Why Kinsella is wrong.

Economics Political Theory
21

Kinsella’s position is simply anti-government in that he is saying the current IP laws are wrong because they bind unrelated third parties. If that was all he said then that would be fine. He goes further to argue that contracts either can’t be used or won’t be effective. It is a little unclear whether he would prohibit IP contracts or not. If you believe contracts should be prohibited regarding IP, please explain why? If you believe contracts will be universally ineffective then you are factually wrong. By definition if I contract with at least one person not to reproduce music I will have had some impact on the speed of reproduction of music. So again the effectiveness of the contract would depend on what was prohibited in the contract and the penalties for breech and on the type of IP you are trying to protect. I do not argue they will be 100% effective but it seems clear that the effectiveness is much more case dependent than Kinsella’s blanket assertion that they will not work.

In general, I would say the more closely held and complex and difficult to reproduce the IP is then the more success IP contracts will have. So the effectiveness would be a continuam and not an either or.

Kinsella is wrong.

22

Stephan Kinsella is wrong about some things, but IP is not one of them. I try to avoid your threads, because you have a bad habit of arguing irrationally, but this one really takes the cake.

Not only have you failed for the umpteenth time to make your case about IP, you have continued to demonstrate ignorance regarding the nuances of the Kinsellian position on IP.

At best, you’re talking past the argument.

For once, have the good grace to stop writing ignorantly, and fully research Kinsella’s position. Then, and only when you have a decent argument, come back to LvMI and proclaim he is wrong. Anything less is dishonest.

23

I think my arguement is quite specific and is based on his quotes from this site. I understand he is a demi-god for you so any honest criticism backed by reason is not permissable in your mind but maybe you should try addressing the issues rather than attacking me.

Either explain why IP contracts should be prohibited or will universally be ineffective or move on.

24

I have attacked your argumentation, not you. It’s laughable you would claim I regard Kinsella as a demi-god. You obviously don’t know my history with him.

The onus is on you to make your case for IP positivism. We’re still waiting for you to do the research, and to make a water tight case for your position. As hard as this may be for you to understand, negative proof, is not proof.

25

Basically, Kinsella is arguing that NDAs would not exist in a natural order. I find that extremely difficult to believe and he hasn’t given any good reasons to believe it. What would not exist is the “socialist NDA” attached to the purchase of a specific good (e.g. a CD or DVD) whereby the FBI forces the taxpayers to pay for the enforcement of an “NDA” between themselves and the RIAA. NDAs could conceivably exist in a natural order, it’s just that the enforcement costs (being borne by the parties to the NDA) would mean that only very valuable information could be so protected.

Clayton -

26

It is not me making the claim that contracts are universally ineffective in protecting IP. I am merely pointing out the obvious that this would seem to be very case specific in the effectiveness. Clayton in the next post lays out good reasoning why we would expect some protection of IP to exist even without government.

It is funny how you can accept at face value Kinsella’s assertions that contracts will be universally ineffective in protecting any form of IP.

Isn’t obvious that if people have contractual means of protecting IP even if it’s imperfect they will utilize that tool?

27

If it is economically inefficient, then they will be out of business. I’ve explained this to you before. You can contract anything. If you can’t deliver, then the contract for all intents and purposes is worthless.

It is funny, for reasons you do not even know.

28

Can you point us to where Kinsella says specifically that?

29

I am not against NDAs–or any contracts–but you have to realize the limits of contract. First, third parties are not bound by them. Second, if you have an NDA that does not prevent the information from being disclosed. It only provides a penalty to the disclosing party. But once the information is public, nothing can be done about it except fine the discloser. This is the law even now, with respect to trade secrets–once the information is (even wrongly) disclosed, it’s public and no longer a secret. The trade secret is thus destroyed. So would it be for private NDA’s.

Third, according to the Rothbard-Evers title-transfer theory of contract, they are not binding promises but only title transfers to property. So this makes it even harder to stop leaks.

As I note here, http://www.stephankinsella.com/2009/09/04/doctorow-on-bit-copying/ , quoting Kevin Carson, “As Cory Doctorow put it, a computer is a machine for copying bits. If you put a cultural artifact into bits, it’s going to get copied. And anybody whose business model depends on stopping people from copying bits is f*cked, plain and simple.”

MaxLiberty said “It is a little unclear whether he would prohibit IP contracts or not. If you believe contracts should be prohibited regarding IP, please explain why?”

