IP Freely
Let me begin with a definition: by "intellectual property" or "IP" I mean things covered by copyrights and patents (I exclude trademarks for the sake of brevity). More generally, I mean ideas and information that are covered by laws that grant their creators certain exclusive rights, such as the right to produce or sell instances of the IP in question. The U.S. Constitution, for example, grants its Congress the power to "promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." In other words, the stated purpose of intellectual property in the United States is to benefit society as a whole by providing incentives for the creation of ideas.
There is another frequently-stated justification for IP that I wish to cover first, though: "fairness," the idea that creators have the "right" to benefit exclusively from their creations at least for a short period of time. This argument as applied to IP law is usually circular, since many people use IP law itself as the implicit basis for this supposed right. For fairness to be a valid argument for IP, one must first argue the existence of this right to exclusive benefit outside the existence of IP law, a tack not many have been willing to take. For good reason: even though physical property and intellectual property are both artifacts of law, intellectual property is a far less natural and obvious one than is physical property. In the eloquent words of Thomas Jefferson:
If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody.
There is an important but subtle distinction here. If a person writes a poem and keeps it only in his head, it is tempting to say that he exclusively possesses the poem, as Jefferson's terminology seems to imply. But what that person actually possesses is a particular instance of that poem, stored in the neurons of his brain; for example, what if someone else were to compose the same poem independently? In fact I do not believe there can be any sensible definition of "exclusive ownership" of an idea, any more than a person can "own," say, the number two. The farthest we can get along that line is a sort of simulation of exclusive ownership through law, which brings us back to the question of whether those kinds of laws are indeed justified.
As for the argument that IP benefits society: usually people support this idea by asserting that IP rights provide incentives as described above, and that without such incentives we would suffer an absence or at least a great dearth of innovation and creativity. It is true that IP rights do provide some incentives, but I dispute the notion that we would suffer any serious lack of innovation or creativity without these incentives.
For the purposes of this discussion, I divide intellectual property into two types, corresponding roughly to the arts and to the sciences. By "the arts" I mean creativity for its own sake, where the intellectual property that is produced is a good in and of itself; by "the sciences" I mean invention and innovation that serves some other purpose than simply to exist, such as medical and other scientific research.
To claim that the first type of creativity would hardly exist in a world without intellectual property betrays, I think, an utter lack of understanding of the creative process. Artists, writers, actors and members of all manner of creative professions have existed since long before there was intellectual property; these people simply feel a drive to create, and often to share their creations with the world. It is true that the big entertainment industries would probably not exist in the form they do now, but that is because the motivation for most of the industry is now only money. Frankly I do not think that would be such a terrible loss; without the entertainment juggernauts we might get fewer blockbusters, but so few of those display any real creativity anyway. In their place, the market would start to fill with a more diverse, creative mix including some of the independent works that are currently pushed aside by blockbuster releases.
As for the second type, there are many systems other than state-enforced monopolies that have enjoyed great success. The most recent example is the open-source model, of course: one has only to look at projects like Linux and Wikipedia to see that this model can be wildly successful in a number of areas. There are other models as well, like the donation model and the patronage model, that have quietly flourished over the years. Take mathematics as an example: mathematicians don't get paid every time someone uses a formula they've developed, yet they've somehow managed to create a truly remarkable body of knowledge even without those incentives.
In fact, I assert that intellectual property is now causing more harm to society than good. The harm that intellectual property inflicts ranges from the obvious to the subtle, but it is undoubtedly far-reaching. After all, information and ideas are by their nature nonrivalrous goods; in other words, any number of people can consume the same idea at any time without interfering with anyone else's ability to do so. Intellectual property is an attempt to suppress this defining characteristic, to create artificial scarcity so that supply and demand will set a higher price for these goods. That part of IP, at least, has succeeded beyond our wildest dreams; after all, we often pay fifteen to fifty dollars or more for discs of round, shiny plastic! The costs don't stop there, either: there is also the massive (and growing) cost of enforcing this artificial scarcity. Producers are constantly devising newer and more elaborate means to protect their intellectual property, but the end result is usually only more restrictions for regular consumers.
In addition, creating new IP is now often a minefield of existing copyright and especially patents that soon only large companies with armies of lawyers will be able to traverse. There is much creative work that is currently stifled by intellectual property laws; as an example, consider the Japanese phenomenon of doujinshi (independent manga) that are based on existing, commercial anime or manga. Derivative doujinshi are flourishing in Japan despite the existence of Japanese IP laws, because the major producers generally tolerate them (for various reasons); in contrast, American companies are often highly intolerant of such derivative works. It is true that the original works upon which the doujinshi are based were created within the structure of IP law, but my point is simply that there may be an untapped well of creativity based on derivative works that could offset any loss of creativity that might come from eliminating intellectual property.
The sad thing about all this is that discussion of these important issues is being circumvented by the entertainment industries, whose campaigns to shape public opinion have been so successful that most people simply see intellectual property as a natural right, and the way things obviously ought to be. The RIAA's and MPAA's use of the term "theft" for copyright infringement and their frequent analogies to physical theft ("You wouldn't steal a CD from a store, so why would you pirate music?") are perfect examples of this: they want to cement the idea in people's minds that intellectual property is not only as important as physical property, but is in fact the same thing!
We need to re-open the dialogue on intellectual property, and soon. If the public doesn't start to become aware that there are alternatives to IP, at least as currently implemented, we will only continue to lose our digital freedoms as companies and governments try ever harder to enforce laws that are essentially unenforceable (which is a topic for another time). If you are interested in learning more, I highly recommend John Perry Barlow's article The Economy of Ideas as well as Lawrence Lessig's book Free Culture, freely available online.