Intellectual property is theft

Free market economists treat the rights of property as axiomatic. They are apt to talk of private ownership as one of the rules by which a market must work, to regard its importance as self-evident and the defense of private property as the primary function of the state.

Free market economists treat the rights of property as axiomatic. They are apt to talk of private ownership as one of the rules by which a market must work, to regard its importance as self-evident and the defense of private property as the primary function of the state. They attribute spoliation of the environment to the difficulty of enforcing rights of property over the sea and the sky and the air (though the trading of licenses to emit noxious substances is a valiant attempt to privatize the right to pollute these elements). Naturally, classical economists are not surprised that the enemies of the marketplace advance their cause by the redistribution of property, and they judge the soundness of governments by their willingness to resist that process. Niall Ferguson included property rights in his list of the six keys to prosperity, and Hernando de Soto ascribed to their absence the failure of capitalism in much of the developing world. In fact, the works of professional economists can read as if the entire economic and political history of the modern world can be reduced to a discussion over the rights and distribution of private property.

Yet there is and always was an undeniable tension between the right to the exclusive enjoyment of property and economic progress through history. It was as hard for an entrepreneur to accumulate capital in early modern Europe as it is for peasant living in an African kleptocracy today. Possessive individualism may well explain the rapid economic progress of Europe and North America in the 19th and 20th centuries, but it also explains the reduction of post-Soviet Russia to a gangster-state. Copycat products and fake brands are seen by major corporations as straightforward expropriations of copyright, akin to the industrial espionage of the Cold War era, yet the subsequent lobbying and litigation proves even dispassionate judges are not always persuaded of that. Recent technological developments have exposed this underlying tension in yet another form. In biotechnology (where patentees are staking claim to what others regard as the common property of mankind) and the Internet (which robs musicians, publishers and filmmakers of their rents) the true nature of property, not as a natural right that is unchanging through the centuries but a legal and social creation that evolves with time and technology, is vividly apparent.

Like every legal and social creation of modern democracy, the evolution of rights of property is not the work of the disinterested. It is driven largely by rent-seeking corporations interested in protecting existing products and services rather than inventing new ones. Of course, the laws of property must evolve. If a market economy is to adapt to new demands and technologies, property rights must flex as much as the rest of the institutional infrastructure. History shows that they have indeed evolved over time, as have their means of enforcement. In 18th century England, for example, the aristocracy owned even the wild animals that crossed their land, and stealing a sheep carried the death penalty. This absolute ownership of most of the land (and the legislature) made urbanization and industrialization much easier to effect in Britain. As recently as 1833, a British government was mindful enough of the rights of property to actually pay compensation to the owners of slaves it had liberated. Yet, within a generation, the Victorians had invented the limited liability companya device that specifically attenuates the rights and responsibilities of the owners of property.

In our own time, an entire branch of law has developed to protect so-called intellectual property, such as recorded music, films, pharmaceutical formulae, transcriptions of the genome, novels, software applications and even the work of journalists. It is hard to disagree that a pharmaceutical company that spends millions of dollars developing a drug deserves a measure of protection from competition, at least for a time, to recoup its investment. This is because the cost of manufacturing the drug, once discovered, is effectively zero, and not only for the inventors. On the other hand, rights of protection against competition must always expire eventually in order to allow new knowledge to become part of the public domain. That way, inventions and innovations can eventually be exploited efficiently by others, or put to new uses, or combined with other inventions or knowledge to create new products. So there is a balance to be struck between using laws of patent and copyright to provide a temporary monopoly that encourages innovation, and avoiding monopolies of any kind, because every monopoly is a source of inefficiency. The important question to address now is whether that balance has shifted too far in favor of large and wealthy corporations.

Certainly, the compromise between the incentive to innovate and the dependence of progress on knowledge being freely available is breaking down. Contrary to the impression given by Hollywood and the music industry, this is not because the now-defunct Napster (closed down by lawsuits initiated by rock stars) and other forms of file-sharing (If you havent paid for it, youve stolen it, as the Motion Picture Association of America puts it) are stealing the property of creative geniuses. It is copyright steadily increasing its boundaries, thanks to well-funded lobbyists and lawyers working on behalf of large corporations, especially in the entertainment and biotechnology industries, that wish to capture economic rents in perpetuity. Jack Valenti, the former president of the Motion Picture Association of America and indefatigable copyright lobbyist, put his ideal copyright term at forever, minus a day. Unfortunately, he and his successors have effectively achieved exactly that. The original copyright law of the United States, passed in 1790, granted a term of just 14 years, renewable once, and restricted its protection to American citizens only. It increased steadily thereafter, to 28 years in 1831, 56 in 1909 and life plus 50 years in 1976, when the United States elected to bring its own copyright law into line with the Berne Convention. The Copyright Term Extension Act (CTEA) of 1998 extended the copyright term in the United States from life plus 50 years to life plus 70.

