KOL079 | “Federalist Society IP Debate (Ohio State)” (2011)

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Kinsella on Liberty Podcast, Episode 079.

This is from March 3, 2011: “IP Debate: John Templeton Foundation’s Big Questions Debate series on Intellectual Property and Wealth Creation,” The Ohio State University Moritz College of Law Student Chapter of The Federalist Society (Moritz College of Law, Ohio State University, Columbus OH). Transcript below.

This debate was part of the “John Templeton Foundation’s Big Questions Debate series on Intellectual Property and Wealth Creation”; I debated patent attorney and adjunct IP law professor Steve Grant, who represented the pro-IP side.

A video was taken with a videocamera, but it was not direct mic’d so the quality is only so-so. The podcast version here is from my iPhone recording, which I often make during speeches as a backup, in case of low quality of the official version. My iPhone version is better quality, for my own remarks, than the audio from the camera (the audio file from  the camera’s recording is here). Professor Grant did his best, but didn’t have a solid argument for IP other than the standard “I think we should reform IP but not get rid of it.”

My opening speech is about 15 minutes and has decent audio quality, and is a summary of a hard-hitting version of the basic libertarian case against IP law (here is the powerpoint presentation I used; embedded version below). Grant’s speech is audible but I was not very close to him; but his conventional and unsystematic, more empiricist and positivist than libertarian and principled remarks will be of only mild interest to libertarians. For my 10 or so minute rebuttal to him, I left my iPhone at the table but it’s still audible; for the Q&A period, it was in front of me so it’s decent again for that part.

My host was Aman Sharma, a very staunch libertarian law student and head of the student chapter of the Federalist Society. When I was involved with the Federalist Society (lawyers chapters) in Philadelphia and Houston they were populated with mainly Newt Gingrich loving neocons; good to see some Austro-libertarians infiltrating their ranks. Sharma told me “I had a lot of fellow students approach me after the event with questions showing a new-found interest in the Mises/Austrian worldview.” That is cool and gratifying.

While in Ohio, I met my friend Jacob Huebert and other local libertarians/Federalist Society people—including Katelyn Horn and Maurice Thompson, of the 1851 Center, for dinner at Barrio Tapas. A fun trip, and great people.

TRANSCRIPT (from Youtube)
0:02
good afternoon president of the federal
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society on behalf of more federal society and I get lost inside here more so I welcome you to today’s event
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entitled isn’t Alexa property he relevant anymore proud to have the John Templeton
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Foundation sponsors for this event they’ve got excellent catered food we hope you’re enjoying I wanna mention
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just a few things before we get going the first is that elections with minimal water out of Schneider come out at the
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end of this month we an email out on the twin deserves so if you’re on plan and you’re on our site will be able to get
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the updates for that the boudin and whatever on that sort of thing next I’ll explain the format and then
0:44
I’ll get started with the brief introduction of speakers and we’ll get going here first the format as usual it is going to
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allow for debate so we’re gonna have clothing productions by each speaker starting with our guest speaker
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purchased upon detail and we’ll have a ten minute rebuttal in the same order on the Washington answer session with you
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the members of the audience so let’s start with her grandmother Stephen grant
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practices with assembly wall group in Dublin in the field intellectual property is most particular expertise as
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the prosecution of us had an application that originated in and offices he’s been admitted to
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practice before the ten years the US Patent and Trademark Office the Supreme Court of Ohio they go in there namaha a
1:25
federal district court and the Federal Circuit Court of Appeals he’s been frequent speaker continuing legal education courses as well as
1:32
general education presentations for adventures writers and artists he’s a regular contributor to the newsletter of
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the Ohio State Bar Association intellectual property law section he said a number of laws around the country including at warrants and he’s their
1:44
first teaching ability and stephan kinsella is a registered patent attorney and general counsel for applied
1:50
optoelectronics already former partner with 20 more he’s pressed me to run into patent applications where i’ve had
1:56
clients ability intelligent and others this is Beach FL dental lumineer seasoned student editor of Liberty and a
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pers and director at least ten indistinctly innovative freedom he’s published numerous articles and books on
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IP long and as you know law and application of libertarian principles of equal topics including international
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investment political risk and dispute resolution of practitioners di Louisiana’s civil law engineering and
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proxy’s Institute in 2008 before my actual blood pressure stopped extra
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policy logging currently teaches that the online leave is happening on intellectual property or libertarian legal theory with that please join me
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motivate first time develop thanks much
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okay got my talent one here it’s good to be here thank you come on I’m going to
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start out with some sort of Austrian economics type observations human beings
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in this world are largely dissatisfied creatures this is why we act humans
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employ means that are causally efficacious at changing the state of affairs that would otherwise occur so if
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to achieve ends they have to ameliorate their health uneasiness this is amaziing idea these means which
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in our bodies are necessarily scarce or rivals this means that there’s a possibility of violent conflict when two
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people struggle over a given scarce resource as the Austrian libertarian philosopher and economist of hunter
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Mahatma says only because scarcity exists is there even a problem of formulating moral laws insofar as goods
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are super abundant or free goods no conflict over the use of goods as possible and no action coordination is
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needed hence it follows that any ethic correctly conceived must be formulated
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as a theory of property ie a theory of the assignment of rights of exclusive control over scarce means because only
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then does it become possible to avoid otherwise inescapable and irresolvable
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conflict
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so in other words what libertarians favor is peace cooperation and prosperity and therefore we favor the
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assignment of property rights so there are resources that are scarce can be used peacefully and productively and
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cooperatively and in particular what we favor is the assignment of property rights as follows each person owns his
