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Source link: http://archive.mises.org/7409/trademark-and-fraud/

Trademark and Fraud

November 7, 2007 by

An edited excerpt from my comment in an email discussion:

It seems to me that the primary justification for trademark rights is based on the notion of fraud–that the “infringer” is defrauding his customers by misrepresenting his identity and the source of the goods being sold (see pp. 43-44 of my Against Intellectual Property, pp. 59-63 of Reply to Van Dun: Non-Aggression and Title Transfer, p. 34 of A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability). This would give a cause of action to customers, however, not to the holder of the mark, who is not defrauded.Now just as some a “class representative” is given the right to sue on behalf of the whole class in a class action lawsuit for efficiency/incentive reasons, the more law-and-economics minded types might say that the right to sue for such consumer fraud ought to be transferred from the diffuse group of defrauded customers, to the trademark holder himself. That is, the trademark user can sue infringers, but his right to do this is based on the right of customers’ fraud cause of action.

There are problems, to my mind, with transferring the customers’ rights to the trademark holder, but even if you were to do this, the trademark holder should not be able to sue an infringer unless there is clear fraud of the customer. For example, Rolex could not sue Rolex knock-off companies, because people who buy fake Rolexes for $10 are not being defrauded. They know they are buying a cheap knock-off. But trademark law–both statutory and common law–does give trademark holders the right to sue infringers, regardless of whether there is really fraud to the consumer.

This is my main problem with current trademark law–that in transferring the customer-fraud-based right to trademark holders, the fraud basis is lost over time, as the trademark right is conceived of as a right of the trademark holder. Then it gets broadened and extended, as all IP law does, just like money is continually debased and rights are continually diluted–for example, now trademark law has the horrendous “anti-dilution” cause of action, which does not even require “consumer confusion,” which at least standard trademark infringement claims do.

***

From earlier comments in the same email thread:

Identity theft is usually a form of fraud. But the concept of fraud, like that of IP (as well as “labor” and “creation” etc.) is bandied about imprecisely. To my mind, “fraud” is a type of crime not if it’s merely “being dishonest,” but if it’s one way to gain unconsented-to use of another’s property. Just as sex with a child is effectively rape, because the child has no capacity to consent–no effective consent is given–so the transfer of possession and title to a good based on false representations made by the recipient is one where no effective consent is given. In other words, it’s a way of stealing property; it’s “theft by trick.” If you give me your pig, for my bucket of (good) apples, but my apples are all rotten or fake, then title to the pig does not pass to me, and I know it. My right to have and use your pig is conditioned on my not tricking you about the quality of the apples made in payment. So if you give me bad payment, you know you have my pig without my effective consent. And what is theft or trespass but the use of others’ property without consent?

But what is important to realize here, and in the case of fraud, is that it is the party actually being defrauded who is the victim. If you try to base trademark, or reputation rights, on fraud, it fails. In the case of trademark, the company using the mark is held to be infringed. If it were really based on a fraud claim, then the buyers of fake Louis Vuitton purses are not defrauded (they know they are buying a fake $10 purse), so there would be no trademark infringement; yet there is.

To address some of Professor Reisman’s particular points:

“Is identity theft, about which so many people are concerned, some form of mirage or is it a real phenomenon”

Identity theft describes a real phenomenon, one in which fraud is almost always involved. For example, I lie to a bank and persuade them I am Reisman, and they hand over Reisman’s gold to me. I am in possession of gold I do not own and have no right to control. I have defrauded, and stolen from, at least Reisman or the bank. I see no reason to invent “IP” to describe this.

“If it is a real phenomenon and identities are actually being stolen—as many thousands of victims of identity theft are prepared to swear, and as the banks and credit card companies of these victims also swear—then does it not follow that identities are a form of property? For nothing can be stolen that is not first owned by someone.”

I do not think it implies identity is a form of property. It only implies that you only have a right to use others’ property if they consent to it.

“If identities are a form of property, are they not intellectual property, since they consist entirely of words and symbols, not the physical persons of the people to whom the identities refer?”

I think it is not “intellectual property,” since the property at issue is always real property. The question is who is controlling it. If someone uses it or takes or controls it without the consent of its owner, it’s a form of theft or trespass.

