02 April 2012 Written by  Balew Mersha G/Hiwot Hadush

Justifying Intellectual Property

Property institutions fundamentally shape a society. These legal relationships between individuals, different sorts of objects, and the state are not easy to justify. This is especially true of intellectual property. It is diffi­cult enough to determine the appropriate kinds of ownership of corporeal objects (consider water or mineral rights); it is even more difficult to determine what types of ownership we should allow for non corporeal, intellectual objects, such as writings, inventions, and secret business in­formation. The complexity of copyright, patent, and trade secret law re­flects this problem.

According to one writer "patents are the heart and core of property rights, and once they are destroyed, the destruction of all other property rights 'will follow automatically, as a brief postscript."Though extreme, this remark rightly stresses the importance of patents to private compet­itive enterprise. Intellectual property is an increasingly significant and widespread form of ownership of intellectual property. Many have noted the arrival of the "post-industrial society" in which the manufacture and manipulation of phys­ical goods is giving way to the production and use of information. The result is an ever-increasing strain on our laws and customs protecting intellectual property. Now, more than ever, there is a need to carefully scrutinize these institutions.

As a result of both vastly improved information-handling technologies and the larger role information is playing in our society, owners of intel­lectual property are more frequently faced with what they call ”piracy" or information theft (that is, unauthorized access to their intellectual property). Most readers of this article have undoubtedly done something considered piracy by owners of intellectual property. Making a cassette tape of a friend's record, videotaping television broadcasts for a movie library, copying computer programs or using them on more than one ma­chine, photocopying more than one chapter of a book, or two or more articles by the same author—all are examples of alleged infringing activ­ities. Copyright, patent, and trade secret violation suits abound in indus­try, and in academia, the use of another person's ideas often goes unacknowledged. These phenomena indicate widespread public disa­greement over the nature and legitimacy of our intellectual property in­stitutions. This article examines the justifiability of those institutions.

Copyrights, Patents, and Trade Secrets

It is commonly said that one cannot patent or copyright ideas. One copy­rights "original works of authorship," including writings, music, draw­ings, dances, computer programs, and movies; one may not copyright ideas, concepts, principles, facts, or knowledge. Expressions of ideas are copyrightable; ideas themselves are not. While useful, this notion of separating the content of an idea from its style of presentation is not un-problematic. Difficulty in distinguishing the two is most apparent in the more artistic forms of authorship (such as fiction or poetry), where style and content interpenetrate. In these mediums, more so than in others, howsomething is said is very much part of what is said (and vice versa).

A related distinction holds for patents. Laws of nature, mathematical formulas, and methods of doing business, for example, cannot be patented. What one patents are inventions—that is, processes, machines, manufactures, or compositions of matter. These must be novel (not pre­viously patented); they must constitute non obvious improvements over past inventions; and they must be useful (inventions that do not work cannot be patented). Specifying what sorts of “technological recipes for production" constitute patentable subject matter involves distinguish­ing specific applications and utilizations from the underlying unpatentable general principles. One cannot patent the scientific principle that water boils at 212 degrees, but one can patent a machine (for example, a steam engine) which uses this principle in a specific way and for a specific purpose.

Trade secrets include a variety of confidential and valuable business information, such as sales, marketing, pricing, and advertising data, lists of customers and suppliers, and such things as plant layout and manu­facturing techniques. Trade secrets must not be generally known in the industry, their nondisclosure must give some advantage over competi­tors, and attempts to prevent leakage of the information must be made (such as pledges of secrecy in employment contracts or other company security policies). The formula for Coca-Cola and bids on government contracts are examples of trade secrets.

Trade secret subject matter includes that of copyrights and patents: anything which can be copyrighted or patented can be held as a trade secret, though the converse is not true. Typically a business must choose between patenting an invention and holding it as a trade secret. Some advantages of trade secrets are (i) they do not require disclosure (in fact they require secrecy), whereas a condition for granting patents (and copyrights) is public disclosure of the invention (or writing); (2) they are protected for as long as they are kept secret, while most patents lapse after seventeen years; and (3) they involve less cost than acquiring and defending a patent. Advantages of patents include protection against re­verse engineering (competitors figuring out the invention by examining the product which embodies it) and against independent invention. Patents give their owners the exclusive right to make, use, and sell the in­vention no matter how anyone else comes up with it, while trade secrets prevent only improper acquisition (breaches of security).

Copyrights give their owners the right to reproduce, to prepare deriv­ative works from, to distribute copies of, and to publicly perform or dis­play the "original work of authorship." Their duration is the author's life plus fifty years. These rights are not universally applicable, however. The most notable exception is the "fair use" clause of the copyright statute, which gives researchers, educators, and libraries special privileges to use copyrighted material.

