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Trademark versus Copyright and Patent, or: Is All IP Evil?

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I think we can all now agree that copyright and patent are evil and should be abolished (hey, if they can say we are all Keynsians now…).

But what about other forms of IP, such as trademark? One problem is that IP is not really property at all, and is just an umbrella term linking distinct, mostly artificial, positive rights created by the legislature out of thin air–”legally recognized rights arising from some type of intellectual creativity, or that are otherwise related to ideas.” (Against Intellectual Property, p. 9.)

Thus patent gives a monopoly to a way of using, or configuration of, practical, useful devices (inventions); while copyright gives a monopoly to certain uses of original creative patterns of information (works of authorship like novels or paintings). While trademark protects a set of rights clustered around one’s reputation (but then, so do defamation laws); and trade secret is more like a type of contractual right to keep people from revealing secret information.Bad Connections

From what I’ve seen, it is clear to most activist-opponents of IP that copyright and patent are terrible. But it is not so clear what is wrong with other types of IP, such as trade secret and trademark. What about these, and other rights, such as various other trademark-related rights (rights against “trademark dilution,” certain forms of cybersquatting, and various “unfair competition” claims); mask work protection available for semiconductor integrated circuit (IC) designs, boat hull designs, and (proposed) rights in databases, or collections of information? (See Against Intellectual Property, p. 13, summarizing various types of IP.)

The “intellectual” part of IP improperly lumps together conceptually distinct types of laws; and “propery” improperly begs the question. So these must be treated in turn. Mask work, boat hull, and database rights are very similar to copyright at least in what is problematic about them; so they, too, like patent and copyright, are obviously unjust.

As for trade secret–I deal with this in a short section (pp. 56-57) of Against Intellectual Property, as the bulk of the article deals with copyright and patent, and trade secret law is not nearly as problematic.

Trademark

So we come to trademark. I deal with this on pp. 58-59 of Against Intellectual Property, and also in some detail in Reply to Van Dun: Non-Aggression and Title Transfer (esp. pp. 59-63). In my view, the new-fangled extensions of trademark law–rights against “trademark dilution” and cybersquatting, etc.–are obviously invalid. Further, federal trademark law is problematic since it is not authorized in the Constitution (copyright and patent are, but not trademark; trademark relies on the Interstate Commerce Clause, and thus the federal trademark law only covers trademark connected to interstate commerce, and does not preempt state law, so that state trademark law still governs many intra-state situations).

But even if federal trademark law were abolished, as well as modern extensions such as rights against trademark dilution, even common law trademark is problematic, for three primary reasons. First, it is enforced by the state, which gets everything wrong. Second (see First), the test of “consumer confusion” is usually applied ridiculously, treating consumers like indiscriminating idiots. Third, and worst of all, the right at issue is the right of the defrauded consumer, not the competitor. Trademark law ought to be reformed by abolishing the right of trademark “owners” to sue “infringers” (except perhaps as proxy for customers, when consent can be presumed or proved), and treating this as a case of the customer’s right to sue a vendor who defrauds him as to the nature of the good purchased. Some might argue that this is only a minor change, but it is not: such a change would make it clear that “knockoffs” are usually not a violation of anyone’s rights: the buyer of a $10 “Rolex” is almost never defrauded–he knows what he’s getting. Yet by giving an enforceable trademark right to the user of a mark, he can sue knockoff companies even though their customers are not defrauded and in fact are perfectly happy to buy the knockoff products.

By the way, examples of trademark abuse are legion. It’s not only copyright and patent that give rise to outrageous examples of injustice. See, e.g., Chip Wood, A Bully-Boy Beer Brewer; Justin Levine, 9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After All, Against Monopoly (09/26/2007); Kinsella, Trademarks and Free Speech, Mises Blog (Aug. 8, 2007); Kinsella, Beemer must be next… (BMW, Trademarks, and the letter “M”), Mises Blog (Mar. 20, 2007); Kinsella, Hypocritical Apple (Trademark), Mises Blog (Jan. 11, 2007); ECJ: “Parmesian” Infringes PDO for “Parmigiano Reggiano”, I/P Updates (Feb. 27, 2008); Engadget Mobile Threatened For Using T-Mobile’s Trademarked Magenta, Techdirt (Mar. 31, 2008).

Now IP proponents often assume trademark law is unproblematic, and then try to lump types of IP together, so that they stand or fall together. For example it could be argued that if you are for reputation, then you must be for trademark; and if you are for trademark, you must be for “intellectual property”; and thus, you cannot be opposed to IP in principle, so you cannot oppose copyright and patent. (See, e.g., the comments here, making this argument.)

Now one fallacy of this argument is that it relies on the positive law conceptual grouping of different areas of artificial, legislated law to make its point. But there is no reason one has to favor the validity of copyright or patent law, even if one supported trademark law, say. Each has different defects and a different nature.

The other fallacy is the view at work here that there is no such thing as reputation, or even identity, absent trademark law. But this is incorrect. Of course people and firms can have reputations even if trademark law is nonexistent. All that is required is that people be able to identify other people and firms, and communicate. Pro-trademark arguments often implicitly assume that this is not possible, absent state-enforced trademark law, which is ridiculous. For example, how can there be fraud (as in my theory), if the vendor is free to call himself whatever he wants? What if Joe Schmoe sets up a knockoff McDonald’s restaurant? Well, it is McDonald’s–that’s what it calls itself, and the “real” McDonald’s can’t stop it without trademark rights–so why is it fraud? Well, because the consumer is (per assumption) deceived as to the nature of the goods he is buying. As I argued in Reply to Van Dun (pp. 62-63),

“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 [McDonald's] 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 often have identical names, e.g. John Smith).

The other thing to realize is that consumers are not stupid. They can spot a knockoff easily. And the trademark frauds are usually going to be marginal low-life types, who could never compete with a legitimate business anyway–the kind of company that makes knockoff Rolexes, which doesn’t fool its customers.

Consider. You have a successful burger joint, let’s call it “Tommy’s.” Now, suppose they have no trademark, and other Tommy’s pop up. So if you want the original Tommy’s, where do you go? You go to the original Tommy’s. Which just calls itself The Original Tommy’s. (A similar phenomenon is in Twitter, where some well-known people and celebrities’ names are taken, like dvorak–so John Dvorak just goes by “THErealDVORAK“. End of problem. No anti-Twittersquatting law needed.)

If some other Tommy’s tries to deceive customers into thinking it’s owned by the same guy that owns the original Tommy’s, then they are eventually going to get sued. Or have only marginal customers as people figure out this new place is run by seedy liars.

The truth is that any legitimate businessman wants to use a unique name. Just like people manage to distinguish their identities, even when they have the same names.

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