KOL475 | Guest Lecture: Intellectual Property: Principles of Austrian Economics II | ECON104 (Saifedean Ammous and Saylor Academy)

by Stephan Kinsella on October 8, 2025

Kinsella on Liberty Podcast, Episode 475.

This is my guest lecture for Saifedean Ammous’s course Principles of Austrian Economics II | ECON104 (recorded May 7, 2020, I believe), also now on Saylor Academy. Transcript and summary and other notes below.

KOL441 | The Bitcoin Standard Podcast with Saifedean Ammous: Legal Foundations of a Free Society, Property Rights, Intellectual Property
KOL314 | Patents vs. Bitcoin: The Bitcoin Standard Podcast (Saifedean Ammous)

GROK SUMMARY

Summary of Economics 12 Seminar: Intellectual Property Discussion with Stephan Kinsella

Introduction to Intellectual Property and Scarcity

Timestamp: 0:01

In the ninth discussion seminar of Economics 12, Principles of Economics 2, host Saifedean Ammous introduces guest discussant Stephan Kinsella, who has written extensively on intellectual property (IP) and its justifications. The lecture focuses on Kinsella’s paper, which explores the legitimacy of property rights and why IP lacks a coherent basis. Ammous highlights the core issue of scarcity: property rights manage scarce resources, but ideas, being non-scarce, cannot be owned without controlling others’ bodies or property, violating individual rights. This is described as a “kill shot” to IP arguments, though other critiques are also explored.

Utilitarian and Natural Rights Arguments Against IP

Timestamp: 3:07

Stephan Kinsella elaborates on the incoherence of IP, arguing that information is a characteristic of owned resources, not property itself. Claiming ownership over ideas, like owning the “redness” of a ball, would absurdly grant control over others’ property. He traces IP’s origins to Locke’s labor theory of property, which confuses action with ownership, leading to flawed justifications by Ayn Rand and others. Kinsella critiques the utilitarian argument that IP stimulates innovation, noting the U.S. Constitution’s temporary monopoly grants were based on unproven assumptions. He argues that 200 years of data fail to show IP’s net benefit, with studies suggesting it distorts or depresses innovation.

Empirical Weaknesses and Market Failures

Timestamp: 7:44

Kinsella challenges the empirical case for IP, pointing out that proponents assume a market failure in innovation without government intervention. However, studies are inconclusive or show patents hinder innovation, costing billions annually in the U.S. alone. He criticizes reports like the Commerce Department’s, which claim IP-intensive industries drive GDP, for mistaking correlation with causation. Ammous adds that academic theoretical models often support IP without empirical backing, relying on simulated universes to justify claims of increased innovation, further highlighting the lack of real-world evidence.

Alternative Business Models Without IP

Timestamp: 19:13

Ammous argues that the assumption IP is essential for creators’ income reflects limited imagination. Musicians, for instance, earn most of their income from concerts and sponsorships, not record sales, as seen with artists from local bands to superstars like Madonna. Platforms like SoundCloud and YouTube allow free music distribution, boosting popularity and concert attendance, as evidenced by Iron Maiden’s use of BitTorrent data for tour planning. Authors can profit from physical books, courses, or speaking engagements. Without IP, lower legal costs would reduce prices, benefiting consumers and producers, with first-mover advantages and reputation sufficing for profitability.

Trade Secrets and Regulatory Impacts

Timestamp: 27:44

Kinsella discusses trade secrets as an alternative to patents, noting that patent law encourages disclosure over secrecy, undermining natural market advantages. The FDA’s regulatory system exacerbates this by requiring public disclosure during drug approval, negating trade secret benefits and justifying patents. He argues that removing both systems would allow trade secrets and first-mover advantages to thrive, criticizing the cycle where one regulation (FDA) necessitates another (patents). Ammous suggests that trade secrets could reduce offshoring, potentially benefiting local industries.

Market Solutions and Moral Considerations

Timestamp: 32:58

Kinsella proposes that in a free market, creators like J.K. Rowling could profit without IP through fan support, crowdfunding, or authorized endorsements, as fans value authenticity. He refutes claims that IP prevents fraud or plagiarism, noting market mechanisms like Amazon’s removal of knockoff books naturally police such issues. Ammous emphasizes that fans are unlikely to harm creators they admire, and pirated copies by non-paying audiences only expand reach. Kinsella illustrates with examples like fake Crest toothpaste or McDonald’s, showing market incentives deter fraud without IP laws.

Visual Critique of Patent Policy

Timestamp: 42:28

Kinsella shares a chart critiquing libertarian Alex Tabarrok’s “patent policy on the back of a napkin,” which assumes an optimal patent strength without data. He argues that innovation decreases with more patent protection, contrary to Tabarrok’s unproven Gaussian curve, reflecting a broader failure of empiricists to address IP’s root issues.

