Actually, it was a farce from the beginning. But what do you call it when an inherent farce devolves into a an even bigger farce?

Details here and here.

This is an increasingly familiar pattern. Otherwise truthful people seem to have no problems lying in legal proceedings when they perceive the underlying laws and system is inherently unfair and stacked against them. That is why you see examples such as this and others such as music downloaders claiming that somebody else must have used their computer without their knowledge. In the end, more and more individuals are likely to conclude that it is easier to commit perjury as a potential shortcut remedy when faced with a lengthy and expensive legal entanglement with media conglomerates.

I sympathize with these people. If you want people to have respect for the law and the legal system, you must first make sure that you have laws and a legal system that is worthy of respect. Can you honestly say that this is the case when it comes to the current state of copyright law?

How else am I to describe the company called 'Continental Enterprises', which bills itself in its overview as "an intellectual property consulting firm that takes a novel and aggressive approach to brand protection and infringement issues." ?

They state that their "number one goal is to ensure that those who attempt to steal from our clients are left to wonder when, where and how we will strike next."

Look out folks - The Continental Enterprise outfit doesn't just know how to litigate in order to preserve an overly broad, maximalist IP scheme, but they are also apparently ninja-like experts in "asymmetrical warfare".

Chest-puffing from lawyers is always a sad spectacle, but let's examine their fine work in action, shall we?

Here is an example of them using subtle threats against a beverage review site for posting a picture of a product they were reviewing.

I'm sure the people at Continental Enterprises must be proud of their work. And I'm sure Monster Energy drink must feel that its money well spent.

Monstrous indeed.

[Hat-tip: Overlawyered.com/]

One of the most interesting things about patents is that many entrepreneurs I have talked to are unenthusiastic about them. You can make money by creating a product, building a business and developing customers. Or you can spend your time in court trying to grab money from someone else. Successful entrepreneurs tend to do the former. Richard Corsale is an entrepreneur, and writes to us his views about patents. His career titles include: software developer, project manager, CIO, CTO and CEO and Sandwich Artist. He is currently launching an Open Source software company with a value added business model. The concept centers around IP that is placed in the public domain (tofui.com). He is considering producing a mini-documentary about the launch of tofui and other companies that are embracing alternative business models.

Richard says: I have been an entrepreneur for as long as I can remember. I generally believe that whats good for the ecoystem of an industry is good for everyone in that industry. I view a robust public domain as crucial for intellectual advancement and cultural identity. Politically I suppose I lean left on social issues and center/right on fiscal policy.

He submits the following remarks about software patents:

Five Reasons the US Supreme Court should explicitly deny patent protection to software.

1. Software is simply a solution to a problem. Patenting the solution is pointless since it is protected under copyright. So what we end up with are patents that cover a conceived problem. Of course the problem does not exist until it is conceived, and thus it is abstract. Abstract ideas are not patentable subject matter and neither are algorithmic solutions. Software patents have nothing to do with software, rather with the purely imaginary problems that they solve. What we are left with is technical process or method patents. I will refer to these as Software patents throughout this document since that is what they were originally billed as. Applying exclusivity to a process (regardless of whether it involves a computer or not) is tantamount to oppressing creative freedoms.

2. The arguments in favor of software patents are based on a series of assumptions regarding innovation that do not translate to modern, digitally creative arts. Innovation in technology companies that are effected by such patents obviously do not require industrial infrastructure to acquire market share. Their goods and services are essentially inexhaustible. Patent protection was intended (in spirit) to grant a "head start" to inventors so that they might establish market presence on their own inventions, before having to compete with established companies with an existing industrial infrastructure; thus ensuring the incentives of upward mobility. The alternative was thought to be losing domestic markets to foreign sources. If this reminds you of the horse and buggy then you see where I am going with this. Today's technology juggernauts started in garages without patent protection and most are less than a decade old. Patents have in fact, hindered innovation through rent-seeking. For example: MySpace and Facebook both developed without the protection of patents. Both are constantly assaulted with multiple concept patents from companies that innovated nothing. Essentially the industry has enormous incentive to innovate without patents. The situation is analogous to an arms race and oneupmanship is the rule. Software protections are absolutely unnecessary.

