Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Trademark versus Copyright and Patent, or: Is All IP Evil?

I think we can all now agree that copyright and patent are evil and should be abolished (hey, if they can say we are all Keynsians now...).

But what about other forms of IP, such as trademark? One problem is that IP is not really property at all, and is just an umbrella term linking distinct, mostly artificial, positive rights created by the legislature out of thin air--"legally recognized rights arising from some type of intellectual creativity, or that are otherwise related to ideas." (Against Intellectual Property, p. 9.)

Thus patent gives a monopoly to a way of using, or configuration of, practical, useful devices (inventions); while copyright gives a monopoly to certain uses of original creative patterns of information (works of authorship like novels or paintings). While trademark protects a set of rights clustered around one's reputation (but then, so do defamation laws); and trade secret is more like a type of contractual right to keep people from revealing secret information.

Bad Connections

From what I've seen, it is clear to most activist-opponents of IP that copyright and patent are terrible. But it is not so clear what is wrong with other types of IP, such as trade secret and trademark. What about these, and other rights, such as various other trademark-related rights (rights against "trademark dilution," certain forms of cybersquatting, and various "unfair competition" claims); mask work protection available for semiconductor integrated circuit (IC) designs, boat hull designs, and (proposed) rights in databases, or collections of information? (See Against Intellectual Property, p. 13, summarizing various types of IP.)

The "intellectual" part of IP improperly lumps together conceptually distinct types of laws; and "propery" improperly begs the question. So these must be treated in turn. Mask work, boat hull, and database rights are very similar to copyright at least in what is problematic about them; so they, too, like patent and copyright, are obviously unjust.

As for trade secret--I deal with this in a short section (pp. 56-57) of Against Intellectual Property, as the bulk of the article deals with copyright and patent, and trade secret law is not nearly as problematic.


So we come to trademark. I deal with this on pp. 58-59 of Against Intellectual Property, and also in some detail in Reply to Van Dun: Non-Aggression and Title Transfer (esp. pp. 59-63). In my view, the new-fangled extensions of trademark law--rights against "trademark dilution" and cybersquatting, etc.--are obviously invalid. Further, federal trademark law is problematic since it is not authorized in the Constitution (copyright and patent are, but not trademark; trademark relies on the Interstate Commerce Clause, and thus the federal trademark law only covers trademark connected to interstate commerce, and does not preempt state law, so that state trademark law still governs many intra-state situations).

But even if federal trademark law were abolished, as well as modern extensions such as rights against trademark dilution, even common law trademark is problematic, for three primary reasons. First, it is enforced by the state, which gets everything wrong. Second (see First), the test of "consumer confusion" is usually applied ridiculously, treating consumers like indiscriminating idiots. Third, and worst of all, the right at issue is the right of the defrauded consumer, not the competitor. Trademark law ought to be reformed by abolishing the right of trademark "owners" to sue "infringers" (except perhaps as proxy for customers, when consent can be presumed or proved), and treating this as a case of the customer's right to sue a vendor who defrauds him as to the nature of the good purchased. Some might argue that this is only a minor change, but it is not: such a change would make it clear that "knockoffs" are usually not a violation of anyone's rights: the buyer of a $10 "Rolex" is almost never defrauded--he knows what he's getting. Yet by giving an enforceable trademark right to the user of a mark, he can sue knockoff companies even though their customers are not defrauded and in fact are perfectly happy to buy the knockoff products.

By the way, examples of trademark abuse are legion. It's not only copyright and patent that give rise to outrageous examples of injustice. See, e.g., Chip Wood, A Bully-Boy Beer Brewer; Justin Levine, 9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After All, Against Monopoly (09/26/2007); Kinsella, Trademarks and Free Speech, Mises Blog (Aug. 8, 2007); Kinsella, Beemer must be next... (BMW, Trademarks, and the letter "M"), Mises Blog (Mar. 20, 2007); Kinsella, Hypocritical Apple (Trademark), Mises Blog (Jan. 11, 2007); ECJ: "Parmesian" Infringes PDO for "Parmigiano Reggiano", I/P Updates (Feb. 27, 2008); Engadget Mobile Threatened For Using T-Mobile's Trademarked Magenta, Techdirt (Mar. 31, 2008).

Now IP proponents often assume trademark law is unproblematic, and then try to lump types of IP together, so that they stand or fall together. For example it could be argued that if you are for reputation, then you must be for trademark; and if you are for trademark, you must be for "intellectual property"; and thus, you cannot be opposed to IP in principle, so you cannot oppose copyright and patent. (See, e.g., the comments here, making this argument.)