Student Questions: Photography and Copyright

Timestamp: 45:25

A student, Tim, a former photographer, raises concerns about copyright’s role in photography, citing moral issues when images are used without permission, potentially stifling creativity. Ammous suggests market demand may not support all photographers, and alternative income sources like event photography could replace royalty-based models. Kinsella argues that copyright on photographs is absurd, citing cases like a monkey taking photos, and notes that digital technology makes copying unstoppable. He suggests private contracts or watermarks as solutions, emphasizing that information, once public, cannot be controlled like property.

Case Studies: Samsung, Apple, and Tesla

Timestamp: 1:03:03

Student Daniel discusses the Samsung-Apple patent battles, which enriched lawyers, and Tesla’s 2014 decision to open its patents, which didn’t spur expected innovation in electric cars. Kinsella notes that patent disputes create cartels, locking out small innovators, and Tesla’s move was largely PR, as they likely still acquire patents for defense. He argues patent thickets hinder innovation, acting as a tax on building upon prior technologies.

Open-Source Models and Ethereum

Timestamp: 1:12:28

Ammous praises open-source models like Linux, which avoid patent taxes and dominate critical infrastructure. Student Andrew highlights Ethereum’s open-source innovation, but Ammous critiques it as a Ponzi scheme, producing unprofitable “Rube Goldberg machines.” Kinsella humorously notes Ammous’s tendency to bring up crypto, contrasting it with his own focus on IP.

Protecting Trade Secrets and NDAs

Timestamp: 1:24:24

Ammous and Kinsella discuss trade secrets as a viable alternative, using NDAs to protect proprietary processes without patents. Kinsella explains that NDAs create contractual disincentives for leaks, but patents discourage secrecy by risking others patenting the same invention. They address concerns about employees leaking secrets, suggesting contracts and incentives like bonuses can suffice without resorting to violence. Ammous argues that Austrian economics shows coercive solutions backfire.

Guilds and Market Dynamics

Timestamp: 1:41:43

Ammous proposes that in a free market, industries like car manufacturing could form guilds to mutually respect innovations, shunning violators. However, he remains skeptical, believing information wants to be free and markets will find profitable models without IP. Bitcoin’s open-source success, dominating despite copycats, illustrates this, as its competitors lose relevance over time.

Conclusion

Timestamp: 1:46:11

The seminar concludes with Kinsella and Ammous emphasizing that IP’s flaws—philosophical, ethical, and empirical—outweigh its benefits. [Actually, I don’t concede there are any benefits. —SK] They advocate for market-driven solutions [there is no problem to have a “solution” to], encouraging students to contact Kinsella for further questions and to follow him on Twitter. The discussion underscores the power of free markets to innovate without IP’s coercive framework.

***

Audience Pre-Lecture Discussion and Questions

Kinsella:

For our joint lecture today, I think these are some of the resources you might want to share with the class, for the utilitarianism/empiricism issue (all articles or posts by me unless noted otherwise)

There’s No Such Thing as a Free Patent, Mises Daily (Mar. 7, 2005)
“The Overwhelming Empirical Case Against Patent and Copyright” (Oct. 23, 2012)
Against Intellectual Property, the section “Utilitarian Defenses of IP”
Boldrin & Levine, The Case Against Patents: https://www.aeaweb.org/articles?id=10.1257/jep.27.1.3
B&L, Against Intellectual Monopoly http://www.dklevine.com/general/intellectual/againstfinal.htm

TRANSCRIPT

Introduction to the Seminar

Timestamp: 0:01

Saifedean Ammous (0:01):

Alright, hello, and welcome everybody to the ninth discussion seminar of Economics 12, Principles of Economics 2. Today, I’m delighted to have as our guest discussant Stephan Kinsella, whose paper we covered during the lecture on Monday. He’s written extensively on intellectual property and the intellectual justification for intellectual property.

During the lecture on Monday, we focused on the earlier parts of Stephan’s paper, which pertained to the concepts of ownership, property, and the justifications for property—why property emerges and why it is legitimate. Then, toward the end of the paper, we discussed why intellectual property doesn’t really make sense.

Ultimately, the problem is the issue of scarcity. When things are scarce, property is the way we deal with this scarcity—how we manage scarce resources. But with ideas, given that they’re not scarce, you cannot enforce property rights in them. There’s no need for enforcement of property rights in them, and the only way you can enforce it would involve some kind of control over the body and property of another person.

In other words, if you buy my book, to enforce intellectual property on the content, I’d have to control your body—what you can do with your property. I’d need a mechanism to prevent you from taking something you own, like a copy of my book, and photocopying it, giving it to your friend, scanning it, putting it online, or emailing it to all your friends.

