A few weeks ago, my position on intellectual property (IP) shifted. I abandoned the possibility that copyright by contract could function within a libertarian framework.

I have argued for decades that IP cannot be derived from natural rights. Most IP advocates claim IP is a product of your labor in the same sense as a chair you build; if you do not need a contract to claim the chair as property, then neither do you need one to own an idea. (See the Daily Anarchist article “The Basics of Copyright” for arguments against IP as a natural right.)

But I hoped the free market could provide the protection of contract for some forms of IP. Albeit, this protection would almost certainly erode over time as the idea spread. I have now concluded that such a contractual arrangement would be contradictory, politically disastrous and incompatible with a libertarian legal system. Giving an example of each belief provides a sense of where my thoughts on IP are driving.

Contradictory

Chapter 10 of Murray Rothbard’s Man, Economy, & State makes a concerted libertarian defense of copyright by contract. Rothbard argues that a book with the word “copyright” imprinted on its first page constitutes a contract with which a buyer agrees to abide at the point of purchase. He concludes, “any infringement of the contract by him or a subsequent buyer is implicit theft and would be treated accordingly on the free market.” Elsewhere, Rothbard defines “implicit theft” as fraud.

It is a odd argument. If ideas are natural property protected by law, then taking them without consent is explicit theft. If they are property protected only by agreement, then misusing them is a breach of contract for which restitution and damages may be due. But a single word that the buyer may not have seen is far from an enforceable contract. A contract should have written or oral agreement by both parties, and agreement requires a knowledge of the terms which vary from one form of copyright to another. Equally odd is enforcing the ‘contract’ upon a third party who was not involved in the original agreement. What if that person found it abandoned on the ground? To what has he consented?

Perhaps Rothbard assumes that the original buyer has also agreed to terms of sale through which he can transfer ownership of his physical copy. If so, then he is extending copyright protection far beyond that championed by even diehard natural-right advocates of IP who argue that a buyer owns the physical copy of his book but not its content; that is, he can resell the book but not reproduce it. Rothbard seems to be saying that the word “copyright” means that the physical book itself is only conditionally owned with the author or publisher retaining control over the terms of its sale or gifting.

Of course, the same situation could occur with music, patented goods, movies, art… Indeed, why not stamp the bottom of every good produced with the equivalent of the word “copyright” and then assume a legally enforceable contract exists against the chair being replicated or sold on the ‘wrong’ terms?

Rothbard is stretching the concept of copyright and contract beyond recognition. But he does so because it is the only way to preserve a theory copyright by contract.

Politically disastrous

IP and libertarianism are politically incompatible because of the incredible policing of individuals that is necessary to monitor the ‘crime’ of sharing ideas and expression. The policing would be necessary whether or not the copyright was contractual or state-enforced. If nothing else, the immense flow of information over the Internet means that more invasive methods are being and will be used in the name of IP protection.

And, now, 3D printers have the potential for transforming the flow of goods in much the same way as the Internet did for information. The downloading and creation of duplicate goods may become as convenient as the downloading of music is currently. This potential would devastate patents, of course. Again, the only way to protect patents would be to monitor, restrict or outright criminalize an individual’s use of 3D printers.

At every turn, as technology offers greater freedom and prosperity, IP reaches out to snatch it away…if not through controlling the technology, then by controlling individuals.

Incompatible with a libertarian legal system.

Incompatibility between copyright and restitution means that enforcement of IP would lead to an unjust and unlibertarian system of law. The purpose of libertarian courts is to provide reasonable restitution to victims.

Consider the case of a person who ‘improperly’ downloads a song. Libertarian courts would aim at making the ‘victim’ whole, perhaps with some damages included. Disagreement exists on whether additional damages should be due but not on whether the overall compensation should be reasonable; otherwise, the penalty is not just. Yet the music industry and the courts have penalized people hundreds of thousands of dollars for a handful of downloads. On March 18, 2013, the news site NJ.com reported on a woman who has been ordered to pay $222,000 for downloading 24 songs. The overkill is necessary to maintain IP. The overkill is very likely to continue in a court aimed at restitution.

The continuation would occur for at least two reasons. Restitution is not a term spelled out by the alleged contract created by buying a book or downloading a song. If it were, if a music company specified a $30,000 penalty for downloading a song that may be misused by someone else – perhaps a family member – then no one would risk buying their product.

Instead the courts retroactively define the terms of the contract that cover a breach. But what is the lost profit and damages from one song being downloaded? Even if that cost could be realistically assessed, the entire compensation has to be reasonable to be just. If the court found that the company lost $10 and assessed quadruple the sum in restitution and damages, then there would be no incentive for people to eschew downloads. The chances of being caught are negligible, and the cost of being caught would be as well.

To minimize downloads, it is necessary to make the law draconian and to punish severely a selection of offenders who serve as a cautionary tale to other scofflaws. Thus, federal law allows a recording company to claim between $750 and $30,000 per illegal download. This quickly moves any legal system away from restitution and justice.

CONCLUSION

For an action to be politically and legally permissible in a libertarian framework, it must include what the philosopher Robert Nozick called “no morally impermissible” steps. With regard to IP, the protection of one person’s rights cannot involve the violation of another’s. This principle applies whether natural-rights or contractual IP is being argued. I now believe that any form of IP would inherently contain morally impermissible steps.