Thursday, August 12, 2004

Properties of Property Rights

Consider the following two criticisms of intellectual property rights, both of which I’ve heard made by anti-IP libertarians: (1) “They have limited duration. If they’re true property rights, shouldn’t they have unlimited duration? If IP is a just form of property, then having a limited copyright or patent period should be construed as an unjust taking.” (2) “Ideas are non-rivalrous in consumption – use or enjoyment of an idea by one person does not diminish use or enjoyment by another person. This means ideas are fundamentally different from material assets.”

You can’t make both criticisms simultaneously, because one is the answer to the other. Ideas do in fact differ from material assets, just as stated in criticism (2). That is why it makes sense to treat intellectual property differently from material property by imposing an expiration date. The longer is the patent or copyright period, the greater is the deadweight losses from under-use of ideas.

Does an expiration date make property not “real” or “true” in some sense? I think not. Intellectual property and material property follow different rules. Real estate and movables also follow different rules. Assets in land, water, and air also follow different rules. Some rights, like your right not to have your car taken, are protected with property rules (violators are punished for not getting your consent), while other rights, like your right not have your car dented, are protected with liability rules (violators must pay damages but are not punished for failure to get consent). All of these distinctions derive, I would argue, from differences in the physical or economic characteristics of the assets or activities in question.

Allow me to appropriate Tom’s surfing-rights example to make the point more concrete. In the surfing system to which Tom refers, the following convention applies:
[Referring to a picture with four surfers labeled A, B, C, and D, in order of decreasing distance from the breaking wave.] OK, so it's surfer D. Why, because surfer D is closest to the breaking wave. Simple as that!. If surfer D does not get the wave then its up to surfer C and so on.
Note that in this system, some rights exist for limited durations – and not just the life of the wave. For a moment in time, D has the right to claim the wave. But it’s a “use it or lose it” situation: if he doesn’t take the wave, someone else claims it. Thus, D’s right has limited duration, and for good reason: unless someone jumps on the wave soon, it goes to waste.

Imagine, for a moment, that waves did not rapidly vanish, but instead became “fixed” upon having been claimed. In that situation, D could be granted a more permanent right without great harm. He could claim the wave, wait to use it until a more desirable time, sell it to someone else, etc. And that’s just how we handle much material property. If you acquire a piece of vacant real estate, you don’t lose it because you fail to develop it. You can wait until its most valuable use becomes clear before developing.

Some might object that the surfing convention above applies to homesteading of initial property rights, and therefore the more apt analogue in real estate is the requirement that a homesteader must use the land in some way – e.g., farming it for some period of time – in order to secure his claim. Perhaps so, although I’m not sure the “must use” requirement applies to all forms of homesteading. But set that aside and consider what happens even after a surfer has homesteaded the wave. As Tom observers, “Someone who favors large, outside waves might ride one only partially in-shore before pulling out over the lip and paddling back out, allowing a surfer who favors inside breaks to then take possession.” Note that the first claimant can only maintain ownership by maintaining possession; if he abandons the wave, he cannot forbid another surfer from taking over. Not true for real estate. The justification, as before, is that the wave would likely go to waste if the first claimant’s consent were required. Again, not true for real estate.

My point is not that surfing rights resemble intellectual property rights. My point is that surfing rights differ from traditional property rights for a sensible reason related to the nature of the assets in question – specifically, their permanence or rate of decay. Likewise, the rules of intellectual property rights also differ from other property rights for a sensible reason related to the nature of ideas – their non-rivalrous character. In no way does the difference in rules indicate the unreality or injustice of such rights.

(Addendum: From my recent posts, it may appear that I’m an ardent defender of strong intellectual property rights. Not true. There exist viable consequentialist arguments against strengthening – and in favor of weakening – IP protection. I may discuss them in future posts. Here, I’m arguing against the blanket dismissal of IP on what I consider silly or irrelevant grounds.)

1 comment:

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