 Hello, and welcome to the Bitcoin Standard Podcast Seminar. I'm Dr. Seyfried Din Ammous, and today we are joined by two guests, Stefan Kinsella and Jed Grant. Stefan, some of you or all of you hopefully should be familiar with him. He is the Stefan Kinsella, as he often reminds people. And he came and gave one of the lectures in economics 12 in the course that I teach on this website, seyfrieddin.com. So all of you who are registered can go and see the discussion seminar that we held with him in economics 12 where we discussed intellectual property. And Stefan, although he is a lawyer, which should genetically disqualify him from understanding economics, he has actually contributed some incredibly important economic work in the Austrian tradition. In particular, I think the really most important contribution, at least in my mind, I mean, he may disagree because he has many, but in my mind, I think, you know, he was the one who really laid out the Austrian libertarian case against intellectual property. And this is something that is some controversy among libertarians about this and about whether it's a good idea or not that we have intellectual property. But Stefan, in my mind, settles this debate and explains very clearly why there can be no such thing as intellectual property, that property is only in things that are scarce and rival. And this, I think, is a very powerful analytical tool with which to analyze and understand the world. So I'm delighted to have Stefan. And Jed is the CEO of KYC3 and also the founder of the Open Crypto Alliance, and which is an organization that tries to protect people in the Bitcoin space and well, the crypto space in general from patent trolls and from being targeted by all kinds of nefarious intellectual property attacks, essentially. So we are going to be discussing today the case against intellectual property. We're gonna recap a little bit from what Stefan's told us already in economics 12. And then we want to look at this question in the context of Bitcoin and in the context of blockchains and in the context of open source software and where the threats are and what the problems are and what people should be careful about. So thank you very much, Stefan and Jed, for joining us. So I wanted to begin with you, Stefan. I'm hoping you could just give us a brief overview of your case against intellectual property. Why is intellectual property not a thing? Okay, very briefly. There's many ways to explain this I found over the years. I think maybe the simplest is just to say that if you understand the kind of basic case for the necessity for property rights, right? Then it's pretty easy to explain why intellectual property law is incompatible with that. So the basic idea is that we are human being to live in a physical world and we need to move around and use things to survive and to get things done, right? That's human action. So we basically employ scarce resources or scarce means as Lutri von Mies is the Austrian economist calls them, but because of the nature of these things they're scarce in not in the sense that not being plentiful but in being the type of thing that only one person can use at a time. They're basically rivalrous in the economic terms. So that means there could be rivalry or conflict over them which means that if I'm using it it prevents you from using it or excludes your use. So only I can use this piece of land to plan a crop or to build a house or only I can ride my bicycle, et cetera. If someone takes my bicycle then I don't have it anymore. So people that prefer peace and cooperation tend to prefer property rules that settle the issue of who owns a given resource so that everyone can use them peacefully and without interference and then we can trade and cooperate and they all do better off, have more prosperity in society. So that's the basic purpose of property rights and the Western and basically all of private law and all of humanity has roughly said whoever gets a resource first has a better claim to it or someone who gets it by contract from another person. So that's the basic rules of property is that when there's a resource that two people dispute we settle the issue of who owns it by asking who started using it first when it was unowned and who got it by contract from a previous owner. And those two questions basically can settle almost every property dispute in the world. Now in the case of your body you own your body because you're the original inhabitant of it but for other things it's who got it first and who got it by contract. Now, intellectual property basically is a grant by the government that says whoever obtains this intellectual property right like a patent or a copyright is able to go to a court and get state force used against a competitor in the market that forces them from using their own property as they see fit. So if you have a copyright you can literally stop someone from using their own printing press or their own computer in the case that we were discussing earlier where someone is saying they own a certain Bitcoin related paper and they're demanding that other people take it down from their servers. So these people own their servers, they own their computers and so they own the memory on those which hosts a copy of this paper. So the copyright if enforced here would allow the owner of the copyright to basically control other people's use of their own property. So it's in a sense of taking a property and it also results in censorship and distortion of culture. And in the case of patent, if you get a patent on an invention what that means is you have a right to prevent anyone else from using their own body and their own factory and their own materials to make a certain machine, right? Designed in a certain way. So it again, it gives the patent holder a property right in other people's property. But those in the law, I think it should be classified as what we call a negative servitude in the civil law or a negative easement. And a negative easement or a negative servitude is perfectly legitimate if it's granted contractually. This is the basis of restrictive covenants in neighborhoods where everyone agrees when they move into a neighborhood, not to use their house for commercial purposes or something like that. So they give everyone else a negative right over their own property like a veto over how they can use it. So their neighbors don't have a right to use their house but they have a negative servitude saying that they can prevent you from using your house in a certain way. But it's okay because you agreed to it. But in the case of patent and copyright, it's just a decree by the state that grants a negative servitude on behalf of the patent or copyright holder over someone else's property. So it's a type of taking a property. And in the case of patents, this results in reduced innovation and monopoly prices and heavily distorts. It impedes the development of new techniques because once someone has a few patents on a given technology, they can rest on their laurels and just rake in the monopoly profits. And other would be competitors or afraid to compete or to develop alternatives or improvements because they can't sell them for 17 years. So it delays the entrance of competitors and new innovation. So the basic case against patent and copyright is that they are anti-free market, anti-property rights, anti-competitive. They are state-granted monopoly privileges, right? Which result in monopoly prices and reduced output and reduced innovation and impediments to free speech. That's the basic case against patent and copyright. I hope you heard me. If you're not going to jump in safe, that ties into why the OCA Open Crypto Alliance exists. The whole point is to keep innovation open and keep everything available for those that are innovating on this technology. So that argument that we just heard is one of the core reasons why we set up Open Crypto Alliance. And I could add one thing too. So you'll notice that in the case we were discussing earlier, so patent and copyright are the two core and historical and most dangerous forms of intellectual property. The others would be trademark law, which in trade