Tuesday, June 12, 2018

The Faulty Syllogism of Intellectual Property's Detractors

Stuart K. Hayashi

This essay is adapted from the much longer essay “Economic Value of Patents As a Direct Result of Supply and Demand, Not Labor Inputs.”

U.S. Patent Design No. 264,109. George Lucas’s design patent  on toys with Boba Fett’s likeness.

In this philosophic debate over the legitimacy of intellectual property rights (IP rights or IPRs), IPRs’ detractors rely on a psychological bait-and-switch. IPRs’ opponents proclaim that private property rights are only applicable to values that are “scarce.” Then they say that ideas are not scarce at all. And that is true for (a) impractical, fantastical, scientifically unsound ideas and (b) ideas that might be practical and sound in a very generalized context but have yet to be fleshed out to the point where the idea can be practicably implemented. Those sorts of ideas are easy to come by.

But patents and copyrights are not claims of ownership over either type of idea. A utility patent protects a detailed, illustrated, and scientifically accurate set of instructions for producing a unit for some good or service that is to satisfy some marketplace demand. Copyrights and design patents protect the exact, specific, aesthetic form of a design, proscribing duplication that is either exact or near-exact-with-tiny-perfunctory-and-cosmetic changes.

The specific original designs in patents and copyrights are “scarce” for two reasons:

  1. A party must invest considerable time and effort and material resources to produce a new design that plausibly possesses the potential to satisfy marketplace demand profitably. Very few parties are willing to take on this financial risk. And if these parties are not even reimbursed on these costs by the consumers who make use of their inventive design or artwork, these parties will scale back on their innovation, resulting in still fewer original designs being made available in the future.
  2. As a consequence of the variability in human experience, even when separate parties implement the same basic idea, the final result of each party’s effort ends up with its own unique qualities.

And yet IPRs’ opponents place the highly specific, granular, and scientifically tested designs that are patented or copyrighted under the umbrella of “ideas.” They rely upon people noticing there is no “scarcity” to impractical, fantasy-only ideas or to potentially-practical-but-still-vague-and-unexplored ideas.  Then in a supreme conflation, these opponents proclaim that because everything is just “ideas” sans all important distinctions, it follows that the non-scarcity of impractical ideas and vague ideas necessarily applies to the practical and specific idea-implementations in patents and copyrights. But the difference between (a) the designs codified in IP versus (b) general ideas is not a mere difference in degree; the difference is substantial enough to make it a difference in kind.

IP’s detractors advance an argument that purports to follow this syllogism. In category A is “ideas,” category B  is “that which is not scarce,” and category C is “that which cannot be rightful private property.” Then, applying Aristotle’s syllogism “If A = B and B = C, then A = C,” IP’s detractors put forth this:

  1. Ideas (A) are not scarce (B). (And this is definitely true of impractical ideas and still-only-vague ideas.)
  2. That which is not scarce (B) is that which cannot be rightful private property (C).
  3. Therefore, ideas (A) are that which cannot be rightful private property (C).

The fallacy is the presumption that the specific, practicable, and tested ideas protected in IP belong in category A alongside the impractical ideas and vague ideas. Let us be more accurate and say that impractical ideas and vague, unexamined ideas are in category X, whereas the specific, practicable, and tested ideas codified in IP are in category Y. The reasoning of IPRs’ opponents thus ends up like this:

  1. Impractical and vague ideas (X) are not scarce (B). True.
  2. That which is not scarce (B) is that which cannot be rightful private property (C).
  3. Therefore, specific-practicable-tested ideas, Y, a category we haven’t examined, are C, that which cannot be rightful private property.

You see how that is actually a non-sequitur?

The infographic on the bottom was added on Sunday, December 23, 2018.

Monday, June 11, 2018

Private Ownership Over Land Is an Obvious Natural Right But Intellectual Property Is Not?

or, A Good That Seems “Non-Scarce” and “Non-Rival” on a Smaller Scale Is Not Necessarily “Non-Scarce” and “Non-Rival” on an Important Larger Scale

Stuart K. Hayashi

The first half of this essay is adapted from the longer essay “Economic Value of Patents As a Direct Result of Supply and Demand, Not Labor Inputs,” but the second half (about my old northern European friend sneaking into movie theater screenings) is new material.

