 Good afternoon, this is Michael Ostrelink with the Medical Freedom Report, a project of the Association of American Physicians and Surgeons. And I'm speaking with Stefan Kinsella, who's a senior fellow of the Ludwik von Mises Institute, founder and editor of the Libertarian Papers, and the founder and director of the Center for the Study of Innovative Freedom. Good afternoon, Stefan. Thank you. Glad to be here. Stefan, tell us a little bit about yourself, about your work at the Ludwik von Mises Institute and the Center for the Study of Innovative Freedom. Well, I'm a practicing patent attorney, actually. I'm a general counsel for a private high-tech laser company here in Houston. I've been practicing law since 1992, and I've been heavily involved in libertarian and Austrian economic theory and things like that since around that same time. I founded a journal called Libertarian Papers a couple of years ago, which is a scholarly journal which sort of replaced the Journal of Libertarian Studies. And I teach at the Mises Academy, which is a online teaching platform of Mises Institute. And I founded the Center for the Study of Innovative Freedom last year to sort of gather a bunch of the world's leading pro-free market, but anti-monopoly, anti-intellectual property scholars together so that we can gather our resources and provide news and opinions in upcoming years, seminars and other things like this based upon this idea. Now, can you explain what you mean by the anti-monopoly intellectual property? Yeah, I think the best way to explain it is this. There's sort of been, there's a field of law called intellectual property law, which is very arcane and highly specialized and not many laymen or non-lawyers know much about it. In fact, not many lawyers who are not specialists know much about it. And even say trademark lawyers don't know really a lot about patent law quite often, for example. So these are very arcane areas of law and they're often taken for granted by people that don't know much about them. They just sort of assume this is a type of property law. After all, it's called intellectual property. So intellectual property law is a type of, is an umbrella term that covers several, somewhat related but not completely related types of legal rights that the state enforces. The primary ones are patent and copyright and there's also trademark and trade secret. And so you can see right away, we're getting to four different types and there's other types as well, boat hull designs and reputation rights and things like this, database rights, moral rights. So it gets to be really complicated and this is why most people's eyes are where they don't understand it, but they just sort of assume that it's a type of property right. So that if you're in favor of a capitalist private property system, then it should probably have some type of intellectual property component, although the person saying this usually doesn't know much about it. But what's interesting is the origin of these systems, unlike regular property, and tangible or material things, arose in the state grants of monopoly and control and censorship, copyright and patent in particular, and were never even originally called property. This is a more recent propaganda technique by the state and those who advocate IP law to try to give it the veneer of respectability that regular property rights have by calling it property. Now I'm a little confused so hopefully you can clear up my confusion. A lot of the folks that I spend my time with who call themselves libertarians or conservatives support something called intellectual property. And now you're saying it's actually, it shouldn't be supported from a true free market libertarian perspective. Can you explain that? Yeah, so here's the situation. And I've taken about five or six different approaches to explaining this. I'm a patent lawyer, I've done copyright, I've done trademark, and trade secret, and I specialize in patent law. So I'm really familiar with the system, I've been doing it since 1993. And as a libertarian I always initially assumed that there was some way to justify this although I was always bothered by it and so I've looked into it and over the years I've come to the conclusion that you cannot justify these types of laws and they are contrary to property rights. Basically what it is is the state grants a monopoly right to a person who applies or who does something that the state approves, gives them a right to sue other people for using their own property in a certain way that the holder of this monopoly right has not consented to or gave permission for. So here's what I think has happened. When the American system was founded, 1776, wherever you dated, and the Constitution was enacted in 1789, there was the patent and copyright power granted. Now what happened was there was a statute of Anne and the statute of monopolies in England, the 1600s and 1700s, which are sort of reactions to this English and European monarch grant of monopolies and censorship controls. So basically the origin is this, the state, 1600s, 1700s was really afraid of ideas getting out that they didn't want getting out like Protestantism or something like that. So Queen Anne establishes the stationer's guild which has a monopoly over officially approved ideas because the printing press is starting to really threaten the state. At the same time monarchs are granting privileges to court cronies like you can have the monopoly of making bread or saddles or whatever in this town. Finally, Parliament responds to these things and starts choking back on them. But when they choke back on them, there was a reaction. So you have the statute of Anne which sort of said, look, we're going to get rid of these censorship type monopolies. We're going to let authors have kind of a remnant of this right. And at the same time Parliament also said, we're going to get rid of the kings and the queens authority to grant these favoritist monopolies to their court cronies, these privileges, but we're going to make an exception for inventions. So basically these things arose out of court state grants of monopoly privilege and censorship