In Praise of Copycats

In this weekend’s Wall Street Journal, Kal Raustiala and Chris Sprigman have penned a thoughtful piece on the relationship between innovation and intellectual property. It’s called “In Praise of Copycats,” and it’s excerpted below.

The conventional wisdom today is that copying is bad for creativity. If we allow people to copy new inventions, the thinking goes, no one will create them in the first place. Copycats do none of the work of developing new ideas but capture much of the benefit. That is the reason behind patents and copyrights: Copying destroys the incentive to innovate.

Except when it doesn’t. There are many creative industries, like finance, that lack protection against copying (or did for a long time). A closer look at these fields shows that plenty of innovation takes place even when others are free to copy. There are many examples of successful industries that survive despite extensive copying. In fact, some even thrive because they are so open to copying.

The empirical case for intellectual property has not been proven (of course, finding a control group is difficult), and it seems as though many are successfully plying their trade in industries where copying is permitted. Ralph Lauren, for example, does not find it hard to land a paying job despite the lack of copyright protection for his designs. Vanguard Funds found no difficulty attracting billions to its S&P 500 index fund despite the lack of a process patent.

But it seems to me that the real question is whose interests a putative system of intellectual property is to protect. Is it more important to create a strong property right in patents, copyrights and trademarks so that inventors and their business interests are protected? Or is it more important to loosen the system so that the general public reaps the benefits? Ultimately, that seems to be the tradeoff.

I would personally prefer the latter, not just for the social consequences, but because the property right to what we now call intellectual property is a synthetic one anyway. It finds its justification more in the law than in first philosophy.

But given that, wouldn’t we do well to determine the legal foundations of intellectual property? Of course, we have to turn to Article 1, Section 8, Clause 8 of the U.S. Constitution:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

“To promote the Progress of Science…”? Interestingly, this assumes that granting a private property right as such would do so. On the other hand, if it does not, then perhaps the legal protection of intellectual property is ironically unfounded.

In areas as diverse as fashion, finance and football, intellectual property is unprotected, and not only does the consumer ultimately benefit, but it certainly seems as though progress is not hindered. Perhaps there’s something to the copycats after all.

Source Code Theft is not a Criminal Offense

A court has found that source code theft is not theft of property per se, and therefore a criminal defendant has escaped prosecution. This may go nowhere ultimately, but it’s an interesting step in the development of software-related intellectual property.

An American court has ruled that software can’t be regarded as property that may be stolen. The ruling in question was delivered in the case of Sergey Aleynikov, a Goldman Sachs programmer. He was accused of downloading source code for the investment company’s high-speed trading system from the company’s servers. Local media reports say that Aleynikov was wrongly charged with theft of property since the code wasn’t a physical object and therefore the defendant didn’t gain control of anything when he downloaded it.

A quick article on intellectual property and piracy

Over at Forbes, Paul Tassi has an interesting article on Intellectual Property and piracy.  Take a look at this opening and tell me you don’t want to read the whole thing:

Now that the SOPA and PIPA fights have died down, and Hollywood prepares their next salvo against internet freedom with ACTA and PCIP, it’s worth pausing to consider how the war on piracy could actually be won.

It can’t, is the short answer, and one these companies do not want to hear as they put their fingers in their ears and start yelling.

Wait, so you’re telling me that yelling won’t solve all my problems!? That ramming a “shoot first, ask questions never” law like SOPA/PIPA through the Congress is not actually going to help people!? Stop the presses.

The issue that lobbying shops like RIAA and MPAA have with piracy is not one of property rights – they don’t care a whit about your property rights. It’s not even law – to them, that’s a means to an end. It’s a question of business model.

Rather than adapt their business model to one that can work in a world where common thieves have adapted their business model, they would instead prefer a law that would kill off just about the only free part of the market left in the world.