secret law. Now you've seen a bit of trademark law come to play in the Bitcoin sphere with just the battles over the name Bitcoin. I don't know if there's been any official trademarks over BTC or Bitcoin itself, but that kind of dispute has to do with trademark. Now, there's another type of legal right in the world, in positive law of the world called defamation, which is libel and slander law. Libel is the written form of defamation and slander is the oral form of defamation. And defamation law is considered just to be a tort where you're liable for damages if you misrepresent someone's reputation in a way that harms them. And according to libertarians, and this is my belief, defamation law is completely illegitimate as well, as Murray Rothbard explains in his chapter in ethics of liberty called knowledge true and false. But the point I wanna make here is that defamation law is, I believe should be classified as a type of intellectual property law because it's very similar to trademark law. They're both basically based upon the idea that you can own something that's not tangible, which is your reputation. And just like with a case of patent and copyright, the flaw of all these types of laws is that the law tries to assign property rights in non-scarce, non-material things. But that's literally impossible. It's not just that I disagree with owning information or patterns of information. It's not just that I don't like it or think it's unethical or unjust or immoral. It's literally impossible. It's not possible to own information because owning is a physical activity backed by physical force of a law. And that can only be applied against things that to which force can be applied, which are physical things in the world. So all human rights, all rights are human rights. Only humans have rights. And all human rights are property rights, as Rothbard explained, because rights only apply to the physical things that we manipulate in the world, the means. And therefore, when you have a law that just says people have a right to their inventions, for example, or their reputations, they don't really have that right. That's a disguised way of transferring property rights in tangible things, which is why I think that this is why I brought up the negative servitude idea earlier. Really, that's what these rights are. They're negative servitudes. And in the extreme case, they're basically slavery because if you can prevent someone from using certain words out of their mouth by saying that you're a bad person, which would be defamation maybe, or by singing a song that's copyrighted, right? Then they have control over your body, which means they're your partial slave. So in the extreme case, intellectual property is a type of slavery. So it's about the worst type of law that we have. So my point is all three of these things are being used in the Bitcoin space. The defamation is being threatened against some people who claim certain people are not Satoshi. And patent in the case of blockchain-related innovations is being threatened against certain crypto companies who are using... Stefan, I think you got muted. We can't hear you anymore. We lost audio, yeah. Stefan, we lost the audio. Stefan? Now he's muted. Gotta unmute him. I think he can do that. We lost you there in the last couple of minutes, Stefan. I don't know if you can hear me or we couldn't hear you. But I guess, yeah, I think the crux of the point that Stefan makes, which I find extremely compelling, is that if you try to establish property rights over things that are immaterial, that are not scarce, that are not physical, for which there is no scarcity, there's no competitiveness, there's no rivalry, you know, a bicycle, if you're riding a bicycle, I can't ride a bicycle. But if you're making a wheel, I can still make a wheel myself. So if you try and establish property rights if you try and establish property rights over a wheel, over an idea, over the idea of the wheel, then you're going to just end up, the only way that you can do that is that you're going to have to establish physical subordination of the people that you're trying to apply this on. In other words, you have to essentially declare ownership of people's minds. You can't think about the wheel that I invented and then do it. And so even if you're building a wheel with your own material, even if you're making your wheel with your own material that you own, if we were to say that this is, if we were to establish property rights on the idea of the wheel, the only way that we can do that is by allowing some coercive authority to establish physical dominance over the people that are copying the idea of the wheel. So you have to, you have to aggress against the property of peaceful people in order to establish intellectual property rights. And so I think the moral case for it and the natural right case for it is completely invalid because there's no logical way in which you can establish ownership and ideas and then you go around enforcing it by using effectively violence to stop people from using ideas when using ideas is completely peaceful. So either we live in a world in which everybody gets to claim an idea and then we have an endless world of conflict where people want to control each other's things. No, no, no, you can't use your guitar to play my song. You can't use your material to build a wheel that I had thought about before you. You can't copy an idea that I have, you can all these things. If we do it, then that means that we need, we legitimate somebody using your physical materials. We legitimate the sovereignty of others over your own property and your own body. And that's I think the kind of natural right take on it. And of course, there's a less popular way of understanding it among Austrians is to think about it in terms of its effects in terms of the economic consequences of it. And so for some people, they would say, well, maybe it's a bit messy, but at least if we establish intellectual property rights that will give us more innovation and that will allow the world to be more innovative because people would have an incentive to come up with great ideas. And if they know that they can have property in them. But Stefan also shows in his work that there's very little evidence to suggest this is the case. In fact, the opposite seems to be true. In fact, it seems that in industries where patents and intellectual property gets imposed, you end up instead of motivating innovation, you end up actually motivating litigation. And then motivating people to just come after each other and to continue to fight over each other's property and how they all use each other's property. And I think this is the kind of utilitarian case. And I think the utilitarian case against intellectual property is also quite valid. Stefan, do you wanna tell us a little bit more about that? Does intellectual property actually encourage innovation? You're muted, Stefan. Yeah, I'm good now, sorry. I just posted a couple of links in the chat. Did my whole previous spiel get lost? Just the last few seconds. Okay, yeah, I was just explaining the defamation law, trademark and copyright and patent are all becoming threats to the Bitcoin ecosystem, which are all types of IP. So the empirical argument is flawed from the start because it's utilitarian and it suffers from all the problems of economic utilitarianism, so which is that you can't measure utility in cardinal terms and you can't compare it interpersonally. And not only that, the evidence is just not on their side. In fact, so you can take the modern copyright and patent system as starting roughly around 1790 with the US Constitution and the US system and it wasn't based upon empirical evidence, it was just based upon sort of a hunch. In the Constitution it said to promote the progress of the science and the useful arts, which is authorship of creative ideas, which is copyright and inventions. It's just said to promote them, Congress can grant limited monopolies basically, but it didn't prove that this actually did promote it. And in the 200 plus years since, no one has been able to prove it. A lot of empirical studies have been done starting around 60, 70 