Lord Kames Explains Why Copyright Is Not Property... In 1773

from the a-look-back dept

Mockingbird writes "I've posted the full text of Lord Kames's opinion in the important Scottish Sessions case of Hinton v. Donaldson from 1773. This was the case that rejected for Scotland, by a vote of 11-to-1, the theory of "common law copyright", that authors (meaning, in practice, publishers) had a perpetual copyright, at common law, of their writings. It was followed a few months later by the English House of Lords's decision in Donaldson v. Beckett, in which the English Lords rejected just as forcefully the claim that authors had perpetual copyright under the common law of England.

Of the twelve Sessions Lords who decided the case, ten issued opinions. Lord Kames's is one of the longer ones, and one of the most famous. Kames builds his case on principles of common law, property law, and commercial law, and finds the claim of "common law copyright" to be inconsistent with the principles of all these areas of law:

this claim, far from being founded on property, is inconsistent with it. The privilege an author has by statute, is known to all the world. But I purchase a book not entered in Stationer's hall; does it not become my property? I see a curious machine, the fire engine, for example. I carry it away in my memory, and construct another by it. Is not that machine, the work of my own hand, my property? I buy a curious picture, is there any thing to bar me from giving copies without end? It is a rule in all laws, that the commerce of moveables ought to be free; and yet, according to the pursuer's doctrine, the property of moveables may be subjected to endless limitations and restrictions that hitherto have not been thought of, and would render the commerce of moveables extremely hazardous. At any rate, the author of avery wise or witty saying, uttered even in conversation, has a monopoly of it; and no man is at liberty to repeat it.

Lastly, I shall consider a perpetual monopoly in a commercial view. The act of Queen Anne is contrived with great judgement, not only for the benefit of authors, but for the benefit of learning in general. It excites men of genius to exert their talents for composition; and it multiplies books both of instruction and amusement. And when, upon expiration of the monopoly, the commerce of these books is laid open to all, their cheapness, from a concurrence of many editors, is singularly beneficial to the public. Attend, on the other hand, to the consequences of a perpetual monopoly. Like all other monopolies, it will unavoidably raise the price of good books beyond the reach of ordinary readers. They will be sold like so many valuable pictures..... [the] booksellers, by grasping too much, would lose their trade altogether; and men of genius would be quite discouraged from writing, as no price can be afforded for an unfashionable commodity. In a word, I have no difficulty to maintain that a perpetual monopoly of books would prove more destructive to learning, and even to authors, than a second irruption of Goths and Vandals. "

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Bad Ideas: Trying To Make Content More Like Physical Property

from the bangs-head-on-desk dept

Let's play a little hypothetical. Let's say that someone had discovered a way to automatically -- without any additional cost -- create all the food that the world's population needed, and automatically have it appear wherever and whenever needed. Think of it like the "replicator" device in Star Trek, where you can just walk up to it, and it'll create whatever food you want. The entire issue of hunger and worries about the "scarce resource" of food would go away. Who, in their right mind, would want to break such a machine, and force this newly abundant resource back to being scarce?

Yet, that seems to be exactly what's happening in the music world. A whole bunch of folks have sent in this positively ridiculous attempt by some guy named Paul Sweazey to get the IEEE to endorse a new standard to make content act more like physical property by allowing it to be "stolen." It's basically a weird DRM system that would allow the content to be fully "taken away" from the original holder. I've read the article a few times, and I have to be honest, that I don't quite get it. Those who get the content would still be able to share the actual content with whoever they wanted, however many times they wanted it -- but there's a separate "playkey" and someone can "take" that away, such that those who had it before can't use it after. But why would anyone "take" the playkey, other than to be a jackass?

But the bigger issue is why bother in the first place? Why purposely try to limit an abundant resource by making it scarce? Sweazey claims:

His answer is that such freely-copiable goods breaks the basic business model of human commerce by making goods nonrivalrous; it no longer has aspects of a private good, and this makes it difficult to sell.

But, this is wrong. It shows an out-of-date understanding of economics. While it may mean that you can't directly create a (paid) market in that private good, it opens up and enables many more markets. Going back to the food analogy: if you had many more people in the world who weren't hungry, and didn't have to spend all their money on food or food production, would that be good or bad for the economy? It seems rather obvious that it would be good, as money could be spent on higher level things that expand the economy.

Taking an abundant resource and actively working to make it act like a scarce resource makes no sense. It limits progress and the wider economy, and it's the last thing that a group like the IEEE should be supporting.