3. The people filing amicus briefs on concering software patents are primarily people and organizations that benefit from monopolies on ideas. The reason that Microsoft, IBM and other patent laden Goliaths expect to benefit from patent protection on software is obvious. However Bill Gates famously said: "If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today....The solution to this is patent exchanges with large companies and patenting as much as we can." Others that argue reap the benefit of software patents through "donations," licenses or litigation fees. If you want to know how innovation is really effected, ask software engineers and startups what they think. With assured anonymity they would provide honest unbiased feedback without fear of legal retaliation. They usually side with common sense rather than special interests.

4. The length of time that software patents remain valid render them oppressive. By granting a twenty year monopoly to companies in an ecosystem where consolidation is the rule, you are ensuring that the top 1% of tech companies will hold the vast majority of the IP in the industry. This means that the state reinforces corporate monopolies with state granted monopolies furthering their power to crush opposition. How does that foster innovation? I do not think this point needs to be expounded upon. It is just common sense. The U.S. Constitution never envisioned a scenario where someone could simply imagine the future and stake a claim on it without action or liability of failure. Then as happens now upon either success or failure (through acquisition or bankruptcy or liquidation) the inventor's intellectual assets wind up in the hands of the very companies that they were intended to protect against.

5. One point that makes most proponents of software patents cringe is the international enforcement of software patents. It is impossible, impractical and unethical to deny countries access to concepts that are standards of modern computing. The patents that are filed in the US are generally considered to be ludicrous and overly obvious by the international patent community. There will be no global consensus on software patents anytime soon if ever. Quality standards in nations that have allowed software patents vary greatly and are difficult to enforce even within the EU. At the end of the day it comes down to this: one person or company on the planet Earth owns the exclusive rights to a concept. They then attempt to divert revenue from companies around the world into their coffers. This is obviously not going to benefit countries that are charged with enforcement. Developing countries with little IP have no incentive whatsoever to render verdicts favorable to foreign companies that lay claim to broad concepts. International enforcement of idea patents is pure fantasy. What we are really left with is a massive disadvantage for tech companies in the US. If you want to see this in practice print out ten random technical process patents. Now imagine that you are presiding over an infringement hearing on these patents one at a time. Most would be eliminated in US courts, but presume that you are in a country with no laws to cover patentable concepts (most expressly prohibit idea patents) and see how many you find in favor of.

In closing I would like to point out that if you affirm software/technical processes as patentable a firestorm of litigation will ensue, resulting in a massive and unjust transfer of resources. The resulting effect on innovation in the US would lead to the inevitable question: Why would we expose our company to the risk of crushing litigation in the United States when our markets are just as accessible through the Internet?

[From Mises blog, Dec. 7, 2007]

I received an impressive inquiry from a high school senior: "I am contacting you to ask if I can interview you for my senior project paper, which is a persuasive paper about why copyrights are invalid and impractical. I will have between 5-10 questions regarding intellectual property for you to answer." I said sure; and she sent on her questions, which were:

1. What would you say is the most powerful argument against copyrights and patents? 2. What would you respond with to someone who argues that resources do not have to be finite or scarce in order to be allocated as property? 3. How would you respond to Lysander Spooner's argument that property is wealth that is owned, and wealth includes ideas since they can be manifested into tangible wealth? 4. What about the argument that people own their minds, so they own the mental products? 5. Some anti-IP people believe in a right to first sell. Would you say that the original creators should have a right to sell the creation first? Why or why not? 6. What would you respond to someone who claims that if there were copies all around, the original inventor wouldn't get as much profit as he should have?

My replies are below.

Question 1. What would you say is the most powerful argument against copyrights and patents?

