Copyright and the Internet: Is Intellectual Property Good for Society?

1. Introduction

Never in history has intellectual property been so protected by laws in favoring content creators, publishers, and producers. There exist numerous trade organizations for the strict purpose of enforcing intellectual property claims through lawsuits against individuals, groups, or companies that infringe on their members works. However, is all of this for the better? Do these laws and groups and organizations benefit the economy and society? Quite the contrary, especially in the modern internet economy, intellectual property laws — specifically copyright laws — inhibit economic growth, individual rights and freedoms.

2. History of Intellectual Property Laws

Ray Patterson details the history of copyright laws in great detail in two separate articles. In both, he clearly covers the history and motivations behind copyright law. Likewise, in their book Against Intellectual Monopoly, Boldrin and Levine detail the motivations and history of patent law. Both sources also show the effects on industry and the economy these intellectual property laws had. Without getting into the effects quite yet, the history is rife with laws designed to protect government-favored business and stifle competition, and to allow business to censor on behalf of the government (Patterson 9-11).

3. Arguments in Favor of Intellectual Property Laws

Intellectual property proponents cite an array of common arguments in favor of the existing laws and even call for stronger intellectual property laws. These common arguments include the oft-repeated claim that copying is theft, or as is often articulated copying is akin to stealing a car or bicycle. Whether this claim is stated in a quick warning before a movie, or this claim is run in a commercial on television or at a theater, this is one of the most common arguments in favor of intellectual property laws. Another fairly common argument for intellectual property laws is that these laws protect the artist or creators of work bound by such laws. That these laws prevent others from selling something they copied from the creator and thus preventing the creator from selling the work to these same buyers. This is the foundation of the argument that copying is theft. The argument goes something like this: the copier sells the product, which “robs” the creator of potential market share, as well as from achieving their dream of selling their creation. (Carnes)

Further, intellectual property proponents argue that copying reduces the quality of the products and destroys the market altogether. Copying has “now caused a chain reaction that has robbed people of their dream of producing good work that can be enjoyed in the future” (Carnes). “Also, those who were training to go into the business designing and building [the copied product] will now see that there is no business model in place that will allow them to make a living doing what they love, and so they will be forced to go into a different business. So, what on the surface may have seemed harmless has now hurt absolutely everyone…because the quality product…can no longer be produced” (Carnes).

The remaining argument in favor of intellectual property laws is that such laws create incentive to create. This is the argument less frequently heard, but offers the strongest basis for intellectual property law. The strength of this argument is that this is the reason such laws were created to begin with, and despite the rhetoric are the chief justification for such laws even today. It is argued that intellectual property laws promote creation by providing creators with an incentive to create by having their intellectual works protected from copying and non-authorized distribution so that the creator can sell their work exclusively (and without competition) for a prescribed length of time deemed appropriate by law to keep creators incentivized.

4. Redefining the Intellectual Property Argument

Before an argument can be made one way or the other there needs to be an understanding of the basic elements of the intellectual property debate. Property and private property are central to the debate as intellectual property ideology stems from the idea that intellectual property is a from of private, ownable property. Secondary to private property in the intellectual property debate is what constitutes wealth creation and value. These two elements are related and linked more than one might imagine as the entire intellectual property debate is strictly an argument of economics framed in legal and social terms.

Stephan Kinsella, an intellectual property attorney, notes, in Against Intellectual Property that “the function of property rights is to prevent interpersonal conflict over scarce resources, by allocating exclusive ownership of resources to specified owners” (30). In Intellectual Freedom and Learning Versus Patent and Copyright, Kinsella further details the way one comes to own property is by finding or buying it (Kinsella). He explains that creation does not constitute a means of ownership and gives several examples such as:

“Creation just means transforming things [already owned]. Think about a man who has a big chunk of marble. He owns it because he found it. He didn’t create any new ownable thing. I [it could be said] he’s creative in finding it, but he’s not creative in the modern intellectual property sense. His neighbor sneaks over in the middle of the night and carves a statue out of it. Who owns the statue? Under current [IP] law, it’s indeterminate. Under [natural] law, the original guy owns it. This is a clear example that creation by the neighbor is not sufficient to give rights. It’s also not necessary since the first guy acquired ownership because he found it. So [one] can see that creation is neither necessary nor sufficient for property rights and things. Creation is not an independent source of ownership or property rights” (Kinsella, “Intellectual”).

