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Rethinking Intellectual Property: History, Theory, and Economics

October 22, 2010

Tags Free MarketsLegal SystemWorld HistoryEntrepreneurship

In previous decades libertarians viewed intellectual property as a boring and technical area of the law, the province of legal specialists. They also assumed it to be a legitimate, if arcane, type of property in a capitalist, free-market society. After all, it's in the Constitution, and Ayn Rand blessed it. But we don't ignore it anymore, and we don't take its legitimacy for granted. We can't. The injustices of IP have multiplied in the Internet age and are staring us in the face.

The advent of the Internet, digital information, and easy file-sharing and duplication have been met with ever-more draconian enforcement of the state's IP law, and with incessant lobbying for legislation to make IP stronger and last longer. Just as the state wants to tax everything that moves, intellectual properteers want to cover ever-more subjects of life with IP protection. But everyone — the young, students, and libertarians — copies files, and we all regularly hear stories about insane patent and copyright lawsuits. Single moms and college students are sued for file-sharing. The IP barons seek three-strikes-and-you're-out laws banishing accused offenders from the Internet for life. They seek international enforcement of their national monopoly rights, to harass street vendors in third-world countries. The legislators, who are in their pockets, have already outlawed the possession of devices that might be used to crack encryption codes. Their propaganda — in TV commercials, video games, magazine ads, and unskippable warnings at the beginning of DVD movies — hectors kids and college students about how uncool it is to copy.

We hear regularly about multimillion- or even billion-dollar patent lawsuits, and about the millions of dollars spent by corporations on patent attorneys and litigators just to cross-license with each other, leaving smaller companies outside the walls of the barriers to entry erected on these patent arsenals. In the name of IP, books are banned, movies are ordered destroyed, singers are prevented from singing, car owners prevented from photographing their own cars, churches are prohibited from having Super Bowl parties, and imports of watches and reimports of drugs are blocked. And a little mouse keeps getting his life extended, thanks to copyright — from the original 14 years to over 100. Trumped-up charges of IP infringement are used as an excuse by the government to investigate political opponents.[1] IP may still be arcane, but it's not boring anymore. Scary and outrageous, maybe, but not boring.

Everyone knows something is wrong here. Everyone. Except perhaps for patent lawyers, federal judges, and Orrin Hatch. I take that back. I think even most patent lawyers know something is wrong. But mired in a mainstream, quasi-statist mindset, most people are unable to think clearly about this issue. For libertarians — especially those with a principled view of individual rights and an understanding of Austrian economics — there is more hope.

We must start by taking a close look at the traditional libertarian assumption that IP is, in fact, a legitimate type of property right. And it turns out that advocates of the free market have made a mistake all along. Patent and copyright, to take the two worst manifestations of IP, are nothing but state monopolies that violate property rights. IP is antithetical to capitalism and the free market.

And should this be any surprise? Copyright is rooted in censorship. No wonder it still leads to censorship today. Patent law finds its origins in mercantilist monopoly grants, and even legalized plunder — letters patent were used to legalize piracy in the 16th century — making it ironic for IP to be used against modern-day "pirates" who are not real pirates at all.

Once IP is seen this way, the scales fall from one's eyes. It's a transformative moment in one's libertarian life, akin to the moment when one finally admits to himself that even the minimal state is criminal and thus adopts anarchism. Realizing that IP is not part of a free-market order makes possible a reassessment of aspects of libertarianism, economics, or social thought hitherto neglected or seen confusingly through the IP haze.

But this does not mean that once you realize IP is unlibertarian that is all there is to know. There is so much more. This is a difficult subject in the sense that it requires serious thought, not just a quick intuition. As noted above, libertarians are beginning to grapple with this issue in recent years as we enter the digital-information age. The realization that IP is incompatible with libertarianism is forcing a rethinking about topics that have been neglected or taken for granted.

While the fairly recent advent of the digital revolution has caused most libertarians to turn their attention to this issue, I started focusing on this issue intensely almost 20 years ago, as a libertarian beginning to practice patent law. I have been criticizing the validity of IP in print since 1995,[2] and I kept learning as other insights unfolded in the ensuing fifteen years. The history of IP is illuminating. For example, it was not simply invented by infallible, well-intentioned, protolibertarian framers of the Constitution, but originated in censorship and mercantilism. Seen in this light, IP is seen as another mercantilist-corporatist state intervention in the free market. And one simply must have a sound, coherent, and libertarian understanding of property rights, the nature of homesteading, and the nature of contractual exchange, to understand the IP issue. Or, rather, in wrapping your head around IP, you hone and deepen your understanding of property rights, and make new connections. In so doing, new insights become possible, indeed inevitable.