“If individuals do have a property right in their own identities, do they not also have a property right in the words and symbols that uniquely identify their products and services? And, by extension, do not voluntary associations of individuals, such as business partnerships and private corporations have a property right in the words and symbols that uniquely identify them and their products and services? Thus, for example, does not General Motors have a property right in its name and logo and in the names and logos of its various individual products and services? In other words, are not brand names and trademarks legitimate forms of intellectual property?”

If I claim to sell a Mont Blanc pen, but it’s a knockoff, then the buyer is defrauded, unless he knows what is is buying is a fake. The company “Mont Blanc” is not defrauded in either case, as far as I can see.

“Are trademarks and brand names not essential for the operation of free competition, in which better producers benefit from their record of past good work and poorer producers suffer from their record of past poor work?”

It is perhaps essential that people be able to identify themselves, and communicate, but this does not mean there are property rights in identifications or ways of communication (languages or words). I see no reason to believe that absent IP there would be no records or reputations, or no ways to prevent or penalize fraud.

And let’s face it: who publishes public domain works now, under false names? Who claims to be the new author of the Nichomachean Ethics? Any serious businessman wants to establish his own name, not pirate others’.

“I want to say that I recognize that we live in an age of intellectual disintegration, in which philosophers, lawyers, and judges have proved themselves capable of corrupting practically any concept. As a result, it should not be surprising that there are corruptions of the concept of intellectual property and its application. One that comes readily to mind is Ralph Lauren’s ability, according to John Stossel, to appropriate the word “Polo,” to the point that even organizations of actual polo players cannot use the word without being held guilty of violating an alleged intellectual property right of Lauren’s. The truth, of course, if Stossel is right, is that Lauren’s appropriation of the word “Polo” is a violation of their intellectual property rights.”

In my view, this is the inevitable and predictable result of entrusting the state with the production and adminstration of law.

“I’ve deliberately avoided any discussion of patents and copyrights here because my purpose has been simply to establish the legitimacy of the concept of intellectual property as such.”

As far as I can see, there is no legitimacy to this concept. To the extent it’s legitimate, it’s just the application of principles of fraud and property. To the extent it goes beyond these things (e.g., giving the right to sue to the trademark user instead of to the customer) it’s not legitimate.

{ 22 comments }

Yancey Ward November 7, 2007 at 2:02 pm

I am looking for Person, is he here yet?

Person November 7, 2007 at 2:47 pm

Person here, reporting for duty.

Stephan_Kinsella: I’ve long held the distinction between a customer vs. producer right to sue about trademark misappropriation is meaningless.

Let’s say for a moment that only customers can sue. So what? Then the trademark owner can send people out to buy the stuff and then say, “Oh wait! I thought I was buying a genuine McDonald’s burger — that sign out front looks so much like the real thing!”

Then he’d have the right to sue, he would get class action status, and we’d be right back to the situation where trademark holders had the right.

Now, about identity theft: I agree with you that on the issues George_Reisman raised, there is no need to reference “intellectual property”. However, personal information privacy is a problem you and all other IP opponents. Specifically: why, under your property rights theory, would it be illegal for me to sell other people your PIN number? Let’s say I hack into your computer and get your passwords. I can understand (for the sake of argument) how that’s trespassing. However, you have always held that even if I obtained information from trespassing, I still have the right to use that information, as long as I made good on the trespassing tort.

In that case, your only libertarian objection to distributing someone’s authentication information (including helping them modify their face, voice, etc.) is that it makes you an “accessory to fraud”. Is that accurate, or is there another reason why you object to giving away people’s PINs?

And then on top of that, what if say, I took pictures of your children in the bathroom? Okay, I have to trespass to do that. But then nothing in your property rights theory prevents me from distributing the pictures. Whatever reason you use, comes down to form of IP.

Don November 7, 2007 at 3:49 pm

“Specifically: why, under your property rights theory, would it be illegal for me to sell other people your PIN number?”

Because that’s part of the bank account, which is someone else’s property.

“Let’s say I hack into your computer and get your passwords. I can understand (for the sake of argument) how that’s trespassing.”

And, necessarily, a property rights violation. So you’ve answered your own question. QED.

