 The United States Constitution explicitly calls for copyright and patent laws to promote the progress of science and useful arts by authors and inventors. But wood-getting rid of all intellectual property laws actually encouraged more creativity and innovation by inventors, writers, and artists. That was the topic of a November 15th SOHO forum debate held in New York City. Stephen Concella, who spent 28 years as a practicing patent law attorney, argued in favor of the proposition that all patent and copyright laws should be abolished. He believes that government-created intellectual property laws empower patent and copyright trolls and powerful corporate interests, while limiting the free flow of information, thus reducing the rate of innovation and creativity. Richard Epstein, the Lawrence A. Tisch professor of law at NYU, says that our current system isn't perfect, but he sees copyright and patents as a natural extension of private property rights and believes that they should be defended by libertarians, accordingly. The debate took place in New York City in front of a live audience and was moderated by SOHO forum director Gene Epstein. Now for the main event, the resolution reads, and again you're voted on it, all patent and copyright law should be abolished. Here to defend the resolution, Stephen Concella, Stephen, please come to the stage. During the resolution, Richard Epstein, Richard, please come to the stage. If Richard could climb over a couple of bodies, he will come to the stage. Yes, okay, all right. Don't get too friendly. Stephen, sit here. You want me to sit on the far right? Far right? Yes, absolutely. Richard Epstein is no relation to Gene Epstein because there are a lot of Jews named Epstein, but we now have to close the voting. Jane, please close the voting. And Stephen, you can take the podium, which I assume you would like to do. You have 17 and a half minutes to defend the resolution. Take it away, Stephen. Oh, my God. All right. Thank you very much, Gene. It's a pleasure to be here, especially with Professor Epstein. I'm really grateful you agreed to discuss this with me. You're one of my intellectual teachers, and I've learned a lot from you over the years. The resolution is all patent and copyright law should be abolished. Why? I want to briefly say I'm a patent attorney. I've been doing it for about 28 years. I've been a libertarian for far longer than that, and I actually wrestled with this intellectual property issue because patent and copyright are types of intellectual property law. I wrestled with this issue all throughout college and law school and as a young attorney. And around the time I passed the patent bar, I decided that it should all be abolished. So I came to it through a lot of hard thought, and my 28 years of practicing has only deepened my feeling about this. The bottom line is these laws violate property rights. They violate freedom of speech and the press. They distort culture. They impede innovation. They literally kill people, both copyright and patent, and they impoverish the human race. They create nothing whatsoever good about patent and copyright law. They're complete abominations and they harm humanity. They're a mistake. That's why we should abolish them. Now what are these laws? These are arcane laws, especially like me learn about, and Professor Epstein teaches about. Copyright protects the right of authors, like creators of artistic works for original works of authorship, like novels, paintings, movies. So the life of the author plus 70 years, which means the term of copyright now lasts about 120, 130 years in many cases. And by the way, originally it was 14 years at the beginning of the country. Copyright law is enforced by injunctions and by legal protections like statutory damages of up to $150,000 per act of infringement. Patents are granted by the state to inventors of practical devices like machines or processes, and they last for about 17 years. And they can also be enforced with injunctions unless the government takes it back with what's called a compulsory license, which they threaten to do sometimes. Now, there are obvious objections to these laws. The first objection is that they obviously violate natural property rights because they prevent people from using their own property as they see fit. Copyright in effect prevents you from publishing a book or singing a song because someone can use a court forced to stop you from doing it. Patents prevent you from making products, competing, or even improving on other people's products. Right? Legally speaking, in my view, these laws should be thought of as what's called a negative easement or a negative servitude, which you guys are familiar with in the form of a restrictive covenant or a homesteading association policy where your neighbors can prevent you from painting your house a certain color. So negative servitudes or easements are fine if they're consented to, but these are not consented to the state. Because grants is negative easement, which is a property right. So it's a taking of property, it violates property rights. I'm not 100% sure, but I believe Professor Epstein even agrees with that. It's just that he doesn't think property rights are absolute. So the idea is that generally, so why would you favor monopoly privilege grants by the state that violate property rights, protect people from competition, and censor speech? Because they think that property rights in the free market, while generally good, sometimes they fail. Because what we call market failure due to various problems, as Professor Epstein points out repeatedly in some of his writing on intellectual property and in his takings book, like the free rider problem or holdout problems or coordination problems. So the idea is that on occasion the state can identify these problems and come in and they can do a taking of private property, which is the power of eminent domain or some kind of regulation, and it will solve this problem and make society better off. And when it does this, they generate a social surplus because it makes us richer. And out of the surplus, you can now compensate the person that you took property from. So like in the house of, in the case of a building a road, you need to take someone's house to build the road. They're compensated for the fair market value of their house by tax receipts and everyone else is better off. That's the theory. But the point is, as Professor Epstein points out in his takings book, most government regulations are takings, but they don't make us better off because they're not solving a real problem and they're doing that damage to us all and therefore they're unconstitutional under the Fifth Amendment. So the question is, in the case of intellectual property, why do we, why does this logic apply there? Why can you violate property rights in the name of helping out, helping, granting a monopoly privilege to an artist or to an inventor? So the idea is that because of the unique nature of certain types of products and services that are intellectually based, like if you write a novel, paint a painting, or if you come up with a new mousetrap or a new iPhone, it's too easy for other people to compete with you. So generally competition is accepted and tolerated as a libertarian. I think it's generally a good thing. But the Chicago people think it's tolerable if competition is difficult. If competition is too easy, then it's going to be difficult for the first guy to recoup his investment costs. So then he'll never invest in it in the first place. So that's the basic idea. And this is the idea, by the way, behind the copyright clause in the Constitution of the United States, which says, Congress has the power to promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive right to their writings and discoveries. So that's where patent and copyright come from, from that clause. Now, historically the origin of patent and copyright come from bought control and censorship and protectionism. The printing press threatened state and church control of what could be printed, which led to the stationers company and eventually and its monopoly on printing books and then culminated in the statute of Anne in England in 1710. And the origin of patents lies in mercantilism and protectionism where the king would grant open letters or a letter patent because the word patent or patente means open, granting someone the exclusive right to sell a given product in the region. Like, you're the only guy who can sell playing cards or sheepskin. There's pure protectionism that culminated in the statute of monopolies in 1623. This finally led to the US Constitution authorizing Congress to pass similar laws, which we have now. So let's talk about copyright. Copyright has its origins and censorship and thought control, so it's no wonder that's what it still does today. So I'm going to give some examples. These are just some examples, and I'm going to go through some data in a little bit. So the seminal German silent film Nosferatu, some of you may have heard of and even seen, was deemed a derivative work of Dracula and courts ordered all copies destroyed. Now, luckily, someone preserved a copy, and that's why we still have it today. Shortly before his death, the author J.D. Salinger, author of Catcher and the Rye, convinced US courts to ban publication of a novel called 60 Years Later Coming through the Rye. It was a sequel unauthorized, and it was a derivative work, and copyright law prevented the publication of a book. There was one time about 2005, a grocery store in Canada mistakenly sold 14 copies of the new Harry Potter book a few days before its official release. And so a British Columbia Supreme Court judge ordered customers not to talk about the book, copy it, or even read it before its official release date. Copyright also threatens freedom on the internet, which is very serious because the internet is one of the most important tools we have in the fight for freedom to fight state tyranny. And just a few years ago, the Stop Online Piracy Act or SOPA was only narrowly defeated by an uprising on the internet. Aaron Swartz, who some of you may have heard of, was a brilliant young inventor of RSS, the technology behind blogging and podcasting, and he was an anti-SOPA activist. He uploaded some academic journal articles to the internet, and he was facing life in prison for federal copyright infringement, and he killed himself. Gotting Gilberto Sanchez bought a copy of an unfinished version of the 2009 movie X-Men Origins Wolverine in the Bronx, uploaded to the internet, and was sentenced to a year in federal prison. There was a grad student in Britain named Richard O'Dwyer, who had a website with hyperlinks to other people's pirated movies, and the US went after him and finally got a judge to order him to be extradited to the United States to face federal prison. He finally escaped it, but his life was almost ruined and derailed for many years. In 2011, there's an interesting paper by law professor John Taranian, where he talks about how the normal activities, because of the statutory damages clause of copyright that I mentioned earlier, up to $150,000 per infringing act. A typical internet user, like an average American law professor, like maybe named Richard, who doesn't even engage in PDP file sharing, could theoretically result in up to $4.5 billion in liability annually for copyright infringement. And if you might remember the singer Susan Boyle, the singer Susan Boyle from American Idol was permitted for singing a song because of copyright. Now, patent law, let's take some patent law examples. Patent law is rooted in protectionism, so it's no wonder that's