Chapter 5
INTRODUCTION
Any serious enquiry into the subject of IP and development has to consider the crucially important role of copyright and the copyright-based industries (including publishing, film, television, radio, music and now computer software too) in the production and dissemination of knowledge and knowledge-based products. These industries supply the intellectual “raw material” for science and innovation, as well as for education and instruction in general, and they have helped bring about dramatic increases in productivity through aiding the creation of information-based products like desk-top publishing software, electronic mail or sophisticated scientific computer databases. Moreover, the copyright-based industries have developed into a huge source of wealth and employment creation in the knowledge-based global economy. In the US, for example, their overall combined value has increased at such a rapid rate in the last twenty or thirty years, that together they currently contribute more than $460 billion to US gross domestic product and sold almost $80 billion in exports in 1999.[1]
For developing countries this provides both enormous opportunities and challenges:
“The creation and
ownership of knowledge products are of increasing importance because of the
centrality of information and knowledge to post-industrial economies. The
concept of copyright, originally intended to protect authors and publishers of
books, has broadened to include other knowledge products such as computer
programs and films… Copyright has emerged as one of the most important means of
regulating the international flow of ideas and knowledge-based products, and
will be a central instrument for the knowledge industries of the twenty-first
century. Those who control copyright have a significant advantage in the
emerging, knowledge-based global economy. The fact is that copyright ownership
is largely in the hands of the major industrialized nations and of the major
multimedia corporations placing low per capita income countries as well as
smaller economies at a significant disadvantage.”[2]
The legal protection of copyright dates back to the 1700s with the Statute of Anne, and at the end of the 19th century it was enshrined in the Berne Convention. Although the language of the Convention suggests a paradigm for the protection of the rights of authors and artists, in many cases copyright belongs not to individuals but to the firms that employ them. Indeed, copyright is an essential element in the business model of publishers, television and record companies, and software producers because they grant their owners exclusive rights, inter alia, over the reproduction and distribution of protected works. The new information and communication technologies (ICTs), and in particular the Internet enable unauthorised creation of unlimited, perfect and costless copies of protected works, as well as their almost instantaneous and worldwide distribution. This poses an unprecedented challenge to copyright law. Some 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, supplemented by contract law and sui generis forms of IP protection for databases.
We believe that copyright-related issues have become increasingly relevant and important for developing countries as they enter the information age and struggle to participate in the knowledge-based global economy. Of course, some developing countries have long standing concerns that copyright protection for books and learning materials, for example, may make it harder for them to achieve their goals in education and research. These were prominently expressed at the 1967 Stockholm Conference of the Berne Convention and remain valid today.
Copyright deserves special attention now not only because millions of poor people still lack access to books and other copyrighted works, but because the last decade has seen rapid advances in information and communication technologies, transforming the production, dissemination and storage of information. This has been accompanied by a strengthening of national and international copyright protection. Indeed, it was largely these technological changes that led the copyright-based industries in the developed countries to lobby for TRIPS and the WIPO Copyright Treaty, as well as the sui generis protection system for databases established by the EU in 1996. These trends are likely to have both positive and negative aspects for developing nations and it is important to understand how they impact on such countries, particularly the poor.
The crucial issue for developing countries is getting the right balance between protecting copyright and ensuring adequate access to knowledge and knowledge-based products. It is the cost of access, and the interpretation of “fair use” or “fair dealing” exemptions that are particularly critical for developing countries, made more so by the extension of copyright to software and to digital material. These issues need to be addressed to ensure developing countries have access to important knowledge-based products as they seek to bring education to all, facilitate research, improve competitiveness, protect their cultural expressions and reduce poverty.
In this chapter we consider the following issues:
· How important is copyright as a stimulus to cultural and other industries in developing countries?
· How does copyright affect developing countries as consumers of products from abroad, particularly educational material, including via the Internet?
· What should developing countries do about enforcement of copyright?
· How does copyright on software affect developing countries?