“However, you have always held that even if I obtained information from trespassing, I still have the right to use that information, as long as I made good on the trespassing tort.”

You can, and then how many people will continue to deal with you?

Stephan Kinsella November 7, 2007 at 5:14 pm

Person:

Stephan_Kinsella: I’ve long held the distinction between a customer vs. producer right to sue about trademark misappropriation is meaningless.

Let’s say for a moment that only customers can sue. So what? Then the trademark owner can send people out to buy the stuff and then say, “Oh wait! I thought I was buying a genuine McDonald’s burger — that sign out front looks so much like the real thing!”

Then he’d have the right to sue, he would get class action status, and we’d be right back to the situation where trademark holders had the right.

Except the notion of class action is problematic too. Plus, you’d not be back where you started before–here, the TM owner could sue ONLY for fraud. He could NOT sue a knockoff artist who admits to the customer he’s selling a cheap knockoff.

Now, about identity theft: I agree with you that on the issues George_Reisman raised, there is no need to reference “intellectual property”. However, personal information privacy is a problem you and all other IP opponents. Specifically: why, under your property rights theory, would it be illegal for me to sell other people your PIN number?

Well, let me think. For them to use my PIN number would be akin to theft–it would be unconsented-to access to my property (my bank account, whatver). And you are aiding and abetting them.

Let’s say I hack into your computer and get your passwords. I can understand (for the sake of argument) how that’s trespassing. However, you have always held that even if I obtained information from trespassing, I still have the right to use that information, as long as I made good on the trespassing tort.

I merely say that using information is not a violation of anyone’s rights per se, since information is not owned. But you don’t have the right to commit trespass–whatever means you want to employ. And if you use my PIN to take my money, you are gaining access to my property (money) without my permission–that’s theft.

In that case, your only libertarian objection to distributing someone’s authentication information (including helping them modify their face, voice, etc.) is that it makes you an “accessory to fraud”.

Accessory to conversion/theft/misappropriation, actually.

And then on top of that, what if say, I took pictures of your children in the bathroom? Okay, I have to trespass to do that. But then nothing in your property rights theory prevents me from distributing the pictures. Whatever reason you use, comes down to form of IP.

No, if you did that, I can stop you from distributing the pix, b/c I have hte right to punish you for committing trespass. The punishent could include restricting your actions. BUt if you had already leaked the pix, to third parties, I think there’s nothing I can do to stop them from using or distributing the pix.

Person November 7, 2007 at 5:48 pm

Stephan_Kinsella:Except the notion of class action is problematic too. Plus, you’d not be back where you started before–here, the TM owner could sue ONLY for fraud. He could NOT sue a knockoff artist who admits to the customer he’s selling a cheap knockoff.

So you’re referring to a situation where someone sells a purse with a Gucci logo but says, “ah nah, don’t worry about that, it’s not really Gucci, just an imitatation”? That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”

Just as you would not like for people act like that while impersonating you, Gucci would not like people to wear stuff that says “this is Gucci” when it’s really not. So if you object to one, you have to object to the other. Does your property rights theory stop me from imitating you like I described above?

Well, let me think. For them to use my PIN number would be akin to theft–it would be unconsented-to access to my property (my bank account, whatver). And you are aiding and abetting them.

Right — just like if I gave them a computer or internet access or a lockpick or a gun …

No, if you did that, I can stop you from distributing the pix, b/c I have hte right to punish you for committing trespass. The punishent could include restricting your actions. BUt if you had already leaked the pix, to third parties, I think there’s nothing I can do to stop them from using or distributing the pix.

First of all, how does the right to punish me for committing trespass give you the right to restrict my transfer of information?

Second, if you really don’t believe this distribution can be legitimately restricted, I don’t know what to tell you. Few people, even libertarians, want to live in that kind of world.

Stephan Kinsella November 7, 2007 at 7:25 pm

Person/Silas:

Stephan_Kinsella:Except the notion of class action is problematic too. Plus, you’d not be back where you started before–here, the TM owner could sue ONLY for fraud. He could NOT sue a knockoff artist who admits to the customer he’s selling a cheap knockoff.

