In this discussion we will discuss the discussion question of describe factors that make it difficult to estimate useful life So if we see an essay question like this, we probably want to first think about okay What is useful life related to useful life in and of itself? Doesn't mean much unless we apply it to something that's something being property planting equipment So when we think of useful life in the context here We're talking about property planting equipment and then we might want to define what property planting equipment is and the context of the useful life So property planting equipment is going to be something that we're going to have it It's going to be something tangible something we can touch feel something that usually has a useful life over a year So meaning we're going to use it for an extended period of time in order to help generate revenue in the future Therefore when we purchase it, we're going to put it on the books as an asset Rather than expending it at the point in time of purchase So we're going to put it on the books as an asset then allocate that cost of that asset over It's useful life and that's in accordance with the matching principle. So what we're doing with the useful life is trying to say Here's the cost of this equipment. How are we going to allocate it in some way? Whether it be straight line or some accelerated method How are we going to allocate that cost to the time periods that it's used in order to generate revenue in accordance with the matching principle So that the useful life then is one estimate within the calculations of The depreciation calculation depreciation calculation is an estimate The useful life is a huge component in that estimate And when you think about depreciation, you may be asking yourself, well, how would someone come up with the useful life? Isn't that pretty arbitrary to to get the useful life? I mean, can't you have a pretty big difference in terms of of what you're going to be allocated in terms of net income Based on what you decide the useful life to be and the answer is yeah, you can it can change things a lot So notice if you're talking about like the tax code, they'll actually have some pretty stringent regulations in terms of what qualifies as a useful life, but Um Those tax codes aren't geared towards the best financial reporting They're they have they have other motives other than just good financial reporting for good financial reporting We want to find the best useful life that makes the most sense the one that's the most accurate What we think is our best estimate we're going to try to make our best estimate of how long something's going to last Now when we think about that, uh, there's a couple factors that would go into consideration One would be just deterioration How much is this going to deteriorate in value decline in its productivity? Uh, and therefore how should we allocate just the normal decline In value just through the usage There's some other factors though one one could be just the inadequacy of the equipment as we grow meaning We may be behind a machine that suits our needs now, but the capacity is not there Once we grow to a certain degree and we may not know whether we're going to grow To a certain degree we may for example if we make a if we bought a printer that prints so many pages Uh, per second or whatever like that and if we bought if we got bigger We might need uh, we might need the printer to be able to print more pages per second or produce faster And so it might be sufficient for our needs now but as the company grows and uh, it might not to be sufficient and it's very difficult of course to Calculate what the company is going to do in terms of the capacity and needs of this particular piece of equipment It's also possible that there could be obsolescence that we it's difficult to know especially in today's Time where we could buy a piece of equipment that uh pretty soon Gets outdated new piece of equipment comes out That's a lot more efficient and a lot better making the old piece a lot obsolete And if that happens, it's going to be difficult for us to calculate Well, when when is that going to happen when's this new technology going to take place and make the piece of equipment obsolete? So there's a there's a couple components They're just note that when we when we use an estimate it is just an estimate But we have to use the estimate in order to make our financial statements As good as they can as best guess is we can't we know the cost of it, but we have to estimate in some way Uh, the decline in the value we have to estimate the the allocation of the cost to expense in some way And we all we can do is do our best with that one way one Estimated part one big estimate in that calculation is of course The useful life


Hi and welcome back, today I'm going to create a vintage card with a heart on top so it would be perfect for a Valentine's Day card, but depending on the sentiment that you choose to go with, it can be used for other occasions as well. I'm starting with Nina Desert Storm cardstock and I'm going to cut it down to be 4.25 x 5.5. That's 80 pounds cardstock and for the layers of a card I always like to go with 80 pounds. I'll use this die to cut out my panel and these dies come from a set that I had for ages more than 5 or 6 years ago, I got this one, but it is one of those really versatile diesets that it's fun to have. It's the Essential Labels by Spellbinders.  So I'm going to combine two of those one inside the other and round them through my die cutting machine.  And I don't know if your die cutting machine looks like mine, but it usually has little pieces of a wash tape or low tuck tape on top of it. Anyway, I have my panel here and I think it looks just gorgeous. I absolutely love this shape and I think it adds something extra on a card, especially when you go vintage. Now I'm going to work on the focal point and for that I'm going to do some foiling. These hearts, the foiling plates are from the latest kit by Spellbinders and you can check it down below. If you don't have this foiling kit then of course you can just die cut a heart to replicate the design and make a similar card. However adding foiling on a focal point really adds that extra touch on a card. Now the kit comes with a red foil, however I'm going to use copper one that I had in my stash.  As my foiling machine is getting warm I'm going to prepare all the pieces. I like to secure the foiling plates on top of my paper and the foil using some low tack tape or you can use washi tape for sure. Just to make sure that nothing is going to shift there is a lot of movement there since you have to take out the platform and run it through your die cutting machine so it's better to be safe. For my heart I decided to go with this dark red cardstock since I'm going for a vintage look and feel I didn't want to use any bright red color for my heart. Now my foiling machine is ready nice and warm I'm going to place the two sandwiches that I created the heart and the sentiment and then I'm going to press that button and wait for it to stop blinking. I can place the plates on top. You have to wait for a few seconds and then this is going to stop blinking and you can take the whole platform and run it through your die cutting machine. I'm doing that very slowly and a couple of times and every time I get a good impression. This time I didn't have any over foiling but if you get some over foiling you can always erase it with a sand eraser. Now these plates are quite warm that's why I'm going to use my magnetic tweezers there. This is not so hot that it is going to burn your fingers but it is better to avoid. Now you can see the beautiful heart and how copper looks on top of dark red cardstock. I absolutely love the look and here is the sentiment that I foiled on the craft cardstock.   Now notice that since I am going for a vintage looking card I am not going to die cut the flowers from white cardstock.  I will also die cut more leaves from a different colored green cardstock a lighter one so that I have some variation on the finished card. Now back to my panel I'm going to do some stamping for that. I'm using a very old stamp that I had in my stash for years. This is a text stamp that I keep on using again and again mainly on my Argyral projects. I'm going to stamp that with vintage photo and I'm not going for the perfect impression. This is why I'm not using a stamping platform or an acrylic block. This is going to give something extra a visual texture on my background to make it more interesting which is already interesting just because it has that lovely shape and the line of dots all around. Now I'm going to do some inking only on the edges again using vintage photo and by the way this is not the oxide it's the original Distress Ink. Now here is what I found. I forgot completely my technique of inking with Distress Ink. Just because I moved on into inking with the oxides I find that I got more heavy-handed just because the oxides blend beautifully and even if you are more heavy-handed it doesn't really matter. So I had to adjust my pressure here and remember how I did it. Very very lightly better to go over the areas again and again instead of having blotches of ink here and there that you cannot move. This is not the case with oxides since they stay on top of the paper and you can always move them around. So anyway back to the card I am using a darker shade of brown only at the very edge just to darken it up a little bit and I am going to repeat the same process inking up the edges on the sentiment just a little bit so that it has the same look and feel with the background panel. For the same reason I'm going to ink up lightly the edges of the leaves. I'm not adding too much just a touch just touching the blending tool on top of them as well as the flowers so they don't look as bright. And it's time to start assembling my card. The heart is going on top first. I have foam scrolls at the back for some added dimension and then I'm going to place the sentiment on top. The sentiment has a tiny strip of foam tape on each side so that it is aligned with the heart. On the flowers I did add some dimension using my tool there but you can do that with your fingers as well and then I'm going to stick the small flower on top of the larger one making sure that it is offset so that it looks fuller. I'm going to repeat the