What about patents?

[synapz]

I admit I am a bit nervous focusing on these issues when there are "more important" things going on (war, imprisonment, taxation), but maybe everyone needs to focus on their own thing. Anyway, I'd like to set the record straight about what I feel is the "proper" (hard to be more divisive than that!) libertarian view towards patents, copyrights, and all other forms of "intellectual property".

This all comes down to the non-aggression axiom (like everything else in the libertarian philosophy) - "Do not use aggressive force," or, "Only the use of aggressive force is a crime." This means that you may not use force against another person except in self-defense, which is clearly not a use of aggressive force. Note here that the libertarian includes the property of an individual as a potential object of this force, and so may rightfully be protected.

In addition, the libertarian defines property as that natural resource that is collected freely (without the use of force) and changed into something through the labor of the individual who now owns it. This could be ore that is refined into metal, or even just the ore itself, as it has been altered from its natural state by the one who collected it.

Now, let's examine a case of "intellectual property infringement" in this light.

Sam invents the hammer. Sam builds and sells his hammer to Bob. Joe has witnessed this event and decides he can build a hammer better, faster, or just more of the same to reach a wider market that Sam has not managed to reach. Joe builds many hammers and begins to sell them. Sam is incensed that Joe would steal his idea, and accuses him of infringing upon his intellectual property.

But Joe has used no force against Sam. Neither has he stolen any genuine property of Sam's. In fact, Joe has done no wrong; he has attempted only to create more wealth in the market.

Now suppose Sam sees Joe selling a hammer to Bob. He is so angry that he shoots Joe. But what has happened here? Joe and Bob are engaging in mutually voluntary trade, a cornerstone of the free market. Sam is inhibiting the free market, not promoting it through his invention.

So, after considering core libertarian principles, I would conclude that IP is an unethical farce. Whether or not this results in a better or worse market for consumers is irrelevant to me at this point; I want the right thing to be done, I don't want some better market that comes at the cost of liberty. So when I go on to explain how Sam could make a pretty penny from his invention without indulging in unethical constructs, I want you to understand that ultimately, this is irrelevant. IP would still be wrong with or without this explanation. The ends do not justify the means.

So, back to Sam...

Sam invents the hammer. He realizes that he has a great idea, but that it would be very difficult for him to produce very many hammers and sell them at a profit. He does, however, know a fellow named Joe who could produce hammers quite easily. Sam talks to Joe and tells him that he has a splendid idea, and that he will share it with him under contract to receive a portion of the profits Joe yields from the idea, should he ever use it. Joe agrees, provided Sam doesn't sell his idea to anyone else before Joe has the opportunity to introduce them into the market. They agree, Sam tells Joe about the hammer, Joe builds many hammers, and sells them to the Bobs of the world.

Sam probably does not make as much money as he could have under an IP monopoly. He does get rewarded handsomely for his idea, however, along with Joe. In all, I would deem this result far more materially fair to everyone involved, all the way down to the consumer. I don't think Sam should be living the high life for the next 17 years because he monopolized the idea of the hammer.

You see, this is just one more case when doing the right thing leads to good results. The problem is that we cannot always foresee that things will indeed be better in the future when we do the right thing. Most of us, for example, admit that things will probably be better in the future if drugs are legalized. Bust most people think doom and gloom when they consider such a thing. The point is, it doesn't matter what you fear happening because of doing the right thing, what matters is that you do the right thing. This is what separates true libertarians from "utilitarian libertarians", in my humble opinion. True libertarians will never believe that the ends justify the means. They will always claim that doing the right thing is, in fact, the right thing to do. It just so happens to turn out that this also leads to the best social situation, lucky us.

 

[Zarxrax]

Sam invents the hammer. He realizes that he has a great idea, but that it would be very difficult for him to produce very many hammers and sell them at a profit. He does, however, know a fellow named Joe who could produce hammers quite easily. Sam talks to Joe and tells him that he has a splendid idea, and that he will share it with him under contract to receive a portion of the profits Joe yields from the idea, should he ever use it. Joe agrees, provided Sam doesn't sell his idea to anyone else before Joe has the opportunity to introduce them into the market. They agree, Sam tells Joe about the hammer, Joe builds many hammers, and sells them to the Bobs of the world.

