Weak copyrights would kill "fair use"

COMMENTARY--A debate has gathered over the importance of copyright protection in developing nations. That debate was recently stokedby the Commission on Intellectual Property Rights(CIPR), a UK organization which concentrates onthe integration of intellectual property rights intodevelopment policy.

In a recent study, the group advocated a more laxapproach to international copyright rules thanadvocated by TRIPS or WIPO. The argument centersaround the notion that strict adherence deniescopyright-poor third world nations access to richworld technology information. Without proper accessto books, technology, and software, the "knowledgegap" will widen, sentencing the third world togenerations of poverty and perpetuating a rich/poordivide that leads to conflict. As the CIPR noted:

there are also developing countries who haveprovided copyright protection as members of the Berne Convention for decades (such as Benin or Chad which joined in 1971) and have not seen significant increases in their national copyright-based industries or in the level of copyright-protected works being created by their people.

However, I think such arguments get a bit ahead ofevents on the grounds. Copyrighted material (that is,of the technological sort) is the product of aknowledge economy, and a knowledge economy is built onthings like universal literacy, proper scienceeducation, the technological tools and infrastructurepeople need to express their innate creativity, and alevel of affluence capable of providing for thesethings. So long as most in poor nations lack cleandrinking water, solid homes, electricity, and decentmedical care, they won't have the foundation uponwhich to build a knowledge economy. The CIPR andothers worry about a potential economy that is yearsbeyond the present day capacity of most third worldnations.

What third world nations need most is economicdevelopment. Pursuant to this, the first order ofbusiness should be to deal with structural issues thathinder development. The greatest hindrance is thelack of an integrated property system to whicheveryone has access. Legally defensible propertyrights are essential to the process of capitalcreation, in that property can be used as collateralon loans to grow a small business. Furthermore,incorporation must be within easy reach of normalcitizens. Legal companies can take advantage ofofficial distribution channels and grow theirbusinesses internationally, something illegalcompanies cannot do.

Most third world nations lack these things. AsHernando de Soto explained in his book TheMystery of Capital, legal property is somethingonly an elite in these nations can afford. In thePhilippines, it takes 13 to 25 years for a citizen toacquire legal title to property. In Peru, Hernando deSoto's home, he discovered in the course of anexperiment involving the creation of a two sowingmachine garment factory that it "took more thanthree hundred days, working six hours a day. Thecost: thirty-two times the monthly minimum wage (DeSoto, 190)".

For these reasons, most developing nation productivecapacity comes from those trapped in the extralegalmarket. In Haiti, "68 percent of city dwellers and97 percent of people in the countryside live inhousing to which nobody has clear legal title. (DeSoto, 33)". In Egypt, two-thirds of all economicactivity can be attributed to unofficial businesses. To survive outside the official property system, local communities create de facto legal arrangement which assign property rights to those in the local cooperative. Though this manages to ensure property rights at the local level, it isn't valid at the national level, denying the businesses based on these "extralegal" arrangements access to national and international investment sources. This starves the businesses of entrepreneurs who would normally be the source of growth. When most productive individuals must live within these strictures, the nation not surprisingly ends up poorer.

Even with these changes, however, third world nation'swill not develop knowledge economies overnight. Suchnations will still be concentrated, at leastinitially, around labor-intensive products, such as agricultural goods, textiles and raw materials. These markets, consequently, are some of the most protected in the rich world. High barriers to third world agricultural products, textiles and raw materials exist in both Europe and America (admittedly lower in America), denying third world nations access to markets, and thus access to the capital that will allow these nations to reduce rapidly the poverty of its citizens.

These issues are far more important to third worldeconomic development than issues of copyright. However, copyright STILL merits protection, even inthird world nations.

Why Copyright Matters
First, the CIPR study mentioned previously advocatesweakening copyright protections in third world nationsin the interest of "easing access to information." However, it also notes that "(s)ome believe thefuture will see copyright become of far lessimportance as industries switch to technology-basedprotection, in the form of encryption andanti-circumvention measures." I can't think ofany better way to hasten the arrival of such "strongDRM" technology than to give third world nations carteblanche (or just carte grise, through lax enforcement)to ignore international copyright in the interest ofboosting their citizens’ access to copyrightedinformation.

