1. 1 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Rethinking Intellectual Property: History, Theory,
and Economics: PRELIMINARY INFORMATION► _
► _
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2. 2 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Stephan Kinsella
C4SIF.org, Mises.org
Mises Academy
November 29, 2010
Rethinking Intellectual Property: History,
Theory, and Economics
Lecture 4: IP Statutes and Treaties;
Overview of Justifications for IP;
Property, Scarcity, and Ideas
3. 3 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Course news
► Optional mid-term test to be posted shortly
4. 4 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Outrages of the Week
► See recent C4SIF.org posts
► Hershey Claims Ownership of Orange, Brown and Tan Candy Wrappi
(trademark)
► UK High Court Ruling Implies Headlines Are Copyright
Some German publishers have lobbied for this too
► Universities attacking high schools over trademarks (Gators)
► EFF rescues ASL Ally’s sign-language YouTube music videos
videos that interpret song lyrics in American Sign Language for deaf and
hard-of-hearing people yanked after complaints by Warner and Universal
► Gibson sues WowWee, retailers over Paper Jamz toy guitars; would r
Trademark
5. 5 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Outrages of the Week
► Judge Bars ‘Fair Use’ Defense in Xbox Modding Trial
DMCA
► Going Toe To Toe With Medical Device Giants
Forbes: about the plight of smaller companies who can be bankrupted by
patent lawsuits and threats from the medical device giants
► Jury Rules SAP Owes Oracle $1.3 Billion
Copyright
► Hollywood Backs State Thuggery Over Free Speech
COICA
► Copywrong: copyright as censorship
2005 LRC post: a grocery store in Canada mistakenly sells 14 copies of the
new Harry Potter book a few days before its official release this Saturday,
July 16. So last week a British Columbia Supreme Court judge “ordered
customers not to talk about the book, copy it, sell it or even read it
before it is officially released at 12:01 a.m. July 16.”
6. 6 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Other News
► See recent C4SIF.org posts
► The Effects of Patent and Copyright on Hollywood Movies
► Doctorow: What do we want copyright to do?
“creators (and, notably, their industrial investors) are notoriously
resistant to new media. The composers damned the record companies as
pirates; the record labels damned the radio for its piracy; broadcasters
vilified the cable companies for taking their signals; cable companies
fought the VCR for its recording “theft.” Big entertainment tried to kill FM
radio, TV remote controls (which made it easy to switch away from
adverts), jukeboxes, and so on, all the way back to the protestant
reformation’s fight over who got to read the Bible.”
► Copyright Troll Backs Down
7. 7 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Other News
► Patent Litigation Facts
$10 million: Cost to defend a high-stakes patent suit
$3.8 million: Median damages awarded in patent infringement cases
from 2001-07
482,871: Patent applications filed in 2009
191,927: Patents issued in 2009
2,700: Average number of patent-infringement lawsuits filed per year
$1,000: Hourly rate charged by top patent litigators
100: Average number of patent cases that go to trial each year
57%: Percentage of trials won by patent holders
34.6: Average number of months to secure a patent
► Ideas are Free: The Case Against Intellectual Property: or, How Liber
► Don’t Fall for False Copyright Claims
8. 8 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Where we left off…
► Overview of arguments for IP
Rights based (deontological, creation-based, natural law, principled)
Wealth-maximization (utilitarian, consequentialist)
9. 9 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Today’s Lecture
► Law Continued:
Photography
Key IP Statutes and Treaties
► Overview of Justifications for IP
► Property, Scarcity, and Ideas
the nature of property rights, role of scarcity, and the function of the
market
10. 10 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law Continued: Photography
► See Photography and the law (Wikipedia)
► The owner of the copyright in the photograph is the
photographer--the person who creates it
Watermarks
Amateur issues (printing etc.)
