The Case for Eminent Domain
January 1998
(Editor's note: This article was posted on the Internet approximately three weeks before Netscape announced its plans to release their Navigator source code to the public.)

When one company succeeds extremely well, there seems to be a very two-sided argument in society about what to do. On the one hand, hard-core free-market types say "let it ride." On the other hand, interventionists say "hold the bus!" Both sides really want the same thing, of course: economic prosperity through a fair marketplace with opportunity for all to innovate and succeed. The difference between these two sides is in determining whether a successful company can actually become an obstacle to further progress -- and whether government regulation would be a "cure worse than the disease."

But there is another alternative to either government intervention or total monopoly; that alternative is already used regularly for a variety of public benefits, such as interstate highways, national parks, and flood control systems. This alternative is the concept of Eminent Domain. Under eminent domain, a federal agency can "condemn" a piece of property and convert it to public use for the benefit of the greater community, while providing monetary compensation to the property owner. If that principle is applied to literal property under the domain of the U.S. government, why not to intellectual property which is granted protection by that very same government?

What would this imply? For one thing, it would mean that certain pieces of music, literature, or software could be classified under a special "public domain" category as being a vital national interest. There might be certain books, for example, ancient Bible manuscripts; or particular chemical formulas, such as a cancer cure or an AIDS cure; or even software, such as operating system source code, that might be more valuable in the public domain than limited to a narrow group of scholars or business magnates.

Imagine if a cure for AIDS was discovered, but the company that developed it needed to charge $75,000 for a course of treatment just to break even. What a tragedy that would be, that perhaps millions of people would be denied the cure simply because of the cost! Would it not be more beneficial to have the formula purchased outright by a federal agency, placed in the public domain for any organization wishing to produce it for its members or customers, and published worldwide for the benefit of humanity? Meanwhile, the innovative activity of the pharmaceutical company could be amply rewarded, perhaps with an annual stipend. Everyone would benefit, and perhaps by revealing the formula, other cures could be developed using the same technology applied to the first cure, leading to the eventual eradication of many diseases.

Similarly, if a piece of software code becomes a critical linchpin in the information infrastructure of the nation or of the world, would it not make sense to have its contents publicly available for all to use freely? Related applications could be made more compatible and more reliable by the availability of source code for examination and deciphering. Furthermore, this would prevent an unscrupulous monopolist from leveraging any "secret" program codes within the software to damage or exclude a competitor or a customer that the innovator had a personal animosity towards.

Imagine the benefits to all programmers everywhere if products like Microsoft's operating systems, Netscape's browsers, and perhaps eventually Sun's Java were published openly and freely. Perhaps the stipulation would be, any product which maintains a monopoly (greater than 70% market share) for more than two years would automatically qualify. Under this stipulation, companies have plenty of opportunity to innovate and create new products, and if the marketplace produces no viable alternative, then a "natural monopoly" condition results, meaning that the public interest is best served by eminent domain.

Of course one immediate result is that no computer company would ever have to pay an operating system tax, or be threatened with retaliation for using a competing product on some of their systems. Industry experts could pore over the code line-by-line and find errors, proprietary traps, or missing functions, and propose solutions and fixes to repair them. No more lawsuits or fear of any one company gaining too much influence in the industry. Meanwhile, a steady revenue stream is guaranteed to the original innovator, but without the possibility of product "tying" or "bundling" in violation of antitrust law. Everyone benefits!

Some may consider this option unrealistic, and perhaps it may be so. But at least it is an alternative that removes lawsuits, government micromanagement, and monopoly fears from important markets like pharmaceuticals and software. The possibility of removing these nuisances makes this an alternative worth considering.

Most recent revision: February 3, 1998
Copyright © 1998, Tom Nadeau
All Rights Reserved.