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Why Virtual Property Doesn't Make Sense

from the bingo dept

I've long had trouble with the idea that "property rights" make sense in virtual worlds. After all, the entire purpose of property rights is to efficiently allocate resources in the presence of scarcity. If there's no scarcity, there's no question of efficient allocation (everyone can get as many copies as they want). However, for whatever reason, there's been a big push to create "property rights" within virtual worlds. Slashdot points us to an excellent paper that goes through the arguments for assigning property rights in virtual worlds, and even models out some scenarios based on them. In the end, it finds no compelling reason for assigning property rights in virtual worlds. Here's just a snippet, from a look at whether or not property rights make markets more efficient in a virtual world:

Extending property rights to virtual resources does not make more efficient markets for those resources. The qualified approach to virtual resource property rights provides no reductions in the search costs of a buyer since the legal rights and attributes of those resources mirror those granted by the virtual world's code-based regulations. Worse, a carte-blanche approach will increase search costs by requiring a buyer to determine where the code-based rights and attributes of a resource deviate from its legal rights and attributes.

Therefore, the efficient market justifications for virtual resource property rights can not be satisfied under either the carte-blanche or qualified approach to virtual resource property rights. The only way this justification may be satisfied is if legislatures and courts reach into the virtual worlds and mandate what specific rights and attributes virtual resources can take.

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How Copyright Can Be Viewed As Anti-Property

from the removing-rights dept

One of the regular discussions we get into around here is over the question of whether or not things like copyright and patents are really property. The IP lawyers who insist that it's just like property focus on a rather simplistic (and wholly inaccurate) explanation of why it is property: which is that if it's a bundle of rights that can be transferred, then it is property. But that's misleading. Because it mixes up a couple of key elements that make this definition quite inconvenient. The key among them is that those who hold IP rights rarely sell them (yes, it does happen, but it's a rare transaction when it does). Instead, they mostly license the rights. And that's rare with real property. Again, it does happen sometimes, but not very frequently -- and, when it does, it's always represented quite clearly as a rental or a lease rather than a purchase. It's not even thought of in the same framework. So, you have a major difference right there.

And, in fact, there's a reasonable argument that when most of the transactions are licenses but are represented as purchases, it's actually very much against the basic principles of property, rather than for them. Martin points us to a fascinating and thoughtful writeup, by Nicklas Lundblad, originally written in Swedish, but the Google translation is quite readable, that discusses how the recent actions by Amazon to delete purchased George Orwell ebooks on the Kindle demonstrates just how anti-property "licensing" is (my own edit of part of the translation):

What is interesting with the time, however, is that it illustrates an example of a conflict that has not been seen very often - between the copyright and ownership of individual copies of a work which we have purchased legally. As noted in the article above, we would probably flinch [if someone] knocked on the door, courteously explained that the publisher who sold us the last part of Harry Potter no longer wants to provide a paper edition, and that therefore they had brought with him a little gasoline to burn up our copy . Most of us would probably shut the door again, put on a little coffee and [laugh]... [if anyone] would try their hand at this. But in the transition to the digital economy it will make it harder for us to protect our own space and our property, as more and more terminals are now sold [with what is] charmingly called a "kill switch". The iPhone will have, like the Kindle and other terminals: an opportunity to, at a distance, without our consent in the case (but we have certainly agreed to it in any agreement anywhere) change the content of the technologies we use.

And that very fact is incredibly anti-property. The idea that something we believe we have legitimately purchased can suddenly be snatched away from us, at a distance, with no recourse is not property. It's the opposite of property. In the comments to our original post, someone pointed out that for all the copyright maximalists who like to refer to infringement as "theft," Amazon's deletion of 1984 was a lot closer to "theft" in that people who had purchased something suddenly found that it was gone. Poof. That is extremely anti-property, and anti-free market -- and that's a problem:

The original article goes on to note that while a contractual agreement is the cornerstone of the free market, a license agreement built on copyright is quite different. It's built with a very strong imbalance, backed up by government protectionism, that changes the free market structure. Lundblad notes:

The license is like a parody of a contract because the contract coordinating effect been eliminated from the outset by a law which gives one party all the bargaining power.

While I have no doubt that this will upset and anger the folks who believe that copyright is absolutely 100% property, it's a rather compelling explanation of how copyright isn't just not like property, but in many ways is anti-property in that it violates some of the basic tenets of true property and true property rights.

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Why Treating Patents As Property Is A Bad Idea

from the yet-again dept

We've pointed out in the past why it doesn't make much sense to treat "intellectual property" as "regular property," since it ignores some very important differences between the two. James Bessen and Michael Meurer, who wrote the recent book Patent Failure have always taken a slightly different approach. While they agree with us that the patent system tends to do more harm than good (and they've got a ton of research to back that up), they claim that the problem is that patents don't act enough like property. They say the problem is that the "fuzzy boundaries" around patents mean that there aren't clear rules or "fences" as with real property. So, their prescription is to look for ways to treat patents more like real property.

