President Obama made the overhaul of America’s patent law a personal priority, including it prominently in his January 2011 State of the Union address. The America Invents Act was signed into law on September 16. The key change is a switch from “first to invent” to “first to file.”

Critics and advocates overwhelmingly focus on the practical implications of the Act. Fundamental questions about patents are rarely raised. These questions include: What is a patent? Do patents express a natural right or a governmental grant of monopoly?

What Is a Patent?

Patents and copyrights protect what is called “intellectual property.” A patent is an ownership claim to the expression or implementation of an idea. If the idea is an original expression – for example, music – the ownership claim is called copyright. If it is expression through implementation – for example, an improvement to a machine — the claim is called a patent. The holder of a patent can prevent anyone else from identically implementing the same idea. At its root, controversy over intellectual property is about freedom of expression and when it can be properly restricted.

Patents and copyright quickly part company. The most famous libertarian to make a sharp distinction between the two was the single-tax champion Henry George. He rejected the former and embraced the latter.

Why? In his periodical The Standard (June 23, 1888), George explained his objection to patents, “No man can justly claim ownership in natural laws, nor in any of the potentialities which nature hold for it.” A patent involves identifying and using a law of nature or a fact of reality, neither of which have been created by the discoverer.

Discovery versus Production?

George distinguished between two forms of labor involved in invention. The first was the mental labor of working out operating principles: discovery. The second form was the construction of a specific machine or implementation: production.

Since the principles discovered were preexisting – such as how X amps of electricity react to Y ohms of resistance — they  should be available for anyone to use and not monopolized by one man. To the argument that specific implementations – such as voltmeters — did not exist in nature and so could be patented, George replied that the principles on which machines operated were intrinsic in nature. A windmill expresses how the force of wind pushing against a particular surface can produce power. Thus every patent amounts to an ownership claim over an expression of nature and the logic of its application. A man could own a specific windmill he produced but he could not prevent others from similarly producing their own windmills.

This is a common distinction between patents and copyright. Patents are an ownership claim over preexisting natural laws and their implementation; copyright is a claim to “goods” with no preexistence.

Simultaneous Discovery

Another argument against patents is that they violate the rights of a simultaneous inventor. Two people can plausibly invent the same thing independently and at nearly the same moment; hence it is not proper for only one to have a monopoly.

Fields of endeavor can reach a stage where certain breakthroughs become almost inevitable. Then it is not uncommon for people independently to develop extremely similar applications. The most famous example may be calculus, developed by both Newton and Leibniz.

This objection to patents was expressed by the nineteenth-century libertarian Benjamin Tucker: “The central injustice of . . . patent laws is that it [sic] compels the race to pay an individual through a long term of years a monopoly price for knowledge that he has discovered today although some other man . . . in many cases very probably would have discovered it tomorrow.”

Obama’s patent “reform” trades one injustice for another. Formerly the first to invent won the patent, even if someone else indisputably did the same thing independently. Now the first to file for a patent will win, similarly excluding independent inventors – not to mention anyone else who tries to use the natural principles as embodied in the invention.

Roots of Patent

Historically patents were grants of privilege awarded by a ruler to his favorites or to those willing to pay bribes. America broke precedent. Article I, Section 8 of the Constitution states, “Congress shall have the power . . . to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The original American patent law thus extended protection in order to encourage innovation. However, one might say that it simply changed the criterion by which monopoly privilege would be granted.

Whether you agree with that original purpose or believe (as I do) that all patents are improper, the America Invents Act is repellent. By granting patents to those who merely file first rather than invent first, Obama further advantages State-privileged corporations with their massive research funds and lawyers, and takes a huge step backward toward the days of patents as royal privileges.

