A CHALLENGE TO Some disclaimers...
Are Intellectual Property
PUNDITS:
For those of you still insistent upon the
position that intellectual property does
foster innovation,
we challenge you to name even a
single case of a new industry
emerging as a result of the pro-
tection of existing patent laws.
For more information on why copyright
and patent laws should be reconsidered,
please visit or consult:
 Center for the Study of Innovative
Freedom (c4sif.org)
 design had been taken in an instance of trespass
Against Intellectual Monopoly (A
highly recommended book available
for free in PDF at
levine.sscnet.ucla.edu/general/
intellectual/againstfinal.htm)
 The Ludwig von Mises Institute
(mises.org)
 Againstmonopoly.org
trademark TM
Laws a Good Thing?
Although copyrights and patents hold no place
in a world of true property rights, trademark is
a separate issue. Consumers should be able to
know what products they are buying and from
whom they are buying them. If a company is
selling a watered-down version of Coca-Cola
and claiming that the product is genuine, then “What?! Are you out of your mind?!” you
that company should still be held liable for
fraud. Trademark has played a role in keeping
might be thinking right now. “Of course
fraudulent activity at a minimum. However, intellectual property protection is a good
any effort toward legal reform of copyright and thing! It makes sure people have the
patent law will need to consider how to limit
incentive to profit from innovation,
the use of trademark to prevent its use as a
substitute for copyrights and patents. doesn’t it? Shouldn’t we have control
over our own property?”
Rights to privacy should always be protected. In
the case of the ink pen that was replicated at the These are perfectly valid responses, but you may
snap of a finger, if the information regarding its
want to consider the case that copyright and patent
laws do not encourage further innovation and
to personal property, then of course, the replica-
tor should be held liable for trespass but not for
industry growth. Rather, we are willing to argue
theft. Once that information is out there, it’s any- that IP laws have exactly the opposite effect.
body’s to do with as they please (e.g. Wikileaks)
and cannot be restituted as physical property Not only does IP stagnate progress, but it actually
can. So, when a student is guilty of plagiarism, infringes upon real (or scarce) property rights.
she is not guilty of theft, but only of breaking con-
tract with either the school or the teacher.
Intellectual Property Infringes
Upon Actual, Scarce Property
Let us say that I have a sleek ink pen that I
designed myself and intend to profit from.
Now let us assume that simply by snapping
your fingers, you now have an exact replica
of that pen. If you have done nothing to
harm or reduce my own physical property,
then should you be held liable for damages?
In effect, this is precisely what happens
when others reproduce (to a potentially
infinite extent) the original ideas of any
individual or group. The patent or copy-
right thus keeps others from doing what
they wish with their own physical prop-
erty (raw materials, machinery, etc.)
If you believe that you should be held liable
for damages, then you must believe that peo-
ple also own the value of their property.
However, if I buy an ounce of gold at a value
of $1400 today and then a week later, if the
market supply of gold has significantly in-
creased (or has been replicated), should I
still be entitled to $1400 when I decide to sell
the gold?
Intellectual Property Stagnates
Innovation, Knowledge, & Growth
The history of economic development is the story of
imitation and incremental improvements upon those
imitations. Eli Whitney did not invent the cotton gin—
he was one in a long line of innovators who improved
upon ideas that came before him.
Despite their own modest contribution to the devel-
opment of the airplane, in 1906, the Wright brothers
managed to obtain a patent covering virtually any-
thing resembling an airplane. While refusing to de-
vote any effort to selling their own airplane, they did
invest an enormous amount of effort in legal actions
to prevent others from selling airplanes. Fortunately
for the history of aviation, the Wright brothers had
little legal clout in France, where airplane develop-
ment began in earnest about 1907. By the time the
United States entered WWI, French planes were used
instead of American ones.
During the period of James Watt’s patents on the
steam-powered engine, the UK added about 750
horsepower of steam engines per year. In the thirty
years after Watt’s patents had expired, additional
horsepower was added at a rate of more than 4,000
per year. Moreover, the fuel efficiency of steam en-
gines changed little during the period of Watt’s patent;
however, between 1810 and 1835 (after the patent’s
expiration) it is estimated to have increased by a factor
of five.
What Happens in the Absence of
Intellectual Property?
When there is no government-granted monopoly
in place over the production or expression of
something, then the producer is now forced to
stay competitive by making improvements upon
the original object. If I put a book on the market
for $25 and it is not protected by copyright,
someone else might publish the same book for
$12. Instead of sitting back and filing suit, I now
must either produce a higher quality book than
my competitor or make it less expensive.
The fashion industry is an example of an industry
functioning without much IP protection. Enormous
innovation occurs every three to six months, with a
few top designers racing to set the standards that
will be adopted by the wealthy first and widely imi-
tated by the mass producers of clothing for every-
one else shortly after. As one example among many
in the industry, the Spanish clothing company Zara
and its many imitators show that the original inno-
vator keeps innovating and keeps getting richer
while everyone benefits.
Free software licenses allow most open-source soft-
ware to be written by large and loosely organized
teams of programmers, each contributing small piec-
es of code and all benefiting from shared infor-
mation and ideas. Similar “open-source” success sto-
ries are in the American automobile industry, the
Swiss and German chemical industries, the oxygen
steelmaking industries, the Italian textile and fashion
industries, the Swiss watch industry, the Czech and
Venetian glass industries, and so on and so forth.