IP Needs to Be Reconsidered

Last month, the Global Intellectual Property Center (GIPC), in conjunction with the U.S. Chamber of Commerce, released a report evaluating intellectual property (IP) laws in eleven different countries. The report used five general categories—patent law, copyright law, trademark law, enforcement thereof, and participation in international treaties—as a basis for evaluation. The United States was ranked the highest of those studied, meaning its IP protection is the strongest in the world; worst among the eleven were Russia, Brazil, China, and India.

Brazil, Russia, China, and India have something else in common, however. Despite weak IP protection, these four countries have the fastest-growing emerging economies. In a February 2012 report by Price Waterhouse Coopers, these four countries—the “BRIC” nations—had average annual growth rates between five and nine percent in terms of GDP, up to three times the growth rate of the U.S.

Another recent report issued by the Republican Study Committee (RSC) indicates a shift in—or, at the very least, a questioning of—the general milieu surrounding IP protection. The paper, entitled “Three Myths about Copyright Law and Where to Start to Fix It” was authored by Derek S. Khanna, who was later removed from the RSC amidst intense backlash from the entertainment industry. Before being retracted, Khanna’s analysis concluded that overzealous copyright law was responsible for “retard[ing] the creation of a robust DJ/remix industry,…hampering scientific inquiry, [and] penalizing legitimate journalism and oversight.” He also offered different ideas for IP reforms, including limiting the length of time a work can remain under copyright.

The National Council on Teacher Quality (NCTQ), a nonprofit research firm based in Washington, D.C., has been involved in an IP boondoggle for nearly two years. As part of an ongoing partnership with U.S. News and World Report, the NCTQ has been collecting syllabi and other information from university teacher-education programs across the nation.

While there may be valid reasons why universities would be interested in shielding themselves from outside influence, their excuses in this example have been exceptionally dubious. Reporting in the Milwaukee Journal Sentinel, Erin Richards writes, “Many education school deans—including some from the University of Wisconsin—expressed in 2011 that they were skeptical of the council’s methods for data collection and analysis. Some don’t appreciate the independent rating effort because education schools already have to be approved by official accrediting bodies.”

In Wisconsin, among other states, the NCTQ has tried to obtain syllabi via the state’s Open Records Law. Their requests have been denied on the grounds that the syllabi are protected by copyright. Notwithstanding the “fair use” statute in federal copyright law, this may be technically accurate; but what of the many students who could easily pass a copy of a syllabus to the NCTQ? The copyright claim breaks down as soon as it is exposed to the tiniest beam of the light of common sense.

Thus, recent empirical evidence and policy analysis suggest a correlation between IP laxity and economic growth. Such a suggestion may seem to fly in the face of conventional capitalistic thinking, however. Don’t property rights create fortuitous conditions for wealth creation?

This apparent contradiction arises from a conflation of opposing ideas of “property.” The foundation of capitalism is the unwavering protection of tangible property rights. Private ownership of tangible property is a priori necessary for the peaceful development of the economy; physical resources are scarce, and therefore must be protected by a system of tangible property rights in order to prevent conflict. Ideas, on the other hand, are infinite—they are ever-abundant, cannot be used up, and cannot be “owned.” Tangible property rights and intellectual “property rights” cannot co-exist; they are antithetical to one another.

For example, suppose that an author writes a book and makes a copy of it. There are now two books, one of which is purchased from the author by a reader. The reader now owns a book (tangible property), but copyright law prevents him from using his own paper and ink (also tangible property) to make additional copies of the book, even if he gives the author due credit for authorship. Control (and implicitly, partial ownership) of the reader’s physical resources—his book, paper, and ink, all of which are tangible property—is transferred to the author via IP rights. These “rights” actually violate and diminish legitimate tangible property rights. Stephan Kinsella, an authority on the matter, writes, “There is, in fact, no reason why merely innovating gives the innovator partial ownership of property that others already own.” All ethical defenses of IP are contrived and unjustifiable.

Copyright and patent are nothing more than government-granted monopolies. Where monopolies exist, inefficiency abounds. IP inhibits competition, and empirical evidence suggests that economic growth is hindered by its existence. The RSC report reads: “Copyright violates nearly every tenet of laissez faire capitalism.  Under the current system of copyright, producers of content are entitled to a guaranteed, government instituted, government subsidized content-monopoly.”

In their convincing book Against Intellectual Monopoly, Michele Boldrin and David K. Levine conclude that innovation is greater under free competition than in the presence of IP, and that IP is “damaging for society, as valuable productive capacity is literally destroyed and thrown away.” In the most recent damning example of squandered wealth, Carnegie Mellon University recently won a lawsuit worth $1.17 billion against Marvell Technology Group infringing upon two of its patents.

To be sure, throughout the world, correlations between innovation, economic growth, and the number of patents and copyrights issued exist. Making an argument for more stringent IP protection on these grounds is fallacious; as Stephen Kinsella writes, “The argument…assumes that innovation is critical to prosperity and economic development—true enough—and then correlates patents with innovation. But not only is this correlation problematic—not all patents are innovative and not all innovation is patented—but even if patents are correlated with innovation, correlation does not prove causation. It is equally as plausible, in fact more plausible, that innovation persists despite, not because of, a patent system.”

Objection to IP protection is nothing new: in 1958, economist Fritz Machlup concluded: “If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one.” Nor is it unpopular: open-source software innovators willingly freely share their innovations and make no small amount of money doing so; authors use the Creative Commons to attribute their works to the public domain immediately, bypassing conventional copyright; and Korean pop sensation Psy is worth millions of dollars in no small part because he welcomes the unregulated sharing and “pirating” of his name and brand.

This article originally appeared in The College Fix on January 23, 2013. It has been approved for re-posting.

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