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Dr. Harry Hillman Chartrand, PhD

Cultural Economist & Publisher

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h.h.chartrand@compilerpress.ca

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Launched  1998

 

 

Economics 3593

SURVEY OF INTELLECTUAL PROPERTY IN THE GLOBAL VILLAGE

5.0 Uses & Abuses

Introduction

As previously noted, intellectual property rights (IPRs) have evolved over the course of centuries (Chartrand 2011) but as economist Paul David: observed, they have not been created “by any rational, consistent, social welfare-maximizing public agency” (David 1992).  The resulting regime is “a Panda’s thumb”, i.e., “a striking example of evolutionary improvisation yielding an appendage that is inelegant yet serviceable” (David 1992).  Paralleling development of IPRs is the evolution of multilateral and national cultural property rights (CPRs) (Chartrand 2009).  In this concluding section I will consider some 18 uses and abuses of the ICPR regime.

 

Appropriation

For our purposes, appropriation refers to the taking of intellectual and cultural property from Third and Fourth World Peoples and using it for profit in the developed world.  This practice involves both copyright and patents.  First, copyright.  In preliterate societies knowledge is transmitted orally, usually through the mnemonics of chant, ritual and storytelling, enforced through religious practice and taboo.  The association of rhythmic or repetitively patterned utterances with supernatural knowledge endured well into historical times.  Among the ancient Arabs, for example, the word for poet was sha'ir, “the knower”, a person endowed by the spirits with knowledge (Jaynes 1978).  

Oral tradition remains the dominant form of inter-generational and intra-generational transfer of knowledge among peoples of the Fourth World – aboriginal or indigenous peoples.  It can only be transmitted and the fabric of the culture maintained through person-to-person communication.  It is not codified extra-somatically.  To many tribal peoples, a song, story or icon does not belong to an individual but to the collective.  Rights are often exercised by only one individual in each generation, often through matrilineal descent. 

The intellectual property rights regime, however, is based on three principles: (a) fixation of knowledge in material matrix; (b) limited duration of rights before knowledge enters the public domain; and, (c) rights are granted only to a Person – Natural or Legal.  This means that: (a) ephemeral works such as the spoken word are not protected; (b) tribal traditions granting rights in perpetuity – as long as the rivers flow and the sun shines – have no legal standing because the knowledge is in the public domain; and, (c) family lines, clans or tribes are not Persons in a legal sense and hence can have no standing in court unless they incorporate and adopt alien ways of governance.

The question of “appropriation” has arisen in the artistic community regarding the telling of tales and creation of works of art based on Fourth World cultures.  At the extreme, the term is ‘cultural vampirism’.  On the one hand, some in the First World community recognize ownership by Fourth World peoples of their own cultural property.  On the other hand, there are those who believe if artists restrict themselves to their own culture all humanity will be deprived of cultural richness.

An apocryphal example of appropriation is the alleged mid-1980s case of the thunderbird motif used by the Kwakiutl people of west coast Canada. Kwakiutl women knitted woolen sweaters using this design.  A pair of Japanese businessmen saw the sweaters on a tour and promptly mass produced them for sale in Asia.  Apparently over $100 million in sales were made.  Not a penny was returned to the Kwakiutl people.  And because such images are considered to be in the public domain the Kwakiutl had no standing in court to seek damages and compensation for the appropriation of their cultural property for the profit of others.

Second, patents.  Another aspect of Third (the developing countries of the South) and Fourth World knowledge is traditional environmental knowledge, or TEK, defined as a body of knowledge built up by a people through generations of living in close contact with a specific natural environment.  

Ethnobiology is the interdisciplinary study of how human societies use or have used flora and fauna to serve human purpose, e.g., for medical or nutritional purposes. Its principal sub-disciplines include ethnobotany, ethnomycology, ethnolichenology, ethnozoology, ethnoecology, paleoethnobotany, and zooarchaeology.  The Society of Ethnobiology publishes a journal documenting activities in these fields.

Ethnobiology draws heavily on the knowledge of historical, pre-modern and/or indigenous peoples of the Third and Fourth Worlds.    Such knowledge is generally called ‘traditional ecological knowledge’ or TEK.  With the 1991 Convention on Biological Diversity (CBD) the principles of compensated bioprospecting were established globally with the notable exception of the United States which is not a member of the Convention.  The convention recognizes ownership of biological forms like mineral deposits by the Nation-State in which they are found.  Efforts by the World Intellectual Property Organization and UNESCO to cede TEK rights to indigenous peoples themselves rather than the Nation-State in which they live have, so far, failed.

In 1995 with the founding of the World Trade Organization (WTO) and its Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) a conflict developed with the CBD.  Under Common Law and Civil Code intellectual property rights can only be granted to a Person – natural or legal – and only for a limited period of time.  The idea that such rights could reside in traditional knowledge that lasts forever and belong to a collective such as a tribe or indigenous nation is therefore rejected by TRIPS.  Similarly, to qualify for protection knowledge must be novel and not the documented subject of previous art.  Given that most TEK is oral in nature (or written in obscure ancient languages) this means that biotech firms can, for example, patent the active ingredients of traditional medicines as well as crops because there is no previous documented art.

The exploitation of TEK by biotech firms has led to charges of ‘biopiracy’ (Duffield 2002), i.e., stealing the work of others for one’s own profit.  Among the leading and most articulate critics is India-born Vandana Shiva (Shiva 1999).  In response Third World countries have increasing sought to protect their biological resources.  India, for example, is putting together a 30-million-page electronic encyclopedia of its traditional medical knowledge (as well as yoga positions).   Ancient texts in Arabic, Bengalis and Sanskrit are being translated into five global languages - English, French, German, Japanese and Spanish - in an effort to establish ‘previous art’ and prevent others from claiming intellectual property rights (Biswas 2005).  Brazil, on the other hand, is tightening enforcement of its CBD rights and has, for example, recently sentenced Marc van Roosmalen, a world-renowned primatologist, to 16 years in prison for ‘biopiracy’ (Rohter 2007).  Competition for novel genetic command codes is thus heating up.

There are thus similarities between Third and Fourth World peoples.  However, the Third World is made up of sovereign Nation States.  They can pass laws and sign international agreements requiring “national treatment”.  Peoples of the Fourth World, on the other hand, are unable to do so.  Rather, they must depend on national and international institutions if their cultural property is to be legally recognized.  In this regard the 2005 UNESCO Convention on Intangible Cultural Property represents the most fully articulated international expression of global concern. 

 

Author’s Rights & Liabilities

The first reference to the ‘author’ in the official record is found in a 1542 Proclamation of Henry VIII.  It did not, however, refer to the rights of authors but rather to their liability for works against religious doctrine.  Liability was henceforth to be determined by compulsory inclusion of the author’s and publisher’s name and the date of publication.  If a work was deemed offensive its author and publisher could quickly be identified.

In fact during the entire period before the Statute of Queen Anne in 1709 the author had no rights.  If lucky a work would be sold to a Stationer for a one-time payment or honoraria.  All rights were then assumed in perpetuity by the Stationer copying the title into the Company’s Register – hence copy right.  More often, however, a work was in effect given to the Stationer, sometimes with payment for printing, as a form of ‘vanity publishing’.  Capital as printing press technology simply trumped authorship.  Words are cheap; paper and ink are not, at least then.

