Power & Market

Intellectual Property Protection Should Be Closer to Morally Optimal for Everybody

Intellectual Property Protection Should Be Closer to Morally Optimal for Everybody

What makes an entity a property that can be owned is morality.

At 2 years old, children see their possessions as extensions of themselves. At 3 years old, children discover the value of voluntarily exchanging possessions with others. By 5 years old, children start factoring in what others might feel and think when others trade with them. Children gain a sense of fairness and a sense of justice.

Moral intuition filters perceptions, incorporates conscious processing, and pursues motivations, as informed by emotions, all to optimally control actions. This thinking and feeling is done in physical bodies using these bodies’ physical components.

When dealing with physical possessions, we have intuition about who owns them. To improve a resource, its developer invests time—which amounts to a portion of his liberty—or invests property. We sense that it’s fair and just, and moral, to consider the product this developer’s property.

But with electronic copies of intellectual property, our intuition is different. The electronic original isn’t a physical entity. It doesn’t get taken away from its owner. The copy isn’t produced by physical action by the person who created the original, and meanwhile in a subtle reversal, the copy is produced by physical action by the person who makes the copy.

These differences in the various entities’ physical relationships to the various people’s physical bodies may be enough to change more than a few people’s moral assessments. But there’s more to consider too.

People nearly universally treat physical property as being owned, and treat takings as theft. As a result, enforcement can treat physical property inefficiently and the price is still modest compared to the overall value that people create when they voluntarily produce, sell, and buy physical property.

But people don’t as-universally treat electronic copies of intellectual property as being owned by the originals’ owners, and treat copying as theft. As a result, enforcement would need destructively-high prices and punishments. To bypass this, enforcement is more lax and arbitrary.

When dealing with a trade secret like a recipe for Coca-Cola, the same group invests liberty or property not only to create the secret but also to keep it secure. People nearly universally treat a trade secret as this exclusively-investing group’s property.

But with a grant of intellectual property—a drug molecule’s composition, a process, the information content in copies of a text or artwork, or a trademark—a group invests liberty or property to create a property, but then governments take property from everyone to keep this grant secure.

Further, independent creation or use of such a property gets blocked. This blocking is not obviously morally right. Intellectual property, like everything that’s created, is built up almost entirely using proven components created by others. The vast majority of these proven components get incorporated without royalties being paid.

By getting themselves involved, government people position grantees to seize even-greater privileges. Intellectual property owners are concentrated interests, who stand to gain or protect sizable portions of their incomes. In contrast, customers are diffuse interests, who stand to gain only small portions of their incomes. Creators and owners can readily pay to play. No one else can.

As a result, using the current laws in the USA as an example, trade secrets are owned forever. Trademarks are government-protected forever. Copyrights get government-protected until 70 years after their authors die. Patents get government-protected for 20 years. In practice, even slight variations can get patented and government-protected for another 20 years. Also, the patent grantees don’t get required to disclose all of the business knowledge needed to monetize the protected products, which includes extensive, developing knowledge of the product in the areas of research and development, quality control, consumer testing, marketing, and customer support.

It’s intuitive to protect people who invest their liberty and property to develop intellectual property. But it’s intuitive to also protect the people who pay with their property to create this protection, and it’s intuitive to also protect the people who contribute their own legacy knowledge.

Across most of history, government people granted no monopolies, or very few. Even so, people still developed a great diversity of processes, tools, and products. Developers still earned first-mover advantages. Producers didn’t compete to be protected from competition and disclosure, producers competed to provide superior products and customer support. Customers and producers added more value and received more value.

Comparatively recently in history, government people have granted more monopolies. As they have, they’ve protected cronies and no one else. Where they have, further development of products, tools, and processes has slowed to a crawl or has stalled out. International harmonization of intellectual property protection has made this inescapable, by eliminating natural experiments that would at least leave the people in some nations more-morally protected.

The time is long overdue to stop divvying out grants that continue for destructively-long durations, and that don’t, in exchange, require comprehensive disclosures.

To better approach optimal intellectual property protection, the next approximations should be one or the other of these two options:

  1. Limited grants

Grant copyrights and patents summarily and quickly, to disrupt progress less.

Grant patents only if the grantees provide open access to all business data on the monopoly-protected products, and only as long as the grantees maintain open access to all business data as this continues to develop.

Limit copyright and patent durations so they disrupt progress less—say, only 10 years, or 5 years, or 3 years. Keep trademarks perpetual.

  1. No grants whatsoever

Offer all cronies, as a class, only this one alternative—take it or leave it.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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