So you’re referring to a situation where someone sells a purse with a Gucci logo but says, “ah nah, don’t worry about that, it’s not really Gucci, just an imitatation”? That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”

Surely, Silas, you are familiar with the phenomenon of cheap knockoffs. People buy fake $10 LV purses because they are cheap, and they konw they are fake. They are not defrauded. Do you agree?

How about wearing the purse? Is that “defrauding” anyone?

Just as you would not like for people act like that while impersonating you,

Who cares what I “like”?

Gucci would not like people to wear stuff that says “this is Gucci” when it’s really not.

Who cares if they don’t “like” it? So? Blockbuster does not “like it” when a HollyWood Video opens up across the street, either. So what?

So if you object to one, you have to object to the other. Does your property rights theory stop me from imitating you like I described above?

I don’t see how it does, as a general matter.

SK: Well, let me think. For them to use my PIN number would be akin to theft–it would be unconsented-to access to my property (my bank account, whatver). And you are aiding and abetting them.

Right — just like if I gave them a computer or internet access or a lockpick or a gun …

It’s not the point how you aid and abet someone. Just b/c you help them do something does not mean the way you help them is necesarily property, if tha’ts what you’re getting at.

SK: No, if you did that, I can stop you from distributing the pix, b/c I have hte right to punish you for committing trespass. The punishent could include restricting your actions. BUt if you had already leaked the pix, to third parties, I think there’s nothing I can do to stop them from using or distributing the pix.

First of all, how does the right to punish me for committing trespass give you the right to restrict my transfer of information?

I can use my right to punish in a variety of ways. I can say I will wield my right to punish if you release the picture. Think creatively dude.

Second, if you really don’t believe this distribution can be legitimately restricted, I don’t know what to tell you.

Oh, thank goodness.

Few people, even libertarians, want to live in that kind of world.

Nice argument!

David Bratton November 7, 2007 at 9:06 pm

Person:That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”

What if it was your identical twin?

Robert M. November 8, 2007 at 1:43 pm

David:
Well it depends, who was born first?

Person November 8, 2007 at 1:57 pm

Yeah, that Holocaust deal — it’s all a myth. XD

Kevin B November 8, 2007 at 2:02 pm

*takes off Person costume*

Fooled you!!! (in Dark Helmet voice)

Michael A. Clem November 8, 2007 at 2:02 pm

That would be equivalent, in my mind, to me going around with cosmetic surgery to look like you, identifying myself as Stephan_Kinella to everyone, and saying, “Yeah, that Holocaust deal — it’s all a myth.”
Um, that doesn’t sound equivalent to me. Now suppose someone who looked like Stephan but told people his real name, and that he wasn’t Stephan, then that would be equivalent. See the difference?

George Reisman November 8, 2007 at 5:19 pm

Dear Stephan:

Thank you for your answers to my various questions. Not surprisingly, your answers raise further questions.

1. You appear to reduce the concept of identity theft to fraud, at least insofar as you think that the complaint is legitimate. So let’s deal with cases in which no fraud is involved in the sense of someone’s obtaining someone else’s wealth by means of deception. Let’s deal with cases in which one person assumes another person’s identity for the purpose of maligning him. Thus, for example, imagine that a scholar publishes articles under another scholar’s name, articles which support views that that other detests, signs his name to petitions of a like nature, enrolls him in organizations he despises (at the same time paying the dues for such enrollments), and finally perhaps, arranges to have his target’s name appear on a list of registered sex offenders. Imagine, for example, that Oskar Lange, or some other Communist, did such things to von Mises.

My understanding of your position is that no crime is present in any of these or like instances because no right of the victim—namely an exclusive right to the use of his own name in presenting himself to others—is being violated because no such right exists. Am I correct in my understanding of your position?

2. Now back to wealth being involved in the misrepresentation. My understanding of your position here is that the use of another’s brand name or trademark may represent an instance of fraud against the buyers of the products involved but no crime is committed against the seller.

So let’s imagine two soup companies, “Good Soup” and “Bad Soup.” The company producing “Good Soup” is careful to produce a soup that is always good tasting and untainted. The company producing “Bad Soup” doesn’t mind if an occasional fingernail is found in one of its cans. In a free market, business will tend to be good for “Good Soup” and bad for “Bad Soup.” But as I understand your position, if the producers of “Bad Soup” exactly duplicated the labels affixed to cans of “Good Soup” and affixed them to their own cans of “Bad Soup” and then sold the latter as though it were “Good Soup,” the only parties able to claim the status of victims of a crime would be the buyers of the mislabeled cans of soup.

