by Stephan Kinsella
Ayn Rand and Atlas Shrugged, Part II: Confused on Copyright and Patent
Reports about the new movie Atlas Shrugged: Part II indicate that it highlights Ayn Rand’s deep confusion on the whole issue of intellectual property (IP)—e.g,. from my friend Jacob Huebert. Stephanie Murphy mentions some of the IP confusion in the film in her recent PorcTherapy podcast (at around 1:05). And Chris Bassil, of Hamsterdam Economics, in Atlas Shrugged Part II: Hank Rearden Confuses his Principles, notes:
At one point, industrial steel magnate and metal manufacturer Hank Rearden is ordered by the state to sell his Rearden metal to them, which he has up until this point been refusing to do. He is also forced to sign away his rights to the metal, so that the state can distribute its procedure to other manufacturers and it can be universally produced. At this point, Rearden accuses the agent in his office of trying to take his patents from him.
This, to me, is a philosophically complicated position. Now, Ayn Rand, despite taking a position against the government in many cases, was a huge supporter of patents and intellectual property rights. As Stephan Kinsella has pointed out here, Rand endorsed them on a number of occasions:
Patents are the heart and core of property rights.
Intellectual property is the most important field of law.
Without getting into the larger points concerning intellectual property (which Stephan Kinsella covers well here, and which I discussed briefly in the Duke University Chronicle here), I think that Rearden’s position on this is a bit contradictory. He is indignant that the state would move to deprive him of his patents, thereby also depriving him of the fruits of his labors. But isn’t that what those patents do to others? Don’t they prevent others who develop similar products from bringing them to the market? It is true that, within the context of the film, Rearden plays a heroic producer who alone seems able to keep the steel industry afloat. But this glosses over the daily considerations of intellectual property laws, which are seldom enforced on such a genuine basis.
Furthermore, Rearden’s position seems to me to be a little bit disingenuous. After all, he opposes the state’s use of force. In fact, he constantly pushes state officials to actually endorse the use of force instead of merely allowing it to be implied. At the same time, however, his patents themselves rest on just such a threat. I see this as something of a double standard.
Of course, Rand might respond that the force backing Rearden’s patent is legitimate, since, in her view, patents are themselves legitimate derivations of individual property rights. I don’t agree with this either, but that would require a much more extensive blog post to cover. For now, see my article in the Chronicle on it, and Kinsella’s book, articles, YouTube videos, or even audiobooks available for free from the Mises Institute on iTunes U.
Overall, this is why I think that Ayn Rand’s work largely functions more as a gateway to discovery of free-market ideas rather than as a truly solid foundation for them. In my opinion, much of what Rand was right about is better said by others, and there was a lot that I don’t think she was right about, either.
And as Jeff Tucker notes in his recent comments on the movie:
Of course this gets us into the Randian view of IP, that great industrial ideas — appearing out of nowhere in the minds of a few — must somehow be assigned to owners and protected by government. And sure enough, patents and copyrights as property play a major role in Atlas II, as when Hank Reardon is blackmailed into assigning his patents as a gift to the government. It’s a scene that completely overlooks that these patents themselves were actually granted by government in the first place and would not exist in the free market.
In fact, for any viewer schooled in the role of patents today, this scene actually makes the viewer less sympathetic to Reardon. For a brief moment, he actually looks like a member of the monopolist class who is dependent on government favors. Not good. This scene reinforces for me my sense that the single biggest mistake Rand made was not in her ethics, economics, or religion but in her view that ideas are property and must receive government codification.
I haven’t seen either Part I or Part II yet of the movie versions of Atlas, but none of this is surprising to me, given Rand’s completely confused IP views. Some of these IP views are of course present in her magnum opus Atlas Shrugged and could be expected to leak into the films (at least the IP issue doesn’t dominate or ruin Atlas, like it does The Fountainhead, which basically glorifies IP terrorism). Rand’s view of IP and rights was very confused. I have referred to it as libertarian “creationism” and have criticized it, as well as her confused view of the relationship between labor, ownership, homesteading, and production (see, e.g., most recently, my recenty speech Intellectual Nonsense: Fallacious Arguments for IP (Libertopia 2012), and various blog posts on these and related fallacies and confusions, e.g. Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and ‘Rearranging’, Rand on IP, Owning “Values”, and ‘Rearrangement Rights’, Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors, and Hume on Intellectual Property and the Problematic “Labor” Metaphor.
