Copyright and LeadershipThe Middle-Ground Approach:
A call for international standards and common- sense
by John Whish

Bill Gates of Microsoft continues his reign as one of the richest individuals on the planet. Linus Torvalds the inventor of Linux isn't even a household name. Yet both have created products which arguably do the same thing. One protects his developments with religious fervour yet the other freely distributes and designs his product for public development.

Bill Gates, and most lawyers, believe that intellectual property is a commodity and that stringent copyright protection is a necessity. Yet how do you account for Torvalds' seemingly altruistic Linux?

One theory argues that software development (like most technological advances) is inevitable. If I don't develop it today then someone else will tomorrow, therefore why should I receive anything for it! Ah…there's the rub, and perhaps one of the forgotten issues of the copyright argument - the profit motive.

I don't believe for a second that when Bill Gates and Steve Jobs were puttering about in Steve's garage that they were motivated by anything else other than how to make a dollar off their software. Granted, Bill has done some wonderfully philanthropic things while he still continues to accumulate money at an astounding rate.

Most drug companies fund large research and development projects for profit, not for the good of mankind. Their new formulae are protected and codified in case law as if they were actual products. Then along comes a company like Apotex Canada headed by Barry Schwartz, who is able to re-create these drugs in generic form for a fraction of the cost. Sure, Apotex is also in the business of making a profit, but their profits are not as large as the traditional drug companies. Ironically, Apotex continues to grow and do extremely well.

What do Linus Torvalds and Barry Schwartz have in common? They both continue to make a fair dollar on their respective products, yet they freely share their development with others. The key word here is "fair."

This is the "middle-ground" theory of copyright protection and intellectual capital. Each has provided what may be construed as a basic "outline" for building a product. Torvalds protects his rule that others can make products from his community's software as long as they release the source-code which opens up the path to further development. Ironically, this is protected under the GNU=General Public Licence. Apotex produces products under generic names using formulae which have had their copyright protections expire.

Middle-Ground and Profit
The "middle-ground" theory, on the surface, seems to fly in the face of the profit motive. One could argue that without profit, research and development would grind to a halt and all the incentive for writers to write and software to advance would cease.

Not so. For example, Red Hat Software continues to develop software at a reasonable profit based on the Linux "open" operating system. Apotex continues to make improved generic drugs at affordable prices with formulae available to everyone..

Like Apotex, people often say that Linus Torvald is not the actual "creator" of his software. Torvalds' Linux was based on Unix - proprietary software that was created about a decade ago. Similarly, Apotex may actually also be using someone else's creation. Lawsuits are always at the periphery of both initiatives.

In reality, both cases share many similarities. Apotex usually manufactures its generic drugs based on formulae that are not new, most often where the copyright protection has lapsed. Linux' foundation lays in Unix but has now advanced far beyond. Both are using another creation as a foundation for something new without any financial recognition to the inventor. Both profit from someone else's creation - creations are no longer new and arguably should now provide wider community benefit. This segues into the second portion of the 'middle-ground' theory of copyright and intellectual property protection.--the time lag - broader societal benefit.

Protection vs. Time lag & Social Benefit
Several years ago Hollywood began trying to protect itself from illicit copies of movies. It developed complex copy-guard systems such as "Macrovision." Today's latest encoding systems will enable you to play a feature on your DVD only for the 24 hours for which you paid. New products (feature films) are now brought to market with the understanding that there will only be a limited shelf life before the exclusivity of copyright protection is compromised. The great fear here is that the "time-lag" is getting shorter and shorter. In most cases if a large Hollywood feature is released on a Thursday, illicit copies are on the street by the following day. Most successful Hollywood features easily re-coup their production costs in a single weekend. This short payoff vs. 'time-lag' has become the new benchmark for success.

Hollywood has recognised the inevitability of bootleg DVD's appearing within days (or even prior to) of a feature films release. This puts an emphasis on maximizing the first weekend's box office receipts. First weekend receipts have become a new benchmark of success. There's an easy formula that can calculate the number of screens required for a weekend release to actually return a dollar. Plus, let's not forget that Hollywood will always receive a tidy sum for a later Broadcast release and more. Ironically, Hollywood's main copyright concern now appears to be with DVD releases. It is estimated that 50% of movie revenues/profits are now derived from home DVD sales and rentals. Thus, the current model in Hollywood is to re-coup production costs within the first weekend, then rely on DVD sales for overall profit. Perhaps Hollywood has finally recognised that if technology advancements are inevitable, then why not leverage that technology to really protect a shorter 'time-lag.'

Once again, the "middle-ground" theory seems to be evolving. Hollywood seems to have accepted the inevitability of a small window of copyright protection. Surely now, it would be easier to keep the copyright lawyers and encoding technologists busy guarding a smaller window of opportunity rather than protecting rights in perpetuity.