Just a little devil's advocate here, but couldn't it be argued that, like Sam's contract with Joe, a patent is a contract with the rest of society? Essentially, you have the option of keeping your idea to yourself, or putting your idea out on the market. If you choose to put your idea on the market, then the public is accepting this benefit to themselves, and in exchange, implicitly agreeing not to take your idea.

 

[Banana]

synapz,

Your arguments are quite interesting. But what about the economic argument?

If you'll bear with me-

Suppose we have three actors; Acme company, Ace company, and an inventor. Assume we have no patents, IP, nothing.

The inventor invents a widget. He tries to bring it to market. As soon as it arrives, both companies immediately start churning out their own widgets, shutting out the inventor.

Inventor could try to get a contract with one of the company, since they're far more better positioned to market the widget. He goes to Acme, gets a contract, and it hits the market. Ace immediately comes up with the widget and because it isn't encumbered by royalty fees, it gets to sell them at a discount. Once again, the inventor get shut out again.

At the end of day, the inventor will think to himself, "gee, there's no profit in inventing things. I might as well be a laborer because then I can at least collect wages."

In both scenarios, no force were initiated, but the capital of bringing about a invention was lost and it was the inventor who bore the full cost of R & D while the companies got a free ride. This means that there are no incentives for people to invent new things and therefore the capital invested toward innovation would be shunned in favor of capital toward labor or something else so the society develop at much more slower rate, inventing only what is necessary rather than leap-bounding on what is possible.

Ideally, the patent law should only guarantee that the capital invested into innovation will be guaranteed that there will be no stolen returns on the investment. This should give anyone an incentive to try something new; the risk of failure is still there, but there is no risk of it being used by someone else who never bore the burden of bringing it to the fruition.

 

[synapz]

Just a little devil's advocate here, but couldn't it be argued that, like Sam's contract with Joe, a patent is a contract with the rest of society? Essentially, you have the option of keeping your idea to yourself, or putting your idea out on the market. If you choose to put your idea on the market, then the public is accepting this benefit to themselves, and in exchange, implicitly agreeing not to take your idea.

I wouldn't view it that way, exactly. It seems to me that when you invoke "society" the way you have here, that you're forcing others to agree to a contract that they have not really agreed to. While Sam may apply for a patent, Joe has not entered into a contract with him. Neither has Sam entered Joe into a contract with "society".

 

[nickcoons]

Sam probably does not make as much money as he could have under an IP monopoly.

I would contend that Sam would actually make more money in your scenario than he would with an IP monopoly. As you've mentioned previously, Sam did not have the resources to produce hammers as quickly or inexpensively as Joe did, and an IP monopoly will not magically give him that resource. He would slowly sell more expensive hammers on his own and keeping all of the money, instead of taking a smaller portion of a much more voluminous position.

 

[nickcoons]

Just a little devil's advocate here, but couldn't it be argued that, like Sam's contract with Joe, a patent is a contract with the rest of society?

The only way "society" can enter into a contract is if the contract contains 6 billion signatures. No one can enter into a contract on anyone else's behalf. Likewise, the government cannot enter into a contract (the patent) with Sam on my or your behalf.

 

[synapz]

synapz,

Your arguments are quite interesting. But what about the economic argument?

If you'll bear with me-

Suppose we have three actors; Acme company, Ace company, and an inventor. Assume we have no patents, IP, nothing.

The inventor invents a widget. He tries to bring it to market. As soon as it arrives, both companies immediately start churning out their own widgets, shutting out the inventor.

Inventor could try to get a contract with one of the company, since they're far more better positioned to market the widget. He goes to Acme, gets a contract, and it hits the market. Ace immediately comes up with the widget and because it isn't encumbered by royalty fees, it gets to sell them at a discount. Once again, the inventor get shut out again.

