to sue the individual who breached that contract for damages.

It should also be noted that a contract analogous to copyright would *not* be assumed in an unhampered free market whenever someone runs into some document without a license. Thus, in the unhampered free market, rights analogous to copyrights could be contractually created, but would only be binding to those individuals who agreed to the contract, and not to third parties who did not agree to the contract. Thus, contractually created “copyrights” would be much more limited in scope in a free market.

Duodecimal March 26, 2004 at 1:07 pm

Even appealing to Rothbard’s authority here does not entirely support the argument. Are implicit, unconsciously-entered-into contracts valid?

Statists argue that our choice to drive on government roads or attend government schools is a sort of social contract that implies our consent to be taxed to support these services. So the whole notion of implied contract doesn’t sit well with me at all.

The only contract I and most people think comes into effect when a book is bought is between me and the book dealer: an exchange of my money for his book. I’d never considered before that there’s an implied contract between me and the book author – who is at least two degrees removed from my market transaction.

So let’s say I buy the book, run off to Kinkos, and start selling excerpts for a dime each on the corner. What right does Rothbard have to that income? I am not competing with him for patronage from publishers, I am competing with his publishers for marketshare.

In a free market without copyrights or patents, the first to market, or the most efficient producer, or the best marketer, is the one who profits and gains market share. This is how it works for the myriad consumer products that are not covered by patents (and yet, corporations manage to reap profits selling) and for classical works that are not covered by copyright (but, even so, generate profits for publishers by selling to people who like buying well-produced leather-bound editions).

Copyrights and patents obstruct this free market by granting a monopoly that could not exist without the threat of violence against my person, my printer, or my cash resources.

There must be harm for an act to be a crime, a first act of aggression. No one has yet pointed out how an author, songwriter, or inventor is harmed by inexclusive production or sale. There is no natural right to an exclusive income or a monopoly market share, and to state otherwise is an affront to the natural rights of others, as far as I can tell.

Duodecimal March 26, 2004 at 1:22 pm

My position may seem parasitic, at the expense of the well-being of creators of intellectual resources, but it’s the same issue as that posed by who pays for positive externalities. There’s no reason to treat the output of a human mind differently than services and improvements that benefit people beyond those who paid for such services or improvements.

Like many things supported by anarchists, it might not seem like any of this is workable, but, like all other things, markets will adjust. The extinct class of Patrons will return to support composers and writers. Maybe there’ll be less of the kind of popular culture and modern art being produced today, and, well, that’s a tragedy I think I can live with.

David Heinrich March 26, 2004 at 1:43 pm

Duodecimal,

Currently, when you buy books, there is no contract or license, because copyright law creates defaults.

However, in a free market, authors very well could put a license right on the first page of the book. They could instruct publishers to put a sticker on the outside of the book saying “sold under license X”. The first page of the book could explain the license.

This is not in any way an “implicit contract”. It would be explicitly stated. That is not to say that tehre is no such thing as an implicit contract, or that they aren’t valid. Whenever you enter into a restaurant or movie theatre, there are certain conditions you have implicitly accepted, and must obey.

Duodecimal March 26, 2004 at 2:02 pm

I don’t disagree with that. A restaurant owner is within his rights to eject me from the premises however he sees fit once I become a trespasser.

But your example of a free market solution to the copyright problem, by putting a sticker on the book, only removes the problem by one step, as Alex pointed out a couple posts ago. Unless the author sees these initial copies as his way to capitalize on being first to market, there is little point to it.

An author can only file civil charges against a contract-breacher – but by that point, his work has been loosed upon the market and its further movement can not be stopped because none of the other market participants have agreed to the now-broken contract.

When real property is involved in contracts, the breach of that contract does not change the true nature of the property – arbitration, a civil trial, any of these will aim to restore the property or provide compensation for any damages.

But by breaching a copyright or patent contract, that monopoly is now forever beyond the control of the originator. Compensation for damages can not be calculated – mainly because of the unlimited nature of intellectual property’s reproducability, and because of the physical impossibility of damaging ethereal property.

When such apparently unsolvable dilemmas show up (just think of what sort of invasive means have been and will be required to enforce copyrights and patents on all market participants), it is probably because the underlying problem itself is misunderstood.

To me, at least, this is a case of one intervention begetting an unbounded series of further interventions, all because a statutory right is mistaken to be a natural one.

RTR March 26, 2004 at 5:04 pm

Mises’ Human Action economic reasoning itself bolsters the case that patents are inefficient protectionism. Although he does not explicitly show this, even concluding “it is beyond the scope of catallactics to enter into an examination of the arguments brought forward for and against the institution of copyrights and patents…this is a problem of delimitation of property rights” (XXIII p.662), the case against patents and copyrights is really just an extension of the economically demonstrated concepts of subjective valuation and trade.

Mises labels “external economies” as actions that benefit not just the actor but also other people. External economies are categorized according to 1.) benefits and 2.) costs. Only those projects in which the benefits exceed the costs will be undertaken. Well this is by definition true of all action, at a given state of uneasiness (present) a state of greater uneasiness (cost) is employed to arrive at a state of lesser uneasiness (benefit) than existed before the action (future). He cites the example of a railroad building a dike to protect against avalanches simultaneously protecting houses on adjacent grounds. The dike is built without any shared investment costs of the houses as the benefit to the actor alone outweigh the costs.

However, Mises has specutively placed the railroad’s subjective valuation as an “objective” valuation of the houses ranked subjective valuations. The adjacent houses are not *necessarily* getting a free ride on the railroads investment. It could even be a net negative for them as a new high rise building erected may shield you from the sun, saving air conditioning costs, but blocking your view of a lake. The point is you cannot assume an objective valuation of benefit for a society, a civilization, let alone another individual. This is important because the holy ghost of objective genius universal benefit is almost always applied to the concepts of “technology” and “innovation”. Thus Mises correctly demonstrates:

“A project P is unprofitable when and because consumers prefer the satisfaction expected from the realization of some other projects to the satisfaction expected from the realization of P. The realization of P would withdraw capital and labor from the realization of some other projects for which the demand of the consumers is more urgent. The layman and the pseudo-economist fail to recognize this fact. They stubbornly refuse to notice the scarcity of the factors of production. As they see it, P could be realized without any cost at all, i.e., without foregoing any other satisfaction. It is merely the wantonness of the profit system that prevents the nation from enjoying gratuitously the pleasures expected from P.

