Posts Tagged ‘patents’

The Economic Impossibility of Copyright in a Digital World

copyright-economics
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I recently posted an article (A Conversational Treatise on the Problems with Intellectual Property) that addressed what I believe to be the incorrect assumptions necessary to support the entire concept and legal system surrounding intellectual property. The post came about as a result of a conversation I had with a friend, and it is simply a question/response format long discussion on the topic. The core argument I made is that information is inherently not ownable, in that it is an infinitely reproducible non-physical resource. Secondarily, patents and copyrights are not necessary for innovation and creation to flourish.

My friend asked good questions throughout the course of the conversion, which helped me articulate and solidify my own viewpoint. However, I admit that some (though not all) of that conversation and the arguments within it are ideological in nature, and based on my worldview rather than incontrovertible empirical data. Therefore, I want to address a different side of the argument, one which is based on current and widely accepted economics.

I know that my ideas here are very, very far away from what many people believe, so I don’t expect everyone to agree with me. All logical comments in response are welcome. The core of my argument today is this:

Digital storage and distribution, combined with basic economic principles, are fundamentally incompatible with selling zero-value-added digital information.

In other words, “create once, sell forever” is no longer a viable business model if all you deal with is digital information.

Ideological Argument Recap

One of the comments on my last post presented an example scenario to counter what I wrote there. The essence of the scenario is that someone decides to take everything I wrote in the article, claim it as his own, and then use it to get a book deal with the Wall Street Journal. I’ve just been ripped off, haven’t I?

In short, no.

I will recap my original argument here for clarity: in this case, the knowledge has already been given away (I posted it online), and to demand future payment for that is unjustified. I might be totally happy not to pursue the topic any further, and then the rest of society might benefit from someone else continuing the discussion via a WSJ-sponsored book. But assuming I did want my own book deal, then as the original author, I also have means of attempting to expose the other person as a fraud, redirecting the WSJ to the original source of talent (assuming they consider it a “talented” composition). But the only thing really wrong in this hypothetical situation is that the other guy lied about his authorship of the original work—a problem which does not require copyright law to address. The fact that he got a book deal based on what I did means that I am passing up a potential opportunity, not that he “stole” the published content that was “rightfully mine to sell.” He does, after all, still have to do all the work of writing the book in order to fulfill his end of the WSJ deal.

The same friend I had the original conversation with asked a similar hypothetical question, this time about the “S#!@ My Dad Says” guy on Twitter. He started a while back posting short, funny quotes from his dad on a Twitter account, and as a result of that, ended up with a book deal and a TV show. (Good for him for capitalizing on it!) My friend’s question was, like the post comment, what if someone else had compiled all those tweets and printed a book or started a TV show without accrediting the original author? Wouldn’t that be screwing him?

Again, in short, no.

It would still be wrong for another person to claim authorship of something he didn’t write, and it would be an obvious move for the original author to jump in and demonstrate his true authorship, and subsequently reap the benefits of whatever negotiations had been fraudulently started by the other guy. However, that’s not a problem that requires copyright law to address. It’s just fraud, plain and simple. If the other guy managed to get a book deal or a TV show based on stuff that admittedly belonged to someone else, then there should be no problem whatsoever.

The Economic Reality of Marginal Cost

Now, to address today’s topic: Whether or not you agree with the previous argument, there is an economic argument as well which starts the same way. Exactly why is it actually wrong to “monetize off of somebody else” in this way? Fundamentally, it’s just duplicating information and then adding value (compiling it into a book, etc.) which others are willing to pay for. The original author, by virtue of being the true source, has options for attempting to redirect the money back to himself as I mentioned before. But by freely posting his content online, he has permanently set the no-value-added “cost” of that knowledge at exactly $0.

If the SMDS guy didn’t make a book or TV show out of his tweets, and nobody else did either, then everyone would be content (with the possible exception of the people who really wish there were book or TV show). Nothing would have been “taken” from anyone despite the fact that it is all freely available for everyone to read. But suddenly, once a book or TV show deal comes into play, it makes a legal difference who goes forward with it? That doesn’t make sense.

The economics of this are simple. First, a few definitions courtesy of Wikipedia’s pages on marginal cost and marginal revenue.

  1. Marginal cost is the change in total cost that arises when the quantity produced changes by one unit.
  2. Marginal revenue is the extra revenue that an additional unit of product will bring. It is the additional income from selling one more unit of a good; sometimes equal to price.
  3. For a business, profit maximization requires that a firm produce where marginal revenue equals marginal costs.

Note here that the marginal cost of information (knowledge, ideas, art, music, video, designs, etc.) is effectively zero. I can share information for free. I can create 1,000 copies of one ebook, MP3, or video as easily as 100, or 10, or 1—or none, for that matter. Anyone else can too, just as easily. As storage and bandwidth costs continue to fall, the marginal cost will only get closer to zero—though it is already so close as to be indistinguishable. Economically, this means that sustainable marginal revenue (i.e. markup) can only be greater than zero if there is something besides the information itself present to add value. This is why it is impossible to enforce copyright today. Attempting to do so is directly attacking a fundamental principle of basic economics. It is not possible, in the long term, to make any money on something that costs nothing to reproduce unless you add something else of value along with it.

Although it is painful to face sometimes, this applies to any information that becomes public, whether intentionally or not. The effective economic cost of any public information is $0. This is why trade secrets are valuable, and yet even our IP-friendly government says you’re out of luck once they become public. They are no longer secret, and impossible to protect as such.

Real Work Creates Real Value, But Not Necessarily Forever

Now, if you’re in a band that goes to the effort to record a dozen songs for an album, that work is real and does have a cost. The typical thinking today is that the cost of that work should be off-loaded onto the consumer in exchange for albums, concert tickets, merchandise, etc. This is a fine idea except that album sales, economically speaking, should not be included in the revenue equation due to their $0 marginal cost. Whatever else it may be, relying on album sales for a critical stream of revenue is an unwise business model, because it depends on your ability to convince people that the value of a $0 marginal cost resource is not $0. There are plenty of less risky ways to offset the fixed cost of the original recording, most of which are some private or crowdsourced variation of the concept of commissioning a work of art.

I also want to clarify that while the digital data representing a band’s album has a $0 marginal cost, that doesn’t mean that it is impossible to make money selling albums. Obviously, physical media has a cost, and you can get some small profit by marking up and selling CDs to people who still want physical media. That customer is evidently a dying breed, however, and I wouldn’t recommend it as a key part of your business. A more effective approach would be to sell autographed CDs, or CDs that come with a unique photo of the band, or something like that. These add-on features provide real value by virtue of being unique (scarce, not infinite). Yes, it takes more work than simply running off 10,000 identical copies of a CD. But that’s kind of the point: it takes real effort to create real value. To believe otherwise is naive. The initial work that goes into recording an album does not somehow translate into infinite future value, which is precisely what copyright would have us believe. It is just an excellent way to promote your band and entice people to pay for scarce goods, like concert tickets. But the music alone, in digital form, costs nothing to reproduce and has no defensible inherent value.

Of course, there are a lot of people who will still pay $1 per track from iTunes even though they could torrent your entire discography for free in 20 minutes. Some do this because it’s convenient (or they don’t know how to use BitTorrent). Some do it because they want to support the artists—though I’d argue that torrenting the music and sending a $15 check straight to the artist would probably be far more beneficial. Some do it because they are afraid of the legal consequences. All of these people see a $0 marginal cost product as having a value above $0, due to altruism, convenience, or fear. The music industry has the best chance to succeed by capitalizing on convenience, but they seem to run in the opposite direction all the time by employing ever-worsening DRM and by attacking services that make it easy to get lots of music while still paying, simply because it’s less money than they demand.

