The Intellectual Property Question

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Like most people, I never really gave much thought to the idea of intellectual property before. I just accepted it was part of our lives, and that it was really no different from regular property. For example, if you write a book, or a song, or discover a new drug that cures a disease, or invent some new technology that improves people’s lives, it made perfect sense that you, and you alone, should have the right to earn a profit from your creation.

It’s what trademarks, copyrights, and patents are for, with the logic being that the absence of such legal protections would lead to fewer people pursuing such activities and ultimately decrease the total amount of creativity and innovation in the world.

But recently I learned there are people who believe there should be no such thing as intellectual property rights. Some would even say that the presence of intellectual property rights leads to less innovation and creativity, not more. By granting exclusive ownership of an idea and limiting its access to others, they argue that it prevents other people from building upon and further innovating on those ideas, leading to a reduction in overall competition.

I recently happened to listen to a podcast detailing the origins of Novo Nordisk, the Danish pharmaceutical company that makes Ozempic. If you didn’t know, Novo Nordisk was founded over a hundred years ago as Nordisk Insulinlaboratorium. Early on in the company’s history, there was a dispute between one of the founders and a pair of brothers who had been hired to work in the newly formed company’s factory. The brothers were subsequently fired and decided to build their own insulin manufacturing company down the street, called Novo Insulin. This was possible because there were no patent laws in Denmark back then. What ensued over the next several decades was a bitter rivalry between the two companies, with each one trying to outcompete the other by producing a better product at a lower price. As such, at least in the case of Novo Nordisk, it could be argued that the lack of intellectual property rights led to more innovation, not less.

But let’s put aside for now this question of whether or not having intellectual property rights is better or worse for society overall. Instead, let’s address whether or not ideas in and of themselves can be considered property in the same way that a tangible good like a person’s car, or their house, can be considered property.

All libertarians agree we need laws preventing people from walking up to another person and breaking their nose, or breaking into someone’s home and stealing their things, but the question of whether or not there should be laws protecting intellectual property isn’t as clear cut.

There are obviously differences between intellectual property and what we might refer to as tangible property. For one thing, tangible property is scarce in a way that intellectual property is not. This is why some libertarians will argue that a product of the mind can’t be stolen at all. Let’s say I write a novel and save it as a file on my computer. If someone were to somehow get their hands on that file and make a bunch of copies, have they actually stolen it considering I still have my copy? Furthermore, have they harmed me in the same way I would have been harmed had they stolen my actual computer? The answer is no.

On the flip side, you might say that if that person then went out and sold copies of my novel and pocketed that money for themselves, haven’t they in a roundabout way stolen money that rightfully belongs to me? If you accept this as being true, the question is why wouldn’t you want to have laws in place to prevent this from happening?

As an aspiring novelist, I struggled at first to understand how anyone could argue against having laws to protect a person’s intellectual property just like the laws that protect a person’s tangible property. Yet for some reason I found myself unable to just dismiss the idea altogether. There was something there that gave me pause.

For one thing, I couldn’t help but admit there is indeed a difference between someone stealing the money out of my wallet versus someone who gets their hands on a file for my book and profits off of it. Obviously, I think people who create anything that brings value to other people’s lives have the right to be rewarded for their work. But are those rights the same as the rights to their physical property?

In addition to the fact that stealing the money out of a person’s wallet is not quite the same thing as making money off of someone else’s idea, there are other differences as well. For instance, tangible property is something you generally acquire through a transaction between you and another party. Therefore you can prove ownership with some kind of receipt, or a deed, which isn’t often the case with intellectual property. When you write a book, create music, or invent a new way of doing something, chances are you did it not because you were promised something in exchange, but because you were self motivated without knowing in advance whether or not your creation would be valued by others.

It is because of such differences, and more, that I found myself unable to decide on this issue one way or the other. That’s when I came up with this thought experiment: what if we could choose between two different worlds, one with intellectual property rights, and one without? Which one would I prefer to live in?

To my surprise, I quickly decided I’d choose the one without. Here’s why. I came to the conclusion that in totality, I don’t think intellectual property rights benefit society. With regard to patents, it seems to me that they can hinder innovation and hurt consumers overall rather than helping them. The case of Novo Nordisk is a perfect example. As for the notion that having no intellectual property rights would mean less people trying to come up with new inventions, I’m not so sure about that. I know for a fact that we humans are motivated by more than just money, and we’ve been inventing and creating things since long before the idea of copyrights and patents ever existed.

I’m also not sure that intellectual property laws aren’t just another layer of bureaucracy we could do without. That they aren’t being used to justify the behavior of rent seekers who add no value to the world. While it may not be possible to know for certain if the existence of such laws has made our lives better, or worse, I know that I wouldn’t just assume it’s the former.

Has the rise of the pharmaceutical industry, which relies heavily on patents, led to an improvement of overall health? Or has the behavior of these companies that are fueled by profit seeking and patents led to a worse outcome? I don’t know. While it’s true we live longer today than we ever did, is that attributable to patents, or merely due to advances in farming, sanitation, and other medical discoveries that may very well have been made even in a world without patents?

Another argument that one could make is where do you draw the line? If I happened to use a copyrighted image in one of my articles without permission and was paid a few dollars for that article, should I go to jail? How about if I had earned a million dollars for the article?

But imagine a world where we did away with intellectual property rights in their entirety. It would mean a lot less lawyers, a lot less bureaucracy, and a lot less energy being wasted on enforcing laws where you might say there is no real victim. The absence of intellectual property rights could also lead to a greater proliferation of new art, music, inventions, and technologies that we might have been deprived of otherwise. Or to put it another way, the lack of intellectual property laws would almost certainly lead to more abundance, while the presence of such laws would almost certainly lead to more scarcity.

Don’t get me wrong, I’m not saying every idea or creation of the mind should be given freely and open sourced. An author should still have every right to profit from their work while making it as difficult as possible for someone to obtain a copy without proper payment. But what I’m also saying is the author shouldn’t expect men with guns to go chasing down someone that does.

Of course there will be an endless number of scenarios that could arise in this new paradigm. What about someone making a movie out of a book without paying the author for the right to do so? Or a singer passing off someone else’s song as their own? Maybe they get caught and are humiliated and their reputations suffer, but maybe not.

As the famous economist Thomas Sowell said, “There are no solutions, only tradeoffs”, and I believe that applies here as well. I don’t think there is necessarily a right or wrong answer to this question of whether or not we should have intellectual property rights. No matter how you treat the issue, there will be both benefits and drawbacks, which made me realize something else: that none of us should ever expect to live in a perfect society. It is impossible to control every thing, or every person. But I do believe the best we can hope for is to create a society that incentivizes people to take responsibility for their own actions, that encourages us to hold one another accountable, rather than relinquishing that responsibility to some central authority.

Finally, I want to be clear that this doesn’t mean I think those who do believe in intellectual property rights are flat out wrong. The case may be that we simply have different preferences and ideas of what’s best for society. In a way, it’s a lot like crypto and how each network has different consensus rules that people are free to leave or rejoin at will. And while I might choose to live in a society without intellectual property rights, you might choose differently, but what matters most is that we each have the freedom to choose.