what it does today. It protects people from competition. Back in 1999, at the dawn of e-commerce, Amazon had a patent on one click, which was clicking once to complete an order, and they sued Barnes & Noble right before the Christmas season for daring to let its customers complete a purchase with a single click. By the way, these are not abuses. These are how the laws work and are supposed to work. In 2008, a patent holder threatened to use court injunctions to force forward, not to use various technological safety measures like active park assist, stability control, blind spot detection, and hands-free voice control. So this is another example of how patents can prevent safe measures from being implemented and can cause injury or death. And by the way, Professor Epstein is all in favor of patent injunctions because after all, if it's a property right, you need to enforce it. Here's another one. Even though the practice of saving seeds after a harvest to plant the next season is as old as farming itself, patents prevent farmers from saving patented seeds. Monsanto even and others even come after farmers for growing patented crops just because the wind carried it from a neighboring farm. Back in 2010, there were people who were literally dying who had Fabri's disease. And they could be treated with a drug called Fabrizyme, made by Genzyme. It was a very short supply because it was being sold in Europe for a higher price. No one else could make it because of the patent. Another example of how patents kill people. And for a more recent example, some of you may know this, it always turns to Bitcoin, by the way, in Jean's opening remarks. On Saturday, Taproot was activated, which implements something called Schnorr signatures in Bitcoin, which is going to make it much more secure, more efficient. For 12 years, we've had Bitcoin, and we haven't had this because of a patent, which expired right before Bitcoin came out. OK, but what's more important here is what is the empirical evidence? Because in my view, if the argument is we need to infringe property rights for this limited purpose to make society better off, where's the evidence for this? Does patent and copyright do they promote the progress of science of the useful arts? So it wasn't even a hunch at first. This wasn't done in England to promote progress. It was done to bribe court cronies to collect taxes for the king. So the English Parliament never did a study before the Statute of Anne in 1710, or the Statute of Monopoly 1623, to see if these things benefit society. So we've had 230 years. The founders didn't do a study when they put it in the Constitution. So it's been 230 years. Where's the evidence? Where's the proof? So back in the 1800s, there was a growing reaction against patent and copyright law by free market economists who were wondering, what the hell are we doing limiting trade and limiting competition? And in response, because they were being attacked by free market defenders, the defenders came up with a term like intellectual property to make it sound like these are natural property rights, but they're not. Now, the first big empirical study was in the 50s. The Austrian economist Fritz Maklop, who actually did his PhD under Mises, in 1958, after commissioned by Congress to do this study, concluded, no economist on the basis of present knowledge could possibly state with certainty how the patent system, as it now operates, confers a net benefit or net loss on society. 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. In 1958, 1986, George Priest, an economist and attorney, a law professor, in the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or of other systems of intellectual property. Wesley Cohen and Stephen Merrill in 2003, there are theoretical as well as empirical reasons to question whether patent rights advance innovation in a substantial way in most industries. The literature on the impact of patents on innovation must be considered emergent. And then he says, an economic analysis of the cost and benefits of IP is no more within our reach today than it was in Maklop's day in the 50s. Boston University Law School professors and economist Myron Bison in 2008, it seems unlikely that patents today are an effective policy instrument to encourage innovation overall. Patents place a drag on innovation. There is clear empirical evidence that the patent system is broken. Law professor Andrew Torrance, 2009, little empirical evidence exists to support the assumption that the patent system spurs innovation. Economist Bolger and Levine in 2013, the case against patents can be summarized briefly. There is no empirical evidence that they serve to increase innovation and productivity. Petra Moser, 2016, when patent rights have been too broad or strong, they actually discouraged innovation. Heidi Williams in 2017, to summarize evidence from patent law changes has provided little evidence that stronger patent rights encourage research investments. And finally, in law professor Thomas Chang's view, theory and empirical studies firmly refute the notion that patent protection is necessary for securing innovation. So in my view, the evidence is on our side, on the patent abolition side. There is no evidence that shows that the takings done by patents benefit society. My own estimates based upon estimates of the cost of patent trolling is that patents cost at least $100 billion a year on the economy. And it's not like we're hurting people to the tune of $100 billion, and then we're getting $300 billion of innovation out of it. I believe we're actually getting less innovation because once you have a patent on a product, you have less of an incentive to keep innovating because you can rest upon your laurels for 17 years. And your competitors have less of an incentive to innovate by improving your product because if they make an improved product, they can't sell it. So I believe patents actually discourage innovation. So we're paying $100 billion, and we're getting less innovation for the bargain. So I believe it's clearly time to abolish these monstrous regimes. And I welcome Professor Epstein refuting what I said because then I can feel better about the career choice I made 28 years ago. Thank you very much. Can I ask you a question about some? You can take less if you want. Oh, I never take less. Okay. Well, it's still going. I do not believe in trends will trespass. I want to try and step for setting me up in a way. Let me see what I can do in order to answer him. And let me begin in effect by reminding everybody what the resolution was. It's a rather extreme resolution. It calls for the abolition of the system. And I don't think that you could establish the abolition of any particular system for any reason. If what you can show is that the system is it now exists contains certain kinds of excesses which need not be put there. So to start with the copyright example, the so-called Copyright Term Extension Act did give people copyright protection for 70 years after death. It is one of the dumbest statutes that has ever been drafted. There is no reason whatsoever to tie any exclusive right. However, it may be created to the life of the author so that Gilbert outliving Sullivan gets longer protection for his part of the thing than the other. But the question is, can you make the same argument about a statute which has a 14 year term and a 14 year extension with respect to original work? And that's going to be a much more difficult kind of thing to do. It's certainly correct if you talk about power copyrights and the kind of statutory damages that are given that in many cases are absurdly hard because they bear no relationship to real losses. But it doesn't follow that a regime which has been tempered a little bit is going to have those difficulties. It says that sometimes what you do is you issue injunctions that shut down very useful situations. But it doesn't follow from that, that you can't put together a rather effective regime for either copyrights on the one hand or patents on the other, which gives limited injunctions and conditions them in various kinds of ways. So as permit the uses that are truly necessary with respect to the patented or copyrighted technology while avoiding wholesale exploitation. So what you have to do is to figure out from first principles as to whether or not you want this thing and why do you want? Well, what we're told by Steph is that if you look at the world, but you will see, is that it's a system of natural rights is one that we protect and a system of copyrights and patents given the fact that they're always going to be created by some kind of statutory authorization offend the system of natural rights. If you go back and you start doing the classical history on all of this stuff, what you find out is that many people made exactly the same arguments associated with having property rights in land acquired by first possession. So if you want to go back to the Prudone type of theories, what they said is the moment somebody takes a piece of land, puts a fence around it and claim it to his, what happens he has now prevented the rights of other people to move various places across the face of the earth. And so therefore a system of private property is necessarily unjust because of the way in which it takes the normal rights of mobility. I was trained in Roman law and when I discovered is amazingly enough these yokels managed to get it exactly right when they said there's certain kinds of resources that should be left in common rivers and beaches and so forth because the poll now problem was too great but there are other kinds of resources mainly land, chattels, animals and so forth in which private property rights are going to be necessary even if you take things out of the nature because what happens is the incentive to create and to develop these things is only going to exist if you have exclusive rights to them. This started off as an agricultural metaphor most famously in the expression those only people who ought to be able to reap are those who sow and if in fact you had only common land and nobody would ever be able to plant anything because somebody else would be able to snatch it away. And when you start dealing with various kinds of intellectual property you have exactly the same kind of distribution. There are in all systems of natural property things which cannot be reduced to private possession by any form of grant or administrative application and these are generally called abstract ideas and natural elements of the two main categories and the theory is you try to run a world in which you could patent or copyright the Pythagorean theorem. It means that anybody who wants to do a proof for the next 20 years is going to have to pay him there are gonna be thousands of theorems that you have to buy and the whole thing will break down and so what you do is you say these things are held in common and you give a system of prizes or rewards or something if you try to stimulate that stuff. But if you're then starting to talk about various things that could be made using these mathematical theorems algorithms for the designs of various medicines and things of that particular sort all of a sudden the dynamics start to change. If you decide that you're going to leave these things in the public domain no matter how much work's put in you get the following kind of fatal disequilibrium which is going to really hurt innovation. I spend a billion dollars to develop a brand new drug I get no protection for it. Somebody else can figure out what the formula is quite easily by reverse engineering. I have to recover my fixed cost when I try to sell this stuff. This particular fellow