Payment for authors was so low that many of the best writers of the Elizabethan age turned to the theatre.  Their talent was attracted by the pecuniary success of the new medium and its generous compensation (Backus 1897, 84-86).  With a Stationers’ honoraria an author could not get rich but could if the work was performed.  Something like 1 or 2 nights of box office each week was the reward.  This arguably remains true (Litman 2010).

It was in fact only in 1644 that Milton in his Areopagitica raised author’s rights, arguably for the first time.  That even he, the most famous poet of the time, had little bargaining power with publishers is reflected in the following quote:

1667, April 27. Milton executes this day the contract disposing of the copy-right of his Paradise Lost to Samuel Simmons, a printer and stationer of London, for the present sum of five pounds, and five pounds more when 1300 copies of the first impression should be sold in retail, and the like sum at the end of the second and third editions… This is one of the earliest authenticated instances of a copy-money being given by previous agreement for an original work. (Timperley 1839, 544)

It should be noted that Simmons, the publisher, became rich while Milton got £5 for each re-printing.  Later in the century John Locke formalized his labour theory of value giving birth to the ‘sweat of the brow theory’ of copyright.  Locke, however, later argued against not just perpetual Stationers’ copyright but also against perpetual author’s rights in his 1694 Memorandum.

The idea that an author’s rights are extinguished on sale of a work to a proprietor is implicit in the 1709/10 Statute of Queen Anne and was subsequently confirmed by the dissenting opinion of Justice Yates in the 1769 Court of King’s Bench case of Miller v. Taylor.  Yates argued that any moral or other rights of the author are extinguished on sale or assignment to and publication of a work by a proprietor.  Yates’ opinion was confirmed by the 1774 decision of the House of Lords in Donaldson v. Beckett

This was three years before the King of France in 1777, following the Enlightenment precepts of Immanuel Kant, declared authors had perpetual moral and economic rights to their works (Hesse 1990).  In the French Revolution these rights were limited in time to favour the public domain.  Nonetheless, this concept fundamentally changed bargaining power making the publisher/producer an agent of the author not the plenary owner of a work under the Civil Code.  Even an employee retains moral rights to one’s work.

Under Common Law, however, all rights of the author were and remained subject to assignment to a proprietor.  This is most apparent with the blanket or ‘all rights’ license including, in Canada, the waiver of all moral rights in favour of a proprietor. 

 

Branding

Advertising is intended to persuade consumers – final or intermediary – to buy a particular brand. Sometimes brands are technically similarly but advertising can differentiate them in the minds of consumers, e.g., Tide vs. Cheer, effectively splitting off part of the industry demand curve as its ‘owned’ share.  In the Standard Model of Market Economics only factual product information qualifies as a legitimate expense.  Attempting to ‘persuade’ or influence consumer taste is ‘allocatively inefficient’ betraying the principle of ‘consumer sovereignty’, i.e., human wants, needs and desires are the roots of the economic process.

This mainstream view connects with consumer behaviour research which calls this approach the ‘information processing’ model.  A consumer has a problem, a producer has the solution and the advertiser brings them together. It is a calculatory process.  An alternative consumer behavior school of thought, ‘hedonics’ argues that people buy products to fulfill fantasy, e.g., people do not buy a Rolls Royce for transportation but rather to fulfill a lifestyle self-image (Holbrook & Hirschman 1982; Holbrook 1987).  Thus product placement, i.e., placing a product in a socially desirable context, enhances sales (McCracken 1988).  In this regard the proximity of Broadway and especially off- and off-off-Broadway (the centre of live theatre) and Madison Ave. (the centre of the advertising world) in New York City is no coincidence.  Marketeers search the artistic imagination for the latest ‘cool thing’, ‘style’, ‘wave’, etc.  Such pattern recognition is embodied in the new professional ‘cool hunter’ (Gibson 2003) coolhunter.com.  In fact peer-to-peer brand approval is consumer business success in the age of the Blog.

In terms of IPRs, branding is a glorified form of trademark.  The ‘Brand’ represents, like its trademark, the ‘goodwill’ of costumers who come back and come back again and again.  This defines a ‘going concern’.  Branding, however, like traditional advertising relies on the Arts for it impact.  Again, Art is the technology of the heart.

Over the past four decades, branding has evolved.  In the 1950s, a brand was made by a product's claim to uniqueness.  The idea might be utilitarian: trustworthy, effective, a bargain.  By the 1980s, the idea was the organisation behind the product, e.g., The Body Shop ®.  In the 1990s, a Brand created a culture around itself.  It wasn’t the product but the "right" label – Apple, Nike, et al.

Today a successful Brand persuades people to consume an idea in consuming a product.  A Brand becomes shorthand for identity.  Think sneakers.

It has been argued that mainstream Branding uses big, brash logos turning a consumer into a walking advertisement seeking the lowest common denominator.  The Mainstream and Counterculture, however, has fissioned into a multiverse of mainstreams, counter-, sub- and counter-sub-cultures.  In broadcasting it is called ‘narrowcasting’.  Here the consumer wants novelty and here are emerging so-called ‘minibrands’ or Underground Brands in major capitals around the world – New York, Tokyo, London, Paris, Madrid, Seoul, Shanghai and Hong Kong.  Think microbreweries.

Here brands are creative expression of a culture or lifestyle.  The idea is to generate ‘meaning’ beyond commercial success.  Firms, instead of attaching ideas to products, create products to express an idea.  Nonetheless, to remain a going concern customers must come back again and again and again.

There are also ongoing efforts to establish the ‘Brand State’.  Through organized advertising campaigns, Nation-States strive to create a positive image in the minds of foreigners.  Singapore and the Republic of Ireland are examples that have successfully created an emotional resonance with other peoples (van Ham 2001).  On the one hand, the Brand State reflects the importance of tourism as the largest industry in the world.  A quality brand, however, also lubricates the sale of other goods and services on world markets.  On the other hand, contemporary branding is arguably just an extension of ancient historiography practiced by royal dynasties in medieval and Renaissance Western Europe.  National historiography, the origins of nations, differ between the Nations States that coalesced into modern Europe out of the Germanic occupation of the Western Roman Empire (Chartrand 1992).  In France, it was the Chanson de Roland telling tales of glory about Charlemagne’s champion stopping the Islamic invasion of Western Europe.  In England, it was the Arthurian legend and the Holy Grail used to support the Tudors and the Anglican Church and then the Anglo-Saxon ‘throneworthiness’ myth used by Parliament to overthrow the Divine Right of Kings (MacDougall 1982).  Nonetheless, Brands – corporate and national – are effectively trademarks embodying the goodwill of consumers.

 

Copyright & Patent Abuse

One legal development emerging from the contemporary campaign is ‘copyright misuse’.  This is a relatively new legal concept that emerged in the United States with the case of Lasercomb America v. Reynolds in 1990.  The concept is based on the more developed doctrine of patent misuse.  In the U.S., a patent misuse defense against alleged infringement is an equitable defense that must show that the patentee has impermissibly broadened the physical or temporal scope of the patent resulting in anticompetitive results.  If the defense is successful then the patent will be judged unenforceable while remaining valid.

