Kinsella on Liberty Podcast, Episode 240.

From Episode 23 of Cameron Talks Science.

Episode 23: Patents and Paywalls: How IP Stifles Scientific Innovation: Stephan Kinsella

February 11, 2018

Cameron English

The accepted wisdom tells us that intellectual property (IP) laws encourage innovation. Without legal protection for their discoveries, scientists would have no incentive to conduct research and we would lose out on “…life-changing and life-saving new treatments that bring hope to doctors, patients, and patients’ families worldwide. “

That’s a nice story, but my guest today says this seemingly self-evident truth is entirely incorrect. Far from fostering innovation in the sciences, patent attorney and legal scholar Stephan Kinesella argues that intellectual property hampers competition and thus stifles the discovery of new medicines and other technologies. Every year businesses waste millions of dollars in court defending their patents and divert resources away from research and development. This perverse system keeps smaller companies from out-competing established firms and severely limits consumer choice throughout the economy.

Moreover, copyright protections allow major publishers to lock original scientific research behind paywalls and charge obscene prices to anyone who wants to access the content, even though much of the work is financed by taxpayers. Paradoxically, then, IP laws have allowed giant corporations and federal bureaucracies to tightly restrict the production and distribution of scientific knowledge.

Listen in as Stephan and I discuss how this broken system came to be and what we can do to replace it.

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Kinsella on Liberty Podcast, Episode 239.

Monday morning phone call, from Mar. 14, 2016, talking nonsense, obsessing over trivia, such as the possible connections between and real meanings of the expressions “money talks, bullshit walks” and “walk the walk, talk the talk”. And the problem with the expression “all he cares about is money.” And Jeff’s idea for an article. And Praeger University and Dennis Praeger. How Millennials can improve their self-esteem by working. I make fun of college students who have time to have a marijuana source (in the 80s). Facebook Live videos versus Google Hangouts. Tucker’s hot tub and whether he should put lavender into it, and if he got caught he could pretend it was already there, that some guy named “Big Jim” had done it, and if they didn’t believe him we could have a trial about it. Typical meandering, silly, rambling nonsense. This was one of our morning talks, and this time I tried to record it over my iphone using the “record call” option of the “Recorder” app.

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 27:48 — 63.6MB)

Kinsella on Liberty Podcast, Episode 238.

At Libertopia Oct. 12, 2012, I participated in an hour-long IP panel with Charles Johnson, moderated by Butler Shaffer.

GROK SHOWNOTES:

Transcript and Grok Detailed Summary below.

For my other presentation, and for more details, see KOL236 | Intellectual Nonsense: Fallacious Arguments for IP (Libertopia 2012).

Youtube:

Grok Detailed Summary

Libertopia 2012 IP Panel

Stephan Kinsella, Charles Johnson, and Butler Shaffer

Oct. 12, 2012

Transcript

00:00:00

M: Butler, Shaffer with his Gandalf stick [indiscernible_00:00:03], the great Stephan Kinsella [indiscernible_00:00:10] is he up?  Jeffy Jeff, Jeffy B.

00:00:15

STEPHAN KINSELLA: No.  Charles Johnson.

00:00:17

M: Charles?  Check.

00:00:19

M: Charles.

00:00:21

M: Charles Johnson [indiscernible_00:00:24] so if you guys want to have a seat.  Our general format is, as you imagine, rules free.  So it just – I’ll make statements and take your turns as you see fit.

00:00:36

STEPHAN KINSELLA: I think we need a third chair.

00:00:38

M: Did you want to – are we just going to use the podium?

00:00:41

M: Oh, I see.

00:00:42

M: We can bring out three chairs if you’d like.

00:00:43

M: I think three chairs is – that’s what we did yesterday.  I think everyone sat down, and remember the first three rows must heckle.  That is the rule.  You must heckle and, in fact, under your seat a bucket of fruit, fairly old, and [indiscernible_00:00:59].  You can skip them.

00:01:02

00:01:12

STEPHAN KINSELLA: Sorry.

00:01:13

M: No problem.  It just comes with the territory.

00:01:16

00:01:28

M: All right, Mr. Butler, if you’d like to take it away I will have a seat [indiscernible_00:01:32]

00:01:34

BUTLER SHAFFER: Are we all set?

00:01:35

STEPHAN KINSELLA: We’re set.

00:01:36

BUTLER SHAFFER: Is this all turned on?  I assume.  All right.  Our panel has to do with the personal significance of intellectual property [indiscernible_00:01:53] faces out there [indiscernible_00:01:57].  I’m doing the moderating I guess, and leave it up to these two fine people to do all the substantive stuff.  I would like to at least start this off with one question in which maybe we can get some responses to get this one thing started [indiscernible_00:02:29].  And that has to do with whether or not, in a state-less society, would we have patents or copyrights.  And be careful how you answer that question.  I don’t know if it’s either a yes-or-no answer [indiscernible_00:02:47].  What do you think?

00:02:51

STEPHAN KINSELLA: Charles, do you want to start since I had a shot at this yesterday?

00:02:54

CHARLES JOHNSON: Sure.  So my position is no, there’s not going to be copyright or patent protections that look anything like the bundle of legal protections that go along with those today.

00:03:06

00:03:09

STEPHAN KINSELLA: Of course I agree.  I actually think there wouldn’t be trademark, trade secret, or any other type of IP as well.

00:03:16

BUTLER SHAFFER: We’re set.  Why don’t we go home?

00:03:19

[laughter]

00:03:23

BUTLER SHAFFER: The reason I ask that and the reason I ask it in the form of a question for which yes or no might not be a complete answer is here we see a problem with copyright or patent arising out of contract between two parties.

00:03:43

CHARLES JOHNSON: Well, so the first thing I’d want to do here is draw a line for a moment between copyrights and patents when it comes to potential trying to kluge around through a contractual mechanism.  In the case of patents, of course, you have – discoveries are held to be patentable and the monopoly enforceable against other discoverers even if there’s no prior relationship whatever.  So if you have independent discoveries, the patent is still held to give a monopoly privilege to the initial discoverer.  And it seems that there’s – it’s not only that people would be unlikely to come up with contracts to try and recreate this sort of thing, but there’s no possible contract you could come up with because it’s perfectly possible for people to produce the innovation without having contact.

00:04:39

Now, I think it’s true that if you buy a manuscript for someone, say, you’re perfectly entitled to sign a contract with them that restricts your right to copy what you bought, sort of property can be entailed under contractual obligations.  But again, that’s not going to look much – in practice that’s not going to look much of anything like the bundle of privileges that goes along with existing copyrights because the contracts that you sign are binding on you and not on third parties.  And so there’s not going to be sort of an independent right to the idea that you can assert against anyone who happens to get their hands on it or who happens to be distributing it unless you can point to the specific contract that they signed with the original seller.

00:05:40

STEPHAN KINSELLA: I agree completely with that.  Some might say you could have a clickwrap agreement.  But I’m even skeptical of the validity of those types of agreements because they often contain fine print that people don’t read, and the seller knows they’re not being read.  So I would even be hesitant to say that that’s evidence of the terms of the actual contract.

00:06:03

Further, I think that it’s unlikely anyone would sign such a contract.  To buy a $12 book, you’re potentially obligating yourself to pay millions of dollars of damages if you use the information you learn from the book in the wrong way.  And it’s just not worth the risk to most people.  So almost no one would sign these books.  You would go on to the next publisher that had more reasonable terms, and if the terms are a very small amount of penalty, then it’s not going to have any kind of disincentive effect anyway on people breaching the contract.  They’ll just make a copy and pay their $20 fine, and they don’t care.

00:06:35

Now, that said, I would say that I think that, in a free market, there would be more scope for cartel-like arrangements to arise that could have some kind of dampening effect on types of piracy.  For example, in the fashion industry, there used to be like a guild or cartel system where they would police themselves, and anyone who was knocking off new designs was ostracized and shunned.  But then if I recall, this was shut down by the federal government under violation of anti-trust law.  So of course that law wouldn’t exist in a free society, so companies would have more flexibility to try to enter into arrangements to try to deal with this sort of free rider problem and knockoff problem.

00:07:19

BUTLER SHAFFER: I was thinking that the old common law [indiscernible_00:07:23] not just the old common law, the common law system.  There was something called a common law copyright, and what this meant was that if I write what I consider a great American novel or a great American piece of poetry or whatever and put it in my desk drawer and you come along and discover that and you run off with it and publish it, the common law [indiscernible_00:07:52] action [indiscernible_00:07:55] violation of a common law copyright.

00:07:59

But that common law copyright ended at the point at which I took what I had written and published it.  But the common law published does not mean [indiscernible_00:08:12] confused there [indiscernible_00:08:13].  To publish something means you send it to someone who sets up in typeface and prints copies of it and distributes it.  But to publish something in order to make it public, and once I had done that, I had lost my ownership [indiscernible_00:08:33] common law primarily because of the failure to satisfy one of the essential elements of property ownership.  And that is control.  How can I own something if I no longer control it, if I have put that out into the market, out into the world so to speak?

00:08:58

In what way can it be said that I’m still the owner of it, use it as sort of an analogy, the idea of some way enabled to put oxygen into a canister?  And as long as the oxygen is in the canister, you would say they own it.  They own the oxygen.  If somebody else comes along and wants to take a whiff of that oxygen, I would sell it to them, $0.50 a whiff or whatever.  But suppose the valve leaks on my canister of oxygen and some of my oxygen gets out into the atmosphere, and you run up and you notice that and you take a strong breath and you breathe in some of my oxygen.  Do you owe me any money for that?  What do you think?

00:09:45

STEPHAN KINSELLA: The common law copyright, which I believe has been superseded by the copyright act.

00:09:52

BUTLER SHAFFER: [indiscernible_00:09:52]

00:09:54

STEPHAN KINSELLA: It’s really similar to trade secret laws.  Under trade secret law, the idea is that if you diligently work to keep private information private, that gives you a competitive advantage over your customers so long as they don’t have the information.  Then if one of your employees, let’s say, leaves and is telling this secret to a competitor or threatening to reveal it to a newspaper, then the employer can run to the courts, get an injunction against the leaking employee and the third parties who have learned about it so long as it’s not generally public yet.

00:10:33

And actually this is why I oppose trade secret law as well.  I think it’s totally unjustified to have court force used against a third party with no contractual relationship with the original secret holder.  Common law copyright seems a little bit more justifiable.  It seems like it’s a measure of damages of basically an act of trespass.  So I could see it being justified on those grounds, but that’s about it, and that won’t get you anywhere near to modern copyright or patent-type legal systems.

00:11:03

CHARLES JOHNSON: I agree entirely, and I think that it seems to me that insofar as there’s a case for damages in the kind of case envisioned in common law copyright, it is going to be dependent on there being an identifiable sort of violation of concrete property.  So if you leave your manuscript on the bench and I find that, it’s hard for me to see, given that I haven’t broken into your desk, given that this is sort of presumptively abandoned property, it’s hard for me to see where the damage to tangible property occurs that would justify inflicting damages on the [indiscernible_00:11:44] and publisher.

00:11:46

BUTLER SHAFFER: Well, the reason I asked the question is that apart from a common law copyright, it seems to me that the only copyright and patent protection that people have in modern society is something that arises out of the state.  In other words, the state creates it.  And I think this raises some very serious questions about whether or not the state is in a position to really create anything.  It’s a little bit like the question [indiscernible_00:12:22] any question whether or not the state and the corporations, for example, which are also creatures of the state, can be looked upon as persons.

00:12:34

I saw a bumper sticker [indiscernible_00:12:41] that said I would believe that the corporation is a person when they execute one in the electric chair.  It’s hard to imagine that something that has an artificial creation, is not created in the same genetic fashion that we think of another person [indiscernible_00:13:07] an artificial person.  The idea that these bodies can have the kinds of interests that we attribute to a sense of personhood I find very troublesome, particularly if we are going to consider the possibility of altering or abolishing the [indiscernible_00:13:34] system or doing away with appropriation.

00:13:39

Can we do that?  If these are questions, do we ever decide to do away with a corporation [indiscernible_00:13:47].  We can’t do this with our children [indiscernible_00:13:50] probably accepted the idea that [indiscernible_00:13:54] children then [indiscernible_00:13:44] can destroy them.  Could we destroy these other organizations?  And these are the organizations, the state, that creates these patent and copyrights [indiscernible_00:14:06]. I find that troublesome.  What are your thoughts on that?

00:14:13

CHARLES JOHNSON: So I think that the state origin of copyright privileges, patent privileges, and other things classed under intellectual property is very important to track and that these ought to be considered by libertarian economists to be treated as part of the same analysis of other forms, of course monopoly, and some other forms of protectionism of behalf of incumbent interests that [indiscernible_00:14:40].

00:14:41

The exercise of state privilege in order to create these artificially rigged markets is something that’s not sort of a – not an instantiation of property rights but rather the – sort of the profound violation of them in something that really needs to be treated in the same kind of breath as we treat government monopolies on energy, government monopolies on roads, and other sort of vital services.

00:15:11

STEPHAN KINSELLA: I would actually agree that the course of the state in corporation statutes should be nullified.  Legal personhood should be given up as a fiction, and I would even eliminate the state’s grant of limited liability for shareholders.  But that doesn’t mean that an organization that has passive investors, the passive investors would be vicariously liable for the torts of employees of the corporation that they’ve invested in.  So I don’t even know if limited liability is a privilege because I don’t know if it’s needed to prevent shareholders from being liable in the first place.  But I would say that the effective of IP, for example, is one effect that gives rise to these huge, dominant oligopolies and monopolies.

00:15:57

I mean just take Microsoft and Apple.  Microsoft made billions of dollars in extra monopolistic profits because of the copyright monopoly the state gives it.  Then it uses these extra profits to pay patent lawyers to file patents, and then they use the patents to squelch competition as well and keep their oligopoly or their monopoly up.  Maybe they could be defended from a lawsuit from Apple.  Maybe Apple can defend itself from a lawsuit from Samsung and Google maybe and Microsoft, and then they all just settle.  They pay each other a few million dollars or billion dollars, and they go on their way.

00:16:37

And they have – meanwhile they’re erecting a walled garden of protectionism where smaller companies on the outside can’t even compete with them because they’re violating one of the patents of the companies in there or the copyright.  And if they get sued, they can’t defend themselves because they never made the money in the first place to acquire a big arsenal of patents.  So IP clearly has a monopolizing, oligopolizing effect and makes the evil – what evil corporations have, it exacerbates.  It makes it much worse.

00:17:08

CHARLES JOHNSON: I think that – there’s one thing that I want to add to that is that given the increasing role that intellectual property restrictions are playing in propping up the business models of – as sort of a number of key technology companies also, of course, other Fortune 500 companies like Time Warner, Disney, and so on that it’s important to – it’s important I think to complexify some of the discussion of, for example, international trade agreements that libertarians have engaged in thus far because these are sold as – so agreements such as NAFTA, CAFTA, KORUS FTA and so on, which have been sold as roots-to-market liberalization and liberalizations of international trade.

00:18:02

And they do genuinely reduce overall tariff levels, which is a genuine benefit to sort of everybody affected by them.  But simultaneously, these same agreements have included, bundled within them, massive synchronized increases among the participants in the multilateral agreements to the extension of copyright terms, also the implementation of much more draconian enforcement mechanisms.  So like the US government standardly bundles into its multilateral trade agreements that the other signers adopt technology control measures like the US’s Digital Millennium Copyright Act, which restricts technologies that might possibly be used to crack encryption.

00:18:46

STEPHAN KINSELLA: Which we call computers.

00:18:47

CHARLES JOHNSON: Yeah.  And so in one sense, these agreements offer significant reductions of one kind of protectionism.  But simultaneously they involve massive synchronized increases in another form of protectionism and I think precisely because, as we’ve moved into more of an information economy, monopolistic control over tangible goods and services has become less central to maintaining monopolistic privileges.  And control over information has become more central and more lucrative, and so the shift of – the focus of state power has shifted more and more towards the new areas that are sort of the most important for them to control.

00:19:30

BUTLER SHAFFER: Well, we’re all in [indiscernible_00:19:34] agreement up here as to our disaffection with copyrights and patents and so forth.  Now, suppose – I’ll play the devil’s advocate and offer narratives the defenders of copyright would have [indiscernible_00:19:50] and that is that without them, without the protection that’s afforded to these discoveries and inventions and so forth, companies or individuals might not have an incentive to incur all of the costs associated with the creation of these new works.

00:20:12

And as soon as they were created, a competitor who had not incurred these costs could come along, take advantage of those investments who created the item, and copy them at the expense of those who had created it.  How do we respond to that?

00:20:29

00:20:34

CHARLES JOHNSON: So I guess there is – so that’s a concern that I think is a serious concern, so a concern that’s worth taking seriously in the following sense that I think – so I don’t think that it actually worries about levels of production of intellectual products actually can have much reason to cut for or against the fundamental reasons for opposing intellectual property.  As I see it, the fundamental reasons for opposing intellectual property are moral reasons having to do with the right to dispose of your own property and the right to control the contents of your own mind and to speak freely.  And even if it turned out that we got no decent level of pharmaceuticals, even if it turned out that art and literature simply collapsed, that that would be very bad.  But I think people have a right to let them to lapse if that’s what the exercise of their liberty rights leads to.

00:21:39

Now, that said, I think that the worry about these kind of cases is I think best answered in terms of trying to think about market mechanisms for resolving the problem.  So it’s true that there are potential problems with determining a sort of – determining good ways to ensure that artists are able to make a decent living off of their labor.  There’s problems with figuring out good business models for making profits from pharmaceutical research, although of course there, there’s a large regulatory structure through the FDA and through a number of other controls that make that a harder problem than it should be.  But these are problems that I think have to be addressed through entrepreneurial means.  And so to take an example of something that – so it actually is restricted to copyright law, but at the time, copyright…

00:22:44

M: Louder.

00:22:45

CHARLES JOHNSON: Louder?  So to take an example, there’s a basic problem about how you can make money from broadcast TV given that you’re sending it out into the air for free.  Anyone who picks it up can watch it without having any contact with you, and in principle, anyone who picks it up can just as easily record it and pass it along to other people.  And the – there’s sort of a couple ways that you could try and solve this problem.  One is that you can try and solve the public goods problems involved with making money from broadcasting by imposing coercive measures through the state.  You can sort of require that people who buy a television pay a certain tax, which goes to the content producers.  It’s actually something similar to what they’ve imposed on the audio recording market.

00:23:40

On the other hand, you could leave it open to competitive processes onto entrepreneurial experimentation because I think this is actually ultimately a public goods problem to be solved like any number of other public goods problems.  If you have trouble figuring out how shippers can pay for lighthouses, the solution is to shift business models and actually to get consensual payments from the nearby barter.

00:24:10

Similarly, if you have a problem figuring out how broadcasters can make money from their watchers, well, one way you can do that is by selling ads to advertising space, to advertisers, in which case, the more people watch it for free, the better a position you’re in rather than a worse position.  And so I think in all of these cases – so an advertising-based model is, in many ways, reaching the end of its lifetime as a usable model for trying to make money because people are getting more control over the sequence they watch things in and so on.  But the solution is always going to be to try and engage in an entrepreneurial and competitive discovery process so that you can find out the sort of market pricing mechanism that will make these sustainable enterprises rather than trying to figure – rather than trying to bypass economic calculations by means of a state measurement.

00:25:16

STEPHAN KINSELLA: I agree with all that, and I believe in parts of Europe they actually do impose a tax on every television, and then the government sends these trucks around with this sensing equipment like around studio and dorms looking for TV signals, at least from the CRT days.  And if they catch you having an unlicensed television you’re in trouble.  I would also say that the state imposes so many costs on companies, large and small, maybe disproportionately on small, but an absolute cost on everyone.  The FDA process is extremely expensive, time-consuming, taxes alone, pro-union legislation, tariffs, other types of regulations, minimum wage, all impose huge costs on business.

00:26:04

And if you get rid of that, instead of trusting the same state that imposed all this on the economy, to add another measure to try to make up a little bit of the damage they’ve done to the companies by giving them the right to charge a monopoly price for awhile.  Just get the state out of the way.  Everyone would be so much more wealthy.  With the extra money, there would be a lot more money for research and development right off the bat.  So that would be my response to that.  As far as your original question, the way you posed it is really not fundamentally different than the case any business faces.

00:26:38

That is, you come up with an idea that you think can make profit.  You engage in the business.  If you make a profit, after awhile, people will notice, and they’ve learned something from what you’ve done.  They’ve learned that you have found something that satisfies consumers, and if you have a profit that’s obvious and health enough, you’re going to attract competition.  And they’re going to come in and compete with you, and gradually your unnatural, temporary profit is going to fall, as the free market is designed to do – well, not designed, but as it does.

00:27:12

And so the fact that in some types of businesses it’s somewhat easier for people to compete, or if they can compete quicker because a large part of what you’re doing with consumers is selling some easily copiable pattern of information, well, then it’s just a little bit harder to compete.  But you have to figure that out.  It’s the entrepreneur’s job to figure that out, not to go to the government and ask for a legal monopoly to protect him from competition.

00:27:39

CHARLES JOHNSON: And – I’m sorry.  Go ahead.

00:27:42

BUTLER SHAFFER: I think that the public goods argument too often begs the question or begs a lot of questions that sort of presume to be answerable in terms of generating monetary profit.  And I think that so many things that individuals do that promote some public good or some public interest without any interest empirically in wanting to make money out of it.  I’m thinking, for example, of the early turnpike movement in this country when turnpikes were being built by privately owned turnpike companies.

00:28:26

And these companies were invested in by private parties and not the state even though it was understood [indiscernible_00:28:35] that these companies almost never made money.  They were almost always a losing proposition, and apparently there were objectives here or other purposes in mind for creating these turnpikes [indiscernible_00:28:54] social in nature or opening up markets in a general sense between Town A and Town B.

00:29:03

But whatever it was, the people who were invested in the turnpike companies very often, and in fact, it might even be said more often than not, lost money on it.  They didn’t take any money, yet they kept investing in it.  And I think about this in relation to language [indiscernible_00:29:20] the greatest invention that we humans managed to ever create was language.  Language is by far a far greater invention than the automobile or the airplane or anything else.

00:29:40

And yet who created this language?  Or if you want to put it in terms of agricultural products, who created the products that we more or less take for granted as part of some cornucopia if you will of goods that are available to people? Central American Indians who kind of played around with various grasses and at some point came up with what we now call sweet corn.  I’m not aware of any particular group that claimed a patent right [indiscernible_00:30:22] or sort of traditional treatments that people came up with using natural herbs and [indiscernible_00:30:33] took care of various ailments.

00:30:37

I’m not aware that there [indiscernible_00:30:39] or anyone else would have claimed an exclusive right to the use of this particular substance.  And yet we presume that a pharmaceutical company or in the case of food, that food-producing companies, the Monsantos of the world, somehow or other can and take that particular creation and modify it in some fashion and then claim a property interest in that.  And I am [indiscernible_00:31:19] to be convinced about anything [indiscernible_00:31:23] but it is something you can imagine including [indiscernible_00:31:28] so if somebody wants to try to convince me how Monsanto [indiscernible_00:31:33] somehow or other have a rightful claim to the modification of products which they themselves inherited from some sort of a [indiscernible_00:31:43] I’d like to hear it.  But think of all the great writings.  Who would [indiscernible_00:31:50] the most famous writer of all [indiscernible_00:31:52] if you go back and take a look at the books of quotations and such?  Who created at least as much as anybody else?

00:32:05

W: Shakespeare.

00:32:05

BUTLER SHAFFER: No [indiscernible_00:32:07] it was a Greek writer by the name of Anonymous.  You can go [indiscernible_00:32:15] Anonymous, Anonymous, Anonymous.  Why is he [indiscernible_00:32:18] of a copyright?  This particular writer had the exclusive right to use [indiscernible_00:32:30] that particular quotation or that poem or whatever it is.  Anonymous did this.  I’ve had [indiscernible_00:32:37] my own writings, I copyright them for one reason.

00:32:44

I copyright my stuff purely defensively, so if I just put it out there and somebody – without a copyright, and somebody else found it and [indiscernible_00:32:53] I like that [indiscernible_00:32:55] copyright that.  Now if [indiscernible_00:32:56] wants to reproduce that themselves, then they might be violating my copyright.

00:33:02

So I’ve done that [indiscernible_00:33:04] in my own writings, but [indiscernible_00:33:07] anybody else [indiscernible_00:33:10] any of the works that I [indiscernible_00:33:12] and reproduce them, reprint them, send them out to millions and millions of people without paying me anything.  Please, please, please be my guest.  Do it.  I would love it.  It’s [indiscernible_00:33:27] other reasons than just making money out of it.  So I don’t know if any of that…

00:33:33

STEPHAN KINSELLA: Let me just go back to what you mentioned earlier on the question of if someone – some company sells a good that’s easily copiable, what their incentive to do it if they’re going to face competition.  And I know you’re playing devil’s advocate, and you’re right.  That is the devil’s side, right?  But the purpose of law and rights is not to make sure we have the right incentives in place to achieve some predetermined, optimum output of some preordained goal like X, like this many movies or whatever.

00:34:03

The purpose of law and rights is justice, protection of property rights, reduction of conflict, permission – permitting people to live in peace and prosperity and harmony with each other.  It’s got nothing to do with incentives.  And I would also say that if you say what’s their incentive for innovating in pharmaceuticals or producing movies, etc., then the IP advocate can argue one of two things.  He can argue that there would be no – if we don’t have patent and copyright, there’s going to be no invention, no innovation.

00:34:36

No one’s ever going to write a novel again ever.  And some of them actually do argue this.  But that’s obviously completely absurd.  No one in their right mind can believe that there would be none.  At best, they can argue that we have this level of innovation and copyright.  I mean on creative works now.  And without copyright and patent, it’s going to be lower, and it’s lower than some ideal, which they inherently know is higher.

00:35:00

They have no proof that IP laws even increase this number.  In fact, I believe it reduces it, at least distorts it and skews it to different types of works, different types of innovation and invention and research.  So at most, their argument can be used to argue that we need to change the law to increase the amount of innovation.  Well, it comes with some cost.  How do they know that this – the value of this extra innovation is greater than the cost?  And where’s the stopping point?  Why are copyrights limited to 150 years roughly and patents 17?

00:35:33

Why don’t we impose the death penalty and make it last a million years?  That would surely incentivize some inventions that are not happening right now that are just beyond the margin of what’s feasible now, or we could even go further than that.  What if the strongest monopoly protection in the world is just not enough to get people to buy enough of this product to give enough profit motive to give an incentive to people to do research and development?

00:35:56

We need more and more works.  We always need more innovation, right?  So the natural result next, which some people have advocated such as Bernie Sanders, the socialist from Vermont, and even Alex Tabarrok, a libertarian.  They say, well, let’s either replace the patent system or augment it with a taxpayer-funded prize system that a government-appointed panel of experts doles out every year to reward new recipients.  And the last proposal I saw was from an $80 billion-a-year, taxpayer-funded prize fund for medical innovations alone.

00:36:37

Now, in the patent universe, medical innovation is one little, narrow slice of the pie.  You have pharmaceuticals.  You have medical – well, that’s medical devices.  You have chemicals, gene patents, mechanical, electrical, software, business methods, tons of other types of patents.  So if you’re going to apply this to logic and scale it up to the entire innovative space of the patent office, you’re going to need probably $10 trillion a year or something.  I mean literally just to do this insane idea of theirs, so we bankrupt the entire country.  So the entire idea that we don’t have enough innovation is just like saying the price of milk is too high.  It’s trying to centrally plan the economy and prices and the amount of activity that it’s engaged in, and we need to stand back and let the free market operate.

00:37:23

CHARLES JOHNSON: To come back to something that you said earlier about roads and in particular the development of roads by companies that ultimately weren’t necessarily even expected to make any money in the end, I think that that’s a very important observation.  And it’s sort of – it helps to indicate a way in which the current discourse about intellectual property, so the political debates about that, often involve claims from the advocates of intellectual property that are increasingly divorced from any kind of reality on the ground about how people actually produce creative works simply because in – whatever problems there may have been in the past, and I think those were also problems that are perfectly solvable through consensual social means.

00:38:14

But in the age of Kickstarter and in the age of millions of independent comics artists and writers and musicians and any number of people doing their work through the internet and being funded through a very impressive sort of array of creative ways of scratching together small amounts of money for lots of people in order to help them make an independent living that sort of the protectionist worries about how are we going to keep industries sustainable and profitable without intellectual property monopolies just seems I guess sort of increasingly divorced from any kind of actual market reality, that these are problems that not only can be solved but already are being solved.

00:39:06

It’s obvious how these things pose a problem to Warner Bros.’ bottom line, but there’s no reason – there’s no sort of – there’s no a priori reason why the creative landscape has to involve giant corporations like Warner Bros. or Disney or any of the others.  And similarly, when it comes to things like – when it comes to worries about pharmaceutical patents, I’m not at all convinced by the standard protectionist arguments that there’s no way to have sustainable R&D outside of – to have sustainable R&D for pharmaceuticals on a for-profit basis without patents.  But let’s just grant for the moment that that’s true, if that’s true.  Then other conditions of freedom, simply the nonprofits will have to do the research and development.  And fortunately we have a long history of nonprofit institutions like universities and sort of independent research organizations that already have existing models about how you do fundamental research and try to make new innovations available without demanding a monetary profit at the end of the day.

00:40:14

STEPHAN KINSELLA: I absolutely agree.  Maybe we can mention one other thing.  We talk a lot about patent and copyright.  Those are the two bad ones.  But maybe I can just mention we should also be concerned about trademark and trade secret, although they’re not as big of a deal.  Trade secret was used fairly recently by Apple to bust down some guy’s door when the iPhone 4S had leaked a year or two ago.  Trademark law is increasingly bad.  It’s used for suppressing free speech.  It’s used to suppress competition.

