Against Monopoly

defending the right to innovate

Intellectual Property

Monopoly corrupts. Absolute monopoly corrupts absolutely.

Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.

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Victoria Espinel

So, now we even have an IP-Czar (how about "Czarina", at least? Ah, the foreign languages ...).

Good, or bad? No idea. I looked around the web and could not figure out why Ms. Espinel is the appropriate person for this job. Visiting Assistant Professor at George Mason and Assistant U.S. Trade Representative for Intellectual Property is not exactly a lot, but one never knows ... Oh, right, she is also the president of some lobbying group working to empower Americans to obtain the full benefit of their creativity and ingenuity. That sounds like a program, indeed.

Anyone out there has any idea about her views, writings, previous actions taken, professional experience and knowledge of the matter?

Mine is just plain curiosity: a Czarina is supposed to be a very powerful person, after all, so it would be nice to have some track-record somewhere.

A reading list and a quotation

Mike Masnick at Techdirt has put together a nice reading list on "intellectual property. link here. For those of us who were brought up brain washed on the constitutional sanctity of patents and copyrights, and have since learned better, it is cheering to know that there is this much available in print.

His site also has a nice quote from one of the great critics and professors of English literature. In a word, memorable:

During the course of this long volume I have undoubtedly plagiarized from many sources--to use the ugly term that did not bother Shakespeare's age. I doubt whether any criticism or cultural history has ever been written without such plagiary, which inevitably results from assimilating the contributions of your countless fellow-workers, past and present. The true function of scholarship as a society is not to stake out claims on which others must not trespass, but to provide a community of knowledge in which others may share." -F.O. Matthiessen, American Renaissance 1941 link here

An Anti-Patent Patent Attorney? Oh my Gawd!

A friend of mine was asked by a patent attorney he knows how I can be a patent attorney and against IP. The assumptions behind the question are odd; here was my reply.

First, when there are tax laws, there is a need for tax lawyers. When there is cancer, we need cancer doctors. There is nothing wrong with advising people or companies as to how to navigate the positive law in society.

Second, just as having a gun is not a crime since the gun can be used for good or evil, so having a patent is not in an of itself evil--there are both legitimate and illegitimate uses of them. For example if I am sued for patent infringement I will use my patents in a countersuit. In fact most patents are held for defensive purposes--to ward off suits.

Third, it could be that being a patent lawyer has helped me to see why patent law is unjustified.

Fourth, this kind of assumption reminds me of what annoys me about criticisms by liberals and blacks of any black such as Clarence Thomas who opposes the standard liberal crap on affirmative action etc. It's as if they think the unwilling "beneficiary" of their liberal policies should also shut up about it and toe the line. Do the advocates of IP want those most able to oppose it to be muzzled? Can only those ignorant of how IP works complain about it?

Fifth, I have yet to see a sincere or informed pro-patent opinion by a single patent attorney. The few I know who are cynics like me are resigned to it; the patent lawyers who promote the system invariably repeat the tired and pathetic arguments in favor of it. I have yet to find a single patent lawyer who promotes IP who has a sincere or serious argument in favor of it. (For more on this see There's No Such Thing as a Free Patent, Yet Another Study Finds Patents Do Not Encourage Innovation, Patent Attorney Admission, Miracle--An Honest Patent Attorney!) I don't mind patent attorneys doing their jobs, to put bread on the table. But when they start trying to justify their profession by repeating the bankrupt arguments of utilitarians and statists, they open themselves to criticism.

Finally, these pieces of mine might be of interest (available also here): The Morality of Acquiring and Enforcing Patents and Letter to an Anonymous Patent Attorney.

IP for crafts comes to Vietnam

The fascination with declaring intellectual efforts as property begins to captivate the developing world. This story comes from Vietnam where "Viet Nam has 2,790 traditional craft villages nationwide, according to the Viet Nam Association of Craft Villages link here. But the number of craft villages which have registered their industrial property rights, I can count on two hands," said association deputy chairman Luu Duy Dan. Fewer "than 100 out of the 800 specialties are protected by intellectual property rights laws like trademark protection, collective brand names and geographical indication protection."

Unfortunately, the Vietnamese government doesn't seem to have thought about how IP has come to be and whether it serves legitimate public interests. Thus, the monopolists continue to try to spread their tentacles.

From Sweden's Pirate Party

Hi over there!

I guess with the speed of news at internet you already know what happend - we got 7.1% of the total result and probably two mandates when the Lissabon treaty goes into effect.

We did it. Now it´s time to start the race for the national parliament - we need 4 % next year to get in. But with the current result - we will have the finances and the organisation in place to get that done. That I am sure of.