Copyright-protected works in the scene
► Music
► Sculptures
► Home videos—children dancing
11. 11 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law Continued: Key IP Statutes and Treaties
► Historically
1624: Statute of Monopolies 1623 (England): key patent statute
1710: Statute of Anne 1709 (England): key copyright statute
1691: South Carolina enacts first "general" patent law
► as distinguished from authorization to the Crown to make patent grants
12. 12 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law Continued: Key IP Statutes and Treaties
► Modern IP (US)
Patent: Constitution; Patent Act of 1790; Patent Act of 1952; now
Title 35, USC
► USPTO (Dept. of Commerce)
Copyright: Constitution; Copyright Act of 1790; now Title 17, USC
► Copyright Office (Library of Congress)
Trademark: state law, plus federal
► Lanham Act of 1946: Title 15, Ch. 22 of USC
► USPTO
Trade Secret: mostly state law
► Restatement (Second) of Torts §757 and Uniform Trade Secrets Act (UTSA)
(1979)
13. 13 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law: Key IP Statutes and Treaties (cont.)
► Modern IP Additions (US)
Copyright
► No Electronic Theft Act (NET Act) (1997)
criminal prosecution for copyright infringement
Up to five years in prison and up to $250,000 in fines.
► Sonny Bono Copyright Term Extension Act (CTEA) (1998)
Sonny Bono Act, or “Mickey Mouse Protection Act”
Extended copyright term by 20 years (life of author plus 70 years, or 95/120)
► Digital Millennium Copyright Act (DMCA) (1998)
criminalizes use of DRM anti-circumvention technology
Key “safe harbor” for OSPs and ISPs for copyright liability
► Online Copyright Infringement Liability Limitation Act ("OCILLA”)
DMCA added “Vessel Hull Design Protection Act”--protection for boat hull designs
14. 14 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law: Key IP Statutes and Treaties (cont.)
► Modern IP Additions (US)
Trademark: Antidilution
► Federal Trademark Dilution Act of 1995
Trademark Dilution Revision Act of 2006
Trade Secret
► Federal Economic Espionage Act of 1996 (18 U.S.C. § 1831–1839)
makes the theft or misappropriation of a trade secret a federal crime
► Major International Bodies
World Trade Organization (WTO)
► Organization for liberalizing international trade
World Intellectual Property Organisation (WIPO)
► UN agency for IP protection
15. 15 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law: Key IP Statutes and Treaties (cont.)
► IP Treaties
Paris Convention for the Protection of Industrial Property (1883)
► Permits patent filing date in first country to be relied on in others
Patent Cooperation Treaty (PCT) (1970)
► Unified procedure to file international or “PCT” applications can be filed
► Still examined separately and result in national or regional patents
Regional: European Patent Convention (EPC) of 1973
► European patents granted by European Patent Office not unitary
► Side by side with national patents
Berne Convention for the Protection of Literary and Artistic Works (1886)
and WIPO Copyright Treaty of 1996
► International standard for and recognition of copyright of other countries
16. 16 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law: Key IP Statutes and Treaties (cont.)
► IP Treaties
Madrid System
► international registration of trademarks
► administered by the International Bureau of WIPO
General Agreement on Tariffs and Trade (GATT)
► 1994 Uruguay Round covers IP
The Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS) is an international agreement administered by the WTO that sets
down minimum standards for many forms of intellectual property
regulation as applied to nationals of other WTO Members
17. 17 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Law: Key IP Statutes and Treaties (cont.)
► Pending IP Laws and Treaties
Anti-Counterfeiting Trade Agreement (ACTA)
► See http://c4sif.org/tag/acta/
► Proposed agreement for the purpose of establishing international standards
on intellectual property rights enforcement
► would create its own governing body outside existing international
institutions such as the WTO and WIPO
► Designed to protect copyright and patent (and trademark?)
► Copyright: Anti-circumvention prohibition as with DMCA
Combating Online Infringement and Counterfeits Act (COICA)
► See http://c4sif.org/tag/coica/
► Proposed in United States Senate
► allows the blocking the domain names of web sites accused of piracy
Agitation to add IP laws for fashion, database rights, etc.
