 Against Intellectual Property by Stefan Kinseller Copyright 2008 Ludwig von Mises Institute Against Intellectual Property first appeared as part of the symposium Applications of Libertarian Legal Theory, published in the Journal of Libertarian Studies, Volume 15, No. 2, Spring, 2001. For information, write to the Ludwig von Mises Institute 518 West Magnolia Avenue, Auburn, Alabama, 36832, USA, or see Mises M-I-S-E-S dot org. This audio production is read by Jock Coates of Oxford, England, and JockCoates dot me. Against Intellectual Property Rights Tangible and Intangible All Libertarians favour Property Rights and agree that Property Rights include rights in tangible resources. These resources include immovable, realty, such as land and houses, and movables, such as chairs, clubs, cars, and clocks. Further, all Libertarians support rights in one's own body. Such rights may be called self-ownership, as long as one keeps in mind that there is dispute about whether such body ownership is alienable in the same way that rights in homesteadable external objects are alienable. In any event, Libertarians universally hold that all tangible scarce resources, whether homesteadable or created, immovable or movable, or our very bodies, are subject to rightful control or ownership by specified individuals. As we move away from the tangible, corporeal, towards the intangible, matters become fuzzier. Rights to Reputations, Defamation Laws, and Against Blackmail, for example, are rights in very intangible types of things. Most though not all Libertarians oppose laws against blackmail, and many oppose the idea of a right to one's reputation. Also disputed is the concept of intellectual property, herein referred to as IP. Are their individual rights to one's intellectual creations, such as inventions or written works? Should the legal system protect such rights? Below, I summarise current U.S. law on intellectual property rights. I then serve various Libertarian views on IP rights and present what I consider to be the proper view. A Summary of Intellectual Property Law Types of IP Intellectual property is a broad concept that covers several types of legally recognised rights arising from some type of intellectual creativity or that are otherwise related to ideas. IP rights are rights to intangible things, to ideas as expressed, copyrights, or as embodied in a practical implementation, patents. Tom Palmer puts it this way. Intellectual property rights are rights in ideal objects, which are distinguished from the material substratta in which they are instantiated. In today's legal systems, IP typically includes at least copyrights, trademarks, patents, and trade secrets. Copyright It is a right given to authors of original works, such as books, articles, movies, and computer programs. Copyright gives the exclusive right to reproduce the work, prepare derivative works, or to perform and present the work publicly. Copyrights protect only the form or expression of ideas, not the underlying ideas themselves. While a copyright may be registered to obtain legal advantages, a copyright need not be registered to exist. Rather, a copyright comes into existence automatically the moment the work is fixed, in a tangible medium of expression, and lasts for the life of the author plus 70 years, or for a total of 95 years in cases in which the employer owns the copyright. Patent A patent is a property right in inventions, that is in devices or processes that perform a useful function. A new or improved mousetrap is an example of a type of device which may be patented. A patent effectively grants the inventor a limited monopoly on the manufacture, use, or sale of the invention. However, a patent actually only grants to the patentee the right to exclude, i.e. to prevent others from practicing the patented invention. It is not actually granted to the patentee the right to use the patented invention. In a footnote the author expands, suppose A invents and patents a better mousetrap, which has a night and all memory metal spring for better snapping ability. Now suppose B invents and patents a mousetrap with a night and all spring covered with non-stick coating, to improve the ability to remove mouse remains while still providing the night and all driven snapping action. B has to have a mousetrap with a night and all spring in order to use his invention, but this was infringed upon A's patent. Similarly, A cannot add the non-stick coating to his own invention without infringing upon B's improvement patent. In such situations the two patentees may cross-license so that A can practice B's improvement on the mousetrap and so B can use his own invention. Not every innovation or discovery is patentable. The U.S. Supreme Court has, for example, identified three categories of subject matter that are unpatentable, namely, laws of nature, natural phenomena, and abstract ideas. Reducing abstract ideas to some type of practical application, i.e. a useful, concrete and tangible result, is patentable, however. U.S. patents, since June 8, 1995, last from the date of issuance until twenty years from the original filing date of the patent application. The previous term was seventeen years from date of issue. Trade secret A trade secret consists of any confidential formula, device, or piece of information which gives its holder a competitive advantage so long as it remains secret. An example would be the formula for Coca-Cola. Trade secrets can include information that is not novel enough to be subject to patent protection or not originally enough to be protected by copyright, for example, a database of seismic data or customer lists. Trade secret laws are used to prevent misappropriations of the trade secret or to award damages for such misappropriations. Trade secrets are protected under state law, although recent federal law has been enacted to prevent theft of trade secrets. Trade secret protection is obtained by declaring that the details of a subject are secret. The trade secret, theoretically, may last indefinitely, although disclosure, reverse engineering, or independent invention may destroy it. Trade secrets can protect secret information and processes, for example, compilations of data and maps not protectable by copyright, and can also be used to protect software source code not disclosed and not otherwise protectable by patent. One disadvantage of relying on trade secret protection is that a competitor who independently invents the subject of another's trade secret can obtain a patent on the device or process and actually prevent the original inventor, the trade secret holder, from using the invention. Trade Mark A trade mark is a word, phrase, symbol or design used to identify the source of goods or services sold and to distinguish them from the goods or services of others. For example, the Coca-Cola mark and the design that appears on their soft drinks cans identifies them as products of that company, distinguishing them from competitors such as Pepsi. Trade Mark Law primarily prevents competitors from infringing upon the trade mark, i.e., using confusingly similar marks to identify their own goods and services. Unlike copyrights and patents, trade mark rights can last indefinitely if the owner continues to use the mark. The term of a federal trade mark registration lasts ten years, with ten-year renewal terms being available. Other rights related to trade mark protection include rights against trade mark dilution, certain forms of cyber squatting and various unfair competition claims. IP also includes recent legal innovations such as the mask work protection available for semiconductor integrated circuit, IC, designs, the Suey-Generes protection similar to copyright for boat hull designs, and the proposed Suey-Generes right in databases or collections of information. In the United States, federal law almost exclusively governs copyrights and patents, since the Constitution grants Congress the power to promote the progress of science and useful arts. Despite the federal source of patents and copyrights, various related aspects, such as ownership of patents, are based on state law, which nevertheless tend to be fairly uniform from state to state. Federal trade marks, by contrast, not being explicitly authorized in the Constitution, are based on the interstate commerce clause, and thus only covers marks for goods and services in interstate commerce. State trade marks still exist, since they have not been completely preempted by federal law, but federal marks tend to be more commercially important and powerful. Trade secrets are generally protected under state, not federal law. Many laymen, including libertarians, have a poor understanding of intellectual property concepts and law, and often confuse copyrights, trademarks and patents. It is widely and incorrectly believed that in the U.S. system the inventor who files first at the Patent Office has priority over those who file later. However, the U.S. system is actually a first-to-invent system, unlike most other countries, which do have a first-to-file system for priority. In a footnote, the author expands, Einrand mistakenly assumes that the first-to-file has property, and then she is at pains to defend such a system. See, Einrand, Patents and Copyrights, in Capitalism the Unknown Ideal, New York, New American Library 1967, page 133. She also confusingly attacks the strict antitrust scrutiny given to patent holders. However, since patents are government-granted monopolies, it is not unjust to use an anti-monopoly law to limit the ability of a patent owner to extend this monopoly beyond the bounds intended by the patent statute. The problem with antitrust laws is in their application to normal, peaceful business dealings, not to limit real, i.e., government-granted monopolies. A similar point might be made with regard to Bill Gates, whose fortune has largely been built based on the government-granted monopoly inherent in copyright. Moreover, as Bill Gates is no libertarian and doubtlessly does not oppose the legitimacy of antitrust laws, one can hardly wring one's hands in pity over his having to lie in the very bed he helped make. IP Rights and Relation to Tangible Property As noted above, IP rights, at least for patents and copyrights, may be considered rights in ideal objects. It is important to point out that ownership of an idea or ideal object effectively gives the IP owners a property right in every physical embodiment of that work or invention. Consider a copyrighted book. Copyright holder A has a right to the underlying ideal object of which the book is but one example. The copyright system gives A the right in the very pattern of words in the book. Therefore, by implication, A has a right to every tangible instantiation or embodiment of the book, i.e., a right in every physical version of the book, or at least to every book within the jurisdiction of the legal system that recognizes the copyright. Thus, if A writes a novel, he has a copyright in this work. If he sells a physical copy of the novel to B in book form, then B only owns that one physical copy of the novel. B does not own the novel itself and is not entitled to make a copy of the novel, even using his own paper and ink. Thus, even if B owns the material property of paper and printing press, he cannot use his property