And what is not being acknowledged is that the things that pirates do are illegal already. Pirates are nothing more than common thieves with a new tool. Record companies and movie studios have the resources and rights to go after pirates. When they have, the backlash over suing 14 year olds for millions of dollars has caused them to back down, but is that in any way my problem? Or anyone’s problem who innocently uses the internet?

In a world where the internet has sped up the inevitability of “adapt or die,” the big drivers of intellectual property law are not only refusing to adapt, they are seeking to levy the costs of their dead business model on everyone else.

I’m back from vacation; here are a few interesting posts for your enjoyment

You may have noticed a hiatus on this blog that was somewhat longer than normal.  I was on vacation in lovely Costa Rica with my lovely wife (since my nom de plume is Socrates, I shall refer to her as Xanthippe).  To prove it, I took a picture of a politician that I snapped outside of my hotel in Tamarindo.  I believe her name is Nancy:

For the biologically curious, that’s actually a howler monkey.  Or in Spanish a mono aullador.

Anyway, to kick off my triumphant return, I’m going to give you a three for one deal of posts that I found infuriating, depressing, and silly.  See if you can put them in order!

First, in court case in Colorado, the FDA is claiming jurisdiction over an individual person’s stem cells.

In another outrageous power-grab, FDA says your own stem cells are drugs—and stem cell therapy is interstate commerce because it affects the bottom line of FDA-approved drugs in other states!

…The Centeno-Schultz Medical Clinic takes your blood and bone marrow, puts it into a centrifuge machine that separates the stem cells, and cultures it to get more cells before a doctor puts them back in your body to repair damaged tissue. The FDA states that when the stem cells are cultured, they become FDA-regulated drugs. The clinic has argued numerous times that stem cells aren’t drugs because they are components of the patient’s bone marrow from his or her own body.

How long before the FDA asserts jurisdiction over my white blood cells?

Secondly, and in completely unrelated news, the bell continues tolling the tragic death of the anti-war left.  It seems as though a majority of self-identified liberal Democrats now support keeping Guantanamo open as well as the use of drones for targeted killings.  At the rate they’re going, I give them until 2014 before they re-invade Iraq.

Unless of course “their guy” is no longer in office, in which case they will heartily disapprove. I have spoken of the demise of the anti-war left before: here, here, here, and here.

It is exactly this kind of blatant partisan hackery that makes me say that “partisanship is the first resort of the feeble mind.”  Perhaps I should copyright that…

And finally, in another completely unrelated topic, talentless pop-“artist” Shepard Fairey, the hack behind the ubiquitous Obama-Hope posters, pleaded guilty to criminal charges. But get this, the criminal charges stemmed from fraud and misconduct related to the civil suit that he himself filed against the AP.

Shepard Fairey fails so hard he can’t even sue people right.

Fairey “went to extreme lengths to obtain an unfair and illegal advantage in his civil litigation, creating fake documents and destroying others in an effort to subvert the civil discovery process,” US Attorney [Preet] Bharara said in a statement…

Fairey sued AP in 2009, seeking a ruling that his poster didn’t infringe the copyright because his use of the photograph was protected by “fair use.” The news organisation countersued.

Throw the book at him.

And welcome back to me.

Some Fun Links for Your Lazy Saturday

Since we were just speaking of the TSA:

I will finally get around to posting this article (it’s somewhat late, so I apologize) about their British counterparts.  You see, it seems that when Britain’s Border Agency went on strike, the expected hellish lines and hours-long delays at Heathrow not only did not materialize, but conditions actually improved.

Perhaps we only think we need these people. Perhaps the private sector would be doing it anyway – and better.  Read all about it at the Daily Mail.

More on China:

A few days back, China cut its reserve requirements for its banks by 50 basis points, injecting extra cash and liquidity into a market already swimming in paper debt.  Bloomberg charitably reports that this “might signal a slowdown.”

Socrates reports that this is yet another step towards the inevitable Chinese conflagration. Will it be today?  Tomorrow?  Five years from now?  Whatever the case, a fool for China and his money will soon be parted.