Now, these short-sighted critics go on to say, the absurdity of the profit system becomes especially outrageous if the unprofitability of P is merely due to the fact that the entrepreneur’s calculations neglect those advantages of P which for them are external economies. From the point of view of the whole of society such advantages are not [p. 659] external. They benefit at least some members of society and would increase “total welfare.” The nonrealization of P is therefore a loss for society. As profit-seeking business, entirely committed to selfishness, declines to embark upon such unprofitable projects, it is the duty of government to fill the gap. Government should either run them as public enterprises or it should subsidize them in order to make them attractive for the private entrepreneur and investor. The subsidies may be granted either directly by money grants from public funds or indirectly by means of tariffs the incidence of which falls upon the buyers of the products.” (XXIII 658-659)

That exact same economic argument which advocates public arts/works projects is employed to advocate patents and copyrights. Thus, “Outfits producing at higher costs are brought into existence or preserved while other outfits producing at lower costs are forced to curtail or to discontinue their production. The consumers are not getting more, but less.”(p.660) Cost can be a time component of bringing or attempting to bring to market something too early for which there is insufficient private demand and or willing investment. That statement applies to any and all technological innovation protected by government patent monopoly. The number of “patentable” and “un-patentable” technologies is mathematically infinite. Granting some is necessarily arbitrary and discriminatory. Technology spans the gamut from recipes on making coffee to manufacturing pharmaceutical drugs and computer operating systems to even such mundane “trade secret” magician (taken as a productive profession giving entertainment utility) tricks. And it’s perhaps true that a majority of patents are not worth the paper they are printed on.

If an “external economies” project is too expensive, i.e. the benefit it provides to the undertakers is less than its cost, then it is economically *inefficient* to be undertaken at that time given that structure. It could very well become profitable if for instance, an individual is replaced by a corporation, a fund-raising drive is undertaken to raise capital to cure some disease, etc. The free-market allows numerous solutions to arise to solve the cost benefit problem. If it’s universally speculated that some such enormous technological benefit would come about then it would be by definition *voluntarily* universally funded. There is absolutely zero economic need for patents or copyrights to fund “external economies”.

So Mises didn’t need to create a separate section entitled “The External Economies of Intellectual Creation”. “The characteristic mark of formulas, i.e., the mental devices directing the technological procedures, is the inexhaustibility of the services they render. These services are consequently not scarce, and there is no need to economize their employment.”(p.661) Of course, “It places the producers of such formulas–especially the inventors of technological procedures and authors and composers–in a peculiar position. They are burdened with the cost of production, while the services of the product they have created can be gratuitously enjoyed by everybody.

If there are neither copyrights nor patents, the inventors and authors are in the position of an entrepreneur. They have a temporary advantage as against other people. As they start sooner in utilizing their invention or their manuscript themselves or in making it available for use to other people (manufacturers or publishers), they have the chance to earn profits in the time interval until everybody can likewise utilize it. As soon as the invention or the content of the book are publicly known, they become “free goods” and the inventor or author has only his glory.” (p.661)

However, I have already shown that it is *not* true, it is a socialist argument for public works projects (substitution of universal objective value for individual subjective value) that “it is obvious that handing down knowledge to the rising generation and [p. 662] familiarizing the acting individuals with the amount of knowledge they need for the realization of their plans require textbooks, manuals, handbooks, and other nonfiction works. It is unlikely that people would undertake the laborious task of writing such publications if everyone were free to reproduce them. This is still more manifest in the field of technological invention and discovery. The extensive experimentation necessary for such achievements is often very expensive. It is very probable that technological progress would be seriously retarded if, for the inventor and for those who defray the expenses incurred by his experimentation, the results obtained were nothing but external economies.” (p. 662)

The plethora of internet sites, blogs, chatrooms, etc. daily improving upon technological knowledge is a testament to the improved efficiency of that “laborious task”. The division of labor has adjudicated this job, which perhaps previously was insufficient, to those for whom it is a pleasure to do such things; they aren’t necessarily limited to acting for only monetary profit. And the number of involved participants maximizes the input knowledge perspectives and increases the efficiency for those who are free to trade those inputs into better market outputs. As the old BASF advertisement says, “we don’t make a lot of the things you see, we make a lot of the things you see better.”

But Mises’ reasoning is somewhat roundabout when he says that patents are “suspect, as they are lucrative only if they make it possible to sell at monopoly prices. [14]. Moreover, the fairness of patent laws is contested on the ground that they reward only those who put the finishing touch leading to practical utilization of achievements of many predecessors. these precursors go empty-handed although their main contribution to the final result was often much more weighty than that of the patentee. ” (p. 662) More straight forward, monopoly profit margins are brought about by patent and copyright, and are exactly inefficient in the way tariff protectionist trade is inefficient to free trade, in exactly the way public works projects are inefficient usurpation of private wealth. So if you are a pharmaceutical concern that wishes to bring a $900 million drug to the market, get 900 million people to *voluntarily* invest $1 each first. If a you are computer operating system concern that wishes to bring a (‘cough’ ‘ahem’ ‘cough’) $50 million operating system to the market, don’t bring it to the market unless it provides you yourself (and your investors) more than $50 million in benefits. Thus, patents and copyrights are economically unnecessary. All they do is substitute coercive usurpation for reasoned voluntary persuasion, thus reaping monopoly price gains at the expense of consumers.

Brian Macker March 26, 2004 at 6:56 pm

Duodecimal,

You missed my point when you wrote, “I was greatly amused that you view taxation as any sort of means to the end of physical property protection; taxes are inimical to the protection of property in exactly the opposite way that patents protect intellectual property.”

I wrote: “I think there is no question that patents, as implemented, do not properly enforce intellectual property rights. However the same can be said for physical property rights, which are currently protected with a regime of taxes.”

I was explicitly pointing out that physical property rights are NOT properly implemented by a system that uses taxes as a means. By using taxes to support the enforcement of property rights you violate other property rights. The fact that this is done in no way invalidates the concept of property rights. In a similar fashion the fact that intellectual property rights are improperly enforced in no way invalidates the concept of intellectual property rights.

That was my point. You can’t claim that “Patent law is bad therefore there are no intellectual property rights” without committing a fallacy.

Brian Macker March 26, 2004 at 7:38 pm

The specific thing I find bad about patent law is that intellectual property rights are enforce by preventing anyone other than the patent holder from using an “idea” even when they have not copied the idea from the patent holder. I hold that if you did an independent invention you should be able to use the idea, license it, or give it away for free.