COPYRIGHT AS A
STIMULUS TO CREATION
As agencies such as WIPO, UNESCO and the World Bank have pointed out, it is important that developing countries develop mechanisms to protect and benefit from the commercial exploitation of their own past and present creative works. On this view, copyright can play an important role in the development of cultural industries in developing countries by ensuring rewards through exclusive rights over copying and distribution.[3] In Chapter 4, we discuss the issues relating to protection of traditional knowledge in developing countries and much of that is also relevant here, in so far as such knowledge and creativity may be protectable under copyright.
From a global perspective, the direct rewards from copyright protection are largely directed to the publishing, entertainment and software industries in Europe and North America. As Figure 5.1 below shows, the US, UK, Germany, Spain, France and Italy between them produced nearly two thirds of global exports of books in 1998. But, in some instances, copyright-based industries in developing countries are also flourishing and obtaining a share of these rewards.
Perhaps the most famous case is the Indian software industry. Between 1994-95 and 2001-02, the industry’s gross earnings expanded from $787 million to $10.2 billion (a large proportion of which were software exports, which grew in value during the period from $489 million to $7.8 billion) and by March 2002, the software and services sector employed about 520,000 workers.[4] And certainly there is a wealth of creative talent in developing countries – such as the musicians in Mali and Jamaica or the traditional artists in Nepal – which could be harnessed to generate more wealth for emerging economies. But this will only happen if there is a local infrastructure for cultural industries, for example for publishing and recording. Currently many writers and musicians in developing countries (particularly in Africa) have to rely on foreign publishers or record companies.
Figure 5.1 The Top Book Exporting Countries by Market Share, 1998
Source:
UNESCO (2000a)
At the same time, whilst there are success stories like India’s software industry, 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.
The evidence suggests, therefore, that the availability of copyright protection may be a necessary but not a sufficient condition for the development of viable domestic industries in the publishing, entertainment and software sectors in developing countries. Many other factors are important for the sustained development of such copyright-based industries. Taking the publishing industry in Africa as an example, factors such as the unpredictability of textbook purchasing by governments and donors, weak management skills in local firms, high costs for printing equipment and paper, and poor access to finance are likely to continue to act as very severe constraints in many countries for the foreseeable future.[5]
Moreover, given the small market size of many developing countries, the availability of copyright protection may be most significant from a commercial standpoint in export markets rather than domestically, notwithstanding the fact that authors and companies from developing countries may face insurmountable costs when action to enforce their rights in such markets is required. Of course, in larger developing countries like India, China, Brazil or Egypt, copyright protection in the domestic market is clearly of considerable importance to national publishing, film, and music and software industries. Although, as we have noted, during the 19th century the US sought to aid the development of its domestic publishing industry by not recognising the rights of foreign copyright holders.
Collecting Societies
In order to realize the potential benefits of copyright, some developing countries have established collective management societies, which represent the rights of artists, authors and performers and collect royalties from licensing copyrighted works held in their inventories. At present, only a minority of developing countries has followed this approach and there are quite different views on the merits of the establishment of collective management societies. WIPO and some donor agencies actively advocate and support them, as do some developing country governments (for example, in the Caribbean). Copyright-based industry groups in developed countries also argue that the establishment of Reprographic Rights Organisations in developing countries would facilitate wider provision of access to protected works through photocopying at rates suited to the local market.
On the other hand, some commentators argue that although such organisations in developing countries may collect royalties for local authors and artists, they are likely to collect far more for foreign rights holders from developed countries who may often dominate the market place for copyrighted works. For example, in South Africa, where the balance is likely to be more favourable than in lower income developing countries, its Dramatic, Artistic and Literary Rights Organisation (DALRO) distributed a total of approximately Euros74,000 to national rights holders, of which approximately Euros20,000 were received from foreign collecting societies; whilst over the same period it distributed approximately Euros137,000 to foreign rights holders.[6] It is also important to recognise that collective management organisations can potentially wield significant market power and may act in an anti-competitive manner. This is particularly of concern in developing countries with weak institutional capacities and regulatory frameworks.
Ultimately, developing countries will have
to make their own judgements on the benefits of establishing collective
management organisations. In developing
countries with large markets for the products of their copyright-based
industries, domestically and abroad, establishing these institutions may bring
financial benefits for copyright holders.
