Mises Daily Articles
The Fight against Intellectual Property
[Chapter 10 of Libertarianism Today by Jacob Huebert (Praeger, 2010). Reproduced with permission of ABC-CLIO, LLC, Santa Barbara, CA.]
When the Recording Industry Association of America (RIAA) wins a $1.92 million verdict against a 32-year-old Minnesota woman for sharing 24 songs online, is that good for liberty? When Disney and other big media companies got Congress to extend copyright protection for Mickey Mouse (and everything else) far into the future, should libertarians have cheered? When a patent-holding company threatened to shut down the Blackberry network unless Blackberry's creator paid it hundreds of millions in licensing fees, was this a win for property rights, or was it just extortion?
For a long time, libertarians were conflicted about "intellectual property" (IP). On the one hand, libertarians support property rights, so IP sounds like something they should favor. On the other hand, IP empowers some people to use government to limit other people's speech and actions. Libertarian giants of the past such as Ayn Rand and Ludwig von Mises endorsed IP, either as a moral matter (for Rand), or to encourage the production of creative works and inventions (for Mises). But more recent libertarian thinking attacks the idea that so-called intellectual property is either justified or necessary.
Older Libertarian Views
To call the ideas protected by patents and copyrights "property" is misleading. Historically, "property rights" referred only to interests in real property (land, buildings) and personal property (tangible objects). This kind of property right existed before there even were governments, as people homesteaded land, produced goods, and traded. Government came into existence later, to protect these property rights; it didn't invent them.
Intellectual property has origins that are far different and far more recent. As law professor Lawrence Lessig has put it, some people's desire to treat IP rights just like we treat other property rights has "no reasonable connection to our actual legal tradition." Rather, intellectual property rights are the product of government fiat — of statutes that grant inventors, writers, and artists a monopoly privilege to use certain ideas for certain lengths of time.
The people who enacted IP laws in the first place knew this well — that they were not recognizing some preexisting natural property right, but just granting a temporary privilege. This is clear in the wording of Article I, section 8, clause 8 of the US Constitution, which gives Congress "the power to promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." The language shows that Congress would be granting a positive right to serve a specific purpose, not recognizing some preexisting natural right.
We can contrast this, for example, with the First and Second Amendments, which state that certain rights "shall not be infringed," implying that those rights already exist. Congress didn't need to grant those rights because they derived from individuals' rights to their lives and property and therefore preceded the formation of the government.
If IP rights really were just like other property rights, they wouldn't present a controversial or difficult issue for libertarians. After all, libertarianism is founded on property rights. So, in that case, libertarians could simply agree with the late Motion Picture Association of America head Jack Valenti, who declared before Congress, "Creative property owners must be accorded the same rights and protection resident in all other property owners in the nation." And libertarians would also then have to agree with present-day representatives of the recording industry who claim that, when a person illegally downloads an album online, it's no different than if the person went into to a store, took a copy of the CD off the shelf, and walked out with it. And maybe libertarians would find those huge verdicts against file sharers justified.
But even in the days when a greater proportion of libertarians supported IP, it was never quite that simple.
Ayn Rand considered the legal protection of a patent or copyright necessary to protect the rights of an idea's creator because of "man's right to the product of his mind." But Rand recognized that ideas couldn't really be treated just like other property. Rights to ordinary property exist in perpetuity — you can pass the property on to your heirs, and they to their heirs, and so on forever. But Rand believed that IP rights could only be recognized for some limited period of time. She could see that if people retained permanent property rights in ideas, this would "paralyze" society as research and innovation would grind to a halt and people would be forced to pay royalties for virtually everything they use to the layabout heirs of long-dead inventors. So Rand recognized that some time limit would have to be established that balanced the inventor's rights with the ability of others to pursue further research.
Rand maintained that her philosophy and her views on IP were a product of her moral views on man's rights, so limiting the duration of IP rights to encourage innovation seems uncharacteristically utilitarian. But anyone who believes that IP rights are natural property rights will have to contend with this difficulty.
