RoR: Forum

Hi Joe,

That is a good argument, but I cannot agree with it.

You said,

By making a trade, if one side opts out of the contract, they are violating the property rights of the other. By not fulfilling their part of the exchange, they are simply stealing what they received. Breaking a contract is a form of theft.

So what happens when someone decides after he's signed the contract and learned about the invention that he wants to keep the idea for himself? What happens if he decides to violate the contract by using the ideas in whatever way he wants? The answer, if intellectual property rights do not exist, is - nothing. Without property, there is no theft. Without intellectual property, there can be no theft of ideas. A contract wouldn't be worth the paper it was written on.

Contracts do not required "property" to be valid, else there could be no such thing as a service contract. A "promise to perform" or "to behave in a certain way," can certainly be contracted. The "value" exchanged is the money the person buying the service contract is willing to exchange for the promise of the, "performing a service," or, "keeping a secret."

It is not the concept, idea, or design non-disclosure agreements and limited-use contracts directly protect, it is the promise of an action or behavior that is being contracted. The failure to perform the contracted action, such as an agreement to protect the secrecy of a design or to use it in only a specific limited way, can be litigated without reference to "theft of a design or idea." It is the, "failure to perform," that constitutes the theft, that is, receiving a value (money) for a promised but undelivered action.

If contracts could only protect property, every kind of contract for service or performance would be invalid; lawyers, plumbers, actors, musicians, teachers, and doctors would all be unprotected.

Regi

Post 1

Friday, June 25, 2004 - 3:28pm

Hi Regi,

This is related to the “marriage contract” thread below. Contracts do require property to be valid and service contracts protect property. Once a lawyer, for instance, provide his services for an amount of money, that money becomes morally his, so it is his property being protected by the contract. Conversely, if a client pays in advance, the contract protects his property and ensures the service is carried out. The money (consideration) is the property being protected and it rightfully belongs to the party who has performed to service/action/behavior or is yet to be the beneficiary of the service/action/behavior.

Post 2

Friday, June 25, 2004 - 6:41pm

Hi Glenn,

You are right, of course, that the money exchanged as part of a contract is property.

Once a lawyer, for instance, provide his services for an amount of money, that money becomes morally his, so it is his property being protected by the contract.

You might have noticed I said, "The "value" exchanged is the money the person buying the service contract is willing to exchange ...." I could have replace the word "value" with "property," but intentionally avoided that word, because the question has to do with "intellectual property," which obviously is not exchanged. It was to prevent confusion with the word property in these two distinct different ways, I avoided the word.

Otherwise I totally agree with your comment.

By the way, there was a very long discussion of this issue recently that you may or may not be familiar with here: SOLO forum , if you are interested.

Regi

Post 3

Friday, June 25, 2004 - 6:15pm

Glenn,

I looked contracts up in one of my old textbooks and the part that we're talking about here is known as consideration. That is defined in my book as "exchang(ing) something of value." The chief concern is value, not property. An example of a contract where there is actually no property may be two companies who contract to perform certain services for each other without exchanging any monetary currency. They may express this service in a monetary value when they balance the books, but the contract has nothing to do with property per se, only services rendered in exchange for the same value in services rendered as agreed upon in the contract. (Labor does have a monetarily expressible value, but that doesn't make it anyone's property, only something that they have control over and can exchange for values that they want)

Kevin

Post 4

Friday, June 25, 2004 - 10:35pm

Regi – I must admit, I haven’t been following the IP thread … just responding to your comment in the light of the other thread. Thanks for the link … weekend reading!

Kevin – Property is a subset of value - property is material value. You write:

[T]he contract has nothing to do with property per se, only services rendered in exchange for the same value in services rendered as agreed upon in the contract.

How is this “same value” determined if not materially? (i.e. in the form of money/property.) I think in cases where services are bartered, it would be prudent for parties to nominate a monetary value of the exchange as part of the contract. (Money, as a tool of exchange would be the ideal tool.) Otherwise courts would have to determine the material loss of one party if the other defaulted or couldn’t perform the service.

Post 5

Friday, June 25, 2004 - 11:49pm

Few comments.

