Against Intellectual Monopoly

because it minimizes transaction costs. For, with intellectual property, possession belongs to the buyer and not to the seller. If you sell me a copy of
an idea, I now have that idea embodied either in me or in an object I own.
For you to control the idea requires intrusive and costly supervision of my
private sphere - similarly, if you sell me a book, a CD, or a computer file. In
each case, I have physical control of the item, and you can control its use only
through intrusive measures. Moreover, in the case of well-functioning markets, owning is a good substitute for renting. Our basic argument against
intellectual monopoly is that markets will function well in its absence,
and so there is no need for a rental market as the latter only effectuates
intellectual monopoly.
    We emphasize that it is not rental versus sale that is the crucial distinction,
but the presence of restrictions on the use made ofan idea. Rental agreements
over intellectual property that implied no restrictions on the use of the idea
during the period for which rental was agreed would be consistent with our proposal but would offer little advantages over sale. In the case of an idea,
such as an invention or mathematical formula, once you have passed the
idea to me, rental has little meaning because I can neither return my copy of
the idea to you nor credibly promise to forget it after a fixed period of time.
In the case of an object embodying an idea, such as a book or a CD, you may
well rent the object tome for a fixed period of time. However, in the absence
of intellectual monopoly effectuated by downstream licensing, I am free to
make a copy of the book or CD, and that copy would remain my property
even after the rental period expires. There is no economic objection to
rental without downstream licensing; on the other hand, while we would
not prohibit such rentals, we would not expect such rental markets to be
widespread in the absence of intellectual monopoly.

    More extreme forms of abolition are possible, even if it is not obvious
how desirable they are or what their practical relevance might be. Still, the
economic theorist living inside us must contemplate also these possibilities.
Without government grants of monopoly or enforcement of monopolistic
contracts, innovators by virtue of their first-mover advantage will generally
have some monopoly power. There are government policies that can be
used to combat even this ephemeral monopoly. For example, at the lesser
end, trade secrecy, digital rights management, and encryption could be
eliminated by a law requiring the publication of detailed information about
an innovation as a condition of doing business. Of course, the transaction
costs are probably large, as the definition of innovation would suddenly
become blurred, and legal challenges could be mounted with relative ease.
    Nevertheless, the idea is certainly practical. For example, to sell computer
software, the seller would be required to make available the source code;
to sell a drug, the manufacturer would have to publish the chemical formula. This latter example may convince you that, along certain dimensions,
such a proposal is scarcely radical - to sell a drug now, the chemical formula must be published - pharmaceutical companies are not allowed trade
secrecy over their products. Along other dimensions, though, the proposal
is more radical. Consider the case in which a new production process or a
new business method is adopted, and think about the complexity involved
with full disclosure of its details. The very same facts that, in earlier chapters, allowed us to claim that, in the real world, imitation is costly and
that innovations do not become public information just because they are
implemented or because a technical paper is published describing them
imply, in this case, that full disclosure may be nearly impossible and most
certainly manipulated, leading to excessive legal and transaction costs. So -
and rather uncharacteristically of us - we would drop the radical position in this particular case and vote for a system in which, if you are lucky to
become a monopolist because you really got there first and the other have a
hard time catching up with you, well, lucky you!

    There is also the intermediate possibility of allowing the elimination
of secrecy through private contract only - that is abolishing all copyright
except the GNU public license, which serves to enhance