years ago. They're starting really with Fritz Maklop who was kind of a, I believe a quasi Austrian economist and Edith Penrose in the fifties in the US. I think Congress commissioned this big study and they basically concluded, we cannot find any evidence that patents for example, patents encourage innovation at all because it has lots of obvious negative effects on innovation, as I mentioned earlier. Number one is that there's the cost of it, just hiring patent attorneys and having to hire lawyers to defend you in lawsuits and having to maintain the patents that you acquire. And it also distorts or skews research. Like if you can get a patent on this type of thing, but not on this type of thing, you might research in that area instead of the other, which distorts what people would naturally research in. But the studies tend to show that if anything, it impedes innovation. So I just sent a link to the chat and you can go through just a summary of all the studies I've found and none of them can show conclusively. The only studies trotted out by the pro IP crowd that they claim prove it are just bogus correlations. Like they'll have a US Commerce Department study which just basically assigns to every business in the country a classification of whether they're IP intensive or not. In other words, whether you're high tech or not. And so they'll say, well, what's the US economy? Like $17 trillion GDP or something like that. They'll say, well, one third of the US economy is IP dependent because they have technology. And therefore intellectual property attributes $5 trillion a year to the economy. This is the kind of arguments you get which is completely fallacious, of course. And then my favorite argument is when they measure innovation with patents in order to prove that patents produce innovation. Yeah, actually one of the Austrian sympathetic researchers his name is Pierre Disrochers. He's in Canada about 15, 18 years ago. He wrote an article. I think it was for the review of Austrian economics. It's on my website, c4sif.org. It's called on the use of patents as economic indicators or something like that. This is done all the time. Some people will bemoan China. They'll say China is overtaking American innovation because they're filing even more patents now. At the same time, they'll criticize China for not respecting IP and for stealing American IP. I mean, which one is it? Do they have a lot of patents and they really respect IP or they don't, it's just all over the map. But yeah, of course, I mean, I've prosecuted in my career, I don't know, over 1,000 patents for different companies. And my experience is that companies will keep an important invention secret as a trade secret if they can. If it's the type of invention that you can't help but reveal it's designed when you sell the product. It's like if you have a new mousetrap, you can't hide the features that are new. In fact, you're gonna promote those features on the advertising to try to sell it. So that's gonna tell your competitors how to make an improved mousetrap to compete with you. So you can't keep that as a trade secret. So you might as well get a patent on it. So patents tend to get filed only on things that would be revealed anyway publicly. And the alleged purpose of the patent system is to encourage disclosure of inventions that would be kept secret otherwise. That's why you get a reward, the patent reward is in reward for your disclosing to the public. That's why you have to have a written disclosure. But it doesn't even do that. You're basically giving out monopolies for free because people would already have to disclose their invention just by selling the product. Yeah. And I think another example of the studies that they use are just theoretical modeling where they do a bunch of math equations that have no link to real world data and real world examples and illustrate with the model how if you have patents, then you get more. And this is what I like to call economic sock puppetry. You build the model to give you the results that you want and then you conclude that see, I've proven what I wanted to prove. But I think, yeah, I think the way that I like to think about it is, Isaac Newton's famous words, if I could see further, it's because I stood on the shoulders of giants. Patents are effectively attacks on the shoulders of giants. It makes standing on other people's shoulders much harder and therefore it makes things, it makes it much harder for the Newton's to see what's going on. And interestingly enough, when you look at the history of science and technology and you look at the history of music and art, you know, Beethoven didn't need a patent or copyright in order to come up with their song with his symphonies. The best art was, it did not require patents and copyrights. And in fact, when you look at the world today, I think you could say that the fact that you grant these monopolies to people is probably correlated to the fact that things keep getting crappier because all you need to do is get a patent on something and then get the way to distribute it to others and you don't need to innovate as much. You know, if you have the right lawyers, you don't really need to innovate all that much. And frankly, when I think about it, you know, when you think about many of the companies that exist today, I wonder for instance, I haven't studied Microsoft extensively, but I wonder just how much Bill Gates and Microsoft people have actually produced useful things rather than just took useful things from others and what they've added is the lawyers and the patents and the ability to basically sue anybody who copies them and cause trouble and then just end up becoming the major player in the industry and think about it. Windows has been a quasi-monopoly almost for 20, 30 years now and that's largely because of patents and copyrights and all of these laws. I don't think it's something that's merited on the market. I think we had a free market. We'd have a lot more open source software and we'd have a lot more richer ecosystem of computing all over the world. We'd have, I think instead of having Microsoft as the dominant operating system, we probably have something like 10 apples where we have different kinds of arrangements in terms of software and hardware bundling. So some people specialize in software, some people specialize in hardware and some people will combine the two. And I think in a free market, you wouldn't get as much, you wouldn't get as many Bill Gates becoming so rich, but I think you'd have better software for users. This is my intuition toward how these things affected. I think IP is a major force for centralization of production into quasi-monopolies. And when you read the economics textbooks, the economics textbooks always carry you of market monopolies that require government intervention and they bring up examples like Microsoft and they fail to bring up the fact that the reason that they have this monopoly in the first place is because of patent law. So we don't need to use antitrust in order to bring Microsoft down. We just need to stop indulging them and all of those armies of lawyers and giving them ownership over other people's property, other people's computers and other people's hardware and software. Yeah, so Theo has a question in the chat. How do the pro-IP people explain that people bother to invent stuff before the existence of IP protection? That's an excellent one. And they don't have a good argument. They just ignore it or they just change the subject. Or they'll say, well, there wasn't much innovation before or they'll say that, well, that was back when the kings would have to be a patron or something like that. And we don't wanna go back to those days, do we? Even while we have Patreon now and we have private awards like SpaceX and we have government awards in the form of NIS grants or all these things, military research grants. So we have an award system now in addition to the monopoly system. So they just don't have a good response to that. I think what they say is basically well, there would be some innovation, but it's not optimal. So they make that argument sort of like the antitrust