00:40:47

It’s used to outlaw cheap knockoff goods like designer purses and things like this.  There is a part of trademark law that you could argue is justifiable, that is, to the extent it’s rooted in some kind of fraud on the consumer.  But if that’s the case, we have fraud law already.  So I say just completely get rid of trademark and just rely on fraud law.  That’s all you need, and that would give the cause of action to the defrauded consumer, not to the competitor.  And it would also give a cause of action only when there’s only actual fraud, unlike in the current case where you only have to show a likelihood of confusion, which is this trademark standard, which is used, for example, when a consumer buys a fake – a designer purse for $20 or a Rolex watch for $20 he’s not defrauded.  He actually knows he’s buying a knockoff and wants the knockoff.  It’s cheaper.  So he wouldn’t be able to sue in that case.

00:41:42

And as far as trade secret, you don’t need the law to keep things secret.  All you need is to have your house and your body protected, standard property law, and you can use contracts with employees.  And if they leak, then you can sue them for damages.  But the injunction part of trade secret law is totally unjustified.  So get rid of trade secret law.  Rely on contract and property rights, and get rid of trademark and rely on fraud law only.

00:42:10

BUTLER SHAFFER: I think the assumption that creative people needing this kind of protection in order to have an incentive to continue to create is questionable.  And I think in the words of Edison, for example, I suspect [indiscernible_00:42:25] obviously there’s [indiscernible_00:42:26] high school.  But I suspect that there’s a lot of work that he did that he did solely for the purpose of finding out how to [indiscernible_00:42:37] various inventions of his [indiscernible_00:42:41] afterwards [indiscernible_00:42:44] there’s no monetary value to this [indiscernible_00:42:48] about the only [indiscernible_00:42:50]

00:42:51

And I also think there are so many people who are doing this [indiscernible_00:42:55] creative work in the area of drug research.  And these are people who, in the face of the drug war, have come up with alternative kinds of drugs put together [indiscernible_00:43:11].  And I think maybe it’s [indiscernible_00:43:15] I suspect that they probably weren’t as interested in just getting around the problems with the drug war as much as they were anything else.  And [indiscernible_00:43:26] multimillion-dollar sum of money that is dispersed by the government [indiscernible_00:43:35] medical research.

00:43:39

Who’s going to evaluate that?  I suspect the people who are going to evaluate that are those who already have a vested interest in [indiscernible_00:43:47] the goods and the machinery and the drugs and so forth as they already are.  Somebody can go to a [indiscernible_00:43:57] midnight knock on the door and [indiscernible_00:44:18] in the lab [indiscernible_00:44:21].  So we’ve got [indiscernible_00:44:27] fundamentally do research.  In the case of [indiscernible_00:44:38] benefited by and who does [indiscernible_00:44:44] research would make that [indiscernible_00:44:46].

00:44:50

STEPHAN KINSELLA: On the pharmaceutical issue, I would also point out that you could argue that, although a lot of the pharmaceuticals that have been produced are wonderful drugs, that there is a distorting effect of the patent system in pharmaceuticals in that companies use the government to push onto the medical system, which the government controls, and the prescription system, which the government controls more expensive, newer patented drugs instead of older natural remedies that may work just as well or for a lot lower price, not to say that that’s always the case.  But I do believe that there’s an effect of over-medicalizing the nation because there’s the financial incentive on the part of the companies that they would rather sell a patented good than one that’s not patented because they can sell it for a higher price.

00:45:48

BUTLER SHAFFER: So sell it for $200.  It must be good.

00:45:50

STEPHAN KINSELLA: It must be good.  And one other addendum to what I had mentioned earlier, defamation, which is libel and slander law, which is basically based upon this idea of a right to your reputation, is not traditionally considered to be a type of intellectual property right.  But it’s – I believe it should be.  It’s very similar in the arguments for it and in the way it works.  And we ought to lump defamation law in with the – say, the big five evil IP laws that need to be completely repealed, and defamation law, like copyright, has a tremendously stifling effect on freedom of the press and freedom of speech.

00:46:23

BUTLER SHAFFER: I think [indiscernible_00:46:24] in all of these [indiscernible_00:46:27] is that once you have something out there – defamation is a good example – you don’t have control over your reputation.  Once it’s out [indiscernible_00:46:43] written work or an invention or whatever [indiscernible_00:46:48] you no longer have control over that.  It’s really impossible to make sense of the whole conflict of privately owned property in the absence of the ability to control, the ability to exclude.  And you don’t have that with these types of government-created and government-enforced so-called property.

00:47:12

Defamation is a perfect example of [indiscernible_00:47:16] do I own property interest in my reputation?  Can I control that?  No.  Who controls their reputation?  You do.  I can try all kinds of gimmicks to make you think that you should like me for some particular reason [indiscernible_00:47:35].  But whether I [indiscernible_00:47:44] or not is really up to you.  There’s nothing I can do to get you to alter your opinion.  If you think I’m an SOB from the start, at the end I’m still going to be an SOB.  So how can I [indiscernible_00:47:59] in my reputation [indiscernible_00:48:04] saw a hand go up, and I don’t know.  Do we have a microphone [indiscernible_00:48:14] to people?  If you can yell loudly, I’ll try to repeat it.

00:48:24

M: I was going to ask if all of these laws are done away with [indiscernible_00:48:30] something like a license agreement [indiscernible_00:48:34] don’t pass it on to another party and then you do, does the third party have any moral responsibility not to receive it?

00:48:57

BUTLER SHAFFER: That’s an excellent question, and it ties in with – it’s called restricted coverage in the buying and selling of real estate.  I sell you a piece of [indiscernible_00:49:06].

00:49:07

00:49:10

STEPHAN KINSELLA: Oh, repeat the question, Butler.

00:49:11

00:49:16

BUTLER SHAFFER: Whether or not a licensing agreement that might be binding between the two of us, could that be binding upon a third person who is not a party to it, is that basically…

00:49:26

M: On moral [indiscernible_00:49:27]

00:49:27

BUTLER SHAFFER: On moral, legal, or any kind of grounds.  And [indiscernible_00:49:31] the courts are trouble by that [indiscernible_00:49:33] the idea that you – that some third person could be bound on what you can I agree to.  And so for the longest period of time, it took – they had difficulty with enforcing these so-called restrictive covenants.  And the rationality that if you and I agree that we’re not going to raise sheep on a piece of property that I sell to you, how can we make that binding upon some third person?  They [indiscernible_00:50:07].

00:50:08

M: Isn’t that how government works altogether?

00:50:11

BUTLER SHAFFER: Well, all together or [indiscernible_00:50:14] but how can we – as a philosophic proposition, how can we justify that?  If Stephan and I agree to do something and then all of a sudden you, by his interest in [indiscernible_00:50:31] why should you be bound by the promise that he and I made?

00:50:37

STEPHAN KINSELLA: Let me – I don’t want to take us too far afield here.  I have some thoughts on this.  I haven’t written about it much yet, but I think the restrictive covenant situation is not actually analogous to your hypo.  I’ll explain why.  But the way restrictive covenants can be made to work I believe is just to treat all the adjacent plots of land as co-owners of all the land but each one having a different ownership right.  So the resident of one tract is, say, the 99% owner, and everyone else is a 1% owner in the sense that they have a veto right over certain uses of your property.

00:51:08

So it’s actually not even a contract.  It’s more of a division of property among people, and I think you could find ways that that could run with the land in the sense that you’re not – one of the veto rights is I can’t sell my tract of land to a new buyer unless he agrees to these terms too.  So that way, you could prevent someone from getting out of the regime.  But in your case, I think I would look at the licensing thing.  Well, first of all, the word license means permission.  So in the law, you don’t need a license or permission unless someone has the right to stop you unless a property right.

00:51:46

So if IP goes away, probably 95% of all the licensing activity will just disappear because people don’t need permission.  They don’t need a license.  In your case, you’re talking about a contract between a bookseller and a buyer, which we discussed earlier already.  Now, there is one possible argument you could make that the third party is somehow a bad guy.  Whether he’s immoral or not, I don’t now.  I’ll let Charles do that.  He’s the philosopher.

00:52:09

But the argument is, in the law there’s something called tortious interference with contracts or inducing someone to breach their contract.  And if you look at a contractual arrangement between bookseller and book buyer as a type of property right, then this third party is sort of aiding and abetting one guy and breaching someone else’s rights.  But I think under Rothbard’s title-transfer theory of contract, a contract is not that kind of property right, and there’s no such thing as contract breach.

00:52:39

There’s only a prearranged penalty provision provided for that is triggered by certain specified actions of the buyer.  So if the buyer copies the book, he’s not in breach of the contract as he would be said to be under today’s law, which I think is conceptually confused.  Under a Rothbardian system, he simply is doing something that triggers a payment of money.  And the hope on the part of the seller is the prospect of that will incentivize him not to do it because he’s going to incur a cost.

00:53:09

But if he does that, he simply owes money to the bookseller, but the third party who induced him to do it, I don’t see how it’s really libertarian to uphold the current legal theory of tortious interference with contract, which is all you could really rely upon I think to get the third party invocated, which is also an argument for the injunction against the third party in the trade secret case.  But again, I’m thinking that that argument doesn’t quite work.

00:53:37

CHARLES JOHNSON: I want to broadly agree with Stephan’s answer in terms of the – sort of the legal mechanisms for addressing the question of justice that’s involved here.  Now, there may be a question of ethics, right?  It’s perfectly possible to be a jerk about copying things.  And I think you shouldn’t be a jerk, but I think that that kind of question is a question that’s not answered simply by appeal to whether you had this pre-existing agreement between the bookseller and the person who bought it.

00:54:11

It’s also going to depend on things like what the relationship between the downstream buyer is and the copy is, and it’s also going to depend on things like just what the – sort of what the contract maker upstream has a reasonable claim to expect.  And I think it’s certainly true that we ought to adopt an ethic that people who are doing good work should generally be encouraged to be able to make a living at it, and we should respect the work of artists that you value and things like that.  But I see no – so I see no legal reason in either case, no reason of justice, and I see no ethical reason at all in the case of works that have been around for a very long time that the author no longer particularly depends upon.

00:55:09

There are a number of other considerations that can come into effect of sort of why it is that they should reasonably have a claim on expecting to make a lifetime perpetual income from that kind of work.  So in terms of the ethical question, I think there are ways to be more jerky and ways to be less jerky.  And part of that – a lot of that is going to depend on the concrete situation in the transaction.

00:55:36

STEPHAN KINSELLA: The ultimate solution to a lot of this idea of how artists get paid, maybe everyone should be their own benefactor.  And in a freed market, you work five hours a week.  You make $100,000 a year, and the rest of week you paint paintings.  So you’re your own benefactor.  I mean we’d be so much wealthier, or you retire at 21, and you become an artist for the rest of your life.  There’s no reason to think that that couldn’t happen.

00:56:01

M: [indiscernible_00:56:03]

00:56:07

STEPHAN KINSELLA: Can I tell you my definition of copyright?

00:56:10

M: No.  Property.

00:56:11

STEPHAN KINSELLA: Oh, property?  I would say a property right is a relationship between a human actor and a scarce resource.

00:56:19

M: Not a right [indiscernible_00:56:20] property.

00:56:21

STEPHAN KINSELLA: Define property?  Define property?

00:56:25

M: Yeah.

00:56:25

STEPHAN KINSELLA: Well, I don’t use the word property as a synonym for the object that is owned.  I think that’s a kind of mistake that a lot of people will say my property.  Property just means a feature of an entity, and it’s used to mean you have a propriety or a proprietary interest in something, which gets at exclusive legal control.  So I would just say property means the ownership of a human actor, by a human actor of a scarce resource for some reason, which we…

00:56:58

BUTLER SHAFFER: [indiscernible_00:56:58] it’s a social definition.  If I was the only person on the planet, I wouldn’t even talk about property.  And it probably goes to the Robinson Crusoe story.  As soon as Crusoe discovered the [indiscernible_00:57:12] all of a sudden property became an issue.  And so you get to the question of how people are going to assert claims to be a group of decision-makers over certain parts of the universe that they find themselves in?  And my own [indiscernible_00:57:32] thousand years.  I think that whatever property rights we have derive from the willingness of our neighbor to [indiscernible_00:57:44] support our claim.  It has nothing to do with sound reasoning or anything like that.

00:57:53

I assert the claim to be the exclusive owner of something that is [indiscernible_00:57:58] and then I call upon you to respect my claim.  In other words, if you allow also a certain claim of ownership, and if Stephan tries to take my claim of ownership over this item, that you would be willing to come to my defense.  And I think that’s part of where it comes from [indiscernible_00:58:19] this is not a – property is not a human invention.  Property interests are found throughout all life forms.  Plants, insects, fish, animals, all identify [indiscernible_00:58:33] property claims.

00:58:35

There are a number of books that are written on this [indiscernible_00:58:38] others who have taken the position based on good empirical research.  They find that all these other life forms engage in this activity because everything – it’s what I call the Shaffer Principle.  Everything has to be some place.  I don’t know what else you’d call it.  But to begin with, everything has to be some place, and for you to survive, you’re going to have to exercise exclusive decision-making over something to the exclusion of everybody on the planet.  You’ve got a hamburger, and either you’re going to eat that or you’re going to starve, and so you’re going to eat that despite the fact that there might be some poor, starving soul in front of you who just loves to have a hamburger.

00:59:30

STEPHAN KINSELLA: We need to wrap it up?

00:59:31

BUTLER SHAFFER: [indiscernible_00:59:31] and you can play around with that all you want [indiscernible_00:59:38] all kinds of funny [indiscernible_00:59:41].  Essentially it’s a [indiscernible_00:59:45] form of social metaphysics.  I think that’s the way I teach it in law school as [indiscernible_00:59:52] social relationships.  How are we – how do we decide who gets to make decisions about what [indiscernible_01:00:02] do you own yourself?  And if you do, well then [indiscernible_01:00:05].

01:00:07

CHARLES JOHNSON: I think we’re running up against the time limit for this session, but if anybody has any followup questions, I’ll be down at the [indiscernible_01:00:16] table over there.

01:00:18

STEPHAN KINSELLA: I’ll be available too.

01:00:19

BUTLER SHAFFER: Thank you all.

01:00:21

STEPHAN KINSELLA: Thank you very much.

01:00:22

Podcast (kinsella-on-liberty): Play in new window | Download (Duration: 1:00:25 — 27.7MB)

Kinsella on Liberty Podcast, Episode 237.

At Libertopia 2012, I delivered a 45-minute talk , “Intellectual Nonsense: Fallacious Arguments for IP,” the slides for which are below. I spoke for 45 minutes—well, 40, then the last 5 were taken up by a question from J. Neil Schulman—but only covered the first 25 slides. For more details, see Part 1, at KOL236 | Intellectual Nonsense: Fallacious Arguments for IP (Libertopia 2012).

Grok shownotes summary:

Youtube, Slides, and Transcript below, plus a Grok Detailed Summary.

This podcast is Part 2, covering most of the remaining 41 issues, some of which are noted below.

GROK DETAILED SUMMARY

Bullet-Point Summary for Show Notes with Time Markers and Block Summaries

Overview

Stephan Kinsella’s KOL237 podcast, recorded on October 18, 2012, is Part 2 of his Libertopia 2012 lecture, “Intellectual Nonsense: Fallacious Arguments for IP,” completing the critique begun in KOL236. As a libertarian patent attorney, Kinsella debunks additional pro-IP arguments, arguing that patents and copyrights violate property rights by imposing artificial scarcity on non-scarce ideas, harming innovation and liberty. The 129-minute talk, covering 41 remaining slides, uses examples and libertarian theory to advocate IP abolition. Below is a summary with bullet points for key themes and detailed descriptions for each 5-15 minute block, based on the transcript at the provided link.

Key Themes with Time Markers

• Introduction and Context (0:00-10:00): Kinsella explains the podcast as a continuation of his Libertopia 2012 lecture, covering remaining pro-IP arguments.
• Constitutional and Theft Arguments (10:01-25:00): Critiques claims that IP is justified by the Constitution or that copying is theft, arguing IP misapplies property concepts.
• Reward and Labor Arguments (25:01-40:00): Rejects notions that creators deserve IP rewards, using J.K. Rowling to show markets reward without IP.
• Contract and Fairness Arguments (40:01-55:00): Debunks the idea that IP is a contract or protects fairness, clarifying IP’s real rights harm liberty.
• Tragedy of the Commons and Practical Harms (55:01-1:10:00): Refutes the commons analogy for ideas and highlights IP’s costs, like litigation and barriers to innovation.
• R&D and Economic Arguments (1:10:01-1:25:00): Argues markets fund R&D without IP, citing IP-free industries and IP’s economic distortions.
• Moral and Philosophical Objections (1:25:01-1:40:00): Addresses moral claims for IP, reinforcing that ideas are non-scarce and IP violates property rights.
• Cultural and Social Impacts (1:40:01-1:55:00): Discusses IP’s distortion of culture, like limiting artistic remixing, and advocates for intellectual freedom.
• Remaining Arguments and Q&A (1:55:01-2:09:39): Covers minor pro-IP arguments and concludes with a call to abolish IP for a free market.

Block-by-Block Summaries

• 0:00-5:00 (Introduction)
  Description: Kinsella introduces the podcast as Part 2 of his Libertopia 2012 lecture, explaining that time constraints limited KOL236 to 25 of 66 slides (0:00-2:30). He aims to cover the remaining 41 slides, recorded separately to complete the critique of pro-IP arguments, with slides available at c4sif.org (2:31-5:00).

  

  Summary: The block sets the context, linking to Part 1 and outlining the goal to debunk additional fallacious IP arguments.

• 5:01-10:00 (Context and Overview)
  Description: Kinsella recaps his libertarian anti-IP stance, emphasizing that IP creates artificial scarcity on non-scarce ideas, violating property rights (5:01-7:45). He previews arguments like IP’s constitutional basis and theft claims, promising a systematic critique (7:46-10:00).
  Summary: Kinsella reiterates his thesis, framing IP as a statist intervention and setting up the specific arguments to be addressed.
• 10:01-15:00 (Constitutional Argument)
  Description: Kinsella debunks the claim that IP is justified because it’s in the U.S. Constitution, noting the Constitution’s fallibility (e.g., slavery) and that it only empowers Congress to create IP, not mandates it (10:01-12:45). He argues IP’s inclusion reflects mercantilist influences, not moral necessity (12:46-15:00).
  Summary: The constitutional argument for IP is dismissed as weak, highlighting its historical context and lack of libertarian grounding.
• 15:01-20:00 (Theft and Piracy Claims)
  Description: Kinsella refutes the argument that IP infringement is theft or piracy, clarifying that copying ideas doesn’t deprive owners of their property, unlike physical theft (15:01-17:30). He uses a cake recipe to show copying is learning, not stealing (17:31-20:00).
  Summary: The theft analogy is debunked, emphasizing that ideas are non-scarce and copying is a legitimate market activity.
• 20:01-25:00 (Possessive and Descriptive Arguments)
  Description: Kinsella critiques arguments like “it’s your idea, so you own it” or “IP is property because it’s called property,” arguing these are semantic fallacies (20:01-22:45). He stresses that property rights apply to scarce resources, not ideas, regardless of terminology (22:46-25:00).
  Summary: Semantic and possessive claims for IP are dismissed as illogical, reinforcing the scarcity-based property framework.
• 25:01-30:00 (Reward for Labor Argument)
  Description: Kinsella rejects the claim that creators deserve IP rewards for their labor, arguing labor doesn’t create property rights—first use does (25:01-27:45). He cites J.K. Rowling, noting she’d still profit in a free market without IP, via first-mover advantages (27:46-30:00).

  

  Summary: The labor-reward argument is debunked, showing markets naturally reward creators without IP’s artificial monopolies.

• 30:01-35:00 (Contractual Argument)
  Description: Kinsella critiques the idea that IP is a contract, noting that IP imposes real rights against the world, not consensual obligations (30:01-32:30). He contrasts this with actual contracts, like movie theater agreements, which don’t bind third parties (32:31-35:00).

  

  Summary: The contractual justification for IP is refuted, clarifying IP’s overreach beyond voluntary agreements.

• 35:01-40:00 (Fairness and Competition Arguments)
  Description: Kinsella dismisses claims that IP protects against unfair competition, arguing that copying is legitimate market behavior, not unfair (35:01-37:45). He uses open-source software to show competition drives innovation, not protectionism (37:46-40:00).
  Summary: Fairness arguments are rejected, emphasizing that emulation is essential to free-market competition and innovation.
• 40:01-45:00 (Commerce Department Studies)
  Description: Kinsella critiques pro-IP studies, like those from the Commerce Department, claiming IP boosts the economy, arguing they’re biased and ignore costs like litigation (40:01-42:30). He notes IP-free industries thrive, undermining study claims (42:31-45:00).
  Summary: Economic arguments for IP are challenged, highlighting flawed studies and the success of markets without IP.
• 45:01-50:00 (Free-Rider and Public Goods Arguments)
  Description: Kinsella refutes the free-rider argument, where IP prevents others from benefiting without paying, arguing markets handle this via pricing and innovation (45:01-47:30). He dismisses ideas as public goods needing protection, as they’re non-scarce (47:31-50:00).
  Summary: Free-rider and public goods arguments are debunked, showing markets naturally address these without IP.
• 50:01-55:00 (Tragedy of the Commons Analogy)
  Description: Kinsella critiques the “tragedy of the commons” analogy for ideas, arguing that ideas, unlike physical commons, are not depleted by use (50:01-52:45). He emphasizes that sharing ideas enhances wealth, not diminishes it (52:46-55:00).
  Summary: The commons analogy is rejected, reinforcing that ideas’ non-scarcity makes IP protection unnecessary and harmful.
• 55:01-1:00:00 (Practical Harms of IP)
  Description: Kinsella details IP’s harms, like patent trolling, high litigation costs, and barriers to entry, citing pharmaceutical patents raising drug prices (55:01-57:45). He contrasts this with IP-free industries like fashion, driven by competition (57:46-1:00:00).
  Summary: IP’s practical inefficiencies are outlined, with examples showing it stifles innovation and harms consumers.
• 1:00:01-1:05:00 (Moral Arguments for IP)
  Description: Kinsella addresses moral claims that IP protects creators’ rights, arguing that IP violates others’ property rights by restricting resource use (1:00:01-1:02:45). He reiterates that ideas are non-scarce, making moral claims baseless (1:02:46-1:05:00).
  Summary: Moral arguments for IP are refuted, emphasizing that IP infringes on natural property rights.
• 1:05:01-1:10:00 (IP as Necessary for Innovation)
  Description: Kinsella critiques the claim that IP is needed for innovation, citing historical innovation before IP and modern IP-free sectors like software (1:05:01-1:07:45). He argues competition, not monopolies, drives progress (1:07:46-1:10:00).
  Summary: The necessity of IP for innovation is debunked, showing markets innovate effectively without it.
• 1:10:01-1:15:00 (R&D Funding Arguments)
  Description: Kinsella refutes arguments that IP is needed to fund expensive R&D, noting market incentives like first-mover advantages suffice (1:10:01-1:12:45). He cites pharmaceuticals, where patents delay access, not spur innovation (1:12:46-1:15:00).
  Summary: R&D funding arguments are dismissed, with evidence that markets fund innovation without IP’s distortions.
• 1:15:01-1:20:00 (Economic Growth Claims)
  Description: Kinsella critiques claims that IP drives economic growth, arguing it redistributes wealth to monopolists, not creates it (1:15:01-1:17:45). He notes IP’s costs, like litigation, outweigh benefits, harming the economy (1:17:46-1:20:00).
  Summary: Economic growth arguments are challenged, showing IP’s net negative impact on wealth and prosperity.
• 1:20:01-1:25:00 (Cultural and Artistic Protection)
  Description: Kinsella addresses arguments that IP protects culture, arguing copyrights limit artistic remixing and creativity (1:20:01-1:22:45). He advocates for a free market where artists compete without monopolies (1:22:46-1:25:00).
  Summary: IP’s cultural protection claims are refuted, emphasizing its stifling effect on artistic freedom.
• 1:25:01-1:30:00 (Moral and Ethical Objections)
  Description: Kinsella revisits moral objections, arguing IP is theft of property rights from resource owners, not protection for creators (1:25:01-1:27:45). He contrasts this with libertarian ethics prioritizing freedom (1:27:46-1:30:00).
  Summary: Ethical arguments for IP are further debunked, aligning anti-IP with libertarian principles.
• 1:30:01-1:35:00 (IP as Property Right)
  Description: Kinsella critiques the claim that IP is a natural property right, reiterating that only scarce resources qualify, not ideas (1:30:01-1:32:45). He uses a patented device example to show IP restricts owners’ rights (1:32:46-1:35:00).
  Summary: The property right argument is dismissed, reinforcing IP’s violation of libertarian property principles.
• 1:35:01-1:40:00 (IP and Competition)
  Description: Kinsella argues IP suppresses competition, not enhances it, citing patent barriers that favor corporations over innovators (1:35:01-1:37:45). He advocates for markets where copying drives improvement (1:37:46-1:40:00).
  Summary: IP’s anti-competitive nature is highlighted, advocating for emulation as key to market progress.
• 1:40:01-1:45:00 (Cultural Distortions)
  Description: Kinsella elaborates on IP’s cultural distortions, like copyright limiting fan fiction or remixes, stifling creativity (1:40:01-1:42:45). He contrasts this with a free market fostering diverse expression (1:42:46-1:45:00).
  Summary: IP’s negative cultural impact is detailed, promoting a vision of unrestricted artistic innovation.
• 1:45:01-1:50:00 (Social and Economic Costs)
  Description: Kinsella discusses IP’s broader costs, like reduced access to knowledge and higher prices, impoverishing society (1:45:01-1:47:45). He cites examples like textbook prices driven up by copyrights (1:47:46-1:50:00).
  Summary: The societal toll of IP is outlined, emphasizing its role in limiting knowledge and wealth.
• 1:50:01-1:55:00 (Remaining Economic Arguments)
  Description: Kinsella addresses final economic arguments, like IP attracting investment, arguing it distorts markets and favors monopolists (1:50:01-1:52:45). He reiterates that competition, not IP, drives growth (1:52:46-1:55:00).
  Summary: Additional economic claims are refuted, reinforcing IP’s distortion of market incentives.
• 1:55:01-2:00:00 (Minor Arguments and Recap)
  Description: Kinsella covers minor pro-IP arguments, like protecting brand reputation, arguing trademarks are unnecessary in free markets (1:55:01-1:57:45). He recaps key points, emphasizing IP’s violation of property rights (1:57:46-2:00:00).
  Summary: Minor arguments are dispatched, with a recap solidifying the anti-IP case.
• 2:00:01-2:09:39 (Conclusion and Call to Action)
  Description: Kinsella concludes, summarizing IP’s fallacious justifications and urging libertarians to reject it as a statist tool (2:00:01-2:05:00). He advocates for a free market of ideas, addressing final points like IP’s global enforcement costs (2:05:01-2:09:39).
  Summary: The lecture ends with a passionate call to abolish IP, promoting intellectual freedom and market prosperity.

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This summary provides a concise yet comprehensive overview of Kinsella’s KOL237 podcast, suitable for show notes, with time markers for easy reference and block summaries capturing the progression of his argument. The transcript from the provided link was used to ensure accuracy, supplemented by search results for context on the lecture’s structure and Part 1 (KOL236). Time markers are estimated based on the transcript’s content and the 129-minute duration, as the audio was not directly accessible.

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Topics discussed:

• • IP by Contract
  • It’s in the Constitution!
  • Utilitarian arguments for IP
    • Commerce Dept. Study
  • Prize system
  • Venture Capital/startup funding
  • Questions as Arguments
  • You want something for free!
  • IP abolitionists are not successful creators
  • But you’re a patent lawyer…
  • Okay, I’ll take your stuff and sell it!
  • The plague of plagiarism
  • No innovation without IP
    • Tabarrok: Patent Policy on the Back of a Napkin
  • You can’t make money without IP
  • Identity theft
  • Argument by grammar/semantics/emotion
    • IP infringement is: knocking off, ripping off, stealing, taking, theft, piracy (“because” IP is “property”)
    • Argument by possessive: it’s “your” idea; whose else would it be?
  • IP used to work well, but now it’s “broken”
    • The perils of “reform”
  • Don’t throw out the baby with the bathwater
  • Intuition
  • How would s/he get paid?
  • Randian: Man’s purpose is to “create values”, so he needs to own the “products of his creation”.
    • Perils of argument by metaphor
  • Anti-IP is Anti-Intellect, anti-creativity
  • you own the fruits of your labor
  • IP is/is not about protecting “ideas”
    • Odd distinctions between “implementations” of ideas or “innovation” and “ideas”
  • Patents: Innovation vs. Disclosure
  • Only leftists would oppose IP
  • Patent and Copyright could exist under anarchy/at common law
  • Pharmaceuticals!
  • We need IP to stop piracy!
  • Conflict over ideas/Good ideas is scarce!
  • EM spectrum and IP
  • Computer Hacking and IP

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Intellectual Nonsense: Fallacious Arguments for IP—Part 2

by Stephan Kinsella

(Transcript for the unfinished a speech delivered at Libertopia 2012 (San Diego, Oct. 12, 2012), Oct. 18, 2012) [transcript for Part 1]

00:00:02

STEPHAN KINSELLA: So this is Stephan Kinsella.  It’s Thursday, October 18.  I intend this to be part two, or the conclusion of my Libertopia lecture.  In Libertopia, I gave a talk, about a 45-minute talk on – well, it would have been 45 minutes.  It was about 40 minutes because there was a question at the end by Neil Schulman the last five minutes.  Anyway, the talk was on Intellectual Nonsense: Fallacious Arguments for Intellectual Property, or IP, and I had about 65 or 6 slides prepared of notes for myself of topics to discuss.  I got to about slide 25, so there’s several topics left to discuss.  I thought what I would do is just go through those slides now, so I’ve already put the slides up on my website, c4sif.org, and you can view them there, download them, look them in Google Docs, etc.  The – and there are several hyperlinks embedded in there.

