WEBVTT NOTE IP as Contract 1 00:00:00.000 --> 00:00:05.000 Against Intellectual Property by Stefan Kinsella 2 00:00:05.000 --> 00:00:11.000 Intellectual property as contract, the limits of contract. 3 00:00:11.000 --> 00:00:19.000 The law, then, should protect individuals' rights to one's body and to legitimately acquired scarce resources, property. 4 00:00:19.000 --> 00:00:28.000 There is not a natural right to ideal objects, to one's intellectual innovations or creations, but only to scarce resources. 5 00:00:28.000 --> 00:00:39.000 Many opponents of IP rights typically support only contractual arrangements to protect ideas and innovations, private contracts between property owners. 6 00:00:39.000 --> 00:00:56.000 Suppose, for example, that A writes a book and sells physical copies of it to numerous purchasers, B1, B2, BN, etc., with a contractual condition that each buyer, B, is obligated not to make or sell a copy of the text. 7 00:00:56.000 --> 00:01:06.000 Under all theories of contract, any of the buyer's B becomes liable to A, at least for damages if he violates these provisions. 8 00:01:06.000 --> 00:01:18.000 But the advocates of the contractual approach to IP are mistaken if they believe that private contract can be used to recreate the same type of protection afforded by modern IP rights. 9 00:01:18.000 --> 00:01:25.000 Patent and copyright are good against all third parties, regardless of their consent to a contract. 10 00:01:25.000 --> 00:01:37.000 They are real rights that bind everyone, in the same way that my title to a parcel of land binds everyone to respect my property, even if they do not have a contract with me. 11 00:01:37.000 --> 00:01:52.000 A contract by contrast binds only parties to the contract. It is like private law between the parties. It does not bind third parties, i.e. those not in privity with the original parties. 12 00:01:52.000 --> 00:02:00.320 Thus, if the book purchaser B relates to third parties T, the plot of a purchased novel, 13 00:02:00.320 --> 00:02:05.520 these third parties T are not bound in general by the original contractual obligations between 14 00:02:05.520 --> 00:02:12.480 A and B. If I learn how to adjust my car's carburettor to double its efficiency, or if 15 00:02:12.480 --> 00:02:17.560 I learn of a poem or movie plot someone else has written, why should I have to pretend 16 00:02:17.560 --> 00:02:24.560 I have not obligated myself by contract to the Creator. I do not deny that contractual obligations can be implicit or tacit, but there is not even an implicit contract in such situations, nor can it be said as a general matter that I have stolen or fraudulently acquired the information, as there are many legitimate ways for individuals to acquire information. 17 00:02:47.560 --> 00:02:52.560 Artistic works, by their very nature, typically are made public. 18 00:02:52.560 --> 00:02:59.560 Scientific discoveries and innovations likewise can become known beyond the parties to confidentiality agreements. 19 00:02:59.560 --> 00:03:10.560 And it certainly cannot be said that my use of my carburettor, or writing a novel using the same plot, physically interferes with the creator's use of his own tangible property. 20 00:03:10.560 --> 00:03:20.560 It does not even prevent the creator from using his own carburetor idea to improve his own car or others, or from using that plot. 21 00:03:20.560 --> 00:03:30.560 So, my adjusting my carburetor is not a breach of contract, it is not theft, and it is not physical trespass on the inventor's tangible property. 22 00:03:30.560 --> 00:03:35.560 Twiddling my carburetor does not violate the inventor's rights. 23 00:03:35.560 --> 00:03:44.560 At most, my use of his idea will diminish its value to the inventor by hampering his ability to monopolistically exploit it. 24 00:03:44.560 --> 00:03:51.560 As we have seen, however, one cannot have a right to the value of one's property but only to its physical integrity. 