CTEA is also known as the Mickey Mouse Protection Act, since the lobbying campaign that preceded it was led by the Walt Disney Company, whose copyrights over Mickey Mouse, Donald Duck, Pluto and Goofy were due to expire in 2003. For work-made-for-hirein other words, work done for corporationsthe term is now 95 years. There is no longer even a need to register works for copyright protection: They are automatically subject to copyright, with no obligation to renew. Patent law has not expanded quite so much, but the time in which royalties are payable has increased from 17 years to 20. More importantly, its scope has increased massively to encompass inventions based on original discoveries, the tests on which medical treatments are based and seeds from new crop varieties. The genetic composition of the Hepatitis C virus, for example, is now patented, as are DNA segments associated with various cancers and immunity to HIV. The United States Patent and Trademark Office now grants patents so readily that large corporations have built up huge portfolios of patented software applications that limit consumer choice, though digital coding necessarily develops as the work of many hands. The Department of Justice and the Federal Bureau of Investigation have gone even further and are now actively closing down so-called pirated movie and app Web sites and arresting their principals (even in foreign jurisdictions).

This aggressive and assiduous protection of corporate America from competition is a measure of the power of lobbying in the American political system. It is also a measure of the sclerotic condition of American capitalism that its largest elements fear they have more to lose than to gain from openness to competition. The Hollywood lobbyists at the forefront of the campaign to protect intellectual property rights have conveniently forgotten that the industry is based in California only because their forebears sought escape from the patents Thomas Edison held on raw film and which he defended zealously through the law. Americans should remember that another of their emblematic industriesthe automobilestruggled to expand until Henry Ford refused in 1904 to pay George Selden, a patent attorney, any licensing fees. Certainly, modern corporate America has strayed far not only from the approach of Henry Ford, but also from the open and progressive ideals of the Founding Fathers. John Adams attacked the Stamp Act as a tax on knowledge. Benjamin Franklin encouraged skilled artisans to smuggle technical expertise out of England to build American industry and insisted that all of his own insights and inventions were freely available. James Madison pilloried copyright as an assault on liberty. Thomas Jefferson (whose dislike of binding future generations extended to time-limiting the Constitution) actually tried to prohibit patent monopolies by legislation. These great Enlightenment figures saw the dissemination of knowledge as essential to the maintenance of liberty. He who lights his taper at mine receives his light without darkening me, as Jefferson put it.

Unfortunately, the enlightened and energetic culture that built the United States into the most powerful nation on earth is now replaced by a supine rule of lawyers that seeks aggressively to prevent other nations emulating the history of their own country. Instead of clamoring for knowledge to be freely available, American legislators prefer to impose a tax on consumers for the benefit of incumbent producers, most of them directors of large corporations rather than artists or innovators or inventors in their own right. In other words, the balance of power in the American economy has tilted decisively towards monopoly. In the system as it is currently construed, everything created or likely to be created in the United States is now presumed to be owned exclusively and must therefore be rented or purchased by the consumer before it can be enjoyed. It is not a balanced system in which work is initially made available only on monopolistic terms but eventually released freely into the public domain. The corporations that are patenting genome sequences or other aspects of nature are discouraging research into useful applications for fear of being sued or facing excessive costs. This blind prospecting, as it is called, is exactly comparable to the age of the robber barons of early 20th century American capitalism, when large corporations bought the patents to new inventions and techniques, not to exploit them, but to prevent anyone else exploiting them.