Ludwig von Mises was not concerned with natural rights, so he didn't run into this problem. He simply considered IP necessary to motivate people to create useful books and technological innovations. He wrote in Human Action that it is "unlikely that people would undertake the laborious task of writing" such things as "textbooks, manuals, handbooks, and other nonfiction works," if "everyone were free to reproduce them," and that it is "very probable that technological progress would be seriously retarded" if inventors and those who finance their work could not have a patent's help to recoup their expenses.
Murray Rothbard began to chip away at the IP idea but still clung to parts of it. He attempted to justify copyrights and, in a limited sense, patents by rooting them in the traditional Lockean system of property rights, even though IP did not actually arise out of that tradition.
For Rothbard, a believer in natural law and natural rights, copyright could not be justified on utilitarian grounds or legitimately established by government fiat. But Rothbard thought copyright could be justified if it were the product of contract. For example, if, when Smith sells Jones a book, Smith marks it "copyright," then Jones would only receive from Smith the right to possess and use that physical book, but not the right to copy it.
In other words, by giving Jones notice of copyright, Smith does not include the right to make and sell copies of the book in the bundle of rights that he sells to Jones. Because a person cannot transfer any greater rights in something than he or she owns, any third parties who later got the book after Jones would be subject to the same restriction Jones faced. Under this line of thinking, anyone who copied a copyrighted book without permission would be stealing by exercising a right that still belonged to the book's original owner because he or she had never given it up.
Rothbard justified patents of a sort on similar grounds. If Smith sells Jones a new kind of vacuum cleaner and marks it "patented" (or, as Rothbard would have it, "copyright"), that tells Jones that he is only receiving the right to the physical object, not the right to make copies of it. The patent/copyright creates a contractual limitation, just as in the copyright context.
This type of "patent" would not, however, prevent another inventor who comes up with the same device completely on his own from producing and distributing his device. As it stands, patent law grants exclusive rights to the first inventor of a good, and later inventors — even if they never saw or heard about the original invention — are bound by the patent. For Rothbard, this was unjust because the later inventor did not violate any property rights of the first inventor when he thought up and created the invention on his own. (This problem doesn't arise in the copyright context because it's safe to assume that two people will not independently write the exact same novel, play, or piece of music, Shakespeare-typing monkeys notwithstanding.)
Rejecting Intellectual Property
IP remained a questionable issue among libertarians for decades, but in the first years of the 21st century, opinion seems to have shifted strongly against the legitimacy of IP for natural-rights libertarians and consequentialist libertarians alike. (Here, and throughout the chapter, when we refer to IP rights, we refer to patents and copyrights; trademarks, another concept typically grouped with IP rights, are relatively uncontroversial.)
IP Violates Property Rights
The current generation's libertarian scholars in the natural-rights tradition have largely rejected the legitimacy of IP. The most influential figure in this intellectual revolution has been lawyer and legal scholar Stephan Kinsella, whose article, "Against Intellectual Property," appeared in the Journal of Libertarian Studies in 2001 and was published separately as a monograph in 2008. According to Kinsella, the problem with IP is that it isn't grounded in property rights — as all libertarian rights must be — and in fact requires government to violate property rights for its enforcement.
Under the Lockean-libertarian theory of property rights, people create private property in land (assuming it is unowned when they find it) by occupying it and making it theirs. Then, they are entitled to do what they please with that land — live there, enjoy what they produce on it, sell it to someone else, give it away — as long as they don't aggress against anyone else or anyone else's property in the process.
Land and tangible items are subject to becoming private property in this way because they are scarce. That is, they are limited in quantity, and one person's use of a piece of property prevents someone else from using it. Two people cannot occupy the same space or eat the same orange. Without property rights, there would be irresolvable conflicts over who can use what land and objects, and how they may use them. With property rights, these conflicts are avoided. On the other hand, if certain things weren't scarce — if we could reproduce them infinitely at no cost, or if they were somehow abundant — there would be no conflicts over those things and no need for ethical rules, property rights, or laws to govern such conflicts.