Sincerely yours


Kevin Carson on Intellectual "Property"

I highly recommend Kevin Carson's "'Intellectual Property': A Libertarian Critique," published by the Center for a Stateless Society. It is first-rate. So-called intellectual property is not just about rock bands "protecting" recordings. It's about big dinosaur corporations attempting to subordinate people through the control of ideas. This big issue will only get bigger in the near future, and much is at stake. Whether one realizes it or not, defense of patents and copyrights puts one on the side of the opponents of liberty.

Looking good for the pirate party

via Mika Sjoeman the latest polling numbers. Check it for the Swedish election results in English.

"Secret intellectual property treaty could profoundly change life on the Internet"

So argues David Bollier in the post Et tu, Obama? Open Government Suffers Another Blow. An excerpt:

A government cannot be held accountable if there is a cloak of secrecy around its core deliberations and citizens are excluded from the process. ... So what gives with the Obama administration's refusal to share the most basic documents about a pending intellectual property treaty that are widely available among corporate lobbyists in Europe, Japan and the United States?

The Anti-Counterfeiting Trade Agreement, or ACTA, may sound arcane, and certainly its corporate champions must wish to make it seem boring and obscure. But in fact, the misleadingly named treaty could dramatically alter the Internet by allowing the film, music, publishing and other industries to aggressively enforce their IP rights, as they broadly construe them, at the expense of citizens, consumers and creators. All this would be achieved through secret deliberations an international version of the smoke-filled room: another brazen disenfranchisement of citizens and trampling of democratic norms.

No official version of the proposed treaty has been released, but it is known that it seeks to set forth standards for enforcing cases of alleged copyright and patent infringement. The treaty also seeks to provide legal authority for the surveillance of Internet file transfers and searches of personal property. Read more about ACTA here and here.

[Cross-posted at Mises blog]

Ludwig von Mises on Intellectual Property

Some here might be interested in the remarks on IP by the greatest economist of all time (though Boldrin and Levine will no doubt disagree with this characterization!), Mises:

In this comment on a post here, I was accused of hiding or avoiding mention of one of Mises's comments about copyrights and patents. I suppose the commentor was unaware of my extensive quotes of Mises in this comment on another thread, which quoted a large deal of Mises's remarks on IP, including the one in question. So much for suppression. Since this extensive comment is buried on a thread, I reprint it below as a standalone post.

As I noted in Against Intellectual Property (n. 38), "Mises expressed no opinion on the issue, merely drawing the economic implications from the presence or absence of such laws."

Here are Mises's words:

The External Economies of Intellectual Creation

The extreme case of external economies is shown in the "production" of the intellectual groundwork of every kind of processing and constructing. The characteristic mark of formulas, i.e., the mental devices directing the technological procedures, is the inexhaustibility of the services they render. These services are consequently not scarce, and there is no need to economize their employment. Those considerations that resulted in the establishment of the institution of private ownership of economic goods did not refer to them. They remained outside the sphere of private property not because they are immaterial, intangible, and impalpable, but because their serviceableness cannot be exhausted.

People began to realize only later that this state of affairs has its drawbacks too. It places the producers of such formulas--especially the inventors of technological procedures and authors and composers--in a peculiar position. They are burdened with the cost of production, while the services of the product they have created can be gratuitously enjoyed by everybody. What they produce is for them entirely or almost entirely external economies.

If there are neither copyrights nor patents, the inventors and authors are in the position of an entrepreneur. They have a temporary advantage as against other people. As they start sooner in utilizing their invention or their manuscript themselves or in making it available for use to other people (manufacturers or publishers), they have the chance to earn profits in the time interval until everybody can likewise utilize it. As soon as the invention or the content of the book are publicly known, they become "free goods" and the inventor or author has only his glory.

The problem involved has nothing to do with the activities of the creative genius. These pioneers and originators of things unheard of do not produce and work in the sense in which these terms are employed in dealing with the affairs of other people. They do not let themselves be influenced by the response their work meets on the part of their contemporaries. They do not wait for encouragement.[13]

It is different with the broad class of professional intellectuals whose services society cannot do without. We may disregard the problem of second-rate authors of poems, fiction, and plays and second-rate composers and need not inquire whether it would be a serious disadvantage for mankind to lack the products of their efforts. But it is obvious that handing down knowledge to the rising generation and [p. 662] familiarizing the acting individuals with the amount of knowledge they need for the realization of their plans require textbooks, manuals, handbooks, and other nonfiction works. It is unlikely that people would undertake the laborious task of writing such publications if everyone were free to reproduce them. This is still more manifest in the field of technological invention and discovery. The extensive experimentation necessary for such achievements is often very expensive. It is very probable that technological progress would be seriously retarded if, for the inventor and for those who defray the expenses incurred by his experimentation, the results obtained were nothing but external economies.