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own body and he also owns resources that he homesteads or that he acquires by
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contract from a previous owner this is exactly why a growing number of
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libertarians including myself oppose patent and copyright we view the grant of such artificial rights by the state
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as statist socialist and theft this is because these rights grant to third
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parties say inventors artists and creators of veto right over how owners use their own property in effect patent
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and copyright makes innovators and creators a co-owner with the original owner of the owners property and this is
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just theft is the redistribution of wealth it’s really that simple this is the problem of patent and copyright so
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for example a patentee acquires partial ownership rights and other people’s property but he did not homestead the
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property he has no contract with the owner and the owner has never committed any kind of tort or crime that justifies
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weakening his property rights or redistributing them them to the to the patentee now the question arises how
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contemporary into favor property rights and other advocates of capitalism in the
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free market how could they have been bamboozled into thinking that an anti-competitive monopolist to grant of
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state privilege by a criminal state be justified so let’s just take a quick look at the history of the sordid
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origins of patenting copyright as a Eric Johnson a law professor writes in an
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upcoming study the monopolies now understand his copyrights and patents were originally created by royal decree a
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stowed it’s a form of favoritism and control as the power of the monarchy dwindled these charter anomalies were
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reformed and essentially by default they wound up with the hands of authors and adventures so let’s just think about
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copyright copyright in a modern sense originated when Queen Mary created the
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stationers company 1557 which had the exclusive franchise over book publishing
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so this was based upon the monarchies desire to control the press and to control this the use of the printing
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press which is emerging into censor ideas and to have only approved ideas spread in 1710 was that to the ban
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formalized this idea of copyright and gave authors a copyright and one reason
7:22
authors were happy to have its copyright was now they had the right to control their own works so in a way the the
7:28
reason that they approved and won a copyright was to remove the state’s control over their own works it wasn’t
7:35
to be able to extort money from people using their words as for patent excuse
7:43
me the English Parliament enacted the statute of monopolies in 1624 and this
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was aimed at stopping the grants of letters patent by the Parliament by the crown which was being a notorious
7:56
notoriously misuse even it was used to authorize Sir Francis Drake to be an actual pirate on the season 1587 but
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there was a carve out for Manhattan early banned in the statute of
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monopolies except there was a carve out for for novel inventions so this is the origins of patent and copyright so it
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ends up being included in the American Constitution and the patent and copyright Clause of 1789 nowadays some
8:23
people say that it’s a natural right to have patent copyright it was never regarded as this it was it was done for
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purely utilitarian purposes to induce innovation and invention and creativity
8:33
John Locke was mildly favor of patenting copyright but never thought his
8:39
homesteading Theory covered it the founding fathers did also did not believe patent copy reverent natural rights it was put in there purely for
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Prudential reasons to encourage innovation so basically it was based upon some assumption at the time that
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it’s necessary or that it generates it’s necessary to generate wealth and
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creativity the problem is studies since then have not been able to verify this utilitarian
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assumption in 1958 fretts mclubbe a quasi Austrian economist was
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commissioned by Congress to write a study on the IP system is one of them anyone who’s interested in this field
9:13
should really read his study he wrote in 1958 in a study to Congress no economist
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on the basis of present knowledge could possibly stay with certainty that the patent system as it now operates
9:26
confers a net benefit or a net loss upon society the best he can do is famous sumption and make guesses about the
9:34
extent to which the reality corresponds to these assumptions if we did not have a patent system it would be
9:40
irresponsible on the basis of our present knowledge of its economic consequences to recommend instituting
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one and I’ve done an estimate myself because you’ll find that the advocates of intellectual property who claimed
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that this system is justified because it generates net wealth in the form of extra innovation they never bother queue
9:59
even attempt to try to figure out what’s what these numbers are so I’ve done it myself and I’ve come up
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with a conservative estimate that the patent system in America alone just the patent system imposes a net loss on the
10:13
economy of at least 42 billion dollars that’s a complete net loss and it probably reduces innovation that on
10:21
the net in the bargain so when we lose money to have worse innovation the point is
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the burden is on proponents of the IP system to justify it they need to tell
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us what is the cost of the patent system what is the value of the extra innovation that it allegedly induces
10:39
what’s the cost of the innovation that it suppresses and what’s the net number I’d like to know and in my view because
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of these empirical facts IP is arguably unconstitutional because the copyright
10:54
and patent Clause space it the purpose of the grant amount of this power to Congress is to promote the progress or
11:01
the size of the arts but there’s no showing that it actually does promote the progress of science in the arts so
11:07
what happens is in the meantime this idea of intellectual property becomes part of the fabric of Western capitalism
11:13
starts being called a property right this was done intentionally as Matt Guf says those who start using the word of
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property in connection with inventions had a very definite purpose in mind they wanted to substitute a word with a
11:24
respectable connotation property for a word that had an unpleasant marine privileges
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so basically intellectual propaganda as I call has been used to cover up the monopolistic character of these grants
11:36
so now you have people saying well my piece of natural right that just even
