Bryan Caplan  

A Nice Statement of My Position on IP

The Anti-IP Crusaders... My Fake Economist Artic...
Some economists would argue that any contracts voluntarily entered into should be enforced. That is what lead them to argue that, if I agree not to redistribute your book, then I should be bound by that agreement. In this view, the copyright law simply codifies the contract that sellers of embodied ideas would wish to bind their buyers to, and so saves on private transaction costs.

What do Boldrin and Levine have to say against the view that they have so aptly summarized? They make an analogy to the ban on slavery contracts, and say that this is "not only a 'morally just' prohibition, as many economists have argued, it is also an economically efficient one."

For starters, I don't see what the moral or economic problem with a slavery contract is supposed to be. Boldrin and Levine just assume the reader will agree that a slavery contract is morally offensive. Their economic case mostly consists in pointing out some disadvantages of slavery-like contracts, without giving due credit to the compensating advantages that lead such contracts to be signed despite their drawbacks.

But suppose you share the widespread view that slavery contracts are just wrong and should not be allowed. Question: Doesn't it have something to do with the fact that a person is ceding everything they will ever have - or at least a high fraction thereof - to another person, AND will have no easy way to back out? Would you have a moral problem with a five-minute slavery contract? What if you could cancel your five-minute slavery contract for a $1 fee?

That's about how onerous the typical copyright is. A contract not to copy the Hero System Fifth Edition core rulebook is at worst a petty inconvenience, not a daily albatross around my neck. And if I did feel oppressed, I could always sell the book, or just burn it, and I'd once again be free as a bird.

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COMMENTS (17 to date)
candid writes:

So your position on IP is that if there's a certain type of contract that some (but certainly not all!) buyers and sellers would want to agree to, then the government should simply choose a particular instance of this contract and enforce it as law for all transactions?

Robert writes:

In one sense, the situation described by candid isn't really the case, since even when the government establishes the default contract between the buyer and seller, they are free to negotiate other terms. It's just that when it the transaction costs of negotiating other terms exceed the expected benefit of either party in attempting to do so, they do not. The existence of a default contract in statute even saves the transactors the hassle of having to come to any formal agreement at all.

More generally, if some point of negotiation resembles a zero-sum game, then the total utility for all participants does not depend on the outcome. And so the best outcome is the one in which the participants experience the smallest transaction costs: further negotiation over how to slice the pie only reduces its size. In such a case, arbitrarily imposed terms, whatever they are, may be the best solution.

NathanB writes:

The problem with copyright (and most IP law) is that it's binding on everyone, not just private parties.

Because of this, IP law is subject to capture by rent-seeking special interests, and this is exactly what we've seen in the last 50 years.

What should be a system of incentives for creators has become a way for rights holders to create a permanent monopoly of ideas. In practice this means perpetual copyright term extensions every time Mickey is about to enter the public domain, a chilling effect on citing and excerpting works, patent trolls stifling innovation, and a public domain of ideas frozen in 1920.

I believe there should be some form of copyright and patent protection, but the current system is totally broken.

Brad Hutchings writes:

You could also just make a copy, and that action might fall under fair use, or if you're discreet about it, the rights holders probably don't care that much. Make a copy for a friend, there's not much of a foul. Make a copy for 5,000 friends or 5,000,000 friends, the copyright holder might have a problem.

One thing I know too much about is software DRM. One thing I've learned is that if you (as a developer) approach the problem as trying to ensure that no unauthorized copy gets used, you'll lose a lot of hair and people will think you're a jerk. If you approach the problem as trying to ensure that networks of people who reuse a code don't get too big, you'll probably be really successful. For example, look at what iTunes Music Store lets you do. You can burn a mix CD for 5 of your friends directly from iTunes. Or you could burn 1 copy in iTunes and dupe the CD ad inifinitum with Toast. You can let all your friends connect their iPods to your computer and offload music that they can play on their iPods. Technically, it's all a violation of the license, but if you use a little judgment and don't get too out of hand with it, Apple and the RIAA aren't gonna crash through your door.

And this is where B&L really breaks down. They rely on a totally literal interpretation of the law and the contracts, which, in practice, nobody on either end follows. If Jesus were alive today, he'd burn mix CDs for his brother Craig. What copyright law and license agreements and DRM and all the other mechanisms say to the licensee, however, is that if you get too out of hand, we're gonna come down on you like a ton of bricks (or feathers or Jell-O or whatever). It's not the only area of law where the letter is not absolute. We have it in our daily lives, from 65 mph speed limits that mean "keep it safe and under 75" to immigration law that now means "if ICE shows up at your worksite, you should direct them to an office off-site to check in while you ensure that everything is in order" (actual general advice from a major firm representing employers, no kidding).

Laurent GUERBY writes:

You have to be careful with IP, it's not just about copyright.

Patents and trademarks do not work like copyright and the contract approach you cite just doesn't work for trademarks and patents: they can be enforced on you even if you've never heard or met their "owner", so you've of course never signed any contract.

If we limit ourselves to copyright, you say: "And if I did feel oppressed, I could always sell the book, or just burn it,". In your contract approach both could (and will) be prevented. In particular you are not free to resell Microsoft Windows software licences for example.

With current copyright, you have all the public places and broadcasting issues. You take a picture of a building you see from a public place, in some countries this is a copyright violation. Did you sign a contract? No. You tape public-aired in the clear radio or TV, did you sign a contract? No.

There's the juridiction issue, do citizen of other countries have to enforce this kind of contract if they decide democratically not too?

For software, what about file formats and ownership of your own data? You write some text or create some music with proprietary software, who's owning the result? You or the software firm? If the contract forbids file format reading by other software, you're no longer the owner of your own data.

