The Great Debate on Intellectual Property
n November 14 the Cato Institute ment, to bring forth new knowledge.” ty runs little risk of convincing contem-
O and Forbes ASAP cosponsored the
Fifth Annual Technology and Soci-
ety Conference, “The Future of Intel-
lectual Property in the Information Age.”
Among the featured speakers were Tom W.
Of course libertarians often disagree
with the Supreme Court. Some argue that
copyrights and patents rely on a Lockean
theory—that creators mix their efforts with
their creations and thereby enjoy natural
porary legislators or courts to forsake the
prevailing utilitarian view of copyright and
patent. The language of the Constitution’s
Copyright and Patent Clause settles the
issue. That language speaks in a utilitari-
Bell of Chapman University School of Law rights to their intellectual properties. That an voice, justifying the exercise of state
and James V. DeLong of the Competitive facially plausible extension of Locke’s the- power as necessary “to promote the progress
Enterprise Institute. Excerpts from their ory does not withstand close scrutiny, how- of science and useful arts.”
remarks follow. ever. Locke’s justification gives a creator The Copyright and Patent Acts, though
clear title to only the particular tangible designed to counteract market failure, have
Tom W. Bell: Arguments about intellectual item in which he or she fixes his or her cre- themselves fallen into statutory failure. We
property ultimately turn on questions of ative work. thus need to encourage market-based alter-
values, not merely questions of fact or quan- So the author, sitting in his garret writ- natives to copyrights and patents.
titative measures. ing, wins clear title to only the piece of Copyright and patent law provides emer-
However, since copyright and patent law gency shelter to creations that but for these
purportedly aims to strike a “delicate bal- special statutory protections would have
ance” between public and private interests, fallen through the cracks of common law
the relevant quantitative data matter. The and been left wandering homeless through
rationale for copyright and patent protec- the market economy.
tion relies on a showing that lawmakers Just as commentators call the special
have at least roughly approximated such a treatment afforded influential commercial
balance. But copyright and patent law has interests “corporate welfare,” we might
not struck, and indeed cannot strike, a del- call copyright and patent law “creators’
icate balance of public and private inter- welfare.” We ought to withdraw copyright
ests. Lawmakers can, at best, achieve only and patent protection when and if it proves
a rather indelicate imbalance of those pri- redundant. It’s an emergency measure.
vate interests that get a spot at the legisla- Tom W. Bell: “Copyrights and patents function as
Clearly, however, copyright and patent
tive table. a federal welfare program of sorts for creators.” law can lay just claim to being a fairly effi-
We need to reconsider state action pro- cient means of giving creators incentives.
tecting copyrights and patents. Copyrights paper and pen with which he has mixed his The creation of fungible and divisible rights
and patents function as a federal welfare labor. It does not follow that the author by statute law does tackle a difficult prob-
program of sorts for creators. As are oth- can walk out into the street and say, “Shut lem, one important enough that the Founders
er welfare programs, copyrights and patents down the presses; that’s my work you’re thought it worthy of being addressed in the
are necessary evils at best, and thus subject copying.” Constitution.
to reform efforts. Locke himself did not try to justify intan- Yet if we don’t need those protections,
Some people might object to the char- gible property rights. More pointedly, copy- they become not necessary evils but just
acterization of copyrights and patents as right and patent protections contradict plain old evils, and therefore unjustified.
purely utilitarian devices for maximizing Locke’s justification of property. By invok- Copyright and patent policy almost cer-
social utility and argue instead that those ing state power, a copyright or patent own- tainly fails at striking a delicate balance
intellectual properties represent natural er can impose prior restraint, fines, impris- between public and private rights. Politi-
rights that vest in creators. onment, and confiscation on others. Were cal authorities cannot measure all the rel-
Cases, legislation, and commentary on I now to start singing a copyrighted song, evant economic, legal, technological, and
copyright and patent law leave little room for instance, I would thereby infringe on cultural factors that go into a calculation
for natural rights, however. The Supreme someone’s intellectual property rights. But of the optimal level of protection. And even
Court has, for instance, described copy- it’s my throat; it’s your ears. Where does if they could, politicians could not balance
right as “the creature of the Federal anyone get the power to tell us we can’t do those incommensurable values.
