Defending Intellectual Property: DeLong Presentation On The Future Of Intellectual Property

First Presented At The Cato Institute's Annual Technology And Society Conference

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Intellectual property (IP) is a fine topic for anyone with a bent for mischief.  Because views in the interested community are both fractured and vehement, at any gathering one can idly ask, “So, what do you think of Napster?” and sit back to enjoy the entertainment.  This is special fun at lunch meetings, as anyone with fond memories of the food fight in Animal House will quickly understand.  If you have forgotten that scene, you can rent the movie for about $3.00, thanks to a system of protecting intellectual property that enables video rental outlets to maintain large stocks of old classics.

Despite the virtues of protecting IP, as demonstrated by such pragmatic criteria as the easy availability of old movies, not everyone likes the institution.  One camp of skeptics contains libertarian-oriented critics who accept the institution of tangible property as both morally compelled and socially vital, but do not believe that intellectual property is supported by the same philosophical and practical considerations.  They would not allow a creator to invoke the legal power of the state to exclude others from using his creation.  However, they would allow self-help, ranging from encryption to contract.  Their objection is not so much to the idea of intellectual property as it is to the use of state power to enforce it.


Another camp might be called the anarchists.  Their view seems to be that the intellectual property should be available to all, in no way subject to the control of the creator.  I have yet to read of anyone propounding the proposition that a creator has an affirmative duty to create, and may not withhold his effort just because he has no mechanism for obtaining recompense for the effort, but I would not be surprised to see such an argument.

The number of avowed anarchists is small, but they seem to me to have many fellow travelers in the academic world, closet anarchists who claim to favor intellectual property, in the abstract, if the rights of creators and the public are properly balanced, but whose policy prescriptions would in pragmatic reality destroy IP as an institution.  In Universal City v. Corley, 48 prominent law professors endorsed the theory that encryption vitiates “fair use” doctrines that permit limited copying of IP and that the Digital Millennium Copyright Act (DMCA), which outlaws some encryption-cracking devices, is therefore unconstitutional.  Their view seems to encompass the proposition that encryption itself should be illegal because it extends protection of IP beyond the powers granted to Congress by the copyright clause of the Constitution.

The professors reject alternative methods of recognizing the interests protected by fair use doctrine, and do not consider at all whether the doctrine should be retooled for the digital age.  For example, a strong argument for treating copying for academic use as fair use has always been that obtaining permission involves high transaction costs.  Because the Internet reduces these costs, it undercuts this rationale and militates in favor of shrinking rather than expanding the scope of the fair use doctrine.  Realistically, an inevitable consequence of eliminating encryption would be to make all digitized property indefensible, which would be the destruction of intellectual property rights in anything that can be digitized.  Since the professors are not stupid, it is fair to assume that they are aware of this consequence of their position, and that their dedication to fair use is in fact a cloak for a desire, or at least a willingness, to bring about this destruction.

That such views are found in academia is not surprising.  Anyone who deals with issues of rights in tangible property knows that academia generally is permeated by hostility to property rights, usually justified by reference to environmental protection, smart growth, historic preservation, social justice, or some other abstraction.  Skepticism about IP is a logical extension of this distaste for property generally.

Another camp of skeptics focuses on the problems created by collisions between intellectual property rights and other values.  Some measures designed to protect rights in IP, notably the DMCA, present serious First Amendment issues involving free speech, as in Universal City v. Corley, in which the defendant is charged with publishing a computer program that constituted a device for cracking encryption.

Other collisions can arise out of law enforcement or self-help efforts to defend intellectual property.  Suppose, for example, that authorities or private parties hack into an individual’s computer hard drive to see if it contains pirated material; the effort would present problems of search and seizure under the Fourth Amendment, of invasion of privacy, and of interference with business relationships.  Even a firm supporter of IP rights can believe that they should be subordinated to other values in particular contexts.  On the other hand, it is also possible for those who oppose intellectual property rights to seize on the need to protect other values as yet another weapon against IP in general.  The Electronic Frontier Foundation, which is the laboring oar in Universal City v. Corley, sees no grays at all.  In any collision between IP and some other value, the other value wins.

One more position is also identifiable.  Numbers of people who strongly support protection of intellectual property are happy to dilute rights in tangible property, at least when the tangible takes the form of real estate and the dilution carries a tag of environmental protection.  (They would probably view differently any government effort to appropriate their retirement accounts.)  This stance is not the product of a consistent philosophy, but it has a solid basis in the realpolitik of the modern world.  Real estate has become less important as a producer of wealth and more of a consumption good.  Intellectual property is an increasingly important source of wealth.  Those whose economic position depends on IP defend it, even as they are indifferent to protecting rights in other forms of property not important to their economic well-being.

I have heard representatives of Hollywood-based entertainment industries, people who endorse any diminution of property rights characterized as “protecting endangered species, “wetlands preservation,” “smart growth,” or other environmentalist cause, bemoan the lack of respect for property rights exhibited by the Napster generation.  At one panel session, I finally got up, pointed out the incongruity, and asked:  “Is it not possible that the Napsterites are only practicing what you taught them?”  The remark was not well received, or even understood.

This phenomenon of picking and choosing among property rights also operates in the software industry.  Think-tank staffers who regard the government’s antitrust prosecution of Microsoft as an attack on intellectual property rights note wryly that Microsoft employees are major supporters of anti-property movements in the Northwest, and rarely see the connection between the government’s quick willingness to appropriate Microsoft software and its cavalier attitudes toward the rights of owners of other types of property.  These observers also believe that Microsoft’s competitors are foolish to support the antitrust action, because success will provide a basis for continuing government efforts to take and reallocate other intangible assets that are important to the intellectual classes, such as 401(k) plans or telecommunications capacity.

Not that the government needs much encouragement; it already regards telecommunications as subject to allocation by the government through “open access” and “must carry” rules.  Congress also arrogates to itself the right to reallocate intellectual property rights according to political whim — recent legislation extended the copyright term of property that was about to fall into the public domain, for example.  Washington scuttlebutt lays responsibility on the Disney Corporation, which was petrified about the expiration of copyright on some of its cartoon characters.


The analysis in this chapter addresses all these lines of thought, but its focus is on the views of the critics who defend tangible property while rejecting intellectual property.  The other criticisms are taken up in passing.  Similarly, the views of those who support intellectual property while disrespecting tangible property are addressed only by implication – it is not possible to make a coherent argument to this effect, because arguments for IP are built on arguments for property generally, and any devotee of IP who ignores protection of tangible property is cutting off the roots of his own position.