 Hello, and good evening. Welcome to this evening's edition of Public Affairs, Public Access. I'm your guest host, David Hutzelman. You may be seeing this live on today, on February 22, but you also may be seeing it on a rebroadcast mode. We'll be trying to take some questions from later on in the show for our guest here. I'm on about once a month and try to bring you items of local interest to the general Houston community and maybe to the libertarian community in particular. And tonight, we're very pleased to have with us a guest to talk about the topic of intellectual property, which has certainly gotten its way into the public discourse because of some legislation that's appeared in Congress and also some of the events that are going on in the third world mostly regarding China and India and some of the intellectual property provisions. So my guest tonight is Stephen Kinsella. Stephen is the founder and executive office editor of Libertarian Papers. He's the founder and director of the Center for the Study of Innovative Freedom. You'll see that website on the monitor a little bit later. He's a member of the editorial board of Reason Papers and a general counsel for Appied Opto Electronics where he's a registered patent attorney and a former adjunct professor at South Texas School of Law. He's a senior fellow with the Mises Institute and he has published numerous articles and books on intellectual property law, international law, the application of libertarian principles to legal topics. He received an LLM in International Business Law from King's College in London, JD from the Paul M. Herbert Abair Law Center at LSU and a BSEE and MSEE degree from LSU. Welcome Stephen and thank you for Stefan and thank you for being with us this evening. Thanks. Glad to be here David. Okay. Since many of our viewers may not be familiar in detail with what intellectual property really comprises, maybe you could give us a brief rundown on what the term intellectual property means. Sure. I'll be happy to and probably until recently it's a fairly esoteric and boring area for most people but it's taken on increasing importance lately with the importance of the internet and with increasing attempts by the government to regulate the internet in the name of intellectual property. Intellectual property is a fairly recent term that is used by lawyers and legal scholars and the government to classify different discrete areas of the law, primarily patents and copyrights and as well as some other areas. So intellectual property is a sort of umbrella term that describes patent copyright, trademark, trade secret and some other types of laws. Laws that deal with protecting what is called creations of the mind or the intellect. Although some of these laws have somewhat different bases and purposes, they're all lumped together this way. The big two that are of concern in our modern economy are patent and copyright. Patents protect property rights in inventions, mouse traps, computer software and copyright protects artistic creations like novels, paintings, movies, things like this. Okay. And the current legal system, as I understand it, you can get a patent protection for what, 17 years? About 17 years. That's right. And if somebody else does something to create or make money from an idea that presumably is covered by your patent and you can sue them for damages or cause them to cease and desist. Yes. The way the patent system works is to obtain a patent you have to apply for one. Copyright, by contrast, since 1980s is automatic. If you write down on your note paper right now a paragraph, you instantly have a copyright in that. Even if I disavow a copyright? You can't disavow. There's no way to get rid of it. Oh. Okay. You don't have to put a copyright notice. You don't have to register it with the copyright office. Patents but you have to apply for patent. The requirement for a copyright is that you be the original author, the author of something original. That's all it has to be. For a patent you have to be the inventor of a useful and non-obvious and new machine or process that does something useful and practical. Okay. And do I understand that the copyright laws used to be shorter but now there's something like what, the life of the author plus 70 years or something like that? Yeah. The average life of a copyright nowadays is over 100 years because of this provision. Certainly at the founding of the United States which had sort of the first modern copyright and patent system right at the founding of our constitution in 1789 and soon after that with the first copyright and patent statutes, they both lasted roughly 14 years and you could extend it for maybe another 14 years with copyright. And interestingly the reason for the 14 year term, the idea was that we need to protect people from competition. Now this is not a free market idea protecting people from competition but the idea is that if you invest in a new process or you come up with a new plot for a movie, of course back then it wasn't a movie but a new novel or a play, you need to be protected from competition for the length of two consecutive apprenticeship terms. Now apprentices served about seven years each. So it's obviously an arbitrary number. This derived from about 300, 400 years before in England and Europe where the practice of the monarch and the crown granting patents to protect favored courtesans, cronies of the court from competition. For example in England the crown would grant a monopoly to someone or a patent for the manufacturer of playing cards. Now the person who got this monopoly didn't invent playing cards, they were just the ones who had the sole right to make them. And then they would actually be able to call upon the crown to send the crown's police into competitor stores to search their playing cards, to make sure they had the right seal on them, to make sure they weren't counterfeit. Counterfeit just means without the government's approval. Sounds very much like mercantilism. It's not just mercantilism, it's what's going on right now when you have the RIAA, the music industry and the Motion Picture Association in the U.S. is getting, they're getting laws and regulations from the federal and even state governments that gives them the power to use state police to go invade, you know, allegedly counterfeit CD makers or DVD makers to make sure that they're not making something that's not approved by the state. Let me go down a list of things which, you know, may come to our viewers' minds as to intellectual property and you can tell me what laws they might be currently covered under. What about music and songs? Music and songs would be copyright. Okay, those are copyright laws. They're creative and artistic. Okay. Movies? Again, that's copyright. Okay. How about software? Software is covered by both patent and copyright. It didn't used to be