COMMENTARY--A debate has gathered over the importance of copyright protection in developing nations. That debate was recently stoked
by the Commission on Intellectual Property Rights
(CIPR), a UK organization which concentrates on
the integration of intellectual property rights into
development policy.
In a recent study, the group advocated a more lax approach to international copyright rules than advocated by TRIPS or WIPO. The argument centers around the notion that strict adherence denies copyright-poor third world nations access to rich world technology information. Without proper access to books, technology, and software, the "knowledge gap" will widen, sentencing the third world to generations of poverty and perpetuating a rich/poor divide that leads to conflict. As the CIPR noted:
there are also developing countries who have provided 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 of events on the grounds. Copyrighted material (that is, of the technological sort) is the product of a knowledge economy, and a knowledge economy is built on things like universal literacy, proper science education, the technological tools and infrastructure people need to express their innate creativity, and a level of affluence capable of providing for these things. So long as most in poor nations lack clean drinking water, solid homes, electricity, and decent medical care, they won't have the foundation upon which to build a knowledge economy. The CIPR and others worry about a potential economy that is years beyond the present day capacity of most third world nations.
What third world nations need most is economic development. Pursuant to this, the first order of business should be to deal with structural issues that hinder development. The greatest hindrance is the lack of an integrated property system to which everyone has access. Legally defensible property rights are essential to the process of capital creation, in that property can be used as collateral on loans to grow a small business. Furthermore, incorporation must be within easy reach of normal citizens. Legal companies can take advantage of official distribution channels and grow their businesses internationally, something illegal companies cannot do.
Most third world nations lack these things. As Hernando de Soto explained in his book The Mystery of Capital, legal property is something only an elite in these nations can afford. In the Philippines, it takes 13 to 25 years for a citizen to acquire legal title to property. In Peru, Hernando de Soto's home, he discovered in the course of an experiment involving the creation of a two sowing machine garment factory that it "took more than three hundred days, working six hours a day. The cost: thirty-two times the monthly minimum wage (De Soto, 190)".
For these reasons, most developing nation productive capacity comes from those trapped in the extralegal market. In Haiti, "68 percent of city dwellers and 97 percent of people in the countryside live in housing to which nobody has clear legal title. (De Soto, 33)". In Egypt, two-thirds of all economic activity 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's will not develop knowledge economies overnight. Such nations will still be concentrated, at least initially, 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 world economic development than issues of copyright. However, copyright STILL merits protection, even in third world nations.
Why Copyright Matters
First, the CIPR study mentioned previously advocates
weakening copyright protections in third world nations
in the interest of "easing access to information."
However, it also notes that "(s)ome believe the
future will see copyright become of far less
importance as industries switch to technology-based
protection, in the form of encryption and
anti-circumvention measures." I can't think of
any better way to hasten the arrival of such "strong
DRM" technology than to give third world nations carte
blanche (or just carte grise, through lax enforcement)
to ignore international copyright in the interest of
boosting their citizens’ access to copyrighted
information.
Software companies, among others, can be expected to rely on strong DRM to protect their copyrighted material. In such an environment, fair use would essentially 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 expect to have to pay for such material. This makes life much harder for domestic producers of copyrighted material. Local producers essentially price themselves out of the market. As an example, the US in the 1800's protected domestic authors copyright even as they ignored international ones. This resulted in a dearth of American authors, as they were forced to compete with an influx of cheap copies of British works. Imported works were "good enough," and so there was less incentive for Americans to pay high prices for domestically produced content.
In the software market, a culture of free software makes it much harder for software startups to gain any traction in the marketplace. Most young software companies rely on the local market for business. If that market has been led to believe that software is free (or the cost of a copied CD), they will be reluctant to buy from that company.
Similarly, there is a risk that nations with lax copyright 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 no plans to target Chinese gamers with its Playstation 2 product, even though China is a short hop from Sony’s home market. The same applies to XBox, which is marketed in Japan, but not in China, due to piracy concerns.
Third, it ignores the willingness of companies to adjust their pricing policies to accommodate the lower incomes of third world nations. This is not inconceivable. Differential pricing schemes are common in the industry. Lower cost “Food Club” brand mozzarella uses the same cheese as the higher cost “Sargento” brand (you learn unusual things from consulting projects in Wisconsin). So long as it is an open question as to whether their rights will be protected, companies have no incentive to find ways to service 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 former
communist countries are teeming with entrepreneurs.
You cannot walk through a Middle Eastern market, hike
up to a Latin American village, or climb into a
taxicab in Moscow without someone trying to make a
deal with you. The inhabitants of these countries
possess talent, enthusiasm, and an astonishing ability
to wring a profit out of practically nothing. They
can grasp and use modern technology. Otherwise,
American businesses would not be struggling to control
the unauthorized use of their patents abroad, nor
would the U.S. government be striving so desperately
to keep modern weapons technology out of the hands of
Third World countries. (de Soto, 4)
Information is essential to the advancement of third world nations. However, that doesn’t mean the stated policy 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 ensure that producers of copyrighted material will find more ironclad 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.