argument where they have all these charts and they try to show that there's a reduction in production of consumer goods or an increase in price, a suboptimal production of goods for consumers if you allow monopolies to exist. And ironically at the same time, they favor the granting of monopolies and the long patents to prevent another suboptimality. So to these guys, they always wanna optimize things and they wanna trust the government to optimize it even though it's not in the government's interest and even though the real reason it's suboptimal is because of government intervention in the first place. It's all schizophrenic and nonsense. Yeah, and I think another way in which they try and justify is that, well, back in the dark ages and in the ancient times, we didn't have a lot of innovation but now we live in a world with a lot of advanced technologies and they kinda try and claim the credit for that. So the reason that we had incredible things in the 20th centuries and we had all those nice toys is because we developed patents but I think it's the other way around. In fact, if you look at the development of the steam engine, it seems pretty clear that James Watt having a patent had allowed him to slow down the development of engines all over England when people were copying him and arguably things would have advanced faster if we weren't, if we didn't have these patents. Yeah, there's another example because of the Wright brothers patents on the airplanes in the US, they stifled the whole industry. So leading up to World War I, the industry moved to France or something like that. So like the US and other countries had to go outside the US to buy airplanes because we just had killed the whole industry with the patent wars about it here. It was finally settled, the whole case is just amazing but did you wanna talk about how OCA came about too which was Jed's brainstorm and his idea? Yes, absolutely. It's a good time to transition. I wanna apply all of this to the Bitcoin space and Jed has been working on that. So please go ahead, Jed. Yeah, and let's not forget that those companies, the steam engine, the airplane, these were technology companies of the day. I mean, we don't think of them as tech companies today, but back then they were tech companies. But yeah, the blockchain space to put this in context, if you look at the patent filings in the blockchain space, there were a few hundred per year in 2016, 17, 18, but last year and 2019 saw each year over 10,000 patent filings. So there's a wave of patents coming in the blockchain space. And when you look at these patents, a lot of them are being filed by a small number of protagonists, antagonists, actors. And they intend to use them, obviously, some to protect their core business, like I believe a lot of the patents filed by IBM are around protecting their hyper ledger ecosystem, but others intend to use them in a predatory manner, I believe, to hunt down successful crypto and blockchain companies and basically shake them down and take their market once they've proven that they're viable. The other thing is looking at these patents, a lot of them are weak, they're in a phase now where they're filed, they're not necessarily all granted. And they're based on existing open source technology, so patent piracy, if you will, they're taking technology that's already out there and simply being the first to patent it. And the purpose of OCA is complimentary to other patent alliances out there. You have lot network, which is a patent pooling sort of anti-patent troll organization, so you put your patents in, and then if your patent goes into a patent troll, all the other lot members get a royalty free license to be protected with that patent. And then you have COPA, which is an organization where people agree not to sue each other over patents among members, but OCA is different. The purpose of Open Crypto Alliance is actually to identify those weak patents that are there now in the filing process ideally, and then to challenge them directly and to annul them effectively and turn them into void patents and keep that technology in the public domain, prove the prior art, and make sure that everybody has freedom to operate in the blockchain space. So and how I got into this is I've been thinking about patents in blockchains for quite a while, and I actually filed a patent on a technology called Peer Chain in 2017 as part of a defensive strategy. So the idea there was to patent that so that when someone came along and said they had a patent that I was infringing, I could have a patent that shows I'm within my own patent and not infringing there. It's also joined lot network back then, by the way. And then OCA is just the next iteration in this is drive to keep crypto open and free. That's fast. Yes, so what we'll tell us more about what you do with OCA is the open crypto alliance. And so the client, yeah. And we're pretty new. I mean, we just set it up in the last couple of months. It started at the end of last year. And now we're looking for support. We were raising funds and those funds will be used to oppose patents that are in the pipeline, particularly those that are being amassed by actors who we believe intend to use the patents to control or stifle innovation in the space. So, and a lot of those patents are the easiest ones to go after as well. Cause like I said, they're based on existing prior art open source technologies. So the point is to do that. Ideally, we'd like to crowdsource amongst supporters and members. A lot of the research for prior art. So patent offices today are overloaded patent inspectors don't see the full picture. And we believe that the community has a much better overview of what's happening on GitHub and elsewhere. And so we can crowdsource prior art in order to build the cases and selectively choose those paths. So they're gonna be maximum benefit to have in the open public domain and oppose those ones with priority. So that is, that's the plan. I see. And of course this is, you know, patent trolls for people who are not very familiar but you give us a little bit of a little bit more color about this breed of troll, what do they do and how they... A patent assertion entity as the lawyers insist, I call them, or that's a patent troll or a patent pirate. So it's a company whose objective is to make money by shaking down other companies using a portfolio of patents that they've acquired through one way or the other. And I think the official definition is if an entity makes more than 50% of its revenue in that manner, it is a patent assertion entity. And there are some entities out there, one that's operated by someone claiming to be Satoshi or one of the founders of, which has amassed well over a thousand patent applications and has clearly stated that the intent is to control the industry by using these patents in an aggressive and combative manner. And let me just add one thing here too, patent trolls are not the only problem. And so a patent troll is just someone who doesn't basically own the technology that they have a patent on and they sue other people who the patent covers. And that's considered to be like an unfair fight. It's like, if you have two guys fight each other in a boxing ring, it's a fair fight because they both have gloves. But, and normally in the world before the patent troll phenomena, if you have two companies, they tend to vote, there are competitors, they tend to both have patents on their parts. And if one guy sues the other, the other guy can use his own patents and counts or sue the other guy. So it's sort of like a fair fight. So they might back down or settle. This is what happened in the smartphone wars, right? Apple, and so that actually helps to create cartels and oligopolies, but anyways, considered to be a fair fight. But with a troll, you can't counter sue them because they're not practicing what you might be doing because they're not a competitor. Now, in the Bitcoin space, I'm not 100% sure whether all the potential patent threads are from trolls or they're from competitors. In a sense, the threats from competitors are even worse because a patent troll just wants a little bit of money