Jones invents (and patents) the wheelbarrow and uses it on his land. He intends to produce this great new device and sell it to a world that eagerly awaits it. Smith lawfully walks by Jones’s property and watches him using the wheelbarrow, realizing this is something no one has ever seen before. If Smith goes home and, using her own materials and labor, makes a wheelbarrow from the mental image stored in her mind, what has she taken from Jones? Smith’s mental image is hers. One could say it is the result of her own mental labor (observing, understanding, remembering). When she acquired it, in no way did she interfere with Jones’s access either to his physical wheelbarrow or his mental image of it. Jones had what he started with. That’s how it is with ideas. (Bear in mind that under current law Smith is guilty of patent infringement even if she never saw Jones’s wheelbarrow. Do not assume that patents are primarily about prohibiting copying.)

Smaller Profits

But, someone will object, if Smith competes with Jones in selling wheelbarrows, Jones’s profits will likely be smaller than if the government were to stop Smith from competing in that market.  (That’s what patents and copyrights boil down to.) True enough. But now the subject has changed. Instead of talking about property rights in the product of one’s labor, we’re talking about property rights in economic value or potential profits. How can one own economic value? It’s in the eyes of beholders. How can one own yet-to-be-made profits?

But, our critic might say, those profits would have been made had Smith not done what she did. We’re back to square one. What did she do? Again, she used her labor and materials to build a wheelbarrow based on a image in her mind. That image was there as a result of nonaggressive action. Had she broken into Jones’s home, Jones would have a cause of action for burglary. But Smith committed no burglary in our story. Had a contract existed between the two parties with respect to the wheelbarrow, perhaps a breach occurred. That’s also not part of this story. The burden of proof would seem to be on anyone who thinks a rights violation took place.

My example may be rejected because Jones obviously took no precaution against people seeing his wheelbarrow. I think that objection fails. If he owns the very idea wheelbarrow (which is the implication of a patent), why should he have to take such a precaution? Lysander Spooner, who pushed the case for IP as far as it can be pushed, wouldn’t have thought so. If Jones leaves the keys in his car, that certainly would not be a valid defense for a car thief.

Slave Labor

In a recent discussion about copyright, my interlocutor suggested that the unauthorized publishing of a book in effect makes a slave of the author because the publisher profits off the author’s labor without consent. But that begs the question by assuming what is in dispute, namely that the publisher took something that belongs to the author. But what? The intangible book is an arrangement of words, however imaginative or novel. It’s hard to see how that can be owned. (We’ve already dealt with the lost-profits argument.) Of course there is nothing to stop fans of the author from launching a campaign to encourage people to buy the authorized edition. (J. R. R. Tolkien launched such a campaign for himself when The Lord of the Rings was issued in an unauthorized paperback.)

(I do not concede, by the way, that absent copyright, authors would suffer great hardship in the free market. Copyright advocates assert without good grounds that duplicating artistic works and complicated inventions is necessarily a low-cost and automatically lucrative endeavor, which is by no means the case. But that subject is for another time.)

The “slave labor” objection in fact proves too much. If Jones creates a new market by offering a novel product, is he exploited if Smith caters to that same market with a similar yet sufficiently different product? (Apple created a market with the iPod, but soon competitors came along that presumably did not violate Apple’s patents.)

Plagiarism

Finally, it is curious that the first thing that occurs to people on first hearing the anti-IP case is plagiarism: “You mean it would be okay for someone to take an author’s work, put his own name on it, and sell it?”

Two issues are conflated here. One can plagiarize without violating a copyright, and one can violate a copyright without plagiarizing. Under copyright law you may use brief verbatim excerpts of another’s written work without permission as long as you use quotation marks and attribute the text to the author. It’s called “fair use.” (Question for copyright fans: Isn’t even fair use a violation of an author’s rights?) If you were to use an excerpt that otherwise would qualify under the fair-use principle but without attribution, you would be guilty of plagiarism but not copyright violation. The same would be true if you quote Shakespeare without attribution. (Shakespeare wrote without benefit of copyright.)

On the other hand,  if you publish Atlas Shrugged with Ayn Rand’s name on it, you would be guilty of copyright violation but not plagiarism.

For the sake of clear thinking, let’s keep these issues separate.

Well, is plagiarism okay? No, it’s not! Obviously it is dishonest and dishonorable to represent someone else’s work as one’s own. But note, according to LegalZoom, “plagiarism is not a criminal or civil offense.” Nor should it be. It’s a breach of good conduct, and there is a plentitude of nonviolent, non-State ways to deal with it, especially in the Internet age.

