In Defense of Napster and Against the Second Homesteading Rule

by Stephan Kinsella
by N. Stephan Kinsella
Previously by Stephan Kinsella: The Greatest Libertarian Books

Internet bad boy Napster has come under fire. In a lawsuit filed earlier this year by the Recording Industry Association of America (RIAA) on behalf of its members, the RIAA contends that Napster's service "enables and facilitates piracy of music on an unprecedented scale," and seeks to shut down Napster for infringing the copyrights of its members. U.S. District Court Judge Marilyn Hall Patel initially granted the RIAA a preliminary injunction, effectively ordering Napster to shut down. However, the injunction has since been stayed by the U.S. Court of Appeals for the 9th Circuit, pending an appeal.⁽¹⁾

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

First, does Napster violate U.S. copyright law? In the Napster system, Napster users A and B "find" each other by using a directory maintained by Napster. Napster user A then copies the digital music file (e.g., an MP3 file) of Napster user B, using file transfer software provided by the Napster service. This is known as peer-to-peer file sharing. However, the file is transferred from B to A over the Internet, not through Napster's servers. Napster does not itself do any copying. It is more like an intermediary, who introduces A and B, who then may copy files from each other. It is clear, then, that Napster does not directly infringe any copyrights, because it does not itself reproduce music files.

For this reason, Napster has been accused only of "contributory" infringement (contributing to the direct copyright infringement of its consumer-users)⁽²⁾ and of "vicarious" infringement (profiting from infringing activity under its control). Napster has several defenses available under the law.

Perhaps the strongest defense to contributory infringement is the "staple article of commerce" doctrine. Under this doctrine, a provider of technology used to perform the direct infringement is not liable as a contributory infringer, if the technology is capable of commercially significant noninfringing uses.⁽³⁾ If a product has both infringing and noninfringing uses, then the sale of the product is not necessarily contributing to others' acts of infringement. Paraphrasing the NRA, selling technology doesn't infringe – people do! It was under this rationale that the Supreme Court permitted the sale of VCRs, which can be used both for copyright infringement and for legal, noninfringing uses (such as time-shifting).

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.

Additionally, Napster is not liable under either theory if its users are not direct infringers. There are two such arguments. First, Napster's users themselves may have a fair use defense to copyright infringement. Most consumer copying is not for commercial purposes, but for sampling or space shifting, which arguably constitute fair use. If Napster users have a fair use defense, they are not direct infringers.

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

Even assuming Napster violates positive copyright law, we must inquire into the legitimacy of the law. Unlike most other federal laws, copyright law is clearly authorized by the Constitution.⁽⁵⁾ This, however, does not mean the law is legitimate, only that it is constitutional. The question is whether copyright law is justified, i.e. is it in accord with our natural rights?

Redistribution of Property

Let us recall that copyright gives an author partial rights of control – ownership – over the tangible property of everyone else. The author has partial ownership of others' property, because, by virtue of his copyright, he can prohibit them from performing certain actions with their own property. The author, for example, can prohibit a third party from inscribing a certain pattern of words on his own blank pages with his own ink.

That is, by merely authoring an original expression of ideas, by merely thinking of and recording some original pattern of information, the author instantly, magically becomes a partial owner of others' property. He has some say over how third parties can use their property. Copyright changes the status quo by redistributing property from individuals of one class (tangible property owners) to another (authors of original works). Prima facie, therefore, copyright law trespasses against or "takes" the property of tangible property owners, by transferring partial ownership to authors. (The same is also true of other forms of intellectual property, or "IP," such as patent law.) It is this invasion and redistribution of property that must be justified in order for copyright law to be valid. Can this be done?

Utilitarianism

The most common defense of copyright laws is utilitarian. It argues that creativity and wealth are increased by granting monopolies to writings so as to "encourage" authors. Without a copyright in their works, many authors would not bother to write novels, software, or other types of works. In fact, most utilitarians ground their defense of all property rights in utilitarianism. Conservatives and libertarians should be wary of adopting utilitarianism. It is a thoroughly incoherent and immoral doctrine, for several reasons.

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.

Not only is utilitarianism morally insufficient to justify property redistribution, but it is incoherent as well. As Austrian economists have shown, the utilitarian weighing of costs against benefits requires the impossible be done, namely making interpersonal utility comparisons, as when the "costs" of copyright laws are subtracted from the "benefits" to determine whether such laws are a net benefit.⁽⁶⁾ In short, there is no way to compare the benefit to B and the detriment to A of a given redistributionist policy, because values and disvalues have no cardinal magnitude. The reason for this is that values are subjective and ordinal, not cardinal.⁽⁷⁾

Finally, even if we set aside the problems of interpersonal utility comparisons and the justice of redistribution and plow ahead and employ standard utilitarian measurement techniques, it is not at all clear that IP laws do lead to an increase or decrease in overall wealth.⁽⁸⁾ That is, it has not been demonstrated that the "costs" of copyright and other IP laws outweigh the benefits of such laws.