from you. They want to wet their beak like the mafia. They don't want to take too much because they want to kill you because they want to keep coming back to, they don't want to kill the goose that lays the golden egg. So they're like a little tax, but the guys that have patents that cover their own products, they view the other Bitcoin players as competitors and they might use their patents not to ask you for a license, but to shut you down, right? Or to steer the industry in a certain way, according to their vision of how Bitcoin or crypto should be. So in a sense, the threat wielded by patents held by non-trolls is even greater than the threat from patent trolls. But from our point of view, I don't think it matters. Basically, we're going to identify patents that are threats to the crypto ecosystem and try to identify the ones that are most ripe for attacking based on prior art and the phase that they're in, in the patent application process. Would you say that's fair, Jed? Absolutely, yeah, it's absolutely. Yeah, I think as a little side note, I think this is a great example of just how stifling patents can be for innovation because if you look at the example of cell phones or you look at the example of pharmaceuticals, let's say you were messing around in your laboratory and you came up with a concoction that can in fact cure COVID or can cure cancer or can cure some disease and you try it out on somebody you know who's sick and it works and you try it on more people and it keeps working. Because of patents, it's practically impossible for you to make good money from it and it's practically impossible for you to take it to market. If you wanted to do that in order for it to go to market, you need to get FDA approval and you need to get all of these and you need to get it patented and that takes a lot of time and a lot of money and that's something that you don't have if you were just an innovator, a chemist who's making those things. But it is something that large pharmaceutical companies have because they have armies of lawyers. And so what ends up happening with drugs is that the people that are experimenting with the drugs, the people that are actually devising the concoctions end up getting paid very, very, very little. And it costs something like $10 billion to get a drug out on the market in about 10 years. And this is outdated statistics. I remember reading this in Mikhail Boldrin's book Against Intellectual Monopoly. So it might be much higher right now. It's practically, nobody or very few people have a billion dollars in 10 years to go and get a drug approved, a billion, it's not 10 billion. But very few people have a billion dollars in 10 years to get a drug approved. But people who do have it are the pharmaceutical companies. And so they're able to take that concoction from the postdoc in a lab somewhere who's working on it and pay them a few hundred thousand dollars and then spend the 10 years running through the hoops of the process in order to get it approved and patented and then they'll sell it. And so if you think about it, compared to a world in which there was no patent, well then in that world, the market would be the one that would judge if your drug was good. And so you come up with a drug, you start bottling it and selling it to people and people take it and they get cured and they tell their friends and their friends take it and then the thing spreads and you make money on it before anybody has time to copy you. And that's it and the drug is out of there on the market. Because of the patent process, we ended up getting stuck in this war of litigation that we'll have 10 years of people dying because they can't access this drug while the inventor of the drug can't make money from it. And while the pharmaceutical companies and their lawyers are fighting it out and the lawyers obviously, as always, they're the ones who end up making the money. So if you think about this in the Bitcoin space, I think this is what can be worrying because if you're a company in the Bitcoin space and you're working on something that's innovative, unless you've got yourself an army of lawyers, it is likely that somebody with an army of lawyers with a bigger army of lawyers than yours might be able to take your idea, call it theirs and then essentially patent it and take it away from you even. Yeah, to give an example, suppose you made a lightning network payment system where you had price tags in retail shops and an app and this got wide adoption and you're a startup doing this. So you take a small fee on these transactions which is cheaper than these are master cards. So merchants love you, consumers love you. You're doing well. You get to a million a year in turnover and you think you've got a nice little crypto business running here and that's the moment when one of these trolls will come and assert and shake you down and you may have a million a year in revenue but it's gonna be very hard for you to cough up a quarter million dollars or maybe more to deal with that shakedown, whether you take it to court or just settle. So you're effectively out of business as soon as you begin to get traction and that's the scenario that Open Crypto Alliance is here to prevent. That's our core mission, you know by invalidating those patents that people would use to attack that small business that's getting traction. Nobody wants to attack a crypto company that doesn't have traction. There's no money in it. Exactly. Or let me emphasize something else too. You know, there's as Bastiat and Hazlut talk about there's the seen and the unseen. So it's not just these companies that start up and then they fail because of the threat. You know, there are companies that never come into existence in the first place because if you're a high tech startup or some kind of technology startup and there's a patent minefield out there, you know, your investors know this. And so it's harder to raise funds because you have to prove to them, number one, I'm not gonna get sued out of existence by a patent. And how can you prove that? Because there's so many patents and the law is so vague and you have to prove to them that you're proactively acquiring your own patents because these investors think that it's a defensive arsenal that you need to have, which is either true or not true in some cases but the point is that's expensive. So you have a startup who's struggling to raise funds. They don't have a big revenue stream yet if any and they're trying to persuade people to give them money and that's hard enough to do and they have to raise another million dollars just to have money there to hire people like me to go get patents because they have to play the game. So all this has a huge drag on the whole, you know, space of entrepreneurship and startups in general, it's just impossible to know how many companies never started because of the heavy cost. I mean, you have to go buy insurance to insure yourself against possible suits and the insurance is extremely expensive for patent litigation insurance. And if you don't have it, some investors are afraid to invest. So money flows into the established legacy industries. So what's there to guarantee that the open-grouped alliance won't itself turn into a mechanism for shaking down the Bitcoin companies if you'd excuse the rude question, but I mean, couldn't you just... How would we do that? We're not going to hold any patents. Our idea is to get rid of patents. Okay, so the focus is not to get patents for anybody but to just stop people from getting patents on ideas. Right, the focus is to go after other parties that are applying for patents that we believe are abusive or will become abused in the future that are gonna lock down innovation in the crypto and blockchain space. So the alliance will not hold any patents. We don't do anything with our members' patents. It is simply a proactive effort to stop patents from being granted. Obviously, we probably won't chase our own members' patents and applications. So there's a good reason to become a donor and a member but we are not gonna hold patents and we're not gonna shake down any crypto companies. Well, that's reassuring. Maybe, hold