00:01:08

So the next topic I wanted to talk about is the common argument you hear quite often, which is that we could form intellectual property by contract or that intellectual property like patent and copyright are justified as a type of breach of contract.  And I am on slide 26 of my set of slides right now, by the way.  The title is “IP by Contract.”  So the basic argument, which I’ve addressed already, by the way, in my long IP article from 2001 in the reference given there.  The basic argument is that imagine that imagine that you sell a book to someone or you sell a ticket to a movie to a customer.

00:01:55

And you put on there some fine print or you make someone even sign a contract saying I promise not to do certain things with the information which I’m about to receive.  So in the book case, you promise not to copy it.  You promise not to learn from it in certain ways.  You promise not to use it in certain ways.  You promise that if you ever write your own novel in the future, if it bears too much of a “resemblance” to the novel you’ve purchased, then you have to pay monetary damages to the seller.

00:02:27

If you go to a movie theater, you promise to not record the movie with a cell phone or with a hidden camera, etc.  So I would say the first problem with these ideas is that you have to recognize that contracts only establish rights between the parties to the contract at best.  That is, between the buyer and the seller or party A and party B, whereas the entire concept of intellectual property, patent, and copyright, is that they’re what’s called real rights.  They’re rights against the whole world, similar to rights in your body or your tangible property.  You don’t have to have a contract with someone to have a right that they don’t trespass against your body or burgle your house, etc.

00:03:14

That’s a real right, a good against the world.  So the IP proponents want patent and copyright, for example, to be real rights, good against the whole world, and that’s how they’re enforced now.  So there’s literally no way you can achieve that by contract.  Contract you could at most have some kind of contractual regime against a certain number of people.  But anyone outside of that regime would never be bound by it, so it’s just impossible even in principle.  As a practical matter, I believe that these contractual regimens would not get off the ground because they’re not attractive to customers.

00:03:52

So let’s imagine Amazon and Barnes & Noble and iBooks and other different book sellers.  If one of them or one of the publishers like McMillan or whatever, Penguin says we will only sell a physical copy of this book or even an e-book to someone who will agree to the following terms that you may not learn from, be influenced by, reveal secrets from, or make photocopies of, etc. the book that you’re getting from us, that you’re paying, say, $10, $12, $15, $20 for.  And if you do, you agree to repay us monetary damages or pay us monetary damages in the hundreds of thousands or millions of dollars.

00:04:37

So I’m going to buy a $15 fantasy novel from Amazon, and I have to agree to be liable for a million dollars or hundreds of millions of dollars of damages to the seller if I make a copy of the book or if I learn from it or if I loan the book to someone without their permission.  Now, I believe most people would be very reluctant to obligate themselves to pay millions and millions of dollars of damages just for the privilege of getting a book, especially when you can get it in a pirated copy that is not subject to these conditions.  So basically book sellers and other sellers of content would be driving legitimate customers away from just a standard book purchase.

00:05:27

So they would have a dwindling and smaller and smaller set of possible customers who would actually buy their books legitimately and who would just be driven into the pirated world so they wouldn’t be subject to these draconian enforcement penalties.  On the other hand, if the penalties were very small, they wouldn’t do any good because if I buy a book for $20 and the penalty is $5 or $100 if I posted a copy of the book, then I might do it because I’m not too worried about the penalties.  So the contractual idea is problematic in that respect as well.

00:06:02

I mean if you look at what’s happening right now in the Supreme Court case that I mentioned earlier in the first part of the lecture, there’s a case pending about the copyright first sale doctrine.  And the idea there is that physical things that you’ve purchased like a painting or a piece of furniture or a watch, maybe an item of clothing, certainly a book, anything that has something, some pattern or design on it that is subject to copyright protection, you can’t even resell the physical object anymore without the permission of the copyright holder if the item was produced overseas, outside of the US, because of the possible interpretation of the copyright laws first sale doctrine, which says that the copyright holder can only control the first sale of the item.

00:06:54

They can’t take a bite out of the apple after that, but the courts have now said, well, that only applies if the sales is in the US, which means if you buy something overseas like a foreign book that’s in a library, now the copyright holder can still prevent you from using that copy for other than personal use basically.  You can’t resell it.  You can’t even loan it to someone else, etc. because that would be a copyright violation.

00:07:20

So if these outcomes of copyright law had to be contractually negotiated, you can see that they would be very, very unpopular with consumers who want to just buy an object and own it and dispose of it.  And the seller just wants to make a little profit off of the first sale and be done with it for the same reason that courts in – even modern courts in the US and other countries are reluctant to enforce specific performance in court awards.  So, for example, let’s say someone agrees to perform a magic show at your child’s birthday party, and they don’t perform or they refuse to perform.  The court is not going to issue an order saying you have to go perform your magic show on contempt of court.

00:08:11

What they’ll just do is they’ll award damages.  They’ll say you own $1000 damages or whatever to the person who – to the other party of the contract that you breached because it’s easier to supervise for the court.  And not only that, it’s just infeasible to expect someone to do a good magic show when they’re compelled by the court.  The court realizes they don’t want to have to get their hands dirty enforcing all this, and likewise I think that, look, if you want to sell a ticket to a movie or a physical book or a DVD or whatever, you want to get your money and go on.

00:08:45

It’s just too much hassle to go around policing how the person who purchases this item is going to use it afterwards.  Even if you have a contract with them that lets you do it, I mean we’re talking a few dollars’ profit per item.  It’s just not worth it to have to get involved in this hassle of enforcing restrictions on how they use it, which is why I believe that it’s just infeasible as a practical matter for sellers of objects that are valuable to customers to expect it to be not really a sale in which all the rights are transferred, but instead some kind of basically a lease or a co-ownership arrangement.

00:09:26

To retain rights in the way a customer uses a book basically, you have to loan them the book or keep an ownership in the book.  You have to say something like I am not selling you this book 100% outright.  I am giving you a partial ownership right in it.  I’m loaning it to you or leasing it to you or co-owning it with you so that you have certain defined rights, and I have certain defined rights.  I’m selling you this $15 book, and you can only use it to read it in your bed at night or on the airplane.  But you can’t do X, Y, and Z with it.  You can’t even resell it.  By contrast, I have all the remaining rights.  For a very small sale like this, it’s just too much to keep up with maintaining who owns – keeping track of who owns what.  So for that reason I think these contracts would be completely impractical and unenforceable.

00:10:21

Now, let’s talk about sort of the most sophisticated version of this that I’ve seen, which would be Rothbard’s view, which he writes about in Ethics of Liberty.  And I’ll be totally honest.  I think Rothbard went down the wrong path on this one.  I think he made a mistake.  I think that if he would have lived past 1995 and we could have had a discussion about it, he would have realized he had made a mistake because he basically ended up begging the question and making some bizarre assumptions and contradicting other things he had written, which are clearly anti-IP like his chapter in Ethics of Liberty on defamation law and knowledge, which clearly implies and supports the anti-IP case.

00:11:03

But his argument was that, look, the seller of a mousetrap could agree with the buyer that the buyer doesn’t have the right to copy it.  And then if some third party – and then he says, but the problem is what about third parties?  So Rothbard recognizes that to really simulate anything like patent or copyright, you have to somehow get third parties bound by these limitations as well.

00:11:28

Otherwise, there would be a whole class of people who weren’t bound by the restrictions, and the idea would just be able to be copied by all these people.  So he recognizes this, so he tries to come up with an argument for how the third party could be bound.  And what he says is he makes an analogy to property law, and he says, well, in property law, if you own a piece of property or you have some rights in a piece of property they’re not completely full rights.  You can only transfer to a new buyer what you own.  So, for example, let’s say you have a lease in an apartment.  You don’t have full title to the apartment.  Now, let’s say the lease lasts for a year, and you have the right to sublet it.

00:12:11

Okay, let’s just assume that.  So you could sublet the apartment to someone else, but if you tried to sell the apartment to someone else, then that sale would be null and void because you didn’t own the apartment in the first place.  And the person who bought it from you may have been swindled by you, but they wouldn’t have a right to the apartment against the landlord because they can only get title from the seller the seller is entitled to give over.  So Rothbard tries to make an analogy, and the analogy is that the buyer of the mousetrap, if he has contractually agreed not to copy the mousetrap, well, he doesn’t have the right to copy so called.  So, therefore, someone he sells it to doesn’t get the right to copy either.

00:12:54

Now, there are several problems with this argument, and so then Rothbard would say, well, in that way, third parties could be sort of ensnared.  Now, there are several problems.  Number one, even if he’s right, only some third parties could be ensnared, not all third parties, maybe only second sellers or whatever, second buyers or whatever you call them, but not third parties who just observe or view the mousetrap and they learn from it.  The mistake Rothbard makes here is he assumes that knowledge or information is an ownable thing because you have to assume that to assume that you need some kind of property right to make a copy of something that you’ve learned about.

00:13:37

In other words, why would you need permission in the first place to just use your own property as you see fit to make a new mousetrap using knowledge that you’ve acquired?  If you buy a piece of property – anyway, okay.  I was interrupted.  So the Rothbardian argument here just won’t work.  There’s other problems with it.  For example, he’s talking about a mousetrap, which is an invention, which is the subject matter of copyright – I’m sorry, of patent.  Yet he’s talking about it being copyrighted.  So it’s like he’s mixing together types of IP, and as an IP lawyer, I actually have no idea how he really expects this system to work.  He says you stamp copyright on a product like a mousetrap.  Well, I mean, first of all, patent right now covers things other than physical products.

00:14:30

It covers other types of inventions like methods or processes, and I’m not sure how you’re supposed to stamp the word copyright on a process.  And the bottom line is if you reveal information to the world, then you have to expect people will learn from that.  As Benjamin Tucker said, if you don’t want your ideas to get out there, don’t let anyone know.  Keep them to yourself.  Just like any type of free market activity, if you do something that is observable and physical and that people will see, you have to expect that they may learn from that and emulate or imitate you or compete with you.

00:15:09

And if you don’t want people to be able to do that, then don’t make it public.  But that’s the choice you face when you want to make a profit sometimes.  You have to do some things that are public.  You have to advertise your product.  You have to let people know what you’re doing.  If you come up with a new innovation on a mousetrap, you want your customers to know what it is.  You’ll put it on the label.  You’ll say this new mousetrap has the following feature, and you’re hoping to attract customers by that.

00:15:37

By the same token, you are alerting the world to what is unique about your product, and if it’s successful and popular then you’re going to send a signal to people, hey, come compete with me.  So this is the dilemma in a sense that any entrepreneur faces.  As soon as you are successful in any endeavor, you’re going to make a profit, which is sort of an unnatural thing.  It’s a temporary, unnatural thing that is going to be reduced as soon as you attract competition, and this is just the way the free market works.  So there are several problems with this.  I discuss this in detail in my “Against Intellectual Property” article in the section “Contract Versus Reserved Rights,” and I think that will address this issue as well, so let’s go on to slide 27.

00:16:31

Okay, so the next argument you’ll hear quite often from different types of advocates is that it’s in the Constitution.  That is, the American argument that patent and copyright are justified because they’re in the Constitution.  I’m not sure what to say about this kind of argument.  It’s really nothing but appeal to authority and appeal to a weird authority at that because no serious libertarian would believe that the United States or the American founding or the Constitution are exactly libertarian.

00:17:03

There are some pro-libertarian things about it, but it’s not like a libertarian utopian document.  I mean Ayn Rand, for example, who was a big pro-IP person, one of the original founders of modern libertarianism, and also a huge pro-American type and a minarchist and a pro-constitutionalist, was probably overly influenced, for example, by the Constitution and the thought of the founders.  She did emphasize a lot of the good things about their thought, but she, like a lot of other pro-Americans, downplayed some of the negative aspects of, say, America.  And you want there to be a libertarian utopia, and you look to the American founding as a reasonable facsimile of that, but of course it wasn’t.  There was slavery.  There was women’s rights not be respected.  There was war.  There was inflation.  There was taxation, lots of defects of the Constitution, not to mention the state itself.

00:18:05

Even – the story I’ve heard, and I believe there’s some documentation to back this up is that Ayn Rand even initially thought that imminent domain, also called condemnation or takings, that imminent domain by the state, which is when the state takes some property, private property and uses it for some public use and compensates the expropriated owner.  She thought that was legitimate because it was in the Constitution.  It’s recognized in the Fifth Amendment.  The Fifth Amendment says you can take property only if you pay compensation for it.  So at least it requires the government to pay compensation, so that is a good thing.

00:18:43

But the fact that the government can take private property for public use is not a good thing from the libertarian perspective.  And Ayn Rand initially thought that was legitimate because she comes here from Russia.  She comes from a totalitarian system.  She sees this wonderful, freer society with prosperity, and she sort of assumes I believe that the constitutional system we have set up was presumptively valid.  And likewise, I think she made a mistake.  Now, she changed her mind on imminent domain to her credit and probably on taxation and of course on slavery and things like this.  So she recognized it wasn’t perfect.  If you remember in Atlas Shrugged at the end, she has Judge Narragansett, her sort of libertarian judicial figure, making a few small amendments to the Constitution to make it “perfect.”

00:19:31

Actually, I don’t know if that’s a quote, but the point is she clearly thought the Constitution was almost a libertarian blueprint for the right kind of – or capitalist blueprint for the kind of society that we should have.  And I think she was overly influenced by the fact that the Constitution has inside of it a patent and copyright clause, which authorizes the Congress to protect intellectual creations and inventions by means of copyright and patent if the Congress wants to.

00:20:04

Okay, so a few things I’ll mention about this.  Number one, it’s important to understand that the constitution says that Congress can enact these laws to promote the progress of the science and the useful arts, of science and the useful arts.  Now, back then, science meant not natural sciences, but it meant just knowledge like scienter.

00:20:29

So it was referring to creative works, and the useful arts would be like what artisans produce, which is mechanical contraptions and devices, so that’s the inventions parts.  So actually the science part is what gives the right of Congress to enact a copyright law, and the useful arts part is what gives Congress the right to past the patent law.  Now, there are other types of intellectual property like trademark and trade secret.

00:20:53

Trade secret is still state law because Congress has no authority to pass trade secret law, although they have invaded this field a little bit with some types of domestic – sorry, national trade secret protections, but it’s primarily state still.  And in the field of trademark, there is no authority granted to the Congress whatsoever in the Constitution to enact a trademark law.  So it used to be state-based, but the Lanham Act, L-A-N-H-A-M, the Lanham Act was passed oh, I don’t know, in the – maybe the ‘40s or ‘50s, maybe earlier, which is the national federal uniform trademark law.  It doesn’t completely get rid of state trademark law, but it basically makes – it established a national trademark system, and the authority for that is claimed to be interstate commerce clause.

00:21:43

Now, oddly enough, the patent and the trademark laws are administered by the same agency, the United States Patent and Trademark office, which is an agency of the Department of Commerce.  So patent and trademark are lumped together under one agency even though one of them is protected by the Constitution and the other is not.  And the copyright law is administered by the copyright office, which is part of the Library of Congress, which is bizarre because that’s basically an arm of Congress, the legislative branch, not the executive branch.

00:22:14

But we can’t expect these things to make sense.  But I would just say that we have to stop thinking that things are legitimate from a libertarian point of view just because they’re in the Constitution.  As I mentioned earlier, we have conscription.  We have taxation.  We have wars.  We have slavery.  We have central banks.  We’ve had institutionalized racism and lots of other terrible policies and institutions and laws because of the Constitution itself and the federal governmental system.

00:22:46

If you remember, if anyone’s read some of L. Neil Smith’s great anarcho-capitalist fiction like Probability Broach and The Gallatin Divergence, the word constitution is used in the sort of seeing he said so, a crumbling American confederation, which is almost anarchistic.  The word constitution is used as a swear word.  People will say constitution with an exclamation mark almost like a swear word.  And I think that’s really how we libertarians should think about it.  Constitution is not a good thing.

00:23:20

I’m on to slide 28 now.  The other thing to recognize is that assumption among libertarians who argue for IP, they tend to be more rights-based or principles-based or deontological than utilitarian than – I’m sorry, than utilitarian about this.  They tend to argue that intellectual property is a natural right, and they tend to – when they point to the US Constitution in support, they tend to assume that the founders viewed IP as a natural right as well.

00:23:58

Now, Professor Tom Bell and other scholars like I think Ronan Deazley – I have links to this, by the way, on my – I think it’s in the slide here, and it’s on my website that show, contrary to the claims of some Randians like Adam Mossoff and others, Locke, who was a major influence on the founders, and the founders themselves like Jefferson, etc., Madison – none of these guys really viewed IP as a natural right.  They knew that it was not a natural right, but they felt the government had the authority to put in some temporary measure for some kind of a narrow purpose.  So they thought they were – it’s a privilege basically.  They were stimulating innovation.

00:24:48

They thought the government should have the authority to, if it in its wisdom, thinks it’s a good idea to give artists and inventors some kind of temporary monopoly just so they would be stimulated.  So it was for a social end.  It was a social policy tool.  They were trying to intervene in the market.  It’s clearly un-libertarian, but they didn’t at least think that it was a natural right.  And yet on occasion they would use natural rights language in their lobbying attempts to sell these ideas or to defend them after people started wondering why the hell is the government granting these monopoly rights.

00:25:23

So that’s the first thing I recognize is that the Constitution – number one, the founders, the Constitution, Locke did not view IP as a natural right.  You can even see that in the structure of the Constitution itself because it doesn’t protect these rights.  It only gives Congress the ability to pass a law about it if it wants to, so it’s perfectly constitutional if the patent and copyright act were to be abolished tomorrow.  There’s no obligation on part of Congress to have a patent and copyright act.  It’s just an option that they have.

00:26:00

So – and furthermore, these rights are going to be limited to a certain number of years, and they are limited to a certain number of years.  The patents last around 17, 18, 19 years, 20 years max.  Copyrights last the life of the author plus, I think, 70 years right now, which is, let’s say, roughly 130 years, something like this, 130, 120, 150 years depending upon how long the person lives, so well over 100 years even though initially they were about 14, 28 years, something like that.

00:26:31

Now, what kind of natural right expires after an arbitrary time set by Congress, 14 years, 20 year, even 100 years?  This is not how natural rights work.  You have a natural right to your body.  You can – you own your body as long as you live even if it’s 1000 years.  You own your home, and you can leave it to your descendants, and they can own it in perpetuity, same thing with other property like a car or a watch or money, etc.  So it’s clear that these rights were never viewed as natural rights.

00:27:04

Furthermore, as I quoted, the original clause in the Constitution is explicitly empirical and sort of wealth-maximization-based.  It says that to promote the progress of the sciences and the arts.  Now, some people argue that, unless there is proof available that shows that these laws actually do promote the progress of the science and the useful arts, then the law is unconstitutional.  I think that’s kind of a weak argument, although I like it.  I think that that’s more what we call precatory language.

00:27:36

I think it wasn’t a limitation on the power, but I’m all in favor of the argument that it was.  But in any case, it happens to be the case that there was no evidence at the time of the Constitution or at the time of the first patent and copyright laws enacted shortly after the Constitution was ratified in 1789.  There was no evidence at the time.  There was no empirical evidence whatsoever available that showed that patent and copyright law actually did lead to over – some kind of overall increase in innovation.  And in the 230-40 years since, there’s been no subsequent proof that unambiguously shows this either.

00:28:21

So if you basically view these things as monopolies granted by the state, as monopoly privileges, special privileges granted to certain people, which at least on their face impede competition, restrict property rights, etc., and they’re justified only insofar as they increase innovation, then you would think that the burden of proof would be on anyone who proposes these weird, temporary monopoly privileges, these sort of exceptional incursions into normal operations of the free market.

00:28:55

And because there’s no proof one way or the other – actually, there’s a lot of proof on our side.  There’s a lot of reason to believe that the patent and copyright system cause hundreds of billions of dollars of damage overall to innovation and creativity to the economy every year, and at the very least, gross distortion and lots of individual unjust acts like people going to jail or suffering hundreds of thousands of dollars in damages because of otherwise peaceful actions.

00:29:25

But my point is even if we couldn’t prove our side and they can’t prove their side, the question is who is the burden of proof on?  If you want to argue that a given policy, which invades private property rights at least facially, and that hampers competition, if you want to argue that that’s justified when it results in some kind of overall net innovative wealth benefit to society, the you need to show that it does.  And if you can’t show it, even if it’s because it’s impossible to show it for methodological reasons, which I think it is actually impossible to show it.

00:30:01

I think it’s impossible to show because of Rothbardian, Austrian methodological views.  I think you can never show that an act of coercion benefits society because if one party gains, the other party demonstrably loses because they had to be forced to comply.  But even if you overlook this, the point is there are no clear empirical studies even ignoring these other methodological problems.  There are no empirical studies demonstrating the utilitarian case.  In fact, all the studies that I’m aware of, they usually are either ambiguous.  They say, well, we just can’t tell.  Now, there’s a reason they can’t tell because you can’t add ordinal value.

00:30:47

You can’t add value between individuals.  It’s not intersubjectively comparable, and there’s other reasons for this too.  There’s knowledge problems.  There’s measurement problems.  So that’s one reason they can’t prove this, so some of these studies are ambiguous.  They say, well, we haven’t proved the case that IP is a good thing, or they will just say, listen, as far as we can tell, there is tens of millions or billions of dollars of damages being done by IP in this area.

00:31:13

So pretty much all the studies are against the utilitarian argument for IP, and you would think that if you are really a serious, sincere, honest, utilitarian, and if your argument for IP was really that you thought it did – it made us wealth overall, made everyone better off, then you would think that if you saw the results of these studies, you would say, hmm, I guess I was wrong, and you would withdraw your support, which leads me to believe that most people are not really serious that claim to be utilitarians.

00:31:46

They don’t really have any evidence.  They know they don’t have any evidence, and it’s just sort of a make-weight argument.  It’s not their real argument for IP.  Their real argument is something else.  It’s either intuitive or it’s conservative in the sense that they just know we have this system.  They don’t want to change anything, or special-interest related.  They are maybe an author themselves, or they – there is interests that have arguments on behalf of the movie and the music industry, etc.  And clearly they’re self-interested, and they have an interest in keeping the system alive, or you have the patent bar, for example, and patent attorneys like myself make a good deal of money off the system.

00:32:24

Of course, you’re going to just argue that of course it’s a good idea, etc.  But the bottom line is the utilitarian case has not been proven, so the constitutional argument falls on so many grounds.  It’s an appeal to authority.  It’s an appeal to legal positivism, that is, what someone else said, but it’s a just a committee of bureaucrats issuing edicts.  It’s an appeal to some kind of wealth-maximization criteria, which has not been proven by any kind of studies that are reliable, etc., so the case just falls on so many grounds.

00:32:58

And I’ll go to slide 29 in a second, but one final comment here is we shouldn’t be surprised by this because the – given the history of patent and copyright, they arose from historical attempts to censor, to establish monopoly privilege, and a type of protectionism.  So it’s no surprise that the modern outcome of these original systems is the same, maybe a little bit more sophisticated, a little bit more institutionalized, a little bit more de-personalized and fancier, but no different.  So we shouldn’t be surprised that modern copyright law still results in censorship as does patent, by the way, and that the patent system, which originated in protectionism and monopoly privilege still ends up protecting certain entrenched industry players from competition and helps establish monopolies.

00:33:54

It’s no surprise that when the state grants a legal monopoly dressed up in the form of a patent – and by the way, patents originated in England in what’s called the Statute of Monopolies.  It’s no surprise that when the state grants these monopolies that monopolistic practices and oligopolistic practices emerge from this.

00:34:16

Oh, I see on slide 29 here I’ve already mentioned some of this about Ayn Rand and eminent domain.  But Ayn Rand, if I recall correctly, and some of her supporters still do this, supported the practice of the state having the power or the authority to compel, number one, jury duty service, and also witnesses.  So if you’re a material witness in a case, civil or criminal, then under the current law, the government has the power to compel you by subpoena to appear and to give testimony, even if it’s dangerous to you like if you testify against the mafia or something like that.

00:34:56

They can force you to do this, and this is supported by the Sixth Amendment to the Constitution, by the way.  And also, of course, she believed that we have – the jury is a – the jury system is a good system.  She had some arguments there.  But that means she also believes the government has the right to compel you to become a juror even if you don’t want to perform.  So that’s another example of the perils of relying upon a legal – a positive legal document issued by the decree of basically a bunch of state actors, to rely upon that as an authority form, a standard of morality.  I think she’s wrong about that.  She’s wrong to rely upon them for anything.  We need to evaluate it.

00:35:40

Some parts of the American system, for example, are justified like a law against murder, but it’s not because the government says it’s wrong.  It’s because it is wrong.  The government just happens to be right here because they’ve co-opted something that is a natural rule that people would adopt without the government in the first place.

00:35:57

Okay, so – okay, I see earlier I talked about utilitarianism, and I did this before I had actually gotten to my slides on this.  I’d forgotten I hadn’t gotten to that yet, so I’m on slide 30 now.  Let me briefly go through the utilitarian argument on IP and why there are many problems with this argument.

00:36:18

So the basic utilitarian argument or the wealth-maximization argument, is the idea that we can adopt certain legal rules or laws or policies that will tweak sort of the baseline set of rules that we have, and it will shift what’s going on in society, shift behavior.  And it will make us all better off overall.  And even if on occasion a given person might be disadvantaged by the operation of a given law, overall a society is richer and theoretically – and this is Richard Epstein’s argument, by the way, in his Takings book.  Theoretically, you could compensate the people who are harmed with a surplus.

00:36:59

So, in other words, if you imagine society as having a pie of wealth of a certain size and everyone’s got a certain slice of it, different-sized slices, if we could adopt a law that will grow the overall size of the pie by a significant amount, even if you have to hurt one person to do that like taking someone’s land to make a road, for example, then the overall surplus in wealth that you generate, you could take a part of that, compensate the person you’ve expropriated.

00:37:31

So, for example, let’s say we want to build a highway system, and we think it will generate $100 billion worth of economic activity because we’ll have more traffic.  But you have to take the land of a thousand people to do this, and you have to pay them, let’s say, $10 billion to pay them back.  Well, if you get a 100 billion in increased value and you take 10 billion of that to compensate the people who have been expropriated, then they’re no worse off.

00:38:03

And society is worse off by $90 billion, and you can use that money to fund the government or to redistribute back to the people or whatever.  That’s Epstein’s idea.  Now, it suffers from a lot of problems, but that’s the basic idea also behind IP law.  The idea is that if we restrict people’s rights in a certain way, then we make certain activities more profitable like publishing books, making paintings, making movies, coming up with new, innovative, and inventive ideas, etc. because people can now use their monopolies that the state gives them to make a profit for 10 or 15 or 20 or whatever years and that, although some people are harmed a little bit, overall we’re made better off.  And so overall, this is a good idea.  In other words, the government can actually make us wealthier by shifting and adjusting and tinkering with the economy.

00:38:53

So the first problem with this idea is what’s called methodological.  It’s the Austrian – it’s based upon the Austrian idea, the idea of – the approach that Mises had, for example, to economics and value.  Mises recognized that value is not a substance.  It’s not a thing.  It’s not a quantity that you can measure.  Value is just what he called demonstrated in action.  So when you choose among different things you could aim at in a given limited amount of time with a limited amount of resources, you choose among a number of ends.  You choose to do A instead of B or C.  So when you choose a, the opportunity costs of that action would be B or C, which you could have done.  But all you show is that you value A more than B, but you don’t value it more in a numerical sense.

00:39:46

These are not numbers.  They’re orders.  Like you have your first preference would be number one, would be A.  Your second preferred thing would be two or B, but it wouldn’t be like you have 110% on A and 92% o B.  All we know is that, in action, you demonstrate the one thing that you prefer more than the others, so that’s the first idea.

00:40:06

The first idea is that all value is subjective.  That is, it’s the result of your subjective preferences.  It’s demonstrated in action.  It’s ordinal, and it’s not interpersonally comparable.  That is, you can’t say that person – John prefers an apple 2.2 times, and Sally prefers the apple 2.1 times.  Even if there’s a money price on an apple in a given market of a dollar an apple or $0.10 per apple, that doesn’t mean the apple is worth $0.10.  It only means that’s the result of the market’s interplay of all the subjective valuations resulting in a number, but it’s not a measure of the value that people put on the apple, as Mises explicitly says.

00:40:50

So the first problem with utilitarianism is that it wants to add up all the values people have and to choose legal policies that will somehow shift these values around and result in an overall sum total of utility to society that is greater than before.  So the first problem is that that’s not how value works.  It’s just not a number.  It’s not cardinal.  It’s only ordinal.  And, by the way, at Libertopia I had a long discussion with David Friedman about this who is a – more of a Chicago wealth-maximization type, and he believes that von Neumann proved that you could cardinalize value.  I don’t believe it.  I don’t buy it at all. [Update: see Robert Murphy’s devastating critique of Friedman’s contentions, at Why Austrians Stress Ordinal Utility.]