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

Some advocates of copyright and other forms if IP try to justify IP with natural law–type arguments. For example, some say that the author "creates" a work, and "thus" is entitled to own it. However, this argument begs the question by assuming that the authored work is property in the first place; once this is granted, it seems natural that the "creator" of this piece of property is the natural and proper owner of it.

But "creation" does not justify ownership in things. If I homestead a farm, there need be no "creativity" involved, in the copyright sense; I need only be the first possessor of the land. On the other hand, if I carve a statue into your block of marble, I do not thereby own the resulting statue. In fact, I may owe you damages for trespass or conversion. Thus, creation is neither necessary nor sufficient for ownership.

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⁾

The intangible "things" covered by copyright are simply not scarce, in this sense. An idea or pattern of words, for example, can be copied by others an infinite amount of times, without "taking" the idea from its originator. Unlike tangible property, several persons can use the idea at the same time, independently. If you copy my novel, I still "have" the novel, and you have it, now, too. Ideas are not scarce and are not property. As Thomas Jefferson, himself an inventor and the United States' first Patent Examiner, wrote, "He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me." For this reason, copyrightable works should not be viewed as property, and copyrights should not be granted.

In fact, because ideas are not property, granting property rights in them has to end up diluting the property rights accorded to actual, scarce resources. And this is exactly what we see. As pointed out above, to grant an author a copyright in his novel means that he now has partial ownership rights in all others' tangible property. For example, an author, Arthur, can prevent Brown, owner of Blackacre, from using Blackacre to recreate Arthur's book-pattern. Yet by the Lockean homesteading principle, once the unowned tract Blackacre is homesteaded by Brown's first possession of it, Blackacre is no longer unowned, and no longer subject to homesteading. There is no unowned property left to homestead. Thus, no action by Arthur can result in his homesteading part ownership of Blackacre. Brown is the first possessor and owner of Blackacre, not Arthur.⁽¹⁰⁾

Indeed, by explaining the situation in these terms, we can see why Arthur has no copyright in his authored work: not only is Blackacre not subject to homesteading (it is already owned), not only is Arthur not the first possessor of Blackacre (Brown beat him to it) – but Arthur is not a possessor at all of Blackacre. Arthur could not even homestead an unowned tract of land, Greenacre, by merely writing a novel. The act of writing a novel is not an act of possession of Greenacre, much less first possession of it.

To grant Arthur rights in Blackacre, merely by virtue of setting down in writing an original expression of ideas, requires the Lockean homesteading rule to be undermined by a new, second homesteading principle. This new rule provides a second way that an individual can come to own tangible property. To-wit, the copyright advocate must propose some homesteading rule along the following lines: "A person who comes up with some creative idea which can be used to imprint a pattern on his own property, thereby instantly gains a right to control all other tangible property in the world, with respect to that property's similar use." This new-fangled homesteading technique is so powerful that it gives the creator rights in third parties' already-owned tangible property. This second rule of homesteading has no justification whatsoever, and can only dilute and undermine private property rights just where they are needed, in scarce resources. For these reasons, property rights in ideas are not justified, and Napster should not be penalized by such unjust laws.

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.

2. Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971); see also Melville B. Nimmer & David Nimmer, Nimmer on Copyright (New York: Matthew Bender, 2000), § 12.04[A][2].

3. Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 442 (1984); Nimmer on Copyright, § 12.04[A][2][b].

4. Audio Home Recording Act of 1992, 17 U.S.C. §§ 1001–1010.

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.

8. See Julio H. Cole, "Patents and Copyrights: Do the Benefits Exceed the Costs?" (forthcoming; jhcole@ufm.edu.gt) for an excellent survey and critique of the cost-benefit justification for patent and copyright. See also Tom G. Palmer, "Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects," Harv. J. Law & Publ. Pol'y 13, no. 3 (Summer 1990), pp. 818, 820–821, 850–851, and idem, "Intellectual Property: A Non-Posnerian Law and Economics Approach," Hamline L. Rev. 12 (1989): 261, 300–302, for useful discussions of evidence in this regard; also Boudewijn Bouckaert, "What is Property?", Harv. J. Law & Publ. Pol'y 13, no. 3 (Summer 1990): 812–813; Leonard Prusak, "Does the Patent System Have Measurable Economic Value?," AIPLA Quarterly Journal 10 (1982): 50–59; idem, "The Economic Theory Concerning Patents and Inventions," Economica 1 (1934): 30–51.

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 my monograph Against Intellectual Property.

September 4, 2000

Stephan Kinsella [send him mail] 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. The author thanks Gil Guillory for helpful comments on an earlier draft. His personal website is located at www.stephankinsella.com.

Copyright © 2009 Stephan Kinsella

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