This strikes me as incredibly unjust. The damage to the buyer of a can of soup is the dollar or two that he paid for it. The damage to the seller may be many millions of dollars in sales revenues that he is prevented from earning because of the damage to his reputation. Indeed, all supporters of the doctrine of opportunity cost must regard his loss in this instance as being fully as real as the loss of millions already in his pocket and thus as being on all fours with his being the victim of fraud. (As you may know, I oppose the doctrine of opportunity cost, and so I would not go this far. I am content to say that it is a deprivation of wealth that the seller otherwise almost certainly would have had, and that, being the result of deliberate deception, it too should be punishable by law.)

3. Continuing with point 2, if it is legal for “Bad Soup” to duplicate the label and all the other possible external identifying characteristics of “Good Soup,” how can there be any basis for claiming fraud against “Bad Soup” in the first place?” On what basis should the buyers expect that only “Good Soup” would be labeled “Good Soup”? Shouldn’t they know that when they buy “Good Soup,” it may just as easily be “Bad Soup” as “Good Soup”? If they have no reasonable expectation of a product being one thing rather than another, how can they claim to be deceived when it is one thing rather than another?

4. You wrote, “It is perhaps essential that people be able to identify themselves, and communicate, but this does not mean there are property rights in identifications or ways of communication (languages or words). I see no reason to believe that absent IP there would be no records or reputations, or no ways to prevent or penalize fraud.”

It is indeed essential that people be able to identify themselves, and communicate. Life in a division of labor-society absolutely requires it. Such a society requires the constant interaction of people and their ability to discriminate between the good and bad performance of others and to reward and penalize accordingly. They can do this only if they know the exclusive, unique identities of those others, so as not to confuse the good with the bad or the better with the worse. This knowledge is secured by the legal recognition of property rights in such things as trademarks and brand names and in one’s own name and identity insofar as one is represented to others.

I invite you to explain how in the absence of the legal recognition of such rights, the necessary discriminations could be made in any effective and economical way. I think I have offered reasons why they could not be.

Sincerely,

George

Kevin B. November 8, 2007 at 5:51 pm

George Reisman,

2. What kind of reputable store stocks its shelves with a new soup that is obviously trying to defraud its customers?

3. Why should customers expect to find soup inside cans labeled, “Soup”?

Peter November 8, 2007 at 6:37 pm

My understanding of your position is that no crime is present in any of these or like instances because no right of the victim—namely an exclusive right to the use of his own name in presenting himself to others—is being violated because no such right exists. Am I correct in my understanding of your position?

I should hope so. Nobody has exclusive rights to “their” name. I know of at least five other people that share my name (well, four now; one died a while back). I can’t stop those people from signing my name on petitions, etc.; what difference does it make if someone who doesn’t share my name signs my name on a petition? (How do you even distinguish between signing my name and signing the name of the moderately-well-known architect who has the same name as me?)

Stephan Kinsella November 9, 2007 at 12:23 am

Reisman:

Thank you for your answers to my various questions. Not surprisingly, your answers raise further questions.

1. You appear to reduce the concept of identity theft to fraud, at least insofar as you think that the complaint is legitimate. So let’s deal with cases in which no fraud is involved in the sense of someone’s obtaining someone else’s wealth by means of deception. Let’s deal with cases in which one person assumes another person’s identity for the purpose of maligning him. Thus, for example, imagine that a scholar publishes articles under another scholar’s name, articles which support views that that other detests, signs his name to petitions of a like nature, enrolls him in organizations he despises (at the same time paying the dues for such enrollments), and finally perhaps, arranges to have his target’s name appear on a list of registered sex offenders. Imagine, for example, that Oskar Lange, or some other Communist, did such things to von Mises.

My understanding of your position is that no crime is present in any of these or like instances because no right of the victim—namely an exclusive right to the use of his own name in presenting himself to others—is being violated because no such right exists. Am I correct in my understanding of your position?

