In our series highlighting misconceptions about the copyright monopoly, we’re arrived at comparing them to contract rights. Several people who defend the monopoly from a libertarian standpoint claim that a sale can be put under any conditions, otherwise known as freedoms of contract. The copyright monopoly stands in opposition to this freedom.

We have previously examined how the copyright monopoly stands in opposition to property rights. This doesn’t, in and of itself, invalidate a mechanism where people transfer exclusive rights (“monopoly rights”) by contract – it just highlights that the copyright monopoly cannot be defended from a standpoint of defending property rights, as the copyright monopoly limits property rights and stands in direct opposition to them.

Once we go beyond property rights and look at the right to transfer exclusive rights in general, we can talk more easily about the right to contract and how it would fit with the exclusive rights we know as the copyright monopoly.

Often enough, the argument is heard that the copyright monopoly is an extension of, or based on, the right to sign contracts voluntarily. It is argued that you can transfer a right (a property right, a monopoly right, or other form of right) under any conditions that you and the buyer agrees on, and that this would be part of the freedoms of contracting.

In other words, “if you don’t agree with the copyright monopoly terms – that is, the terms of sale – don’t buy the DVD.”

But it this really what the copyright monopoly is? Freedom to contract? Let’s look at what happens when Alice sells a DVD to Bob (possibly through an intermediary that, for all intents and purposes, mediates the contract), and the sale includes a written condition to not share the bitpattern on the DVD with anyone else, which Bob even reads, understands, contemplates, and signs.

In this case, Bob would be bound by contract to not share that bitpattern. So far, so good. But let’s assume he does anyway. He shares the bitpattern with Carol, who manufactures a copy of the DVD using her own parts and labor.

In this, Bob would be in breach of contract with Alice. But what about Carol’s copy? Carol has signed no contract with Alice whatsoever, and contracts aren’t contagious in the sense that they follow the original object, concept, idea, or pattern; they require voluntary acceptance from an individual, which Carol has not given. Carol has signed no contract, neither with Bob nor with Alice.

Thus, Carol would not be bound by the original contract in the slightest on a functioning free market, regardless of Bob’s breach, and she would be free to share the bitpattern of her own copy of the DVD as much as she pleased with David, Erik, Fiona, and Gia, who could all manufacture their own copies from the bitpattern that Carol shared, without any breach of contract having taken place.

But the copyright monopoly prohibits this. Carol would be in breach of the copyright monopoly, which is a highly unnatural construction on a free market. Contracts don’t work this way at all, and therefore, we have demonstrated clearly in this example that the copyright monopoly cannot possibly be seen as an extension of the freedom to sign contracts.

But it goes beyond that observation. The copyright monopoly limits Carol’s rights to sign contracts in her turn regarding her property that she manufactured with her own parts and labor – the DVD with the bitpattern: it limits her ability to sign contracts with David, Erik, Fiona, and Gia regarding this piece of property, should she desire to do so. For example, with the copyright monopoly in place, she cannot even legally execute one of the simplest forms of transaction – a transfer of property. She can’t make additional copies of her own property and sell them, or even give them away without any terms whatsoever.

Thus, the copyright monopoly doesn’t just not follow from the freedoms of contract. The copyright monopoly stands in direct opposition to the freedoms of contract.

Therefore, the monopoly cannot be defended from the perspective of the right to apply any terms to a voluntary sale. The monopoly limits such rights.