same process to create fake flowers and I did the same thing for the leaves. I'm adding some dimension with my tool again you can do that with your fingers and I'm going to use my tweezers and pinch them on the edge so that they look even more dimensional. I am embellishing with the flowers and the leaves the sentiment on the edges and I'm going to use two of the flowers on one side and the other flower on the other side. Now I did use some tiny little foam scrolls at the back so that they are leveled with the sentiment and the heart and for the third flower I'm going with glue. On a scrap piece of paper I'm adding a blob of glue so that I can easily touch the leaves there and then tuck them underneath the flowers. I will make sure that I place different colors of leaves next to each other so that the composition looks more interesting so a darker and a lighter leaf and here is the finished look. There is something with vintage projects and pearls so I would like to somehow incorporate them in my projects. That's why I'm using these tiny pearls. These are from Dress My Craft and they are called flower pearls. I'm going to add three of them on each and every one of the flowers at the center and just because these are super tiny my embellishment went to the rescue. It's super handy to work with it and I always keep it on my desk next to me. Now of course you can stick this panel on top of a pre-folded card that's four and a quarter by five and a half however I wanted to keep that shape that's why I cut two more panels and this is vanilla cardstock so that it matches the look and feel. I don't want to have anything bright white. I'm going to stick the panel on one of those two shapes which is exactly identical but you will be able to see that vanilla cardstock picking through those dots. Then for the other panel I'm going to bring in my scoring board and I am going to score a line at the top. It can be half an inch it's up to you it can be three quarters of an inch. By the way my mini scoring board is by Dress My Craft they have some really handy tools. This is going to be the inside of my card so I'm going to fold the top make sure that I have a nice crease there with my bone folder and then I'm going to add glue up there. You can always go with a double-sided tape if you like. I'm going to stick that at the back of my card front. They match perfectly one on top of the other since I used the same die and my card is ready.  Down below you will find the links to everything I used. Thank you all so much for watching today and I'll see you all next time.


If there are any that I've missed, please alert me and we can talk about them later or I'll answer them after the class. Okay, so I think my name is showing up properly now because I'm just another panelist with you guys and Danny is Mises Institute. So Danny, can you hear me? Are we good to go? Okay, I uploaded the slide myself. That worked okay. Okay, good evening everybody. Glad to be back and let's resume with the talk. And we're going to pick up where we left off if I can find, here we go. Okay, so this week I'm going to do something I did last class which worked out pretty good. I mean, I have this blog at C4SIF. Let me see if I can turn on the laser pointer actually. I've had trouble last time and that's fine. Let me do it. Never mind. I have a blog or a site called C4SIF.org and I post regularly various IP-related items. There's probably one about every maybe two or three a day. There's so many things to blog about. So that's a good way to keep up with what's going on. And so in the beginning of each class, sometimes I have like an outrage of the week and I just kind of go through quickly some of the things I posted in the last week or two of the course actually. It's hard to keep up because there's so many things going on. So anyway, like I said, C4SIF.org, which is a think tank I started, or really just kind of a private research foundation that started last year, it means Center for the Study of Innovative Freedom. But basically it's about getting rid of IP loss so we have innovative freedom. The new Grave Robbers, I'll just go through a few of these right here. The new Grave Robbers is about, let me turn on the laser pointer so it's not letting me do it. I'm not sure where it is on here. Anyway, so the new Grave Robbers is about a type of IP rock called the Rite of Publicity, which is called Grave Robbers because it's lasting past the death of the famous person in some American states. And it's being used more and more. It's called a Rite of Publicity or an Identity Rite. And one recent case is the Tolkien estate is trying to block a novel that uses Tolkien as a character. So this could threaten historical fiction. This is an example of how one type of IP law can actually restrict free speech and free expression. Here's a blog post about recent IP cartel advances. This was, a lot of these are reposts of other people's blogs, but this is about how in Europe there's a steam for motion, agitation for changing the law and adding new IP rights and strengthening IP law, even in Sweden and in Italy and in France. So you can browse that later. We have a lot to go through, so I'm just going to go through some of these quickly. You can read these blogs. These are all links, by the way, on the slides. Owning language, using trademark law. A lot of companies are fighting over the use of words. This has always been done, but it seems to be an increasing problem. Right now we have Apple actually claiming the right to the term App Store, which is ridiculous, but because Amazon actually has the Amazon App Store up now. And so Apple is, and Amazon may be a mitigation. There's a new white paper up, and it's kind of funny. It will be awesome if they don't screw it up. 3D printing, intellectual property, and the fight over the next great disruptive technology. 3D printing is going to be, some people think, an amazing thing where you can basically have, you can have manufacturer three-dimensional objects using a recipe. Of course, if you have intellectual property that interferes with this, you could stop people from making things in their own houses, like making screws or shapes or widgets or gadgets. I found a quote from 1986, which I liked, an economist named George Priest in a law journal. In the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or other systems of intellectual property. So we have this system where even today we still, the economists have still not been able to verify the claims of empiricists or the advocates of the property, IP system. And we'll get to that later in today's course, or maybe next course. There's a new patent reform act. There's been one pending for the last five or 10 years, but finally it looks like it's gaining steam and may be about to pass. The Senate passed it like 95 to five. By the way, Rand Paul did vote for it, which is disappointing. But anyway, so there's a new patent reform act called the America Invent Act. And I did a blog post just going through the provisions showing how they're not a big deal or they're negative. Daniel Schulman, an old friend of mine, is a science fiction author and a kind of quasi-Randian and a huge advocate of his strange version of intellectual property called logo rights. He's starting to get testy about all the challenge to IP by libertarians. He recently called me the foremost enemy of property rights. I guess I took that as a compliment. Jock says, did Sanders. Jock, are you talking to me? I'm not sure that question is about did Sanders. I don't know what that means. There's a recent lawsuit by the R.I. recording industry. Oh, I don't know. It's 95 to five. I didn't look to see how everyone voted. Jock says, did Bernie Sanders from Vermont vote for that law? I don't know. It's a good question. In my post, I tried to have a link to the address site that shows the status of the vote. So just click on that link here that I have there. Maybe you could find out. It was 95 to five, so only a few people held out. I saw the people who didn't vote for it. I don't remember seeing his name. It's like three Democrats, two Republicans, if I recall. But there's a suit where the R.I. triple A is suing the Lime Wire for file sharing, and they've done the math using the statutory damages in the copyright statute, and they've added up, multiplying it by all the different sharings of these files, like 10,000 files being shared many times. And they've calculated that they're owed $75 trillion of damages from Lime Wire. This is not a joke. $75 trillion. I have a blog post about an old patent in 1924 where they're warning people, you cannot use your airplane to write words in the sky because you violate our patent. That's kind of funny. I also have a trademark about, I mean a post about trademark absurdities with two cases here in Houston.  And that was their name.  