Intellectual Objects as Nonexclusive

Let us call the subject matter of copyrights, patents, and trade secrets 'intellectual objects'. These objects are nonexclusive: they can be at many places at once and are not consumed by their use. The marginal cost of providing an intellectual object to an additional user is zero, and though there are communications costs, modern technologies can easily make an intellectual object unlimitedly available at a very low cost.

The possession or use of an intellectual object by one person does not preclude others from possessing or using it as well. If someone borrows your lawn mower, you cannot use it, nor can anyone else. But if someone borrows your recipe for guacamole, that in no way precludes you, or any­one else, from using it. This feature is shared by all sorts of intellectual objects, including novels, computer programs, songs, machine designs, dances, recipes for Coca-Cola, lists of customers and suppliers, manage­ment techniques, and formulas for genetically engineered bacteria which digest crude oil. Of course, sharing intellectual objects does pre­vent the original possessor from selling the intellectual object to others, and so this sort of use is prevented. But sharing in no way hinders per­sonal use.

This characteristic of intellectual objects grounds a strong prima facie case against the wisdom of private and exclusive intellectual property rights. Why should one person have the exclusive right to possess and use something which all people could possess and use concurrently? The burden of justification is very much on those who would restrict the maximal use of intellectual objects. A person's right to exclude others from possessing and using a physical object can be justified when such exclusion is necessary for this person's own possession and unhindered use. No such justification is available for exclusive possession and use of intellectual property.

One reason for the widespread piracy of intellectual property is that many people think it is unjustified to exclude others from intellectual objects.' Also, the unauthorized taking of an intellectual object does not feel like theft. Stealing a physical object involves depriving someone of the object taken, whereas taking an intellectual object deprives the owner of neither possession nor personal use of that object—though the owner is deprived of potential profit. This nonexclusive feature of intel­lectual objects should be kept firmly in mind when assessing the justi­fiability of intellectual property.

Owning Ideas and Restrictions on the Free Flow of Information

The fundamental value our society places on freedom of thought and expression creates another difficulty for the justification of intellectual property. Private property enhances one person's freedom at the expense of everyone else's. Private intellectual property restricts methods of ac­quiring ideas (as do trade secrets), it restricts the use of ideas (as do patents), and it restricts the expression of ideas (as do copyrights)—re­strictions undesirable for a number of reasons. John Stuart Mill argued that free thought and speech are important for the acquisition of true beliefs and for individual growth and development. Restrictions on the free flow and use of ideas not only stifle individual growth, but impede the advancement of technological innovation and human knowledge generally. Insofar as copyrights, patents, and trade secrets have these negative effects, they are hard to justify.

Since a condition for granting patents and copyrights is public disclo­sure of the writing or invention, these forms of intellectual ownership do not involve the exclusive right to possess the knowledge or ideas they protect. Our society gives its inventors and writers a legal right to ex­clude others from certain uses of their intellectual works in return for public disclosure of these works. Disclosure is necessary if people are to learn from and build on the ideas of others. When they bring about dis­closure of ideas which would have otherwise remained secret, patents and copyrights enhance rather than restrict the free flow of ideas (though they still restrict the idea's widespread use and dissemination). Trade secrets do not have this virtue. Regrettably, the common law tra­dition which offers protection for trade secrets encourages secrecy. This makes trade secrets undesirable in a way in which copyrights or patents are not.

Labor, Natural Intellectual Property Rights, and Market Value

Perhaps the most powerful intuition supporting property rights is that people are entitled to the fruits of their labor. What a person produces with her own intelligence, effort, and perseverance ought to belong to her and to no one else. "Why is it mine? Well, it's mine because I made it, that's why. It wouldn't have existed but for me."

John Lock’s version of this labor justification for property derives property rights in the product of labor from prior property rights in one's body.16 A person owns her body and hence she owns what" it does, namely, its labor. A person’s labor and its product are inseparable, and so ownership of one can be secured only by owning the other. Hence, if a person is to own her body and thus its labor, she must also own what she ' joins her labor with—namely, the product of her labor.

This formulation is not without problems. For example, Robert Nozick wonders why a person should gain what she mixes her labor with instead of losing her labor. (He imagines pouring a can of tomato juice into the ocean and asks whether he thereby ought to gain the ocean or lose his tomato juice.) More importantly, assuming that labor's fruits are valu­able, and that laboring gives the laborer a property right in this value, this would entitle the laborer only to the value she added, and not to the total value of the resulting product. Though exceedingly difficult to mea­sure, these two components of value (that attributable to the object la­bored on and that attributable to the labor) need to be distinguished.

