siderations of the importance of incentives and mechanisms for

PROPOSITION: investment (and of the freedom of anyone with an entrepreneur-

ial idea to bet on it without approval by hierarchies); the political

Intellectual benefits of separating people’s livelihood from power structures

(the old idea of the independent yeoman class, as modified for

Property Must a society in which land has become less important as a factor of
production and ideas more so); and the philosophical concepts

Be Protected of human agency and personal dignity, combined with the role
of property—intangible as well as tangible—in making them a
reality rather than an abstraction.
As always, it’s in moving from the abstractions to the realities
where the devilment lies. Defining and bounding intellectual
property rights is complicated. The field is subdivided into four
major domains: Copyright governs written, visual, and audio
creations; patents apply to inventions; trademarks deal with
brand protection; and trade secrets cover confidential informa-
tion. Each has special characteristics and is subject to its own
special rules.
Other than trade secrets, these domains differ from tan-
gible property in a crucial way. Because tangible property can
be locked up, nailed down, or fenced in, anyone who wants to
infringe my rights must make physical contact with it. That
makes self-protection the first line of defense, with invocation
of state power as a backup. (Because trade secrets are much
like tangible property in this respect, they tend not to rouse as
much resistance.)
Intangible property, in contrast—to be either useful or lucra-
tive—must be made available publicly and can be easily copied.
Sometimes self-protection is possible by integrating tangible
property with the intellectual product. Newspaper content, for
AFFIRMATIVE: example, was for decades protected by the expense of printing
and distribution. But usually the holders of intellectual property

I.P. Holders Need the
Legal System To Uphold
Their Rights
JA MES V. DELONG
IF ANY GATHERING of people of libertarian bent becomes dull,
raise the topic “intellectual property.” The result will be an
entertaining escalation in both outrage and decibels. The only
certainty is that no minds will be changed, because the pros
and the cons emphasize different values and the twain show
no signs of meeting.
The case for recognizing a creator’s right to his creations and
his claim on the state to help protect this right rest on the same
foundations as the arguments for protecting tangible property:
Lockean entitlement to the fruits of one’s labors; economic con-
must rely upon the legal system to uphold their rights.
It is not surprising that this intimate intertwinement of prop-
erty with state power worries libertarians, as indeed it should. A
government-enforced monopoly based on a patent or copyright
looks a lot like a monopoly granted by a self-seeking officeholder
to his political favorite. The founders of the American republic
had experience with such preferential favoritism—the Boston
Tea Party was more about the East India Company’s monopoly
than the taxes being levied—and the U.S. Constitution gives
Congress the power to hand exclusive rights only to authors
and inventors for limited periods of time. It also specifies that
the purpose is “to promote the Progress of Science and useful
Arts.” No monopolies were to be granted for importing caffein-
ated beverages.
On the whole, though, the system has done a reasonable job
of policing the boundary. Patents are granted only for inven-
tions that meet the criteria laid out in the first known patent
law, from Venice in 1474: novelty, creativity, usefulness, non-

