From Mises Blog, an excerpt from Boldrin/Levine's blockbuster book:

Was James Watt's patent of the steam engine a crucial incentive needed to trigger his inventive genius, as the traditional history suggests? Or did his use of the legal system to inhibit competition set back the Industrial Revolution by a decade or two? Here is a case study--by the authors of a wonderful new work on patents and copyrights--in how "intellectual property rights" do grave damage to the market economy. FULL ARTICLE

In Easing the Transition to an Alternative Economy, posted at the Citizen's Briefing Book at Change.gov by "Mutualist" Kevin Carson (mentioned here at Center for a Stateless Society, and here on Carson's blog), Carson has a good critique of the damaging and distorting effects of IP. Now, he does mix it in with ideas I find questionable (see 1, 2, 3), such as the leftist hostility to "bigness" and the corporate form of business, the penchant for "localism," the notion that "road subsidies" somehow favor large companies (which basically, as many "vandarchists" seem to believe, makes them fair game for vandalism and worker appropriation since they do not "really" own their property), and the idea that we should "liminat[e] differential tax exemptions that favor firms engaged in centralized, large-scale, capital-intensive production" (this would just amount to raising taxes--now he does advocate making up for this by lowering overall taxes, but only enough to be "revenue neutral," which, by my math, does not prevent net taxes from being raised on some companies; a good libertarian opposes all tax increases)--so I bold the parts below that I reall like:

If we want to replace the present centralized economy of waste production and planned obsolescence, it's an inescapable fact that a great deal of excess manufacturing capacity cannot be saved. In my opinion it's a mistake to try to prop it up through expedients like the Detroit bailout.

Corporate capitalism has been plagued from its late-19th century beginnings with chronic crises of overaccumulation and overproduction, which would probably have destroyed it in the Great Depression (despite the New Deal) had WWII not postponed the crisis for a generation by helpfully blowing up most of the plant and equipment in the world outside the U.S. and creating a permanent war economy for absorbing surplus output. But Europe and Japan rebuilt their industrial capital by 1970, and since then the chronic crises have been back with a vengeance. Before the current downturn, America's overbuilt industry couldn't dispose of its full output running at capacity, even with everybody tapping into home equity and maxing out their credit cards to replace everything they owned every five years. And we'll never see those levels again. So there's no escaping the fact that much of our plant and equipment, in a few years, will be rust.

The goal should be a shift from the present system of overaccumulated, centralized, oligopoly industry, and its business model of planned obsolescence and "push" distribution, to a decentralized economy of small-scale manufacturing for local markets. This means, among other things, a switch from capital-intensive production methods based on product-specific machinery, to production with small-scale, general purpose machinery. It means, in place of the old Sloanist production model, something like the present-day economy of Italy's Emilia-Romagna region: networked small manufacturers producing for the local market, with a high degree of cooperative ownership. Such an economy, based on a "pull" distribution model with production geared to demand on a just-in-time basis, will be insulated from the boom-bust cycles of the old national "push" economies. And we need a new model of user-friendly, modular product design aimed at cheap and easy repairability and recycling.

Your main focus, in my opinion, should be to ease the transition by eliminating present policies (market-distorting subsidies, privileges, and cartelizing regulations) that impede it and protect the old economy from the new one.

This means, for one thing, eliminating differential tax exemptions that favor firms engaged in centralized, large-scale, capital-intensive production: e.g., the depreciation allowance, the R&D credit, the deductability of interest on corporate debt, and the exemption of stock transactions involved in mergers and acquisitions from capital gains tax). Then lower the corporate income tax enough to be revenue-neutral.

It means, especially, eliminating the biggest subsidy to economic centralization, and to artificially large market area and firm size: i.e., subsidies to long-distance transportation. The Interstate should be funded entirely by weight-based user fees on trucking, which causes virtually all of the roadbed damage. All subsidies to new airports or to expanding old ones should be eliminated, including all federal guarantees of local bond issues.

Perhaps most important of all, it requires radically scaling back the present strong "intellectual property" regime. IP (through patent pooling and exchange, monopolies on current production technologies, etc.) is probably the single most powerful cartelizing force, which enables each industry to be concentrated in the hands of a few players. It impedes the transfer of skills and new technology from the old manufacturing dinosaurs to the kinds of small, local producers we need. It also serves as a powerful bulwark to planned obsolescence, imposing legal restrictions on the manufacture of cheap generic replacement parts.