In other countries, the net benefits to the citizens of the country as
opposed to foreign nationals means it may be difficult to justify the
costs. In any event, it would seem to
be imperative that the full costs of establishment and operation of such
agencies in developing countries are demonstrated transparently from the outset
and that these are borne by copyright holders as the direct beneficiaries. Moreover, collective management
organisations should probably not be created unless properly functioning
specialist copyright and competition tribunals can be established in parallel.
Although the potential benefits from the development of copyright-based industries in some developing countries may be enticing in some cases, it is hard not to conclude from looking at the evidence from the developing world overall that the negative impacts of stronger copyright protection are likely to be more immediate and significant for the majority of the world’s poor. Today, there is an enormous “knowledge gap” between the richest and the poorest countries. As the World Bank has noted:
“If knowledge gaps widen, the world will be split further, not just by disparities in capital and other resources, but by the disparity in knowledge. Increasingly, capital and other resources will flow to those countries with the stronger knowledge bases, reinforcing inequality. There is also the danger of widening knowledge gaps within countries, especially developing ones, where a fortunate few surf the World Wide Web while others remain illiterate. But threat and opportunity are opposite sides of the same coin. If we can narrow knowledge gaps and address information problems … it may be possible to improve incomes and living standards at a much faster pace than previously imagined.”[7]
In the long term, stronger copyright protection may help to stimulate local cultural industries in developing countries if other conditions affecting the success of such industries are also met. But in the short to medium term, it is likely to reduce the ability of developing countries and poor people to close this gap by getting the textbooks, scientific information and computer software they need at affordable cost.
WILL COPYRIGHT RULES ALLOW DEVELOPING COUNTRIES TO CLOSE THE KNOWLEDGE GAP?
In theory, international copyright rules should be able to deal with problems of access because they provide room for countries to include exemptions and relaxations of copyright in certain circumstances under their national laws. So, for example, Articles 9 and 10 of the Berne Convention permit countries to allow limited copying of protected works without permission for certain purposes defined in national legislation such as teaching, research and private use, so long as these do not interfere with the normal exploitation of the work by the copyright owner (see Box 5.1).
Box 5.1 “Fair Use” and “Fair Dealing” in the Digital Era
As part of the balance between the exclusive rights of authors, artists
and other creators on the one hand, and the social goal of wide dissemination
of knowledge on the other, international copyright rules allow countries to
place limits on the right to prevent
unauthorised use and reproduction in certain prescribed circumstances.
For example, article 9, paragraph 2 of the Berne Convention states "It shall be a matter for legislation in the
countries of the Union to permit the reproduction of such works in certain
special cases, provided that such reproduction does not conflict with a normal
exploitation of the work and does not unreasonably prejudice the legitimate
interests of the author".
Accordingly, national copyright laws in most countries incorporate
exceptions for copying for personal use, research, education, archival copying,
library use and news reporting, based on principles of ‘fair dealing’, or in
the US, the doctrine of ‘fair use’. The scope, strength and flexibility of
these exceptions vary widely between countries and regions, in part due to
differing national jurisprudence, but generally focus on the following
conditions:
·
The purpose and
character of the use – copying must be for private, non-commercial purposes.
Only single or a small number of copies may be reproduced.
·
The proportion of the
work that is copied – copies should be made only of parts of the work. Complete
works may be copied only where originals are not available on the market.
·
Copies of hard copy
works may typically be produced only by reprographic processes. There is also
some freedom to make copies of electronic works as, for example, for
time-shifting of TV programs or archiving of computer software.
·
If there are exemptions
for the benefit of libraries and archives, those institutions must be
accessible to the public and act in a non-commercial way.
·
The legitimate interest
of the right-holder must be taken into account – the effect on the potential
market for the work.