11:42
though its original purpose was monopoly censorship and control and then a utilitarian ground or they’ll say it’s
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justifiable empirical ground but they never give any evidence for this in a way it’s similar to the minimum wage
11:53
which economists routinely and universally regard as being harmful to the economy and yet it’s hard
11:59
to kill politically it’s very similar with regard to intellectual property economists are pre uniform in their view
12:05
that there’s no proof that a patent system is worth it but what happens is
12:11
because it’s in the Constitution and part of the American system libertarians and proper Carians and others who came in the free market
12:16
now they’ve sort of bought into this mentality that well it’s a property right or favor of property rights so and
12:22
you know after all it’s in the Constitution right well I’m not so sure that being in the Constitution is a good
12:28
endorsement the Constitution was nothing but a centralizing power grabbing coup the Constitution also permitted or
12:34
condone slavery paper money and inflation the business cycle judicial supremacy taxation tariffs capital
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punishment conscription war corruption domination drug prohibition mass murder war crimes torture Guantanamo Waco Ruby
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raised the Eagle Abraham Lincoln suspension of habeas corpus imperialism eminent domain state enforced bigotry
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racism and misogyny as Lysander Spooner the famous in Turkish said the
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Constitution has either authorized such a government as we have had or it’s been powerless to prevent it
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in either case is unfit to exist in my view of the Constitution is utterly unlimber carrion and we libertarians
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have to wake up and stop worshiping the Constitution as quasi-libertarian in the early America it’s put a libertarian
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they weren’t as fine ran might say wishing doesn’t make it so speaking of
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Iran one reason I believe for the strong Pro IP view among libertarians until the
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present day was her influence so she was part of the movement to help starting
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describe patent and copyright his property rights she even said ridiculously patents on the heart and
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core of property rights some of her modern acolytes say things like all property rights are
13:47
all property rights are property rights by the way line ran actually initially favored eminent
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domain because it was in the Constitution that she changed her mind later when she thought about it so she had this constitution fetish in worship
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because it was better than the Russia she came from the point is despite the
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propaganda about classifying patenting copyright as property rights they’re still artificial state monopolies the
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goal of the law and is justice and property rights not tweaking incentives by the state to produce innovation or
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maximize wealth the purpose of property rights is the fairly assign owners to
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scarce resources so they can use maybe use peacefully and productively instead of being fought over the purpose of
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property rights is to reduce conflict and as I mentioned in the beginning human action uses scarce means to
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achieve ends but it’s guided by ideas so the role of information and ideas is
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different than the role of scarce resources it means in human action so
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take imagine the idea of making a cake to them to make a cake you need a recipe but you also the scarce resources
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ingredients a bowl and oven your body you and your neighbor can both make the
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same type of cake at the same time as long as you have property rights and your own resources but you can use the
15:05
same recipe this is exactly why there are property rights with scarce resources but not in non scarce
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resources like ideas and if you think about it this way patenting copyright
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are always ultimately enforced against scarce resources money or body so for example if I assert my patent right
15:23
against you I take you to court I get the state court to issue state force against you to force you to cough up
15:29
some money from your bank account or to force you to physically stop under threat of an injunction using your body
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in a certain way so it always comes down to control of spirit resources and these
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in copyright laws serve as nothing but an excuse to assign resources from one
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person to another they’re merely disguised transfers of wealth from owners to innovators and others who
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receive a state privilege that protects them from competition so the prop with
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IP is that it undermines legitimate property rights so the reason property Rian’s like me or anti IP is for the
16:05
same reason where gains taxes and redistribution of wealth in the first place one more way to think about it is this
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how much time do I have in my okay one
16:17
more way to think about it assist the free market we live in a world of scarcity you can’t say this a bad thing
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because it’s natural but it certainly is a challenge to living we all have to find resources that are efficacious and
16:29
just satisfy our needs food shelter tools and with a free market where
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property rights are respected in competition is possible by the way competition requires emulation saying when someone’s doing
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and emulating it or doing better or learning from the body of human knowledge when this is when this is
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possible the free market generates amazing prosperity in the face of scarcity so you can think of scarcity is
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the enemy that the free market is trying to overcome and does a good job of overcoming it and yet we already have
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non scarcity in ideas the body of human knowledge grows over time this is what
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makes progress possible we can always dip into the body of human knowledge and add to it and learn of new alternatives
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things we can do for example I may know of two types of the pie chocolate pie
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human pie so I choose one of those as my favorite and that I might know of two ways to achieve that pie I can cook it I can
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hire someone or I can buy it or I can steal it well if I if I learn more information I might learn of a coconut
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pie now my universe of ends has been expanded or I might learn of another technique another technique to make the
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pie maybe I buy frozen pie so my Universal means is expanded so the more knowledge we have the Richards our
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universe of information that we can use to guide our actions so it’s a good thing that the body of human knowledge