So they finally reopened and renamed themselves the Velvet Melvin, which is ridiculous, but they had to do that. And then there's the famous Taco Cabana in two-paces suit, which I discussed briefly in that post. Here's one. There's an Asian-American band up in Portland called the Slants, and they applied for a trademark, and the trademark office denided on the grounds that the trademark or their name of their band is racist. So these are Asian-Americans, and they call themselves the Slants for obvious reasons. But anyway, I have a sign down here, Fat Ho Burgers. That's actually from a blog post about this actual burger tank called Fat Ho Burgers. So I guess they would have trouble, too. One more thing. Howard Hughes, the famous eccentric billionaire, actually filed a – he purchased a bunch of companies and copyrights under the name of some other companies that he owned. And he purchased copyrights to articles written about him that were used for this unauthorized biography. And then he sued the publisher of the biography for copyright infringement. So he was using copyright to stop people from commenting about him. I'll skip this one for now. I'll try to save a little time. So where are we left off? We were talking about the types of IP, patent, copyright, trademark, trade secret, and other types of IP, and what the focus of the course is going to be. And today's lecture will be on – will continue talking about law. I'll elaborate some more things about law. And then we're going to go into the history of the patent and the copyright system. Okay. So I didn't mention last time – let me explain one thing. So I've mentioned several types of IP, patent, copyright, trademark, trade secret, boat hull design, mass work protection, publicity rights, reputation rights, moral rights. But we're going to focus in this course on patent and copyright. These are the two big ones that cause the most problem. These are the two that are the most dangerous. Now, it's hard to say which one's worse. I'm a patent attorney. I've done copyright as well. It's hard to say which one's worse. I tend to think patent is worse in some ways, but then patent's only the last 17 or so years. Now, as I mentioned, there are reputation rights and related rights like publicity and media rights and identity rights, which we just talked about, which are also un-libertarian, in my view, which I'll discuss why later. Many experts of trademark law are un-libertarian, in my view. Let me just give a quick overview of the problem of trademark law. The only good thing about trademark law could be done by just pure fraud law. And that is, if one company defrauds a customer by misrepresenting the goods he's selling to them. So let's say I sell you a fake Rolex watch for $10,000, and I represent it as a genuine Rolex. I defrauded you, and you consume me. Under the current law, Rolex consume me for trademark attention. They're the plaintiff, not the defrauded customer, which makes no sense. But in the real case, a Rolex watch is sold for $20, and it's a fake Rolex, and the customer knows it, and he's not defrauded. And yet, Rolex can still sue the seller, even though there's no fraud. So that's the other problem with trademark law. There are also un-libertarian aspects of trade secret law, which we'll get to later. But the main focus will be on patent and copyright, because once you understand the problems with these, then it's easy to figure out how to view the sort of more junior type of IP rights. Oh, by the way, I mentioned earlier, EDGAR. I was thinking wrong. EDGAR is the online database for securities filings, SEC filings with the Securities and Exchange Commission. What I meant was Thomas. If you search THOMAS, which stands for Thomas Jefferson, Thomas is the big database for congressional bills and votes and things like this. So that's where you can check and find out who voted for that American Vensack and find out whether Bernie Sanders from Vermont voted for it. Okay, so let's continue with patent rights. And by the way, I just want to mention something. Okay, Jock is posting here, who voted against it, I guess. Yeah, Sanders is not there, so I suppose Sanders voted for it, which is bad. Now, some people think that the Reform Act improves a little bit. If you look at my summary of the provisions, I don't think it's been improved. Anything that's improved is minor, and there are some negative parts to it. In any case, let's move on. I call it intellectual property. That's the American terminology, or IP, is typically called industrial property outside of the U.S. Although the really essential thing is intellectual property as a type of right, that is sort of a descriptive term we use to cover many types of rights. Patent, copyright, trademarks, trade secrets, et cetera. Now, on patents, it's important to remember what I think that emphasized at last time. And if anyone has any questions about this, please ask me because it's important to understand this. Just understand our patents work. Patent is not the right to practice your claimed invention. It's only the right to stop other people from practicing it, because it's possible that by your practicing your invention, you would violate someone else's patent. Patent can overlap. So to get a patent, it needs to be new on the basis of the prior art. It doesn't have to not infringe someone else's patent. It could infringe a patent. And the chair example I gave last time is an example of that. Someone events a stool and they have a patent on a stool, which is like a seat with some legs attached to it. And then someone else comes up with a chair, which is a stool with a seat attached to the back of the, I'm sorry, with a back attached to the seat. And you could get a patent on the chair because it would be novel and non-obvious, possibly. But you couldn't use it because it would still be a stool because it would still have a seat and legs. So it's a type of stool. So that's the example. That's the difference. So there are two types of sort of publications or things that matter for a patent. One is publications like any article or any knowledge is publicized in a way like a magazine article to be what's called prior art or a patent application itself. Even if it's expired, like even a 50-year-old patent application published in the Patent Office records, it could serve as prior art. And you wouldn't be able to get a new patent if it's already described in one of those. If the examiner at the Patent Office finds it, that is. But when you infringe a patent, it has to be a live existing patent, one that has not expired. Now, for patents, let's talk about remedies. When you have a patent and someone makes, uses, sells, or exports, I'm sorry, imports a device or uses a method that is covered by the claims of your patents, then one of the remedies you can get is you can go to court and you can ask the court, well, you can sue for money, money damages. But you can also ask the court to grant an injunction, which is an order by the court telling the infringer you must stop doing this. Now, if you think about it, a patent is a monopoly license granted to an applicant by the government. So the government claims the right to break that grant if they want to. That's called a compulsory license. So the government claims the right, if they want to, to issue to someone else a license to make your patent, and then they'll pay you reasonable damages like its compensation.  So in fact, they threatened to do this in the anthrax-sipro case about 10 years ago. If you remember, there was an anthrax here, here in the U.S., and there's only one maker who was making the sipro drug, and they couldn't make enough. They were charging a lot for it. And Congress or the Patent Office, whoever is in charge of that, a Commerce Department, I guess, threatened to issue a compulsory license to authorize other people to make this drug, but they didn't have to because the maker of sipro lowered the price and made more. And the funny thing is sometimes you'll have advocates of IP, they will, you know, whistle with outrage if you talk about the government issuing a compulsory license. But all that means is the government is kind of taking back a monopoly privilege grant that they gave the patentee in the first place. It's kind of funny to get outraged about the government taking back a monopoly grant that they gave someone. It'd be like if they authorized someone in a town, you're the only guy who can make shoes. And then the government one day says, oh, we're going to take away that. We're going to stop enforcing that and let other people make shoes. And someone would accuse the government of infringing this guy's property right to be the only one to make shoes in a given town. That's what it's about. By the way, some libertarians actually or some people actually call for either supplementing the patent system or replacing it with a price system or a bonus system. So instead of granting people these monopoly rights and letting them use it to extort higher prices out of customers or extort damages out of the competition or to reduce competition with a threat of a lawsuit, what they say is instead of doing that, you ought to have the government steal money from taxpayers, put it in a big fund, like some have said, like $80 billion, take $80 billion from the taxpayers, put it in a – and use that every year to be handed out to people that come up with worthwhile inventions like in the medical industry, something like that. We sort of like a private, I mean like a government Nobel Prize or a government MacArthur Prize. We kind of have that already with medical – I mean with government funding of R&D, right? The government takes money and funds it on R&D and military contracts all the time already. Big science is already heavily corrupted by a similar idea. But this idea is you appoint a panel of government-chosen experts who would decide who's going to get. I give you a million dollars, I give you half a million dollars, I give you $10,000 dollars, I give you $10 million here and there. I mean this is advocated as far back as 1787, maybe earlier as far as I know, but James Madison in the U.S. advocated 1787. Michael Poliani, Polanyi advocated 1944. This was actually done in Russia in 1834 in the Soviet Union in 1941. So you can see it's a really free market idea to do this, right? It has been advocated by Joseph Stiglitz, who is an alleged quasi-free market economist and Nobel Prize winner, I believe. Bernie Sanders, the Socialist from Vermont that Josh just mentioned, and the Libertarian, quasi-Austrian Alexander Taborok. Anyway, let's skip down to the next slide now. There is something in patent law, and there's actually something similar in copyright law. It's called the exhaustion doctrine. I have this in here because in my last class in November of last year, a student asked this question, and I thought it stood in nicely here. They asked about what the exhaustion doctrine was about. The idea here is that if you sell a patented item, then you're giving an implicit license to the buyer to use it. In other words, you can't sell a new mousetrap that you have patented to someone and then sue that person for violating your patent. You've basically given them permission to use your patent by selling them the device. Now then, if he re-sells it to a second customer down the line, you can't sue him either because the idea is that you've exhausted your right to exploit your monopoly already. Now I won't go into the details of this, but you can read this later if you like, this quanta versus the LG electronics case. It was an intel sort of dispute that involved intricacies of this exhaustion doctrine. There's a similar idea in copyright, by the way. I don't think I have this in any of my slides, so let me mention here. I have a blog post that if you search on my C4SF.org blog for the OMEGA case, it's about the exhaustion doctrine too. I think it's