In Defense of Napster and Against the Second Homesteading Rule

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This
case gives rise to the question: Should Napster be shut down by
force of law? The answer can be yes only if Napster is violating
the individual rights – property rights – of others. To
determine this we can ask a two-pronged question: (1) Is Napster
violating any positive law?, and (2) If so, is the law legitimate?
The second question is necessary because, even if Napster is technically
in violation of a legal prohibition, we can only say that Napster
“should” be subject to the law’s punishments, if the law is itself
legitimate. To hold otherwise is to adopt legal positivism and the
moral relativism from which it springs. Let us, then, take each
of these two questions in turn.

Positive
Law

Likewise,
Napster’s service is capable of numerous commercially significant
noninfringing uses, such as promotion and distribution of songs
from independent record labels or new artists, and free (authorized)
distribution of songs, in addition to sampling and “space-shifting”
(the process of sharing files between hard drives and players).
Thus, because Napster can be used for these and other significant
noninfringing uses, it is not a contributory infringer.

As
for vicarious infringement, there is only liability if Napster has
both (1) the right and ability to supervise the infringing activities
of its users; and (2) a direct financial interest in the infringing
activities. However, despite the District Court’s ruling, there
is no way for Napster to distinguish between legitimate and illegal
copying by its users. Thus, it does not have the “ability” to supervise
any infringing activities.

Second,
under the Audio Home Recording Act (AHRA), consumers have a right
to create and transfer digital music for noncommercial purposes.(4)
Because Napster users typically share files for free, the copying
is arguably for a “noncommercial purpose.” Thus, either due to a
fair use defense or the AHRA, Napster users are not direct infringers,
meaning that there is no direct infringement to which Napster can
contribute or be vicariously liable for.

Legitimacy
of Copyright Law

Redistribution
of Property

Utilitarianism

First,
even if a given policy could increase “net” wealth by redistributing
property from A to B, that does not justify the policy. The goal
of law is justice, not wealth maximization. B may be helped “more”
than A is harmed by redistribution, but how does this justify the
harm done to A? By the reasoning of utilitarians, we could not condemn
every act of theft, rape, or murder; we would have to weigh the
benefit to the thief, rapist, or murderer against the harm suffered
by the victim, to determine whether or not the crime should be permitted.
In cases where the aggressor enjoys his crime “more” than it harms
the victim, it is not a crime at all, and should be permitted, since
net wealth is increased. Clearly, this is a wholly immoral and unprincipled
view.

Utilitarian
analysis is thoroughly confused and bankrupt: talk about increasing
the size of the pie is methodologically flawed; there is no clear
evidence that the pie size is increased by IP rights; and in any
event pie growth simply does not justify the use of force against
the otherwise-legitimate property of others. For these reasons,
utilitarian defenses of IP are not persuasive.

Natural
Law and the Second Homesteading Principle

It
is scarcity that is the hallmark of ownable property, and it is
by first possession that one comes to own such ownable property.
This can be seen by examining the purpose and nature of property
rights. Were things in infinite abundance, there would be no need
for property rights. But in the real world, there are scarce resources.
These things can be used and controlled by only a single person.

Because
of this fact of scarcity, there is always the possibility of interpersonal
conflict over scarce resources. If I take your lawnmower, you no
longer have it. If I take over your house and your land, you lose
control of it. These tangible goods are scarce. Property rights
exist to allocate ownership in scarce resources to a specified owner,
thereby permitting conflicts over the use of these scarce resources
to be avoided (and resolved). Thus, it is only things that are scarce,
in the economic sense, that can be property. This is why, for example,
there can be ownership of tangible, scarce resources such as land,
cars, printing press, paper, and ink. Moreover, in the libertarian
and conservative view, these property rights in scarce resources
are allocated in accordance the Lockean homesteading rule, in which
unowned scarce resources are homesteaded by the first possessor.(9)

Notes

1.
Further information about the Napster lawsuit may be found at:
http://www.riaa.com/napster_legal.cfm
and http://www.napster.com/pressroom/.
See, e.g., the RIAA’s
motion
for preliminary injunction and Napster’s
brief
appealing the district court’s preliminary injunction.