to create another copy of A's book. Only A has the right to copy the book, hence copyright. Likewise, A's ownership of a patent gives him the right to prevent a third party from using or practicing the patented invention, even if the third party only uses his own property. In this way, A's ownership of ideal rights gives him some degree of control, ownership, over the tangible property of innumerable others. Patents and copyright invariably transfer partial ownership of tangible property from its natural owner to innovators, inventors and artists, libertarian perspectives on intellectual property, the spectrum. Libertarian views on IP range from complete support of the fullest gamut of IP imaginable to outright opposition to IP rights. Most of the debate about IP concerns patent and copyright. As discussed below, trademark and trade secret are less problematic. Therefore, this article focuses primarily on the legitimacy of patent and copyright. Pro-IP arguments may be divided into natural rights and utilitarian arguments. Libertarian IP advocates tend to adopt the former justification. For example, natural rights, or at least not explicitly utilitarian libertarian proponents of IP include From More to Less Extreme, Calambos, Schulman and Rand. Among precursors to modern libertarians, Spooner and Spencer both advocated IP on moral or natural rights grounds. According to the natural rights view of IP held by some libertarians, creations of the mind are entitled to protection just as tangible property is. Both are the product of one's labour and one's mind, because one owns one's labour, one has a natural law right to the fruit of one's labour. Under this view, just as one has a right to the crops one plants, so one has a right to the ideas one generates and the art one produces. This theory depends on the notion that one owns one's body and labour, and therefore its fruits, including intellectual creations. An individual creates a sonnet, a song, a sculpture by employing his labour and body. He is thus entitled to own those creations because they result from other things he owns. There are also utilitarian pro-IP arguments. Our Judge Richard Posner is one prominent utilitarian, although not libertarian, IP advocate. Among libertarians, anarchist David Friedman analyses and appears to endorse IP on law and economic grounds, a utilitarian institutional framework. The utilitarian argument presupposes that we should choose laws and policies that maximise wealth or utility. With respect to copyright and patent, the idea is that more artistic and inventive innovation corresponds with or leads to more wealth. Public goods and free rider effects reduce the amount of such wealth below its optimal level, i.e., lower than the level we would achieve if there were adequate IP laws on the books. Thus, wealth is optimised, or at least increased, by granting copyright and patent monopolies that encourage authors and inventors to innovate and create. On the other hand, there is a long tradition of opposition to patent and copyright. Modern opponents include Rothbard, McElroy, Palmer, LePage, Bucart and myself. Benjamin Tucker also vigorously opposed IP in a debate in the 19th century individualist anarchist periodical, Liberty. These commentators point out the many problems with conventional utilitarian and natural rights arguments given to justify IP rights. These and other shortcomings of standard pro-IP arguments are surveyed below. Utilitarian defences of IP. Advocates of IP often justify it on utilitarian grounds. Utilitarians hold that the end of encouraging more innovation and creativity justifies the seemingly immoral means of restricting the freedom of individuals to use their physical property as they see fit. But there are three fundamental problems with justifying any right or law on strictly utilitarian grounds. First, let us suppose that wealth or utility could be maximised by adopting certain legal rules. The size of the pie is increased. Even then, this does not show that these rules are justified. For example, one could argue that net utility is enhanced by redistributing half of the wealth of society's richest 1% to its poorest 10%. But even if stealing some of A's property and giving it to B increases B's welfare more than it diminishes A's, if such a comparison could somehow be made, this does not establish that the theft of A's property is justified. Wealth maximisation is not the goal of law. Rather, the goal is justice, giving each man his due. Even if overall wealth is increased due to IP laws, it does not follow that this allegedly desirable result justifies the unethical violation of some individual's rights to use their own property as they see fit. In addition to ethical problems, utilitarianism is not coherent. It necessarily involves making illegitimate interpersonal utility comparisons, as when the costs of IP laws are subtracted from the benefits to determine whether such laws are a net benefit. But not all values have a market price. In fact, none of them do. Mises showed that even for goods that have a market price, the price does not serve as a measure of the goods value. In a footnote, the author expands, Mises states, Although it is usual to speak of money as a measure of value and prices, the notion is entirely fallacious. So long as the subjective theory of value is accepted, this question of measurement cannot arise. On the measurement of value in The Theory of Money and Credit, translated by H. E. Batson 1912, reprint Indianapolis Liberty Fund 1980, page 51 Also, money is neither a yardstick of value nor of prices. Money does not measure value, nor are prices measured in money. They are amounts of money. Ludwig von Mises Socialism and Economic and Sociological Analysis Third Revised Edition, translated by J. Kahana, Indianapolis, Independent Liberty Press, 1981, page 99 And, see also, Human Action, pages 96, 122, 204, 210, 217 and 289 Finally, even if we set aside the problems of interpersonal utility comparisons and the justice of redistribution and we plow ahead, employing standard utilitarian measurement techniques, it is not at all clear that IP laws lead to any change, either an increase or a decrease in overall wealth. It is debatable whether copyrights and patents really are necessary to encourage the production of creative works and inventions, or that the incremental gains in innovation outweigh the immense costs of an IP system. Econometric studies do not conclusively show net gains in wealth. Perhaps there would be even more invention if there were no patent laws. Maybe more money for research and development would be available if it were not being spent on patents and lawsuits. It is possible that companies would have an even greater incentive to innovate if they could not rely on a near-20-year monopoly. There are undoubtedly costs of the patent system. As noted, patents can be obtained only for practical applications of ideas, but not for more abstract or theoretical ideas. This skews resources away from theoretical research and development. In a footnote, the author quotes Plant, the Economic Theory Concerning Patents for Inventions, page 43, and extensively from Rothbard, Man, Economy and State, pages 658 to 659. It is by no means self-evident that patents encourage an increased absolute quantity of research expenditures, but certainly patents distort the type of research expenditure being conducted. Research expenditures are therefore over-stimulated in the early stages before anyone has a patent, and they are unduly restricted in the period after the patent is received. In addition, some inventions are considered patentable while others are not. The patent system then has the further effect of artificially stimulating research expenditures in the patentable areas while artificially restricting research in the non-patentable areas. It is not clear that society is better off with relatively more practical invention and relatively less theoretical research and development. Additionally, many inventions are patented for defensive reasons, resulting in patent lawyers' salaries and patent office fees. This large overhead would be unnecessary if there were no patents. In the absence of patent laws, for example, companies would not spend money obtaining or defending against such ridiculous patents as those in the appendix. It simply has not been shown that IP leads to net gains in wealth, but should not those who advocate the use of force against others' property have to satisfy a burden of proof. We must remember that when we advocate certain rights and laws and inquire into their legitimacy, we are inquiring into the legitimacy and ethics of the use of force. To ask whether a law should be enacted or exist is to ask, is it proper to use force against certain people in certain circumstances? It is no wonder that this question is not really addressed by analysts of wealth maximization. Utilitarian analysis is thoroughly confused and bankrupt. Talk about increasing the size of the pie is methodologically flawed. There is no clear evidence that the pie increases with IP rights. Further, pie growth does not justify the use of force against the otherwise legitimate property of others. For these reasons, utilitarian IP defences are unpersuasive, some problems with natural rights. Other libertarian proponents of intellectual property argue that certain ideas deserve protection as property rights because they are created. Rand supported patents and copyrights as the legal implementation of the base of all property rights, a man's right to the product of his mind. For Rand, IP rights are, in a sense, the reward for productive work. It is only fair that a creator reap the benefits of others using his creation. For this reason, in part, she opposes perpetual patent and copyright, because future unborn heirs of the original creator are not themselves responsible for the creation of their ancestors' work. One problem with the creation-based approach is that it almost invariably protects only certain types of creations, unless that is every single useful idea one comes up with is subject to ownership. But the distinction between protectable and the unprotectable is necessarily arbitrary. For example, philosophical or mathematical or scientific truths cannot be protected under current law on the grounds that commerce and social intercourse would grind to a halt where every new phrase, philosophical truth and the like, considered the exclusive property of its creator. For this reason, patents can be obtained only for so called practical applications of ideas, but not for more abstract or theoretical ideas. Rand agrees with this disparate treatment in attempting to distinguish between an unpatentable discovery and a patentable invention. She argues that a scientific or philosophical discovery which identifies a law of nature, a principle or a fact of reality not previously known, is not created by the discoverer. But the distinction between creation and discovery is not clear-cut or rigorous. Here the author expands in a footnote, Plant is correct in stating that the task of distinguishing a scientific discovery from its practical application, which may be patentable, is often baffling to the most subtle lawyer. The Economic Theory Concerning Patents for Inventions pages 49 to 