In The Reach of Patent Law and Institutional Competence, one Richard Gold makes an odd argument that "stealth libertarianism" is to blame for some of the problems in patent law. He believes there has been a "clandestine shift in patent law's normative base from a utilitarian justificatory rationale to a libertarian one; a trend the author refers to as 'stealth libertarianism.'"

Under the "libertarian" (sic) approach, it is assumed "that the social good is always attained by expanding patent rights in all domains," but courts dress this "libertarian analysis in the commonly accepted language of utilitarianism. This surreptitious adoption of libertarian analysis is particularly disconcerting because it enables courts to avoid addressing the ethical and distributional effects of patent determinations."

As far as I can tell from a quick read, Gold maintains that a utilitarian basis should be employed, instead of a "libertarian" one; that courts are incompetent to make these utilitarian determinations; and that if utilitarianism is correctly applied, patent law scope would not be expanded as much as it has been by courts applying a "stealth libertarian" rationale.

I can't figure out if this guy is an ally or not.

In Apple May Use ‘Nuclear Arsenal' to Delay Palm's IPhone Rival, Bloombert reports: "Apple Inc., usually on the defensive when it comes to intellectual-property lawsuits, is threatening to use its hoard of patents to quash iPhone competitors."

For shame, Apple, for shame. They appear to be suffering from the delusion pointed out by Boldrin & Levine, as noted by Tucker in Seen and Unseen Costs of Patents:

It is the most common thing in the world for a businessperson who use every market-oriented skill to get a product to market: a good product at a good price that becomes the market leader. At this point, and for some odd reason, the businessperson gets confused. He thinks that it his IP that is the key to his success and ends up fighting for it with all his might, even at his own expense.

Here is the statement by Boldrine and Levine: " "Being a monopolist" is, apparently, akin to going on drugs or joining some strange religious sect. It seems to lead to a complete loss of any sense of what profitable opportunities are and of how free markets function. Monopolists, apparently, can conceive of only one way of making money, that is bullying consumers and competitors to put up or shut up. Furthermore, it also appears to mean that past mistakes have to be repeated at a larger, and ever more egregious, scale."

(Cross-posted at Mises Blog.)

On tonight's FreeTalkLive (from about 1:06:55 to 1:38:22, again from 1:51:52 and following) the hosts discuss and read Jeff Tucker's entire article Does Innovation Require Property in Ideas? on the air (Tucker's article discusses Boldrin & Levine's Against Intellectual Monopoly). A very lively discussion ensues including--surprise!--a patent lawyer who calls in to meekly support patent law (and also some kind of limits on how much money doctors can spend on marketing... hunh?). (HT to Manuel Lora.)

(Cross-posted on Mises Blog.)

Interesting blog musings on IP by Vincent McAffrey, in "Newton's Fig."

I cannot tell whether he is anti-IP or not, but he seems to be leaning that way.

In Patent Law: Global Economic Slowdown Edition, one patent practitioner comments:

"International patent filings under WIPO's Patent Cooperation Treaty (PCT) grew by 2.4% in 2008, to nearly 164,000 1 applications. While the rate of growth was modest, as compared to an average 9.3% rate of growth in the previous three years, the total number of applications for 2008 represents the highest number of applications received under the PCT in a single year. Continued use of the PCT, a cornerstone of the international patent system, indicates that companies recognize the importance of sustained investment in research, development and innovation to remain competitive even within challenging economic conditions."

Interesting patent-lawyer spin, in the bolded words--i.e., PATENTING = INNOVATING.

On Strike The Root one "John deLaubenfels" criticizes us IP critics.

I'll comment on one argument here:

Copies of an author's work can be made virtually for free; therefore they aren't "scarce"; therefore they have no value that anybody need respect. This line is not heavily stressed by B&L, but it is popular among anti-IP'ers and was apparently originally conceived by their darling, Stephan Kinsella. Nonsense! The actual worth of a work can be calculated as the sum of what each person on earth would willingly pay for a copy, if it could be obtained in no other way. This figure may fairly be said to represent the potential value the author has brought to the world. Subtract the cost of making copies for all purchasers, and we arrive at a return the author may hope to approach in a just society, assuming he's able to reach all potential buyers and is able to guess how much they're willing to pay. Note that this second number goes UP, not down, as the cost of making copies decreases. An interesting question for anyone who buys into the Kinsella argument would be: consider a product which requires physical raw materials to produce. Would it be "not stealing" to break into a store, take one, and leave in exchange only the cost of the raw materials and labor needed to produce it? The idea is as absurd as Kinsella's is for intellectual works.

