I have profited from Professor Boudewijn Bouckaert’s insightful essay “What Is Property?”, Harv. J. L. & Pub. Pol’y 13, no. 3 (Summer 1990): 775–816, which was part of a symposium on Law and Philosophy which also included Tom Palmer’s seminal article on IP.1
Unfortunately, Bouckaert’s article is not available online other than behind the HeinOnline paywall.
[Update: via email to me on March 2, 2012, Professor Bouckaert gave me permission to post his article: it is available here and here.]
Below I will briefly highlight some of the key insights that helped illuminate the IP issue for me, as can be seen by my citations to and quotations from this paper in Against Intellectual Property. I quote here a relevant passage from AIP, with endnotes:
It is a peculiarity of property rights in patents (and copyrights) that they do not arise out of the scarcity of the objects which become appropriated. They are not a consequence of scarcity. They are the deliberate creation of statute law, and, whereas in general the institution of private property makes for the preservation of scarce goods, tending . . . to lead us “to make the most of them,” property rights in patents and copyrights make possible the creation of a scarcity of the products appropriated which could not otherwise be maintained.[64]
Bouckaert also argues that natural scarcity is what gives rise to the need for property rules, and that IP laws create an artificial, unjustifiable scarcity. As he notes:
Natural scarcity is that which follows from the relationship between man and nature. Scarcity is natural when it is possible to conceive of it before any human, institutional, contractual arrangement. Artificial scarcity, on the other hand, is the outcome of such arrangements. Artificial scarcity can hardly serve as a justification for the legal framework that causes that scarcity. Such an argument would be completely circular. On the contrary, artificial scarcity itself needs a justification.[65]
Thus, Bouckaert maintains that “only naturally scarce entities over which physical control is possible are candidates for” protection by real property rights.[66] For ideal objects, the only protection possible is that achievable through personal rights, i.e., contract (more on this below).[67]
Only tangible, scarce resources are the possible object of interpersonal conflict, so it is only for them that property rules are applicable. Thus, patents and copyrights are unjustifiable monopolies granted by government legislation. It is not surprising that, as Palmer notes, “[m]onopoly privilege and censorship lie at the historical root of patent and copyright.”[68] It is this monopoly privilege that creates an artificial scarcity where there was none before.
[64] [Arnold] Plant, “The Economic Theory Concerning Patents for Inventions,” p. 36. Also Mises, Human Action, p. 364: “Such recipes are, as a rule, free goods as their ability to produce definite effects is unlimited. They can become economic goods only if they are monopolized and their use is restricted. Any price paid for the services rendered by a recipe is always a monopoly price. It is immaterial whether the restriction of a recipe’s use is made possible by institutional conditions—such as patents and copyright laws—or by the fact that a formula is kept secret and other people fail to guess it.”
[65]Bouckaert, “What is Property?” p. 793; see also pp. 797–99.
[66]Bouckaert, “What is Property?” pp. 799, 803.
[67]It could also be argued that ideal objects deserve legal protection as property because they are “public goods,” that is, because of negative externalities which arise if IP is not legally protected. However, the concept of public goods is neither coherent nor justifiable. See Palmer, “Intellectual Property: A Non-Posnerian Law and Economics Approach,” pp. 279–80, 283–87; Hans-Hermann Hoppe, “Fallacies of the Public Goods Theory and the Production of Security,” Journal of Libertarian Studies 9, no. 1 (Winter 1989): 27; also [in] Hoppe, The Economics and Ethics of Private Property, chap. 1. As Palmer points out:
the cost of producing any service or good includes not only labor, capital marketing, and other cost components, but also fencing (or exclusion) costs as well. Movie theaters, for example, invest in exclusion devices like ticket windows, walls, and ushers, all designed to exclude non-contributors from enjoyment of service. Alternatively, of course, movie owners could set up projectors and screens in public parks and then attempt to prevent passers-by from watching, or they could ask government to force all non-contributors to wear special glasses which prevent them from enjoying the movie. ‘Drive-ins,’ faced with the prospect of free riders peering over the walls, installed—at considerable expense—individual speakers for each car, thus rendering the publicly available visual part of the movie of little interest. . . . The costs of exclusion are involved in the production of virtually every good imaginable. There is no compelling justification for singling out some goods and insisting that the state underwrite their production costs through some sort of state-sanctioned collective action, simply because of a decision to make the good available on a nonexclusive basis.
