Submission to UK Independent Review of "IP" and Growth

As promised in my previous post, I include below my submission to the UK Independent Review of "IP" and Growth.

Submission to Independent Review of “IP” and Growth

In this submission I will restrict my comments to two areas: software patents and digital copyright.

On Open Enterprise blog.

UK Independent Review of "IP" and Growth

A couple of weeks ago I wrote about the UK's ”Independent Review of Intellectual Property and Growth”, which is currently soliciting submissions from interested parties. The corresponding Web site is very helpful, providing background information and an entire section that seeks to explain what exactly the review is looking for.

On Open Enterprise blog.

The Economic Consequences of Piracy

I've noted elsewhere that there is a major piece of FUD being put about by content producers: that piracy causes massive damage to a country's economy. But as that post explained with regard to the BSA's claims about the harm of software piracy, here's the reality:

Reducing software piracy will not magically conjure up those hundreds of billions of dollars of economic growth that the BSA invokes, or create huge numbers of new jobs: it will simply move the money around - in fact, it will send more of it outside local economies to the US, and reduce the local employment.

The basic idea is really pretty simple to understand. When people make unauthorised copies of content or software, they save money. But that doesn't mean they put it in a bank: human nature being what it is, that money is generally spent elsewhere in the local economy.

And yet despite the simplicity of this crucial idea, report after report seems to have difficulty grasping it. Here's another [.pdf], this time on film piracy, put together by UK Ipsos MediaCT and Oxford Economics for AFACT (the Australian Federation Against Copyright Theft). The top-line "results":

6,100 Full Time Equivalent (FTE) jobs were forgone across the entire economy (equivalent to more than six times the number of job cuts announced by Telstra in October 2010) including nearly 2,300 forgone directly by the movie industry and retailers. These impacts of piracy on employment persist as long as piracy persists.

Allowing for effects on other industries, some A$1,370m in Gross Output (Sales) was lost across the entire Australian economy.

This was equivalent to a loss of GDP of A$551m across the Australian economy – reducing national economic growth and Australia’s ability to invest in its future.

Tax losses are A$193m, representing money that government could employ for other social uses in areas such as education and healthcare.

What's sad is that the report does try to make reasonable assumptions about piracy:

We do not assume that every pirate version equates to a lost sale.

We do allow for ‘sampling’ - those who see an authorised version subsequent to the pirate version are not treated as contributing to lost revenue. In fact, we make the very cautious assumption that no lost revenue results from piracy if any authorised version is seen subsequently.

We do allow for ‘over-claim’ – we apply a ‘downweight’ to those claiming they would have paid for an authorised version (had the pirate version not been available).

But this laudable attempt at rigour is completely undermined by the fact that nowhere in the report is there any recognition that all this "lost" money does *not* disappear, but is simply channelled elsewhere in the Australian economy, where it might actually create more jobs than it would if spent on films (because of revenue outflows to the US, and the fact that local money would be spent on more labour-intensive industries like retailing or catering.) Similarly, it *does* produce tax revenue for the Australian government, just from different sources.

It would be far more conducive to producing an honest debate about the *real* effects of unauthorised copies on national economies if these key facts were included for a change; by continuing to ignore them, these misleading and one-sided reports amount to little more than industry propaganda.

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Nokiasoft: Who are the Open Source Winners and Losers?

The dust has barely settled on the announcement of the major deal between Nokia and Microsoft, weird possibilities have been and gone, and we are all still pondering the implications. One of the key concerns for readers of this blog will be: what are the effects on free software? And: who will be the open source losers - and winners? What follows is just a first sketch of what the eventual answers may be: expect them to be refined and possibly reversed as more details and reactions emerge.

On Open Enterprise blog.

The Death of (Analogue) Patents

In a post last week, I wrote about the current obsession with “IP”, and noted some moves to make it more suitable for the digital age. In this post, I want to look at the other main class of “IP”, patents. Surprisingly, perhaps, I won't be talking about software patents, not least because I've written plenty on the topic. Instead, I want to consider patents on analogue - that is, purely physical - objects.

On Open Enterprise blog.