called leveraging IP, leveraging IP. So in copyright, there's a similar doctrine, right? And what happened was there was – OMEGA was selling their watches, which are apparently very expensive. They sell them at a higher price in the U.S. than in some other countries. So you have these guys, they went down to, I don't know, Argentina or Brazil or somewhere. They would buy the watches legitimately, legally, down in Argentina for a lower price and then sell them back in the U.S. for a higher price. Jockey found it, thank you. It's OMEGA's blog post. It's also a C4SF, but thank you for finding that. And OMEGA doesn't like this because they like to control the prices in their markets, which is their right. But they couldn't stop it because they couldn't say it was any kind of violation of any kind of IP, right? Because it was a legitimate watch. There was no fraud being alleged. There was no trademark violation. So what OMEGA did was they designed this special little globe logo or something that's copyrightable. Basically, they designed an original mark and they put it on the front of the watch or the back of the watch or something, which becomes part of the design of the watch. And so now there's a copyright on there. So then they sued this guy for copyright infringement. Well, you would think that the exhaustion doctrine would apply to that, but in a sort of intricacy of the copyright law, the court ruled that, well, it's called a first-sale doctrine in copyright law, the first-sale doctrine. That means that whoever you sell it to first, then they can resell it and they're not guilty of copyright infringement. This is why libraries can reload books. And this is why there's a used book market and it's not called a copyright infringement when you sell that book. But the court said that the first sale has to occur in the U.S. for that to be triggered. So it's ridiculous, but in any way, and the danger of this ruling is that some libraries now are wondering if some of the books they have on their shelves that they purchased from another country are now not covered by the first-sale doctrine anymore. So maybe they can't resell them or even loan these books out. Maybe they're infringing copyright at libraries. I don't know what it means to develop about that. Another sort of twist on this idea in the patent area is this idea. You guys may have heard of the re-importation issue. That is, so drugs or pharmaceuticals are sold in the U.S. for a high markup if they're patented, let's say. They're very expensive. So Bayer or some company might sell it in the U.S. for $1,000 and they might sell it in Canada for $300 because the Canadian government imposes price control because they're not quite as free-market in some ways. And then, so you'll have the drug be re-imported back to the U.S. because it's the same drug that's sold here and there's no patent infringement because of the exhaustion doctrine. And this first-sale idea of copyright law doesn't apply here. So it actually is not a patent infringement. But now you have the FDA problem. So another is FDA says, well, we haven't approved that one, although it's the same drug. We've only approved the one sold in the U.S. So do you have all these patent advocates saying the FDA should crack down on this re-importation of drugs? And so Congress was poised to pass this Drug Re-Importation Act and there was controversy about that. But a lot of the free-market advocates who are in favor of patents, like some people like Cato, like if I recall Richard Epstein and a few other people over there, actually were opposed to the right to import a drug from, let's say, Canada that had been sold over there to re-import it back to the U.S. because that would undermine the patentee's right to charge a higher price here. So basically you have the advocacy of patent rights of free-market guys corrupting their free-market principles. And I have some posts on this. I think they are on the Lou Rockwell site. And if you search for Cato, Tugs, Stray back onto the reservation, if I recall, I think you will find that too. I don't think this has anything to do with TRIPS, Jock. It was just lobbying in the U.S. Jock asked whether this was related to the TRIPS, T-R-I-P-S, in all caps agreement. Is the TRE related aspects of the military property? No, this was just lobbying to change the law or to force the FDA to go ahead and permit drugs to be re-imported. If it was the same drug by the same manufacturer that was already approved over here, go ahead and let it in and then you had patent advocates fighting against it and then it was patent rights. And they're saying, well, the fact that Canada has a socialist economy and they're having price controls shouldn't penalize, you know, Bayer drugs or whatever over here in the U.S. But, you know, Bayer sold this voluntarily over there. They're selling it presumably for a profit. And if the buyer wants to resell it to the U.S., it's hard to see how that violates their property rights. Okay. That's an interesting topic, but we spend a lot of time on it. Let's move on. Okay. Like I mentioned, the first sale doctrine is the analog of the exhaustion doctrine in copyright law. I've already talked about this, so I will skip slide 14. Oh, I do have the Omega. I already have the Omega. I got you guys searching for things I already have on here. I forgot what I had on here. And so I had the numbers wrong. So Costco bought the Omega Semaster Watch. So it was Costco, actually, you know, the big retailer here in the U.S., like they're a Walmart-type store or a Stam's Club-type store. So it sold for $1,300 instead of $2,000 in Paraguay. So it's $700 cheaper. So they bought it there and they resold it here. So they put a globe on it. So anyway, I've already described this case. So it's an interesting case. And on this page here on slide 16, I have a quote from the Wall Street Journal talking about how this decision could affect public libraries because of this first sale doctrine idea. I'm going to skip some of this stuff on the top here. Slide 17 is a little bit arcane stuff about how the actual quanta case worked out. So don't worry about that too much. It was just one application of the exhaustive doctrine. But I think you can see from this that these monopoly privileges, copyright and patent, granted by the state, you can see how they lead to infringement on property and contract rights. And by the way, one other interesting point. Remember how I said that Omega, in order to stop arbitrage, price arbitrage, in order to stop Costco from buying one of their watches in Paraguay and reselling it in the U.S., in order to stop that, which they couldn't do legally otherwise, they put a design on their watch which they probably otherwise wouldn't have done just so they could take advantage of copyright law and sort of hook into copyright law. Now, forget about the ethics of their action. I mean, they're exploiting state IP laws to control their price, basically. But the point is they actually changed their design in response to IP law. So you can see how IP law, in this case, is distorting and maybe corrupting, you might say, culture, right, and fashion. And you can also see this in the case of the fashion industry, like Gucci or Louis Vuitton or Chanel purses and shoes and dresses and jewelry. They have their logos plastered all over these purses and things. Now, we're used to this now, but why do they do that? They do that because there is no copyright in fashion. So you could knock off a Louis Vuitton purse. You could knock off a Chanel dress. Maybe I'm using the wrong fashion names, but I'm not into high fashion, but you could knock it off. In fact, this is done all the time. So what these guys do is they start embedding their trademarks into their products as part of the design so that now they can accuse a knock off artist of trademark infringement. Now, if trademark law also wasn't available in the same way that it's available now, then you could see that they may never have integrated their trademark or their logo into their fashion design. That's sort of a weird thing. It's like Omega adding the globe design to their watch, not for aesthetic reasons, but just to use copyright law to sue people so they can control their price. So we have a whole distortion of the culture industry just because of the existence of IP law. Now, in addition to patent and copyright and trademark and trade secret, there's a type of law centered around a cause of action for defamation, and you can think of this as a reputation right. Now, this is not traditionally called intellectual property, but I think it should be included as IP because it's basically on the same kind of mentality that you are entitled to have a property right in some sort of immaterial or intangible thing that has value that you created by your efforts, even though it's not an actual material or scarce resource that you own. In fact, it's just what other people think about you. So it's kind of strange that you have a right to what other people are going to think about you. Now, defamation, there are two types of defamation. One is called libel. One is called slander. So defamation, libel, and slander. These terms are used sort of interchangeably and sometimes improperly by people. To keep them straight, think of libel as written because they both have an I in them. That's the little device I use. Libel and written both have an I. Slander's oral. So it's when you say something bad about someone that is untrue and that hurts their reputation. And when you communicate it or publicize it, it's called. By the way, the word oral is also misused by people, by laymen and even by lawyers. They'll say, is that a verbal agreement or a written agreement? Well, all agreements are verbal. Well, actually some are not. Like if I silently hand you a dollar for a candy bar, that's not verbal at all. Verbal just means words, like verbs. Think the word verb. So whether you write it or speak it, it's still verbal. So even a written agreement is verbal. People use the word verbal as a synonym for oral. It's just a little thing of mind that I'm nitpicky about these things. And people misuse words and it bugs me. So just letting you guys know, be careful. Use the word oral if you mean spoken agreement, like say oral agreement, written agreement. Don't say verbal agreement. Anyway, it's a defamation of some kind of statement