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Will the UK take its Digital Opportunity?

Wednesday, May 18th, 2011

The final report of the Hargreaves Commission is now available. The commission was appointed by the Cameron government.

The Commission appeared unable to directly recommend that the UK adopt fair use provisions of the kind already found in the law of the United States and the Philippines, and more recently Israel and Chile because the UK is bound by an EU directive which limits copyright exceptions to a narrow set. Because of the constraints imposed by the EU the Commission suggests that the UK engage in a long term process to create a flexible provision in EU copyright law that will enable new uses. It also recommends that within the constraints of EU directive the UK should introduce exceptions for research, format shifting, digitisation by libraries, and parody. The Commission also recommends that licensing terms should not be allowed to trump legislative exceptions.

The report recommends that the UK should not follow the European Patent Office in ignoring the empirical evidence about software patents. The UK should therefore continue to refuse to grant patents over software that does not have a technical effect.

The Report is entitled “Digital Opportunity”. The question is whether the UK government will take that opportunity. As the Hargreaves Report itself points out some of the recommendations were made five years ago by the Gouwers Review of Copyright but they were never implemented. Instead the Labour party government ignored it and passed controversial legislation demanded by multinational record companies.

Just because good sense is available for governments doesn’t mean that they follow it.

Of Black Robes, Panda’s Thumbs and Legal Anachronisms

Saturday, April 23rd, 2011

Not every reader of this blog will have known this but I am admitted as an attorney in the Republic of South Africa. When South African attorneys appear in court we must wear a long black robe. This startling anachronism, dates from 17th Century England, apparently becoming uniform for all barristers mourning the death of Charles II of England in 1685. Some accounts suggest that mourning for the King was continued long after the usual period as a show of support for the monarchy, and in particular James II.

To those who are not members of the legal profession in a British Commonwealth jurisdiction, the picture of African lawyers wearing 17th century English robes over 18th century country leisure garb (suits), must seem like a bizarre relic from a pre-Modern past. But the public which finds the practice picturesque, if inexplicable, does not perceive that the legal institutions of companies, copyright and patents are of greater age and of equally anachronistic origin.

Companies were created as the preferred instrument of colonialism; the East India Company was granted a Royal Charter in 1600, the Vereenigde Oost-Indische Compagnie (Dutch East India Company) was chartered in 1602, while the
still extant Hudson Bay Company was chartered in, 1670.

In an important but too often overlooked essay entitled ‘Intellectual Property Institutions and Panda’s Thumbs’ economist Paul David likened intellectual property arrangements to the thumb of the Giant Panda. The “thumb” is not a digit at all but an enlarged sesamoid bone which does enable panda’s to grasp but is mechanically limited and inefficient. David explains that copyright and patent are not carefully calibrated mechanisms for encouraging innovation in modern economies but as ill-suited contraptions. Patents and copyright have been developed from the privilegi granted by mercantilist cities in Renaissance Italy, and letters-patent wielded in patronage politics by putative absolute monarchs. The result David notes is that copyright and patent are “a mixture of the intended and unintended consequences of an undirected historical process on which the the varied interests of many parties, acting at different points (some widely separated in time and space) have left an enduring mark.”

Contemporary discourse on the “Knowledge Economy” often suggests that patent and copyright are unquestioningly appropriate amongst Moore’s Law, network effects, cDNA and nanobots. It’s worth asking though whether they make any more sense than African lawyers sweltering in black robes, suits and ties in stifling (non air conditioned) court rooms.

Just because a legal concept or institution has a long history that does not make it bad. Novelty for its own sake is not desirable in legal regulation. There is something to be said for an argument that legal institutions that have developed over a long time period may incorporate the kind of pragmatic learning that Utopian legislative schemes may not. But patents and copyrights, begun as privileges, and re-purposed to enable Industrial Revolution capitalists to control the means of production exhibit not such pragmatic learning but an increasingly grandiose denial of the extingencies of technological change. Most lawyers readily acknowledge that law changes at a far slower pace than technology. That in itself is not necessarily problematic. The lag between the social and economic changes in which human ingenuity plays a central part, and legal regulation enables the shape of problems to become clear, or at least clearer than at first. Perhaps other solutions may emerge which render a legal solution unnecessary, so much the better. Even if problems remain however some delay will enable a deeper appreciation of the problem. Patent and copyright however by their nature do not lag emerging technology but set the conditions whether some technologies can emerge at all. On a micro level a patent might prevent the emergence of a competitor to an incumbent. That is difficult to detect and police (especially by competition law) since potential competitors and competing technologies may be still born, or strangled at birth.On a macro level intellectual property laws have been mobilized and extensively modified ostensibly to make them more suitable for technological change but, as is becoming increasingly obvious in battles over music and movies, to entrench existing business models.

Proponents of the current copyright and patent schemes will be quick to point out that it will be difficult to abandon the schemes now that so much is configured around them. We are to some extend prisoner’s of history. Economist Fritz Machlup suggested something similar in 1958, that without sufficient economic knowledge we cannot conclude that that patent schemes contribute to an economy over all. In the absence of such knowledge those countries without patents system should not implement them while those with should probably keep them and ‘muddle through’. It would be irresponsible Machlup warned on the basis of then current economic knowledge to institute a patent system. Davids echoed those conclusions in 1993, no greater economic knowledge having become available. By 2001 economists have been unable to find clear evidence that patents are a useful or necessary institution. Despite the warnings of Machlup and David and without any compelling new knowledge emerging, developing countries that did not have much in the way of copyright and patent legislation were compelled to invest their resources in creating and maintaining copyright and patent as institutions through the TRIPS agreement. The world has become even more path dependent.

How does this history change how we think about copyright and patent? It will no longer come as a surprise to us when they produce sub-optimal outcomes. Nor will we require a very high threshold of evidence for reforms which seek to ameliorate the negative effects of the current schemes.

More subtly we will start to think about these problems differently as we recognize the contingent nature of the current rules.