In the long term, they will in all likelihood prove ineffective anyway. The Internet protocols written by Tim Berners-Lee superseded those of the University of Minnesota because they were from the outset in the public domain. Berners-Lee had persuaded his employer (CERN) to make the network protocols freely available, and they were as a result adopted by software developers in preference to the Gopher system, which contained the threat of being charged license fees or being sued for not paying them. But the world might wait a long time for technology and jurisdictional arbitrage to put right the crimes against progress that are embodied in copyright expansion. In the short term, where most people are obliged to live and work, it is hard to think of a more profound obstacle to economic growth than the attempt to take ownership of every scientific discovery, piece of information or addition to human knowledge. For the secret of progress, as Matt Ridley has innocently pointed out, is giving information the opportunity to have sex. Open source software is an obvious instance of this idea in action. The exchange of knowledge, uninhibited by rights of ownership, has steadily enhanced the quality of the code without preventing developers taking ownership of applications of it.

Linux may appear modern, but is not unusual. Most inventions grow so much out of preceding inventions that the individual who finally invents the invention is better described as the discoverer than the inventor. Indeed, the individual or corporation that ends up owning the patent to a technology, or profiting from it, can be completely random. Contrary to popular understanding, Alexander Graham Bell did not patent the telephone in 1876. The now unknown Elisha Gray beat him to the patent office by three hours. But the real loser was one Antonio Meucci, who had declared his invention five years earlier but could not afford the $10 registration fee. The fact that three people can plausibly lay claim to having invented the telephone is a reminder that useful knowledge rarely depends on individual revelation. The myth that certain individuals are singular geniuses that are uniquely inspiredand therefore deserve, as Thomas Edison held, to retain exclusive ownership of what they create or inventis potent, but it is still a myth. In almost every case, genius is the talented host of collective endeavor.

Creativity in all fields, from arts to sciences, is not just collective, but cumulative and collaborative. The sequencing of the genome, like the discovery of DNA itself, was a triumph of collaboration between intellects and laboratories all over the world. Indeed, the academy is a better model than the corporation. Of course, academics can be astonishingly small minded. But they are more likely to judge knowledge by its ability to enlarge human understanding than its capacity to produce an income. The true academic mind is inspired not by the prospect of gain, but by curiosity, love of truth and the pleasure and acclaim of discovery. Ernest Rutherford consciously chose atomic research over the commercialization of radio because he knew patenting a technology would undermine his credentials with his fellow scientists, leaving the field clear for Marconi. Similarly, the many fine minds that uncovered the workings of quantum mechanics, from Max Planck to John Stewart Bell, did not have in mind the mobile telephone, though their work proved essential to the development of that device.

It is eminently possible to retain a distinction between knowledge that is discovered and the technologies and works of art that call upon it. The case for retaining knowledge of the genome entirely in the public realmagainst some well-funded commercial interestsultimately hinged on the fact that it was not invented but discovered. As Jonas Salk asked, when pressed about whether he would patent the polio vaccine, Could you patent the sun? The genome, like the polio virus, was always part of nature. Patenting natural discoveries is fundamentally different from patenting applications of them, all of which rely on common access to knowledge of the discovery, in the same way as open source users create profit-seeking applications of the underlying code. If scientific truths became the preserve of commercial interest, they would naturally and rightly seek the most profitable uses for themand a gene for breast cancer or HIV resistance is not necessarily more profitable than one for blue eyes or blonde hair. Private ownership of engineering devices or chemical formulae or transcriptions of the genome would also erect high barriers to entry for innovative newcomers promising fresh combinations of the various components. The price of manufacturing penicillin fell by 93% within five years of its discovery, precisely because Alexander Fleming was unable to patent his discovery. This did not prevent pharmaceutical companies enjoying full ownership of derivatives of the original discovery.

Those companies are of course open to the criticism that they focus more on the alleviation of obesity and cardiovascular disease than tuberculosis or malaria, since those diseases are suffered mainly by people too poor to buy a remedy. Pure science cannot make such distinctions: It must explore everything, in pursuit of knowledge of everything, even if it has no immediate use. In fact, a depressing symptom of cultural decadence is the intrusion of corporatism into the academy. It is not just that research laboratories are funded by pharmaceutical companies. Economists write papers in support of corporate ambitions. Business school professors become paid consultants to large corporations. Physicists lend their knowledge to the creation of algorithms useful to banks making complicated financial products. Most depressingly of all, academic researchers have themselves taken to patenting their discoveries, as corporatism crowds out sources of reward other than money. In these senses, the lawyers ramp we call intellectual property is a motor as well as a symptom of the corporatization of all aspects of our civilization. The irony is that it is undermining the economic vitality of the mature capitalist economies of North America and Western Europe. When economies are young, the largest firms have attained that market position because they are the most efficient. When economies are old, they maintain that position because they are politically powerful and find it more lucrative to employ lawyers and lobbyists to protect their rents than to invest in innovation.