published to someone else, or made to someone else that damages someone's reputation. There are some details about defamation law. Number one, it has to be false. So truth is usually a defense, at least in the U.S. There's a distinction between fact and opinion. If you just say, in my opinion, that movie was bad, you know, you can't be sued for defamation usually. But if you say, you know, the director of that movie took a bribe to make it or something like that, you might be sued. Now, of course, the state usually exempts their own people, judges and prosecutors and legislators and presidents. When they make statements officially from the floor of their office or whatever, it's called parliamentary privilege or other terms used for it. So of course, the government makes these laws and then exempts themselves from them. Now, a public figure, you need to show actual malice. There's like a higher standard, at least in the U.S. And there's a famous, I think, New York Times v. Sullivan case. New York Times v. Sullivan, if any of you are interested, which established that back in the 70s or 60s, I want to say. So if you say something about Madonna or Arnold Schwarzenegger, you know, someone really famous, it's harder than to sue you for defamation because you have to show that this statement was malicious. In other words, people that are public figures, they're sort of an open game for criticism. Now, there are other types of things. There's saying something that puts someone in a false light. There's related to some similar reputation rights. There's invasion of privacy that's publicly revealing a private fact. Of course, there's blackmail, which libertarians don't think should be a crime. And there's this publicity right, which I mentioned earlier. So you have a variety of types of legal rights that are related to you, the reputation rights, or otherwise the IP. Now, there's also domain name issues. This was established, I don't know, 10, 15 years ago. There's a domain name dispute resolution procedure. And basically, if someone registers a domain, so let's say you register the name TomCruz.com. TomCruz may be able to use this UDRP procedure to get the domain from you, even if you're not infringing. So it's considered to be a sort of tech version of trademark infringement, even if it's not technically counted as trademark infringement. So there's elements here under the policy. This is, I think, an international policy, by the way. I think there's different countries you can sue in. I think Czech Republic is one, and actually, I think they're done online, but there are different centers for this. But the domain name has to be identical or confusingly similar to the complainant's trademark. The registrant has no legitimate interest in the name, and they registered it in bad faith. And the bad faith factor could be asking the, like, if you approach TomCruz, hey, I registered TomCruz.com. Would you like to buy it from me? So that's one factor for your bad faith. So if you don't ask him for it, you have a better chance of not being sued by him, but then you can't get the name from you. So it's a weird system. So let's go on. By the way, the whole course will not be about the needy gritty of the IP law. I'm trying to go through these first two lectures about what IP law is, so you have a good feel for the actual legal system. So we'll know how to analyze it, understand it, critique it, put it in its place, decide what parts are good and what parts are bad, et cetera. Because you'll find a lot of people that comment on IP, especially the defenders of IP, often don't know what they're talking about. And libertarians and laymen often confuse different types of IP rights. Because I'll say, doesn't Coca-Cola have a patent on their name? No, that's a trade secret. I'm sorry, that's a trademark. Stephen King has a patent on his book. No, that's copyright. Or some company has a copyright on their drugs. No, that's a patent. They mix these things up all the time, and yet they're in favor of them. And obviously they don't really know the differences and even understand how they work. So I think it's important to see how they work to lay open the guts of these systems and to really understand how they're a really clear example of an un-libertarian legislative bureaucracy, basically. Okay, there's also something related to diamonds, the Anti-Cyber Squatting Consumer Protection Act. This is related to what I talked about before. This is a U.S. law, though. It's basically a way of stopping cyber squatting. And of course, you know, this is partly uneconomic and partly based upon IP ideas, because the IP aspect is that you can see from the fact that there's a cause of action for registering or using or selling. I mean, confusingly similar to a trademark of someone else. That's basically trademark concepts. But the fact that it's being squatting, you know that a lot of cities or states have laws against scalping, right, from tickets. Of course, there's nothing wrong with scalping, because it just means you buy the ticket and you sell it somewhere else. It's just arbitrage. I mean, it makes – you only hurt people when you stop scalping and you outlaw that type of action, which is the type of squatting in a way. Okay. And again, Madonna is an example I have here. I do have an example. Robert De Niro – so Madonna used it. And so she was able to get Madonna.com and some other names turned over under the UDRP procedure that I mentioned earlier. Robert De Niro, the famous actor, he claimed ownership of domain names that had Tribeca in them that had any content on the website related to film festivals, because I guess he's got some ownership of Tribeca Film Festival. So he's got some dispute with the owner of Tribeca.net. I don't know how it turned out. Okay. Now, now let's turn to history. It's 8.48 my time. Before we go on about the history of the IP system, and primarily I'm going to talk about patent and copyright, does anyone have any questions at this point about the actual types of IP and the legal systems themselves? Because I'd be happy to pause here and to address any questions. So Matt asks, is DRM legal? For instance, you're not allowed to resell digital media that you've purchased. Oh, you mean is it legal for the copyright holder who sells music to put DRM on it to prevent you from reselling digital media that you've purchased? Well, let's just clear the facts up here. So digital media usually means like a physical media, right, like a CD. Now, I don't think a CD is usually not covered by DRM, right? So if you own a CD, which is old technology, I know, or an LP or a paperback book, those things are something physical that you purchase and you can resell that under the first sale doctrine. Now, I do think some software is sold in that form and is encoded or encrypted or disabled or something unless you have a lock. Yeah, so basically, yeah, it's not illegal to ever put DRM on something if you want to. That's just like putting a lock on something. It's not illegal. But the distinction here is in the law there's a distinction between a sale and a license. A license is more like a lease. So when you buy a CD, you are buying the physical object, but you only have a license, which is permission, to use the music on it for noncommercial purposes. But you can sell that physical medium under the first sale doctrine. But you couldn't make a copy of it and sell the copy because you don't own the content. You don't own the copyrighted material on there. You only have a license to do it. You don't have the ownership of it. When you download, let's say, movies or songs, or when you purchase software, even on a disk, I believe, usually the way the seller words it is that they're granting you a license. So even if you buy a song for 99 cents from Apple's iTunes store, you're not really buying a song. You're purchasing a license to that music. Even if it's not DRM, and they're not DRM anymore, you still don't have the right to give a copy to someone else or a seller copy to someone else because you only have a license to it. And because it's not a physical medium, the first sale doctrine would apply to. And anyway, the first sale doctrine applies to sales. So you didn't technically have a sale. You just had a license. So there's no first sale doctrine. So no, you cannot. Well, it's a little fuzzy in the law right now. There's a company that was just started. I forgot what it was called. And they're actually trying to come up with a model where if you have a digital song that you bought or a movie, you can resell it to someone else. But I think there's a system where you actually wipes it from your hard drive or something. Of course, there's no way to guarantee this, which just shows why all these property concepts, applying them to the realm of non-scarce things makes almost no sense because these things can be copied over and over.  I believe in the U.S. you have the right to make a backup copy of that CD or to rip it and to put the songs on your iPod, let's say. So that's legal. But if you then sell the CD and you keep the copy you made on your iPod, are you infringing copyright? Well, the sale of the CD is not an infringement because of the first sale doctrine. Now, the copy on your iPod was already there, so you didn't really copy it at a point in time when you didn't have the right to do it. So are you grandfathered in? I mean, I don't really know what the answer is. I don't think anyone knows. It's cloudy because these laws really are incoherent and make no sense. Jock says you could use something like Bitcoin's mechanism to pass on the digital media and lose the ability to use it yourself. Well, yeah, that's the idea Amazon has. It's already with a Kindle with this loan in your book for 14 days or two weeks or whatever to a friend. It disables it on your device and then you get it back. And then this site I was talking about, this service, it was discussed recently on Squill, I think, this week in law, or maybe this week in tech, one of the recent episodes. Anyway, there's a service that was trying to come up with a way to let you resell your used, so-called used, digital media. And I think it would have to find a way to disable it on your own computer, which is problematic. So the bottom line, DRM is legal. You can put DRM on anything as long as the person agrees to it. If it interferes with your ability to resell something, well, too bad. Okay, any other questions before we go on to history? Oh yeah, Gwendolyn asked, this is relevant to what we just talked about, too. Yeah, I have a blog post on my C4SIF in the last couple weeks about this topic. What she says is, there's talk of putting a limit on how many times an e-book can be lent in public libraries to like 12 linings. I thought it was more than that, but it's something like that, 20 or 30 or somewhat small number. And then it would expire and they need to be repurchased from the library. Yeah, there is talk about that, which of course is ridiculous. I mean, books, libraries buy books now and they can loan them as many times as they want until a book falls apart. Well, digital media cannot fall apart. And this is what the sellers are saying. They're saying, well, it's unfair that these digital copies last forever. So they're trying to penalize you for the fact that it lasts forever.  