Locke thinks that until labored on, objects have little human value, at one point suggesting that labor creates 99 percent of their value. This is not plausible when labor is mixed with land and other natural re­sources. One does not create 99 percent of the value of an apple by pick­ing it off a tree, though some human effort is necessary for an object to have value for us.

What portion of the value of writings, inventions, and business infor­mation is attributable to the intellectual laborer? Clearly authorship, dis­covery, or development is necessary if intellectual products are to have value for us: we could not use or appreciate them without this labor. But it does not follow from this that all of their value is attributable to that labor. Consider, for example, the wheel, the entire human value of which is not appropriately attributable to its original inventor's.

The value added by the laborer and any value the object has on its own are by no means the only components of the value of an intellectual ob­ject. Invention, writing, and thought in general do not operate in a vac­uum; intellectual activity is not creation ex nihilo.Given this vital depen­dence of a person's thoughts on the ideas of those who came before her, intellectual products are fundamentally social products. Thus even if one assumes that the value of these products is entirely the result of human labor, this value is not entirely attributable to any particular laborer (or small group of laborers).

Separating out the individual contribution of the inventor, writer, or manager from this historical/social component is no easy task. Simply identifying the value a laborer's labor adds to the world with the market value of the resulting product ignores the vast contributions of others. A person who relies on human intellectual history and makes a small mod­ification to produce something of great value should no more receive what the market will bear than should the last person needed to lift a car receive full credit for lifting it. If laboring gives the laborer the right to receive the market value of the resulting product, this market value should be shared by all those whose ideas contributed to the origin of the product. The fact that most of these contributors are no longer present to receive their fair share is not a reason to give the entire market value to the last contributor.

Thus an appeal to the market value of a laborer's product cannot help us here. Markets work only after property rights have been established and enforced, and our question is what sorts of property rights an inven­tor, writer, or manager should have, given that the result of her labor is a joint product of human intellectual history.

Even if one could separate out the laborer's own contribution and de­termine its market value, it is still not clear that the laborer's right to the fruits of her labor naturally entitles her to receive this. Market value is a socially created phenomenon, depending on the activity (or non activity) of other producers, the monetary demand of purchasers, and the kinds of property rights, contracts, and markets the state has established and enforced. The market value of the same fruits of labor will differ greatly with variations in these social factors.

Consider the market value of a new drug formula. This depends on the length and the extent of the patent monopoly the state grantsand enforces, on the level of affluence of those who need the drug, and on the availability and price of substitutes. The laborer did not produce these. The intuitive appeal behind the labor argument—"I made it, hence it's mine"—loses its force when it is used to try to justify owning something others are responsible for (namely, the market value). The claim that a laborer, in virtue of her labor, has a "natural right" to this socially created phenomenon is problematic at best.

Thus, there are two different reasons why the market value of the product of labor is not what a laborer's labor naturally entitles her to. First, market value is not something that is produced by those who pro­duce a product, and the labor argument entitles laborers only to the prod­ucts of their labor. Second, even if we ignore this point and equate the fruits of labor with the market value of those fruits, intellectual products result from the labor of many people besides the latest contributor, and they have claims on the market value as well.

So even if the labor theory shows that the laborer has a natural right to the fruits of labor, this does not establish a natural right to receive the full market value of the resulting produce. The notion that a laborer is naturally entitled as a matter of right to receive the market value of her product is a myth. To what extent individual laborers should be allowed to receive the market value of their products is a question of social policy; it is not solved by simply insisting on a moral right to the fruits of one's labor.

Having a moral right to the fruits of one's labor might also mean hav­ing a right to possess and personally use what one develops. This version of the labor theory has some force. On this interpretation, creating some­thing through labor gives the laborer a prima facie right to possess and personally use it for her own benefit. The value of protecting individual freedom guarantees this right as long as the creative labor, and the pos­session and use of its product, does not harm others.

But the freedom to exchange a product in a market and receive its full market value is again something quite different. To show that people have a right to this, one must argue about how best to balance the con­flicts in freedoms which arise when people interact. One must determine what sorts of property rights and markets are morally legitimate. One must also decide when society should enforce the results of market in­teraction and when it should alter those results (for example, with tax policy). There is a gap—requiring extensive argumentative filler—be­tween the claim that one has a natural right to possess and personally use the fruits of one's labor and the claim that one ought to receive for one's product whatever the market will bear.