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is always expanding learning is a good thing emulation is a good thing competition is a good thing and these
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ideas are already luckily not scarce and infinitely reusable transmittable learn
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about and to oppose artificial scarcity illness in the name of a free market and the name of property rights which
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operates the fight scarcity in the physical realm is suicidal and absurd and frankly not obscene and I will stop
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here [Applause]
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[Music]
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although the Constitution may not have
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been written exactly today and the importance a Shinto
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Congress and let me read one article 1
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Clause 8 section 8 says it says that to promote the progress of science and
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useful arts by securing for limited times and that’s the important word for
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limited times to authors and inventors and those are really important words to
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the exclusive right to their respective writings and discoveries yeah an author
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or an invention has given us something that we didn’t have okay they’ve taken
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goods when they thinking of view of the world and they put it through their mind
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to give you a few examples [Music]
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certainly we could all agree that if I’m ever to build that table I would have
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the right to sell the table to someone who wants to okay but are we going to deny during the time
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the top right Mel goes right to the character captain maybe I swear a bogey
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deck story that isn’t exist before he put it down on paper would we deny
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Harper Lee the story to tell about merge are we going to say that that book never
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had an influence on anybody and that public domain and let everybody take
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this copy in the area of patents would
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we say that we’re not going to give some sort of compensation to the inventor of
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pencil and the number of lives that were saved after Tennyson was introduced because a
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piece inside previously said there wasn’t agree to get out the article I’ve
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heard a lot of good things and some things I had I agree with with mystery-solving one of the things that I
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have to point out to you is that in the
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world today and we have a convention
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international convention called the virgin be sure to the United States for the renegade for many years did not join
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about 20 years ago but we have in the
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United the world today we have 164 countries that are parties to the Berne
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Convention in other words they have copyright system we have in the world
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intellectual property organization and the ability to get to get priority on
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your patent applications by finding in our own country we’ve got like 184 countries I don’t
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know any developed country of the world that does not have a copyright and more
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patent system and they have a wealth I don’t think that anybody would like to
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be the first one to jettison their system it’s one of the things that has
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happened and I certainly can agree with Professor with mr. Kinsella that we need
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to maybe make some changes in the very specific language that we
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have one of them being one of the problems that we all see with our copyright system for example is that the
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term of copyright is much much longer than it is that originally the United States they
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were about the same however it almost becomes a joke when I end up saying to
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people I did last semester by hybrid class here if I was a lobbyist for a drug company I would be going down to
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Congress and suggested they should be giving me 90 year passes for my drugs
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the important thing is the way leading the courage innovation is to make people
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innovative to basically put something out there right and at the end of that
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and this is where the limited times comes in our system requires that again
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at the term that invention belongs to the public okay there’s no way you can renew that
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back there’s no way that you can redo that copyright forever at some point in
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time the contribution the novel contribution is going to want to all of
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us and what we need to do is to encourage that I’m not necessarily the
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biggest supporter of President Obama but one of the things I hope you’ve heard it
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is standing in a dress is the need to get American innovation
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to start and to get it that is where we moved they had many other developing
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countries were going to be we’re developing country one of the things we
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can see today in China is a very strong effort in that country to encourage
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innovation to their back system has made tremendous strides in the last twenty
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years and so I think that we need to be
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honest intellectual property protection and it is not yes you might have had
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suggested to you a system that the government is involved in there is no
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copyrighted police or there shouldn’t be there is a faculty police but if
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somebody takes something I don’t like object I should have the opportunity good court and to stop taking and that’s
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what our patent system provides provides a civil remedy to people and one of the
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things that’s really important with the intellectual property system and this becomes real work when you deal with a
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client if somebody trespasses by my real
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property and I go to court nice to the poor trespass chances are extremely good
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that when I walk out of that court whether I bid the trespass sooner mom I
