Against Intellectual Monopoly

and tragedy of mercantilism is when this
individually correct philosophy is transformed into a national policy: that
we are all better off when our country as a whole buys cheap and sells dear. It
was this myopic and distorted view of the way in which markets function that
Smith, Ricardo, and the classic economists were fighting against 250 years
ago. At that time, wheat producers in England wanted to restrict free trade in
wheat so English producers could sell it dear. That meant English consumers
could not buy it cheap. Now, before moving to the next paragraph, consider
the current debate about preventing parallel imports of medicines, CDs,
DVDs, and other products covered by intellectual monopoly. Do you see
parallelism? That is our point.
    The contemporary variation of this economic pest is one in which our
collective interest is, allegedly, best served if we buy goods cheap and sell ideas
dear. In the mind of those who preach this new version of the mercantilist
credo, the World Trade Organization should enforce as much free trade as
possible, so we can buy "their" products at a low price. It should also protect
our intellectual property as much as possible, so we can sell "our" movies,
software, and medicines at a high price. What this folly misses is that, now,
like three centuries ago, although it is good to buy their food cheap, if they
buy movies and medicines at high prices, so do "we." In fact, as the case
of medicines and DVDs proves, the monopolist sells to "us" at even higher
prices than to "them." This has dramatic consequences for the incentives to
progress: when someone can sell at high prices because of legal protection
from imitators, he or she will not expend much effort looking for better and
cheaper ways to do things.
    For centuries, the cause of economic progress has identified with that
of free trade. In the decades to come, sustaining economic progress will
depend, more and more, on our ability to progressively reduce and eventually eliminate intellectual monopoly. As in the battle for free trade, the first
step must consist in destroying the intellectual foundations of the obscurantist position. Back then the mercantilist fallacy taught that, to become wealthy, a country must regulate trade and strive for trade surpluses. Today,
the same fallacy teaches that, without intellectual monopoly, innovations
would be impossible and that our governments should prohibit parallel
import and enforce draconian intellectual monopoly rules. We hope that
we have made some progress in demolishing that glass house.

Notes
    1. Machlup (1958), p. 80. It appears that Machlup was, in fact, paraphrasing Penrose
(1951), which we learned from a talk by Bronwyn Hall, who apparently learned it
from Joshua Lerner.
    2. To the best of our knowledge, the first published statement of this proposal is
in Kukkonen (1998), but a quick search on Google shows the idea is receiving
lots of attention from interested lawyers and law firms, see Das (2000) and http://
www.mofo.com/news/updates/files/up date1022.html (accessed February 24, 2008).
    3. As in the Spanish case of Gedeprensa, which we discussed in Chapter 2.
    4. The recent extension of patents to story lines is discussed at http://www.emediawire.
com/releases/2005/11/emw303435.htm (accessed February 24, 2008). For a more
than sympathetic, but highly revealing in its bias, legal analysis of the whole idea
of patenting plots, visit http://www.plotpatents.com/legal_analysis.htm (accessed
February 24, 2008), which comes directly from the law firm that worked hard to
patent fictional plots.
    5. As we discussed in Chapter 8 and references therein.
    6. There is no need for references here; still, here is one to an old and rather interesting
case of university research patenting: Apple (1989).
    7. Again, material abounds on the Web and in the regular press about the ongoing
debate to extend the E.U. copyright term to match the U.S. one, post-Sonny Bono
Act. To start, see http://news.bbc.co.uk/l/hi/entertainment/music/3547788.stm
(accessed February 24, 2008). For a piece by Dennis Karjala on European UnionUnited States harmonization, see http://homepages.law.asu.edu/-dkarjala/Opposing
CopyrightExtension/legmats/HarmonizationChartDSK.html (accessed February
24, 2008).
    8. See http://www.usdoj.gov/atr/public/hearings/ip/chapter_I.pdf (accessed February
24, 2008) for a relatively technical discussion of the issues involved in the