There’s no way to do that without violating your body and property. For me, this is the kill shot of the intellectual property argument. However, this isn’t the only kill shot we have. There are plenty of others.

Generally, the argument for patents is built from a utilitarian perspective: the idea that, okay, maybe it’s not nice that we have to throw the occasional teenager in jail for downloading an Iron Maiden song, but to make an omelet, you have to break some eggs.

We throw the occasional teenager in jail, but that gives more incentive for rock and roll bands to produce better music because they know their intellectual property is protected. There’s a lot to discuss here, including empirical work, which I thought would be a good topic for today’s discussion. I’d like to hear what Stephan has to say, and I hope you guys are looking forward to this as much as I am. Stephan, the floor is yours.

Stephan Kinsella’s Overview of Intellectual Property

Timestamp: 3:07

Stephan Kinsella (3:07):

Thank you, Dr. Ammous. I appreciate this. I’m always happy to talk about liberty, IP, and things I’ve figured out a bit about over the years. There were a couple of questions from students from previous lectures, and I’m happy to address them whenever you want.

If you’d like me to speak on the utilitarian aspect, in my article “Against Intellectual Property,” I discussed the scarcity issue and the functions of property rights in general, and why the basic case for IP is incoherent, which I believe Dr. Ammous has already covered.

The fundamental reason is that information is always a property, characteristic, or feature of an underlying owned resource. It’s just the arrangement of some previously owned good, and those goods already have owners. So, the only way to have property rights in information is to make it what Roderick Long calls a “universal.”

For example, if I have a red ball and I own the ball, that means I own its features or properties, like its redness. Does that mean I own everyone else’s red thing or every red ball? That would obviously be absurd—it would take property from them. That’s the basic principled, propertarian case against IP.

IP is heavily entrenched in today’s society. I believe it’s one of the most insidious ideas informing our legal systems and practices, like the trade war with China and Trump’s accusations that China is “stealing” IP, though they’re never clear about what that means.

This idea of intellectual property has risen in a herky-jerky way since Locke’s argument for private property rights, which relied on the metaphorical and vague idea that you own yourself, therefore you own your labor, and thus you own what you make with your labor.

From an Austrian or economic perspective, labor is just action. Saying you own your action is strange—action is what you do using resources you own or possess, like your body or other scarce things.

This notion that you own your body, labor, and creations leads to confusion. Ayn Rand’s followers talk about owning values, but Austrians believe value is demonstrated through action toward a goal, not something you own. This confusion in Locke’s ideas has led to practices like book censorship in Europe centuries ago, sparked by the Gutenberg Press’s threat to the established order, and the granting of monopoly privileges, originally called patents. Copyright was initially seen as censorship.

With the U.S. Constitution and the Industrial Revolution, Congress was authorized to enact patent and copyright laws for utilitarian reasons—to promote invention and reward creators for a limited time. This was seen as a deviation from the natural order, not part of common law or normal private property rights, but a temporary intrusion to fix a perceived issue.

The framers relied on tradition from England and Europe without empirical evidence, as econometrics didn’t exist then. They guessed the government could grant monopoly privileges to authors, painters, novelists, and inventors to induce output. You’d think in the 200 years since the Industrial Revolution around 1800, we’d have studies proving that the patent and copyright systems make us better off by producing an excess of innovation.

Critique of Utilitarian and Natural Rights Arguments for IP

Timestamp: 7:44

Stephan Kinsella (7:44):

My view is that most proponents of IP haven’t met this burden of proof. In the 1800s, free-market economists criticized patents and copyrights as monopoly privilege grants, arguing they deviate from the free market and private property, are anti-competitive, and protect producers from competition.

In response, advocates claimed these were not privileges but rights—specifically, intellectual property rights. This term arose to defend the system by fitting it into a natural property rights framework, benefiting certain industries.

However, the original constitutional basis in the U.S. was empirical, utilitarian, or consequentialist, creating an uncomfortable blend of natural rights and utilitarian arguments.

The natural rights argument suggests that if you create something, you deserve to profit, which sounds Marxian or Lockean. Both Rand, Locke, and Marxists have a confused view, tied to the labor theory of value—the idea that value comes from labor effort.

From a Lockean perspective, mixing labor with scarce resources establishes an objective claim to ownership, showing society you used it first. But extending this to labor or action creates confusion, implying property rights in actions, which makes no sense.

In the U.S. and Western Europe, industries like those of Thomas Edison entrenched the patent system with international treaties. The primary argument now is empirical: without government-granted monopoly privileges, there’d be an underproduction of innovative works—a market failure.