But are they? There are good reasons to think that IP is not actually property—that it is actually antithetical to a private-property, free-market order. By intellectual property, I mean primarily patent and copyright.

It’s important to understand the origins of these concepts. As law professor Eric E. Johnson notes, “The monopolies now understood as copyrights and patents were originally created by royal decree, bestowed as a form of favoritism and control. As the power of the monarchy dwindled, these chartered monopolies were reformed, and essentially by default, they wound up in the hands of authors and inventors.”

Patents were exclusive monopolies to sell various goods and services for a limited time. The word patent, historian Patricia Seed explains, comes from the Latin patente, signifying open letters. Patents were “open letters” granted by the monarch authorizing someone to do something—to be, say, the only person to sell a certain good in a certain area, to homestead land in the New World on behalf of the crown, and so on.

It’s interesting that many defenders of IP—such as patent lawyers and even some libertarians—get indignant if you call patents or copyright a monopoly. “It’s not a monopoly; it’s a property right,” they say. “If it’s a monopoly then your use of your car is a monopoly.” But patents are State grants of monopoly privilege. One of the first patent statutes was England’s Statute of Monopolies of 1624, a good example of truth in labeling.

Granting patents was a way for the State to raise money without having to impose a tax. Dispensing them also helped secure the loyalty of favorites. The patentee in return received protection from competition. This was great for the State and the patentee but not for competition or the consumer.

In today’s system we’ve democratized and institutionalized intellectual property. Now anyone can apply. You don’t have to go to the king or be his buddy. You can just go to the patent office. But the same thing happens. Some companies apply for patents just to keep the wolves at bay. After all, if you don’t have patents someone might sue you or reinvent and patent the same ideas you are using. If you have a patent arsenal, others are afraid to sue you. So companies spend millions of dollars to obtain patents for defensive purposes.

Large companies rattle their sabers or sue each other, then make a deal, say, to cross-license their patents to each other. That’s fine for them because they have protection from each other’s competition. But what does it do to smaller companies? They don’t have big patent arsenals or a credible countersuit threat. So patents amount to a barrier to entry, the modern version of mercantilist protectionism.

What about copyright? The roots literally lie in censorship. It was easy for State and church to control thought by controlling the scribes, but then the printing press came along, and the authorities worried that they couldn’t control official thought as easily. So Queen Mary created the Stationer’s Company in 1557, with the exclusive franchise over book publishing, to control the press and what information the people could access. When the charter of the Stationer’s Company expired, the publishers lobbied for an extension, but in the Statute of Anne (1710) Parliament gave copyright to authors instead. Authors liked this because it freed their works from State control. Nowadays they use copyright much as the State originally did: to censor and ban books. (More below.)

IP, American Style

The American system of IP began with the U.S. Constitution. Article 1, Section 8, Clause 8 authorizes (but doesn’t require) Congress “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Despite modern IP proponents’ claims to the contrary, the American founders did not view intellectual property as a natural right but only as a policy tool to encourage innovation. Yet they were nervous about monopoly privilege, which is why patents and copyrights were authorized only for a limited time. Even John Locke, whose thought influenced the Founding Fathers, did not view copyright and patent as natural rights. Nor did he maintain that property homesteading applied to ideas. It applied only to scarce physical resources.

Granted, some state constitutions had little versions of copyright before the American Constitution. (See Tom W. Bell, Intellectual Privilege: Copyright, Common Law, and the Common Good, part 1, chapter 3, section B.1.) On occasion, the language of natural rights was used to defend it, but this was just cover for the monopolies they granted to special interests. Natural rights do not expire after 15 years. Natural rights are not extended to Americans only. Natural rights wouldn’t exclude many types of innovation and intellectual creativity and cover only a few arbitrary types.