DRM Has a Very Temporary Value

I am not implying that anyone who produces a digital product—music, movies, photos, or a software package like Windows or Photoshop—should by definition give it away, either in compiled or source form. It is certainly up to the creators to do whatever they want to with their products, including the application of complicated DRM and copy protection methods. Economically, this adds a perceived “value” of convenience that (to some) makes it worth paying for the official version, because it means they don’t have to do any extra work to get around any DRM and copy protection.

But this is a temporary solution, since DRM can always be broken with enough effort, and then the “value” is effectively gone. As content creators get more and more desperate to protect their content by employing these methods, they often end up annoying or completely alienating their paying customers while the pirates continue to have an enjoyable, DRM-free experience. In some cases, the copy protection schemes are so bad that companies are forced to issue patches to defeat their own DRM, as was the case with the infamous Sony rootkit debacle, and with Ubisoft—which actually turned a 3rd-party software crack into an official utility to “fix” one of their games.

Copy protection measures are a gamble at best. It takes more work to implement, more work to update, more work to support, and for at least a small portion of your customer base, it will end up being completely worthless. This is true of video, audio, text, and software; anything digital is subject to this reality. Of course, it is definitely your prerogative as a creator to use DRM if you want to, but it’s a big risk. Economically, it makes more sense to focus on adding real value that nobody can take away from your product by breaking through the DRM. Depending on the nature of your product, examples of real value are things like priority and/or automatic updates, helpful customer support, custom integration, autographs, concerts, merchandise, personal communication, consulting, informational workshops, training sessions, and media appearances. Anything that requires actual effort every time has the potential to create real value, since actual effort cannot be duplicated at zero cost.

Create Once, Sell…Forever?

Back to the “S#!@ My Dad Says” guy on Twitter: assuming that only the tweets exist, then the only way anyone (including the author) could sell a book or create a TV show is by putting in more effort. If the original author does it, great. If someone else does it, fine. In an economy that recognizes that the cost of digital reproduction is zero, it shouldn’t make a difference who does it, though with some effort, the original author probably has the best chance to effectively monetize his own work if he wants to. The author has already eaten the fixed costs and set the marginal cost of his creation to $0. To expect automatic remuneration for doing nothing else is an unjustified sense of entitlement, albeit one that has been encouraged by our IP system for hundreds of years.

Why does it make sense for a product to be created once (in an infinite format) and then sold exactly as-is to an unlimited number of customers for a profit without adding any further value? The concept is absurd outside of the information business, since any other type of product cannot be reproduced at zero cost. This, really, is the whole point. It’s only been possible to pull this off inside the information business because there previously weren’t enough tools available to counter it effectively—though, there have been information “pirates” in the classic sense for a very long time. Then along came the internet and digital storage and transfer, and suddenly people everywhere are realizing that a zero-marginal-cost thing with no value added should maybe also really be a zero-marginal-revenue thing.

People tend to complain when markup is very high, because it feels like the merchant is trying to rip them off. Markup is often calculated based on cost, which is done by dividing the difference in cost and sale price by the original cost. In the case of infinitely reproducible zero-marginal-cost goods, this means that any markup at all is always infinite. No wonder so many people reject the idea!

The development of cheap digital information storage and zero-cost duplication and transfer has killed the viability of the “create once, sell forever” content-centered business model. Whether it should have is a different discussion, but it certainly did.

The Decadence of Society or the Failure of a Business Model?

“But Jeff,” I hear you say, “are you claiming that just because technology makes it easy to steal, that it’s somehow okay? What have you been smoking? If technology made it easier for you to walk out of my front door with my plasma TV, would that be okay too?!”

Ah, no. That is missing the point entirely.

Physical property is very different from information (a.k.a. “intellectual property”). You cannot own information, and therefore you cannot steal information. Stealing your plasma TV, on the other hand, would be wrong no matter how easy it is.

Technology has not made it easier to “steal” information from people who “own” it. Technology has simply made it a lot harder to sell something which could not really be owned in the first place. What we are witnessing today is a violent backlash from businesses that previously made all their money by selling identical copies of infinite resources. This business model has been effectively killed, though the law hasn’t caught up with this reality, and those who stand to profit most are fighting like mad against their impending doom (though a few are adjusting their business models instead).

The nominal purpose of the institution of copyright is to encourage creativity. I address at length in my last post why I don’t believe this is necessary at all, but for the next point, its necessity is irrelevant. Copyright is enforced by establishing a specific owner of some piece of information, and then that owner can file a copyright infringement lawsuit against someone else if they use that information in an unauthorized way without permission. Of course, even if the lawsuit is won, the defendant can’t exactly give the information back, since it was never gone in the first place, but…I digress.

The point is that copyright law is based on the assumption that information can be owned, and subsequently enforced by attempting to keep people from stealing it. Since it is impossible to deny that information is itself infinitely reproducible at no cost, the only practical purpose for copyright law is to make sure that information (with no added value) is sold for some monetary gain according to the desires of the copyright owner. In other words, the only practical purpose for copyright is to prop up a business model that is economically unsustainable.

Again, whether it should be is another conversation, but there it is.

One other clarification: my ideas don’t change the fact that IP laws are still in place. No matter how much you or I or anyone may hold this position, you can still be sued for copyright infringement. Ideological difference is not a valid defense in this case. Please keep that in mind, and realize I am not encouraging anyone to break the law. But I wholeheartedly encourage anyone and everyone to create products and run businesses without relying on or enforcing any part of the concept of IP. I think this is the most effective way to bring about change, because it demonstrates that IP is not necessary.

The internet has illuminated the economic problems with IP. Once enough people realize that they can do far better in the long run focusing on the economic solutions instead of IP enforcement, the laws will lose favor and, I believe, ultimately be widely ignored and eventually changed or repealed as a result. One can hope so, anyway.

Alternative Business Models

So if you can’t continue to sell infinitely reproducible zero-value-added information, how can you stay in business? If you’re honestly asking that question at this point in time, then you have a fighting chance.

The obvious (but general) answer is that you need to add some value to the infinite digital product. If people don’t see value in what you are selling, they won’t pay. Costs are measurable, but perceived value is subjective. If the perceived value equals or exceeds the price, then people will pay for it.

Pay What You Want

As I mentioned before, some people will pay even when they know the marginal cost is zero. You can market a product with this in mind using what is typically known as a “pay-what-you-want” model. The Humble Indie Bundle software sales have done this with great success in the recent past. Radiohead was famously one of the first major bands to abandon the common recording contract model and release a pay-what-you-want album (that link goes to a Time article from October 2007 with some very interesting observations). Many open-source projects get some financial support using the same concept.

Pay-what-you-want can work very well to build interest, and it’s almost impossible to lose if your product is digital. But I have a feeling that it only works as well as it does now because people still expect to have to pay for digital information in most cases. If that changes, then pay-what-you-want will lose some of its novelty, but it can still be very useful.