Scholars don’t claim there’d be no works, just fewer than optimal. They argue the government can recognize this market failure and craft laws to stimulate extra innovation. The implicit assumption is that the system’s costs are trivial compared to the gains from this extra innovation.

From a libertarian and Austrian economics perspective, this argument has several flaws. First, the Austrian objection is that value is subjective and ordinal, not cardinal or quantitative, so you can’t compare interpersonal values. The entire project is methodologically flawed.

Second, there’s a moral objection: the argument assumes laws should maximize social utility, but there’s no basis for this claim. It could justify horrific outcomes, like forcibly transplanting an eyeball to benefit a blind person at a slight cost to the sighted person.

Finally, there’s the empirical problem. In over 200 years since the Industrial Revolution, IP advocates haven’t met their burden of proof. Studies show the patent system may discourage or distort innovation, lead to rent-seeking, or at best, have inconclusive effects.

The only positive claims, like a Commerce Department study claiming IP-intensive industries generate 27% of U.S. GDP, mistake correlation for causation. These industries use IP because it exists, not because it drives their success.

The only studies with positive claims about the patent system’s effects are dishonest. Careful studies are inconclusive or conclude it hurts innovation. In 2025, we still don’t have a single proponent of the IP system who can meet their burden of proof.

Additional Critique and Real-World Examples

Timestamp: 19:13

Saifedean Ammous (19:13):

I agree entirely, but I’ll add one way the argument is often presented in academia: through theoretical models. Economists create a fake universe where people aren’t paid to innovate, then another where they are, run simulations, and conclude the paid universe has more innovation.

There’s an enormous amount of literature like this for many bad economic ideas. Even though empirical economics can be manipulated, it’s hard to conclusively show results favoring policies like expansionary monetary policy, so theoretical models are often used.

However, empirical studies on IP show little strong evidence that it works. There’s an assumption that intellectual property is the only way for creative people to make money. If you’re a musician without IP, people would steal your music; if you’re an author, they’d steal your book and sell it cheaper, undercutting you.

But this shows limited imagination, similar to the theoretical modeling people do to get desired results. Musicians, from local indie bands to superstars like Madonna, make about 90% of their income from concerts and sponsorships, not record sales. Copyright doesn’t help with that.

With platforms like SoundCloud and YouTube, artists post music for free to gain popularity and drive concert attendance. For example, Max shared a link about Iron Maiden using BitTorrent traffic data to decide tour locations.

This applies to authors too. People still want physical books and to engage with authors through courses, consultations, or speaking engagements. Even without IP, authors can profit. If publishers didn’t face legal costs to secure IP, books, music, and drugs would be cheaper.

In pharmaceuticals, most costs go to legal battles, not lab development, as argued by Boldrin and Levine. Without IP, first-mover advantage and reputation would suffice, and costs would drop, reducing the incentive for piracy.

The reason we have piracy and generic drugs is because the IP system makes things more expensive. Consumers and producers would be better off interacting freely. The publishing industry’s job is to get content from the producer to the consumer efficiently and cheaply.

If they can’t do it cheaply, people find better ways. With music, this has changed significantly over the last 10–15 years. Up until around 2000, music was sold on CDs because it benefited production companies’ IP model.

What benefited consumers and producers was making music as free as possible online, so listeners could enjoy it and artists could promote their work more.

Trade Secrets and Regulatory Impacts

Timestamp: 27:44

Stephan Kinsella (27:44):

Before we field questions, let me add a couple of things about the FDA system. I added links in the public chat that people might find interesting. One type of IP is trade secrets, which we haven’t discussed much.

There’s trademark, trade secrets, patents, and copyrights, and a few others like moral rights, semiconductor mask works, and boat hull designs, but the main ones are patent and copyright. Trademark is harmful too, in my view.

The idea of a trade secret is that you keep proprietary processes secret without needing a law, though trade secret laws provide extra remedies, which I consider unlibertarian because they allow government court force against people without a contract.

The purpose of patent law isn’t to encourage innovation but disclosure—to prevent trade secrets. The “patent bargain” gives inventors a 17-year monopoly in exchange for public disclosure, advancing science and arts.

However, the FDA’s regulatory system acts as a quasi-patent by imposing barriers to generics, requiring costly approvals and public disclosure of secrets, undermining trade secret protection.

This creates a cycle where one regulation (FDA) justifies another (patents). Getting rid of both would allow trade secrets and first-mover advantages to flourish naturally. Chronologically, they get it backward because the patent system started in 1790, and the FDA came later.

They’re justifying an earlier regulation with a later one, which makes no sense. It doesn’t occur to them to get rid of both systems, let people use trade secrets, issue drugs when they want, and let consumers try them if they assume the risk.