Software companies, among others, can be expected torely on strong DRM to protect their copyrightedmaterial. In such an environment, fair use wouldessentially be a dead issue, since it would not be technologically possible to copy copyrighted material without paying for it. Paradoxically, advocating a lax approach to copyright might result in less information being available in the future.

Second, by refusing to protect copyrighted material,third world nations tell their citizens not to expectto have to pay for such material. This makes lifemuch harder for domestic producers of copyrightedmaterial. Local producers essentially pricethemselves out of the market. As an example, the USin the 1800's protected domestic authors copyrighteven as they ignored international ones. Thisresulted in a dearth of American authors, as they wereforced to compete with an influx of cheap copies ofBritish works. Imported works were "good enough," andso there was less incentive for Americans to pay highprices for domestically produced content.

In the software market, a culture of free softwaremakes it much harder for software startups to gain anytraction in the marketplace. Most young softwarecompanies rely on the local market for business. Ifthat market has been led to believe that software isfree (or the cost of a copied CD), they will bereluctant to buy from that company.

Similarly, there is a risk that nations with laxcopyright enforcement will become havens for copyright infringement. China currently faces this problem, and pays the price in terms of less attention paid to the needs of Chinese users. A number of software companies are reluctant to localize their software for the Chinese market, in hopes that it will discourage Chinese users from using the software. Sony has noplans to target Chinese gamers with itsPlaystation 2 product, even though China is a shorthop from Sony’s home market. The same applies toXBox, which is marketed in Japan, but not in China,due to piracy concerns.

Third, it ignores the willingness of companies toadjust their pricing policies to accommodate the lowerincomes of third world nations. This is notinconceivable. Differential pricing schemes arecommon in the industry. Lower cost “Food Club” brandmozzarella uses the same cheese as the higher cost“Sargento” brand (you learn unusual things fromconsulting projects in Wisconsin). So long as it isan open question as to whether their rights will beprotected, companies have no incentive to find ways toservice third world markets.

Fourth and last, it seems a dereliction of government responsibility, not to mention unfair, to insist that private companies give away their intellectual property on terms with which they do not agree. Taxes are always easier to justify if politicians can say only businesses pay them. A policy which insists that private companies shouldn’t expect a certain level of copyright protection is a tax, if not in name. It is debatable whether this is justifiable if the result was to boost in some way the financial prospects of third world nations, but as I’ve discussed in my other points, it is unconscionable when its only effect is to undermine knowledge industries in developing economies.

Conclusion
The cities of the Third World and the formercommunist countries are teeming with entrepreneurs. You cannot walk through a Middle Eastern market, hikeup to a Latin American village, or climb into ataxicab in Moscow without someone trying to make adeal with you. The inhabitants of these countriespossess talent, enthusiasm, and an astonishing abilityto wring a profit out of practically nothing. Theycan grasp and use modern technology. Otherwise,American businesses would not be struggling to controlthe unauthorized use of their patents abroad, norwould the U.S. government be striving so desperatelyto keep modern weapons technology out of the hands ofThird World countries. (de Soto, 4)

Information is essential to the advancement of thirdworld nations. However, that doesn’t mean the statedpolicy should be to encourage a weakening of copyright protection. As my quote from de Soto shows, third world nations find the information they need when they need or want it. Perhaps that information isn’t always acquired in a strictly legal sense. However, the value of official adherence to copyright protection is to discourage casual copying, not to deny those who genuinely need access to information.

Weakening that official adherence will just ensurethat producers of copyrighted material will find moreironclad ways to protect those rights.

In other words, companies will increasingly turn to "technology-based protection, in the form of encryption and anti-circumvention measures." That, my friend, will be the end of "fair use."

John Carroll is a software engineer who is in the process of moving to Ireland. He specializes in the design and development of distributed systems using Java and .Net. He is also the founder of Turtleneck Software.