25 00:03:51.560 --> 00:03:56.560 Thus, the use of contract only gets us so far. 26 00:03:56.560 --> 00:04:02.560 A book publisher may be able to contractually obligate his purchasers not to copy his book, 27 00:04:02.560 --> 00:04:09.560 Contract vs. Reserved Rights 28 00:04:32.560 --> 00:04:39.560 If you are not really using his ideas, it is difficult to use standard contract law to prevent third parties from using ideas they glean from others. 29 00:04:39.560 --> 00:04:50.560 Perhaps, sensing this problem, some quasi-IP advocates shift from a purely contractual approach to a reservation-of-rights approach, 30 00:04:50.560 --> 00:04:56.560 in which property rights in tangible resources are seen as a divisible bundle of rights. 31 00:04:56.560 --> 00:05:16.560 For example, under the standard bundle of rights view, a landowner can sell the mineral estate to an oil company while retaining all rights to the surface, except for an easement, servitude, granting passage to a neighbour, and a life estate, usufruct, granting use of the surface estate to his mother. 32 00:05:16.560 --> 00:05:31.560 Drawing on the bundle of rights notion, the reservation of rights approach holds that a type of private IP can be privately generated by creatively reserving rights to reproduce tangible items sold to purchasers. 33 00:05:31.560 --> 00:05:43.560 Rothbard, for example, argues that one can grant conditional ownership of knowledge to another while retaining the ownership power to disseminate the knowledge of the invention. 34 00:05:43.560 --> 00:05:51.460 Or, Brown, the inventor of an improved mousetrap, can stamp it copyright, and thereby sell the 35 00:05:51.460 --> 00:05:56.280 right to each mousetrap except for the right to reproduce it. 36 00:05:56.280 --> 00:06:02.640 Like the real rights accompanying statutory IP, such reservations allegedly blind everyone, 37 00:06:02.640 --> 00:06:06.200 not just those who have contracted with the original seller. 38 00:06:06.200 --> 00:06:11.840 Thus, third parties who become aware of, purchase or otherwise come into possession of the restricted 39 00:06:11.840 --> 00:06:18.440 Item also cannot reproduce it, not because they have entered into a contract with Brown, 40 00:06:18.440 --> 00:06:23.620 but because no one can acquire a greater property title in something than has already been given 41 00:06:23.620 --> 00:06:31.120 away or sold. In other words, the third party acquires a tangible thing, a book or a mousetrap, 42 00:06:31.120 --> 00:06:37.080 say, but it is somehow missing the right to copy part of the bundle of rights that normally 43 00:06:37.080 --> 00:06:40.720 constitutes all rights to the thing. 44 00:06:40.720 --> 00:06:46.040 The third party acquires ownership of information from a person who did not own the information 45 00:06:46.040 --> 00:06:51.760 and thus was not entitled to transmit it to others. 46 00:06:51.760 --> 00:06:54.480 But surely something is amiss here. 47 00:06:54.480 --> 00:07:01.000 Suppose that A writes a novel and sells a first copy, book 1, without restriction, i.e. 48 00:07:01.000 --> 00:07:04.460 without a reservation of rights, to be one. 49 00:07:04.460 --> 00:07:11.920 And a second copy, book two, to be two, but reserving the book's inherent right to copy. 50 00:07:11.920 --> 00:07:17.400 The two books, book one and book two, appear to third parties to be otherwise identical, 51 00:07:17.400 --> 00:07:19.000 yet they are not. 52 00:07:19.000 --> 00:07:26.120 One is incomplete, the other somehow contains more mystical rights essence within its covers. 53 00:07:26.120 --> 00:07:31.960 Books B1 and B2 leave these books on a park bench where they are discovered by third-party 54 00:07:31.960 --> 00:07:39.360 tea. According to Rothbard, Book 2 is missing the right to copy, much like an electronic 55 00:07:39.360 --> 00:07:46.320 toy that is sold batteries not included. It is as if there is an invisible mystical tendril 56 00:07:46.320 --> 00:07:52.880 of reproduction ownership stretching from Book 2 back to its true owner, A, wherever 57 00:07:52.880 --> 00:08:04.880 Thus, even if T finds and homesteads the abandoned book II, this book simply does not contain, within itself, the right to permit the owner to copy it. 58 00:08:04.880 --> 00:08:10.880 It is continually being siphoned away by a rights wormhole which connects the item to owner A. 59 00:08:10.880 --> 00:08:16.880 Thus, if T homesteads the book, he still homesteads no more than he acquires. 