I posted the following comment to Cory Doctorow's BoingBoing post Competition and Google Book Search:

Cory, Google is not perfect but the attacks on them for attempting this seem to me to be demonizing the wrong party. The problem is copyright law--a state legal system. The state is, as usual, to blame. Why some people are trusting the same state that foists IP law on us to protect is us mystifying. In attacking Google they are allying with the state (see my post Google Digital Library Plan Opposed by German Chancellor), which is the real enemy. I don't see any choice for google to accomplish the quasi-digital libertarian of orphan and other works other than its creative legal-settlement route.

Lohmann writes:

"Nobody likes this "only-for-Google" aspect of the settlement--in fact, Google has said that it would support orphan works legislation that would empower the Registry to make the same deal (or even a better deal) with others who want to use these unclaimed works."

I am not sure I see the concern here--seems to me only someone who cares about copyright would object to this.

"The settlement agreement even has a provision that makes it clear that the UWF can license others "to the extent permitted by applicable law"--what amounts to an "insert orphan works legislation here" invitation."

I'm not sure what is wrong with this. Even partially libertaring orphan works from the confines of copyright law would be good.

"But absent some legislative supplement to the revised Settlement 2.0, it still seems that any other company would have to scan these books, get sued, and hope for a class action settlement. That, of course, is the kind of barrier to entry that any monopolist would envy."

Again, it seems to me that Google is doing it the only way they see possible, given the terrible state regime.

"...But we shouldn't be satisfied with antitrust law here."

This line really bothers me. The EFF and others supposedly concerned with individual rights should recognize the state as the enemy. They should recognize antitrust law is completely unjustified; the real monopoly is the state, which arrogates a true monopoly to itself. This line implies that antitrust law is okay; it's not. It's immoral and unjustified. All antitrust law should be of course abolished.

See my An Open Letter to Leftist Opponents of Intellectual Property: On IP and the Support of the State and Eben Moglen and Leftist Opposition to Intellectual Property.

[Mises blog cross-post; SK.com cross-post]

Truly fantastic speech by Jeff Tucker on the problems of intellectual property.

My article Intellectual Property and Libertarianism was published last month in Liberty magazine (December 2009 issue). This article is based in part on a speech at Mises University 2009 (July 30, 2009; audio; video) and also on my What Libertarianism Is, which contains references not present in the Liberty paper (as does The Case Against IP: A Concise Guide). A version with endnotes was published here in Mises Daily.

In Jeff Tucker's superb article If You Believe in IP, How Do You Teach Others?, he notes Rand's increasing focus on exalting the creator and elevating "intellectual rights" to such a height that they totally trump real rights. This is no exaggeration. As I noted in Against Intellectual Property, Rand actually, incredibly said that "patents are the heart and core of property rights." See also my post Inventors are Like Unto .... GODS....., noting Objectivist IP attorney Murray Franck approvingly repeating this quote: "intellectual property is after all the only absolute possession in the world."

So, yes, Objectivists focus on the creation of value, and thus in rights in value, and explicitly drop the connection between property rights and scarcity. As I note in footnote 76 of Against Intellectual Property, Objectivist David Kelley wrote:

Property rights are required because man needs to support his life by the use of his reason. The primary task in this regard is to create values that satisfy human needs, rather than relying on what we find in nature, as animals do. . . . [T]he essential basis of property rights lies in the phenomenon of creating value. . . . Scarcity becomes a relevant issue when we consider the use of things in nature, such as land, as inputs to the process of creating value. As a general rule, I would say that two conditions are required in order to appropriate things in nature and make them one's property: (1) one must put them to some productive use, and (2) that productive use must require exclusive control over them, i.e., the right to exclude others. . . . Condition (2) holds only when the resource is scarce. But for things that one has created, such as a new product, one's act of creation is the source of the right, regardless of scarcity. [emphasis added]

Letter on Intellectual Property Rights, IOS Journal 5, no. 2 (June 1995), pp. 12-13 (including: David Kelley, "Response to Kinsella," IOS Journal 5, no. 2 (June 1995), p. 13; and Murray I. Franck, "Intellectual and Personality Property," IOS Journal 5, no. 3 September 1995), p. 7.

