*I'm republishing here because IP is a recurring topic in bitcoin discussion right now. BSV fans in particular seem to believe, despite that fact that bitcoin and everything on top of it was built without patents, it requires strict patent enforcement to proceed.
I'm not making a detailed argument about bitcoin patents here. I'm presenting a wider perspective on the concept in general.
"He knocked down my Lego tower!”
“Only because she built it to look exactly like the one I made, and that’s not fair. I made mine first!”
All the parents I know handle this situation by pointing out to the aggressor that it is perfectly acceptable for other kids to build things that mimic his own creations; in fact, he should feel honored!
But let’s visit a household wherein the parents are strict advocates and respecters of intellectual property.
In this house, children are punished for copying their siblings.
Any new Lego ideas, whether actually built or not, are immediately filed with the parent, and every time Lego building takes place, the children must first check the files to make sure they aren’t about to build something that someone else had already thought of and filed. No imitation is allowed in this household.
This is, of course, an absurd environment.
The main source of learning for children, imitation, is being crushed while some of the most beastly childlike tendencies — spite and anger at others’ success and an overwhelmingly selfish desire for all the attention — are nurtured.
This is also the environment faced by all inventors, entrepreneurs, creators and businesses in any legal structure that enforces IP laws.
Let’s fast-forward a few decades.
The IP-conscious parent gets a call from their grown-up child complaining about how he designed and built a beautiful garden, but the neighbor loved it so much he put in an identical twin next door.
The good parent would immediately sympathize with the victimized child and come over with some shovels and firearms and help his son destroy the thieving neighbors’ copycat garden, and demand some payment from the neighbor at gunpoint, to boot.
This is only fair, of course, because this gardening son built the garden for profit, not just pleasure. It was so grand that he planned to sell tickets to people who wished to walk through and enjoy its splendor. How could he do so when the neighbor’s identical garden could be walked through for free?
It seems easy to spot the ridiculous and childish nature of anti-copying arguments in these examples, but there is no significant difference in the real world of IP law.
Ideas, unlike physical goods, are not scarce.
The neighbor can build his garden without so much as a single fern being removed from the other.
Garden design is an idea. Some argue that it’s not the idea of garden itself that’s being stolen, but the value it could produce. Even in the case of physical goods, no one has a right to a certain market value. If I steal your car, your property rights are violated. If a manufacturer designs a slew of new cars that make yours far less valued in the market, your rights are not violated, because you never had a right to a given resale value.
Many people argue that the real need for IP law arises when we’re talking about companies making multi-billion dollar investments in R&D, not merely five-figure gardens. What incentive is there to pursue such costly innovations with no promise of reward for the effort?
There are several problems with this analysis. First, even with current IP laws, there is no guarantee of profit. How many billions of R&D dollars are spent on projects that end up yielding no return? Consumers are fickle, and IP doesn’t guarantee they’ll like your product, no matter how much you spend on research.
Second, the massive R&D sticker price is somewhat deceiving. Drug companies, for example, are not spending billions of dollars of the CEO’s money. Instead, they are spending billions of dollars of shareholder money. Most shareholders have shares amounting to thousands, and they have portfolios with money spread across many companies and industries. Even if a $1 billion R&D project is fruitless, the losses are actually not that acute.
But let’s say they are. Let’s pretend a single individual had a great idea and they could devote their entire life and livelihood to developing it. Surely, without the security of IP law, they would have no incentive to do so, right?
How do you explain a fashion designer whose every energy goes into designs that can be immediately copied in the IP-free fashion industry? How do you explain football coaches who spend years developing and perfecting new schemes and plays only to have the best of them immediately adopted by inferior coaches across the league?
Do you think the NFL would be more dynamic and innovative if coaches could copyright their plays? What if no one were allowed to use the cover 2 defense except its creator? The spread offense? The I formation?
Thankfully, no such IP laws exist in football. Do you think we’re suffering a lack of innovation for it? Are there innovative coaches sitting on the sidelines with amazingly innovative plays, failing to use them for fear they won’t reap enough reward in a copycat league?
IP law is not necessary to incentivize innovation.
There are no guarantees of success or uniqueness in the market, yet entrepreneurs and investors put significant resources into innovation every day, apparently willing to hazard the risk. IP law stifles, rather than encourages, innovation.
Not only is IP unnecessary, it is a holdover from our nursery days before we learned that it’s not OK to be possessive little tyrants who demand no one copy their babbling noises, Lego towers and Crayon scribbles.
IP laws are childish and bring out the kind of nasty and immature backbiting that parents work so hard to correct in their kids. Let’s grow up and quit trying to hold back the beauty and dynamism of a world where ideas are free.
Originally published here.