statute”—the Copyright Act—and observed that? It comes from the Copyright Act— Furthermore, even if such a balancing
that “Congress did not sanction an exist- not natural law. act were possible, politicians would listen
ing right but created a new one.” In anoth- Because they gag our voices, tie our most to the parties closest at hand. We thus
er case, the Supreme Court observed: “The hands, and shut down our presses and our see in the Copyright and Patent Acts not
patent monopoly was not designed to secure machine shops, copyrights and patents vio- so much a delicate balance of public and
to the inventor his natural right in his dis- late the very rights that Locke defended. private interests as an indelicate imbalance
coveries. Rather, it was a reward, an induce- At any rate, Locke’s theory of proper- that reflects bare-knuckled politics and spe-
8 • Cato Policy Report January/February 2002
cial interests’ jockeying. Those who lob- that discussions of property since the
by for greater copyright and patent pro- time of Plato have involved four themes:
tection benefit from the rhetoric of prop- morality, economics, politics, and psy-
erty, asserting that they aim only to pro- chology.
tect authors and inventors from theft. First, morality: the general concept of
So, what should libertarians and classi- Lockean justice is that ownership is derived
cal liberals do about the overextension of from labor, because each person has the
copyrights and patents? They should first right to the fruits of his industry. There seems
of all take care to conserve their rhetorical to me a strong argument that the creativi-
resources. As more and more rights win the ty that goes into an intellectual product does
label “property,” property risks losing all indeed create Lockean title, not simply to
significance. James V. DeLong: “It is difficult to see why intel- the particular paper and ink with which one
We also need to keep a lookout for clear lectual property should be regarded as funda- expresses an idea, but to the idea.
imbalances in intellectual property. Not mentally different from physical property.” A second line of justification for prop-
withstanding the impossibility of delicate erty involves the utilitarian or incentive
balances, we can tell when copyright and erty. In both academia and law practice, argument that Tom mentioned. People work
patent fall seriously out of whack. Just as there appears to be little cross-fertilization hardest and produce the most when they
Soviet planners surely knew that one kopek between people involved in the two areas. produce for themselves; money matters.
for a tractor was too low a price, for instance, I was recently at a gathering where a bunch This is as true for artistic expression as it
we can be sure that if Congress passes a bill of Hollywood types were bemoaning Nap- is for shoemakers.
mandating that people making copies of ster and kids with no respect for intellec- Economic historian Douglass North has
DVDs will suffer death and dismember- tual property. After a while, unable to restrain commented that the great leap of the Indus-
ment, it has gone too far. myself any longer, I said: “Well, in every trial Revolution was caused by societies’
Finally, we need to think harder about environmental context, such as wetlands or developing ways to protect interests in inno-
“exit” options that can privatize intellec- endangered species, you guys in Hollywood vation—not just property rights but con-
tual property protections. If private mar- have favored looting private property. Don’t tract rights—so as to provide ways to make
kets can provide adequate incentives for you think maybe these people are just prac- innovation pay and to create incentives.
the creation of expressive works and nov- ticing what you taught them?” The Holly- Property is necessary to produce investment.
el inventions, after all, we want to move wood people were utterly baffled. Who would forgo his current consumption
toward those markets. My own interest in intellectual property unless he got some future benefit?
Thus framing the problem properly is evolved from an interest in tangible prop- That leads to the third theme, the polit-
crucial. It is not a problem of natural rights. erty, particularly in connection with ical. Property diffuses power and rewards
It is today a problem of devising an effi- environmental issues. The core of many efficient administration. Ownership is a
cient welfare program that gives creators environmental disputes—over wetlands, way of decentralizing decisions rather than
sufficient incentives and leaves the door endangered species, zoning, and land preser- depending on planning authorities. If resources
open to market-based reforms. vation—involves property. Governments are not owned, they will be allocated not
are quick to take property without com- only inefficiently in an economic sense but
James V. DeLong: Here’s a good way to liv- pensation as long as they can call it envi- politically.
en up a dull day: walk down the hall at the ronmental protection. Property ownership is also an impor-
Competitive Enterprise Institute or Cato Although there are important differ- tant component of a democratic republic.
and ask, “So, what do you think about ences, the reasons for recognizing intellec- People do need a stake in society to ensure
Napster?” Instantly, you will have a fight tual property really parallel the reasons for that its politics does not run off the rails.