Pay-what-you-want also makes it incredibly easy to go through official channels to get a digital product and effectively donate what you want to. Many people realize that even if they can get something for free, it is still worthwhile to support the creator to help ensure that he continues updating or maintaining that product, or will decide to create another desirable thing in the future. People associate quality with value, and if they get Product A for free and find it to be a high-quality item, they will be much more likely to pay in advance to encourage the creation of another high-quality Product B. Essentially, the creator is saying, “I’m giving you Product A for free. If you like it and you ever want to see a Product B, you have to give me some money, because it’s not worth it to me otherwise.” How much money the creator needs is up to him, and how much money the Product A consumers are willing to give is up to them. If the creator gets enough money to make it worth moving forward to him, then the business continues. Otherwise, it doesn’t.

Of course, this approach is not the only option. It is very difficult to predict how well it will do, so if you’re creating a solid business plan to bring in a reliable revenue stream, you will probably want to incorporate other means instead of or in addition to a pay-what-you-want offer. The initial work (fixed costs) required to produce the first copy of a photograph, book, song, movie, etc. is significant, and it’s good business to try to recoup those costs somehow.

As with any business, the initial investment required to produce the first instance of a product is usually larger than that required to produce the second instance of the same product. With manufactured physical goods, this usually looks like a 1/x curve that starts at one point then drops toward zero. The highest point is usually at the “Quantity = 1″ point at the very beginning, and this represents the fixed cost: manufacturing tools, preparation, materials, business licenses, and everything else you need to get started. The lowest point the curve ever reaches is the marginal cost of the product.

In the case of company who wants to sell their products digitally, this is not a curve at all. The “Quantity = 1″ point represents the cost of creating the product (which can be very high), and then every point after that is on the zero line. Aside from marketing and distribution channels that require raw materials (printed books, CDs, DVDs, theaters, etc.), all of the costs are at the very beginning of the production cycle. In light of the previous discussion of marginal cost relating to marginal revenue, relying on digital sales of a zero-value-added infinite product to recoup the initial investment is an economically bad move.

Crowdsourced Funding

What other choices do you have, since pay-what-you-want is unpredictable and selling infinite goods is bad economics? Regardless of what your product is, there is always the option of the “commission” approach. By this, I mean that someone else pays you to create what they want, rather than paying you after they discover that you created something they like. The idea of “commissioning a work of art” may bring up mental images of royalty negotiating with Mozart, but nothing says it needs to be complicated or high-profile.

One great example of a current similar system is the Kickstarter platform, which allows for crowdsourced funding with minimized risk. You pitch your idea as a Kickstarter project and set a minimum funding goal, and then if people like it enough, they pledge to support you in return for various “rewards” which you define. If you get enough pledges to reach your funding goal, all of your backers’ credit cards are charged for their pledge amounts, and you get the money you need to continue. If you don’t reach the goal, then your backers pay nothing and you get nothing; if this happens, then the market has spoken, and it doesn’t like your idea enough. Back to the drawing board.

There are countless creators using Kickstarter in this way right now to fund photography projects, books, music, movies, and all kinds of other things. The idea is economically solid and obviously effective. The beauty of this platform is that not only can you raise all the money you need, you also have an excellent opportunity to uniquely connect with your best customer base and get great feedback before you put in all the effort. On the other hand, if your idea has difficulty finding a market, then you get to make that critical discovery before you put in the initial investment to create a product.

The Non-Infinite Component

If you want to sell digital data with any real success, then you need to add some special, unique, non-infinite component to go along with it. (I use the term “non-infinite” rather than just saying “finite” to highlight the fact that the core product is actually infinite and has no marginal cost.) As I listed before, this could take any number of forms depending on the nature of your creative work.

  • For software, it might be customer support, automatic updates, inclusion in beta tests, customization, integration, or training.
  • For art, it might be a personal showing, unique photos taken or paintings made specifically for the customer, or signed works.
  • For books, it might be an autographed copy, a one-on-one session to discuss the book, or a presentation at a conference.
  • For music, it might be concert tickets, small-venue personal shows, autographed photos or CDs, T-shirts or other clothing, featured remixes, or back-stage passes.
  • For movies, it might be theater tickets or coupons for free food at the theater, a unique single-frame printed photo from the film, signed memorabilia from the set or related to the actors, or other movie-related merchandise.

These ideas are not original to me, and this is not a comprehensive list. The important thing is to make sure people have a reason to buy rather than simply obtain what can be infinitely copied without loss of quality. All of the above suggestions are impossible to duplicate without cost, which is why they work. Sell the things that are finite. Don’t try to sell the things that are infinite, because people are starting to realize that to do so makes no economic sense, whether or not they can articulate it.

The High-Dollar Movie Business

“But Jeff,” I hear you say again, “Avatar cost $236 million to make. Do you seriously think they could have used crowdsourced funding to achieve that, or relied on merchandise sales or other gimmicks?”

In all honesty, probably not. It did gross over $2.7 billion though, a record-setting amount, so obviously a lot of people liked it. The important thing to mention here is that $2.7 billion came in from theater releases. As of the end of July 2011, Avatar only brought in a paltry $190 million from DVD sales, or 7% of the income from the theatrical release. Blu-ray sales are not included in this amount, since I haven’t been able to find accurate information. Taking into account the higher cost and currently smaller market for the Blu-ray format, let’s assume for the sake of argument that Blu-ray sales brought in another $200 million (though it may be much less). This means that Avatar managed to make over $2 billion from theaters in the first two months, whereas 15 months of home media sales brought in only about 20% of this amount. Clearly, theaters offer better return-on-investment opportunities for expensive, visually impressive films.

For movies with very high production costs and a lot of publicity, their best chance to succeed comes from capitalizing on the unique, finite aspects of movies—most notably, as mentioned above, from the theater experience. This experience cannot be duplicated without cost. It’s a social event, something which most people can’t even begin to imitate in their own homes. Today, going to the movies is less “fun” to many people than it used to be, particularly to people who have memories of what it was like many decades ago. But this is not a terminal problem; it is just an area for improvement. Theaters obviously still bring in a lot of money despite whatever shortcomings they may have.

If a private company has a reasonable expectation that a movie will cost $250 million to produce and will gross $2 billion from the theatrical release, then it is a wise business decision to simply get a $250 million loan and go ahead with it. This is an example of a good risk, and a good use of debt, to fund an expensive creative undertaking. No copyright is necessary to create the story, hire actors, hire a fantastic digital effects crew, turn it into a visually stunning movie, or get a 700% return-on-investment.

Game Theory and Copyright-Free Content

For the sake of thoroughness, there’s a counter argument here that I need to address: if the marginal cost of a digital copy of Avatar is $0 (which it is), what’s to stop the theaters themselves from “pirating” the $236M-fixed-cost movie in a copyright-free world and just reaping all the $2.7B profits for themselves?

This is a very good question, which does indeed have a good answer consistent with a copyright-free position.

Movie theaters are nothing without movies. They cannot possibly survive if they don’t have good films to show on a regular basis. Therefore, the first priority of a theater that wants to compete is to make sure it can obtain new movies in a timely fashion. It can get them through an authorized contract agreement from the official distributors, or it can attempt to get copies for free through unofficial distributors. Any smart theater owner is going to go the free route, right?

Actually, no.

Game theory indicates that businesses in a competitive market will almost always choose the option that has the most “predictably good” outcome, not the option with the highest possible profit, when the outcome depends on the decisions of competitors. For instance, let’s say that two people can each choose either option 1 or option 2. If they both choose option 1, then they both get $5. If only one of them chooses option 2, then that one gets $10 and the other one gets $3. But if they both choose option 2, then they both get nothing. The only way either can get $10 is if only that one chooses option 2. Although it is possible to get $10 with the right set of choices, the best predictably good choice is option 1, which has a smaller guaranteed payout, but no chance of a zero payout.