and control. And then when the American Revolution happens, these ideas are in the air. So they put it in the Constitution. There's a clause in there that says Congress has the authority to protect inventions and artistic works. So, but the American Revolution was closed in the language of natural rights. So everyone assumes that this component of the Constitution, this component of the American system is like one aspect of natural rights or property rights. And then you have theorists like Ayn Rand come along and she's from Russia. She hates Russia. She sees America is much better. So she basically assumes America is this proto-libertarian paradise. And she takes everything she sees in the Constitution as presumptively valid. So she starts promoting that, of course, in laws for property law because the Constitution supports it is a type of property right. And of course, this is libertarian. So you have these generations of libertarians coming up never really questioning this arcane bureaucratic, monopolistic grant by the state that they don't really understand the details of, but because it was part and parcel of this country that they assumed to be the sort of quasi- or proto-libertarian model. So in recent years, libertarians have begun to question this. They've begun to realize, wait a second. We have a state granting monopoly privileges to people that allows them to use the state's courts to get state force or injunctions or damage awards ordered and issued against other people who are just using their property peacefully and they're not committing aggression with their property. So you have basically an emergence among libertarians of a rejection of the IP idea. They're starting to cast off this idea of intellectual property as a legitimate type of private property right. This is Michael Osterlink with the Medical Freedom Report, a project of the Association of American Physicians and Surgeons. And I'm speaking with Stefan Kinsella. He's a senior fellow at the Ludwik von Mises Institute, founder and editor of the Libertarian Papers and director of the Center for the Study of Innovative Freedom. Stefan, can you give me an example, a present day example of an issue that would kind of highlight what you're talking about? Yeah, I can give you several. I have several blog posts. If you just do a Google search for my name, Kinsella and Trademark Patent Horror Files. I have like a post collecting all this. So on the Mises.org blog is Patent and Trademark Horror Files. And you can, in copyright, Patent, Trademark and Trade Secret, I can give you lots of examples of each one. But let's take a copyright. So the original purpose of copyright was for the crown to issue a monopoly to one company that it controlled, the stationers company, so that it can control these printing presses which were starting to emerge and which books would get published. So basically it was used for literally for censorship purposes. Now today it's been more democratized. It's protected by statute. And there's a bureaucracy in charge of it. And the crown is sort of out of the picture. But the exact same thing still happens. And in fact, just recently, a couple of years ago, there was someone who had written a sort of sequel to The Capture in the Rye. It was like a parody. Anyway, the estate of J.D. Salander, the author of that book, sued. And the court issued an injunction to the author and the publisher saying that you may not even publish this book. They didn't say you have to pay royalties. They didn't say if you do it, you're going to have to pay a fine or a penalty. They said you may not do it under penalty of contempt of court. So basically what you have is the court using the force of the state to enjoin free speech. Someone could not comment on this. And there's other examples too. There was a film called Nostaratu, a Dracula film that was ordered. All copies were ordered destroyed by the court. There was a parody of Gone with the Wind called A Wind Done Gone, which was prohibited by injunction. So that's the copyright case. In terms of patent, this is a regular thing. You have companies on a regular basis who are afraid to innovate in or enter into a given market for fear of a patent lawsuit. If you remember a few years ago, when we had the Amperac Scare in Congress, and there's one drug called Cipro, which is authorized by the patent holder, there was not enough drugs being made. So Congress threatened to use its authority to grant a license. See, the federal government grants these patent monopolies, but then they claim the authority to grant an exception to it when they need to. It's called a compulsory license. So they threatened the maker of Cipro with, look, we're going to authorize other people to make this drug if you can't make enough. So the company backed down. Another case was the Blackberry case. When the maker of Blackberry was threatened with patent infringement and they were threatened with being shut down by the plaintiff holding a patent, congressmen had Blackberries and they were very fond of their Blackberries. And when their interests were threatened, they threatened to institute a compulsory license yet again to get out of it. But what happened was, Rem, who makes Blackberry, they were sued by a company called NTP. Rem agreed to pay $612 million, this was like three, four years ago, just to settle in suit. This was even though the patents were being challenged in court at the time, but the problem is, if so long as they're not yet invalidated by a court, another court could issue an injunction and shutting the entire Blackberry operation down. So these are examples of basically how patents are used as extortion threats by competitors. What they are basically is a patent is a way that a company who does not like competition can use the power of the state to help get rid of competition. And what you have, Michael, is you have a lot of medium to large-sized companies, like my own, accumulating dozens or hundreds or thousands of patents, almost completely defensively. And they use these things to threaten their competitors with a counter lawsuit if they get sued. So the larger and medium-sized