Information and Communication Technology Policy and Strategy
sml0om7
05wkict-ipr-17.pptx
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Outline of Lecture
Introducing the Fundamental Issues
Fair Use and Exceptions
The Music Controversy
The Software Patent Controversy
The Deep Linking Controversy
Summary
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Introducing the Fundamental Issues
What are Intellectual Property Rights?
Copyright
Patents
Trademarks
Registered designs
Trade secrets
For information goods (e.g. software and digital content)
copyright is the principal means of protection. It provides exclusive rights to reproduce information.
Current copyright law in most countries gives an exclusive right for the life of the author plus either 50 or 70 years.
Although copyrighted works of the early 20th century are now coming out of copyright, it will not be until the 22nd century that most works being produced today will come into the public domain.
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Introducing the Fundamental Issues
Why do IPR Laws Exist?
Incentives
Without IPR, market competition would result in prices of software and other information goods falling near to zero as individuals traded freely their copies of works. There would be no incentive to create the information in the first place.
The Optimistic View
The system of incentives created by IPR results in a rich collection of technological alternatives (near substitutes) so that the ‘exclusivity’ provided by IPR does not result in substantial market power.
The Pessimistic View
Nature or markets are not so bountiful and monopoly rents are a ‘cost of progress’ or even without monopoly rents the social welfare loss of not being able to freely exchange exceeds the gains to producers
2. The Moral Rights Argument
IPR is not only about economic incentives but also the moral principle that individuals should be entitled to the fruits of their labours (unless they have sold those rights)
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Introducing the Fundamental Issues
‘Information Wants to be Free’
“On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life.
On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”
Stewart Brand 1984
http://en.wikipedia.org/wiki/Information_wants_to_be_free
If we paid for things according to their value, there would not be a problem.
In fact, we part with our money only to the extent it is necessary to acquire what we want.
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Why is copyright controversial?
The substantial improvement in the infrastructure for data communications has created unprecedented opportunities (and challenges)
It is now possible to publish information ‘for the world’ at very low cost
It is also possible to pirate ‘for the world’ at very low cost
As the result of many influences (i.e. the Internet alone is only a part of
the explanation), an ‘emergent policy’ in both the US and the EU has been to strengthen IPR and to broaden its applicability.
Because the richer countries have important intellectual property, international trade liberalisation has been accompanied by requirements to protect IPR.
TRIPS (Agreement on Trade Related Aspects of Intellectual Property Rights) was agreed during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.
Introducing the Fundamental Issues
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What is ‘fair use’ and ‘copyright exceptions’?
In practice, copyrighted information is used to produce further copyrighted information
I cannot write a book without relying on previously written (and copyrighted)
books
Some countries (notably the US) make an exception to copyright for ‘fair use’ which is the limited copying of another’s work in the context of an original creation and other countries have ‘exceptions’ to copyright
In many countries, it used to be true that academics could copy readings without receiving permission or paying fees. (copyright exceptions)
It is now quite expensive to produce a ‘course reader’ with the readings copied for every student (because of copyright fees)
The change reflects the view that universities are like other parts of society and should pay their ‘fair share’ – it is part of the logic by which universities are being ‘privatised’ – i.e. they are meant to sell their services at a rate that will cover their costs.
Fair Use Issues
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‘Owning’ a musical recording
You might think that when you buy a CD, you have a right to use its contents in any way you like
This is not the case in the UK. ‘Ripping’ (digitally copying) a CD was not legally permitted until recently even for your own use and exchange of such copies has been and continues to be a violation of copyright.
These issues led the Belgian Minister of Justice to the following exchange:
Question: Do you agree that violations of copyright are a violation of law that have criminal penalties?
Answer: Yes.
Question: How much money will be allocated to the enforcement of these rights by your government?
Answer: Zero
So one answer is that IPRs are only real to the extent that they are enforced in law
The Music Controversy
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The Music Controversy
Private enforcement
Perhaps unfortunately, it is not only about what Ministers of Justice might choose to do about enforcement
Individuals can be sued by IPR owners and even if courts are not very sympathetic to hearing the case, the individual risks substantial penalties they are found guilty – most settle out of court by paying some kind of ‘damage’ charge to IPR owner
A private enforcement campaign was begun by RIAA (Recording Industry Association of America) and amounts to a business suing its customers since many of the individuals targeted are also buyers of music
Obviously this is not a happy outcome – however the RIAA saw the alternative as a further decline in musical recording revenues
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The Music Controversy
Global music sales in million US$ (IFPI 2004a).