Such a gap exists as well between the natural right to possess and personally use one's intellectual creations and the rights protected by copyrights, patents, and trade secrets. The natural right of an author to personally use her writings is distinct from the right, protected by copy­right, to make her work public, sell it in a market, and then prevent others from making copies. An inventor's natural right to use the inven­tion for her own benefit is not the same as the right, protected by patent, to sell this invention in a market and exclude others (including indepen­dent inventors) from using it. An entrepreneur's natural right to use val­uable business information or techniques that she develops is not the same as the right, protected by trade secret, to prevent her employees from using these techniques in another job.

In short, a laborer has a prima facie natural right to possess and per­sonally use the fruits of her labor. But a right to profit by selling a product in the market is something quite different. This liberty is largely a so­cially created phenomenon. The "right" to receive what the market will bear is a socially created privilege, and not a natural right at all. The natural right to possess and personally use what one has produced is relevant to the justifiability of such a privilege, but by itself it is hardly sufficient to justify that privilege.

Deserving Property Rights Because Of Labor

The above argument that people are naturally entitled to the fruits of their labor is distinct from the argument that a person has a claim to labor's fruits based on desert. If a person has a natural right to some­thing—say her athletic ability—and someone takes it from her, the re­turn of it is something she is owed and can rightfully demand. Whether or not she deserves this athletic ability is a separate issue. Similarly, in­sofar as people have natural property rights in the fruits of their labor, these rights are something they are owed, and not something they nec­essarily deserve.

The desert argument suggests that the laborer deserves to benefit from her labor, at least if it is an attempt to do something worthwhile. This proposal is convincing, but does not show that what the laborer de­serves is property rights in the object labored on. The mistake is to con­flate the created object which makes a person deserving of a reward with what that reward should be. Property rights in the created object are not the only possible reward. Alternatives include fees, awards, acknowledg­ment, gratitude, praise, security, power, status, and public financial sup­port.

Many considerations affect whether property rights in the created ob­ject are what the laborer deserves. This may depend, for example, on what is created by labor. If property rights in the very things created were always an appropriate reward for labor, then as Lawrence Becker notes, parents would deserve property rights in their children. Many intellectual objects (scientific laws, religious, and ethical insights, and so on) are also the sort of thing that should not be owned by anyone.

Furthermore, as Becker also correctly points out, we need to consider the purpose for which the laborer labored. Property rights in the object produced are not a fitting reward if the laborer does not want them. Many intellectual laborers produce beautiful things and discover truths as ends in themselves. The appropriate reward in such cases is recog­nition, gratitude, and perhaps public financial support, not full-fledged property rights, for these laborers do not want to exclude others from their creations.

Property rights in the thing produced are also not a fitting reward if the value of these rights is disproportional to the effort expended by the laborer. 'Effort' includes (1) how hard someone tries to achieve a result, (2) the amount of risk voluntarily incurred in seeking this result, and (3) the degree to which moral considerations played a role in choosing the result intended. The harder one tries, the more one is willing to sacrifice, and the worthier the goal, the greater are one's deserts.

Becker's claim that the amount deserved is proportional to the value one's labor produces is mistaken. The value of labor's results is often significantly affected by factors outside a person's control, and no one deserves to be rewarded for being lucky. Voluntary past action is the only valid basis for determining desert. Here only a person's effort (in the sense defined) is relevant. Her knowledge, skills, and achievements in­sofar as they are based on natural talent and luck, rather than effort ex­pended, are not. A person who is born with extraordinary natural talents, or who is extremely lucky, deserves nothing on the basis of these char­acteristics. If such a person puts forward no greater effort than another, she deserves no greater reward. Thus, two laborers who expend equal amounts of effort deserve the same reward, even when the value of the resulting products is vastly different. Giving more to workers whose products have greater social value might be justified if it is needed as an incentive. But this has nothing to do with giving the laborer what she deserves.

John Rawls considers even the ability to expend effort to be deter­mined by factors outside a person's control and hence a morally imper­missible criterion for distribution. How hard one tries, how willing one is to sacrifice and incur risk, and how much one cares about morality are to some extent affected by natural endowments and social circum­stances. But if the ability to expend effort is taken to be entirely deter­mined by factors outside a person's control, the result is a determinism which makes meaningful moral evaluation impossible. If people are re­sponsible for anything, they are responsible for how hard they try, what sacrifices they make, and how moral they are. Because the effort a per­son expends is much more under her control than her innate intelli­gence, skills, and talents, effort is a far superior basis for determining desert. To the extent that a person's expenditure of effort is under her control, effort is the proper criterion for desert.