companies don't sue each other for patent infringement because they know they'll be countersued. So they enter into either a silent or an explicit sort of gentleman's agreement not to sue each other or they license each other their technology. But what this does is it creates sort of a walled garden or a barrier to entry to smaller companies that don't have any patents because they're like naked. They don't have any defense to a patent suit from these guys that have all these patents. So basically, patents are a clearly, explicitly anti-competitive grant of monopoly privilege by the state. And it's a little bit of seen and absurd that this terrible anti-free market, anti-private property practice has been co-opted by the state and has bamboozled libertarians into thinking it's part of libertarianism. But now we're starting to wake up. Well, let me ask you a question. Let's assume for a moment one of our doctors writes a book, develops some software benefiting his practice as a doctor, and perhaps creates a new drug or a new technology for medicine. And you can use any one of these three or all three of these examples. He spends or she spends a lot of time, effort and money to do so. One in that individual having an interest in having their time and resources protected, at least for a certain amount of time, as opposed to someone else being able to just come in and utilize their thinking for their own benefit at the expense of the person who spent all the time and effort putting into developing a product or something along those lines. So here's how I would approach that. First of all, yes, they have an interest, but then senior citizens have an interest in getting social security payments. Welfare recipients have an interest in getting welfare payments. Halliburton has an interest in the welfare, warfare state. So the fact that someone has an interest, to me is not really determinative. The question is what is just and what is property rights? And as a libertarian, as someone interested in property rights and justice and fairness and freedom in a free market, we have to step back and ask, what is the function and purpose of a government? The only possible function of government is to do justice. And we libertarians believe that's done in a particular way, which is to protect property rights. Property rights in the libertarian conception, which is to enforce the rights of people to scarce resources that they have a legitimate title or claim to. The purpose of the state and the government and justice cannot be to have a group of bureaucrats that sit in some city and try to determine what rules that they can decree and enforce to maximize the production of certain arbitrarily decreed goals or goods. So the purpose of the state is not to make sure that we have enough innovation. The purpose of the state is not to make sure that we have enough music being produced. The purpose of the state, if anything, is to just protect and defend property rights. So to argue that there is a copyright or a pattern, you have to argue that it's a property, right? Not that someone has an interest in it and not that the state ought to be tweaking these things to maximize these other things. Not to mention that all of the studies that have been done, even if you take this sort of utilitarian perspective, which I do not take, but even if you take this perspective, that we should try to have the state adopt rules that maximize wealth and utility or whatever thing you want to maximize. All of the studies that have been done by just mainstream and perical economists and others conclude that these IP laws, there's no proof that they actually do what they claim to do. By all lights, they clearly distort the market for culture, creativity, and innovation. They distort it by pushing research from one to the other, things that can be protected. And there's evidence that it actually reduces overall innovation. So that would be my first argument that, so you take your doctor, I think the way to look at things is this. In life and in a pre-market society, it is the job of the actor, the human actor, the entrepreneur, to figure out what end he wants to achieve and how to make a profit off of it. And if part of that involves the use of your creative energy, innovation, then it's up to you to figure out how to make a profit of it. Let me give a brief example. Back in the 50s, if you remember, drive-in theaters were more popular in the US than they are now. And as we all recall them, you drive in, you pull up next to these little 10 set of speakers, and you listen to the movie. Now, why did they do this? They did this because initially they didn't have little speakers. They had a big loud speakers. But people would drive up and have free riders and they would just sit on the neighboring hills or on their cars and they would watch the outdoor screen and listen to the outdoor speakers and they would get to benefit from the performance for free. Now, the drive-in movie theaters could have lobbied Congress for a law to make it illegal to sit on your own property, on your own porch and watch your screen. But instead what they did was they got creative and they said, listen, we need to find a way to exclude enough of these free riders to make a profit. So they installed the speakers that are per car speakers, cost some money. They have to also install a ticket booth and a person may have to hire someone to make sure you only come in if you've paid a price. This is the way the business war works. If you're selling something that's a bundle of service and content and a scarce resource, you have to find a way to make a profit. That's the entrepreneur's job. And in that case, they did it. So there's a lot of research, a lot of studies about how people can do these things. I can't answer all of them, but the point is if you release into the public an idea or information, other people are going to learn from it and compete with you. That's what competition is. All libertarians believe in competition. Someone has an idea for a new type of business or restaurant, they come into town, you know, they'll move to theater, they have a new drug store, they