50. On a related note, the US Supreme Court has noted that the specification and claims of a patent constitute one of the most difficult legal instruments to draw with accuracy. Toplif versus Toplif in an 1892 Supreme Court decision. Perhaps this is because patent law has no moorings to objective borders of actual tangible property, and thus is inherently vague, amorphous, ambiguous and subjective. For the latter reason alone, one would think that objectivists, ardent, self-proclaimed defenders of objectivity and opponents of subjectivism, would oppose patent and copyright. Nor is it clear why such a distinction, even if clear, is ethically relevant in defining property rights. No one creates matter. They just manipulate and grapple with it according to physical laws. In this sense, no one really creates anything. They merely rearrange matter into new arrangements and patterns. An engineer who invents a new mousetrap has rearranged existing parts to provide a function not previously performed. Others who learn of this new arrangement can now also make an improved mousetrap. Yet the mousetrap merely follows laws of nature. The inventor did not invent the matter out of which the mousetrap is made, nor the facts and laws exploited to make it work. Similarly, Einstein's discovery of the relation E equals mc squared, once known by others, allows them to manipulate matter in a more efficient way. Without Einstein's or the inventor's efforts, others would have been ignorant of certain causal laws of ways matter can be manipulated and utilized. Both the inventor and the theoretical scientist engage in creative mental effort to produce useful new ideas, yet one is rewarded and the other is not. In one recent case, the inventor of a new way to calculate a number representing the shortest path between two points, an extremely useful technique, was not given patent protection because this was merely a mathematical algorithm. But it is arbitrary and unfair to reward more practical inventors and entertainment providers, such as the engineer and songwriter, and to leave more theoretical science and math researchers and philosophers unrewarded. The distinction is inherently vague, arbitrary, and unjust. Moreover, adopting a limited term for IP rights as opposed to a perpetual right also requires arbitrary rules. For example, patents last for 20 years from the filing date while copyrights last, in the case of individual authors, for 70 years past the author's death. No one can seriously maintain that 19 years for a patent is too short and 21 years too long any more than the current price for a gallon of milk can be objectively classified as too low or too high. Thus one problem with the natural rights approach to validating IP is that it necessarily involves arbitrary distinctions with respect to what classes of creations deserve protection and concerning the length of the term of the protection. Of course, one way to avoid this difficulty is to claim that everything is protectable by IP with perpetual, infinite terms. Spooner, for example, advocated perpetual rights for patent and copyright. Shulman advocates a much broader concept of creations or ideas protectable by IP. He argues for property rights called logo rights in any logos that one creates. The logos is the material identity or identity pattern of creative things. The owner of a logos would own the order or pattern of information imposed upon or observed in material substances. The most radical of all IP proponents is Andrew Joseph Chalambos, whose ideas, to the extent that I understand them, border on the absurd. Chalambos believed that man has property rights in his own life, primordial property, and in all non-procreative derivatives from his life. Since the first derivatives of a man's life are his thoughts and ideas, thoughts and ideas are primary property. Since action is based on primary property, ideas, actions are owned as well. This is referred to as liberty. Secondary derivatives such as land, televisions, and other tangible goods are produced by ideas and action. Thus property rights in tangible items are relegated to lowly secondary status as compared with the primary status of property rights in ideas. Even Rand once elevated patents over mere property rights in tangible goods in her bizarre notion that patents are the heart and core of property rights. Can we really believe that there were no property rights respected before the 1800s when patent rights became systematized? Chalambos reportedly took his own ideas to ridiculous lengths, claiming a property right in his own ideas and requiring his students not to repeat them. Dropping a nickel in a fund box every time he used the word liberty as a royalty to the descendants of Thomas Paine, the alleged inventor of the word liberty, and changing his original name from Joseph Andrew Chalambos, Jr. presumably, to Andrew Joseph Chalambos, to avoid infringing his identically named father's rights to the name. By widening the scope of intellectual property and by lengthening its duration to avoid making such arbitrary distinctions as Rand does, the absurdity and injustice caused by IP becomes even more pronounced as Chalambos demonstrates. And by extending the term of patents and copyrights to infinity, subsequent generations would be choked by ever-growing restraints on their use of property. No one would be able to manufacture or even use a light bulb without getting permission from Edison's heirs. No one would even be able to build a house without getting permission from the heirs of the first proto-human who left the caves and built a hut. No one could use a variety of life-saving techniques, chemicals or treatments without obtaining permissions of various lucky rich descendants. No one would be able to boil water to purify it or use pickling to preserve foods unless he is granted license by the originators or their distant heirs of such techniques. Such unbounded ideal rights would pose a serious threat to tangible property rights and would threaten to overwhelm them. All use of tangible property would by now be impossible as every conceivable use of property, every single action would be bound to infringe upon one of the millions of past accreted IP rights and the human race would die of starvation. But as Rand noted, men are not ghosts. We have a spiritual aspect but also a physical one. Any system that elevates rights in ideas to such an extreme that it overrides rights in tangible things is clearly not a suitable ethical system for living, breathing, human beings. No one living can actually act in accordance with such an unrestricted view of IP. The remaining advocates of IP all qualify their endorsement by limiting the scope and or terms of IP rights, thus adopting the ethically arbitrary distinctions noted above. A deeper problem for the natural rights position lies in its undue emphasis on creation instead of scarcity as giving rise to property rights as discussed below. Intellectual property and property rights. Property and scarcity. Let us take a step back and look afresh at the idea of property rights. Libertarians believe in property rights in tangible goods, resources. Why? What is it about tangible goods that makes them subjects for property rights? Why are tangible goods property? A little reflection will show that it is these goods scarcity, the fact that there can be conflict over these goods by multiple human actors. The very possibility of conflict over a resource renders it scarce, giving rise to the need for ethical rules to govern its use. Thus, the fundamental social and ethical function of property rights is to prevent interpersonal conflict over scarce resources. As Hopper notes, only because scarcity exists is there even a problem of formulating moral laws. Insofar as goods are super abundant, free goods, no conflict over the use of goods is possible and no action coordination is needed. Hence it follows that any ethic correctly conceived must be formulated as a theory of property, i.e. a theory for the assignment of rights of exclusive control over scarce means, because only then does it become possible to avoid otherwise inescapable and unresolvable conflict. Others who recognize the importance of scarcity in defining what property is include plant, hume, palmer, Rothbard, and tucker. Nature, then, contains things that are economically scarce. My use of such a thing conflicts with, excludes, your rights of it and vice versa. The function of property rights is to prevent interpersonal conflict over scarce resources by allocating exclusive ownership of resources to specified individuals, owners. To perform this function, property rights must be both visible and just. Clearly, in order for individuals to avoid using property owned by others, property borders and property rights must be objective, intersubjectively ascertainable. They must be visible. For this reason, property rights must be objective and unambiguous. In other words, good fences make good neighbors. Property rights must be demonstrably just, as well as visible, because they cannot serve their function of preventing conflict unless they are acceptable as fair by those affected by the rules. If property rights are allocated unfairly or simply grabbed by force, this is like having no property rights at all. It is merely might versus right again, i.e. the pre-property rights situation. But as libertarians recognize, following Locke, it is only the first occupier or user of such property that can be its natural owner. Only the first occupier homesteading rule provides an objective, ethical and non-arbitrary allocation of ownership in scarce resources. When property rights in scarce means are allocated in accordance with first occupier homesteading rules, property borders are visible and the allocation is demonstrably just. Conflict can be avoided with such property rights in place, because third parties can see and thus sidestep the property borders and be motivated to do so because the allocation is just and fair. But surely it is clear, given the origin justification and function of property rights, that they are applicable only to scarce resources. Were we in a garden of Eden where land and other goods were infinitely abundant, there would be no scarcity and therefore no need for property rules. Property concepts would be meaningless. The idea of conflict and the idea of rights would not even arise. For example, your taking my lawn mower would not really deprive me of it if I could conjure up another in the blink of an eye. Lawn mower taking in these circumstances would not be theft. Property rights are not applicable to things of infinite abundance, because there cannot be conflict over such things. Thus property rights must have objective, discernable borders and must be allocated in accordance with the First Occupy Homesteading Rule. Moreover, property rights can apply only to scarce resources. The problem with IP rights is that the ideal objects protected by IP rights are not scarce, and, further, that such property rights are not and cannot be allocated in accordance with the First Occupy Homesteading Rule, as will be seen below. Scarcity and ideas. Like the magically reproducible lawn mower, ideas are not scarce. If I invent a technique for harvesting cotton, your harvesting cotton in this way