Re: Intellectual property

Pat Fallon (
Thu, 20 Mar 1997 10:50:19 -0500

On the subject of intellectual property, Jeff Coulter wrote:

>It would be great if you could offer a model or some evidence/background
>to back up these facts.

Markets for ideal objects can and do function in the absence of
intellectual property rights.

Functioning markets existed for foreign authors in the U.S. in the 19th
century. The free market paid royalties to British authors even though
those authors
received no copyright protection in the US until the extension of
copyright protection
to foreigners in 1891. The American publishers paid the royalty in order
to obtain
advance galleys, even though they themselves had no legal protection
against competitors
who could legally copy their new releases and sell them. In the absence
of state
protection the authors and publishers used several voluntary and
arrangements for the internalization of externalities.

The problem shifts to being one of marketing. Although current
publishers so used to
operating with a copyright may think this analysis strikes at the
foundations of the
publishing biz, it is aimed at the present selling methods.

American laws over intellectual property are rooted in the English
patents and copyright
system. The Crown issued patents for new inventions with the aim of
securing control of
endeavors thought to be of political import; or to raise money through
the granting of
monopolies. Copyright served to ensure state control over the press in
an era of
tremendous political and religious dissent. As Tom Palmer remarked in
his recent paper
on Intellectual Property, "Monopoly privilege and censorship lie at the
historical root
of patent and copyright." Many times the state granted monopoly
privilege with no
concern for the original inventor. Venice in 1469 (One of the earliest
patents I could
find) granted to John of Spyer a monopoly over the art of printing
itself. Queen Marys'
chartering of the Company of Stationers in 1557, granting its monopoly
over printing,
was an attempt to control a new, threatening technology, primarily to

Any service or good has, as a component of its' cost of production, not
only the costs
of labor, marketing, capital, etc., but also the cost of exclusion. For
the owner of a
movie theater, these exclusion costs include paying for walls, ticket
windows, ushers.
These serve to exclude or fence out 'freeriders'. Now they could set up
projectors and
show the movies on low level stratus clouds (ok, screens in parks), and
then attempt to
prevent those casually passing by from watching. The method of marketing
their product
is their choice. In the case where their marketing decision results in
the publicness of a good, it seems to me to be grossly unjust to ask
the government to force all who might potentially see the show without
paying to kick in some bucks, whether they DO in fact see the show or
not. Or to force those passing by to don glasses that prevent them
from viewing the movie. Yet the proponents of property rights in ideas
choose such
a method when they attempt to get every person purchasing a blank tape
to pay a
royalty to a third party.

Alternatively, as with DAT tape recorders, their proposals seek to ban
or cripple entire
technologies. This method, done in the name of preventing technologies
which are capable
of recording publicized (broadcast) music without loss of fidelity,
would make mere
ownership of tangible property (DAT recorder) a crime. I view proposals
for such an
implementation of property rights in ideas, which wipe out other areas
of property
rights altogether, as inconsistent.

If we privatize the enforcement of contracts, let those who want to
"own" ideas pay for
the enforcement of that contract. Market forces will probably lead the
programmer to tie a perceived value to the registration of their program
upgrades, technical support, etc.); rather than paying for a protection
agency that
tries to police the digital information realm. But they would be
welcome to try to
enforce a contract against copying a program that the purchaser would
sign when he buys
the product. I just wouldn't subscribe to a protection agency that used
some of my
subscription fee to police copyright protection.

Pat Fallon