As it happens, ideas fall into this latter category. If two people want to have the same idea in their minds, or put that same idea to use, there is no conflict between them — they both can do it. And they can pass on an idea to as many people as they want without diminishing their own possession of the idea. Kinsella uses the example of a book:
[I]f you copy a book I have written, I still have the original (tangible) book, and I also still "have" the pattern of words that constitute the book. Thus, authored works are not scarce in the same sense that a piece of land or a car are scarce. If you take my car, I no longer have it. But if you "take" a book-pattern and use it to make your own physical book, I still have my own copy.
Thomas Jefferson had essentially the same insight some two hundred years before:
If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.
So IP rights cannot be true "property rights." And when government grants IP rights, it's not really granting a property right in an idea, but is instead granting a monopoly on the right to use an idea for certain profitable purposes. If you own a copyright in a book, only you (or someone to whom you give permission) can produce and sell copies of that book. If you own a patent on an invention, only you (or someone to whom you give permission) can produce and sell the invention for a certain period of time.
This means that IP rights are not property rights, but are in fact a power to stop other people from exercising their own property rights.
If I own a copyright in a book, I can use the force of government to stop someone from using their own paper and ink to produce their own copies of the book. If I own a patent in an invention, I can use the force of government to shut down someone else's factory that produces copies of my invention, even though the other person is using his or her own equipment, machinery, and components. I can even do this if the other person is not using a "copy" of my invention, but independently invented it all on his or her own. For a libertarian, this is unjust because it's using aggressive force against peaceful people. As law professor Tom W. Bell has put it,
By invoking state power, a copyright or patent owner can impose prior restraint, fines, imprisonment, and confiscation on those engaged in peaceful expression and the quiet enjoyment of tangible property. Because it thus gags our voices, ties our hands, and demolishes our presses, the law of copyrights and patents violates the very rights Locke defended.
So according to libertarian theory, IP rights are not "property rights" at all but are a government-issued license to attack property rights — and therefore they should be abolished.
Rand's attempt to justify IP fails under this framework because it presumes that ownership of ideas is possible and legitimate. So does Rothbard's attempt to ground IP in contract. We can see why by comparing Rothbard's contract-based copyright to a case in which Jones makes a contract with Smith to tell him a secret. A contract to keep a secret, standing alone, is legitimate — people can always make deals to do or not do things. If Smith tells everyone Jones's secret, Jones rightly can sue Smith because he broke their deal. Jones cannot, however, sue everyone else in the world who now knows the secret to stop them from repeating it; he didn't have contracts with those people and therefore can't claim any rightful ownership over them, the ideas in their heads, or their property.
And so it is with copyright: a seller can make his buyers agree not to copy a book, but he may not stop others who happen to see it from doing so. Likewise, an inventor may not stop someone who sees his or her invention (say, a machine) from using this knowledge to make a similar or better machine.
All this analysis may sound academic, but it illustrates how libertarians approach issues by going back to their philosophical first principles in a way that most adherents to the more nebulous political philosophies of conservatism and liberalism do not. And it is important for libertarians, as champions of property rights, to explain why IP rights are not property rights because to call IP "property" is not only Orwellian, it also sullies the reputation of true property rights. This is why Bell suggests we instead refer to IP as a "privilege," not as "property," and why the two authors we'll focus on in the next section, Michele Boldrin and David K. Levine, suggest an even more blunt term for IP: "intellectual monopoly."
IP, Creation, and Innovation
Of course, our argument about property rights might not matter to a utilitarian. Libertarian thinkers such as Mises or, today, Richard Epstein, would argue that even if IP rights aren't property rights in the usual sense, we should make an exception to the usual rule of liberty and property rights for IP because it presents a rare case where the benefits to society of a government intervention far outweigh the costs. If such claims by IP supporters were true, they might present a compelling argument in favor of IP. But the facts show that this is not true, and that IP not only isn't necessary for creation and innovation to occur, it also actively harms these things.
The leaders in debunking the myth of IP's necessity have been Boldrin and Levine, whose 2008 book, Against Intellectual Monopoly, argues that patents and copyrights are not necessary for progress and creativity, and, in fact, have greatly harmed it. (Boldrin and Levine may not be strict libertarians across the board, but they are close, they have influenced libertarians, and they are pure libertarians on the subjects of patent and copyright, so that's good enough for our purposes.)