would not take away the technique from me. I still have my technique as well as my cotton. Your use does not exclude my use. We could both use my technique to harvest cotton. There is no economic scarcity and no possibility of conflict over the use of a scarce resource. Thus, there is no need for exclusivity. Similarly, if you copy a book I have written, I still have the original, tangible book, and I also still have the pattern of words that constitute the book. Thus, authored works are not scarce in the same sense that a piece of land or a car are scarce. If you take my car, I no longer have it, but if you take a book pattern and use it to make your own physical book, I still have my own copy. The same holds true for inventions and indeed for any pattern or information one generates or has. As Thomas Jefferson, himself an inventor, as well as the first patent examiner in the U.S., wrote, He who receives an idea from me receives instruction himself without lessening mine, as he who lights his taper at mine receives light without darkening me. In a footnote, the author cites Thomas Jefferson in a letter to Isaac MacPherson, Monticello, August 13, 1813, from the writings of Thomas Jefferson, volume 13, edited by A. A. Lipscomb and A. E. Berg, Washington, D.C., Thomas Jefferson Memorial Association, 1904, pages 326 to 338. Jefferson recognized that because ideas are not scarce, patent and copyright are not natural rights and can be justified only, if at all, on the utilitarian grounds of promoting useful inventions and literary works, and even then they must be created by statute, since they are not natural rights. See also Palmer, Intellectual Property and Non-Posnary and Law and Economics approach, page 278. Yet this does not mean that Jefferson supported patents even on utilitarian grounds. Patent historian Edward C. Watersheed explains that throughout his life Jefferson retained a healthy skepticism about the value of the patent system, from Thomas Jefferson and the Patent Act of 1793, Essays in History, volume 40, 1998. Since use of another's ideas does not deprive him of its use, no conflict over its use is possible. Ideas, therefore, are not candidates for property rights. Even Rand acknowledged that Intellectual Property cannot be consumed. In a footnote the author cites Rand, Patents and Copyrights, page 131. Mises in Human Action in page 661 recognizes that there is no need to economize on the employment of formulas, because their serviceableness cannot be exhausted. On page 128 he points out A thing rendering such unlimited services is, for instance, the knowledge of a causal relation implied. The formula, the recipe that teaches us how to prepare coffee, provided it is known, renders unlimited services. It does not lose anything from its capacity to produce however often it is used. Its productive power is inexhaustible. It is therefore not an economic good. Acting man is never faced with a situation in which he must choose between the use value of a known formula and any other useful thing. Ideas are not naturally scarce. However, by recognizing a right in an ideal object one creates scarcity where none existed before. As Arnold Plant explains, it is a peculiarity of property rights in Patents and Copyrights that they do not arise out of the scarcity of the objects which become appropriated. They are not a consequence of scarcity. They are the deliberate creation of statute law. And whereas in general the institution of private property makes for the preservation of scarce goods tending to leaders to make the most of them, property rights in Patents and Copyrights make possible the creation of a scarcity of the products appropriated which could not otherwise be maintained. Here the author includes a footnote citing Plant, the Economic Theory Concerning Patents for Inventions, Page 36. And also quotes Mises from Human Action, Page 364. Such receipts are, as a rule, free goods as their ability to produce definite effects is unlimited. They can become economic goods only if they are monopolized and their use is restricted. Any price paid for the services rendered by a recipe is always a monopoly price. It is immaterial whether the restriction of a recipe's use is made possible by institutional conditions such as Patents and Copyright Laws or by the fact that a formula is kept secret and other people fail to guess it. Buchert also argues that natural scarcity is what gives rise to the need for property rules and that IP Laws create an artificial unjustifiable scarcity. As he notes, natural scarcity is that which follows from the relationship between man and nature. Scarcity is natural when it is possible to conceive of it before any human institutional contractual arrangement. Artificial scarcity, on the other hand, is the outcome of such arrangements. Artificial scarcity can hardly serve as a justification for the legal framework that causes that scarcity. Such an argument would be completely circular. On the contrary, artificial scarcity itself needs a justification. Thus, Buchert maintains that only naturally scarce entities over which physical control is possible are candidates for protection by real property rights. For ideal objects, the only protection possible is that achieved through personal rights, i.e. contract, more on this below. Here the author inserts a footnote. It could be argued that ideal objects deserve legal protection as property because they are public goods, i.e. because of negative externalities which arise if IP is not legally protected. However, the concept of public goods is neither coherent nor justifiable. See Palmer, intellectual property, a non-Posnian law and economics approach, pages 279-280 and 283-287. Hans Hermann Hopper, fallacies of the public goods theory and the production of security, Journal of Libertarian Studies, volume 9 number 1, winter 1989, page 27. Also Hopper, the economics and ethics of private property, chapter 1. As Palmer points out, the cost of producing any service or goods includes not only labour, capital, marketing, and other cost components, but also fencing or exclusion costs as well. Movie theatres, for example, invest in exclusion devices like ticket windows, walls, and ushers, all designed to exclude non-contributors from enjoyment of service. Alternatively, of course, movie owners could set up projectors and screens in public parks and then attempt to prevent passers-by from watching, or they could ask governments to force all non-contributors to wear special glasses which prevent them from enjoying the movie. Drive-ins, faced with the prospect of free riders peering over the walls installed at considerable expense, individual speakers for each car, thus rendering the publicly available visual part of the movie of little interest. The costs of exclusion are involved in the production of virtually every good imaginable. There is no compelling justification for singling out some goods and insisting that the state underwrite their production costs through some sort of state-sanctioned collective action, simply because of a decision to make the good available on a non-exclusive basis. From Palmer, Intellectual Property, a non-posnary and law and economics approach, pages 284 to 285. There is no way to show that ideas are clearly public goods. Moreover, even if ideas were public goods, this does not justify treating them as property rights, for the same reasons that even wealth increasing measures are not necessarily justified, as discussed above. Only tangible, scarce resources are the possible object of interpersonal conflict, so it is only for them that property rules are applicable. Thus, patents and copyrights are unjustifiable monopolies granted by government legislation. It is not surprising that, as Palmer notes, monopoly privilege and censorship lie at the historical root of patent and copyright. It is this monopoly privilege that creates an artificial scarcity, where there was none before. Let us recall that IP rights give to patent creators particular rights of control, ownership, over the tangible property of everyone else. The patent creator has partial ownership of others' property by virtue of his IP right, because he can prohibit them from performing certain actions with their own property. Author X, for example, can prohibit a third party Y from inscribing a certain pattern of words on Y's own blank pages with Y's own ink. That is, by merely authoring an original expression of ideas, by merely thinking of and recording some original pattern of information, or by finding a new way to use his own property, recipe, the IP creator instantly, magically becomes a partial owner of others' property. He has some say over how third parties can use their property. IP rights change the status quo by redistributing property from individuals of one class, tangible property owners, to individuals of another, authors and inventors. Prima facie, therefore, IP law trespasses against or takes the property of tangible property owners by transferring partial ownership to authors and inventors. It is this invasion and redistribution of property that must be justified in order for IP rights to be valid. We see then that utilitarian defences do not do the trick. Further problems with natural rights defences are explored below. Creation versus scarcity. Some inconsistencies and problems with natural rights theories of IP were pointed out above. This section discusses further problems with such arguments in light of the preceding discussion of the significance of scarcity. As noted before, some libertarian IP advocates, such as Rand, hold that creation is the source of property rights. This confuses the nature and reasons for property rights, which lie in the undeniable fact of scarcity. Given scarcity and the correspondent possibility of conflict in the use of resources conflicts are avoided and peace and cooperation are achieved by allocating property rights to such resources. And the purpose of property rights dictates the nature of such rules. For if the rules allocating property rights are to serve as objective rules that all can agree upon so as to avoid conflict, they cannot be biased or arbitrary. For this reason, unowned resources come to be owned, homestated or appropriated by the first possessor. The general rule then is that ownership of a given scarce resource can be identified by determining who first occupied it. There are various ways to possess or occupy resources and different ways to demonstrate or prove such occupation, depending upon the nature of the resource and the use to which it is put. Thus I can pluck an apple from the wild and thereby homestead it, or I can fence in a plot of land for a farm. It is sometimes said that one form of occupation is forming or creating the thing. For example, I can sculpt a statue from a block of marble or forge a sword from raw metal or even create a farm on a plot of land. We can see from these examples that creation is relevant to the question of ownership of a given created scarce resource, such as a statue, sword or farm, only to the extent that the act of creation is an act of occupation or is otherwise evidence of first occupation. However, creation itself does not justify ownership in things. It is neither necessary nor sufficient. One cannot create some possibly disputed