covered by either one, but because of court decisions, they have said that there's an artistic aspect to the way you express computer code. So the way the code is written is like a writing. Like the block diagram or something? No, not even the block diagram. Actually, the computer code, the printout, the 700-page printout of the Incomprinciple code is protected by copyright. But the functionality would be protectable by patent. That's a process. Okay. Like the block diagram of how it works. Exactly. But the code itself is copyrighted. Code itself is copyrighted. Okay. And that's, in inventions, those are patentable. Inventions are patentable. So the invention in the case of software would be the functional process that tells you how to operate a computer. I guess maybe just as a variation of that. What about the recipe for these new wonder drugs and modern medical miracles? Well, recipes, technically, if you mean it in the food sense, which you're not speaking of, is not covered by anything yet. Although there's agitation on the part of bartenders and chefs to get IP that covers recipes. Just like there's agitation to get a type of copyright that covers fashion designs, which are currently not covered. And I'm sure that the perfume industry is coming next. Oh, yeah. But in the pharmaceutical industry, the composition of a given pharmaceutical is covered under patent as a composition of matter. That's one of the three or four types of patents. You can get a patent on plants, asexually reproduced plants. You can get a patent on designs, which is a special type of patent. But the primary type of patent is utility patent, which is a useful device. A machine or a process or a composition of matter or an improvement of something else. And what you just mentioned is a type of patent. Okay. But that's, is it the, which one of those processes? I guess it's probably copyright that applies to if you go to a photographic studio and they give you a picture and you take it to your local copying place and they say, oh, no, this has got this prohibition on it. That's a copyright. That's copyright. And it's even worse than that. According to copyright law, the owner of the copyright of a photograph is the photographer. So if you're on vacation and you hand your camera to a stranger passing by to take a picture of you and your family and you go home with that snapshot, you don't own the copyright to it. And you don't know who does because he's a stranger. Or if you hire a photographer to take a picture of you and your family, he owns the copyright, which is why you can't go down to a copy shop and have it copied without risking thousands and thousands of dollars of penalties. Okay. We'll get into some more esoteric things. What about the logos on fashion merchandise and so forth? You see all these knockoff labels and every once in a while in Houston, you'll read about a bust of some place down, typically on Harwin Avenue where we have a lot of Oriental and East Asian goods coming in. So that would be covered by trademark law. Now trademark law, so copyright is designed to cover the, protect the expression, the original expression of an idea. Patents covers the useful invention. Trademarks are supposed to just guarantee the authenticity of the source of a good. So the idea is rooted in fraud, that you cannot defraud a consumer. But the problem with trademark law is that if this knockoff purse maker down on Harwin sells a Louis Vuitton purse, that's a fake purse, in almost every case the consumer knows what they're buying. They're not being defrauded. They know they're buying an $18 Louis Vuitton purse that normally costs $3,000. So they're not being defrauded. The person who can sue this knockoff company is not the consumer, it is actually Louis Vuitton. But Louis Vuitton is not being defrauded either. So that's one of the problems with trademark laws that's currently implemented. To get into maybe an even more esoteric area, which I seem to remember reading that you talked about very briefly, and that's somebody's reputation that you don't really own your reputation or your reputation is not your intellectual property. Well, so the way this works is the four classical types of IP or intellectual property are trademark, trade secret, and patent and copyright. So trade secret is just the ability to keep something secret and to protect it with the courts if it starts leaking out and if it's not made public yet. The field of reputation rights, which is covered by defamation law, the two types of defamation law are liable and slander. Liable is the written form of defamation, and slander is the oral form of defamation. They're both basically making a statement public that is false and that damages someone's reputation. Now that is covered under, as I say, reputation rights law or defamation law. That is not typically included under the umbrella of intellectual property, but in my view it should be because it's based upon the same theory, and it's also fallacious for the same reasons that patent and copyright and the other types of rights are basically all these types of rights hold the view that people have a property right in the value of intangible things. And that is the fundamental mistake. The proper view that informed the original Western capitalist system is that there are things in the world that we need to use to be prosperous, but only one person can use these things at a time. They're scarce. They're scarce goods. So we have a property rights system that says who can use this thing in a peaceful, cooperative, productive way. But you have a property right in the physical integrity of these objects, including your body, but you never have the property right in the value of things, because the value is what other people think about your reputation or how much your house is worth. And if they have a property right in the value or if you have a property right in the value, you can basically use the force of the state to keep people from acting in certain ways or thinking in certain ways that affects the value of your property. That's the fundamental mistake of all IP rights. Let me remind our viewers that we will have a call-in session toward the end of the program. We'll let Stefan talk a little bit more about some of his more controversial views so that we can stir up some questions. But in the meantime, we talked, I mentioned a little bit about what the terms of the current copyright and patent law is, but what's this stuff about SOPA and PIPA that's going around in the Congress, I guess is this to stop pirating of movies and software in other countries? Is that what the basis for that is? That's part of it, and also to stop it here. Let's back up a little bit and talk about what you asked earlier about the origin of the term intellectual property. The term intellectual property is a fairly recent term that has been