44 O CTO B ER 2018 Illustration: Wikimedia

obviousness, and a working model. Copyright is also hedged
with limitations; only specific expression, not general ideas
or plotlines, can be protected. Both patent and copyright are
subject to rich and complicated bodies of legal doctrine, which
testifies to their importance.
Things do indeed go awry sometimes, especially in times
of rapid change. In the late 19th century, rural America was
outraged by the “driven well patent,” which covered a pipe
pounded into the ground. A decade or so ago, patents were
granted too freely for computerization of familiar practices,
such as conducting a Dutch auction. But the system, for the
most part, works.
Copyright is a bigger problem. To a large degree, the anti-
I.P. forces have gotten their wish. The internet, and especially
Google search and YouTube, have made people’s rights to their
own creations practically unenforceable for anyone who isn’t a
large corporation with a battalion of lawyers on call.
The results are mixed—at best. For those who use informa-
tion as a tool for some other purpose, and whose business model
does not depend on selling that information, the web has pro-
duced spectacular results. Commerce is now easier, and think
tanks and other groups benefit enormously from the increased
reach they can attain.
But for those of us who are dependent on monetizing infor-
mation itself, the results have been disastrous. News organiza-
tions have been reduced to living off of the mere crumbs that fall
from the maw of Google’s advertising algorithms. In many ways,
the traditional news business no longer exists at all. Instead,
the product is the consumer, whose eyeballs can be sold and,
because tailored ads are more effective and thus more lucrative,
whose privacy is increasingly invaded.
In the entertainment field, individual artists have always had
a hard time making a buck, but the trend, as intellectual prop-
erty rights become less reliable, is toward ever-greater indus-
trial concentration. A creator must sign on with one of the new
barons, such as Amazon or Netflix, to access the necessary clout
and resources to protect herself.
Sure, some artists do well in this system, but most cannot,
and anyone outside the magic circle is fish bait. One of the great
promises of the internet was that people on the fringes could
use it to access a wider array of potential customers and become
less dependent on intermediaries. Without defensible property
rights, this is a pipe dream.
Time will tell how this all works out, but the current state of the
news business is hardly a cause for libertarian exultation. Per-
sonally, for both news and entertainment, I mourn a lost alterna-
tive world in which strong intellectual property protections and
micropayments together could have restored both consumers
and producers to their proper, and more prosperous, roles.
NEGATIVE:
Patents and Copyrights
Are Dubious Legal
Instruments
TOM G. PALMER
PATENTS AND COPYRIGHT are frequently in the news, with head-
lines such as “Amazon Patents Aerial Fulfilment Centers
for Improved Drone Delivery” and “Elon Musk, Artist Settle
Copyright Row Over Unicorn.” Sometimes the conversation
turns to the alleged need for legislative changes to lengthen
or strengthen patent and copyright protections. The argu-
ments in favor of such moves are propelled by moral claims
about fairness and just reward but also by dubious claims about
increased innovation and economic growth. (Trademark and
trade secret protections are generally defended for other rea-
sons based on contracts.)
Generally, both the very best defenses and the very best cri-
tiques of patents and copyrights were crafted by people working
in the libertarian tradition. The reason isn’t hard to identify: Pat-
ents and copyrights have come to be called “intellectual prop-
erty,” and libertarians see property and liberty as intimately
connected. John Locke argued that people join in society “for
the mutual preservation of their lives, liberties and estates,
which I call by the general name, property.”
Property is associated with prosperity, voluntary coopera-
tion, and social harmony. It overcomes many “free rider” prob-
lems by creating incentives for people to take care of what is
their own: In the fourth century BCE, Aristotle pointed out that
“that which is common to the greatest number has the least care
bestowed upon it.”
Yet as Fritz Machlup and Edith Penrose pointed out in their
classic study “The Patent Controversy in the Nineteenth Cen-
tury,” “those who started using the word property in connec-
tion with inventions had a very definite purpose in mind: they
wanted to substitute a word with a respectable connotation,
‘property,’ for a word that had an unpleasant ring, ‘privilege.’”
Patents and copyrights are privileges granted by political
authorities. They were originally used to advance the interests
of the rulers, not of the ruled; monopoly rights were often sold
or handed out for political reasons. Only later were these instru-
ments reformulated as attempts to create an artificial scarcity
that would generate incentives for authors and inventors.
If I write a song and you sing it, you may be infringing
a copyright granted to me by the state, and a court may be
REASON 45
 authorized to enjoin you tors register patents before them, or use the number of patents
from using your voice filed to measure the productivity of their R&D departments.
as you choose—mean- There is no compelling evidence from empirical research that
ing that your liberty of patents generate overall economic benefits, with one possible—
action over your body and significant—exception: chemical compounds.
is lessened by my legal In many cases, these compounds can be easily reverse-engi-
privilege. The prob- neered and are also relatively easy to define. In the pharmaceuti-
lems with patents are cal industry, the costs of R&D and of evaluation by the Food and
no less severe, espe- Drug Administration can be astronomical, and the consumer
cially when you con- benefits can be very substantial. Pharmaceuticals may be the
sider that merely filing best case (and I write “may,” since there could still be other solu-
a patent application 10 tions in that instance) that general benefits can flow from grants
minutes earlier confers of monopoly privileges—so long as the formulae are published,
a full monopoly over the ensuring that generics can be made available after the patents
invention, regardless expire, and the duration of the monopoly is limited. But one
of the claims another exception does not a general case make.
inventor may have. The power to hand out such legislative monopolies is
Merely calling a priv- expressly limited by the Constitution, but those limitations are
ilege “property” doesn’t under attack in ways that clearly have nothing to do with pro-
mean that it has the moting the further “Progress of Science and useful Arts.”
characteristics of prop- Extending the copyright of a film won’t cause more of that
erty that libertarians film to be produced. The current patent system, rather than
find desirable. Occupa- speeding up innovation, may even be hampering it, as pat-
tional licenses, monop- ents are issued with barely any examination of whether the
olies, farm subsidies, application is overly broad or whether someone else is already
and other privileges are producing what the patent covers. “Patent mill” law firms then
sometimes referred to as buy up such patents and shake down tech firms by threatening
property (and in many patent infringement suits that would, even if unsuccessful,
cases have characteristics of property—they’re transferrable, cost the targets millions to defend against. The tech compa-
can be borrowed against, etc.), but that is no reason to extend to nies often agree to hefty settlements (accompanied by non-
such privileges the traditional libertarian respect for the “lives, disclosure agreements) with the law firms because doing so is
liberties, and estates” that were designated by Locke as property. less costly than litigation would be. In discussions with CEOs
Thomas Jefferson, after some years as a member of the fed- of electronics firms manufacturing in the U.S., I’ve been told
eral Patent Board, wrote that “if nature has made any one thing that the existing system increases the cost of doing business
less susceptible than all others of exclusive property, it is the and that, despite their cutting-edge position, they’d prefer to
action of the thinking power called an idea, which an individual be rid of the whole mess.
may exclusively possess as long as he keeps it to himself; but the The future of civilization does not hinge on whether we
moment it is divulged, it forces itself into the possession of every extend, diminish, or abolish copyright and patent protec-
one, and the receiver cannot dispossess himself of it. Its peculiar tions. There are other, more critical issues before us. But people
character, too, is that no one possesses the less, because every who value liberty should be skeptical of moves to lengthen or
other possesses the whole of it. He who receives an idea from me, strengthen legislatively granted monopoly privileges. Putting
receives instruction himself without lessening mine; as he who the lipstick of “property” on a pig shouldn’t make it sexy.
lights his taper at mine, receives light without darkening me.”
JAMES V. DELONG is the former director of the Center for the Study of Digital
Jefferson granted that the state may award such monopolies “as Property at the Progress & Freedom Foundation.
an encouragement to pursue ideas which may produce utility,”
but he was skeptical that they actually served that function. That TOM G. PALMER is a senior fellow at the Cato Institute and George M. Yeager
Chair for Advancing Liberty and executive vice president for international
skepticism has been borne out by historical experience. programs at Atlas Network.
Plenty of innovation takes place in fields without patent pro-
tection, including effectively the whole U.S. aviation industry
from 1917 to 1975. Most firms patent to avoid having competi-

46 O CTO B ER 2018 Illustration: Wikimedia

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