As I elaborate in In Defense of Napster and Against the Second Homesteading Rule and Against Intellectual Property (both available here), humans need to use scarce or "rivalrous" resources -- for example, tangible things like land or food or clothing -- to survive. The nature of these things is that only one person can use or control the resource. Thus, there is a possibility of conflict over the use of these things. For people to live peacefully and productively in the world, we need to be able to find ways to use scarce resources without fighting over them. This means that each scarce good--each thing that might be the subject of conflict--is assigned one unique owner, someone with the exclusive right to control that resource. The rules for determining who is the owner have to be objective, fair, and just, in order to be generally accepted and serve the function of reducing conflict. It is for this reason that ownership is thus assigned to the person with the best claim to the thing in question--the most objective "link" to it. This is the libertarian-Lockean idea of "first use"--whoever first possesses or uses a thing--that is, establishes objective property "borders" with respect to the resource--is the owner. Any other rule is non-objective or arbitrary. For example, if the first user did not have the best claim to the resource, then whatever rule you use to assign property rights, property is not secure because some latecomer could just take it from the current owner. So any property assignment rule at all presupposes the first-user idea--the idea that an earlier user, ceteris paribus, has a better claim than any other user. Which implies the first user -- the homesteader -- has the best claim of all. Any other rule in effect violates the notion that latecomers have an inferior claim to earlier users. For example, a thief who steals property is in effect a latecomer. And mere verbal decree is not sufficient either, for one or two reasons: first, because (with respect to unowned resources), it's not an objective use of the thing; it does not establish any visible link; and any number of people could make such a claim, in contradistinction to first possession, which can only be done by one person, and which is objective and visible; and second, because (with respect to already owned resources) this amounts to theft, or a latecomer ethic.

Now, given this understanding, we can see that any just and peaceful and prosperous society requires the assignment of ownership rights in scarce resources in accordance with the libertarian homesteading or "first use" principle. Now ideas -- creative works protected by copyright or inventive designs or recipes or processes of patent law -- are not scarce resources. Any number of people can have a copy of a song; or can use the same method or design, with their own bodies and property. To assign rights in such things--called "ideal objects"--means setting up enforceable claims in these intangible things--but force is a tangible, real thing that can only be applied to other real (scarce) things. In other words, because ideas are scarce, assigning rights in ideas necessarily is accomplished by assigning ownership rights in scarce resources. So, for example, the holder of a copyright to a novel has a partial ownership right over the bodies and tangible property of everyone else in the jurisdiction, because he can stop them from using their bodies or property in a certain way. The owner of the patent for a mousetrap can stop you from using your own body and wood and metal to make a mousetrap having a similar design to his patented design. But as we have seen above, recognizing such rights contradicts the only just and objective property assignment rule, since it overrides the ownership rights already established in already-owned things. I homestead property, and own it; then someone else acquires some rights to control my property merely by a decree of the state, in effect, merely by their thinking of a way to use their own property, which is not "first use" of the resources they now claim ownership of.

So, in short, the problem with patent and copyright is that it amounts to theft of rights to scarce resources.

Question 2. What would you respond with to someone who argues that resources do not have to be finite or scarce in order to be allocated as property?

Assigning rights to non-scarce things necessarily infringes on rights to scarce things, since IP rights are enforced with force, real force, in the real world, against real things. For example, the copyright holder can force the "infringer" to pay money to him; or can get an injunction forcing him to stop using his body and (scarce) property in a certain way. Assigning rights to non-scarce things acts much like inflation of the money supply does: the more you do it, the more you dilute and reduce the value of real property (money). Question 3. How would you respond to Lysander Spooner's argument that property is wealth that is owned, and wealth includes ideas since they can be manifested into tangible wealth?

Wealth is too nebulous a term to be used here and is unnecessary. It appears to mean value; but as Hoppe and Rothbard show, value is not ownable or owned. The owner of property has no property right in the object's value, since its value lies in how others' appraise it. (Hoppe argues this in his TSC, as I note in my Against IP article, at text at note 79.) See also Rothbard's explanation for why there are no rights to one's reputation--because a reputation is what others believe about you, and you don't own their minds or opinions. (I think this is in Ethics of Liberty.)

Question 4. What about the argument that people own their minds, so they own the mental products?