Eric Goldman points us to a recent paper by well known law professor and patent system expert Mark Lemley on why it's a good thing that patents aren't treated more like property. Lemley is mostly a patent system supporter, but (unlike some around here) he appears to recognize that the system could be improved, and seems open to evidence concerning where the patent system does more harm than good.

This paper makes some important distinctions between patents and real property, and notes that it's probably for the best that in the real world patents actually are not treated like property, because it would slow down innovation if, before anyone invented anything, they had to secure a ton of agreements with patent holders:

It is currently very much in vogue to talk about patent rights as a form of property, and in particular to draw analogies to real property. So let's engage in a thought experiment: what if we took the analogy seriously and actually behaved with patents as we do with real property? Product manufacturers would have to stop ignoring patents. No venture capitalist or bank (or shareholder, should Intel fund the project internally) would give Intel the money to build a new manufacturing plant (or "fab") unless it could demonstrate that it had conducted an exhaustive search for patents it might infringe in manufacturing its chips and had obtained irrevocable or at least long-term licenses to use any patent that anyone might conceivably later assert against the chips or the manufacturing plant. Intel, in turn, would look to a group of "patent insurance" firms that would spring up and that would conduct the search and determine what patents needed to be licensed. Unless and until all of this had happened, Intel could not start construction of its fab, much less make or sell chips produced by that fab. If there were significant disagreement over whether a party legitimately owned patent rights, perhaps Intel could bring a declaratory judgment action to try to clarify those rights, but it would hold construction in abeyance until it got an answer. And since there is no experimental use defense to patent infringement, scientists at both universities and corporations would have to conduct a similar search and wait to get permission from all possible interested parties before they began their research, lest they infringe a patent in the lab.

Would this world be desirable? I'm skeptical. Let's begin with the benefits of such a world. Patent owners would get paid early and often. Patent litigation would decrease, or maybe even disappear entirely, because anyone who wanted to make a product would find the patent owner and enter into a deal up front, or else not make the product. And patent owners who compete in the marketplace, and rely on the patent to preserve exclusivity, would not face competition during the often-protracted period during which the patent is being litigated.

At the same time, these benefits would come at significant cost. First, both research and the manufacture of products would be regularly delayed for years and perhaps decades as potential defendants identified and cleared rights....

Second, a real-property patent system would replace competition with central coordination in a significant number of cases. So far we have assumed that the patent owners will be willing to license their patents. But that is likely not to be true in many cases. Patent owners who compete in the marketplace want exclusivity, and there is no license price an equally efficient competitor will be willing to pay that will compensate for the loss of monopoly rights. Even patent owners who do not compete in the marketplace may find it more lucrative to grant an exclusive rather than a nonexclusive license to someone who does make a product, for the same reasons. Nor will a competing company be particularly sympathetic to efforts by outsiders to engage in research on the invention if the effect of that research will be to design around or improve that core invention. The effect of a real-property or title-search system is to replace competition in the shadow of a patent while it is being litigated with single-firm markets whenever the patentee participates in the market, either directly or by proxy. Researchers who could not obtain a license would direct their scientific efforts into different fields, and potential competitors would do the same, meaning that the owner of a core patent could control who, if anyone, worked on a particular technology. If you believe, as I do, that the evidence suggests that competition is often a better spur to innovation than monopoly, removing that contingent competition is a potentially significant cost.

Third, and perhaps most important, a significant percentage -- maybe as many as three-fourths -- of these patents turn out to be either invalid or not infringed. It is this probabilistic nature that most critically distinguishes patents from real property. Under the current system in patent-ignoring industries, consumers benefit from competition during the time before those patents are invalidated or held not to be infringed. Under a real-property patent system, the owners of invalid patents can capture supracompetitive profits during the time before their patents are invalidated, profits made at the expense of consumers and that they will never have to disgorge. That extra profit, in turn, would create significant incentives to obtain and enforce dubious patents....

Finally, people usually build a house on a single plot of land, while as I have noted, there may be hundreds or thousands of rights that must be aggregated to build a multi-component product. As Carl Shapiro and I have argued elsewhere, this fact exacerbates the patent holdup problem and leads to systematic overpayments by manufacturing companies, because individual patent owners won’t discount the royalty they charge to account for the complementary rights owned by others.

He goes into a lot more detail beyond that, and basically suggests that the current system of companies simply ignoring patents until later is probably better than going to one where patents are fully treated like property.