Giving an inventor exclusive rights to make and sell her invention (for seventeen years) may provide either a greater or a lesser reward than she deserves. Some inventions of extraordinary market value result from flashes of genius, while others with little market value (and yet great social value) require significant efforts.

The proportionality requirement may also be frequently violated by granting copyright. Consider a five-hundred-dollar computer program. Granted, its initial development costs (read "efforts") were high. But once it has been developed, the cost of each additional program is the cost of the disk it is on—approximately a dollar. After the program has been on the market several years and the price remains at three or four hundred dollars, one begins to suspect that the company is receiving far more than it deserves. Perhaps this is another reason so much illegal copying of software goes on: the proportionality requirement is not being met, and people sense the unfairness of the price. Frequently, trade se­crets (which are held indefinitely) also provide their owners with bene­fits disproportional to the effort expended in developing them.

The Lockean Provisos

We have examined two versions of the labor argument for intellectual property, one based on desert, the other based on a natural entitlement to the fruits of one's labor. Locke himself put limits on the conditions under which labor can justify a property right in the thing produced.

One is that after the appropriation there must be "enough and as good left in common for others." This proviso is often reformulated as a "no loss to others" precondition for property acquisition. As long as one does not worsen another's position by appropriating an object, no objec­tion can be raised to owning that with which one mixes one's labor.

Under current law, patents clearly run afoul of this proviso by giving the original inventor an exclusive right to make, use, and sell the inven­tion. Subsequent inventors who independently come up with an already patented invention cannot even personally use their invention, much less patent or sell it. They clearly suffer a great and unfair loss because of the original patent grant. Independent inventors should not be prohib­ited from using or selling their inventions. Proving independent discov­ery of a publicly available patented invention would be difficult, however. Nozick's suggestion that the length of patents be restricted to the time it would take for independent invention may be the most reasonable ad­ministrative solution. In the modem world of highly competitive re­search and development, this time is often much shorter than the sev­enteen years for which most patents are currently granted.

Copyrights and trade secrets are not subject to the same objection (though they may constitute a loss to others in different ways). If some­one independently comes up with a copyrighted expression or a compet­itor's business technique, she is not prohibited from using it. Copyrights and trade secrets prevent only mimicking of other people's expressions and ideas.

Locke's second condition on the legitimate acquisition of property rights prohibits spoilage. Not only must one leave enough and as good for others, but one must not take more than one can use. So in addition to leaving enough apples in the orchard for others, one must not take home a truckload and let them spoil. Though Locke does not specifically mention prohibiting waste, it is the concern to avoid waste which under­lies his proviso prohibiting spoilage. Taking more than one can use is wrong because it is wasteful. Thus Locke's concern here is with appro­priations of property which are wasteful.

Since writings, inventions, and business techniques are nonexclusive, this requirement prohibiting waste can never be completely met by in­tellectual property. When owners of intellectual property charge fees for the use of their expressions or inventions, or conceal their business tech­niques from others, certain beneficial uses of these intellectual products are prevented. This is clearly wasteful, since everyone could use and benefit from intellectual objects concurrently. How wasteful private ownership of intellectual property is depends on how beneficial those products would be to those who are excluded from their use as a result.

Sovereignty, Security, and Privacy

Private property can be justified as a means to sovereignty. Dominion over certain objects is important for individual autonomy. Ronald Dworkin's liberal is right in saying that "some sovereignty over a range of per­sonal possessions is essential to dignity." Not having to share one's per­sonal possessions or borrow them from others is essential to the kind of autonomy our society values. Using or consuming certain objects is also necessary for survival. Allowing ownership of these things places control of the means of survival in the hands of individuals, and this promotes independence and security (at least for those who own enough of them). Private ownership of life's necessities lessens dependence between indi­viduals, and takes power from the group and gives it to the individual. Private property also promotes privacy. It constitutes a sphere of privacy within which the individual is sovereign and less accountable for her actions. Owning one's own home is an example of all of these: it provides privacy, security, and a limited range of autonomy.

But copyrights and patents are neither necessary nor important for achieving these goals. The right to exclude others from using one's in­vention or copying one's work of authorship is not essential to one's sov­ereignty. Preventing a person from personally using her own invention or writing, on the other hand, would seriously threaten her sovereignty. An author's or inventor's sense of worth and dignity requires public ac­knowledgment by those who use the writing or discovery, but here again, giving the author or inventor the exclusive right to copy or use her intellectual product is not necessary to protect this.