The difference between a company seeking protection of its investment in an innovative drug or technology and one seeking protection from competition is a fine one, and judges (and especially legislators) cannot always be relied upon to identify it. When Apple sued Samsung for damages, claiming the Korean company had copied its devices, its comprehensive victory in an American court showed that home advantage counts. It also showed that Apple had forgotten its own history. The first Apple computers sold well not because of the intrinsic value of the machine but because the first spreadsheet was written to run on Apple machines. In other words, the initial success of Apple computers depended on something extrinsic to the company. There is no reason to suppose Apple would have designed such an application themselves. The defense of intellectual property rights through the law in this way is another instance of big business slowing down progress in technology, science and the economy as whole in order to maximize its profits.

The dangers inherent to this are not hard to identify. It is a commonplace of the history of both technology and science that the greatest innovations are the result not just of collaboration between individuals willing to pool their knowledge, but are actually modifications of existing ideas, concepts, laws, theories, experiments and components. Newton himself, echoing Bernard of Clairvaux, admitted that he had seen further only because he stood on the shoulders of giants. Goethe wrote that my work is the work of a collective being that bears the name of Goethe. In Arcadia, Tom Stoppard has a character who reminds us that even the most striking originality has its precursors: Discoveries may in fact be rediscoveries. The procession is very long, and life is very short, says Septimus Hodge. We die on the march. But there is nothing outside the march, so nothing can be lost to it. The missing plays of Sophocles will turn up piece by piece or be written again in another language. Ancient cures for diseases will reveal themselves once more. Mathematical discoveries glimpsed and lost to view will have their time again.

It is not fanciful to believe that humanity is on a long march toward enlightenment, and that what knowledge we accumulate on the way is part of the common stock. Creative Commons, the non-profit founded by the Center for the Study of the Public Domain at Duke Law School, has actually published draft copyright licenses that enable people to license the use of their work for free, and seen them adopted in more than 50 jurisdictions. Commons is of course a term that resonates negatively with free market economists, who point instinctively to medieval Commons as the classic instance of economic failure caused by lack of ownership, since unowned common land is inevitably overgrazed by stock holders that have no incentive to farm the land sustainably. It is doubly ironic for the economics profession that The Tragedy of the Commons, the paper on which this argument depends, was penned by an authoritarian biologist from California bitterly opposed to unlimited growth of both populations and economies (Garrett Hardin) who had misunderstood completely how medieval Commons actually worked. Far from being free-for-alls, Commons were in fact governed by intricate webs of property rights that controlled the right to graze, cut wood, dig turf, turn out pigs, catch fish, breed rabbits and take gravel, sand or stone.

It is triply unfortunate that another group of lobbyiststhe environmental movementhave successfully captured the idea of Commons as a communistic alternative to the private owners who are destroying the planet, when in fact these rights over common land were in fact owned by individuals who lived locally and so had an interest in managing the resources sustainably. Property held in common is not at all the same thing as communism. As both the medieval Commons of the past and the Creative Commons of today prove, property held in common or as part of the public domain can be managed judiciously by local people in ways that will always elude ill-read economists and rapacious lawyers in the pay of commercial interests. Muddle-headed thinking about Commons at all points on the political spectrum is characteristic of the caliber of public debate about copyrights and patents in general. Intellectual property law has developed entirely as a byproduct of rent seeking by large, wealthy and powerful corporations. As a result, something important is lost from view.

Major scientific breakthroughs cannot by their nature be transcended by rivals, or enjoyed exclusively by a single owner, or be accessible only by paying customers. The discoveries of the natural sciences, like the national defense budget, are public goods: Nobody can be excluded from the benefits, so rights of property in them cannot be made effective. This becomes obvious from even the most cursory reading of the history of science. There it is written that all of the greatest scientific breakthroughs, from quantum mechanics to the double helix, are collaborative endeavors. Science is additive and cumulative, not revolutionary. Commerce, as it happens, proceeds in the same wayby mixing ideas, techniques, technologies and components to create new products and services. It follows that the fulfillment of the ambition of intellectual property lawnamely, to obstruct that process of admixturewill place a brake on economic progress. Indeed, it would give a better sense of the true purpose of intellectual property law if it was renamed a privilege of monopoly, not a right of property.