Sources:
Zentner, A. (2006). "Measuring the Effect of File Sharing on Music Purchases." The Journal of Law and Economics 49(1): 63–90.
IFPI (International Federation of the Phonographic Industry) (2004a), “The Recording Industry in Numbers.” London: IFPI.
Note: Local currency values are converted to dollars at the exchange rate of each year. Music videos are included since 2001.
What are the social costs of pursuing copyrights?
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One Measure of Downloading Impact
US$90
billion
The Music Controversy
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Source: Liebowitz, S. J. (2006). "File Sharing: Creative Destruction or Just Plain Destruction?" Journal of Law and Economics XLIX(April): 1-28.
Another Approach: US Only and Not Monetised
[However – This might lead to a monetary estimate of US$ 41 billion]
(300 million Americans times 3 albums times US$15 per album avg. price)
The Music Controversy
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Source: Chris Crotty, “MP3 and Portable Media Players: Reaching for the Stars,” iSupli – Applied Market Intelligence, March 2006, http://www.isuppli.com/catalog/L3_cons.asp?sr=CONS&se=14, Accessed 9 September 2006
So – we might take the loss to the record industry as US$30-40 billion per year. However, much of this is a transfer to another industry – the MP3 player industry
The Music Controversy
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The Software Patent Controversy
In the US, software can be patented. In Europe, software patents as such,
do not exist (yet).
Proponents of European patent software patents argue that it would provide an incentive for innovation and a return to the substantial investments made by European companies in software inventions.
Opponents argue that patents on software would serious constrain the availability of techniques that can be employed to construct software and that this ultimately would result in greater losses than the gains to be expected from incentives
This issue is greatly complicated by the suspicion that the US Patent and Trademark Office was too lenient in granting patents to ‘existing art’ in software and that extension of these patents throughout Europe (and the world) would result in huge litigation costs to ‘set right’ the historical record on invention in the industry – better to let the industry develop without patents – copyright is protection enough.
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The Software Patent Controversy
Although software as such cannot be patented, claims can be made for
‘technologies’ (hardware) with software components
To take a European patent on software then it is necessary to design a device that embeds the software one is interesting in patenting and then to patent the device. It is not quite as simple as it seems – the software has to be integral to delivering a technological solution that could not be achieve by a person skilled in the art.
As a result, Europe still has a higher threshold for ‘software patents’ than the US
It remains controversial whether this has helped or hurt the European software industry.
The Deep Linking Controversy
The creation of content for the WWW and its distribution over the Internet often relies upon the traditional ‘advertising supported media’ formula – content is free, but you have to receive it with advertising.
For example, Fortune and Slate magazines subject the reader to an introductory advertisement before entering the site proper… Both allow paid subscribers direct access to content.
What happens when someone bypasses this ‘front page’ and provides a link to content?
In Denmark, newspapers have successfully sued news search services for providing such ‘deep links.’
On the one hand, barring deep links may be important to preserve advertising revenue.
On the other hand, where will this bar stop – does it mean that search engines like Google will not be able to index content?
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Summary (1/2)
IPR issues are deeply controversial because technical capabilities to reproduce and exchange information have mostly outrun efforts to ‘contain’ or ‘protect’ information from copying
Computer manufacturers (or MP3 player manufacturers) could have prevented this by agreeing a standard for DRM (Digital Right Management) but have refused to do so
This has resulted in the strangeness of recording companies suing their customers for ‘piracy’ and the continuing expansion of an ‘underground’ of music and software copying
One response to this controversy is a loss of reputation – people are now looking to find digital content and software that is not encumbered with intellectual property issues
There is considerable willingness to satisfy this demand and it seems inevitable that the business models of information providers will need to change
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One model, which we have already noted is advertising supported information
Another is DRM free selling such as iTunes and others now offer (which makes it less attractive to search for ‘free’ copies – some of which are of dubious quality)
Yet another is for the creators to change their strategy – musical groups for example can put a greater emphasis on live performance and merchandise, software producers can more frequently change the versions of their programme offering ‘upgrades’ as a service of a fee, and other content producers can charge for the convenience of access, cataloguing, etc.
Still another, more radical, model is to devise a means to compensate creators and publishers while providing content freely. Current UK policy is to require open publication for Research Council funded research and this may be extended to all published research submitted for REF or other ‘quality’ exercises. The funding to pay for this ‘open access’ publication will come from the research budget and may eventually reduce the costs of maintaining libraries.
Summary (2/2)
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