Intellectual Property and the Urge to Regulate the Internet:

Quick, what is the most creative, fastest growing sector of the economy?  No, it’s not General Motors.  It is, of course, the “internet economy,” or broadly the information technology that has connected the entire world over the past couple of decades.

And get this, the internet revolutionized our entire lives in spite of being completely devoid of regulation!  Wait, scratch that, it revolutionized our entire lives because it was completely devoid of regulation.

That is why Google happens to be correct in its excoriation of the new “online piracy” bill, which in reality is just intellectual property on steroids:

Google is exhorting senators to oppose an online piracy bill, arguing it would threaten national security, shackle the Internet with regulations and imperil free speech, according to a document obtained by The Hill.

The memo that is being circulated on Capitol Hill lists five reasons not to co-sponsor the legislation. It argues the bill puts at risk “the ability for free speech and the ability of political parties to spread their message” while creating a “thicket of new Internet regulations similar to the administration’s net-neutrality rules.”

It also calls the legislation “a trial lawyer’s dream” and claims it seeks to “regulate the Internet.”

This thing passes, and the internet as we know it dies.

An Update on the Whereabouts of the Anti-War Left:

A while back, I put out an APB on the anti-war left, which disappeared completely once their pro-war president was elected.  Turns out, it is still missing.

Reason has been patrolling the same beat, and Sheldon Richman argues persuasively that “Obama’s War Record Should Appall Progressives.”

Watch as Richman batters the tired arguments of formerly anti-war left, who are now left to rationalize the actions of “their” president, who happens to be ratcheting up all of the failed policies of the former president.

Oh, and if anyone can find where the real anti-war left went, please let me know.  Thanks.

The Unintended Consequences of Race-Based Preferences:

The Supreme Court is choosing whether to hear a case on the racial preference system of the University of Texas.  George Will, who in the last few years has been razor sharp, argues that the court should hear the case and be confronted with the failed legacy of affirmative action:

The Supreme Court faces a discomfiting decision. If it chooses, as it should, to hear a case concerning racial preferences in admissions at the University of Texas, the court will confront evidence of its complicity in harming the supposed beneficiaries of preferences the court has enabled and encouraged…

For 33 years, the court has been entangled in a thicket of preferences that are not remedial and hence not temporary. Preferences as recompense for past discrimination must eventually become implausible, but the diversity rationale for preferences never expires…

But what if many of the minorities used in this process are injured by it? Abundant research says they are, as two amicus curiae briefs demonstrate in urging the court to take the Texas case…

“Academic mismatch” causes many students who are admitted under a substantial preference based on race, but who possess weaker academic skills, to fall behind. The consequences include especially high attrition rates from the sciences, and self-segregation in less-demanding classes, thereby reducing classroom diversity.

The entire article is well worth a read.

And hey, it’s Saturday.  What else are you doing?

Freedom to Be Sacrificed at the Altar of IP (Again)

Matthew Ingram at GigaOm has written a piece worth exploring, called “Looks like Congress has declared war on the internet.”

In a by now cliched story, Congress has taken that which they do not understand (the internet), hitched it up to something that they do (overregulation), and squeezed several tight coils of bad legislation right on our collective front yard.  In pertinent part, Ingram spells out the problem:

What it really is, however, is a disaster for the internet. As the Electronic Frontier Foundation notes in a post on the proposed legislation, the law would not only require ISPs to remove websites from the global network at the request of the government or the courts (by blocking any requests to the central domain-name system that directs internet traffic), but would also be forced to monitor their users’ behavior in order to police acts of copyright infringement. Providers who do not comply with these requests and requirements would be subject to sanctions. And in many cases, legal hearings would not be required.