And what is the result of this system? In the case of patents we have a modern statute administered by a huge federal bureaucracy that grants monopolies on the production and trade of various things, which means holders may ask the federal courts to order the use of force to stop competitors. But the competitors have not done anything that justifies force. They merely have used information to guide their actions with respect to their own property. Is that compatible with private property and the free market?

Examples of Censorship

In the case of copyright the result has been actual censorship, as recent examples will show. According to Engadget, Russian authorities, with Microsoft’s approval, used IP law as a “pretext for seizing computers and other materials from political opponents of the government and news organizations.” In another case Susan Boyle, the English singer from Britain’s Got Talent, was prevented from singing a Lou Reed song on America’s Got Talent because of copyright. Then there was the case in which a 1922 German silent film, Nosferatu, was deemed a derivative work of Bram Stoker’s Dracula and ordered destroyed.

One of the most outrageous cases concerns the novel Sixty Years Later, Coming Through the Rye, Frederik Colting’s sequel to J. D. Salinger’s The Catcher in the Rye. Salinger got the courts to ban publication of the book on copyright grounds. “I am pretty blown away by the judge’s decision,” Colting said. “Call me an ignorant Swede, but the last thing I thought possible in the U.S. was that you banned books.”

These examples will be dismissed as abuses of an otherwise good law, but it’s the law itself that is the abuse.

Although natural rights are often invoked, the most common argument for IP, even among libertarians, is utilitarian, or “wealth-maximization,” which was the approach of the Founding Fathers: IP monopoly encourages innovation and therefore creates net wealth. In other words, the benefits outweigh the costs.

No doubt the patent system imposes costs on American society. I’ve estimated the net cost at $38–48 billion a year, and this is probably conservative. The costs include patent attorney salaries, fees, litigation, increased insurance premiums, and higher-priced products—plus innovation and research lost when companies concentrate on patentable innovations and allocate fewer resources to more basic scientific research, or when an entire field is avoided for fear of patent-infringement lawsuits.

Anyone who argues that patents yield a net gain is obliged to estimate the total cost (including suppressed innovation) as well as the value of any innovation thereby stimulated. But IP proponents never provide these estimates. I’m no empiricist—my opposition to IP is based on principles of justice and property rights—but IP advocates make the empirical claim that we are richer because of the patent system. They say we have more innovation at a low price. Yet virtually every empirical study I’ve seen on this matter is either inconclusive or finds a net cost and/or a suppression of innovation. (I ignore here the valid Austrian objection that costs and benefits are subjective and not measurable.)

Thus a good utilitarian would have to conclude that patent and copyright laws are harmful.

Creation

Some IP advocates do make a serious natural-rights case on the grounds that the innovator has created some new, valuable thing—a song, a painting, a novel, or an invention. Because he created it, the argument goes, he is its natural owner. But this conflates the source of property rights with the source of wealth. As Ayn Rand—a strong proponent of IP—recognized (in “The Metaphysical Versus the Man-Made,” Philosophy: Who Needs It):

The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power—and it is the only meaning of the concept “creative.” “Creation” does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. “Creation” means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.

In other words, individuals create wealth by using their intellect, creativity, and labor to transform already owned scarce resources into more valuable configurations. In a free society a producer owns the resulting products because he owned the factors transformed in the production process. The idea behind production adds nothing to the ownership claim that wasn’t already present.

Control of Physical Property

In fact, assigning property rights in ideas and other immaterial things, such as patterns or recipes, ends up restricting other people’s rights to control their physical property. Copyright and patent holders thus become, in effect, co-owners of others’ property, courtesy of the State. This is illustrated in the copyright censorship examples provided. And it is seen in cases where a patentee uses the courts to shut down competitors.

Another way to understand the error in treating information, ideas, and patterns as property is to consider IP in the context of human action. Ludwig von Mises explained in The Ultimate Foundation of Economic Science that “[t]o act means: to strive after ends, that is, to choose a goal and to resort to means in order to attain the goal sought.” Knowledge and information of course play key roles in action. As Mises puts it, “Action . . . is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means” (emphasis added).