I come across Timothy Sandefur’s repeated insistence that because a defense of intellectual property rights (IP rights or IPRs) was not frequently included in Enlightenment philosophers’ treatises on natural rights, it follows that IPRs are not consistent with the Objectivist defense of IPRs. On Sandefur’s part, that is a non-sequitur for multiple reasons, the first of which is his false assumption that the Objectivist theory of individual rights is the same as the natural rights theory of Enlightenment philosophers. It is true that the Objectivist theory of rights draws from the Enlightenment philosophers’ natural rights theory, insofar as the focus is on rights to life, liberty, and private property to which a person cannot rightfully be deprived by force, but which are not entitlements that a needy person must receive from the State at the forcible expense of others. But the Enlightenment philosophers’ defense of “natural rights” to life, liberty, and property as being self-evident or granted by a deistic God is too primitive for Objectivists to find satisfactory. The Objectivist theory of rights fills in the many gaps left by the Enlightenment’s natural-rights philosophers, including their insufficient attention to IPRs.

Sandefur writes about natural rights to life, liberty, and private ownership over physical matter, including land, as if they are all part of a cohesive set, whereas he singles out IPRs as some unwelcome, out-of-place addition that Objectivists have attempted to group together with the other natural rights, imposing a horrible mismatch. He thereupon pontificates that holding IPRs to be on par with the other rights described by John Locke is something that inevitably “fails,” as IPRs are “purely statutory creations” and therefore “are not natural rights.” For those familiar with old TV cartoons, I will say that Sandefur scoffs at the Objectivist inclusion of IPRs with other rights as something akin to Hanna-Barbera executives trying to introduce the character of Scrappy-Doo into the Scooby-Doo series when membership of Mystery, Inc., should be confined to Scooby, Shaggy, Fred, Velma, and Daphne. To wit, if the rights to life, liberty, and private ownership over real estate are the original Mystery Inc., then, to Sanderfur, intellectual property rights are the Scrappy.

Implicit in Sandefur’s opining on the matter is that, among the natural rights, the right to private ownership over land is obvious — hence such a right being commonly defended by the Enlightenment’s natural-rights philosophers and the Objectivists after them — whereas a right to IP is often omitted from the treatises of the Enlightenment’s natural-rights philosophers on account of a right to IP being far from obvious. And such a right to IP being far from obvious, continues Sandefur’s presumption, is entirely consistent with his conclusion that a right to IP is just plain invalid. This assertion — that defenses of IP being infrequent in Enlightenment philosophers’ treatises on natural rights is sufficient to consider a defense of IP to be inconsistent with Enlightenment liberal philosophy — seems to be Sandefur’s other favorite rationalization for writing off IP rights as illegitimate, second only to the repeated falsehood that “scarcity” does not apply to the specific, detailed, nuanced, diagrammed designs that are copyrighted and patented.

This is silly; that an idea was not obvious to the Enlightenment’s natural-rights philosophers does not preclude that idea from being the result of the logical extension of the more rational aspects of their philosophy being taken to their logical conclusion. It was not obvious to Locke that his defense of the freedom of thought and conscience for varying denominations of Christians should logically extend to atheists. It was not obvious to Thomas Jefferson that his defense of an individual’s rightful ownership of his own life would logically extend to nonwhites. Nor was it obvious to Albert Venn Dicey that his defenses of an adult male’s freedom should logically extend to women.

The Need for Governmental Enforcement of Boundaries Separating Private Estates As Non-Obvious and Artificial, a “Creature of the State”
Moreover, that there should be a right to private ownership over land is actually not more obvious than the idea that a designer should have the first rightful claim of ownership over her design. Over 99.9 percent of the history of the genus Homo consists of such hominins being only hunter-gatherers. For over 89 percent of the history of Homo sapiens, this species has only performed hunter-gathering, functioning as nomads. The idea of a settling on the same plot of land for years was alien. Even when human beings finally began to farm plants as hunter-horticulturalists, and started the first villages, a long-term ownership over the land was strange. The convention was for hunter-horticulturalists to settle in a village for about fifteen years at the maximum — by the end of those fifteen years, nests of pesky invertebrates accumulated in the villagers’ huts, and the quantity of available game for food had dwindled, prompting the hunter-horticulturalists to abandon the village and set up another makeshift settlement elsewhere (Rob R. Dunn, The Wild Life of Our Bodies, [New York: Harper, 2011], 117.)

