Property is incompatible with decentralization

A lot of NFT discourse involves people who understand neither intellectual property nor regular property arguing about whether or not it’s…

Property is incompatible with decentralization

A lot of NFT discourse involves people who understand neither intellectual property nor regular property arguing about whether or not it’s good to reimplement both without any kind of enforcement mechanism. I work in IP and let me tell you: property is fucked.

Intellectual property is fucked in several very specific ways, because it has never been about some kind of transcendent metaphysical right to get money in perpetuity for your mindchildren but about incentive engineering, and incentive engineering is hard even if you’re skilled.

The ostensible point of copyright is the closest to this metaphysical version of property that normies believe in, but it’s extremely limited: you can only copyright substantial works, and only those actual works are subject to protection. You can’t copyright an idea, for instance. You can’t copyright your OC but can copyright a specific drawing of your OC. You can’t copyright facts (actually, facts are not subject to any form of IP). You can’t copyright a word or phrase, but you can copyright a poem.

That said, we have to recognize that copyright was originally established in order to make government censorship easier. Copyright (along with government control of the presses) added friction to the process — ubiquitous after the invention of the printing press — of constantly compiling and modifying other people’s pamphlets and fliers, much of which was politically or religiously dangerous. Later on, this idea of “moral right” got grafted on, and depending on where you live, the meaning of “moral right” ranges from “your real name must be attached” to “your real name can be attached if you request it” to “there is no public domain”. (How this interacts with concerns like “work for hire” depends on the country too: Disney films don’t credit their animators, but would need to in some places, even if the animators aren’t entitled to royalties.)

Moral right is essentially totally disconnected from the right to royalties, & different rules apply to each. Both are a “right to sue” (or a “right to, hypothetically, more easily win a lawsuit” to be more accurate). IP in general is this kind of thing. As soon as you move away from copyright (which again, is very restricted in what it can apply to) moral right goes completely out the window — basically because moral right was grafted onto existing censorship legislation in order to improve its PR. All other forms of IP are newer & so arrived in a world where copyright was already a thing; they didn’t need to be justified by a campaign to invent the concept of authorship. They are completely beings of commerce.

Everybody (implicitly) owns copyrights because every form of copyrightable content is implicitly copyrighted (so if you’ve doodled on your notepad, you already own the copyright on that doodle) but only corporations can afford to regularly interact with copyright enforcement. Other forms of IP mostly involve expensive registration processes, and also mostly involve expensive lawsuits.

Patents are one of the more straightforward forms. You pay the patent office some money when you submit an application, and they check to see whether or not your invention is sufficiently different from other already-existing patents. If they decide it is, they allow you to pay some more money in order to actually grant the patent, which gives you a right to sue anybody who tries to sell your patented process for a couple decades. You can renew your patent exactly once, for more money, and if your patent expires then the design goes into the public domain. The purpose of patents is, ostensibly, to incentivize people to release blueprints for new inventions.

Patents are not quite as fucked as copyright, but they’re pretty fucked. Patent examiners are not generally qualified to evaluate whether or not the applications they get are actually patentable, so like with copyright, a lot of patents get invalidated in lawsuits. Many more patents *would* be invalidated if brought to suit but actually never get there, because suits are expensive. So, these zombie patents that are clearly bogus can be used to threaten people with nuisance lawsuits. That’s mostly the actual purpose of patents.

Then there’s the trademark. Normies kind of understand that patents are specific to inventions (though this isn’t exactly true) but generally confuse trademarks and copyrights, since they both apply to ‘creative’ works. A trademark’s ostensible purpose is consumer safety: trademark law exists to make it harder to pass off cheap knock-offs of some ‘trusted brand’ as products of the brand itself. As a result, trademarks will get invalidated if the trademark holder doesn’t sue often enough. A trademark is a license to sue competitors that goes away if you don’t sue competitors that get too close to using your trademark. This is why, for instance, Disney goes around suing nursery schools that have hand-painted murals of mickey mouse.

Trademarks aren’t subject to the same kind of fair use concerns as copyrights, but they end up overlapping in various ways. For instance, “transformative uses” of copyrighted material are generally protected, especially if they are educational or satirical. An educational use of a trademark won’t be mistaken for a use of that trademark to sell a competing product, nor will a genuinely satirical use, so transformative derivative works that mix copyrighted & trademarked material are often fair use for both.

