more on more on Is Real's 'hacking' of iPod legal?

[David Farber <dave () farber net>]

Begin forwarded message:

From: Chris Savage <chris.savage () crblaw com>
Date: August 3, 2004 7:51:29 AM EDT
To: "dave () farber net" <dave () farber net>
Subject: RE: [IP] more on Is Real's 'hacking' of iPod legal?

-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Tuesday, August 03, 2004 7:27 AM
To: Ip
Subject: [IP] more on Is Real's 'hacking' of iPod legal?

From: L Jean Camp <jean_camp () harvard edu>
Date: August 2, 2004 5:12:54 PM EDT
To: dave () farber net
Cc: Ip <ip () v2 listbox com>
Subject: Re: [IP] Is Real's 'hacking' of iPod legal?

> > The use of so-called copyright control technologies and indeed
security
technologies have been most valued when the goal is to prevent
competition.<<

Dave, this point goes to the heart of what is problematic about IP law
in general.  The main thrust of antitrust and regulatory law is that
competition is *good*.  It maximizes welfare by forcing producers to be
more efficient and offer consumers what they want.  The problem with
intellectual property is that it is the embodiment of "market failure,"
in that the effort to copy a piece of IP is typically a miniscule
fraction of the cost of creating the original.  In a "state of nature"
(of which, e.g., Libertarians should be fond), once you release your IP
into the wild of the marketplace, your ability to continue to extract
value from it is essentially nil.  So, you enlist the power of the state
to restrict natural private economic activity -- copying that floppy --
in order to create value for producers of IP.

But giving the producers monopoly rights over their IP -- control over
what happens to IP as though it were a table or a car -- says that in
*this* realm of economic activity, monopoly is somehow good, not bad.
Which makes no sense.  The point of IP rights is to pay/bribe creative
people to create and distribute stuff.  You do that by giving them money
(and/or fame, "props").  That could be done via, e.g., universal
compulsory licenses.  Or shorter terms for copyright and patent.  Etc.

In this regard, the normal mantra of regulatory agencies is that when a
market fails, you want to try to makes things as much like what would
happen in a competitive world as possible, given the market failure.
Here that "state of nature" is unlimited copying of all IP.  The fact
that the unlimited copying would deprive the creator of the incentive to
create is the "market failure" we are trying to correct.  It seems
fairly obvious that the answer is to give the creator money -- more
money for more successful creations -- not to empower the creator to
*restrict* copying or distribution.  All such restrictions take us
*farther away* from the "natural" economic state of affairs (i.e., what
would happen competitively, absent the market failure).

Bottom line: we need a major re-write of IP laws.  Note in this regard
that in an increasingly competitive world (think China, India) our
comparative advantage is going to come from continually inventing new
stuff, not enforcing reproduction/distribution restrictions on new
stuff.  So while I agree with the various pundits who say that IP is
increasingly important to our economy, the notion that our current IP
laws give US creators and distributors the optimal incentives is nuts.

Chris S.

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