Kinsella follows this segment up by describing the differences between natural rights and allocated rights. He references the right to eat or the right to an education as an allocated right as opposed to property rights being natural rights by pointing out that such allocated rights require others to use their property to provide for others allocated rights such as eating or education. He then uses this parallel with intellectual property rights to point out that they are allocated rights and though they may share tangibility with property rights, they are more aligned with other allocated rights in that they only serve to redistribute another’s property for the use of the right’s holder (Kinsella, “Intellectual”). Kinsella isn’t the only one that sees intellectual property laws as allocated rather than natural rights. Ray Patterson of the University of Georgia School of Law writes in his treatise on the history of copyright that “the authoritative pronouncements that copyright is a grant of a limited statutory monopoly are too many and too clear” (Patterson 5); and that even the courts regard copyright as a derivative (allocated) right, by way of statute, of natural property rights (Patterson 6).

A very current example can be given where the Sony Computer Company is claiming that their intellectual property rights for the Playstation system trumps the property rights of the individuals who have purchased such units. This dispute has Sony blocking access to features and the users data on the system hard drives in claiming that these are Sony’s intellectual property and that by using these systems in a way they disapprove of is not allowed. Whereas the consumers claim that in buying the system they own the system and that Sony is infringing on their property rights by limiting what they can and cannot do with their system (McSherry). Or even where, Dan Brown, in his book, Digital Fortress, touched briefly on the way government intervention in technology hinders societal growth and natural rights in reference to the way the EFF fights the NSA over communication monitoring and monopoly (130-131).

So this begs the question, why can’t songs and movies be owned if they’re tangible goods and aren’t using any property that belongs to another? The answer to this question is one of the keys to understanding the whole intellectual property debate and though it can be said in a number of ways, Kinsella, says it best when he says, “because ideas are not scarce resources in the sense that physical conflict over their use is possible, they are not the proper subject of property rights designed to avoid such conflicts” (“Against” 42)

The whole point of an economic market and entrepreneurial growth is to decrease scarcity and create wealth and value by allowing more people to have more things they need and desire. Intellectual property law by its very nature tries to create scarcity where there is none. Intellectual property law is at its very core perverts the economy and is hypocritical.

5. Responses to Arguments for Intellectual Property Laws

As a point by point rebuttal of the arguments for intellectual property laws, this chapter will follow the order of chapter three and address the claims that copying is theft, decreases production, and provides an incentive to create, respectively. First, in regards to the claim that copying is theft it is important that a distinction between copying and fraud be made. QuestionCopyright.org lays out the following point in distinguishing between copying and fraud:

“Fraud (i.e., counterfeiting) is different from copying. If [one] downloads a song and shares it, there is no fraud — there may be copyright infringement, but no false claims are being made. On the other hand, if [one] removes the original author’s name from the song and put [their] own name there instead, that would be completely different — that would be fraud, of course (it would be plagiarism, which is a specific kind of fraud).

Likewise, if [one] made copies of my birth certificate, IDs, etc, and [kept] them locked in a drawer in [their] house forever and no one else is ever confused by them, that’s actually okay. It’s not the copying that’s the issue there. But if [they] were to use that ID to open a bank account and cash checks meant for me, that’s different. It has nothing to do with copyright. The issue is simply that it’s lying.