Trump touts the “compassionate use” exemption, grudgingly giving permission to someone on their deathbed to try unapproved drugs, acting like it’s a favor when it’s what natural rights allow anyway.

Market Solutions and Moral Considerations

Timestamp: 32:58

Stephan Kinsella (32:58):

When Dr. Ammous was talking about concerts and artists, you can think of ways people would make money and profit in a free market without relying on protectionism. Take J.K. Rowling, who wrote the Harry Potter books.

Even if she published for free on Kindle without copyright, she had millions of fans. She could have used Indiegogo, saying, “I’ve got books two and three written; I’ll release them with 5 million subscribers or pre-orders.”

If a movie was made, there might be multiple versions because you don’t need permission. One producer might offer her a share of ticket sales to consult and authorize it, outperforming knockoffs.

Copyright doesn’t guarantee profits—poets don’t make much now anyway. The argument that “without IP, how would I make money?” isn’t valid. Entrepreneurs must figure out their business model in a free market.

IP distorts the market, making some activities more profitable and others less so. Removing it would revert to a natural order, and we shouldn’t fear change.

Timestamp: 35:33

Saifedean Ammous (35:33):

The idea that J.K. Rowling’s fans would steal her books assumes fans want to harm her, which is strange. If a publisher has her permission, fans would likely pay a small premium to support her. Poorer audiences might access pirated versions, but that only expands her fanbase without hurting her.

Fraud and plagiarism are often confused with IP. Copyright doesn’t prevent plagiarism; it prevents selling her work with her name on it. Market mechanisms, like Amazon removing knockoff books, naturally police fraud without IP laws.

Timestamp: 36:58

Stephan Kinsella (36:58):

People often confuse fraud and plagiarism with patent and copyright, and they also confuse patent, copyright, and trademark because it’s a highly specialized, arcane legal field. Plagiarism and fraud have nothing to do with copyright.

If there was no copyright, people say, “I could take J.K. Rowling’s Harry Potter novel, put my name on it, and make millions.” That’s not what copyright stops. Copyright stops selling her novel with her name on it. If I published Stephan Kinsella’s Harry Potter and the Philosopher’s Stone, no one would buy it because they’d wonder what else I altered.

They want the original, with a guarantee of quality. If I’m lying about authorship, I’d be a laughing stock, and no one would trust it. Why waste seven hours reading a book if you’re unsure it’s authentic?

On the other hand, if I’m an upstart writer and say, “Here’s my interpretation of Harry Potter,” people know it’s a derivative work. There’s no fraud or plagiarism. Fan fiction, like Star Wars or Star Trek novels by amateurs, is the same—there’s no issue.

The market can police this straightforwardly. Amazon, for instance, wants to maintain good relationships with authors. When someone mixed my book with Andreas Antonopoulos’s in a poor translation and posted it on Amazon, they removed it because they don’t want to give revenue to scammers.

Market institutions aren’t idiots; they care about their interests. For example, in trademarks, if a knockoff Chinese company sells fake Crest toothpaste to Kroger, customers will find out, and Kroger would lose trust overnight. No one would invest in a fake McDonald’s in Times Square—it would collapse due to fraud.

Everything IP proponents argue makes no sense.

Visual Demonstration of Patent Policy Critique

Timestamp: 42:28

Stephan Kinsella (42:28):

Can I try to share my screen to show you something?

Timestamp: 42:35

Saifedean Ammous (42:35):

Absolutely.

Timestamp: 42:35

Stephan Kinsella (42:35):

I haven’t done Zoom much. There’s a green share screen button. I’m hitting that—oh, it’s asking for system preferences. Let me permit this.

Timestamp: 43:01

Okay, can you see this chart?

Timestamp: 43:07

Saifedean Ammous (43:07):

Yeah, can everyone see this little curve?

Timestamp: 43:07

Stephan Kinsella (43:07):

This is from one of my posts about Alex Tabarrok, showing that even libertarians who sound anti-IP are empiricists. They don’t strike at the root, avoiding principled statements like abolishing IP law.

Tabarrok’s “patent policy on the back of a napkin” draws a Gaussian curve, claiming an optimal patent strength, but provides no data to show where the optimum is or that the curve is shaped that way. I think it’s downward sloping—more patent protection, less innovation.

Timestamp: 45:06

I just wanted to experiment with this. Did you want to address the questions you sent me earlier, or what do you want to do? Tim has a question he wanted to ask. Tim, could you— I need to unmute you first.

Student Questions and Responses: Photography and Copyright

Timestamp: 45:25

Unidentified Student (Tim) (45:25):

I’m not sure I have a succinct question, but copyright is something I’ve dealt with my whole life. I’m a filmmaker but was a photographer for many years, and copyright was a huge part of our business model. I was always an advocate for it.