Many IP advocates take it as self-evident, as the framers of the US Constitution did, that copyrights are necessary to motivate people to produce creative works. Supposedly, writers, musicians, and filmmakers wouldn't bother to produce books, music, and films if other people could come along and copy and take the benefits of their work — or at least, creative people wouldn't produce "enough" of these types of works, whatever that means. But it is not self-evident that this is the case, and the evidence shows that it's just wrong.
After all, for most of history, there were no copyrights, but people still created great literature, art, and music. Suppose Shakespeare had lived in a world where copyright existed. As one writer put it, "his legal bills would have been staggering." Shakespeare made a unique contribution to Western civilization by putting words together in a way that no human being had before or since, but he was not a pure original. He took many stories, characters, and ideas from other works by other people — which he wouldn't have been able to do if the creators of those previous works had possessed and enforced copyrights.
And what of copyright protection for Shakespeare's own plays? He authored 38 plays without any incentive or protection from copyright law, and he managed to prosper besides. It's difficult to see how copyright would have prompted him to create more. One can imagine, though, that if copyright had existed in Shakespeare's day, he might have spent his some of his time and effort suing people who sold transcriptions of his plays or performed them without permission, and devoted less of his time to writing, and we would all be immeasurably poorer for it.
A rich public domain allowed Shakespeare to become what he was, and it has allowed the world to benefit in turn from Shakespeare. It seems likely that IP rights would only have resulted in less for him to draw upon and less for us to enjoy.
Writers today could make money without copyright even if they're not modern-day Shakespeares. Of course, even with copyright protection, most authors whose names are not Stephen King or J.K. Rowling don't make much money from book royalties. Instead, publishing a book gives an author prestige and opportunities to do other things. Publishing in academic journals (for no pay) creates opportunities to get teaching jobs. Publishing books for a popular audience (usually for low pay) may raise one's profile as an expert and create opportunities to give speeches or do other things for money.
Still, even without copyrights, many authors would make some money from book sales, and some authors would make a lot of money. One reason we can be confident of this is because books by foreign authors did not receive copyright protection in the United States for most of the 19th century, yet the authors made money here anyway. A publisher would pay an author to be the first to receive a copy of the author's manuscript, which would allow the publisher to be first publisher to reach the market with the book.
Even without copyright protection, there is great value in being the first publisher to sell a book. The first publisher will have the market to itself for a while because it will take competitors time to come out with their own editions. Plus, other publishers are unlikely to find it worthwhile to copy that book unless it proves to be a success for the first publisher. Once the first publisher has success, then it might be worthwhile for others to copy and sell it, if they believe they can profitably sell enough additional copies. But in any event the first publisher is likely to reap the biggest profits, especially since books on average make 80 percent of their profits in their first three months.
So that's the 19th century. What about now? In this century, the government gave W.W. Norton the right to be the first to publish the 9-11 Commission Report. As a government work, the 568-page report would immediately enter the public domain, and others would be free to copy and sell it. Despite this lack of copyright protection — and even though the report was also available online for free and downloaded millions of times — Norton's edition of the Report became a bestseller and earned Norton profits approaching $1 million. Two weeks after Norton's edition came out, St. Martin's released its own edition, with additional articles and analysis included, and it too became a bestseller.
Based on this and similar cases, Boldrin and Levine estimate that J.K. Rowling could have received multimillion-dollar advances for later books in her Harry Potter series — not enough, perhaps, to make her one of England's richest women, as copyright protection did, but surely enough to keep her writing.
What about the music industry? Here we know what happens because artists have already effectively lost copyright protection for their recordings as millions of people trade them for free on the Internet instead of buying them. This has simply pushed artists into other ways of making money, especially performances. Even before the Internet age, most rock musicians, even successful ones, made comparatively little from their album sales. So, like books, recordings have been a way for their creators to attract attention and make money through other projects.