This line of reasoning is based on the confusing notion that creation is an independent source of property rights. This error is similar to the confused idea that we own things we mix our labor with because we "own" our labor. We own -- have the right to control -- various scarce resources, such as our bodies and other scarce resources we homestead or acquire from previous homesteaders. We do not own "labor"; labor is just an action, an activity of the body. To be sure, when one first uses unowned property, and thereby homesteads it, he is engaging in a type of "labor"; but we do not need to rely on the confusing metaphor that we "own" our labor. By working to emborder or possess an unowned resource, one thereby establishes a visible link with the property, thus establishing a better claim than any latecomer, i.e. ownership. This chain of reasoning does not imply or rest on the idea that we "own" our labor.

As for creation, it is often maintained that one can acquire ownership of things by either finding (homesteading), contract (acquiring it from a previous owner), or by creating the thing. But this is confused: creation is not an independent source of ownership. In fact, a bit of reflection shows that it is neither necessary nor sufficient. If you own a resource and re-shape it into some new, more useful, more valuable configuration (say, you "create" a mousetrap using your wood and metal; or you "create" a statue by carving up your hunk of marble), then you own the resulting "creation" simply because you were already the owner of the material that constitutes it. So it is not necessary to think of creation as a "source" of ownership rights. Likewise, if you carve a statue into someone else's property, then you do not own the resulting statue; rather, the owner of the marble is entitled to have his marble back, and perhaps damages for trespass. So creation is not sufficient for ownership either.

In fact, the only legitimate ways of acquiring title to a given scarce resource is to either homestead it from its unowned state, or to contractually acquire it from someone who already owns it and who can trace his title back to an original act of homesteading. This fully exhausts all ways of coming to own scarce things. This is because matter cannot be created by man, but only rearranged.

Now let me note one other thing. Rothbard explains in Ethics of Liberty why there is not really an independent right to free speech; there are only property rights. There is no "right" to free speech that gives you the right to speak on others' property--you must have the consent of the owner. And if you own property, you can do whatever you want on it, including speak--not because you have a "right to free speech" but because you can do whatever you want with your own property so long as you do not invade others' property rights.

So back to your question: we do not own the mental products of our mind for several reasons. First, owning one's body, just as owning property gives you in effect a (derivative) right to speak on it, allows you to use it to do useful things, such as come up with ideas, or even sell your services, or labor. There is no need to engage in the confusing fiction or metaphor that you "own" your labor, or you "own" the "products" of your mind. Second, "products of the mind" is far too vague of a concept. It is so broad that if property rights were granted in them, they would swamp and override all real rights in real things. And finally, if the products of your mind are scarce, you presumably own them because they result from reworking material you already owned (if not, as in the stolen marble example, you do not own it at all, but someone else does). And if they are not scarce, they are not the subject of property, since granting property in them is impossible, and can only be accomplished by eroding property rights in others' things. Question 5. Some anti-IP people believe in a right to first sell. Would you say that the original creators should have a right to sell the creation first? Why or why not?

I believe you may be referring to the doctrine of common law copyright. As a practical matter, if you have an idea or manuscript, you can use this to leverage payment to reveal it. But if you are foolish enough to let the information become public, it is too late to do this. As Benjamin Tucker noted: "You want your invention to yourself? Then keep it to yourself." (see on this Wendy McElroy, Copyright and Patent in Liberty).

Question 6. What would you respond to someone who claims that if there were copies all around, the original inventor wouldn't get as much profit as he should have?

Austrian economics teaches us that values are subjective, and that the only way to determine an objective price is on the market. See on this Rothbard's Utility and Welfare Economics, e.g. The only way to know how much profit someone "should" make is to see what people are willing to pay them for. Part of the market is the need to incur costs of exclusion. If you don't put a lock on your business, people will steal it. If drive in movie theaters didn't incur the cost of putting little speakers for each car, then people would free ride by watching it from outside. To decide whether a given endeavor is worthwhile, one must take all costs into account, including costs of exclusion. The more creative find ways to exclude that have a low enough cost and that exclude a sufficient number of free riders so that the business can be profitable. For those entrepreneurial plans that have too high a cost, they should not be engaged in. So we see people finding ways to profit from their ideas, given the free rider problem--so rock bands give away their music for free (it plays on the radio, e.g.) so they develop fans who will pay to see them play live in concert (but even here, there are costs of exclusion--the ticket selling and enforcement mechanism, say). Or television shows are broadcast for free and paid for by advertisting. And so on.

