A proposed tightening up of copyright legislation has divided businesses. Some say it will prevent crime, others argue it will stifle creativity
The Independent, 5 November 2003
You might expect that the usual suspects - online activists, civil liberties groups - would be against a law called the "Intellectual Property Enforcement Directive". And they are. What's more surprising is that corporations such as Nokia and BT, themselves big rights-holders, are also questioning the long-term implications of the legislation, which will be discussed by the European Parliament next week.
The worry is that the legislation could stifle technological innovation and commercial competition, and that it erodes the rights of consumers to use products as they see fit.
Initially the directive was planned to cover copyright, trademarks and patents. Now the UK-based Foundation for Information Policy Research (FIPR) suggests that it will turn out to be even more far-reaching than the controversial US Digital Millenium Copyright Act (DMCA), which has recently led to hundreds of people - including a 12-year-old and a grandmother - being sued for sharing music files.
Ian Brown, director of the FIPR, says that the directive tilts the whole legislation towards the large global-rights holders. He questions whether the explosion in usage of the internet, or even the development of technologies such as Apple's iTunes and iPod - which offer a legitimate means of downloading music - would have occurred or been so commercially viable if this legislation had existed earlier. Apple wouldn't comment; but companies such as Nokia and BT are beginning to question the long-term implications of the legislation.
BT believes that the current proposals are too broad in scope and threaten the delicate balance of existing legislation. The company has no problem with legislation aimed at addressing counterfeiting. But it doesn't find the directive, as it stands, acceptable. Nor do many others. Tim Frain, director of intellectual property at Nokia, says that while "counterfeiting and piracy represent a serious drain on the proper rewards available to rights-holders" - necessitating some form of legislation - the European directive could interfere with everyday business practice.
Here's what worries him. Whereas at the moment companies will usually negotiate over copyright licences and patent details if some form of infringement is likely - which allows a certain amount of informed risk-taking in developing new products and services - the European legislation will make managers individually liable for infringement of copyright and patents.
"Once managers become personally liable to a criminal conviction if copyright is infringed, as they would be under the new legislation, then they are less likely to take informed risks, and this will ultimately stifle technological innovation," says Frain.
Frances Moore, European regional director for the IFPI, which represents the recording industry worldwide, and is a strong supporter of the enforcement directive, doesn't agree. "If anything the directive should help innovation," she says. "Pirates and counterfeiters don't re-invest anything in industry." Piracy, and the resulting financial drain on companies, inhibits innovation, she argues.
This is also the view held by the UK Patent Office. Dr Jeremy Philpott, a marketing executive for the organisation, notes that "the directive is aimed at large-scale, substantial and commercial counterfeiting and piracy, typically done by organised crime gangs. It is not intended to target teenagers who engage in small-scale file-sharing."
Moore stresses that the directive does not add any extra rights to the EU member states' existing copyright legislation, such as the European Copyright Directive which came into effect - pretty much unnoticed - in Britain on 31 October. "What the legislation under discussion does is harmonise the enforcement procedures for the existing legislation," she explains.
But will the enforcement directive do what its backers want it to - work against pirates and counterfeiters? The IFPI reckons the directive is only the first step, and that its effectiveness really depends on each member state having the political will to see piracy and counterfeiting as a serious issue.
Moore and her colleagues want legislative tools to tackle a problem to which they say the film, video, music, business and leisure software sectors lose more than €4.5bn (£3bn) annually. "In many ways we are disappointed that the current directive under discussion does not go far enough," she says.
That does not allay the concerns of organisations such as the FIPR. Professor Ross Anderson, the organisation's chairman, believes the draft directive has implications far beyond combating piracy and counterfeiting. He emphasised its effect on innovation in the software sector, highlighting in particular the problems that smaller companies could face unprotected by the historic compromise that enables companies to reverse-engineer competitors' products to produce something that does the same work - but doesn't use the same methods. Under the directive, reverse-engineering (testing a product's outputs against a series of inputs, and guessing what the machine in the middle does) would be illegal.
"Tilting the playing field by introducing the threat of criminal penalties will make life significantly harder for the free software community in the long term," says Professor Anderson. That will reduce competition in the software market.
He says there are also implications for universities, libraries and the disabled: universities may become liable if students swap copyrighted songs over their networks, while the use of electronic books and book readers for the blind will be limited - unless a US-style exemption is incorporated in the legislation.
Professor Anderson also warns that internet and communications firms could become targets for litigation: after all, they provide a service used by people who abuse IP rights.
If that's worrying you - and the FIPR thinks it should - then there is one ray of light: the directive isn't law yet. But it soon might be.