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was still over my house but that’s not true
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because if I go to court and I say that somebody is infringing might have just
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as much as that Court has the right to enjoin the other party from stopping her
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folks from there to Friendship the court also has the ability to determine that if the Patent Office was
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wrong in getting a patent because my invention is not useful or not audible
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or it is obvious I may well leave that court with out of
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the path I will walk in with property and we’ll walk out having the Caddy
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taken away from and that is valuable harnesses I think that American progress
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and progress around a lot of the world is attributable to patent copyright
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systems and I think that we need to keep it in place is it totally perfect no is it better
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though it would is it better to have it than to allow this you guess
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[Applause]
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okay thank you a few comments and reply you said that
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inventors and innovators give us something we didn’t have before can copyright that’s somewhat true although
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even Shakespeare borrowed from previous plays that works with others don’t think
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so all creators borrowed from others and you want for you to do that you couldn’t have the creation in the first place and
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as Benjamin’s / famous internist said if you want you to mention to yourself then keep it to yourself
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nice for inventors I don’t think it’s true that in many cases they give us something that we wouldn’t otherwise have the history of patents is rightful
29:04
at the example of the simultaneous or near simultaneous invention in fact
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wonder if he would support a independent inventor and in priorities of Defense and half of all which would help to
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ameliorate this injustice in fact that you mentioned
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pharmaceuticals I would commend everyone here take a look at the very good book the case
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children the data ravine which is free online on my site C or casaya or the
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resources page he’s got a great chapter in there they have a great chapter about pharmaceutical patents and they
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basically explode every mythos trotted out over and over and show that pharmaceuticals in the strongest case
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for patent protection most of the top ten women drugs of the
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last century were not patented at all and he showed that almost all the common
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assumptions comparable speaking about pharmaceuticals are just one would be false
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that’s what being the first country not have a patent system well I mean the past controlled about two hundred years
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old so countries had animation before then we had artistic creation for copyright law that Neverland and thus
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which ones have 50 years seven-year period in 1800 they had impact protection and innovation variety
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increased there’s a recent story of how Germany had almost no copyright protection for a period of time of
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eighteen hundreds and during that period of time the publishing industry thrived
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Oris magnitude more than the more control system is written so if you want to empirical studies there’s lots
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of reasons believe that it’s just simply unnecessary and I’d like to know what is
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the proof that the benefit I mean we all get admit that there’s a cost of the patent system in the copyright system it
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clearly imposes costs on society the question is what’s the internet results
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and is a greater than this cost I’d like to know how do we know that
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this is to his worth engine asks for pretty promoting innovation it’s not the
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job of the state they should the state does a terrible thing everything does except kill
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destroyed and propagandize it does a bad job everything else one if you want to
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improve innovation you know cost innovation strong system and property rights and wealth and this is what the
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state ruins and undermines everyday taxes over half of our wealth ruins
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another half another half of that half with the cost of regulations cost business cycles inflation imposes crazy
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regulations on companies with the FDA pro-union legislation and a wage loss there are no regulations basically is
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doing everything you can to kill private enterprise and the free market so if you
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want to promote innovation can’t stay out of the way haven’t reduce the tax rate have introduced regulations don’t
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go to this criminal penalizing monster that is hurting our lives and our
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economy putting people in jail for for smoking marijuana telling people in Iraq don’t trust this thing that is
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destroying our economy to add a monopoly right on top of it for people to make up
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a little bit for the harm to the economy so if you want to if you want to promote
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information reduce the size of the state drastically or eliminated one final comment as there be no contract police
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well there was about 100 domain seizures a couple weeks ago by this organization
32:50
so there was a police
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[Applause]
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the words that I heard in the bottle
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there were words like taxes monopolies in the copy regularly and let me start
33:21
with that last one I’m not living with the nice situation but in general and certainly on the back
33:30
side of things there is no criminal procedure in place and to the extent
33:38
that there is in copyright as I said I think the overall system is good at the
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edges it has things that are wrong and in fact the criminal infringement notice
33:53
that you see at the beginning of the movie when you write a movie from Blockbuster and F Langstrom on these
33:58
places I’d like to see that go away – I mean again it’s assuming should be
34:05
accomplished it’s a personal property type issue it should be settled between
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people taxes I would know that we impose
34:19
any taxes on you before the cut right path systems in the United States and in
34:25
fact my clients to go to bat rock this pay a considerable amount of money to