For a movie theater, competition means showing new, popular movies in a fun environment and at a reasonable price as soon as they are available. If the owner opts to show movies obtained through unofficial channels, he is likely to run behind the theaters who don’t, giving them a clear advantage among people who want to see the movies first. This decision also virtually guarantees that no other major movie production company will make a deal with him in the future, meaning that theater is forever relegated to showing unofficially distributed movies behind its competitors. Some “bargain” theaters would be able to make a business out of this, to be sure, but not all of them.

Bringing the game theory example into it, the theaters who use official channels are choosing option 1, the smaller guaranteed payout instead of maximum possible profit. By doing so, they are also fostering a relationship with the movie production companies and building goodwill among their providers and customers (who want to see more good movies made and shown in the future). The other theaters that use unofficial channels, on the other hand, are choosing option 2. They get a larger profit per ticket, and by taking some customers away from the official theaters, reduce their competitors’ profits as well, but at what cost? Delayed releases, zero beneficial relationships with the movie producers, no future contract possibilities, and boycotts from customers who believe some of the ticket price should go back to the producers.

Continuing the game theory application, what if all theaters decided to choose option 2 and bypass official distribution agreements? For a very short time, they would all reap enormous profits. Then, of course, their source of profit would vanish entirely. Most people, and certainly most production companies, would never spend $250 million to make a movie which they know they can’t recoup their investment on somehow. Few people would be passionate enough to spend even a tiny fraction of that hiring actors and crew to create a movie if they knew without a doubt that someone else would reap all of the profits on it. Game theory indicates that this “mutually assured destruction” outcome will not happen, but that most theaters will choose to stay on good terms with producers to support what ultimately creates their customer base.

This is not to say that the film industry, or any creative industry for that matter, will die without a profit motive (I totally disagree with this idea). There are many reasons people create every conceivable type of work. For every blockbuster movie, there are probably dozens of excellent small, independent films that never get much exposure. These are often made on a very small budget, sometimes with no expectation of a guaranteed return-on-investment. But for the argument above, blockbuster releases are the lifeblood of many theaters, and it is definitely true that these high-profile, giant-marketing-campaign films are made at least in large part due to their profit potential.

…which, again, is really not dependent on copyright.

Summary

  • Ideas cannot be owned.
  • Copyright is not necessary for creativity.
  • Digital storage and distribution, combined with basic economic principles, are fundamentally incompatible with selling zero-value-added digital information.
  • Public information has a permanent no-value-added “cost” of exactly $0.
  • Sustainable profit can only be greater than zero if there is something besides the information itself present to add value.
  • DRM has a very temporary “value.”
  • There are plenty of good ways to recoup initial investment that do not rely on copyright.
  • Technology has not made it easier to “steal” information from people who “own” it. Technology has simply made it a lot harder to sell something which could not really be owned in the first place.
  • The only practical purpose for copyright is to prop up a business model that is economically unsustainable.
  • The development of cheap digital information storage and zero-cost duplication and transfer has killed the viability of the “create once, sell forever” content-centered business model.

Any logical comments are welcome. I think I’m right, but I don’t know I’m right. I’m always open to hear from people who don’t agree.

A Conversational Treatise on the Problems with Intellectual Property

ipdebate
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Update August 9, 2011 – I received a patent litigation threat one day after publishing this. Incredible timing! More details at the tail end of this post.

I recently had an extended conversation on Facebook with one of my friends about the nature and problems of intellectual property. This wasn’t the intention of the post that started the comment thread—it was about Microsoft calling out Google for claiming MS bought the Novell patent portfolio to keep them out of Google’s hands after Google declined to participate in a joint bid with MS. I posted a comment about an alternative take on the story from Techdirt, which prompted the following conversation which took place over a the next few days. It ended up including quite a bit of detailed opinion about patents and copyrights, and it took enough collective effort that I wanted to post it for others to read and respond to as well. My friend’s identity is removed, though just for perspective, I will say that he is a photographer and makes at least some of his living off of his work. This influences his take on intellectual property, as I’m sure my vocation as a programmer and work on the Keyglove project does to my own position on it.

For an introduction to where I’m coming from, I recommend that you read the first two linked articles, especially the one on Intellectual Property and Libertarianism. The one on Ten Myths About Patents is shorter and has a slightly different focus, but is also very clear and concise.

I don’t assert that I’m absolutely right, though I do feel that my points are argued well, and as of the time of this post, I wouldn’t change what I said. I may revisit this in a year and realize that my views have changed, or I may not. I welcome any further comments, positive or negative, as long as you take the time to read everything below before you respond so that you can get the whole picture. Challenges from others are the best way I know of to either cement or revise my own opinions through debate. (His posts are indented in block quotes, mine are in normal text.)


Patents are often painted in bad light, but being an innovator, do you not see the merit in them? If someone took your concept and capitalized on it without you seeing any revenue, wouldn’t you be pissed? I think some reform may be great, but I think this article distracts from Google’s two-faced whining. I don’t imagine them playing ball with everyone else had they acquired the patent portfolio.

Patents are, at their core, a government-granted right to control other people’s property, which I find very difficult to defend while believing in physical property rights at the same time. Yes, I would be disappointed if somebody capitalized on my concept without my seeing any revenue, IF I intended to capitalize on it first. But if I have an idea, and they actually implement it, then do I REALLY have a right to demand compensation just because I thought of it first? Patents say yes, even if they thought of it independently. I say no in either case.

Intellectual Property and Libertarianism (mises.org)

Ten Myths About Patents (falkvinge.net)

(The 1st one is especially well-written and argued)

Well, there’s a difference between patent-whoring, like what Lodsys was doing, but if you have an actual product, I don’t quite see a problem with capitalizing on it. The article is a bit deluded in its conclusion that IP does not increase wealth. Take Novell, for example. They sold off their patent portfolio and made money off a technology they developed (as is my understanding). If your project is successful, and you patent it, a company that knows how to improve it may want to buy you out – that increases wealth. When, on the other hand, a patent troll like Lodsys comes along, they need to be stripped of their ‘patents’ because they’re just philosophical in nature, not pragmatic. The actual utility needs to be considered in patents, and this is why I believe there should be reform, and not an altogether ousting of them.

The Mises.org article doesn’t say that IP doesn’t increase wealth, exactly. It says that IP doesn’t demonstrably increase general wealth, meaning it is illogical to argue for patents from a utilitarian standpoint. IP can absolutely increase specific wealth, that of the person who is the legal “owner” of the IP. Their point is that the only studies available tend to show that there is a net loss in the system as a whole when one individual or group gets to control the implementation of a single idea–i.e., no increase in general wealth. Sure, that individual or group can make more money, but that doesn’t automatically mean it’s justified. Why EXACTLY should a company that knows how to improve on an idea and turn it into a better product be required to get my permission to do so?

I agree that what Lodsys is doing is indefensible on more than one level. But who makes the call on whether patents are philosophical or pragmatic? There is often a conflict of interest among the people who know what they are talking about, and usually a lack of comprehension among every one else (how else would Lodsys have been granted patents for things that are so obvious?).

From the article, a clarification on wealth and ownership:

“While production or creation may be a means of gaining “wealth,” it is not an independent source of ownership or rights. Production is not the creation of new matter; it is the transformation of things from one form to another — the transformation of things someone already owns, either the producer or someone else.