Regi, if I understand it right, even under current contract law, both sides have to both gain something, and lose something. The whole premise of the anti-intellectual property people is that you lose nothing by having someone copy your IP, since you can use it yourself. Which means simply that ideas would be legally ignored under contract law. You can't contract for them. You can't even contract not to use them, because according to that premise the first party isn't hurt from the second party deciding to use it after all.

Also, the next question is if someone decides to violate that contract, what fine would the government impose? The fine would normally be based on the cost to the first party. But given the notion that there was no cost, there would be no penalty. Of course if they paid you not to use the idea, you'd have to give the money back. That's if the government recognized that part of the contract at all. I think it logically can't.

I have no doubts that in some cases, you can struggle to come up with a legal fiction to get around the issue. Such as paying someone to explain the idea to you, not simply pay for the idea. But then the second party would still be able to use his ideas. And without knowing what the idea is, the first party might get ripped off. But you still have tons of issues. I mentioned the theft of the trade secret, and a mere trespassing feel. There are plenty of other examples.

Kevin, I have to question the theoretical validity of the current system. The ultimate question when it comes to contracts and the government is why exactly the government can use violence in order to enforce them. There is no consensus on this issue from what I can tell. The majority view seems to be based on utilitarianism. But of course Objectivism would reject that. If the government is allowed to use violence to enforce the contract, then a violation of the contract must itself be an initiation of force. Which means some rights are being violated. Who's rights? What kind of rights?

The anti-intellectual property people say that it's not property, and you have no right to the ideas you create (whether copyright or patents). And the logical conclusion is that government can't enforce a contract that if broken, doesn't violate rights. I can't see how those arguing against intellectual property can solve this dilemma, except through legal contortions like I mentioned above. And more, if they hold their position consistently, I can't see why they would try to come up with contorted schemes to try to have their cake when they so clearly want to eat it. And all of this so you can emulate what would happen if intellectual property did exist.

So I wouldn't look to a textbook for a definitive answer, since the scope of law is based on politics, which is philosophy. The courts don't seem to have a clear idea of what a contract is, and why it should be enforced. They've evolved the definition over time, and a lot of it is still decided on a case by case basis.

Glenn, thanks for the comments here and on the other thread.

Post 6

Saturday, June 26, 2004 - 11:21am

Joe,

Which means simply that ideas would be legally ignored under contract law. You can't contract for them.

I don't think that is so. The terms of a contract cannot regard the IP as a value, but can certainly regard it as an idea and include it in the terms of the contract. If I am an actor under contract to perform a certain piece, that piece is part of the terms of the contract, although the value of it is not. If I choose to perform some other piece, I have violated the contract, even though the value of the pieces (the one I did not perform and the one I did) were not part of the exchanged value.

I can certainly sign a contract to not use some idea or to only use it in a specified way without considering the property value of the idea one way or the other.

The fine would normally be based on the cost to the first party.

The cost would be determined by negotiation at the time the contract is agreed on. Almost always, the penalties are defined as part of the contract.

I don't expect these answers will satisfy you, but one thing is certain. My views are not going to be implemented any time soon, and yours already are, so, in practical terms, your views are winning. Of course it's taking an awfully big government to do it.

Regi

Post 7

Saturday, June 26, 2004 - 3:44pm

Again, it comes down to why the government gets involved with the contract at all. There must be a rights violation in the unilateral breaking of a contract, or contracts can have no validity. My major point here is that if intellectual property is not a right, then it can't be privately contracted either. I already admitted that you can try contorting what the contract is really doing in order to try to fake the existence of intellectual property, although I think that it won't ever work very well.

And as for enforcement, I think that's a cop-out. You accept the validity of property rights, don't you? How big of a government do you need to enforce those? You can't dismiss the validity of a right because it doesn't protect itself.

Post 8

Saturday, June 26, 2004 - 3:44pm

Guys, the IP issue is simpler than it looks.

1) You cannot copyright an idea

2) You can copyright the *expression* of an idea

That's basically the situation from a legal point of view. Contracts really are neither here nor there.

You can't copyright (or patent or whatever) the idea of a "car" but you can copyright the design of the Ford Mustang.