Though patents and copyrights are not directly necessary for survival (as are food and shelter), one could argue that they are indirectly neces­sary for an individual's security and survival when selling her inventions or writings is a person's sole means of income. In our society, however, most patents and copyrights are owned by institutions (businesses, uni­versities, or governments). Except in unusual cases where individuals have extraordinary bargaining power, prospective employees are re­quired to give the rights to their inventions and works of authorship to their employers as a condition of employment. Independent authors or inventors who earn their living by selling their writings or inventions to others are increasingly rare. Thus arguing that intellectual property promotes individual security makes sense only in a minority of cases. Additionally, there are other ways to ensure the independent intellectual laborer's security and survival besides copyrights and patents (such as public funding of intellectual workers and public domain property status for the results).

Controlling who uses one's invention or writing is not important to one's privacy. As long as there is no requirement to divulge privately cre­ated intellectual products (and as long as laws exist to protect people from others taking information they choose not to divulge—as with trade secret laws), the creator's privacy will not be infringed. Trying to justify copyrights and patents on grounds of privacy is highly implausible given that these property rights give the author or inventor control over certain uses of writings and inventions only after they have been publicly dis­closed.

Trade secrets are not defensible on grounds of privacy either. A cor­poration is not an individual and hence does not have the personal fea­tures privacy is intended to protect. Concern for sovereignty counts against trade secrets, for they often directly limit individual autonomy by preventing employees from changing jobs. Through employment con­tracts, by means of gentlemen's agreements among firms to respect trade secrets by refusing to hire competitors' employees, or simply be­cause of the threat of lawsuits, trade secrets often prevent employees from using their skills and knowledge with other companies in the in­dustry.

Some trade secrets, however, are important to a company's security and survival. If competitors could legally obtain the secret formula for Coke, for example, the Coca-Cola Company would be severely threat­ened. Similar points hold for copyrights and patents. Without some copy­right protection, companies in the publishing, record, and movie indus­tries would be severely threatened by competitors who copy and sell their works at lower prices (which need not reflect development costs). With­out patent protection, companies with high research and development costs could be underpriced and driven out of business by competitors who simply mimicked the already developed products. This unfair com­petition could significantly weaken incentives to invest in innovative techniques and to develop new products.

The next section considers this argument that intellectual property is a necessary incentive for innovation and a requirement for healthy and fair competition. Notice, however, that the concern here is with the se­curity and survival of private companies, not of individuals. Thus one need to determine whether, and to what extent, the security and sur­vival of privately held companies is a goal worth promoting. That issue turns on the difficult question of what type of economy is most desirable. Given a commitment to capitalism, however, this argument does have some force.

The Utilitarian Justification

The strongest and most widely appealed to justification for intellectual property is a utilitarian argument based on providing incentives. The constitutional justification for patents and copyrights—"to promote the progress of science and the useful arts"—is itself utilitarian. Given the shortcomings of the other arguments for intellectual property, the justi­fiability of copyrights, patents, and trade secrets depends, in the final analysis, on this utilitarian defense.

According to this argument, promoting the creation of valuable intel­lectual works requires that intellectual laborers be granted property rights in those works. Without the copyright, patent, and trade secret property protections, adequate incentives for the creation of a socially optimal output of intellectual products would not exist. If competitors could simply copy books, movies, and records, and take one another's inventions and business techniques, there would be no incentive to spend the vast amounts of time, energy, and money necessary to develop these products and techniques. It would be in each firm's self-interest to let others develop products, and then mimic the result. No one would engage in original development, and consequently no new writings, in­ventions, or business techniques would be developed. To avoid this dis­astrous result, the argument claims, we must continue to grant intellec­tual property rights.

Notice that this argument focuses on the users of intellectual prod­ucts, rather than on the producers. Granting property rights to producers is here seen as necessary to ensure that enough intellectual products (and the countless other goods based on these products) are available to users. The grant of property rights to the producers is a mere means to this end.

This approach is paradoxical. It establishes a right to restrict the cur­rent availability and use of intellectual products for the purpose of in­creasing the production and thus future availability and use of new in­tellectual products. As economist Joan Robinson says of patents: "A patent is a device to prevent the diffusion of new methods before the original investor has recovered profit adequate to induce the requisite investment. The justification of the patent system is that by slowing down the diffusion of technical progress it ensures that there will be more progress to diffuse. . . . Since it is rooted in a contradiction, there can be no such thing as an ideally beneficial patent system, and it is bound to produce negative results in particular instances, impeding progress unnecessarily even if its general effect is favorable on bal­ance. Although this strategy may work, it is to a certain extent self-defeating. If the justification for intellectual property is utilitarian in this sense, then the search for alternative incentives for the production of intellectual products takes on a good deal of importance. It would be bet­ter to employ equally powerful ways to stimulate the production and thus use of intellectual products which did not also restrict their use and avail­ability.