used and introduced by advocates of patent and copyright to say a hundred years ago who were on the fence because your typical advocate of the free market sees there's something a little bit problematic about the government granting monopolies that protect people from competition, which is what patent and copyright are. So the advocates of IP who are in trench business interest started calling it property because property has a positive connotation in most people's minds. Historical precedent. And now people are used to calling it property. And at the same time they started calling a natural free market activity, which is competition, which involves seeing what someone else does that's successful and makes a profit and you enter that market to compete with them. That requires imitation, emulation, and copying, or what you might call sharing. And sharing is nothing more than learning and when you learn information you repeat it or build on it or whatever. So the government has demonized these peaceful activities, sharing, competition, emulation, by calling them piracy and stealing and theft. Now normally when you steal something from someone, they don't have it anymore. Or when you commit piracy you board their ship and you shoot people and throw things overboard and ransack them and leave them worse off. But nowadays these pejorative terms stealing and theft and piracy are applied to people simply seeing something and using it to determine what to do with their own property. So what about SOPA and PIPA now? So SOPA and PIPA were just the most recent and a long chain of attempts by the government at the behest of the special interest groups such as the music industry, the RIAA and the motion picture industry, the MPAA to try to crack down on people sharing information which is especially easy nowadays since the advent of the internet since 1995 or so and the advent of digital information itself. Basically the internet is the world's most perfect and beautiful copying machine and you have all these business models that were based upon the difficulty of copying in the old age. Going back to the monks in the monastery. Which brings us back to the origin of copyright. Copyright arose as a response of the government and the church to the danger to them of the advent of the printing press because it made the copying of books easier and the spread of information to the regular people more easy and they were losing their gatekeeper control over what ideas could be presented to the average person which is why the stationer's company was chartered by the crown to have a monopoly over what books could be printed and then gradually it turned into the statute of Anne in 1709 which is the first major copyright law. So copyright emerged as an attempt to control the spread of information. And that technology has only gotten more powerful as we've gone along and given more people the wherewithal that didn't own a printing press before now own a computer or a copying machine. Now everyone's a printer and everyone can copy and so SOPA stands for the Stop Online Parity Act. It was the and it's counterpart in the congress was PIPA the Protect Online Protect IP Act and they were both the spawn of Koika the combating online infringement copying act which died a couple of years ago which was the spawn of another bill and it just goes on and on and even though the problem with SOPA was it would give the government and even private interest in some incarnations of the bill the ability to simply make an allegation that a given website contained infringing content or even a link to infringing content and that allegation could go to a court in secret that is without the website owner being notified that was an ex parte hearing with no due process and the court could issue an order to ISPs and Google and search engines telling them you have to remove all traces of this information from your from your system so basically these websites would be cut off from the internet and you couldn't get to them unless you knew it's actual IP address which no one knows anymore they just know the alphanumerical domain name so the danger of this is that it would result in what's called a black list or even a white list a government controlled list of companies that are authorized to be on the internet which is exactly what is done in China and other repressive regimes that we pretend to be superior to so there was a really big danger that SOPA would basically break the architecture of the internet or give almost total control to the state and its special interest groups and the internet rose up against it and defeated it at least temporarily but the problem is Obama had already signed ACTA the Anti-Counterfeiting Trade Agreement a couple of months before no one even noticed except for a few of us and that contains provisions similar to SOPA already and as we speak the trans-specific partnership is being negotiated in secret between the US and several other Asian and other countries which would require all these countries to adopt United States style copyright provisions similar to SOPA and similar to other bad laws that we have I see I know every once in a while I'll look for something on Facebook that I can from a Google or something will send me to a page and when that page comes up it'll say this page, this Facebook video has been removed because of an injection I guess so that's a result of the DMCA I have a blog post on my website c4sif.org where I talk about death of freedom by acronyms because you can just list all the, I mean you can leave out all the statues with no acronyms, you have ICE and ITU and TPP and ACTA, COICA, PIPA, SOPA Pro-IP Act, it's just unending and the one you're talking about is DMCA, the Digital Millennium Copyright Act which was enacted in 19, I want to say 1998 under Clinton and at the dawn of the internet the DMCA, which is a horrible law the DMCA basically says it established this takedown procedure which we're used to now what it said was if you're an ISP or an OSP online service provider and you're like a conduit of information these people were afraid of liability for defamation and for copyright infringement like for example, Yahoo might be afraid that if a user posts a copyrighted video without permission on their site like just with a blog account or something that Yahoo could be sued so Congress responded to that and they said we will give you a defense for copyright infringement and defamation if you establish a policy where if you get a complaint then you take it down right away so that's why you see these videos being taken down and at the time the copyright lobby did not realize how powerful this exception would become it's called a safe harbor they gave in on it because they were negotiating but if that safe harbor had not been negotiated it's possible that Facebook and YouTube and Google never could