The development and diffusion of digital
technology, however, now permits
unauthorised creation of unlimited, perfect and costless copies, and the almost
instantaneous and worldwide distribution of protected works. The copyright industries are responding by using
digital technology, in the form of encryption technologies and
anti-circumvention measures, supplemented by contract law and sui generis forms of databases
protection. Critics argue that these
measures effectively restrict “fair use”, and may reduce the ability of
teachers, students, researchers and consumers to access information,
particularly in developing countries. On this view, new approaches are needed
to ensure that appropriate “fair use” exceptions can be preserved in this
digital context.[8]
At the 1967 Stockholm conference
of the Berne Convention, developing countries argued for additional
flexibilities within international copyright rules because of their needs for
mass education. The conference produced a Protocol that allowed developing
countries to provide a reduced term of protection of 25 years together with
compulsory licensing for translations into local languages and, most
controversially, for any protected use for educational, scientific or research
purposes. But the Stockholm Protocol
was never ratified because of a lack of consensus between developed and
developing countries. Eventually, in
Paris in 1971, agreement was reached on a watered down set of exemptions for
developing countries, essentially allowing limited compulsory licensing of works
for translation into local languages.
These are set out in an Appendix to the Convention, but it has been of
very little direct benefit to developing countries, as shown by the fact that
only a handful of developing countries have ever included the special
provisions in their national law.[9]
A central question is whether the exemptions and limitations within the existing framework of international rules allow developing countries to set the right balance in protecting copyright whilst addressing their special development needs. There are certainly grounds for doubt. As one distinguished international copyright expert has put it:
“Where a developing country decides to enter
international copyright relations it will generally find that a perceptible gap
remains between what is needed to satisfy its requirements [for education and
transfer of knowledge] and the standard of protection demanded by a
multilateral instrument such as the Berne Convention.” [10]
In fact, our consultations with stakeholders and reading of the evidence suggests that the issues are most serious in relation to access to education materials where demand is not met by the local publishing industries or donor-financed programmes; and in relation to access to computer software, a pre-requisite for access to information and for competitiveness in the global economy. The arrival of the digital era provides great opportunities for developing countries in accessing information and knowledge. The development of digital libraries and archives, Internet-based distance learning programmes, and the ability of scientists and researchers to access sophisticated on-line computer databases of technical information in real time are just some examples. But the arrival of the digital era also poses some new and serious threats for access and dissemination of knowledge. In particular, there is a real risk that the potential of the Internet in the developing world will be lost as rights owners use technology to prevent public access through pay-to-view systems.
COPYRIGHT-BASED
INDUSTRIES AND COPYING OF PROTECTED WORKS
As we note at the beginning of this chapter, copyright-based industries such as publishing and computer software play a major part in the global knowledge-based economy, and the products and services they provide have a central role in facilitating innovation and social and economic development in general. The success of these industries is reflected by their tremendous growth, which has generated millions of high-paying jobs and billions in revenues, including in some developing countries. The computer software industry is also a highly important source of innovation in its own right and its members argue that they have produced dramatic gains in the performance and functionality of many commercial software products in the last decade or so while prices have remained stable or even fallen.
Representatives from these industries have stressed to us the importance of copyright laws and strong protection against unauthorised copying to encourage investments in creativity and innovation, as well as in product and technological development. The scale of these investments in developing creative works and bringing them to market is certainly considerable. For example, according to the Publishers’ Association there are around 600,000 books currently in print in UK. This is a hugely valuable knowledge resource for innovative industries and society at large. And of course, industries must be able to recoup these investments to pay for new generations of knowledge-based products. So, for example, the computer software industry argues that charging licence fees for its products allows companies to generate revenues to fund future R&D.
The prevention of unauthorized copying has always been the principal objective behind the development of international copyright rules and this remains the case. Unauthorised copying of copyrighted works (usually described rather more pejoratively as “piracy” by copyright holders) has a long history and remains an international phenomenon, occurring in both the developed and the developing world. The US, for example, justified its persistent refusal to grant copyright protection to foreign authors during the 19th century on the grounds that this was a necessity to meet the nation’s needs for knowledge and enlightenment. And interestingly, although industry claims that current rates of unauthorised copying are highest in some developing countries and transition economies,[11] the biggest financial losses to rights holders still occur in developed countries, because their market size is so much bigger.[12] The arrival of the digital era has created the fear for the copyright-based industries that they may be able to sell “only one copy” of a new e-book, DVD movie, music CD, or computer programme before it is illegally copied, as a perfect replica at no cost, and may be distributed seamlessly worldwide through computer networks and the Internet.