doesn't have any fixed cost and so what he can do is outsell me in the marketplace. I understand this going in and once I understand that I don't engage in the kind of investment you're talking about a step is quite right to say you wanna look around and you can do things by trade secrets and that is certainly a dominant mode with respect to formula and various kinds of processes but if you're trying to sell a drug and so forth that can be easily reversed engineered you've got to have a patent system and so the way in which the intellectual property space is organized you have things that are kept in the common domain you have things that become trade secrets you have things that become copyrighted and patented and all of these things if they work together are going to create some kind of greater efficiency. Now I've heard that there's no empirical evidence that supports this particular position but I think on balance it's probably not the case. If you start looking at this one of the things that I would refer to is a well-known statute called the Baidol statute which was introduced back in 1980 and Baidol had the following proposition. It said the government gave lots of money to various universities in order to sponsor research and the theory was that you now have something which is sponsored by the government and the government could say that as a condition of its particular grant it wants you to leave this stuff in the public domain so that anybody can use it in whatever way shape or form that they happen to see fit. And if you go back to a famous book by Vanaba Bush called The Science the Endless Frontier back in 1945 at the beginning of the period of American dominance in science and research or what he said is he wanted the following kind of patent regime. He wanted to make sure that when you were working with things up to the proof of principle that is general arguments about how various things in nature start to work and nobody ought to be able to get a patent on that. But when it came to talking about compositions of matters for example particular kinds of drugs or various kinds of processes with industrial application at that particular point he encouraged people to patent these things because of the incentive effects that it had and that they would hope that they would give the government the license to use them free of charge itself a rather tricky situation. Well the question is can we figure out whether this is a good or a bad thing? With Baidol the general rule was that stuff was left into the public domain and so therefore without patents and without any copyright protection on what you should be able to say is uh-huh we're gonna get an enormous amount of innovation coming out of this stuff but in fact they found exactly the opposite. They found out that there were many labs that had all sorts of very clever techniques but when it came to commercialization nobody was prepared to commercialize something even though it was left in the public domain. And so what the statute said under these circumstances is that we are now going to create a device to incentivize people to privatize this stuff and to patent. And so the way the system started to work is that you work with a university on a government grant and then the school makes an elaborate kind of contract the author gets a certain percentage the department gets a certain percentage the university itself gets a certain protection and all of a sudden out of nothing you see all sorts of research arms developing in universities this whole purpose of which is to market these kinds of patents into various kinds of spaces. And the question is well why is it that they want this kind of protection and it's a kind of a subtle argument cause the empirics were very clear there was a massive growth in innovation that took place in the early 80s in response to this kind of development and the attitude I think most people had is if this thing is out there and it's not being protected by patent we have no idea who our competitors are going to be they're gonna be so many of them in so many different directions that it has a very substantial chance that if we develop this stuff there's gonna be somebody else who's gonna try to sell the same thing they're gonna be too many people who coming in they'll compete the price down to zero and none of us will be able to recover the fixed cost associated with the operation and development of our patent and the other hand once you start to give for patent kinds of protection it's very important because it changes the game now that you have this particular kind of protection what you do is you have an exclusive right to the invention that comes there it may well be that you're going to get competition from somebody who has a different device and a different patent but you don't have to worry about the added risk that the particular technology that you're trying to develop through the patented resource is going to be the think that's gonna be misappropriated and taken by somebody else and so what happens is now you start to see people really springing to action and the level of increase in various industries that have taken place was nothing short of spectacular in virtue of this particular situation innovation now became institutionalized proof of principle was left in the university and the development of various kinds of goods and so forth was taken and put together in this other kind of system and now when you start looking at this the question is how do you describe these things and here it's very important to draw an intellectual distinction between two ways of thinking of the patent system or the copyright system those people who think about this system in a hostile fashion almost always call it a system of monopoly power those people who think about it in a more positive light as I tend to do as a classical liberal but not a hard-line libertarian we tend to call them exclusive rights what's the difference is between the two of them well every system of private property has to have a system of exclusive rights so I happened to own unit 80 in my particular building on central park west actually I don't know that the university done it's there and lots of people own their own homes they have a monopoly as it were over their own house but when you look at a real estate market everybody calls this market highly competitive even though there may be no two houses that are identical if only because they're all each of them is located in a different place from the other but they're close enough substitutes that an organized markets with brokers and intermediates take place and nobody would want to say that the guy owns 430 Walker Drive in Los Angeles has a monopoly over that particular property given everything else that is done so essentially the creation of a system of exclusive rights with respect to land is an absolute prerequisite for trying to create a competitive market what you have to do is to have strong exclusive rights and then they have to be enough close substitutes out there so that you do not want to call this thing a monopoly so for example you compare the system of private property that I'm just talking about with the system of common carriers where it turns out there's only one carrier that can take you in 1400 let us say from Oxford to London this fellow is under a duty to serve because he does have a monopoly position he's entitled to get rent and revenue and what you then do is develop a very different kind of system than you have with competitive markets namely there's a system in which rate regulation is going to be permissible and you're trying to dance between Silla and Corribdes figuring out how this guy can charge enough to cover his cost and make a reasonable profit but making sure that he doesn't engage in a form of monopoly exaction those sorts of risks simply do not exist when you start dealing with ordinary people now when you start coming with respect to drugs and chemicals and largenies and so forth it's exactly the same thing I may have a monopoly or writing my new book on Shakespeare but there are other people who could write other books on the same topic and so you start looking under S in the bookstore you'll find 50 or 100 books all which are in competition with one another if you start trying to say well I really need to have some kind of a drug to control my high rate of cholesterol well you could find a number of drugs that do this all which are in competition with one another and so what happens is the competition between these drugs drives the prices down it's also the case that when you think about this particularly in the patent space the way the system is organized there is now an enormous incentive on the part of people to piggyback off of everybody else so one of the important features of a patent system is what it does is it requires you to make a full disclosure of the various methods that you have used in order to develop the particular device in question and to give a complete specification of the product design now why are you required to do that? well for one thing what it does is now somebody reads this two things happen they can use this and then they can try to develop complementary products or they can try to develop substitute products the complementary products are one that you want to put into place and to deal with the first guy and the substitute comes back on the other side to give you a competitive mark it turns out there's a very nice work by Jonathan Barnett who says this follows if it turns out you're a big company you really don't care as much about patent protection because you can internalize things through contracts and trade secrets but he says it has ample evidence empirically to show the point that if in fact you're a small guy you want patent protection because the network of contracts that a large firm has is not available to you so contrary to the conventional wisdom is sort of things that big guys must allow little guys the actual empirics of the situation goes in the other direction the little guy is the one who needs the patent protection because he can't resort on the other contractual network and these guys come in and if they're pioneers in a new area they're going to get an extraordinary high rates of return because they will be quote-unquote a monopolis for a short period of time but the system of disclosures and the narrow limitations on the patent I mean that other entrants can come in and try to fill the same space because you're only allowed to patent your device or your medicine you're not allowed to patent or protect yourself with respect to the way in which you have a particular end so if you have something like celibrex as a drug you can't use beta cox drugs or whatever the hell they're called and when everybody else from putting a rival and what you do is you develop a competitive market out of these things now it turns out this is a competitive market that is given to you for a reason the reason is to create this innovation and when they found out for example with respect to the hatch waxman act in nineteen eighty four and that if in fact you had to get a patent before you apply to the fda for drug approval that your patent term would essentially run before you could get the drug to market and the patent would become worthless and so what they did is they passed another adjustment which essentially extended at that time for five years the patent for a long enough period so that you could go through at the time the fda process and still have the full term unfortunately the fda no surprise has become more complicated and the hatch waxman offsets have become somewhat inefficient