on a second. Maybe, Jed, you can explain the difference between the lot network and those other models in our, because some people don't understand the whole patent practicality and what we're doing is different and we're not a threat at all. It is, yeah, lot network, it's all one word if you look up their website, LOT, LOT stands for license on transfer. And this is a network which all the big tech companies, Google's one of the founders, they're all involved in a lot of companies. And the way it works is you join that network and then your patents become part of the lot network. And that means that if your patent falls into the hands of a patent assertion entity or patent role, meaning a company that makes its living by shaking down other companies based on their patents, then if you're sued based on that patent, you have a license because it was in the network, the license on transfer. So when, for example, KYC-3 has a patent or a member of lot network, I go bankrupt for whatever reason and my patent gets bought by a patent troll in that bankruptcy proceeding. That's a transfer. The minute that transfer happens, if the acquirer is a patent troll, everyone in the lot network has a license to use my patent and therefore can't be sued using that patent. So that's what lot network does. COPA is more of a coalition and it's a crypto open patent network. And it is a coalition where the members of COPA who all have patents agree not to use their patents to sue each other. So they all are holding patents, but if you and I are both COPA members, we're not gonna sue each other because we've signed paperwork saying that's not gonna happen. And then open crypto alliance is a third kind of beast. What we're here to do is simply oppose patents that are being applied for so that those patents never get granted and that the technology behind them remains in the public domain based on prior order or other factors that we can bring to the table. Excellent. One other particular horse I like to keep whipping when it comes to patents in pharmaceuticals is the fact that you cannot patent anything that exists in nature. It has to be a novel compound that you have created. And so therefore this means that all of modern medicine is entirely geared away from natural existing compounds regardless of their effectiveness because there's no money to be made in treating people with things that exist out there in nature that can't be patented. Whereas if you come up with a chemical substance that is new and in many cases, what pharmaceutical companies are trying to do is they take the active and effective ingredient in a natural cure and then try and change it into something that is artificial, that is unique, that is distinct enough that it is no longer naturally occurring in nature and then get a patent to it. And so there's this insane bias to try all these chemicals that are concocted in a lab and never try anything that is natural because you can't get a patent on things that are natural. And so this is really why natural compounds are not very popular for treatment even though treatments are usually derived from them. So a lot of medicines come from these things. Don't get me started on not finding a cure and rather finding a treatment to symptoms. And that is an even more twisted element in the pharmaceutical industry. Absolutely, because the cure will... You'd rather sell a pill a month. Exactly. If somebody takes a pill in their cure, there's no money to be made there. But if you are able to just manage their symptoms then that's a lifelong relationship that you've got there. And I remember somebody told me, it's just somebody once told me and it really stuck with me, said the patent system is geared toward not finding cures. It can't function with cures. If you pay a billion dollars in 10 years in order to get something out of the market, you can't have that thing actually work because if it works, there's no way you're gonna make the money out of it. Whereas if you build the dependency relationship with the customer, that's what works. And it's probably true of most pharmaceutical drugs. They're optimized for dependency and long-term commitment rather than effectiveness, which in a free market, you wouldn't get. In a free market, you wouldn't have to wait 10 years and pay a billion dollars to get it out. And so then it would be pretty straightforward to get it done. All right, but let's not get too much into pharmaceuticals and get back to Bitcoin. How is this different in the case of Bitcoin when it comes to, or in case of immutable blockchains? The fact that anybody can put something on a blockchain and then everybody who has that blockchain running on their nodes, which is primarily a problem for Bitcoin because it's the only one that has a lot of distributed nodes. Then everybody who wants to run the Bitcoin blockchain is basically doing copyright infringement. So can that be weaponized as an attack vector against Bitcoin so that anybody who's running a Bitcoin node is in contravention of copyright law and then jail for running a Bitcoin node because your Bitcoin node has copyright material? What do you think? I think the key that wrote the transaction to put the copyrighted material in the chain would be the one infringing the copyright, not the hosts. It's just the way telecoms operators are not held liable for the content of their wires. So I'd rather view a blockchain network as a network the way a satellite or telecoms distribution network would work. And the content that goes over that network is the responsibility of the originator of that content. I mean, copyright law is one thing but think about child pornography. What if someone wrote a JPEG of child pornography into the Bitcoin chain? Does that make every host a child pornographer? No, it's the key that signed that transaction is the guilty party in my opinion. Stefan, you may have a different opinion on that. I'm not sure if the law settled on that. That's a good argument, I think, which is one reason we should all oppose the efforts in the US at least and probably similar efforts in Europe and elsewhere to get rid of the Section 230 Safe Harbor in the Communication Decency Act and the similar Safe Harbor in the DMCA, the Digital Millennium Copyright Act for copyright, so which basically treats platforms or ISPs as not being liable for copyright infringing or defamation or other type of content by their users because they're just platforms, which would be the argument Jed's trying to make. So you would analogize the Bitcoin system as a platform and what people put into it is they're like the users and a particular user may be guilty of copyright infringement for putting or for child porn or whatever, but the platform is not. But that's one reason we should oppose. There's a lot of hate right now in the conservative and libertarian community towards the tech giants like Google and Facebook and Twitter and they're wanting to get rid of their Section 230 exemption, which just means that they will be liable for defamation lawsuits for content posted by their users. That's all it means. Or for copyright infringement, for copyright infringing content by their users. But since copyright and defamation law are totally unlibertarian and unjust, we should not want to remove the safe harbors because we didn't want to impose this liability on these companies, even if you don't like these companies because it wouldn't stop with them. It would affect Bitcoin, for example, and us. So I tend to, I think I agree with you Jed. And in terms of most of the code and the white papers and all of the things that are used to make Bitcoin work, all of that stuff is out there in the public domain, de facto at least, it's all publicly accessible. And yet we witnessed some attempts by people to try and claim ownership of that. And so we've seen there's a character who's suing websites like bitcoin.org for posting the Bitcoin white paper because they claim that it is actually their work. I'm wondering how much of a case can somebody like that get? And what's the worst damage that they can do to others? So is it just about dragging people to court? And I mean, I