At the end of day, the inventor will think to himself, "gee, there's no profit in inventing things. I might as well be a laborer because then I can at least collect wages."

In both scenarios, no force were initiated, but the capital of bringing about a invention was lost and it was the inventor who bore the full cost of R & D while the companies got a free ride. This means that there are no incentives for people to invent new things and therefore the capital invested toward innovation would be shunned in favor of capital toward labor or something else so the society develop at much more slower rate, inventing only what is necessary rather than leap-bounding on what is possible.

Ideally, the patent law should only guarantee that the capital invested into innovation will be guaranteed that there will be no stolen returns on the investment. This should give anyone an incentive to try something new; the risk of failure is still there, but there is no risk of it being used by someone else who never bore the burden of bringing it to the fruition.

Hi Banana,

I would like to say before beginning that despite the fact that I am about to offer an argument that answers the questions implicit in the questions you have posed here (I hope!), I consider these questions largely irrelevant. I consider them irrelevant because I believe it should be more important to "do that right thing" than "have the desired outcome". There will inevitably be some situations that are too difficult for me to address. Had this been one, I would still view it as unimportant whether or not the inventor got some proceeds from his idea next to the use of force preventing others from doing as they please when not using force against others.

That said...

Inventor would be wise to go to the company that is best poised to bring his idea to market quietly, en mass, and efficiently. The company (and Inventor) will reap large profits by being the only supplier on the market while other companies try to bring their production online to begin to compete with the initial supplier. So yes, while the royalties the original company is paying to Inventor does cut into their profits, other companies have not yet begun to move towards production. Once they do, this could have a negative impact on the original producer. It would be in the interest of Inventor to reduce the royalties at this point, and I would expect this to be part of the original contract the inventor enters into. I suspect the original producer will estimate how long it will take for a competitor to enter the market, and either cut off or greatly reduce the royalties at that point.

Which is fine, in my opinion. The inventor should get a just reward for his invention, and he will be rewarded properly if he handles his invention properly.

Also, do not discount the research the entering competitors will have to engage in in order to reverse-engineer the product and reproduce it. While copying a hammer will be simple, and the reward to the inventor appropriately reduced, pulling off the same stunt with a CPU from Intel would be a colossal undertaking. The reward to the inventor of that product would be appropriately increased.

I'm certain that there are some issues that I have not foreseen and quite possibly could not find immediate solutions for. But the point is, this is not relevant. What is relevant is the fact that doing the right thing is always more important than getting the desired outcome. I would rather live in teepees and in peace than in mansions and in a police state.

 

[nickcoons]

The inventor invents a widget. He tries to bring it to market. As soon as it arrives, both companies immediately start churning out their own widgets, shutting out the inventor.

And here's the flaw. This doesn't have much to do with patents, but more with marketing practices. Let's say that in your scenario, patents exist and are thoroughly enforced. If the inventor did not file for a patent on his invention, then he's in the same position. This has more to do with an inventor taking due diligence to protect his idea, because the existence of a patent system doesn't help him.

An inventor should be an inventor, and a production company should be a production company. If I invent something, I would realize that I am not a producer, so I would not be so naive to think that I can just start churning my widgets out in my garage and think that no one will have the means to out-produce me.

Instead of bringing my idea to market, I would approach various companies, making all of them sign NDAs (which is a contract, and perfectly enforceable in a libertarian society) such that none of them could use my idea without paying an agreed-upon royalty. Then I'd choose the company that would give me the best results (both in royalties and ability to produce large enough quantities quickly enough that by the time a competitor caught on the market would be saturated and it wouldn't be profitable). Heck, I could make a non-exclusive agreement, with a lower royalty, with the five largest producers such that there would be no way that a competitor of theirs would be able to produce this item in any profitable way.