Copyright is a practical compromise, not a philosophical position, whose defensibility rests on the need to incentivize investments of time and money in innovation. As a privilege granted by the state, its value is repaid when its copyright expires by the simple device of the knowledge being made freely available. As a creature of society and the law, the true antecedent of intellectual property law is not the rights of property of free market theory but the medieval monopolies over printing (which inhibited progress in knowledge) and trade (which inhibited material progress as well). Modern corporations are akin to the medieval guilds, which sought to protect their knowledge (mysteries) from being copied in order to profit from their monopoly of useful knowledge. The medieval state even prohibited skilled craftsmen from leaving the country, lest they pass their secrets on to rival powers, in much the same way that modern corporations force employees to sign non-compete agreements or serve a sabbatical before joining a rival. These tools are the very essence of mercantilism, which is why they were such objects of loathing and contempt for Adam Smith.

The great economist warned that it is always the ambition of men of business to widen the market and to narrow the competition, and that the proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined not only with the most scrupulous but with the most suspicious attention. He would have recognized intellectual property law as a classic case in point, in which modern corporations are engaged in a vast rent-seeking conspiracy against the public. Its reach extends even to international trade, where the exchange of information, techniques and technology is at least as important as the exchange of capital, goods and labor. Since 1995, the member-states of the World Trade Organization (WTO) have subscribed to the so-called TRIPS Agreement, in which they undertake to protect and enforce copyrights, trademarks and patents. It is hard to see how this agreement, the joint creation of big business and the big state, is consistent with the mission of the WTO to remove the impediments to trade and competition in the world economy. It puts power in the hands of the wealthiest corporations from the richest countries, which they are using unashamedly to protect themselves from competition.

And it is competition, not private property, that is the true genius of capitalism. Our progress as a species hinges on competition to the uttermost in ideas, knowledge, science, art and technologies. If capitalism is to sustain its essential work of creative destruction, it needs openness, the sustained churning of incumbent elites and a culture in business that seeks to create new wealth rather than pay lawyers to secure rents. Instead, great corporations are purchasing protection from the state. A plutocratic interest is purchasing the public interest. It is converting money into power. Intellectual property law does not protect the weak against the strong. It protects the strong from the weak. On a global scale, it has become an instrument for keeping the poor in a state of permanent economic subjugation.

But more is at stake in this debate than the standard of living of the seven billion inhabitants of the Earth. If knowledge is not freely available, freedom itself must falter. If ideas and inventions are not open to all, eventually, if not immediately, the path to enlightenment by the uninhibited pursuit of truth is obstructed. Truth emerges by collision with error. If any aspect of truth or error is withheld for any but the shortest practicable time, collisions will not take place. Indeed, it is not a long journey from copyright to censorship. As publishers know better than most, the cheapest and easiest response to any complaint of copyright infringement is the same as that for allegations of defamation: to remove the offending material. Copyright infringement is already being used routinely as a device to inhibit the circulation of unwelcome material about individuals and organizations. The legal costs of contesting such arguments are usually sufficient to guarantee silence.

Such steadily advancing prohibitions on free speech and discussion are obviously antithetical to liberty. They expose the tension at the heart of the constitution of the United States in particular by undermining the compromise between the time-limited copyright of Article 1, paragraph 8 to promote the progress of science and useful arts and the First Amendment guarantee of free speech and a free press. The Copyright Clause and the First Amendment seek related objectivesthe creation and dissemination of information, as Justice Stephen Breyer put it in his dissenting note to Eldred v. Ashcroft, the Supreme Court case that upheld CTEA by seven votes to two. When working in tandem, these provisions mutually reinforce each other, the first serving as an engine of free expression, the second assuring that the government throws up no obstacle to its dissemination. This statute involves not pure economic regulation, but regulation of expression, and what may count as rational where economic regulation is at issue is not necessarily rational where we focus on expressionin a nation constitutionally dedicated to the free dissemination of speech, information, learning and culture. The use of the law to extend copyright is turning citizens into subjects whose ability to express themselves and to read the expressions of others is being severely curtailed. When it is seriously proposed that Girl Scout camps be charged an annual license fee to sing God Bless America around a campfire, it is clear that an important public interest is at stake. No issue is more important to the future of liberty than freedom of expression and of the press, and their suppression should proceed on surer grounds than the maintenance of corporate profitsespecially since it will in time reduce those as well.