Scaling back IP law (a good start would be repealing the DMCA, the WIPO Copyright Treaty, and the Uruguay Round's TRIPS accord) would eliminate the barriers to the diffusion of skill and technology that currently prop up the old corporate dinosaurs of the software and entertainment industries, and facilitate their replacement by networked production on an open source model. Please cut loose the MPAA, RIAA, and Bill Gates, and do so yesterday!

Finally, we need to eliminate all subsidies to large-scale agribusiness. The result will be a flourishing sector of community-supported agriculture, replacing the old agribusiness dinosaurs as fast as new ground can be cultivated.

Often we opponents of socialistic, legislatively-created, utilitarian-based, property-redistributing, artificial, arbitrary, inconsistent, irrational, innovation-hampering, monopolistic, anti-competitive, and wealth-destroying intellectual property laws are accused of hypocrisy when we "copyright" our articles and books.

I've pointed out to such people innumerable times, to little avail, that copyright is a noun, not a verb--that you don't "copyright" something--you have a copyright in your original works of authorship as soon as you write them, automatically, courtesy of federal law. No copyright notice is required. No copyright registration is required. You have the right, whether you like it or not.

Well, then, why don't you just "make it public domain," some then, a bit unreflectively, retort. The problem is, there is no clear and good way to do this.

If you use a Creative Commons license, you are actually employing the copyright the state grants you--you are putting conditions or limitations on what others may do with your works. Even if you use the least restrictive type, "Attribution," you are requiring others to do something to avoid being liable for copyright infringement.

Now, some have tried to find ways to let you abandon your copyright, or "dedicate" it to "the public." Creative Commons has a proposed "Public Domain Dedication", but: (a) it doesn't seem easy, at least for the typical user; and (b) there appear to be doubts as to whether it would work--and until it's clear that it does, it's worse than a CC license, since publishers would be afraid to rely on it. It is possible that a type of estoppel would apply, preventing the "dedicator" from complaining if someone else relied on his "dedication" to his detriment; but there is "a quirk of U.S. copyright law which grants the author of a work the right to cancel 'the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright" thirty-five years later, unless the work was originally a work for hire.'" So sayeth Wikipedia; and it outlines other deficiencies of the "public domain dedication."

Creative Commons seems to recognize the potential problems with their attempt to set up a "public domain dedication"-- first, they say, "Please note that the Public Domain Dedication may not be valid outside of the United States." Well, that's no good. We do live in a global, um, world. Last time I checked, the Internet was available even outside America! Second, I had to google their site to even find it--it's not even listed in their Licenses page, or in their FAQ. They provide this method with disclaimers and no guarantees, and they bury it on their site. Hmm, tells you something.

So, what's a libertarian to do? I tend to think the CC 3.0 Attribution license is the most libertarian--it only requires you to say who wrote it--but most people would do this anyway, so that's not a huge imposition. The "non-commercial" ones prevent people from using it "for profit"--this is still a use of copyright to force people not to publish. And the "Attribution Share Alike" seeks to use one's copyright threat to force others to use this license too.

(For example, suppose you have a deal with a publisher, and you want to use a CC share-alike licensed work in your book. But the publisher you are using refuses to grant a "share alike" license. So now, you can't use the CC licensed work. I.e., if you publish your paper with a CC attribution license, the other guy can use it in his book. But if you do a share alike one, he can't. He's prevented by your copyright assertion threat.)

The d*mned government imposes this right on us and does not even provide an easy way to opt out of it or get rid of it. Ridiculous.

***

Update: In my comments to Roderick Long's post Steal This Journal!, I noted:

Roderick, If I'm not mistaken, "copyleft" is similar to the Creative Commons "share alike" license. Libertarian Papers, however, uses the Creative Commons Attribution 3.0 License. After thinking about this, it seems to me that the "Attribution" license is more libertarian than "Share-Alike" (or copyleft).

Now the new "CCO", or "No Rights Reserved," attempt to make one's work "public domain" seems the most libertarian of all, but its efficacy looks doubtful to me, and it's still embryonic as far as I can tell.

In response to Charles Johnson's (Rad Geek) suggestion that Attribution-Share-Alike (a "viral" type of copyright license, a.k.a. "copyleft") might be preferable or acceptable from a libertarian perspective, I replied:

Rad, I see the argument, but I think the best policy is just to free it up. It's a bit too paternalistic, rude, untrusting, to force others to do it like you do, to assume they'll "abuse" their power. And, it might stop the work from being re-published. We want our libertarian ideas spread far and wide. I want an editor of a book considering reprinting one of our pieces to see no obstacles. A "viral share-alike" provision could be. Let ideas be free.