60 00:08:16.880 --> 00:08:25.880 T. Homestead's only a book without a right to copy built in, and thus does not have the right to copy book too. 61 00:08:25.880 --> 00:08:31.880 The same is true for subsequent third parties who come to possess the book. 62 00:08:31.880 --> 00:08:38.880 Is such a view really tenable? Can we conceive of property rights working in this way? 63 00:08:38.880 --> 00:08:45.320 in this way? Even if we can, would it really achieve the desired end result here, preventing 64 00:08:45.320 --> 00:08:51.600 third parties from using the protected ideas? It is difficult to maintain that rights can 65 00:08:51.600 --> 00:08:56.720 be reserved in this manner. One function of property rights, after all, is to prevent 66 00:08:56.720 --> 00:09:03.160 conflict and to put third parties on notice as to the property's boundaries. The borders 67 00:09:03.160 --> 00:09:08.360 Borders of property must necessarily be objective and intersubjectively ascertainable. They 68 00:09:08.360 --> 00:09:14.280 must be visible. Only if borders are visible can they be respected and property rights serve 69 00:09:14.280 --> 00:09:21.040 their function of permitting conflict avoidance. Only if these borders are both visible and 70 00:09:21.040 --> 00:09:28.040 objectively just, justifiable in discourse, can they be expected to be adopted and followed. 71 00:09:28.040 --> 00:09:50.040 But think of the two books, Book 1 and Book 2. How could one tell the difference between them? How could one see the right tendril connected to the latter but not to the former? How can third parties be expected to respect an amorphous, invisible, mystical, spooky, possibly unknown and unknowable property border? 72 00:09:50.040 --> 00:09:56.040 The implications of such a view are troubling. Palmer writes, 73 00:09:56.040 --> 00:10:02.040 The separation and retention of the right to copy from the bundle of rights that we call property is problematic. 74 00:10:02.040 --> 00:10:06.040 Could one reserve the right, for example, to remember something? 75 00:10:06.040 --> 00:10:13.040 Suppose that I wrote a book and offered it to you to read, but I had retained one right, the right to remember it. 76 00:10:13.040 --> 00:10:19.040 Would I be justified in taking you to court if I could prove that you had remembered the name of the lead character in the book? 77 00:10:19.040 --> 00:10:21.960 in the book. 78 00:10:21.960 --> 00:10:25.160 Here the author includes a footnote citing Palmer, 79 00:10:25.160 --> 00:10:30.520 Are Patents and Copyrights Morally Justified, page 853. 80 00:10:30.520 --> 00:10:35.560 Palmer also quotes the following illuminating passages. 81 00:10:35.560 --> 00:10:36.560 Hegel argued, 82 00:10:36.560 --> 00:10:41.280 The substance of an author's or an inventor's right cannot in the first instance be found 83 00:10:41.280 --> 00:10:45.180 in the supposition that when he disposes of a single copy of his work, 84 00:10:45.180 --> 00:10:50.900 He arbitrarily makes it a condition that the power to reproduce facsimiles as things, a 85 00:10:50.900 --> 00:10:55.960 power which thereupon passes into another's possession, should not become the property 86 00:10:55.960 --> 00:10:59.500 of the other, but should remain his own. 87 00:10:59.500 --> 00:11:03.460 The first question is whether such a separation between ownership of the thing and the power 88 00:11:03.460 --> 00:11:08.460 to produce facsimiles which is given with the thing is compatible with the concept of 89 00:11:08.460 --> 00:11:13.160 property, or whether it does not cancel the complete and free ownership on which there 90 00:11:13.160 --> 00:11:18.120 There originally depends the option of the single producer of intellectual work to reserve 91 00:11:18.120 --> 00:11:24.240 to himself the power to