have blossomed like they did and that's why ever since then the RIAA and the MPAA have been fighting to kill that safe harbor they hate the safe harbor what they want is they want a DMCA that has the safe harbor removed the gatekeepers, the ISPs to be liable and in fact they are trying to impose DMCA type provisions on other countries through this TPP I mentioned or through ACTA another part of DMCA which is really disturbing is it actually outlaws what they call anti-circumvention technology which is what I call a computer because in other words if you have a piece of equipment you could use to break the encryption on some copyrighted material even if you have the right to break that encryption because of a fair use exception on the copyright law even if you have the right to do it if you have equipment that could be used to break encryption that is protecting copyrighted material then it is illegal to have that it's like contraband in other words you're holding a piece of equipment that's like a narcotic it's paraphernalia the computer that we have now is theoretically an anti-circumvention device under the DMCA does the issue of adult websites and content play into this or is that a totally different well it's I'd say there's three big categories that the state uses to as an excuse to regulate the freedom of action among consenting adults on the internet to use Nozick's phrase and that would be porn especially kiddie porn child porn piracy which is copyright infringement and terrorism of course and so you have Obama signing the indefinite detention act recently under the name of terrorism we have mega uploads being shut down we have the state saying that proceeds of piracy from third world countries and other countries is used to support terrorism so they're using terrorism in combination with copyright law as it is used to shut down sites and drug laws I guess to support and of course gambling is another one they're using gambling to shut down people gambling ten dollars at an online poker machine because they can't gamble in their states so yeah the excuse of protecting the children is always trotted out as a way to violate our liberties and I noticed from some of the things of course I've looked at some of the blogs you've been on some of the responses and so forth and of course one of the things that seems even to me in some ways counterintuitive is this idea of protecting value you know if I spend ten years writing a software program and I'm selling it and everybody has the right to copy it and send it to their friends or send it overseas or whatever else in some way it makes me feel like I've screwed up and not only that I've screwed up but that if I knew that was going to happen maybe I would have never invested my effort in that to begin with and I know that's not necessarily an intellectual argument against it but it is a consequence that most people think of with people spending millions of dollars to make first run movies or write books or anything that somehow or other their value is being stolen well there's a interesting little logo I have on my website it's a little arrow-flot symbol and it says your failed business model is not my problem you know but what that gets that is that in any society an entrepreneur has to be aware of the possibility of free writers and they have to try to come up with a creative way to make a profit despite the fact of some things are being easily copied and some things are not so as a simple example in the fifties when the drive-in movie theaters were initially popular one problem according to apocrypha is that you could have free writers sit on the neighboring hills and watch the movie for free because it was outdoors and they could listen to it because there were loudspeakers behind the screens and so these guys had the bright idea well let's pay a little money and install little speakers on little poles by every car now that's probably not as good of a solution and it's probably cost money but they found a way they didn't go to the government to say make it a federal crime to sit on a hill and watch a movie and in fact every business has locks and the doors and at the movie theaters they have tellers that take the tickets to make sure you only come in if you buy a ticket these things cost money so every business model the entrepreneur has to find a way to make a profit if you can't find a way to make a profit probably that's not something you should be involved in but I believe the reality is that almost every practice we're used to in a today's society could exist in a free society absent copyright and patent primarily because taxes would be so much lower we would all be so much more wealthy we'd have so little few regulations if the government were stripped down to such a small size that he couldn't impose patent and copyright that we'd have just an excess of money for research and development and for investing in movies there's no reason to believe for example that a blockbuster movie couldn't be made maybe Tom Cruise would be paid 5 million instead of 20 million but you sell tickets people go to the movie theater and they watch it and then if it's pirated after that you've made a lot of money for example let's take Harry Potter J.K. Rowling very popular author she's probably worth second or first richest woman in England now maybe she wouldn't be worth half a billion dollars in a free society maybe she'd worth 10 million I don't know but I think she'd have an incentive to write Harry Potter because she wrote it as an unemployed welfare mom because she loved the characters so let's imagine she writes the first Harry Potter book and she sells it on Amazon and it's pirated soon after that because it's popular she makes a little money but not as much as she could have she had a monopoly but she becomes wildly popular as she did in real life well then she publishes a second novel and she sells more but she's still pirated well then she says listen I've got 17 million fans around the world I've got the third novel written as soon as you guys as soon as I get a million people pledge ten dollars each to buy the book I'll release it so she makes ten million dollars that way and then someone wants to make a movie of it there might be four people making a movie of the first Harry Potter novel at the same time because they don't need her permission if there's no copyright but maybe one of these studios says you know I bet if we get Harry Potter on board and to give her authorization and to consult that we will get more of the fans to come see our version rather than the other unauthorized versions so they offer to pay five million dollars to be a consultant I mean these things don't occur to people now because they can rest upon the copyright and the patent monopoly but in a free society there's no end to the creativity that entrepreneurs could and would