In the realm of serious music, many of the great composers' works were never protected by copyright. England began protecting musical compositions with copyright in 1777, yet relatively few composers lived or worked in England after that time, despite England's relative prosperity overall. Beethoven, for one, lived in Germany, which offered no copyright protection, yet he made enough money to survive and felt sufficiently motivated to create some of the greatest musical works ever. Like Shakespeare, pre-IP composers were able to draw on previous composers' works and alter and adapt them freely. Today, that requires permission from copyright holders that may or may not be granted.
Like the record labels, movie studios face rampant piracy, yet they remain in business. This is so in part because people are willing to pay for the experience of seeing a film in a theater; for many people, a DVD or downloaded version is no substitute. This wouldn't change in the absence of copyright. Studios could use contracts, technology, and security to make sure their films are only exhibited in theaters that pay for copies of them. Like book publishers, studios would also profit from being the first to market with a DVD. We could also note, as Boldrin and Levine do, that the pornographic film industry has always thrived and constantly innovated even though it essentially operates outside the protection of IP law because of its lack of social respectability.
Another point that applies to all media is that many people create just for the joy of doing it, without concern for further benefits; no government policy is necessary to "incentivize" them. For example, one of the most important American composers, Charles Ives, spent his days making money as an insurance executive and wrote serious music on the side, for which he received minimal recognition (let alone money) during his lifetime.
Copyrights in general are questionable; the kinds of copyright-term extensions we have seen in recent years are entirely indefensible. The Sonny Bono Copyright Term Extension Act of 1998 (CTEA) increased copyright terms by 40 percent. Copyrights were extended (retroactively) to cover the life of an author plus 70 years, or, in the case of a work for hire, the earlier of 95 years after the date of publication or 120 years after the date of creation. Did this extension create additional incentives for writers, musicians, and filmmakers to produce more? Of course not. What difference does it make to an artist if you extend his or her copyright protection for some number of years long after they're dead?
In fact, economists have determined that the CTEA increases creators' revenue by just 0.33 percent. So copyright extension doesn't benefit artists; instead, it benefits big media companies that own really old properties and don't want to lose them to the public domain. In fact, the CTEA was pushed by one such entity in particular, Disney, which didn't want to lose its copyright on Mickey Mouse.
While copyright extension offers no benefits to anyone but big media, the costs to the rest of society are tremendous. There is no "cultural commons" for creative people to draw from, as Shakespeare did — and as Disney did when it made movies out of stories in the public domain such as Snow White and the Seven Dwarfs, Pinocchio, and Sleeping Beauty. Countless thousands of books, recordings, and software titles go out of print and remain out of print because the rights holders can't be found, refuse to take advantage of their rights, or refuse to release their rights. We are all poorer as a result.
It is also not obvious that patents are necessary to inspire innovation — and there is much reason to believe that they prevent innovation.
If you own a patent on a mechanical rice picker, that means you can stop other people from building a better rice picker that's based on yours. For a number of years, your potential competitors can't legally innovate and improve your product — or at least, if they do, they can't bring their innovation to market without your permission until the patent expires.
At the same time, you don't have much incentive to improve your product because you can just milk your old invention free from competition — enforcing your patents becomes a substitute for research and development. This forces your competitors to waste effort trying to "invent around" your ideas to make competing products, perhaps inferior ones, without infringing on yours. And it also gives you, the patent holder, an incentive to take out a cluster of broadly worded patents for products similar to your own, to discourage others from even trying to enter your field and legally block them if necessary. The potential to infringe on one of these patents and then get sued scares many would-be competitors out of the market.
On the other hand, what if there were no patents? The first person to implement an idea would still receive exclusive benefits for some period of time, because even without patents, it would take a while for the competition to figure out how to imitate the invention and catch up. But competitors probably would figure it out before too long, so the original inventor couldn't rest on his or her laurels. Everyone would have to constantly improve to stay competitive.
We see that idea at work in the many innovations businesses make where patent law doesn't protect them. The people who invented shopping malls, 24-hour convenience stores, supermarkets, fast-food franchising, and the extra-value meal didn't have any exclusive rights to their ideas. Neither do the people who invent perfumes, recipes, clothing designs, furniture, or car bodies. But people do come up with these things because they want outpace their rivals. Without IP privileges, they have to be focused on what they can do to attract and please customers better — not what they can do with the legal system to crush other businesses.