reproduce, or to part with this power as a thing of value, or to 92 00:11:24.240 --> 00:11:29.240 attach no value to it at all and surrender it together with the single exemplar of his 93 00:11:29.240 --> 00:11:30.240 work. 94 00:11:30.240 --> 00:11:41.240 Hagel's Philosophy of Right, page 55, quoted in Palmer, Our Patents and Copyrights Morally Justified, page 853 95 00:11:41.240 --> 00:11:44.240 And, as Kant noted, 96 00:11:44.240 --> 00:11:51.240 Those who regard the publication of a book as the exercise of the rights of property in respect of a single copy, 97 00:11:51.240 --> 00:11:55.240 it may have come to the possessor as a manuscript of the author, 98 00:11:55.240 --> 00:12:11.240 or as a work printed by some prior publisher, and who yet would, by the reservation of certain rights, go on to restrict the exercise of property rights, maintaining the illegality of reproduction, will never attain their end. 99 00:12:11.240 --> 00:12:24.240 For the rights of an author regarding his own thoughts remain to him, notwithstanding the reprint, and there cannot be as distinct permission given to the purchaser of a book for, and a limitation of, its use as property. 100 00:12:24.240 --> 00:12:30.240 How much less is a mere presumption sufficient for such a weight of obligation? 101 00:12:30.240 --> 00:12:53.240 From Immanuel Kant, Was ist ein Buch? in Die Metaphysik des Sitten, edited by W. Weisschedl, Frankfurt am Main, Sohrkamp Verlag, 1977, page 581, translated and quoted in Palmer, Our Patents and Copyrights Morally Justified, page 853. 102 00:12:54.240 --> 00:12:59.240 But third parties still pose a problem for this theory. 103 00:12:59.240 --> 00:13:05.240 Even if a seller of an object could somehow reserve certain use rights with respect to the sold object, 104 00:13:05.240 --> 00:13:12.240 how does this prevent third parties from using information apparent from or conveyed in that object? 105 00:13:12.240 --> 00:13:20.240 Reserved rights proponents say more than that the immediate buyer, B1, is bound not to reproduce the book. 106 00:13:20.240 --> 00:13:28.240 For this result could be obtained by pointing to the implicit contract between seller A and buyer B. 107 00:13:28.240 --> 00:13:36.240 Let us consider a third-party T1 who finds and reads the abandoned book, thus learning the information in it. 108 00:13:36.240 --> 00:13:42.240 Alternatively, consider third-party T2 who never has possession or even sees the book. 109 00:13:42.240 --> 00:13:49.240 He merely learns of the information in the book from gossip, graffiti, unsolicited email and so forth. 110 00:13:49.240 --> 00:13:56.840 Neither T1 nor T2 has a contract with A, but both now possess certain knowledge. 111 00:13:56.840 --> 00:14:01.640 Even if the book somehow does not contain within it a right to reproduce, how can this 112 00:14:01.640 --> 00:14:07.000 prevent T1 and T2 from using their own knowledge? 113 00:14:07.000 --> 00:14:12.060 And even if we say that T1 is somehow bound by a contractual copyright notice printed 114 00:14:12.060 --> 00:14:18.640 on the book, an untenable view of contract, how is T2 bound by any contract or reserved 115 00:14:18.640 --> 00:14:25.640 Rights. Rothbard attempts to address this point as follows. 116 00:14:25.900 --> 00:14:32.120 A common objection runs as follows. All right, it would be criminal for Green, the buyer, 117 00:14:32.120 --> 00:14:37.380 to produce and sell the brown mousetrap, but suppose that someone else, black, who had 118 00:14:37.380 --> 00:14:42.620 not made contact with brown, happens to see Green's mousetrap and then goes ahead and 119 00:14:42.620 --> 00:14:45.700 Green produces and sells a replica. 120 00:14:45.700 --> 00:14:48.300 Why should he be prosecuted? 121 00:14:48.300 --> 00:14:53.660 The answer is that no one can acquire a greater property title in something than has already 122 00:14:53.660 --> 00:14:56.300 been given away or sold. 123 00:14:56.300 --> 00:15:00.780 Green did not own the total property right in his mousetrap in accordance with his contract 124 00:15:00.780 --> 00:15:06.340 with Brown, but only all rights accept to sell a replica. 