Property and Technology

Professor Picker gave a talk today on copyright and the Sony case, which allows companies to sell products that can be used to infringe on copyright so long as they have a substantial non-infringing use. Picker doesn't like this standard, and he was fairly persuasive, but what really interested me is the interaction between technology and property rights. As a quick note, I didn't see Gus at the talk, which is more evidence that when it comes to technology and intellectual property rights, he's a dilettante. That, or he has delusions of grandeur and was at the law review meeting.

So here's the concept. There's no reason in particular why property rights can't be enforced on a might-makes-right basis. In fact, libertarians sometimes espouse this view, although more frequently they see property protection as the one role that government legitimately exercises. Whether this is at all consistent is a subject for another post. Imagine that I own an apple orchard. I can protect it by, say, building a fence (the "technological" solution). My neighbor can then invest in a ladder. I might respond by building a taller fence, or spending a lot of time in my orchard. Eventually he might get over the fence, and I might end up fighting him. The winner, I suppose, will get the apples.

The problem with this state of affairs is obvious. It is very costly for individuals to compete in this manner. Remember that when I build a fence, I'm not producing any wealth, I'm merely preventing my wealth from being transferred to someone else. Similarly with the ladder, the taller fence, and the physical damage incurred in the fight. Sure, there might coincidentally be other uses for the fence, but if so then it should be built regardless of the property struggle.

Now the government steps in and bans theft. The land is mine and the trees are mine, so the apples are mine. I don't have to build a fence, because if my neighbor takes my apples, I can invoke the power of the state and punish him. We have the same number of apples (or maybe even more) with a lot less effort necessary to enjoy their fruit. You can see why lots of people prefer the legal solution to the technological solution.

Apply this to intellectual property. There are technological solutions to pirating, such as better and better encryption (taller and taller fences). The problem is that pirates have lots of technical skills, too, and can at the very least force continual spending on security measures. All of this is costly to society. If we could use the law to preclude this struggle, we could spend our resources more efficiently. This, I think, is Picker's main point.

So is there anything to be said for the other side? I'm not sure, but here's my stab at it. Property enforcement by the government isn't costless. When its costs are high enough, it makes more sense to switch over to private enforcement, despite its pathologies. Note that we frequently supplement the law with technological protection as it is; to replace it entirely might not be such a big step when it comes to file sharing. The competence of law to protect intellectual property is an empirical question, and most hackers scoff at legal efforts (I don't use the term pejoratively; it just means people who can write code).

As Professor Helmholz would say, "Of course, that can't be right." I don't know much about technology, but I do know this. Encryption is pathetic at protecting intellectual property. This is because, without any exception that I can think of, whatever you can see and hear you can also rip off. So the only way to make a video immune from pirating would be to make it unviewable. Meanwhile, encryption is an excellent tool to escape detection as a pirate. Public key cryptography is so powerful that, absent a quantum computer, it can effectively never be broken. This is a bar both to private and public enforcement of property rights, of course, but at least the government can in theory subpoena the private key, etc.

All of this is not to say that technological solutions don't matter. They can always supplement legal solutions, and their cheapness and feasibility will feed back into which laws make sense and which ones don't. Still, I'm fairly convinced that traditional property rights make sense in the digital world, and that Sony should be distinguished or overturned. The funny thing is, I bet Sony agrees.