…

The bottom line is that if it passes and becomes law, the new act would give the government and copyright holders a giant stick — if not an automatic weapon — with which to pursue websites and services they believe are infringing on their content. With little or no requirement for a court hearing, they could remove websites from the internet and shut down their ability to be found by search engines or to process payments from users. DMCA takedown notices would effectively be replaced by this nuclear option, and innocent websites would have to fight to prove that they deserved to be restored to the internet — a reversal of the traditional American judicial approach of being assumed innocent until proven guilty — at which point any business they had would be destroyed.

So the internet, which is as vibrant, useful, and frankly awesome as it is because it has not heretofore been strangled by the stupidity of a government that is always at least two decades behind the times, will now be strangled as such.  Wonderful.  Way to look out for our best interests, Congress.

Against Copyright – Part 1, the “Benefit” Side of Cost-Benefit Analysis

My recent post on copyright trolls has been rebutted by Jeff Cobia, writing at his blog here.  I suppose I should have expected it, since I kept the post short and fairly conclusory, as I realize I have a tendency to run on quite a bit.  My own lack of cited support seems to have been an invitation to trouble.

Nevertheless, I disagree with Jeff’s assertion that my post was “rubbish,” and I will accept his invitation to war.  However, since I respect his intellect, I imagine that this will be an exceedingly polite one.  That said, I shall now cry havoc, and let slip the blogs of war.

The Benefit Side of Cost-Benefit Analysis

Jeff immediately goes after my parenthetical – “Even if you were to concede that economic benefits flow from IP protections (and I would argue that, empirically, they do not)” – and I am not terribly surprised that he has.  My use of the term “empirically” was, I concede, a mistake, and that is precisely because the question of economic benefit to authors under copyright is an empirical one.  Ironic, no?

Of course, one cannot prove that the author will benefit, in the strictly pecuniary sense, more under a system without copyright, and this is so for exactly the reason that Jeff has pointed out.  If one assumes that the work is unique, one cannot compare its protected sale with its unprotected sale unless one has access to parallel universes.

However, I believe that authors would absolutely not be cast into penury with the removal of copyright.  Casual observers note the attachment of copyright and the flow of economic benefit and assume a cause-effect correlation.  I propose that this may very well be far weaker than commonly assumed.

I do have some empirical backing, of course.  This will obviously not be an exhaustive list, but I will point out a few highlights.

Germany and England

First, there is the case of Germany and England before the rise of copyright.  Copyright is a relatively new invention, with England adopting it in 1710.  Germany, by contrast, had no central government and no copyright by default until 1871.  This century and a half provides a very useful empirical resource for assessing authors’ relative ability to prosper with and without copyright.

Historian Eckhard Hoffner has compared the data between the countries.  In England, authors were paid for sale of rights to their work, as has continued in the modern age.  In Germany, where pirate publishing was “virtually allowed,” authors tended to be paid by sheet and edition, and by self-publication through subscription.  Even best-sellers were reprinted quickly by “pirate” publishers.  In both countries, however, book authors tended to earn a comparable average, and in both countries, writing was a viable career.

The biggest difference was at the poles.  In England, the >1% who were wildly successful (think of the J.K. Rowlings, the Stephanie Meyers, the Stephen Kings of our current age) could make a fortune.  The “fat middle” of the bell curve, however, was very comparable to Germany.

In Germany, however, the skew was more toward the other end – because writing was viable and the publishing industry was made far more efficient through the lack of copyright, there were many more books published, by a factor of 10 at the height (n.b. Germany had twice the population, but fewer urban citizens).

While the top >1% in Germany never attained the dazzling fortunes of their English counterparts, far more Germans were writing, making a living writing, and more importantly writing more.

The Lengthy History of Publishing

The common viewpoint of publishing is a static one (this is not limited to publishing, of course).  Publishing is what it is, and its implications are derived only from the present state of affairs.  However, the internet has come along, and the game is changing.  In a historical blink of an eye, the rules will be completely rewritten.