scarce resource without first using the raw materials used to create the item. But these raw materials are scarce and either I own them or I do not. If not, then I do not own the resulting product. If I own the inputs, then by virtue of such ownership I own the resulting thing into which I transform them. Consider the forging of a sword. If I own some raw metal, because I mined it from ground I owned, then I own the same metal after I've shaped it into a sword. I do not need to rely on the fact of creation to own the sword, but only on my ownership of the factors used to make the sword. Here, in a footnote, the author adds, I do not need to rely on ownership of my labour, strictly speaking. Labour cannot be owned and labour ownership need not be relied on to show that I maintain ownership of my property as I transform it. And I do not need creation to come to own the factors, since I can homestead them by simply mining them from the ground and thereby becoming the first possessor. On the other hand, if I fashion a sword using your metal, I do not own the resulting sword, in fact I may owe you damages for trespass or conversion. Creation, therefore, is neither necessary nor sufficient to establish ownership. The focus on creation distracts from the crucial role of first occupation as a property rule for addressing the fundamental fact of scarcity. First occupation, not creation or labour, is both necessary and sufficient for the homesteading of unowned scarce resources. One reason for the undue stress placed on creation as the source of property rights may be the focus by some on labour as the means to homestead unowned resources. This is manifest in the argument that one homesteads unowned property with which one mixes one's labour because one owns one's labour. However, as Palmer correctly points out, occupancy, not labour, is the act by which external things become property. By focusing on first occupancy rather than on labour as the key to homesteading, there is no need to place creation as the fount of property rights as objectivists and others do. Instead, property rights must be recognised in first-comers or their contractual transferes in order to avoid the omnipresent problem of conflict over scarce resources. Creation itself is neither necessary nor sufficient to gain rights in unowned resources. Further, there is no need to maintain the strange view that one owns one's labour in order to own things one first occupies. Labour is a type of action and action is not ownable. Rather, it is the way that some tangible things, e.g. bodies, act in the world. The problem with the natural rights defence of intellectual property then lies in the argument that because an author inventor creates some thing, he is thus entitled to own it. The argument begs the question by assuming that the ideal object is ownable in the first place. Once this is granted, it seems natural that the creator of this piece of property is the natural and proper owner of it. However, ideal objects are not ownable. Under the libertarian approach, when there is a scarce, ownable resource, we identify its owner by determining who its first occupier is. In the case of created goods, i.e. sculptures, farms, etc., it can sometimes be assumed that the creator is also the first occupier by virtue of the gathering of raw materials and the very act of creating. Imposing a pattern on the matter fashioning it into an artifact and the like. But it is not creation per se that gives rise to ownership, as pointed out above. In a footnote, the author expands, even such advocates of intellectual property as Rand do not maintain that creation per se is sufficient to give rise to rights, or that creation is even necessary. It is not necessary because unowned property can be homesteaded by simply occupying it, which involves no creation, unless one stretches the concept without limit. It is also not sufficient because Rand would certainly not hold that creating an item using raw material owned by others gives the thief creator ownership of the item. Rand's view even implies that rights, including property rights, only arise when there is a possibility of conflict. Rand, for example, views rights as a social concept arising only when there is more than one person. See Rand man's rights in capitalism the unknown ideal, page 321. A right is a moral principle defining and sanctioning a man's freedom of action in a social context. Indeed, as Rand argues, man's rights can be violated only by the use of physical force, i.e., some conflict over a scarce resource. The nature of government in capitalism the unknown land, page 330. On page 334, Rand attempts unsuccessfully to justify government, the agent that enforces rights, based on the fact that there can be honest disagreements, i.e., conflict, even among fully rational and faultlessly moral men. So in Rand's theory, creation per se is neither necessary nor sufficient, just as in the theory of property advocated herein. For similar reasons, the Lockean idea of mixing labour with a scarce resource is relevant only because it indicates that the user has possessed the property, for property must be possessed in order to be laboured upon. It is not because the labour must be rewarded, nor because we own labour and therefore its fruits. In other words, creation and labour mixing indicate when one has occupied and thus homesteaded unknown scarce resources. It is for these reasons that I disagree with the creation-centred approach of Objectivist David Kelly and Murray Frank. According to Frank, intellectual and personality property, page 7, although property rights help ration scarcity, scarcity is not the basis of property rights. The view that it is appears to reverse cause and effect in that it sees rights as a function of society's needs rather than as inherent in the individual who in turn must live in society. I am not sure what it means to say that rights, which are relational concepts that only apply in a social context, are inherent in an individual or that they are functions of anything. The former notion verges on the positivistic, in implying rights have a source as if they could be decreed by God or government and the latter borders on the scientific in using the precise mathematical and natural sciences notion of functions. And the argument for property rights is not based on the need to ration scarce items, but instead on the needs of individuals to employ means to achieve ends and to avoid interpersonal conflict over such means. Thus scarcity is not the basis for property rights, but a necessary background condition that must obtain before property rights can arise or make sense. Conflict can only arise over scarce resources, not abundant ones. As pointed out in the preceding footnote, objectivism also holds that conflict possibility is just such a necessary condition for property rights. Moreover, the scarcity based argument set forth here is no more a function of society's needs than is Frank's objectivist approach. Frank believes that men need to be able to create things in order to survive in a social setting where the presence of other men makes disputes possible. Thus, law should protect rights to created things. But the scarcity based arguments recognizes that men need to be able to use scarce resources and that this requires conflicts to be avoided. Thus, law should allocate property rights in scarce resources. Whatever the relative merits of the creation based and the scarcity based positions, the scarcity argument is not more collectivists than the creation one, and the creation argument is not more individualist than the scarcity argument. Kelly, in response to Kinsella, and page 13, writes, property rights are required because man needs to support his life by the use of his reason. The primary task in this regard is to create values that satisfy human needs rather than relying on what we find in nature as animals do. The essential basis of property rights lies in the phenomenon of creating value. Scarcity becomes a relevant issue when we consider the use of things in nature, such as land, as inputs to the process of creating value. As a general rule, I would say that two conditions are required in order to appropriate things in nature and to make them one's property. First, one must put them to some productive use. And second, that productive use must require exclusive control over them, i.e. the right to exclude others. The second condition holds only when the resource is scarce, but for things that one has created, such as a new product, one's act of creation is the source of the right, regardless of scarcity. My reasons for disagreeing with Kelly here should be apparent, but let me point out that all human action, including creation of values, has to rely on the use of scarce means, i.e. the material stuff of the world. Each act of creation employs things made of already existing atoms. Neither this fact nor the recognition of it is animal-like in any pejorative sense. But men, as opposed to animals, wish to create higher order values by using scarce resources did not change this analysis. Second, Kelly advocates two separate rules for homesteading scarce resources by first use of the resource and by creating a new, useful or artistic pattern with one's own property, which gives the creator the right to stop all others from using a similar pattern, even with their own property. As discussed below, these two homesteading rules are in conflict, and only the former can be justified. Finally, Kelly states that the creator of a new product owns it because he created it regardless of scarcity. If Kelly here means a tangible product, such as a mousetrap, such a good is an actual scarce tangible thing. Presumably, the creator owned the scarce raw materials which he transformed into the final product. But he does not need to have a right in the ideal object of the mousetrap idea or pattern in order to own the final product itself. He already owned the raw materials and still owns them after he reshapes them. If Kelly instead means that by creating a pattern or idea, one acquires the right of control over all others scarce resources, then he is advocating a new type of homesteading rule which I criticise below. By focusing on creation and labour, rather than on first occupancy of scarce resources as the touchstone of property rights, IP advocates are led to place undue stress on the importance of rewarding the labour of the creator, much as Adam Smith's flawed labour theory of value led to Marx's even more deeply flawed communist views on exploitation. Here the author adds a footnote quoting Murray Rothbard, economic thought before Adam Smith, an Austrian perspective on the history of economic thought. Volume 1 Brookfield Vermont Edward Elgar 1995 Page 453 It was indeed Adam Smith who was almost solely responsible for the injection into economics of the labour theory of value and hence it was Smith who may plausibly be held responsible for the emergence and the momentous consequences of Marx. Even otherwise sound thinkers sometimes place undue stress on the importance of labour to the homesteading process and its ability to be owned. Rothbard himself, for instance, implies that an individual owns his own person and therefore his own labour. Rothbard, Justice and Property writes page 