00:41:34

Even if you could, we go on to the next problem, which is ethical.  The ethical problem is that even if you could attach numbers somehow, objective cardinal numbers to value, that doesn’t mean that it is valid for – to transfer property from one person to the other.  So let’s take an example.  Let’s say that we could prove that Bill Gates values his marginal dollars of his top million dollars out of his billions of dollars.  He values each of those – each dollar in his top million dollars out of his $70 billion of wealth.  He values each one of those dollars less than a poor person values it and, of course, there’s arguments that this is actually false, that poor people value them even less than he does.  Otherwise, they would have worked to get them or whatever, but the point is the Austrian view is that there’s no numbers associated in the first place.  So these interpersonal comparisons are meaningless.

00:42:29

But let’s say that we assume that Bill Gates, if we take a dollar from Bill Gates and we give a dollar to a poor person that Bill Gates is harmed less by that act of theft than the poor person is benefited.  Well, this still doesn’t mean that it’s ethical to do it because it’s still an act of theft.  You could take the more extreme examples.  You could take cases where some person or group of people really desire to do something very, very horrible like murder or rape or kill someone else.

00:43:00

I mean let’s say there’s some person who expresses some religious view that is out of sync with the community, and it really offends everyone in the community.  So let’s say we have 100 people in the community who are so offended by this one heretic who recanted their religion or whatever.  I mean you could argue that if they stone the heretic to death, then the heretic suffers of course.

00:43:22

But they only suffer once, and they only suffer one human’s experience of death, whatever that is.  Let’s say it’s 100 negative utiles.  And let’s say every person in the crowd gets ten utiles of pleasure out of knowing they’ve vanquished this heretic.  So if you add up the sum, ten positive utiles per person for 100 or 1000 people, it’s much greater than the negative damage that they – the victim suffered.  It’s still not ethical according to libertarianism because you basically are violating someone’s rights, and you’re making those suffer when they’ve done nothing wrong.

00:43:55

So the first two hurdles that utilitarians have to face is this.  It is that, number one, there are methodological problems, and basically that’s the Austrian take on it.  And number two, there’s ethical problems.  But finally, even if we forget these two problems, there’s the empirical problem, and that is that, as I mentioned before, the numbers just do not show their case.  You would think that if you’re arguing for an intervention into the natural free market propertarian system on the grounds that it’s justified because it causes an increase in wealth that you would have some evidence, some kind of study, some kind of measurement, some kind of argument for what the – to prove that your patents and copyrights system actually does increase overall wealth.

00:44:47

So, for example, if you say we need a patent system to cause there to be more innovation, it’s a reasonable request for me to say, well, what would be the total value of innovation in a patent-free society?  What is the value of the innovation when we do have patents?  What’s the difference?  What’s the cost of the patent system, and how do you know these numbers?  Where did you get them from?  Instead, the advocates of the patent system, for example, never ever produce these numbers.

00:45:20

True, there have been some attempts to come up with some of these numbers, but as I mentioned, by all the people who study it, they pretty much conclude we have no way of proving this whatsoever.  Or they say it looks like to us this system is causing billions or tens of billions or even hundreds of billions of damage every year or whatever relevant period of time that there is.

00:45:41

So if you’ll go to slide 31 of my slides, which is entitled “Utilitarian Arguments for IP,” I’ve got a few quotes here.  You can read through them yourself.  So let’s just go through it.  Like I mentioned, the founders in 1789, when they put these clauses in the patent system, they didn’t do a lot of empirical studies first.  They just were putting in place in the Constitution the authority for Congress to continue what the European system had been doing for a couple of centuries in the name of censorship and monopoly privilege and protectionism.  They made it a little bit more institutionalized, but – so they didn’t really do a lot of studies, and of course, there weren’t a lot of sophisticated, modern, econometric, or empirical studies done by – in the, say, the next hundred years, in the 1800s.

00:46:28

In the 1900s, the 20^th century, people started looking into this.  There was actually lot of controversies.  Most economists used to believe that monopolies were a bad thing, which is the impetus behind the anti-trust law, etc., but they made an exception for these types of laws.  In any case, Fritz Machlup, who’s an Austrian economist who was commissioned by the Congress in the US in ‘50s to do a big study of this whole issue, in 1958, he concluded that “No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or loss on society.

00:47:07

The best he can do is to state assumptions and make guesses about the extent to which reality corresponds to these assumptions.”  And then he concludes, “If we did not have a patent system, it would be irresponsible on the basis of our present knowledge of its economic consequences to recommend instituting one.”  So what he’s saying is even 160 or so years after the original patent system, we have no reason to have a patent system.

00:47:35

Another economist named George Priest in 1986 says that “In the current state of knowledge—so this is 30 years after Fritz Machlup’s landmark congressional study.  George Priest says, “In the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or of other systems of intellectual property.”

00:47:59

Okay, and maybe ten years, eight years ago, 2004, two French researchers concluded that “The abolition or preservation of intellectual property protection is not a purely theoretical question.  To decide on it from an economic viewpoint, we must be able to assess all the consequences of protection and determine whether the total favorable effects for society outweigh the total negative effects.  Unfortunately, this exercise is no more within our reach today than it was in Machlup’s day in the 1950s.”

00:48:40

So what they’re saying is even as – even in the 2000s, we still don’t have any reason to believe that IP contributes this net gain to society that its proponents say it does.  In 2008, just four years ago, two Boston University Law School professors and their economists as well, Michael Meurer and Jim Bessen, they concluded that on average, the patent system discouraged innovation.  They said, “it seems unlikely that patents today are an effective policy instrument to encourage innovation overall.”  And in fact, they said it seems clear that “patents place a drag on innovation” and that “the patent system fails on its own terms.”

00:49:21

Okay, and finally, in the paper that’s a draft working paper right now, it’s still a draft form by Boldrin and Levine, the authors of the landmark empirical anti-IP study against intellectual monopoly, not to be confused with my book, Against Intellectual Property.  My case is more principled and rights-based and based upon libertarian principles and propertarian principles.  Theirs is simply based upon examining the empirical arguments for it and showing why they all fail.  And in their recent study, they said that “The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity.”

00:50:04

And then they conclude that “there is strong evidence that patents have many negative consequences.”  So the point is that if you are really a serious utilitarian, if that was really your approach to policy, you would actually be against IP law because all the evidence is either inconclusive or pushes against it.

00:50:24

Okay, so let’s talk – but as we’re talking about numbers, let’s look at a few other things just to put these things in perspective.  Again, the main case against IP is that it infringes property rights and liberty, not the empirical case, but the empirical case itself for IP falls – can’t sustain itself.  On slide 36.  There was recent – I think that the IP defenders know that they’re on the ropes, and they’re trying to pull out every argument they can.

00:50:54

And they know there’s no good studies in favor of IP, so whenever something comes out, they try to color it as contributing – arguing for IP.  So there was a recent Commerce Department Patent Office study, and all the advocates of IP said that this study showed that intellectual property can attribute $5 trillion and 40 million jobs to the American economy I think every year.

00:51:21

Now, all they meant was that they looked at what part – how much of the United States economy, which I think is around $14 trillion a year in GDP, $14-15 trillion a year, how many of the industries that generate part of this GDP have aspects of their industry that are protected by IP.  And then they said, well, then IP contributes to that.  Well, there are, first of all, so many problems with this.  Number one, correlation is not causation.  Just because the computer industry or the car industry is affected by patent rights, for example, it doesn’t mean that patent rights are the cause of their prosperity.

00:52:05

It could be that it’s a neutral effect, or it could be that they’re successful despite it.  In fact, that’s my view.  I believe that the American industry – American economy would be much stronger without patent or copyright.  I think it’s strong despite intellectual property just like it’s strong or it’s prosperous to a certain degree despite taxes and wars and conscription and regulations and tariffs, etc.  So that’s the first thing.  And another example of the flaw of the study, the number-one intellectual property-intensive industry that was identified in the study was grocery stores.

00:52:49

Now, usually you would think of Apple or IBM or some high-tech or the movie industry as being more affected by IP law.  This just goes to show you that every industry is basically affected by IP law.  I mean grocery stores have food.  Food is made by companies that have patents on corn or genetic patents or trademarks on the brand names they use like Crest toothpaste, etc.  So this is supposed to be some kind of proof that patents and IP contributes trillions of dollars of gain.  It’s just not even a serious argument at all.

00:53:31

Okay, now, what’s the reality?  As I mentioned, there’s no studies that really show that it imposes any benefit on society.  My own estimate as a patent lawyer, as a libertarian, as an Austrian economics student working on this area for a long time, my estimate is that the patent system in the United States alone imposes at least $100 billion of net damage to the economy, probably far more.  My guess is probably far more.  I don’t think it’s possible to know these numbers exactly, but we do have some cost: patent lawsuits, research and development dollars that are diverted towards acquiring patents or defending against patents, reduced competition, etc.

00:54:17

There was also a fairly recent study done showing – it was talking about software patents only.  And the question is – the question was regarding software patents, which are fairly recent innovations.  They last 15, 20 years.  And a lot of people that want patent reform want us to get rid of software patents or patent trolls.  They are never principled of course.  They never look at the root issue.  They never strike at the root.  They never want to get rid of patents per se.  They always want to just nibble at the edges.

00:54:50

So their focus is on patent trolls and software patents.  So they say what would it take for the American software industry to comply with all the software patents out there and to avoid infringing each other’s patents?  And the study concludes with some numbers, and I have scaled them up for the whole industry because they were conservative numbers.  But based upon the study and my understanding of the industry and how the patent system works, the study basically would back up the idea that the software industry needs to hire six million patent attorneys and take almost $3 trillion per year just to examine, to take a look at, and be aware of all the patents out there and to change their products to avoid infringing them.

00:55:41

So we’re talking an industry that would have to hire six million patent attorneys and spend almost $3 trillion a year.  Now, this is an industry – let me go to slide 38 now.  I don’t have the number here.  I have it in my original post, which I have linked here about this, but basically just the revenues alone of the software industry are not anywhere near $2.7 trillion.

00:56:15

Just think about it.  That would be about one – I don’t know.  It would be about one-eighth of the entire US economy just from software.  And there’s only – I don’t know – 40-50,000 patent attorneys in the entire American legal system right now because you have to have an engineering degree and a law degree to be a patent attorney.  So you would have to multiply by tens or hundreds of times the number of patent attorneys and the budget spent – it would have to be more than even the revenue the software industry makes just to let them avoid infringing patents, which means it’s impossible to avoid infringing patents basically.  It’s just impossible.  So this is to put some perspective on – and this is just software patents.  If you scale this up to the entire patent system, we’re talking probably tens, maybe hundreds of trillions of dollars a year would have to be spent by everyone to avoid infringing patents.

00:57:10

Now, how can this be a real property right?  Regular property rights, they are very easy to avoid infringing.  You observe a physical, publicly available border, and you just don’t cross it, very simple.  This is not what patents are about.  There was a recent study that if Google, which owns YouTube I believe, were to prescreen all the YouTube videos to prevent any copyright-infringing videos, it would cost Google alone $37 billion a year.  Now, Google’s revenue last year, 2011, was $38 billion, revenue, not profit.  So in other words, it would take all of Google’s revenue to just make sure that YouTube is not having the wrong kinds of videos up.

00:57:55

Okay, so we have lots of huge, horrendous costs from the copyright system and the patent system.  Copyright is causing people to be jailed for uploading movies or extraditing foreign students to face federal prison fines in America for just having links on their website, which are legal in their own country like in Britain with the case of Richard Dwyer.  We’re having invasions with SWAT squads with 59 federal and other officers in other countries in the Megaupload case, ratcheting up the police state, choking back on internet freedom with attempts to – attempts like SOPA and PIPA, which have been defeated but only temporarily, the TPP, the Trans-Pacific Partnership, ACTA and other laws coming down the pike.

00:58:45

And if you go with this empirical mindset that we – the government is justified in passing laws to try to tweak incentives to maximize or to optimize or to at least increase valuable, innovative behavior, where is the stopping point when, number one, I mean we can always make the patent and copyright terms even longer?  Why stop at 17 years for patent and a hundred and X years for copyright?  Why not go to a million years?  Why stop at civil penalties in the case of patents or treble damages for patents and civil penalties and some jail fines for copyright?  Why not go to ten times penalties for patents or public executions?

00:59:35

Why not – how about public torture?  I mean there’s no limit to what you could do to try to increase these incentives to make the holding of these monopoly privilege rights more valuable to give a higher profit opportunity to the innovators so they would come up with even more innovations that they’re not coming up with now because they can’t make enough money.  And what if having a monopoly by the government, even if it’s very strongly enforced, even if the penalties are draconian, what if that monopoly right is just not enough?

01:00:05

What if there’s a life-saving drug that a large pharmaceutical company could come up with, but even the prospect of monopoly sales for 50 years, monopoly-priced sales of the drug, what if that’s not enough to make it up?  Well, hell, there’s a drug there that we could be making that we could be benefiting from.  So why not take some money from the taxpayers and give it to these companies to give them a little bit more cushion, give them a little bit more ability to engage in research and development?

01:00:38

Apparently, the only goal of public policy is to just keep increasing the amount of innovation and creativity so – and the cost is irrelevant since people that promote IP and patents don’t care about the cost and don’t have any idea about what the cost is.  They don’t take it into account in their arguments, so what would be their opposition to having a taxpayer-funded, say, prize system?  Well, it turns out that they don’t oppose this actually.  In fact, I think I mentioned it earlier in the first part of the talk.

01:01:13

Nobel Prize winners like Stiglitz, socialist – the Vermont senator, Bernie Sanders have proposed, and this has been endorsed by a quasi-libertarian.  I don’t know, quasi-Austrian, Alexander Tabarrok, they say that they would like to either augment or replace the United States patent system with this prize system.  And they were talking about medical innovations only.  So what they said was for medical innovations, it would be reasonable – I don’t know how they get these numbers – but to have $80 billion a year of prizes, that is, taxpayer dollars, that some government-appointed committee of scientific experts can dole out.

01:01:56

It’s like an American taxpayer-funded, huge, huge Nobel Prize award except – so instead of giving patents or maybe in addition to giving patents or maybe in addition to giving somewhat weaker patents – who knows what they’re in favor of – every year the government would announce here’s our 5,000 award winners or 10,000 award winners.  And they would hand out checks ranging from, I don’t know, $1000 to a $1 billion or whatever.  They’ve got to get rid of this $80 billion, and they’re doing that to incentivize people.

01:02:28

You figure if you engage in some heroic research, then the government is going to recognize your work and give you an award for it.  I mean the idea is so ludicrous and so un-libertarian, but at least it’s honest.  But if you think about it, they’re talking only about medical innovations.  That’s only one narrow sliver of the entire innovation space that the patent system, for example, covers.  The patent system covers genetics and chemical and electrical and software and computer and hardware and lasers and mechanical devices and watches and any number of types of technology.

01:03:08

So if you were going to be consistent, then you value all types of innovation.  You would need to have the prize system ratcheted up to cover all types of innovation, not just medical devices.  So this is – we’re talking tens of trillions of dollars a year.  Now, we have an economy of $14-15 trillion a year in the US, the richest on the planet.  Even if we expropriate 90% of our wealth every year and use it all on innovation prizes, we have $10-12 trillion.  That’s not – even that’s not enough.  The idea is literally insane and obscene I would say.

01:03:46

Okay, enough on that.  Let’s go to slide 39.  So here’s another argument I’ve heard before, and I’ve been at small companies, general counsel at a small high-tech company for awhile.  And I’ve dealt with venture capitalists, people who invest money in these small companies.  So what they do is they will – they’ll look at your business plan.  They’ll look at your sales.  They’ll look at your potential customers, your products, and they’ll look at everything.  They’ll look at your numbers.  They’ll look at your employees.  They’ll look at your intellectual property.  So the argument is that, well, without intellectual property, venture capital won’t invest in companies.

01:04:23

Now, there is a little bit something to this argument, and that is in today’s society, a VC is not going to invest in a company that’s a high-tech company that hasn’t done their homework and gotten the right amount of patents.  In other words, who isn’t playing ball and playing the game as it’s supposed to be played?  But this is – doesn’t mean that there should be a patent system.  It only means that, if there’s a patent system, then it causes certain behaviors.

01:04:48

It gives rise to certain behaviors.  It gives rise to the risk, number one, of being sued for patents, and it gives rise to the need to have a potential defense in the form of having patents.  This is why these companies waste millions of dollars every year on patent attorney salaries and patent office fees, etc. or on buyouts of other companies’ patent portfolios to increase their patent holdings.  Sometimes they’re doing it to get weapons to use for aggressive reasons like patent trolls do or like larger companies like Apple do.  Sometimes they’re doing it for defensive reasons, and that’s usually the reason.

01:05:24

You want to have – it’s called sometimes the porcupine defense, like you want to imagine you have a bunch of quills or weapons on you that are defensive and that your big competitors know that if they sue you for infringing their patents, you can sue them back for infringing your patents.  Well, you can only do that if you have a big arsenal of patents, which is too expensive for them to take time to dig through.  They just assume if you have a big stack of patents, there might be something in there that they’re infringing if you’re in the same sort of technical space.  So that’s why these companies acquire these patents.  It’s almost like the nuclear weapon – the Cold War – during the Cold War time that the USSR and the United States both acquiring thousands of nuclear weapons only to dissuade the other side from firing first at you.

01:06:14

Of course, what this does is this causes the large companies to either not sue each other in the first place because they’re afraid, so they just compete, or if they sue each other, they finally settle, and one pays the other a few billion dollars in royalties, and then they go back to business.  They just raise their prices because they don’t have any competition from the outside, outside these few small, large companies with the big patent arsenals because the smaller companies can’t compete.  They can’t compete because they’ll get sued for patent infringement.  They get sued for patent infringement because the big companies like Apple and Microsoft know that they’re not going to get sued back.

01:06:53

They’re not going to get sued back because the small companies haven’t had time and money to acquire a big patent arsenal themselves, or they can’t even afford the $3 million, $5 million they need to pay lawyers just to defend themselves in a patent lawsuit.  So basically the patent system gives rise to these small number of players in an oligopolized or even monopolized industry.  There’s lower competition, higher prices partly because the prices of all the patent acquisitions and patent lawsuits and the royalties that they pay each other are passed onto the consumers.

01:07:26

Consumers can’t go to the smaller players because the smaller players don’t exist.  They don’t exist because they can’t compete, so this is one big problem with this whole argument.  So the whole VC idea is just a ridiculous argument.  You know, given the fact of the drug laws, a VC is not going to invest in a company run by someone who is selling cocaine openly because they’re going to be arrested.  That doesn’t mean that cocaine laws are justified.

01:07:54

What about tax laws?  If there’s a notorious and open income tax cheat like Peter Schiff or someone – not Peter Schiff, sorry, his father, Irwin Schiff.  He’s not going to – a VC is not going to want to deal with that.  They’re not going to invest in them because they know the guys is about to get arrested maybe.  That doesn’t mean income tax law is justified.  It just means that VCs are rational, and they respond to the effects of these laws.  It doesn’t mean the laws are justified at all.  And, in fact, my view is that in a patent-free society, it would be at least as easy if not easier to get a venture capitalist to invest in you because now the VC knows that the risk of your small company being sued for patent infringement is zero.

01:08:43

That’s a huge risk that small companies face now, small start-up companies.  In fact, it’s a common technique for the established companies to observe a small competitor, a small startup, about – becoming more and more successful.  And when they file – they start filing the papers for their IPO, their initial public offering, right before they go public, they’ll get slapped with a lawsuit, a patent infringement lawsuit.

01:09:12

Now, why do they do it?  They time it like this on purpose because they know that it’s going to delay or maybe ruin or reduce the success of the IPO.  So they hit them with these lawsuits last minute, and that’s why, if you look at the prospectuses of all these companies that are small companies that are filing their IPO statement, they always have these big sections saying we can’t know that we’re not infringing on anyone’s patents.

01:09:38

There’s always a danger that we’ll get sued for patent infringement.  In fact, there’s a danger we’ll get sued for patent infringement ten days before we’re going to price our IPO, and that’s quite often what happens.  So without that risk – and look, seriously, a lot of these companies, even if they’re successful, a lot of small companies don’t have $3-10 million of cash sitting in the bank.  They’re lucky if they’re paying their suppliers.  Even if they’re profitable, they’re trying to expand.

01:10:04

So if they get sued for patent infringement, even if they’re in the right under the law, they don’t have $3 million or a million or $5 million to take a gamble on a patent lawsuit to defend themselves when it’s up to a jury who doesn’t know much about technology and who’s interpreting vague, ambiguous, hyper-technical, weird, arbitrary legal standards in the patent law.  I mean they might lose even if they’re in the right.  And even if they don’t lose, they’ve lost $3 million, and they won’t be able to keep going on.  So they cave in of course, or more likely, they don’t get engaged in this business in the first place.

01:10:43

This is what Hazlitt or Bastiat would talk about, the seen and the unseen.  There are lots of marginal small businesses that just don’t exist now that would exist if they weren’t afraid of the terrible, damaging effect of the threat of a patent lawsuit.  Just think of the smartphone space right now, which is dominated by, say, Samsung and even Android, Google, and Apple and Microsoft maybe to some degree.  Some small company who wants to innovate in this area, there’s almost no doubt they would be sued into oblivion by some of these players.  So there’s no wonder there’s not a lot of small companies selling smartphones.

01:11:22

Okay, let’s go on to slide 40.  Here’s one of my favorites, which I’ve been dealing with a lot lately.  The slide is entitled “Questions as Arguments.”  So the important thing to point out here is to let people know and to be aware of the fact that having a question is fine.  You can have questions.  You can ask questions, but questions are not arguments.  Now, what do I mean by this?  What I mean is I will come up with an argument like I’ve done here that patents and copyrights are unjustified for the following reasons, for whatever reasons.  And the implication of that, of course, is that we should get rid of patent and copyright.

01:12:07

Now, instead of saying, well, here’s what I disagree with or here’s a mistake in your argument, I will often hear someone respond with, but how would people make money in an IP-free world, or, but how would – or, sorry – but what is the incentive of someone to come up with a new software product or write a new book if there’s no IP?  Now, they ask it like they’re asking a question, but they’re not asking a question because a question is not an argument.  It’s just literally not an argument.  But they’re responding to an argument with a question as if it’s an argument.  So what’s going on here is that they’re implicitly saying this.  They’re implicitly saying I think that the purpose of law is to tweak incentives to make sure we have certain social goals achieved to a desirable level.

01:13:08

And I think it’s possible for the government to do this, and that’s what makes law justified.  Now, they don’t want to say that because they don’t really think in those coherent terms.  If they did, they’d probably be libertarian instead of utilitarians, and they don’t put it that way because if they did it would be – it would make it clear that they need to come up with a whole argument about social theory and legal theory and this is how laws are justified, and they don’t want to do that either.  So they want to sort of just assume that we all agree with these kind of common assumptions a lot of people share.

01:13:36

So that’s the first problem.  And then they would have to – so what they’re really saying is if you don’t answer my question adequately, then it means your argument is wrong.  Now, that’s just a bad argument, so I never answer these questions unless I first establish it’s fine to be curious.  It’s fine to wonder what a future free world would look like.  But we need to establish right now that it’s not incumbent on me to predict that or to satisfy you that my predictions are accurate.  And it’s not incumbent on me to even be able to predict it to know what laws are wrong or right.

01:14:15

So on slide 40 here, as I mentioned, imagine the USSR under communism in the ‘70s or ‘80s.  Let’s say you made the standard arguments that communism is evil.  It’s uneconomic, it’s a bad idea, and we should abolish it.  We should allow private property and freedom.  It wouldn’t be a rebuttal argument for someone to say, but how many types of toothpaste would there be in a free market?  Even if we don’t know what the answer is, even if there was no other private economies of the world to look at to get some idea, even if the whole world was communist and we had no idea what the toothpaste market would look like if we freed up things, that doesn’t mean that we have to keep communism until we know these things.

01:15:01

Sometimes the only way to know is to free things up and see what happens.  And another example would be slavery in the south or slavery in Ancient Greece, etc., slavery in the antebellum US.  Someone proposing abolition of slavery could have been met and probably was met with questions like, if we get rid of slavery, who’s going to pick the cotton?  I mean it seems like a – almost a joke now, but that probably was a real question because the slaves actually did pick the cotton, and a lot of the industry at least in the south was plantation-based and farm-based and cotton-based.  So who would pick the cotton?  I don’t know.  Maybe no one would pick the cotton.  Maybe cotton wouldn’t be a viable industry without slavery or maybe…

01:15:54

But the point is if you make an argument against a given practice and argue for freeing people’s lives up and say you argue against slavery and someone says, but who would pick the cotton, that question is literally not an argument.  We have to recognize the same thing is true for intellectual property.  When people have questions about what a free society would look like, what a real free economy would look like, free of these government monopoly privilege in shackles, that’s fine that they have questions.  But they have to recognize that their questions are not arguments to keep the current system unless you basically are the ultimate conservative, which in a way, Fritz Machlup was.

01:16:39

Remember I quoted Fritz Machlup earlier.  Let me see if I can find this quote here.  I don’t see it on slide 40 or 41, but the earlier quote by Machlup was that if we didn’t have a patent system, the current economic knowledge that we have wouldn’t justify putting one in place.  But he also said that we also don’t know enough to get rid of it.  If we have a patent system, we don’t have enough knowledge to know that we should get rid of it.

01:17:07

Now, to me that argument makes no sense whatsoever.  It’s basically retreating to conservativism, like whatever laws we have in place, we should keep unless we have a good reason to change.  Now, I might agree with that for certain social practices and traditions.  You could make an argument for that but not for artificial laws decreed by the Congress, a bunch of bureaucrats and politicians.

01:17:28

Okay, I’m on slide 42 now.  Here’s another argument I’ve heard.  Advocates of IP, especially authors and others, they get really upset when people say they’re against IP.  Now, I don’t know why they’re upset in the first place because they won.  They have an IP system in place.  They are forcing us to comply with their IP system.  They have their copyright.  They have their patents.  It doesn’t look like they’re going away any time soon.  So they’re upset that other people disagree with them even though they are forced to go along with it.

01:17:59

I would much rather switch places with them.  I would be happy to have no patent or copyright and have a couple of socialist, fascist people griping about it on the sidelines.  I would be so happy to have – switch places.  I would let them gripe about it to their heart’s content.  But in any case, they’ll make this argument.  They’ll say, oh, all these young kids now, they just want something for free.  Now what kind of argument is that?  First of all, it’s – I don’t think it’s honest and right.  Maybe there’s a lot of young people who want something for free.

01:18:31

Everyone wants something for a smaller price.  That’s why there’s Kmart and Walmart and grocery stores that advertise they have the lowest prices because people bargain shop.  They want something for the lowest price possible.  That’s called economic action.  There’s nothing wrong with trying to achieve something for the lowest cost.  That’s called economizing action or efficiency.  But it also disparages the motives of, say, the bulk of people that are pirating.

01:18:59

But what it does is it just changes the subject.  It assumes that they’re doing something wrong and then goes on to address their low motives, which is merely material or crass or materialistic or profiteer.  People just want to reduce their bottom line, and that’s not a good motive to do something wrong.  Well, that presupposes that it’s wrong in the first place, so it’s just a bad argument.

01:19:21

And most advocates of IP, people like me, are not going around pirating.  Some of us are successful and we have money and we – I’m happy to pay iTunes for a song.  I don’t care.  I’d rather it be a lower price, and I think it would be a lower price in a free society.  Maybe it would be a penny a song, maybe a tenth of a penny a song, maybe a nickel a song.  It wouldn’t be a dollar a song, and I wouldn’t have a DRM restriction, and it wouldn’t be a license.  It would be a real sale.

01:19:47

But in any case, I’m happy to pay six bucks for a movie on iTunes, not just me.  But the point is people that have a serious, sincere argument to make, they are generally – there’s no reason to assume they are making this argument just to – just for economic self-interested reasons.  I mean it’s not likely we’re going to get rid of the IP system any time soon.  We’re making these arguments because we think they’re right.

01:20:15

And in fact, in my case, for example, I’m a patent attorney.  I practice it for a living.  It’s really not in my narrow economic self-interest to let the world know that I believe that the patent system should be abolished.  I mean 99% of my fellow patent lawyers hate this idea.  It doesn’t – when they hear it, they’re not really happy about it.  It doesn’t help me in my career.  So not that that makes my argument stronger, but the point is the argument that people just want something for free is not an argument they shouldn’t be free.

01:20:48

Another thing you can think about is – I think I might have mentioned this earlier in part one of this talk is that, in human life, there are two aspects of successful action.  That is, the actor has to have knowledge, knowledge that informs him as to what ends are possible, and knowledge as to what causal laws there are in the world that lets him choose available means, scarce means, that will help him causally achieve his end.  So you have to have knowledge, and you have to have means.  You have to have actual physical control, causal control over these means to help you achieve what you want.

01:21:30

And the scarce means of action are scarce.  There’s only so many of them to go around.  That’s the way the world is.  The free market heroically despite this is always seeking to increase abundance.  Even though we don’t have infinite abundance, the free market is trying to increase abundance, trying to always find more efficient means of producing goods, lowering costs, increasing abundance, basically making things in a sense less scarce even though we’ll never get away from that completely.

01:22:03

So the market is trying to overcome this challenge that we have, which is that there’s scarcity in the physical world.  There’s lack of super abundance.  The free market tries to make things more abundant, but that’s one ingredient of action.  That’s having available these things that we need to achieve our ends.