Over the past 5,000 years, when humans had finally decided that farming grains, rather than hunter-gathering, would be their main source of food, they developed an understanding of long-term settlement on real estate in manner dissimilar from what Locke and the Enlightenment’s other natural-rights philosophers envisioned. The first long-term land settlements consisted of chieftains and nobles proclaiming that a plot of land belonged not only to the people currently living, but also to their descendants and to the spirits of their long-dead ancestors, whom they had to consult when making decisions on how to alter the land. And those plots of land were “privately owned” only insofar as they were considered the joint property of one collective society as opposed to other collective societies.

The legitimacy of private land ownership is not even obvious to self-proclaimed libertarians who cite the Enlightenment’s natural-rights philosophers. That is why the original edition of Herbert Spencer’s Social Statics argued that land — not having been created by humans — cannot rightfully be privatized. It is also why there are self-styled “geo-libertarians” today who advance that very same conclusion. A right to private ownership over land is not fundamentally more obvious than a designer’s right to exclusive control over her specific original design — not to human beings in general or to Enlightenment-inspired natural-rights theorists in particular.

Today, thousands of people express indignation when their favorite artists, such as Lars Ulrich of the rock band Metallica, reproach them for their unauthorized copying of his art and balk at his enforcement of his IP. But that backlash is minor in comparison to what happened in the high Middle Ages, when landholders finally initiated the enclosure movement. Exactly because the need for private land ownership was far from obvious, throughout the Middle Ages grazing land was considered something that should not be controlled by a private party, but instead open to everyone in a “commons.” Nor was it obvious to these people that grazing land being held as a public domain had discouraged private parties from maintaining that land and maximizing its productivity. When a grazing area was finally recognized as the private domain of a single party, the single party put up walls to block access to non-owners — the enclosure of which historians speak — that protected that grazing area from freeloaders who tried to benefit from the land without contributing to its care.

But on account of it not being obvious to most people that this was for the best, hundreds of the former grazers considered the enclosing of the former commons to be a heinous usurpation by a private party of a public good, and hence violent riots erupted against the enclosures, much to the approval of left-wing professors still writing today (here and here). We are so much better off today on account of the enclosure movement succeeding over such opposition, just as we will prosper more greatly in the future if the devisers of practicable new machine designs and new forms of artwork succeed against those of the present who demand that all specific original designs should not be copyrighted but held in a digital “commons.”

Collectivists who denounce private ownership over land are actually correct on this point: There is no natural, default division in one plot of land from another; the boundaries separating one plot from another are enforced by the State even in the many cases where there is no physical marker of that boundary on the actual ground. The collectivists continue that the property line separating parcels does not exist in any market by default, but is an artificial imposition by the State, a “Creature of the State” (sound familiar?).

John Locke’s reply, of course, is that while the land itself already existed, what justifies an entrepreneurial, innovative homesteader taking private ownership over a particular parcel is that while the land already existed, that homesteader’s improvement of the land — rendering it hospitable — is the creation of new economic value that had not existed in the land prior to the improvement. The boundary separating one homestead from another may be an artificial, human creation, but so was the value that each homesteader gave to his or her own separate plot. And that applies to inventions and artworks to be protected under patents and copyrights respectively — those are new economic values that the designer creates and which otherwise would not exist, not having already existed in the material objects that will eventually be made into unit’s according to the inventor’s or artwork’s design.

As I have discussed elsewhere, the homesteader’s right to own the land and other natural resources he improved — entities which had no owner prior to his improvement of them — is the original intellectual property right. Karl Marx obfuscates the meaning of Locke’s statement that the “labour” of the homesteader’s “body, and the work of his hands, we may say, are properly his,” and therefore what the homesteader “removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.” By removing Locke’s use of the words labor, body, and hands, and putting special emphasis on these words in a new context, Marx bamboozles his readers into believing that Locke’s argument is that the physical motor movements employed by the homesteader are the direct cause of the addition of new economic value to the land. But the homesteader’s most essential investment in the improvement of the land was the intellectual effort — the intellectual labor — in studying the terrain and employing the proper plans that would yield the most efficacious results.