285, emphasis added, see also Rothbard, the Ethics of Liberty, page 49. It is a misleading metaphor to speak of owning one's own labour or one's life or ideas. The right to use or profit from one's labour is only a consequence of being in control of one's body, just as the right to free speech is only a consequence or a derivative of the right to private property, as Rothbard recognised in the Ethics of Liberty, especially Chapter 15. As noted above, for Rand, intellectual property rights are, in a sense, the reward for productive work, i.e. labour. Rand and other natural rights IP proponents seem to adopt a mixed natural rights utilitarian rationale in holding that the person who invests time and effort must be rewarded or benefit from this effort. For example, Rand opposed perpetual patent and copyright on the grounds that because distant descendants did not create their ancestors' works, they deserve no reward. In addition, in a strange admixture of natural rights and utilitarian thinking, the natural rights IP approach implies that something is property if it can hold value. But as Hopper has trenchantly shown, one cannot have a property right in the value of one's property, but only in its physical integrity. Moreover, many arbitrarily defined things can acquire economic value if government grants a monopoly over the thing's use, even if the thing is not otherwise a scarce resource. For example, the Postal Service's monopoly power to deliver first-class letters. Thus, because ideas are not scarce resources in the sense that physical conflict over their use is possible, they are not the proper subject of property rights designed to avoid such conflicts. Two types of homesteading. What, though, is really wrong with recognizing new property rights? After all, since new ideas, artistic creations, and innovations continually enriches, what is the harm in moving with the times by recognizing new forms of property? The problem is that if property rights are recognized in non-scarce resources, this necessarily means that property rights' intangible resources are correspondingly diminished. This is because the only way to recognize ideal rights in our real scarce world is to allocate rights' intangible goods. For me to have an effective patent right, a right in an idea or pattern, not in a scarce resource, means that I have some control over everyone else's scarce resources. In fact, we can see that IP rights imply a new rule for acquiring rights in scarce resources which undercuts the Libertarian Homesteading principle. For, according to Lockean Libertarian Homesteading, it is the first occupier of a previously unknown scarce resource who homesteads it, i.e. becomes its owner. A latecomer who seizes control of all or part of such owned property is simply a thief, because the property is already owned. The thief effectively proposes a new and arbitrary homesteading rule to replace the first occupier rule, namely, the particularistic rule. I become the owner of property when I forcibly take it from you. Of course, such a rule is no rule at all and is clearly inferior to the first possessor rule. The thief's rule is particular, not universal. It is not just and it is certainly not designed to avoid conflicts. Proponents of intellectual property must also advocate a new homesteading rule to supplement if not replace the first possessor homesteading rule. They must maintain that there is a second way for an individual to come to own tangible property. To wit, the IP advocate must propose some homesteading rule along the following lines. A person who comes up with some useful or creative idea which can guide or direct an actor in the use of his own tangible property thereby instantly gains a right to control all other tangible property in the world with respect to that property's similar use. This newfangled homesteading technique is so powerful that it gives the creator rights in third parties already owned tangible property. For example, by inventing a new technique for digging a well the inventor can prevent all others in the world from digging wells in this manner even on their own property. To take another example imagine the time when men lived in caves. One bright guy, let's call him Golt Manion, decides to build a log cabin in an open field near his crops. To be sure, this is a good idea and others notice it. They naturally imitate Golt Manion and they start building their own cabins. But the first man to invent a house according to IP advocates would have a right to prevent others from building houses on their own land with their own logs or to charge them a fee if they do build houses. It is plain that the innovator in these examples becomes a partial owner of the tangible property for example land and logs of others due not to first occupation and use of that property for it is already owned but due to his coming up with an idea. Clearly this rule flies in the face of the first user homesteading rule arbitrarily and groundlessly overriding the very homesteading rule that is at the foundation of all property rights. There is in fact no reason why merely innovating gives the innovator partial ownership of property that others already own. Just because a rule can be proposed does not mean that it is workable or just. There are many arbitrary rules one could dream up by which property rights could be allocated. For example a racist could propose that any white person can homestead any property already first homesteaded by a black person or the third occupier of a scarce resource becomes its owner or the state can homestead all capital goods even if already first acquired by individuals or by legislative decree the state can homestead in the form of taxes part of the estates that are already owned by private individuals. All such arbitrary homesteading rules including the IP rule that innovators homestead partial control of all others tangible resources are unjustifiable. They all conflict with the only justifiable homesteading rule first occupation. None of them establish fair objective rules that avoid interpersonal conflict over scarce resources. Discussions of protecting rights in ideas creations or things of value only serves to obscure the fact that the proponent of IP opposes the unadulterated right to homestead and own private property. Intellectual property as contract. The limits of contract. The law then should protect individuals rights to one's body and to legitimately acquired scarce resources property. There is not a natural right to ideal objects to one's intellectual innovations or creations but only to scarce resources. Many opponents of IP rights typically support only contractual arrangements to protect ideas and innovations private contracts between property owners. Suppose, for example, that A writes a book and sells physical copies of it to numerous purchasers B1, B2, BN, etc. with a contractual condition that each buyer B is obligated not to make or sell a copy of the text. Under all theories of contract any of the buyers B becomes liable to A at least for damages if he violates these provisions. But the advocates of the contract approach to IP are mistaken if they believe that private contract can be used to recreate the same type of protection afforded by modern IP rights. Patent and copyright are good against all third parties regardless of their consent to a contract. They are real rights that bind everyone in the same way that my title to a parcel of land binds everyone to respect my property even if they do not have a contract with me. A contract by contrast binds only parties to the contract. It is like private law between the parties. It does not bind third parties i.e. those not in privity with the original parties. Thus if the book purchaser B relates to third parties T the plot of a purchase novel these third parties T are not bound in general by the original contractual obligations between A and B. If I learn how to adjust my car's carburetor to double its efficiency or if I learn of a poem or movie plot someone else has written why should I have to pretend that I am ignorant of those things and refrain from acting on this knowledge? I have not obligated myself by contract to the creator. I do not deny that contractual obligations can be implicit or tacit but there is not even an implicit contract in such situations. Nor can it be said as a general matter that I have stolen or fraudulently acquired the information as there are many legitimate ways for individuals to acquire information. Artistic works by their very nature typically are made public. Scientific discoveries and innovations likewise can become known beyond the parties to confidentiality agreements. And it certainly cannot be said that my use of my carburetor or writing a novel using the same plot physically interferes with the creator's use of his own tangible property. It does not even prevent the creator from using his own carburetor idea to improve his own car or others or from using that plot. So my adjusting my carburetor is not a breach of contract. It is not theft and it is not physical trespass on the inventor's tangible property. Twiddling my carburetor does not violate the inventor's rights. At most my use of his idea will diminish its value to the inventor by hampering his ability to monopolistically exploit it. As we have seen however one cannot have a right to the value of one's property but only to its physical integrity. Thus the use of contract only gets us so far. A book publisher may be able to contractually obligate his purchasers not to copy his book but he cannot prevent third parties from publishing and selling it unless some contract prohibits this action. Contract versus reserved rights. Third parties then who are not parties to the contract and are not in privity with the contractual obliger and obligee are not bound by the contractual relationship. For this reason although an innovator can use contract to stop specified individuals from freely using his ideas it is difficult to use standard contract law to prevent third parties from using ideas they glean from others. Perhaps sensing this problem some quasi IP advocates shift from a purely contractual approach to a reservation of rights approach in which property rights in tangible resources are seen as a divisible bundle of rights. For example under the standard bundle of rights view a landowner can sell the mineral estate to an oil company while retaining all rights to the surface except for an easement servitude granting passage to a neighbour and a life estate usufruct granting use of the surface estate to his mother. Drawing on the bundle of rights notion the reservation of rights approach holds that a type of private IP can be privately generated by creatively reserving rights to reproduce tangible items sold to purchases. Rothbard for example argues that one can grant conditional ownership of knowledge to another while retaining the ownership power to disseminate the knowledge of the invention or Brown the inventor of an improved mousetrap can stamp it copyright and thereby sell the right to each mousetrap except for the right to reproduce it. Like the real rights accompanying statutory IP such reservations allegedly blind everyone not just those who have contracted with the original seller. Thus third parties who