First, I have stressed repeatedly that property rights are rights in the physical integrity of a resource, not in its value. Libertarianism does not mandate that people "respect the value" of property. Only that they do not invade its borders--use it without the owner's permission. So it is irrelevant whether a work, or copies of it, "have" a "value". The question is: are patterns and information ownable things? Are they the type of things that can be, that ought to be, property? The answer to this question does not turn on whether people value the pattern or information or copies or not.

As for the question: consider a product which requires physical raw materials to produce. Would it be "not stealing" to break into a store, take one, and leave in exchange only the cost of the raw materials and labor needed to produce it?"

Property rights are rights to the physical integrity of owned scarce resources. So it's stealing to take my product without my permission, since I own it. This is true whether or not the object "has value" or not; and it's true whether or not the thief leaves me partial (or even complete) restitution.

This entire line of reasoning is confused.

(Cross-posted on Mises Blog.)

A great comment by Techdirt's Mike Masnick that deserves to be highlighted on its own--Masnick just keeps getting better and better on IP issues:

***

"Resources are allocated by prices that form in the market after exchanges of private property. If there is no private property, there are no exchanges."

Shame that someone who claims to understand economics is so woefully wrong.

First off, yes, private property is a key element of a marketplace, but you have to first understand the purpose of private property. This is rather important, and often gets lost in the shuffle. The purpose is to allow for the efficient allocation of resources.

However, when a good is infinitely available, there is no question of the efficient allocation of that resource, because efficiency is easy: anyone who wants a *copy* can get it. This is not socialism, as you imply. It's pure free market capitalism. Your mistake is confusing the "copy" with the original good. It's a common mistake.

Thus, it makes little sense at all to apply property rights to infinitely available goods. In that case, all you are actually doing is making allocation INEFFICIENT by putting artificial and unnecessary limitations on things, and actually diminishing transactions, because the infinitely available works cannot be built upon to create new and valuable works.

So you have put the cart way before the horse here in focusing on the marketplace, rather than the efficient allocation of resources. We like markets for scarce goods because they make allocation efficient.

We can have a market for infinite goods, but since the supply is infinite, the price will get set at zero (this is just basic economics).

Now, the real reason given for IP rights is not about allocation of resources, but incentives to create (you seem to confuse these things in your comment). So, your question about "the calculation problem" is actually about incentives to create, which is separate from the issue you later brought up (the market for efficient allocation).

But, once again, here you seem to have a lack of understanding of the facts. There is tremendous evidence nearly across the board that there are significant and workable models to create plenty of new works (or new inventions) in the absence of IP protections. In fact, much of the evidence suggests that the end result would, in fact, be MORE works created, because so many creative and inventive works are actually built off of earlier works.

In other words, both creative and inventive works are an ongoing process of creation, and placing an unnecessary, inefficient and market limiting tollbooth at each stage of the process drastically slows down the incentives for creation.

So, let's try starting again from scratch. Look at the difference between the allocation problem from the creation problem -- and then look at alternative models and the research concerning how those alternative models do. Then, perhaps, you might want to tone down your false statements concerning "socialism" and maybe, just maybe, apologize to those you insulted with your own statements.

Funny interview with Stephen Colbert an Lawrence Lessig, discussing copyright policy and Lessig's new book Remix.

Lessig is not a perfect libertarian but is for reform at least. I suspect many of Colbert's mainstream-ish arguments in defense of copyright are partly mocking the standard Republicanoid view on IP. See also the funny video The Colbert Report ::: Remix feat Lawrence Lessig (Eclectic Method Mix)--a "remix" made in "violation" of Colbert's tongue-in-cheek warning not to (i.e., his invitation).

GREAT post on patents and innovation posted on Mises blog in the comments:

I just finished reading your article A Book that Changes Everything.... Great stuff! I wanted to send along my thoughts on the subject.

First, I should confess that I work for a company that has received more patents than any other - for every single year - the last 15 years. Second confession: I co-own several of those IP patents (well, the company is the real owner - I'm just the "inventor" on some of them. I'm a software engineer.).

I'm going to avoid mentioning the company I work for (more corporate regulations), but given the clues you can figure it out fairly easily.

We are slightly different than some of the corporations you mention: "It is impossible to develop software without running into IP problems, and the largest players are living off IP and not innovation"

We do make great money off our patents (I'll explain what I think is the real benefit though). However, we do innovate, and we make the vast majority of our revenue off of our products - because our product is superior. (Ok, I may be slight biased - but our customers tell us this too)

Anyway, I believe that the real benefit of patents for the company I work for, and other large software firms, is that we trade them - sort of like kids with baseball cards. That is, we'll allow firms to use certain patents in exchange for the rights to some of theirs. As you can probably figure out, this is not a real option for start ups that do not have the IP portfolio to make this attractive.