Copyright misuse occurs when a copyright owner, through a license, for example, stops someone from making or using something that competes with the copyrighted work but does not involve use of the original itself.  An early case was Video Pipeline, Inc. v. Buena Vista Home Entertainment (2003).  While not successful due to legal technicalities:

The defense of copyright misuse was raised … because Disney licensed its movie trailers subject to license terms that prohibit the licensees from using the movie trailers in a way that is derogatory to or critical of the entertainment industry or of Disney.  That is, Disney uses the exclusive rights conferred upon it by the Copyright Act, not only to obtain a return for its creative efforts (which is consistent with the purposes of copyright protection), but also to suppress criticism (which is contrary to the purposes of copyright protection). (Tech Law Journal Daily E-Mail Alert, 2003)

As noted in a 2010 judgement involving Cosco and Omega Watches of Switzerland:

Cases that have found copyright misuse have been limited to situations involving antitrust typing agreements and restrictive licensing agreements.  However, this is not to say that copyright misuse could not exist in other situations.  Indeed, the courts in Lasercomb, Practice Management and A&M Records all deliberately chose a broad rule for copyright misuse so that the rule could be applied to new situations as they arose.  If the contrary were true, then those courts would not have made a tying agreement or a restrictive licensing agreement a necessary element of copyright misuse.  Finally, “[c]opyright misuse is an equitable defense to copyright infringement, the contours of which are still being defined.” MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928, 941 (9th Cir. 2010).

 

Counterfeiting, Piracy & Plagiarism

Counterfeiting and plagiarism involve fraud, i.e., passing off something as something it is not.  Piracy, on the other hand, involves theft and the sale or other distribution of stolen goods.

First consider a traditional case of counterfeiting and piracy.  For millennia, visual works of art have historically attracted the attention of confidence tricksters, forgers, thieves and others involved in criminal activity.  Works resulting from such activities may, in and of themselves, have very high aesthetic but little if any scarcity value.  Most works involved in fraud were created with good intent, for example as a test of a maturing artists’ skill in replicating the work of a recognized Master.  Subsequently, however, these works may be used as instruments to commit fraud by someone else who passes them off as by the Master when they are merely “of the school”, “of the period” or “in the style”.  It is the “passing off” which is fraudulent, not the works themselves.

With respect to piracy, Thomas Hoving, former curator of the Metropolitan Museum of Art in 1992 at the World Economic Forum estimated, while on contract with the Turkish government, that $250 to $300 million a year is plundered from Turkey because most empires of the ancient and medieval worlds were, at one time or another, resident in Turkey. He outlined the organized crime connections in what has become the most lucrative of all international crimes.  According to Hoving, ounce for ounce, art is more valuable than heroin; it yields this higher rate of return at less risk and faces significantly less punitive criminal punishments.  Germany and Switzerland were identified as the main ‘laundries’ for stolen art and plundered antiquities stored in bank vaults, sometimes collateral for loans from the same bank.

Second, consider contemporary examples of counterfeiting and piracy.  With respect to counterfeiting, trademarks and industrial designs are the subject of organized criminal activity.  To most of us, counterfeiting means forging money but counterfeiters turn out a wide range of goods including designer fashion goods, software, CDs and DVDs, medicines, mobile phones, food and drink, car and aviation parts.

Once upon a time counterfeits were cheap and shoddy imitations, today their packaging and contents, especially of digital products, often make them virtually indistinguishable from the genuine article.  They use the same industrial design and bear the same trademark as the original and are then fraudulently passed off as the original.

Contemporary piracy, on the other hand, generally involves literary, musical and artistic works as well as software.  An original is obtained by one means or another and copies then made available for sale or other distribution with no pretense of being the original.  Illegal downloading sites, for example, make no pretense that it is selling the original.

Counterfeiting and piracy come together in ‘theft’ of an industrial design, copyrighted work, patent or trademark.  They separate when such designs or trademarks are used to pass off a counterfeit as the real thing – fraud.  The financial cost to producers and the health and safety costs to consumers of counterfeit goods is in the tens if not hundreds of billions of dollars a year.  For the most recent U.S. estimates please see:  The Report of the Commission on the Theft of American Intellectual Property, May 2013.

 

Cross Market Penetration, Cultural Sovereignty & American Clones

According to Wikipedia, largest global media conglomerates are Viacom, CBS Corporation, Time Warner, News Corporation, Bertelsmann AG, Sony, Comcast, Vivendi, Televisa, The Walt Disney Company, Hearst Corporation, Organizações Globo and Lagardère Group and, as of 2012, Walt Disney, News Corporation, Time Warner and Viacom were in order the largest American conglomerates. 

Unfortunately the last study of global media concentration was conducted in 1990 by the National Telecommunications and Information Administration: Comprehensive Study on the Globalization of Mass Media Firms.  At that time, 5 media conglomerates contributed nearly 20% of the world’s output of news and entertainment programming.  These firms are conglomerates that are vertically and horizontally integrated producing film, music, books, newspapers and television programming as well as their more recent internet activities.  It should be noted that at the time only one of the five top firms was American-owned – Time Warner.  The others were Bertelsmann (German), News Corporation (Australian), Hachette (French) and Sony (Japanese).  Nonetheless the primary market for all five was the United States.

There are two reasons for American cultural dominance beyond imperialism – audience size and the Common Law tradition of copyright.  With respect to audience, the United States is the third largest country by population after China and India.  More importantly it is significantly richer per capita than both.  While India through Bollywood has made significant gains in global media recognition China has yet to gain much recognition partially because its market economy remains directed by a Leninist regime – laissez faire by Party dictate.  Historical Chinese events while of great cultural value, simply do not resonate commercially in the global marketplace like American films such as The Terminator and The Predator.  The myths are simpler as is the dialogue.  Action speak, not words.  They translate easily.

With respect to copyright, the ability to ignore the moral rights of artists and authors enabled Hollywood to rise while Paris and Berlin faded in the early age of film.  Collective works such as motion pictures, stage plays and sound recordings in the Anglosphere belong to those responsible for organizing ‘production’, a.k.a., the producer, proprietor or publisher, usually a legal person or body corporate, a.k.a., a limited liability corporation.  This contrasts with the Civil Code tradition in which rights to such works reside with the ‘artistic’ director as author with associated moral rights.  As one Common Law lawyer suggested moral rights make negotiations very difficult.  The ability to shape a work to enhance its commercial rather than aesthetic value is thus limited in Civil Code countries but relatively unlimited in the Common Law Anglosphere.  

The response has been cross market penetration whereby foreign firms set up operations in the United States to benefit commercially from both the larger base market and Common Law copyright.  At the same time, as has been seen, domestic markets in many countries are subject to film and recording quotas to limit American market penetration and foster domestic arts industries including bilateral and multilateral film co-production agreements.  In many cases the result has been what I call ‘American cultural clones’, i.e., foreign made literary and artistic works designed to look and feel American.

 

Digital Conversion & Locks

Old wine in new bottles is an old story.  When the oral era ended the manuscript era began with a backlog of tall tales and stories of a mnemonic age.  Manuscript supplanted the oral because it more accurately recounted and preserved a story not subject to the vagaries of human memory, generation after generation. 