The issue is not at all blurred by digital technology, though some people think it is. If a technology was invented that mean you could reproduce Ford Mustangs for free, it would still be illegal, as the *design* was someone's property. The idea is actually only half the story. Anyone can have an idea, but to *execute* it successfully is quite a different feat. That's the basis of the legal position. Someone had paid the R&D, the prototypes, take the risks, all the stuff that went into it before it even rolled onto the line. *That's* what gets stolen with IP theft. Music is no different in this respect, nor film, books, etc.

Without IP protection, no one would have any incentive to invest in R&D, or in imaginative invention like the arts, as anyone could steal it. Just the same as no-one would have the incentive to open a corner shop if they thought there was no police force to protect them from thieves. The same rules apply as in other markets, it's just the policing of IP that is more difficult. But that in itself is no objection.

- Daniel

Post 9

Monday, June 28, 2004 - 2:11am

reductio ad absurdum:

Let us pretend that Joe is a genius and has invented the wheel. If I see Joe going past my place with his horse and a CART. Is it not anti human for Joe to use force against me to stop me making my own wheels based on my own observations. I entered into no contract with Joe (and I accept Joe's argument on contracts) so I conclude that he must be initiating force against me.

When is a copy not a copy? If I make a mustang but add an extra stop light, is it still a mustang? How many stop lights would I need to add before it wasn't a mustang?

Genius Joe has invented that brilliant new motor. I have snuck in to his property and stolen the plans. I get caught but instead of $100- fine for trespass I get the death penalty. Would IP rights still be required? Are the laws protecting real property too lax?

I conclude that it is ideas that are real and not IP. Ideas are not limited as property must be. It is scarcity that gives property its value. IP is a government granted monopoly that initiates force against a persons right to use his own mind, body and property.

Post 10

Monday, June 28, 2004 - 2:39am

No6 writes:
>When is a copy not a copy? If I make a mustang but add an extra stop light, is it still a mustang?

If you add an extra sentence to Atlas Shrugged, does that make you the writer of the whole book? How about a comma?

Can you see the problem here? It is one of *substance*.

The point is: intellectual property does not protect some vague idea, which anyone can dream up, but can only protect very specific, substantial products of the intellectual process; plans, designs, sheet music, performances. That kind of thing.

*Because only these things have any realisable value in the first place*. Vague ideas, the germs of creation, blinding insights - vital as they are, they can come and go in a flash, leaving no trace. Turning them into something is what takes the work, and that is what can and should be protected.

Adding a comma to Atlas Shrugged requires no great effort, nor adds anything particularly unique - anyone could do it. Therefore it requires no great protection. The same could not be said of the novel itself.

Sure, the system is not perfect, but no system is.
And just because it is not perfect does not mean it is hopeless either.

- Daniel

Post 11

Monday, June 28, 2004 - 9:55am

Hi, Joe.

>>Again, it comes down to why the government gets involved with the contract at all. There must be a rights violation in the unilateral breaking of a contract, or contracts can have no validity. My major point here is that if intellectual property is not a right, then it can't be privately contracted either. I already admitted that you can try contorting what the contract is really doing in order to try to fake the existence of intellectual property, although I think that it won't ever work very well.<<

A valid contract, as has been pointed out already, requires an exchange of consideration. Under common law, consideration can be: [1] Property; [2] performance of an act; [3] forbearance (i.e., not performing an act one is entitled to); or [4] the creation, modification, or destruction of a legal relationship. As you can see, a valid contract under legal principles that have been valid for centuries is not confined to only the exchange of property. You possess other things that might be of value to others -- i.e., your ability to obligate yourself to things your liberty does not require of you.

Thus a trade secret agreement might involve the following consideration: I give access to documents I have no obligation to share with you in exchange for which you forbear upon your right to copy the information they contain. None of this requires intellectual property rights. In fact, just the opposite. Where intellectual property rights now exist, there can be no contract. For example, you and I can have no contract in which I agree to not make copies of a book you have authored, because federal law has taken that liberty away from me. Thus, no exchange of consideration can take place, because I cannot forbear upon an act already forbidden to me by law.

