Thursday, November 08, 2007

Do Intellectual Properties Need Legal Protection?

The eminent economist Friedrich Hayek was a staunch defender of how essential private and “several” property is to a modern free society. In his book, The Fatal Conceit, Hayek includes some very interesting discussion about the evolution of property laws from the communal structure of primitive societies. He offers very clear reasoning as to the importance of private property ownership, while admitting that the “institutions of property, as they exist at present, are hardly perfect;” and require further evolution (p. 35).

While Hayek is unyielding in his defense of private property ownership, he takes a markedly different view with respect to intellectual properties, such as copyrights and patents. Hayek writes (p. 36-37):

“The difference between these and other kinds of property rights is this: while ownership of material goods guides the use of scarce means to their most important uses, in the case of immaterial goods such as literary productions and technological inventions the ability to produce them is also limited, yet once they have come into existence, they can be indefinitely multiplied and can be made scarce only by law in order to create an inducement to produce such ideas. Yet it is not obvious that such forced scarcity is the most effective way to stimulate the human creative process. I doubt whether there exists a single great work of literature which we would not possess had the author been unable to obtain an exclusive copyright for it; it seems to me that the case for copyright must rest almost entirely on the circumstance that such exceedingly useful works as encyclopedias, dictionaries, textbooks, and other works of reference could not be produced if, once they existed, they could freely be reproduced.

“Similarly, recurrent re-examninations of the problem have not demonstrated that the obtainability of patents of invention actually enhances the flow of new technical knowledge rather than leading to wasteful concentration of research on problems whose solution in the near future can be foreseen and where, in consequence of the law, anyone who hits upon a solution a moment before the next gains the right to its exclusive use for a prolonged period (Machlup 1962).”

When Hayek died in 1992, the Internet was still a rather arcane tool used only by a relative few. I wonder what he would think of efforts like Wikipedia, a reference work which anyone willing to do so could readily replicate? If some intellectual properties should be considered worthy of copyright, and others not worthy of it, as Hayek proposes; who should make that decision? Should such a decision be made by class or on a case-by-case basis? If by class, how would the rule be kept current with developments that might render it obsolete? If case-by-case, what kind of system would govern the decision making?

I admire Hayek a great deal, although, I don’t completely agree with him on every issue. I believe that the current state of American intellectual property law causes many problems. But I think that the model to which Hayek alludes could also prove rather problematic. What would it be like to have no property laws governing the vast majority of intellectual properties? It sounds scary, but Hayek also implies that society would naturally evolve and implement rules sufficient to govern the matter without any kind of central authority creating the rules. Once those rules have become accepted through a natural evolutionary process, they would likely be officially codified.

I have seen a lot of whining about the current state of our intellectual property laws. But I haven’t seen much discussion about what should be done. I’m putting the matter into my puny brain so that it can do background processing and information gathering. I’d be interested in reasonable thoughts others might have on this issue.


y-intercept said...

A large number of modern thinkers wanted to find a ways to make property rights an attribute of physical property.

My take is that the classical liberal tradition sees property rights (ownership) as an abstraction. For example, I am sitting in a hotel room. I don't have a property right to the TV on the dresser, but I have property rights to my computer.

If you rented your car to me; It would still be your car despite it being in my possession.

If you start with the idea that property rights are an abstraction, then it is natural to want to extend the abstraction to intellectual efforts, which are also abstractions.

You are right that property rights should evolve with time. Unfortunately, we are in one of those shrill shouting matches that makes it impossible to engage in deliberation. There are many people who see property rights as an attribute of property. The far left wants to promote the rejection of intellectual property rights with a hope that it will lead to a rejection of all rights. Even worse, there is an entrenched elite that wants copyrights pushed to an absurdity to protect their investments in IP in perpetuity.

Wikipedia is interesting. Notice that wikipedia can exist within a system of strong copyright laws. It would be difficult for organizations that pay people to go out and produce quality content, like The National Geographic, to exist if we got rid of IP.

The fact that different structures can exist in a system of strong IP is a good indication that we are on the right track.

When you look at the hundreds of thousands of books and CDs produced, then I think it is quite clear that IP is a good idea. Strong IP laws leads to more diversity in the world of ideas.

Judging from the large number of links you've given to Wikipedia, it is clear that you are enamored with the site. However, I would like to point out that there is really not a large diversity of sites that will ever exist in this space.

The Wikipedia model is creating a model where one site dominates the whole space. Personally, I don't like being dominated. I would rather see a diverse world where a large number of people were thriving than one with a few bright stars that dominate the world and force the rest into submission.

As for the statement that there are few important creations that owe their existence to IP, I beg to differ. Big budget hollywood owes its existence to copyright.

A better example of the power of IP was the Renaissance. The Florentines had noticed that most of the great inventions of Romans and Greeks had disappeared as most of their science were closely held secrets.

The Florentines had decided to use patents to protect the IP of inventors. They issued their first patent to Filippo di ser Brunelleschi in 1421.

A primary cause of the Renaissance was the fact that there was a greater effort to protect the creations of the mind.

Prior to the Renaissance, the great intellects of the day were as anonymous as a contributor to Wikipedia. The pre-Renaissance paradigm was for inventors to keep their techniques closely guarded and live off what they could produce. The Renaissance happened because there was a way to bring ideas into the open and still exist.

Scott Hinrichs said...

You've got me on the Wikipedia thing. For one thing, it's free to use. True, the veracity of the content is questionable, but I don't know that it's any worse than the encyclopedia content produced via the traditional structure.

I had an IP course in grad school from a guy that was a practicing IP attorney. It was very interesting and opened up lots of questions. He also took pains to note that prior to the development of IP laws, many things were closely-guarded secrets. Now people feel more free to publish their findings so that more people can benefit from them.

While I appreciate many of Hayek's thoughts, I'm not sure I agree with him that we'd have every good work available with no IP laws. On the other hand, I think we have some IP laws that are abusive. For example when drug companies merely repackage a formula without creating any significant new benefit, as a tactic to extend their patent and ward off useful competition.

Perhaps our IP laws could use some tweaking, but scrapping the system is undoubtedly unwarranted. Hayek himself didn't say that this should be the case. He merely calls the current system into question. His treatment of the issue is really just the two paragraphs I cited. It's more like he was exploring than offering conclusions. I note that he copyrighted all of his own works.

Jesse Harris said...

A semi-recent study on copyrights determined that the idea copyright period for IP is around 7 years or so, the same period that Congress initially set back in the 18th Century. Nowadays, most IP amounts to nothing more than a government-granted monopoly on ideas. When Steamboat Willie is still not in the public domain, you know something is horribly wrong.

Scott Hinrichs said...

You got that right.