Mireille Buydens, professor at the Catholic University of Louvain and a lawyer in Brussels, Belgium
New Delhi, in a get-tough demonstration organized by software companies, an elephant tramples on pirated CDs.
Pirates can market copied productsat far lower prices than the originals, since they don’t have to pay the cost of creating or advertising the product. By doing this, they distort competition
Los Angeles, 1996: a police raid on a T-shirt store selling counterfeit clothing.
Research and development, notably in genetic engineering, require a considerable amount of high-risk investment which cannot be profitable unless there is adequate legal protection
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The counterfeiting industry According to Peter Lowe of the Counterfeiting Intelligence Bureau (CIB), a London-based
organization that reports to the International Chamber of Commerce, counterfeiting
is a “multi-billion-dollar industry”. The CIB puts its global turnover at $250 billion.
“It is estimated that it accounts for 5-8 per cent of world trade,” says Lowe. The
most commonly counterfeited products are software programs, CDs, CD-Roms, videocassettes,
watches and designer clothes. |
Efforts to strengthen
intellectual property rights are posing a challenge to their original purpose–striking
a balance between the protection of individual property and the public interest
What is the purpose
of intellectual property rights? Originally they were based on the principle that
creators should be granted exclusive rights to exploit their works, in order to ensure
they were properly remunerated and, in addition, to encourage creative activity.
But in the interest of the community and of future artists and inventors, those exclusive
rights were limited in time: when the term of protection ran out, the works fell
into the public domain, a copyright-free space that encourages creation and competition.
They could then be used as raw material and a kind of “suggestion box” by fresh generations
of creators. A balance between the protection of individual property and the general
interest was guaranteed.
Today that balance has been destroyed. The founding principles of intellectual property
seem to be threatened by an ill-considered increase in the number of privately held
exclusive rights at the expense of the public domain.
Counterfeit
software and designer clothes
The main factor hastening
these developments is a change in the economy, which focuses increasingly on products
with “intellectual added value”, such as new software, the selection and presentation
of information, specialized computer services, cultural and entertainment products,
biotech products, and other applications of cutting-edge technologies. Control of
ideas, forms, images and brands is a crucial
element in this so-called “immaterial economy”.
While it is difficult to steal a consignment of steel girders or a cargo of bananas,
it is child’s play to copy software or manufacture counterfeit designer clothes.
It is easy for intellectual added value to be illicitly appropriated: it cannot be
“put under lock and key”. Those who want to exploit it for their own profit simply
need to be able to reproduce it. Pirates in this field can market copied products
at a lower price than the originals, since they do not have to pay the cost of creating
or advertising the product. By doing this, they distort competition.
International
negotiations
To protect their industries
against piracy and counterfeiting (see
box), the member countries
of GATT (General Agreement on Tariffs and Trade, which governed international trade
from 1947 to 1994) set out to strengthen intellectual property rights within the
GATT framework. GATT’s main concern was to protect companies from unauthorized copying
and unfair competition, thus ensuring they would get a return on their investment.
When GATT concluded its first agreements, intellectual property was not very high
on the agenda. In the immediate postwar years, products put on the market still consisted
of atoms of matter, not bytes. It was not until the Uruguay Round of talks started
in 1986 that the issue came to be discussed at the international level. That round
of talks resulted in the signing, on April 15 1994, of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). Like the multilateral agreements
on trade in goods, the text was included in an appendix to the Marrakesh framework
agreement that set up GATT’s successor, the World Trade Organization (WTO).
TRIPS, which has a global application (most countries in the world have now subscribed
to it), confirmed the economic importance of intellectual property rights. It requires
member states to protect all forms of creation: literary and artistic works in the
broadest sense (including maps and press photos), computer programs, data bases,
sound recordings, radio and television broadcasts, drawings and models, inventions
of products and processes in every technological field, the lay-out designs of integrated
circuits, and so on.
The agreement was a milestone in the history of intellectual property. First, its
scope of application is unprecedentedly wide: anything created in the fields of technology,
software, news or culture can and must be protected by an intellectual property right,
in such a way that it exclusively benefits rights holders, who alone decide how it
should be reproduced and distributed. Secondly, for the first time TRIPS requires
contracting states to organize procedures and sanctions that enable rights holders
to ensure that their rights are respected. Those states are for example obliged to
allow persons or companies whose rights have been infringed upon to go to court and
obtain damages. Such duties are chiefly incumbent upon the developing countries.
Most of these countries do not possess the human or financial resources that would
enable them to develop their own production, and they have tended to become the preferred
locations of the copying industries.