Government support of intellectual work and public ownership of the result may be one such alternative. Governments already fund a great deal of basic research and development, and the results of this research often become public property. Unlike private property rights in the re­sults of intellectual labor, government funding of this labor and public ownership of the result stimulate new inventions and writings without restricting their dissemination and use. Increased government funding of intellectual labor should thus be seriously considered.

This proposal need not involve government control over which re­search projects are to be pursued. Government funding of intellectual labor can be divorced from government control over what is funded. Uni­versity research is an example. Most of this is supported by public funds, but government control over its content is minor and indirect. Agencies at different governmental levels could distribute funding for intellectual labor with only the most general guidance over content, leaving busi­nesses, universities, and private individuals to decide which projects to pursue.

If the goal of private intellectual property institutions is to maximize the dissemination and use of information, to the extent that they do not achieve this result, these institutions should be modified. The question is not whether copyrights, patents, and trade secrets provide incentives for the production of original works of authorship, inventions, and inno­vative business techniques. Of course they do. Rather, we should ask the following questions: Do copyrights, patents, and trade secrets increase the availability and use of intellectual products more than they restrict this availability and use? If they do, we must then ask whether they in­crease the availability and use of intellectual products more than any al­ternative mechanism would. For example, could better overall results be achieved by shortening the length of copyright and patent grants, or by putting a time limit on trade secrets (and on the restrictions on future employment employers are allowed to demand of employees)? Would eliminating most types of trade secrets entirely and letting patents carry a heavier load produce unproved results? Additionally, we must deter­mine whether and to what extent public funding and ownership of intel­lectual products might be a more efficient means to these results.

We should not expect an across-the-board answer to these questions. For example, the production of movies is more dependent on copyright than is academic writing. Also, patent protection for individual inventors and small beginning firms makes more sense than patent protection for large corporations (which own the majority of patents). It has been ar­gued that patents are not important incentives for the research and in­novative activity of large corporations in competitive markets. The short-term advantage a company gets from developing a new product and being the first to put it on the market may be incentive enough.

That patents are conducive to a strong competitive economy is also open to question. Our patent system, originally designed to reward the individual inventor and thereby stimulate invention, may today be used as a device to monopolize industries. It has been suggested that in some cases "the patent position of the big firms makes it almost impossible for new firms to enter the industry" and that patents are frequently bought up in order to suppress competition.

Trade secrets as well can stifle competition, rather than encourage it. If a company can rely on a secret advantage over a competitor, it has no need to develop new technologies to stay ahead. Greater disclosure of certain trade secrets—such as costs and profits of particular product lines—would actually increase competition, rather than decrease it. Since with this knowledge firms would then concentrate on one anoth­er's most profitable products. Furthermore, as one critic notes, trade secret laws often prevent a former employee "from doing work in just that field for which his training and experience have best prepared him. Indeed, the mobility of engineers and scientists is often severely limited by the reluctance of new firms to hire them for fear of exposing them­selves to a lawsuit." Since the movement of skilled workers between companies is a vital mechanism in the growth and spread of technology, in this important respect trade secrets actually slow the dissemination and use of innovative techniques.

These remarks suggest that the justifiability of our intellectual prop­erty institutions is not settled by the facile assertion that our system of patents, copyrights, and trade secrets provides necessary incentives for innovation and ensures maximally healthy competitive enterprise. This argument is not as easy to construct as one might at first think; substan­tial empirical evidence is needed. The above considerations suggest that the evidence might not support this position.


Justifying intellectual property is a formidable task. The inadequacies of the traditional justifications for property become more severe when ap­plied to intellectual property. Both the nonexclusive nature of intellectual objects and the presumption against allowing restrictions on the free flow of ideas create special burdens in justifying such property.

We have seen significant shortcomings in the justifications for intel­lectual property. Natural rights to the fruits of one's labor are not by themselves sufficient to justify copyrights, patents, and trade secrets, though they are relevant to the social decision to create and sustain in­tellectual property institutions. Although intellectual laborers often de­serve rewards for their labor, copyrights, patents, and trade secrets may give the laborer much more or much less than is deserved. Where prop­erty rights are not what is desired, they may be wholly inappropriate. The Lockean labor arguments for intellectual property also run afoul of one of Locke's provisos—the prohibition against spoilage or waste. Consid­erations of sovereignty, security, and privacy are inconclusive justifica­tions for intellectual property as well.