become aware of purchase or otherwise come into possession of the restricted item also cannot reproduce it not because they have entered into a contract with Brown but because no one can acquire a greater property title in something than has already been given away or sold. In other words the third party acquires a tangible thing a book or a mousetrap say but it is somehow missing the right to copy part of the bundle of rights that normally constitutes all rights to the thing or the third party acquires ownership of information from a person who did not own the information and thus was not entitled to transmit it to others but surely something is amiss here suppose that A writes a novel and sells a first copy book one without restriction i.e without a reservation of rights to B1 and a second copy book two to B2 but reserving the book's inherent right to copy the two books book one and book two appear to third parties to be otherwise identical yet they are not one is incomplete the other somehow contains more mystical rights essence within its covers suppose B1 and B2 leave these books on a park bench where they are discovered by third party T according to Rothbard book two is missing the right to copy much like an electronic toy that is sold batteries not included it is as if there is an invisible mystical tendril of reproduction ownership stretching from book two back to its true owner A wherever he may be thus even if T finds and homesteads the abandoned book two this book simply does not contain within itself the right to permit the owner to copy it it is continually being siphoned away by a rights wormhole which connects the item to owner A thus if T homesteads the book he still homesteads no more than he acquires T homesteads only a book without a right to copy built in and thus does not have the right to copy book two the same is true for subsequent third parties who come to possess the book is such a view really tenable can we conceive of property rights working in this way even if we can would it really achieve the desired end result here preventing third parties from using the protected ideas it is difficult to maintain that rights can be reserved in this manner one function of property rights after all is to prevent conflict and to put third parties on notice as to the property's boundaries the borders of property must necessarily be objective and intersubjectively ascertainable they must be visible only if borders are visible can they be respected and property rights serve their function of permitting conflict avoidance only if these borders are both visible and objectively just justifiable in discourse can they be expected to be adopted and followed but think of the two books book one and book two how could one tell the difference between them how could one see the rights tendril connected to the letter but not to the former how can third parties be expected to respect and amorphous invisible mystical spooky possibly unknown and unknowable property border the implications of such a view are troubling Palmer rights the separation and retention of the right to copy from the bundle of rights that we call property is problematic could one reserve the right for example to remember something suppose that i wrote a book and offered it to you to read but i had retained one right the right to remember it would i be justified in taking you to court if i could prove that you had remembered the name of the lead character in the book here the author includes a footnote citing Palmer our patents and copyrights morally justified page 853 Palmer also quotes the following illuminating passages Hegel argued the substance of an author's or an inventor's right cannot in the first instance be found in the supposition that when he disposes of a single copy of his work he arbitrarily makes it a condition that the power to reproduce facsimiles as things a power which there upon passes into another's possession should not become the property of the other but should remain his own the first question is whether such a separation between ownership of the thing and the power to produce facsimiles which is given with the thing is compatible with the concept of property or whether it does not cancel the complete and free ownership on which there originally depends the option of the single producer of intellectual work to reserve to himself the power to reproduce or to part with this power as a thing of value or to attach no value to it at all and surrender it together with the single exemplar of his work Hegel's philosophy of right page 55 quoted in Palmer are patents and copyrights morally justified page 853 and as Kant noted those who regard the publication of a book as the exercise of the rights of property in respect of a single copy it may have come to the possessor as a manuscript of the author or as a work printed by some prior publisher and who yet would by the reservation of certain rights go on to restrict the exercise of property rights maintaining the illegality of reproduction will never attain their end for the rights of an author regarding his own thoughts remain to him notwithstanding the reprint and there cannot be as distinct permission given to the purchaser of a book for and a limitation of its use as property how much less is a mere presumption sufficient for such a weight of obligation from Emanuel Kant bus ist ein Buch in the Metaphysic De Sitten edited by W. Weissschadel Frankfurt am Main Sorkampferlag 1977 page 581 translated and quoted in Palmer are patents and copyrights morally justified page 853 but third parties still pose a problem for this theory even if a seller of an object could somehow reserve certain use rights with respect to the sold object how does this prevent third parties from using information apparent from or conveyed in that object reserved rights proponents say more than that the immediate buyer B1 is bound not to reproduce the book for this result could be obtained by pointing to the implicit contract between seller A and buyer B let us consider a third party T1 who finds and reads the abandoned book thus learning the information in it alternatively consider third party T2 who never has possession or even sees the book he merely learns of the information in the book from gossip graffiti unsolicited email and so forth either T1 nor T2 has a contract with A but both now possess certain knowledge even if the book somehow does not contain within it a right to reproduce how can this prevent T1 and T2 from using their own knowledge and even if we say that T1 is somehow bound by a contractual copyright notice printed on the book an untenable view of contract how is T2 bound by any contract or reserved rights Rothbard attempts to address this point as follows a common objection runs as follows all right it would be criminal for green the buyer to produce and sell the brown mousetrap but suppose that someone else black who had not made contact with brown happens to see green's mousetrap and then goes ahead and produces and sells a replica why should he be prosecuted the answer is that no one can acquire a greater property title in something than has already been given away or sold green did not own the total property right in his mousetrap in accordance with his contract with brown but only all rights accept to sell a replica but therefore black's title in the mousetrap the ownership of the ideas in black's head can be no greater than greens and therefore he too would be a violator of brown's property even though he himself had not made the actual contract there are several problems with this reasoning first of all black merely sees greens mousetrap he does not see or have access to ideas in greens head nor does he need to have such access in order to duplicate evident features of the mousetrap further ideas in one's head are not owned any more than labor is owned only scarce resources are owned by losing sight of scarcity as a necessary aspect of a homesteadable thing and of the first occupancy homesteading rule as the way to own such things Rothbard and others are sidetracked into the mistaken notion that ideas and labor can be owned if we recognize that ideas cannot be owned they are not scarce resources that creation is neither necessary nor sufficient for ownership first occupancy is and that labor need not be owned in order to be a homesteader then the trouble caused by these confused notions disappears if black somehow comes into possession of the ideas implicit in an item which brown invented in Rothbard's example he happens to see it it is irrelevant that the mousetrap may not have had a right to copy built into it for black does not need such permission to use his own property as he sees fit how does happening to see the mousetrap make black a trespasser or a violator of brown's rights all action including action which employs own scarce means property involves the use of technical knowledge some of this knowledge may be gained from things we see including the property of others we do not have to have a right to copy as part of a bundle of rights to have a right to impose a known pattern or form on an object we own rather we have a right to do anything at all with and on our own property provided only that we do not invade others' property borders we must not lose sight of this crucial libertarian point if I own a hundred acres of land I can prance around naked on it not because the land is imbued with some right to prance naked but because I own the land and it does not necessarily violate the property rights of others for me to use my property in this fashion similarly I am entitled to do what I want with my own property my car my paper my word processor including improving my car's carburetor or using my ink to print words on my paper that is unless I have contractually obligated myself to someone else to restrict my actions with respect to my use of this knowledge I do not have to first find in my property a right to use in a certain way for all ways of using it except those that cause invasions of others' properties are already encompassed within the general right to use my property in libertarianism we live by right not permission we do not need to find permission to take actions with our own property contrary to practice in totalitarian societies all things that are not forbidden are permitted the reservation of rights view would reverse this by assuming that every use of property is valid only if that particular use right can be somehow found or located in the property consider the following analogy farmer Jed discovers oil under his land no one for miles around knows about the black gold Jed plans to buy his neighbour's property for a song they'll sell it cheap too since they don't know about the oil in the middle of the night his nosy neighbour Kutuk suspicious over Jed's recent good spirits sneaks onto Jed's land and discovers the truth the next morning at Floyd's barbershop Kutuk spills his guts to clam and the boys one of them promptly runs to a pay phone and gives a tip to a reporter at the Wall Street Journal who happens to be his nephew soon it is common knowledge that there is oil in the vicinity the neighbours now demand exorbitant prices for their land thus spoiling Jed's plans let us grant that Kutuk can be prosecuted for trespass and harms flowing