Without intellectual property rights the right of contract could provide almost all of the protections (except government-protected monopoly) that now exist to control the dissemination of valuable ideas. It would also do so with the flexibility that would adjust to the differing values of ideas instead of the straitjacket of one-size-fits-all federal statute. However, under the regime of intellectual property rights, a large chunk of what we once had the right to contract over has been devoured by the state.

This resolves your concern that there can be no middle ground. You're right. Indeed, basic contract law depends upon it.

Regards,
Bill

Post 12

Monday, June 28, 2004 - 12:38pm

I've been really thinking about this whole IP thing, and there is certainly a lot to think about.

Glenn:

It sounds like you're putting the cart before the horse. Money is an expression of value, a tool used to exchange value. The expression "money not worth the paper it's printed on" is a good example of this. As traders, people exchange what they want for what their willing to give, whatever that may be. You can express it any way you want, but it's still an exchange of value.

Joe:

I agree with you that the current system of contracts is probably in severe need of repair to tackle a lot of the very interesting issues coming up in the modern world. After all, it is possible that the creation of IP may have been partially motivated by a willingness to make it compatible with contract law, due to the difficulties you expressed. Indeed, if IP was abolished, the immense amounts of money that are made thanks to its existence would probably disappear, and rather quickly I imagine. I don't buy the notion that contracts can completely take up the slack created by IP, since their a part of IP's power (especially since some of the proponents of the abolishment of IP are also anarchists of one stripe or another!). The market would change, but the market has had major changes before, and would survive. (Just ask a local programmer whose job was outsourced to India, or a former Eastern employee)

Daniel:

If an idea has no value until it produces a physical product, then what has the value? Is it the idea, or the product it produces? Why does the idea behind a product, its "design", have more value than the product itself? That's the real problem here: if an idea is never made into a product, it has no value. The "expression" of an idea is the product, whether it's a book, a car, a cd, or whatever.
Yet, through patents, companies are able to get away with stuff like patenting ideas that haven't even been "expressed" yet to stop anyone from competing against them. Case in point: Nintendo putting out a patent on emulators for their portable, handheld Game Boy Advance system on other handheld platforms. Nintendo doesn't make another portable platform that emulates the Game Boy Advance on different hardware. But, other companies who want to emulate the Game Boy Advance on their handheld system are now barred from doing so through patent law. Why? Because the government said so.

-Kevin

Post 13

Monday, June 28, 2004 - 2:19pm

Hi, Kevin.

>>Indeed, if IP was abolished, the immense amounts of money that are made thanks to its existence would probably disappear, and rather quickly I imagine. I don't buy the notion that contracts can completely take up the slack created by IP, since their a part of IP's power (especially since some of the proponents of the abolishment of IP are also anarchists of one stripe or another!). The market would change, but the market has had major changes before, and would survive.<<

You are right. In the absence of statutorily protected intellectual property rights, which presently distort the market, the market would change and, of course, survive. I'd say, thrive. The market would shift from rewarding those who have expressed an idea to those who have labored to physically manifest that idea, from a preliminary blueprint to the manufacturing process to the finished product. An undistorted market would shift its rewards to whomever among the originator, the designer, and the producer makes the most valuable contribution in turning a particular idea into a sellable product. Presently, the federal government arbitrarily rewards the originator with a monopoly that gives him an unwarranted bargaining power with designers and producers.

So, you're also right that contracts may not "take up the slack created by IP". Contracts will more accurately reflect where the real bargaining power lies among originator, designer, and producer. By all means be suspicious of certain calls for the abolition of intellectual property. I will agree that even if there shouldn't be a federal copyright law, customers of outfits like Napster simply wanted something for nothing. No doubt if there were no copyright law, artists would have protected their works from unauthorized copying by contract. However, as I noted in my post to Joe Rowlands, an artist CANNOT make such a binding contract with anyone because copyright law already requires all of us to forbear from making unauthorized copies.