presumably think that they can't really damage Bitcoin itself. They can damage individual Bitcoiners or individual webmasters for posting things by dragging them to court and so on. So I'm wondering, what do you think are the possibilities there? Well, I suppose they could, you could go after the exchanges, which could cause a trouble at first, but the exchanges can move around. You know, it's just like an attack by the government. If the government decided to start shutting down exchanges, would that kill Bitcoin? I think probably not. But the person suing for copyright infringement would have to prove that they own the copyright, which means they have to prove they're the author, which means they have to prove they're Satoshi. And I doubt there's anyone out there at the present time who can credibly prove that in court. So I think they would probably lose in court, but whether someone who's being targeted could melt legal defense, could afford to do that as another question. The problem, at least in the US, there are statutory damages, which are up to $150,000 per infringing act. And I don't even know what that means on the internet. Does that mean if you upload a paper or if you copy it, that if other people copy it, it's multiplied by a thousand. So damages can be astronomical. It's totally unrealistic, but that's the law that we have. I think one law professor about 10 years ago did an estimate that every American citizen is potentially liable for like $3 billion of damages every year from just mundane everyday activities of forwarding emails and copying and pasting things, just doing a couple of things that are copyright infringement. So several billion dollars per person. And if you multiply that times the number of people, there's not enough wealth in the galaxy for that. It's crazy. Yeah, I think the end point of the patent economy is that everybody's starving and suing each other and we'll do nothing but sue each other. I think this is where we seem to be heading unless Bitcoin comes and fixes all of this and saves us, hopefully. Daniel, you had a question? Yes, I was just thinking, most of you guys were talking about like patents and things and this NFT, the non-fungible tokens that are cropping up and being talked about. I can't really understand the need for them, but maybe Jed or Stefan, you could talk a little bit more about it, but the way I understand it, people that wanna protect, whether it's artwork or even a product to put that patent as a non-fungible token on the Bitcoin blockchain. So if anybody ever copies it in the future, they can say, hey, that was my work and here it is in the blockchain with this address. Yeah, Jed, you seem to be nodding your head. So I'll follow that one at you. NFTs are a token that represents a unique token, but the purpose of an NFT is not to assert copyright or patent or anything like that. The NFT is actually a bearer asset, just like Bitcoin, but being non-fungible, the bearer has a unique object, a unique digital object in their possession. NFTs have an off-chain metadata. So what you would do if you want to attach an NFT to an artwork, for example, if it's a digital artwork, you can hash that artwork, the JPEG file and you put the hash of that JPEG file in the NFT on the chain. So whoever has that NFT then is declared to own the copyright on that JPEG. So the NFT is just a mechanism that allows you to tie an off-chain object to a token that can be transferred from person to person on chain with a record of it. The off-chain metadata can be much more exhaustive for an NFT and it can also be dynamic. So using this, you can actually have a bearer asset that has different functions based on who is holding it and can refer to different things. So also if you look at, like you could issue an NFT to represent ownership in a piece of real estate. So you can think of NFT, an NFT kind of like a deed, it refers to something else and whoever has that piece of paper or digital NFT in their possession is the one who can assert, I am the controller of that off-chain element that this NFT refers to. So in terms of, I'm sure there are patents filed on NFT technology that are pending, that's for sure in different ways of using it because there are use cases for NFTs that have not been explored yet, that are very, very new. CryptoKitties was the first kind of big one, but that's just a hashing of a thing and referring to it as I explained. But there will be other uses. NFTs can also be used as like a membership card, for example, a digital membership card to show that you're a member of a club, but uniquely you are member number 73 or whatever it is, or you have these attributes. So there are lots of uses for NFTs, but they're that reference. It's not actually a copyright. When people talk about putting a copyright of a song on chain, what they actually mean is creating a hash of the song or a record of the song and then referring to that in a token that then represents ownership of that. An interesting project that really explored this legally and unfortunately the project was not a success was called Mesenus. And what they did is they wanted to create a way to own real world art. They actually did an auction for an Andy Warhol piece on chain, but in a way that didn't require KYC and facilitated fractional ownership with fungible tokens like Bitcoin. So you could own a millionth of that Andy Warhol painting. And they did that by legally setting up a structure where they created one NFT, which was then held in a smart contract that behaved like a trust. And then that smart contract issued ERC-20 fungible tokens that each represented a share of ownership of that NFT. So it sounds convoluted, but at the end of the day they were able to represent a physical artwork as a non-fungible token that was then irrevocably given to a smart contract on chain, which then issued shares in that artwork that weren't shares legally because they were digital partial ownership of an NFT. So a very interesting project. They spent a lot of money on lawyers. Might be one of the reasons they didn't succeed. Yeah, it's a short fire way of guaranteeing failure and success for your lawyers. Well, maybe that's not fair. You kind of do need lawyers to succeed, but you know, I'm an economist and we hate lawyers and it's mutual. Stefan is the only good one. Jen, are you a lawyer too? No, I'm a technologist. Okay. I'm 35 years in tech. I'm a cypher punk from back in the 90s, mixed master, you know, non-penet-fi if anyone's old enough to remember those things. So Stefan still remains the only undefeated lawyer in the entire profession. So what kind of things should individuals be worried about? So in crypto alliances for companies as an individual user, is there anything you need to be worried about with that regard? Because there was a Stefan mentioned that there's a Bitcoin character on Twitter who's getting sued right now because he has spent quite a bit of time going online telling the world that somebody claiming to be Satoshi is not Satoshi. So other than that, do you see any kind of serious threats for individuals? We went over the running a node and we think that's probably not a problem, but other than that, what kind of issues might happen in the Bitcoin blockchain space that might, you know, that the average individual should be careful about not to get to trouble and get dragged into court. Leave that for you, Stefan. I was gonna leave it for you yet. Well, from my standpoint, I don't see issues as an individual, you know, running a node and as a user, patents are not gonna affect you copyright. My libel and defamation laws potentially on Twitter, but I don't see a big patent risk for an individual. It's the minute you start writing code that patent law might affect you. Yeah, well, if we're gonna get coders and individual attributes to Bitcoin Core, what should they keep in mind when they're doing this stuff? Keep in mind that they're writing code that someone may try to assert a patent against. And if they're the contributor of that code, I don't know the details of how that would play out. Stefan, you probably know better than I do, but. Well, so the way, you know, for