To develop an understanding of property, contract, and homesteading sophisticated enough to understand the nature of IP and exactly how and why it does not fit into libertarianism and the free market, you must look closer at the nature of homesteading (Locke), contract theory (Evers-Rothbard), and at the nature and function of property rights. This last category, in particular, provides a good illustration of why Austrians are especially suited to libertarian theorizing, as it requires a close study of praxeology and the very structure of human action. On this topic, we must examine the work of Austrian luminaries such as Mises, Rothbard, and Hoppe to fully appreciate the relationship between scarcity and property rights, and the unique role of ideas and emulation in a free market and in society in general.

The purpose of my Mises Academy course, "Rethinking Intellectual Property: History, Theory, and Economics" (six weeks, starting November 1, with Monday evening lecture/question-and-answer sessions), is to explore these issues in detail. The history of IP is little known; we will cover it, and expose its statist, mercantilist, monopolistic origins. Advocates of IP are often shamelessly ignorant of the nature and details of the very system they support; even skeptics and critics are often unclear about what IP law is. The course will therefore provide an overview of modern intellectual-property law, distinguishing between the various types of IP, with examples and illustrations.

The course will explore and offer critical analysis of various utilitarian and deontological justifications offered for IP. We will seek to analyze the proper relationship between property, scarcity, and ideas, and to integrate the proper perspective on IP and the nature of ideas, emulation, and information with Austrian economics and libertarian theory.

As to putting some of these ideas into practice, the course will conclude by studying or proposing various legal and political reforms that might be implemented. Finally, because even those skeptical of IP naturally ask, "but how would I make money doing X without copyright and patent?," we will discuss likely types of market and social institutions and practices that could be expected to arise in a post-IP world.

Here are some of the topics that the course will cover:

  • The statist origins of patent and copyright, and how IP, used to persecute "pirates" today, was used in the past to support actual piracy;
  • The types of IP, and the difference between copyright and patent — and trade secret, trademark, moral rights, reputation rights, database rights, and sui generis IP rights like boat-hull designs and semiconductor maskwork protection;
  • Problems with utilitarian arguments in general, and with utilitarian arguments for IP;
  • Why empirical arguments for IP's "success" are flawed;
  • How open-source software depends on IP;
  • Why it's almost impossible to get rid of copyright, and why it's not hypocritical to oppose IP and still "have" a copyright;
  • Why patent and copyright cannot originate in the common law (also: what is wrong with legislation, anyway; and what "common law copyright" was; bonus: what's a "poor man's patent");
  • What is the most libertarian type of copyright license to use in today's world;
  • The relationship between scarcity and property;
  • Homesteading theory, the nature of human action and contract, and their relationship to property and scarcity;
  • Why IP cannot be based on contract;
  • How most patent lawsuits have nothing to do with "copying";
  • Central mistakes and confusions of natural-law arguments for IP;
  • Common fallacies and mistakes of pro-IP arguments, such as the implicit idea that there are property rights in labor, or that creation is an independent source of rights;
  • What Mises, Hayek, and Rothbard, as well as other notable economists such as Fritz Machlup, thought about IP;
  • The IP arguments of early libertarians like Benjamin Tucker and Lysander Spooner;
  • Legal and political reforms to improve or abolish IP; and
  • Market and social institutions and practices that would arise in a post-IP world.

As noted above, coming to grips with IP is not easy. Thinking it through helps firm up the case for property rights and contract. And the implications of what we learn extend far beyond just this area; it reaches into social theory and competition theory as well.

Mises Academy: Stephan Kinsella teaches Rethinking Intellectual Property: History, Theory, and Economics

Those already convinced by the general argument against IP thus have much to learn in this course, which will deepen and extend their understanding of not only IP theory but also libertarian theory and economics. The course is also ideal for those who are on the fence, or who are confused, about IP; no intellectual conformity is required. Libertarians who think there are good arguments for IP are also welcome — at the least, they can test their arguments against the best we critics have to offer, and perhaps strengthen, modify, or deepen their own views about the nature of ideas, government, and property rights. (For further details about the course, see my interview about it with Jeff Tucker.)

This should be a fun course. I look forward to sharing ideas with you!

Notes

[1] Some examples are collected in my post "The Patent, Copyright, Trademark, and Trade Secret Horror Files."

[2] See my various IP-related publications here.


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