But yeah, there is talk about doing that. That's correct. And of course the idea of lending an e-book makes no sense anyway. I mean, we're trying to apply these models applicable to the world of physical scarce goods and material things and objects to the realm of things that can be copied forever and that lasts forever. And they can be perfectly duplicated easily in a second. It makes no sense. Okay. So let's go on now to the history of IP. Now, there's something I sometimes call the immaculate conception of IP. By the way, it's 855 and five or 10 minutes. I'm going to take a five-minute break and then we'll resume. We may go to the end of the 90-minute period on the history part. So I'm going to cover everything so we don't get farther behind. If we stay up on history, then we're good for the next lecture. And I can stay a little bit later for questions if anybody likes. Okay. Now, I call it the immaculate conception of IP based upon one of my favorite Rothbard articles called Robert Nozick and the Immaculate Conception of the State. Now, what Rothbard does is he criticizes Nozick's energy state in Utopia, which most people who haven't read it assume is a radical libertarian book defending energy. But of course it's not at all. It's a somewhat libertarian book, but its energy state in Utopia basically is an attempt to justify the state. It's an attempt to show how the state, at least a minimal state. So Nozick was more advocating menarchy here. It was an attempt to show how the state could arise by a series of legitimate steps, and therefore the state is not inherently illegitimate. Now, of course, even if he was right, which he's not because there's mistakes in his argument, the states we have didn't arise that way. None of them arose by the steps that Nozick outlined that would be a possible way for a legitimate state to arise. And that's what Rothbard critiques. Jock says he doesn't make any arguments just assertions. Well, I think you're referring to the beginning of his book where he talks about he's going to just assume that we have rights. Yeah, he never argues for rights. He just assumes he takes it for granted that we have rights. Actually, I don't have a problem with that too much. His problem is how he applies it. Anyway, these Rothbard quotes are good. Beginning with the free market anarchist state of nature, Nozick portrayed the state as emerging by an invisible hand process that violates no one's rights, first as a dominant protective agency, then to an ultra-minimal state, and then finally to a minimal state. For every state where the facts are available, originated by a process of violence, conquest, and exploitation, in short, in a manner which Nozick himself would have to admit violated individual rights. Now, I'll bring this up because there's a similar romantic notion of the conventional account. I'm on slide 23 now of how IP arose. And so if you ask anyone who has some familiarity with it, they're typically in favor of it, but they would say, oh, it's sort of this Saturday morning schoolhouse rock cartoon version, romanticized notion of the founding of America, and how great civil government is, and the Democratic government's wonderful, and our government's the best in the world, and we're here to protect rights, and blah, blah, blah. And founding fathers are wonderful quasi-libertarians, even though they own slaves and conscripted people and tax people and hoisted an illegal constitutional coup in the country. And Dr. Washington took his slave's teeth out to make his own bald teeth, and all these heroes are really great. Anyway, so the conventional account is that the libertarian founding fathers of the country recognize this important natural right, which they put it in the Constitution. And that's why Article 1, Section 8, Clause 8 of the Constitution grants Congress the power to promote the progress of the science and the useful arts by giving to authors and inventors limited monopoly on their inventions and works. Now, just as a point of trivia, you might think that science is what patents are for promoting, and the useful arts is what copyright is for promoting, because copyright is for the artistic area and promotes artistic works, creative works, original works. And patents protect inventions that are usually scientific in nature, something like that. But that's actually not correct. Science, back in the language of the late 1700s, had to do with knowledge. So that actually had to do with general knowledge, including artistic knowledge. So that's what they were talking about. Copyright was a promotion of science. Useful arts was like artisans, think about artisans, practical guys that made shoe horns for horses and ironworks and craftsmen. The useful arts are inventions. Now, so basically, understand this. Patent and copyright are constitutional, in my view, because there's a clause in the Constitution granting Congress the authority to do it. So the problem with copyright and patent is not that they're not constitutional. They are constitutional, although you could argue that they actually do not promote the progress of science and the useful arts, because they actually harm that. And so the laws that we have are contrary to the purpose granted for that power. But that's a weak argument, because the power is still there. The purpose is merely explanatory, or what we can say in law is precatory, merely precatory. I don't think it's a limiting clause. Some argue that. Jock says, we have the Royal Society for the Promotion of Science, Arts and Manufactures. And Ben Franklin was an early member. Interesting. Very interesting. I have a blog, I put a post on the C4 essay of recent in the last few weeks about Jefferson, how Jefferson came up with some new technique that he thought would be really useful. And he wanted to make sure it worked. And when it worked, he was going to publish an article about it anonymously to prevent anyone else from filing a patent on it. And then he was just going to let it become part of the public domain and let everyone use it. He was actually trying to prevent people from publishing it. I recall Franklin was also, didn't believe in patents. It didn't patent his inventions, but I can't remember if that's correct. Okay, but back to the origin of these statutes. In the U.S., trademarks have traditionally been protected by state law. But this act called the Lanham Act, I think in the TISDs, L-A-N-H-A-M Act, was enacted a federal law which gives federal protection to trademarks that pertain to services and sales and products that pass through interstate commerce. Okay, so if you have something that sold only within a state, it wouldn't be protected by federal trademarks but by state trademarks. And so that's based on the IC clause or the interstate commerce clause, which of course is nonsense. The interstate commerce clause was not meant to give the federal government the power to regulate anything that had an effect on interstate commerce. It was meant to basically establish a free market in interstate free market in the U.S., which it has done that too, which is one reason I think why the U.S. was so prosperous early on. Now, trade secret law is still mostly based on state law. So you have patent and copyright for federal law in the U.S., trademark is federal and state, although the federal part is unconstitutional, I believe. Trade secret is primarily state law. So you have it being called a natural right, but you also have it being touted on utilitarian grounds. So people will always say, well, we need patent and copyright to encourage innovation or to incentivize innovation. And they're always starting to find the right balance right between how long the term of patent and copyright should be, et cetera. But as we'll see later, John Locke and even the founders, none of them ever regarded patent and copyright as natural rights. They viewed it just as a policy tool. That is sort of in a utilitarian way. They sort of had this hunch, I call it called. You know, they thought, well, if we grant these temporary monopolies, it'll give an incentive to these guys to invent a lot more things and everyone will be better off. That was their hunch. Now, they had no way of proving it, but that was their hunch. But the truth is, the origins of these things were in monopoly and censorship. There's a great quote by Nietzsche from Book One of Dawn, and I learned this from Stephen Mulliam, by the way. I never heard this quote before until I heard it a few weeks ago, and I like it. And it's on rationality, ex post facto. The quote is, and I'll take a break after this quote, whatever lives long is gradually so saturated with reason that its irrational origins become improbable. Does not almost every accurate history of the origin of something sound paradoxical and sacrilegious to our feelings, doesn't the good historian contradict all the time? And I agree with that, and that's what I'm going to try to go into the actual history and the origins of IP to show you to reveal its sorted origins and try to burst some of these rosy myths about the real purpose of patented copyright law. So let's take a five minute break. It's five past the hour. We'll resume at 10 past the hour. Okay, I'm back. Aaron, Eric said, you're having a hard time hearing me. I'm sorry, I have no ability to, I have a little volume control, but it's maxed out, and it's not letting me, I'm not sure actually which microphone is being, so I'll just get closer