Information Landmine

"The Americans keep telling us how successful their system is. Then they remind us not to stray too far from our hotel at night." - An un-named EU trade representative quoted during international trade talks in Denver, Colorado, 1997.

Friday, December 08, 2006

Location, location, location...

Has anyone else ever wondered why it is that so many land metaphors get used when people talk about intellectual property? Environmentalism for the public domain, enclosures of the mind, Lessig constant referring to the Causby’s ownership case… it seems a little bit like anyone worried about what you might call IP over-reach can’t help but analogise to territorial property. An interesting corollary of this is that those who are a bit more sanguine about strong IP rights tend to talk about patents, copyrights etc. in terms of mobile property, or at least intangible goods like financial instruments. Richard Epstein’s columns in the FT are pretty typical: patents, copyrights and trademarks are things you record on the books like stocks and shares, and it does no-one any good when governments mess with the system by changing the rules and introducing a whole load of uncertainty into the game.

Now this isn’t a hard and fast rule – Epstein actually used trespass law in his eBay case – but it’s a fairly good rule of thumb that if someone’s talking to you about IP in terms of territorial property, they’re trying to tell you that the system’s out of control. If they’re talking in terms of financial instruments, they’re saying everything’s just dandy except for those damn pirates. More broadly, IP sceptics tend to tell stories about static market problems where incumbents have too much control: their model of the IP company looks like a Ricardian landlord, sitting on a fixed asset and making everyone around them do the actual work while they collect ever-larger rents off the back of it (think Amazon and 1-click patents). IP-enthusiasts tell stories about dynamic markets where there’s strong competition in terms of innovation: their IP company is a Schumpeterian entrepreneur, busily engaged in some good ol' creative destruction so that they can maintain their very temporary advantage in the marketplace (think Xbox vs. Playstation3 vs. Wii and the worries about Sony losing its lead). So what’s going on here?

At first sight this might just look as though the cyber-hippies and the e-yuppies are just reverting to their traditional stereo-types (as laid down by Led Zeppelin) for the intellectual property argument – romantic stories about blissful landscapes being torn up by the Lord Sauron and his evil corporations from the sandal-wearing crowd, stories of technological progress, nine figure transactions and stock-market escapades from the cocaine set. While this undoubtedly has a grain of truth to it, I think there’s more we can say.

Essentially, the arguments of both sides involve claims that we should think about IP as a different sort of property - land for the sceptics, mobile property for the supporters. Because of the very different nature of these two sorts of property, governments have tended to take very different attitudes towards them. States are very involved with what people do with their land. Planning permission, pollution laws, forestry regulations – you might own your little bit of England, but you’re still very much answerable to the government about what you do with it. There’s also a consensus that certain types of land should be held in common, and are the more valuable for it: parks and the road system are the classic examples. By contrast the government tends to take a fairly hands-off attitude to what you do with your mobile property. Even where it has rules concerning the use of it (telecommunications devices, cars, guns) these tend to have as much to do with your use of some sort of territorial property (the radio spectrum, roads) or some other law of the land (murder). This essentially boils down along good old-fashioned state vs. market, public vs. private lines: should IP be regulated along the lines of land: with a mix of public and private ownership, and some fairly robust regulation limiting owners’ rights to their property (fair use, compulsory licensing etc.), or should it be largely in the private sphere, with governments doing little more than maintaining standards (through the protection of encryption technologies etc.)?

My feeling is that IP has aspects in common with both sorts of property. Without wanting to compile an exhaustive list, there are three lines of difference I think you could instantly draw up:

1) Can you manufacture it? At the risk of sounding obvious, the big thing that separates both IP and manufactured goods from land is that, in the majority of cases, it can be manufactured. The Nissan garage in Sunderland will today put out a whole load of cars and I’ll post this up. In both cases property that wasn’t there before will have come into being. With the exception of the odd island in the Middle East, land isn’t really susceptible to those sorts of processes (resources like oil and minerals are another interesting grey area, but I don’t want to complicate the discussion too much at the moment).

2) Is it fungible? Mobile property tends to be fungible: you can have more than one of it (technically, it’s interchangeable with other items in fulfilment of a contract). This is not the case for real estate and IP. If you’re buying a can of coke, you unlikely to be particular about which one. If you’re buying a plot of land or the rights to a book, you’re going to be very particular.

That’s pretty rough and ready, but you get the idea. People use different metaphors according to what they want to foreground. Stories of IP as mobile property highlight its manufacturing aspects: IP is something where you have to work to bring it into being, and people are more likely to do that work if they think they’re going to get broad rights in exercising the fruits of it. Stories of IP as landed property emphasise the fact that, because it occupies a unique position (i.e. isn’t fungible) and is under the control of a single company, it’s very possible that it’ll be used strategically: think Microsoft using/abusing their dominance in the operating systems market to dominate other spheres – by controlling the OS they control the access route to the majority of PC users. Windows might be valuable because a lot of work went into manufacturing it, but it’s more valuable because it’s sitting in that privileged spot on so many of the world’s PCs. This leads me on to point 3, which is, you’ll be pleased to hear, the point:

3) Where does it derive its value from (given the contentiousness of theories of value amongst economists through the ages, this is really worth a much longer discussion – if all readers could put their reservations on hold and just go with this for a second, I’d be very grateful)? Mobile property tends to derive its value as a function of its inputs – raw materials and labour. Territorial property derives its value partly from its composition (is the soil any good for agriculture?), but also from its position in relation to other bits of territory (is it in a nice neighbourhood?). IP, similarly, derives some of its value from content, but a lot of it from its relationship to other ideas (not all of them property). Windows is an obvious example here, but it really works for almost any sort of IP you can think of. Ska songs take some work to create, but derive a lot of their value from previous ska classics that have gone before, both because the new borrows from the old and because old ska songs helped to develop a market of ska-lovers out there. All the patents that Audi’s so proud of filing derive much of their value from their relationship to other patents, past and present, on other inventions (most obviously the internal combustion engine). At the risk of sounding a little wanky, you could say that the value of your IP depends largely upon where it’s sitting in the intellectual landscape. Man.


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