I find it wrong because intellectual property rights are properly grounded in physical property rights. They are a subset of physical rights. One cannot copy an idea without getting hold of a physical representation of the idea. There is no such thing as platonic ideas living in some alternate reality. Every embodiment of an idea is physical. Either as a written description, an object, or some other physical copy. You have to understand it this way, as holding ownership over all objects created by direct or indirect copying from the originator of the idea whether authorized or not.

In order to copy an idea you must have physical access to an embodiment of that idea or an unauthorized copy of it.

If you had no such physical access then you cannot have violated the underlying physical right against copying. Thus if you make an independent invention of the idea the patent holder has no right to exclude you. You have not trespassed against him.

With works of art, books, software, articles, it becomes obvious that if you have an identical article that it must have been copied. It is so astronomically impossible for you to have come up with an identical copy of Microsoft windows on your own, or a novel for that matter that we know you copied it. Thus in such cases we can ignore the fact that

This restriction is in no way an hindrance on your own use of your property precisely because there is no way in hell you would have ever been in the position to mold your property into said configuration without copying it. Just as an edict to prevent you from flapping your arms to fly has no effect because you couldn’t possibly fly by flapping them in the first place.

Of course as with any property right a libertarian system will need some way to make the claim clear. Just as with say land ownership you will need to clearly post and register your ownership with third parties to avoid disputes. The purpose of the intellectual property contract is more declarative than contractual. It is laying out how you are going to allow use of your idea, without the right to copy.

The idea that that contract is not binding on others is only partially true. If I contract with someone else to rent them my house without the right to modify the landscaping that does not bind on anyone else. They do not have to pay rent to me. However just because they are not party to the contract does not give them the right to come over and reck the grass, steal it or use it for nude sunbathing.

I also believe that in order for the intellectual property right to be valid one must take reasonable care not to broadcast that idea beyond those who are bound by the contract. I may want the opportunity to come up with my own ideas. The embodiment should be clearly labeled as such with some form of copyright symbol or label. Should I happen upon such an object I can avoid inspecting it.

Another reason for the label is so that I know it is a privately owned idea. Thus I can avoid trespassing against you by modifying my resources into an embodiment of your idea.

The case of unauthorized copying is similar to receipt of stolen goods. The remedy being that you should modify your resource so that it no longer infringes on my copyright. For instance, you erase the bootleg copy of MS Word off your computer, or you turn the booklet you copied back to paper pulp. You retain ownership of the physical resource. Of course, intentional theft may require different remedies such as recompense for enforcement.

There are of course going to be fuzzy areas as in many cases of other forms of physical property rights. “Who owns the aquifer” sorts of problems. One cannot reject intellectual property rights on this basis any more than one can reject the physical.

Let’s see how this applies to Microsoft. You friend purchases Windows XP and installs it on a single computer. The contract says this is the only amount of copying he is allowed. Microsoft retains rights over the use of the software in the contract. It’s labeled as copyrighted. He then hands the CD to you. The minute you copy it you are a physical trespasser against Microsoft. Therefore Microsoft is perfectly justified in sticking a gun in your face. Your friend is not authorized to allow you to utilize Microsoft property in this fashion and you know it. Clear as day. You copy it and you are stealing.

The claim cannot be made that no harm is done here. It is quite evident that this copying harms Microsoft because it decreases their income. In fact this very argument is used by the anti-IP crowd. Boo-hoo, Microsoft is so rich because they have copyrights.

The fact is that in order to get your copy you have to use Microsoft property. You may not think this is a big deal. But how can you then exclude people from using your property whenever they felt it didn’t harm you much. What if everyone in your neighborhood decided they could copy your “As Good As It Gets” DVD without harming you. If all thousand of your neighbors proceeded to do so you would no longer be able to watch it. The first neighbor would sneak by and take if for a quick copy. Then someone else would see he had it and he would think no harm in letting them copy it too. Soon it would be passed around everywhere without you knowing where it was. Harm even in small amounts when added together become serious.

So, if you throw away the notion that intellectual property rights are based on owning the platonic ideal, not only do you clean up your philosophy, but you get a clearer understanding of IP rights true basis, physical property rights.

So where is the inconsistency? Seems to fit perfectly with other libertarian values.

Copyright 2002 Brian Macker – Limited rights to reproduce granted to Mises.org ;)

RTR March 27, 2004 at 2:16 pm

“It’s said genious knows the answer before the question”–A Beautiful Mind

The inconsistency of defining IP rights by getting rid of platonic ideals is huge. It’s justification could only possibly work in the very limited number of cases whereby it was obviously true that an operating system was identical in every way, like a xeroxed book, copied song, or copied movie. I do not think there is any legal basis for these claims though as they can and are taken care of in the free market through contract and enforced through non-invasive measures like encryption. They only appear to be the majority of cases given current copyright/patent law, and that is only because the potential majority of other non-violating cases has been artificially choked off by current conceptions and enforcement of IP.

Just because you would need to get rid of platonic ideals to have a consistent libertarian conception of IP doesn’t mean they don’t exist (if “only” for human understanding and meaning) either given the logical structure of the human mind which cannot conceive in any “illogical” or “irrational” fashion.

It seems that it would be hard to prove beyond a reasonable doubt that any and all offshoot derivatives of some idea were not or could not be independently created. Nor even should one be able to prevent the use of an idea in a novel way which the author had not contemplated, or perhaps even which he had not explicitly stated in his IP professment. In fact, you might epistemologically
call the use of an old idea in a new way a new idea, for instance a patented drug for fighting a disease being slighly altered to fight a different disease. To claim as a property right would preclude in operating systems markets some or
even many primary functions being common to differing products, none of which was in violation of the others, such as many layered Apple or Microsoft, applications windows on a monitor.

You’re right that platonic ideals would have to be gotten rid of for IP to work. Else it would be necessary for operating systems to have obtained rights from the inventor of the file cabinet. This would also prevent the inventor of the concept of a desk owning all objects containing 4 legs and a rectangular surface. That seems to solve the problem of the first and whomever or whatever
collection of whomevers he might pass such “rights” onto to conceive of the circle being able to charge royalties for everything circular such as wheels or
even some arguments. For if these things were truly property their right would be able to be indefinitely extended subject to amended fees which could halt all technological progress.