but this was again clearly market driven everybody said you know it cost me one point two billion dollars to make a drug and if the only thing i can do with this drug is to do it under these circumstances i won't get any return from it so when you look at all these systems what's going on is you're talking about a copyright bargain and talking about a patent bargain you're talking about situations with the folks who come in and get this particular protection have to supply something in exchange for it and then just to make sure that it works really well what you make sure is that these patents and these copyrights are for limited terms that much too long today on the copyright space probably too short today uh... with respect to the patent debates particularly with respect to pharmaceuticals and when you do that the things then go into the public domain because having given the incentive to create for a long enough period of time now allowing a drug that has already been created to be used at zero price is going to have reasonably desirable effects because you no longer have to worry about the problem how you're going to create the darn thing it's already been created and so you could try to reduce the level which is done and so there is now another additional source of competition which is that off-copyright drugs and off-copyright patents and so forth all of these things uh... can be in competition which things are created the other way the system looks a little bit messy but it really in fact works amazingly well at least if you get rid of some of the distortions and errors that are associated with this application and this is violently different and I'll end on this point then some of the practice that you had in England where the patent system was worth it because it was so expensive to use that nobody could rely upon it and where it was also so corrupt that these things were given not in exchange for a new invention they were given to people simply to allow them to raise revenue which they could then kick back to the crown so the useful invention requirements associated with the patent clause are designed to get rid of all of that stuff and when you do get rid of that stuff the current system with all its worth is better than no system at all and it could be made a lot better if in fact we prune away the excesses and basically return to the theory of patents and copyrights that animate the original design of the system thank you thank you Richard five minutes of rebuttal if you would like to take the lectern I'm sad to say I'm still a little bit depressed about my career choice uh... slightly technical matter jean I mean professor Epstein I'm I'm familiar with the patent bargain refers to the idea that the patent law grants an exclusive right to an inventor in exchange for him disclosing everything okay so that's to overcome the practice of people using trade secrets with the kept in secret so that's the patent bargain I've I've never heard of a copyright bargain so I don't know look forward to reading up about that I never claimed that patents grant monopolies but they are called monopoly privilege grants and the entire in the supreme court actually refers to those monopoly privilege grants just in a in a case last year uh... and the purpose as you say is to allow these drug companies to recoup their cost how they're going to recoup their cost that they can't sell it for a higher price than they otherwise could I mean sometimes that's called a monopoly price doesn't mean that they get a monopoly that would classify as a monopoly under the antitrust laws which have a different standard uh... than economists do uh... as for the idea that payments help the little guy that that patents help the little guy first of all most patents are owned by employers not the little guy who's the inventor who invented it okay so it's almost uh... it's almost always owned by the employer and as for helping small companies and not big companies i think is exactly the opposite uh... what happens is you have large companies amass huge patent treasure troves uh... for as a good example this was the recent smartphone patent war is about seven or eight years ago between apple and samsung and motorola and they are you know apple suing because they uh... someone else had a smartphone with a touch screen and rounded corners because they had a patent on that and and then they're being countersued what you what you do is if you're a large company you have tens of thousands of patents which you paid lawyers like me to get for you right and you didn't reward your inventors for when someone suits you for patent infringement you look you look through your pile of patents and you suit you countersued them for some so the patent lawsuits going for five years and they finally settle each other in the grant across license and in the meantime little companies or left out mccole because if they tried to enter this fray they'd be sued into oblivion because they don't have ten thousand patents to go after the large companies with so patents of course helped the big companies and they basically help form cartels and oligopolies which is not surprising because they are monopoly grants of privilege uh... as for pharmaceuticals the idea first of all anyone who's interested in can do this war debating but you should read chapter nine of bolger and levin's book against intellectual monopoly they completely explode all the myths about the pharmaceutical industry needing patents and being requiring patents uh... so let's take covid as an example right now there's a eleven different vaccines that have been approved for emergency use somewhere in the world and as the summer as of december twenty twenty last year there are over two hundred vaccine candidates of covid being developed and at least fifty two were in clinical or human trials so there's lots of innovation going on and maternal on october twenty waved its patent rights so if it needs a patent to recoup its costs why did it wave its patent rights italy in switzerland didn't even have drug patents until the late seventies and they were some of the leading uh... creators of drugs if just as an example bolger and levin they did a study they look to a poll uh... if the british medical journals readers on the top medical milestones in history they found that almost none of them had anything to do with patents penicillin x-rays tissue culture and aesthetics uh... chlorprom i can read that one public sanitation germ theory evidence-based medicine vaccines birth control pill computers or read oral rehydration therapy dna structure monoclonal antibody technology and the discovery of the health risks of smoking of the top fifteen entries only two had anything to do with patents and the center for disease control in the u.s they had a list of the top ten public health achievements of the twentieth century none of them had anything to do with patents uh... a review of the even review of the most important pharmaceuticals reveals that many came about without the motive or the possibility of requiring a patent including like aspirin a z t cyclosporine digoxin ether fluoride insulin medical marijuana methadone morphine oxytocin penicillin phenobarbital process of quite nine riddle in solvers and vaccines and vitamins you don't need patents to develop drugs start with the the first point that he raised about the question about employers in large firms in domination uh... there is a key distinction between small firms that have employees and large firms that have employees in both of these cases the patent is always filed for by the particular inventor and they're assigned over to the firm but they're going to be assigned in very different ways to large firms into small firms one of the things that we now discover is that to the extent that patent rights turn out to be weak the small firm no longer could be confident that it can get injunctive relief against the large firm that blizzards it with respect to suits and so they can be put into difficulty if in fact uh... when you started to have a patent and you knew that it was protected uh... you're not going to be suffered by uh... the particular difficulties at hand the second thing to understand about all of these things is that uh... the so-called monopoly risk associated with these patents in the coordination problem is handled in other ways on one of the most important institutions associated with patents is the system of licensing this can work in many different ways sometimes it's one person just gives a license to another person to use it on a non-exclusive basis and then what happens is you can get this out to many other people and see exact same method that you use with respect to trade secrets only you don't have quite the same confidentiality problem uh... but the more important development with respect to these various licenses is one which allows you to have license pools of one kind or another in order to develop various kinds of technology uh... so you take something like telecommunications where the a particular cost of transmitting and collecting various kinds of information has dropped exponentially for the last forty or so years what you discover in fact is that these things are all organized by very a latin patent pools they have all sorts of rules which tell them how it is that you're going to figure out what you put inside the particular standard how it is you enter into agreement with various companies so that they restrict the monopoly price if in fact one of their elements is in the standard it turns out that the number of companies that you now need as the patents become all the products become more complex increases and yet the continued rate of decline in prices is all been driven by the ability of these licensing arrangements to start to work to create these kinds of standards uh... you would never get these devices to begin with if you didn't have a patent system and in addition to that you would never be able to get the coordination without the licenses to understand how the system particularly works what you have to do is to understand that when you're dealing with real estate and other kinds of situation if you give people as a property right only the exclusive right to use something and you don't give them the right to enter into various leases of mortgages or gifts or other kinds of transaction are they going to be relatively useless and the patent system essentially overcomes the holdout problem that you get by having extremely developed institutional set of arrangements uh... which works in this particular fashion and when it comes to the invention it's important to understand that there's a distinction many of these drugs were discovered in earlier and simpler times where it turns out that you didn't have that kind of massive development costs that are associated today but even then it may be that the device wasn't discovered through a patent system but it's marketing in fact probably did require some kind of additives or other stuff which may well have been protected by patent so the question you have to ask is whether or not the unprotected stuff will make it into the marketplace faster than it will with some degree of protection and i didn't hear any response to the statements associated with by dole which took a situation where everything was in fact in the public domain and found that it did not work particularly well and there was an enormous uptake in the number of drugs you're trying to figure out what it is that blocks innovation it's the same kind of standard regulatory arguments that all libertarians and classical liberal makes it's essentially something like the FDA