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1.
Preamble and Background:
Being
an SME and a member of creative industry for twenty years, we hope that
the following opinion would serve as a reference for the government to
know more about our concern with the overall IP policy. SMEs account
for more than ninety percent business establishment and employ half of
the working population but receive little social and political support.
We admit that the government adopt positive SME policy and has provided
a lot of supporting service to SME. However, in the process of
legislation or making the macro-economic policy, our views and interest
were not properly represented. A total skew in favour of large
corporates was once and again manifested in various areas such as IP
protection policy and review of copyright ordinance. As a rational
member of SME, we just demand for a balance policy and legal framework
leading to fair competition.
In
the past two decades, we had thought that if we acted in good faith and
took all necessary measures to ensure our activities complying with the
law, including the copyright ordinance, we would have been free
from the troubles. However, even though we foresaw the
inherited
flaw of the 2001 revised copyright ordinance, revised our trading
procedure, gave up some 'sensitive and dangerous' business services
such as photo copy and trading of brandname products of which
counterfeits overflowed the market for the purpose of avoiding
unnecessary dispute over copyright issue, we could not free us from the
legal claims triggered by the false evidence provided by an evil-minded
reward hunter preying on victims of SME. We provided convincing
evidences proving this man's fraudulent behaviour to the police and
demand for investigation but finally we found that it was extremely
difficult for an unprepared victims to provide sufficient evidence
meeting the standard of proof for criminal charges (Refer to Appendix 1
for details). Under the prevailing legal framework, there is no
statutory means to regulate the behaviour of these reward hunters. They
are able to trap their prey with all malicious and illicit approaches
like phishing, pretexting, enticement or else that are criminal in most
western countries without the fear of facing criminal prosecution yet
the collaboration of these notorious people with law professionals and
the executive of rich copyright or patent owners may deliberately abuse
the civil claim to blackmail their prey with a high sounding ethical
reason. According to the information from other traders, our issue was
not an isolated and independent case.
2. Underlying
Principles and Practical Issues:
The
deficiency of the current copyright ordinance and IP policy is not
limited to this. We honestly felt that the legislation process was
overshadowed by the influence of lobbiers representing large corporates
and their cartels. We do not know how much the views of the general
public and SMEs will be taken into consideration but our bitter
experience told us that we should not remain silent. In those 'advanced
countries', not just a single voice is heard. In the 'Gowers Review of
Intellectual Property' (http://www.hm-treasury.gov.uk/media/583/91/pbr06_gowers_report_755.pdf)
by Andrew Gowers for the UK government, the author admitted the
importance of balanced and flexible rights and assured that
recommendations would be made to ensure the instruments of the IP
system (patent, copyrights, trade marks and designs) were 'balanced,
coherent and flexible' (Gowers Review of Intellectual Property, The
executive summary, p5), It would be much appreciated if the same
principle is well incorporated in the legislation process of the
copyright ordinance. Practically, we hope the government take steps to
seek a reasonable balance in dealing with the following issues:
2.1 The private
interest vs public interest:
Apparently,
this issue was properly dealt with in the legislation process. However,
at least two issues were not paid proper attention.
At
first, the IP in the public domain was not properly protected against
intended privatization by people who claim proprietary right to the
common human legacy. Nobody, including the government official, can
have a perfect knowledge in the cultural heritage we inherited There
should be an overriding clause in law providing the general public the
right to void the patent or copyright at any time once sufficient
evidence is found for proving that the IP in question belongs to the
public domain (i.e. prior art). The following is a typical example:
US
patent no. 5900240 was granted to a company on the anti-diabetic
properties of 'karela', 'jamun', and brinjal, of which the use is
common knowledge and everyday practice in India. In response to the
approval of the patent, an angry Indian, Vandana Shiva wrote:
'
If a patent system which is supposed to reward inventiveness and
creativity systematically rewards piracy, if a patent system fails to
honestly apply criteria of novelty and non-obviousness in the granting
of patents related to indigenous knowledge then the system is flawed,
and it needs to be changed. It cannot be the basis of granting patents
or establishing exclusive marketing rights.
The
problem of biopiracy is a result of Western style IPR (intellectual
property rights) systems, not the absence of such IPR systems in India.
Therefore, the implementation of TRIPs, which is based on the U.S.
style patent regimes, should be immediately stopped and its review
started. ' (http://www.progress.org/archive/patent03.htm):
In
addition, the attempt of any kind to extend the effective period of
patent or term of copyright also infringe the interest of general
public. The following is a citation from WikIPedia about the the 'Sonny
Bono Copyright Term Extension Act” of USA:
'The
Copyright Term Extension Act of 1998—alternatively known as
the
Sonny Bono Copyright Term Extension Act or pejoratively as the Mickey
Mouse Protection Act—extended copyright terms in the United
States by 20 years. Before the act (under the Copyright Act of 1976),
copyright would last for the life of the author plus 50 years, or 75
years for a work of corporate authors' IP; the act extended these terms
to life of the author plus 70 years and 95 years respectively. The act
also affected copyright terms for copyrighted works published prior to
January 1, 1978, increasing their term of protection by 20 years as
well. This effectively 'froze' the advancement date of the public
domain in the United States for works covered by the older fixed term
copyright rules.... .'(http://en.wikIPedia.org/wiki/Sonny_Bono_Copyright_Term_Extension).