 

[synapz]

I would contend that Sam would actually make more money in your scenario than he would with an IP monopoly. As you've mentioned previously, Sam did not have the resources to produce hammers as quickly or inexpensively as Joe did, and an IP monopoly will not magically give him that resource. He would slowly sell more expensive hammers on his own and keeping all of the money, instead of taking a smaller portion of a much more voluminous position.

I'm no economist, but I wouldn't be surprised if you turn out to be correct. I'd vote for you, Nick.

 

[Banana]

I consider them irrelevant because I believe it should be more important to "do that right thing" than "have the desired outcome".

Fair enough. The only unfortunate thing about it is that reality has a tendency to rear its ugly head.

Otherwise, your idea of having a contract with limited royalty (factoring in the competition) and the fact that reverse engineering does cost time & money is quite valid.

Let's see and if we agree on this analogy...

A painter Joe has been hired to paint Sam's house. After a long and hard work, Joe is finally finished, and will return when Sam is home to collect his bill.

It so happens that a painter Bill stops by Sam's house before Joe does, and presents Sam with a bill, and Sam agrees with the amount due and pays it. Ordinarily, Joe should able to take Sam to court and force Sam to pay the bill even if Sam paid Bill; it's Sam's fault for having paid the wrong painter.

But suppose the judge ruled that since Bill is a painter, it was expected that he should charge for his service and it's basically Joe's fault for not getting the bill from Sam before Joe did.

Would that be the case if we didn't have patent laws?

 

[magicmike]

I'm certain that there are some issues that I have not foreseen and quite possibly could not find immediate solutions for. But the point is, this is not relevant. What is relevant is the fact that doing the right thing is always more important than getting the desired outcome. I would rather live in teepees and in peace than in mansions and in a police state.

This is definitely one of the problems, look up Prisoner's dilemma if you are not already aware of it. It matches very much with your idea, taking the scenario of two prisoners escaping.
There are only two options to cooperate or defect (brake trust/kill/snitch)
Best chances for success are to cooperate, but best payoff would be to defect.

The wikipedia article goes into good detail about the scenario. But I would like to add the the game becomes even more interesting if one prisoner claims to know the location of stolen bank money.

The possibility of punishment (Patents/NDA's/etc...) for defecting insures cooperation though.

I admit I am a bit nervous focusing on these issues when there are "more important" things going on (war, imprisonment, taxation), but maybe everyone needs to focus on their own thing.

Though talking of IP/Patents/Copyright/ right now is not a pressing issue, it will be soon. And may be too late if we don't start now, many things will be coming in the future that I believe should not be patentable like DNA, and anything that is a "living creation" this opens up some horrible possibilities where parts of your custom designed body could be "owned" by somebody.
While the pressing issues could be considered the branches of a monstrous overgrown tree, hacking at the roots may be a more effective route.

 

[synapz]

Fair enough. The only unfortunate thing about it is that reality has a tendency to rear its ugly head.

Otherwise, your idea of having a contract with limited royalty (factoring in the competition) and the fact that reverse engineering does cost time & money is quite valid.

Let's see and if we agree on this analogy...

A painter Joe has been hired to paint Sam's house. After a long and hard work, Joe is finally finished, and will return when Sam is home to collect his bill.

It so happens that a painter Bill stops by Sam's house before Joe does, and presents Sam with a bill, and Sam agrees with the amount due and pays it. Ordinarily, Joe should able to take Sam to court and force Sam to pay the bill even if Sam paid Bill; it's Sam's fault for having paid the wrong painter.

But suppose the judge ruled that since Bill is a painter, it was expected that he should charge for his service and it's basically Joe's fault for not getting the bill from Sam before Joe did.

Would that be the case if we didn't have patent laws?

Can you word this another way? I'm a little confused.

 

[synapz]

Though talking of IP/Patents/Copyright/ right now is not a pressing issue, it will be soon. And may be too late if we don't start now, many things will be coming in the future that I believe should not be patentable like DNA, and anything that is a "living creation" this opens up some horrible possibilities where parts of your custom designed body could be "owned" by somebody.
While the pressing issues could be considered the branches of a monstrous overgrown tree, hacking at the roots may be a more effective route.