When print emerged there was a backlog of ancient and medieval manuscripts by famous long-dead authors.  Conversion of manuscript to print initially pre-occupied the industry to the detriment of contemporary authors.  Print supplanted manuscript because each copy was mechanically identical, the message always the same, not subject to the vagaries of dictation by which manuscripts were ‘mass’ produced or the idiosyncrasies of the solitary transcriber. The printing press of 1440 was the first engine of mass production and an enabling technology for all other industries.

Photography and audio-video recording then fixed sight and sound just as the manuscript had fixed human speech. Broadcasting then made ‘recorded’ and ‘live’ sights and sounds available to a mass listening and viewing audience.  Radio thus began with a backlog of phonograms, plays and books while television began with a backlog of black & white movies of the 1930s and 40s.  Cable increased the number of channels permitting narrowcasting to niche markets.  Audio-video recording and broadcasting, however, involved sight and sound not print, not text. 

Earlier experiments with interactive text in the 1970s and 80s such as Telidon in Canada and the electronic phone book in France were, in effect, washed away by the 1990s digital tsunami called the Internet.  Unlike print and audio-video recording digital technology is able to convert all human communications – text, sight and sound - into a common format permitting easy and accurate duplication as well as near instantaneous global transmission.  

As in previous communications revolutions there is a backlog of content awaiting digitization.  Also contemporary authors, artists and creators in general must contend with competition not just from living peers but with the famous dead.  This is a primary differences between the Arts and Sciences: New knowledge does not necessarily displace the old.

The digital is, however, unlike previous revolutions.  First, it is not a one-to-one conversion but rather all-into-one.  All analogue content – text, sight, sound – is being converted into digital format.  It should be noted that when a work is converted from say film into DVD a new term of copyright begins for the work fixed in the new format.

The backlog includes not just works under copyright but also those in the public domain and the patrimony of Nation-States.  For works in the public domain and national patrimony the question becomes: Who will digitize and what will be the terms of access?  As noted above the European Union is taking an active role on behalf of its member states to ensure the public domain and national patrimony remain ‘free’.  In the Anglosphere, however, the commercial sector is the most active with access being financial in nature. 

The historical connection between Carpenters, Joiners, Smiths & Letter Founders of the 1662 Licensing Act  and the Digital Millennium Copyright Act of the United States was first noted by Patterson (2003/3).  I have since extended it to include the Canadian Copyright Modernization Act, Bill C-32, June 2010 (Chartrand 2010).  Carpenters, joiners, et al were the craftsmen who could build presses – legal or illegal.  Hackers and console cowboys are the craftsmen who can pick the digital locks of the DMCA and CMA.  The wording of this historic Act bears an uncanny resemblance to both post-Common Law statutes:

Licensing Act  1662

… no joyner, carpenter, or other person shall make any printing press, no smith shall forge any iron-work for a printing press, no founder shall craft any letters which may be used for printing for any person or persons whatsoever; [nor import or buy materials] belonging unto printing, unless he or they respectively shall first acquaint the… master and wardens of the… company of stationers... for whom the same presses, iron work or letters are to be made, forged, cast, brought or imported…

13 & 14 Car. II, c. 33, 1662.

Digital Millennium Copyright Act

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component or part thereof, that is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title.

17 U.S.C. § 1201(a)(2)(A), 2000.

Copyright Modernization Act

No person shall…

(c) manufacture, import, distribute, offer for sale or rental or provide - including by selling or renting - any technology, device or component if

(i) the technology, device or component is designed or produced primarily for the purposes of circumventing a technological protection measure…

Bill C-32, s.47, June 2010.

 

Easement Theory of IPRs

Patterson believes that ongoing legal tension between copyright, and I would argue IPRs in general, as a proprietary monopoly and as a statutory grant has seriously compromised attainment of the purpose of copyright – the encouragement of learning.  To escape the resulting confusion Patterson proposes an alternative theory: copyright as easement of conflicting property rights.  In eight succinct paragraphs Patterson lays out his alternative unified or ‘easement’ theory of American copyright:

A legal theory provides a framework for analysis.  To be useful, it must be consistent, coherent, and congruent: consistent in its parts, coherent as a whole, and congruent with the public interest.  We need not revisit the point that, by these measures, copyright theory is lamentably lacking by reason of its dual nature, which prevents it from doing what copyright theory should: enable a decisionmaker to allocate rights and duties among creators, entrepreneurs, and users in a manner that serves the public interest in the creation, transmission, and use of knowledge.

The unusual aspect of this dictum is the inclusion of duties in the copyright equation.  The reason that duties are important in this context is that copyright law is based on a tripartite relationship of author, publisher, and user.  While a two-sided relationship may involve only rights of one party and duties of the other, a three-sided relationship changes the equation so that all the parties have duties to each other: the author and the publisher have reciprocal duties; both have duties to respect the rights of the user; and the user has a duty to respect the rights of the author and the publisher.

This is not the usual analysis, both because the issue typically arises in litigation, which is bilateral in nature, and because publishers are assignees of authors.  The assignor-assignee relationship gives the impression that copyright law entails only a bilateral relationship between author and user, which enables the publisher to reap the benefit of the equity due to the author.

The tripartite relationship, however, makes apparent this usurpation of equity, and that in turn makes apparent the defects of treating copyright as either the statutory grant of a monopoly or a natural law property of the creator.  As to the statutory grant theory, courts have difficulty maintaining the limits of the grant, as the long-lived (and unconstitutional) sweat-of-the-brow doctrine proves. As to natural law property, courts have difficulty in recognizing the rights of users, both because users seldom have advocates and because the most fundamental characteristic of property - the right to exclude - is enhanced when the property is “natural,” that is, acquired by creation rather than transfer.

While copyright is a form of property, it is in no sense natural; indeed, it is more of a quasi-property right than a plenary one.  The question, then, is whether there is a property concept that is more appropriate for copyright as a limited property right than are fee simple rules developed for real property.  Such a concept would be a quasi-property right because copyright entails limited rights recognized for a limited time among creators, entrepreneurs, and users - complex relationships that require a concept of adaptability.

The proprietary concept that has this characteristic is the easement, a concept of inclusion, not exclusion - and it is this variation on the property scheme that leads to the conclusion that copyright is best treated as quasi-property in the form of an easement.  There is, in fact, a good case to be made that the easement concept is not only consistent with, but may even be required by, the Copyright Clause of the Constitution.

One advantage of the easement theory is that it makes irrelevant the origin of copyright as the source of theory - creation by an author or grant by a legislature - which too often produces a tail-wagging-the-dog situation.  This is because the legislative grant can be said to be based on the equity that is the basis of natural law, which serves as a rationale for enhancing copyright.  The error is in assuming that the use of natural law as the motivation justifies treating the final product (despite its statutory limitations) as a natural law concept.

The advantage of easement theory is that it combines the natural law and statutory grant theories so that neither is dominant.  Thus, copyright as an easement can be used to protect the author's rights, but also to limit those rights in order to protect the rights of others.  The essence of the easement theory, then, is this: it requires that rights in copyright law be defined for the purpose of regulation in terms of the public interest rather than in the private interest of the author, the publisher, or the user.  (Patterson & Birch 2009, 383-385)

 

Enclosure of the Public Domain

Dislocation of the rural population in the early Tudor period resulted from the plague but especially from the enclosure movement.  Land owners recognized wool as more valuable than turnips for peasants tilling traditional common lands and enclosed it to keep sheep.  The dislocation was then amplified by disestablishment of the Roman Catholic Church in England and disbursement of its land and property to the supporters of Henry VIII.  As recorded in this work the result was successive statutes and proclamations against vagabonds, rogues and sturdy beggars including bards, minstrels and common players (actors).