George, I think this is basically correct. I think the reasoning of libertarians like Rothbard who oppose rights in reputations is right, e.g. as Rothbard argues here.

Now back to wealth being involved in the misrepresentation. My understanding of your position here is that the use of another’s brand name or trademark may represent an instance of fraud against the buyers of the products involved but no crime is committed against the seller.

So let’s imagine two soup companies, “Good Soup” and “Bad Soup.” The company producing “Good Soup” is careful to produce a soup that is always good tasting and untainted. The company producing “Bad Soup” doesn’t mind if an occasional fingernail is found in one of its cans. In a free market, business will tend to be good for “Good Soup” and bad for “Bad Soup.” But as I understand your position, if the producers of “Bad Soup” exactly duplicated the labels affixed to cans of “Good Soup” and affixed them to their own cans of “Bad Soup” and then sold the latter as though it were “Good Soup,” the only parties able to claim the status of victims of a crime would be the buyers of the mislabeled cans of soup.

Yes, I think this is basically right.

This strikes me as incredibly unjust. The damage to the buyer of a can of soup is the dollar or two that he paid for it. The damage to the seller may be many millions of dollars in sales revenues that he is prevented from earning because of the damage to his reputation. Indeed, all supporters of the doctrine of opportunity cost must regard his loss in this instance as being fully as real as the loss of millions already in his pocket and thus as being on all fours with his being the victim of fraud. (As you may know, I oppose the doctrine of opportunity cost, and so I would not go this far. I am content to say that it is a deprivation of wealth that the seller otherwise almost certainly would have had, and that, being the result of deliberate deception, it too should be punishable by law.)

I understand your position here, but your position appears a bit question begging. Whether it’s unjust or not, in the political sense, depends on whether there is a property right, which is the question. Merely causing “damage” is not enough; with a loose enough conception of “cause damage”, the HollyWood Video that moves in across the street from a BlockBuster, thus “taking” some of “its” business, also “causes damage”–but this is entirely rightful. The reason is the Hollywood Video is not entitled to be patronized by customers. Likewise, I would argue that Good Soup is not entitled to have any of its customers buy soup from it. That is up to the customers. If the customers choose, for *whatever reason*, not to buy from Good Soup, this does not violate any property right of Good Soup. This is so even if the reason is that the customers choose to rely on the false information spread by Bad Soup. At most, it is the customers who have been harmed (defrauded), but since Good Soup is not entitled to their purchase of its soup in the first place, I do not see how its rights are violated if the customers do not make the purchase.

Let’s take a simple, but stark, example. I murder some lady on her way to the store, where she was planning to buy a can of Good Soup’s soup. Now, the purchase does not take place. Did I “damage” Good Soup by murdering the would-be customer? I think not; my act of wrong is fully exhausted by the crime against the victim. It’s not as if Good Soup is married to the victim and has some separate right of recovery for my crime against her. It’s just a crime against victim.

Continuing with point 2, if it is legal for “Bad Soup” to duplicate the label and all the other possible external identifying characteristics of “Good Soup,” how can there be any basis for claiming fraud against “Bad Soup” in the first place?” On what basis should the buyers expect that only “Good Soup” would be labeled “Good Soup”? Shouldn’t they know that when they buy “Good Soup,” it may just as easily be “Bad Soup” as “Good Soup”? If they have no reasonable expectation of a product being one thing rather than another, how can they claim to be deceived when it is one thing rather than another?

I understand this critique; it is basically the point made by Van Dun in Against Libertarian Legalism: A Comment on Kinsella and Block — see, e.g., pp. 68-70. I already replied to this–see pp. 59-63, in particular p. 62-63 of Reply to Van Dun: Non-Aggression and Title Transfer. As I wrote there:

“Van Dun might argue that it is not possible to identify the R-Burger chain if it does not have a trademark right, and that the L-Burger chain can just rename itself Ã’R-BurgersÓ too, so that when the customer asks for an R-Burger ( i.e., conditions the title transfer to the money on it being made and sold by R-Burger), he is actually getting one. He is just getting it from the second R-Burger company, not from the first R-Burger company.