A homesteader who plans carelessly will yield pitiful results even as he exerts just as much physically strenuous effort as does another homesteader who invested considerable time and effort in learning the scientific properties of the terrain and plans accordingly. It is qua inventor and designer, not qua manual laborer, that the homesteader took resources that were no one’s private property and, from such resources, produced a form of economic value that had not existed previously.

The same principle even applies to a hunter-gatherer who takes sticks and stones that no one had previously claimed as personal belongings, and then fashions them into a stone tool — it was not mostly the physical actions, but the hunter-gatherer’s use of his mind, that produced this new value. And it is not an accident that the socialists’ argument against privatized real estate is nearly identical to the IP-opposing libertarians’ argument against IP — that there being “gray areas” in the establishment of the boundary separating one piece of property from another is somehow enough to invalidate private ownership in this context altogether.

A homesteader’s right to what he homesteaded is one of the earliest recognized intellectual property rights. And the intellectual property rights in the creation of such new value is the source of all wealth. It is therefore self-contradictory to claim that private ownership over improved land is a legitimate natural right whereas IP is not; private ownership over improved land is a form of IP.

It Is Only Through a Narrow Scope That Access to Easily Duplicated Artwork Seems “Non-Rival” and “Non-Scarce”
At this point, Timothy Sandefur will issue the reply that his distinction between ownership over private land versus original designs is legitimate on account of land of there being an inherent “rivalry” among persons who want the same plot of land, whereas he and most other people see no inherent “rivalry” when it comes to access to a particular digital motion picture that can be downloaded online. As Sandefur puts it,

In the case of tangible property, real [as in private “real estate”] or personal...the property is naturally exclusive, meaning that if I have it, you simply cannot; if I take it, you no longer have it — you have been “disseised.” Intellectual property, however, is not like this. I can “take” it from you, and yet you still have it. If, for example, you are the...musician...John Fogerty...and you have written...“Born on The Bayou,”...then I can sing “Born on The Bayou” in my shower, and you can still, at the same time, use and enjoy your “property” as you wish: you can perform it, sell it, or leave it alone.

That is, if you own a particular plot by a gorgeous river, then I cannot have that same plot, and your claiming more land for yourself means less for me. By contrast, goes the argument, if 500,000 people illegally download the same copyrighted motion picture over the World Wide Web, that does not obviously reduce the quantity of units of that download available to millions or even billions of other people want access to digital copies of that movie.

Another manner in which this can be phrased is that access to an easily copied digital artwork is “non-rival.” For a good to be a “rival” good means that, because there is a finite number of units of this good on the market at any given moment — even if more units can be produced in the long run — one user obtaining an additional unit will necessarily result in fewer units being available to other users in the near future. Conversely, for a good to be “non-rival” means that one user accessing the good does not reduce the quantity of units available for others to access.  Sandefur says about making unauthorized copies of movies online, “In Jefferson’s phrase, a person who lights his candle from mine illuminates himself without darkening me.”

In reality, a growing number of people making unauthorized duplicates of a particular movie will reduce the number of original productions of similar movies that people will enjoy in the future. And it is pretty ironic and ultimately inconvenient for Sandefur’s case against IP that, in his explanation of how intellectual property is “non-rival,” he compares it to a flame on a candle, as candles are an obviously “rival” good. We will return to both of those points by the conclusion of this essay.

This particular attempt to classify private land ownership as legitimate and intellectual property as illegitimate on the basis of “scarcity” is itself not so much in the tradition of the Enlightenment’s natural-rights philosophers as it is in the tradition of twentieth-century Chicago-school economists who reject natural-rights theory in favor of “greatest good for the greatest number” ethical utilitarianism. That false distinction most prominently comes from the twentieth-century Chicago-school economist Arnold Plant. Still, Sandefur can reply, even if this dichotomy was emphasized more by utilitarian Chicago-school economists than by the Enlightenment’s natural-rights theorists, the distinction is still valid and does not seem to contradict the Enlightenment’s natural-rights philosophers. After all, while John Locke did argue for copyrights elsewhere, he did not include a defense of intellectual property in the very Second Treatise of Government that immortalized “life, liberty, and private property,” and which provided the inspiration for the Declaration of Independence.