However, I think it’s a dangerous mistake to get rid of platonic ideals. In Epistemological Problems of Economics Mises writes “Concepts are always
logically prior to the understanding of the individual…nor can one speak of causes and effects in the individual case unless one possesses a theory that treats certain connections between cause and effect as having a universal range of applicability” (EPOE p.1). That’s the problem, any and all ideas have a universal range of applicability. It’s arbitrary to have ownership of either a platonic ideal or any specific IP derivative offshoot of it.

IP (even just basic copyright) of the theory of human action would necessarily entail the total enslavement of the rest of mankind, “as holding ownership over all objects created by direct or indirect copying from the originator of the idea whether authorized or not” (Brian) would be absurd. We would wander aimlessly as drones chanting Igor like “yes master Mises.” Hence I’m of the suspicion that any and all contracts entered into regarding IP would necessarily be invalid. You have the right to remain silent is all.

Perhaps we do have too much plato to dust off or brush off our shoulders. Self-denial, defined as the act or power of denying oneself gratification, is a logical impossibility as the absence of action is the absense of existense. Human cooperation has evolved and is evolving to solve conflicts regarding physical property, which begins with the self. Ownership of any necessarily unlimited and universally related abstract IP concept or specific derivatives of them worries me. It’s like a record company arguing that all humming in heads of
proprietary music is a violation of copyright potentially subject to royalty enforcement. Will an invention come about to coercively test on suspicion of violation? Sounds like Soviet Russia to me. I think there wouldn’t be any way for one to even test a violation of one’s IP without violating another’s actual physical property at least firstly upon suspicion alone.

Sans IP I would see tremendous overlap of ideas in unique substitute good products thus that competition would constantly be commoditizing them,
continuosly benefiting even producers many times more as consumers (in the aggregate) than they could temporarily benefit as government created
monopolistic producers (given enough time) of a specific IP protected good unless one were to assume technological innovation is close to complete. Anything else would be a damning indictment against the free market. The reason
I can’t get my distinctly different better cheaper copy of MikeRoweSoft Vrindows is because government patent protection prohibits it even though it might have many more unique feature than it has in common with Windows.

If it could be demonstrated that a smaller piece of a larger wealth pie which is larger than a bigger piece of a smaller pie is the highly probable outcome for even the greatest genius (ala division of labor comparative advantage principles) who does not intentionally guard his knowledge from slipping/spreading to others with government enforced patents/copyrights, then he would be a fool to choose otherwise. It doesn’t even have to be mathematically proved. For if it were not so that would call into question the very faith, on the basis of efficiency, in the free market. It can be surmised, for what reason would there ever be for communication, let alone trade, with others. You would potentially have the ultimate inefficient coordination problem taking IP to its logical extreme.

Just in case you’re not buying my idea that platonic ideals do exist I submit that a marooned surviving child would still proceed through at least some various steps of the mind’s logical structure. These steps, or discoveries, could be meaningfully comprehended by others. Any claim to ownership “right” of that process, or a given expression of it, is necessarily a violation of another being’s right to exist as a human being. Both “rights” are mutually exclusive, therefore only one of them can exist. Declaration of IP has no more meaning than declaring ownership of the air or stars. It’s nothing but a call to arms.

I’d ask for a refund on the idea that ideas (pull string, light bulb is lit and cha-ching goes the sound of charged royalities to all who get ahold of that physical representation) are always physical representations that aren’t necessarily derivatives of logicaly prior categories. General principles exist a priori equally for every human mind to potentially discover. Claiming ownership of some derivative of that is akin to demanding your neighbor stop breathing your air. I’m not even sure that all (most I would agree) ideas can be physically represented let alone embodied.

The idea of zero, of nothingness, cannot physically be demonstrated. How can a being contemplate or understand the meaning of what not being would be?
(probably why metaphysical religion is sold as comfort, here have some Jesus on the house) One divided by zero is mathematically undefined. A pretended physical representation is the best substitute that could occur. Is the idea of action
“a” singular physical representation or every conceivable representation? How can a human mind distinguish the difference between finite and infinite? And even with regard to ideas that can be physically embodied if there are sets of representations for a given idea the idea could not be claimed except upon universal recognition and professment of all its possible representations which given the limits of human cognition is impossible. The same idea could originate independently from differing factors thus precluding that logical possibility by IP is onerous.

Getting rid of platonic ideals (or categories) seems radically un-Austrian and fundamentally against especially Mises’ a priori epistemological assumptions upon which the theory of human action is constructed. If those assumptions are dirty philosophy, well, I wouldn’t know where to begin.

———————————–

Excerpted in a “fair use” fashion from a transcript of the PBS documentary “Commanding Heights” to the necessary percentage limit my subsidizing tax dollars allow:

Onscreen title: Switzerland, 1947

NARRATOR: Hayek loved mountains. He said they breathed freedom. But he saw socialist ideals and the planned economy as threats to freedom, and so he organized a conference at a formerly fashionable hotel on the top of Mont Pelerin — Pilgrim Mountain.

RALPH HARRIS: Well, what happened in 1947 was that Hayek at last brought off a great dream, which was to assemble 36, mostly economists, some historians, and a few journalists, a handful of what he regarded as survivors, good eggs, good intellectuals, who understood the market economy and the whole of the case.

MILTON FRIEDMAN, Professor Emeritus, University of Chicago: This was Hayek’s belief and the belief of other people who joined him there, that freedom was in serious danger.

NARRATOR: One of the delegates was a young economist from Chicago, Milton Friedman.

MILTON FRIEDMAN: The point of the meeting was very clear. Hayek and others felt that the world was turning toward planning and that somehow we had to develop an intellectual current that would offset that movement.

NARRATOR: They met downstairs in the cocktail bar. The room and its furniture are not much changed.

RALPH HARRIS: The whole world was shadowed by the Iron Curtain, the Russian threat, by the failure to establish democracies in the Eastern European countries and by the prevalence everywhere intellectually of these ideas of collectivism arising from the war. The argument always was that democracy is impossible without a free economy. You need a free economy; free economy is a necessary though not a sufficient condition for democracy.

NARRATOR: The debates were passionate. At one point, Hayek’s former mentor, Ludwig von Mises, stormed out of a meeting.