“However, this response would be easy to overcome. It need only be possible for the customer to adequately identify what the condition is. Language is not infinitely malleable, and communication is (undeniably) possible. If pressed, the customer could specify that the purchase is conditioned on the current store he is in being owned by the same R-Burger company first started at such and such date and address, and so on. There is no reason it would be impossible to identify a given vendor without traditional trademark law, just as it is not impossible to identify fellow humans, despite the fact that we do not usually have trademarks on our names (in fact, humans often have identical names, e.g., John Smith).

“Van Dun’s implicit assumption here is really that communication and identification of individuals or entities is literally impossible in the absence of trademark rights. This is obviously absurd.”

Continuing with Reisman’s comments:

You wrote, “It is perhaps essential that people be able to identify themselves, and communicate, but this does not mean there are property rights in identifications or ways of communication (languages or words). I see no reason to believe that absent IP there would be no records or reputations, or no ways to prevent or penalize fraud.”

It is indeed essential that people be able to identify themselves, and communicate. Life in a division of labor-society absolutely requires it. Such a society requires the constant interaction of people and their ability to discriminate between the good and bad performance of others and to reward and penalize accordingly. They can do this only if they know the exclusive, unique identities of those others, so as not to confuse the good with the bad or the better with the worse.

I think this is basically correct, to this point.

This knowledge is secured by the legal recognition of property rights in such things as trademarks and brand names and in one’s own name and identity insofar as one is represented to others.

Yes, it can be protected this way. The question is whether this is justified, or even necessary. I do not think “communication” requires a state-enforced set of reputation and trademark rights.

I invite you to explain how in the absence of the legal recognition of such rights, the necessary discriminations could be made in any effective and economical way. I think I have offered reasons why they could not be.

For one, as noted previously, the consumer himself can sue for fraud, thus penalizing such activity. And I think, as indicated above, and as your comments support, that the view that trademark/reputation rights are required, basically implies that without such rights, communication is impossible. This seems to be a clearly false claim. Consider all the public domain works available now, works with no trademark, reputation rights, or copyright–say, the works of Plato or Aristotle. You are free to sell your new book under the name of “Aristotle”, if you wish; you are free to sell a duplicate of the Nichomachean Ethics under your own name, if you wish. Why does no one do this? I think the reason is because serious people who want to do things with their lives do not want to be viewed as jokes. Same with businessmen: if I start a restaurant I want it to be mine, I do not want to call it McDonald’s. A few may get away with this, and would be loooked on as shady, fly-by-night operators, and sued by customers to boot. Who would lend money, or invest money in, a proposed business which involves knocking off, say, McDonald’s restaurants? If it’s going to be a real consumer fraud, then no one would invest in this –it would be doomed to be sued to death for fraud.

Fred Mann November 9, 2007 at 12:46 am

George,
George,
In an world without trademarks, the “Good Soup” company could easily protect itself by saying on the label, “Produced in Factory X by Mr. Y, — Guaranteed fingernail-free since ’93″, or whatever. Anyone copying this would be committing fraud. Also, as Kevin B. suggested, stores could specialize in stocking “originals”, and be very careful about the source of their purchases. These types of product differentiations would be adopted almost immediately and universally upon the repeal of IP laws, since the copying of differentiation techniques would not be forbidden, and the wisdom of doing so would be obvious. Currently, these types of differentiations/divulgences are suppressed to some degree — possibly to our detriment.
The key, of course, would be to incorporate information that is specific enough to prevent copycats, but not so specific as to divulge trade secrets.
One could conceivably differentiate oneself/one’s personal reputation in similar ways — i.e. George Reisman b. 1950 in CO to Harry and Elaine blah, blah, blah. – and might even become common practice in situations where this approach is generally warranted.

Fred Mann November 9, 2007 at 12:54 am

George,
(only one “George” this time). Sorry about the slight overlap between me and Kinsella. I didn’t refresh the page before posting. I’m also sorry that I didn’t post first and that you had to read through his long and boring reply before getting to my succinct nuggets of wisdom.

Fred Mann November 9, 2007 at 3:46 pm

Just kidding, by the way. I’m a huge Kinsella fan. I have his poster in my bedroom.