Thus, Objectivists will talk about man creating values. For them "a value" is a thing that exists; it's what you "create". For the Austrian and Austro-libertarian, you don't talk about "a value" as if it's an existing thing that you create. I don't make a value. For us, it's more of a verb: we value things as ends or as means to ends. We can make something more valuable by transforming it, but we do not create new property when we do this. As discussed in Intellectual Property and Libertarianism, creation is an important means of increasing wealth. As Hoppe has observed,

One can acquire and increase wealth either through homesteading, production and contractual exchange, or by expropriating and exploiting homesteaders, producers, or contractual exchangers. There are no other ways. [Hans-Hermann Hoppe, "Banking, Nation States and International Politics: A Sociological Reconstruction of the Present Economic Order," Review of Austrian Economics 4 (1990): pp. 55-87, p. 60. Emphasis added.]

While production or creation may be a means of gaining "wealth," it is not an independent source of ownership or rights. Production is not the creation of new matter; it is the transformation of things from one form to another the transformation of things someone already owns, either the producer or someone else.

By viewing "values" as things that we create, Objectivists then think there should be property rights in values. They are things, after all, right? But this is a fundamental mistake. As I noted in Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors, a common mistaken belief is that one has a property right in the value, as opposed to the physical integrity of, one's property. For elaboration, see pp. 139-141 of Hoppe's A Theory of Socialism and Capitalism; also see my comments re same to Patents and Utilitarian Thinking. This assumption sneaks into or lies at the basis of many fallacious notions of property rights, such as the idea that there is a right to a reputation because it can have value. It ties in with the (especially Randian) notion of "creation" as the source of rights, and the confusing admixture of the "labor" idea, when we talk about using our labor to "create" things of "value" (like reputations, inventions, works of art). As Hoppe notes in The Economics and Ethics of Private Property:

According to this understanding of private property, property ownership means the exclusive control of a particular person over specific physical objects and spaces. Conversely, property rights invasion means the uninvited physical damage or diminution of things and territories owned by other persons. In contrast, a widely held view holds that the damage or diminution of the value (or price) of someone's property also constitutes a punishable offense.As far as the (in)compatibility of both positions is concerned, it is easy to recognize that nearly every action of an individual can alter the value (price) of someone else's property. For example, when person A enters the labor or the marriage market, this may change the value of B in these markets. And when A changes his relative valuations of beer and bread, or if A himself decides to become a brewer or baker, this changes the value of the property of other brewers and bakers. According to the view that value damage constitutes a rights violation, A would be committing a punishable offense vis-à-vis brewers or bakers. If A is guilty, then B and the brewers and bakers must have the right to defend themselves against A's actions, and their defensive actions can only consist of physical invasions of A and his property. B must be permitted to physically prohibit A from entering the labor or marriage market; the brewers and bakers must be permitted to physically prevent A from spending his money as he sees fit. However, in this case the physical damage or diminution of the property of others cannot be viewed as a punishable offense. Since physical invasion and diminution are defensive actions, they are legitimate. Conversely, if physical damage and diminution constitute a rights violation, then B or the brewers and bakers do not have the right to defend themselves against A's actions, for his actions - his entering of the labor and marriage market, his altered evaluation of beer and bread, or his opening of a brewery or bakery - do not affect B's bodily integrity or the physical integrity of the property of brewers or bakers. If they physically defend themselves nonetheless, then the right to defense would lie with A. In that case, however, it can not be regarded as a punishable offense if one alters the value of other people's property. A third possibility does not exist.

Both ideas of property rights are not only incompatible, however. The alternative view - that one could be the owner of the value or price of scarce goods - is indefensible. While a person has control over whether or not his actions will change the physical properties of another's property, he has no control over whether or not his actions affect the value (or price) of another's property. This is determined by other individuals and their evaluations. Consequently, it would be impossible to know in advance whether or not one's planned actions were legitimate. The entire population would have to be interrogated to assure that one's actions would not damage the value of someone else's property, and one could not begin to act until a universal consensus had been reached. Mankind would die out long before this assumption could ever be fulfilled.

