What is Intellectual Property?
One of the most egregious government interventions in the digital age flies under the label intellectual property (IP). This type of intervention has been around since the advent of modern capitalism and the Industrial Revolution. Originally recognized as exceptional, state-granted monopoly privileges, even by their earliest proponents, IP rights are now referred to as a type of “property right”; IP is thought of as a natural and essential part of a capitalist, free market order.
We are told that IP is a type of property right. We are told that it is necessary for innovation. Without patent and copyright, we would live in a world of stagnation. There would be no innovation, no artistic works. Who would bother, if the state did not properly incentivize us? But the astounding truth is that IP is completely incompatible with a free market 4 system. It is not necessary for innovation at all. Far from it: it actually gives rise to monopolies that dampen creativity and stultify free market competition. It distorts the market, innovation, and creative culture. And it leads individuals and businesses to adopt coping strategies that are often to their long-run detriment.
An IP-free world would be one of competition, innovation, and prosperity, contrary to the claims of IP’s defenders. An IP-free world would be one of competition, innovation, and prosperity.
But in today’s world, patent and copyright exist whether we like it or not. Individuals and businesses need to be aware of the reality of IP and take it into account in their business strategies. An open-eyed approach as to the true nature of IP is essential to understanding what IP policy should be in a free society. Understanding what IP is, how it arose, and its role in today’s economy can help entrepreneurs develop the proper strategies to thrive and prosper in a mixed economy. The purpose of this guide is to expose the true nature of IP and to provide guidance to entrepreneurs and individuals about the pitfalls of over-reliance on modern IP.
Intellectual property refers to laws that protect the products of the intellect, as opposed to laws dealing with ownership of commonplace physical or material goods. IP is a broad term that includes several types of legal rights: copyright (which gives authors a right in original works such as novels or paintings); patent (which gives inventors rights in practical inventions like a mousetrap); trademark (which gives companies rights in names used to identify products such as Coca-Cola); and trade secret. Trademark is said to have its basis in protecting consumers from deception and fraud by unscrupulous vendors who falsely use others’ names and reputations.