Of course they should not. But it’s a question whether title transfers only would be given effect (meaning damages awarded for breaches of confidentiality), or other form of remedy. But the point is that once information reaches the public, the contract can’t stop non-parties from using the information.

“If you believe contracts will be universally ineffective then you are factually wrong. By definition if I contract with at least one person not to reproduce music I will have had some impact on the speed of reproduction of music. So again the effectiveness of the contract would depend on what was prohibited in the contract and the penalties for breech and on the type of IP you are trying to protect. I do not argue they will be 100% effective but it seems clear that the effectiveness is much more case dependent than Kinsella’s blanket assertion that they will not work.”

There is something to this and I have adverted many times to the fact that various contractual regimes would surely arise and have effects. But if you understand IP its essential nature is to be like in rem–good against the world. Against third parties. This cannot be recreated with a bilateral contract. Theoretically it could be created with a unanimous multilateral contract just as a “state” could be. But this is fantasy.

I only dip into the forums here on occasion. I’ll try to check back later.

30

I am glad you responded, this is something that has been bothering me from AIP to your articles I have read on the Mises daily. I agree that you can’t use an NDA to contain information once it is out in the wild. But I think that the fact that 3rd parties are not bound by an NDA is no more important than the fact that 3rd parties are not bound by any type of contract to which they are not party. If I contract to store your belongings and someone else steals them from me and I find out who it is, you cannot go to the contract you and I had to find what should be done to the thief since he was not party to that contract. The difference, of course, is that thievery of scarce goods constitutes aggression, whereas copying a pattern does not.

I agree that you cannot contain the information once in the wild. However, you could simply stipulate damages in the contract that reflect the cost of a leak of the given information. Obviously, only information valuable enough to hire a lawyer to write such a contract with each person to whom the information is being disclosed and to pursue enforcement of the contract once violated could be protected by such arrangements. I’m thinking of things like software source code, architectural blueprints, etc.

Yup. Totalitarian DRM would only create the mother of all black markets.

Clayton -

31

Third parties not being bound them is irrelevant. I agree that once information is leaked or stolen it can not be put back in the bottle. Second, although an NDA is not a guarantee that information will be disclosed it is often quite effective in preventing information from being disclosed. Again, the effectiveness depends on the type of information and number of people involved. So where it will work and have some impact then it will work and be used. Also, I think your arguement lacks imagination and faith in the general creativity of the marketplace. I hope we agree that protecting IP/information in many cases will be deemed quite valuable and as such we might expect the market to develop mechanisms and contract regimes to satisfy that need. One clear example is that we might find the majority of protection agencies joining a regulatory agreement that would cover IP so most but not all people would voluntarily subscribe to limit their copying and sharing of information as part of an overall broader package.

The goal of the contract is to prevent the information from reaching the general public. There are lots of NDA’s right now that have no government protection that are effectively preventing information from reaching the general public. So even though the penalty is only against the contracting party it is serving the purpose of restricting the information. It in fact is current refutation of your stance.

This is what the government is trying to do with their IP laws. In the absence of government people would still try and protect what they believe is sensitive information just like they are successfully doing now with contracts. The absolute guarantee that there will not be third party disclosure is not a requirement in order for contracts to be effective in restricting the release of IP/information. The fact that contracts will not always be 100% effective does not mean contracts are useless. Things widely distributed such as music may very well be difficult to control with contracts…trade secrets in a small group may very easily be kept under control with contracts.

Your arguements are essentially anti the current governement regime which I am in agreement with but I disagree and the facts show that contracts can be used effectively to protect some forms of IP/information.

Thank you for taking the time to respond.

32

Of course. I do not believe I have ever implied otherwise.

Not at all. I have never constrained what can be done nor implied I know what regimes will arise. I simply know the difference between real IP and contractual approaches. And I am also aware that those pro-IP types who strain to find a way to “simulate” IP via contracts are NOT content to merely have a regime that binds only parties to the agreement; they want to argue that the contract somehow DOES ensnare third parties. They do this b/c they are quite aware that to have actual IP you need to bind third parties too. this is why Rothbard made his contorted argument that I critique. This is why other recurring IP pests on Mises blog threads continually rest their arguments on some kind of assumption that information itself is owned, so that they can treat contract breach as analogous to a stolen watch–in this latter case the recipient has to return the watch; they want to argue that breach of contact re confidential info is similar to this. They are wrong. They are trying to construct a way to bind third parties by contract tricks. This is what is wrong. My imagination is not the problem–if anything, theirs is, because they are the ones unable to see that you can, in fact, find ways to achieve adequate protection by simply relying on standard contracts that do not bind third parties. They are desperate to find tricks to bind third parties because (a) they want to keep IP and its effects on third parties; and (b) they lack imagination and don’t think standard contract principles will be sufficient.