MILTON FRIEDMAN: In the middle of a debate on the subject of distribution of income, in which you had people who you would hardly call socialist or egalitarian, people like myself, Mises got up and said, “You’re all a bunch of [damned] socialists,” and walked right out of the room. (laughs)

David Heinrich March 28, 2004 at 12:53 am

Brian,

Unless I sign a contract with you when I buy your book, how does my photocopying it and distributing it in any way amount to an act of aggression against you? Furthermore, what of the person whom I show this book, and who photocopies it, then distributes that? Unless you put a license notice on the bottom of every page, the person would not know this, unless I told them. How does their action, then, amount to an act of aggression against you, which they can be forcibly prevented from doing? What if they scan it into a computer, remove the license notice, and put it online. Anyone who then downloads it has no way to know that the book’s under a license, so they are in no way committing an act of aggression against you. You can make efforts to inform people of such, but only those who you can prove that you made aware of the license, can you in any way argue aggressed.

RTR,

That last paragraph was most amusing. I could definately see Mises considering wishy-washy economists as being a socialist. Especially when the topic is the distribution of income. Anyone who attempts to artificially modify the distribution of income on the free market is acting socialisticially.

RTR March 28, 2004 at 12:17 pm

Any “contract” signed buying a book is necessarily *invalid*. You might as well as have signed a contract to not breath your neighbor’s air or not bask in “his” sunshine. You might as well be sold a 300 page book with “protected by copyright” repeated over and over throughout every word of the contents. The author has the choice to remain silent only. Copyright/patent is absurd government regulation of the flow of ideas. Any physical representation of any ideas to others, whether verbally or written, is necessarily in the public domain. There’s no need now for roundabout examples of alleged breach by second parties before third parties as there is never any valid existing contract in the first place. And it is no more sympathetic that an atist’s income is subject to this competition than a buggy whip makers income is also subject to the same competition. In fact, it’s a very good thing that xerox machines and file sharing programs are more efficient than ancient scribes for even the authors themselves.

David Heinrich March 28, 2004 at 10:19 pm

RTR,

Why is any contract invalid? Let’s say I write a short story, Story X. I let you read the first paragraph, and you think it’s interesting. I agree to sell you the entire story for $10, on the condition that you don’t redistribute it, or take the exact same plot with your own words and publish that. You agree to the contract. How is that invalid on its face? The only condition on which I would sell it to you was if you’d agree not to redistribute it. You had the choice to either accept that term and give me $10 for the book, or reject it and not have the book. How is this invalid on it’s face?

Brian Macker March 29, 2004 at 7:56 am

David,

To lower transaction costs in our society we have made copyright notices the equivalent of a contract. When you see the notice that informs you of the standard contract. Everyone is aware that they should look for this notice. You accept the contract when you decided to continue reading the book beyond the copyright.

Books can be stripped of their copyright notices and I covered that in the prior post. That is the equivalent of recieving stolen goods. I already gave the remedy, for books erasure of content. Just as you should know that great price on those TVs you are getting off the back of the truck are too good to be true, you should know that most books come with a copyright. There is a convention and it seems to work.

Duodecimal March 29, 2004 at 9:14 am

How are the goods stolen? The only way to steal a book is to remove it from the owner’s library. Making copies of a book you bought isn’t theft because:

a) no one else is deprived of the use of the copies they bought (or created); you’ve already compensated the owner and publisher by buying the book in the first place (or they were compensated by whoever originally bought the book you’ve come to own)

b) the original author had no exclusive claim on the fruits of others’ labor

When you copy and distribute a book, that is your mixture of labor with the original. The author has as much a right to continue improving his book by publishing additional editions and paying others to market the sale of those copies. His lack of entrepreneurialism or that of his publishers by ceding market share to others more willing to distribute his work is not an indictment against those secondary distributors.

The sense of entitlement to the distribution of an idea is the wrong here. How is $18 a CD or $15 a book the correct price? Mises.org has shown that the infinite reproduction of a work electronically doesn’t destroy the market of a physical copy.

Will everyone want to burn their own CDs or print their own books? These cost money and time. Buying ready-made works for pennies or dimes on today’s dollar will make ‘piracy’ relatively unprofitable, compared to today’s profitability that, like the drug war, exists to the extent it does only because of government interference in the free market.

No one has a right to income or a market of their own, enforced via coercion and restriction on natural rights.

RTR March 29, 2004 at 9:54 am

It would be like going to the town square and shouting “what I am about to say is patented/copyrighted. If you continue to listen to what I am saying without paying me $24.95 you are in violation of this contract.” Rothbard’s Man Economy and State isn’t and was not in violation of Mises Human Action, even if Mises or Mises’ estate were to claim that Rothbard illegally stole his ideas from Human Action. I doubt anyone would object to summaries in your own words of another’s ideas, but patents most assuredly do exactly that. The underlying building block ideas of the theory of human action cannot be claimed and owned. You could hear it if someone has a “book on tape” and plays it so that I can hear it. I cannot be forced to artificially dampen my hearing, not to mention one could independently discover those ideas (though with extremely high probability that it would be expressed differently) on their own.

You cannot force someone to be silent. If you cannot force someone to remain silent on basic underlying (especially egregiously prevalent on patents of technological processes) ideas than forcing someone to remain silent on any particular expression of them is a violation of another’s right to exist. The mere fact of reading or listening to another’s ideas copies (potentially) them to your brain, thus you and the author both now have the same ideas in your head. The author’s claim that you cannot express thoughts (no matter how and where they originated), whether as summaries or as exact duplicates, in your head to another third party is a violation of your right to exist.

Nobody is prohibited from giving anyone else money for their work. If you personally feel that one should purchase works of art directly from the artist or his distributor you are free to do that. However, the fact that you could purchase the same work from a copycat scribe keeps the potential monopoly price a particular author could potentially charge royalties on from halting all technological progress if it were a key element to future advancement, such as the properties of mathematics. And given the efficiency of Xerox machines and file sharing programs they cannot be distributed for almost nothing. That benefits the author’s themselves and they receive also as consumers every other artists ideas for zero too and they are much better off because they get much more than they give. If art/thought is primarily a leisure class activity, after more pressing wants are satisfied, then that’s the way the distribution of labor works.

“Lend me your ears”—Julius Ceasar

Brian Macker March 29, 2004 at 6:21 pm

RTR,

I wasn’t getting rid of abstraction. One can reject Plato’s belief that abstractions exist on their own plane of reality without rejecting abstractions. Thus one doesn’t lose much even in ones philosophy when doing so.

I am making the criteria for IP more restrictive by doing this. Not only am I requiring that the abstraction be about a concrete thing, I am also requiring that a violation of IP be defined as use of that concrete thing without permission for the purpose of copying it. In order to stake an IP claim you would need a non-precisive abstraction. The abstraction would have to require the attribute of having been copied in a line of descent from an object for which the IP rights holder retained rights.

