David Levine

The great statesman Edmund Burke spoke eloquently in Parliament in the name of economic freedom and against the creation of unnecessary monopoly - but to no avail.

After the expiration of Watt's patents, not only was there an explosion in the production and efficiency of engines, but also steam power came into its own as the driving force of the Industrial Revolution.

As a result, we find that, far from being driven out of business, "Boulton and Watt for many years afterwards kept up their price and had increased orders."

More broadly, are the two essential components of our current system of "intellectual property" - patents and copyrights - with all of their many faults, a necessary evil we must put up with to enjoy the fruits of invention and creativity? Or are they just unnecessary evils, the relics of an earlier time when governments routinely granted monopolies to favored courtiers?

The wasteful effort to suppress competition and obtain special privileges is referred to by economists as rent-seeking behavior.

New ideas accrue almost by chance to innovators while they are carrying out a routine activity aimed at a completely different end.

It is possible to conclude more definitely that the patent litigation activities of Boulton & Watt during the 1790s did not directly incite further technological progress.... Boulton and Watt's refusal to issue licenses allowing other engine makers to employ the separate-condenser principle clearly retarded the development and introduction of improvements

Indeed, while many of us enjoy the benefits of being able to freely download music from the Internet, we worry as well how musicians are to make a living if their music is immediately given away for free.

Our analysis leads to conclusions that are at variance with both sides. Our reasoning proceeds along the following lines. Everyone wants a monopoly. No one wants to compete against their own customers, or against imitators. Currently patents and copyrights grant producers of certain ideas a monopoly. Certainly, few people do something in exchange for nothing. Creators of new goods are not different from producers of old ones: they want to be compensated for their effort. However, it is a long and dangerous jump from the assertion that innovators deserve compensation for their efforts to the conclusion that patents and copyrights, that is, monopoly, are the best or the only way to provide that reward. Statements such as, "A patent is the way of rewarding somebody for coming up with a worthy commercial idea"" abound in the business, legal, and economic press. As we shall see, there are many other ways in which innovators are rewarded, even substantially, and most of them are better for society than the monopoly power that patents and copyright currently bestow. Because innovators may be rewarded even without patents and copyright, we should ask, Is it true that "intellectual property" achieves the intended purpose of creating incentives for innovation and creation that offset its considerable harm?

This book examines both the evidence and the theory. Our conclusion is that creators' property rights can be well protected in the absence of "intellectual property," and that the latter does not increase either innovation or creation. They are an unnecessary evil.

Trademarks are different in nature from patents and copyrights: they serve to identify the providers of goods, services, or ideas. Copying, which would be a violation of copyright, is quite different from lying, which would be a violation of trademark. We do not know of a good reason for allowing market participants to steal identities or to masquerade as people they are not.