Sometimes…people [will] say “Well, if copyright is so bad, how about I just start copying dollar bills! That would be okay too, right?” Which is silly, of course — there’s a reason that no country has their copyright office policing counterfeit currency, and it’s that counterfeiting is fraud, not copyright infringement. A physical token of money is a claim on the issuing authority’s assets; to duplicate the claim token is just like duplicating someone’s birth certificate or ID: it is only useful to enable fraud, because all these tokens are indicators of value held somewhere else, rather than containing the value themselves. Thus when [one] makes and circulate duplicates, [they] do not increase the total amount of value, and actually decrease the amount of value per token (thus effectively stealing from everyone else who already has tokens, which is why counterfeiting is a crime). Contrast this with culture, where duplicating it does actually increase the total value in circulation, because more people are exposed to it.

Copying is not theft. It’s also not fraud. Fraud, on the other hand, may be enabled by copying certain kinds of things, but it’s not the copying itself that’s the fraud, it’s the subsequent lying, which the copies are merely used to bolster (“Question Copyright”).

Distinguishing between copying and fraud is important, just as distinguishing creation and ownership was important early on. This distinguishing factor plays a huge role in defeating the argument that copying is theft as all of the arguments that state or imply that copying is theft rely on the assumptive or implied view that creation equals ownership or that copying equals fraud. Since neither of those assumptions or implications are true, it becomes quite clear that copying is not theft. In that regard, content creator Nina Paley, has released a simple minute-long music video with catchy lyrics that lay out the counter argument in simple terms. The Lyrics go as follows: “Copying is not theft. Stealing a thing leaves one less left. Copying it makes one thing more; that’s what copying’s for. Copying is not theft. If I copy yours you have it too. One for me and one for you. That’s what copies can do. If I steal your bicycle you have to take the bus, but if I just copy it there’s one for each of us! Making more of a thing, that is what we call “copying.” Sharing ideas with everyone. That’s why copying is FUN” (“Copying Is Not Theft”)!

Second, Carnes reiterated the common argument that copying destroys production by replacing quality products with cheap copies that lack the quality of the original, and that such an act kills the industry in question and drives new growth away as there is no longer a productive business model once the industry is rife with cheap copies. This, however, is a straw man argument that ignores economic laws and the facts of history. In simple terms, if the original product is of higher quality than the cheap copies, there will still be a market for such goods. The case of James Watt and his steam engine is a perfect example of this truth. Watt’s patent expired and many cheap copies from competitors flooded the market, and yet, Watt saw increased orders as the quality of his product and the brand recognition from having been first to market were enough to generate more sales than the cheaper copies. The benefit of the copies, however, is that as each made minor improvements to Watt’s engine, the technological advancements that occurred drove the industrial revolution. While Watt is typically given credit for this advancement, it was the cheap copies that actually drove the advancement (Boldrin and Levine 4,50). In fact, it is well known in economic circles that the free exchange of ideas and the copying (and improving) another’s work generates technological and economic growth.

Which brings us to the final argument in response to those for intellectual property laws, the incentive to create. It would seem from the above that there does exist an incentive to create with copyright, as creating and being given a limited exclusivity allows the creator a greater opportunity to profit from their idea or creation. However, the intellectual property model actually provides disincentive to create by encouraging lawsuits rather than continued innovation. Once again the Watt example is a perfect one (though there are countless others that can be used, such as: McDonald’s, the twenty-four hour convenience store, home delivery of precooked food, the suburban shopping mall, franchises, delivery businesses like UPS, and internet commerce (Boldrin and Levine 47), or historically created works like Shakespeare’s plays, or Bach and Handel’s music). After Watts’ patent expired innovation in the steam engine industry skyrocketed as engineers were employed on a contract basis to improve the engines. Investors gained from the improved engines and the engineers gained from their fees and advertising the value of their improvements. This steam-engine improvement system is similar to the modern day open-source software system, which also thrives and drives innovation and technological advancement (Boldrin and Levine 4, 50) – and in many ways can be credited with the creation and growth of the internet itself. “Intellectual monopoly is absolutely not necessary for great inventions to take place. It is damaging for society, as valuable productive capacity is literally destroyed and thrown away” (Boldrin and Levine 208).