which comes along and in the name of safety and effectiveness imposes requirements that keep drugs off the market for so long that it turns out that their healthy our quantities are not going to be exploited and they're all too many cases of drugs that are left on the market only after years when in fact if they have been introduced earlier they would have produced the same benefits ten years before and ten years longer than it otherwise had been the case so putting this whole system together um the question is not whether you can find devices that we develop without patents in one form or another the question is do the patents add to that we were mentioned about um Moderna and other kinds of companies that do this the point to remember is you may not need patent protection if you're going to get tens of billions of dollars of payment guaranteed by the company the government for the property that you create because if in fact you have a guaranteed buyer of the particular situation all the incentive problems aren't there the issue you have to worry about in all those cases is whether or not the government is paying too much and it may well be if you ran a patent system you could actually get the things for less total cost after you subtract out the tax subsidies and put into case the patent protection so it's much more complicated I think than Steppen has said thank you thank you both we now go to the Q&A portion of the evening and as you know in this particular case we're going to give either of you the option at any time to ask the other a question would one of you Richard or Steppen would you want to exercise that present that option now wait for the question first you want you want to waive the opportunity or do you want to ask Richard a question all right you want to ask a question Richard should fire yeah go ahead okay so Professor Epstein uh you've you seem to believe with me that 130 years or so for copyright is absolutely absurd and ridiculous now apparently if you have a copyright system that's what happens so would you prefer to have no patents or 130 I mean sorry a zero copyright term or 130 years if that was your choice I take the 130 years even though I hate it because it turns out oh yeah excuse me I'm sorry I'm sorry I would take the second and miserable one of these alternatives because most of the value with respect to any liberty any literary work most of it for most of them are going to be concentrated in the first 10 or 15 years so essentially distortions that are completed from the years 20 to 120 may matter with respect to Mickey Mouse and a few other things like that but with most things it turns out it doesn't and remember it's not just books and literature that are subject to copyright a software is subject to a complicated regime but it's often protected by copyright and the useful life of the software copyrighted devices sort of five ten years at most usually less than that and so essentially I think that the old ridges harmful but I think the most important years of the in years not the out years and so I would keep the system and I would do everything at my power to get rid of the silliness all of which was introduced by international agreements because I think what I would answer is I'm talking about an ideal patent system which doesn't have the terrible risk that are associated with the public choice dimension that we have in the current law where the ability to take things out of the comments and to put them into these things are completely up to legislative discretion there was in fact as I tried to make in one of these cases that were border early on that if something is already in the public domain to put it back and to say it's now going to receive copyright protection or patent protection is just crazy and the culprit there is the constitutional system which is so weak that what it says is we use a rational basis test which in my takings book I attack and allow them to be reprotected and this was the case that Larry Lessig argued in 2003 so however the name seems to escape me but I thought that it was exactly right to say that if you want to extend it for no quid pro pro whatsoever which is what they did with the term extension act that should be unconstitutional so again I think the simplest way to put the point is I'm trying to defend an ideal system not the current system but the only way you could get to that system paradoxically is to do what I wanted to do in the takings book which is to create a strong and stable system of property rights which would also mean that things that have been put into the public domain will be kept there yeah I want to inform the microphone is over there and so please if you want to answer ask a question of either one please line up at the mic and so do so with that microphone over there and I wanted I wanted to ask exercise moderators prerogative to also ask Richard a question I guess pertaining to the similar one where you there seems to be a notion on your part that that that when you give government power it won't abuse it I mean that that's an accusation where obviously in in eminent domain for example notoriously you defend eminent domain but you're saying oh well Donald Trump exercising eminent domain in Atlantic City that's not an inevitable part of the system that that when you allow government to exercise these actions that the crony capitalist and the corruption won't take over and that therefore it's we can always imagine an ideal system have you heard that kind of complaint before to your view and what do you say in response to it to say that I have not heard it would commit gross perjury on my part it is I think in fact the central objection that you made that has been made to my system about eminent domain said the problem about you Richard is you prefer to have corrupt judges doing this stuff and I prefer to have corrupt legislatures my answer is in effort to try to stop the corruption on both sides I want to aid to divide the powers and be to resort to a title which I'm now associated with simple rules for this complex world that will start to delineate when it is that the government can and cannot take and so what happens is you see the areas going both ways there's a case called Monsanto and what they did is they had a series of devices that would pay trade secreted and they had to essentially get government approval for their use and the government tried to condition their approval of the thing on the grounds that they allow other people to use it for a license fee that was either zero was set by the government and my view was that if you're doing things for health and safety you're not allowed to under the doctrine of unconstitutional conditions to permit somebody in the government to give it to your rival for at something below market cost so that's the trade secret system and Steve you know Steph is in favor of that and you have exactly the same time of corruption that could exist there my view about this is I spent my life trying to argue for a system of coherent property rights and just compensation and limited public use to control those particular public choice problem have I been successful I think that question answers itself but it's not because the system has been tried and failed it's because it's never been tried at all particularly after a famous case called Penn Central of which says there's a rapid distinction between regulations quote on quote on the one hand and taking the property on the other and the government rolls over and dies with respect to regulations so zoning and all sorts of air rights are now at risk and I think the answer is we don't want to mess around with the intellectual property system which works very well between private parties by and large although they're obviously huge cases of error but what you want to do is to make sure that the government can corrupt it by taking these rights and giving them to somebody else so the culprit in all of these endeavors is in fact a weakened indefinite system of property rights sponsored by the courts who are essentially give up on their constitutional function and by the way they do it with land zoning laws are a classic illustration of gigantic government over speech with respect to use because they don't follow the common law prescriptions on zoning and reciprocal covenants but allow huge wealth transfers to take place so this is a problem endemic across the entire system and you don't and you don't think that the endemic and nature of it is what you're up against Richard that that's it is but it is if you grant them and it is when you don't grant them the government is essentially a promiscuous beast you put any system of rights together whether it's a good or bad one and they have the infinite capacity of left to their own devices to make it worse and so what I'm trying to say quite simply is you have to attack the monster at the other end what you have to do and the reason I wrote the takings book was you have to stop the rent seeking which of course is exactly what we both agree on and what happens is you have a bunch of courts out there who believe that all government agents in the legislature are well-intentioned in what they do and so they defer to what it is that they want to say and if you're going to get a regime of judicial deference no matter what the system of property rights you start with you're going to end up with something that's truly horrible and so either you tighten up the constitutional system or we're going to have to fight it through and sometimes you'll be better in the eighties we actually had a bit more sense on this you come to abide then you come to Obama and you come to everybody afterwards and it's been pretty much downhill since that time and it will continue to be so unless there's a fundamental change and on that issue constitutional limitations on the government to confiscate I think we're at one I mean I've spoken too long but I think we're at one you guys agree the government is a whore as Richard just said I didn't say that I said the government is a rinse just I prefer it's a much more delicate you said it's a promiscuous beast but I bet yes anyway uh yeah uh do you want to come just a quick comment uh I actually would abolish trade secret law too but that's a different argument but uh isn't it it's a little ironic that I believe you have argued correct me if I'm wrong you've argued that you're think there might be some use for antitrust law but generally you would oppose it because it's going to be abused so no no no no no no no no I can send you the quote okay let me you guys are talking about your trust now it's a little bit off topic but anyway but if you want to say something just the one sentence the answer is the the only area in which antitrust law teams to work at all well is with respect to horizontal arrangements and the big gun certainty is whether you render those unenforceable or put the Sherman Act behind it and the actual history of this stuff started very badly but I think it got a little bit better so by the time you got to the 1990s it was a terrible body of law you're seeing systematic decline coming back again my former student Amy Klobisch has put forward a bill at the end that's a Richard Epstein sentence thank you very much for that Richard Epstein sentence and uh period question and uh question uh go ahead don't have to identify yourself late on these guys who do you want to ask the question of go ahead hi my my question is for Steven and I came to this debate Stefan uh Stefan uh inclined to try to to be sympathetic to your view but I and then I heard the debate and the debate's more about efficiency and and well what produces the