It’s quite clear to me from this criteria that you couldn’t copyright the color red, or information about things other people own, or musical notes. It would be hard to prove someone didn’t come up with the idea of painting his car red on his own. Knowledge about the world can’t be copyrighted. I can’t copyright the fact water runs downhill. It’s something anyone can observe without actually trespassing against my property.

I am not basing my position on utilitarian grounds. Neither am accepting counter arguments based on utilitarianism. So I am ignoring all pleadings based on how much more efficient it would be one way vs. the other. Both sides claim more efficiency or that more lives would be saved. Even if I discovered that violating peoples IP rights was “more efficient” I wouldn’t be for it.

Brian Macker March 29, 2004 at 7:07 pm

Duodecimal,

You write:
“How are the goods stolen? The only way to steal a book is to remove it from the owner’s library. Making copies of a book you bought isn’t theft because:

a) no one else is deprived of the use of the copies they bought (or created); you’ve already compensated the owner and publisher by buying the book in the first place (or they were compensated by whoever originally bought the book you’ve come to own)

b) the original author had no exclusive claim on the fruits of others’ labor”

If you bought the copyrighted book you did so with the understanding that the seller was only selling you that particular physical copy with the restriction that you would not copy it. That is a different good than the same object without the copyright. If you then procede to copy the book you are committing theft by fraud.

If I showed you a field full of potatoes and sold you a “dig your own” potatoes ticket for twenty pounds then you proceded to walk into my farm stand an take a twenty pounder bag then you would be stealing. Why? Because they are different goods. The one in the farm stand was picked by me. Even though the goods are indistiguishable they are different. The “dig your own” are cheaper so buying them does not entitle you to the “pre-dug”.

In the same way a book can look the same but be different. However even that is not the case. The book is different in that it has a copyright notice.

You did not compensate the owner of the book when you bought it for “book plus copying rights” you only compensated him for “reading rights”. Thus if you copy it you commited fraud in your original purchase.

Whether the owner of a piece of property being deprived or not is not the issue. It’s not the issue with many private goods. If I run a cable from my TV out to the cable companies lines I am not depriving them of anything either. That doesn’t mean I am not stealing. Attaching a wire to their pole is use of their property even if it doesn’t deprive anyone of anything. If some homeless guy decides to sleep in your car when you are not using it then you aren’t deprived either.

I’d love it if J.K. Rowling would sell me a uncopyrighted version of her book so I could copy it and make lots of money. I would certainly pay more than the book stand price.

I don’t even understand your point b). How does J.K. Rowlings having copyright ownership over her own book, in any way, making an exclusive claim on anyone elses labor. Is this the fallacious belief that her writing the “Harry Potter” book prevents you from doing so? If so I already covered that. If Rowling had never written her book the odds of you doing so are less than my computer deciding to self levitate off my desk.

duodecimal March 30, 2004 at 6:37 am

Brian writes: “If you bought the copyrighted book you did so with the understanding that the seller was only selling you that particular physical copy with the restriction that you would not copy it. That is a different good than the same object without the copyright. If you then procede to copy the book you are committing theft by fraud.”

This would be true if the book’s content was protected by property rights. But because the content is not a scarce resource, the fundamental rules of property rights simply do not apply.

The violation of contract you talk about is the consequence of the trespass on the contract violator’s property – his paper, his ink, his body – initiated by the author.

The simple act of thinking up and making literature, art, or an invention magically grants this creator partial owernship of all the paper, CDs, video cassettes, pens, pencils, paintbrushes, canvasses, oils, steel, copper, iron, plastic, in the world? How does asserting such a property right in the absence of any form of homesteading denote anything but fraud?

The author’s contention that his writing of the book grants him partial ownership of all bookmaking materials in the world was itself the first fraud in this case. Any contract based on fraud is invalid and unenforceable.

Something must be scarce and it must be exclusively possessed for it to find protection under property rights. Nothing covered by patents nor copyrights are scarce, and applying property rights to them invalidates the pre-existing property rights of all real property. There can be no ‘partial ownership’ either way, either of a book or of the materials used to make one.

The ‘fraud’ you accuse a book-copier of engaging in is only his re-assertion of his own, valid, property rights over his own book-making property. He’d be within his rights, perhaps, to file charges against the author for his attempt to fraudulently acquire partial ownership of his ink, printer, and paper by attempting to enforce such a contract.

RTR March 30, 2004 at 10:03 am

“Knowledge about the world can’t be copyrighted. I can’t copyright the fact water runs downhill. It’s something anyone can observe without actually trespassing against my property.”

I’ll take this as ceding all “rights” to patent scientific/technological cause and effect processes. So all we are considering now is copyright of artistic/creative expressions of unique fictional stories, paintings, movies, musical pieces and the like (precluding dictionaries, encyclopedias, textbooks, manuals, etc.). I would think non-precisive abstraction would weaken an IP claim, and as you say, IP conceived this way would be much more restrictive. This is a considerably less onerous (already) situation than what exists today.

At any rate, say I write a book entitled The Dark Stormy Night. The copyright reads (which I copied from some book perhaps in violation of royalties due some legal firm), “All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.” Ooops. Put it on my tab.

The contents of The Dark Stormy Night read, “It was a dark and stormy night. The End.” Every individual word is a part of this book. A single word such as “it” cannot be copyrighted. Any single word cannot be copyrighted without necessarily precluding its use ever again without permission of the originating author. The same would hold for the phrase “a dark and stormy night”. So what’s actually being copyrighted is not words but meaning. The author is attempting to control *meaning*, and how others also use that meaning. However, there are dark and stormy nights in the real world so it would be absurd to prevent another author from writing the “Whan Thee Nigh Was Doth Storma” reading “Stormy oh was the dark night. Peace out.” However, the *meaning* is essentially the same, though expressed differently.

Thus copyrighting *meaning* violated another’s right to exist and express himself regarding a similar experience in another fictional work. If “right” cannot be proved at this most basic budding of expression than it seems the probability of proving “right” would get not more but less in such an elaborate J.K. Rowling work for that work is likely to contain many such violations of others’ copyrighted meanings (in any context); as you cannot have “right” on something which is in violation of other’s rights, the copyright claim is null and void in its entirety; else you would have a cesspool of prohibiting meaningful expression by others, thus violating their right to exist.