But this purported distinction between why land should be private, whereas IP shouldn’t be, isn’t as clear-cut as IP’s opponents want us to believe. Years ago I had a friend from northern Europe who had dubious ethics when it came to movie theaters. He noticed that in each movie screening, there were many empty seats. He would therefore buy a ticket to one movie and, after it ended, sneak into a showing of another movie. After that, he would sneak into a third movie. He noted that every showing of a movie had a fixed cost. The major cost of each theater screening consisted of someone turning on the projector; that cost the same regardless of the number of people in the audience. Another major cost had to do with cleaning up the mess that patrons made within the theater, such as leaving popcorn on the floor. However, unless someone is particularly extreme in his or her messiness, just one additional person filling a seat in the theater is negligible in terms of how much it costs to clean up the theater.

 Hence, the cost of each screening was the same regardless of whether my friend snuck in or not. His conclusion was that if he snuck into that second, third, and fourth movie, the theater lost nothing; no additional cost was added by one person placing himself in a seat that otherwise would have been empty anyway. Judging in terms of whether just one person adds himself to this room of many otherwise-empty seats, access to a second or third movie initially seems non-scarce.

And that is the crux of the matter: in the immediate moment it appeared to my northern European friend that he was not competing against any would-be theater patron for a scarce resource. From his vantage point, his sneaking into a showing and taking a seat that would have been empty anyway was not depriving any paying patron of that seat. In the immediate moment, there was no obvious scarcity to the value that he accessed.

Here, the predictable reply from IP-opposing libertarians is that if too many people snuck into the theater at once and took all the remaining seats, the theater would be overcrowded and then others couldn’t enjoy the screening. By contrast, these IP-opposing libertarians add, even if two billion people made unauthorized downloads of an artist’s digital artwork, that artist will still have lost nothing, as she maintains custody of the original copy.

But too many people crowding onto a land space too small to support them has an effect that is actually not too different from what happens when the number of people making unauthorized downloads of an artwork altogether prevents the artist from recouping the costs of producing that very same artwork. If that artist isn’t reimbursed by those who download her work, she will stop making new art she otherwise would make. That is an exacerbation of the scarcity of new IP. Upon hearing my example of my friend illegally filling a theater seat otherwise would have been empty, many libertarians will note that even if my friend doesn’t notice an economic “scarcity” in the short run, such economic “scarcity” will still apply in the long run. It would behoove those same libertarians to acknowledge that economic “scarcity” also applies in the long run in terms of artworks that prove to be very costly to create and problem-solving inventions that were costly to devise.

Too many people being able to get away with sneaking into a movie theater without paying for a ticket will eventually result in a large number of business owners closing down their theaters, and too many people being able to get away with making unauthorized digital duplicates of an artwork without reimbursing the artist will eventually result in a large number of artists reducing the quantity of output that they avail to the public. When my friend stole access to movie theater showings, he was doing to the theater owners, on a smaller scale, what millions of people do to an artist when they make unauthorized digital duplicates of her artwork. Sure, the number of instances of people pirating an artist’s artwork that it would take to motivate an artist to abandon her craft will probably be much greater than the number of instances of people sneaking into theater showings it would take to motivate a theater owner close his business — but, in the end, the effect is the same.

Let us go back to the very metaphor from Thomas Jefferson that Timothy Sandefur cited: “In Jefferson’s phrase, a person who lights his candle from mine illuminates himself without darkening me.” If you light a candle, and then I use your candle to light mine, that does not extinguish the flame on your candle. That is just as my northern European friend being the lone person to sneak into a movie theater’s empty seat during a screening did not add to the theater owner’s costs and did not deprive a paying customer of a seat. And if just one person makes an unauthorized digital copy of a Metallica song, Lars Ulrich would not feel the brunt of it. But if a thousand people stampede toward you and try to light their own candles using yours, that will extinguish the flame on your candle. That is why people who want reliable access to a small flame notice that they must purchase their own matches and lighters and candles. When a million people duplicate an artist’s work and fail to reimburse her on the monetary value it cost her to produce that work, that does likewise extinguish the flame of future inspiration on the artist’s part. When you take the very metaphor that Sandefur employed against IP, and think on it further, it undermines his case against IP.

On June 14, 2018, I added the paragraphs about the homesteader’s right to the new value he created in the land, coming from the use of his mind, being one of the earliest recognized intellectual property rights.