The "middle-ground" approach to copyright protection is something that the North American mind needs to embrace. The pure business mentality operating here and in Western Europe treats copyright purely as a commodity - something that can be owned and protected.

In other parts of the world, copyright is treated as community property, something that simply exists for everyone's use. For example, the accessibility and acceptance of bootleg movies in Mainland China is the norm. Current release DVD's are sold in the street without any fear of prosecution. To force the masses to pay developed world prices would be inhumane if not impossible.

In a global economy, the issues of copyright and intellectual property become even more important and confusing. The confusion often lies in the different political and cultural views on this issue. Copyright issues can be crucial to development in the third world. (i.e. the availability of generic drugs) Yet they have now been thrown into the complex mix of relationships between technically advanced countries and the third world combined with the pragmatic issues of international trade treaties.

If an internationally agreed-upon "middle-ground" approach were adopted, then surely international trade management and policies could be more easily implemented. The General Agreement on Trades and Tariffs (GATT) only touched lightly on intellectual property rights. It has been only recently that the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) has been adopted by many developed nations. The acronyms continue with the fine-tuning of the WIPO (World Intellectual Property Organization) agreement. Fortunately, WIPO is the first agreement to address the dangers of copyright infringement due to the internet, but resolving the issues will be much more challenging.

Hidden behind all of these agreements are both political and wealth enhancing general trade agreement agendas. Many developed countries feel that copyright agreement may simply be a part of straightforward trade negotiations with other countries. The United States with its firm stand on copyright infringement tries to implement its stance on other third world countries in order to gain trade concessions - not stopping to consider the other world's value stance.

Once again a 'middle-ground' approach must be maintained. International common-sense cannot afford to ignore the needs of the third world which operates with different values and views of such things as copyright infringement. Recognition must be made to the different cultural views on intellectual property. This is perhaps best summed up by Harry Hillman Chartrands paper on Intellectual Property in the Global Village.

In the emerging global, knowledge -based econom,y the issue of intellectual property rights will play a critical role in international trade, development of the information superhighway and in the relationship between various neighbourhoods. (cultures) To the first world, intellectual property is a commercial commodity and the creator is the individual. To the second world, intellectual property belongs to the state. To the Third World, intellectual property is often the product of communitarian action and activity. To the forth world intellectual property embodies the soul and spirit of a people. Recognition of the different perspectives is essential if cultural diversity is to be preserved, fostered and encouraged. Without a multiplicity of intellectual property rights regimes, the global village could become as banal, homogenous and monotonous as the suburbs of modern North American cities. (1)

It appears that progress is underway towards an international "middle-ground" approach to copyright protection. The Supreme Court of Canada extolled the virtues of a "middle-ground" approach and also incorporated a sensible time-lag for copyright protection. A statement for proper understanding and balance from the Court was issued in a landmark case….

"The proper balance…lies not only in recognizing the creators rights but in giving due weight to their limited nature…excessive control by holders of copyrights and other forms of intellectual property may unduly limit the ability of the public domain to incorporate and embellish creative innovation in the long-term interests of society as a whole, or create practical obstacles to proper utilization." (2)

In summary, copyright and intellectual property issues must be treated with common-sense and "middle ground" attitudes. Anything less will fly in the face of our own integrity and international social responsibilities. Increasing pressures from countries that are pre-occupied with the profit side of intellectual property will strain international relations and put undue pressure on leadership decisions. One can only hope that common-sense will rule. If so, at the very least, a degree of social conscience will prevail and be mixed with modest profit expectations. One can only hope that intellectual property decisions do not become overly burdened by legal complexities and political trade agendas.

John Whish is General Manager, Toronto, of PS Canada. PS Canada provides camera, lighting and grip equipment to the feature film, television and entertainment sectors coast to coast. With over 25 years of industry leadership experience his previous positions include VP Operations for Atlantis Broadcasting, and Director of Operations for Corus Television in Toronto. He attended the Alliance-Atlantis Banff Television Executive Program in January 2002. He can be reached at: johnwhish@psps.com

Notes
[1] May be cited as/On peut citer comme suit:
Harry Hillman Chartrand, "Intellectual Property in the Global Village," Government Information in Canada/Information gouvernementale au Canada, Vol. 1, no. 4.1.
Harry Hillman Chartrand
Cultural Economist
706 Landsdowne Avenue
Saskatoon, Saskatchewan
S7N 1E5

(2) Toronto Star, Monday, October 20th, 2003. 'Law Bytes': Michael Geist Canadian Research Chair in Internet and E-Commerce Law, University of Ottawa.