We have a huge team of IP lawyers, a bonus structure that makes it attractive to try to patent any possible new inventions, and a management that uses your personal patent portfolio as a factor in determining who to promote. We've been told that they'll patent anything new we come up with - even if it is unrelated to the business (i.e. I've seen them patent an exercise device).

We'll often write papers on items that the business decides not to patent - just to show prior discovery should we be challenged by other corporations. We also get a bonus for this - just not as much.

From an employee standpoint, this is attractive. Hey - it's a lot of extra money to us, and we are helping out our company. As an employee who happens to be a libertarian, I honestly have no issue with my company taking advantage of the silly IP laws.

That brings me back to the main issue at hand though: should we have IP laws?

Speaking from my own experience, corporations (such as the one I work for) spend a lot of money to innovate. However, I would "press that button" and get rid of IP law immediately, given the chance. I agree completely with the arguements made in the article - as such, I'll just bring up a few other issues:

I think IP law is incredibly damaging to innovation and competition. In the case of software patents, moreso in that they take resources (primarily money which gets redirected to legal teams) from firms who are forced to research existing patens, and also defend themselves against IP lawsuits.

Many software patents are particularly silly. Many of these are issued for algorithms - the vast majority of the time, these algorithms are only available outside the company via patent! That is, when they are shipped externally, it is in a form that is not readable (object code). Sure - this can be reverse engineered. But for a particularly complex program or operating system, this in itself would be a colossal endeavor. Yet, a patent is issued for it - and the patent describes exactly what the algorithm does!

Another firm could look at the patent and use the invention. In most cases, it would be impossible to tell that they've "stolen" anything. Here they are counterproductive.

I should also mention the obvious - the corporation which holds the patent already has a huge advantage! They will ship a product with these innovations before any other corporation can ship its' product. Quite frankly it will generally be a significant period of time before another product can be shipped which contains these innovations - even if the innovation was immediately obvious and known. This will not generally be the case.

Then you have the patents for user interface - these are just silly. I've seen patents issued (granted, this was a long time ago) for using a particular color on a "dummy" terminal.

Anyway, I hope I do not sound like a hypocrit (because I hold IP patents). As I said, it is a part of my job. I also cannot fault my company for taking advantage of whatever silly laws are created. I simply view this as another case of the state interfering with the market, and the market adjusting to exploit the foolishness of the laws.

From Mises Blog, good quote from Hayek:

From Individualism and Economic Order (ironically under copyright), Chicago, 1948, pp. 113-14.

Where the law of property is concerned, it is not difficult to see that the simple rules which are adequate to ordinary mobile "things" or "chattel" are not suitable for indefinite extension We need only turn to the problems which arise in connection with land, particularly with regard to urban land in modern large towns, in order to realize that a conception of property which is based on the assumption that the use of a particular item of property affects only the interests of its owner breaks down There can be no doubt that a good many, at least, of the problems with which the modern town planner is concerned are genuine problems with which governments or local authorities are bound to concern themselves. Unless we can provide some guidance in fields like this about what are legitimate or necessary government activities and what are its limits, we must not complain if our views are not taken seriously when we oppose other kinds of less justified "planning."

The problem of the prevention of monopoly and the preservation of competition is raised much more acutely in certain other fields to which the concept of property has been extended only in recent times. I am thinking here of the extension of the concept of property to such rights and privileges as patents for inventions, copyright, trade-marks, and the like. It seems to me beyond doubt that in these fields a slavish application of the concept of property as it has been developed for material things has done a great deal to foster the growth of monopoly and that here drastic reforms may be required if competition is to be made to work. In the field of industrial patents in particular we shall have seriously to examine whether the award of a monopoly privilege is really the most appropriate and effective form of reward for the kind of risk-bearing which investment in scientific research involves.

Patents, in particular, are specially interesting from our point of view because they provide so clear an illustration of how it is necessary in all such instances not to apply a ready-made formula but to go back to the rationale of the market system and to decide for each class what the precise rights are to be which the government ought to protect. This is a task at least as much for economists as for lawyers. Perhaps it is not a waste of your time if I illustrate which have in mind by quoting a rather well-known decision in which an American judge argued that "as to the suggestion that competitors were excluded from the use of the patent we answer that such exclusion may be said to have been the very essence of the right conferred by the patent" and adds "as it is the privilege of any owner of property to use it or not to use it without any question of motive." (Continental Bag Co. v. Eastetn Bag Co., 210 U.S. 405 (1909). It is this last statement which seems to me to be significant for the way in which a mechanical extension of the property concept by lawyers has done so much to create undesirable and harmful privilege.