Using your labor and creativity to transform your property into more valuable finished products gives you greater wealth, but not additional property rights. (If you transform someone else’s property, he owns the resulting transformed thing, even if it is now more valuable.) So the idea that you own anything you create is a confused one that does not justify IP.”

But free-market economics doesn’t necessitate the increase of general wealth, does it? And sure, someone can take my writing (I know that’s copyright, but still IP) and make it better, but should they have the right to? I don’t think so. Would you disagree?

Free-market economics definitely doesn’t necessitate the increase of general wealth, no. The article was just addressing that argument as one of the approaches typically used to defend the patent system, and pointing out that it doesn’t even make sense even if increased general wealth is one of your goals.

Copyright falls under the IP category as well, yes, and that’s something I’m still thinking about. The majority of the article is on patents, since the author is a patent lawyer, while copyrights are just sort of lumped in together as being part of the same system. There is a difference to be sure, since patents deal with physical products while copyrights deal with information. I believe there is an aspect of fraud that enters the situation if I were to copy something you wrote while claiming that I wrote it. But if I copy something you wrote and add to it while differentiating between who wrote what, or if I simply redistribute something you wrote and still attribute it all to you, then fraud is not present. This idea allows for infinitely reproducible content to be valued by the market instead of the producer.

This approach is enormously disruptive to the current system of copyright, publishing, and distribution. …which is why I’m still processing it to think about exactly what I would be comfortable with and ready to defend as a producer. I’m inclined to say that I would disagree with your own answer to your question though.

Well, we have the concept of Creative Commons, which is contrary to the article’s statements that it’s impossible to get out of a copyright. Most self-publishing sites allow for this. However, if I wanted to make money off of my writing (and not simply get attributed anytime it was shared), I should have the right to, should I not? The idea of someone just passing on my words (even when attributed) is rather socialist in nature. Taking excerpts to expound, etc. makes sense, but sharing the whole body is contrary to the ideas of liberty, unless you acknowledge that everyone owns all ideas. Now, I can concede that the overly statist ideas and abuses by the RIAA and MPAA are ridiculous, but as a content creator, I reject the premise that people should have access to it without paying at all. A musician puts a lot of time and effort into recording his music and putting out an album. For someone to say that it falls under general domain because they don’t view copyrights as a protectionary guideline is wrong and selfish. However, for the RIAA to sue someone who downloaded 20 songs for $2 million is just about as absurd. So what I’m saying is that there must be a balance.

The article doesn’t state that it’s impossible to get out of copyright, but rather that it is received automatically and hard to get rid of. The article linked from that footnote is here (also an interesting read):

Copyright is Very Sticky (mises.org)

Creative Commons is not copyright-free; it is actually using the copyright system to grant a specific license to everyone that, while it is far more permissive than typical automatic copyright, is not truly free of the system. The linked article discusses the difficulties and uncertainties in trying to place anything truly into the public domain with zero restrictions, due to the way copyright works here and now.

I am always hesitant to say that anyone has the “right” to make money. You certainly have the right to attempt it using legal means, but whether you succeed is not guaranteed. You probably meant it that way, but I’m just trying to avoid potentially dangerous terminology. I agree also with the Biblical principle that a workman is worthy of his wages, that if you do something for someone else in an agreement that you will be paid a certain amount, and you deliver the work, then you should be paid for it as promised.

I think you and I (and most people) would agree on the ownership of physical property, since it’s a scarce resource. If you own it, and I take it without your permission, I’m wrong. Only one person can have any given thing. (Fun thought experiment: what happens if/when somebody invents a working Star-Trek-esque matter-transforming replicator?)

However, ideas and knowledge are infinite by nature. If I tell you something I know, then we both know it. This is true of a math formula, a scientific discovery, a DNA pattern, a story I made up, or a song I wrote. My ideas and knowledge are not lessened personally by sharing them with you. So the question then becomes this: at what point, if any, does an idea or knowledge become an “ownable” thing? It’s a huge gray area unless your stance is either “always” or “never.”

If you and I sit down at Starbucks, and I tell you a fairly involved and clever joke, I think most people would say it is ridiculous for me to then demand payment for hearing it, or to assert that you have no right to repeat it. If it’s part of my upcoming comedy tour, then you might altruistically not tell anyone because you and I are friends and you want my efforts to succeed. But that’s a courtesy you give, not a right that I demand.

Then there is the matter of costs of reproduction which most people also agree on, namely, that if you want a copy of a physical book which I wrote, then you cannot rightly ever demand that physical book for free because of the costs of materials and machinery used to make it. It is a scarce resource, and can only be owned by one person. Whatever tangible value is placed on the actual written contents of the book, at least the physical materials alone warrant some payment.

Back to the main question though: when does a single idea or set of ideas transform into something which you have the right to demand that nobody reproduce or redistribute? It’s either always, never, or somewhere in the middle. But it has to be concrete, defensible, and easily understood if the system is supposed to work.

I play one of my songs at a coffee shop. Someone hears it, likes it, has the resources to record it, and the backing to sell it, while I don’t. Don’t I get screwed in the process? How am I protected from that, if not from some sort of copyright process? I agree that knowledge is infinite in nature, but at the same time, I don’t think your (and the article’s) views on IP being as black and white can succinctly address that issue. I would love to hear a solution, but all I’ve read so far is that granting IP protection is wrong. Okay, I can see why you think it’s wrong, but you haven’t provided a solution. Say you do tell me that joke, and I claim that as my own at the comedy club I’m playing tonight, our friendship may be over, but what you were hoping for, in terms of getting stuff out of a potential tour, is forever lost. You could argue that your delivery may be better than mine, but I may just have screwed your chances at getting a record deal from some label.

This is where the argument breaks down for me. If there is a solution, I’d love to hear, and consider it. If not, it’s simply ideological positioning, and that doesn’t really solve much.

If you play your song at a coffee shop, and someone else hears it, likes it, records it, and sells it, then whether or not that is “screwing” you depends subjectively on what you wanted to accomplish, and objectively on whether you “own” that specific arrangement of notes and words (the core of the debate).

What has demonstrably happened in this situation is that, at absolutely no further cost to you, something you created has been spread among potentially millions of people who were interested enough to want to hear it. That much is definitely true. To some songwriters, this very thing would be a dream come true, because it is a potential source of a huge audience. They are, after all, still the original source of the talent.

What may have also happened is that you lost an opportunity to capitalize on recording and selling that song yourself (though whether it was really an opportunity is debatable, since in your hypothetical description you already said you don’t have the means). But this is not even necessarily the case; different artists record the same song all the time, even in very similar styles, and typically doing so only adds to the perceived value among different groups of fans. Take One Republic’s “Apologize” vs. Timbaland’s version, both of which did well in different arenas.

In the case of the joke example, it is possible that if you blab, I might lose some or all of what I hoped to gain by that comedy tour. I do not believe that it’s the government’s business to punish you for my naivete in sharing that content with someone who would then go repeat it. Now, if I have you sign an NDA before I tell you the joke, that’s a different matter entirely.