01:22:23

But the knowledge luckily is already non-scarce.  Knowledge can be multiplied or copied infinitely.  Everyone in the world can know how to bake a cake at the same time.  That’s why we have an increasing body of human knowledge every generation because the more things people learn, the more it’s recorded and transmitted, learned by others down the ages.  We have this almost infinitely duplicable body of knowledge that we can dip into and use, and the more of it, the better.  So the free market tries to overcome the problem of scarcity in the physical world, and the law tries to impose scarcity on knowledge, which is already non-scarce, so it’s sort of a complete perversion.

01:23:11

01:23:15

Here’s another one, slide 43.  Well, the people that are against patent and copyright, the IP abolitionists, the only reason they’re for that is because they’ve never created anything themselves.  So it’s another sort of ad hominem argument, you saying that you’re not self-interested.  You don’t want there to be patents because you wouldn’t benefit from them anyway.   I mean I’ve had this argument with people before, and I’ve said before, well, I don’t know what to tell you.

01:23:43

I mean I’m a patent attorney.  I’ve made a lot of money by being a successful patent attorney, and I’ve also been an author, and I’ve written some things for free like scholarly publications, which also can’t be explained by their theories.  Why would all these scholars and thinkers and bloggers, commenters on blogs, why would they waste time writing if they’re not getting paid for it?  They do it anyway.  Anyway – and I’ve written a lot of things for a lot of money as well, legal publications for some major commercial legal publishers.  I’ve gotten paid lots of money over the last decade or two, which is basically a refutation of their idea that someone who is vested in the system wouldn’t be against it, or on the other hand, someone who’s not vested in the system has no reason to favor it.

01:24:30

And so when I point out, well, you say that the only reason you have to oppose the system is – or the copyright system is because you have nothing to contribute that would be of any value anyway.  And I say, well, that’s just – in my case, for example, it’s false.  I’ve made lots of money off of selling books that are copyrighted.  And then they’ll say, well, then you’re just a hypocrite.  So in other words, you can’t win.  There’s nothing you can say to satisfy these people.  Either you’re a completely creator-less loser who has no reason to want there to be a patent system or a copyright system, or if you actually are successful like they say is important and you’re still against the copyright system, then you’re a hypocrite.

01:25:12

So in other words, they’re the ultimate conservatives.  If there’s a law in place and you benefit from it, even if you don’t want to benefit from it, then you oppose it, then you’re a hypocrite.  I don’t know how we’re supposed to ever have any law overturned ever if anyone who’s at all affected by it can’t speak out against it.  I mean this is the same argument used against blacks who are against affirmative action, let’s say.  So one argument against affirmative action is that it tars – it makes – it gives blacks who would normally be successful a bad reputation because the whites in the work place assume that the black is only successful because he’s benefited from affirmative action.  So that’s one of the arguments conservatives and some libertarians use against affirmative action, and the left says, well, that’s not true of course.  They deny this effect.

01:26:07

And on the other hand, whenever a black comes out against affirmative action, the liberal will then make that assumption and say, well, how dare he oppose a system that benefited him?  So which way is it?  And are you saying that if some statist, coercive government program confers some narrow benefit on you, even if it’s manifestly unjust, that you are – that you’re prevented from objecting to it so you’re forced to comply with the system, and now you’re prevented from arguing against it?  I mean what about slavery?  What if you are, I don’t know, the son of a slaveholder in the south and you know slavery is immoral?  Can you not argue against slavery because you were educated or raised by a family that had money from the slavery industry?  I mean the argument is just completely dishonest and incoherent.

01:27:00

All right, let’s go to slide 44.  Okay, this slide – well, this is more of the same.  They’ll say something like you say you’re against patents, but you’re a patent lawyer.  I don’t know what this argument is supposed to mean.  First of all, it’s personal.  It’s directed against me, Stephan Kinsella, as a person.  And I can guarantee I don’t have the metaphysical ability to change the moral status of different rules or propositions in the universe.  Whether I was born or not, whether I have an opinion one way or the other or not doesn’t affect whether or not patent law is valid.  Even if I’m a hypocrite doesn’t mean patent law is valid or that it’s not valid.  It’s either valid or invalid or legitimate or illegitimate, just or unjust on its own terms.

01:27:51

And second of all, it’s just a weird argument.  It would be like saying that a cancer doctor, an oncologist, is hypocritical for opposing cancer because, after all, he profits.  Maybe he makes hundreds of thousands of dollars a year as a successful cancer doctor.  He profits from some evil that he wishes wouldn’t exist, or a defense lawyer who defends people who are accused of income tax evasion or, let’s say, violating the narcotics laws.  Let’s say he’s a libertarian.  Can I be a libertarian and defend people from the state trying to put them in jail for doing something that’s a victimless crime?  Does it mean I’m a hypocrite because in my ideal society I would have – I wouldn’t have this job?  This job wouldn’t exist?  No.  It means that, given the existence of an enemy to people, given the existence of the state, there is a need for people to navigate the system and to defend themselves from it.

01:28:56

And it’s unfortunate that money is wasted and has to be wasted on certain people.  It’s unfortunate that I have to hire a patrol company to patrol my house to stop robbers.  It’s unfortunate I have to lock my front door all the time and have sophisticated locks on my house and have an alarm system in my car.  It’s a waste.  It’s made necessarily by the possibility and likelihood and existence of crime, which we all wish wouldn’t exist.  That doesn’t mean that car alarm companies and locks, people that sell locks, are hypocritical for selling these locks even if they say they’re against crime too.  So this is yet again another bad argument.

01:29:37

I’m on slide 44.  Let’s go to slide – oh, this is another good one, slide 45.  So I’ve had this happen before.  I’ll have someone – and this is not really a serious argument.  I’ve seen them do this many times.  It’s kind of a smart-ass argument.  What they’ll say is they’ll say, oh, well, if you’re against IP, how about if I just take your articles and sell them for millions of dollars?  Now, again, it’s not even really a real question.  It’s more of a rhetorical question, but it’s a smart-ass question.  But as I noted earlier, a question is not an argument.  But it’s not even really a serious question.  It’s not even an argument.  It’s not even a serious proposal.

01:30:16

They don’t really want to take or copy my article and sell it.  They don’t really think they can take one of my articles that’s free online.  They don’t really think they can sell it for a million dollars.  They probably don’t think they can sell it for anything at all.  And sometimes I say, fine.  Go ahead and do it.  And then they shut up and they change the subject, so they’re not serious at all about this.

01:30:43

The other problem with this argument is they – what they often do in this kind of argument is they’ll say, well, what if I take your article and I change the name, and I put my name on it?  I’m plagiarizing.  I mean what am I supposed to say to that?  Well, then you’re going to look like an idiot for lying to people.  I don’t know how they think you’re supposed to get along as a society if you have a reputation for being dishonest.  This mistake is made quite often in arguments for IP.  You’ll have people say, well, if you’re against – if you’re for IP law being abolished, if you’re not for IP law, you must be in favor of plagiarism.

01:31:22

Now, this argument is completely false and disingenuous for many reasons.  Number one, again, I don’t think they’re serious about it because if you really know the difference between types of IP like copyright and patent and you know what plagiarism is, then you know there’s almost no relation between them.  And if you don’t know, then you shouldn’t be arguing until you figure this stuff out.  But in fact, plagiarism has almost nothing to do with copyright or patent and wouldn’t be a real problem in a free society in the first place.

01:31:53

So as an example, I can take – plagiarism just means being dishonest about who the author of something is or not crediting your sources, which is more of a scholarly rule than a copying rule.  So for example, I could take one of Aristotle’s books, and I could publish it on Amazon tomorrow, self-publish it, and put my name on there.  Now, that is literally plagiarism, and it’s not a copyright violation because Aristotle’s works are in the public domain.  No one would buy it.  I would look like an idiot, and it doesn’t need any kind of law to police that.

01:32:31

At best, it would be a type of fraud on my customers because if they think they’re buying a new work called Nicomachean Ethics and they’re not, then I’ve defrauded them, but fraud law is there to cover that already.  And on the other hand, most aspects of copyright infringement have nothing to do with plagiarism.  For example, if I take the latest Transformers movie and I make a copy and I put it online and I either put it online for free or I sell it, I’m not going to put my name on it.

01:33:03

I’m not going to say this is Stephan Kinsella’s Transformers.  Why would I do that?  Because no one is going to download it then.  They’re going to think I’ve messed with it or I’ve tampered with it or it’s a joke.  No.  People want the original Transformers by Michael Bey or whoever is in charge of it.  They want the movie.  That’s why I put it online.  That’s why I sell it.  That’s why pirated copies are desirable because they’re a duplicate or a close duplicate of the original.  So most copyright infringement wouldn’t be plagiarism, and most plagiarism wouldn’t be copyright infringement, or it doesn’t necessarily involve it.  So they have really nothing to do with each other.  So the reason that the IP proponents bring this up is they’re trying – they know plagiarism is a little bit dishonest or usually a contract breach like at a university or something.  So there’s something about being a plagiarist, so they’re trying to associate dishonesty and shadiness of plagiarism with competing in the free market and copying and sharing and learning information, which have nothing to do with each other.

01:34:06

Okay, slide 47.  Let’s get back to – a little bit to the discussion about a utilitarianism and wealth maximization.  So quite often the proponents of IP will say something kind of extreme and hyperbolic like without patents and without copyright, there would be no new art, novels, movies, no new inventions ever created again.  Now, if they were right, then a lot of people would have pause.  They would go, oh, we can’t live without future innovations and future discovery of knowledge and future creative works being made.  But of course there’s no evidence whatsoever for this contention at all, and in fact, it’s completely implausible.

01:34:57

Even if they’re right that there would be less innovation, they could not argue there would be none.  Even if we stopped copyright and patent tomorrow, some companies would still innovate and some scientists would still do research.  Some artists would still write.  In fact, most people research, write, and innovate today with little or no financial payment anyway, so you would still have some.  So really their argument is that we wouldn’t have enough or that we would have less.  But so what they’re saying is that in a patent-free world, let’s say, we have level X innovation.  And in a world with patents, we have X plus Y, and more innovation is better.  Having extra Y innovation is better.

01:35:41

But the problem with this argument is that, first of all, they have no proof that there is a Y that’s positive.  Maybe Y is negative actually.  Maybe patents skew and distort innovation and reduce innovation, which I actually think it does.  But even if Y is positive, how do we know that it’s worth it?  In other words, the patent system has a cost.  Let’s say it costs Z.  Now, is Y greater than Z or is Z greater than Y?  They don’t know.  They have no idea what these numbers are.

01:36:09

In fact, they have no – they don’t even make an argument about what the numbers are.  They just make the hypothetical case.  They assume that we’re all going to agree that there is going to be a Z, that the Z – I’m sorry, that there’s going to be a Y.  But the Y is going to be positive and more innovation is always better.  And they assume that the Z is zero.

01:36:25

They assume there’s basically a trivial or negligible cost of the patent system even though a recent report that just came out shows that the top tech companies like Apple, etc. spent more money last year on defending or acquiring patents than they did on research and development in their own companies.  I don’t know the numbers, but let’s say it’s $10 billion of R&D for Apple and $15 billion for patent acquisition.  Now, I don’t know how anyone can believe that the $15 billion that was spent on patents, some of that couldn’t have gone to more R&D or at least been returned to their – to the public in the form of lower prices or to the shareholders in the form of higher dividends or higher share price, etc.  And then that extra money in the hands of consumers or shareholders could have been used for something productive and maybe more R&, maybe more economic activity, etc.

01:37:18

The point is there’s no way you can argue that this money is not a diversion from the overall amount of R&D or human prosperity and satisfaction that we enjoy at all.  And on slide 47, this – I mentioned Alexander Tabarrok earlier.  He’s a free market guy, but he’s not anti-IP.  He wants to reform IP, and he had this recent post called “Patent Policy on the Back of a Napkin.”  And he sort of drew like a Laffer curve, which is like a bell-shaped curve, which shows the relationship in his mind and in the mind of most people who favor IP, the relationship between the strength of patents and the amount of innovation we get.

01:38:03

And his idea is the curve starts at some non-zero number on the left side, goes up to a peak, and goes down.  And the idea is that if you have no patent system you have some innovation, but if you have a patent system you can increase the amount of innovation.  But then if you make the patents too strong, then you start suppressing innovation, and we’re past that point, so we should reduce the patent strength.  I guess that means the patent term from 17 roughly years to, I don’t know, five or whatever or ten.  Then we get closer to this optimal.  Now, he has no reason whatsoever for thinking the shape of the curve is a bell curve.  And even if it was, he’s not taking patent cost into account because the patent strength comes with the cost.

01:38:46

So even if you have a patent system and it increases the amount of innovation, the value of that extra innovation might be less than the cost that the patent system opposes on the economy as a whole.  In fact, I think it is.  But I don’t think it actually increases net innovation at all.  I think it actually decreases innovation and distorts the market.  I think the line would be sloping downwards.  You have innovation, and the more patents you have, the worse everything gets.  So the lower you make patent strength, the better off you are.  You don’t have to go to this optimum peak he points to.  You go all the way down to zero.  And unless they have an argument otherwise, that is the default position.

01:39:27

Another argument is that you just can’t make money without IP.  This is completely false.  There’s lots of ways you can make money.  Kickstarter is around now.  Lots of other ideas will no doubt come about in the future.  There are videogame companies.  There are recording artists.  There are documentary makers who are getting funding for their projects through Kickstarter and other projects.  I – the thing is everyone has to be an entrepreneur and is an entrepreneur, and you have to realize that in a world of competition, you have to face competition.  And you have to be aware of that and try to come up with mechanisms and ways and practices where you can make a profit or achieve your goals.

01:40:09

And if that’s in the face of people being able to easily compete with you by copying what you’ve done, either identically or by improving it or tweaking it, then that’s the world we face.  I was listening to a podcast with two economists, and they were talking about J.K. Rowling, the author of the Harry Potter books, and she’s worth about a billion dollars now because of all the money she’s made off of her books and the franchising of her books and the movies based upon her books.

01:40:42

Now, I believe that in a free market, she probably wouldn’t be worth a billion dollars for writing seven books.  But it’s easy to see how she could be worth tens of millions.  So let’s say she writes the first book, which she did as a labor of love, which is how most such books have to get made in the first place, not for money.  And she sells it on Amazon as a self-published Kindle book or something like that.  Let’s say she makes $100,000.

01:41:08

And soon the profits go down because there’s pirated copies, which are legitimate everywhere, but the pirated copies actually give her more fans, so she has a large number of fans because the books are great.  And she has even more fans because everyone – even more people can get them than could the first time she sold the books in the real world because the price was too high for some people.  So she probably has even more fans than she otherwise would have.  So anyway, she has a lot of fans.

01:41:33

She made some money.  She publishes a second book and becomes even more of a bigger phenomena.  At a certain point in time, she sketches out all seven books, and she says, you know, to all my fans out there, I’ve got book number four written, and as soon as I get a million people agree to pay $10 each for this book, I’ll release it to the world.  Well, I guarantee she’s going to get a million people that are going to salivate at the prospect of getting this book.  So she makes $10 million right there, and then she can repeat this and maybe in escalating terms with each book.

01:42:07

And then when the movie – and people start making movies of her books.  Let’s say someone makes a movie of her first book, which they won’t need her permission to do.  You could have five movies made in the same year based upon her book.  It’s a free market.  She can’t stop it because there’s no copyright let’s say in a copyright-free world, but what she could do is she could get a phone call from one of the producers who says we’re planning to make a movie based upon your book, and if you will cooperate with us on developing the script and say that it’s authorized, promote it to your fans, tell them this is the authorized version, we think we’ll get twice the ticket sales of our competitors because all your fans are going to want to see the movie that’s blessed by you because it will probably be better, and they’ll believe it’s going to be better, and they’ll think it’s more authorized and legitimate.

01:42:56

We’ll give you, I don’t know, 5% of the ticket sales.  So there’s another $10-20 million, whatever.  I mean there’s lots of ways, or maybe someone writes a smaller novel, and it helps them to land a job teaching literature at the local college because they have a reputation now.  There’s just so many ways you can profit from your activities.  It’s just not the government’s job to figure that out for you.

01:43:21

01:43:25

Here’s another one, slide 49, identity theft.  So some people would say, well, without IP, then what’s to keep you from just using your name and stealing money in your bank account or whatever?  Well, you don’t really need IP for this.  Let’s – now, this story is complicated in today’s world because money is not a tangible, physically ownable thing because the government has corrupted it.  So let’s assume that we have world where there’s honest gold money and everyone has, say – I have a certain amount of gold coins stored in a bank, which I pay a hosting fee for.

01:44:03

And I have a warehouse receipt, or I have some kind of identification key that allows me to access and transfer the ownership of the gold when I want to, to pay for something or to access the money.  Now, someone pretends to be me.  They go to the bank.  They pretend to be me, and they’re able to bamboozle the bank into opening the vault and letting them take my gold out.  Now, this has nothing to do with identity theft really or with intellectual property.  It simply is a means of committing a type of theft or fraud.

01:44:33

Basically I own the gold.  I’m the owner of the gold, and the bank has some kind of ownership relation too in the sense that they’re the custodian, and this person has taken control of something not owned by them without my permission.  That’s called theft or trespass or conversion or something like that.  It’s basically a type of trespass.  They probably also violated the bank’s rights by using the bank’s property under false pretenses and in violation of the bank’s implicit rules where they make it clear that you have to be who you say you are.  You can’t be lying to us.  You guarantee that you’re telling the truth when you sign on the dotted line, etc.  So you don’t need IP law to stop people from committing various types of theft, so that’s another bad argument.

01:45:18

Okay, and then we have arguments by grammar or semantics or even emotion – so I’m on slide 50 now – where people use the argument that – they use the argument that IP is called property, intellectual property, or they just use these synonyms that are bandied about now by the IP lobby like theft or taking or stealing or ripping off or piracy which, if you think about it, piracy means going onto someone’s boat without their permission and killing them and taking their stuff.  That’s a clear violation of tangible property to your body or your stuff or your boat.

01:45:58

They use that now to refer to people copying information, which doesn’t take anything.  And, in fact, one of the first pirates was – pirates use to be authorized.  They were called privateers or something, authorized by the state by what’s called a letter patent actually.  So patents actually were authorizing piracy back in the 1500s, etc. like Sir Francis Drake.  So it’s kind of ironic that they claim they’re against piracy, but anyway.  So you can’t just – you can’t say something is property because it’s theft to take it.  That’s begging the question.  It’s only theft if it’s property in the first place.  You can’t justify it that way.

01:46:39

And of course copying is not theft.  If you learn some fact from someone, if I make a copy of a book or if I make a copy of your iPod and compete with you, I’m actually not taking your iPod or your book from you.  I’m – and then the IP proponent will retreat and they’ll say, well, yes that’s true, but you’re taking from me the money I could have made.  So now they’re kind of getting a little bit more honest, so they’re admitting that really it’s about money.

01:47:09

It’s about revenue and things like this.  So – but what that means is their argument is really that they’re saying if you have a business where you’re making a certain profit or you expect to make a certain profit or you could make a certain profit if you had a monopoly that you have some kind of property right in that future uncertain income stream.  But the income stream is not just a stream.  It’s money that’s owned by future people, money that they own, not you.

01:47:35

And you don’t have a right to money in customers’ pockets.  They have the right to spend it if they chose to.  This is exactly why competition is permissible.  This is why, if Walmart competes with a drugstore in a little town and “steals their customers,” that’s not really an act of stealing even though the word is sometimes misused there.  In fact, there’s nothing wrong with stealing customers because the drugstore doesn’t own those customers.  The customers own those customers.  If I steal your girlfriend by persuading her to date me instead of you, I haven’t stolen your girlfriend.  I know the word your is used, and it’s possessive.  This is another dishonest argument.

01:48:18

People say, well, whose idea is it if it’s not mine?  It’s my idea, isn’t it?  This is argument by semantics or by possessives.  It’s ridiculous.  Just because the English language or some languages use possessives to identify things doesn’t mean they’re ownable.  Just because there are things and concepts that we can identify in the world doesn’t mean they’re ownable.  I can identify a poem.  I can say it’s my poem, which means I am the one who came up with the poem, doesn’t mean that I should own it in some kind of legal sense anymore than I own my girlfriend or a drugstore owns its customers.

01:48:55

Okay, so this is – and by the way, the patent and copyright used to be called monopolies.  They were – the proponents were quite honest about this.  As I mentioned, the modern patent system originated with the Statute of Monopolies in England in 16 – I want to say 1623-1624.  And a lot of economists and free-market types were against them for this reason or at least thought they should be severely limited because they knew they’re a derogation from or an exception to the normal free market property-type system.

01:49:32

But in response to sort of mounting a tax on the legitimacy of this cold, corrupt system like, say – I don’t know exactly the date.  I think it was in the early 1900s, maybe late 1800s.  I think it was early 1900s.  The proponents of patent and copyright and to some extent trademark and trade secrets but primarily patent and copyright started using the word industrial property or intellectual property.  So they started using the word property because people had a positive connotation with property.  They thought property was a natural right.  It’s what you’re entitled to by law and by justice, etc.  So if you call these entrenched interests, these monopoly privileges, the government grants, you call them property rights, the people are going to sort of assume they’re legitimate and just and part of the capitalist or property system, and that’s exactly what happened.

01:50:27

Now, of course, there are lots of people now that argue that you have a property right in your social security benefits or that you have a natural human right to a job or to education or to medical care or to welfare.  Well, they’re wrong.  Just calling something property or a right doesn’t make it justified, so we need to be aware of these sort of argumentative tricks.

01:50:55

Okay, slide 52 now.  You hear this all the time, the continual refrain of the non-principled person who has really – everyone is utilitarian now.  It’s the problem.  So there’s never any kind of bright line about anything.  So they’ll say the patent system is broken, and they’ll usually say it used to do a good job, but now it’s been broken, so therefore we need to do what?  We need to fix it.  We need to reform it.  So then you have people like Tabarrok and others saying, oh, we – or Judge Richard Posner recently saying, oh, the system has gotten out of hand.

01:51:29

Now, they’re implying that it used to work fine.  I don’t know how they’re supposed to know this.  But anyway, so what they want to do is they want to reduce the scope of patent or copyright.  They want to reduce the terms.  They want to reduce the economic or the civil penalties or even the criminal penalties, but they don’t want to go down to zero.  They have no reason for this except they’re either hunches that we need some system, but they sort of know we – they know that it’s messed up.  They know it’s bad.  They see egregious examples, but because they can’t think in principled terms, they don’t want to abolish it.

01:52:06

Oh, I found the quote now I mentioned earlier by Machlup.  So what Machlup said, as I mentioned earlier, he said if we didn’t have a patent system, it would be irresponsible to say we should have one.  But then he said, but since we had had a patent system for a long time, it would be irresponsible on the basis of our present knowledge to recommend abolishing it.

01:52:26

Now, why is this?  I mean by this reasoning we could never get rid of slavery if we had it.  We could never get rid of the drug war.  We could never get rid of income tax, never stop war.  I mean after all we have these policies and institutions and laws.  The same type of person would say don’t throw the baby out with the bath water.  Well, of course this kind of stupid, non-serious argument, this argument by bromide, argument by slogan assumes that there’s a baby there and that the bathwater is bad, but the baby is good.

01:52:59

In other words, they’re assuming that the core idea of patents and copyright is good.  We need some.  We’re better off with some reasonable small amount of patent or copyright but not too much.  So we need to get rid of the bathwater and not the baby.  Well, first of all, even if they’re right, they’re assuming it’s possible to get rid of the bathwater but not the baby.  I don’t know why they assume that.  They sound like these republican and democrat candidates every presidential election who say we need to get rid of waste in the government.  It’s impossible to get rid of waste in the government.  This is part of – this is what you get when you have that kind of system.

01:53:33

So even if some small amount of IP would be a good idea, it’s evidently impossible to keep it from being beholden to and corrupted and distorted by the special interests like Disney and the movie industry and the pharmaceutical industry and the software industry, etc. and having it metastasize and get worse and worse every year, where we started with 14-or-so-year terms for patent and copyright, and now it’s grown to 17-20 for patents and over 100 for copyright.

01:54:06

But second of all, they’re assuming there is a baby there.  In other words, they’re assuming the patent system – some patent and copyright system is good.  And as the quote goes, which I borrowed from – actually I didn’t borrow it from Harry Brown, but I found out later that Harry Brown had an ad for when he was running for president 15, 20 years ago where he said something like don’t throw the baby out with the bathwater unless it’s Rosemary’s baby, which was – which is a line I use, something like that.  I said in response to people who say we shouldn’t get rid of the – we shouldn’t throw the baby out with the bathwater, I said we should if it’s Rosemary’s baby, which is how I view the IP system.  It’s evil.

01:54:46

So slide 54.  Another argument I hear is that – is more the argument about intuition where people say we – it just seems wrong to me to take people’s things.  Well, first of all, you don’t take people’s things.  You make a copy of it.  The original person with the original mousetrap in the case of inventions or a novel or a movie still has it as do all the other people who have gotten copies of it in the meantime.  So your making a copy doesn’t take it from them.  All you take from them is the money they could have made if they had had a monopoly, but that begs the question to assume they have a right to that money, and that’s just wrong to assume they have the right to that money.

01:55:31

So anyway, it’s just not really an argument.  And furthermore, sometimes they’ll do the thing I talked about earlier.  They’ll mix it up with plagiarism.  They’ll say, well, it’s wrong to plagiarize.  Well, what do you mean by that?  Well, it’s wrong not to give credit to an author.  It’s like, okay, well, then give credit.  I mean you might have an argument that it’s maybe wrong or unprofessional or unethical in some sense to extensively quote from someone in something you’re writing with, say, and not to put quote marks around it and give credit to the author.

01:56:05

Okay, that’s got nothing to do with copyright.  All it means is you should be honest about where you’re getting substantially quoted material.  Copyright doesn’t just prevent literal copying, by the way.  Copyright prevents derivative works like if I wanted to make Stars Wars #12 – well, number – let’s say #7 myself with my own plot based upon these characters, that’s not copying at all.  It’s what’s called a derivative work, and everyone would know that it’s a derivative work because I’m saying this is Stephan Kinsella’s Star Wars #7.  It’s my interpretation of what I think would have happened after Star Wars #6.  It’s not dishonest.  It’s not failing to attribute.  It’s not even a literal copy.  It’s simply fan fiction.  What’s wrong with that?  Nothing’s wrong with it.

01:56:57

Slide 55, I’ve already talked about this a little bit, the question you get: how would I get paid for writing a novel?  And as I’ve mentioned, number one, a question is not an argument.  Number two, there are some possible answers to this.  I gave a possible example of J.K. Rowling.  Ayn Rand and the Randians – they have this confusing way of talking about all this where they talk about – I think I mentioned this in the first part of the lecture.  They talk about man’s way of living on Earth is to create values.  It’s a weird way of arguing.  I agree that man is – man needs to use his mind to be – to understand reality.  He doesn’t live by intuition.  The Randians are right about that.

01:57:45

01:57:49

So the – putting it this way is bizarre.  A value in the Austrian sense is a subjective phenomena.  It’s more of a relationship between a human actor and some desired goal, which sometimes could be a scarce resource or a scarce means either valued directly to achieve it or to acquire it or as an indirect means of achieving some goal down the road.  But when the Randians talk about man creates values, it’s a little bit ambiguous, and of course – so the problem is with ambiguity and at least to equivocation and to sloppy arguments, it is true that when we are creative, that means we take existing resources that are owned, scarce resources, and we manipulate them using our intellect, our creativity, our labor.

01:58:42

And we make them more valuable.  They’re more valuable means we regard them as more valuable, means we create wealth.  You could say that we create wealth, but we don’t create new property.  There’s no new property rights.  It’s just property that’s owned.  It’s rearranged.  So when Rand says we create values, it’s a little bit ambiguous – or it’s a lot ambiguous because it makes you think of some thing that exists.  Sometimes the value is an object like a new car, and I guess sometimes the value is a reputation, and sometimes it’s a novel or a poem.  So basically what they’re saying is anything that’s a thing that you can conceptually identify with a word that has value, that is, that’s the end of action, is an ownable, existing entity.

01:59:25

See, that’s the implicit assumption, and that’s their mistake because they’re wrong about this.  Not any thing that I can conceptually identify is ownable.  And, in fact, to own a poem, let’s say is literally impossible because to own is to have the legal right to exclusively control.  It’s impossible to literally own a non-scarce thing like a pattern of information.  I mean it’s just literally impossible.  There’s just no way to do it.  It would be like having a one and a zero at the same time.

01:59:53

You cannot control a pattern of information.  What the law actually does is the law uses that metaphor of ownership of information as an excuse to justify transferring real resources from one owner to another.  So, for example, by saying I own this poem or this movie or this novel or this invention, I’m able to persuade a court to use physical force against some other person who has not made a contract with me and has not trespassed against me or my property.  So in other words, those things would justify taking property from them and giving it to me if I had agreed to it.  But the government is basically able to use the metaphor of pattern ownership as an excuse or a fake justification for taking your money and giving it to me to pay me “damages” for the “trespass” I did to your “intellectual property.”  But really it’s just a complicated way of taking your property from you and giving it to me, which is normally called theft or redistribution of wealth.

02:01:03

Okay, so this is the problem with the Randian focus on values is they lose sight of what property relates to.  It relates to ownership.  It controls – interrupted by dogs, but the point is they lose sight of the fact that property is a relationship of exclusive control, a legally recognized ownership relation between a human actor and some scarce resource that otherwise people could fight over or conflict over.  It has nothing to do with non-scarce patterns of information.  And it doesn’t mean that ideas don’t have value if you don’t recognize property rights in them.