Palmer, “Intellectual Property: A Non-Posnerian Law and Economics Approach,” pp. 284–85. There is no way to show that ideas are clearly public goods. Moreover, even if ideas were public goods, this does not justify treating them as property rights, for the same reasons that even wealth-increasing measures are not necessarily justified, as discussed above.
Bouckaert’s comments about privity of contract and the implications of classifying IP rights as real rights help to show why “IP-by-contract” arguments are flawed, as discussed in Kinsella, “Law and Intellectual Property in a Stateless Society,” in Legal Foundations of a Free Society, Part III.C. For example, he writes, at pp. 794–95 (bold and bold-underlined emphasis added; citations omitted):
As shown by the historical outline of the concept of property in the continental legal tradition, property was considered the most fundamental of real rights (droits reels, dingliche Rechte). The continental legal doctrine traditionally makes a sharp distinction between these real rights and the so-called personal rights (droits personnels, creances, Forderungsrechte). Within the category of real rights, property is considered as the most complete right. The holder of it is entitled to the right to use property, to enjoy the yields of it, to alienate it, and even to destroy it (ius utendi, ius fruendi, ius abutendi). Property implies the right to complete control of the good. All other real rights have to be qualified as partial alienations of this right to complete control, such as usufruct, easements, pledge, mortgage, and the right to build plants on land owned by third parties.
Nevertheless, this traditional distinction between property and other real rights did not remain safe from criticism within continental legal doctrine. At the end of the Nineteenth Century, some civil law authors, of whom Planiol was the most famous representative, developed the so-called personalist theory (theorie personnaliste), in which the distinction between real and personal rights was maintained, but conceived in an alternative way.[46] According to this theory, real rights differ from personal rights because they establish a different kind of interpersonal obligation. Real rights imply a universal and passive obligation, that is, the obligation of everybody to refrain from acts that interfere with the owner’s control of his good. Personal rights, on the other hand, imply a specific obligation of the debtor either to transfer a good under his legitimate control, to perform a specific action, or to refrain from a specific action.
This personalist theory is undoubtedly more in accordance with the economic approach of property rights as developed by the American school of property rights. Pejovich for instance defines property rights as follows:
[P]roperty rights are defined not as relations between men and things but, rather as the behavioural relations among men that arise from the existence of things and pertain to their use. The prevailing system of property rights assignments in the community is, in effect, the set of economic and social relations defining the position of interacting individuals with respect to the utili[z]ation of scarce resources.[47]
This approach can lead to a broad use of the notion of property rights, which differs substantially from the classical notion as developed by continental legal dogmatics. In effect, all kinds of entitlements which are recognized by the law and are enforceable by the courts, can be qualified as property rights. From this point of view, property rights could include not only real rights, but also the personal rights of creditors to performances of debtors, the familial rights of parents who are owed some duty by their children and vice versa, the fiscal rights of the state towards its citizens, and even the administrative powers of civil servants over assets of the public domain that pertain to the use of scarce resources.
By accepting this conceptual explosion of the notion of property rights, some debates, such as the aforementioned controversy about the legal nature of intellectual rights, are reduced to a matter of degree. Conceiving intellectual rights as real rights would then merely consist of questions about the obligations of third parties. When one conceives of intellectual rights as mere personal rights, the rights imply only obligations from specific debtors that result from contractual arrangements (for example, the editors and the purchasers of books, works of arts, and software programs). By conceiving of them as real rights we extend intellectual obligations to everyone, even those who are not in contractual privity with the author. In both cases, intellectual rights have to be qualified as property rights. Only the extension of the obligations will be different.
The question now arises whether this whole discussion about the definition of property rights is only a matter of terminological convention, or whether it has some deeper relevance with regard to the economic and ethical foundation of property rights. In my opinion, the latter is the case. To argue this, I will first revive the old distinction of real and personal rights, and second I will show that this distinction has some economic and ethical relevance because the same kind of arguments that are applicable to real rights are not apposite to personal rights.