Moreover, “[m]eans are necessarily always limited, i.e., scarce, with regard to the services for which man wants to use them.” This is why property rights emerged. Use of a resource by one person excludes use by another. In contrast, ownership of the information that guides action is not necessary for performing the action. Two people who each own the ingredients can simultaneously make a cake with the same recipe.

Material progress is made precisely because information is not scarce. It can be infinitely multiplied, learned, taught, and built on. The more patterns, recipes, and causal laws that are known, the greater the wealth multiplier as individuals engage in ever-more efficient and productive actions. It is good that ideas are infinitely reproducible. There is no need to impose artificial scarcity on ideas to make them more like physical resources, which—unfortunately—are scarce. As Frédéric Bastiat observed, “All innovation goes through three stages. One possesses unique knowledge and profits from it. Others imitate and share profits. Finally, the knowledge is widely shared and no longer profitable on its own which thereby inspires new knowledge.”

Patents artificially prolong the first stage at the expense of the others. Thus, IP is inimical to progress, prosperity, and freedom.

Specifically, the agreement extends intellectual property protections by ensuring copyright holders have the exclusive right to publish their works online. It also bans the hacking of technology used to protect copyrighted work from unauthorized duplication.

The agreement also addresses online piracy, strengthens copyright enforcement by criminalizing end-user copyright theft, outlaws the use of camcorders in cinemas and provides law enforcement the necessary authority to seize and destroy counterfeit goods and the equipment used to produce them. The entertainment industry believes that authority will dissuade counterfeiters from using South Korea as a conduit for their illegal trade.

Once again “free trade” is being used to obscure a U.S. government effort to pressure other countries to adopt stringent American-style “intellectual property” laws, which attempt to control the dissemination of information. Not only is IP becoming increasingly more difficult to enforce as the price of technology falls, IP is completely at odds with the spirit of freedom and liberalism, and requires that the individual right to physical property be violated by government. That’s right, the U.S. government is exporting bigger government to other countries — at the behest of powerful business interests.

For articles on the case against IP, see:

“How ‘Intellectual Property’ Impedes Competition” by Kevin Carson

“Open-Source Software: Who Needs Intellectual Property” by Michele Boldrin and David K. Levine

“Fashion Design and Copyright” by Edward J. Lopez

“Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine” by Michele Boldrin, David K. Levine, and Alessandro Nuvolari, and

“Intellectual ‘Property’ Versus Real Property” by Sheldon Richman

To the Editor:

Although I don’t see any flaws in your arguments about the theory of free trade in your column for the April 2004 issue of The Freeman, you should at least acknowledge the distortions in most any nation’s economy because of government intervention and direction. Because of that government involvement, I question whether we really can have free trade in the world today.

Just because jobs move to other countries where tasks can be done more cheaply than in this country does not necessarily mean that it’s because of the working of the free market. In fact, that is certainly not the case. Most, if not all, countries subsidize their industries so that they can compete with American companies or, in some cases, overtake and replace them. . . . For example, Japan set up national industrial policies to subsidize their electronics and steel industries specifically so they could overtake the U.S.’s. . . . [T]hat’s also why Japan’s economy has been stagnant for the past ten or so years. . . .

One may discuss the ability of governmentsubsidized goods to cross borders freely; but free trade? It can’t exist under the current state of political control of economies. Let’s remove the controls in our own country first, then talk about free trade.
—JOE OGRINC
Bratenahl, Ohio

Sheldon Richman replies:

My article did what is suggested in the letter: “[T]he mixed economy creates problems that appear attributable to international trade. . . . Finally, the doomsday scripts written by the free-trade skeptics confuse the effects of trade with those of pervasive government intervention in the economy. Yes, free trade requires people to make adjustments. Here’s how the government can help: cut spending, slash and repeal taxes, abolish regulations, and move to market-based money.”

Even if foreign competitors are subsidized to the extent that most people think, why is it assumed that shelter from competition would make those firms efficient? We should expect just the opposite. Japan’s record of helping industry has been unspectacular, despite impressions to the contrary. Foreign subsidies are indeed unjust to the taxpayers who have to provide them, but they do not violate free-trade principles per se, which merely call for borders open to goods and services.

