You are on page 1of 4

A World Without Intellectual Property - The Mises Community

The Fashion Industry
Advertising Revenue
The Electronic Accreditation Technique
Books & Newspapers
Brands & Trademarks
Further Reading

There are many good reasons to completely repeal patents and copyright laws: they are too complex to be understood or obeyed by anybody except
a highly trained Intellectual Property (IP) attorney, they are often used for predatory purposes, they impede innovation since a patented invention
cannot be improved by a third party.

Additionally, because one firm holds a monopoly on the patented product, competition diminishes bringing with it the high prices and low quality of all
monopoly services. Intellectual property is also very expensive to enforce since it requires surveillance and enforcement on millions of consumers.

Nevertheless, some continue to support IP rights under the following mantras:

Authors of IP should be paid for their work

IP supports investment and innovation in R&D departments
An industry with no IP would lose productivity

This article attempts to answer those and other objections.

The Fashion Industry

* Natwest Loans

If we removed IP law from the fashion industry, what would be the effect on this industry, which thrives on creativity and new design. Would
innovation and creativity cease? Would companies like WalMart copy fashions the second they were created and undercut the brilliant producers behind
the scenes? Would the market stagnate?

The answer is "No" for a very simple reason. The fashion industry is not covered under the blanket protection that IP law provides so many other
industries. The creativity and variety that are the hallmark of this industry are the results of natural market evolution, without any IP protection.
WalMart already does copy the designs straight from the runway.

Advertising Revenue
The elimination of IP law would have a dramatic effect on advertising revenue. While it could be argued that many companies would continue to
receive such funding, some will not. In the event that every television show, every song and every book were made public domain, then there would be
two options for funding the distribution.

First, there are the traditional channels. This would use your viewing time to pay for the service of hosting and delivering the content. The authors of
such content would not necessarily be paid from these funds, but it may be sufficient to run a bunch of servers producing on demand content.

Second, fee for use hosting and peer based sharing could serve as the distribution mechanism. It would be hard to deliver a service that interrupted the
show every fifteen minutes to advertise when the same content could be gotten elsewhere without the annoyance. This may cripple or even destroy
many firms which fund their operations from advertising revenue.

The Electronic Accreditation Technique

Asbestos Lawsuit l Tampa Criminal Attorney l Natwest Loans l Egg Loans l Alliance Leicester Bank l Name Badges

Under this paradigm, all media would be stamped with a unique signiture that maps back to the authoring group or individual author. Tools could be
cheaply created that allow you to donate directly to any producers you like. Like DRM, this stamp would be unique and tamper proof. Unlike DRM, it
would not encrypt the media in any way.

This would require very simple integration with media playing software and can be set up to donate 5/10/25 cents to anything you rate highly
enough... at your choosing.

Accreditation can be used alongside copyright or as a replacement. This type of producer compensation is made possible by current technology and may
provide a suitable producer targetted replacement for the business friendly copyright laws.

1 of 4 29/09/2010 16:42
A World Without Intellectual Property - The Mises Community

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts
printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers'
doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to
read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers
could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their writing services work, and to have their work widely read and enjoyed so as to make a name for
themselves. Those two interests sometimes run contrary to each other. However, the system discribed above, works for everybody. Authors can get
paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book
without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a
few chapters in the newspaper, then purchase the entire book at a competitive price.

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of
piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs
and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways
(increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it,
what are you going to do:

Spend a few dollars, get a dozen good songs in your possession, or

Spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to
manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was
known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his
investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of
manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to
manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is
punished and his rival's ingenuity is rewarded.

This happened with the invention of the steam engine. James Watt made important improvements and secured a patent for them, but then blocked
many further improvements, which could be applied only when his patent expired.

"During the period of Watt's patents the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt's
patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during
the period of Watt's patent; while between 1810 and 1835 it is estimated to have increased by a factor of five." (*)

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from
the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by
volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything
with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar
product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though,
consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreneur who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly
legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name

2 of 4 29/09/2010 16:42
A World Without Intellectual Property - The Mises Community

and request you to call it something else, phentermine online, pest control service. In the absence of intellectual property laws, general consensus
would determine which words refer to a specific firm and which words refer to a generic product.

NOTE: Most authors address registered trademarks independently of copyrights and patents. While a patent has the potential to stifle innovation, no
such danger exists with trademarks. Many authors treat trademarks as a unique identifier to establish a level of trust with the consumer. It would be
fraudulent to impersonate a company to try to trick customers into trusting them. Immitation is okay... impersonation is not. The cereal above would
be fine if it was labeled "SomeCompany Toasty-O's", but would be lying to imply that they are indeed General Mills.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch
movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you
wouldn't need to feel guilty for downloading audio files from your next-door neighbor.

Further Reading

James Watt: Monopolist

The Cathedral and the Bazaar -an custom essay writing on open software

Recent Comments
By: Mikio Miles Posted on Sat, Jan 23 2010 5:18 PM

Very comprehensive, pafema. Keep it up buddy. Nice work.