Funny that we find this so amazing.  Although the internet is a complete and total revolution in the publishing world, it is not the first, and it will not be the last.  Consider the long history, and the question “how will authors be paid without copyright?” becomes less relevant, because it soon becomes clear that the question itself is saddled with assumptions from the present day.  As it happens, authors have always been paid, and the assumptions from the present day are quite limited in their usefulness in explaining history beyond their short timeframe.

Scribes’ work had been largely unchanged for centuries until the advent of moveable type in the mid-1400s.  Serious consternation within the monastic class followed, but within decades, monasteries had set up their own printing houses and contracted out scribes’ work to established private printing houses.

The quantity of published books skyrocketed.  According to historian Michael Clapham, within the 50 years following the invention of moveable type, there were more books published than had been published since “Constantine founded his city in A.D. 336.” The number of editions since the 15th century must number in the billions.  (Michael Clapham, “Printing,” in Charles Singer et al., eds., A History of Technology, vol. 3, From the Renaissance to the Industrial Revolution, Oxford University Press, 1957. p. 37)

Perhaps more importantly, works beyond the Bible, Augustine, and Etymologiae were being published.  Despite having no copyright protections, the author was born.

Digital distribution has the potential to do for books what the moveable type did, but on a much larger scale, and like the monks of the 1400s, copyright hawks are similarly concerned.  But remember that copyright law is a relatively recent invention.  Even in England, the earliest adopter, copyright was not established until the 18th century.  In the meantime, we certainly did not find that authors were discouraged from their pursuits.

Although there could never be an empirical study of the future of publishing (a history of the future?), one can reasonably expect that, if allowed to do so, history will tend to follow similar courses, albeit through different channels.  The internet is no less a revolution than the printing press, but in both cases, I think the evidence has – and will – accrue to side of non-restrictionists.

Far from discouraging publishing, I think the internet has so far fostered an explosion in publishing of all types, and for the most part, copyright has never been vigorously enforced in digital media.  I expect that authors will find ways to monetize their own publications outside of the restrictive licensing system of traditional, fixed-media copyright.  Jeff has already mentioned one who does – Cory Doctorow – but that is merely one avenue (and one that is probably more common than it seems).  Perhaps the most profitable has not been conceived of yet.

Monetization in a Pirate’s World

This leads into the discussion of monetization, and I am sure that I will be accused of unwarranted assumptions if I did not elaborate on the above.  I do not think that monetization of authorship outside of the copyright context is at all a pie-in-the-sky concept.  In fact, it has been done before, and to great effect.

Consider the music industry.  Despite the fact that the RIAA and [some of] its members have somehow managed to survive, it seems as though it is mainly a vehicle for lawsuits.  People simply do not buy CDs anymore.  What is left of the physical CD industry will soon be dead.  Even iTunes, the great creative destroyer, may not survive long on its first-mover advantage unless it can continue to give the people what they want.  Overwhelmingly, what the people want is “free” music.

So how would artists be paid?  Well, it did not take the internet to come up with an answer for this.  Bands like the Grateful Dead have been doing it since the age of vinyl.  Their entire business model was at one point based on the bootleg; they actively encouraged their fans to record, swap, and distribute their concerts.  They found, unsurprisingly, that this had the effect of driving customers to their concerts.  In fact, by encouraging people to act outside the scope of copyright, they have likely driven more fans to pay for more-lucrative concert tickets that would otherwise have been possible.

Before this is dismissed as a case isolated to music, or even to jam bands whose music is only “good” while one is still under the influence, consider what the Mises Institute found when it put the Ludwig von Mises book Omnipotent Government online for free download, as related by Jeffrey Tucker.

The Institute set about freeing the book from its copyright shackles by contacting its original publisher.  Although the book was never a strong seller, the Yale Press still insisted that the Institute pay it in advance for what they assumed would be lost sales.  The Institute did so, and put the book online.

By opening up the text for reading, discussion, linking, printing, etc., the Mises Institute sold more copies of Ominpotent Government  in the month after its free release than it had in the 10 years prior.  Yale Press ended up with both a payment for lost sales and a plethora of extra sales.  It turns out you do not even need a ticketed performance to monetize freely-released copyrightable works.