Now one fallacy of this argument is that it relies on the positive law conceptual grouping of different areas of artificial, legislated law to make its point. But there is no reason one has to favor the validity of copyright or patent law, even if one supported trademark law, say. Each has different defects and a different nature.

The other fallacy is the view at work here that there is no such thing as reputation, or even identity, absent trademark law. But this is incorrect. Of course people and firms can have reputations even if trademark law is nonexistent. All that is required is that people be able to identify other people and firms, and communicate. Pro-trademark arguments often implicitly assume that this is not possible, absent state-enforced trademark law, which is ridiculous. For example, how can there be fraud (as in my theory), if the vendor is free to call himself whatever he wants? What if Joe Schmoe sets up a knockoff McDonald's restaurant? Well, it is McDonald's--that's what it calls itself, and the "real" McDonald's can't stop it without trademark rights--so why is it fraud? Well, because the consumer is (per assumption) deceived as to the nature of the goods he is buying. As I argued in Reply to Van Dun (pp. 62-63),

"this response would be easy to overcome. It need only be possible for the customer to adequately identify what the condition is. Language is not infinitely malleable, and communication is (undeniably) possible. If pressed, the customer could specify that the purchase is conditioned on the current store he is in being owned by the same [McDonald's] company first started at such and such date and address, and so on. There is no reason it would be impossible to identify a given vendor without traditional trademark law, just as it is not impossible to identify fellow humans, despite the fact that we do not usually have trademarks on our names (in fact often have identical names, e.g. John Smith).

The other thing to realize is that consumers are not stupid. They can spot a knockoff easily. And the trademark frauds are usually going to be marginal low-life types, who could never compete with a legitimate business anyway--the kind of company that makes knockoff Rolexes, which doesn't fool its customers.

Consider. You have a successful burger joint, let's call it "Tommy's." Now, suppose they have no trademark, and other Tommy's pop up. So if you want the original Tommy's, where do you go? You go to the original Tommy's. Which just calls itself The Original Tommy's. (A similar phenomenon is in Twitter, where some well-known people and celebrities' names are taken, like dvorak--so John Dvorak just goes by "THErealDVORAK". End of problem. No anti-Twittersquatting law needed.)

If some other Tommy's tries to deceive customers into thinking it's owned by the same guy that owns the original Tommy's, then they are eventually going to get sued. Or have only marginal customers as people figure out this new place is run by seedy liars.

The truth is that any legitimate businessman wants to use a unique name. Just like people manage to distinguish their identities, even when they have the same names.


A customer who's been deceived by someone selling counterfeit goods is indeed the victim of fraud.

Would you agree that the legitimate producer of those goods is also a victim when their reputation is damaged by low-quality counterfeits?

Jesse, No, I wouldn't. There is no right to a reputation. See Rothbard, Ethics of Liberty, e.g ch. 16. http://mises.org/rothbard/ethics/sixteen.asp
There's no right to a reputation, but there is a right to truth (against impairment). Trademarks should simply be a convenient registry for arbitration purposes as to which name identifies which company or products. It should not be about owning names as if property, but disambiguation as a means of preserving the truth of manufacture. Even if trademarks can be concluded to be more trouble than they're worth, the right to truth remains, i.e. against passing off or other deceptive practices. Nothing necessarily wrong with imitations per se, only with misrepresentation.

Property derives from the right to privacy, therefore there is such a thing as intellectual property. There's simply no natural right to prevent others copying what you give them, or to prevent them using something similar that they've come up with independently. That's why copyright and patent are so unethical, because they grant unnatural privileges to IP owners. Without such privileges intellectual property is as perfectly natural as material property.

As for commercial secrets, whilst it may be possible to bind corporations, one cannot alienate people from their right to liberty (freedom of speech), thus people cannot contract away their right to reveal secrets to which they have been made privy. They may lose their employment as a result, but they have violated no rights.

My favourite example of this is the original compiled book of chords and melodies (called lead sheets) for jazz standards. This was called the Fake Book, literally so you could fake it or quickly jump into a jazz tune you didn't know and play along with other musicians. It was mostly compiled illegally through photocopying from various sources and there were various versions. Then in 1974, Berklee College of Music published the "Real Book" which purported to correct all the errors in the earlier fake books. This spawned a rash of imitators or "fake Real Books". Even now it is quite confusing for the Jazz novice to find the right real fake book to use. Right now the dominant standards are the "original Real Book" and the "new Real Book".

As an aside, jazz music could not have thrived in the way it has without violating copyright. From the Wikipedia entry for the Real Book quoting journalist Mark Roman - "I don't know a jazzman who hasn't owned, borrowed, or Xeroxed pages from a Real Book at least once in his career".

