To IP or Not to IP?

First, Do No Harm


Before turning to some practical ways to navigate the modern business world, including patent and copyright law, let’s consider the proper stance toward IP law. Each person, in his private capacity, recognizing the immorality of IP and its incompatibility with justice, free markets, capitalism, and private property rights, should never advocate or support IP law. Your business should not lobby for it, and you should not vote for it. You could condemn it and speak against it, oppose it whenever possible.


IP law is like the drug war. Even if you recognize that narcotics should not be criminalized—that the state has no right to lock people up for using or selling drugs— you might choose to respect the law to avoid the risk of jail. Your stance would be: the law is immoral and should be repealed, even if you warily abide by such laws out of prudential concerns.


Likewise, whatever your practical coping strategy for dealing with IP law (discussed below), you should always make it clear that you oppose patent and copyright law, that you do not condone or endorse it, that you recognize it as unjust and completely incompatible with individual rights and freedom. The moral, principled, and practical businessman must denounce IP law while finding ways to cope with it, so long as it exists


But While IP Exists …


Opposing IP is all well and good. But for now it permeates our legal system. Even the most morally punctilious of businessmen have to recognize that patent and copyright law exist and must be taken into account. These legal systems infect, distort, and corrupt the modern business environment, no doubt. But they exist and are enforced.


What does one do, in the face of such legal and business practices, if one is aware of the deficiencies of IP law?


It is obvious that law cannot be ignored. This is a recipe for disaster. In a free society based on private law, you could start a business that streams popular songs; in today’s world this may get you shut down, arrested, and invaded by FBI agents.


So one response is to just play the game like everyone else does. Assume that the law is what it is, forget about legitimacy, and focus on profit only. Use copyright and patent to your advantage where necessary, regardless of its legitimacy or morality. Do what other companies do.


But is this the wisest approach? If we know that there is something wrong with the very basis of IP law, maybe there is something wrong with going along lock-step with the standard way of dealing with IP. One should not be a Pollyanna martyr and act as if IP law does not exist; but perhaps there is a different position one can take—one that is more profitable both in monetary and moral terms. My contention is that individual human beings, in their capacity as entrepreneurs and businessmen, should strive for both morality and profit. By understanding the corrupting nature of IP, we can avoid some of its pitfalls, and earn both moral and monetary profit.


To IP or Not to IP


The standard advice given to businessmen is to simply take the existing legal system for granted, and to work within it. If the system permits you to obtain patent and copyright, apply for or obtain them. If it permits you to sue your competitors, sue. If the system permits you to lobby legislators through campaign contributions, influence their votes, and give you preference over competitors, do it.


But the success of the Internet and open models of innovation and development in the digital age should give one pause before adopting the business models and approaches mired in the fallacious reasoning of bureaucrats and special interest groups.


The entrepreneur who sees the benefits of freedom and openness and the harm wrought by patent and copyright law should ask himself several questions:


  • Do I really want my business model to depend on patent or copyright?
  • Do I really want to turn my customers into enemies if they actually use and profit from the information I provide to them?
  • Do I want to spend tens or hundreds of thousands or millions of dollars, on legal fees to secure and enforce IP rights?
  • Do I really believe in free markets and fair competition?
  • Do I want to prosper, flourish, and profit on my own merits, or rely on the state to protect me from competition?
  • Do I want to be free to innovate and change business strategy and direction as I see fit, or be mired in some IP-maximization strategy?


Below, we’ll examine some case studies, examples, and practical strategies and considerations entrepreneurs can contemplate when faced with an IP-laced business environment.

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