All (Intellectual) Property is Theft

According to anarchist Pierre-Joseph Proudhon, all “property is theft.” He railed against the iniquities of the rich-poor divide, recognizing that property depends on power – the power to take and to keep; but Proudhon missed the point. Property is not ‘the thing that somebody owns’; rather it is a government-sanctioned monopoly right, legally enforced through courts. Governments can seize assets on a whim, simply by passing laws reclaiming ownership – they already do this piecemeal through the tax system and by inflating the currency.

However, they cannot behave arbitrarily. Excessive seizure will inhibit individuals from becoming involved in the economic system, undermining its viability – a harsh lesson eventually learned by every socialist state. Only when people believe that they can hold onto private property will they use their efforts and assets to purchase goods, and thereby keep the economy going.

A self-sustaining economic system needs more and more objects turned into property for sale. This explains the vast expansion of Intellectual Property Rights over the past decade. However, some people see ‘Intellectual Property’ as theft of their longstanding rights. For example, they believe that all government-funded research and development is public property – they should not pay twice to use it. They want all publicly funded property freely available to the public.

Common rights about recording, sharing and manipulating music, which the record buying public have taken for granted for decades, are now being eroded. Those who legally buy music and movies have its usage severely constrained: they can neither share it, nor even take it to another ‘region’; their PCs are being externally searched; they have no legal right to copy it onto an MP3 player; even the number of devices where they can play it is restricted. Meanwhile those with pirated CDs/DVDs can do what they like – although they do face the full force of the law in the highly unlikely event of being caught.

Enclosing the Commons

Thomas Jefferson believed that intellectual property should not be ring-fenced; ‘cultural artifacts’ should spread freely for the good of mankind. Clearly science would never have developed under an IPR regime. Scientific research is being stifled by IPRs, and some scientists are so concerned that they have launched the external page Science Commons initiative, seeking “open access to scholarly literature and data," and trying to "identify[ ] and eas[e] key barriers to the movement of information, tools and data throughout the scientific research cycle." According to these scientists, "[t ]he hope is to combine their publishing, data, and licensing approaches, in order to develop solutions for a truly integrated and streamlined research process.”

In 1955 Jonas Salk produced the first inactive polio vaccine. When asked why he hadn’t patented the vaccine, he replied: “That would be like patenting the sun.” Science has changed over those fifty years! Nowadays the merest discovery is patented/copyrighted with inventors rushing to patent far too soon, particularly if another group is working on the same problem. This was a major cause of the Fleischmann and Pons ‘cold fusion’ fiasco of 1989.

Nevertheless, big IPR owners pressurize governments to protect their rights. The problem is that IPRs are negative rights – they prohibit rather than permit. Some call them government-condoned anti-trust and anti-competitive, with a cartel of favored users given an unfair advantage. Anyone who wants to adapt a protected work without permission is barred, or at a disadvantage at the very least. In general, there is no requirement for the rights' holders to exploit their property. They can buy up new competitor patents, kill off the competition and block development, all the while continuing to profit from old patents. “Patent trolls” collect an IPR portfolio and then sue all and sundry for infringements, while doing little to develop the inventions. That is why some enlightened countries require that inventions be exploited and threaten to revoke patents, awarding licenses to others wishing to exploit the inventions.

Those willing to pay, find some artefacts, such as films, have a bundle of property rights attached that are linked to multiple owners. They are required to obtain the permission of each and every rights’ holder before they may legally embark on the production of any derivative work. Rights may become so fragmented that it is impossible, or at the very least expensive and time consuming, to track down all the holders. Mercer and Kinsella observed IPRs “are a burden to marketplace transactions, and discourage business startups.”

Far from benefitting innovation, IPR legislation often achieves the exact opposite. Innovation isn’t a single event, rather an ongoing process of applications derived from the initial breakthrough. Nobel Laureate Herbert Kroemer explains this in his Lemma of New Technology: “The principal applications of any sufficiently new and innovative technology always have been – and will continue to be – applications created by that technology.” Most applications are not developments by the original creator but by others who build a whole raft of derivative applications way beyond the imagination of that originator. By banning derivative works, the potential of an invention is limited, and all future revenue streams are cut off.