Moreover, the assertion that one has a property right in the value of things involves a contradiction, for in order to claim this proposition to be valid - universally agreeable - it would have to be assumed that it is permissible to act before agreement is reached. Otherwise, it would be impossible to ever propose anything However, if one is permitted to assert a proposition - and no one could deny this without running into contradictions - then this is only possible because physical property borders exist, i.e., borders which everyone can recognize and ascertain independently and in complete ignorance of others' subjective valuations.

Rand did have insights that militated against property rights in "values"; as she once wrote:

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.

She should have realized that this means there cannot be property rights in value since this would have to mean property rights in arrangements or patterns, which would then give the owner of the arrangement rights in other people's already-owned property. If she had kept her focus on the fact that rearranging already-existing property can indeed make that property more valuable, she would have realized that creation (rearrangement) is not an independent source of property rights: if you rearrange your own property, even if this makes it more valuable, you already owned the property that you have rearranged (made more valuable). Yet this does not give you rights in other people's property. You can re-word the Randian view as follows: if you make your property more valuable, it gives you additional property rights--the right to prevent other people from making their own property more valuable. And this makes it all the more obviously flawed.

This is where the Misesian approach to subjectivist value makes sense: things have value to a valuer; values do not exist independently as free-floating things that can themselves be owned. And again, Rand should have recognized this; e.g., she once wrote, "Material objects as such have neither value nor disvalue; they acquire value-significance only in regard to a living being particularly, in regard to serving or hindering man's goals." (For more on the compatibility between Objectivism and Austrian economics, see Mises and Rand (and Rothbard); Randian Hoppe(?), Austrian Rand(?).) So she should have realized that if rearranging owned property makes the owner or potential buyers value the object more, it does not mean there is any additional thing created for which we need to find an owner.

I think a similar mistake is made by Tibor Machan. Rand slips into thinking of values as ownable things because she thinks of values as created things, rather than thinking of it as a verb: people value things (and demonstrate this preference or valuing in action). I'm sure Machan would disagree with my way or framing his argument, but his argument, to me, seems to say that if you can have a concept for some"thing", or a name or word for "it," then it's an ontological "type of thing," and after all, if you create this thing, why shouldn't you be "its" owner? The problem (For more on this, see New Working Paper: Machan on IP; Owning Thoughts and Labor; this comment to "Trademark and Fraud"; Libertarian Creationism; also Elaborations on Randian IP and Objectivists on IP.)

Powerful piece by Jeff Tucker: If You Believe in IP, How Do You Teach Others?

November 16, 2009 7:43 AM by Mises Daily (Archive)

The MIT model is the model of the ancient world and every university environment ever since, and it is the only way to deal with a digital society in which every thought becomes globalized upon utterance. FULL ARTICLE by Jeffrey Tucker

Intel Will Pay $1.25 Billion to Settle Disputes With Rival reports: "Ending the computer industry's most bitter legal war, the chip maker Intel agreed on Thursday to pay a rival, Advanced Micro Devices, $1.25 billion to settle antitrust and patent disputes."

$1.25 billion in wealth transferred, and untold hundreds of millions spent on litigation, patent acquisition, losses due to strategic adjustments in response to antitrust and patent law ... Yet another example of how the central state's artificial legislative patent and antitrust schemes do nothing but destroy and waste wealth. Well, not only that--they also enrich certain classes who parasitically benefit from the system, e.g. patent lawyers, litigators, and large companies.

(See also my post Nokia's infringement suit against Apple illustrates need to scrap US patent system.)

In Survey of the Disruptive Impact of a First-to-File Switch, and on his facebook page, patent attorney and law professor Dennis Crouch asks "patent professionals" to "Please Respond to my Survey on Switching US Law to a First-to-File System."