125 00:15:06.340 --> 00:15:11.540 But therefore Black's title in the mousetrap, the ownership of the ideas in Black's head, 126 00:15:11.540 --> 00:15:17.140 can be no greater than Green's and therefore he too would be a violator of Brown's property 127 00:15:17.140 --> 00:15:23.500 even though he himself had not made the actual contract. 128 00:15:23.500 --> 00:15:30.060 There are several problems with this reasoning. First of all, Black merely sees Green's mousetrap. 129 00:15:30.060 --> 00:15:35.800 He does not see or have access to ideas in Green's head, nor does he need to have such 130 00:15:35.800 --> 00:15:40.280 Research Access in order to duplicate evident features of the mousetrap. 131 00:15:40.280 --> 00:15:45.960 Further, ideas in one's head are not owned any more than labour is owned, only scarce 132 00:15:45.960 --> 00:15:48.360 resources are owned. 133 00:15:48.360 --> 00:15:53.400 By losing sight of scarcity as a necessary aspect of a homesteadable thing and of the 134 00:15:53.400 --> 00:15:58.880 first occupancy homesteading rule as the way to own such things, Rothbard and others are 135 00:15:58.880 --> 00:16:04.460 sidetracked into the mistaken notion that ideas and labour can be owned. 136 00:16:04.460 --> 00:16:10.420 If we recognize that ideas cannot be owned, they are not scarce resources, that creation 137 00:16:10.420 --> 00:16:16.860 is neither necessary nor sufficient for ownership, first occupancy is, and that labour need not 138 00:16:16.860 --> 00:16:22.540 be owned in order to be a homesteader, then the trouble caused by these confused notions 139 00:16:22.540 --> 00:16:25.340 disappears. 140 00:16:25.340 --> 00:16:30.140 If Black somehow comes into possession of the ideas implicit in an item which Brown 141 00:16:30.140 --> 00:16:53.140 In Rothbard's example he happens to see it. It is irrelevant that the mousetrap may not have had a right to copy built into it. For Black does not need such permission to use his own property as he sees fit. How does happening to see the mousetrap make Black a trespasser or violator of Brown's rights? 142 00:16:53.140 --> 00:17:00.500 All action, including action which employs own scarce means, property, involves the use 143 00:17:00.500 --> 00:17:05.660 of technical knowledge. Some of this knowledge may be gained from things we see, including 144 00:17:05.660 --> 00:17:11.620 the property of others. We do not have to have a right to copy as part of a bundle of 145 00:17:11.620 --> 00:17:18.420 rights to have a right to impose a known pattern or form on an object we own. Rather, we have 146 00:17:18.420 --> 00:17:27.420 We have a right to do anything at all with and on our own property, provided only that we do not invade others' property borders. 147 00:17:27.420 --> 00:17:32.420 We must not lose sight of this crucial libertarian point. 148 00:17:32.420 --> 00:17:40.420 If I own a hundred acres of land, I can prance around naked on it, not because the land is imbued with some right to prance naked, 149 00:17:40.420 --> 00:17:45.620 But because I own the land and it does not necessarily violate the property rights of 150 00:17:45.620 --> 00:17:53.100 others for me to use my property in this fashion. Similarly, I am entitled to do what I want 151 00:17:53.100 --> 00:17:58.980 with my own property, my car, my paper, my word processor, including improving my car's 152 00:17:58.980 --> 00:18:06.300 carburettor or using my ink to print words on my paper. That is, unless I have contractually 153 00:18:06.300 --> 00:18:25.300 I do not have to first find in my property a right to use in a certain way, for all ways of using it, except those that cause invasions of others' properties, are already encompassed within the general right to use my property. 154 00:18:25.300 --> 00:18:30.300 In libertarianism, we live by right, not permission. 155 00:18:30.300 --> 00:18:35.300 We do not need to find permission to take actions with our own property. 