[WSIS CS-Plenary] FW: [Reader-list] How to stop worrying and learn to live with piracy

Tue Feb 1 16:31:05 GMT 2005

A nice point - there may be an even simpler one: if intellectual products 
have network externalities (in the sense that they are more attractive the 
more people use them - like interoperable software), then the interests of 
all parties are served if IPR are defined (so that large, rich users will 
pay for them) but not enforced (so that numerous, poor users will adopt them).

The 'piracy' of students or citizens of poor countries may increase the 
total demand for the pirated products beyond the level attainable through 
monopoly provision. See:
    * Chen and Png in INFORMS 
(http://www.extenza-eps.com/extenza/loadPDFInit?objectIDValue=14762)
    * Takeyama, L. (1994), The Welfare Implications of Unauthorized 
Reproduction of Intellectual Property in the Presence of Network 
Externalities, Journal of Industrial Economics XLII, 155-166.
    * Conner, K. and R. Rumelt (1991). Software Piracy: An Analysis of 
Protection Strategies, Management Science 37, 125-139.
Cheers,

Jonathan

At 13:17 01/02/2005, you wrote:
>Perhaps a contribution to the development of the CS perspective on the
>IPR discussion.
>
>MG
>
>-----Original Message-----
>From: reader-list-bounces at sarai.net
>[mailto:reader-list-bounces at sarai.net] On Behalf Of Jeebesh Bagchi
>Sent: January 31, 2005 3:01 PM
>To: reader-list at sarai.net
>Subject: [Reader-list] How to stop worrying and learn to live with
>piracy
>
>
>http://www.businessworldindia.com/feb0705/index.asp
>
>How to stop worrying and learn to live with piracy
>
>A US professor has rocked the current patent debate by saying that
>piracy is not only inevitable, it may even be beneficial.
>
>Doron S. Ben-Atar is hardly your usual suspect when it comes to
>subversion. He is a genial giant from the world of academia, a professor
>of history at Fordham University in New York who has written or
>co-authored several books, a researcher who has won prestigious
>fellowships. For all that, he has managed to undermine the conventional
>arguments in today's hotly debated question of who owns intellectual
>property (IP) - simply by looking at the issue through the prism of the
>past.
>
>Ben-Atar's contention is that all developed nations, especially the US,
>did not respect IP rights and indulged in rampant piracy - and he has
>detailed researches to prove this - during a certain period in their
>history of industrialisation. Tracing the roots of patent and copyright
>laws in early America, he says that during the country's industrial
>revolution, its very prosperity was founded on copyright infringement,
>industrial espionage and outright theft of IP.
>
>What could be construed as subversion is his belief that developing
>countries should be allowed to do the same. He believes this for two
>reasons. One: no amount of regulation and policing will stamp out
>piracy. Indeed, a new study validates this; it shows that losses due to
>software piracy are rampant across the world, but are highest in the US
>itself (see 'Topping The Piracy Charts'). Two: it would be unfair to
>force developing nations to devote their scarce resources to protect the
>interests of the rich and powerful. He maintains that as long as the
>income disparity between rich and poor persists "the temptation to
>pirate would triumph over all principled devotions to an abstract notion
>of IP."
>
>And here is a radical prescription: leaders of developing nations should
>pay lip service to IP agreements "and occasionally raid a warehouse full
>of pirated CDs or prosecute a high-profile pirate". That's because US
>history teaches us that symbolic acts and talk of principles,
>accompanied by lax enforcement, are a winning combination, he says (see
>'Lessons For India').
>
>This unusual perspective on intellectual piracy comes in a riveting
>study that Ben-Atar has brought out on the historical intellectual
>piracy in the US and the efforts made by Britain to stem this outflow to
>its former colony. Published some months ago, Trade Secrets:
>Intellectual Piracy And The Origins of American Industrial Power (Yale
>University Press) has received widespread interest. Much of the buzz
>around the professor's thesis has been occasioned by the growing
>competition to a range of American industries from the giant
>manufacturing hub of China, and to a lesser degree, India and other
>emerging economies.
>
>Ben-Atar takes pains to highlight the many ironies surrounding the IP
>issue in America. At the same time that the young republic was indulging
>in full-scale piracy, it had also enacted the most exacting patent laws
>which required inventions to be original and novel across the world, and
>not just in America - unlike Europe which granted patents to introducers
>of technology in use elsewhere. That set new standards for protecting
>IP. But, shows Ben-Atar, it was a Janus-faced approach. Nearly every
>branch of manufacture in the US was founded upon imported skill and
>machinery which was smuggled in because there were strict prohibitions
>in Europe, especially in Britain, against the emigration of skilled
>artisans and the exportation of machinery.
>
>The IP laws were actually a smokescreen for a very different reality,
>says the Israel-born academic who went to study in the US 25 years ago.
>The statutory requirement of international originality and novelty did
>not hinder widespread and officially sanctioned technology piracy. In
>fact, most of the patent applications were for devices already in use,
>since getting a patent involved little more than successful completion
>of paperwork.
>
>But what use is the past in the current battle by the US and allies to
>impose the WTO-mandated trade related aspects of intellectual property
>rights (TRIPS) agreement on developing countries? Does history have any
>les-sons for today's IP warriors in an intensely contested arena?
>Ben-Atar says it is important to remind Americans of their past so that