As for claiming credit for something you didn’t create, I think legal fraud may come into play, but there I’m not sure. People who fraudulently rise to fame are not often able to maintain the illusion for long. As to whether claiming credit for something you didn’t do is actually the government’s business, I’d much rather keep them out of it as much as possible. If you claim to be the legal originator of something and it can be demonstrated conclusively that you aren’t, then there goes your reputation, and it’s a breach of contract with any contracts you have claimed that on as well, and perjury if you say so in court. Outside of a contract or court where false claims are made and executed, only reputation is at stake–which, in just about any vocation, is critical to long-term success. Reputation (a.k.a. market forces) is certainly the strongest regulatory/preventive influence in an IP-free system.

The main question still comes down to what, if anything, turns some particular bit of knowledge into something that can be owned and legally protected against “theft” (duplication, really) like physical property.

If ALL knowledge is inherently ownable in this way, then every instance of communication creates the possibility of legal action–a terrible idea. There would be an NDA app on everybody’s phone, and friendships would include pre-nup-style contracts.

If NO knowledge is ownable in this way, then there are quite a few content-centered business models that would need to adjust radically (or disappear entirely), but the legal system would also lose an enormous chunk of complexity, and Lodsys et. al. would vaporize into nothingness. Although my position is in flux, this second option (and the paragraph about fraud/reputation) is currently my idea of a solution. I gather you don’t like it though. :-p

If the answer really does lie somewhere between the two, then it can’t afford to be subjective on a case-by-case basis depending on who has more money for clever lawyers. That’s how you get the system we have now. If it isn’t clear and simple, then those who stand to benefit most financially from a draconian IP system will constantly vie for more power and privilege. How would you define the line between “protectable knowledge” vs. “unprotectable knowledge”?

What you’re suggesting would destroy creativity altogether. What is my incentive to create if what I create is not protected? I would still argue that this is far more socialist, even communistic in nature than libertarian. Unless, of course, you subscribe to the anarchistic school of thought in libertarianism. And I find that a very tough ideology to argue.

I don’t think the fraud/reputation model is enough to sustain the fields of creativity. When people are told ‘he stole this idea from so-and-so’, the general consensus is ‘so what?’ I’ve never really heard real concern about this. Just consider the downloading of mp3′s for example. How many people have said this is morally reprehensible? Almost no one except the artists. People were pissed about Metallica’s stance against Napster, but they didn’t consider for a moment that the band made money through their music. And no amount of reputation rhetoric would overturn the damage they suffer by the leaking of their music.

Of course, this is a very simplistic approach and one that avoids talking about the other players in the system, but it’s still valid, considering the fact that someone was a party to theft. I don’t think you’ve established your case enough to say that it wasn’t theft. What you’re referring to (covers and all) go through legal channels. BMI and ASCAP actually make sure that the artist that wrote the original song gets monetary compensation for its use in covers, movies, tv shows and the sort. Now, if you were to recommend a free-market system to replace governmental regulation, I’d be all for it, but what real authority would such a system have?

As for differentiating between protectable and unprotectable knowledge, I would say that a statute of limitations, as is in place, is the best way to distinguish those. Instead of 70 years, as with copyright, the patent approach to 7 years (unless I’m misunderstanding) is a good timeframe. If within 7 years, you haven’t quite capitalized on your work, I don’t think that’s going to suddenly change. Unless, of course, you die, and in that case, you won’t be using the money anyway. What that does, is give you a window to promote your work, make your money, and capitalize on those who would like to build upon what you have. Of course, this would only matter in truly creative fields of arts and literature, as well as technology and education. Humor, for example, serves no real purpose in advancing civilization, and so would not be covered. I’m sure the argument could be made about some of the literature that’s published too, but good or bad, I think it advances the civilization in one of two ways: propelling it by providing a framework to build on, or highlighting what must be avoided at all costs. I’d say that’s my thought on those.

Your claim that such a system would destroy creativity because removing IP also removes the incentive to create is very common, but illogical for a couple of reasons. First, there was no official blanket copyright law anywhere until 1709 in Britain, though there were some similar monopoly-style privileges granted in certain cases and limited geographical spheres as early as 1486. Surely, a great many literary works were written before then; these writers didn’t write books, poems, songs, etc. because of copyright, so creativity can certainly survive without copyright.

Patents as well only began in something like their current form in Italy in 1474, though some similar privileges were granted individually by the King of England as early as 1331 (even these early English “letters of patent” were abused by both the government and inventors though). There was even a documented reference to 1-year patent-like awards to winners of a particular culinary competition in a Greek city ca. 500 BC, though these were short, local, and very narrow. Widespread patent enforcement has only been around for a little over 500 years, and it has taken that long to develop into the system we have today. But new inventions surely didn’t spontaneously begin 500 years ago. Pre-patent-era inventions are a demonstration of creativity surviving despite having no patent protection.

I would also argue, as an aside, that the industrial revolution in the 18th and 19th centuries didn’t occur because of patents, but rather despite them. Rapid advancement of technological development is far, far easier to effect when people are not artificially banned from innovating for some period of time.

Now, I admit that some people make new designs or creative works purely because they want to make money. (I would bet that these people, of all creators, are the least successful overall though, since passion for the work typically translates into quality much more than passion for money.) But there are many, many people who are creative either partially or entirely for reasons outside of financial gain. People write books, record songs, and make movies to express what is inside them, or to effect social change, or to make others laugh. People invent things to solve problems, to make life easier for themselves or others, to provide better, faster ways to do what they want to do. Often there is a simultaneous hope for financial gain, and there’s nothing wrong with this. There’s also nothing that says it is impossible to achieve without IP protection from the government.

As counterexamples to your initial claim, I present myself, my wife, the entire open-source software community, and the entire open-source hardware community. I like to write code that I and others can use to solve problems. I like to give a lot of it away for free, and so I do. Also, I’m building the Keyglove because I really love the process and am excited for the end result. I hope to make money off of it, but I don’t believe IP is required to accomplish this, which is why so much of the current design and development process is right up there on the project website. Regardless, I am sure that even if I knew I was the only one to use it, I would still build it for multiple non-financial reasons.

My wife loves to sing, and so she records songs. She happily posts these on her website with no current intention of trying to sell them. She enjoys the experience of singing, the challenges, and the outcome, all outside of financial gain.

Open-source hardware (rapidly growing) and software (already huge) are two sources of vast creativity that have not just begun and grown without the need for IP, but in many cases also explicitly rejected IP protection for ideological reasons. These are people who create things that they want to for their own purposes, and subsequently give it away. (Yes, some open-source stuff is low quality, but certainly not all of it–that is to say, open-source doesn’t guarantee low quality any more than closed-source/IP guarantees high quality.)

So, it is definitely not true that removing IP would destroy creativity.

In the case of musicians, I think it is also worth pointing out that it is generally far more lucrative for a band to focus and capitalize on concerts, merchandise, and uniquely engaging with their fans than it is to try to sell more copies of albums. There are many disappointing reports of exactly how little any given artist or band usually sees from album sales, and there are many interesting reports of how well bands do when they connect with their fans in innovative ways (private concerts, personal responses through social media, contests, encouraging remixes, etc.). Economically, this makes sense. With digital distribution, once a song or album has been recorded, it requires virtually no extra costs to share with anyone who wants to hear it, and many people realize this. It can, from a techincal standpoint, be duplicated almost infinitely with only relatively tiny costs for bandwidth (which is usually at least shared, if not entirely paid for, by the consumer).

Many musicians are now wholeheartedly encouraging this behavior (what is typically labeled “piracy”) because it translates into widespread zero-cost exposure, simultaneously increasing interest among new and existing fans who will then willingly pay money for the unique (scarce) aspects of the music like concerts and merchandise. With the advent and falling cost of digital distribution, there is no economic reason for the RIAA to exist. They don’t even need to be “copyright cops,” since if copyright is truly legitimate, individual artists can stand on their own with just as much real legal clout as anyone else.