156 00:18:35.300 --> 00:18:42.300 Contrary to practice in totalitarian societies, all things that are not forbidden are permitted. 157 00:18:42.300 --> 00:18:54.300 The reservation of rights view would reverse this by assuming that every use of property is valid only if that particular use right can be somehow found or located in the property. 158 00:18:54.300 --> 00:19:20.300 Consider the following analogy. Farmer Jed discovers oil under his land. No one for miles around knows about the black gold. Jed plans to buy his neighbour's property for a song. They'll sell it cheap, too, since they don't know about the oil. In the middle of the night, his nosy neighbour, Kuta, suspicious over Jed's recent good spirits, sneaks on to Jed's land and discovers the truth. 159 00:19:20.300 --> 00:19:27.460 The next morning, at Floyd's Barber Shop, Coutre spills his guts to Clem and the boys. 160 00:19:27.460 --> 00:19:31.660 One of them promptly runs to a payphone and gives a tip to a reporter at the Wall Street 161 00:19:31.660 --> 00:19:35.220 Journal who happens to be his nephew. 162 00:19:35.220 --> 00:19:38.220 Soon it is common knowledge that there is oil in the vicinity. 163 00:19:38.220 --> 00:19:43.900 The neighbours now demand exorbitant prices for their land, thus spoiling Jed's plans. 164 00:19:43.900 --> 00:19:51.140 Let us grant that Coutre can be prosecuted for trespass and harms flowing therefrom. 165 00:19:51.140 --> 00:19:56.380 The question is, can Jed's neighbours be prevented from acting on their knowledge? 166 00:19:56.380 --> 00:20:01.940 That is, may they be forced to somehow pretend that they do not know about the oil and sell 167 00:20:01.940 --> 00:20:07.220 their land to Jed for what they would have sold it when in ignorance? 168 00:20:07.220 --> 00:20:10.020 Of course they may not be so forced. 169 00:20:10.020 --> 00:20:14.000 They own their land and are titled to use it as they see fit. 170 00:20:14.000 --> 00:20:19.340 Unlike tangible property, information is not ownable, it is not property. 171 00:20:19.340 --> 00:20:24.100 The possessor of a stolen watch may have to return it, but so long as the acquirer of 172 00:20:24.100 --> 00:20:29.220 knowledge does not obtain that knowledge illicitly or in violation of a contract, he is free 173 00:20:29.220 --> 00:20:32.140 to act upon it. 174 00:20:32.140 --> 00:20:37.060 Note, however, that according to the reservation of rights view, the neighbours would not be 175 00:20:37.060 --> 00:20:41.940 be permitted to act upon their knowledge, because they obtained it ultimately from Coutre, 176 00:20:41.940 --> 00:20:48.260 a trespasser who had no title to that knowledge. Thus they could not have obtained greater 177 00:20:48.260 --> 00:20:55.260 title to it than Coutre himself had. Note also that others, such as geological surveyors 178 00:20:55.260 --> 00:21:00.260 mapping oil deposits, cannot include this information in their maps. They must feign 179 00:21:00.260 --> 00:21:06.500 ignorance until given permission by Jed. This imposed ignorance correlates with the unnatural 180 00:21:06.500 --> 00:21:13.500 There is clearly no warrant for the view that reserved rights can somehow prohibit third-parties from using knowledge they acquire. 181 00:21:13.500 --> 00:21:22.500 It is simply not legitimate to restrict the use to which an owner of property can put it unless that owner has contractually obligated himself or has otherwise acquired the information by a violation of the information-holder's rights. 182 00:21:22.500 --> 00:21:28.500 Talk of reserving the right to copy is merely a form of manipulation. 183 00:21:28.500 --> 00:21:34.120 has acquired the information by a violation of the information holder's rights. 