• 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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