IP is one of the worst things the state does to us (about #6, as I argue in Where does IP Rank Among the Worst State Laws?). To uphold it as legitimate is bad enough, but to say “Patents are the heart and core of property rights” or “Intellectual property is the most important field of law” is obscene, especially for a soi-disant champion of capitalism, individual rights, and the free market. And she had only a dim understanding of the actual workings of the actual IP system that she claimed was the basis for her entire system of property rights. I view this as inexcusable. As Rothbard wrote,
It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.
Likewise, Rand should not have run around promoting and jabbering about IP when she knew little about it. She gave the US Constitution wayy too much presumptive libertarian validity, which is probably one reason she was so pro-patent and copyright: the Constitution says it’s okay! This also explains why Rand initially favored eminent domain–because the Constitution implicitly authorized it (until around 1954, when Herb Cornuelle convinced her to oppose eminent domain). (I’ve been told this is indicated in Murray Rothbard’s correspondence, as I also noted in Ideas Are Free: The Case Against Intellectual Property.)
But as for her shallow understanding of the actual and evil IP law that the felt fit to endorse — as I mentioned in Ayn Rand Finally Right about the First-to-File US Patent System, Rand mistakenly assumed that under US patent law, the first inventor to file has priority over later filers, in the case of multiple independent inventors of the same idea. Then she bent into contortions trying to defend such an obviously unfair, and artificial and arbitrary, rule.
And the way IP rights play out in Atlas shows that she didn’t have any IP lawyer look at her drafts.
Por ejemplo: take a look at these excerpts from Atlas Shrugged (some bolded by me):
“What profits?” yelled Orren Boyle. “When did I ever make any profits? Nobody can accuse me of running a profit-making business! Just look at my balance sheet—and then look at the books of a certain competitor of mine, who’s got all the customers, all the raw materials, all the technical advantages and a monopoly on secret formulas—then tell me who’s the profiteer! [Rand, Ayn (2005-04-21). Atlas
Shrugged: (Centennial Edition) (p. 535). Plume. Kindle
“Point Three. All patents and copyrights, pertaining to any devices, inventions, formulas, processes and works of any nature whatsoever, shall be turned over to the nation as a patriotic emergency gift by means of Gift Certificates to be signed voluntarily by the owners of all such patents and copyrights. The Unification Board shall then license the use of such patents and copyrights to all applicants, equally and without discrimination, for the purpose of eliminating monopolistic practices, discarding obsolete products and making the best available to the whole nation. No trademarks, brand names or copyrighted titles shall be used. Every formerly patented product shall be known by a new name and sold by all manufacturers under the same name, such name to be selected by the Unification Board. All private trademarks and brand names are hereby abolished.
“Point Four. No new devices, inventions, products, or goods of any nature whatsoever, not now on the market, shall be produced, invented, manufactured or sold after the date of this directive. The Office of Patents and Copyrights is hereby suspended. [Rand,
Ayn (2005-04-21). Atlas Shrugged: (Centennial Edition) (p.
538). Plume. Kindle Edition.]
Boyle did not catch the tone of mockery, and answered earnestly, “It destroys the blight of monopoly. It leads to the democratization of industry. It makes everything available to everybody. Now, for instance, at a time like this, when there’s such a desperate shortage of iron ore, is there any sense in my wasting money, labor and national resources on making old-fashioned steel, when there exists a much better metal that I could be making? A metal that everybody wants, but nobody can get. Now is that good economics or sound social efficiency or democratic justice? Why shouldn’t I be allowed to manufacture that metal and why shouldn’t the people get it when they need it? Just because of the private monopoly of one selfish individual? Should we sacrifice our rights to his personal interests?” “Skip it, brother,” said Fred Kinnan. “I’ve read it all in the same newspapers you did.” “I don’t like your attitude,” said Boyle, in a sudden tone of righteousness, with a look which, in a barroom, would have signified a prelude to a fist fight. He sat up straight, buttressed by the columns of paragraphs on yellow-tinged paper, which he was seeing in his mind: “At a time of crucial public need, are we to waste social effort on the manufacture of obsolete products? Are we to let the many remain in want while the few withhold from us the better products and methods available? Are we to be stopped by the superstition of patent rights?” “Is it not obvious that private industry is unable to cope with the present economic crisis? How long, for instance, are we going to put up with the disgraceful shortage of Rearden Metal? There is a crying public demand for it, which Rearden has failed to supply.” “When are we going to put an end to economic injustice and special privileges? Why should Rearden be the only one permitted to manufacture Rearden Metal?” [Rand, Ayn (2005-04-21). Atlas Shrugged: (Centennial Edition)
(pp. 544-545). Plume. Kindle Edition.]