[Mises blog post; SK cross-post]

The power of big business was once again illustrated in several stories this week. Two stood out. The first reported the ability of the three big banks to talk to the Secretary of Treasury in the midst of the financial crisis link here. Another was their ability to ignore public opinion and do little or nothing when pressed by the Congress to modify mortgages to help out beleaguered home owners avoid foreclosure or to meliorate the financial crisis. One respondent was Congresswoman Marcy Kaptur (D-OH) and the other was economist Simon Johnson link here. The bottom line of that story was that the moment to reform our financial system had past and now would not happen. The banks were making money and were happy with things as they are. To paraphrase the words of Rahm Emanuel, the good, the crisis had been wasted.

Let me highlight a few excerpts from Google digital library plan opposed by Angela Merkel: German chancellor opposes the internet firm's attempt to put every book ever written online:

German chancellor Angela Merkel yesterday waded into the row over Google's plans to build a massive digital library.

The move was a remarkable intervention from a leading world politician in a growing dispute about the threat posed by the internet, and Google in particular, to publishing companies, authors and also newspapers.

In her weekly video podcast, before the opening of the Frankfurt Book Fair this week, Merkel appealed for more international co-operation on copyright protection and said her government opposed Google's drive to create online libraries full of scanned books.

"The German government has a clear position: copyrights have to be protected on the internet," Merkel said, adding that there were "considerable dangers" for copyright protection online.

Isn't this astonishing? I thought "the goal" of copyright was to promote the spread and growth of human creativity. Now it appears "the goal" is to protect copyright itself. This reminds of government school advocates who say they "believe in public school"; who oppose any attempt to reform or privatize public school because it might threaten public schooling--when the goal of public schools is supposed to be education. Google's "plan would make millions of out-of-print books available online and thus would not cannibalise existing sales, as those books were not readily available to buyers. Google argues that it is increasing access to works that would otherwise never see the light of the day." But the state fears the unregulated behavior of free people. Who knows what people might do with this information? If you let people freely connect and communicate in a digital world, the state's copyright and other regulations might not even reach them! And we can't have that!

So these atavistic brutes want to kept information locked up in musty paper because of a fear that some people might learn things without dropping a nickel in the Galambosian box. If they don't understand it, if they can't control it--Hulk smash! Doesn't this recall the heartless zeal of drug warriors who are willing to deny suffering people medical marijuana because the only way to effectively outlaw recreational marijuana use is to allow no exceptions. And we have to prevent recreational marijuana use... don't we? We have to protect copyright, don't we? We have to have government education, don't we? I mean, who can imagine the horrors of a dystopian world where people were free to use marijana; where they had hundreds of millions of books available any time, at their fingertips; where states are not able to brainwash and propagandize students in their little loyalty-factories.

[LRC cross-post; SK cross-post]

In my post An Open Letter to Leftist Opponents of Intellectual Property: On IP and the Support of the State, I noted that both conservative and libertarian IP advocates, and leftist IP opponents, all accept the idea that IP is a type of property right. The leftists oppose IP for this reason--because they are opposed to private property rights; and the libertarians favor IP because they are proponets of property rights. I noted Richard Stallman and Eben Moglen as examples of the former.

I just listened to Moglen's speech below (google video link). He's smart and has some good insights and criticisms here and there. But, although some hail the speech as "absolutely brilliant," Moglen seems has no coherent underlying or principled theory other than vague anti-corporatism and an inconsistent belief in "free speech" combined with the idea that in today's age, this means free software, almost free hardware, and free, unlimited bandwidth--he says this is everyone's "birthright" (as socialist Finland believes, too--it recently enacted legislation making broadband access a legal right). I didn't jot down all the problems I noted when I listened to it, but, for example, he opposes regulating the EM spectrum as a property right--he seems to think it has been treated as private property since the federal government nationalized it decades ago, and he seems not to realize that despite technological advances there is of course still scarcity and thus the need for property rights; he seems to be in favor of copyright, and even some form of patent (if I did not misunderstand his comments); he speaks of upholding the Jeffersonian goals of the Constitution's IP clauses, which is both naive and positivistic; he tosses off confused comments about how the nature of economics has changed. He is rightly extremely cynical about the corruption and incompetence of Congress, even though he does not seem to oppose the state on principle or even its IP law and its positivistic Constitution, and even though he seems to want to trust the same state to provide everyone with unlimited, free bandwidth as their "birthright", and to use the power of the state to outlaw the charging of price for bandwidth services (in this he seems to go beyond even the net neutrality advocates goals).