As for the political lean of this idea, if knowledge is inherently not ownable, then I don’t see how an IP-free system is either socialist or communist. I also don’t see how which particular “flavor” of libertarianism I subscribe to has any impact on whether a specific idea is more socialist or communist. Now, if knowledge IS ownable, then it would indeed be communistic to say that it belongs to everyone. But that question (ownable vs. not) is the whole point of this debate, right? If it is ownable, then my approach falls apart. If it isn’t, then I think my approach is the end result of accepting that answer.

As to whether reputation is a significant enough market force to deal with fraud, it is difficult to argue outside of hypotheticals because of the system we already have in place, and have had for the entire duration of the country’s existence. If someone claims an idea as their own, they are expected to use the patent and/or copyright system we have to prove it, and if they can’t, then they’re out of luck. Reality is effectively trumped by legal filings, and even if you can eventually prove that you’re right, it usually takes a huge amount of time and money to do so. If there were no IP controls in place, reputation would become a lot more valuable because merely having the smartest lawyers would become worthless.

I would say at least, as I stated above, that absolutely nothing is required to “sustain the fields of creativity.” That’s going to happen no matter what. Incidentally, I think that would STILL happen even if we did have Star-Trek-esque replicators, because creativity is driven by things other than financial gain, and the ability to create is not hampered by the ability to duplicate.

There is certainly a lot of apathy and pragmatism from consumers when it comes to the source of what they consume. If it’s what they want and it’s the right price, they’ll buy it. But “what they want” extends beyond just physical aspects and immediate utility. There is value placed on intangible things like how long something is expected to last before breaking, what the manufacturer’s customer service is like, and even less pragmatic and more emotional things like the work environment at the place where the thing is made. Each of these factors has a different weight in any given consumer’s decision, and sometimes price wins out–but not always. Whether someone destroyed other businesses in the process of emerging into the market will, if it known, be one of these factors people consider. A reputation as a fraud might not have enough impact to prevent a sale, but it might.

If someone is told, as in your example, that “he stole this idea from so-and-so,” and the general consensus is truly nothing more than “so what?”, then there are some things we might learn from that response. First and foremost, I think that response implies something else: “Well, THIS guy actually implemented the idea, which is why I’m looking at (or holding, or reading, or listening to) the end result right now. How is this a bad thing?” Very pragmatic to be sure, but that particular response fits with an IP-free system. If two people have an idea, and one of them implements it, then where is the problem? Is it a problem because one of them implements it before the other one, rather than doing it together? Or because the one who implemented it first didn’t think of it independently?

People automatically respond differently to “he stole my car!” than they do to “he stole my idea!”, despite the continued and long-winded efforts of the IP industry to convince us that they are exactly the same thing. Theft is when I take something that you own, which is particularly evident and provable precisely because you don’t have it anymore. “Stealing” an idea, whatever else it may be, is certainly not exactly the same thing, and at least some of the apathy present in the “so what?” response is because people understand this implicitly, if not explicitly.

An additional response possibly implied by “so what?” is this: “so why aren’t you competing?” In an IP-free system, nobody could be legally prevented from competing with any existing product. Of course, it may not be feasible for multiple reasons for some people who would otherwise enter the market, either as an originator or a competitor. Does that automatically mean that nobody else should be allowed to, because the guy who originally came up with the idea doesn’t have the means to implement it? I think not. That isn’t a free-market system at all.

As for MP3 downloads, I would disagree that it’s mainly the artists who say that downloading MP3s is morally reprehensible (though some of them do for sure, most famously Metallica, and Prince as well). I would say that beyond a shadow of a doubt it is mainly the people who profit most from copyright licensing–the RIAA and similar groups in the US and elsewhere. As mentioned before, the artists usually don’t stand to lose much from piracy due to (1) the pittance they get from album sales and (2) the free exposure it gives them. The Recording Industry often uses bands as part of anti-piracy campaigns to lend some credibility to their message, but I think it is comparatively rare for the bands themselves to be gung-ho about the idea.

Metallica, as a high-profile old-school band firmly entrenched in pre-internet business models, is probably one of the exceptions in terms of how much they make from album sales. From my casual reading of various blog posts, comments, and articles over the past few years, I’d say that the community has still not completely forgiven them for being the frontrunner band against Napster, though their friendly acceptance of Beatallica mash-ups won them some points. I would argue that Metallica lost far more from the attack on Napster (and subsequent disinterest or pointed rejection by fans) than they did in terms of sales lost due to piracy. Reports continue to suggest that the biggest music pirates are also the biggest music purchasers. If you make your hardcore fans (those most likely to look for your music on Napster) decide to hate you instead, they will certainly stop buying your stuff and going to your concerts. As a high-profile band, Metallica stands (or stood) to profit more than most from concerts and merchendise, but they lost a lot of that potential by turning fans into opponents.

As for licensing groups, the function of BMI, ASCAP, and other similar groups is not something that necessarily needs continue. They exist to make sure that certain ideas cannot be “stolen,” but instead that they are always “bought” according to copyright laws. Their existence presupposes the ability of ideas to be owned, which again is the core of the debate. If ideas cannot be owned, then licensing groups have no function. You mention a free-market system to replace government regulation, but that doesn’t really make sense. A system is a free market precisely because there is no government regulation. A free-market replacement wouldn’t have any authority, true, because a free-market replacement for government regulation is exactly nothing. That’s the point.

Your ideas for where to draw the line between protectable and unprotectable knowledge are interesting, but they strike me as very subjective and arbitrary. A statute of limitations would at least be relatively simple to enforce, but does it apply universally? Do you have to claim it, or is it automatically given for any and every thing you create? When does it begin relative to when you claim it, either for works that are already created or for ones you plan to create? How do you identify the “beginning” of an idea? If you have to claim protection, is there a specific window of time when you can do that? Can you transfer this exclusive protection, or share it? Can you revoke it if it’s automatically given? You probably could come up with answers to these without much difficulty, but could you defend those answers well? The reasoning depends on a lot of different factors.

Patents in the US typically last for 20 years, as do European patents. There are a few exceptions (decorative design patents last 14 years, for example), but 20 is the most common. Granted, a 7-year ban on competition and innovation is less harmful than a 20-year ban, but why have one at all? And, on the other side of the argument, what if you’re developing a drug that takes 15 years to study thoroughly? How many other industries would require exceptions to the rule to make everything “fair”? One exception paves the way for a multitude of them, granted to politically motivated and/or wealthy special interest groups. Having no exceptions means that either some industries will be at a disadvantage due to long development times, or everyone will be forced to endure unreasonably long terms to accomodate those few extremes (which we might discover decades later are still not long enough to accomodate some new industry). Having no IP avoids this problem entirely.

The government should not be allowed (or required) to selectively subsidize creators to help them make money. That’s not the government’s job at all. But, even if that were the case, and assuming I agree with you that only truly creative fields should be given special treatment, who gets to make the call for what is “truly creative”? Who gets to say whether something “advances civilization” or not? How much humor can my technical document have in it before it is no longer covered? How much technical information do I have to put in my joke book before it qualifies? This approach leaves things wide open for reinterpretation.

An IP-free system remains as the only approach I can currently defend in good conscience all the way down to the foundation.