Historically, there have been many cases where patents allowed their holders to stop innovating and to stop others from innovating. Consider the supposedly heroic Wright brothers. They created their first airplane by slightly improving the unpatented ideas of others who came before them, such as British engineer Sir George Cayley and German Otto Lilienthal. Their 1902 patent was for the system of flight control resulting from "wing warping" and the use of a rudder.
Glenn Curtiss improved on the Wright brothers' design by replacing the wing-warping technique with movable control surfaces, the means by which airplanes to this day control their movements. For this, the Wright brothers — who did not sell many airplanes at the time — sued Curtiss to try to stop him from selling airplanes. The Wrights' litigiousness stunted the growth of the aviation industry in the United States as they focused more on suing Curtiss and other competitors than on making better planes. As a result, airplane development then took off in France, where the Wright brothers "had little legal clout."
Another example Boldrin and Levine point out concerns James Watt's steam engine. During the period in the late 18th century that Watt and his business partner, Matthew Boulton, held their steam-engine patent, innovation in steam engines practically ceased. When Jonathan Hornblower built a better engine in 1790, Watt and Boulton sued and stopped him from bringing it to market. Other competitors invented their own improvements, but kept them off the market while waiting out Watt's patent term; they didn't want to be sued like Hornblower.
Watt himself was distracted from improving his product both because he didn't need to do so — he had monopoly protection — and because he was preoccupied with using the legal system against his competitors. As a result, while his patent was in place, the UK added only about 750 horsepower of steam engines per year; in the 30 years after Watt's patent expired, horsepower was added at a rate of more than 4,000 per year. Similarly, fuel efficiency improved little, if at all, during the years of Watt's patent (1769-1800), but increased by approximately a factor of five between 1810 and 1835.
What about pharmaceuticals? Some people argue that we need pharmaceutical patents because drugs require expensive R&D to develop, but then can be cheaply reverse engineered. So, the thinking goes, if we don't give drug makers patent protection, they won't bother to produce drugs in the first place.
Numerous facts undermine this argument. Boldrin and Levine have found that the pharmaceutical industry historically grew "faster in those countries where patents were fewer and weaker." Italy, for one, provided no patent protection for pharmaceuticals before 1978, but had a thriving pharmaceutical industry. Between 1961 and 1980, it accounted for about nine percent of all new active chemical compounds for drugs. After patents arrived, Italy saw no significant increase in the number of new drugs discovered there — contrary, one supposes, to the IP advocates' predictions.
Another fact the conventional view overlooks is that patentable drugs are not the only medical innovations possible. Boldrin and Levine looked to a poll of the British Medical Journal's readers on the top medical milestones in history, and found that almost none had anything to do with patents. Penicillin, x-rays, tissue culture, anesthetic, chlorpromazine, public sanitation, germ theory, evidence-based medicine, vaccines, the birth-control pill, computers, oral rehydration theory, DNA structure, monoclonal antibody technology, and the discovery of the health risks of smoking — of these top 15 entries, only two had anything to do with patents.
Similarly, nothing on the US Centers for Disease Control's list of the top ten public-health achievements of the 20th century had any connection to patents. And even a review of the most important pharmaceuticals reveals that many came about without the motive and/or possibility of acquiring a patent, including, for example, aspirin, AZT, cyclosporine, digoxin, ether, fluoride, insulin, isoniazid, medical marijuana, methadone, morphine, oxytocin, penicillin, Phenobarbital, prontosil, quinine, Ritalin, salvarsan, vaccines, and vitamins.
Patent law does create one incentive for researchers: to pursue more of the kind of research that will lead to patentable drugs, and less of the kind of research that might lead to other types of breakthroughs that cannot be patented — even though, as we've just seen, the latter kind may be some of the most important. If patent law were abolished, we would probably see fewer artificial chemical drugs and more discoveries related to remedies from natural substances such as vitamins, minerals, and plants. Given the harmful side effects of many prescription drugs, it is not at all obvious that this would be a bad thing.