Patents and copyrights are results of the legal evolution of the last centuries. Their place in the traditional body of property rights is still controversial. People look askance at them and deem them irregular. They are considered privileges, a vestige of the rudimentary period of their evolution when legal protection was accorded to authors and investors only by virtue of an exceptional privilege granted by the authorities. They are suspect, as they are lucrative only if they make it possible to sell at monopoly prices. [14]. Moreover, the fairness of patent laws is contested on the ground that they reward only those who put the finishing touch leading to practical utilization of achievements of many predecessors. these precursors go empty-handed although their main contribution to the final result was often much more weighty than that of the patentee.

It is beyond the scope of catallactics to enter into an examination of the arguments brought forward for and against the institution of copyrights and patents. It has merely to stress the point that this is a problem of delimitation of property rights and that with the abolition of patents and copyrights authors and inventors would for the most part be producers of external economies.

and here:

The Creative Genius

Far above the millions that come and pass away tower the pioneers, the men whose deeds and ideas cut out new paths for mankind. For the pioneering genius [12] to create is the essence of life. To live means for him to create.

The activities of these prodigious men cannot be fully subsumed under the praxeological concept of labor. They are not labor because they are for the genius not means, but ends in themselves. He lives in creating and inventing. For him there is not leisure, only intermissions of temporary sterility and frustration. His incentive is not the desire to bring about a result, but the act of producing it. The accomplishment gratifies him neither mediately nor immediately. It does not gratify him mediately because his fellow men at best are unconcerned about it, more often even greet it with taunts, sneers, and persecution. Many a genius could have used his gifts to render his life agreeable and joyful; he did not even consider such a possibility and chose the thorny path without hesitation. The genius wants to accomplish what he considers his mission, even if he knows that he moves toward his own disaster.

Neither does the genius derive immediate gratification from his creative activities. Creating is for him agony and torment, a ceaseless excruciating struggle against internal and external obstacles; it consumes and crushes him. The Austrian poet Grillparzer has depicted this in a touching poem "Farewell to Gastein." [13] We may assume that in writing it he thought not only of his own sorrows and tribulations but also of the greater sufferings of a much greater man, of Beethoven, whose fate resembled his own and whom he understood, through devoted affection and sympathetic appreciation, better than any other of his contemporaries. Nietzsche compared himself to the flame that insatiably consumes and destroys itself.[14] Such agonies are phenomena which have nothing in common with the connotations generally attached to the notions of work and labor, production and success, breadwinning and enjoyment of life.

The achievements of the creative innovator, his thoughts and theories, his poems, paintings, and compositions, cannot be classified praxeologically as products of labor. They are not the outcome of [p. 140] the employment of labor which could have been devoted to the production of other amenities for the "production" of a masterpiece of philosophy, art, or literature. Thinkers, poets, and artists are sometimes unfit to accomplish any other work. At any rate, the time and toil which they devote to creative activities are not withheld from employment for other purposes. Conditions may sometimes doom to sterility a man who would have had the power to bring forth things unheard of; they may leave him no alternative other than to die from starvation or to use all his forces in the struggle for mere physical survival. But if the genius succeeds in achieving his goals, nobody but himself pays the "costs" incurred. Goethe was perhaps in some respects hampered by his functions at the court of Weimar. But certainly he would not have accomplished more in his official duties as minister of state, theater manager, and administrator of mines if he had not written his plays, poems, and novels.

and here:

The special conditions and circumstances required for the emergence of monopoly prices and their catallactic features are: ... 11. The monopolized good by whose partial withholding from the market the monopoly prices are made to prevail can be either a good of the lowest order or a good of a higher order, a factor of production. It may consist in the control of the technological knowledge required for production, the "recipe." Such recipes are as a rule free goods as their ability to produce definite effects is unlimited. They can become economic goods only if they are monopolized and their use is restricted. Any price paid for the services rendered by a recipe is always a monopoly price. It is immaterial whether the restriction of a recipe's use is made possible by institutional conditions--such as patents and copyright laws--or by the fact that a formula is kept secret and other people fail to guess it.

The complementary factor of production the monopolization of which can result in the establishment of monopoly prices may also consist in a man's opportunity to make his cooperation in the production of a good known to consumers who attribute to this cooperation a special significance. This opportunity may be given either by the nature of the commodities or services in question or by institutional provisions such as protection of trademarks. The reasons why the consumers value the contribution of a man or a firm so highly are manifold. They may be: special confidence placed on the individual or firm concerned on account of previous experience[15]; merely baseless prejudice or error; snobbishness; magic or metaphysical prepossessions whose groundlessness is ridiculed by more reasonable people. A drug marked by a trademark may not differ in its chemical structure and its physiological efficacy from other compounds not marked with the same label. However, if the buyers attach a special significance to this label and are ready to pay higher prices for the [p. 365] product marked with it, the seller can, provided the configuration of demand is propitious, reap monopoly prices.