I can't argue with this logic!

 

[satchelmcqueen]

I didn't read anything but the OPs post. i like patents if it is a real original ideal. that needs protection from thieves looking to steal ones ideas. If you come up with an original ideal, you should be able to secure that same ideal until YOU are ready to sell or use it.

 

[Banana]

Can you word this another way? I'm a little confused.

Sorry for losing you.

I was trying to test water but apparently I muddled it instead.

The basic question was if you paid a guy for work that he didn't do besides showing up with an invoice, it's a given that the guy who did the actual work should be able to sue you to get his full payment even if you say you've already paid for the work, but simply to wrong person and he has to go after that person; wouldn't that basically be the patent law's intent?

Helps any?

 

[synapz]

Sorry for losing you.

I was trying to test water but apparently I muddled it instead.

The basic question was if you paid a guy for work that he didn't do besides showing up with an invoice, it's a given that the guy who did the actual work should be able to sue you to get his full payment even if you say you've already paid for the work, but simply to wrong person and he has to go after that person; wouldn't that basically be the patent law's intent?

Helps any?

Well, I think I understand the scenario you are painting, but I can't seem to connect patent law to it.

 

[Banana]

The premise was that if you paid someone else for the work they didn't, this is considered immoral and theft.

When a company copycats a inventor's work, company essentially did no work in R & D (of course, we should factor in the fact that reverse engineer will cost some time & money... see below), wouldn't that be a theft of the inventor's capital invested into the innovation?

In first scenario, it's easier for us to resolve in the court; all we need to show that we actually did work and didn't get paid as per our agreement. In second scenario, it depends on patent laws being present, no?

Does that help or am I making this clear as mud?

 

[synapz]

The premise was that if you paid someone else for the work they didn't, this is considered immoral and theft.

When a company copycats a inventor's work, company essentially did no work in R & D (of course, we should factor in the fact that reverse engineer will cost some time & money... see below), wouldn't that be a theft of the inventor's capital invested into the innovation?

In first scenario, it's easier for us to resolve in the court; all we need to show that we actually did work and didn't get paid as per our agreement. In second scenario, it depends on patent laws being present, no?

Does that help or am I making this clear as mud?

For me, this comes down to the use of force. If you use force to steal someone's idea, then that's wrong. If you use force to prevent someone from peacefully manufacturing and selling something, then that's wrong. I think with regard to patent law, the situation will be the latter.

 

[jpa]

I have thought long and hard about IP and patents specifically.

I think along the same lines as Ayn Rand on this issue... as long as patents avoid organizations and corporations, and belong to only individual people, you are protecting the individuals claim to innovation.

"The government does not "grant" a patent or copyright, in the sense of a gift, privilege, or favor; the government merely secures it -- i.e., the government certifies the origination of an idea and protects its owner's exclusive right of use and disposal. A man is not forced to apply for a patent or copyright; he may give his idea away, if he so chooses; but if he wishes to exercise his property right, the government will protect it, as it protects all other rights. ... The patent or copyright notice on a physical object represents a public statement of the conditions on which the inventor or author is willing to sell his product: for the purchaser's use, but not for commercial reproduction."

-Ayn Rand

my employer requires me to sign a voluntary contract to work for them. That contract states that I have to assign any IP that I create while employed that applies to thier industry to the company. Most technology companies require that.

So Ayn Rand's proposal doesn't prevent our current situation. In fact, AFAIK patents are assigned to people, not corps today.

 

[Dequeant]

I am against anything that restricts competition, innovation, and free trade.

As a business major, the biggest restriction on innovation is to NOT have a patent system or a system of intellectual property rights. Without the patent system, there is no motivation to invent something new, because those with more money and resources than yourself can simply copy your design and gain the profits. You will never have a chance to profit off your innovation because you will never have as many resources as the microsofts of the world....who will use those resources to capitalise on your idea/invention before you have a chance.

Like it or not, the patent system protects the "little guys" and encourages innovation.