Update: See Doubts Raised About Legal Soundness of GPL2

(Cross-posted at Mises Blog.)

The Association of Government Accountants (formerly the "Federal Government Accountants Association") has awarded the US Patent and Trademark Office its "Fiscal Year 2007 Performance and Accountability Report Award" (which looks oddly similar to the USPTO's own "red ribbon" patent grant) one of 17 federal agencies to get this award that year.

Not only does the USPTO prepare "a well structured, logically organized and easy-to-navigate report" it's very "productive" too. As it boasts on its website,

Highlights of USPTO accomplishments for the past year include ... Increased patent production by an additional 14 percent over 2007 by examining 448,003 applications the highest number in our history. Production has increased by 38.6 percent over the past four years, compared to a 21.3 percent increase in application filings during the same period.

It's sobering to think how much worse off the US would be in this recession without all this productivity.

For some more interesting patent statistics, see the World Patent Report: A Statistical Review (2008) for example, as of about 2006, there were about two million patent applications filed per years worldwide; about 750,000 patents issued (granted) every year; and about 6.1 million patents in force around the world.

(cross-posted at Mises.org)

Interest post on Squawking Tech--proposes that because of natural (price) deflation,

"With the exception of land and human time, in all areas of society we have been conditioned to expect more for less over time. Yet until just a few years ago, the music industry was increasingly charging more, for the same product. And they were able to do this because copyright law gives them the ability to set prices like a legal monopoly. ... When people in aggregate are asked to pay far more than what they think something should cost, they start looking for alternatives. In this case, the alternative comes in the form of P2P technology."

Intriguing argument: that the failure of music to fall in price along with other technology-related goods is evidence of the pernicious effect of copyright.

Tom Cruise May Face Legal Action Over Hitler Globe reports that the collector who bought the famous "Hitler's globe" may sue for use of a likeness of the globe in Cruise's recent film Valkyrie, "the thriller about a real-life plot to assassinate Hitler." The article reports that in "2007, Pritikin paid $100,000 for the globe and had its likeness copyrighted to keep it from being used in propaganda by sick neo-Nazi groups." Whew, what a relief!

(Cross-posted at LewRockwell.com.)

It can of course be useful to point out harmful consequences of various policies, if only to engage advocates of same on their own turf. Thus in There's No Such Thing as a Free Patent I point out that those who claim the benefits of patents outweigh the costs never seem to tally up these figures and give us the net. And indeed, whenever anyone ties to do this, they usually conclude that the patent system does more harm than good. For example, Boldrin and Levine's Against Monopoly, Bessen & Muerer's work, Julio Cole's Patents and Copyrights: Do the Benefits Exceed the Costs?, and so on (see my post, What Are the Costs of the Patent System?).

And yet, there are severe drawbacks to relying exclusively on the utilitarian approach, as I explained in my Against Intellectual Property. We need to have principled, moral reasons that can cut through the fog of inconclusive utilitarian back-and-forth. Case in point is Rosemarie Ziedonis's reply to Bessen & Muerer's On the Apparent Failure of Patents. In her civil and reasonable reply, she argues that Bessen & Muerer provide

little basis for concluding (as the authors assert) that public firms outside the chemical and pharmaceutical industries would be "better off" if patents did not exist. Public firms benefit from the patent system in numerous ways that are not captured by Bessen and Meurer's "net benefits" calculations, including through information revealed during the patenting process and through growth opportunities provided by startups. More generally, the authors are unable to observe the innovative productivity or financial performance of public firms in an alternative, nonpatent regime."

What can a utilitarian say when a critic simply replies, "but there are other benefits you are not capturing"? The strongest counter, it seems to me, is to note that the burden of proof is on the proponent of a utilitarian argument favoring a state regulation, but how do utilitarians ever know if they've taken all costs, and all benefits, into account? That's why a principled, property-rights argument is crucial.