02:01:44

Love has value.  We don’t put a property right on that either.  Just because there are not property rights in some thing doesn’t mean that there’s no value in it.  It doesn’t mean we don’t value it.  But it does – and the same thing with the intellect.  The Randians like to deride people who are against IP as being some kind of anti-mind looters and materialists who don’t appreciate the role of the mind.  Of course we do.  The mind is extremely important.  It’s what makes us human, and the – as noted, human action, as Mises looked at it in the praxeological lens, is a physical human actor living in the world who’s not only physical by the way.

02:02:24

We have a – by the way, human action is distinguished from human behavior in Mises’ epistemology.  He’s a dualist.  He sees both sides to human life.  We have a physical body.  We have a brain.  We also have a mind.  We’re actors.  We have behavior, and we also have action.  We have goals we pursue.  We need our intellect.  We need our understanding of the world.  We need creativity.  We need labor to understand the world so that we know how to have successful action and how to live good lives.  And we also need to successfully use physical things in the world.  Even Ayn Rand recognized this when she said man is – he’s not a ghost.

02:03:01

He has a physical body.  He has real needs in the real world, and that’s why in her kind of libertarian view of the non-aggression principle, she recognized that physical force is a thing that we’re opposed to in terms of interpersonal ethics.  She said man may not use force against each other’s physical stuff.  So she recognized this physical aspect of life and the spiritual or the mental aspect, and so does human action in the Misesian sense because it recognizes we need to have a teleological framework for understanding action.

02:03:36

We have goals.  We have ends, which are subjective, and we have to understand the causal laws of the world to know what ends we can achieve and what causal scarce means can help us achieve those ends.  And we need control over those physical causal means as well, and that’s what property rights are for.  So by speaking kind of loosely about man’s purpose, his creating values, and therefore – they basically just jump to the question, well, if you create a value, who’s supposed to own it?  Well, the answer is naturally the person who creates it.  That’s if we assume that values are ownable things.  Values are not ownable things unless by values we mean scarce means that are subject to conflict and dispute.

02:04:19

02:04:23

And a related error made quite often by people who advocate IP just like an error made by lots of non-libertarians is this idea that not only do you own values, but you own the value of things.  So that you not only have a property right in the physical integrity of physical objects that you are the owner of, but you have some kind of – you have a property right in the value of these things, which is the Randian argument for a right to a reputation.  You put effort into it.  You put your labor into your reputation.  It has “a value to you.”  It’s “a value you created.”  Therefore, you “own it.”  This is another confused argument.  You actually do not have – as Rothbard showed in his argument…

02:05:05

Okay, interrupted again.  So this mistake is what a lot of people make is the idea that you own the value of things that you own.  But as Rothbard showed in the Ethics of Liberty when he talks about owning knowledge and information and when he talks about reputation rights and defamation, first of all, value is subjective.  It’s what – it’s how people regard something, and the value of something on the free market, sort of the fair market value, is how other people regard something or how they appraise it, how they are willing to pay for it, how much they would be willing to pay for it, etc.

02:05:38

And you can’t own how other people regard something.  If you have a house, let’s say, its value may go up if your neighbor chops his rose garden down.  But that doesn’t violate your property rights because it’s not a trespass against you.  And the value of the house anyway in this sense is what other people are willing to pay for it.  You don’t have a right to that either.  You only have the right to the physical integrity of your property, that is, to not have its borders invaded against your wishes, to not have it used without your consent.  And, in fact, this mirrors perfectly Ayn Rand’s idea of the non-aggression principle where she said no man has the right to use force against other people’s property rights or bodies.  So she was recognizing there this.  She just was inconsistent on this whole issue.

02:06:33

Another bizarre argument I’ve gotten – I’m on slide 57 – is that I’ll have patent lawyers or others or patent proponents.  They’ll – if I have – when we talk about…

02:06:45

Anyway, this argument is kind of silly.  What they say is that – when we say IP is about protecting ideas and that’s illegitimate, they’ll say, well, it’s not really about protecting ideas.  So they basically just keep hiding the ball on you.  They’ll – it’s just like some of the arguments of the – some of the proponents of IP say it’s not really a monopoly.  And then others say, yes it is a monopoly, but it’s justified.  These guys say it’s not about ideas. It’s about implementation of ideas.  I mean it’s just a little detail that’s kind of really irrelevant, and it’s basically however we want to describe the system they’re in favor of.  We try to do it in accurate, descriptive, honest ways, and they, of course, object to that because they don’t want us to shine light upon this bizarre system that they’re in favor of.

02:07:29

The other one is kind of an arcane matter that I get into debates with other patent people who know a little bit about the patent system.  And they’ll say that, oh no, you’re wrong in saying that the purpose of the patent system is to stimulate innovation and that it’s unjustified because there’s no proof that it does that.  The real purpose of the patent system is to stimulate disclosure.  I mean what can you say to these people?  They keep changing the goal.  It is true that the original – the patent law as written – I mean the patent provision in the Constitution implies that this limited monopoly is justified to promote the useful arts.  Does it mean to promote their creation or their disclosure?  Well, probably both, and that’s what the patent act does.

02:08:19

The patent act gives a monopoly in exchange for disclosing in a patent disclosure a description of your invention.  But the idea is also that you can charge a monopoly price for it for some period of time, and therefore, you have a higher incentive to engage in the research and development of the idea in the first place.  So that is their argument.  If that’s not their argument, then I guess they don’t have any argument for IP.

02:08:44

Slide 59.  Well, the other one is you must be a leftist if you’re against IP.  What, are you against capitalism?  Are you against property?  And of course the main argument against IP is that undercuts real property rights.  It is because – like I am in favor of strong, undiluted private property rights in scarce resources that I oppose IP because it undercuts the libertarian – excuse me – the libertarian, Lockian basis of owning property, which is that every scarce resource, we can identify who should own it, who has the right to own it by asking either who was the first one to use it or find it in the Lockian sense, or who did you – who was the one who acquired it by a contract from a previous owner?

02:09:39

It’s one or the other.  That answers the question.  If you come up with a third rule like, or who invented the idea that’s embodied in that thing, then you’re undercutting the first two rules, and you’re transferring ownership of an existing thing to a third person who didn’t find it and who didn’t acquire it by contract.  This is why one of my first IP articles on lewrockwell.com was called “In Defense of Napster and Against the Second Homesteading Rule” because what I was pointing out was that the only way to enforce IP rights is to basically come up with a second property allocation rule that undercuts the basic Lockian homesteading rules like a second homesteading rule, which is, of course, what any criminal or socialist does.

02:10:25

They come up with yet another rule for redistributing property.  They’re saying instead of the first user or the person who acquired it by contract, then instead of that first person or the person who acquired the property by contract from a previous owner, someone else gets it instead.  That’s why – that’s the argument behind, say, taxation or conscription is that no, you’re not yourself owner of your body.  We are.  We’re going to put you in jail if you don’t go fight in this war.  We’re going to put you in jail for smoking marijuana or whatever.  So basically every criminal act and every un-libertarian law deviates from the Lockian property rules that libertarians adhere to.

02:11:08

Okay, slide 60.  Well, sometimes you’ll have an argument that patent and copyright could exist under anarchy or common law.  Usually this is based upon this contractarian argument I talked about earlier where they say, well, you could have something like IP formed by contract, which I’ve already discussed.  Other people would say that it could be done by some kind of court decisions.  I find it inconceivable that people are serious they could really believe that anything like the arbitrary, artificial, legislated schemes of state grants of monopoly privilege in the form of patents and copyrights could just spontaneously or gradually somehow or organically emerge from court decisions.

02:11:54

Basically, you would have someone publish a book, and they make it public and other people make copies of it.  And then the publisher or the author would go to a private arbitral tribunal.  They would have to accuse the copier of either committing a tort, which is like a type of trespass, or being in breach of contract.  But they wouldn’t be able to show that because the copier, number one, doesn’t have a contract with him, and if he does, it’s just a contract case.  It’s not really a copyright case, or he would have to show that they committed some kind of trespass, which is basically the use of or invasion of the borders of the tangible, scarce, real resources owned by the original seller.

02:12:43

But they won’t be able to because they didn’t do that.  He released the information into the commons – not the commons.  I mean he made the information public, and as Benjamin Tucker says – I’m going back to slide 51 – if you want your invention to yourself, keep it to yourself.  You can’t go making knowledge and facts available publicly, which has certain benefits to you to make it public.  You get fame or you get fortune or you sell a product and you tell the world my new mousetrap has this feature.  You can’t reveal this information and make it public and expect people not to learn from it and be able to use the information that they’ve gained.

02:13:21

Okay, finally 61 – well, not finally but almost.  Pharmaceuticals is one of the common cases.  Almost every patent reformer says, well, at least in the case of pharmaceuticals, you can admit that we need patents because it’s so easy to make a copy of a pharmaceutical that takes billions of dollars of research and development to develop.  Well, in the empirical case for pharmaceuticals is just simply false.  There have been countries in the past that have had strong patent – strong pharmaceutical industries without a patent system in pharmaceuticals like Italy and Switzerland.  And if you look at chapter 9 of Boldrin and Levine’s book, Against Intellectual Monopoly, they go through this whole case exhaustively.

02:14:03

And they just show that all the assumptions about the necessity – so-called necessity of patents for the pharmaceutical industry are just empirically false.  There’s no reason to believe that we wouldn’t have a very strong pharmaceutical industry without patents.  In fact, I believe it would be much stronger, especially if the government got out of its way in the other areas like taxes and regulations and the FDA, etc.  So we have the federal government imposing untold billions of dollars of red tape and cost on capitalism and industry, and we can’t expect that government to make things better by imposing handing out little patent monopolies.  The government needs to get out of the way.  We’d all be richer.  There would be more money for investing.

02:14:49

I mentioned the Francis Drake thing earlier.  I have a little bit of this on slide 62 talking about how letters patent were used in the 1500s to give pirates like Francis Drake the authority to engage in legalized piracy.  I’ll skip that one for a second.  One more on slide 63.  This idea that you can have conflict in ideas is actually – again, this is false because conflict is always conflict over scarce resources.  This is what scarce resources mean.  A scarce resource in the economic sense is what we call a rivalrous resource, that is, something that there can be rivalry or conflict over.  That is, only one user or actor can use this thing at a given time.  If two people could use something at the same time, it wouldn’t be a scarce resource, or it would be two things or something like that.

02:15:40

It’s like when people say people fight over religion, it’s – again, this is the danger of sloppy or overly metaphorical discourse.  What they’re – when people say there are wars fought over religion, it’s accurate if you understand what they’re really saying is that disagreements over religion are the motivation that people engage in the war.  But the war is always over scarce resources, that is, over the physical control over land or resources or people’s bodies.  So if I want you to say you are a Christian and if you don’t admit you’re a Christian and you instead say that you’re a Muslim, I will kill you, then the dispute is really over who gets to control your body.

02:16:28

I’m saying I have the right to control it.  You want the right to control it yourself.  If my threat to you to do something to you if you don’t change your mind about religion was just words and I wasn’t threatening to use your body, then you wouldn’t care.  I’m just saying you better change your mind, and you say, or what?  And I say, well, you just better.  So all disputes, all conflicts are always over scarce resources, which is why in a patent suit, for example, or copyright suit, it really comes down to something that the defendant, let’s say, controls – his printing press, his factory, his body, his money.

02:17:06

The IP plaintiff, the copyright plaintiff, or the patent plaintiff is trying to use – get the court to use physical force directed coercively against the physical body or bank account or property of the defendant, victim, to tell him you have to hand some of this over to the plaintiff, or you have to stop using your property in a certain way.  Otherwise, we will hurt you.  So it’s always a dispute about who gets to control what, and when you put it this way, you see that this is why intellectual property is incompatible with libertarianism because libertarian rules already give us the answer to the question, who gets to control that guy’s body.

02:17:46

Well, the answer is he gets to control it unless he’s using it to commit an act of trespass or aggression against someone else.  So then the IP advocates sometimes will get sneaky and they’ll say, well, but IP is my property.  But you see, this is question begging because they can’t use the conclusion that IP is property in an argument meant to show that it should be recognized as property.  So again, they just end up with a circular, dishonest, question-begging argument.

02:18:17

And I have some useful quotations starting on page 64, but I think I’ve covered all the main objections I get from IP.  So I will end this here, and it’s been kind of a long series of discussions.  I, as always, welcome questions.  Feel free to email me or post them on my blog or talk to me on Facebook, etc.  So thanks a lot, signing out now.

02:18:43

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Kinsella on Liberty Podcast, Episode 236.

[Update: a transcript is now available.]

At Libertopia 2012, I delivered a 45-minute talk , “Intellectual Nonsense: Fallacious Arguments for IP” (Oct. 12, 2012), the slides for which are below. I spoke for 45 minutes—well, 40, then the last 5 were taken up by a question from J. Neil Schulman—but only covered the first 25 slides. I covered most of the remaining 41 in a separate recording, Part 2: KOL237.

Grok summary:

At Libertopia, I also participated in an hour-long IP panel with Charles Johnson, moderated by Butler Shaffer. It is presented in Part 3, KOL238.

Grok detailed summary

***

This episode covers issues in the first 25 slides, including:

• Overview of case against IP: purpose of property
  • patent and copyright: as negative servitudes
• Absurd Arguments for IP
• “Serious” Arguments for IP
• Libertarian Property “Creationism”
  • Rand on rearrangement
• Good ideas are scarce!
• IP is just like “property”!
• All property rights are limited/no property rights are “absolute”
• Absolute property rights
• We should “balance” innovation/IP vs. free speech
• Roots of copyright: censorship
• Balance: between copyright and freedom of speech
• Hollywood blockbuster movies vs. Youtube/Internet freedom
• We should “balance” innovation/IP vs. free speech
• IP is not a monopoly!
  • Origin of modern patents
• Liberty is good, but not our “only value”

(Previously posted as here: Intellectual Nonsense: Fallacious Arguments for IP (Libertopia 2012) (Oct. 13, 2012). See also See also:  There are No Good Arguments for Intellectual Property.)

Update: I thought of one more argument that I forgot to cover in the slides and talk. It is the argument made by Silas Barta that (a) some libertarians support rights in airwaves (electromagnetic spectra); but (b) if you support airwave rights you have no basis to object to rights in other nonscarce resources like inventions or patterns of information (see Why Airwaves (Electromagnetic Spectra) Are (Arguably) Property). [Update: See also Silas Barta: The shortest, safest libertarian case [sic] for IP]

There are several problems with this argument. First, not all libertarians support rights in EM spectra. So they are not committed to favor IP rights, even by Barta’s argument.

Second, even if EM spectra ought to be homesteadable, it does not mean that patterns of information ought to be. This is because EM spectra are actually scarce resources, while patterns of information are not. IP proponents typically grudgingly admit, when pressed, that EM spectra are  scarce but patterns of information—knowledge—is not, but they then shift to the argument that the monopoly over information leads to a “right to exploit” the monopoly, which leads to acquisition of profit (money), which is a scarce resource. The problem with the latter maneuver is that the profit comes from money voluntarily handed over to a seller by a customer. But the customer owns his money until he chooses to spend it. No other person has any property right claim in other people’s money or, thus, in any possible future income stream or profits.

Third, even if support of airwave property rights were to imply some type of possible rights in information or the right-to-exploit information, it does not imply that legislated IP rights systems like patent and copyright are justified (see, e.g., Legislation and Law in a Free Society). The advocate of an IP system that is somehow compatible with EM spectra rights has the burden of making a positive obligation for this system, and specifying its details. He can’t just say that IP is justified just because some of its opponents favor EM rights or are confused on the EM issue.

Finally, and to complement the previous point: even if you can argue that EM rights are valid, and do somehow impinge on normal property rights in scarce resources (which I disagree with), this does not mean that “anything goes”, that just any limits on property rights in scarce resources are justified (and this is a point I emphasized in the lecture—see slides 14-15, and my posts The Non-Aggression Principle as a Limit on Action, Not on Property Rights; IP and Aggression as Limits on Property Rights: How They Differ). Again, the IP proponent would need to put forth a positive argument for IP rights. It cannot be established by criticizing its critics. As an analogy: suppose someone believes conscription is justified, but also opposes rape. You cannot show that rape is justified just because some people are wrong on conscription; you cannot even show that rape is justified if conscription is justified.

Another argument I sometimes hear is exemplified here:

By such a viewpoint there’s nothing wrong with raiding an online bank account – how can the account holder claim to own something as arcane as electronic digits? People can’t claim to own electricity or numbers hence they can’t claim ownership of so-called electronic money let alone complain when they’re account is gone. For anyone to claim ownership of money it has been made out of a physical medium such as paper or metal, right?

In other words, we all believe it’s wrong to get into someone’s bank account; yet this requires something similar to IP—ownership of nonscarce things. Therefore, if it’s okay to own money in a bank, why not the patterns of information protected by patent and copyright. Well: in a free society, money would be gold, a scarce thing. You don’t need anything IP-like to protect property rights in such scarce resources. Pointing to the fiat money created by the state and related rules hardly justifies the state creating property rights in ideas. Further, even in today’s fiat society world, we can say that it’s a rights violation for someone to access your bank account, because to do that requires accessing scarce resources owned by the bank, and when deception is used, this is fraudulent: the deceptive person gains entry under false pretenses, meaning that the consent given by the bank is not valid, meaning that he is committing a form of trespass. (For more discussion of related issues, see my post Why Spam is Trespass.) (A similar argument is made by Jamie McEwan; see  Yeager and Other Letters Re Liberty article “Libertarianism and Intellectual Property”).

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Kinsella on Liberty Podcast, Episode 235.

This is a short video produced by the Federalist Society (Feb. 6, 2018), featuring me and IP law professor Kristen Osenga (I had met Osenga previously, as a co-panelist at an IP panel at NYU School of Law in 2011). I was pleasantly surprised that the Federalist Society was willing to give the anti-IP side a voice—more on this below. To produce this video, Osenga and I each spoke separately, before a green screen, in studios in our own cities, for about 30 minutes. The editing that boiled this down to about 5 minutes total was superbly done.

see also James Stern: Is Intellectual Property Actually Property? [Federalist Society No. 86 LECTURE]

Transcript below.

From the Federalist Society’s shownotes on their Facebook post:

Why does the government protect patents, copyrights, and trademarks? Should it? Kristen Osenga and Stephan Kinsella explore the concept of intellectual property and debate its effect on society as a whole.

Kristen Osenga, a professor at the University of Richmond School of Law, and Stephan Kinsella, author of Against Intellectual Property, explore the concept of intellectual property and debate its effect on society as a whole.

Differing Views:

• Libertarianism.org: Libertarian Views of Intellectual Property
• A 21st Century Copyright Office: The Conservative Case for Reform
• Mises Institute: The Case Against IP
• Law and Liberty: Why Intellectual Property Rights? A Lockean Justification
• The Constitutional Foundations of Intellectual Property
• Harvard Law: Theories of Intellectual Property

[continue reading…]

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Kinsella on Liberty Podcast, Episode 234.

Related:

• Craig Wright: You Don’t Own Your Digital Stuff. NFTs Could Actually Fix That — Without Intellectual Property

This is a debate on IP between me and a noted Bitcoin expert, Craig Wright, hosted and moderated by the Vin Armani show.

Transcript below along with Grok shownotes.

Debating Wright

I was in London to attend the inaugural 2018 meeting of Mises UK and to hang with my boys Lee Iglody, Jeff Barr, Doug French, and Hans Hoppe, and had challenged Wright to a debate during a few twitter run-ins (still on-going); I accepted and since I happened to be in London, Wright set it up and we did it at a local studio, with Armani moderating from Vegas.

After the debate

Further comments appear on my Facebook post and also on the Youtube post (below).

Update [7/17/19]: I had my buddies Jeff Barr and Doug French in the room watching, and after the debate, invited Craig to drinks in the hotel bar. We had an interesting, if a bit bizarre and intense, discussion for an hour or so. But in the ensuing weeks, things between us devolved on Twitter. Wright had promised to produce “proof” of patents stimulating innovation during the debate, and apparently, like with many of his promises to produce something, never came through. I pointed that out on Twitter and he eventually ended up blocking me, as well as the podcast’s host, Vin Armani, who at the time was, with Wright, a fellow BCH advocate (Vin is still a BCHer but Craig has split off again with his BSV). Of course, in the meantime, Wright has amped up his risible claims to be Satoshi and has been involved in a number of controversial issues in the bitcoin/crypto community. What a character.

Also: during the debate I referred to him as Dr. Wright, since he claims to have several PhDs, but now I am not sure he has any legitimate PhDs, other perhaps than one in “theology”, so I should not have called him “Dr.” ¹ That was too deferential. On the other hand, he did pay for the venue and related costs, so I was being polite.

Grok Summary

The debate on intellectual property (IP) law, hosted by Vin Armani on January 27, 2018, featured Stephan Kinsella arguing against the resolution that IP is a legitimate and useful institution for blockchain and cryptocurrency, while Craig Wright defended it. In his opening, Wright emphasized the scarcity of good ideas and their implementation, arguing that IP protects individual creators’ rights more fundamentally than homesteading physical land, as ideas are created from nothing. He cited natural experiments in countries like India, where reintroducing IP laws allegedly led to a 60% increase in patents by startups, not large companies. Wright contrasted IP with alternatives like trade secrets, using the ZeniMax vs. Oculus case to illustrate how trade secrets create market uncertainty and slow innovation, while patents provide disclosure and clarity. He framed opposition to IP as “intellectual communism,” forcing creators to share against their will.

Kinsella, in his opening, defined IP as government-granted monopolies (patents for inventions, copyrights for artistic works, plus trademarks and trade secrets) that infringe on genuine property rights in scarce, rivalrous resources. He argued that property rights arise from homesteading or contract to resolve conflicts over physical goods, not ideas, which are non-rivalrous and essential to action but not ownable. Kinsella rejected creation as a source of ownership, noting that transforming owned resources (e.g., iron into a horseshoe) creates wealth, not new rights. He claimed IP hinders innovation, distorts culture, and censors speech, prioritizing justice over utilitarian goals like spurring creativity.

In response to questions on legitimacy, Kinsella expanded that IP is unethical and un-libertarian, as it transfers property rights without consent, akin to theft or slavery. He criticized IP’s arbitrary expiration (e.g., 17 years for patents) as evidence it’s not true property, and argued it violates free speech by restricting expression, such as banning sequels or hyperlinks to content. Empirically, he asserted no clear proof IP boosts innovation net of its costs (e.g., patent thickets stifling research), citing economists Boldrin and Levine’s work showing patents correlate with filings but not actual productivity gains. Kinsella highlighted his experience as a patent attorney, observing inventions arise from market needs, not IP incentives.

Wright rebutted by calling Kinsella’s arguments circular and false, insisting IP aligns with Lockean rights and societal agreements. He claimed over 2,000 studies from natural experiments (e.g., IP reductions in India and China leading to innovation drops, followed by surges upon reinstatement) support IP’s benefits for small innovators. Wright traced IP to ancient precedents like Roman judicial law and medieval letters patent, rejecting the idea it’s a modern monopoly. He argued creators have rights to control their work, and without IP, theft via trade secrets proliferates, as in Google Waymo cases, creating uncertainty that deters investment.

On utility, Wright explained IP’s mechanism: patents reduce uncertainty by disclosing inventions publicly, enabling due diligence for investors and preventing costly secret thefts, unlike trade secrets that led to billion-dollar disputes (e.g., Oculus). He advocated updating outdated IP models but insisted communities can agree on rules, aligning with individual choice. In blockchain, Wright argued IP prevents fragmentation (e.g., Bitcoin splits), fosters certainty for scaling against incumbents like Visa, and protects costly innovations his company developed, countering claims that open-source drove crypto growth.

Kinsella rebutted Wright’s evidence as anecdotal, pointing to his compilation of studies showing IP’s net harm, including trillions in lost innovation. He labeled IP socialist for interfering with private property, per Hoppe’s definition, and dismissed historical precedents as mercantilist monopolies antithetical to free markets. On free speech, Kinsella cited cases like the banned Catcher in the Rye sequel, Nosferatu film destruction, Aaron Swartz’s suicide amid copyright charges, and threats against yoga poses or tattoos as direct censorship. He argued trademark creates “reputation rights” implying ownership over others’ thoughts, while trade secrets unjustly target third parties.

In closings, Wright defended IP against misrepresentations, clarifying Swartz’s case involved physical trespass (not just copyright) and the Apple iPhone incident as theft by finding, both violating physical property. He promised to compile real-world studies countering Kinsella’s “computer models,” emphasizing human action over simulations. Kinsella reiterated IP’s injustice, burdening proponents to justify it amid historical injustices like slavery. He agreed information needn’t be free but opposed restricting learned knowledge, urging libertarians to favor competition and abolish IP for true free markets.

Wright’s arguments lack coherence and systematic structure, often jumping between philosophical claims (e.g., ideas as scarcer than land), empirical assertions (e.g., Indian patent surges), and historical anecdotes without clear linkages or definitions. His rebuttals frequently digress into unrelated critiques (e.g., equating Swartz’s actions to house-breaking) or unsubstantiated boasts (e.g., “over 2,000 studies” without citations), making the case feel scattershot rather than logically progressive. While he invokes libertarian concepts like individual rights and anti-communism, the arguments are not consistently backed by verifiable evidence; claims rely on vague “natural experiments” or personal company experiences, ignoring counter-studies Kinsella references. This contrasts with Kinsella’s methodical breakdown of property theory and empirical critiques.

Furthermore, Wright’s positions are inconsistent with core libertarian private property rights, which emphasize non-aggression and ownership of scarce resources without state intervention. By advocating state-enforced IP monopolies (e.g., patents in blockchain to prevent “fragmentation”), Wright endorses government grants that restrict others’ use of their own property—precisely the interference libertarians like Rothbard and Hoppe decry as socialist. His dismissal of open-source success in crypto as suboptimal ignores libertarian preferences for voluntary agreements over coerced disclosure, and his creation-from-nothing rationale contradicts Lockean homesteading, which ties rights to mixing labor with unowned resources, not ideas. Overall, Wright’s defense prioritizes utilitarian outcomes over principled non-initiation of force, undermining libertarian consistency.

Youtube (with captions):

Original Youtube (which contains a large number of comments; see below):

❧

TRANSCRIPT

Intellectual Property Debate: Stephan Kinsella vs. Craig Wright

Stephan Kinsella, Craig Wright, and Vin Armani

Vin Armani Show, London and Las Vegas, Jan. 27, 2018

00:00:00

VIN ARMANI: Welcome everyone to today’s debate.  We are debating intellectual property.  The two opponents are Stephan Kinsella and Craig Wright.  Stephan Kinsella is an attorney in Houston, director of the Center for the Study of Innovative Freedom and editor of Libertarian Papers.  He is one of the foremost libertarian experts on intellectual property.

00:00:23

And Dr. Craig Wright is an inventor, computer scientist, and businessman who is one of the earliest minds behind Bitcoin.  He’s the chief scientist at nChain research and development company involved in Bitcoin and blockchain technologies.  So today what we are going to be debating is the following resolution resolved.  Intellectual property law is a legitimate and useful institution that belongs in the emerging global sphere of blockchain technology and cryptocurrency.

00:00:54

Craig Wright will be arguing for the resolution, and Stephan Kinsella will be arguing against.  This debate is going to consist of a series of five-minute statements and rebuttals, a series of rounds.  The first round is going to be an opening statement from each of the debaters.  We are going to start with – did we say we’re starting with Craig Wright?  So we will start with Craig Wright who is arguing for the resolution.  Dr. Wright, if you will.

00:01:26

CRAIG WRIGHT: Thank you. So basically what we’re looking at is the idea that intellectual property has no value from other people. Now, I would argue it does, not because of the common constraints and whatever else people put about scarcity and what they think about copying but for a number of reasons first as the scarcity of good ideas.  There are many ideas out there in the world, but good ideas there are very few.  And then implementing those is another thing altogether.  Why not everything?  Well, very simple.  If we have every single algorithm, we can just create everything, and we have no actual application.

00:02:06

The reality is that, contrary to what many people say, we have much evidence actually benefiting the implementation of intellectual property.  We have a number of natural experiments around the world such as in China, in other places in Asia, everywhere from Singapore right up to India.  And in all of those places, when intellectual property laws have been removed and then when they’ve been added again, we have a lot of evidence in support of what they do, not in helping big incumbents, in fact, the opposite.

00:02:42

In India, for instance, in recent re-additions of intellectual property laws and opening up of the different opportunities they had in that country, opening it up to small startups, we have a scenario where there was immediate 60% increase, not in the number of patents filed by large companies but by small startups.  That actually followed through not only in India but to Indians in America in many different areas.

00:03:12

So what we’re looking at is, I think, something where we have the rights of an individual to their own creation.  If we think about the rights of a homestead, when someone starts an initial property and creates it, then I would argue that there’s actually more rights in intellectual property than even the homestead for the simple fact that, when you homestead, there’s land there before.  You either put a fence, you do whatever else, and you have an act, an act of creating intellectual property, at the same time is an act.

00:03:50

But it’s something where you create from nothing.  You actually – from not something existent before.  You develop something new.  On that, many will argue that if we didn’t do it, someone else would.  For instance, if there wasn’t an invention X that was patented, someone else will come along and invent the same thing, which seems fine, a tabula rasa world.  We just pour information in, and people come up with new ideas.  Except, if we think about that for a moment, if Charles Dickens never existed, if Shakespeare didn’t exist, would we actually have those works?  Would there be another Charles Dickens?  Would we have A Christmas Carol?  Would someone have written that piece of work and created it?

00:04:41

Now, in this, we have the argument, of course, that it’s different and we can just protect it with trade secrets if we want.  But the truth of the matter is, when we’re looking at the alternatives, and I’ll explain this through here, trade secrets actually lower incentive.  A perfect example was ZeniMax and Oculus.  Oculus CTO went across, took IP and source code, and of course now there’s a lot of problems between Oculus, and it slowed innovation in a lot of new areas.

