Intellectual Property Rights in an Age of Electronics and Information

Chapter 8

Impact of New Technologieson the International Intellectual

Property System

Contents

PageFindings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...........................213

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .,..214

Early History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .............................214

Present International Intellectual Property System ..,,, . . . . . . . . . . . . . . . . . 215Harmonization of Disparate National Intellectual Property” Systems . .............215Principle of National Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............219Minimum Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................219

Stresses on the International Intellectual Property System. . ......................220Increasing Flows of Information and Information-Based Products and Services

Between Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................221Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................,223Growing Importance of Information and Information-Based Products and

Services to National Economies and International Trade and Competitiveness ....224Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................,......225Increasing Cultural and Political Significance of Information and

Information-Based Products and services . . . . . . . . . . . . . . . . . . . . . . . . . . ........228Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................230Emergence of New Information-Based Products and Services That Do Not

Correspond to Traditional Intellectual Property Protections . . . . . . . .............232Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......235Increasing Difficulty of Enforcing Intellectual Property Rights Caused by

Emerging Information and Communication Technologies . .....................237Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................246Growing Convergence of International Intellectual Property Issues With Other

International Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...247Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...............,.........249

Implications for Future U.S. International Intellectual Property Policy . ............250

TablesTable No. Page

8-l. International Intellectual Property Agreements . .............................2168-2. Membership in the Berne Convention, the Universal Copyright Convention,

and the Paris Convention for the protection of Industrial Property ..., . ........2188-3. Estimated Losses From Piracy in Ten Selected Countries . ....................2418-4. Countries and Regions That Infringe Copyrights of U.S. Motion Picture and

Television, Prerecorded Entertainment, Publishing, and Advertising Industries . . .2428-5. Policy Options for Addressing International Intellectual Property Issues . .......251

FiguresFigures No. Page

8-1. Shrinking of Our Planet by Humans’ Increased Travel and Communications .. ...2228-2. Computer Utilization: Selected Countries, 13 Sectors . ........................2268-3. The Speed of Change: Intervals Between Discovery and Application in

Physical Science. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................2338-4. The Level and Location of International Counterfeit Activity of U.S. Products ...239

Chapter 8

Impact of New Technologieson the International Intellectual

Property System

FINDINGS

OTA found that recent developments in in-formation and communication technologies arecreating new stresses on the international in-tellectual property system. Such developmentsinclude:

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●

●

●

●

●

the increasing flow of information andinformation-based products and servicesamong nations;the growing economic importance of in-formation and related products and serv-ices, both within and between nations;the increasing cultural and political sig-nificance of information and related prod-ucts and services;the emergence of new information-basedproducts and services that do not corre-spond to traditional categories of pro-tection;the increasing difficulty of enforcing in-tellectual property rights at the interna-tional level; andthe growing convergence of internationalintellectual property issues with other in-ternational issues.

Given their magnitude, these technologicaldevelopments pose novel difficulties that chal-lenge the relative stability of the internationalsystem. They affect not only the internationallegal system, but also international economicand political relations. Consequently, theyhave major implications for the United Statesboth as a participant in the international in-tellectual property system and also with re-spect to its choices for domestic intellectualproperty policy. These policy implications are:

● As information and communication tech-nologies facilitate the international ex-

change of intellectual property, domesticintellectual property issues will need tobe resolved within an international con-text and according to internationally agreedupon norms.As technological change prompts greaterneed for rapid international consensus onhow and what to protect, the UnitedStates will need to take greater interna-tional action to keep abreast of as well asinfluence the development of internationalpolicies for the protection of new tech-nologies.As information and information-basedproducts and services become major tradeitems and the basis for economic growth,international trade and economic consider-ations will increasingly be brought to bearon the resolution of international intellec-tual property issues.Given the growing cultural and politicalsignificance of information-based prod-ucts and services, international politicalrelations will need to be taken into accountin resolving international intellectual prop-erty issues.As information and communication tech-nologies undermine the traditional mech-anisms for enforcing intellectual propertyrights, the international community willneed to cooperate and coordinate their ef-forts to provide adequate and uniform en-forcement mechanisms and remedies.Given the convergence of international in-tellectual property issues with other in-ternational issues, the United Statesmight need to establish domestic institu-tional arrangements to develop and coor-dinate consistent international policies.

213

214 • Intellectual Property Rights in an Age of Electronics and Information

The United States can choose among a vari-ety of policy strategies to deal with technologi-cal change and its effects on the internationalintellectual property system. There is no clear-cut, single strategy, however, that will com-prehensively address all international intellec-tual property issues. Moreover, many policystrategies may conflict with one another andexacerbate other stresses on the internationalintellectual property system. Thus, the UnitedStates will need to make fundamental decisionsabout how it would like to frame international

intellectual property issues (for example, interms of trade, legal, or political relations) anddesign its international intellectual propertypolicies accordingly. As information and com-munication technologies become major factorsin international trade and nations’ economicand social development, such policy decisionswill become more significant to many aspectsof U.S. foreign policy—from international is-sues of trade, defense, and foreign aid to is-sues of international information and commu-nication policy.

