[Reader-list] How to stop worrying and learn to live with piracy

[Jeebesh Bagchi]

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.