resort to to make a profit off of their ingenuity and creativity Has the music industry come up with a more or less successful business model to to come to realize that copying songs is is not a major technological problem I was out with someone the other night who held up their cell phone where there was a song playing they didn't know what the name of it was they held up their cell phone which evidently had a some kind of a voice recognition and the name of the song came on the cell phone screen and they said oh I think I'll download that I like that song free download site and downloaded the song yep I think I think in a way the music industry has not come up with a way and in a way I think that's a good thing the question is what about artists artists have always been basically exploited by the same with publishers most authors and most artists don't make a lot of money they do it for the passion you're talking about visual artists as opposed to vocal artists even musicians Madonna and Sting maybe exceptions Stephen King maybe an exception J.K. Rowling but your typical author or your typical musician they don't make a lot of money the record industry or the publishing company keeps a huge degree of the profit and they have this oligopolistic position that was created in part built upon the superstructure of the copyright law what I think is happening now is with Amazon and with the threat of piracy which is real even though it's illegal and with the internet and digital publishing the Kindle etc you have artists and authors now that can basically go around these gatekeepers they can go around the big publishers they can go around the the music industry self publish and I think so I think in the in the case of music I think the problem for artists has been solved and that is if you sell a lot of or if you even get have a lot of music free music downloads of your latest song and you get a reputation and you become popular that's going to help you sell tickets at a concert so of course as Cory Doctorow who's a science fiction author in favor of creative commons and open culture he said it may be a challenge to find a way to make a profit in a world where information is easy to copy but he doesn't know of anyone who can make a profit off of obscurity in other words the real threat to any author in this huge world of millions of performers and people you want to get noticed you want your stuff to get copied and then you can figure out how to make a profit off of it but if no one knows who you are because you keep it trapped kind of like a search engine philosophy people start using your search engine you can start figuring out how to make it pay some money I mean why do academics publish papers and journals they don't get paid for this sometimes they have to pay they do it for their reputation they help beat their resume up to get a job teaching at a university almost every field you can think of you can try to see how people would gravitate towards using their creativity to enhance their lives in some way whether it's monetary or not well let me remind our viewers that feel free to call in and ask Stefan any questions that may arise I'm sure some of his remarks have stimulated some of your thinking on that area like they have mine so I'll try to ask as many questions as I can think of that came up with but one of the things that maybe is also somewhat interesting is not necessarily continuing in the same vein but to talk about the political landscape as it relates to intellectual property concerns people on the left versus people on the right people on the right obviously are usually pretty strong property rights proponents and sometimes people on the left well if they're hardcore socialists or something they actually believe that everybody owns everything and there is no private property so how is that playing out in the political landscape if we take mainstream politics into account you see very little difference between republicans and democrats all the mainstream republican congressmen are all in favor of intellectual property primarily because they're in the pockets of Hollywood and the music industry and they also sort of foster and accept the myth that patently copyright are important types of property rights now you have some exceptions like say Rand Paul and Ron Paul and Senator Ron Wyden who even if they support the idea of patently copyright to some degree because it's in the constitution there's a tension between freedom of speech and internet freedom so they oppose SOPA and PEPA for example because they go too far they say now if you talk about political theory there is almost a mistaken notion on the left and the right about IP they both accept the same wrong premise both the left and the right believe the myth that intellectual property is a type of western capitalist property right and for that reason the right wing supports it and for that reason the left wing opposes it so the left wing is against property rights and therefore they're against patently copyright the right wing says they're in favor of property rights and therefore they support intellectual property rights because it's a type of property right the problem is they're both wrong intellectual property is not a type of property right it actually goes against property rights so once you recognize that the left should well at least the right should oppose it it undercuts property rights. And the left is confused on this issue. Depends on which leftist you're talking about. The left libertarians are good on this issue, I have to say. Well, once these protection periods expire, then you really have a society like you're talking about, right? Yes. I mean, things would be. Yes. We see that I think James Joyce's works just came into the public domain a month ago. Who? I'm sorry. James Joyce. Oh, James Joyce. Lissie's, et cetera. But on the other hand, the Supreme Court decided on the same day that SOPA was defeated a month ago, the Supreme Court decided in a case that the United States government, the Congress, had the power to take works that had previously gone into the public domain. I mean, they had been copyrighted for 50 years. And they finally went into the public domain, let's say, 20, 30 years ago. We're talking orchestral works, things like this. They went into the public domain. Well, then the United States passed one of these international treaties, which required us to add 20 years onto the term. And so Congress recently implemented that. So the question was, which means some works that had been public domain for 20 years, they've been performed by church groups, inquires around the country, et cetera, all of a sudden became back into the private domain. And which means I had a concert planned next week. Now I've got to go find whoever the owner is and get their permission, and maybe they can stop me. Got to pay