Of course. Technological means would be employed as well as contractual ones. In fact this is nothing more than the particular application of the general issue of finding exclusion mechanisms–which always have a cost, such as having locks on doors, ticket sellers at the movies, per-car speakers at drive-ins, etc. etc.

My stance is that contracts may not bind third parties, and that IP statutes are unjust. This is not refuted by legitimate contractual examples.

Of course. I never implied otherwise. But this is not what the IP-as-contract advocates are arguing. You are making them seem more reasonable than they are.

That is not my argument. I am a libertarian and believe in respect for property rights and contractual arrangements. Whatever people come up with is fine with me. IT is not my job to predict it. That said, as an IP lawyer I do understand the desire for some of the protections IP law purportedly aims to provide–and why the state is able to foist these laws on us by dressing them up as answers to these reasonable business goals. So in a free market sure, there would be various creative attempts to take these goals and desires into account. What people would come up with, what would persist, is anyone’s guess. My personal guess is that just as iTunes had to drop DRM because people don’t like it, contractual and technological measures that impede the use of data patterns too much just will be impracticable. But it does not matter–whatever people end up doing so long as contracts and property is respected is a libertarian result. Even if people call the resulting arrangment “IP” (after all, there’s freedom of speech).

33

You can’t contractually create monopoly in a free market. Not only can you not bind 3rd parties, but there is this assumption (Max is particularly guilty of this) that the consumer has to buy this product, at any cost, including any restrictive contractual stipulation.

34

Well, your view of IP seems limited to simply what might be the retail consumer level when in fact a fair portion of IP matters relate to business to business. The contract is only designed to restrict what the two parties to the contract are doing. You and Kinsella keep wanting to inject unrelated third parties which has never been mentioned in this thread.

35

This is your quote,

“However, in order for IP to work, it has to bind not only seller and buyer, but all third parties.”

As I interpret this quote, it means that for the protection of IP to work it must bind…all third parties. If your previous posts reflect your opinion that contracts even between two parties can be effective in protecting IP then your original statement is false. Clear existing examples are NDA’s that prevent the passing of trade secrets which you acknowledge have no binding third party protection under the current system.

So IP protection can exist without being binding to third parties. The reason being that the people who are parties to the contract don’t provide the information to the third parties which is the point of the contract. Being binding to third parties is not essential to contracts protecting IP, very useful especially for retail type of IP but not a requirement.

I have not suggested that contracts be binding to unrelated third parties in my critique of your position. That is something you and LS keep introducing.

36

Kinsella spoke on this at ASC 2009. He is an IP lawyer.

Right, and you continue to assume that one party can contract the other one to do anything, with no downside to restrictive contracts. You’re omitting half of the equation in market exchange.

Because the free market cannot duplicate statist IP. Statist IP is accomplished by monopoly. In a free market, such a monopoly is not possible. You keep insisting that IP would be possible under contract, but I suspect that is because you don’t understand what statist IP is. It is not a voluntary contractual situation. It is a blanket contract assumed without consent.

37

So what? If that was supposed to impress me, it failed.

If the parties agree to the contract then your point is mute because they have already made that calculation.

Like many of your arguements it hinges on the existence of the state. Please show me where I have said I am trying to recreate the statist environment for IP. You are interjecting the state into something that has nothing to do with the state. I discuss protection of IP via contract in a stateless society and you say yeah well what about the state. Toomany Austrian ideas are dependent on the state and can’t stand on their own.

38

It wasn’t supposed to impress you. I mentioned it, because it is relevant to the topic, and if you’re going to criticize Kinsella’s position, it would seem logical to be well acquainted with it.

Moot. Not mute. Moot. You included an “if” in your response. This means it is not a given that contracts are the solution, yes?

You’re not reading closely Max.

39

So what if NDAs are effective? NDAs are not IP. This has nothing to do with market IP simulation.

40

The positivist case rests on NDAs being effective.