>they better understand what is happening in other parts of the world.
>"Before Americans rush to condemn those who pirate our knowhow, they
>must not forget how the US became the richest and most powerful nation
>on earth."
>
>Towards the closing decades of the 18th century, the British colonies of
>North America were mostly underdeveloped agricultural settlements. The
>foundations of the American empire were laid during the next 75 years as
>the US was transformed from an underdeveloped decentralised entity on
>the periphery of the Atlantic economy into the hub of industry, wealth,
>and power. "Piracy," says Ben-Atar flatly, "played a crucial role in
>this process."
>
>So, if the developing world is taking a similar route, the US should not
>be complaining. It is no surprise, says he, that while all WTO members
>promise to respect international IP rights, in practice, developing
>nations do little to enforce those laws. His basic point is that all
>efforts to protect technology are destined to fail. "If past patterns
>are going to be repeated, within a short time, local entrepreneurs in
>the developing world will acquire, by whatever means, America's trade
>secrets and produce the desired goods and services on their own."
>
>The latest collision between the US and China on IP violations
>substantiate his position. In recent weeks, the confrontation between
>the two trading par-tners has accelerated over US charges that China's
>state-owned car manufacturer, Chery Automobile Company, had stolen the
>design from General Motors to make its QQ model. In December last year,
>GM filed a lawsuit against Chery Automobile for alleged piracy of the
>design of its Chevrolet Spark, developed by its South Korean affiliate
>Daewoo. In recent days, US officials have been stepping up the heat on
>the Chinese government to crack down on IP theft.
>
>According to the US commerce department, Chinese piracy is bleeding
>America of nearly $24 billion annually.
>
>In a sharp attack two weeks ago, US commerce secretary Donald L. Evans
>told the Chinese leaders that they had to 'forcefully confront' the
>widespread violations of IP rights in China to avoid strains on
>bilateral relations. While Chery has denied the piracy charge and said
>that it "is one of the key state-backed automakers that depends on
>itself for development", the Chinese government's response has been
>laconic. It has advised GM to resolve the issue through mediation or
>legal means.
>
>That is likely to prove costly for GM, since QQ's sales are already way
>ahead of the Spark, which was launched after the Chinese mini-car hit
>the roads. And in a most ironic twist, the six-year-old Chery - it is
>China's eighth largest automaker with sales of around 90,000 vehicles -
>has just signed a deal with a major American car firm to export cars to
>the US. Some analysts believe it is Chery's deal with Visionary Vehicles
>(in which it has also committed to investing $200 million in the Chinese
>company) that has prompted the high-decibel Washington response.
>
>Lessons for India
>
>Doron Ben-atar is categorical about one thing: he is not advocating
>piracy. Some excerpts from an interview with BW.
>
>Are you saying that developing countries should flout international IP
>regulations and take to piracy?
>
>Ben-atar: I am not drawing these historical parallels to condone piracy,
>but to point out the wrong-headedness of the West's often self-righteous
>position on IP.
>
>Trips imposes patent obligations on developing countries. There are
>penalties for flouting the rules.
>
>Ben-atar: It would be wrong of me to claim that I really under-stand the
>context and complexities of the current system. What the US benefited
>from was the absence of international agencies with coercive powers like
>GATT and TRIPS. The recent development in India is bad for the entire
>world because the new Ordinance (the amendment of the Patents Act) has
>alarming consequences. Indian generic drugs had a monumental influence
>in addressing the health concerns of the underdeveloped world.
>
>What can developing countries like India do?
>
>Ben-atar: The American experience shows how you can negotiate the
>terrain of IP by saying you want to adhere to certain standards, but
>claiming that you are producing something different. The second lesson
>is of greater importance. The key to the American economic miracle was
>the immig-ration of millions who brought their skills and ingenuity.
>Developing nations must develop their own IP, unless they are content
>with the crumbs.
>
>Is it enough to copy the IP of the developed countries?
>
>Ben-atar: Developing nations, however, must realise that they will not
>be able to find prosperity through piracy alone. The only way you can
>stop the brain drain is by creating an equal environment in India, one
>that will compensate the bright people for staying behind.
>
>There are others who believe that the Ben-Atar is only too right about
>the impossibility of checking IP theft. The US justice department for
>one. It said in a recent report that the country was losing the battle
>against piracy. This is especially true of software. According to the
>first annual study on software piracy conducted in 2003 by Business
>Software Alliance (BSA) and IDC (the IT industry's market research and
>forecasting firm), the industry is losing about $30 billion annually.
>The rate of losses, however, are the highest in Eastern Europe (71 per
>cent) compared with 53 per cent for the Asia-Pacific region.
>
>All of which, it would appear, underlines the futility of enacting
>legislation to prevent the diffusion of knowledge. Ultimately, says
>Ben-Atar, devoting resources to enforcing western standards of
>intellectual property in the developing world is not only hypocritical
>and sometimes cruel, but above all, a futile act. "A country's most
>valuable asset is not yesterday's invention, but tomorrow's innovation.
>
>
>
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