6. Arguments Against Intellectual Property Laws

While the first and third responses in the chapter above could both be used as arguments against intellectual property laws on their own this chapter will take those arguments and add new perspective on those responses to create entirely new arguments in favor of eliminating intellectual property laws altogether.

Intellectual property laws only serve to protect government-favored business from competition. The granting of a government sponsored monopoly by means of a patent or copyright does not promote growth or advancement, but stifles competition and drives the profits straight into the pockets of the monopoly-holder. In fact, eliminating intellectual property laws would not even have much of an effect on the profits of the monopoly holder, but would serve to keep the competition strong and the quick advancements moving; increasing economic and technological growth. It is estimated that a full eighty percent of a companies profits from a new product are earned within the first three months (Boldrin and Levine 140). This figure is a powerful testament to the strength of the first-to-market principle. The copiers have to play catch-up and their profits are derived from either developing a cheaper way to produce the product or from improvements to the product, both of which create economic growth in society.

Along with economic and technological growth, there is also a greater incentive to create without intellectual property laws than with them. Shakespeare is a perfect example, as is Walt Disney. Both built their reputations on creatively telling already known tales that in a world of intellectual property would have not been available for them to tell. And it was their ability to improve these tales that built their reputation and earned them more opportunity to create. Both were paid on a per work basis (though Disney later was able to get monopoly privilege for his works and subsequent royalties) and were encouraged to create more works. Likewise for modern musicians and other innovators. If they were paid on a contract basis for the task of creating new songs or new ideas or products then there is incentive to create as many new songs and ideas as possible, with their fees being reciprocal to their skills in creating popular first-to-market products – even if they are highly copyable products. They are paid for the act of creation, commissioned, as it was once called, not for the continued sales of such products that are not economic goods as they have no scarcity (it is possible for everyone to own them at no cost). This incentive to create far outweighs the current paradigm that has content creators sitting on current goods and generating more wealth from suing competitors than from investing time and resources into creating new works. As Nina Paley put it in her Mimi and Eunice comic, copyright is an incentive to create: lawsuits (“Incentive to Create II”).

7. Conclusion

As has been detailed throughout this paper, intellectual property laws, especially in the internet age where resources are becoming less scarce, inhibit economic growth, individual rights, and freedoms. Or as QuestionCopyright.org put it, “In a world where distribution costs are quickly dropping to zero, and ambient findability is making successful plagiarism a thing of the past, it is important that we skeptically examine any policy that interferes with the free flow of information” (“Question Copyright”).

Bibliography

• Boldrin, Michele, and David K. Levine. Against Intellectual Monopoly. Cambridge University Press, 2008.
• Brown, Dan. Digital Fortress. St. Martins Press, 1998.
• Carnes, Bevin. When Copying is Theft. Huffington Post, 29 Sep. 2010. Web 1 May 2011
• Copying Is Not Theft. Dir. Nina Paley. Question Copyright, 2009. Film
• Kinsella, Stephan N. Against Intellectual Property. Ludwig von Mises Institute, 2008.
• Kinsella, Stephan N. Intellectual Freedom and Learning Versus Patent and Copyright. Libertarian Alliance, 2011.
• McSherry, Corynne and Marcia Hoffman. Sony v Hotz: Sends a Dangerous Message to Researchers - and its Customers. Electronic Frontier Foundation. 19 Jan. 2011. Web. 1 May 2011.
• Paley, Nina. Mimi and Eustace: Incentive to Create II. Mimi and Eunice, 23 February. 2011. Web. 1 May 2011.
• Patterson, L. Ray. “Copyright and the Exclusive Right of Authors.” Scholarly Works, 1993.
• Question Copyright. A Clearinghouse for New Ideas About Copyright. 2006. Web. 11 Apr. 2011.
• Tucker, Jeffrey. IP Vices and Crimes. Ludwig von Mises Institute, 18 March 2009. Web. 11 Feb. 2011.