Some observers suggest another enclosure movement is underway today, this time of the public domain (Boyle, 2003; Patterson 2002/3).  Stretching the point there is also a movement to disestablish or delegitimize Government and disburse or privatize its property to free marketeers. 

Among the crown jewels of the Nation-State is the public domain of knowledge – all that’s free to know.  It is connected to freedom of information, speech (Patterson 2002/3, 41) and national patrimony.  In fact the Statute of Queen Anne justified modern copyright as a means of encouraging learning by rewarding authors but only for a limited time after which their work enters the public domain.

The European Union is actively converting national patrimony into digital media to keep it in the public domain.  In the Anglosphere, however, much is being privatized including court documents and even statutes.  While technically they remain in the public domain when digital value is added, e.g., pagination, such works again fall under copyright.  They become available on the world-wide web only for a price but as noted by Patterson not all people have the coins to make the turnstiles turn. 

Patterson was one of the Masters of American copyright along with Benjamin Kaplan, Mel Nimmer, Alan Latman and a few others.  Unlike other Masters, however, Patterson takes an explicitly political economic posture.  He sees copyright as juxtaposing free enterprise (economics) and free speech (politics) defined as access to knowledge or ‘the right to hear’(Patterson & Birch 2009, 301).  He stresses that the purpose of copyright is to foster learning through access to knowledge.  This is so specified in the title of the first modern copyright act, the 1710 Statute of Queen Anne, and the title of the first U.S. copyright act of 1790. 

To emphasis ‘the right to hear’ Patterson quotes President George Washington in a speech delivered just before enactment of the first U.S. copyright act.  In it the President stressed that access to knowledge ensures accountability to the people “by teaching the people themselves to know and to value their own rights; to discern and provide against invasions of them.”  Such invasions included not just those by government but also by the private sector where profit is king.  He knew full well how copyright was used in England for nearly three centuries under Anglican, Catholic and Cromwell’s rule to control political and religious debate, a.k.a., the public domain.  The President knew full well of the highly profitable and perpetual copyright monopoly enjoyed by the Stationer’s Company of London under all these regimes meaning there was no public domain, i.e., no free speech. 

Like the Statute of Queen Anne the original American copyright act was intended to foster learning by growing the public domain and prevent its monopolization, not maximize private profit.  Between 1710 and 1976 Patterson argues copyright roughly attained its purpose.  With the 1976 amendment of the American Copyright Act, however, things changed.  Patterson fears that perpetual copyright is returning threatening freedom of speech yet again.

 

 

Legislative Collusion

IPR case law, especially in the United States, often leads to legislative initiatives sometimes sponsored by and sometimes drafted by industry itself:  

The most compelling advantage of encouraging copyright industries to work out the details of the copyright law among themselves, before passing the finished product on to a compliant Congress for enactment, has been that it produced copyright laws that the relevant players could live with, because they wrote them.  If we intend the law to apply to individual end users’ everyday interaction with copyrighted material, however, we will need to take a different approach... There are, [however], few signs that the entities proposing statutory revision have taken the public’s interests very seriously.  Instead, they seem determined to see their proposals enacted before they can be the subject of serious public debate (Litman 1996).

In the U.S. this tendency found expression in the so-called Mickey Mouse Copyright Act, or formally the 1998 Copyright Term Extension Act.  It is so-called because the Disney Corp. lobbied to keep the early Mickey Mouse out of the public domain where any and all could play with him.  More recently in 2005 the relationship surfaced in California where:

… California's attorney general, Bill Lockyer, floated a letter calling peer-to-peer file-sharing software - long the bane of the entertainment industry's interests - a dangerous product.  But a peek at the document's [digital] properties revealed that someone dubbed stevensonv had a hand in its creation.

Vans Stevenson, a senior vice president with the Motion Picture Association of America, said later that he had offered input on the document but had not written it.  (Zeller 2005)

To appreciate the scale of legislative initiatives following U.S. signature of the 1996 WCT/WPPT, many resulting from industrial lobbying, consider Appendix A.  This lists 40 copyright related bills proposed and 7 public laws passed by the 105th and 106th Congress between 1997 and 1999. 

In Canada a similar relationship between industry and the legislature has been suggested and reflected in Bill 32 (2010) and its predecessors – Bill 61 (2008) and Bill 60 (2005).  In contrast to the U.S., however, between 1997 and 1999 in Canada only eight copyright related bills were proposed of which three were enacted.  Four were private members bills and one government bill in First Reading; none received Royal Assent. Three statutes, however, did receive Royal Assent including two housekeeping amendments and S.C 1997, c. 24 An Act to Amend the Copyright Act, the first major restructuring of the Act in 76 years.  Transmission rights were arguably the focus. None of the eight proposed and enacted statutes dealt with ratification of WIPO’s 1996 WCT/WPPT.

 

Mutating Booksellers

If ISPs are the modern equivalent of printing members of the Stationers’ Co. then media conglomerates – global and national – are the booksellers.  It is they who hold copyright on the majority of content – audio-video recording, broadcast, Internet, print, et al.  They are principally concerned with piracy of their copyrighted properties especially on the increasingly ubiquitous and digitally converging Internet. 

Legislation such as the Digital Millennium Copyright Act makes it illegal to break digital locks on copyrighted content.  It also grants copyright owners powers of digital search and seizure reminiscent of the Stationers’ Company.  In turn this has led to a new legal calling – the copyright troll supported by forensic software companies.  These are arguably analogous to the informers employed by the Surveyor of the Press in 1660 and their predecessors.  Fines were usually split with half going to the informer and half to the Crown.

As in the Stationers’ Company the interests of printers/ISPs and booksellers/ media conglomerates do not always conform.  Hence ISPs in a number of countries are legally resisting conducting digital search and seizure for copyright proprietors.

The relationship between the Crown or State and media conglomerates is further complicated by the unique contribution the media can grant a campaigning politician – good or bad press.  Licensed by the State the media industry nonetheless thereby has a unique political economic relation to it, i.e., political power translates into economic profit and economic profit translates into political power. 

This political economic relationship extends to legislation favourable to the profitability of the industry.  As noted by Litman, among others:

The most compelling advantage of encouraging copyright industries to work out the details of the copyright law among themselves, before passing the finished product on to a compliant Congress for enactment, has been that it produced copyright laws that the relevant players could live with, because they wrote them.  (Litman 1996).

A coincidence of interest between the State and copyright proprietors may also develop.  For example, digital search of internet records by agents of copyright holders may uncover obscene or terrorist-related content.  If this information is disclosed to the authorities then copyright holders will act as a policing agent for the State just like the Stationer’s Company.

 

Natural rights is simple nonsense; natural and impresciptable rights, nonsense upon stilts!