34:34
convince an examiner who is representing and watching an ex parte proceeding
34:42
between me and the examiner that he’s the Emperor state the rights of the American people we
34:49
don’t want to go back to somebody and take away an ability they have to do
34:57
something right now
35:06
but again this you know sort out those situations and on the word monopoly you
35:16
know the Constitution talks about an exclusive right meeting right to exclude
35:22
and in fact it’s been probably since the
35:28
late 1930s when the courts of stop talking about monopolies with regard to
35:34
Packers but the real economic finding has been in recent years and court
35:40
buildings is that in most cases a patent holder does not really have a monopoly
35:48
power okay we don’t get involved in antitrust issues in those situations
35:54
because there are enough non-infringing alternatives out there and in fact one
36:00
of the benefits of our system is that in getting the pet I have disclosed to you
36:08
how I do what I do and I to a set of plans and it is up to you if
36:16
you can design around that and move the progress line perfectly free to do so I
36:23
don’t see that we’ve got a problem and as I said I certainly don’t see any
36:28
country that has succeeded without having these protections as for Germany
36:36
in the 1800s and having very driving publishing industry that’s probably
36:42
correct because they could publish books that they didn’t have to pay royalties to be again we had problems in the
36:49
United States in that same time period we did not readily give a copyright
36:54
protection to authors from England for example and I cited because those people
37:00
were writing the English language what publishers in the United States were doing was they were printing to the
37:10
exclusion of American authors they were printing works by British authors
37:15
because they didn’t have to get a loyalty and although we had Henry Clay
37:22
gave a famous speech in the Senate talking about how Walter Scott Sir
37:28
Walter Scott was almost endless in Scotland because his books were being
37:33
ripped off by American publishers when does it be argued we have American
37:39
authors who are not getting their work out because a publisher published
37:47
you’d have to be a loyalty they’re going on in there they’re getting preference the first time you publish great so I
37:55
think that we have some distinct differences and we need to keep the
38:02
system in place fix it all right at this
38:18
time our speakers will take some questions from the audience
38:55
I wasn’t really using that as an argument my personal argument for a positive
39:01
argument to abolish copyright officer just rebutting the the comment by mr. grant that no countries had tried this
39:09
before I mean and just to show that there are counter examples that there are cases this is a pretty famous study
39:16
that came out I think six months ago if you search just search for German publishing or something like that on c4s
39:21
F dot org you’ll find the original newspaper article and the study and it goes into detail about how it worked but
39:28
I think basically what happened was it actually was not German publishers
39:33
publishing works from other countries I mean it was authors writing a lot of
39:39
books and they did it to make a profit or to create the to express themselves I mean you can sell a book even though you
39:44
don’t have a copyright in it it’s possible to do it you just sell it I mean this happens even right now a lot
39:51
of I mean the Mises Institute where I do a lot of work has in part because of the IP ideas opened up everything free they
39:59
published everything Creative Commons Attribution only not even a non-commercial thing and they say take it do whatever you want with it they get
40:05
put free PDFs and epub versus online and they and their their bookstore sales have tripled or quadrupled in the last
40:11
two years people read these books they learn about them and they want to buy the physical copy sometimes or they
40:18
donate more to the pieces too so I think the the incentive is to sell books for
40:23
profit just because there’s competition doesn’t mean it’s impossible
40:35
[Music]
40:43
yes well copyright law has a similar
40:55
feature already because if you if you happen to have independent creation then you’re not actually copying so you could
41:01
have no theory it almost never happens but it sometimes happens in software in
41:08
software there’s an approach called a cleanroom approach so what they’ll do is they will intentionally develop it’s not
41:14
being tellement with the guys dancing around in the in the suits it’s uh it just means they set up an environment
41:19
like a Chinese wall type thing where you can have proof from your procedures that these engineers had no access to the
41:26
software code of a competitor so that if there’s a similarity it had to have been an independent creation so if you added
41:33
this I mean it’s a if you think about it it’s a travesty that the patent law doesn’t have this because most people
41:38
don’t aren’t aware of this and I’d be curious if professor grant would be in favor of such a such a edition of change
41:45
to the patent law you you can even be the first inventor and still be stopped
41:51
okay so let’s say I have a chemical process where I’m a mixing process to
41:56
make a chemical it’s a novel process or a novel nozzle or something like that and I keep a secret for thirty years it’s a trade secret someone else
42:03
independently invents it they file a patent and they can sue me and actually stop me from using my own invention this
42:08
is true wrong is standard and copyright
42:23
is originality and so to the extent that you independently create the originality requirement the
42:31
requirement in patent law is novelty and
42:37
if the invention is known or used by others in this country for example for
42:45
more than a year before you applied for your patent that person would not be
42:51
entitled to a patentee what would probably happen if you’ve been using that process for 30 years and you get
42:59
sued you’re probably going to have a very good excuse because you’re going to show that if others knew the process and
43:07
you’ve used it for that long then the invention is in the public domain likewise the inventor who invents and
43:15
keeps it to himself as undertaken the
43:22
step that we ask for to get a patent you have to give us something you teach us
43:27
something we didn’t know how to do before ok ok so but if the if you’re
43:33
selling a product and the idea is embodied in the product then you’re right it would serve as a as a prior art
43:38
a statutory bar but if it’s in the case I gave it’s secret and if you’re selling just a regular chemical that has no
43:44
novelty in it but it’s just made by say this process which is trade secret it would not serve as a statutory bar and
43:50
you could be stopped even if it’s 30 years later furthermore if you independently invent something at the
43:56
same time or later but it’s you haven’t filed a patent for it you can also be stopped there so it seems to be only
44:02
fair that there should be an exception now someone asked about how you prove this well right now in the patent system
44:08
you have to be the inventor it has to be novel the invention has to be novel and
44:13
non-obvious but it also has to be your invention which means you are the inventor so that’s a statutory
44:19
requirement and so when you file a patent application you have to swear under oath that you are the inventor
44:24
which means you didn’t learn about someone else ok so if you had this defense than the person who was using
44:30
the defense could just make the same kind of proof he would have to prove that he was the inventor of it on its
44:35
own as well it would just be the same kind of standard of proof be used I want to make one comment about
44:41
the professor grant it’s correct that one of the stated purposes of the patent
44:46
system is to encourage disclosure and so that’s the bargain we call it right you in other words to get a patent monopoly
44:53
from the state and I realize it doesn’t make you a monopolist always in the in the antitrust sense although there is
44:58
always a tension between antitrust law and patent law but it is a monopoly grant that allows you to charge a
45:03
monopoly for a monopolistic price that’s the whole purpose is to let you charge a greater price because you can squelch
45:09
competition but you’re right that one alleged benefit is that we get this disclosure of ideas the the problem is