At last, what to do with existing work where no contract was signed? Should grand-children of authors sue Disney because they used "public domain" works that would no longer be public domain with the contract approach (which would likely be of infinite duration)?

Steve writes:

If I download a copy of your book in pdf format using bit-torrent, I have signed no contract. Should you come after me with a lawsuit, you would be the aggressor.

Brad Hutchings writes:

Steve, nobody has come after the downloaders yet. If you upload it and share it with 1,000,000 of your favorite friends (and BT has a nasty tendency of having that built into the protocol) or more likely, you seed the Torrent, expect to get sued.

Nathan Smith writes:

I think the problem with slavery contracts is related to the question of continuity of self over time.

Suppose that the self consists of (1) will, and (2) memory.

My will operates in any given moment, making decisions. The context for the decisions is contemporaneous observations, as well as memory. It is memory that links all the momentary-wills together.

Yet the contents of memory change greatly over time, and with it the personality. We sometimes say of someone, "he has become a different person." We may be told of things we did in early childhood, which we have forgotten, and they do not seem like our own acts.

The right to contract gives the present self power over future selves. Future selves must to some extent submit to be ruled by past selves, but should this rule be absolute? Should there be cases where a person may repudiate his past, like an heir repudiating his inheritance? "I have changed, I am a different person now, I refuse to accept the obligations incurred by my reckless past self..."

A ban on slavery contracts mitigates the rule of present selves over future selves, and protects future selves against decisions by present selves that radically contradict their interests.

Maria writes:

Wouldn't the problem with slavery be that it was not voluntary? People did not "sell" themselves into slavery - they were born into it, or captured and sold. Right?

confused writes:

I'm sorry, I don't understand. What is a five minute slavery contract? How would that differ from a five minute job other than allowing the worker to quit at any time? Where is the connection between human slavery and IP?

I'm totally lost.

nelziq writes:

The problem with contracts view of copyrights is that these form of contracts are unenforceable leaglly or practically. As a practical matter, as previous commentators have suggested, not everyone who violates copyright is a party to the contract. As for legally, the contracts can generally be ignored. The law does not enforce contracts for the sake of enforcing contracts. Contracts are enforced when one party has been harmed by non-performance of the other party. In this case, if I violate my contract with BigMusicCo and make a copy of a CD for my brother and they take me to court, what harm can they claim has come to them? The case would be thrown out or they would be awarded nominal damages of $.01. In some cases damages could be shown, but for the overwhelming majority of situations that copyright is concerned with, this is not the case.

Scott Scheule writes:


Is this a social contract view? If so, why not?

More over, I think the most interesting problem involving intellectual property is what kind of standards third-parties should be held to? I agree that a person should follow the contracts that he's signed, but how does that affect all the other many people who have not (or would not have) signed such contracts?

Patri Friedman writes:

Some economists would argue that any contracts voluntarily entered into should be enforced. That is what lead them to argue that, if I agree not to redistribute your book, then I should be bound by that agreement. In this view, the copyright law simply codifies the contract that sellers of embodied ideas would wish to bind their buyers to, and so saves on private transaction costs.

This is bogus, as candid points out, because it enforces terms on those who wouldn't have agreed to them. I could equivalently argue that most people would prefer if those they rented/sold their houses to didn't do drugs, and then describe anti-drug prohibition as merely law which codifies the contract that sellers of houses would wish to bind their buyers to...

Given how much media is beamed over the airwaves - radio, satellite, and TV, it is absurd to say that the majority of media is purchased in a form which could have a contract associated to it. The electrons in my body are jiggling right now with hundreds of movies, songs, and TV shows, whose patterns I am not allowed to record and do what I want with.

That's an imposition on my freedom, not the codification of something I would have agreed to anyway. I have never met the people jiggling my electrons, and never negotiated a contract with them.

Scott Scheule writes:

I'm agreeing with Patri here, not simply because he's my coblogger, but because someone's deleted his Wikipedia entry and he needs someone to cheer him up.

This line of thought, Bryan, of enforcing unmade contracts, is going to lead you into Rawlsian territory, and you're going to have to flinch and backtrack once you notice that.

chance writes:

Agree with stipulation that third parties shouldn't be drafted into contract.

Agree with patri 100%.

But even within this surreal framework, why is the contract that the sellers wish the buyers would actually enter more important than the contract the buyers wish the sellers would actually enter? That would surely save the same amount in transaction costs right? And I'd love to get a lifetime supply of free pizza with my next CD or book purchase.

Hunter McDaniel writes:

As a computer guy, the main problem I see with IP law in general is that it "doesn't scale well". For large companies it is a manageable overhead, just another cost of doing business. For small companies and citizens generally, it is a no-win minefield. Unlike real property which can be easily surveyed and titled, the boundaries of IP are murky and ultimately consist of assertions backed up by a threat to sue. If the RIAA decides to come after me, I've already lost no matter how strong my defense might be in principle.

Silicon Valley has put powerful creative tools in the hands of everyman, but hasn't been able to make copyright lawyers equally affordable.

Martin Geddes writes:

IP law also ignores the problem that one "idea" may be expressed in many overlapping ways at many times. Disney characters draw from previous folk tales and their ongoing elaboration and retelling. Every player in the media game wants to "cash out" and monopolise those ideas, preventing them becoming the foundation for the next round of idea exchange. If the monopoly were short in duration (e.g. 10 years) it might be reasonable; the current situation is absurd. Furthermore, it fails to reflect the enormously decreased costs of search, aggregation and authoring. If anything, copyright terms should be tumbling, not extending.

In some ways, it's the same conundrum that faces partnerships (e.g. law firms, consultancies) and mutual savings societies, where one generation sells off the assets, thus depriving future waves of partners and customers their windfall. A simple inter-generational transfer payment.

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