Boldrin and Levine also show that patents are not essential to success in the pharmaceutical industry by pointing to the analogous paint and dye industries (which also depended on chemical formulas) in the 19th century. Germany offered no patent protection for paints and dyes at all until 1877, and even then only for the process involved in producing them, not for the products themselves. Nonetheless, German companies' market share rose from next to nothing in 1862 to 50 percent in 1873 and 80 percent in 1913. Britain and France, on the other hand, had patent protection for both products and processes all along and saw their market shares fall from about 50 percent and 40 percent, respectively, in 1862 to between 13 and 17 percent in 1873. The Germans eventually benefited from patents, but it's clear that patents were not essential to their rise to the top.
Costs and Benefits
So we've seen that copyrights and patents have costs that most people don't think about. How to balance this against their benefits? Austrian economists would say this is impossible. Costs and benefits are subjective; they exist inside people's heads and cannot be measured or compared to each other to find out what is economically optimal. The only way to know what is optimal is to look at what people actually do in the marketplace through their voluntary choices using their own actual tangible property. Because IP rights by their nature interfere with private property and voluntary exchange, they necessarily move us away from what is optimal.
Putting aside that problem, any attempt by non-Austrian economists to measure the costs and benefits of IP will necessarily leave out countless important factors. One such factor is human liberty. Even if we could determine that IP makes us materially better off in some respects — in terms of economic growth or the number of different products produced, for example — IP laws require a government empowered to interfere with individuals' peaceful use of their own property. You don't have to believe in natural rights to value liberty and view its loss as a high cost.
Still, even if you measure IP's effects just in terms of economic growth — a rough measure of prosperity — economists are mostly undecided as to whether IP has even made this greater than it otherwise would be. Boston University law professors James Bessen and Michael J. Meurer have found that "intellectual property rights appear to have at best only a weak and indirect relationship to economic growth, the relationship appears to apply only to certain groups of countries or certain specifications, and the direction of causality is unclear." This last point is critical. To the small extent that patents may show a correlation with economic growth, we can't even say whether patents caused the growth, or if the growth caused people to pursue patent protection.
The End of IP
Libertarians may not have to appeal to rights theory, economics, or history to win the war on IP. Libertarians are already winning as people around the globe incessantly violate the legal rights of copyright holders by sharing music through bit-torrent programs and by uploading (and remixing and mashing up) videos of copyrighted material to YouTube without the slightest feeling of guilt.
People cheered the Swedish proprietors of the Pirate Bay website as they went on trial for helping people freely trade music, movies, and software. (The Pirate Bay's anti-IP, proprivacy views are so popular that they have even inspired a Pirate Party that has won one of Sweden's seats in the European Parliament.) As the RIAA and MPAA crack down on file sharers and website operators with ever bigger threats, these organizations only look more like villains to the young people who have always operated under the assumption that they should be allowed to do as they please with their own computers as long as they don't invade anyone else's.
More thinkers outside of libertarianism are challenging IP, too. Lessig and others in the "free-culture" movement have informed a large audience of how lengthy copyright terms and other especially oppressive aspects of IP impoverish us, and how an ever-growing "cultural commons" (public domain) would enrich us. Through the Creative Commons license invented by Lessig, people are deliberately giving up their exclusive rights under copyright law because they believe IP isn't in their interests as creators and they want their ideas to spread.
Michele Boldrin and David K. Levine, Against Intellectual Monopoly. New York: Cambridge University Press, 2008. This is the utilitarian case against IP. The authors make the case that intellectual property is not necessary to spur creativity and innovation. Their evidence and arguments go far beyond what is presented in this chapter. This book is available here.
N. Stephan Kinsella, Against Intellectual Property. Auburn, Ala.: The Ludwig von Mises Institute, 2008. This is the rights-based case against IP. Kinsella shows how intellectual property is antithetical to true private property rights.
Lawrence Lessig, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity. New York: Penguin, 2004. Lessig is not a libertarian, and he supports IP in principle, but his book shows how ever-lengthening copyright terms enrich powerful interests at our great cultural expense.