Was Mises Right about Copyrights?

To the Editor:

In the June issue, Bettina Bien Greaves explored Ludwig von Mises’s opinions on copyrights and patents, and finds that Mises gave at least tacit approval of them. I thank her for bringing our attention to this issue. Her article shows that even the greatest minds can sometimes fall for popular fallacies. At least Mises recognized that copyrights and patents are monopolies created and enforced by a government.

One of the fastest growing areas of the economy today is in works, such as Linux, which are explicitly put in the public domain by the inventors so that they can continue to benefit from progress in technologies necessary for their work without impediment of copyrights and patents. Sharing technology improves efficiency and standardization, especially in favor of those who share that technology. This flies in the face of Mises’s conjecture that if factor fis needed for product g, and f does not attain any price at all, then production of f might need a government monopoly for g to be available. . . .

Mrs. Greaves says, “if the government is to protect property, it must define that property.” I think that such definition might be unsupportable and contrary to natural law. In natural law, a property right is authority to decide how some thing is used. This right is natural, because no two people can use the same thing at the same time. With a patent, one has the pledge of the government that it will assault someone who is imitating one’s patented methods. An unlimited number of people can imitate a method; and very likely no one will know about the vast majority of imitations. So, I find it difficult to call a patent something that can be owned in the same sense that physical property can be owned. To the extent that the government uses patents and copyrights to justify restricting the use of one’s mind, skills, and desired use of property, patents and copyrights involve government violation of property rights rather than protection of the same.

Mrs. Greaves notes that James Madison included copyrights and patents in the U.S. Constitution. However, the writers of the Constitution did so with hesitation, and Thomas Jefferson had serious concerns that merited several letters to James Madison. (See Copyrights and Copywrongs by Siva Vaidhyanathan, 2001.) It is also not at all clear to me that Madison’s inclusion within property rights of “opinions and the free communication of them” meant copyrights and patents. . . .
—JOSEPH D. RUDMIN
rudminjd@cisat.jmu.edu
Harrisonburg, Va.

To the Editor:

Bettina Greaves’s scholarly article on how Mises viewed copyright and patents fulfills the limited objective set by its title, but unfortunately leaves open the question of how those issues might be resolved in a properly free society; that is, one burdened by no irrational presumption that any solution must be furnished by a government.

Supposing that we can bring about such a society, the questions of how composers, writers, and inventors could protect their intellectual property becomes surprisingly simple: for the only “rule” applying would be that no obligations exist except those undertaken voluntarily by contract — that being an alternative expression of the nogovernment premise. Thus if Mrs. Greaves ad written a masterpiece on economics, she would consider whether or not it should be published, hopefully bringing her rich rewards as customers buy copies. If so, she would specify simple terms of contract governing each and every sale; they would include a clause that says the buyer may not under any circumstances copy the work.

Should a buyer subsequently break that contract and sell knockoffs of a work he does not own, he would be made to compensate the author. . . . A powerful deterrent, to be enforced of course by a freemarket justice system.

Similar terms would restrict those who broadcast music and who listen to it, and those who place CDs on the Internet, etc. There would be neither need for nor possibility of “laws”—which are, being no more than one-sided contracts, hopelessly inadequate.
—JIM DAVIES
jimdav@copper.net
Newbury, N.H.

Bettina Bien Greaves replies:

Mr. Rudmin’s criticism, as I see it, consists of three major points. He suggests that (1) by endorsing copyrights and patents, Mises fell for a “popular fallacy”; (2) to the extent that patent and copyright laws prevent individuals from copying a patented device or process, they restrict individuals from using their minds and skills; and (3) government violates “natural law” when it defines property more precisely than to say that “a property right is authority to decide how some thing is used.”