184 00:21:34.120 --> 00:21:39.220 Talk of reserving the right to copy is merely a way to avoid the contractual notion that 185 00:21:39.220 --> 00:21:45.280 only parties to a contract are bound by it. Here, in a footnote, the author adds, 186 00:21:45.280 --> 00:21:51.860 Of course, in anarcho-capitalism it is difficult to predict what extensive contractual regimes, 187 00:21:51.860 --> 00:21:58.100 networks and institutions will arise. Various enclaves or communities may well require their 188 00:21:58.100 --> 00:22:26.720 Therefore, as a general matter, purchasers can be bound by a contract with sellers to 189 00:22:26.720 --> 00:22:32.720 to not copy or even resell the thing. However, once third parties become aware of the ideas 190 00:22:32.720 --> 00:22:37.560 underlying the invention or literary work, their use of that knowledge does not in general 191 00:22:37.560 --> 00:22:43.800 violate any recognisable property rights of the seller. Given this view of scarcity, property 192 00:22:43.800 --> 00:22:52.360 and contract, let us examine the legitimacy of common forms of intellectual property. 193 00:22:52.360 --> 00:22:55.420 Copyright and Patent 194 00:22:55.420 --> 00:23:00.380 As should be apparent, copyright and patent seek to prevent the owners of tangible property 195 00:23:00.380 --> 00:23:05.500 – scarce resources – from using their own property as they see fit. 196 00:23:05.500 --> 00:23:11.140 For example, they are prohibited under patent law from practicing patented methods, using 197 00:23:11.140 --> 00:23:16.660 their own property, or from shaping their own property into patented devices, even if 198 00:23:16.660 --> 00:23:20.920 they independently invent the method or device. 199 00:23:20.920 --> 00:23:25.960 By copyright law, third parties who have not contracted with the author are prevented from 200 00:23:25.960 --> 00:23:30.240 copying or profiting from the author's original work. 201 00:23:30.240 --> 00:23:36.080 Clearly, sellers of novel devices or literary works can contract with buyers to prevent 202 00:23:36.080 --> 00:23:40.840 these buyers from reproducing or even reselling the item. 203 00:23:40.840 --> 00:23:43.400 These contractual webs can be elaborate. 204 00:23:43.400 --> 00:23:48.640 A novel writer can license his story to a movie studio on the condition that the studio 205 00:23:48.640 --> 00:23:54.600 require all movie theatres to require customers to agree not to reproduce the plot of the 206 00:23:54.600 --> 00:24:01.760 movie, and so on. Yet, once third parties not bound by a contract acquire this information, 207 00:24:01.760 --> 00:24:07.920 they are free to use it as they see fit. The reserved rights approach does not change this. 208 00:24:07.920 --> 00:24:13.440 Thus, it would probably be difficult to maintain anything similar to our present patent and 209 00:24:13.440 --> 00:24:23.320 Trade Secrets Trade secrets are easier to justify than 210 00:24:23.320 --> 00:24:30.160 patent or copyright. Palmer argues that they emerge from common law type rights and are 211 00:24:30.160 --> 00:24:37.360 thus legitimate. Trade secret law allows damages to be obtained for or an injunction to be 212 00:24:37.360 --> 00:24:56.360 This can be applied against the person who has improperly acquired the trade secret or who divulges the secret contrary to a contractual obligation, and also against others who know that they are obtaining the secret from such a person. 213 00:24:56.360 --> 00:25:06.360 Suppose employee A of company X has access to X's trade secrets, such as its secret formula for a soft drink. 214 00:25:06.360 --> 00:25:13.280 He is subject to an employment agreement obligating him to keep this formula secret. 215 00:25:13.280 --> 00:25:19.720 He then jumps to X's competitor Y. Y wants to use the formula it learns from A to compete 216 00:25:19.720 --> 00:25:26.160 with X. Under current law, so long as the secret formula has not been made public, X 217 00:25:26.160 --> 00:25:32.460 can get a court order to stop A from revealing the secret to Y. If A has already revealed 218 00:25:32.460 --> 00:25:39.220 For the secret to Y, X can also get an injunction to stop Y from using or publicizing the formula. 