our OCA- A name potentially in a patent suit. Yeah, so our, in the OCA, we're trying to identify patents that are invalid. And what that means is that the patent should not have been granted or should not be granted. And what that means is it doesn't satisfy some of the requirements that patents need to satisfy to be granted, which would be novelty. It means it has to be brand new. No one did exactly the same thing before. Or non-obviousness. That's probably the main thing we'll go after, like it's something that was already known or that enough was already known that the thing you're claiming a patent on is obvious in view of that. Or in Europe it's called inventive step. There's no inventive step. But there's other grounds, and one would be that the person claiming the patent is simply not the inventor, because you have to be the inventor to get a patent, which means that if you learn about an idea from someone else and you claim it as a patent, it's not just that there's prior art out there because of the previous invention. It's that you're not the inventor. Someone else is the inventor. So if you can prove that this person learned of it from someone else, then they're actually committing a fraud on the patent office and they're in big trouble and their lawyers are too. In my mind, that rarely happens to be honest, you know. So one thing you can do, if you're a code developer, I think most of these guys are putting their stuff in the commons anyway through the C, I don't know what the licenses they use. Is it MIT or something? It was one of these open source type licenses, right, Jed? Yeah, MIT or Apache are the most common. Yeah, which means that, and plus the code is made public, I assume. So instead of filing a patent for defensive reasons, you can simply publish your ideas. And that serves as for two, that serves two purposes. Number one, it starts a prior art click, talk, clock ticking. In other words, if someone else later files a patent on that, even if they invented it themselves, they're reinvented it themselves, they would be barred from getting a patent because there's prior art out there, their predates, their filing, okay? So it's just like a patent. So a patent can be invalidated by any publication. It doesn't have to be another patent, it could be just an article or a blog post or a product that's sold with certain features being made public. So one thing they can do is make sure they publicize their code and their ideas on some public forum, which you can prove later, right? As soon as possible. And the other purpose it serves is it proves who the inventor is or it proves who the inventor is not rather. So if someone else just copies this idea and puts it in a patent a year later, not only is it barred by prior art, but that would be approved if this person wasn't the inventor and that they actually are just lying about being the inventor. So that'd be another grounds for attacking their patent. What about solutions, Stefan, like the Benelux IP office has a thing called the IP box. You can actually upload your documents into their secure storage and they keep it and they hash it and refer to it. That gives you digital time-stamped proof that you originated those documents on a certain date even though they're not public. Correct. Oh, they're not public. I wasn't aware of that. In the US there's a similar thing. Instead of filing a patent, you can submit something for a minor fee like $100 or $200 and you can just ask the patent office to publish it. I forgot what it's called. It's like a defensive patent publication or something. And that is safe, but you don't need to do that formality. You can just do it yourself. It's just a matter of proving that it was there. This is why in the old days, companies like IBM used to have a technical journal. It was just a self-published journal because IBM, which is a huge patent troll and a patent assertor, but even they don't file a patent on everything their engineers come up with because even they had limited budgets, they might file 5,000 patents a year, but they might have 15,000 submissions from their engineers. So the ones that they don't file a patent on, some of them they would just publish in their IBM technical journal. And they would do that so that it would serve as prior art to prevent competitors from getting a patent on the same thing later. I think that's sort of fallen into disuse with the identity of the internet because it's so easy to just post something on your own blog or your own webpage. But of course, you could edit that later so it's a little bit harder to show proof, which is why some people suggest using blockchain for that, right? Like put some hash or something in the blockchain so that you can prove it, but it's easier just to use the government solutions if you wanna do that too. Yeah, the BIPO is not public. It's $35 or 35 euros for five years. And then you have to renew it or they erase it. Oh, I see. Yeah, so Stefan just shared in the chat an article that he'd written a monologue called Do Business Without Intellectual Property. And I kind of am sympathetic to this idea of just try and be productive rather than just try and, rather than try and rely on being a troll. And in fact, I'm glad you mentioned IBM because when you think about it, they've got a gigantic blockchain industry. And it seems pretty clear that they don't really do anything there other than just try and get patents and see what's going to happen. And I wonder just how much of their business model is just trying to find patents that work and stick rather than actually try and innovate something useful because it's, when you're that large, when you've got that much money, then you can get patents on all kinds of things. And you can just wait until people make useful things with that patent and then pounce and sue and make revenue from it. So it's another, as I was mentioning with the case of Microsoft, it's another subtle regulatory setting that ends up really helping and favoring large corporations at the expense of small innovators and people who are coming up with nice and new ideas. IBM makes over a billion dollars a year on their patent portfolio, on asserting those, yeah. Right, and yeah, they're trolls basically, even though they're not 51% probably of their revenue, they're essentially a troll. Oh, it's like eight to 10% I think is the number I've heard thrown around. What else do they make their revenue from? Like what the hell does IBM actually do this day? I've been asking people this question for many years and nobody has an answer. They used to make computers, we know that. They don't want any more. Now they do blockchain and they do artificial intelligence and so they make a bunch of buzzwords but how do they get paid? Where do they get their revenue from? Probably do consulting for the government. So they're doing tax harvesting probably. Yeah, they have a massive consulting practice, yeah. Yeah, and they have a massive investment practice. What they do is they borrow, I mean essentially interest rate arbitrage is the business model for most large corporations these days. You borrow it zero, one or 2% and then you invest in all manner of smaller companies and hope to get a higher return. I think, yeah, it's sad. Like this, I think in a world that wasn't dominated by fiat and patents, I think IBM would still be out there making decent computers and people would be buying it and it would be a normal, decent, proper business rather than patent trolls and interest rate arbitrage. But what are we gonna do? That's the world we live in. Anybody have any more questions or thoughts they'd like to share? Oh, it was great to be here. Thank you, Saif, I think that's a good discussion. Thank you. Make comment available at opencryptoalliance.org or KYC3, feel, yeah, reach out anytime. Fantastic, thanks. Yeah, thank you guys for joining and thank you for what you're doing. This is quite useful, particularly in the Bitcoin space and what's going on these days. It's good to be informed of this ugly world out there to take your own precautions. So be careful, everybody. Thanks, Saif. Cheers, Stefan. Thank you, have a good day, everyone.