The sheet music industry objected to the phonograph, which grew into a much bigger industry. The owners of phonograph IPRs originally objected to the radio, which helped boost record sales and created a massive royalty stream. Radio objected to tape recorders. TV and film also objected to video taping – and yet today video sales are a substantial proportion of their income. Arguably, the VHS tape spawned the whole home electronics industry. Would e-commerce have happened under today’s IPR restrictions? For it was not created by the main technology players of the time but by consumers who experimented with business opportunities. Such was the genesis of Amazon, Google, Facebook, Skype and many others of today’s giants.

Despite this, the relevance of IPR to the economy is undeniable, as is the increasing determination with which rights are being enforced. There is much talk of the negative impact of Internet ‘piracy.’ Works can now be digitized, copied and given away ad nauseum. Copyright owners claim to have suffered serious financial loss from wholesale downloading of files. Rights-holders have gone to government for protection and recompense.

The threat of criminalizing anyone who dares ‘experiment’ with intellectual property will intimidate most people into the silence of self-censorship. Ultimately ideas themselves can no longer be freely expressed because every form of expression will be owned by someone. No one will paint sunflowers because van Gogh’s lawyers will have copyrighted ‘the idea of painting sunflowers!’ If the ‘if then else’ clause had been patented, there would have been no software industry. Impossible? This nightmare is too close for comfort as companies attempt to copyright business processes. Even yoga techniques have been copyrighted; will Indians agree to royalty payments?

The interests of the few versus the interests of the many

The current IPR system is a complexity of rights, none of which make any intuitive sense. It isn’t clear who has which rights to what works, what the exceptions are, when they apply or what their scope and ambit are. What is meant by ‘substantial use,’ either qualitatively or quantitatively? Why is there a 'one price fits all' regime – just to convenience the owners? Why should I be blocked from non-commercial experimentation? This all vastly increases the transaction costs to business.

There is a total lack of flexible, customizable IPR solutions and of products that suit the needs of the producers of derivative content. As a result the IPR owners lose out. For there is a huge pot of money at 'the bottom of the pyramid,' with people willing to pay a ‘fair price’ for using images and music, but only if the pricing regimes are designed to suit small-scale players. At the moment only the big boys can play; IPR is in effect the instrument of oligarchy.

I wanted to play three music clips at a presentation in Las Vegas. The American Society of Composers, Authors and Publishers took two months to respond to my queries. A quote of $500 arrived four days before the conference. For that sum I could play the music for two whole days – I wanted 44 seconds! The conference had already paid for playing music between presentations, and the hotel already had a music license. I also wanted to use a Time Magazine cover showing Jonas Salk – I was quoted hundreds of dollars for an annual license. The conference organizers offered to pay, but my response was “over my dead body.” I gave the talk without music, and with a copyright-free image of Salk downloaded from the web.

Access to IP material is crucial for presentations, applications, research and innovation. If such access is impossible or exorbitant, then new markets will not appear, innovation and creativity will diminish and business will go elsewhere. Like all forms of prohibition – because, like it or not, that’s what we have here – the result will be an exodus to alternative markets, boycotting, illegal use, or – far worse – the involvement of organized criminal gangs.

Instead of bleating on about their losses through piracy, IPR owners should look for profits in new markets. Furthermore piracy is far less of a problem than smuggling. As the owners of film copyrights successfully threaten downloaders, the scope for organized gangs selling cut-price DVDs increases. The highly effective illegal economy can only be strengthened with each new raft of IPR regulations, and it will cause far more damage to the legal economy than the loss of some film royalties.

The objective should be a reduction of the friction caused by senseless regulations fixated on moribund direct exchange business models. Instead, policymakers should focus on producing policies that allow new business models to be produced, based on open access for experimentation and the sharing of digital content.

Instead we have IPR, a job creation scheme for lawyers.