I'm trying to figure out why we should care what patent attorneys, of all people, think about patent policy. Why is there an assumption that their opinions on patent policy are especially relevant? If anything, patent professional are biased because of built-in incentives to favor maintaining a patent system. They are not objective at all. And training in engineering and law school in no way provides one with any special knowledge of policy or ethics issues. By analogy, do we care what an IRS agent thinks the tax rates should be?

From a post on Jurist:

Nokia's infringement suit against Apple illustrates need to scrap US patent system

Stephan Kinsella [General Counsel for Applied Optoelectronics and Editor of Libertarian Papers]: "A recent lawsuit filed by Nokia against Apple alleges that the iPhone infringes 10 of Nokia's patents. Nokia is probably "seeking between $200 and $400 million in damages from Apple," which JURIST characterizes as "a relatively low amount to seek from a company that expects revenues...of over $11 billion this year." It doesn't seem trivial to me, given that $400 million is a good chunk - say, 5 to 10% or so - of Apple's profits. And Nokia's is not the only lawsuit Apple faces. Half a billion here, half a billion there, and pretty soon you're talking real money. For other examples, see here.

This case is a good example of the waste caused by the patent system. The common justification for IP is that it increases innovation and overal societal wealth (see my article "There's No Such Thing as a Free Patent"). But study after study concludes otherwise (see my article "The Case Against IP: A Concise Guide," and my post "Yet Another Study Finds Patents Do Not Encourage Innovation"). Is this surprising? After all, the patent system undeniably imposes enormous costs on society - companies spend millions of dollars on patent attorneys' fees and salaries, patent filing fees, licensing fees, litigation fees, and so on. Is the value of the extra innovation that patent law stimulates greater than all these costs? Nobody knows for sure, but the various studies almost universally conclude no. Some studies even conclude that the patent system decreases overall innovation, meaning that that we are paying a huge cost just to have innovation impeded. Thus, as noted by Mike Masnick, "if you build anything even remotely innovative these days, you're going to get sued for patent infringement, probably multiple times. It's become a massive tax on innovation, rather than a lever for innovation."

Many patent lawyers and IP advocates begrudgingly admit that the system is broken, or at least needs significant improvement. As a senior partner in the patent department of a major national law firm wrote me:

Stephan, Your letter responding to Joe Hosteny's comments on Patent Trolls nicely states what I came to realize several years ago, namely, it is unclear that the US Patent System, as currently implemented, necessarily benefits society as a whole. Certainly, it has benefited [Hosteny] and his [partners] and several of their prominent clients, and has put Marshall, Texas on the map; but you really have to wonder if the "tax" placed on industry by the System (and its use of juries or lay judges to make the call on often highly complex technical issues that the parties' technical experts cannot agree on) is really worth it. Of course, anyone can point to a few start-up companies that, arguably, owe their successes to their patent portfolios; but over the last 35 years, I have observed what would appear to be an ever increasing number of meritless patents, issued by an understaffed and talent-challenged PTO examining group, being used to extract tribute from whole industries. I have had this discussion with a number of clients, including Asian clients, who have been forced to accept our Patent System and the "taxes" it imposes on them as the cost of doing business in the USA.

But I disagree that the patent system is broken, or malfunctioning at all. It benefits certain people and companies, as all taxes and regulations do. The beneficiaries of this government program defend it with various forms of propaganda. For example, they say that is a major cause of innovation and wealth - indeed, that it is necessary for innovation. But as noted above, there is no proof that patent systems generate net wealth. Another tactic is to call patent a property right - in particular an "intellectual property right." But calling it a property right does not make it so. In fact, as I have argued extensively - from the perspective of someone who is both as a practicing patent attorney familiar with the system and a libertarian who is a strong advocate of private property rights - patent rights are not genuine property rights. Patents are artificial privileges granted by the state that actually undermine private property rights. A patent is a government grant that gives the patent holder the right to tell others how they can use their own property, by vetoing certain uses. They can use this veto right to extort ransom payments, politely called licensing royalties today.