Similar
bills were also initiated in EU and UK under the lobbying activities of
large corporates regardless of the strong opposition from the public.
They manifested how the public interest could be infringed under the
influence of lobbiers who act on behalf of gigantic corporates.
Secondly,
the unfair terms and conditions in the licensing agreements, especially
those of computer software or the DRM for multimedia entertainment
recordings also infringe the benefits of the general public in the
sense that they deprive purchasers of a lot of basic consumer rights
such as form shift copy as a fair use of copyrighted material. Not all
people bother to dig into the details of the Eula. Therefore, many
people do not know that it is illegal if they share the printer with
more than five users, or the license of their genuine oem
software will void after they have upgraded or repaired their
computer. If not regulated by law, the extensive use of
unfair
Eula will have the effect of legitimating unfair exploitation of
consumers.
2.2 The primary
copyright owner (i.e. the creator) vs the secondary copyright owner
(e.g. the content provider):
Most
people, including the government officials and legislators seem to
assume that the copyright owner is also the creator. Actually this is
not the fact. In many cases, the primary creator 'assigns' his work at
miserable price to wealthy content provider under free market system
and all IP protection measures do not protect the interest of ultimate
IP creator. Cynically, a lot of economic research found that the
incentive to create was inversely related to the extensiveness of the
patent system in the light that over protection tends to
preclude
rather than encouraging competition. (Fritz Machlups: Research on the
MacroEconomic Effects of Patents, report to the US congress
of
1958)
2.3 The primary
copyright owner and the developer:
For
the same reason as stated in section 2.2, over protection of newly
invented technology like an unreasonable long term of patent might not
be a positive factor for its further development. However, the
determination of a proper term of patent for different technologies is
extremely professional. The government must seek outside resources to
make the right decision. Again, the independence and objectivity is
inevitable for arriving at a fair judgment.
2.4 The rent seeker
or free rider vs IP owner:
The
concept of rent which originates from economic studies is not easy to
be understood by ordinary people. The most common rent seekers are
those people or corporates who possess monopoly power in the market. If
the legal framework is in their favour, they are able to set the price
or dissegregate the market for capturing the economic rent at the
sacrifice of consumer. Discriminatory prices in different markets are
common for entertainment products like music CD or movie DVD. Consumers
in western countries have started to queried if the market segregation
is justified. However, rent seeking behaviour does not
confine to
the IP owner. Some people or organizations, for instance, the
guild of software industry, statutory body of recording industry,
copyright lawyer, private investigator are all the parties benefited
from IP protection system. Statutory bodies representing the recording
industry are empowered by IP protection law to charge the user license
fee. Lawyers are the legitimate representative for either party in
copyright dispute. Private investigators as reward hunters prey on
service charge or bonus for conducting the investigation. However, if
these people corrupt and abuse their power, to what extent
will
the adversed effect be caused to the society as a whole? The following
observations and live experience may serve as reference.
i.
Though we do not have resource to conduct a scientific survey to obtain
reliable data about the effect of license fee charged by the statutory
bodies of the recording industry on the retailing shops playing music
in their premises, our unofficial observation tells us that most of the
shops, at least those in our neighbourhood, refuse to pay some four
thousand dollars per year and simply stop buying and playing music
recording in response to this double charge system. Generally speaking,
perhaps not all of them, but at least most of them, including us, were
buyers of genuine product. This license fee amounts to about ten
thousand dollars for shops locating in down town area. Their rent
seeking behaviour has driven this group of quality buyers away from the
market which in turn results in the loss of artists and
publishers. Working out a fairer charging system such as a
reasonable premium charges per CD purchased for commercial purpose
might restore the market demand. In western countries, some independent
artists begin to realize the adverse effect of the system and start to
waive the charges or even let their work be freely download for gaining
more popularity while earning their living from live show or selling CD
album. They strive to work out another business model along with the
technology advancement.
ii.
Under the current patent registration system, just a few vague ideas is
enough to convince the authority to approve the registration of patent
without the need to put real effort in the development of the
hypothetical product or technology. When similar product or technology
appears in the market, these 'patent hijackers' may claim the
manufacturer for compensation. The famous producer of PDA
phone
'Blackberry' was a victim of the defective patent system.
iii.
As we mentioned in previous section, in the absence of an effective
surveillance system to ensure the integrity of the behaviour of reward
hunters (who claim themselves private investigators), their
collaboration with law professionals and executives of IP holding
corporates will form a highly dangerous evil force. The violation of
the investigation protocol is not uncommon in western countries like US
or EU where even malpractice is a criminal offense. For what reasons
can we rely on the self-discipline of the reward hunters in the context
of Hong Kong? We never know the actual number of false allegations
because only a small portion of the victims are willing to publicize
their cases. Some victims do not even know the method of probing used
by the 'investigator' is criminal. We also cannot be sure what the role
of law professional plays in these abuse of IP protection law but the
alternate stupidity before the reward hunter and swiftness before the
alleged was horrifying.