Stephan, I'm surprised to see that citation. Rothbard uses his theory of property rights to argue against the right to a reputation, but not before using it to defend copyright!
Crosbie, I can't make heads or tails of your incoherent comment.

Jesse, it's not surprising. Rothbard was right about reputation rights, and anchored it in a coherent view of property. but his copyright views were dashed off and confused--he uses a mousetrap which is an invention, and the scope of patent law, e.g., in a copyrihgt argument--and implicitly rest on the idea that knowledge is property, which is question-begging and which he rejects elsewhere.


There is no such thing as a general right to truth per se; anyone has a right to say anything he wants to anyone even if it's a lie. (That's why libertarians don't believe in perjury laws.) Of course, the corollary is that no one has to believe the words of someone who has a reputation for lying; and a person who gets caught telling a lie risks ruining his reputation and credibility, with all that implies.

Of course, there are situations where lying might have bad consequences, including legal consequences, for a liar. Examples include lying on a job application, lying in making a contract, and lying before a judge. But a firm taking a job application, a person or firm accepting a contract, or a judge hearing a litigant have no right to prevent someone from lying. They do have a right not to accept a job applicant, an offer to contract, or the words of a litigant because they conclude that they have read the written words or heard the spoken words of a liar.

Property does not derive from an alleged right to privacy. (The SCOTUS invented or at least codified the so-called right to privacy in 1962; but at least it never claimed that property derives from such a right.) Privacy must presuppose property and therefore property rights. Alone in his house or office or car, etc., a person has privacy. Does a homeless person enjoy privacy? Well, presumably not, because he has no property.

Bill, without a right to truth, the rights to life and privacy cannot be sufficiently protected.

Privacy is the space about an individual that they can naturally secure against others. It is by creating, enclosing or introducing objects within this secured space that property arises. The right to truth then enables and protects any agreements of trade or loan.

I find your nihilism disturbing... ;-)

I grant you that there can be a wide variety of consequential impairments to truth resulting from intentional deceit, and the ramifications can vary in degree and in persons affected, but a deliberate impairment of the truth (the apprehension thereof) remains antisocial and offensive. The people have a natural interest and ability in pursuing the truth and protecting it against corruption, and thus have a right to truth (which should not be mistaken for a right to determine it).

Bill, without a right to truth, the rights to life and privacy cannot be sufficiently protected.

Crosbie, A simple counter example refutes your argument. If Joe Sixpack tried to beat up a champion boxer or wrestler, the latter would no doubt defend himself successfully. Even if he chose to turn the other cheek, the cops probably would arrest him. The boxer/wrestler doesn't need to invoke the truth of anything to defend himself.

If a mugger tried to beat you up, would you bother with a discourse about "truth" or would you put your dukes up and fight the perp?

Who commits the violence? A policeman arrives and asks you who started it and you lie and say I did. I go to jail. All's fair in love and war eh? There's no right to truth - no consequence to you for your lie, only to the policeman for taking your word. Or perhaps that's ok by you, you'd have it that a priori no-one's word can be trusted, that if evidence (other than witness accounts) cannot be obtained, then the truth of the matter cannot be ascertained. But then, even if evidence was obtained, someone might tamper with it to incriminate someone else, but hey, there's no right to truth, so that someone commits no offence. The whole concept of justice disintegrates, and we're back to survival of the fittest.

No-one can be found to have violated a right if the truth of it cannot be apprehended. If truth must be apprehended in order to protect rights, then truth is a right.

Presumably the truth would be found out in a jury trial. Even if it weren't, it still doesn't follow that property rights rest on some abstract notion called truth. You have concocted an example that begs many questions, such as where property rights come from, the principle of homesteading, the use and exchange of property, etc. None of these ideas rests solely on an abstract thing called truth. I am not denying that telling the truth is important to the growth and success of a market economy. I do deny that it is of sole importance, as I interpret you to be saying.
Bill, I don't think I've ever said any of these ideas rest solely upon truth, or that truth is of sole importance. I've just said we have a right to truth, and that truth is necessary for the protection of other rights, e.g. to life and privacy.

Anyway, truth is a real thing, we just have difficulty sometimes in fully apprehending it. Fortunately, we have a good chance of detecting attempts to pervert our apprehension of it.

Saying that truth is necessary to protect property rights is no doubt correct, but it's not a sufficient condition for their protection, not by a long shot. Oxygen is necessary for property rights to exist too, but I see no mention of it in Locke.
Bill, I agree.
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