In the last few years, I’ve adapted, finding ways to make money elsewhere, like public speaking, rather than royalties. I’m not necessarily for or against it; I’m just following the market. But in photography, I felt strongly about it for moral reasons—you don’t like the thought that you put effort into something, and someone takes it and makes it their own.

This has happened to me multiple times—spending money on a piece of work that’s then used by another company, even in advertising. I think innovation in photography is stifled by stealing imagery.

I often make agreements with people I photograph, ensuring photos are used only in specific ways, like not for toothpaste ads. But without copyright, someone could use them for that, breaching my agreement. If imagery is stolen left and right, it would change how I work, stifling my creativity.

Some of my photos become brands, and when others use them, it seems like I’m endorsing their product, affecting me directly. I want to control what happens to my work after it leaves me. Royalties used to be a huge income stream, but now I make more from public speaking.

At the small level, if you put your heart and soul into something and can’t make money, you give up. What are your thoughts on photography and copyright?

Timestamp: 49:38

Saifedean Ammous (49:38):

To be honest, it’s not something I’ve thought much about, but I have a couple of initial ideas. This isn’t nice to say, but maybe there isn’t that much market demand for so many photographers taking so many photos. Copyright law might be creating a misdirection of resources by providing financial incentives for more photos than the market demands.

In a free market without copyright, other mechanisms would emerge. Sure, someone might occasionally take your picture and use it on their website, but if it’s systematic, companies can be boycotted by customers, suppliers, and other photographers.

Market mechanisms, like Amazon removing knockoff books or Kroger avoiding fake Crest, would apply to photography. There’s still money to be made in photography, like weddings or special occasions, where stealing is less likely because you send photos directly to buyers.

Removing copyright might mean some photographers switch from posting scenery online to more concrete work like weddings or company photography, where demand exists.

Regarding the moral side, I understand the feeling of unfairness if someone takes your work. I’m sure everyone here wouldn’t just take a series of photographs someone put their heart into. That moral unfairness is real. Let me let Stephan comment.

Timestamp: 51:59

Stephan Kinsella (51:59):

Photographs are interesting. First, the agreements you negotiate now are against the backdrop of an existing copyright system. Without copyright, agreements would be different, not presuming you own the photograph. Copyright law on photographs is perverse and absurd.

There was a case where a monkey took photographs, raising questions about whether there’s a human author or if the monkey’s owner owns the copyright. There was debate early on about whether photographs should be copyrightable at all, as they’re just light depicting factual reality, like maps or databases, which aren’t copyrightable in the U.S. because they lack originality.

Courts have said there’s an artistic aspect to how you aim the camera, set settings, or choose when to click, but a photograph is just a record of reality. You could argue it shouldn’t be copyrightable in the first place.

You use words like “take” and “steal,” which imply property, but the question is whether there should be property in photographs. The better word is “copy.” If you make information public, you can’t complain if people use it. If you want to keep a photograph private, you can, but once it’s public, it’s like a fact—you can’t expect people not to act on it.

Even with copyright, digital technology—scanning, torrents, encryption, and cheap memory—means you can’t stop copying. Sci-fi author Cory Doctorow said the internet is the world’s greatest copying machine, and copying will only get easier.

Relying on a business model where people can’t copy what you make public is delusional. Under copyright law, the photographer is the author. If you hand your camera to a stranger at Disneyland to take a family photo, they theoretically own the copyright. If you make prints later, you’re violating their copyright—an absurd result.

Photographers charge inflated fees for digital originals, but people can scan and print at home. You can’t stop that, so you need business models that work around it. Wendy McElroy quoted Benjamin Tucker: if you have money in a safe, you have a property right, but if you throw it in the street, you can’t expect people to respect that right and return it.

It’s the same with information. You can keep photos private, use watermarks, or add invisible markers to detect leaks, but copyright also hurts photographers by limiting freedom, like needing permission for background sculptures or murals.

Case Studies and Empirical Evidence

Timestamp: 58:20

Stephan Kinsella (58:20):

There are bizarre cases, like a photograph of the Grand Canyon. Someone else takes a similar photo years later from the same spot and gets accused of copyright infringement, even though it’s a recreation of a natural scene.

Once you allow property in ideas, meant to protect scarce resources, you get absurd results, like proving two equals one in math after a divide-by-zero error. Last week, a Supreme Court case questioned whether state governments can copyright legislation or court decisions.

The court said no, arguing the “author” is the people, not legislators, so public access is required. But copyright law could allow states to copyright statutes, making it impossible to copy or read laws without permission—an absurd result.