greatest amount of wealth and things like that and I wonder how you argue how you answer the argument that doesn't it seem fair that if somebody writes a two or three hundred page book and tries to sell it for twenty dollars a copy that there ought to not be that that ought to be prohibited that for some period of time that person not have a competitor who can say well I'll sell it for 10 because hey I was there a copier and and what the heck and and so there is a moral element other than just an economic element and I wonder how you how you meet that I don't think it's fair I think that if you choose to make information public then you can't complain if people copy it period that's the principled argument and not only that there are ways to make money creators find ways to make money off of novels for example you know I've pointed out take the harry potter example uh jk rolling writes harry potter um she writes it on a train because she has a passion let's say she sold it on amazon for 99 cents and she got a million fans and then she was knocked off the next day so then her profits tail tailed off right away okay so now she writes a sequel and she she tells her fans I'm gonna publish this as soon as I get you know five million people give me five dollars and then there's a movie made and they consult with her they pay her they pay her some of the ticket box office because she's going to be a consultant and this is the legitimate movie not all the other knockoffs that are coming out she could have still been a very wealthy woman so people can find ways to profit off of their uh off of their artistic creativity but I think if you reveal information to the public just like if you sell a product uh which pleases customers you're choosing to make your new invention public and if people compete with you no I'm a I'm a libertarian I believe in the free market I think competition is good and I think learning is good well I think there's more competition between Harry Potter and some other book rather than having knockoffs sell for the price of originals um you can use ingenious schemes to overcome some of these difficulties but the revenues you could get from those schemes are far less so you put the scheme together and say I'll put this thing public the moment I get a thousand readers each to pay me five dollars okay you do very fine on that then the book turns out to be a hit and the next generation there are a million people who redo pay nothing but the marginal cost uh the productions are going to clearly go down with respect to that um and I don't think there's any particular social reason to do that to put it another way the problem about libertarianism it has the first correct move which says the prohibition against the use and force and fraud is an improvement over the license to do everything in a state of nature and so what really happens is there's a consequentialist argument given what we know about human beings given that we know what we know about human beings can we create Pareto improvements by changing legal system without cash transfers and the argument in favor patent and copyright says we could do exactly the same thing in areas where physical possession does not give you adequate control and so what we do that we give you the right and then we try to limit it so what is a powerful right does not become a complete monster and they're always you know what is a derivative work there's a lot of abuse on that uh but abe's irish rose was not a derivative work of whatever it was that somebody said it was and so on it goes get good judges you could control it and the issue is where you're gonna get more abuse and I think in effect an open regime with contract gimmicks won't do it nearly as well as a copyright regime and what you then have to do is to try to make sure that it doesn't go off the rail so the answer is we do recognize these things and then what we try to do is to figure out where the abuses are and post something to do it and you know for many years these technical committees that worked on patents and copyright really did it the work that was done for the 1952 patent right by guiles jission and Federico I mean these guys were geniuses and they did it with two guys they sat around the kitchen table and they did a much better job on this than the well I would ask you the question do you prefer the 1952 act to the america invents act I think the america invents act only made trivial changes to patent law you think only trivial yeah only trivial changes the whole system is basically the same well I hope you're right one quick point to make a following up on that if you think about it copyright is basically dead already because the internet's the world's biggest copy machine and thank god for that so encryption file torrenting you know you can go get the next harry potter book the next day you can get music movies it's it's rampant so basically copyright is dead and do we see a reduction in the supply of artistic creations today we probably have more books being printed and published every year than in the history of mankind so the idea that copyright without copyright we wouldn't have artistic creation is obviously absurd because it's happening right now yeah on the other hand though when you have these various books that command these enormous advances right it's because essentially there's a belief that there is some exclusive right even though there's going to be some leakage associated with it and people take enormous steps in order to make sure that these kings cannot be distributed in an illicit fashion clearly you have to worry about that when you put the system together but because it's a worry doesn't mean that you want to say if a system is now 60 effective drive it down to zero what you do is you keep it at the 60 and you recognize the leakage and you know to answer what Steph says for example and the next thing is yes I mean you're a great artist and people start stealing your stuff so the record business goes you do recover some of it by going on tour right on the other hand after you reach 40 you don't like going on tour anymore and if it turns out it's your back issues rather than your new issues going on tour is not going to do it for you at that point so these are very imperfect substitutes and it turns out that the protection does induce the production in all of these industries how you release them on movies and netflix and so forth all that system is still driven by copyright question thank you do as speakers for coming out my question is for professor eppstein you mentioned mickey mouse and and how most most inventions have some kind of natural death that occurs whereas mickey mouse is lasted forever but you also mentioned how corollary to private property whereby you have excuses rights to those forever why isn't why why shouldn't mickey mouse last forever with rights to to the original owner or to the corporation why why should the the expiration change and how is that different from private property okay i think that's great i'm attacked on both sides now so i feel extremely comfortable one person says for god's sake eppstein you don't want any of this system and the other says if land rights are perpetual why isn't the same thing true with respect to copyrights and patent well the explanation is i think best understood by comparing both of these things to something known as a trademark and a trademark is in fact the form of intellectual property and it's a form that lasts forever because what it is it's a beak in that warrants to the potential user that you can be associated with the reputation of the party so that if the people start the chisel on the thing you're going to be hurt because your brand is going to be compromised and i think that's a very good system but the copyright system doesn't have that reputational signaling function and what you want to do is to say there are two goods that you have one of them is you put this thing into the public domain since it's a thing that could be non-rivalous and reproduced every time you get a large number of people who could use it for zero and that's a good but if you do that at the beginning you don't get the thing so it's a balance and what you try to do is to figure out how long of protection do you have to give to induce the production at a satisfactory level given what i said before the out years are much less important with respect to the production than the early years and so thereafter you put it into the public domain it turns out that the thing continue to be used take land and you own it for a hundred years and then you put it into the public domain the whole thing is going to become an absolute mess because i can't farm if you're going to farm and so forth so exclusivity is needed to make sure that land hold its value it's not needed to make sure that patents and copyrights are produced the different situation and if you try to think of this as a kind of a sort of social engineering based on empirical hunches some of these hunches are better than others and this one seems to work and the question then is how long and nobody in his right mind would say 115 years is necessary to induce the production the 24 the 1428 was probably pretty good most people on drugs if you know their profile understand that good drugs actually become more valuable in many cases towards the end of their term rather than less because they now have a history of use which means that the side effects are understood so in the last year of a cholesterol drug going out there it may have its highest level of sale so if you knock that down from 10 to from from 12 to 10 that's a huge difference and generally speaking i think what you want to do is to extend those a little bit longer modify hatch waxman and then as these things become generic they place the necessary price constraint on the next guy who has to make an improvement large enough to justify the premium and the research course that he has to put together so i think they're perfectly good reasons for the way the system works if you understand it um what you have to do is to understand that all these things require judgments at the margin and when you get politicians they're not very good at marginal judgments uh coming from you yeah so i would have all is trademarked too by the way but for different reasons okay uh professor fstein uh good i i like it i mean you're a brave man the the reason that you don't want patents and copyrights last or ever is because you don't really think they're property rights which means they violate property rights although you call them property rights and you're writing and one of your arguments in the structural unity of property intellectual property and real property you allow analogize it to property to normal property and you favor injunctions because it's property rights so you're all over the map i believe on that but there are some insane libertarians who do take a principled approach a consistent approach like uh some morandians galambos spooner they wanted these things to last forever hey if it's going to be a property right it should last forever and if that had happened we would be dead now the human race would have died out because you couldn't do anything you you have to get permission from the from the descendants of of ug from caveman days well that's why i don't want perpetual rights i mean look the constitutional they talk about limited rights they do not mean that you could create a copyright for a million years and say that it's limited uh they meant this in a much more functional way about you know in real time how long makes sense in the fourteen twenty eight year kind of principle