 For these stories, see David Kravets, "Feds Support $1.92 Million RIAA File Sharing Verdict," Threat Level, August 14, 2009; Lawrence Lessig, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity (New York: Penguin, 2004), pp. 213-45; Rob Kelley, "BlackBerry Maker, NTP Ink $612 Million Settlement," CNNMoney.com, March 3, 2006.
 Lessig, p. 118.
 Quoted in Ibid., p. 117.
 Ayn Rand, "Patents and Copyrights," in Ayn Rand, Capitalism: The Unknown Ideal (New York: Signet, 1967) pp. 130–34.
 Rothbard's ideas on IP are presented in Murray N. Rothbard, Man, Economy, and State (Auburn, Ala.: Ludwig von Mises Institute, 1993 ), pp. 652–660; Murray N. Rothbard, Power and Market: Government and the Economy 4th ed. (Auburn, Ala.: Ludwig von Mises Institute, 2006 ); Murray N. Rothbard, The Ethics of Liberty (New York: New York University Press, 1998 ), pp. 123–24.
 Kinsella has not been alone. See also, for example, Roderick T. Long, "The Libertarian Case Against Intellectual Property Rights," Formulations 3, no. 1 (Autumn 1995); Wendy McElroy, "Contra Copyright," The Voluntaryist (June 1985) pp. 1-3; Tom G. Palmer, "Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects," Harvard Journal of Law and Public Policy 13 (1990) pp. 817-65; Timothy Sandefur, "A Critique of Ayn Rand's Theory of Intellectual Property Rights," Journal of Ayn Rand Studies 9:1 (Fall 2007), pp. 139-61.
 Tom W. Bell, "Indelicate Imbalancing in Copyright and Patent Law," in Adam Thierer and Clyde Wayne Crews, Jr., eds., Copy Fights: The Future of Intellectual Property in the Information Age (Washington, D.C.: Cato Institute, 2002), p. 4 (internal footnotes omitted, emphasis added).
 "Trade secrets" — a relatively minor part of IP law — may present a special case. If a third party induces someone to give away a company secret, they may be considered liable in the same way that a co-conspirator to any wrongdoing is jointly liable. See Kinsella, pp. 56-57. Perhaps someone who induced a contractual-copyright breach could be held liable as well — but this still would not be enough to stop the information from getting out, so the attempted copyright protection wouldn't really be effective.
 Epstein argues that IP rights can be considered property rights, and has attempted to tie Locke's system to utilitarianism and IP. See Richard A. Epstein, "Liberty versus Property? Cracks in the Foundations of Copyright Law," San Diego Law Review 42 (2005), p. 1.
 Tom G. Palmer, "Intellectual Property: A Non-Posnerian Law and Economics Approach," Hamline Law Review 12 (1989), p. 302.
 Ibid., p. 141.
 Ibid., p. 25.
 Ibid., pp. 187-89.
 Boldrin and Levine, pp. 36-38.
 Ibid., p. 101.
 Ibid., p. 31.
 Rothbard, Man, Economy, and State, p. 657.
 Julio H. Cole, "Patents and Copyrights: Do the Benefits Exceed the Costs?" Journal of Libertarian Studies 15:4 (2001), p. 92; Rothbard, Power and Market, p. 90.
 Bell, "Indelicate Imbalancing in Copyright and Patent Law," p. 9.
 Boldrin and Levine, pp. 87-88, 206-07.
 Ibid., pp. 1-5.
 Ibid., p. 246.
 Ibid., pp. 222-23.
 Ibid., p. 229.
 Ibid., p. 230.
 Cole, p. 93; Rothbard, Man, Economy, and State, p. 658.
 Ibid., pp. 218-19.
 See Murray N. Rothbard, "Toward a Reconstruction of Utility and Welfare Economics" in Mary Sennholz, ed., On Freedom and Free Enterprise: The Economics of Free Enterprise, (Princeton, N.J: D. Van Nostrand, 1956); Rothbard, Power and Market, pp. 89-92.
 James Bessen and Michael J. Meurer, "Of Patents and Property," Regulation (Winter 2008-09), pp. 22.