219 00:25:39.220 --> 00:25:45.260 Clearly, the injunction and damages against A are proper because A is in violation of 220 00:25:45.260 --> 00:25:51.860 his contract with X. More questionable is the injunction against Y because Y had no 221 00:25:51.860 --> 00:25:59.300 contract with X. In the context in which situations usually arise, however, where the competitor 222 00:25:59.300 --> 00:26:04.740 If competitor Y wants the trade secret and knows the defecting employee is in breach of contract, 223 00:26:04.740 --> 00:26:10.580 it could be argued that the competitor Y is acting in conspiracy with or as an accomplice 224 00:26:10.580 --> 00:26:16.620 of employee A to violate the contractual rights of trade secret holder X. 225 00:26:16.620 --> 00:26:22.300 This is because A has not actually breached his trade secrecy agreement until he reveals 226 00:26:22.300 --> 00:26:24.860 trade secrets to Y. 227 00:26:24.860 --> 00:26:30.940 If Y actively solicits A to do this, then Y is an accomplice or co-conspirator in the 228 00:26:30.940 --> 00:26:37.360 violation of X's rights. Thus, just as the driver of a getaway car in a bank robbery 229 00:26:37.360 --> 00:26:42.860 or the mafia boss who orders an assassination are properly held liable for acts of aggression 230 00:26:42.860 --> 00:26:48.900 committed by others with whom they conspire, third parties can, in narrowly defined cases, 231 00:26:48.900 --> 00:26:57.060 be prevented from using a trade secret obtained from the trade secret thief. 232 00:26:57.060 --> 00:26:58.060 Trademarks 233 00:26:58.060 --> 00:27:02.820 Palmer also argues that trademark law is legitimate. 234 00:27:02.820 --> 00:27:07.620 Suppose some Lachmanian changes the name on his failing hamburger chain from Lachman Burgers 235 00:27:07.620 --> 00:27:12.340 to Rothbard Burgers, which is already the name of another hamburger chain. 236 00:27:12.340 --> 00:27:16.940 I, as a consumer, am hungry for a Rothbard burger. 237 00:27:16.940 --> 00:27:21.940 I see one of the fake Rothbard burger joints run by the stealthy Lachmanian and I buy 238 00:27:21.940 --> 00:27:28.340 a burger. Under current law, Rothbard, the owner of the Rothbard Burgers trademark, can 239 00:27:28.340 --> 00:27:33.660 prevent the Lachmanian from using the mark Rothbard Burgers to sell burgers because it 240 00:27:33.660 --> 00:27:41.700 is confusingly similar to his own trademark. That is, it is likely to mislead consumers 241 00:27:41.700 --> 00:27:45.380 as to the true source of the goods purchased. 242 00:27:45.380 --> 00:27:51.620 The law, then, gives a right to the trademark holder against the trademark infringer. 243 00:27:51.620 --> 00:27:57.520 In my view, it is the consumers whose rights are violated, not the trademark holders. 244 00:27:57.520 --> 00:28:02.420 In the foregoing example, I, the consumer, thought I was buying a Rothbard burger, but 245 00:28:02.420 --> 00:28:08.100 instead got a crummy Lachman burger with its weird kaleidoscopic sauce. 246 00:28:08.100 --> 00:28:13.180 I should have a right to sue the Lachmanian for fraud and breach of contract, not to mention 247 00:28:13.180 --> 00:28:19.100 intentional infliction of emotional distress and misrepresentation of praxeological truths. 248 00:28:19.100 --> 00:28:24.420 However, it is difficult to see how this act of fraud perpetrated by the Lachmanian on 249 00:28:24.420 --> 00:28:28.320 me violates Rothbard's rights. 250 00:28:28.320 --> 00:28:33.160 The Lachmanian's actions do not physically involve Rothbard's property. 251 00:28:33.160 --> 00:28:36.040 He does not even convince others to do this. 252 00:28:36.040 --> 00:28:41.580 At most he may be said to convince third parties to take an action within their rights, namely 253 00:28:41.580 --> 00:28:48.160 to buy a burger from the Lachmanian instead of Rothbard. Thus, it would appear that under 254 00:28:48.160 --> 00:28:54.080 libertarianism, trademark law should give consumers, not trademark users, the right 255 00:28:54.080 --> 00:28:57.040 to sue trademark pirates. 256 00:28:57.040 --> 00:29:04.460 Moreover, more novel extensions of trademark, such as rights against trademark dilution 257 00:29:04.460 --> 00:29:28.700 There is, of course, nothing wrong with being the first to acquire a domain name and thereafter 258 00:29:28.700 --> 00:29:30.300 for Selling it to the Highest Bidder.