is there the whole point here is utilitarian on both hand um if you basically keep these things perpetual people will in fact die off in a terrible way because everything new will become derivative or dependent upon everything before and putting into the public domain so you're trying to figure out how it is that you've maximized over the long term the sum of the incentives to create and the sums for the incentives for effective um dissemination i think it's perfectly principle to do this um what it is is it introduces an element of complexity at the middle but it's worthwhile because if you have the zero alternative you won't get enough of the stuff that you want into commercialization and if you keep it perpetual essentially the patents and the copyrights become strangulation devices so what you do is you try to go for a transition this has always been the history and so i will put the question back to you in the other way if everybody who's ever worked in these fields on a day-to-day basis believes in limited copyright and patent protection um why is it that the extremes are correct i think the correct thing to do is to figure out how it is you take that middle and figure out how you massage it and i don't mean this is an abstract matter i mean i'm pretty confident that if you were to ask serious people there's nobody who's going to stop wanting to have 50-year patent terms the longest you ever hear in any discussion is going to be 20 um and i think that you know that's a perfectly good compromise life is filled with trade-offs i just want the right people to make them which in this case means me not you but he won't run for office unfortunately uh and uh i want a quick comment okay uh you may not be aware of this but when the constitution was being drafted jefferson wasn't there but he sent a letter i think madison proposing an amendment to the bill of an article in the bill of rights which would have said the monopoly grants i think he used the word monopoly copyright can only be granted for x years so he wanted to put a time limit in there it was rejected but i wish it had it happen well i mean that my answer is if it had been 18 months god forbid if it had been 20 years um i would have been comfortable with that it was a blank i read it as a zero yeah i mean and then that's always the problem i mean a number beats a principle that's why i have statutes of limitations and so forth and you could ask the same question about that why is it if you have a good situation uh to sue a trespasser sitting on your land one year you get a million two years you get two million you get the 20 years you get zero and that's because the statute of limitations is put in there in order to basically make sure the security of titles will take place and that these disputes will resolve themselves in time we have it and so having limits like that is everywhere within the law and you have sometimes soft limits the estoppel doctrines and sometimes they are hard limits um and if you get them wrong it's catastrophic a one day statute of limitations isn't going to cut it and a hundred year statute of limitations isn't going to cut it either and so what happens is it started at 40 went down to 30 now it's down to about 10 for land and why is that because the devices for detection are more powerful so there's less reason to allow allow for longer periods of uncertainty um and again it's the question of finding transitions hard transitions are needed because you can't live in the middle space where a patent is 60% valid that doesn't make any sense so it's an on-off switch and the correct thing to do is to figure out where you put that particular switch rather than to pretend that you don't have the patent at all or that you don't have an on-off switch when you do have a patent. Next question yeah yeah next one. Uh uh Samuel Marx uh Harvard Medical School um I'm really convinced consular by your argument um open source everything I invent new medical devices um how do I convince my comrade so to speak when I figure that out I'll let you know I think I've been doing this since nineteen I've been writing on this since 1995 and I just keep trying to meet people over the head with it and doing this hopefully tell them to watch the video yeah um I can say I mean there's several of these cases Mayo and Alice which starts to play very tricky games the exception is to what counts as an uh a natural law there's always been a convention and everybody agrees it equals mc2 is something you can't protect but suppose what it is you divide make a device which allows you to put together certain kinds of chemicals in a thing um this is done empirically and do you call this thing a law of nature or do you in fact call it a new invention and when this thing actually came up um Justice Douglas who was a very strong anti-patent guy in the 1940s in a case called funk basically said it was a law of nature and Giles Rich and Federico they came back and say now we're moving this to the other side of the line uh because we want to have incentives to create it and we can have all sorts of nice stories after Alice and Mayo the two cases on this which indicate in fact that there's a serious risk of the decline in innovation that could take place in the medical business if you can't protect certain kinds of algorithms that start with natural events and then lead to natural cures so I'm on the other side of that I think in fact every time I write one of these briefs is trying to say please get rid of these two particular kinds of cases because if you expand the notion of natural law to the point at which it's currently done uh you're going to get many techniques which were introduced in profusion on going the other way and remember uh Rich and Federico are the two best patent lawyers of the 20th century and to have two guys write a statute that was a great intellectual achievement I agree with Steph to some extent that the 2011 act didn't change as much as it purported to do although it did some harm seriously with various kinds of business method patents but what they did is it was a zoo they had billions upon billion dollars worth of intrigue right and public choice nightmare by a bunch of guys who didn't know what they were talking about uh question you got a question no yeah you you do okay go ahead yes up to the microphone this is so civilized yeah so I've I've always found I love the theoretical aspects of this debate but it seems like we've had a solution sitting right in front of us and that is compulsory licensing so I would want no thanks okay we're done I've always thought you know the way it works in in music publishing or with uh or performance royalties right every you can play these on radio now but you can't reproduce them you can't theoretically wouldn't this work for any any aspect of intellectual property and I'll leave that to either one of you no I mean it works for ASCAP and BMI and and what happens is uh the first thing to note about the system is that their multiple uses all of us are more or less identical of relatively small value so that the transactions cost to negotiate in many cases are simply not uh worth it but the fly that you have in the ointment is how do you set the rate and if it turns you set the participation rate too high uh nobody's going to do it so that's generally not the risk inventors will always or composers will go down but if you set them too low there's a real risk that this stuff will not be produced in sufficient quantity the other key feature about that system is for large users it is always permissible under the current law to negotiate a side deal with them so that you have a customized rate when it turns out that you have large consumption uh but if you start using for example uh the compulsory license system with respect to drugs and so forth um it turns out that they're going to be real white balance associated with their particular operation so that what works in one area doesn't work in the other and this is generally the case with intellectual property uh the systems of use and licensing and exploitation are very sensitive to the kind of intellectual property that you have so just as a kind of an empirical verification for that it turns out that when people work in either patents or copyrights there's almost nobody who does both because it's too difficult they work in very narrow fields so if you're a guy who's doing it you will do cholesterol drugs um you won't try to do diabetes stuff because you don't know the science well enough and they're very different conventions of efficiency that work in different markets both on the licensing side and on the compulsory licensing side next question we have time for only one final question uh not the final questioner please take the mic and ask your question i would like to add a bit of a practical and realistic questions which i have missed so far a bit we had that at some point in time that it is for the small companies who benefit most from patents even though the large companies have the most and i don't think that is a contradiction uh we develop drugs and we are a small company and the experience is if you don't have a patent or only a use patent nobody is going to talk with you that's correct so you have no chance of ever getting that to the market so without a patent protection there is no way small companies can ever approach even a large company and get some of their inventions brought to a larger public we have a drug to prevent children who develop autism from becoming nonverbal nobody was interested until we have the patents granted so even having just applied for a patent is not enough nobody is interested so how do you overcome that yes thank you thank you for that question we run out of time but you each have seven and a half minutes for summary uh i suggest stefan and richard address that question in your summary thank you for the question uh i mean brother we're now we now go we now go to the final good the final part of the uh of the evening and uh i'd take it i'm gonna take it up down address the question that was just sure to you uh in today's world we have a patent system given that system investors want to see your patents and large companies want to exploit patents so of course they have value if there was no patent system people wouldn't demand that you show them your patents so in my concluding concluding remarks let me just say if i happen to win tonight because i've done so well in my career because of the largesse of the system richards and professor rich abstains in favor of i'm going to donate my winnings to charity the tootsie roll we'll go to charity um okay we've been talking practically normally my defense of uh of my position has been on more principled and proper terrain type grounds um not on the utilitarian side so much although i think the utilitarian argument just fails because they they haven't met their burden of proof uh all the studies that i read are all the studies that i'm aware of i'm actually not aware of any solid reliable studies that prove that professor abstain is correct you heard the quotes he didn't counter any of those quotes um so the way i look at it is this i'm going to go a little bit into Austrian economics okay mises is my favorite economist and ludwig von mises looked at human action from his praxeological lens which very simply means he understands what we do as humans by viewing us as human actors that employ scarce resources in the world to achieve ends or goals right this is what we do in life and and economic studies this but one thing that's overlooked in all these discussions is that there's a second key ingredient to successful action and that's