In the past, however, the evidence shows that weak levels of copyright enforcement have had a major impact on diffusion of knowledge and knowledge-based products in certain cases, such as computer software, throughout the developing world. Indeed, it is arguably the case that many poor people in developing countries have only been able to access certain copyrighted works through using unauthorised copies available at a fraction of the price of the genuine original product. We are therefore concerned that an unintended impact of stronger protection and enforcement of international copyright rules as required, inter alia, by TRIPS will be simply to reduce access to knowledge products in developing countries, with damaging consequences for poor people.
Responding to this concern, representatives from the copyright-based industries point to the special initiatives they are undertaking for developing countries, such as donation schemes and low price “budget” editions of books and computer programmes for cost-sensitive users, as the way forward rather than any weakening of international copyright rules and/or enforcement measures in the developing world. For example, the publishing industry is now supporting an expanding number of initiatives aimed at improving affordable access to books and journals in developing countries and establishing partnerships with publishers in less developed countries to encourage the development of local publishing industries.[13] Likewise, in the computer software industry, a leading software company is making several of its software products available to South Africa’s 32,000 public schools at no charge, thereby helping South African students and teachers become IT-proficient, while helping to build its future markets.
But ultimately commercial companies are responsible to their shareholders. They are not charities, nor are they intended to be. Companies therefore think it is the responsibility of governments from developed countries and development agencies to meet developing countries’ requirement for subsidised access to affordable copyrighted works in order to address their needs for education and transfer of knowledge. As noted in a report presented to the UK Parliament in 1977 and by a recent decision of the UK Copyright Tribunal no one has yet suggested that the makers of notebooks, compasses or rulers should supply them to educational establishments free of charge.[14] So why should the copyright-based industries tolerate widespread unauthorised copying of their books, journals, computer software or scientific databases?
We have considered these arguments carefully. We recognise the value of the voluntary initiatives being undertaken by industry for developing countries and think more could be done in this area. More generally, we are not convinced from our observation in different developing countries that, even from the rightsholder’s perspective, the pricing of products is optimal. To the extent that copying, particularly on a commercial scale, is driven by the ratio of the selling price to the cost of producing copies, there must be scope for the use of more differential pricing in developing countries that would either be revenue-neutral or even revenue-enhancing for producing industries. The fact that publishers are prepared to support various schemes for low or no cost access for institutions in developing countries for on-line publications indicates that they recognise there is scope for differential pricing, with suitable safeguards. Whilst we fully accept that copyright holders have a right to appropriate returns from their investments just as other industries, we believe that from the wider public policy perspective, ultimately it is just as important to ensure that people in developing countries have better access to knowledge, as it is to ensure they have access to other essential inputs for development such as food, water and medicines. It is not clear to us that publishers, and software producers, have got the balance right in facilitating access in developing countries in ways that are consistent with their obligations to shareholders.
Publishers, both of hard copy and on-line books and journals, and
software producers should review their pricing policies to help reduce
unauthorised copying and to facilitate access to their products in developing
countries. Initiatives being undertaken
by publishers to expand access to their products for developing countries are
valuable and we encourage an expansion of such schemes. The extension of free
on-line access initiatives for developing countries to cover all academic
journals is a good example of what could be done.
COPYRIGHT AND ACCESS
Educational Materials
In recent years, there has been a welcome expansion of primary and secondary education in developing countries, and aid has been concentrated rightly in these sectors. Whilst there are still major challenges in achieving “Education for All”, developing countries and their donor partners are making significant progress.[15] Access to books and reading materials at primary and secondary levels in some countries has also improved. This is the result of increased levels of public expenditure on primary educationand international book donation programmes, such as Book Aid International. And importantly, in some countries, it is also because local publishing industries, albeit often at an embryonic stage, are able to produce low cost schoolbooks and reading materials.[16]
However, access to books and learning materials is still a real problem in many developing countries. In 1999, research by the Association for Development of Education in Africa (ADEA), a consortium of donors and developing countries, revealed that shortages of relevant, low cost books for use inside and outside school continue to undermine the provision of good quality education. Indeed, the conclusions of ADEA’s research present a very depressing picture:
“Uneven access to teaching and learning materials,
inadequate provision of reading materials for the development of vital literacy
skills and unacceptable pupil/book ratios continue to predominate. African
publishers continue to be at a disadvantage in an economic context that tends
to favour the import of books from abroad at the expense of those published
in-country.” [17]
But access to books and materials is important for other parts of the education system as well. Developing countries need educated people such as doctors, nurses, lawyers, scientists, researchers, engineers, economists, teachers and accountants. Without people skilled in these professions and a system of life-long learning and education, developing countries will be less able to absorb new technologies, generate innovation, and compete in the global knowledge economy. For example, even if developing countries can obtain cheap medicines they will still need trained doctors and nurses to administer them properly in order to save lives.