One may or may not agree with Mises on copyrights and patents. Perhaps he did fall prey to mainstream thinking. After all, the stand one takes is a value judgment, not a question of right or wrong or scientific law. Mises gave the subject serious thought and he agreed pretty much with the view, expressed in the Constitution, that copyrighting written works and patenting inventions would help “To promote the Progress of Science and useful Arts.” It is certainly correct to say that “a property right is authority to decide how something is used.” However, this is not a sufficient definition. All property originates from self-ownership, appropriation, and occupation of unused natural resources, production, exchanges, and gifts. However, it is not “natural law” that determines what is private property in today’s complex division of labor economy. Market participants etermine what is property by trading and by the terms in their contracts. They are continually exchanging goods and services in line with mutually agreeable terms, and ownership is continually shifting. If differences and misunderstandings arise concerning the terms of a contract, it is up to the courts to settle such disputes and assure that each market participant receives the property that is his due. And that is not always easy, even in the case of physical property. In some cases the courts — the government — must even define property and decide to whom it belongs.

I do not agree that government uses patents and copyrights to justify restricting the use of mind, skills, and property. What the patent gives the creator of an invention (a “practical application” of a principle, not the principle itself) is the exclusive right — for a certain period — to make reproductions to sell or to lease to others, or to authorize others to construct and operate the invention. The patent application is public, and its information may save would-be inventors the trouble of doing their own research and enable them to develop a new invention that they can then patent.

In response to Mr. Davies, what the copyright accomplishes is to define a new literary or musical creation as more than a physical object comprising sheets of paper with printing on them, which may be disposed of as the owner wishes. The copyright recognizes a property right of the creator not in the ideas presented, but “in the form or expression of ideas.” This gives the creator “the exclusive right to reproduce the work, prepare derivative works, or to perform or present the work publicly.” Thus once a work has been copyrighted, its “form or expression of ideas” attains special status as “property.”

[I]ntellectual property does not increase innovation and creation. Extending IP rights may modestly boost the incentive for innovation, but this positive effect is wiped away by the negative effect of creating monopolies. There is simply no evidence that strengthening patent regimes increases innovation or economic productivity. In fact, some evidence shows that increased protection even decreases innovation. The main finding is that making it easier to get patents increases … patenting!

IP isn’t merely about rock bands preventing kids from sharing MP3s over the Internet. (See “Weird Al” Yankovic’s musical commentary, “Don’t Download This Song,” here.) It’s about crusty incumbent firms trying to preserve market share by stifling competition, domestically and in the developing world.

The crux of the issue is this: Do IP laws protect legitimately ownable things? One’s view of the laws will proceed from one’s answer to that question, and that’s what I will concentrate on here. I leave for another time the issue of incentives. I do so because the justice of a claim must be decided before we consider the specific incentives and disincentives that flow from our decision. (No, this does not make me a “nonconsequentialist.” Consequences figure in our basic conception of justice.) Suffice it to say that the existence of disincentive effects from the abolition of IP cannot furnish proof that it is legitimate. That question must be decided on its own terms. (On incentives and many other related issues, see Michele Boldrin and David Levine’s Against Intellectual Monopoly; also online. The authors, along with Alessandro Nuvolari, contributed Freeman articles on IP here and here.)

What does IP refer to? What exactly is owned? It is not ideas per se that are owned, according to the law. But what is owned seems problematic. Stephan Kinsella (pdf) points out that “Copyright gives [the creators of original works] the exclusive right to reproduce the work, prepare derivative works, or to perform or present the work publicly.” However, “Copyrights protect only the form or expression of ideas, not the underlying ideas themselves” (emphasis added). Patents, Kinsella continues, grant exclusive use in “devices or processes that perform a ‘useful’ function…. A patent effectively grants the inventor a limited monopoly on the manufacture, use, or sale of the invention. However, a patent actually only grants to the patentee the right to exclude (i.e., to prevent others from practicing the patented invention); it does not actually grant to the patentee the right to use the patented invention.” Importantly, “laws of nature, natural phenomena, and abstract ideas” cannot be patented (emphasis added). But, Kinsella notes, “Reducing abstract ideas to some type of ‘practical application,’ i.e., ‘a useful, concrete and tangible result,’ is patentable….”

