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Are Intellectual Property

Laws a Good Thing?

For those of you still insistent upon theposition that intellectual property does

foster innovation,

we challenge you to name even a

single case of a new industry

emerging as a result of the pro-

tection of existing patent laws.

A CHALLENGE TO

PUNDITS:

What?! Are you out of your mind?! you

might be thinking right now. Of course

intellectual property protection is a good

thing! It makes sure people have theincentive to profit from innovation,

doesnt it? Shouldnt we have control

over our own property?

These are perfectly valid responses, but you may

want to consider the case that copyright and patent

laws do not encourage further innovation and

industry growth. Rather, we are willing to argue

that IP laws have exactly the opposite effect.

Not only does IP stagnate progress, but it actually

infringes upon real (or scarce) property rights.

For more informaon on why copyright

and patent laws should be reconsidered,

please visit or consult:

Center for the Study of Innovave

Freedom (c4sif.org)

Against Intellectual Monopoly (A

highly recommended book availablefor free in PDF at

levine.sscnet.ucla.edu/general/

intellectual/againsinal.htm)

The Ludwig von Mises Instute

(mises.org)

Againstmonopoly.org

Some disclaimers...

trademarkTMAlthough copyrights and patents hold no placein a world of true property rights, trademark is

a separate issue. Consumers should be able to

know what products they are buying and from

whom they are buying them. If a company is

selling a watered-down version of Coca-Cola

and claiming that the product is genuine, then

that company should sll be held liable for

fraud. Trademark has played a role in keeping

fraudulent acvity at a minimum. However,

any eort toward legal reform of copyright and

patent law will need to consider how to limit

the use of trademark to prevent its use as a

substute for copyrights and patents.

Rights

to privacy should always be protected. In

the case of the ink pen that was replicated at the

snap of a nger, if the informaon regarding its

design had been taken in an instance oftrespass

to personal property, then of course, the replica-tor should be held liable for trespass but not for

the. Once that informaon is out there, its any-

bodys to do with as they please (e.g. Wikileaks)

and cannot be restuted as physical property

can. So, when a student is guilty of plagiarism,

she is not guilty of the, but only ofbreaking con-

tract with either the school or the teacher.

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Let us say that I have a sleek ink pen that I

designed myself and intend to profit from.

Now let us assume that simply by snapping

your fingers, you now have an exact replicaof that pen. If you have done nothing to

harm or reduce my own physical property,

then should you be held liable for damages?

Intellectual Property Stagnates

Innovation, Knowledge, & Growth

When there is no government-granted monopoly

in place over the producon or expression of

something, then the producer is now forced to

stay compeve by making improvements upon

the original object. If I put a book on the market

for $25 and it is not protected by copyright,

someone else might publish the same book for

$12. Instead of sing back and ling suit, I now

must either produce a higherquality book than

my competor or make it less expensive.

Intellectual Property Infringes

Upon Actual, Scarce Property

In effect, this is precisely what happens

when others reproduce (to a potentially

infinite extent) the original ideas of any

individual or group. The patent or copy-

right thus keeps others from doing what

they wish with their own physical prop-

erty (raw materials, machinery, etc.)

If you believe that you should be held liable

for damages, then you must believe that peo-

ple also own the value of their property.

However, if I buy an ounce of gold at a value

of $1400 today and then a week later, if the

market supply of gold has s ignificantly in-

creased (or has been replicated), should I

still be entitled to $1400 when I decide to sell

the gold?

What Happens in the Absence of

Intellectual Property?

The history of economic development is the story of

imitaon and incremental improvements upon those

imitaons. Eli Whitney did not invent the coon gin

he was one in a long line of innovators who improved

upon ideas that came before him.

Despite their own modest contribuon to the devel-

opment of the airplane, in 1906, the Wright brothers

managed to obtain a patent covering virtually any-

thing resembling an airplane. While refusing to de-

vote any eort to selling their own airplane, they did

invest an enormous amount of eort in legal acons

to prevent others from selling airplanes. Fortunately

for the history of aviaon, the Wright brothers had

lile legal clout in France, where airplane develop-

ment began in earnest about 1907. By the me the

United States entered WWI, French planes were used

instead of American ones.

During the period of James Was patents on thesteam-powered engine, the UK added about 750

horsepower of steam engines per year. In the thirty

years aer Was patents had expired, addional

horsepower was added at a rate of more than 4,000

per year. Moreover, the fuel eciency of steam en-

gines changed lile during the period of Was patent;

however, between 1810 and 1835 (aer the patents

expiraon) it is esmated to have increased by a factor

of ve.

The fashion industry is an example of an industry

funconing without much IP protecon. Enormous

innovaon occurs every three to six months, with a

few top designers racing to set the standards that

will be adopted by the wealthy rst and widely imi-

tated by the mass producers of clothing for every-

one else shortly aer. As one example among many

in the industry, the Spanish clothing company Zara

and its many imitators show that the original inno-

vator keeps innovang and keeps geng richer

while everyone benets.

Free soware licenses allow most open-source so-

ware to be wrien by large and loosely organized

teams of programmers, each contribung small piec-

es of code and all beneng from shared infor-

maon and ideas. Similar open-source success sto-

ries are in the American automobile industry, the

Swiss and German chemical industries, the oxygen

steelmaking industries, the Italian texle and fashion

industries, the Swiss watch industry, the Czech andVenean glass industries, and so on and so forth.