There seems to be a lot of confusion about Ayn Rand’s position on intellectual property both by her supporters and her detractors. For instance, the Cato Institute considers it almost a prerequisite to have read Atlas Shrugged to work there. However their position on patents and copyrights is in direct contradiction to Ayn Rand’s position.
The following quote from Atlas Shrugged, should give you a hint at Ayn Rand’s position on intellectual property:
“Man’s mind is his basic tool of survival. Life is given to him, survival is not. His body is given to him, its sustenance is not. His mind is given to him, its content is not. To remain alive he must act and before he can act he must know the nature and purpose of his action. He cannot obtain his food without knowledge of food and of the way to obtain it. He cannot dig a ditch––or build a cyclotron––without a knowledge of his aim and the means to achieve it. To remain alive, he must think.” Rand 1992, p. 1012.
Ayn Rand devotes a whole chapter, Chapter 11, in Capitalism: The Unknown Ideal to patents and copyrights. The first sentence makes her position crystal clear. “Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind.” “What the patent and copyright laws acknowledge is the paramount role of mental effort in the production of material values: these laws protect the mind’s contribution in its purest form: the origination of an idea.”
After pointing out that intellectual property is the source of all property rights, she clarifies the distinction between the idea and the physical embodiment. “What the patent or copyright protects is not the physical object as such, but the idea that embodies it. By forbidding an unauthorized reproduction of the object, the law declares, in effect, that the physical labor of copying is not the source of the object’s value, that the value is created by the originator of the idea.” “Thus the law establishes the property right of the mind to that which it has brought into existence.” She then points out that “patents and copyrights only pertain to the practical application of knowledge, to the creation of a specific object which did not exist in nature.”
Next, she tackles the whole question of whether a patent is privilege (in the modern sense of a gift) or is a right. According to Rand, the government does not grant a patent, in the sense of a gift, privilege of favor, but recognizes the originator of the idea and protects their rights in the idea.
Rand has a very interesting take on the reason for limited terms of patents and copyrights. She analogies a patent or copyright to a debt owed to the inventor/author by people that copy the inventor’s invention or author’s book. Debts are not and cannot be perpetual, so this is why the term of patents and copyrights are limited according to Rand. I will note that real property rights are actually time limited also. A person only has a property right in real (personal) property during their lifetime. How can someone who is not alive own something – this would be a logical absurdity. However, real property is passed on to the person with the next best title to real property upon a person’s death. In the case of intellectual property, no one person has better title to intellectual property than anyone else so upon the expiration of its term it becomes free for all mankind to use. Or as Rand explains, real property “can be left to heirs, but it cannot remain in their effortless possession in perpetuity: the heirs can consume it or must earn its continued possession by their own productive effort.” In contrast, “Intellectual property cannot be consumed. If it were held in perpetuity, it would lead to the opposite of the very principle on which it is based: it would lead, not to the earned reward of achievement, but to the unearned support of parasitism.”
Rand seems to anticipate the patent thicket discussion and suggests that this is the reason for shorter terms of patents than copyrights. She also suggests that it is very difficult to correctly define the limits of a patent boundary. Here, she is mistaken. There is no evidence of a patent thicket ever existing on a macroeconomic level, only evidence of people who do not want to compensate an inventor for using their technology. The boundaries of patents are no more difficult to define than those of copyrights or land before GPS and title insurance. However, patents will be more useful as the equivalent of title insurance for invention is created.
I will end this post with a particularly prescient quote from Rand:
Today, patents are the special target of the collectivists’ attacks . . .
 Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 130.
 Ibid. p. 131.
 See Adam Mossoff’s excellent paper “Who Cares What Thomas Jefferson Thought About Patents?
Reevaluating the Patent “Privilege”, where he points out that historically a privilege is a right that can only be secured in society, essentially synonymous with what we would call a “civil right” today. http://www.pff.org/issues-pubs/ip/bulletins/bulletin2.2jeffersonprivilege.pdf
 Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 131.
 Ibid. p. 131
 Ibid. p. 131
Ibid. p. 133
Ibid. p. 133
Ibid. p. 133
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