Sure, before the eighteenth century there was no copyright, but you have to look at the structure of those communities too. How far do you think a person would get by stealing someone else’s IP? A village over? Reputation was a far greater market-force in those days than it is today. I still disagree with the premise that true creativity doesn’t attach to itself the notion of being compensated. Ask any artist, and they’ll tell you that they would create even if they didn’t make money off of it, but we do need to get paid to pay our bills and the sort. So there is always this innate desire that the products of our creativity will somehow bring us an income. You can’t objectively say what the creative community would or would not do when you’re not a part of it. While building on something is great, I still think that some sort of protection is great to ensure you won’t get screwed over. It may not put an end to creativity, but it does make an artist paranoid about showing off his work.

As far as open platforms go, for all the benefits you list, I have yet to see Linux actually perform well. Sure, Ubuntu is great, but it’s so far lacking in support that you can’t truly work on it without investing far too much time in upkeep. If the free-market actually moves towards IP-protected systems such as Macs and PC’s, I think the open platform argument crumbles pretty quickly. If Linux was far outperforming those two, I’d concede to your arguments, but it isn’t, and so I don’t necessarily see a huge benefit to it. Same goes for Gimp, OpenOffice, and everything else that’s open-sourced. They’re just terrible, and don’t even come close to having the versatility that various closed platforms do. So, why would we want to move away from that?

Reputation is far less valuable today only, I believe, because of the government regulations that shield people from true free-market reprisal. The IP system provides a layer of red tape and huge delays for establishing proof of originality such that reputation is off-loaded onto the legal system instead of evaluated individually. I still maintain that in an IP-free environment, reputation would shoot right back up where it used to be in terms of intangible value. I admit that this is speculation though.

I would even say that reputation could be vastly more powerful today, precisely because information transfer is nearly instant. If you are proven to be a fraud somewhere, then suddenly the entire planet can be alerted within minutes (hooray for Twitter, no?).

I’m not sure how to reconcile two of your statements. First, “I still disagree with the premise that true creativity doesn’t attach to itself the notion of being compensated.” And second, “Ask any artist, and they’ll tell you that they would create even if they didn’t make money off of it…” Those things seem to contradict each other. Of course everyone needs to pay their bills, and it is perfectly legitimate for anyone to market their creative works in whatever way they wish to attempt it. But I maintain that not everyone feels that the act of creation entitles them to compensation from those who use what they created. I know I don’t, and as a programmer and the guy working on the Keyglove, I do think that puts me squarely inside the creative community. I do intend to market the Keyglove, and I hope to make money from it. But I don’t feel entitled to that money.

For open-source hardware and software, you specifically target Linux as one data point that makes you reject my argument. I’m not sure why Linux would have to “far outperform” Windows and OS X in order for you to take open-source software as a serious source of IP-free creativity.

First, a free-market IP-free system does not mean that software developers must by definition give away their source code (or hardware designers give their designs away). It’s perfectly acceptable to do whatever is in your power as a developer/company to make your product difficult to copy. You can also make it easy to copy (or purposely free) and then provide high-quality paid support, which is what Canonical does with Ubuntu. The people who value support can use a free OS and pay for the support they need, and the people who don’t value support can use a free OS and figure it out themselves.

Closed-source does not demand government IP protection. Closed source software is basically just an application of trade secrets, which are perfectly legitimate in an IP-free system. The difference is in what can be done if those trade secrets leak–namely, nothing, instead of government intervention. (Interestingly, if trade secrets are leaked in our current system, they become legally public; there is no government protection. This would be the same consequence of any leak in an IP-free system.)

Second, what does it mean for Linux to “far outperform” other OSes? Linux is at least a huge contender, if not a majority option, in the server market. It absolutely dominates the supercomputer market. It certainly isn’t dominating the desktop/laptop/netbook market, but that doesn’t indicate failure by any means. Whether Linux is a good product for you depends on what you are looking for in an operating system.

Third, my point was not about any particular open project, but only that lots of people create lots of stuff not only without the specific goal of making money, but also with the explicit goal of giving it away. Maybe you don’t personally see a lot of value in the products in question, but a lot of people do. GIMP is no Photoshop, but it’s under constant (open, shared, free) development, and nothing says it can’t become just as friendly as Photoshop. Ubuntu keeps getting more and more polished and intuitive. And really, anything that’s open-sourced is terrible? That’s pretty broad. Open-source software is everywhere (including, according to Apple, “major components of Mac OS X”). Surely there are some things on this list of open-source hardware that you would find truly valuable as well:

List of open source hardware projects (wikipedia.org)

Hardware is typically much easier than software to protect practically if you are looking to make money on a design. Yet even these projects, only a few higher-profile ones among many not listed, are being developed specifically so those designs can be given away.

There are definitely some people who create without the belief that they are entitled to compensation from others who use it simply because they created it.

Interesting. I need to do more reading on the types of IP protection. I guess what I was aligning my views with would be more along the lines of trade secrets than patents, per se. I imagined them to be the same, but I guess that’s not the case. I still don’t see myself conceding on copyrights, but I can see how patents could be a messy system if all they’re doing is what Lodsys does. When I look at Apple’s patents, for example, I feel like they’re constantly incorporating them into their products, which is why it makes sense to give them protection. Going back to the original post, however, I think Google’s just a hypocrite though. For them to whine about patents when they lost the bid is just ludicrous. And that’s why I’m glad Microsoft called them out on it :p


He was definitely a willing and courteous debate partner, and I’m pleased by the conversation even though we still don’t agree on everything. It provided us both with a lot to think about. He may come to agree with me more, or I may come to agree with him more; time will tell.



Update August 9, 2011: This just got personal.

I wrote this mainly from an ideological standpoint, though some of my recent actions such as sharing open source software and keeping the Keyglove project very open have been influenced by these same opinions. But by an amazing coincidence, I got an email the day after publishing this post from someone asserting that the Keyglove is infringing their patent, and requesting that I cease all efforts to commercialize the Keyglove and threatening litigation for non-compliance.

The request is entirely serious and, I believe, in no way related to the fact that I posted this the day before he decided to contact me. In fairness, his request was written in as friendly and cordial a manner as possible, given what he was saying. I guess I’m not extremely surprised this happened. In a way, it’s almost encouraging, since it means I’m doing something well enough to be a perceived competitor to another company. Our discussion is only beginning, and the outcome is not guaranteed. I am intentionally avoiding details for this reason. Stay tuned.

I would like to point out that, although I assume he doesn’t see it this way, what he has said from my point of view is this: “I spent a lot of time and money bringing my idea to market. I don’t like the competitive threat you pose, so I’m going to use a government-granted monopoly privilege to shut you down because I want more subsidized opportunity to make money.” (Extra clarification: he did not actually say this. This is my interpretation of what it means to threaten someone with patent litigation. He was much more diplomatic.)

If he’s like many people who believe in the IP system (which he may not be, I’m not sure), then he likely believes that he deserves this “bonus time” to recoup his invested time and money by artificial advantage without fear of market competition. Our society has been conditioned to believe this by hundreds of years of intellectual property law enforcement. The patent system grants him this privilege. I think this is entirely wrong. Of course, what I think and what the law says are currently two very different things, and my opinion doesn’t change what I am required to do (or not do).

I also want to reiterate that everything this person has done so far is entirely within the law as well as tastefully communicated. My comments here are my own interpretation of a personal experience in light of the article written above. I just think it’s interesting that this would happen the day after I originally published this post.