on your hands. recognizing the more tangible forms of Pipes’s last theme is psychology. He says
I especially recommend that this be done property. that property enhances people’s sense of
at lunchtime, for reasons that those of you Property is a fundamental part of all cul- identity and self-esteem. I would say that
who recall the food fight scene in Animal tures. Occasionally one hears of noble sav- property enhances not just the sense but
House will quickly understand. And I might ages who share freely. But I do not know also the reality of personal autonomy and
add that if you do not remember that scene, of any of those anthropological legends power, an important function of any social
you can rent the film for $3 at your local that have survived real analysis. The gen- order
Blockbuster, thanks to our wonderful sys- eral rule seems to be that if a resource is Whether based on natural rights or on
tem of intellectual property. scarce, or requires labor to create or con- utilitarian concepts, Pipes’s arguments
An interesting dimension of discus- vert it into a useful state, then humans will are deeply conservative in the sense that
sions of intellectual property is that they are attach property rights to it. they have evolved over several millennia in
divorced from thought about tangible prop- Harvard professor Richard Pipes notes Continued on page 12
January/February 2002 Cato Policy Report • 9
FORUM Continued from page 9 one can make limited copies without pay- CHINA Continued from page 3
ing or permission. That doctrine arose large-
the context of many different societies. ly because of transaction costs. If the dig- ating fully funded private retirement accounts.
Of course, identifying the basic justifi- ital revolution reduces transaction costs so Guo Shuqing, deputy governor of the
cation for property does not answer all the that permission can be obtained and copies People’s Bank of China, agreed that Chi-
questions, even in the context of tangible made cheaply, then the need for the doc- na should move toward fully funded indi-
property. There are questions of public trine shrinks. (It does not disappear because vidual private accounts to create a stable
facilities, technology, and infrastructure. there are still problems of parodies and pension system.
And there are commons problems, spillovers other uses for which one might not want Mao Yushi, director of the private Uni-
and externalities, and issues of technolog- to require permission.) rule Institute in Beijing, argued for “a
ical change. For example, tangible prop- Of course, one problem with the trans- return from social security to individual
erty is regularly redefined because of tech- action cost approach is the lack of any cur- security.” In the heart of the Middle King-
nological change. A prime example is the rent system for micropayments, neces- dom’s communist stronghold, he declared,
old doctrine that if you own property on sary if providers of intellectual property “The contributor himself should have the
a waterfront you can build a pier. But if are to make available their wares at prices right of choice to determine in which
technological change makes it possible to that seem fair to the users. For example, it financial institution to apply his contri-
build a square mile’s worth of structures would be nice if songs could be made avail- bution.”
on pilings, suddenly your rights change. able for 25 cents a track. Without clearly defined private prop-
You can’t fill up San Francisco Bay. Peo- But the most important point is that erty rights—and thus stock shares that are
ple used to own their property from the technological change does not eliminate fully transferable—there can be no real cap-
center of the earth to the top of the sky. the need to recognize the claims of intel- ital markets in China, said Dorn, vice pres-
Then the airplane was invented. Property lectual property, and it is difficult to see ident for academic affairs at Cato. Eco-
rights are subject to some reasonable lim- why intellectual property should be regard- nomic reform must come first, but, as Dorn
its, and to revision as technology changes. ed as fundamentally different from physi- reminded the audience, former Chinese
The same revision in the light of tech- cal property. leader Deng Xiaoping said in 1987, “With-
nological change should and will occur For all those reasons, I really think that out political reform, economic reform can-
with respect to intellectual property rights. intellectual property is a sound institution, not succeed.”
For example, many current copyright not a necessary evil but a necessary good, Tanner, director of Cato’s Project on
issues involve fair use, the doctrine that and it needs protection. ■ Social Security Privatization, gave an
update on the privatization effort in the
United States and why that effort is so
important for the future of freedom and
Cato’s Mencken Research
China’s capital markets can benefit
Fellow P. J. O’Rourke, author
most recently of The CEO
from pension reform, said Fred Hu, man-
of the Sofa, spoke at Cato aging director of Asia Pacific economics
seminars in Chicago, Austin, research at Goldman Sachs in Hong Kong.
Los Angeles, San Francisco, Creating individual accounts and allow-
Denver, Houston, and Boston ing a range of investment options will
in October and November. increase investment returns and strength-
Host for the Los Angeles en China’s capital markets. The elderly
seminar was the Ronald will have a higher standard of living as a
Reagan Presidential Library. result.
At every stop Cato Sponsors
Other speakers at the conference (fund-
and other attendees lined
ed, in part, by American Skandia Inc. and
up to get their books signed.
O’Rourke is now writing a Aegon) included Ling Li of the Hong Kong
column for Regulation Polytechnic University; Wang Yan, senior
magazine, alternating with economist at the World Bank; David Hat-
magician-commentator ton of the ING Pension Trust; John Green-
Penn Jillette and occasional wood, chief economist at Invesco Asia, Ltd.;
guest columnists. and Francis T. Lui, director of the Center
for Economic Development at the Hong
Kong University of Science and Technol-
12 • Cato Policy Report January/February 2002