Courts bend the law to avoid harsh results when it affects the government, but not in everyday life. Cases like Aaron Swartz, who uploaded academic papers and faced life in prison, or someone jailed for a year for uploading a Wolverine movie, show copyright’s insane results.

Courts don’t consistently tamp down these absurdities unless it affects the government.

Timestamp: 1:03:03

Unidentified Student (Daniel) (1:03:03):

I touched on this at the end of our session on Monday. The Samsung versus Apple case, dragging on for six or seven years, enriched lawyers worldwide. I also brought up Tesla, which got rid of all their patents in 2014.

Elon Musk wrote in a blog post that he once thought patents were good but realized they stifle progress, entrench giant corporations, and enrich lawyers, not inventors. Six years later, we haven’t seen the innovation expected in the electric car market from big automakers. Any thoughts on that?

Timestamp: 1:04:28

Stephan Kinsella (1:04:28):

On the lawyer question, without the state legal system, half to two-thirds of legal jobs would disappear—patent lawyers, tax lawyers, drug defense lawyers. In a prosperous private property order, more lawyers might be employed for contracts and arbitration, as bigger deals benefit from legal advice.

The Samsung-Apple case cost tens of millions in fees, with royalties paid between big players, locking out small innovators who can’t afford to compete. The patent system creates cartels, reducing innovation and increasing consumer prices.

Regarding Tesla, they didn’t really give up their patents. They issued a press release saying they’d allow anyone to use their technology, but that’s not a binding license. Creative Commons tries this, but it’s legally unclear without a contract.

Twitter made a serious effort by requiring employee permission to use patents offensively, but Tesla’s move was PR nonsense. Big companies won’t rely on a press release for billion-dollar investments; they need a signed license.

The patent system slows innovation in electric cars due to patent thickets, acting as a tax on standing on the shoulders of giants.

Impact of Open-Source Models

Timestamp: 1:12:28

Saifedean Ammous (1:12:28):

Open source, like Linux, makes progress because you don’t pay a tax for every innovation. Mission-critical systems—internet infrastructure, servers, mobile phones—are open source, unlike consumer desktops. Every innovation builds on prior technologies, and patents increase the cost of navigating legal barriers.

Timestamp: 1:13:19

Unidentified Student (Max) (1:13:19):

My question is inspired by Andrew Keen’s book, The Cult of the Amateur, from the 2000s. He’s pro-property rights but argues that the internet’s shift to Web 2.0, where everyone can produce content, has bad consequences.

For journalism, anyone can give their version of facts, blurring truth. For music, he says MP3s and piracy hurt mid-tier artists, like a jazz quartet, who aren’t Iron Maiden but are professionals.

Without piracy prevention, these artists might give up, leaving only superstars and amateurs. But maybe we’re looking at it wrong. If I value their work, shouldn’t I pay through crowdfunding or other means, rather than relying on the government? Isn’t that the libertarian take?

Timestamp: 1:17:26

Saifedean Ammous (1:17:26):

The simple answer is that you and those who care should pay them more, rather than throwing teenagers in jail for downloading MP3s. For a small band, piracy doesn’t hurt—it increases attention.

A Chicago jazz band putting music on YouTube or SoundCloud gets more exposure globally, likely leading to more product sales. Even if it doesn’t, the idea that an unprofitable business justifies government violence isn’t valid.

Gaming Industry and Patent Concerns

Timestamp: 1:18:24

Saifedean Ammous (1:18:24):

We got another question from Matt, who works for a gaming company making a variant of a card game for the poker industry. They have a patent and tried marketing it to casinos, with one moderately successful trial run.

Casinos show interest but don’t want to pay to run it, despite evidence it’s profitable. They’re worried an online gaming site with resources could build their own version without the patent, making profitability slim. What do we think of this?

Timestamp: 1:21:10

Stephan Kinsella (1:21:10):

It’s not clear what Matt’s exact question is. I sent a link to my pamphlet, Do Business Without Intellectual Property, with ideas to minimize IP use. We live in a world where IP exists, so as a patent attorney, I represent clients who need to navigate it.

In gaming, investors want to know your IP strategy. It’s an unnecessary cost that slows you down. Focus on what makes money, not what’s patentable. Patents offer a temporary lifeline, but unless you’re a large company, they won’t sustain you long-term.

Timestamp: 1:22:59

Saifedean Ammous (1:22:59):

I agree with Stephan. There are ways to do business without patents. It’s often institutional habit—people think you must do things the conventional way, but you don’t.

The business model could be providing casinos with support and superior execution, so even if they could copy it, they’d prefer hiring the original creators for a better product. Providing value ensures payment, not hoping for a monopoly grant.