Stephan Kinsella November 9, 2007 at 4:23 pm

Wladimir Kraus writes:

Putting aside the problem of consequences/utility for the moment, the fundamental question, as it appears to me, is whether the existence of rights to intellectual property constitutes violation of legitimate interests, or rights, of other people. If it were not so, there would indeed exist no grounds to oppose them.

For example, so-called “positive” rights to health care or education ultimately come into conflict with so-called “negative” rights of those who will be forced to provide them. The problem of political philosophy is to establish which one of the two constitutes the actual, legitimate, true rights and which, consequently, must be viewed as a mere violation of true rights.

While I would argue that there’s a conflict between “positive” rights of individual A and “negative” rights of individual B, no conflict exists between “negative” rights of A and B.

For example, the fact that I have a right to my physical body and to products of my labor, directly or via voluntary exchange, does not violate or diminish any rights of other people. The principle is nicely stated in the maxim that if the rational self-interest is the basis of social interactions no conflicts of interests are involved. Indeed, enormous gains to all are to be expected if negative rights of individuals are observed consistently.

Applied to the case of IP rights, it follows that if and only if their inherent harmful nature can be established, then and only then their existence may be condemned.

I believe that at the root of present controversy stand two opposing theories of property rights: the “scarcity” based theory of property as developed by Rothbard, Hoppe et al., on the one hand, and Ayn Rand’s, for lack of a better word, “creationist” theory of property rights, on the other.

It appears that the problem of IP rights is a particularly good instance to test each of the two theories because this particular problem highlights the differences so sharply.

The fundamental question is what is the source of rights? Is it mere scarcity of resources and therefore the need to avoid conflicts that supposedly arise from the fact of scarcity, or is the source rather the recognition of the fact that in order to survive and achieve happiness in the context of interpersonal relationships, i.e. society, man needs knowledge that would tell him what is he to do if his goal is to survive and achieve happiness in society.

I believe that Ayn Rand’s derivation of the concept of right is much more in accordance with the facts of reality and man’s requirements to survive and achieve happiness than the alternative is.

In regards to IP, therefore, the first question we need to answer is whether IP rights belong to the broad category of “positive” or to the category “negative” rights, and why.

Any comments?

Well, let me say that in a way I agree–one source of disagreement lies in differences over whether rights come from scarcity, or from “creation” (Rand’s “man’s needs” type of argument).

I’ve tried to show that it’s a mistake to think of creation as a source of ownership of property. Often it’s said that you can find/appropriate something, create it, or buy/receive it from a previous owner. But “creation” is not really a third way of acquiring ownership. In fact, it’s neither necessary nor sufficient. Appropriation of unowned goods, and contractual acquisition of goods from previous owners, are the only ways to acquire property rights in things. I discuss this in detail in the section “Creation vs. Scarcity” et pass. of Against Intellectual Property. Also, note that if you say that we have property rights to “things we create,” you indeed open the door to a horrible pandora’s box of things that people have monopolistic rights to, which would entangle and ensnare all use of scarce resources, thus leading to the entire human race dying out. See, e.g., the examples of Galambos and Schulman, noted in my article, who advocate protection of a very broad range of mentally “created” patterns, ideas, “logos,” what have you.

Tibor Machan has alluded to this in some of his writings, where he basically wants to say that there are all kinds of “things” that “exist”–poems, trucks, etc.–and since “The tangible-intangible distinction is not a good one for what can and cannot be owned”, then we need to focus on “intentionality”–things we intentionally create or produce, whether they be “tangible” or “intangible”–indeed, intangible things like poems, computer games/programs, novels, songs, arrangements, etc. are more completely “intentional” and “created” than are tangible goods. I.e., Machan’s theory seems to be that any “ontological type of thing” that we can identify, and that was intentionally created or produced by man, is owned by man. For more on this, see: New Working Paper: Machan on IP; also see the criticism and discussion in the comments (e.g., those of Carl Johan Petrus Ridenfeldt at November 30, 2006 4:59 PM); see also Owning Thoughts and Labor and related comment thread; and the comments in The Copyright/Baseball Analogy. I think if you review the criticisms of Machan’s view here (and my discussion of “Creation v. Scarcity” in my longer paper noted above), you’ll begin to see the magnitude of problems that accompany looking at property in this way.

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