IP and Third Parties

"IP and Third Parties" (source)
Column by John deLaubenfels, posted on October 22, 2003
Article mirrored with permission of John deLaubenfels

In a previous column, I defended intellectual property (IP) rights. Several readers responded with points which deserve to be addressed. One referred me to an article by N. Stephan Kinsella that goes into great detail on the subject, but which, in my opinion, reaches the wrong conclusions.

Suppose filmmaker A borrows 100 million dollars to make movie B, which is shown in theater C, and is surreptitiously copied by theater-goer D, who escapes detection and uploads the movie, anonymously, to web site E, from which it is downloaded by millions of people F, who watch it for free.

According to anti-IP'ers, if A can get his hands on D, he might possibly seek compensation from him, BUT, persons F are completely free to make copies of the stolen movie without fear of prosecution. Wait, it gets even better! Because persons F were not party to any contract with A, they may also show the film in their own theaters or otherwise make money from it, without giving a penny to A. How's that for a Brave New World?

No amount of hand-waving by the finest minds on earth would make such a society one in which I would want to live. It is a society which glorifies and rewards theft, no matter what its proponents may say to the contrary.

Let's examine some specific arguments made by Kinsella. He reviews Murray N. Rothbard's publications in favor of IP rights:

Rothbard, for example, argues that one can grant conditional "ownership" (of "knowledge") to another, while "retaining the ownership power to disseminate the knowledge of the invention." … Like the real rights accompanying statutory IP, such "reservations" allegedly bind everyone, not just those who have contracted with the original seller. Thus, third parties who become aware of, purchase, or otherwise come into possession of the restricted item also cannot reproduce it - not because they have entered into a contract with Brown, but because "no one can acquire a greater property title in something than has already been given away or sold."

That's exactly in line with my thinking, but Kinsella rejects it as follows:

Suppose that A writes a novel and sells a first copy, BOOK1, without restriction (i.e., without a reservation of rights) to B1; and a second copy, BOOK2, to B2 - but "reserving" the book's inherent "right to copy." The two books, BOOK1 and BOOK2, appear to third parties to be otherwise identical. Yet they are not: one is incomplete; the other somehow contains more mystical "rights-essence" within its covers. Suppose B1 and B2 leave these books on a park bench, where they are discovered by third party T. According to Rothbard, BOOK2 is "missing" the "right to copy," much like an electronic toy that is sold "batteries not included." It is as if there is an invisible, mystical tendril of "reproduction-ownership" stretching from BOOK2 back to its true owner A, wherever he may be. Thus, even if T finds and homesteads the abandoned BOOK2, this book simply does not contain "within itself" the right to permit the owner to copy it. It is being continually siphoned away by a rights wormhole which connects the item to owner A.

This makes no sense to me. No owner of the two books in this strange example would fail to mark book1 and book2 as to what rights and what restrictions are attendant to its sale. Every buyer, and even every random finder as in Kinsella's example, has reason to expect that any copyright-like restrictions are spelled out explicitly and plainly. If the original owner has neglected to make this clear, I'd expect any complaint he might make to be thrown out of court.

Kinsella again:

Consider the following analogy. Farmer Jed discovers oil under his land. No one for miles around knows about the black gold. Jed plans to buy his neighbors' property for a song; they'll sell it cheap, too, since they don't know about the oil. In the middle of the night, his nosy neighbor Cooter, suspicious over Jed's recent good spirits, sneaks onto Jed's land and discovers the truth. The next morning, at Floyd's barbershop, Cooter spills his guts to Clem and the boys. One of them promptly runs to a pay phone and gives a tip to a reporter at the Wall Street Journal (who happens to be his nephew). Soon, it is common knowledge that there is oil in the vicinity. The neighbors now demand exorbitant prices for their land, thus spoiling Jed's plans.
Let us grant that Cooter can be prosecuted for trespass and harms flowing therefrom. The question is, can Jed's neighbors be prevented from acting on their knowledge? That is, may they be forced to somehow pretend that they do not know about the oil, and sell their land to Jed for what they "would have" sold it when in ignorance?

They may not be so forced, says Kinsella, and I agree. But does it make sense to generalize this conclusion to a very different situation? Farmer Jed writes, or purchases a license to, a piece of software. Cooter sneaks into his house and steals his installation disk, runs off copies, and shares them with all the farmers in the area. Jed goes after Cooter, with Mr. Kinsella's blessing, it would seem, and secures a judgement against him (Cooter isn't worth much, though, so Jed has to make do with his net assets of $39.18), but the other farmers refuse to stop using the software. THEY didn't steal it, they claim, and therefore they have the right to do anything they want with it. One starts a mail-order business selling copies, and retires from farming on the income.

Are these scenarios equivalent? Should they be considered equal in the eyes of the law? In my view the answer is a resounding NO.

One may of course ask, "If these cases are different, how can the line between them be fairly drawn?" It is a question which defies an easy answer that can be made to apply to all situations past and present, but then, so is the question of whether a particular killing is justifiable self-defense or homicide, yet that doesn't stop libertarians (or anarchists) from asserting a clear moral and legal distinction between the two. Surely if we can take on the difficulty of adjudicating killings on a case-by-case basis, we can also take on IP without asserting that it must cover either everything or nothing. If, for example, I write a book whose entire contents are "Jethro's land has oil," I would not expect it to be subject to copyright. A program of 100,000 bytes, the accidental replicating of which would be astronomically unlikely (1/256 to the power 100,000), is in an entirely different universe. Somewhere in between lies a reasonable definition which can be agreed upon by reasonable men and women.

(original source)

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