“I know,” said Mouch glumly. “That’s the point I wanted Thompson to help us out on. But I guess he can’t. We don’t actually have the legal power to seize the patents. Oh, there’s plenty of clauses in dozens of laws that can be stretched to cover it—almost, but not quite. Any tycoon who’d want to make a test case would have a very good chance to beat us. And we have to preserve a semblance of legality—or the populace won’t take it.” “Precisely,” said Dr. Ferris. “It’s extremely important to get those patents turned over to us voluntarily. Even if we had a law permitting outright nationalization, it would be much better to get them as a gift. We want to leave the people the illusion that they’re still preserving their private property rights. And most of them will play along. They’ll sign the Gift Certificates. Just raise a lot of noise about its being a patriotic duty and that anyone who refuses is a prince of greed, and they’ll sign. But—” He stopped. [Rand, Ayn
(2005-04-21). Atlas Shrugged: (Centennial Edition) (p. 547).
Plume. Kindle Edition.]
These passages illustrate Rand’s ignorance of the systems she thought were the heart and core of property rights.
For instance: she refers to the “Office of Patents and Copyrights.” But there is no such thing. Patent and copyright are both authorized by the Constitution, but they are not handled by a unified office. It is patent and trademark that are handled by the same agency, the US Patent and Trademark Office, which is an agency of the Dept. of Commerce, even though the Constitution does not authorize federal trademark law. Copyright law is handled by a separate agency, the Copyright Office, which is, bizarrely, part of the Library of Congress (bizarre to me, in that that what seems to be an executive agency is under the legislature).
Another mistake: in this scene, the state agents want to find a way to pressure patent and copyright holders to turn them over to the state. After all, “We don’t actually have the legal power to seize the patents.” But this is just false. Patents are just artificial monopoly privileges granted by the state; the states does not seize private property if it “takes them back.” Taking them “back” does not mean “licensing them” back to “all applicants,” but just doing away with these monopoly privilege grants in the first place. And the state does have the “legal power” to issue compulsory licenses, even now, to the patents that the state grants (see my posts Objectivist worried ObamaCare may weaken patent rights; Price Controls, Antitrust, and Patents; Pro-IP Libertarians Upset about FTC Poaching Patent Turf; also, When Antitrust and Patents Collide (Rambus v. FTC);Price Controls, Antitrust, and Patents; Intellectual Property and Economic Development; IP vs. Antitrust; State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law; The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic State; Intel v. AMD: More patent and antitrust waste). So why would the state agents need to make up an excuse to “seize” patents if only to re-license them to others? After all, the state grants these monopoly privileges, and it has the legislative authority to grant compulsory licenses. The whole premise of Rand’s scenario involving patents and Rearden’s metal and Points 3 and 4 of Mouch’s “Directive” makes no sense.
The passages in Atlas quoted above strongly imply that Rearden Metal is not protected by trade secret, but by patent. And that the only reason others cannot make Rearden Metal is that the state has granted to him a “private monoply” (a patent) on it. For Rand to say that the state’s withdrawal of the monopoly patent privilege, is some kind of taking of private property, shows how far she has strayed from libertarian principles.
Notice all this part:
No new devices, inventions, products, or goods of any nature whatsoever, not now on the market, shall be produced, invented, manufactured or sold after the date of this directive. The Office of Patents and Copyrights is hereby suspended.
This implies that without the state providing a patent and copyright office, there would be no more inventions, innovations. This the utilitarian aspect of Rand’s argument. And it is utterly without merit, as can be seen in various studies noted here.