How about a “modern artist” putting a blank canvass on the wall in an art gallery? Meaning can be relative, subjectively interpreted by differing actors. I could write a satire entitled Mrs. Peabody’s Melons which would necessarily be invoking another’s copyrighted meaning against their authorization, though expressing a unique meaning. There’s too much overlap to clearly delineate boundaries regarding any and all ideas, whether fictional or non-fictional.

From Human Action, “HUMAN action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life” (Part 1, Chapter I. Acting man in paragraph 1.I.1).

I forget which ancient Greek philosopher it was that asked if a certain river was always that certain river, as it is constantly changing, in flux. Meaning of ideas are like that. To own IP, unique universally specific meaning would have to be proved in all contexts for all possible interpretations which seems fantastical. The burden of proof here is on the copyright claimant at any rate.

Meaning has interrelated universal applicability, it is not (potentially) constant, for even the exact probabilistic order of letters and words. As it can never be established that a proposed work of fiction is in its entirety, “In order to stake an IP claim you would need a non-precisive abstraction. The abstraction would have to require the attribute of having been copied in a line of descent from an object for which the IP rights holder retained rights” (Brian). This would always be pure fantasy.

Take for instance trade-marking a name like “Madame Bovary”. Well, Madame cannot be trademarked, but lets assume Bovary had never before existed. The probability of someone else inventing Bovary (1/26 * 1/26 * 1/26 *1/26 * 1/26 *1/26) is extremely low. However, the probability of someone else inventing Bovarie is even lower. Meaning is necessarily indeterminate, composed of included ultimate given emotional psychical responses.

“The characteristic feature of a priori knowledge is that we cannot think of the truth of its negation or of something that would be at variance with it” (EPOE 1.3) This would be true whether precisive or non-precisive. It’s still fundamentally only a representation of reality. “What we know is what the nature or structure of our senses and of our mind makes comprehensible to us. We see reality, not as it “is” and may appear to a perfect being, but only as the quality of our mind and of our sense enables us to see it” (EPOE 1.3).

“There is in human valuations and consequently in human actions no such regularity as in the field investigated by the natural sciences. Human behavior is guided by motives (EPOE 1.5). “There is no way to eliminate from an analysis of the universe any reference to the mind. Those who try it merely substitute a phatmon of their own invention for reality” (EPOE 1.8). Copyrighting any individual aspect of that necessarily denies another ego’s meaningful response, and as all more elaborate constructions of meaning contain at least some of these basic meaning responses, you cannot copyright/own them. Non-precisive conceptions applying to physical reality only bolsters the case against IP. A concrete thing is *less* concretely unique to the author as it applies to physical reality which is interpretable by all. Meaning is necessarily *not* a single instance spatial point, but a fluid over-lapping amorphous thing that varies depending upon perspective.

Brian Macker April 1, 2004 at 8:30 pm

Duo: “This would be true if the book’s content was protected by property rights. But because the content is not a scarce resource, the fundamental rules of property rights simply do not apply.”

Wait a second. Sure it’s a scarce resource. Intellectual property is scarce just like other property. We have a lot more of it now than we did before. There is plenty of scarcity in this area. For instance, there has yet to be invented a cure for AIDS.

Duo: “The simple act of thinking up and making literature, art, or an invention magically grants this creator partial owernship of all the paper, CDs, video cassettes, pens, pencils, paintbrushes, canvasses, oils, steel, copper, iron, plastic, in the world? How does asserting such a property right in the absence of any form of homesteading denote anything but fraud?”

Nonsense. This was already covered by me and another poster. You are free to invent on your own and use your resources as you like. What we wish to prevent you from doing is using our property for copying.

If I owned a cookie cutter and you had some dough and I wouldn’t let you use my special cookie cutter that would restrict your use of your dough. But that does not mean I, in any way, assumed control over your dough.

What is being controlled are the copies of my efforts through shared ownership.

Here’s another libertarian that shares this position: http://www.strike-the-root.com/3/delaubenfels/delaubenfels8.html

Brian Macker April 1, 2004 at 8:48 pm

RTR,

Just because there is a continum between IP we can own and ones we obviously cannot does not mean we have to abandon IP completely. The same problems occur with regular property. How high do you own above your land. How deep below the ground. What about the example of owning an island in a river that shifts over time.

The purpose of the abstraction is not to own the meaning but to identify the unique aspects. There is a continum from complex to simple. The simpler the idea the harder it is to prove you didn’t come up with it on your own. Thus the less likely you trespassed against my property to get it. One could hardly write a book like say Peter Pan, then claim it was a “Story about a boy” then stop anyone from writing a story about any boy. That is just plain ridiculous and you know it.

Obviously I don’t need to copy your blank canvas to come up with my own. No physical copying means I didn’t trespass against the supposed IP you have in your “art”.

I’m not going to shift over to discussing trademark law now also. That is based on a different rational.

David Heinrich April 1, 2004 at 10:31 pm

Brian Macker,

I believe you are creating property rights were none should exist. The only property rights in ideas or the expression thereof would have to be contractually created (e.g., NDA).

Intellectual property is not a scarce resource, as we normally think of scarce resources. If I copy your book, you still have your book. Of course, if I *steal* your physical book, that’s a different matter. The unique thing about ideas is that they can be multiplied and replicated at virtually no cost, and without depriving the original owner of his share (see Benjamin Franklin’s candle metaphor). There is no problem that mandates property, as once and idea comes into existence, it is as superabundant and as limitless as the air itself.

Nor can the diversity of ideas be called a scarce resource. There is no limit to the number of ideas that can exist. Ideas are limited in supply only by the capacity of our brains and computers to store them, both of which are effectively infinite capacities. You can say there are more ideas now than there were 2,000 years ago. This is true, but that still does not mean there is a scarcity of any particular idea.

What there *is* a scarcity of is *individuals* who produce ideas, or who produce expressions of ideas. This, however, does not warrant the jump to treat ideas as if they are scarce.

duodecimal April 2, 2004 at 6:29 am

Brian: “Nonsense. This was already covered by me and another poster. You are free to invent on your own and use your resources as you like. What we wish to prevent you from doing is using our property for copying.

If I owned a cookie cutter and you had some dough and I wouldn’t let you use my special cookie cutter that would restrict your use of your dough. But that does not mean I, in any way, assumed control over your dough.”

The reason this analogy fails is because you’re now talking about actual scarce resources, about homesteaded property. The dough is a scarce resource, and so is your cookie cutter. One can not be used without the resource becoming unavailable for others’ use. That’s part of what ‘scarce’ means.

Ideas are a completely seperate class of resource.

