Steve Hamm writes in Business Week about another absurd patent link here. IBM has succeeded in getting one on a method to insert hems and haws into artificial voices used in recordings to make them sound more realistic. Most speakers try to kill those habits. The patent is for "generating paralinguistic phenomena via markup in text-to-speech syntheses." Imagine that. Monopoly really encourages meaningful innovation.

HBO got the exclusive right to broadcast Sunday's inaugural concert link here. They are now firing off take-down notices against YouTube posts of clips of the concert, even privately filmed ones--and making them stick. No question of fair use or who made the video.

Where is the outrage?

Dan McCurdy's article on Patent Trolls spawned supportive comments from CATO's Timothy Lee, which in turn attracted the approving notice of Ramesh Ponnuru and Jim Manzi over at National Review.

It's easy to find "inventors" who are enthusiastic about patents. It's not so easy to find actual innovators. This article - which is about innovation, not intellectual property - might give an idea why that is. This team has built a prototype product. It might go to market, it might not - but here is the thing: nobody is going to bring it to market without paying them. They can show it off, everyone can see how it works, but until and unless they get paid what they want, nobody can make it. The devil is in all the details. Even if they go to production, it is not the case the a rival is going to be able to jump right in with an identical product. Intellectual property just isn't part of the picture here.

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.

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

Over at the Mises Blog Jeffrey Tucker is reviewing and blogging about Michele's and my book Against Intellectual Monopoly. Here's a direct link to his article. As Jeffrey says: the discussion is getting pretty wild...we are being accused of being socialists in favor of some sort of common ownership among other things, presumably by someone who didn't read the book. If you have a few minutes, go take a look. You can also buy it from them link here

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.)