The monopoly which enables the monopolist to restrict the amount offered without counteraction on the part of other people can consist in the greater productivity of a factor which he has at his disposal as against the lower productivity of the corresponding factor at the disposal of his potential competitors. If the margin between the higher productivity of his supply of the monopolized factor and that of his potential competitors is broad enough for the emergence of a monopoly price, a situation results which we may call margin monopoly[16].

... In the long run such a national cartel cannot preserve its monopolistic position if entrance into its branch of production is free to newcomers. The monopolized factor the services of which the cartel restricts (as far as the domestic market is concerned) for the sake of monopoly prices is a geographical condition which can easily be duplicated by every new investor who establishes a new plant within the borders of Atlantis. Under modern industrial conditions, the characteristic feature of which is steady technological progress, the latest plant will as a rule be more efficient than the older plants and produce at lower average costs. The incentive to prospective newcomers is therefore twofold. It consists not only in the monopoly gain of the cartel members, but also in the possibility of outstripping them by lower costs of production.

Here again institutions come to the aid of the old firms that form the cartel. The patents give them a legal monopoly which nobody may infringe. Of course, only some of their production processes may be protected by patents. But a competitor who is prevented from resorting to these processes and to the production of the articles concerned may be handicapped in such a serious way that he cannot consider entrance into the field of the cartelized industry.

The owner of a patent enjoys a legal monopoly which, other conditions being propitious, can be used for the attainment of monopoly prices. Beyond the field covered by the patent itself a patent may render auxiliary services in the establishment and preservation of margin monopoly where the primary institutional conditions for the emergence of such a monopoly prevail.

and here:

Another popular fallacy refers to the alleged suppression of useful patents. A patent is a legal monopoly granted for a limited number of years to the inventor of a new contrivance. At this point we are not concerned with the question whether or not it is a good policy to grant such exclusive privileges to inventors.[14] We have to deal only with the assertion that "big business" misuses the patent system to withhold from the public benefits it could derive from technological improvement.

In granting a patent to an inventor the authorities do not investigate the invention's economic significance. They are concerned merely with the priority of the idea and limit their examination to technological problems. They deal with the same impartial scrupulousness with an invention which revolutionizes a whole industry and with some trifling gadget, the uselessness of which is obvious. Thus patent protection is provided to a vast number of quite worthless inventions. Their authors are ready to overrate the importance of their contribution to the progress of technological knowledge and build exaggerated hopes upon the material gain it could bring them. Disappointed, they grumble about the absurdity of an economic system that deprives the people of the benefit of technological progress.

and here:

The convincing power of the productivity argument is in fact so irresistible that the advocates of socialism were forced to abandon their old tactics and to resort to new methods. They are eager to divert attention from the productivity issue by throwing into relief the monopoly problem. All contemporary socialist manifestoes expatiate on monopoly power. Statesmen and professors try to outdo one another in depicting the evils of monopoly. Our age is called the age of monopoly capitalism. The foremost argument advanced today in favor of socialism is the reference to monopoly.

Now, it is true that the emergence of monopoly prices (not of monopoly as such without monopoly prices) creates a discrepancy between the interests of the monopolist and those of the consumers. The monopolist does not employ the monopolized good according to the wishes of the consumers. As far as there are monopoly prices, the interests of the monopolists take precedence over those of the public and the democracy of the market is restricted. with regard to monopoly prices there is not harmony, but conflict of interests.

It is possible to contest these statements with regard to the monopoly prices received in the sale of articles under patents and copyrights. One may argue that in the absence of patent and copyright legislation these books, compositions, and technological innovations would never have come into existence. The public pays monopoly prices for things it would not have enjoyed at all under competitive prices. However, we may fairly disregard this issue. It has little to do with the great monopoly controversy of our day. When people deal with the evils of monopoly, they imply that there prevails within the unhampered [p. 681] market economy a general and inevitable tendency toward the substitution of monopoly prices for competitive prices. This is, they say, a characteristic mark of "mature" or "late" capitalism. Whatever conditions may have been in the earlier stages of capitalist evolution and whatever one may think about the validity of the classical economists' statements concerning the harmony of the rightly understood interests, today there is no longer any question of such a harmony.

Scribd Version of Against Intellectual Property

I love Scribd--what a cool new service for online books.

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