By: Liberty_n_Life Posted on Sun, Jan 31 2010 1:20 PM

One of the purposes of government is to secure the rights of the people. One of those is to protect our private property. Intellectual property is property.
Civilized society has thrived for 10,000 years without the light bulb or the steam engine. By waiting a few years for the property owner to take advantage of his
intellectual property will have no impact on the overall evolution of society.
The author of the original article commented that the British beat the Americans on steam engine advances because the Americans were hamstrung by the patent laws.
But on the whole, society still benefited. The inventors were still free to take advantage of their private property. If they didn't do as well as someone else could
have done, that's not our concern. If you want to modify a lightbulb or steam engine for your own use, the patent laws don't prevent that, as far as I know.
IP laws have gotten out of control, however, by allowing for the patents on life itself. Life was not invented and modifying it shouldn't be patentable. What if I were
to modify a virus to be extremely contagious and get a patent on it. I could release the virus into society and sue every sick person for patent infringement. Or
modify the genetic structure of some crop such as corn or cotton and sue any farmer whose crop is contaminated by my patented modification.

By: Lucius Posted on Thu, Feb 18 2010 12:31 AM

While I completely support this articles position IP, I believe there are some errors. I appreciate that I may be mistaken, and so I've not edited the article myself.
“Additionally, because one firm holds a monopoly on the patented product, competition diminishes bringing with it the high prices and low quality of all monopoly
services.” – This is not necessarily true. A monopoly that is not created by government is still forced to compete on price and quality, as simply the threat of
competition is sufficient. In addition, monopolies that are created through patents still face competition, particularly in industries where technological advances are
moving very quickly. If monopolies that are created by patents offer very poor products and charge very high prices then their competitors will have a greater
incentive to invent a product that would outdo this present monopoly. So, while it is correct that prices will increase and quality will reduce, the wording used implies
a complete breakdown of competition.
“Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.” – Broadcasters still rely upon
people watching television. If IP laws weren't in place, then downloading TV shows without advertisements would become much more common, reducing broadcasters
audience and consequently, their revenues. However broadcasters are still able to retain profits by expanding away from more traditional means such as the television
towards the internet and mobile services, as we can see they are doing now.
“b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.” – That argument is not particularly intellectual. Perhaps
someone would rather purchase music from a local artist because they wished for that musician to produce more works?

By: ParrhesiaJoe Posted on Tue, Mar 23 2010 12:11 AM

I get really sick of people defending IP when they haven't researched it at all. It is RARE for the inventor of some work to be the primary beneficiary. When you look at
the introduction of IP law and the rate of innovation, you find a negative correlation, not a positive one.
Any defense of IP law must show SOME real benefit... somewhere...
The fashion industry has no intellectual property protection, and it is hard to find a more dynamic, creative industry. Walmart is allowed to copy fashions right off the
runway with no legal recourse.
Bill Gates said that if IP law would have covered software back in the day, there would have been no way for him to break into the industry. I worked for Microsoft, and
we patented every common sense idea that we implemented.
My most recent patent is for "Methods and procedures for providing cross-project commitments."
It is a devensive patent, just like the hundred or so other patents that other developers in my group had. It is a legal game and it favors big newpapers, big software
companies, big recording labels...
Patents have the intention of directing resources to research and development and rewarding individual contributors. This is NOT what it causes. Any historic research
can dispel this myth. By clinging to IP law, we can easily overlook better solutions to these problems... or never look for them at all.

3 of 4 29/09/2010 16:42
A World Without Intellectual Property - The Mises Community

By: eoghank Posted on Wed, Sep 29 2010 9:51 AM

Glaring mistake here: Movies make all their profits from DVD, VOD and TV sales- in the big budget side games and merch also factor in.
If a movie makes a profit in the cinema (very rare) it usually covers the marketing costs for the film, which are never included in the movies "budget" figures. The
star-system would also disappear- a vital factor for accruing funds to make a movie.
In order for movies to make money in a post-IP world i.e. films that exist purely as cinema screenings, one would have to make very cheap movies marketed by cheap
methods- social media etc... with profits boosted by material sales i.e. special edition packages and other merchandise.
Movies as we know them would essentially die out and be replaced by a cinema culture of low-budget and less profitable films. These films will hopefully be a bit
better than the ones that the marketing-led industry churn out these days, but they most certainly will not be able to produce lavish populist masterpieces such as
Inception or the Pixar movies and forget about the more mediocre but beloved big budget fare such as Lord of the Rings, Harry Potter, Bourne trilogies etc.

Ludwig von Mises Institute | 518 West Magnolia Avenue | Auburn, Alabama 36832-4528

Phone: 334.321.2100 · Fax: 334.321.2119 | webmaster | AOL-IM MainMises sitemap

4 of 4 29/09/2010 16:42