However, in many developing
countries, particularly in Sub-Saharan Africa, the tertiary education sector
has sunk to levels where it may soon no longer be able to provide minimum
levels of teaching and research – and this at a time of growing demand for
admissions for undergraduates.[18] With many developing countries already
spending a significant proportion of GNP on education, they may be unable to
find the additional resources required simply to maintain current levels of
tertiary enrolments, let alone improve quality. Clearly, copyright is not the only issue with the weak tertiary
infrastructure but high prices of books and materials and limited access to
Internet-based resources are still important parts of a worsening crisis.
In the tertiary sector, the evidence indicates that access to books and other materials for education and research remains a critical problem in many developing countries, particularly the poorest. Most developing countries remain heavily dependent on imported textbooks and reference books, as this sector is often not commercially feasible for struggling local publishers to enter. The prices of such books are beyond the means of most students.
Libraries
University libraries should play a key role in supporting research and ensuring access to copyrighted books, journals and on-line materials for poor students in developing countries, but they are typically in a very poor state. Donor agencies have provided funding to modernise and re-stock libraries in a number of countries, including providing Internet connectivity and photocopying facilities.[19] More of this assistance is urgently needed. But donors’ systems are just too slow and bureaucratic to enable libraries to maintain up-to-date textbook collections. Generally, the situation for university libraries in the poorer developing countries remains very bleak[20], particularly in Africa, as a recent UNESCO report noted:
“[T]he
downturn in the economic fortunes of African countries during the last
decade or so has had a devastating effect on the quality of library services in
academic institutions, virtually all of which are publicly funded. Most of them
can no longer afford to buy new books, and large proportions of periodical
subscriptions have been cancelled. With a corresponding inability to switch to
the new information technologies, African university libraries in particular,
and African academics in general, face a dim future indeed.”[21]
Our consultations have also found that for better-resourced university libraries in developing countries, such as South Africa, there are sometimes serious problems in having to obtain copyright clearance and pay royalties for materials needed by teachers and students. And the evidence we have reviewed indicates that even these better-funded libraries have had to reduce their subscriptions to academic journals dramatically due to the high costs of maintaining up to date collections. Indeed, even well resourced libraries in developed countries are experiencing extreme difficulty in continuing to stock the full range of journals their academics and students expect. In developed countries the rapid increase in subscription prices for academic journals, and ongoing consolidation in the publishing industry has fuelled an active debate on how researchers can maintain access to the materials they need, and the development of alternative models of on-line publishing such as BioMed Central.[22]
But developing countries also need to be allowed greater freedom to relax international copyright rules to meet their educational and research needs. As we have noted, delegates at the Stockholm conference proposed a package of such amendments to the Berne Convention in 1967. Developed countries rejected these proposals because they were considered to place too radical limitations on copyright protection. Examining the evidence 30 years later, it is clear to us that the special provisions for developing countries that were added to the Berne Convention in 1971, as set out in the Appendix, have not been effective. Further reforms are therefore needed, and different measures may be more or less important in meeting the specific needs in individual countries. As one commentator has put it:
“In some cases, access to scientific journals and books at subsidized prices for a limited period would help greatly. In others, local publishers with limited markets need easy and inexpensive access to foreign books in order to translate them into the local language. In a different context, permission to reprint books from the industrialised countries in the original language is needed to serve an indigenous population literate in English or French but unable to pay the high cost of imported books. And for some countries, most of the elements of an indigenous