royalties. I've had all these things printed up. So on the same day that SOPA was defeated, the Supreme Court said it's constitutional for the Congress to put works back into the private domain. Wow. OK. Well, we've got a caller. Let me see one of our viewers. Good evening, viewer. You have a question for our guest this evening? Yeah, I have a question. I'm getting, you know, what happened to the upload? OK, I've got the question. The caller's asking about mega upload. Let me give a little history of that. Mega upload was one of these sites that allowed people to share files on a website, similar to YouTube in a way, similar to Dropbox in a way. And the owner of it was in a New Zealand. And he had this weird mansion. He was a rich guy. He seemed like a James Bond villain almost. He had a weird name. He changed his last name to .com, actually. And the FBI basically strong armed the Hong Kong and the New Zealand police, and one of the country's police. And about a month ago, two months ago, 69 federal and other agents swarmed in on this compound in New Zealand. I mean, American FBI agents swarmed in with the cooperation of local law enforcement. I mean, with helicopters and SWAT teams and just like a complete blitz and swooped in and arrested the top four guys for pirating movies. They shouldn't have been pirating things like that. It's not the first. And I think last year alone, over 100 or 200 domain names were seized by ICE, the Immigration and Customs Enforcement Agency of the federal government, the Justice Department. You can find these websites. If you go to their domain, you'll see a big ominous federal warning with the federal seal saying this has been just taken down. Recently, a British and English student was accused by American authorities of having a link on his website in Britain that linked to another site that had pirated copy. And they have convinced a British court to allow him to be extradited to the United States for criminal charges. In the last few months, a man who uploaded one copy of the Wolverine movie uploaded to the internet was convicted and sentenced to federal prison for one year. Now, uploading a file. So this is not the first of its kind. WikiLeaks, of course, was shut down about a year ago. The Pirate Bay is always on the run. And the fear now is that with mega uploads shut down, so-called legitimate sites like Yousendit and Dropbox and YouTube and other sites like this are going to have to be shut down or maybe the owners face federal prison time for having a website that's a useful service. In fact, several overseas websites that were doing a similar type of file sharing service now have blocked the United States. So if you're in the US and you have a US IP address and you log into this site, it says, sorry, we no longer serve United States citizens. So we're being treated like the opposite of how China treats its citizens now. It's getting really scary and dangerous. Okay, well, we got another caller here. Yes, caller, do you have a question for a guest? Yes, I do have a question. What happens about there are artists that like to release their music free through like sites like a media fire and such will that affect? Yes, the caller has a good point. Of course, an artist who creates his own song, you have the copyright in it, unless you're sampling or remixing what someone else did in which case you may be in trouble, but assuming you were the creator of a song, you have the right to release it under whatever license you want. So you could use a Creative Commons license. The problem is if you don't wanna use your own website and you wanna use one of these services, then the service has to be in existence. And the problem is sites like Mega Upload and similar sites, some of the material is what you're talking about. It's legitimate and some of the material is pirated. And so if the government determines that it's primarily illegitimate, they're gonna shut the whole thing down. And so the problem is these sites have no ability to know whether the song you upload is legitimate or not. So it would cost them too much money to let you upload songs for free and then figure out and monitor whether or not you're legitimate. So they're just going to shut down the whole service, I believe. So I believe these services are in jeopardy because of actions against Mega Upload and similar actions of the federal government. In the name of copyright, in the name of property rights, property rights are being jeopardized. One of the things when I rent a movie or something, there's always this very ominous screen that comes on at the start of the movie saying, warning, I'm not even sure what all the rest of the text is because I don't necessarily. But what are the penalties? I mean, if I as a private citizen decide that, oh, well, I can figure out how to copy this movie and I do so and give it to some of my friends or something, what sort of a- The penalties can be civil fines and even jail time, as I mentioned in the Wolverine case. And the rules are so arbitrary and ridiculous. There's a ruling by the, I think it's the FCC that makes this one that says that if your television is more than 55 inches in diagonal length, you cannot use it to show the Super Bowl at a church event. I mean, literally. So if you wanna have your church people come and watch the Super Bowl, you can do it only if your TV is 55 inches or smaller. So there's all these rules- Presumably that keeps your audience down if you can't get it more than- There's a reason behind it, but it's obviously tenologically bound. But there was one law professor, his name is John Teherani, and he did an estimate of what your potential civil liability is for violating copyright. If you're a typical young, middle-aged person who uses the internet on a regular basis, but you're not a big pirate type, you never try to go to the Pirate Bay, but let's say you send emails to friends, you copy things from the internet. He estimated that the average person who just uses the internet on a regular basis is theoretically liable for up to $4.5 billion of fines every year. Now, it seems like a joke, but it is a joke, but it's true. Now, maybe it would be only a little billion, okay? But this is, to my mind, it shows that the copyright clause is in tension with the First Amendment, which protects freedom of speech and expression. It's in conflict with the Eighth Amendment, which protects excessive fines and cruel and unusual punishment, because how can uploading a few files and forwarding a few emails to people justify a billion dollars of penalties? It's clearly an excessive fine under the Eighth Amendment. And then you also have a due process problem with the Fifth Amendment. And if you remember, the Bill of Rights, which has these amendments, the First, the Fifth, and the Eighth Amendment, was enacted in 1791, two years after the Constitution