A more complete excerpt of Ziedonis's comments follows:

A second problem with Bessen and Meurer's "better off" assertion is its implicit assumption that the private value firms reap from owning patents is equivalent to the private value those firms derive from the patent system. Here, it is important to understand what was (and was not) included in Bessen and Meurer's statistics. While the authors' "net benefits" calculations allowed public firms to be harmed by patents owned by outsiders through encounters of infringement lawsuits, they did not allow firms to reap benefits from the activities of others. Recall that only the value captured from a firm's own portfolio was captured in the authors' calculations. There are several ways in which public firms reap indirect benefits from the patent system. One is through information revealed during the patenting process (i.e., "spillovers"). In addition to enticing investment through the lure of future profits (the "reward theory" of focal attention in Bessen and Meurer's article), the patent system also aims to foster innovation through the disclosure of information about new inventions (in detailed drawings and descriptions contained in published patent documents) that otherwise might be held secret or be more difficult for outsiders to unravel. ...

Although the evidence generated from Bessen and Meurer's analysis is alarming, it provides little basis for concluding (as the authors assert) that public firms outside the chemical and pharmaceutical industries would be "better off" if patents did not exist. Public firms benefit from the patent system in numerous ways that are not captured by Bessen and Meurer's "net benefits" calculations, including through information revealed during the patenting process and through growth opportunities provided by startups. More generally, the authors are unable to observe the innovative productivity or financial performance of public firms in an alternative, nonpatent regime. Would opportunities to "outsource" R&D to more efficient performers or to profit from entrepreneurial-firm acquisitions be deleteriously affected? It is highly unlikely, of course, that the U.S. patent system will be abolished. Nonetheless, when assessing the current system's performance, these indirect effects of patents are important to consider.

Sometimes against their own former clients.

As a followup to "Patent Hawk" Sues Microsoft, Former Client, for Patent Infringement (Against Monopoly cross-post), see the insightful Law.com article by the tenacious Joe Mullin, Some IP Attorneys Look to Make Their Mark as Patent-Holders, as well as his blog posts "Patent Hawk" lawsuit was an inside job, says Microsoft and Zilka & Kotab, a.k.a. Aloft Media, file patent lawsuit against Google's Chrome browser; the latest of many.

Cross-posted at Mises Blog.

Sometimes against their own former clients.

As a followup to "Patent Hawk" Sues Microsoft, Former Client, for Patent Infringement (Against Monopoly cross-post), see the insightful Law.com article by the tenacious Joe Mullin, Some IP Attorneys Look to Make Their Mark as Patent-Holders, as well as his blog posts "Patent Hawk" lawsuit was an inside job, says Microsoft and Zilka & Kotab, a.k.a. Aloft Media, file patent lawsuit against Google's Chrome browser; the latest of many.

Cross-posted at Mises Blog.

I've noted before (2) the disturbing trend of intellectuals--some even libertarian or free marketeers--advocating taxpayer-funded "medical innovation prizes" to supplement or replace the current patent system--e.g., Alex Tabarrok's support of an $80 billion/year "medical innovation prize fund", and similar proposals by others, including Joseph Stiglitz and Forbes.com.

Now, on Cato Unbound, one "Dean Baker" has his own proposal:

I do not support a prize system .... A prize system would preserve what I see as some of the worst problems of the patent system, most importantly encouraging secrecy in research. ... My ideal system would be a system in which the government allocates a pot of money (@$30 billion a year approximately equal to private R&D in the pharmaceutical sector) that would be awarded in long-term contracts to a relatively small number of master contractors. For example, there can be 10 master contractors getting grants of roughly $30 billion each spread over 10 years.

Of course this is not a perfect system and there may well be better alternatives, but the point is to get the discussion started. ... Perhaps a progressive-libertarian alliance can force economists/policy makers to take this issue seriously.

I think you've got the conversation started, buddy. Congratulations! Now, can you leave us the hell alone

Update: Will Wilkinson, in Dean Baker on Libertarians and the Fight Against Corporatism, discussing the interchange between Dean Baker and Tim Lee, gushes, "the extent of overall agreement really is pretty impressive, and promising." Dissent!

Update2: Cato's Tim Lee writes: "I can't agree with Baker that all copyright and patent monopolies are illegitimate. Copyright and patent protections have existed since the beginning of the republic, and if properly calibrated they can (as the founders put it) promote the progress of science and the useful arts. Like any government intervention in the economy, they need to be carefully constrained. But if they are so limited, they can be a positive force in the American economy."

Ah, yes, that's our job as market liberals--to help the state "properly calibrate" its grants of pattern privilege!

Update3: On HuffPo, Baker ridicules DC intellectuals who favor the bailout, in How Do You Make a DC Intellectual Look Less Articulate Than Sarah Palin Being Interviewed by Katie Couric? Not a bad piece, but his anti-bailout credibility is undermined a bit by advocating $30B of state funding to promote innovation!