Now we come back to the caveat about patents. There are design patents, which are not functional. They’re basically just trademarks that are filed within the patent system so that you don’t have to file as many lawsuits. The coke bottle shape is an example of a design patent. (The coke bottle shape is *also* trademarked. But a trademark only applies within a particular domain. So, the coke bottle trademark prevents you from making a soda bottle that looks like a coke bottle, but the design patent keeps you from making a shampoo bottle of that shape.)

The final version of IP is also the strangest: the trade secret. A trade secret is a secret. It is never registered. Trade secret protection is barely even IP — it’s just, like, an informal retroactive version of an NDA. If you tell somebody that something is a trade secret, and you can prove that you made an effort to keep it secret, then you can sue them if they tell. Once it becomes widely known, you lose your right to win a lawsuit. I’m not sure how widely used it is these days, simply because an NDA is more explicit and more effective.

Now, as you can see, all these forms of IP are really fucked. They’re limited in weird ways, they no longer really incentivize the things they were meant to, and they have all sorts of weird toxic extra incentives. They are also basically only usable by big corporations. If you do not employ a dedicated legal team, you will only ever be eligable to be a victim of IP law. With the exception of trademarks, IP is mostly accumulated as a kind of arms race against other firms, all of which try to avoid suits unless they know they can win. Trademarks are too expensive to maintain for even most big corporations to accumulate endless ones, like they might for patents. Unless you’re Disney, you probably only have a couple.)

The other key thing about IP: all of it is about corporations suing each other, and so it’s completely dependent on government enforcement. IP doesn’t make much sense in the first place, but it makes none if you don’t have a court system invested in it. IP is also extremely subjective. Copyright has some of the clearest cases: a pirated copy of a DVD is just a nearly exact duplicate. But whether something is copyrightable in the first place is always questionable, as well as who might own various pieces. As a result, every form of IP depends doubly on the court system: it is a mechanism where you pay the government money in order to make possible future lawsuits shorter, but those lawsuits always involve some deliberation about whether or not the rights you paid for are legit. (And of course, if you pay to file a patent or trademark and then it immediately gets shot down and dissolved in court, you don’t get a refund.) In other words, none of these ideas can be transplanted, at all, to a non-state context like some ancap’s blockchain.

IP is fucked in specific ways, and some have to do with the abstraction around immaterial goods (which naturally can be trivially copied and modified and are therefore not subject to genuine scarcity). It would be a mistake to say that these problems are limited to IP. Actually, most of the problems with IP are not related to the production of artificial scarcity at all and are actually caused by a fundamental incompatibility between the nature of the world and the notion of property which cause endless fractalline layers of complication.

Material property is concerning in exactly the same way. As with IP, rich people who can afford long lawsuits get in the weeds about this shit all the time and everybody else basically never interacts with property law.

Property law is quite fuzzy and subjective, full of caveats: if a tree grows on your land but shades over your neighbour’s house, whose tree is it? The answer ends up depending on why you want to know. Has it fallen on your neighbour’s house? Is it blocking their sunlight? Or do they want the fruit from it? What about fruit that’s still on a branch vs fruit that has fallen? What if they want to sell the fruit? Tree law is one corner, but every corner is like this to some degree.

Why does any of it matter? Well, to normal people like you, property law doesn’t matter at all. You have stuff because you use it, and if you have more than you need, it ends up circulating around with your friends. This is personal property. Your personal property can be stolen or something, but that barely interacts with any of the complexities of property law, because for someone to steal something you are actively using against your will they need to assault you — a much bigger problem. The point at which property law concerns go to court is the point at which somebody (usually a corporation, for liability and tax reasons) “owns” enough property to no longer be able to use or defend it themselves. In other words, it exists to support rentseeking.

Basically, all forms of property have two elements:

  1. it requires experts to analyze complex subjective phenomena with respect to a long history of case law in order to figure out how a real situation maps onto a property model
  2. only very rich people can afford this analysis

The anti-state, “objective”, “scientific”, “distributed” ideals of cryptarchists (and the limitations of automated evaluation) is incompatible with (1). The liberatory rhetoric of cryptarchists is incompatible with (2).

I used to be a cryptocurrency fan back in 2008–2012 or so, basically because I thought I saw some emancipatory potential in an alternative to state-run currency. (I still do, to some degree.) What I didn’t realize then is that the problem with property isn’t state interference, but that property can’t exist without state interference and creates a hierarchy of state-like entities even where explicit state power is absent.

This document was adapted from a twitter thread.