45:16
most of these things are idea that would have been disposed anyway because they’d be embodied the product and companies
45:22
we’re going to keep some things trade secret still that they don’t want to file a patent for so we’re gonna get disclosure of things that Larsen would
45:28
have been disclosed anyway and furthermore the other pernicious impact of this is the patent system is very
45:34
expensive and complicated and a lot of smaller companies and individuals cannot afford to file a patent application or
45:41
they don’t want to so they’re at risk of being shut down as I mentioned because the they were the first inventor so what
45:47
they do is they they engage in defensive patent publishing so they do they publish an article like in a journal you
45:53
have to pay a hundred dollars or something like this there’s websites to do this and they actually disclose their idea intentionally to set up a statutory
46:01
bar so no one else who patent it later so you’d have these poor people who are not trying to get a monopoly they just
46:07
want to practice their own invention and yet they’re forced to reveal what the otherwise would people have the right to keep as a trade secret in a in a free
46:13
society just to defend themselves from a potential patent suit so the disclosure
46:19
that the patent system encourages is not from the inventors who get the patents because they’re largely disclosing what
46:25
they would have had to disclose any way to market the product but it’s causing potential victims of the patent system
46:32
to disclose what they should have had the right to keep secret if they wanted to
47:28
okay so let me address those those points I mean I’m not making the
47:33
positive claim that there would be more innovation if you get rid of patent copyright although I think there would be but but my point is that the other
47:40
case has not been proven and I think it looks likely that the current system imposes a cost and overall in that cost
47:47
of at least forty two billion dollars one Society if you remove that cost alone then you make people wealthier
47:52
they have more money to engage in innovation by self my point was that if we want to improve innovation we have to
47:58
get rid of other government costs so that I wasn’t saying the copyright system is a tax although it is a tax what I was talking about was regular
48:05
taxes when the government takes 50% of the consumers wealth and taxes corporations and imposes all these costs
48:10
they basically reduce the amount of wealth that we have to use to engage in innovation and hire employees and things
48:16
like that so we would improve innovation by lowering the tax rate for example or in other government innovations that was
48:23
another point now when you ask basically you say and I don’t want to I’m not
48:29
trying to be cute here but you say you don’t see how excellent it would happen I mean a question or confusion is not an
48:35
argument right I mean it’s okay that you have a confusion or a question but that’s not an argument for an IP system
48:40
just because you don’t see how iso-ne would have what happened now there are there are reasonable suppositions or
48:47
ideas about how the the free society would operate but you know if you asked a denizen of Russia and Soviet Union in
48:54
1982 you told them we’re gonna abolish the state monopoly over making
49:00
toothpaste they might freak out and say oh my god who’s gonna make the toothpaste and if we have a free market in toothpaste how many flavors were
49:05
there being and how would I choose I mean it wouldn’t be fair to put the burden of proof on the person advocating
49:11
dismantling the oppressive state and the monopolistic communist system – do I
49:16
have to extrapolate and prove exactly what the new free markets gonna look like when we get rid of the state the
49:22
state has ruined things by distorting everything it’s hard to tell but I think we have some indications you would have
49:29
software made for profit and just like we have now in the in the and the open-source movement I mean this
49:34
goes on all the time what you have right now is you have all these interoperability problems between
49:41
technologies and standards precisely because as professor grant said when
49:47
you’re aware of a patent or a copyright of someone else you have to navigate around it or design around it so you
49:52
have companies putting all crazy coming up different interlocking
49:57
standards different connectors so you have all these standards that don’t mesh together right now so that’s a lot of
50:03
societal waste right there I think you could expect to see a lot more uniformity interoperability and
50:09
compatibility but any case I you know you can imagine any number of ways that
50:15
you could have software being generated look it’s hard to argue that you have no I don’t know anyone who would seriously
50:21
argue that in a copyright and patent free world you would have no innovation at all you can’t say there’ll be no
50:27
innovation you can’t say there being no software you cannot say there would be no artistic creativity novels movies etc
50:34
the only argument you can have is that there would be less but then how much less would there be and how do you know
50:40
that I mean how do you know that we have enough right now in fact there are some even libertarians who who say that well
50:47
the monopoly provided by copyright and patent is not enough extra incentive we still have a shortage of innovation so
50:53
we have to have an 80 billion dollar tax funded medical prize award that a panel
50:59
of government and industrial corporatist experts every year uses to hand out to two of the well deserving recipients
51:06
sort of government nobel prize so there’s no end of this maybe we could taxes we could have a trillion dollars in the pot we could increase the
51:12
penalties to a capital punishment and a million years of copyright term I mean where’s the end of this so basically
51:18
it’s a utilitarian idea that keeps piling on government controls to try to have a little bit more innovation
51:24
stimulated when you don’t even know how much it stimulates and there’s like I say there is no proof that that the
51:31
copyright in the patent system actually increases overall societal wealth
51:39
just like to point out that it’s too bad we don’t have the transcript here mr.
51:45
Kinsella just told us in the same answer that we need to get rid of the state but
51:50
we also need more standards of things have interoperability there’s a it was
52:41
it was a back-of-the-envelope calculation I mean I tried as best I could using data I could find and I’ve got a
52:47
blog post on it where I went through my numbers it’s if you search on my um I think it’s on my personal blog or some
52:52
the Mises blog I think it’s called revisiting the cost of the patent system something like that and I estimated
53:00
using some studies I found how much the cost of litigation is are the things like this and then so I came up with 31
53:08
billion actually it was a net with my first number and then about a year later an actual study came out a really
53:13
detailed study about the cost of patent litigation itself and this was based upon empirical studies of the number of
53:19
suits filed how much lawyers are paid and they concluded 31 billion dollars was the cost of patent litigation now in
53:26
my calculations I had assumed 20 billion so I was within an order of magnitude but I was off so they actually had 11
53:31
billion dollars more that’s why I added 11 to my 31 to make it 42 but yeah I tried to take into account everything I
53:37
can and I honestly think that’s a conservative number I mean I wouldn’t be surprised 100 billion
54:04
well well I’m just direct you to
54:09
seriously read the chapters a short chapel it’s not a short chapter but it’s a good chapter in bouldering Levine’s book it’s exactly on the pharmaceutical
54:16
ministry and their economists and their empiricists I’m not they go through this in detail and it’s really eye-opening
54:22
they just explode almost every single myth out there with hard numbers and they started writing their book to
54:28
defend IP and then they discovered all the evidence was the other way so they became ardent IP opponents so I would
54:34
take a look at that chapter and I think you’ll see that there’s really no support for these claims now you say they couldn’t sell it they
54:40
couldn’t make a profit that’s just an assumption that’s just an assertion I mean as a simple example we all go down
54:46