have a Walmart or a chain store, they have wider aisles in the grocery stores, whatever, their competitors are continually eyeing them and they emulate what works and they may be improved on it. In this way, competitors are always on their toes and consumers are always made better off. But you can't release, say, a new product into the world like a new mousetrap and expect people not to learn from what you've done. Now, in terms of another example, I'd be curious on your take on, for instance, music. So I download my favorite song and I think what I hear you saying is since I own it, since I paid for it, I can pretty much do anything I want to now with it. Is that correct? Well, I wouldn't actually put it that way. I would be more careful about what ownership means and whether you can own a song. A song is a pattern of information and I don't think it can be owned. Ownership applies to scarce resources which people can fight over or conflict over. Now, I would say that if you actually download a song in a legal way and whether you pay a price for it or whether it's free, if you agree to a contract with the seller, then you can bind yourself or become liable for doing things that you agreed not to do. So if a seller of a song offers it on site and says, listen, you can download this but you have to click on this box and agree not to give it to your friends. Well then if you do so, you're in contract breach. It's still not a property issue in terms of the song but it's just a breach of a contract but the problem is that contractual approach to copyright and patent is very limited in how much you can apply it. IP, copyright and patent apply to third parties who have not agreed to anything. And if unless you can somehow have this legal system apply to third parties, then you cannot have anything resembling modern patent and copyright. Now, I understand you're teaching a class at the Mises Academy on this very issue. Is that correct? Well, I taught a course on intellectual property theory, history and economics last fall. I am currently teaching a course on libertarian legal theory but I will be repeating my IP course in March on Mises Academy. Now, if our doctors and their patients are interested in listening to and participating in these programs or these programs of yours, how they find out more about them? They can go to academy.meses.org and the examples you gave earlier were interesting because you've mixed several things together because there are intellectual property touches almost all of these things. You mentioned a book, software and a pharmaceutical and an invention. Actually, what you mentioned involves at least four or five types of intellectual property rights. The book would be copyright. The software would be copyright protected and potentially patent protected. The pharmaceutical would be protected by patents and the innovate invention like a medical device or even a medical technique would be covered by patents and some of this might be covered by trade secrets. So you have the interplay of all these arcane ultra kind of particularistic bodies of law that are hard for people to understand. And in fact, you might find this of interest in I think in 1995 or so there was an amendment to the patent law passed. And of course the patent law is always being changed because of different lobbyists and interest groups. And there was an exception made to the ability of the medical profession to enforce medical procedure patents with an injunction. So in other words, the fear was that a doctor would invent a new technique for performing surgery, a technique now that's a process and he would patent it. And then he could actually get an injunction from a court telling one of his fellow doctors, you cannot even use this technique to save someone's life. So probably because of the potential of the public outcry from this and the Hippocratic Oath idea that we're in this to save people's lives, why would I stop someone from using a technique to help someone? An exception was carved out of the patent law that said doctors cannot use an injunction to enforce a medical procedure patent. But you can still use it to enforce medical device patents. And healthcare providers can be sued but not doctor. I mean, these types of examples are rampant in the patent law and it's very much akin to the income tax code. It's full of completely arbitrary exceptions and details that are the result of compromises and basically bribery and pressure groups. But it sort of indicates to someone is the idea of patent law really a natural right? Is it really something that's compatible with property rights and our nature if Congress makes up these arbitrary rules and exceptions all the time just to prevent its excesses from being too unpalatable to the medical profession or to people in general? Now you're sending for the study of innovative freedom that organization itself looks at and articulates these kind of ideas that we've been discussing, is that correct? Yes, with a focus on what institutional practices and rules ought we to have in society to foster innovation and not to hamper innovation. And a key aspect of this is the very damaging effect of intellectual property law on innovation itself. And basically we have this perverse situation where people assume that patent law, for example, it complements innovation and spurs innovation and is necessary for innovation. But the exact opposite is true when every one of those mainstream assumptions. Now, when our doctors are interested to learn more about your center, how they find it on the web. So our website is C4, that's the number four, C4fif.org. And you're also the founder and editor of the Libertarian Papers, where would folks go to find that as well? That's LibertarianPapers.org. This is a scholarly Libertarian Journal which succeeded the closing of the Journal of Libertarian Studies about two years ago. Well, Stefan, thank you very much. This is really interesting. And perhaps we can have another discussion in the near future and kind of unfold these ideas even further. Michael, I'd be really happy to. Thank you for having me on. I appreciate it. Enjoyed it.