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The purpose of this article is to give an overview of the actual situation concerning Intellectual Property (IP) on Internet.

Vue d'ensemble de la situation actuelle sur internet

Indeed, in recent weeks, the Internet has been through an unprecedented cyclone whose eye is the protection IP. On the one hand, governments all propose obsolete bills (SOPA, PIPA, Hadopi 3, …), on the other side, specialists and the top Internet Companies actively protest against the crazy measures proposed in the bills.

Since a few days, we know that SOPA and PIPA have been postponed, unfortunately this is only a temporary victory since ACTA (1 and 2) is reappearing in Europe and C-11 in Canada: the fight is not over. How can such controversial law propositions manage to get such a political rebound?  A major reason is that big companies’ lobbies (mostly the MPAA and RIAA) regrouped against an ennemy common to all economic sectors: counterfeiting.

Copyright, Patent, Trademark protection, … the lobbies have associated all counterfeiting problems in order to gather companies as various and important as Nike, Burberry, Electronics Arts, Time Warner,… and many other. A more complete list of SOPA supporters can be found here.

This reasoning is fallacious from the start because it makes no difference between digital and non-digital products:

  • In the case of non-digitalizable, anti-counterfeiting laws protect the customer as much as the seller. Indeed, these laws prevent the proliferation of false brand product and guarantees a certain quality to the buyer and contributes to public health (in the case of food and medicines for example).  The rest of this article only concerns digitalizable products.
  • In the case of a digitalizable product (software or audiovisual), we must consider three intrinsic characteristics,
    it is:
    • Indivisible: The production costs are almost independent of the amount of units produced (thus of users),
    • Non rival: there is no destruction in ths usage,
    • Non exclusive: it is complicated to prevent a third party from using it.

Would it be a property of digital data to be copiable? In 2008, Paul Krugman (Nobel Price of Economics in 2008) published a theory in the New York Times that confirms these caracteristics “Bit by bit, everything that can be digitized will be digitized, making intellectual property ever easier to copy and ever harder to sell for more than a nominal price. And we’ll have to find business and economic models that take this reality into account”.

It is then interesting to recall the legitimity of copyright and public domain, and Victor Hugo’s point of view: “The book, as book, belongs to the writer, but as thought, it belongs — the word is not too vast — to the human kind. All minds are eligible. If one of the two rights, the right of the writer and the right of the human mind had to be sacrificed, it would, of course, be the right of the writer, because the public interest our only concern, and all must pass before me”.  Isn’t it obvious that since our earliest childhood, we learn by imitating.  Whether it be our parents, idols, teachers, knowledge, … Learning by imitation is innate us, and it is this promoting of the transmission of knowledge that allowed us to turn a tree in an office chair in only a few million years.

MegaUpload’s takedown is just on time, because if it is not directly related to these new law projects, this example shows us two realities (we won’t discuss the eventual guiltiness of the parties):

  • The existing legal weapons in favor of the protection of IP is effective and sufficient.
  • A few thousand users not respecting the conditions of a free of use service lead to the takedown of said service, including for the many businesses and communities that where using the service for legitimate purpose. Imagine what would have happened if MegaUpload would’ve been hosted at Amazon!

Many movements showed their disapproval towards this exaggerated cultural protectionism, here are some of the most famous:

The Music and Movies industries found unique ways to avoid the law of supply and demand.  The zone restrictions on DVD’s illustrate this by an artificially maintained high prices: such practices are strikingly similar to those found in cartels resorting to unlawful agreements. According to Numérama, “In 1987, the 33,6% VAT on discs was lowered to 19,6%. Sales then rose up by 91%.”  The music sector thus seems to have a great price elasticity.
According to the court, MegaUpload would have caused more than 500.000.000$ shortfall and generated a profit of 175.000.000$.  This proves that an enormous potential market exists, that is not ready to pay the actual official price, but that is ready to pay! This confirms that by adjusting price levels to the customers expectations, the sales volume would raise in a spectacular manner – for the greatest good of culture, the individual and the company! The only ditch between this eden is the difficulty for majors to adapt to a market that completely muted in a very short period of time.

Christopher Dodd, who was US Senator from Connecticut and is now CEO of the MPAA recently announced: Those who count on quote ‘Hollywood’ for support need to understand that this industry is watching very carefully who’s going to stand up for them when their job is at stake. Don’t ask me to write a check for you when you think your job is at risk and then don’t pay any attention to me when my job is at stake“. This public bribery confession triggered a public petition on the White House’s website titled “Investigate Chris Dodd and the MPAA for bribery after he publicly admited to bribing politicans to pass legislation.”

The reaction of certain European politicians (1 et 2) applauding MegaUpload’s takedown proves their total misunderstanding of the media as well as their incapacity to react towards a major technological change.  As Internet specialists, it is our duty to inform our leaders of the horrible mistake they are about to commit.