was ratified. So the Constitution had the copyright clause in 1789. Two years later came the Bill of Rights. Now, my belief is that at least three of the Bill of Rights are inconsistent with the copyright clause. And since they came later, they overrule it. So my view is that the copyright clause is very likely unconstitutional. Interesting approach. One of the terms that I came across in looking at some of your stuff on the internet already was the term patent troll. Can you tell us what a patent troll is? A patent troll is based upon the idea of a troll who sits under a bridge and waits for things to go by. And to cross the bridge, you have to pay a fine. So the idea of a patent troll is that someone, let me back up and explain how patents normally work. Let's say I come up with an invention, a new mousetrap. And let's say I manufacture that mousetrap. And I'm selling the mousetrap and I have a patent on the mousetrap. I can prevent competitors from making a similar mousetrap, I can sue them. But who would I normally sue if I'm a mousetrap maker? I'm suing another mousetrap maker. Now they may have their own patents on their own mousetraps, and I may be violating one of their patents. So I sue them, they sue me back. And we both rattle our sabers and we settle with each other and we go back to business. Maybe I pay him a little, maybe he pays me a little. The problem with this is people on the outside who don't have patents can't even compete with us. So we establish a monopoly or an oligopoly. But everyone seems to think this is fair. Well, if I sue you for my patents, I'm suing a competitor and I'm risking the chance that you might counter sue me. So it's a little bit fair. I get to sue you, but I have to take the risk that you sue me back. Well, a patent troll is someone who, let's say buys the patent from my competitor, but they're not making any mousetraps. They just own this patent. And all they do is they go around seeing people that make a mousetrap that arguably is covered by their patent and they just sue them. Well, if someone that owns a patent sues me, but they're not a competitor, I can't counter sue them for anything. So it's unfair, I have no defense. I just have to give in. But in my view, actually, the animus against patent trolls is misplaced because at least the patent troll just wants money. He has nothing to gain from getting an injunction against me and shutting me down because then I'm not selling anything and he gets no royalty. He just wants a cut, okay? So if I'm selling an Android phone and a troll sues me for violating his patent, he's gonna want a little cut of every Android phone I sell. But if Apple sues me, who is not a troll, then they're gonna wanna get an injunction and shut me down. And in fact, they've been doing that. They've succeeded in getting injunctions against some Galaxy tab maker, Samsung tablets and some Android phones in other countries around the world based upon their patents. So in a way, trolls are less dangerous than actual patent, actual inventors. In many cases, not many cases, but at least in some cases you see economic transactions going on in the world of technology where somebody will buy in some way merge with or absorb another company who obviously is not doing well or has a failed business model and yet they have this storehouse of patents that they have as a part of their business. And does that explain why sometimes these companies are valued a lot higher than you would think if they had a business model that doesn't seem to be working out? Yeah, some recent examples of that would be Google's purchase of Motorola mobility for their 17 or 26,000 patents. Oh yeah. And Kodak is basically bankrupt and they're just trying to sell themselves off for their patents, which are huge. They may be sold for one or two or $3 billion just for their patent portfolio. Android, I'm sorry, Apple I believe purchased about a year ago thousands of patents from IBM. IBM is a huge patent powerhouse and they're all doing this to have weapons against each other and to keep the little guy out. So yeah, that's a big part of it and it's sad that you have these companies spending literally hundreds of millions or billions of dollars on acquiring patents just to counter sue each other so they have the right to keep operating when the only effect of it is to raise prices for the consumer and to stop competition from smaller companies on the outside who see raised barriers to entry. It's any competitive and it's monopolistic. Do you have any advice that you would care to give to aspiring songwriters and authors and or computer software designers who would be living in this new world of no IP protection? Sure, I mean I would say they're already living in that world because at least for copyrights piracy is rampant and I don't think the government will be able to stop it. There is just too much ability of people to pirate things. So whether or not copyright is around, people that make their living off of creating copyrighted type works have to face the fact that there are a lot of people out there that will be able to get their content without paying for it. That's just the fact of reality. So they have to come up with a business model to face facts and to work around that and there are a lot of techniques people are using. They're using things like Kickstarter, Kickstarter.com which you can go to to help get funding for a project. There is a video game company, I blogged about it the other day I'm forgetting their name. They're a very popular video game company and they wanted to revive an old type of adventure style video game which is not really popular right now. They couldn't get a big video game publisher to back it. So they went on Kickstarter and they said, we need, oh, I think they wanted $300,000 pledged within a month to make sure they had enough money pledged from potential customers of this game to fund its development over a three or six month period. And within a day or two, they had over a million dollars pledged. So there are ways that you can have projects funded. What did these investors see as the benefit for putting up this million dollars? Well, the primary benefit is to make sure that the company met its threshold so they would make this game then they would be able to get the game whether they pirate it or buy it. And it was like $10 for the bottom level. And there was a tier of benefits that the company offered for different levels of investment. There was even a $25,000 level investment, I believe. And if you did that they would put your character into the game. So, and you know, for the mid-level $100 you would get a free poster and you'd get advanced copies of the documentary they're shooting during the filming of it. So these guys are being creative and they're using their control over the process to offer something of value to different