For our purposes, however, Bentham’s concept of and impact on Anglosphere Law is at issue.  In his anonymous 1776 Fragments on Government Bentham criticized Blackstone’s concept of Law rejecting Natural Law as ‘an abuse of language’.  This was, of course, the same year that Adam Smith published the Wealth of Nations and the American Revolution began.  Then in 1791 in his Anarchical Fallacies, a commentary on the French Revolution’s Declaration of the Rights of Man, he noted “Natural rights is simple nonsense; natural and imprescriptible rights, nonsense upon stilts…”  And in the Constitutional Code of 1830 he rejected the Bills of Rights as useful only as a check on non-democratic governments.  He rejected it as limiting “legislative omnicompetence… in contradiction to the greatest happiness principle.”

Benthamism had a somewhat different impact in the U.K. and the U.S.  In both, however, it was extremely influential in juristic studies downgrading Natural Law.  And in both Bentham’s demand for an efficient and highly centralized public administration laid the foundation for the modern service state.

 In the U.K., however, Benthamism also provided a distinct English road to democracy.  Given the Napoleonic Wars no doctrine tainted with Jacobinism could win public acceptance.  The path to reform could not include discussion of a social contract, natural rights, rights of man or liberty, fraternity, and equality.  Benthamism satisfied this requirement. 

In the U.S., by contrast, the Declaration of Independence and the subsequent Constitution were both rooted in Natural Law – life, liberty and the pursuit of happiness.  Perversely, at the constitutional level Benthamism was used in America to justify slavery, the fate of which was, of course, determined by the Civil War.  

In both, however, Bentham’s rejection of Natural Law and Natural Rights tainted and continues to taint Anglosphere Common Law.  This makes recognition and implementation of imprescriptible moral rights for artists/authors/creators a much rougher road to hoe.

 

Official Censorship & Privacy

Harvey (2005) argues that it took more than 250 years from the introduction of censorship in 1401 and almost 200 years from introduction of the printing press in 1476 for the Crown to introduce licensing laws in 1662 b that recognized the true nature of print.  Practices developed to censor the old manuscript technology continued in progressively modified form but remain focused on content not the physical media itself – the printing press.  Only gradually did the importance of carpenters, joiners, smiths & letter founders become apparent to the censors.

The constant, however, across three centuries and two communication media was the Stationers’ Company of London.  From the Oxford Constitutions of 1407, Catholic Mary I’s Charter of 1557, Anglican Elizabeth I’s confirmation of that Charter in 1588, Puritan Cromwell’s 1653 assent to search and seizure by the Company, Charles II’s amplification of the Charter in 1684 and William and Mary’s confirmation in 1690, the Stationers’ Company worked hand-in-glove with the Crown to enforce licensing, a.k.a., censorship.  Courts changed from prerogative to Common Law but policing including the power of search and seizure remained firmly in the hands of the Company as well as its own guild court to try members of the Company offending the licensing laws (See for example 1693 b).

Harvey (2005) and Patterson (2003/3), among others, argue, that the licensing system failed.  Illegal, legal and foreign presses pumped out what the Crown considered licentious, seditious and treasonous libels throughout the period.

With expiration of the Licensing Act in 1695 and the Statute of Queen Anne in 1709 the Company’s role in censorship came to an end.  Nonetheless the problem of libels and licentious works continued.  The response was two-fold. 

First was the Stamp Act of 1711.  Paper is a tied good in printing and paper now required an official stamp before printing together with a tax paid to the Crown.  This permitted a form of forensic investigation.  Works on unstamped paper immediately attracted the attention of the authorities because of tax evasion.  Works on stamped paper, on the other hand, allowed relatively easy identification of the printer if not the actual but often anonymous or pseudonymous author of libellous and seditious works.  Second, such works were denied copyright registration and protection by provisions like that contained in the Revised Statutes of Canada of 1906:

7. Exception to immoral works

No literary, scientific or artistic work which is immoral, licentious, irreligious, or treasonable or seditious, shall be the legitimate subject of such registration or copyright.

R.S. 1906, c.70, s. 7

Today in the Anglosphere censorial concerns focus on ‘kiddy porn’ and ‘how-to’ terrorist works.  As with the Licensing Act of 1662 b it is the technology, not the bookseller and content, which is the focus.  In this era printers take the guise of Internet Service Providers or ISPs.  And the forensic instrument of choice, the new stamp so to speak, is the ISP address associated with every web communication.

For example, the proposed Great Fire Wall of Australia is intended to filter from public view foreign porn and terrorists web sites.  India, the United Arab Emirates and other Nation-States are pressing Blackberry to open its servers to search for and seize seditious, treasonous and terrorist encrypted communications. 

Reports of Interpol and related police successes against global child porn on the Web are now almost daily news.  And for decades digital filtering and customs barriers have permitted Islamic States to censor inappropriate cultural images especially of women.  The national right to censor inappropriate foreign content is recognized in a number of multilateral treaties including explicit exceptions from the free trade requirements of the General Agreement on Tariffs and Trade (GATT).  On these subjects, at least, ISPs and Government work hand in glove like the Stationers’ Co. and the Crown.  The pragmatic reason is licensing of ISPs and telecommunications in general is a Crown or State prerogative: Comply with the Government’s request or lose your license and possibly go to jail.

 

Patent Thickets & Wars

In the case of patents, some corporations spend enormous sums of money on research projects that fail for one reason or another.  Nonetheless, everything that can be patented is patented.  These patents may be retained or sold to a patent holding company of one form or another – a patent troll of which more below.  If a rival or competitor emerges who subsequently succeeds in making the technology work then that competitor may be charged with patent infringement.  Whether the charge is valid or not, the rival faces enormous legal costs defending itself or settling out of court.  Both ways, competition is restrained and innovation inhibited.

Similarly, on a battlefield a thicket is a dense concentration of bush that impedes an opponent’s advance.  A patent thicket is an overlapping set of patents that require innovators to license multiple patents from multiple sources.  It is similar to ‘patenting around’ a primary patent. 

When a large company holds many patents it makes it difficult to innovate without infringing numerous patents.  Acquiring patents is slow and expensive so established firms will always have many more patents than start-ups.  Microsoft, for example, holds more than 20,000 patents.  Assuming each cost $20,000 in legal work then they represent a cost of $400,000,000 to Microsoft.

Some argue that patent thickets owned by established companies act as a tax transferring wealth from today's innovators to innovators of the past.  The problem became acute with the granting of software patents in the 1980s.  Much criticism has been lodged that such patents are often weak and too wide in scope due to poor oversight by the Patent Office.  Such critics argue that a new legal mechanism is needed to invalidate such low-quality patents. 

Together with primary patents, patent thickets can be used for defensive and offensive purposes.  If accused of infringement by another firm, a patent thicket may be presented through which the court must plow to determine if any are relevant to the case at hand.  Alternatively a start-up firm may be accused and presented with a similar thicket of claims which make it too expensive and the start-up is stopped or often absorbed by the larger firm.  The recent auction of Nortel’s patent holdings is example of firms building up thickets of patents with which to defend themselves or attack competing firms.  I attach a recent article on the subject entitled “Large patent holders hate this reform proposal. That’s a good sign” by Timothy B. Lee, September 24, 2013, Washington Post.

 

Perpetual Copyright

The 1709 Statute of Queen Anne was intended, among other things, to end perpetual Stationers’ copyright – the right to copy.  The term was limited to 14 years with a possible extension of another 14 if the author was still alive.  This time limitation was intended to encourage learning by growing the public domain of knowledge as quickly as possible. 