Well, what I'm getting at with this Napster digression is that justice does require that a value received be exchanged for a value given. While intellectual property rights do not dismantle this exchange, they distort it. Furthermore, it wrecks havoc upon private contracts, so that artists who are willing and prepared to control the dissemination of their works by voluntary agreement (as opposed to state enforcement) cannot do so. Hence, sharp operators like Napster arise to seize value through the cracks in the government's intellectual property scheme. Thus, intellectual property rights are less effective in ensuring that values are exchanged than a return to old-fashioned contract law.

Regards,
Bill

P.S. I haven't mentioned it in this thread so far, but I must give Regi Firehammer credit for changing my mind on copyright. I was halfway there on the abolition of IP as far as patents go, and Regi's iron logic gave me no choice but to go the rest of the way on copyrights.

P.P.S. By giving credit where credit is due, I do not wish to imply that I am reflecting Regi's ideas regarding contract law and copyright. These ideas are my own. Regi of course would be a wise fellow to copy them to the increase of his own mastery of this subject. ;)

(Edited by Citizen Rat on 6/28, 2:28pm)

Post 14

Monday, June 28, 2004 - 2:18pm

Kevin, you haven't quite got the picture here.

>That's the real problem here: if an idea is never made into a product, it has no value. The "expression" of an idea is the product, whether it's a book, a car, a cd, or whatever.

Nope. It's not that the vague, abstract idea has no value - just that it is *impossible to value* in a physical sense.

It requires a great deal of effort, experiment, skill and expense to turn that asbtract thought, or series of thoughts, into a useful plan or blueprint or sheet music or manuscript or whatever, and then even *more* to turn that blueprint into physical product (very few things are built exactly as per the blueprint!) That work and effort is what IP is designed to protect.

When you say "The "expression" of an idea is the product, whether it's a book, a car, a cd, or whatever." you've missed a step. The *intellectual property* is the design plan or blueprint. The car itself is just *property*.

OK?

>Case in point: Nintendo putting out a patent on emulators for their portable, handheld Game Boy Advance system on other handheld platforms....But, other companies who want to emulate the Game Boy Advance on their handheld system are now barred from doing so through patent law. Why?

Because all the competitors would be doing is, in effect, adding a comma to Atlas Shrugged and then claiming the right to reproduce it as their own work.

This is what I mean when I say a copyrightable work must be rooted in *substance*. It must be substantial, in that it physically exists (say, in the form of a plan, so we can examine it), and it must be *substantially* different from other existing works.

>Because the government said so.

The government enforces rule of law, and rule of law prevents theft of property.

- Daniel

Post 15

Monday, June 28, 2004 - 2:41pm

Hello, Dan.

You responded to Kevin: >>It requires a great deal of effort, experiment, skill and expense to turn that asbtract thought, or series of thoughts, into a useful plan or blueprint or sheet music or manuscript or whatever, and then even *more* to turn that blueprint into physical product (very few things are built exactly as per the blueprint!) That work and effort is what IP is designed to protect.<<

As a designer and a manufacturer, I can affirm your statement about how much work is needed to turn an idea into a marketable (or otherwise useful) product. Too many people think the idea is thing, when in fact most ideas languish uselessly because the work to make the real has not been done.

However, patents really don't protect design (by which I mean detailed specifications that effectively communicate what has to be built) and process (by which I mean the precise methods needed to make the product). All you need to get a patent is working example put together. Design and process lie beyond that effort, and do not need to be developed to get the monopoly protection of a patent.

Fortunately, design and process are readily protected under trade secret, which is, for the most part, enforced by private contract. Trade secret is an excellent example of how private contract really does function to protect ideas from being copied.

Regards,
Bill

Post 16

Monday, June 28, 2004 - 4:08pm

HI Bill

>However, patents really don't protect design (by which I mean detailed specifications that effectively communicate what has to be built) and process (by which I mean the precise methods needed to make the product).

I was speaking very generally. Music, for example, has a different set of requirements again ("mechanical", which protects the sheet music, and "performance" which protects the recorded track). So different industries will have different requirements, depending on the nature of the problems they face. Further, these problems may *change* because of other changes - for example, improvements in computer technology has caused headaches for record and film companies

Contracts may or may not be part of those solutions, but I don't see them as critical. Because contracts have to based on mutually accepted principles to start with, and the confusion seems to lie in the principles of the thing, which are actually relatively clear cut - or, not much less so than with ordinary property when you think carefully about it.