The distinction between universal obligations and specific obligations is by no means novel in the continental legal tradition. As mentioned earlier, Roman law made a distinction between actiones in rem and actiones in personam. The personalist theory is wrong to reduce the distinction between both categories of rights to a difference in the obligations they entail. Universality of obligation is linked with a fundamental characteristic of real rights that logically precedes the difference of the involved obligations. In contrast to personal rights, real rights protect physical control of the good by its owner. The existence of real rights requires two conditions: first, a factual condition, such as the physical control by somebody of something; second, a legal condition, such as the compatibility of this physical control with the given property rules within a legal system. This double aspect of real rights can be illustrated in several ways. It would be, for instance, a pointless debate about who should own the sun, the universe, and the ozone layer. It is clear that in these cases real physical control by an owner is inconceivable.
A later passage also has relevance for this issue (pp. 804–806; citations omitted; bold and bold-underlined emphasis added):
In the case of voluntary transmission of the ideas, the obligation to refrain from the use of the idea or to use the ideas under certain conditions (for example, the payment of royalties) could be linked with contracts as a source of personal rights and obligations. In this case, it is important to analyze whether the act of communication can be interpreted as a contract and whether such obligations are provided or implied by it. There is of course no legal difficulty when the author and the editor include explicit clauses in their contract pertaining to the use of the ideas. According to the classical theory of contracts, it is not even necessary to include such obligations explicitly. Contractual conventions, which are common in society, are considered contextual material for contracts provided that they are not explicitly excluded by it.[57] Suppose that the obligation to respect the basic structure of a literary work is generally accepted as a standard obligation of contracts between authors and editors. A violation of this obligation should then be considered a breach of contract.
In the case of involuntary transmission of ideas and in the case of voluntary transmission without any explicit or implicit contractual background (such as visiting an art gallery where no warning with regard to copyrights is made), neither contract nor tort can be considered the source of the obligation to refrain from the use of ideas. To qualify involuntary transmission of ideas as facts analogous to quasi-contracts is hardly defensible. When somebody makes a mistaken money transfer, the possession of the amount by the recipient is without basis; it is reasonable to ask him to repay the amount. In the case of an involuntary transmission of ideas, the person who made the idea public did not make a mistake and the recipient did not receive any scarce resource. They were merely exposed to information without asking for it. Consequently, there is hardly any basis in natural justice to require from involuntary receivers of ideas a compensation when they happen to use the information. If this should be the case, one could question why such an obligation should be limited to the kind of information the current legislation happens to protect. The way people clothe themselves, the way they comb their hair, the way they paint their houses, and the way they seduce their partners are all kinds of information communicated involuntarily. When a reason of natural justice applies for novels or technological recipes, why not for other kinds of information? This logical extension to all kinds of information would result in a multiplication of obligations, actions, and trials.
The obligations of third parties that result from the laws with regard to the protection of intellectual property can, as a consequence, be qualified only as obligations that are directly imposed by the government. In this respect they are exogenous to the inner logic of private law. They belong to the realm of macro-economic measures by which the government pretends to stimulate particular activities to foster the general welfare. To create artificial scarcity with regard to the use of ideas that are involuntarily transmitted is tantamount to the imposition of taxation to finance subsidies for particular groups that are considered to be in the public interest. The only difference is that the users of the ideas compensate producers directly without the intermediation of the government.
If it is true that the so-called intellectual property rights have nothing to do with the classical notion of property, but rather have to be qualified as a kind of government intervention in the market place, it would be appropriate to treat them as such in our ethical and economic valuation. For instance, we can ask whether the government is entitled to provide additional revenue to some categories of citizens by limiting the classical property rights of the other citizens. In fact, this practice is representative of the so-called intellectual property rights. By putting restraints on the free use of information that is received by citizens outside any contractual framework, governments create an opportunity for intellectual producers to increase their revenue by allowing them to “sell” the use of this information to third parties. One can question whether overall welfare is really increased by taking from citizens a part of their liberty as defined by classical property rights to foster intellectual production.
- Tom G. Palmer, “Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects,” Harv. J. L. & Pub. Pol’y 13, no. 3 (Summer 1990): 817–65. [↩]