Thomas Jefferson, some 80 years later, proposed a slightly longer term based on the principle “the earth belongs in usufruct to the living” computing it at 19 years using actuarial tables (Jefferson, Letter to James Madison, September 6, 1789).

Since that time, however, the duration of copyright in the Anglosphere has been progressively extended to about 100 years. 

…This term of protection is the equivalent of three generations, or perhaps now four.  While a copyright for multiple successive generations is not perpetual, it feels very much like a way-station on the road to infinity and thus presents a problem in view of the constitutional requirement that copyright be granted only for limited Times. (Patterson & Birch 2009, 273)

This extension has resulted partially from the ‘alien’ influence of European artists and authors who inspired the Berne Convention of 1886.  Such artists and authors, however, did not and do not create under Common Law copyright but rather under Civil Code ‘rights of the author’.  These include impresciptable moral rights of the Natural Person that no Legal Person can enjoy.  Moral rights include employees.  Such rights cannot be assigned or waived in favour of a proprietor.  Anglosphere creators do not enjoy such rights so the benefit of term extension falls inequitably to proprietors (Paterson & Birch 2009).

Near perpetual copyright is ironic in this digital age wherein information processing or computing power doubles every 18 months according to Moore’s Law and computer programs have a functional shelf life of perhaps 5 years but remain protected by copyright for 100.

 

Printing Patents and Orphaned Works

The printing patent or license was a privilege granted directly by the monarch to an individual - sometimes but not usually the author of a work - or to an organization including the Stationers’ Company.  Its term could be fixed or granted in perpetuity therefore becoming inheritable property.  It granted ‘the right to a copy’ that being either a specific title or an entire class of works such as the statutes, almanacs, etc. 

Recently in the United States digital conversion of a whole class of works called ‘orphaned works’ came within the decision of a single lower court judge to being, in effect, licensed to one company – Google.  Orphaned works are those still under copyright but whose owner and/or author cannot be located.  The licensing of this entire class of works to a single company was opposed by a number of parties including the European Union.  While finally denied by the judge in this specific case, it is not clear how licensing of entire classes of works will legally develop in the United States and elsewhere.  It is clear, however, that this pre-Common Law concept retains some currency in the post-Common Law era.

 

Software

The 1886 Berne Convention established a clear distinction between artistic & literary works and ‘industrial property’ such as patents, registered industrial designs and trademarks.  These were the subject of the first multilateral intellectual property agreement, the 1883 Paris Convention for Protection of Industrial Property

The distinction between ‘machine readable’ and ‘human readable’ code, a.k.a., software, fuelled a 1970s Canadian debate about software copyright (Keyes & Brunet 1977).  Human-readable code conveys meaning from one human mind to another.  Such are the works traditionally protected by copyright.  The paintbrush, chisel or pen used to make the work does not receive protection.  

A computer program, while codified and fixed in a communications medium, is intended to be decoded by a machine not a human mind.  It is intended to manipulate the flow of electrons in a circuit.  In turn, such circuits may activate other machines, e.g., industrial robots in steel mills, auto plants and fabricating industries.  It fixes knowledge as function, not meaning.  It is executable code.  It is the paintbrush not the painting. 

A distinction can, however, be made between ‘executable’ and ‘base’ code.  Executable software code is machine language, i.e., it is read by a machine.  Base code is what the human programmer uses to ‘write’ the program.  In this sense it is in human-readable form.  Nonetheless the intent is not for the work to be read by another human being, excepting ‘proof-reading’, but rather to become functional instructions for a machine, i.e., it conveys function not meaning.  Nonetheless, what is the legitimate subject of copyright is, for example, what is displayed on the screen and ‘read’ by a Natural Person, not the software itself.

Similarly, genomic software is being codified and fixed into communications media intended to be decoded by machines and molecules, not a human mind.  It is intended to manipulate the chemical bonds of atoms and molecules to analyze or synthesize biological compounds and living organisms with intended or designed characteristics.  It likely qualifies for copyright protection under the existing legal regime.

Extension of Canadian copyright to computer software, in 1988, meant that software would be treated as an artistic or literary work.  Extension of patent protection to software, however, makes it the only work protected by both.  Statutory extension was, however, also accompanied by inclusion of unpublished works.  Previously the price of copyright was publication; afterwards protection became available without publication.  As will be seen, this has implications for software including the competitive ability to keep critical code from competitors and application creators as a trade secret while enjoying copyright protection.  Accordingly, software crosses the legal divides separating copyright, patent and trade secret.

The impact of this unholy trinity of protection is demonstrated by the anti-trust case against Microsoft.  In one generation software copyright has become the legal foundation for a massive global industry. Microsoft, for example, is now one of the largest and most profitable corporations in the world.  Its foundation is copyright in the Windows operating program and Office suite of business applications. 

Using well documented ‘sharp practices’ and playing off the ineptitude of competitors Microsoft now dominates the market.  It has, de facto, established its products as industrial standards.  As the standard all other products must be compatible if they are to succeed in the marketplace.  To Microsoft’s credit this standardization has and continues to facilitate the growth and spread of computer-mediated learning as well as the underlying techno-economic regime supporting it, e.g., Wintel CPU’s, sound and video cards, WWW, et al.  In short, Microsoft exercises market power.

In this regard, the first ‘W’ Bush White House, in 2000, faced an anti-trust case against Microsoft for alleged abuse of its market position brought by the previous Clinton Administration.  The new Administration decided on regulatory and procedural penalties.  The option of breaking up one of America’s largest and most profitable exporters was dropped.

In addition, Windows and Office are used extensively by foreign governments and corporations around the world.  This provides the U.S. with a potentially powerful geopolitical weapon.  Compliance with changing U.S. security requirements could allow Windows and Office to act as Trojan Horses – gifts bearing Greeks - in the accelerating information wars of the 21st century.  At the extreme, ‘enemy’ computers could be remotely shut down using hidden ‘trap doors’ with devastating economic and military effect.

In the European Union, however, more serious penalties were applied to Microsoft and more threatened.  In addition to massive fines, Microsoft is required to open up its ‘’interface’ code to competitors to allow their products to work smoothly with Windows and thereby compete in the marketplace.  This ’interface’ was unpublished and treated as a trade secret by Microsoft as remains the case for the ‘kernel’ of its operating system. 

Arguably where market dominance has been attained by a software firm, the EU now requires publication of interface codes.  They must be dedicated to the public, i.e., be published.  The inner workings or kernel of such software, however, remain a trade secret.  Nonetheless, EU case law may soon cause a tidal wave of change in the global software industry.  The irony is that, among others, it was American corporate competitors who called on the EU to act against Microsoft.  Its decision may soon come back to haunt some of them.

As demonstrated, software is ‘soft-tooled’ knowledge fixing function not meaning into matter/energy.  In this sense it qualifies for patent protection.  Software also fixes instructions as code into a communications medium intended to be decoded by a machine not a human mind.  Nonetheless, at present, it qualifies for copyright.  And, because unpublished works also claim protection some code qualify as trade secrets.  The difference in term or duration of protection is striking.  In Canada the term is 20 years for a patent and 50 for a corporate copyright, i.e., one claimed by a Legal rather than a Natural Person.  In the U.S. it is 20 years versus 70.  A trade secret, on the other hand, is potentially perpetual never entering the public domain. 