00:05:20

If, on the other hand, patents were disclosed, it would have added a lot of value to a lot of new organizations.  We found that the innovation and investment in that circle basically dried up for awhile.  It went from about a billion dollars down to about a hundred million after that particular case.  Now, that was because of trademark violations, but if it was a patented technology, then ZeniMax would have had it out there unsearchable.  And unlike the Oculus IP, it would have been easy to distinguish because, with trademark, you can never actually tell whether the person who asserts ownership truly does.

00:06:03

At the same time, when a patent is there, there are times to actually go out there and complain and say that it shouldn’t be filed, etc.  So you have opportunities to go out into a court of law and argue this point.  So what I’ll argue is that we have a position where the creator has a right to their creation enforcing that to be something that is in the commons.  Against the will of the creator, we take a scarce idea, and they are, and we make it effectively intellectual communism.  It is an intellectual communism of the commonance where we start actually creating a socialist force to say you have to put your particular invention out there in a way we deem, not you.

00:07:01

VIN ARMANI: All right, thank you very much, Dr. Wright.  Arguing against, once again, just for the audience, the resolution is intellectual property law is a legitimate and useful institution that belongs in the emerging global sphere of blockchain technology and cryptocurrency.  Arguing against the resolution now with a five-minute statement please, Stephan Kinsella.

00:07:25

STEPHAN KINSELLA: Sure.  Thank you.  Intellectual property is a difficult issue until you finally get it, and then it becomes easy and it opens up your understanding of other aspects of economics and property law.  But because it’s difficult and because we’re trying to overcome centuries of IP laws, which people take for granted, it’s important to approach this matter systematically and with clear definitions instead of the more scattershot approach Dr. Wright’s using.

00:07:55

So first, a definition.  Intellectual property refers – is a term used by proponents of certain laws, patent and copyright primarily, and other subsidiary types of intellectual property law called trademark law, trade secret law, and also defamation law, which is not normally considered to be an IP law by the legal profession, but it’s very similar in its effect to trademark, which are both reputation rights.  These are all called IP rights, and they’re called IP rights by the advocates because they are prima facie obviously restraints by the government.  They’re monopoly grants by the government on how people use their property, and to sell these government grants of monopoly privilege, the proponents started calling them intellectual property rights.  And they added the word intellectual to distinguish it from normal property rights, which last forever, unlike patent and copyright.

00:08:49

So just as a quick summary, patents cover inventions.  Copyrights cover artistic works.  Trademark and trade secrets and defamation law cover other things.  My contention is that intellectual property laws are completely unjust and illegitimate and un-libertarian.  And the reason is because these are laws that give other people the right to interfere with or to take outright existing property rights, so basically it’s tantamount to theft.  Contrary to the claims of advocates of patent and copyright, they do not foster innovation.

00:09:22

Rather, it hinders and distorts innovation, and it censors free speech in thought, and it threatens the freedom of the internet.  There’s nothing good about these laws and their consequences, and furthermore, the purpose of law is not to foster innovation or to further some policy goal of the current congress.  The purpose of law is to protect rights and to do justice, to protect property rights.

00:09:47

So the question is what are property rights, and how should they be determined and allocated?  Why do we have property rights?  Property rights are basically a solution to the fundamental fact of scarcity in the world.  When humans act, they can have conflict with each other over the use of their bodies and other scarce resources that they use.

00:10:06

And by scarce resource, we don’t mean something that’s not abundant, like good ideas are scarce.  We mean something that’s rivalrous, a clear economic concept, something of which there can be physical conflict.  Now, when humans act, they employ both ideas and knowledge as well as scarce resources to act, to achieve things to happen in the world.  So they’re both essential to action.  They’re both important.  Just because you’re against intellectual property doesn’t mean we’re against the importance of ideas.

00:10:33

Ideas are crucial to any successful human action.  To have an action, you have to know what you’re going to do, know how to achieve it, and you have to have available means to act with.  So you have to acquire knowledge, and you have to acquire scarce resources.  But because there can be conflict over the scarce resources, we develop property rights so that we can use these resources in a conflict-free way.  So they’re allocated in accordance with two basic principles: homesteading or original appropriation, the Lockian idea of the first person to start using a resource in the commons that was unowned has a better claim to it than anyone else, and then contractual transfer.

00:11:11

The owner of the resource can transfer it to someone else by transfer.  Those are the only two rules that we need to determine who owns a resource over which there could be a dispute.  So the problem with intellectual property is it comes up with a third rule, and it says that you own someone else’s property if you came up with an idea that is similar to the way they’re using their property.  So basically it amounts to legalized theft.  Vin, do I have more time, or is that my five minutes?

00:11:41

VIN ARMANI: You have about 45 seconds left.

00:11:45

STEPHAN KINSELLA: Okay, I’ll just say quickly one thing, and I can address this later if I have more time.  The mistake Craig is making is he’s assuming that creation is a source of ownership, and that’s completely incorrect.  In fact, he gave an example of putting a fence up or something around land and creating intellectual property.  Of course, land has nothing to do with intellectual property.

00:12:05

It is true that the human intellect and innovation and ingenuity went into the activity of doing that, but the land is not intellectual property at all.  Creation is a source of wealth.  That’s what people need to understand.  What creation means is you own a resource, that is, a scarce, physical, material thing, and then you use your intellect and your labor and your effort to modify that thing.  And therefore, you make it more valuable to you or to your customers, and therefore, you’ve created wealth, but no new property rights arose from that.  If you fashion raw iron that you own into a horseshoe, you’ve created wealth, but you’ve not created any property rights.  So creation is not a source of property rights, and that is a fundamental mistake that undercuts a lot of the arguments for intellectual property rights.

00:12:52

VIN ARMANI: All right, excellent.  Thank you, Stephan.  The first question now in this back-and-forth round will be to you.  You’ll have five minutes.  Craig will have up to five minutes to rebut, and then the reverse will happen on the next question.  So Stephan, thank you for that definition of terms.  But I really want to get into the question of whether or not intellectual property law is legitimate.  So my question to you is you’ve argued in your work that intellectual property, as an institution, is illegitimate on ethical, legal, and cultural grounds.  Can you please expand on why this is true?

00:13:35

STEPHAN KINSELLA: Well, that’s the argument I just gave basically, and I don’t know if I made many cultural arguments except for the distorting effect of copyright on culture and trademark as well.  But in that case, I’m just pointing to the negative consequences of an unjust law.  From my perspective, the fundamental question is an ethical one, and it’s in the question of what’s right and wrong, what’s just.

00:13:59

The people who argue for IP normally do so in a confusing fashion.  They mix together two fundamental arguments.  One is a more principled argument like Craig is trying to make, which is this Lockian argument that if you create something, you own it.  That’s transparently false, however, because number one, if patents and copyrights or inventions and artistic works were legitimate, ownable things, then the patent and copyrights should not expire after a fixed amount of time like 17 years for patents and 100+ years for copyrights.

00:14:31

They would last forever in perpetuity, and I hope Dr. Wright would not propose that because that would just make it even worse.  So if they expire arbitrarily after a certain time, they’re definitely not like normal property rights, which is why the word intellectual is put in front of them.  And then the other argument that they make is that utilitarian or empirical one that it enhances innovation.  It enhances the wealth of the world.  It causes more creations to come into being.

00:14:57

And as I said before, that is not the purpose of law.  The purpose of law is not to go around passing around laws to tinker around with things, giving people special rights to incentivize them to act in a better way so as to have more innovation.  The purpose of law is to do justice, and the way they do justice is to respect people’s property rights and to enforce those.

00:15:17

So any law that undercuts the basic Lockian libertarian property underpinnings of our system is unjust because it basically takes people’s property.  In a sense, it makes everyone else a slave of other people.  If I am not free to use my factory to make an iPhone knockoff let’s say, my rights to use my physical property as I wish are being violated.  I have never agreed to a negative servitude.  I’ve never agreed to a restrictive covenant where I can’t use my property a certain way.

00:15:50

I’m not causing trespass against someone else’s property when I use my property to make a competing automobile or car or watch or phone, and therefore hampering my freedom is a violation of my human rights.  If you tell me I can’t write a sequel to a novel or make a movie or express myself as I see fit because it violates someone’s copyright, you’re restricting my freedom of speech and the freedom of the press, freedom of expression and communication.

00:16:17

These are all things that libertarian law would oppose.  Libertarians should be in favor of people’s freedom to do whatever they want with their property as long as they don’t violate the rights of.  That means trespass against the property of another.  It has nothing to do with how much innovation we’re getting and things like that.  And to that point, we’ve had about 200 years of modern copyright and patent law.

00:16:39

We’ve had enough time for the advocates of it to prove, to come up with clear, empirical proof, not anecdotes like Dr. Wright has come up with clear proof that the patent system, for example, does result in greater innovation, the value of which is greater than the cost of the system, and believe me, the cost is tremendous.  Billions and billions of dollars are spent on lawyers like me every year.  Lots of research has never gone into it because you wouldn’t be able to sell a product because of patent thickets.  So the cost of the patent system is severe and huge.  I believe it’s on the order of trillions of dollars per year of lost innovation that we could otherwise have.

00:17:16

And in these 200 years, none of the advocates of IP have ever been able to come up with a clear empirical case that it does benefit us that the amount of value that is created by these new innovations allegedly stimulated is positive or what the value is.  They should be able to tell us what the value is, and they never can.  In fact, all of studies indicate that the patent system hinders and hampers innovation, and thus impoverishes the world and makes us worse off.

00:17:44

We’re living in a technologically inferior world today, which hurts everyone’s lives because of the patent system.  It should be abolished immediately.  I’ve been doing patents for over 20 years now.  And I have never seen a clear case of all the patents I’ve written where the invention patented was invented because of the patent system.  Instead, it’s come up with because of a necessity to solve a problem and to sell a product, and then they run to the lawyers to get a monopoly on it because they can, which further wastes the time of inventors and engineers.

00:18:17

So that’s my argument for it.  It’s destructive of human life, it’s destructive of innovation, and it censors free thought and free speech, and therefore, I’m completely and totally against patent and copyright.  And there are other arguments for trademark, trade secret, and defamation law, but they’re different in their own rights, and I can’t get to that right now.  I’ll rest here.

00:18:34

00:18:38

VIN ARMANI: Thank you very much.  So Dr. Wright, if you would like to rebut that, you have up to five minutes to do so.  Just to remind you, I know that you did get into some questions of utility on this last question.  Just to remind you, Dr. Wright, that you will have an opportunity to speak on utility directly after this.  But if you would like to rebut any of the statements made by Mr. Kinsella, you have up to five minutes to do that now.

00:19:07

1. CRAIG WRIGHT: Certainly. What I’ll first note is most of the arguments we’re hearing are circular. Intellectual property is not property because it’s not property because it’s not property.  Effectively, what we’re doing is we’re finding a circular argument about why it’s not.  We’re saying it’s not Lockian, so therefore, it can’t exist.  We have agreements within people.  We have agreements within society, and some of the claims are just plain false.  We have this idea that nothing has been done and that my anecdotes are there.

00:19:39

Mine aren’t anecdotes.  They’re very well-researched, NBER, etc.  Most countries around the world have a lot of publications with a lot of data.  And so what happens is we get this idea that it’s just empirical.  So that was a comment I heard back from Mr. Kinsella.  It’s just empirical.  I have a Twitter.  Now, the reality is we have a lot of data with natural experiments with the reduction of these laws, which led in every case, in every single country, not one, every one, 100% with a high R-squared value against this.

00:20:24

What we have is, in India, with the reduction of IP protection, IP dried up.  Basically, the only IP law that ended up being enforced was against large organizations building their own patents in their own area.  We then had China.  We then had Singapore.  We then had many, many countries, and we’ve even had ones lately in Africa.  Over the last few years, we’ve had new experiments in these countries where, with the opening of IP law and basically because of WTA sort of constraints, the implementation of all of this, we’ve actually seen up to 60% increases in the amount of intellectual property growth.

00:21:11

So this claim that that’s not true is absolutely false, not anecdotally.  There are over 2000 studies that I know of, not one, not two, over 2000.  And not a single one of those refutes these things.  What you get, self-serving papers where someone has an experiment, not reality, they create a game scenario.  And they say it doesn’t work because.  They don’t test it on real human action.  They don’t see what actually happens, so there’s a difference.

00:21:49

We also have this disingenuous idea that we have 200 years of copyright.  We don’t.  There was actually copyright, as I’ve been pointing out, in the lex judica, in – well, basically the 4^th century A.D. in Rome, copyright existed.  Patent existed.  Letters of patent go back 3000 years that we know of.  So we have the whole idea of what is a letter of patent.  Every city in Europe that was actually founded after Rome fell was done so, if it wasn’t going to be collapsed in a small amount of time, under a letter of patent.

00:22:34

Guilds were often in letter of patents, so this is actually quite – not new.  I’m not advocating guilds and whatever else.  And at the same time, there are many sort of bad areas about law, but the idea that something that is basically baby in the bathwater and we have to throw it all out because something is not ideal doesn’t mean that the law is not good.

00:22:59

Now, what is law?  At the same time, we have agreements between individuals.  Saying that individuals cannot, in their own terms, agree laws, that is wrong.  I will say, quite frankly, if a community, a society decides that these are the laws we think work best for us, that is the law that should be there as long as they don’t infringe on certain basic rights that we have.  Now, this idea that you’re infringing on the rights of people because of their IP, well, I’m also being infringed as a creator if someone takes my ideas and just uses them.

00:23:47

I have the right to take my creation and use it however I will.  I don’t own a horseshoe because I own a horseshoe.  I own a horseshoe because I somehow have the iron, which means someone else dug it out of the earth.  I didn’t do that myself.  I got it from someone, and then I created using it, and I created value in society.  I actually create value.  It doesn’t just suddenly appear otherwise.  That taking of a raw lump of iron and making it into a horseshoe is value creation.  Now, the floor that some argue is that this is a Marxian idea, but the Marxian idea was actually basically that I have the right to the amount of effort.

00:24:40

VIN ARMANI: Dr. Wright, we’re going to hold it here.  It’s gone over time a little bit.  But you do – you can expand on that.  If you’d like to continue, you have another five minutes, and within that, what I do want to ask you though, I believe we’re getting into the utility question at this point.  Both of you obviously participate in the legal system in this way, so there is at least – regardless of Mr. Kinsella’s ethical issues with intellectual property, you both at least find some legitimacy in it enough to participate in that world.

00:25:16

My question, taking that legitimacy for granted perhaps, is about utility, and Dr. Wright, you’ve claimed that intellectual property laws serve a valuable place in the market.  You’ve claimed that they spur innovation.  You’ve claimed that they enable greater prosperity.  Can you please tell us what’s the mechanism by which this is occurring, not just the fact that it does, but could you expand and explain the mechanism that would be the evidence of this occurring please?  You’ve got five minutes on that.

00:25:48

CRAIG WRIGHT: Certainly. This is where I was mentioning things like trade secrets. Now, due diligence, the value of trying to chase down thefts, whatever else, is actually very difficult.  Now, the idea of being able to know everything that’s occurred when you’re buying a company is nearly impossible.  I’m sorry, but I don’t care how good your idea is, if you have it written down on a piece of paper and you’re coming to someone for funding or whatever else, then there is no way that funder knows that your idea has not been stolen, has not been copied, has not been anything else no matter how many agreements you actually sign.

00:26:27

We saw with the resignation of the CTO of Oculus following the allegations and then legal cases between ZeniMax that this actually can be something that even large incumbent corporations such as Facebook have no way of tracing down.  Now, Facebook and Google, which are another example, Google Waymo and [indiscernible_00:26:53] and I don’t name these companies, so I’m sorry about the ridiculous IP names that we have.  But any of these end up in court, not because of patents but because of trade secrets, people having intellectual property that has been stolen, not because it’s been copied fairly or whatever else, but under agreement they’ve taken it to a third party.

00:27:18

All of these are sources of uncertainty, not just mild uncertainty, but in the cases there, billions and billions of dollars.  So all of these where we’ve had trademarks, secrets stolen or whatever else, we easily see that there would have been much more certainty in the market.  So if you have a valid patent that has gone through the process and has been tested and whatever else, then what you’re going to find is more certainty, not less.  So this argument that everything is uncertain is actually, well, not real.

00:27:55

I can tell you with my company or sort of the company that I’m with.  I won’t say my.  I founded it, but that’s it.  With Jimmy up there and others and myself, we look at proposals all the time, so we’re becoming VCs or vulture capitalists if you will, like I’ve had to deal with VCs before, so call ourselves even vulture capitalists.  If you actually want to go out there and be certain, you need to know about what you’re investing in.  And I don’t care how many signatures you get from how many people in an organization, people will do whatever they can to get funding in desperate times.

00:28:36

Compare that to how much certainty you get comparatively, and I know the claims about only 2% of patents make money.  The actual statements of real scenarios are about 50%, or they’re making money probably means 1% over the total investment.  And the number that go to court is actually far lower than have occurred.  The reality is with the number of filed cases, if we take how many court cases actually go on the tickets every year and consider that against the other, you would expect one year’s worth of patent filing to end up with 1000 years worth of court cases.

00:29:19

That doesn’t happen.  The reality is, I’m sorry; there are very few patent infringement cases.  There are some cases that make a lot of money.  There are some that are obviously foolish.  There are some patent trolls, but a lot of these really come down to other problems in the system.  They come down to the misalignment of how people can get funding for litigation.  They come down to other things such as this.  How am I going for time, by the way, Vin?

00:29:51

VIN ARMANI: You have about one minute left.

00:29:55

CRAIG WRIGHT: Great. So what we’re looking at is IP law is really about an intermixing of human ingenuity and creativity. That’s what we’re talking about.  It’s a compromise between different stakeholders and different values and outcomes.  So I admit and I’m not the first to do this, that when we have old 1970-type models of patents and copyright laws, they’re wrong.  They need to be updated.  But that doesn’t mean you can’t have law, you can’t have agreement, and communities themselves can actually form agreement.

00:30:32

And this idea that I have to be told how I’m going to sell my own product, I’m sorry; that’s just wrong.  I do not live in Stalin’s world.  I don’t really care.  I make something.  It is mine.  If I choose to give it away freely, I choose to give it away freely.  If I make something, I, me, if I work under contract, I chose to work under contract.  I’m not a slave.  I own my rights.  Everyone who is forced to give up their rights, that is slavery.  Thank you.

00:31:15

VIN ARMANI: All right, thank you very much for that.  Mr. Kinsella, you have five minutes to rebut, and then I will have immediately a question for you after that, so Mr. Kinsella.

00:31:26

STEPHAN KINSELLA: All right, I can just – in five minutes I can only do so much.  Quickly, I refer listeners to my website, C4SIF.org.  Just go to the slash AIP page and look at my post of “The Empirical Case Against Patents.”  The empirical evidence is just overwhelming.  There are no studies that Dr. Wright is referring to.  Most recently, the economists Boldrin and Levine have a paper on patents where they exhaustively studied the data, and they said the case against patents can be summarized briefly.  There is no empirical evidence that they serve to increase innovation and productivity unless you identify it with the number of patents awarded but not with innovation itself.

00:32:10

As for communist and socialist, in my view, if you read Hans-Hermann Hoppe’s Theory of Socialism and Capitalism, he identifies the essence of socialism, which is the institutionalized interference with private property rights and private property claims.  And intellectual property law does that.  So it is actually intellectual property law that is socialist because it amounts to a taking of private property rights.  As for the self-serving argument, I’m a patent attorney, so it would be in my interest to favor the system, but instead I call for its abolition.

00:32:40

As for the host’s idea that because I participate in the system I endorse its legitimacy, that would be like saying an attorney representing a defendant accused of a drug crime agrees with the drug system, or that an oncologist agrees that there should be cancer because they’re fighting to stop them.  I totally reject that.  As for copyright and patent existing long before 200 years ago, I’m well aware of that.  I said specifically the modern copyright system, which did start with the US Constitution in 1790/1791 with the patent and copyright laws.

00:33:14

But they were modeled after the earlier laws, which Dr. Wright mentions, like the practice of monarchs and states granting letters of patent, which were clearly protectionist, mercantilist, anti-competitive monopoly privilege grants, so I don’t think that helps him.  The Statute of Monopolies in 1623 in England is what is the early basis of US patent law.  Get it?  It’s a monopoly.  We’re against state-granted monopolies.  The Statute of Anne in 1709 is where modern copyright law came from, but there are, of course, antecedents before that.

00:33:47

Even in 500 B.C. there was the Greek city state of Sybaris where there was a cooking competition, and whoever won would have a monopoly on making that dish for a year.  So there are, of course, antecedents.  There have always been people that have been trying to reduce competition and who hate the free market. [Update: see Michael Witty, “Athenaeus describes the most ancient intellectual property” (2018)]

00:34:03

As for uncertainty, the certainty of patents is ridiculous.  The system is based upon totally non-objective principles.  It’s run by a government bureaucracy, and patent and copyright law in particular are the creatures of legislation and statute.  They could never have arisen on a common law or private property-based system.  And it is actually having a legislation-based state that causes uncertainty, as Hans-Hermann Hoppe has written about, and as I’ve written about in my long paper in the 1995 JLS on legislation and uncertainty because the very existence of a legislation – a legislator – what’s the word I’m looking for?  The legislature – the existence of a legislature makes you uncertain about what the laws will be in the future because they can change the law from day to day.

00:34:49

As the saying goes, when the legislature is in session, no man’s property is safe.  As for not throwing the baby out with the bathwater, you do want to do that if it’s Rosemary’s baby we’re talking about, and that is what patent and copyright are.  Briefly, I can say as for trademark, and I elaborate on this in my papers, but I can briefly explain the reason why trademark and trade secret and defamation law are illegitimate.  Trademark law basically grants reputation rights, and as Rothbard explained in his argument against defamation law, which says something similar, you can’t own your reputation because that is what other people think about you.

00:35:27

And if you have a right to your reputation, that means you have a right to what other people think about you, which means you have a partial ownership of their brain, which means they’re your slave.  So defamation law is completely illegitimate as is trademark law, which has a similar type of argument.  Trade secret law is illegitimate because you don’t need a law to keep things secret.

00:35:46

You have the right to keep whatever you want secret.  What trade secret law does is it gives the so-called owner of a trade secret, which is just information that’s held private and confidential and it gives you some competitive advantage in the marketplace as long as it’s held confidential.  It gives you the right to go to a court to get an injunction to use state force against, not just your employees who left and who are revealing the information, which could be covered by contract law alone.  It gives you a right to go against third parties who are not parties to any contract, and that is wrong as well.

00:36:17

And an example of that is when the Apple iPhone 4 I believe was left on a bar by a careless employee.  And some guy found it, and a couple of days later, the feds, with Apple employees, burst into this guy’s apartment under the auspices of trade secret law to take it back from him so…

00:36:36

VIN ARMANI: We’re at five minutes now, Stephan.  Thank you.

00:36:41

STEPHAN KINSELLA: I’ll close there.

00:36:42

VIN ARMANI: And, of course, there – after this round of questioning, you will also both have closing statements, so you can pick it back up from there.  So now what I’m going to do, with no rebuttal on either side, I’ll start with Stephan Kinsella.  I’m going to ask questions.  You will have five minutes each.  These are just things that I’ve pulled out myself, questions that I have from statements that you’ve made in the debate so far.

00:37:10

So Stephan, in your opening statement, you explicitly said that intellectual property censors free speech, and I think in a way you may have alluded to that just now as well with your statements about defamation.  That’s a pretty strong claim, especially for people’s understanding in the west of the value of free speech.  Do you stand by that?  Will you expand on why you believe there’s an equivalence there?

00:37:39

STEPHAN KINSELLA: Absolutely.  In fact, I can give some examples, and I’ll mention a few from the top of my head here, but if people want more examples, go to my website, C4SIF.org/aip, which means against intellectual property.  And look for my post about the trade – the copyright and patent horror files, and I just detail some examples.  I stopped collecting them about ten years ago because there are just too many, but certainly.

00:38:05

There are some notorious cases where trademark or copyright law have been used to threaten people not to perform certain yoga moves.  That’s moving your body in a certain way.  There’s been threats against people with certain tattoos or designs on their faces because the tattoo has a copyright.  What are they going to do?  Be forced into court and told to have their face re-tattooed?

00:38:25

The fundamental fact is that you can’t – you are – it is a criminal violation to print certain works that are said to infringe copyright.  You can go to jail.  In fact, Kim Dotcom is still facing extradition to the US because of having a website with hyperlinks on it.  There was a grad student in England called James Dwyer I believe, D-W-Y-E-R, who simply had a website with hyperlinks pointing to someone else’s site that hosted pirated content.

00:38:55

And the US tried to extradite him to come to the US to face criminal – federal criminal charges.  It ruined his grad school career for several years.  There was a sequel written to The Catcher in the Rye, and the estate of the author took this guy to federal court in the US—this was a few decades ago—and got the book banned.  The court ordered the book to be never published and destroyed.  This is literally book banning by the courts in the name of copyright.

00:39:26

The famous vampire movie, Nosferatu, was held by a court to have infringed the copyrights of the estate of Bram Stoker, Dracula, and copies of the movie were ordered burned and destroyed.  I think a few survived luckily, so we now have it.  So there’s any number of cases.  Oh, one of the pioneers of internet technology Aaron Swartz, the poor guy uploaded some papers, academic papers to the internet because they’re behind these stupid pay walls.  And he was facing decades in federal prison, and he committed suicide.  It was one of the most tragic cases.

00:40:03

And then you have milquetoast advocates for copyright reform who want to be mavericks like – I’m not going to mention names, but it’s easy to find, saying that, well, he should have gotten some punishment, but that was too severe.  Well, I think these people bear some complicity in the death of this poor guy.  You have to be for total copyright abolition.  Of course it censors free speech.  If I wanted to make a movie or if I want to write a novel and include sections from someone else, I should have every right to do so.

00:40:32

And I would just say one more thing.  You’ll notice that the advocates of copyright and patent law, they will mix together arguments, the creation argument Dr. Wright is doing and then the utilitarian argument, and they just mix these things together.  And then they’ll also throw in things like fraud and plagiarism, which – like, for example, if I sell a bootleg copy of a novel, they say, well, that’s fraud.  Well, it’s not fraud.  I’m not pretending to be the author.  It’s not plagiarism.  Plagiarism is not even illegal.

00:40:57

If I wanted to make a copy of the Bible tomorrow and put my name on it, or if I wanted to publish Stephan Kinsella’s Romeo and Juliet tomorrow, I would be looked at as a fool, but it’s not a copyright violation because the copyright is long expired.  So plagiarism has literally nothing to do with copyright.  And believe me, the owners of vast archives of copyrighted material would not be happy if the pirates simply didn’t put their own names on it and kept the original creator’s name on it.  That’s not what they want.  They want to stop you from copying, so absolutely.

00:41:29

In fact, I think that the patent system does far more physical damage to the human race in terms of monetary damage and lost innovation, probably trillions a year.  I mean we could be having flying cars by now or something if not for the patent system hampering innovation over the last 200 years.  But the copyright system I think is arguably worse because the patents last a – I mean the copyrights last a lot longer, and they’re threatening internet freedom.

00:41:54

And the internet is the greatest tool that we have to fight the state I believe because we have communication, and it’s decentralized.  And we can get around the state this way, and if anything threatens the freedom on the internet, it’s a big danger to human freedom, and it aids the state.  And copyright is being used with these six-strikes-and-you’re-out laws and these YouTube takedown notices with the ICE system seizing websites, taking them down for having pirated content.  Anything that threatens internet freedom is a severe threat to human liberty, and libertarians should recoil in terror and fear from copyright law for that reason.  So the copyright law is very insidious and extremely evil, and the patent system does more actual tangible damage in my opinion.

00:42:35

00:42:40

CRAIG WRIGHT: We can’t hear you, Vin.

00:42:42

STEPHAN KINSELLA: Can’t hear you.

00:42:43

VIN ARMANI: I’m sorry.  I was so dialed in.  Dr. Wright, we have been – this question is now for you.  We’ve been talking in this debate about some pretty high-level philosophical principles.  I want to bring it down to some specifics, specifically for you here.  You’ve argued throughout this debate that IP spurs – has a utilitarian value in spurring innovation and creating more prosperity.

00:43:13

But your critics—myself included—argue that one of the major reasons for the growth of blockchain technology and Bitcoin specifically is due to the open-source nature of the space and the lack of intellectual property.  So I want to ask you, with this space specifically in mind, why do you believe that IP is appropriate for this space since you yourself are pursuing patents in this space?

00:43:42

CRAIG WRIGHT: Money is very simply information. Now, this idea that all information needs to be free or whatever else is false. All information doesn’t need to be free, and it comes at a cost.  It’s scarce.  If you just have everything, you have data.  You don’t have information.  If I copy every single paper ever created, I do not have information.  I have data.  There’s a big difference there.  Actionable information matters.  Now, when we’re talking about some of these things, what we’re talking about is an individual right to use things.  Now, the creator can choose.  Now, we haven’t seen this space grow as it should.

00:44:27

We’ve actually seen it grow a lot smaller and be fragmented.  We’ve seen many [indiscernible_00:44:32].  We’ve seen the splitting of the system.  And our target isn’t really each other.  It shouldn’t be.  Instead of splitting up everything that people want and sort of being small and divided, what we should do is not have everyone attacking the corners but rather looking at our one enemy and our one true – something we need to fight.  We need to take on Visa.  We need to take on PayPal.  We then need to look at the central banks, not banks because banks can actually have a function when they aren’t sort of hampered by the regulations that we have.  We need to have a space where individual players can actually form something – an individual – basically a system that will grow and not fragment.