My point is to try and clear up the basic confusion over principle, which you summarise nicely below:

>Too many people think the idea is thing, when in fact most ideas languish uselessly because the work to make the (idea) real has not been done.

IP is designed to protect the latter, and not the former, which is to all intents and purposes unprotectable.( At least until the day we can read each others minds...;-))

regards
Daniel

Post 17

Monday, June 28, 2004 - 8:24pm

Hi Bill,

Thanks for the kind words.

"P.S. I haven't mentioned it in this thread so far, but I must give Regi Firehammer credit for changing my mind on copyright. I was halfway there on the abolition of IP as far as patents go, and Regi's iron logic gave me no choice but to go the rest of the way on copyrights."

Fact is, you would have gone the rest of the way on your own, because you do not allow contradictions in your reasoning. If I contributed anything at all, it was only ideas that might have helped you "check your premises."

Just before I got to the end of this post I had decided to post the following:

You have gone way past my own arguments against IP, addressing many of the practical (negative) aspects I had not considered. I appreciate your insights. I may "steal" some of "your ideas" for an update of my original article on so-called intellectual property.

Thanks again!

Regi

Post 18

Monday, June 28, 2004 - 11:29pm

My responses:

Daniel makes some good points in his first post. His last point argues from utilitarian grounds, talking about incentives to build. That's unconvincing for an Objectivist audience, since we don't subscribe to a utilitarian ethics. Also, there can be a case that while radical development might be difficult without IP laws, incremental development of ideas would be easier, which means you may not even be able to count on the utilitarian argument. An Objectivist can still look at Daniel's point, and if they think it's true, ask themselves how it is that the practical is not the moral. Which means that it's not an answer, but it should lead to a little questioning.

No6 needs a little help with his "reductio ad absurdum". The only thing absurd I saw was that he suggested the death penalty. We could turn it around and say "You think you own that nickel on your desk? Are you saying that you'll send me to death row if I take it?".

Citizen Rat starts by saying that contract law has been valid for centuries. But this is an argument from tradition. What makes common law valid? That might be fine for conservatives, but Objectivists don't uphold things as valid because they've always been done that way. You could also say that the postal services is properly an extension of the government because it has been for two hundred years. And in fact you could say that intellectual property has been around for centuries, which invalidates your arguments against it. This whole line of reasoning is useless.

And that brings us back to the real point of this discussion. Why exactly are contracts binding? Why is it the government has the right to use violent force to make someone do something against their will? Is it based on utilitarian grounds that it works well? Or is the force being used actually retaliatory, which means that a violation of a contract is a violation of rights. Citizen Rat just ignored this whole question.

Kevin, I have no doubts that the abolition of intellectual property rights would allow the market to continue in some shape. So does the existence of income tax and property tax. That doesn't get us closer to an answer. I'm not sure your point.

Citizen Rat goes on to say that giving the creator of the idea a right to it distorts the market, by weakening the positions of the people who would produce the actual product. That's really screwed up, considering that he's arguing that the designer could simply contract with them. How are the two systems different at all (assuming contracts were valid in this case)? The difference is that outsiders could wait for someone else to produce the first example, and then copy away. This doesn't strengthen the first producers position. It weakens it. It means he has to make all his money in a heartbeat, because some thieves are gonna come along and take it. And that's true in general. The only position you strengthen are those who want something for nothing. Napster is not an example of slipping through cracks in the government's IP. It's an example of looters coming in and taking what they haven't earned.

And then there's that nasty little assumption again. The assumption that the government can't protect IP because it's not a right, but they can enforce a contract even though it isn't a protection of a right. Say you sign on the dotted line saying you won't use the idea. And then you do use it. Who's rights have been violated? Once the idea is transferred, they can just call off the agreement and do with it as they will. If someone pays you for an invention, he can see the invention and decide not to pay after all. Nobody's rights are violated if you don't really own the idea.

Post 19

Tuesday, June 29, 2004 - 8:07am