However, he then suggests a bunch of changes to the patent system that could (he believes) create a more reasonable middle ground: (1) more resources to the patent office to get through more patents faster (2) preventing patent applicants from delaying the process through things like continuations (3) requiring rapid publication of all patent apps (4) allowing peer-review and post-grant opposition to better establish what a patent really covers (5) allow independent invention as a defense against infringement (6) change the rules on "willful infringement" (which currently encourage people not to look at any patents by tripling damages if they find out you even looked at a patent you're later found infringing on) (7) change patent remedy rules to end situations where patent holders can hold up the production of useful innovations (8) require companies to do patent searches to make sure they are not infringing (this, combined with #6 almost flips current willful infringement rules on their head) and (9) require the publication of any patent license terms.

It's quite a list... At this point, this post is long enough not to get into whether or not this is a good or bad proposal (suffice it to say, I think some of it makes sense, while other parts are troubling -- and I'd bet that patent system supporters will say the ones I think are good are bad, and the ones I think are bad are good), but wanted to post it up here for discussion.

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Another Look At The 'Does File Sharing Equal Stealing?' Question

from the more-than-just-a-semantic-argument dept

Jon Healy, whose writing for the LA Times I admire quite a bit, has written up a very balanced discussion concerning whether or not file sharing equals theft. He links to some of my writings on the subject, as well as pointing to the views of two Nobel Prize winning economists, F.A. Hayek and Milton Friedman, who both point out that copyright is not property, and treating it as such causes problems. He then presents the entertainment industry's view, which (of course) is that copyright is no different than traditional property. Then he brings in legal scholar Mark Lemley (of whose work I'm also a fan) who tries to bridge the gap by noting that copyright isn't property, but that infringing it "is wrong, and should be punished." However, Lemley also points out that most people recognize copyright isn't traditional property, and the entertainment industry's insistence that they're the same works against the industry, as most people recognize immediately that this argument is false, taking away credibility.

Healy comes out on the balanced side himself, suggesting that infringement is close enough to theft. He does so by comparing it to "theft of service" for cable companies, and noting that "you're still acquiring something of value without paying for it, and you're doing it without the seller's permission." This is a commonly used argument, and seems reasonable at a first pass, but I'd like to address why it's incorrect. Just because you acquire something of value for free (and without the original seller's permission) it doesn't automatically make it "theft." Let's run through some examples:

• I go to the pizza shop and they offer me a free soda with two slices. The soda has value, but I just got it for free, and did so without Coca-Cola granting permission. I don't think anyone would claim this is stealing or even wrong or immoral.
• My friend lets me borrow a book, which I read. The book has value. I got it for free, without the permission of the book author or publisher.
• I get on a train and pick up the newspaper that a passenger left behind. The newspaper has value. I got it for free, without the newspaper company granting permission. I don't think anyone would claim that's stealing.
• I go to the beach. The people sitting next to me are playing music on their stereo, that I can hear. The music has value, but I just got it for free, without the permission of the record label.
• I go see "Shakespeare in the Park." I get to see something of great value for free, without permission of William Shakespeare.
• Verizon sees that Sprint is going to announce an "all you can eat plan" and decides to introduce its own similar plan. Verizon got that idea for a bundle from Sprint for "free" and certainly without Sprint's permission. Yet, we call that competition, not stealing.

You can come up with your own examples. Now I'm sure people will start picking apart each of these examples. They'll say things like in the pizza/soda example, the pizza shop has implicit permission to resell the soda at any price they deem reasonable, since they paid for it in the first place. But, if that's the case, then we have another problem for those who claim that copyright is real property -- because the same thing isn't true with copyrighted material. Those who insist that copyright is the same as real property break their own rule by also insisting that they retain perpetual rights to the good, even after it's been sold. If copyright were like real property, after the creator sold it, the buyer could do whatever they want with it, including giving it out for free. Yet, it clearly is not like that. Coca-Cola sold soda to the pizza shop and the pizza shop can do whatever they want with it, including giving it out for free. So, if the entertainment industry wants to keep insisting that copyright is just like real property, and therefore infringement is theft, then they should also agree to let anyone who has bought their works do whatever they want with them, including give them away for free.

In fact, each "but, this is different because" explanation for the examples above can easily be turned around to prove the point that copyright is different than real property -- because it applies the same rules differently and deals with fundamentally different types of goods or services. What it really comes down to, yet again, is that this is a business model problem. For years, an industry that relied on artificial scarcity is discovering that it's hard to keep that artificial barrier in place. It can't pretend something is scarce when it's really infinite -- and trying to limit it will only backfire in the long run. What you need to do, instead, is figure out new business models that embrace the infinite nature of the goods, and focus on selling additional scarce goods, preferably additional scarce goods that are made even more valuable by freeing up the infinite good.

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