Taken together this analysis suggests that software – computer (dryware) and/or genomic (wetware) – is a sui generis work – a one-of-a-kind work - deserving its own intellectual property classification rather than receiving a blend of copyright, patent and trade secret protection. 

 

Trolls

There are both copyright and patent trolls.  In the case of patents, some corporations spend enormous sums of money on research projects that fail for one reason or another.  Nonetheless, everything that can be patented is patented.  These patents may be retained and built into thickets or sold to a patent holding company or ‘non-operating entity’ of one form or another – a patent troll.  If a rival or competitor emerges who subsequently succeeds in making the technology work then that competitor may be charged with patent infringement.  Whether the charge is valid or not, the rival faces enormous legal costs defending itself or settling out of court.  Both ways, competition is restrained and innovation inhibited.  The effect has been noticeable with most U.S. patent infringement cases being lodged by trolls.  Recently some major tech firms have used their patent thickets to stop start-up firms in their tracks.   Some start-ups, in turn, are beginning to sell equity in their patents to a troll who has sufficient resources and legal expertise to defend their rights.  The problem of patent trolls is now being address by the U.S. Congress.

Copyright trolls are essentially law firms that contract content producing firms such as newspapers, film and sound recording producers to patrol the internet for cases of infringement.  Whether such infringement is done for commercial or other reasons letters are sent out accusing a party or a firm of copyright infringement.  They are asked to pay a penalty or go to court.  U.S. courts have minimized the impact of copyright trolls for two reasons.  First, in most cases a troll does not in fact hold the copyright and only the copyright holder has standing before the courts.  Second, the surveillance technology used to identify an ISP address is subject to error, e.g., a Wifi channel can be hacked or otherwise accessed without the knowledge of an alleged infringer.  It is likely, however, that both problems will be resolved in future and copyright trolls may gain the same prominence as patent trolls.

 

Conclusion:

Implications for the Knowledge-Based Economies

The ever increasing importance of intellectual property rights is best illustrated by the recent adjustment by the Bureau of Economic Analysis within the Department of Commerce in Washington to adjust American calculation of Gross Domestic Product – the sum total of domestically produced final goods and services.  Specifically, research & development (patents) as well as creative works (copyright) are to be henceforth treated as investment goods as well as final goods and services.  This includes royalties from movies, TV, books and music, as well as money spent on research and development.  The U.S. is the first country to account for so-called ‘intangible assets’.  This is the biggest change since computer software was introduced into GDP calculations in 1999.  U.S. GDP just went up 3% or $ 468 billion.  Please see:

 http://www.whitehouse.gov/blog/2013/07/31/comprehensive-gdp-revision-and-advance-estimate-second-quarter-2013  and

http://www.ibtimes.com/us-economy-will-grow-3-percent-july-new-way-looking-gdp-goes-effect-1206813

Other than growth in GDP, intellectual property rights have significant implications for income distribution in the emerging knowledge-based economy.  One economic implication of the Copyright Act concerns employment in a knowledge-based economy.  Under the existing Act, copyright and moral rights belong to the employer, not the employee, similarly under Crown copyright.  Under the Civil Code, an employee retains moral rights over his or her work and may even enjoy some ‘neighbouring rights’.  Such Civil Code rights include droit d’suite (% rights of following sales of works of art), exhibition rights, public lending rights and other revenue streams that go directly to the Natural Person.  They are not available to Legal Persons.

While the traditional manufacturing economy boasted life-long employment, the knowledge-based economy is increasingly characterized by contract work and self-employment.  The pervasive use in the Anglosphere of blanket or all rights licences extinguishes all future claims of the creator.  If such trends continue, it can be expected that income distribution for contract and self-employed knowledge workers will increasing look like that of self-employed artists and entertainers who are second only to pensioners as an income class recognized by Revenue Canada (Chartrand 1990).  Furthermore, their income distribution is not a pyramid with a broad base, wide middle and a peak.  Rather it is an obelisk with a huge base of poor ‘starving artists’, a thin column of middle class survivors and a tiny peak earning enormous sums, e.g., Pavoratti.  This could be the future of the knowledge-based economy - no middle class.

Another implication of the current status of intellectual property rights in the Anglosphere concerns the University.  Elsewhere I have written of The Third Age of The University: From Interpretation to Generation to Commercialization of Knowledge, Journal of the World Universities Forum, Vol. 1, 2008.  The first age from about 1100 CE to 1813 the role of the University was essentially interpretation of old knowledge and training a ruling class.  The second age began in Germany with Wilhelm von Humboldt founding the first ‘research’ University at Berlin in 1809. Its mandate was generation of new knowledge. 

The Third Age of the commercialization of knowledge formally began with the OECD’s 1997 National Innovation Systems.  Unmentioned in the article, however, was its informal beginning in 1980 with The Bayh–Dole Act or Patent and Trademark Law Amendments Act (Pub. L. 96-517, December 12, 1980).  The Act permits a U.S. university, small business, or non-profit institution to patent an invention even if its development was federally funded.  In the article I treat a number factors contributing to the paradigm shift.  For now I offer the article’s Conclusions:

In conclusion: How will the Third Age of the University unfold?   What is the probable vs. preferred future? 

The probable future is an extension of current trends, i.e., path dependency and precedent.  With respect to teaching, ‘vocationalization’ continues.  There are no more ‘Liberal Arts’.  Only ‘can-do’ knowledge will do.  With respect to research, specialization accelerates incommensurability with little cross-talk between disciplines.  We know more and more about less and less.  Research becomes increasingly utilitarian, i.e., valued not for itself but for what it can earn.  The University uses increasingly restrictive intellectual property rights to gain revenue from all new knowledge generated by its employees – the professoriate.  Copyright joins patents as an asset shared between employer and employee.  At the same time, researchers in ‘can-do’ disciplines forge ties with Business sometimes suppressing critical knowledge until exiting the University.  Researchers in ‘no-can-do’ fields fade away like natural philosophers.  The ‘ivory tower’ becomes a factory producing knowledge workers and new knowledge to feed Business and the competitiveness of nations in a global knowledge-based economy.

Alternatively, the preferred future is rooted in preference.  My preference is to apply lessons from the emergent fourth epistemic revolution – genomics/bioinformatics.  In fact, the University is, for the first time in its history, the eye of the epistemic storm.  As we learn to inject living things with human purpose we begin to appreciate that over-specialization reduces fitness defined as adaptability to a changing environment.  Fitness requires flexibility and redundancy.  It requires breadth and depth.  It requires integration of incommensurable streams of knowledge like successful innovation in industry (The Economist Oct. 11, 2007).  Arguably, the University is the natural home for such synthesis – all knowledge domains and practices are present. 

In its struggle to survive as an autonomous agent, the University confronts a fitness landscape in which it must dynamically balance three mandates: (1) interpretation of all knowledge domains and practices; (2) generation of new knowledge as an-end-in-and-of-itself; and, (3) commercialization of knowledge – old and new - to tactically resource (1) and (2) and thereby minimize unsolicited political and economic intervention. This requires, however, realignment of self-interest within the University itself – administration, professoriate (including emergent entrepreneurial scientists) and students – old and new.  This, in turn, however, assumes a common objective: to maintain the University as a politically and economically autonomous agent of social change in its Third Age. 

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