to it. I'm not even sure if it's this microphone or the laptop's microphone. I have my nice snowball, which I've been trying to use, but I don't know if it's using this one. Okay, anyone here that's not ready to continue? Okay, let's continue. I'm going to kind of go quickly through this because a lot of the details are not that important, but it's important to just kind of have a feel for where these things came from. I mean, you'll see the messy guts of it. I always say that you never want to see how sausage or legislation is made, and I think that's true. Sometimes with the history of some of these practices that we're used to, we take for granted now. John, by the way, you said the video's freezing. It hasn't happened in mind at all, unlike in the DEMNM session from the last class idea that you were a participant in. Is the technical quality here as good, better, worse? How would you compare it to the – okay, good. You say it's better. All right, fine. So I have here a little snapshot of a – I think that's a patent. So what a patent is, the word patent is used, the word patent is used because it means open, patente. So I mean an open letter instead of a private letter. So like a monarch would give an open letter, which is like a public proclamation that this guy has the authority to do the following. This guy has the authority to explore the new world in my name and Homestead Land in Virginia or whatever. This guy has the authority to capture Spanish ships and plunder them and kill people and keep 25% of the spoils and bring me the rest. That's Sir Francis Drake. This guy has the right to make shoes in this town and no one else does. So basically patents were monopoly grants or authorizations from the crown. And you know I'm not clear why they call some shoes patent and other shoes. I don't know if it's got anything to do with that at all. I need to find that out. So this was done a long time in the past. It was done back in Italy, but one of the kind of the modern origins of it or the quasi-modern origins. What happened was you have the crown, the king, the monarch abusing these privileges, right? They were granting all these monopolies to their favorites to get loyalty from these people, to reward people without having to use tax money, et cetera. And parliament passed the statute of monopolies. Now they called these things monopolies back then. They didn't mince words. And in the statute of monopolies, they did that to restrict the abuses the monarch was doing. They took the power away from the king and they gave it to parliament and they reduced the power to do this. And they set criteria for it. So basically they took an indefinite and broad monopoly and they replaced it with a more definite restricted one. So it was actually a restriction on the right to grant monopolies and they carved out an exception for useful inventions. So they basically limited it, but they kept that one type of patent. Now at the time, no one called these things intellectual property. No one thought of them as property. They knew it wasn't property. They knew these were monopoly grants by the crown. This is just a later propaganda ploy to try to justify these things in the face of criticism of these types of state grants and monopoly. And as Fritz Maklop, who's a famous Austrian economist who wrote several important studies in the 50s, as he wrote, those who started using the word property in connection with inventions had a very definite purpose in mind. They wanted to substitute a word with a respectable connotation, property, for a word that had an unpleasant range of privilege. So it's propaganda. It's using different words. And I mentioned earlier that Francis Drake, he was given a letter of patent in 1587 that allowed him to engage in piracy. Now if you think about it, it's ironic that modern-day opponents of IP or scoff laws of IP, people who skirt IP law, people who download movies and share files, were called pirates, or they're called pirates. They want to be in trouble. They're called pirates, right?  And the actual early use of patents, which is the origin of our modern patent system, was actually used to authorize actual pirates. So it's ironic that IP proponents accuse IP opponents of being pirates when they are the ones who are more associated with real piracy. So that's kind of an interesting and ironic historical fact. And here's another funny thing. You'll notice nowadays, like I said, you have the Statute of Monopolies. They used truth in advertising back then. But nowadays, so you have libertarians and others who are in favor of IP.  It's not a monopoly. It's a property right. It's not a monopoly. So you'll find that nowadays our status are much less honest. Like I said, they will call it a property right instead of a monopoly. Maybe think about the Department of War. I think someone might have mentioned this earlier. Oh, no, that was in the e-mail I had today about a blog post they did in the Lou Rockwell. In the U.S., we had a Department of War that was called Department of War, good on its name. That's what it was for. It was the military's for, to go to war. Until 1947, and then it was called the Department of the Army of the new military establishment. And then a couple years later, they changed it to the Department of Defense, which is called now. That sounds a lot more peaceful, right? But it is widely recognized that patents are state-granted monopolies, even by some advocates of the system and by opponents, of course. I mean, Richard Epstein, who's a proponent of IP law, the U.S. Supreme Court, these things are recognized to be monopolies. The United States Supreme Court, they routinely recognize the historic tension between patent law and antitrust law because antitrust law is meant to stop monopoly power. But patent law is granted by the government and gives you monopoly power. So there's what they call a tension, okay? So the courts are always saying, well, there's a tension between patent law and antitrust law. So they give you these monopolies, but you're not supposed to abuse them, whatever that means. And in fact, as I mentioned, the first patent statute, the modern one, was the statute of monopolies. So clearly the purpose of IP is to provide a monopoly to a creator or an inventor or an innovator to give them an incentive to disclose the idea or to come up with it in the first place. Now copyright, the origin of copyright is in literal censorship, and in fact, they're still used for censorship. And I'll give this an example in a minute. So you have the printing press and I think 1400s, the Gutenberg printing press started becoming more popular and started threatening the control that the church and the state had over the spread of knowledge. Before that, they controlled these guilds of scribes, guys that hand-copied books, right? So what happened was, you know, the court had a list of prohibited books, and then this company called the Stationer's Company in 1557. I think the Stationer's Company was formed in the 1400s, had to do with printing books, using the new famous printing press, right? Well, the church gave them a monopoly over what books could be approved to be printed. So basically, copyright arose out of this because – oh, as a – who's B&L? Bolzer and Levine and against intellectual monopoly. You know, Galileo's trial was an exercising copyright enforcement by the Pope of Rome because they wanted to prevent him from publishing his book, okay? So the roots of copyright are literally in censorship. Now, what happened was the Statute of Anne was passed. It's called the Statute of Anne of 1709. I think it was passed in 1710. It granted 14-year copyright terms. But what they were trying to – what happened was the Stationer's Company – let's call it – yeah, so the Stationer's Company's charter expired. And then the publishers had gotten used to this monopoly privilege, and they asked Parliament to pass a new statute. Parliament said, well, I think we'll give it to the authors instead. So that's what the Statute of Anne did. So that's where copyright came from. And here's one important thing to recognize. One reason the authors were in favor of this at the time – think about it. Up until that time, to have your book published or copied, the government had to approve it. So it basically went through a government censorship system. So by transferring this copyright from the Stationer's Company or the publishers to the author, now they had the control of copying their books. So the original motivation or the reason that authors like this was they kind of liberated their own works from the control of the state. But now let's look at it as a monopoly right that you hold that you can stop people from copying your works. And the original goal or the original motivation was to permit your work to be copied more instead of having the state prevent it. It's a good quote here. I'm going to skip this quote. You can read this later. Basically, it's a summary of what I've been saying on a slide 31. So I want to try to get through their meaning. I think I have 40 slides. I think we can do it in the next 10 minutes. Now, I might have some of these out of order. I'm going to skip this because I think we cover this next time. So we have less slides than I thought. This is good. Oh, yeah. Here's some more interesting history. So even before 1624, the early history of state patents, back in 500 BC, there was a Greek city of Ciberus, which is now in southern Italy. They had these annual culinary competitions, which gave the winner the exclusive right to prepare his dish for one year. So can you imagine the arguments we have now about, I mean, right now there's no copyright in food and restaurant dishes. Maybe someone's going to dredge this up again, right? But you can see this idea has been around a long time, granting these monopolies. And as I mentioned, the way these things started, kings were granting these back in the 14th century. The first general patent law was actually in Venice in 1474. It was used in the 16th century by German princes. And sometimes, actually, the good thing about these, remember, we had all these guilds. So sometimes these patents were granted to give you the right to make something that the guild otherwise had the monopoly over. So in a way, patents were used sometimes to reduce monopoly positions and increase competition because of the existing guild