knowledge because if you don't have knowledge you can't do anything and the reason that we're so wealthy today as a society is not because we've discovered more things in the earth the earth's basically the same and we're not really any smarter than the romans it's because we've accumulated technological knowledge over the years this is what's made us rich how it calls it the fund of experience now the scarce resources are things that only one person can use at the time this is why property rights emerge to ration those efficiently and to let us use them peacefully and cooperatively in trade without having violent conflict so property rights emerge as a response to the scarcity of these means but the knowledge that we have is not scarce it can be copied freely this is why china got rich so quickly because they're copying some of the things that we've done this is not a bad thing this is a good thing this is how the human race advances by emulating by learning by seeing what people do to please their customers and you compete with them to do the same thing or something better these are all good things to try to apply a property rights model to the second key ingredient to human action which is the main source of our wealth today is suicidal and homicidal and in genocidal it's insane okay i'm going to just close with a couple of quotes cori doctor a science fiction writer um wrote three or four billion years ago by some process that we don't understand molecules began to copy themselves we are the distant descendants of those early copyists copying is in our genes we have a word for things that don't copy dead as for the american founders thomas jefferson himself the first commissioner of the patent office famously observed that he who receives an idea from me receives instruction from me without listening mind as he who lights his candle taper at mind receives light without darkening me and finally as the very amazing polymath and created inventor himself benjamin franklin realized as we enjoy great advantages from the inventions of others we should be glad of an opportunity to serve others by any invention of ours and this we should do freely and generously so for the sake of property rights and liberty and innovation the patent system of the copyright system should be abolished thank you each time oh there's two mics basically two mics well thank you so let me start answering the question about the autism which i think is exactly on point um i'm trying to be a very practical person when i say that there are tradeoffs associated with these systems and that if you give too much protection it's going to have a negative set of consequences if you give too little it's also going to have that and the situation that you talk about is exactly the one that jonathan barnett wrote about in his book on innovation he's saying little inventors either they have a copyright or they can't negotiate with anybody and so therefore the information will remain private and if you want to talk about dead information private information is going to be like that or you really want to find other ways to do it there are other systems that you could try to put into place one of them is you could try to use a contractual system to do it but you will never be able to keep the information private and once it's leaked it's going to go out there and even if you kept it private you would never be able to reach the volume of people you want there is also an effort in many cases to start using various kinds of prizes uh because they don't associate themselves with any deadweight losses in the sense that if i give you a Nobel Prize or some kind of prize for making some kind of innovation it doesn't increase the cost to the public at large there is a recent book on this by zarina kahn and i think she's a little bit nuts when she says that oh we don't want to have any prizes at all or draw that implication but by and large prizes essentially have very very sharp limitations associated with their operation one is that they're very tiny right so if you develop a cholesterol drug like lipitor and so forth and you get 11 billion dollars in sale if the government's going to stand up there and says well we want this thing to be freely competed we're going to give you a million dollar prize to develop this stuff it's just not going to happen you do it for a mathematician who proves for a mad serum the thing is going to be proved and you couldn't copyright it anyhow or patent it anyhow because it's a general idea so sure you want to have prizes that are built into the system but they are not going to be able to replace the patent so you give the price to the first person who comes up with an invention and there's somebody else behind him he doesn't get the prize but it turns out that the second iteration is far better than the first if you had a patent system the second guy patents his because there's enough distance between it and the first guy and he can then make a bloody fortune whereas the first guy won't make anything so if you're relying on prizes you're relying on centralized knowledge ostensibly either by a government party who pays the prize or private guy and in fact they don't get the benefit of any kind of information coming out of it now i fully agree that when you're dealing with these systems what you're doing is you're trying to create knowledge well the patent system in the copyright system actually do that you write a book which you wouldn't otherwise have written now anybody else can read it and whereas there's certain reproductive limitations on it if i have a copy of my particular book i could let my wife read it even though she didn't buy it because there's a very well understood set of limitations that people can share these books around them what they cannot do is recommercialize it and go into the market at the same level as the first guy so you're going to get information coming out of that particular system and the same thing if you have to disclose best mode of invention with respect to something for which you pan that information is out there and it could be used and then once the copyright of the patent runs out after a sensible limit of time all that stuff goes into the public domain so it's not as though when you start to create these systems you're basically denying the importance of knowledge what you're trying to do is to figure out an efficient deployment which takes into account both the course of the creation of the knowledge and the course associated with its dissemination and the only way in which you can do that is to have a limited term of years which is the constant point that i took and then you have to figure out how it is you organize this so if i when i teach patents or copyrights what you always do is you start worrying about the situation of when an exclusive right starts to become some kind of a monopoly and if you see the latter thing then you want to move it so for example what they give you one case is in a very gifted set of rules on this government sometimes does something right and in the early 90s what happened is they were trying to figure out the rules associated with the question of when it is that you could put copyrights into a pool rather patents into a pool one to another and what they did was as follows if it turns out that you wish to put tools that are patents that are substitutes for one another into a pool that's the creation of a cartel and we're not going to allow it but if on the other hand what you do is you want to take patents that are complementary to each other in the sense that there's a vertical integration each one leads to the next one putting those together in a pool will essentially eliminate what is called the double marginalization problem where each person essentially having his own patent will try to maximize the revenue on that patent so by the time you have to go through six or seven patents what's going to happen is the process will be worth nothing and the first person who saw the way in which you put this together was none other than that arch progressive Louis Brandeis who when he put together the united shoe deal around 1900 figured out that by having different stages of production put together in a single merged company allowed you to have better products at lower prices than you would if you had them separately so you want to allow that to take place so what you do is you then figure out when you have these patents some forms of interaction between them are monopolistic and some of them are pro-competitive and this is an overtly consequentialist theory so just to end I was mentioned earlier what do I think about the antitrust law well I'm schizophrenic about the antitrust law because frankly what happens is it runs in both directions there's a recent book written which I regard as quite bizarre by my colleague at Chicago Eric Posner who seems to think that what we have to do is every time we see a contract of employment we have to assume that there is a deep conspiracy on the part of employers who are trying to put together some kind of monopoly situation so as to pay their workers low wages and he says what that means is you get all these workers hanging around they're desperate for getting jobs and these skillful monopolist buyers that is monopson this is their call will essentially only hire a few of them then you look at the real world a 4.9 million people quit jobs that it doesn't seem to be a situation where people are being shut out of the markets to raise prices people are raising wages desperately in order to get these back it's a competitive kind of market so you don't want to sweat that kind of stuff but there are other sorts of areas in which you can have various kinds of dangers and in all of these markets you're trying to figure out oh which way will work one way or another so as I mentioned to you before there's a world of difference between an exclusive right on the one hand a monopoly on the other and people who essentially work within the more shall we say utilitarian tradition which I surely do basically will say if you're going to create exclusivity where it promotes competition then you're in favor of it where you create exclusivity where it tends to frustrate competition it turns out that you're against it well how do you figure out which is which you actually have to know something about the subject matter and so the basic point I think that comes out of all of this is this is a very complicated rich body of information that you have to be able to assemble and coordinate if that you start to look at it the corner solutions of perpetual property rights and no property rights don't work you've got to live in the messy middle but the good news is if you understand the theory well enough you can make mid-level adjustments that are worth making and you could do so at least if you could overcome the congenital shall we say ignorance which is associated with our courts in our legislature a problem that exists under every legal regime thank you thank you both Jane please open the voting again if you voted once we want you to vote again and well let's see now um yeah all patent and copyright law should be abolished well the yes vote started at 20.37 percent yes vote started at 20.30 percent and gained to 29.63 percent the yes vote then picked up 9.26 percentage points the yes votes picked up 9.26 that's the number to beat the no vote started at 44.44 and went up to 55.56 it picked up 11.1 point i have to call this a very close race however since richard picked up 11 points and uh seven picked up a little over nine points you win by 1.7 points richard therefore the tussie roll goes to richard upstate