IP advocates often say that infringers "steal" ideas from the originators, to bolster their characterization of ideas and patterns as property. In fact, in the dispute at hand, as reported here, "Nokia said Apple has refused to pay for use of intellectual property developed by Nokia that lets handsets connect to third-generation, or 3G, wireless networks, as well as to wireless local area networks. 'Apple is attempting to get a free ride on the back of Nokia's innovation,' Ilkka Rahnasto, Nokia vice-president for legal and intellectual property, said in the statement." In other words, Nokia is trying to make it look like Apple copied Nokia's patented inventions, so that it looks more like a thief. But in a patent infringement lawsuit, the patentee does not need to prove copying. In fact, the infringer could have independently invented the technology, totally unaware of the patentee's invention, and still be liable. While Nokia here implies Apple is getting a "free ride" by using IP "developed by Nokia," you can bet that they will happily accept a win in court over Apple even if Apple is shown to have independently invented the technology.

And what is wrong with copying, anyway? This is how society and technolgy advances: by emulation, by learning. The free market thrives on competition and cooperation, and also on emulation and imitation. Every stage of technology is built on the body of knowledge developed over the centuries. Emulation and the acquisition of knowledge play a key role - are essential to - society and economy. Nokia's own technology was not developed in vacuo. There is nothing wrong with imitation. It is part of the market. It is essential to progress. It is no more theft than learning is. In fact, IP can be a barrier to learning, and even lead to censorship.

So, no, the patent system should not be reformed. It should be abolished, for the sake of freedom, private property rights and prosperity.

For further elaboration of the ideas expressed in this post, see my monograph Against Intellectual Property, my article "The Case Against IP: A Concise Guide," and other material on my website."

Update: see Intel Will Pay $1.25 Billion to Settle Disputes With Rival, reporting: "Ending the computer industry's most bitter legal war, the chip maker Intel agreed on Thursday to pay a rival, Advanced Micro Devices, $1.25 billion to settle antitrust and patent disputes."

$1.25 billion in wealth transferred, and untold hundreds of millions spent on litigation, patent acquisition, losses due to strategic adjustments in response to antitrust and patent law ... Yet another example of how the central state's artificial legislative patent and antitrust schemes do nothing but destroy and waste wealth. Well, not only that--they also enrich certain classes who parasitically benefit from the system, e.g. patent lawyers, litigators, and large companies.

The cool, hip techno-pundits are usually reliably Obama-liberal/libertarian-lite types. A bit California-smug, engineer-scientistic, anti-principle, anti-"extreme." But okay overall. A soft, tolerant, whitebread bunch.

On the last This Week in Tech, I was pleasantly surprised to hear the always interesting Jason Calacanis voice support for nuclear power; and even more surprised to hear soft-liberal host Leo Laporte echo mild agreement with this. Good for them!

But then they had to revert to form when they, along with Natali Del Conte and Patrick Norton expressed unanimous disapproval of McCain's Internet Freedom Act, since they are all--"of course"--in favor of net neutrality rules imposed by the FCC. McCain's proposed statute would block the FCC's proposed net neutrality rules, which would forbid network providers (e.g. cable companies, telcos, and wireless carriers) from selectively blocking certain types of Internet use.

Got that? The techno-pundits are against regulation (by cable companies) ... so they favor regulation (by the FCC) of the cable companies ... so they oppose government legislation regulating a government agency. They sit there fuming about how disgusting McCain's draft legislation is. So they see that the state is terrible. Yet it doesn't occur to them that it might be a bad idea to trust the government to oversee the Internet. They are against regulation of the Internet, so they support ceding power to the government to ... decide how and whether the Internet should be regulated. It doesn't occur to them that we should simply favor property rights, individual freedom, and the free market. The closest any of them come to this position is John Dvorak, who has a libertarian and contrarian streak, and who often observes on TWIT that there's nothing wrong with tiered pricing--charging more for a fatter pipe, etc.

Is "no regulation of network providers" the libertarian position? It clearly would be if the network providers were purely private. In the libertarian view private property owners determine how their property may be used. There is no "right" to access the Internet. A private network provider ought to be able to offer service on whatever terms he wants; and consumers to accept or reject it. Tiered services, deep packet inspection, prohibition of certain types of uses or even certain types of content--that's up to the providers and customers and whatever deal they agree to. We libertarians believe in "capitalist acts between consenting adults," to use Nozick's phrase (see Rothbard's earlier formulation).

