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Apple and intellectual property

In recent news, Apple, Inc. has won a decisive lawsuit against fellow electronics and software developer Samsung. The lawsuit, which found Samsung guilty of infringing on a number of Apple’s patents, awarded over $1 billion to Apple, and sent a formidably clear message to all others in the field. It has effectively dictated that any imitation of Apple’s products will not be tolerated, and that consumers should receive all their finger scrolling and “pinch-to-enlarge” technology from a single company.

All of this, of course, has been done in the name of property rights. Specifically, it has been done in the name of protecting Apple’s “intellectual property rights,” a concept that today goes almost universally unquestioned. This is unfortunate, however, as the idea of intellectual property rests on less-than-sturdy philosophical foundations, and is not at all clear to be entirely justified.

As intellectual property lawyer Stephan Kinsella has explained, property rights arise as a means for resolving conflict over scarce resources. (If resources were not scarce but rather infinitely abundant, then everyone would have free access to all goods all of the time, and concepts such as property and ownership would lose their meaning to us.) A proper implementation of property rights in any dispute functions by identifying the owner of the good in question, who entertains the full authority in decision-making over that good. An owner of a good can be identified by his relation to the first possessor of that good, and whether the former’s acquisition of it from the latter was legitimate or illegitimate. The entire notion of property rights, then, is derived from the fact of scarcity in nature.

In the curious realm of intellectual property, however, no such scarcity exists. This is because ideas, unlike goods and resources, are actually infinitely reproducible, which exempts them from any consistent theory of either property or ownership. To put it more bluntly, I can’t actually steal an idea from you, since my entertaining the idea in no way diminishes your capacity to do the same.

In order to better illustrate this point, it is useful to borrow a common example from the literature on this subject. Suppose, for instance, that I decide to build a chair for my porch. I construct the chair from scarce resources—previously owned by me—and leave it outside. Imagine, then, that a passerby spots the chair and, admiring it, takes it from my porch. This is obviously an act of theft, since I am now deprived of access to my own property.

What if, instead of actually stealing the chair, the passerby simply examines it, and then constructs an identical chair for herself? Is this also an act of theft, if her chair is built according to my ideas and blueprints? The answer, obviously, is that it can’t be, since I have not been deprived of any of the scarce resources under my control. I still have access to my chair, and the passerby now has access to her own. I also still have undiminished access to the ideas that went into developing the chair. I have, in effect, been deprived of nothing.

How does this situation change if the passerby begins mass-producing the chair, and brings it to market? I am still in control of the resources under my ownership, and she has simply gained control of greater resources for herself, so no fundamental change has occurred. I am still no victim of theft. What if, as in the case of Apple and Samsung, I am the first manufacturer of the chair, and my neighbor is a competitor who is also marketing my design? Can it be said that I am now a victim of theft, since she is earning profits that otherwise would have been mine? No, since this argument rests on a counterfactual—that, in the absence of the neighbor’s chairs, a consumer would have purchased mine—that cannot be proven.

Of course, the fact that my—or Apple’s—property rights are not violated does not mean that all this competition still isn’t bad for my business. In order to deal with it, then, I might choose to approach a third-party with the power to forcibly intervene in the situation. In today’s world, this power more or less rests with the state, in the form of intellectual property legislation.

If, as a result of my complaint to the government, my neighbor is forcibly prevented from continuing to sell chairs based on my design, the situation becomes somewhat inverted. No longer the “victim,” I have become an aggressor who has been awarded a dubiously earned advantage in the sale of such chairs. In fact, I have become more than an aggressor. I have become a monopolist.

In the event of a state-granted monopoly, it is typically the consumer who stands to lose the most. If you are the consumer in this case, you will now have less access to certain features of my chair—the way that it rocks, perhaps, or the designs I carved into its frame—than you previously would have had. Furthermore, I am now able to sell those features, free of any market checks on my business practices, at any price that I wish. It remains unclear, in fact, how anyone other than the new monopolist—like Apple—stands to benefit from this arrangement.

Proponents of intellectual property rights defend the notion on grounds including the following: Without a framework for rights in intellectual property, there would be little incentive for producers to innovate, or for large firms to pursue expensive and time-consuming research. As American economist Murray N. Rothbard has pointed out, however, this is not actually a foregone conclusion, and the burden of proof thus falls on them. Furthermore, to the extent that this is a legitimate argument, it still does not justify the practice of protectionism for first developers as anything close to actual “property rights.” If such a practice is somehow worth salvaging, it badly needs to at least be renamed, and then to be justified on some other grounds.

It’s possible that the notion of intellectual property is, upon examination, just not as ironclad as conventional wisdom would dictate. Unless, of course, you’re a software developer who’s running out of devices to stick an “i” in front of.

Chris Bassil, Trinity ’12, is currently working at Dana Farber Cancer Institute in Boston, Mass. His column runs every Wednesday. You can follow Chris on Twitter @HamsterdamEcon


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