5.
U.S.
Const. art. I, 8
.

6.
On the defects of utilitarianism and interpersonal utility comparisons,
see Ludwig von Mises, Human
Action
, 3d. rev. ed., Chicago: H. Regnery; Murray N. Rothbard,
“Praxeology, Value Judgments, and Public Policy,” esp. pp. 90-99,
and “Toward a Reconstruction of Utility and Welfare Economics,”
in The
Logic of Action One
(Cheltenham, UK: Edward Elgar, 1997),
esp. pp. 90-99; idem, Man, Economy and State (Auburn AL: Mises Institute,
1993); Jeffrey M. Herbener, “The
Pareto Rule and Welfare Economics
,” Review of Austrian Economics,
v. 10, no. 1, 1997: pp. 79-106; Anthony de Jasay, Against Politics:
On Government, Anarchy, and Order (London and New York: Routledge,
1997), pp. 81-82, 92, 98, 144, 149-151. On scientism and empiricism,
see Rothbard, “The Mantle of Science,” in The
Logic of Action One
; Hans-Hermann Hoppe, “In
Defense of Extreme Rationalism
: Thoughts on Donald McCloskey’s
The
Rhetoric of Economics
,” Review of Austrian Economics
3 (1989): 179. On epistemological dualism, see Luwdig von Mises,
The Ultimate Foundation
of Economic Science: An Essay on Method
, 2d ed. (Kansas
City: Sheed Andrews & McMeel, 1962); idem, Epistemological
Problems of Economics
, George Reisman, trans. (New York:
New York University Press, 1981); Hans-Hermann Hoppe, Economic
Science and the Austrian Method
(Auburn, Alabama: Ludwig
von Mises Institute, 1995); idem, “In
Defense of Extreme Rationalism
.”

7.
It is not merely that all costs do not have a market price.
As Mises showed, even for goods that do have a market price, the
price does not serve as a measure of the good’s value. As
Mises states: “Although it is usual to speak of money as a measure
of value and prices, the notion is entirely fallacious. So long
as the subjective theory of value is accepted, this question of
measurement cannot arise.” Ludwig von Mises, The
Theory of Money and Credit
, H.E. Batson, trans. (Indianapolis:
Liberty Fund, [1912] 1980), p. 51 (in chapter 2,”On the Measurement
of Value”). Also: “Money is neither a yardstick of value nor of
prices. Money does not measure value. Nor are prices measured in
money: they are amounts of money.” Ludwig von Mises, Socialism:
An Economic and Sociological Analysis
, 3d rev. ed., J. Kahane,
trans. (Indianapolis: Liberty Press, 1981), p. 99); see also Mises,
Human
Action
,
pp. 96, 122, 204, 210, 217, 289.

9.
On ethical justifications of the libertarian conception of individual
rights, including private property rights and the Lockean homesteading
rule, see Hans-Hermann Hoppe, A
Theory of Socialism and Capitalism
(Boston: Kluwer Academic
Publishers, 1989), ch. 7; idem, The
Economics and Ethics of Private Property
(Boston: Kluwer
Academic Publishers, 1993); Murray N. Rothbard, The
Ethics of Liberty
(New York and London: New York University
Press, 1998 [1982]); idem, “Justice and Property Rights,” in The
Logic of Action One

(Cheltenham, UK: Edward Elgar, 1997); N. Stephan Kinsella, “A Libertarian
Theory of Punishment and Rights” 30 Loyola
of Los Angeles Law Review
607 (Spring 1996) (previous
version
); idem, “New
Rationalist Directions in Libertarian Rights Theory
,” Journal
of Libertarian Studies 12, no. 2 (Fall 1996): 313-326.

10.
This assumes that Arthur does not have a contract with Brown
which prohibits Brown from making a copy of Arthur’s book-pattern.
For further discussion of this matter, see the my forthcoming article
"Intellectual Property: A Libertarian Critique," referenced
below.

September
4, 2000

N.
Stephan Kinsella is an intellectual property attorney in Houston.
The views expressed herein are merely the current speculative opinion
of the author, and should not be attributed to any other person
or entity. He has never used Napster and does not download MP3 files.
A more detailed exposition of some of the ideas in this article
can be found in the author’s article "Against
Intellectual Property
." Email: Stephan@StephanKinsella.com.
The author thanks Gil Guillory for helpful comments on an earlier
draft. His personal website is located at www.stephankinsella.com.

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