If only the leftist opponents of IP would shore up their views with a more realistic view of politics and the nature of the state and a better appreciation for the indispensability of private property rights and Austrian economics.

(google video link)

[Mises cross-post; SK cross-post]

The proposed Google book scanning deal has provoked a great deal of opposition. Google co-founder SERGEY BRIN, defends it link here. He makes a reasonable set of points:

"This agreement aims to make millions of out-of-print but in-copyright books available either for a fee or for free with ad support, with the majority of the revenue flowing back to the rights holders, be they authors or publishers."

"...rights holders can at any time set pricing and access rights for their works or withdraw them from Google Books altogether."

"For those books whose rights holders have not yet come forward, reasonable default pricing and access policies are assumed. This allows access to the many orphan works whose owners have not yet been found and accumulates revenue for the rights holders, giving them an incentive to step forward."

"...nothing in this agreement precludes any other company or organization from pursuing their own similar effort. nothing in this agreement precludes any other company or organization from pursuing their own similar effort."

I remain most concerned about the lack of present competition. But I remind myself that possible future competitors can come forth should Google et al price themselves too richly.

In the meantime, getting a deal that makes the books available is the critical point. Brin reminds us that even library books don't survive fire and flood.

Opponents of copyright will remain opposed on principle. That strikes me as quixotic, even as I agree in principle.

As noted in this alert by the law firm Fulbright & Jaworski, the U.S. Patent and Trademark Office (PTO) has announced that it is rescinding controversial rules promulgated in 2007 that have been ensnarled in litigation since then. The rules sought to limit the number of patent claims per patent application, and the number of continuing applications that could be filed. As I noted in Radical Patent Reform Is Not on the Way, these changes are not radical, as the patent privileges lobby paints them. But the very fact that they were so vociferously opposed by the organized patent bar, such as the AIPLA, indicates that these changes would probably have been in the right direction. Basically, anything the AIPLA is against, the libertarian should be for.

Following the rule that each President is worse than the last and eventually makes you nostalgic for his predecessor, here we have a case where the Obama administration is fighting one of the few halting, tentative efforts of the Bush administration to actually improve matters. As a PTO press release stated, the current PTO Director "has signed a new Final Rule rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property." As Fulbright's alert notes, "The exact scope of the PTO's procedural rulemaking authority, a highly contested issue in this dispute, remains unresolved. The rescission of these rules may prove to be a tactical decision in a quest for greater PTO rulemaking authority. Despite the PTO's emphasis that these rules were proposed by the previous administration, the current administration, via Secretary of Commerce Gary Locke, is actively lobbying for substantive rulemaking authority at the PTO."

[LRC post; SK post]

Interesting post on Wired, Oct. 7, 1806: Do You Copy? Carbon Paper Patented, about Englishman Ralph Wedgwood, who received "the first patent for carbon paper." But this case only shows that simultaneous invention is common, and that inventions usually come one way or the other. As the report notes, Wedgwood's "work seems to duplicate that of Italian inventor Pellegrino Turri":

Turri in Italy had by 1808 completed an early typewriting machine he had been working on for several years. It, too, was for use by the blind and relied on some form of carbon-impregnated paper. So, his work was more or less simultaneous with Wedgwood's.

Also,

Scottish engineer James Watt, of steam-engine fame, had invented a tissue-copying process for business correspondence in 1779. But it required special inks and fluids and was a wet process for the user, so it didn't catch on.

[SK post]