Several years ago we commissioned someone to produce a music CD for our organization with the understanding that we were going to be the only ones who would be able to market the CD. To our dismay, we learned that after a few years elapsed he began selling the CD himself in violation of our agreement. Are we entitled to the profits which he earned illegitimately?
In the Gemara there is no direct discussion about the concept of intellectual property which is what this question concerns. However, poskim of recent generations dealt with the issue and established clear rules.
There are two issues that must be considered. The first issue is whether there is even a concept of intellectual property in halacha. If there is no concept of intellectual property there would not even be a prohibition in copying another person’s work. Moreover, in this case the sale itself that took place would be invalid since, if there is no such concept, the seller did not sell anything and therefore, would not be entitled to any money. This is obvious since if one gives nothing he is not entitled to receive anything in return i.e. it would constitute a mekach to’us.
When the issue first came up about one hundred and fifty years ago, the poskim had two approaches. The approach of the Shoail U’meishiv (1, 1, 44) is that in the context of Torah there is a concept of intellectual property and one who violates its rules is a thief. He says that one who writes a sefer or creates a new object becomes its exclusive owner even to the extent that he is the only person who is allowed to publish the sefer forever unless he sells that right. Selling a copy of the sefer does not empower the customer to copy and sell that sefer. His ownership is limited to the ownership of the physical sefer that he purchased.
The second opinion was offered by the Beis Yitzchok (Yoreh Deah 2, 75). He notes the approach of the Shoail U’meishiv but disagrees. He says that in the context of strict Torah law there is no concept of intellectual property. However, he agrees that it does exist nowadays by virtue of the Torah Law that dino demalchuso dino, that laws of the land that are not against Torah law become the Jewish law as well. The Beis Yitzchok invokes a basic ruling of the Chassam Sofer to establish that the concept of intellectual property applies universally.
The Chassam Sofer (5, 44) notes that the Rishonim offer various approaches to the concept of dino demalchuso dino. The basic issue is what its source is, since it is not based on any posuk. The approach of the Ran (Nedorim 28A) is that the government owns the land and by virtue of that fact, it can make rules. The Ran notes that this does not apply in Eretz Yisroel since the land belongs to all Jews. The Chassam Sofer says that the limitation of the Ran only applies to laws concerning taxes. However, laws that benefit the population as a whole apply even in Eretz Yisroel. Therefore, the approach of the Beis Yitzchok applies even in Eretz Yisroel to the laws concerning intellectual property since they are beneficial to society.
Thus we have established that in Torah law there is a concept of intellectual property and one can sell it. The salient difference between the approaches of the Shoail Umeishiv and the Beis Yitzchok is whether Torah law follows strictly the law of the land. According to the Beis Yitzchok, Torah law is limited to whatever the law of the land is, whereas according to the Shoail U’meishiv it is not.
In any case, there is such a concept and the further sale by your seller violates the halacha. There are many proofs that the Poskim of recent generations rule this way. For example, in the beginning of the edition of the Rambam which was published by Reb Shabsi Frankel many of the gedolim of the time, including Rav Moshe Feinstein and the Steipler, explicitly wrote that it is forbidden for anyone to copy and sell the sefer.
Having established that the act which was done in our case was prohibited, we turn to the monetary issue. Namely, if someone violated intellectual property rights and made money from selling an illegal copy, does he have to give the money he earned to the one who owns the intellectual property?
A landmark case was heard by the Rabbonut shortly after World War 2. The Vilna Press was destroyed in the war and several publishers published the Shas by photo offsetting the Vilna Shas. The owners of the Vilna Shas, who had purchased the rights to publish the Vilna Shas in 1915 from the original publishers, the Romm family, sued them in the Rabbonut for the profits that they earned from the sale of the photocopied Shas. The claim of the plaintiffs was that the original publishers had paid the various authors in order to publish their seforim and therefore, they had the exclusive rights to publish those seforim. Thus, if someone else published the Shas they owed them their earnings. They noted in their argument that this has nothing to do with the fact that the gedolim generally limited exclusivity to a fixed amount of years because that was protection against someone publishing a new work that would compete with the first work. However, here the publishers were taking the work of the Vilna Press and copying it and selling it for themselves.
The dayanim upheld the claim of the owners of the Vilna Shas. (Their decision is printed in the Birkas Shlomo, Choshen Mishpot 24.) Their argument is based on the Gemara that rules that if a person derives benefit from someone else’s property, if the owner has no loss then the one who derived benefit is not liable. This is called ze nehene veze lo chosair. However, if the owner does suffer a loss, even if it is a small loss, the one who derived benefit must pay the entire benefit he derived to the owner.
The example that is discussed in the Gemara (Bava Kama 20 B) is someone who squatted in another person’s house. The Gemoro says if the owner did not plan to rent the house anyway then if the squatter in no way damaged the house, the squatter does not have to pay anything for the benefit he derived. However, if he even just blackened the walls slightly, he must pay for the entire benefit that he derived from the house (i.e. full rent).
Many other poskim issued similar rulings. For example, Rav Menel Schaffrin ruled (Otsar Hamishpot 2, page 545) that if a singer sang songs which were composed by someone else without the composer’s permission he must pay the composer, as Israeli law requires. Earlier, the Divrei Malkiel (3, 157) ruled that if someone obtained governmental approval to market certain medicinal water and someone else copied him and sold the same product, the second person must give the first his profits.
In conclusion: There are two approaches to explain why even according to Torah law there is a concept of intellectual property. Therefore, one who violates the law and benefits from another person’s intellectual property at the expense of the first person must surrender the profits to the owner of the intellectual property.