system. So sometimes patents are credited with liberating industries from restrictive regulations by the guild and local authorities. And as I mentioned earlier, it's similar to the initial purpose or use of copyright law to counter the censorship of the author's own works. So these things had some good aspects originally. By the way, this is an interesting fact, which in a way shows the arbitrariness. Right now, the patent term is about 17 years. It's 20 years from the date of filing, but it takes about two or three years to prosecute the patent. And so when it issues, you've lost about two or three years of that 20-year term, so you have about 17 years left. Copyrights now last, I don't think 70 years past the death of the author, so well over 100 years in many cases. Originally, patents were 14 years and I think copyrights were similar. The reason that it was 14 years was because that was the term of two consecutive seven-year apprenticeships. Now, I remember the apprenticeship system was really more prevalent back in those days. As Mackalop in a 1968 study noted, the duration of patents was determined by historical precedent and compromise, political compromise. It was based upon the idea that two sets of apprentices should in seven years each be trained in the new techniques that the master came up with and through a prolongation by another seven years, though a prolongation by seven years was allowed in some cases. So the idea was that we're going to give you a monopoly over your new idea for time for you to train some apprentices, otherwise they might be competing with you or others would be competing. So basically this 14-year time, if you add seven years to it, that's 21 years, which is close to the current term of patent, is based upon the time of apprenticeships, which is completely arbitrary. It has nothing whatsoever to do with today's economy or with natural rights. I mentioned some of this already, but these patents were granted to court favorites for revenue purposes and there were abuses, they were unpopular. And what happened was in 1603, in the case of Monopoly, a court declared a monopoly in playing cards void under the common law. So then, as I mentioned, 1623-24, the statute of monopolies was passed by Crown to scale back this practice of monopolies, but they made an exception for inventions. And by the way, sometimes some of you have probably heard of the Magna Carta, which is one of the sort of founding documents of the origin of natural rights theory, or the American rights system based upon the English rights of the Magna Carta or the Great Charter. So the statute of monopolies is sometimes referred to as the Magna Carta of the Rights of Inventors. A little bit more on the history of this. 1620-1850 was the spread of the patent system because 1624 was when the statute of monopolies was finally enacted, became the basis of the British patent law, which became the model for patent laws in other places. Interestingly, the first what's called general patent law was South Carolina, 1691. So you have the Italian system, you have the English system in 1623, but the first really modern patent law was 1691 in South Carolina. And then finally the first really modern one was the American one in 1790, which is a system we have still in place now, although it's been modified since then. So basically we have 1624-1850 spread of all these patent ideas, all based upon the grant of monopolies early on. Now, this is my favorite period, 1850-1873. There was a vigorous opposition to patents.  These are government grants of monopolies, a horrible idea. There was a lot of arguments similar to the ones we have now that are starting again now. A lot of pressure, well, there's pressure to expand them. Engineers and inventors, one of them, because they're pressure groups, right? They're special interest groups. But the free trade groups were opposed to patent monopolies. So there's lots of commissions and studies and calls for abolition. And the Swiss legislature refused to enact patent law several times, 1849, 1851, 1854, and twice in 1863. And here's a quote here. The economist of the greatest competence said that the patent system was pernicious and indefensible. But it was a losing battle. You can see that it was inevitable.  Even though economists all know that the minimum wage is a bad idea and causes unemployment, you still have it because it's politically popular and hard to get rid of. And we had socialized medicine spreading, I don't know, 50, 60, 70 years ago in Europe and South America, and finally spreading to the U.S. We're about to get it with Obamacare. I mean, we held out for a long time, but these things had an inevitability about them, which is depressing. Now, interestingly, in 1869, the Netherlands repealed a patent law. They had enough of it. They said, you just can't make a good patent law.  But finally, the patent advocates had a victory. Now, here's one interesting fact about it, which most patent advocates don't know or don't care about it. So up until this late 1800s period, patents were largely seen as an anti-free market. So the free traders would attack patents and tariffs together as things that were invasive of a free market or free trade system. But you had this big depression in 1873 in Europe, a panic of 1873. And what that did was that led to the rise of protectionism and nationalism. So you had reduced opposition to tariffs and protectionism and into patents because they all went together. So what happened was because everyone started becoming more or less resistant to people's calls for protectionism and nationalism, we have to protect our national economy because of this horrible recession we were having, this depression we're having. So free trade rhetoric basically became unpopular because of the depression. So in a way, you could say that this recession is one of the main causes of the victory of the patent advocates and the reason that the anti-patent movement, which I have on page 39, lost steam. They lost steam because of a depression, which gave rise to protection of sentiments. So it opened the door to an increase in patent propaganda by interest groups. And then so finally, 1887, even Switzerland gave in. Now although they had some limitations on their initial patent law, they had a mechanical model limitation to have a patent. You had to give a mechanical model, which most of the countries didn't require. They even removed that in 1907 because Germany threatened them with tariffs. They said, look, you guys get rid of this mechanical model limitation. So it's similar to what the U.S. does now in twisting the arms of China and India and other developing economies to adopt a Western American-style patent and copyright system primarily for the benefit of Western copyright and invention-related interests like some big pharmaceutical or electronics companies, Apple, Intel, Microsoft, all rely on copyright and patent, and also Hollywood and the music industry. So basically at the behest of these corporates' lobbying groups, the Western nations are twisting the arms of China and the developing countries to adopt our IP system, even though it's going to staple their economy, urge their innovation, cost them money, increase the price of drugs, pharmaceuticals, put people in jail for copying songs, bootlegging, et cetera. So you can see that this practice was common even back in the 1800s when our 1900s in Germany twisted Switzerland's arms to give in to their idea of what the patent system should be like. So finally the Netherlands, which was the last holdout, the last bastion for free-trading inventions, they reintroduced the patent system in 1910, affected in 1912. Let me see. Yeah, I have some duplicate slides here. So we'll stop here. Let me just say we'll talk about next class. We're going to now talk about the different justifications for IP and give an overview of sort of the Austrian libertarian approach of how to view property scarcity and ideas. So we have a way of analyzing the empirical and utilitarian and natural rights type arguments for IP. So we've gone five – no, not five minutes over because we started five minutes late. So I'm happy I stopped on time. Sorry I didn't leave time for questions in the official period, but I wanted to get all this in. And I'm happy to stay longer and take any questions now for as long as anyone wants to stay. So shoot. Any questions? Everybody want to go home? Jock, I know it's two in the morning or something for you. I am reading something Jock clipped here about William Shipley. He wanted to use public subscriptions to make awards to inventors in the arts and commerce. So he founded a royal society to encourage it, which had competitions. That's interesting. I didn't know about that. And that's perfectly fine. That's more like the Nobel Prize Award, right? Or the MacArthur Prize or a private prize. There's nothing wrong with having private – I'm assuming this was private, right? Royal society. I don't assume this was funded by tax dollars. The ones I talked about earlier – and this is probably not $80 billion or the inflation adjusted equivalent of $80 billion, which was suggested by $30 billion or $80 billion was suggested by even like some libertarians and stiglants. And that was just for medical innovation. So they said we should have $80 billion of tax dollars set aside for annual rewards to people who come up with really cool, useful innovations in the medical area. Well, I mean, we're going to stop. I then guess we need maybe $1 trillion in there in the pot for other taxes and inventions and for artistic works and new painters and new artists, which of course we have already in smaller forms with the National Foundation for the Arts or what do they call it. Anyway, that's interesting, John. Thanks for the information. I'm going to look into that. Any other comments, questions from anyone? Okay, Donald. I understand it's been an hour and a half and that's a long class. So I think we should call it a break. And I'm happy to have an office hour sometime if we think we have a need for it. Why don't we see how this goes? If anyone has any questions, they want to post in the course materials page. I can answer them either next time or in writing. So I enjoyed the class. Thank you, everybody, for your attention. And everybody, have a good night and I'll see you next Tuesday. Good night, everybody.