In this general move towards comprehensive protection of products with intellectual
added value, the European Union has not lagged behind. In the course of the past
10 years, it has been very active in introducing new legislation. According to the
directive of May 14, 1991, computer programs are protected by copyright at European
Union level. Similarly, the definition of copyright content has been tightened, particularly
as regards the copyright of works put on the Internet. In this connection, a proposed
directive on “the harmonization of certain aspects of copyright and neighbouring
rights in the information society” was examined by the European Parliament on February
10, 1999, with a view to its adoption. The directive contains provisions for authors
or their rights holders to control the distribution of their works on the Net or
to forbid it. Any copy of their sound or visual works available online will entitle
them to financial compensation, even if the copy is made solely for strictly private
use.
A new right
to protect investment
The protection of data bases by copyright has also been confirmed. For the first
time in the European Union, it was even extended to their contents by a directive
of March 11 1996. Until then, it had been accepted that a compilation of data possessing
the characteristics of an original creation could be protected by copyright. But
this protection covered only the selection and arrangement of the data, in other
words the structure or container of the base, not its content. The raw data, on the
other hand, were not covered by copyright and could therefore be used by anyone.
On this occasion, the European legislator stressed that data collection could, irrespective
of the creation of the data base’s architecture, represent a substantial investment.
He concluded that the content of the data base should also be protected. Clearly
departing from the traditional rules governing intellectual property, which in theory
concern creative contributions alone (products with intellectual added value), he
established a new right designed to protect financial investment. Those who make
a “substantial” investment are provided, de facto, with an exclusive right to the
benefits of their investment, even if there has been no intellectual creation.
Financial interests again have now prompted the European legislator to consider the
adoption of a directive on the protection of biotechnological inventions.
The move was motivated by two factors: first, “the protection of biotechnological
inventions will certainly be of key importance for the Community’s industrial development”;
secondly, “research and development, notably in the field of genetic engineering,
require a considerable degree of high-risk investment which cannot be profitable
unless there is adequate legal protection”.
Financial terminology–talk of profitability and an attractive “return on investment”–is
invading the sphere of intellectual property. The notion of intellectual property
used to be a way of protecting intellectual added value; it has now become an instrument
for turning invested capital to good account. Is this a necessity or is it regrettable?
The question is worth debating.
It is true that in the field of biotechnology, for example, creation requires considerable
investment. This is something that industrial companies cannot accept unless they
are sure of being able to make it at least partially profitable. On the other hand,
one may reasonably wonder whether there is any point in creating a new monopoly on
information contained in data bases, even if a great deal of time and money has gone
into creating them. The idea here is not to reward an intellectual creation, however
slight, but merely to repay an investment in time and money. This trend could well
jeopardize the sharing of knowledge. The notion of intellectual property here seems
to have departed from its basic purpose, which was to ensure a balance between private
and public interests.
This change of direction is one of the first perverse effects of the exponential
increase in the amount of space occupied by intellectual property. More fundamentally,
it has been engineered by a society that tends to make legal and material protection
the keystone of its ethos: all property and anything else of value needs to be protected
against risk. Accident prevention, security, insurance and protection have become
mantras in developed Western societies. It has reached the point where those societies
sometimes seem to have forgotten that risk is an inherent aspect of life and freedom.
The second perverse effect of the boom in intellectual property–the broadening of
its scope as well as of its duration–is equally worrying. In 1993, for example, the
duration of copyright in the European Union was increased from 50 to 70 years after
the author’s death.
On many occasions over the last ten years, legislators and courts have also agreed
to an unlimited extension of the scope of copyright protection. Originally designed
to protect works of art, copyright has been extended to cover every sphere of human
creation, from the design of car bodywork or ties, meteorological photographs and
the instruction manuals of electrical household appliances to data bases and recipes.
Since everything belongs to someone, an authorization from the owner is required
for everything. In practice it has become extremely difficult to create a multimedia
work, to shoot a film, to compose a piece of music, or to publish an illustrated
book without in some way having to use elements that are protected by copyright,
and therefore having to request a detailed authorization from copyright holders and
to pay them financial compensation.
In the short term, this increase in the number of exclusive rights will be a threat
to economic activity itself. Competition, after all, boils down to offering the same
product as someone else. Now if that
product and all its variants, versions and components are protected by intellectual
copyright, copying–in other words, making a competing offer–becomes an extremely
hazardous exercise. If limited exclusive rights, which used to form part of the original
spirit of intellectual property, protect companies against illicit copying, disproportionate
exclusive rights quite simply wipe out competition altogether.
As for the extension of the duration of copyright, it means that the community’s
right to make free use of a work after it has fallen into the public domain will
be a theoretical possibility rather than a fact. The present duration of copyright
protection often exceeds the period during which the created work is in fact usable.
After 70 years or more, an old computer program is of no use to anyone.
Similarly, the European directive on data bases theoretically restricts their protection
period to 15 years. But it stipulates that if a data base is modified, notably by
a large number of additions, deletions or changes which show there has been substantial
further investment, the duration can be extended by 15 years. Thus, a regularly updated
data base can be protected for ever and will therefore never fall out of copyright.
That contravenes the most fundamental principles that underlay the notion of intellectual
property rights.