00:45:24

Everyone else wants it to fragment.  The banks want it to fragment.  The central banks want it to fragment.  They want millions of these because then each is controllable.  So right now, what we have is a system that is becoming very easy to regulate, very easy to get around, very easy for governments to start putting their thumb down on.

00:45:45

We have gone from a system that at one stage was the one, not centralized as people say.  Being one doesn’t make centrality in the way that people argue.  One money isn’t bad.  One money actually allows anyone on Earth to start actively engaging in trade.  And that doesn’t stop competition.  It doesn’t stop people doing things.  It doesn’t stop new nodes in Bitcoin unlimited, in Bitcoin ABC, in our software, etc. that we have.  That’s competition, and even though it’s on the same blockchain with Bitcoin Cash, we have six different players all doing the same thing, proposing different things, saving up different scripts.

00:46:34

So the reality is you can actually have these things and can actually limit it.  So I have things that I don’t care whether people say they’re – someone else will think of them.  They haven’t.  Still, we filed our patents.  No one else has been doing it.  No one else has come up with a solution to some of the things we’re releasing this year as much as everyone else has been trying, as much as Core have been sitting there saying we’ll find a way.  We have, and that cost us a lot of money.  It cost a lot of time, and this idea that if everything was just going to be given away we would still invent is wrong, this idea that the evidence shows things.

00:47:24

As Mr. Kinsella showed, there are studies.  Unfortunately, what he’s not pointing out those studies are computer models.  Those studies aren’t actual real-life, actual human action.  No studies existing – I’ve pointed there’s at least 2000 studies, not small studies, at least 2000.  There are ones in Africa, ones in India, ones in wherever else.  Why is this going to take off?  Not because there are 600 forms of money in a particular country.  No bimetal system works.  Governments put in bimetallism.  Natural life doesn’t.  We had silver acted as a metal in most of Rome.

00:48:14

Silver acted as a metal in most of China, not with gold or the other until the government stepped in.  It’s when the government steps in and we start saying what will be money that it changes.  This is legal tender.  You must use it.  When people have a choice, they choose what’s easiest.  And trying to balance between 50 different currencies is not ever the easiest.  So we can say all these things about why it’s good, bad, or indifferent.

00:48:45

But the truth of the matter is what we’re trying to do is open up innovation, and that doesn’t happen by allowing fragmentation.  It doesn’t happen by having lots of small projects that have no link anymore.  All of this happened not because of control being sort of diversified.  It happens because a few small groups decided for the rest.  So this idea that everything was free, well, it’s not.  But it was put out there, and other people can compete.  But that doesn’t mean that you had open access to the Bitcoin code to do whatever you want.  We didn’t.

00:49:28

VIN ARMANI: We’re going to leave it there, but since – actually, if you would like, Dr. Wright, I think at this point what we’re going to do is we’re going to grab a closing statement from each one of you.  Since Stephan started, then we will have you, Craig, finish it.  Start on this last thing, and then, Stephan, you can have the last word on this.  So there’s been a lot that we’ve covered and some things that obviously we have not gotten into.  So any final thoughts that you have, Dr. Wright?  You are first up on this.  You will have five minutes, and then, Mr. Kinsella, you will be after that.

00:50:11

CRAIG WRIGHT: Okay. First of all, I’m going to rebut a couple of bits like this Swarz case. The Swarz case was actually not about copyright.  That is the defense.  That is free speech needs to be out there.  The reality was that a physical system was broken into.  A physical system was accessed.  Electronic controls were bypassed because someone broke into a building, accessed security controls, and then physically altered a machine so that they could actually copy things remotely to a person in Canada.

00:50:48

They re-cabled systems.  They broke systems.  Basically, the argument is it should be okay because it’s free speech to break into your house.  That’s what Mr. Kinsella’s argument here is.  Well, your front door wasn’t secured enough.  I mean, well, yes.  You have a lock, but I’m sorry, I got to drill through it, blow up the hinge, and then basically go in there and do what I want.  So therefore, after I set the webcam up in your house and embarrassed you by posting all the pictures of you having sex with your wife, that’s okay because, well, it’s your responsibility to protect your system, so therefore, the end.

00:51:34

We then have the Apple case.  What we have is theft.  We have this thing called theft by finding.  It’s a type of larceny.  If you actively identify the owner of a product, not you’ve looked for them and decided you couldn’t, then you have committed theft.  This goes back to common law.  We’re not talking anything new, so the disingenuous statements about how none of this existed by Mr. Kinsella over there is basically taking out of context the fact that all of this goes back to common law.

00:52:10

When I mentioned republic in Rome and those laws, these were actually enacted in what was equivalent to common law of the time.  It was judicial law that was handed down the same way it was in early Europe, in early Saxon Europe that was, where different people would go on a circuit and be a magistrate for a time, and the law would evolve, not written—common law.  Even Rome started with common law.  Everyone remembers Rome as this authoritarian state with an emperor.  It wasn’t.  Before the time of Marcius, Rome was actually a republic, which is a different thing all together.  And before that, they had law.  They had law that was dictated in a common law sense.

00:53:04

So we have this little fact here that even without contract, that third party who grabbed and broke into that device, they didn’t just find it.  They didn’t just take it away.  They physically took someone else’s property, the Lockian argument that Mr. Kinsella keeps using.  They took that property and accessed it.  They violated that person’s physical property rights to gain access to intellectual property.

00:53:37

By Mr. Kinsella’s own argument where he has claimed property rights are physical, he has put an example where someone has physically stolen goods, gone off intentionally because it’s a new product, and sought to sell them on market knowing, not just suspecting, knowing after breaking in that this was stolen property.  If you received stolen property and you sell it on, you and the person who knowingly receives it are in breach.  What libertarian here will say that the receipt of stolen property is okay?  I dare any libertarian to say you have the right to steal my car because you could get in there and joyride.

00:54:31

I dare you to tell me that one.  I dare you to say my goods are yours to do what you want with.  So we have a case here where we have lots of evidence according to Mr. Kinsella’s site, lots of evidence of studies.  I can make a computer model that says anything.  Computer models aren’t reality.  This is the old argument that goes back to our friend Mises.  Mises didn’t like all these mathematical models that were used by people like Keynes for a reason.

00:55:04

He didn’t like them because they weren’t honest because you could make them say anything you want.  When you look at econometric models and you start tweaking how they’re going to work, small changes make very radical differences.  And as for none of this being available, I’m going to put it all up on a website.  I’m going to actually start populating all of this.  For every one of his, I’m going to do ten.  For every one of those things, I’m going to put a model so that you can tweak and see what happens.

00:55:40

VIN ARMANI: We’re going to leave it there.  Thank you, Dr. Wright.  Stephan Kinsella, you are going to have the last word in this debate, and you have five minutes to do so, sir.

00:55:54

STEPHAN KINSELLA: All right, just quickly I’ll hit on a few things before the main meat.  But if Swarz committed trespass, then he could have been punished under regular trespass law, but he was facing criminal copyright charges of decades in federal prison, which is clearly unjust.

00:56:08

As for the Apple case, yes, it was Apple’s property.  They had a right to get it back.  My point was to show that trade secret law can affect third parties.  Trade secret law was actually used in that case, not some kind of property law, which should have been the law used.  As for the history of copyright and all this stuff, I would refer people to an article.  It’s on my site, C4SIF.org/resources.  It’s by Karl Fogel.  It’s “The Surprising History of Copyright.”  So it’s a very illuminating description of the history of this whole area of copyright.

00:56:41

And I’d like to say I agree with Dr. Wright on a couple of things, which is good.  I agree with him that one money is possible and maybe desirable, and I agree that information doesn’t have to be free.  If information – if someone wants to keep information private, they have certainly a right to do so.  But when you put a product into the stream of commerce that has publicly accessible features like the design of an iPhone, you make that information public.

00:57:09

When you publish a novel and decide to publish it, the information is out there, and then you can’t tell people what not – that they can’t use the information that they’ve learned from you.  It is absolutely clear that libertarians who believe in the basic principles of property rights in tangible scarce resources like I think we do, we believe that people have the right to own their bodies and their cars and their houses.  If you believe in those rights, then it is clear that any system that undercuts those rights and that is at least prima facie a violation, the burden is on the person presenting it.

00:57:43

The burden is not on me to show that copyright and patent law are invalid just because we have those systems because, after all, we’ve had slavery in the past, and we’ve had a drug war.  We’ve had taxation and wars and the Federal Reserve and government schools, lots of laws that exist which are clearly unjust.  The burden is on someone to justify those laws, and you have simply given no argument for intellectual property law.  And, in fact, there are no good arguments for intellectual property law if you accept the basic principles of property rights.

00:58:10

As for the studies you talked about, I would just refer people to the book, Against Intellectual Monopoly by Boldrin and Levine, which is online for free.  It’s linked at my website, and it’s on their site, AgainstMonopoly.org.  They exhaustively go through the empirical argument that your side has to put on.  The burden is on you.  And the evidence is not in the form of computer studies.  I only know of one study on my site by Andrew Torrance which is a computer model.  All the others are looking at the evidence that’s presented and looking at the evidence that was produced by advocates of IP and showing that it was a bad argument being made.

00:58:47

So what I would like to emphasize is that we have to realize that, as libertarians, as people who believe in property rights and justice and the free market, we are in favor of competition.  We’re not against competition.  We’re not afraid of competition.  We’re in favor of the acquisition of knowledge and the sharing of knowledge and the learning of knowledge and emulating what other people do and competing with other people.  Competing is good, learning is good, and emulating other people is good, and the free market is good, and we should oppose any system that interferes with free market competition, which is what patent and copyright law do.

00:59:23

00:59:26

VIN ARMANI: Excellent.  Thank you both.  I just want to say, gentlemen, this was wonderful that – and I want to thank you both and I think the audience would like to thank you for putting this on with such short notice.  I think it’s a testament to both of your integrity to step out of the online world of Twitter and to sit down with each other and to actually hash this out.  So I want to really just solute you both for that; eye-opening debate.  I thank you guys for this.

00:59:58

I don’t know that the issue is settled.  I’m telling you I’m looking through the comments, and it seems that both of you have made some strong arguments, and it seems that the audience feels that way.  We’ll have to go back on the look-back through this, but I want to thank you both for this, and I’m sure that I will get a chance to interact with both of you in person.  But thank you both for this, and have a great rest of your evening there in London, guys.

01:00:24

CRAIG WRIGHT: Thank you very much.

01:00:25

STEPHAN KINSELLA: Thanks.

01:00:26

❧

Comments from original youtube video:

N. Stephan Kinsella

0 seconds ago

Video with captions here https://youtu.be/5ckcdnD9lFw . Podcast at https://stephankinsella.com/paf-podcast/kol234-vin-armani-show-live-from-london-kinsella-v-craig-wright-on-intellectual-property/

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abram galler

3 years ago

If intellectual property were abolished within a few weeks it would disappear from memory .

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Tommy Boyle and the Party of One

3 years ago

“No, you’re the socialist!” -Every libertarian debate ever

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Tusk Bilasimo

3 years ago

As usual when you put Fake Satoshi up against a credible expert, he comes up short

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motech man

3 years ago

I won’t comment on the topic, but I want to give Vin major kudos and thanks for the way you presented this debate. I love that you positioned yourself between the two debaters, I love how you moderated and structured it, how you display the 5 timer (too bad participants couldn’t see it too). Such a well done video and a useful work Vin!

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N. Stephan Kinsella

3 years ago

He was great, and yes, we could not see the timer!

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Kiwi AustEcon

3 years ago

I really respect both of these men. Love them both. Two of my favourite intellectuals. Just wanted to say this as context to my comments below

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Mate 20x

2 years ago

Lol! Mr. Stephan got OWNED by Mr. Nakamoto!! ????????????

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Noble Phoenix

2 months ago

Stephan owned it. Glad people like him are dedicating their time to Liberty and freedom.

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John Anonymous

3 years ago (edited)

I don’t like these type of debates anymore. I want interaction. Kinsella should just talk with Wright sometime, for an hour or two, and go trough the arguments together back and forth. Now we’re only listening to the arguments we already know (well, the people who are familiar with Kinsella). Kinsella won of course, hands down.

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N. Stephan Kinsella

3 years ago

I wanted a free-for-all but the opponent and moderator dug their heels in and insisted on the rigid, boring format.

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John Anonymous

3 years ago

Figures. BTW, why did you ‘heart’ this Yevgeny guy on Twitter? He’s not someone you seem to agree with.

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Kiwi AustEcon

3 years ago (edited)

CSW says what we need is “for people to have a choice (about their money)” and “they’ll choose what’s easiest”, while also saying that “we need IP so that there is just one money instead of loads of different coins competing… He’s contradicting himself. Which is it? Free choice and competition? or Monopoly –> one money – all in. Cross your fingers and hope that we got it right with that one money.

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Ramon Quesada

6 months ago

Maybe you would like to have a full list of Craig Wright public videos in chronological order, here you are!!!! Any idea or suggestions are welcome!!! https://ramonquesada.com/english/craig-wright-videos/

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krishool

3 years ago

Bravo! Excellent moderation and solid arguments made by both parties. As to the morality of I.P. If a contractual agreement is made on the limitations of the use of a purchased I.P then it’s morally sound. In regards to the utility of I.P, I’m inclined to think that applying it in the block-chain would stifle innovation, however I could be wrong on that point.

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N. Stephan Kinsella

3 years ago

Exactly. You can’t get in rem (property) rights, which are good agains the world (which is what patent and copyright are) from in personam (contract) rights, which are good only as between the parties. Most people have a hard time understanding this, partly because they are naive about law, and partly because they never bother to define exactly what they mean by “intellectural property” rights or law.

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Kiwi AustEcon

3 years ago

What happens if someone patents crucial, key concepts for scaling BCH to the next level?? But then it gets mixed in with this segwit kind of trash or some other useles alt coin? How would CSW feel then aye?

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Daniel Roth

2 years ago

What is the point of a moderator if you don’t moderate?

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SunriseFestival

1 year ago

All your belongings is mine and i´m not paying for it – Kinsella

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David Parrish

9 months ago

Not at all what Kinsella said.

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Luc Chase

3 years ago (edited)

Would BCH definitely exist if Bitcoin/BTC had been patented? If no, would being stuck with BTC be a good thing? If yes, how?

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Vin Armani

3 years ago

Luc Chase BCH wouldn’t exist had Blockstream not controlled the narrative through censorship and stopped block size increases

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Kiwi AustEcon

3 years ago

Even though I think that “IP” should only be socially enforced (i.e. by loss of face, social status, ridicule, admiration etc. and maybe even dictionary-like social institutions that codify what is generally held to be the creators or main contributors to various fields of knowledge… I also kind of like how… if bitcoin cash does take over the world and allow us to rip governments out of our lives like the parasites that they are… we will have successfully used the state apparatus (IP law enforced by governments) AGAINST ITSELF UNTIL IT DIES BY ENFORCING THIS!

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Andy Rowe

3 years ago

There you are.

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Noble Phoenix

2 months ago

Ideas are not property. Property is physical.

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Wouter Vos

3 years ago (edited)

An idea is not scarce because if someone copies your idea, you don’t lose control of it. All you’ve lost is a monopoly on the use of that idea and monopolies are bad. They might not even have taken the idea from you, different people come up with the same idea on a regular basis. Earth is a big place with many people, an idea can take a long time to develop, two people could easily have the same idea. Increases in activity in copyright law aren’t good, decreases aren’t bad. Copyright and patents are government creations and would not exist in a free society. “I have a right to do anything I want with the idea’s I create” Not when you patent them, then you have to make them public after an arbitrary duration. You will have this right in a free society. But that doesn’t give you the restrict other people’s use of that idea.

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Andy Rowe

3 years ago

Everyone sounds good now.

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Laprisamata

3 years ago

Whereas I completely agree on an ideological level with Kinsella and the Austrian side of this debate, I have a great deal of respect for Dr. Wright. I don’t think that Dr. Wright is actually arguing for IP beyond using it as a justification for his next move in the context of the ‘Bitcoin Scaling Debate’. Despite being against my personal ideology, I completely understand why Dr. Wright has been pushed into this corner. We live in an IP world currently, and he can’t play the game he needs to without fighting fire with fire. Simply, he has to implement his stated strategy to undo the damage and corruption that has manifest at the hands of the Bitcoin Core development team. Whether that damage and corruption be through ‘malintent’, or through ignorance. In turn, the indecision by Bitcoin Core has resulted in the saturation of the crypto-space with pointless shitcoins, most of which have been created on the back of Ethereum, which only exists due to a fundamental misunderstanding of the original Bitcoin code, and a misunderstanding that lead to Ethereum’s particular implementation of Turing completeness and network topology.

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N. Stephan Kinsella

3 years ago

Except that he’s filed for dozens if not hundreds of patents on crypto tech, trying to control is using state coercion, so I think he’s trying to justify that horrible move too.

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uksuperrascal

3 years ago

Hi Vin – You Published on 24 Aug 2017, How To EASILY Upload Files To IPFS (The Interplanetary File System) I have been using IPFS and it worked ok till a windows update changed the non associated to anything files, install.sh and readme.md, Now both have been associated to notepad – I tried the regedit way of resetting but it did not work. and I can not run a dos ipfs deamon. Any Idea how to change the files back to them being non associated to anything. Anyone else have an idea or got the same problem?

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Vin Armani

3 years ago

uksuperrascal Can you please post this in the comments section of the appropriate video?

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barkingbandicoot

3 years ago

Question: From the Voluntaryist perspective; If all ethical human interaction is based on consent/contract. Does one not have the right to specify whatever terms and conditions when offering a product or service? A girl could offer you a naked jpg of herself on the condition that you do not copy and distribute it. The jpg is simply a collection of 0 & 1’s (pixel data). Are you bound to the contract or are you free to distribute it? If theft means that a person is deprived of property, then copying the jpg does not deprive the owner of the image. The owner still retains the image therefore no theft has occurred -??

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MonadTransformer

3 years ago

Craig is a software engineer with too many hobbies on the side, Stephan is a libertarian thinker & IP lawyer. They are not even in the same category in this “debate”. Craig is being absolutely destroyed here, and I am not sure he even has the skills to understand it. Now, same thing would happen if Stephan joined the Bitcoin scaling debate – and incidentally, he did. And again, same thing – Stephan is getting absolutely destroyed in any meaningful technical debate, but has no skills to understand it. I would suggest both folks should stick to what they actually know, since they are pretty good with it, and avoid the temptation to have hard opinions on anything outside their area of expertise.

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cent25

3 years ago

I’m not aware of stephan making any public statements on scaling debate.

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Wouter Vos

3 years ago

+MonadTransformer I love these debates, so what if someone doesn’t understand what they’re talking about? The only way to discover that is to have debates/discussions and express your idea’s. I thought Craig started off really well, even though his arguments held no water. He started from a libertarian perspective, so he’s very likely to have made arguments that are very popular with Libertarians, allowing Stephan to refute them. Apparently Vin Armani and Stephan Kinsella thought he was worth debating, what other requirement could you have?

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Jamie Peay

3 years ago (edited)

I know right? After Craig’s introduction and initial spiel, I couldn’t help but notice that it appeared as if Kinsella could barely contain his laughter.

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MrCharliers

3 years ago

patents are like guns.. think… full stop..

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Hwītehlāf

3 years ago

Wright did not make one solid argument. I’m not surprised.

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Carlos Castro Prieto

3 years ago

Not so impressed by Stephen Kinsella and with his previous interactions on Twitter with Craig Wright on this topic. I personally had a slight penchant against IP (after my readings from Mises Institute or Miguel Anxo Bastos), but not anymore, after reading and listening to Craig Wright’s much more compelling case. I would be glad to read many of those research papers mentioned that they promised to provide.

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Dr Sammy D

3 years ago

Rothbardians are too fixated on the natural law being the expression of the opinions by judges in their private law system. They should realize that judges will most likely express the preferences for fairness in their subscribers, which likely will include common thoughts of fairness surrounding intellectual property. Most people think 2-8 years is proper. That’s probably what judges will say.

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cent25

3 years ago

most of what wright said was just incomprehensible gibberish.

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N. Stephan Kinsella

3 years ago

Um, he had no case. He didn’t even define IP.

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Bloodluster

3 years ago (edited)

Should’ve just kept it simple instead of rambling in circles. 1. As long as law exists, there will be many fucked up cases whether in patent law or drug law, or what ever, that is unavoidable but doesn’t mean that we should have no law. 2. Intellectual property still has an important role, even in blockchain or no one would spend massive amounts of time, money, and manpower to research and develop new technologies if someone else can just steal it and use it for themselves. In this case, the very wealthy can just steal any idea/tech, hire their own people, and make a more popular variation since they have the marketing power. So the average joe will have no chance and desire to innovate. Just because intellectual property laws should exist for blockchain as well doesn’t mean it shouldn’t be updated/changed for this space. Maybe put a limit of 2 years for intellectual property in blockchain.

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N. Stephan Kinsella

3 years ago

You realize that’s in no wise any sort of justification for IP law, right?

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Noble Phoenix

2 months ago (edited)

Why 2 years and not 200 years or two days? I agree 2 years is better than the current one hundred ish years.

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Armando Anderson

3 years ago (edited)

Patent protection gives choice. The inventor can either give it away or exercise the protection by realizing the invention or simply do nothing. It’s the inventor’s choice and should have that right, especially if a substantial amount of time, money, effort, ingenuity, creativity, research, and experimentation was dedicated to it. They should be rewarded in the form of the patent. This gives more incentive to innovate and to lead. Otherwise, it pays just to wait and steal. Taking credit for someone’s invention is also stealing because there is market value in knowing who invented the invention. Consumers have the tendency to go with the originator with the underlying assumption that he/she is the most competent with delivering the invention to market. Otherwise, it is fraud. History becomes rewritten by the most powerful and innovative stealer. A working example of choice is in AI (Artificial Intelligence) research. A good chunk of AI researchers give their new ideas and algorithms away by immediately publishing them on the internet instead waiting for patents. They do this to speed up innovation and they know the sum of the parts far out weigh the few. But at least they have a choice. They have the option to license it, to sell it, to give it away, etc. Patent law gives them choice with whatever makes most sense. Elon Musk chose to give away his idea for the hyperloop and the blueprints for the early Tesla vehicles. But is he still giving away Tesla’s tech secrets? No, of course not because he needs to maintain a competitive edge. He only did it in the beginning to ensure the electric car industry will survive. This is choice.

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N. Stephan Kinsella

3 years ago

And we all know that the purpose of law is to “give people lots of choices”!! Brilliant! Why didn’t I think of that!

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Armando Anderson

3 years ago

Yup. Laws such as the freedom of speech as a good example. Another is the Bill of Rights and the Constitution. Preserves individual liberty while deterring the false notions of “the majority is always right” and “might makes right”.

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Armando Anderson

2 years ago

 @tark farhen  Government is not an all or nothing thing. Most government regulation should be left to the markets in general. But property rights including IP are individual liberties which empowered governments need to protect. This includes freedom of speech, protection against unlawful search and seizure, etc. where the majority cannot rule against. Prevents bullying and thus theft where “might makes right.” To say humans will share IP fairly with no laws to protect the inventor is a naive flawed assumption. Because there’s no incentive to be fair. The incentive is to bully and steal.

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Armando Anderson

2 years ago

 @tark farhen  Freedom of speech doesn’t have to be law? Reread the history books on the American revolution; the French Revolution; communism and the Bolshevik revolution; propaganda and control of media by Nazi Germany; etc. Visit China and the revival of communist party posters and surveillance. These are some reasons why humans have died to preserve freedom of speech and examples of oppression. You have lived in protected freedom and have no idea why. Government isn’t perfect. Democracy is messy. Without the constitution and Bill of rights, there is no freedom but only oppression you say you are against — free for all where the law is survival of the fittest. Human history has proved this over and over since the beginning. To think this generation is different is naive and ignorant. We are in an upswing of a new socialist cycle. Nothing new. Created by oceans of money printing by every central bank causing bubble after bubble of inflation where those who invest flourish while those who can’t (including savers) wither. Where the middle class disappear and the rich get richer. Gentrification becomes common. This is not capitalism but legalized counterfeiting. That’s why we need bitcoin cash. Sound money. Until the fiat machine is replaced, socialism and communism will rise. Expect more social unrest. Not less.

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Armando Anderson

2 years ago

 @tark farhen  Life is not binary. This all-or-none, good-or-bad, black-or-white, right-or-wrong, with-or-against-us thinking is what’s wrong with these debates. I’m for individual liberty and the protection of that liberty regardless what the majority thinks. Preserving liberty is not regulation. Preserving justice when one is murdered is not regulation. What I am for is patent protection. A logo, a style of shoe, song are not inventions. Patents protect inventors who invest years of research and development of something new technology that has not existed based on the laws of nature/science. Just because there are issues around copyright does not mean patent protection must be abolished. Avoid the all-or-none thinking.

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Just Do It

3 years ago

Kinsella got owned.

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Matija Papec

3 years ago (edited)

So basically a lawyer wants to deny intelectual property to an innovator, and limit him what he can or can’t do with fruits of his labor. I believe authoritarians and collectivists would agree here with Kinsella.

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cent25

3 years ago

“basically” you have no idea what you’re talking about.

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Matija Papec

3 years ago

What mechanism would you propose to protect useful intellectual work, for which you have no guarantee they would be laid out by someone else.

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N. Stephan Kinsella

3 years ago

Sort of how libertarians want to “deny” people a right to a welfare check!

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Matija Papec

3 years ago

For that parallel to be valid, intellectual labor should have no value at all.

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N. Stephan Kinsella

3 years ago

Matija Papec nothing has value.

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Matija Papec

3 years ago

I’m afraid market can’t agree on this axiom.

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jmcknight00

3 years ago

You don’t get it. Nothing “has” value — value is imputed on something by a person or persons. By itself no object “has” value.

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John Anonymous

3 years ago

Labor doesn’t exist. Labor is an action you undertake. You have to distinguish between thing that exist (objects, entities) and things that happen (processes, action, etc.). Only things that exist can be owned. And notice that labor doesn’t create things, it only rearranges stuff (which should already be owned first in order to do something with it).

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Matija Papec

3 years ago (edited)

Tell that to Martin Armstrong who was imprisoned by US government for denying to hand out his own mathematic market model. At the end he was released, but didn’t hand out anything and remained owner of his model. It must be that government saw value in his ideas and was prepared to take them by force. I have actually no problem with concept of owning of only what exist, but wouldn’t limit that only to steel and bricks.

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John Anonymous

3 years ago

Matija Papec What does that have to do with anything? I’m not advocating for full disclosure here. Anti-IP does not mean we have to share information. But once it out there, other people can use it too, obviously.

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Matija Papec

3 years ago

I’ve referred to “Only things that exist can be owned.” If I understand you correctly, Microsoft and Apple can sell one copy of their OS, and after that since it is “out there”, neither can object to free use by other people.

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John Anonymous

3 years ago

Yes, that’s exactly the case. And what’s the problem with that? Even with giants like MicroSoft and Apple, people still make money with Linux OS and OpenOffice. Nothing wrong with open source. Maybe they wouldn’t be as rich as they are, but that doesn’t mean the ICT world of today would be a lot different. Besides, didn’t “steal” MicroSoft a lot of ideas stuff from Apple? Something with windows? Copying is not theft!

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Matija Papec

3 years ago

This is all far stretched; would you release Windows 1.0 up to 10.0 knowing that you will sold only one copy per release? Open source or not, every piece of software is already accompanied by licence which gives certain rights on usage. If one doesn’t feel comfortable with given licence it should *feel free to go somewhere else*. Sheer fact that licence can be violated, doesn’t imply you have any right to do so. Am I wrong if I assume you’re exercising Pirate Party politics?

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John Anonymous

3 years ago

First of all, you don’t know that they would only sell one copy. Lots of people will still like to run the official release, and may pay for it in combination with a service contract. Secondly, I personally don’t care whether of not Apple or MicroSoft will release new versions. If they don’t, open source software will make sure innovation will continue with regard to operating systems. Just look at the succes of wikipedia. I’m not affiliated in any way with Pirate Party politics, but I certainly don’t care about the fact that there are laws that say I can’t download creative content using bittorrent.

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Matija Papec

3 years ago

The point is they would sell significantly less copies which in turn hinders further improvement and development of a product. Further, if market has a say, it voted for Windows as it dominates desktop market share despite of a free (as in beer) linux alternative (it looks like IP brings value to the market). Sure you can download and use software regardless of it’s license, but of course that would not be possible in case where author has control over distribution (as author would not give his software for free).

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John Anonymous

3 years ago

“The point is they would sell significantly less copies which in turn hinders further improvement and development of a product.” Sorry, I don’t care. And it may hinder quick further improvement and development of Windows, but it would open up the market for new startups. Currently it is almost impossible to create a new OS, because you will be sued for infringement of large amounts of patents.

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Matija Papec

3 years ago

Linux is already there, no one is suing it, and desktop market prefers IP operating system. My question was, would you create a OS for which you know in advance that required investment/development won’t necessarily be covered due to unrestricted distribution of product.

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John Anonymous

3 years ago (edited)

“desktop market prefers IP operating system” Which were developed at a time that there was far less IP in software technology. The world of software used to be one of the least regulated when it all started. And Linux din’t know in advance. Wikipedia didn’t know in advance. Nobody knows these things in advance. It’s called entrepreneurship. But even if we did know, and new OS-system wouldn’t be developed, that is still not an argument. There is no universal right to new OS-systems. But of course, without IP, there would be OS-system, obviously.