to the drug store right now and you see tylenol next to the generic acetaminophen and it’s about twice as
54:52
expensive some people buy the generic some people buy tylenol why is that they
54:57
pay twice as much for tylenol still and if your argument was correct then there would be no way tell them I’ll come make
55:03
a profit off of their their drug or they’d have to cut their cost down all the way down to the generic price in
55:08
other words they face competition and they have a reputation people
55:17
I mean I think a lot of your assertions
55:52
are just based upon they’re just false I mean I would just direct you’d also today or yesterday on the Mises blog
56:00
Hubert who’s here my friend Jacob Hubert his article his chapter from his book on libertarians and today his chapter on
56:07
intellectual property came out and he’s actually got a short summary of that ball turn will be in Chapter in a list
56:13
of all these wonder drugs that came about that had nothing to do with with patent protection so I think if you
56:20
actually see the facts you will see that a lot of the assumptions I mean I think you’re repeating this sort of common
56:25
wisdom and of course the pharmaceutical companies want protection from competition one reason they wanted is
56:31
because they’re hampered by the FDA process and they’re they’re harmed by taxes and regulations so they’re hoping
56:37
to make it up a little bit that way
57:33
well my solution to have a free market you respect property rights get the state out of the way and reduce taxes
57:56
well I’m an anarchist I think the state should be abolished of course and even if we don’t do that I think we should
58:01
have a minimal government like we had allegedly in the beginning of the country and I think the FDA is
58:06
completely unconstitutional as as is the DMCA aspect of copyright as is the
58:11
federal Lanham Act trademark law they are all they’re completely unconstitutional because they’re not authorizing the Constitution and this
58:17
this this idea that the Interstate Commerce Clause justified sit-ins the general police power is absurd ridiculous
58:29
yes yes it should be
58:35
just think about it this way approach it like this I mean I’ve had two 10-15 years to think about this hard so this
58:41
may seem shocking and radical but just think about it this way if you’re going
58:46
to propose the use of the state apparatus to establish this big
58:51
bureaucratic legislated system which clearly is causing some problems if
58:57
you’re going to come up with an argument like you just did about the pharmaceutical industry I mean your
59:02
argument is not good enough it’s just a it’s just short you know if you know or it seems to me I mean you really need to
59:08
have the burden of proof you mean if you want to argue that these patents are necessary then you need to come up with
59:15
some numbers and prove it and I mean from what I’ve seen the if you actually look at it hard like baldra and Levine
59:21
did you will actually see that all the assumptions are wrong it’s just wrong now if you start asking more than how
59:26
are they going to do this I mean you know it’s not the job of a political economist to tell you how to run your
59:31
business and how to make a profit you have to figure it out this is the cost this is what every entrepreneur faces
59:36
they face the fact that they need to have cost of exclusion right a movie a
59:42
drive-in movie theater if they have people that can watch the movie for free and listen to it for free because they
59:47
have loudspeakers and the screens outside I mean they could go lobby Congress for some kind of right to put
59:54
people in jail that are watching it for free or they can just put speakers in for each car like they did you know but
1:00:00
even a regular business that you have to have locks on the doors you have to have security guards you have to have a
1:00:06
receptionist at the movie you have to have someone that takes the ticket because if you don’t people just go in
1:00:11
and watch it for free so you have to envision a business and try to imagine
1:00:16
if you can make a profit with some reasonable or maybe creative cost of exclusion and sometimes it’s a challenge
1:00:22
sometimes you might have to bundle your intangible or your immaterial services
1:00:27
that are hard to keep from being leaked out bundle it with something else reputation
1:00:33
or vision of some kind of services something like that that’s the entrepreneurs job not mine the problem with this tweaking idea I
1:00:40
mean there’s no stopping point I mean basically if your argument is that without patents we have X drugs and
1:00:47
that’s not enough we could have X plus X plus y if we have a patent system ok so now we have X plus y allegedly although
1:00:53
I think it’s X minus y but we have X plus y now well Y is X plus y enough we could have X plus y plus Z if we just
1:01:00
strengthen the protections a little bit more or if we have this bonus system like I’m talking about I mean it’s only
1:01:05
80 billion dollars maybe we get 300 billion a benefit out of having this 80 billion dollar prize I don’t know if
1:01:12
your if your mindset is empirical and utilitarian there’s no reason to not propose that – well why not a trillion
1:01:19
maybe we get two trillion of benefit out of that one trillion it where’s the stopping point it’s a completely unprincipled position and the way to
1:01:26
make it principled is to stop making it seems to me arguments and thinking they’re conclusive I mean if you’re
1:01:31
serious you have to make a real argument and get the data
1:01:54
yeah yeah commented on that before what’s I mean it’s it shows the the
1:02:01
complete economic and literacy of gene roddenberry and these guys I mean Hollywood I mean money is one of the
1:02:07
best inventions of all time money is going to always be necessary for ich for
1:02:14
rational economic calculation to occur and we will never reach a post-scarcity society because we live in a world of
1:02:20
scarcity will always have scarcity in terms of scarcity doesn’t mean lack of abundance scarcity in this technical
1:02:26
economic sense means a particular object can only be used by one person at a time
1:02:32
used by me excludes your ability to use it so even if we had infinite bananas everywhere if I pick one you know this
1:02:38
is a scarce banana and the only way you can use it is to take it from me we can’t both use it at the same time now
1:02:45
in such a world you almost have lack of abundance type scarcity merging with the
1:02:51
economic idea of scarcity of a cuz in a world where there was infinite bananas and infinite food and everything even if
1:02:57
each particular one scarce no one would really care if you’d they took if no one would care if your banana was stolen
1:03:03
because you could just get another and in fact no one would steal it because they don’t need to steal it so in these
1:03:08
sort of hypothetical scenarios economics breaks down so I don’t think we’re ever
1:03:14
going to reach a post-scarcity and to the extent we have scarcity at all we have to have money to rationally
1:03:21
calculate economic activity so I think Star Trek was just measure the connection to IP but Star Trek was just
1:03:28
absurd there [Music] Oh
1:04:31
well I think what you just said is it’s more like a research proposal with like it’s it’s um it’s observing sort of ad
1:04:38
hoc some possible trends which would lead you to study it more seriously if
1:04:43
you wanted to really make that argument I mean I hear this argument all the time from patent lawyers they’ll say well you know America had a patent system since
1:04:50
1790 and we’ve been a great country ever since then but well we’ve also had
1:04:55
taxation and antitrust in war ever got every 15 years in this country so I mean do you want argue that’s the cause of
1:05:01
our prosperity I think probably what happens I mean it could be my personal
1:05:07
losses all the way around I mean you’re you’re confusing correlation with causation I think that this idea of IP
1:05:13
is entrenched and people have been sold the idea that is part of a capitalist property right system so when you start
1:05:19
having a country start having stronger property rights they of course increase their IP protection to because they
1:05:25
think that’s part of it but the reason innovation is improving and increasing is because the country is getting richer
1:05:30
because the property rights system is increasing at the same time so that would be my guess is what you would find if you actually looked into the details
1:05:36
closely
1:05:44
[Applause]
1:05:51
thank you