AllJoyn Open Source

One of the sure signs that open source has entered the mainstream is when companies not normally associated with this approach starting getting involved. A case in point is Qualcomm, not someone that I've come across in this area before apart from this kind of half-hearted toe-dipping (but maybe I missed earlier work: anyone know of anything previously?) Here's a very interesting project they are supporting:

On Open Enterprise blog.

The Future of UK Copyright

As you may have noticed, the topic of “IP” - “intellectual property” - seems increasingly to the fore these days. Actually, that's not really a new trend: as this helpful ngram shows, there has been a really rapid uptake of the term since the 1980s. But promoting the supposed virtues and use of “IP” ever-more widely has turned into something of a bandwagon for politicians who want to be seen to be doing something, and for those who want to assert their intellectual monopolies more strongly.

On Open Enterprise blog.

Piracy/Counterfeit Bait and Switch

As I've noted before, one of the tricks used in the current ACTA negotiations is to blur the lines between counterfeiting and piracy, and to switch between the two whenever it suits the argument. So it's no surprise that a conference bringing together many intellectual monopoly maximalists, the grandly-titled "Global Congress Combating Counterfeiting and Piracy", used the same trick.

The emphasis is very much on the frightening "big numbers" of counterfeiting:

the problem of counterfeiting is growing, which is illustrated by a report on challenges facing the world in 2011, which was recently published by Robert Greenhill from the World Economic Forum. The report says that the illegal economy, corruption, and organized crime all work together to the detriment of society. It estimates the total value of counterfeits in the world to be $360 billion, including $200 billion in counterfeit medicines and $50 billion in counterfeit cigarettes. There is also $60 billion worth of pirated videos. This lessens the economic competitiveness of many countries.

Even if we accept what are probably inflated numbers, the last sentence is simply wrong. Countries where counterfeits are widely sold may damage themselves in the long term through fake medicines, but in the short term they keep more money in the local economy, which is likely to boost their competitiveness since it allows for greater economies of scale there.

Similarly, a speaker from Interpol talked about:

two specific operations taken in the past year to combat piracy and counterfeiting. Operation Jupiter 5 in South America involved 13 countries and led to over 7000 arrests and the seizure of over $200 million worth of counterfeit goods.

Meanwhile:

Gerhard Bauer, President of the International Trademark Association (ITA) noted that the size of the counterfeiting phenomena is so vast that it is hard to grasp, and that it leads to the ruination of many legitimate businesses. The ITA participated in a summit yesterday to discuss how different organizations can work together to build awareness of the program and to build support for ACTA.

None of this, of course, has anything to do with Internet piracy, and yet, as the mention of ACTA reminds us, it is precisely in this field that intellectual monopolists have been most active - and disproportionate in their demands.

The crucial role of ACTA was admitted during the conference:

ACTA is very important because it is more ambitious than any other previous agreement, including unique provisions on seizure and destruction of infringing goods; more criminal prosecutions; more possibilities for enforcement at the border. Especially significant, ACTA is the first treaty that specifically deals with the internet. He noted civil society concerns with ACTA, which he called “legitimate,” but which “must be allayed.” ACTA is compatible with the Doha Declaration, won’t interfere with trade of generic drugs, contains and contains no measures for intrusive searches of passengers. Civil society must be convinced of this.

Again, there is the confusion between counterfeiting - "seizure and destruction of infringing goods...enforcement at the border" - and the digital world, whose goods cannot be seized or destroyed, and for which borders are largely nominal.

Significantly, as the speaker seeks to address "civil society concerns with ACTA", he does not mention the fact that ISPs will be forced to become agents of intellectual monopolists, or the knock-on loss of privacy that will result, or the chilling effect this will have on free speech. That's because he has no answer to these very serious criticisms of ACTA, which has been pushed through largely by exploiting the deliberate confusion between counterfeiting, with its undoubted analogue risks, and digital piracy, which has none.

Follow me @glynmoody on Twitter or identi.ca.

UK Cyberwar - or UK Cyberwallies?

One of the most embarrassing features of the dotcom era was a habit of putting “cyber” in front of everything to make it look hot and trendy (disclosure: I did it too, but I was 15 years younger then...). Don't look now, but it's back:

On Open Enterprise blog.