Non-Pecuniary Benefits

Of course, all of the above has assumed that pecuniary gain has driven authorship, when in many instances throughout history it clearly has not.  For example, although academia has never been one to take copyright lightly (with the notable exception of MIT, which leads the world in Open Courseware), many academics have found that non-remunerative publication, even self-publication, has led to consequences beyond a lack of royalty checks.

In the world of “publish or perish,” many academics have found that being noticed is far more useful than getting a small check for publication in a low-circulation scholarly journal.  Of course, this can be monetized as well, with prestigious professors being offered positions at prestigious universities, and professors of more practical fields being paid for consultations or a selective group of clients.  But prestige can be satisfying in its own right.

The fame and esteem derived from wide adoption of an eponymous theory or process can be overwhelmingly positive.  Imagine how many cocktail party invitations Jeff would get as the progenitor of the lifesaving “Cobia Technique.”  But I digress.

Conclusion

In the end, the situation comes down to cost-benefit analysis, and I do concede that not enough data are available or even possible to determine the exact amount of benefit.  However, on the strength of the above, and other similar scenarios, I would argue that the benefits of copyright are far overstated by copyright trolls similar to the Las Vegas outfit referenced in my original post.  I would also argue that they are likely to be overstated even by those with their feet more solidly on the ground, like Jeff.

There is no way to prove it, to be sure.  But there is no way to disprove it either.

So perhaps it is more useful to look at the cost side of the cost-benefit analysis.  That, naturally, is what I will take up next.  Stay tuned.

An Intellectual Property Troll Loses in Court

A federal judge laid a smackdown on a particularly egregious copyright troll yesterday, according to the Las Vegas Review-Journal, which I am partially copying, knowing full well the ironic implications thereof.

After all, the troll was suing on behalf of the Review-Journal itself, and the paper is reporting its own loss.  Welcome to the digital age, you dinosaurs.

A Las Vegas-based company does not have the right to file copyright infringement lawsuits over Review-Journal content, a federal judge ruled Tuesday.

In a 16-page ruling, U.S. District Judge Roger Hunt dismissed a case filed in August by Righthaven against Democratic Underground.

Sadly, they buried the most important part, which was the reasoning behind why intellectual property trolls are a destructive force, but they did manage to slip a quote from the other side past the keeper.  Skim to the last paragraph:

The Electronic Frontier Foundation and Las Vegas attorney Chad Bowers are defending Democratic Underground. The following statement from senior staff attorney Kurt Opsahl appeared Tuesday on the foundation’s website:

“Today’s decision shows that Righthaven’s copyright litigation business model is fatally flawed, and we expect the decision to have wide effect on the over 270 other cases Righthaven has brought.”

Pardon me while I do my schadenfreude dance. 

Seriously though, a culture of sharing, collaborating, reusing, and reposting information is one of the most positive developments to come out of the internet age since massive amounts of free pr0n.  If you have an interest in how copyright is evolving to suit reality, check out Creative Commons and Copyleft.  (Yep, the links go to Wikipedia, another site that is not a slave to copyright.)

It is ultimately in the best interest of the author to have his work spread as widely as possible; study after study after study has shown that the more people make their work available, the wider their market will be.  These same studies have also shown that people who “pirate” your works would not be willing or able to buy them anyway.  But if you believe in your message and the importance of what you are doing, why would you not want a large audience?

But beyond that, no defender of intellectual property has made a cogent philosophical defense of their system.  Even if you were to concede that economic benefits flow from IP protections (and I would argue that, empirically, they do not), it is indefensible as imposed by government onto a society that has not freely chosen it.

Economically, it assumes that intellectual “property” can be property per se, but it cannot.  Ideas are infinite, and property requires protection if, and only if, it is scarce.

So on that note, feel free to steal this blog post in its entirety.  I don’t even care if you cite me.