there from the question is can Jed's neighbours be prevented from acting on their knowledge that is may they be forced to somehow pretend that they do not know about the oil and sell their land to Jed for what they would have sold it when in ignorance of course they may not be so forced they own their land and are titled to use it as they see fit unlike tangible property information is not ownable it is not property the possessor of a stolen watch may have to return it but so long as the acquirer of knowledge does not obtain that knowledge illicitly or in violation of a contract he is free to act upon it note however that according to the reservation of rights view the neighbours would not be permitted to act upon their knowledge because they obtained it ultimately from Kuta a trespasser who had no title to that knowledge thus they could not have obtained greater title to it than Kuta himself had note also that others such as geological surveyors mapping oil deposits cannot include this information in their maps they must feign ignorance until given permission by Jed this imposed ignorance correlates with the unnatural scarcity imposed by IP there is clearly no warrant for the view that reserved rights can somehow prohibit third parties from using knowledge they acquire it is simply not legitimate to restrict the use to which an owner of property can put it unless that owner has contractually obligated himself or has otherwise acquired the information by a violation of the information holders rights talk of reserving the right to copy is merely a way to avoid the contractual notion that only parties to a contract are bound by it here in a footnote the author adds of course in anarcho capitalism it is difficult to predict what extensive contractual regimes networks and institutions will arise various enclaves or communities may well require their customers patrons or citizens to abide by certain IP type rules on anarcho capitalism see for example hunts Herman hopper the private production of defense in the journal of libertarian studies volume 14 number one winter 1998 to 1999 pages 27 to 52 therefore as a general matter purchases can be bound by contract with sellers to not copy or even resell the thing however once third parties become aware of the ideas underlying the invention or literary work their use of that knowledge does not in general violate any recognizable property rights of the seller given this view of scarcity property and contract let us examine the legitimacy of common forms of intellectual property copyright and patent as should be apparent copyright and patent seek to prevent the owners of tangible property scarce resources from using their own property as they see fit for example they are prohibited under patent law from practicing patented methods using their own property or from shaping their own property into patented devices even if they independently invent the method or device under copyright law third parties who have not contracted with the author are prevented from copying or profiting from the author's original work clearly sellers of novel devices or literary works can contract with buyers to prevent these buyers from reproducing or even reselling the item these contractual webs can be elaborate a novel writer can license his story to a movie studio on the condition that the studio require all movie theaters to require customers to agree not to reproduce the plot of the movie and so on yet once third parties not bound by a contract acquire this information they are free to use it as they see fit the reserved rights approach does not change this thus it would probably be difficult to maintain anything similar to our present patent and copyright laws using contracts alone trade secrets trade secrets are easier to justify than patent or copyright Palmer argues that they emerge from common law type rights and are thus legitimate trade secret law allows damages to be obtained for or an injunction to be issued to prevent acts of misappropriation of a trade secret this can be applied against the person who against the person who has improperly acquired the trade secret or who divulges the secret contrary to a contractual obligation and also against others who know that they are obtaining the secret from such a person suppose employee a of company x has access to x his trade secrets such as its secret formula for a soft drink he is subject to an employment agreement obligating him to keep this formula secret he then jumps to x is competitor y y wants to use the formula it learns from a to compete with x under current law so long as the secret formula has not been made public x can get a court order to stop a from revealing the secret to y if a has already revealed the secret to y x can also get an injunction to stop y from using or publicizing the formula clearly the injunction and damages against a are proper because a is in violation of his contract with x more questionable is the injunction against y because y had no contract with x in the context in which situations usually arise however where could the competitor y wants the trade secret and knows the defecting employee is in breach of contract it could be argued that the competitor y is acting in conspiracy with or as an accomplice of employee a to violate the contractual rights of trade secret holder x this is because a has not actually breached his trade secrecy agreement until he reveals trade secrets to y if y actively solicits a to do this then y is an accomplice or co-conspirator in the violation of x's rights thus just as the driver of a getaway car in a bank robbery or the mafia boss who orders an assassination are properly held liable for acts of aggression committed by others with whom they conspire third parties can in narrowly defined cases be prevented from using a trade secret obtained from the trade secret thief trademarks palmer also argues that trademark law is legitimate suppose some lachmanion changes the name on his failing hamburger chain from lachman burgers to Rothbard burgers which is already the name of another hamburger chain I as a consumer I'm hungry for a Rothbard burger I see one of the fake Rothbard burger joints run by the stealthy lachmanion and I buy a burger under current law Rothbard the owner of the Rothbard burgers trademark can prevent the lachmanion from using the mark Rothbard burgers to sell burgers because it is confusingly similar to his own trademark that is it is likely to mislead consumers as to the true source of the goods purchased the law then gives a right to the trademark holder against the trademark infringer in my view it is the consumers whose rights are violated not the trademarks holders in the foregoing example I the consumer thought I was buying a Rothbard burger but instead got a crummy lachman burger with its weird kaleidoscopic source I should have a right to sue the lachmanion for fraud and breach of contract not to mention intentional infliction of emotional distress and misrepresentation of praxeological truths however it is difficult to see how this act of fraud perpetrated by the lachmanion on me violates Rothbard's rights the lachmanions actions do not physically involve Rothbard's property he does not even convince others to do this at most he may be said to convince third parties to take an action within their rights namely to buy a burger from the lachmanion instead of Rothbard thus it would appear that under libertarianism trademark law should give consumers not trademark users the right to sue trademark pirates moreover more novel extensions of trademark such as rights against trademark dilution or against certain forms of cyber squatting cannot be justified just as a trademark holder does not have a right to his mark neither does he have a right against his marks dilution the law against cyber squatting is simply based on an economically ignorant opposition to scalping and arbitrage there is of course nothing wrong with being the first to acquire a domain name and thereafter selling it to the highest bidder conclusion we see then that a system of property rights in ideal objects necessarily requires violation of other individuals property rights for example to use one's own tangible property as one sees fit such a system requires a new homesteading rule which subverts the first occupier rule IP at least in the form of patent and copyright cannot be justified it is not surprising that IP attorneys artists and inventors often seem to take for granted the legitimacy of IP however those more concerned with liberty truth and rights should not take for granted the institutionalized use of force used to enforce IP rights instead we should reassert the primacy of individual rights over our bodies and homesteaded scarce resources appendix some questionable examples of patents and copyrights some exemplary us patents christmas tree stand watering system us patent number 4993 176 february 19 1991 a christmas tree watering stand shaped like santa claus initiation apparatus us patent number 819 814 may the eighth 1906 a harmless way of initiating a candidate into a fraternity by shocking him with electrodes method of exercising a cat us patent number 5443036 of august 22nd 1995 shining a laser light onto the floor to fascinate a cat and cause it to chase the light a pat on the back apparatus us patent number 4608967 september the 2nd 1986 apparatus with simulated human hand to pat the user on the back hyper light speed antenna us patent number 6025810 february 15 2000 poking hole in another dimension to transmit rf waves at faster than light speed incidentally accelerating plant growth force sensitive sound playing condom us patent number 5163447 november 17 1992 self-explanatory for example it could play dixie method and system for placing a purchase order via a communications network us patent number 5960411 september 28 1999 amazon.com's one-click method for purchasing an item on the worldwide web by a single mouse click financial certificates systems and process us patent number 6017063 january 25 2000 inflation indexed gift certificate or mutual fund share method and system for measuring leadership effectiveness us patent number 6007340 december 28 1999 assigned to electronic data systems corporation sanitary appliance for birds us patent number 2882858 april 22nd 1959 a bird diaper religious soap us patent number 3936384 february 3rd 1976 a bar of soap with religious design on one side and prayer on the other and finally a method of preserving the dead us patent number 748284 december 29th 1903 preserving dead person's head in block of glass copyright law while it has not led to as many clearly absurd applications has also been extended greatly by the courts originally intended to cover literary works the concept has been stretched so that authored works include computer programs and even machine language and object code which is more analogous to a machine part such as a cam than to a literary work against intellectual property by stefan cancella published by the ludwig von mesis institute or burn alabama the printed copy available on the mesis dot org website contains all the footnotes and bibliography the preceding audiobook was read by jock coats in oxford england available on jock coats dot me against intellectual property by stefan cancella