18. 18 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Natural Law and Utilitarian: Overview (revisit)
► Utilitarian
To “maximize” incentives
► To innovate and produce new ideas
► To disclose ideas
“Necessary” for Innovation and Creation
► Obviously false
Other Problems
► Methodologically Incoherent (Austrian subjectivism and utility)
► Ethical problems
Implications:
► justify redistribution
► rape
19. 19 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Natural Law and Utilitarian: Overview (cont.)
► Utilitarian
Other Problems
► Evidence problems
Sincerity problems
should be against IP based on evidence
► Implications: taxpayer funded innovation prizes
Madison 1787
Russia 1834
Soviet Union 1931
Michael Polanyi 1944 (views on tacit knowledge and spontaneous order
influenced Hayek)
Recently: $80B medical innovation prize fund: Stiglitz, Bernie Sanders, Tabarrok
(libertarian)
20. 20 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Natural Law and Utilitarian: Overview
► Natural Law
Locke, Founding Fathers not on board
► Purely civil right
► State constitutions and laws used natural law to mask monopoly privilege
grants to special interests
Arbitrary scope and term
Geographic enforcement
Creationism and labor confusion
Inconsistency: mix with utilitarian rationales
► Rand, limited terms etc.
21. 21 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Property, Rights, Scarcity
► Why do we need property?
► Imagine Garden of Eden
No scarcity
No conflict
No need for production
No need for rationing
Property rights unnecessary
► Property rights meaningless
22. 22 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Property, Rights, Scarcity (cont.)
► “only because scarcity exists is there even a problem of
formulating moral laws; insofar as goods are superabundant
(“free” goods) no conflict over the use of goods is possible and
no action-coordination is needed. Hence, it follows that any
ethic, correctly conceived, must be formulated as a theory of
property, i.e., a theory of the assignment of rights of exclusive
control over scarce means. Because only then does it become
possible to avoid otherwise inescapable and unresolvable
conflict.” Hoppe, TSC, p.158n120
23. 23 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
The nature of property rights, role of scarcity, and
the function of the market
► We do have scarcity
► Implications of scarcity
Conflict
Exclusive use
► Nature of action: praxeology
Purposeful use of a (scarce) means to achieve a desired end or goal
Presuppose categories of action
► Subjective value
► Choice
► Demonstrated preference
► Causality
► Means and ends
► Opportunity cost
► Profit and loss
24. 24 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
The nature of property rights, role of scarcity, and
the function of the market
► Role of scarce resource in action
Means of action
► Role of knowledge
Guide to action
Enriches universe of ends and means
► Recipe/cake examples
► Role of property rights
Assign owners to scarce resources to permit productive and cooperative
use
► Spoon in cake example: need ownership (control)
Ideas are non-scarce
► No ownership needed
► Many can use same recipe
25. 25 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
The nature of property rights, role of scarcity, and
the function of the market
► Acquisition of knowledge
Accumulation of human knowledge
Informal and formal learning
Emulation on the market
► Key aspects of free market
Property rights permit competition
Property rights allow competition
► Competition benefits consumer
Competition requires emulation
► Iterative process
26. 26 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Goods, Scarce and Non-scarce
► Ideas, information, knowledge are non-scarce goods
Recipe, Idea, Tune, Image, Skill, Fire
► Scarce goods
Bagel, Factory, Shoes, People, Desk
► Scarce non-goods
Mud Pie, Poison Soup, Slug, Road Kill
► Non-scarce, non-goods
Bad Idea, Awful Sound, Gibberish Text
27. 27 | Rethinking IP – Lecture 4: IP Justifications; Property, Scarcity, Ideas Stephan Kinsella | Mises Academy 2010
Upcoming Topics…
► Market vs. scarcity
► Perversity of artificial scarcity of information and knowledge
► Diluting effect of new rights
Negative and positive rights
► Welfare rights as trespass
Four Freedoms
Inflation analogy
IP rights as positive right
► Redistribution of rights
► Recall origin in monopoly privilege and censorship
► The basis of libertarian rights and norms
Big topic