Protecting Trade Secrets in a Post-IP World

Timestamp: 1:24:24

Saifedean Ammous (1:24:24):

Boris mentioned that companies can invest in protecting their IP from leaking. If you develop a new industrial process, you don’t need a patent—you keep it in-house, limit access to a few engineers, and have them sign non-disclosure agreements.

This could reduce offshoring to places like China, potentially benefiting local industrialization. As free-market economists, we support free trade, but not all trades under current agreements would occur in a truly free market.

Timestamp: 1:26:03

Stephan Kinsella (1:26:03):

The patent system impedes trade secrets. In a free market, a trade secret might last decades until leaked or reverse-engineered. But under a patent system, if someone else independently invents it, they could patent it and stop you from using your own invention—an unjust feature.

This disincentivizes trade secrets, which people would naturally use without IP.

Timestamp: 1:27:09

Unidentified Student (1:27:09):

How would we protect trade secrets from employees who leave and take them to competitors?

Timestamp: 1:27:44

Stephan Kinsella (1:27:44):

You protect trade secrets with policies, procedures, and employment agreements, including non-disclosure agreements (NDAs). Contracts with employees or partners specify damages for leaking information, providing a disincentive.

In China, where IP enforcement is weaker, joint ventures required by their controlled economy often lead to leaks, which some view as competition and learning, not theft.

Timestamp: 1:30:08

Saifedean Ammous (1:30:08):

NDAs and incentives, like bonuses for not leaking, can handle this without violence. Austrian economics suggests that using violence to fix market issues backfires.

Ethereum and Open-Source Innovation

Timestamp: 1:30:52

Unidentified Student (Andrew) (1:30:52):

I’m interested in your thoughts on Ethereum. The lack of intellectual property is powerful—anyone can create an application, deploy it on the blockchain, and others can build on it without permission, creating a force of innovation like “money Legos.”

What do you think, considering you call Ethereum a shitcoin?

Timestamp: 1:31:50

Saifedean Ammous (1:31:50):

Ethereum has the most innovative Ponzi scheme in history, surpassing Charles Ponzi and Bernie Madoff. Innovation must be useful, but Ethereum’s network produces Rube Goldberg machines that haven’t generated revenue.

It’s an endless cycle of new ideas—build X, then Z, then Y—raising money but delivering nothing. Smart contracts tie up money, creating incentives to invest in new tokens, pump them, and attract more investors.

It’s like Herbalife, where housewives think they’re entrepreneurs but are just bag holders. Removing IP has allowed this industry to prosper in this way.

Timestamp: 1:34:58

Stephan Kinsella (1:34:58):

What’s funny is Saifedean is like the Bizarro Universe version of me. IP always comes up in my talks, and for him, crypto comes up even in IP discussions.

NDAs and Austrian Theory

Timestamp: 1:35:19

Saifedean Ammous (1:35:19):

Boris asked if protecting trade secrets with NDAs contradicts the Austrian theory of knowledge and information not being scarce. Information itself isn’t scarce, but access can be made scarce. There’s nothing wrong with keeping secrets, like money in a safe.

The issue is sharing a secret and expecting to control others’ actions with it. Austrians wouldn’t oppose keeping secrets, just using violence to enforce behavior after sharing.

Timestamp: 1:36:37

Stephan Kinsella (1:36:37):

There’s nothing wrong with using contracts, but IP advocates falsely argue it’s about fraud or contract breach. You can’t build IP on contracts. Property rights are in rem (against the world), while contracts are in personam (between parties).

Contracts are conditional transfers of property titles, not binding promises. An NDA could specify monetary damages for revealing information, but the fee must balance disincentivizing leaks without scaring employees away.

Contracts can’t mimic copyright because high fees lose customers, and low fees don’t stop copying. Guilds could protect information, but antitrust laws prohibit this, showing how government regulations prevent private solutions and justify IP.

Conclusion and Farewell

Timestamp: 1:41:43

Saifedean Ammous (1:41:43):

In a free market, if there’s value in protecting information, industries like car production in Detroit could form guilds where competitors agree not to copy designs, shunning violators. This might outcompete other markets, but I’m not convinced.

Information wants to be free, and value can be created without sophisticated barriers. Bitcoin’s open-source nature shows competitors fail despite copying it. Its dominance is over two-thirds of the crypto market, despite thousands of new coins. The universe takes care of it.

I have to go, but thank you, Stephan. Anyone else have questions?

Timestamp: 1:46:11

Stephan Kinsella (1:46:11):

Thank you, guys. I enjoyed it too. Good luck with the course. Feel free to email me offline with any questions. Bye-bye.

Timestamp: 1:46:23

Saifedean Ammous (1:46:23):

And find him on Twitter too. Bye-bye.