Note that in both cases ideas are said not to be the object of intellectual property. And yet, ultimately, it is ideas that are at issue. For what is a “form or expression of ideas” if not an idea? And what is a “practical application” of an idea if not an idea? When someone holds a copyright to a novel, she does not own all copies of the book in the world. And when someone holds the patent to the widget, he does not own every widget in the world. There’s no escaping that IP is about ideas.

There is another way to look at IP, but it is even harder to square with traditional property rights. When one acquires a copyright or a patent, what one really acquires is the power to stop other people from doing certain things with what is indisputably their own property. One can say that a copyright holder doesn’t actually own anything but the legal authority to stop other people from using their own equipment to copy a book or CD they purchased. And one who holds a patent on the widget actually only has permission to call on the state to stop others from manufacturing and selling widgets in factories they own.

IP is a peculiar form of property, indeed.

Tangible Versus Intangible

There’s another peculiarity. Property rights in land and other tangible, finite, and scarce things emerged among human beings to facilitate cooperation and flourishing. Society can be a setting in which people trade and go about their business only if they generally know in advance what they can and cannot do with the material objects around them. Ludwig von Mises, F. A. Hayek, Bruno Leoni, Bruce Benson, and John Hasnas are just a few of the many scholars who have elaborated this point from a multidisciplinary perspective.

That prompts the question: Why assume that rules which emerged to avert social conflict over tangible objects are also appropriate to intangible things? I need not labor the point that ideas, or what Tom Palmer calls “ideal objects,” are different from material things. Two or more people cannot consume the same Coca Cola or develop the same parcel of land at the same time, but two or more people can possess and use the same idea at the same time. No one has put the issue better than Thomas Jefferson:

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. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

But aren’t ideas scarce in the sense that if I exploit one commercially, your opportunity to do so is reduced? This mixes up two issues: the “thing” and its economic value. You can never own economic value. A falling market price for your house is not proof you’ve been robbed. Likewise, if your income from a book or CD falls, that also is not proof you’ve been robbed.

Kevin Carson (pdf) elaborates:

It is sometimes argued, in response to attacks on patents as monopolies, that “all property is a monopoly.” True, as far as it goes; but tangible property is a monopoly by the nature of the case. A parcel of land can only be occupied and used by one owner at a time, because it is finite. By nature, two people cannot occupy the same physical space at the same time. “Intellectual property,” in contrast, is an artificial monopoly where scarcity would not otherwise exist. And unlike property in tangible goods and land, the defense of which is a necessary outgrowth of the attempt to maintain possession, enforcement of “property rights” in ideas requires the invasion of someone else’s space.

To Create Is Not to Own

Why is this approach resisted by so many advocates of freedom? A key reason is the importance attached to the act of creation. If someone writes or composes an original work or invents something new, the argument goes, he or she should own it because it would not have existed without the creator. I submit, however, that as important as creativity is to human flourishing, it is not the source of ownership of produced goods.

So what is the source? Prior ownership of the inputs through purchase, gift, or original appropriation. This is sufficient to establish ownership of the output. Ideas contribute no necessary additional factor. If I build a model airplane out of wood and glue, I own it not because of any idea in my head, but because I owned the wood, the glue, and myself. If Howard Roark’s evil twin trespassed on your land and, using your materials, built the most creatively original house ever seen, would he own it? Of course not. You would–and you’d have every right to tear it down.

Thus ceasing to treat ideas like property would not jeopardize real property. On the contrary, it would affirm it. Protection of intellectual “property” requires the violation of real property rights, since it forbids you to do certain things with your own CD or DVD burner and blank disks, your own copier and paper, and your own knowledge of production techniques and processes that are protected by state patents.

The last example is most crucial today, Kevin Carson writes, because of “[t]he growing importance of human capital [i.e., the ideas in people's heads], and the implosion of capital outlay costs required to enter the market….” In other words, the free society and competitive economy require an end to intellectual “property.”

Intellectual “property” (IP) is a sleeper issue. It seems uncontroversial: Someone invents or writes something and therefore owns it. What could be plainer? But IP contains the power to destroy liberty.

The rest of TGIF is here.