types of people. But they locked it in and once they make their million dollars on this they're already four times more than they originally needed. Everything else is gravy or land yamper as you say in Louisiana, right? So if people pirate it now it doesn't cost you anything. You've already locked in your... So there are different things that producers can do. I'm thinking just as we were talking about this that certainly advertising must start to play a major role in this. If I'm writing a video game or something the fact that I would have some recognizable product as being either attributable to a character or some scenario in the game might bring the funding from that advertiser. Even if you know there's the phenomenon of freeware and freemium, you know where you give one version away for free for people that wanna dabble with it or can't afford the bigger product and you sell a license for support and for premium products to other people. There's all kinds of... Is freeware and shareware the same thing? Yeah, yeah, the freemium is like the first version is for free or if you wanna get support on the website then you pay a little bit more or maybe they encourage you to just donate to the company. Yeah, I know in a couple of cases in shareware they said if you use this shareware practice if you find this shareware useful and you use it, please send $5 to such and such. There are some donation models. There are some models where you pay, you know, you may see a good app on the iOS store and you may see the name of the company that designed it. It may be a free app and you may wanna have an app develop for your business. You may hire that company so it's advertising for their services. I mean, there's just so many ways that your reputation is enhanced by getting your name out there. You may get a job with a company because you have a song or a program you've written or a book you've published or an article you've published which you didn't get a cent for but it helps you get a job. There's a topic we're talking about tonight and I conjured the word pirate. Conjures up the phenomenon of pirate radio which I guess was more prevalent in the UK although maybe it's still, I think there's some part of the frequency that can still be used by entrepreneurs without getting a FCC license but does the idea of pirate radio and the spectrum have something to do with real property or does that fall into a more intellectual? Well, I think that's somewhat related but a different area of free market thought and I think the similarity is that the state involvement has screwed up that area too but it's not too related to intellectual property unless you believe that the airwaves, right, the frequency of the spectrum is not a scarce resource. I think most economists and I would agree that it is a scarce resource because it is something that's part of the physical world that can only be used by one. If I use it you can. Right, it can only be used by one person at a time and in fact in the early part of the 1900s, the 20th century, common law rules were developing that were giving property rights in homesteading like easements almost. One guy popped up a radio station in a given area and it had a certain signal strength and went a certain geographic distance over a certain wave band over a certain wavelength then he had a property, he had homesteaded that and these rules were developing when the FCC was formed and the government came in and just basically preempted the whole field and took it over. If the government hadn't taken it over they wouldn't be auctioning off things now and the government controlling it all and being subject to the, we wouldn't have the fairness doctrine, the government wouldn't have been able to say this is a public resource that, you know, we have to marshal for the public's benefit, et cetera. It would have been a private resource. There's an analog in the oil and gas field which is that in the United States on private state lands, the minerals underneath private property are owned by the surface estate owner whether it's unitized or whatever. Or you can sell them if you want to as well. You can lease it but basically there is a private owner. So if you're Exxon and you wanna go drill on someone's land, you gotta get their permission. Well, everywhere else in the world, every other country that I'm aware of and in the United States in the federal offshore continental shelf, the federal lands and on federal lands onshore, the government presumes to own all this and they give leases. So the government has stepped in where something would have been private and they've nationalized it, which is what the government does, say in China for regular land. If you wanna build a factory in China, you go get a lease from the government. You don't really own the land. So basically the government's involvement in oil and gas rights in the federal case and in the spectrum is the type of socialization or nationalization of what should be a private resource. And I think the experience, unfortunately, when the government gets to own all the subterranean rights, then the issue of taxation becomes less an issue in some of these countries because the government can use the oil revenues to fund whatever kind of an oppressive regime that they may wanna put into place. As we see in Saudi Arabia and Iraq, UAE, et cetera. A stray from our individual intellectual property. Well, I'll think about the BP case. You know, when BP had the oil spill in the Gulf, okay, they messed up. But they weren't, they were just the tenant of the federal government. The federal government was the less E, the less or. Normally, if you have someone that owns land and they let someone come on their land to make a profit drilling for oil and there's a big oil spill that spills onto your neighbor's land, all your neighbors are gonna sue the land owner. In this case, it was the federal government. Of course, the federal government stepped out of the picture and everyone blames it on BP. They're just the, you know, the tenant of the federal government. Okay, well, Stephen Kinsella, let me thank you. We kind of closed down our show for this evening. Let me encourage our viewers to visit your website, which we've had up on the screen a number of times and communicate with you or just learn from what you, the research you've done. I'd also like to take this opportunity to thank Houston Media Source, who makes these facilities available to us and especially our friend and producer, Mark Pertle, who's always a joy to work with here. And we look forward to creating some interest in these general kinds of public policy issues. And maybe we can have you back on a future show if some more of this legislation comes up in Congress that we need to rally support or at least understanding. Be happy to. Thank you very much. And we need to sit here and just.