2.5 The wealthy
large corporate vs SME:
It
is simple enough to know that wealthy large corporates have all the
comparative advantages over SME in copyright dispute. Lacking
sufficient financial resources, small enterprises cannot afford to play
the costly legal game with large corporates. For many times,
we
found that our work was pirated, We did not bother to take legal action
because the compensation might not be able to cover the cost. On the
contrary, wealthy corporates may bully small enterprises deliberately
without a tight budget. They do not even have to go to the court room
because the immense legal cost is enough to scare their misery rival to
accept their unreasonable terms. They do not even have to pay a penny
but their permission because a lot of reward hunters and their
co-working lawyers volunteer to conduct investigation for them.
2.6 The business
model preservation vs IP protection:
A
lot of people advocating IP protection are actually intending to
protect a certain business model. It is misleading to say that
reproduction or distribution of a certain IP free of charge is a
violation of private property right. A lot of famous software such as
unix or linux are released under GPL (general public license) or its
variants. Their authors are supporters of open source movement and
willing to let their work be reproduced and distributed free of charge.
These freewares have formed the backbone of the current Internet
networking system. The rapid development of WikIPedia is another
prominant example to show the power and contribution of 'free' IP. New
business models have been developed to cope with the new ecosystem by a
lot of enterprises including some very old prominant IT firm in the
industry. Once upon a time, a lot of enterprises made a huge profit by
selling full function software or CD album in box at extremely high
profit margin. They refuse to accept that consumers decline to pay so
much for what they receive on account of a complex of reasons but
attribute the plunge of sale to copyright infringement based on the
unrealistic estimation of loss made by lawsuit agitators who
intentionally confuses the zero price demand (i.e. the illegal
download) with the effective demand at nominal market price. We do not
recognize or admit illegal download of any IP, but have to point out
the fact that the extinction of IP pirate might not help too much to
boost sale of the IP product in question if their prices remain high.
People who were captured, prosecuted and convicted were either
unemployed or students from poor families. They absolutely do not have
adequate budget to consume these luxury genuine product.
Conclusion:
In
most of the case, the IP protection issue is over simplified as the war
between the IP right owner and IP pirate without any awareness of the
special features of IP. Unlike physical property which existence,
possession, assignment, transformation and destruction can be clearly
defined, traced and monitored, IP may only involve virtual idea which
is not easy to be clearly defined in terms of legal jargon. Otherwise,
why do those corporates which advocate IP protection in high profile
appear in the court rooms as defendent almost as frequent as plaintiff
on the prosecution side in the countries claiming themselves having a
more advanced IP protection system?
Appendix:
Appendix 1:
Document showing the false allegation triggered by illicit private
investigator
Appendix 2:
Event history log of maliciour and illicit probing
Note:
As the orginal documents contain sensitive, private and
confidential information, they were sent to the relevant law
enforcement department but could not be disclosed to the public
Reference:
1. Andrew Gowers: 'Gowers Review of Intellectual Property'
2.
The European Parliament has rejected a controversial measure that would
have legalized software patents in the European Union.
A
government representative said that 648 out of 729 members of the
European Parliament voted Wednesday to reject the proposal, called the
Computer Implemented Inventions Directive, which would have widened the
extent to which software could be patented . The
Foundation for a Free Information Infrastructure, or FFII, described
the decision as a "great victory for those who have campaigned to
ensure that European innovation and competitiveness is protected from
monopolization of software functionalities and business
methods."
3. Alliance of 2,000,000 SMEs against Software Patents and EU Directive
An
alliance representing a total of 2,000,000 small and medium-sized
businesses in Europe says that software patents are harmful for SMEs
and that in particular the software patent directive proposal as
amended by the European Parliament's Legal Affairs Commission is a
grave risk for innovation, productivity and employment in Europe.
4. APOM 2004/04/21: Lettre au Premier Ministre sur le Brevet Logiciel
The
French Association of Producers of Multimedia Works (Association des
Producteurs d'Oevres Multimédia) condemns the Commission's
and
Council's approach to software patents and supports the amendments of
the European Parliament.
5. Research on the MacroEconomic Effects of Patents
Since
Fritz Machlups report to the US congress of 1958, a considerable number
of studies about the economic effects of the patent system has
accumulated. Some studies deal with certain types of innovation
(sequential, complex systems) or with special areas such as
semiconductors, genetics or computing rules (algorithms, mathematics).
None seems to claim that the patent system has a positive effect on
innovation in these fields. Most find strong indications for negative
effects. Some governmental studies (e.g. by intellectual property
institutes and the like) combine such negative findings with a
recommendation to legalise software patents.
More links to other macro economic researchs on the effect of copyright
and patent are available on this site.
(http://eupat.ffii.org/archive/mirror/impact/index.en.html)
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