As for trademarks – if I started making cola and put them in cans identical to Coke’s, with the same trademarks and everything, Coke would not have any valid reason to bring me to trial because I did not infringe on any of their real property. However, if someone exchanged their property (money) for my ‘Coke’, they would be defrauded since they thought they were buying Coke cola, not my fake Coke cola, which would probably taste more like garbage than theirs does.

Only a consumer who actually traded property with me under such fraudulent conditions – trademark misuse, plagiarism – have a valid reason to seek compensation.

That’s the limit of the kind of legal action possible against those who use the intellectual resources someone else originally thought up: when actual, physical property becomes involved in an exchange but the rationale for the exchange is fraudulent.

Brian Macker April 2, 2004 at 7:37 pm

You are quite mistaken about the scarcity of ideas. Ideas are not costless to maintain or reproduce. There are carrying costs and reproduction costs. Just because public libraries are government subsidized does not mean the carrying costs are not there. Education, information warehousing, preservation, cataloging, are some of the various costs incurred in maintaining what scarce copies of information we have.

Same goes for reproduction costs. In fact the first illegal copy of someone elses IP can be quite costly. It only becomes nearly costless when you get into mass reproduction.

Just because costs are low does not mean they are non-existent.

IP when conceived of as non-Platonic is constructed in just the same fashion as any other private property, by rearranging existing materials. When one manufactures a car you are just making a copy. No one argues that cars are not scarce. There is a limit to the number of copies one can make.

In order to copy my IP you must steal the property in question in order to make the copy. It is theft to utilize someones property outside the bounds of the agreed upon terms. If I lend you my car an tell you that you cannot drive it outside the neighborhood but you then decide to take a trip to Florida you are stealing. Sure you can return the car afterward. But during the period you were using my car against my wishes you were a thief. If you gave the car to some third party and they drive it out of state they are also violating my property rights. Suppose that third party called me from Florida and said the car broke down. Don’t you think I have the right to say “Stop, do not drive my car anymore.” He can’t just say “Hey man how am I suppose to get back from Florida. I’m driving it back whether you like it or not”. He should have known to ask me before utilizing my property to do such a thing.

The same goes for copyrighted materials. You only own the reading writes to the book. You do not own the copying rights. You also do not have the ability to lend out the book to someone else for them to copy. Should you do this not only you but the other party is in the wrong. Even if the other party has already committed resources he is in the wrong. He should know it’s not his to copy because of the copyright notice. Furthermore even if you strip out the notice he should know better. Books don’t just appear out of nowhere. They are written by people for a living. He should check the source of the book before committing resources to an illegal copying operation.

The very act of copying the book requires you to utilize my resource. This is exactly my point of why it is a normal private property violation. You can’t go around utilizing other peoples property for your own purposes without permission.

The entire argument that it doesn’t harm me is also ridiculous. Of course it harms me. You are utilizing my own property in a way that is going to diminish my income.

I also dispute the idea that a misuse of a trademark is only fraudulent against the consumer.
If I had a sign that pointed to my business, Mackers Mortuaries, and you changed the direction of the sign then put up a fake business then I would also be harmed. Firstly it is an interference in my right of free association. Secondly you are pretending to be me. Your bad actions will hurt my business. Should your caskets be of inferior grade people might believe that I was responsible. You are defrauding not only the customer but also me because the benefits of our free trade is split between us. If someone bought a casket on my good reputation then part the value of that transaction was due to me.

Brian Macker April 2, 2004 at 7:53 pm

By the way I am an inventor. Not only do I invent software I also do physical invention. Here’s one invention I happened to share for free:
http://forum.kingsnake.com/garter/messages/10365.html

I did so, as a form of reciprocal altruism. The people at the forum tended to be helpful to me.

Most of my inventions that I don’t get paid for I don’t care to share. It takes effort to even publish them. It took me quite a while to produce that post, take the pictures and explain it. Someone would have had to break into my house to have found out about it and utilized it for copying purposes. I only had two incentives for sharing it. Either I get paid or I value giving it to others for free (usually as a form of reciprocal altruism). In an academic environment one gets paid a salary to do exactly this kind of behavior. It is a kind of reciprocal altruist society. Unfortunately, many inventors are not academics and need to get paid in order to live.

Funny thing is that I don’t think it will be commercially produced precisely because it is “open source”.

The whole human race is too broad a category for me to get excited about helping for free. It includes people I despise like Osama Bin Laden. Entire cultures have profited immensely from western technology and have given next to nothing in return except hatred. I prefer to get paid and hopefully the buyer will pass the costs on to the beneficiaries. To me they are just free riders if they don’t pay in some way.

David Heinrich April 2, 2004 at 10:11 pm

Brian,

I again refer to Kinsella’s discussion of patents and copyrights, as well as Rothbards. In so far as either allows anything resembling copyright/patent (under libertarian principles), it is solely contractually created; thus, limited to the confines of what a contract can do. Firstly, the cost of enforcing such has to be burdened by you; just because you make a book doesn’t mean you have the right to force others to share in the cost of your contract on that book. Secondly, the contract is only binding on the person who agrees to it; if you put property notices on the book, they are binding on anyone who sees them. If, however, the person you sell the book to breaks contract, and removes the copyright notice, anyone who subsequently sees that stripped book isn’t bound by anything. No-one has a legal obligation to incur the cost of finding out if everything he sees is protected by a contract or not. Furthermore, in such a case, the only person who would be liable would be the person who broke the contract with you in the first place. True, the resources needed to copy resources are “scarce” (though not in much of a significant way…digital information can be replicated at a cost negligible to anyone). However, the ideas themselves are not scarce resources. Furthermore, your claim that your profits are harmed is countered by the arguments put forth by Tucker on this very board for why Mises.org puts books online.

David Heinrich April 2, 2004 at 10:17 pm

Brian,

PS: In a world without the artificially State-created monopolies of patents/copyrights, and with possibly only the very limited contractual rights that could be created to replicate those protections, it would be unlikely that books sold under license would be competitive (few people are going to sign a contract to read a book). Remember, that for thousands of years, there was no such thing as copyright or patent: no-one considered it a violation of artists’/inventors’ rights. A business model under a free market would be something like offering to make an invention public if a certain amount of money was given to you (you could demonstrate the invention, but not provide for the details of it’s working to convince people). Similarly for books, except with intros offered as a sampler. Reputation would also come into play. Furthermore, you would experience a lower cost of living, as the price of obtaining inventions/artistic works would be greatly reduced.

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