But because of various degrees of corporatism--state favors and protectionism, tax funding of infrastructure, etc.--the service providers are arguably not 100% private. But the solution is not to regard them as essentially part of the state and thus fair game for regulation, but to pair our call for no state regulation of the Internet (no net neutrality regulations) with a call for the abolition of all forms of corporatism, such as various laws that work out protecting larger companies (tax funded subsidies, IP law, wage and hour legislation, mandatory worker benefits, labor union legislation, minimum wage, incorporation statutes [note: this does not mean I think that limited liability is a privilege conferred by the state on corporations], and so on).

This is my take, anyway. I am not aware of much informed libertarian analysis on the net neutrality issue. Kevin Carson pointed me to Jim Lippard as "one of the better libertarian writers on net neutrality"--I'll have to take a deeper look, but from a quick glance I'm not sure he's a libertarian; here he writes, e.g., "providers shouldn't be able to block access to competitors' services"--should be able? This seems to presuppose the legitimacy of an overarching state regulation, which is certainly not libertarian.

Update: Leo Laporte must have gotten a lot of flak in the past week for supporting the FCC imposing net neutrality rules on Internet network providers. In TWIT 220, he expresses genuine concern with this. And he seems to get that the issue is not what rules the FCC should impose--which most of his technocratic guests in that episode focus on--but the issue of the danger of empowering the state itself to regulate at all. Most of the panelists at least seem leery of state regulation, but are concerned there is not enough competition in the network provider industry to ensure self-regulation. This concern is understandable, but the pundits should pause to ask: what is the state's role in causing the industry to be the way it is? In addition to being leery of state regulation of the Internet, they should oppose state policies that subsidize and prop up large companies or reduce competition; one of them even brings up the issue of how utilities are given monopoly status by municipalities. So they are almost there. It might help if we libertarians could elaborate the various state regulations and laws that have given current network providers more market power than they would have on a truly free market--taxes, minimum wage laws, implicit and explicit subsidies, the legacy of government-granted monopolies, pro-union legislation, and various other regulations that disproportionately shackle and hamper smaller companies and potential competitors; regulations that help the existing, larger companies by increasing barriers to entry into that field; state taxes, IP laws, and regulations that stifle dynamic change, innovation, and competition.

Laporte also mentions some kind of split on this issue among EFF board members. I looked at the EFF site and can't find much explicit about net neutrality--no categories, etc. They seem to be trying to keep a low profile on this issue, maybe because they have some pro-state-regulation board members. I did find this recent EFF article by Corynne Mcsherry, "Is Net Neutrality a FCC Trojan Horse?," which expresses the concern that if the FCC just grabs "ancillary jursidiction" to impose net neutrality regulations, who knows what other regulatory powers it might just unilaterally decide to assme the power to impose regulations pursuant to an "Internet Decency Statement." But though McSherry here seems to display healthy skepticism of state regulation, she is obviously trying to leave open the door that some state regulation of network providers might be favored by EFF: e.g., McSherry writes, "If 'ancillary jurisdiction' is enough for net neutrality regulations (something we might like) today, it could just as easily be invoked tomorrow for any other Internet regulation that the FCC dreams up (including things we won't like)." Note the bolded language. And she notes that one possible solution to the FCC's "ancillary jurisdiction" power grab is: "Congress could limit the FCC's power by authorizing to regulate only to ensure network neutrality."

The EFF, if it is to remain principled and a proponent of individual, Internet-related freedoms and "digital rights," must be clear on the enemy of such rights: the state. The moment EFF supports any state agency's regulation of private companies or the Internet, they have succumbed to their leftist confusions and statist sympathies and become worthless as principled defenders of individual freedom.

[Mises blog cross-post; SK cross-post]

Excellent post by Kevin Carson, Gene Quinn: Patent Twit of the Week, criticizing patent attorney-shill Gene Quinn's "arguments" for patents.