This analysis suggests that the issue turns on considerations of social utility. We must determine whether our current copyright, patent, and trade secret statutes provide the best possible mechanisms for ensuring the availability and widespread dissemination of intellectual works and their resulting products. Public financial support for intellectual laborers and public ownership of intellectual products is an alternative which de­mands serious consideration. More modest alternatives needing consid­eration include modifications in the length of intellectual property grants or in the strength and scope of the restrictive rights granted. What the most efficient mechanism for achieving these goals is remains an unre­solved empirical question.

This discussion also suggests that copyrights are easier to justify than patents or trade secrets. Patents restrict the actual usage of an idea (in making a physical object), while copyrights restrict only copying an expression of an idea. One can freely use the ideas in a copyrighted book in one's own writing, provided one acknowledges their origin. One can­not freely use the ideas a patented invention represents when developing one's own product. Furthermore, since inventions and business tech­niques are instruments of production in a way in which expressions of ideas are not, socialist objections to private ownershipof the means of production apply to patents and trade secrets far more readily than they do to copyrights. Trade secrets are suspect also because they do not in­volve the socially beneficial public disclosure which is part of the patent and copyright process. They are additionally problematic to the extent that they involve unacceptable restrictions on employee mobility and technology transfer.

Focusing on the problems of justifying intellectual property is impor­tant not because these institutions lack any sort of justification, but be­cause they are not so obviously or easily justified as many people think. We must begin to think more openly and imaginatively about the alter­native choices available to us for stimulating and rewarding intellectual labor.

Against Intellectual Property (Brain Marthin)

There isstrong case for opposing intellectual property. There are a number of negative consequences of the ownership of information, such as retarding of innovation and exploitation of poor countries. Most of the usual arguments for intellectual property do not hold up under scrutiny. In particular, the metaphor of the marketplace of ideas provides no justifica­tion for ownership of ideas. The alternative to intellectual property is that intellectual products not be owned, as in the case of everyday language. Strategies against intellectual property include civil disobedience, promo­tion of non-owned information, and fostering of a more cooperative society.

In 1980, a book entitled Documents on Australian Defence and Foreign Policy 1968-1975 was published by George Munster and Richard Walsh. It reproduced many secret government memos, briefings and other docu­ments concerning Australian involvement in the Vietnam war, events leading up to the Indonesian invasion of East Timor, and other issues. Exposure of this material deeply embarrassed the Australian government. In an unprecedented move, the government issued an interim injunction, citing both the Crimes Act and the Copyright Act. The books, just put on sale, were impounded. Print runs of two major newspapers with extracts from the book were also seized. The Australian High Court ruled that the Crimes Act did not apply, but that the material was protected by copyright held by the government. Later, Munster and Walsh produced a book using summaries and short quotes in order to present the information (Munster 1982).

This example is one of many that show how copyright is used to protect the interests of the powerful in the face of challengers, at the expense of free speech. Yet copyright is standardly justified on the grounds that it promotes creation and dissemination of ideas.

Copyright is one of four main types of intellectual property or, in other words, ownership of information. The others are patents, trademark and trade secrets. Copyright covers the expression of ideas such as in writ­ing, music and pictures. Patents cover inventions, such as designs for objects or industrial processes. Trademarks are symbols associated with a good, service or company. Trade secrets cover confidential business information.

The type of property that is familiar to most people is physical objects. People own clothes, cars, houses and land. When people own ideas, this is called intellectual property. But there has always been a big problem with owning ideas—exclusive use or control of ideas doesn't make nearly as much sense as it does applied to physical objects.

Many physical objects can only be used by one person at a time. If one person wears a pair of shoes, no one else can wear them at the same time. (The person who wears them often also owns them, but not always.) This is not true of intellectual property. Ideas can be copied over and over, but the person who had the original copy still has full use of it. Suppose you write a poem. Even if a million other people have copies and read the poem, you can still read the poem yourself. In other words, more than one person can use an idea—a poem, a mathematical formula, a tune—without reducing other people's use of the idea. Shoes and poems are fundamentally differ­ent in this respect.

Technological developments have made it cheaper and easier to make copies of information. Printing was a great advance: it eliminated the need for hand copying of documents. Photocopying and computers have made it even easier to make copies of written documents. Photography and sound recordings have done the same for visual and sound material. The ability to protect intellectual property is being undermined by technology. Yet there is a strong push to expand the scope of ownership of information.

This article outlines the case against intellectual property. It begins by mentioning some of the problems arising from ownership of information. Then I turn to weaknesses in the standard justifications for intellectual property. Next is an overview of problems with the so-called "marketplace of ideas," which has important links with intellectual property. Finally, I outline some alternatives to intellectual property and some possible strategies for moving towards these alternatives.

Last modified on Wednesday, 02 May 2012 13:05