INTRODUCTIONHistorically, U.S. intellectual property pol-

icy developed in isolation from the rest of theworld. Such isolation was possible becauseprint materials were confined, for the mostpart, within national borders. Over time andas the necessity arose, the United States slowlybegan to extend its participation in the inter-national intellectual property system.

Recently, however, new technological devel-opments have led to a great expansion in thenumber of ways to create, store, reproduce, dis-tribute, and transmit literary, scientific, andcreative works. The progressive developmentof, for example, radio, television, and comput-ers coupled with advanced telecommunicationand satellite systems have greatly increasedinternational distribution and access to works.These technological developments are creat-ing new stresses on the international intellec-tual property system, which raise questionsabout whether the United States should play

EARLYBefore the 19th century, intellectual prop-

erty protection was largely a domestic concern.Because of the limited intercourse and com-munication among nations, works were distrib-uted almost exclusively within their authors’country. Thus, the lack of international pro-tection caused little concern.

a more active role in the international intellec-tual property system.

To examine the effects of new communica-tion and information technologies on the in-ternational intellectual property system andthe adequacy of U.S. participation in it, thischapter will:

1.

2.

3.

4.

review the early history of U.S. partici-pation in the international intellectualproperty system;describe the present international intellec-tual property system;describe how technological developmentsmay affect the international intellectualproperty system; andsuggest the implications that these devel-opments have for both the level and typeof U.S. participation in the internationalintellectual property system and for U.S.domestic intellectual property policy.

HISTORY

By the early 1800s, a variety of social andtechnological developments began to generateinterest in international intellectual propertyprotection. Increased trade, communications,and travel were important factors, as was thegrowing practice of learning foreign languages.In response, the European nations began to

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Ch. 8—Irnpact of New Technologies on the International Intellectual Property System ● 215

consider mechanisms to ensure protectionabroad for their domestic works, as well as toprotect foreign works. These nations first setup a number of bilateral protection agree-ments; then, in 1866, many of the Europeannations joined together and signed the firstmultilateral agreement, the Berne Convention.1

While many European states relied on mul-tilateral agreements to regulate their copyrightrelations, the United States did not participatein any international copyright arrangementsfor the first 100 years of its existence, nor didit recognize any copyright protection for for-eign works or authors.z In fact, in the first U.S.copyright law of 1790, Congress explicitly re-stricted the protection of foreign works:

‘Edward W. Ploman and L. Clark Hamilton, Copyright: IrI-teffec.tual Property in the Information Age (London: Routledge& Kegan Paul, 1980), p. 18.

The position of the United States was almost unique at thetime. The major Western nations early on made provisions forthe international protection of authors’ rights. Acting in 1828,Denmark was the first, Prussia followed in 1836 and Englandin 1837. France in 1852 and Belgium in 1854 also granted pro-tection for alI for foreign works. By the mid-19th century, onlythe Soviet Union, the Ottoman Empire, and the United Statesdid not grant protection for foreign works. Aubert J. Clark, TheMovement for International Copyright in Nineteenth CenturyAmerica, (Washington DC: The Catholic University Press, 1960),p. 26.

. . . [N]othing in this act shall be construed toextend to prohibit the importation or vend-ing, reprinting or publishing within theUnited States, of any map, chart, book orbooks, written or printed, or published by anyperson not a citizen of the United States, inforeign parts or places without the jurisdic-tion of the United States.3

It was not until 1891, when Congress passedthe Chace International Copyright Act, thatthe United States begin to recognize interna-tional copyright relations. The act, however,provided neither for multilateral agreementsnor for the protection for foreign works man-ufactured outside the United States.4 But itdid extend copyright relations to nations foundand proclaimed by the President to afford ade-quate protection to American works. This actprovided the basis for all of the U.S. bilateralcopyright relations for more than the next 60years.

‘Committee on the Judiciary, Subcommittee on Patents,Copyrights, and Trademarks, hearing on “Oversight on Inter-national Copyrights, ’ Sept. 24, 1984, p. 28.

‘The manufacturing requirement, still in existence today al-beit in a much diluted form, stipulates that nondramatic liter-ary material must be manufactured in the United States (orCanada) to enjoy full copyright protection in the United States.This requirement is scheduled to be repealed as of July 1986.Title 17 U.S.C. Sec. 601(a).

PRESENT INTERNATIONAL INTELLECTUALPROPERTY SYSTEM

Over the last century, the international sys-tem for protecting intellectual property hasbeen quite stable, displaying a higher level ofcooperation than other international agree-ments. Unlike other international agreementsthat are periodically readapted or completelyrevised, the interlocking conventions that con-stitute the international intellectual propertysystem have provided a permanent legal framework, although it is subject to amendmentsand revisions if required. Table 8-1 summarizesthe major international intellectual propertyconventions. Table 8-2 shows the nationalmembership of each of the three major intel-lectual property agreements.

The system is complex and structured aroundmany different international conventions and

agreements to which different groups of coun-tries adhere. These conventions share severaloutstanding characteristics that govern the in-ternational intellectual property system. Theyare:

1. the harmonization of disparate nationalintellectual property systems;

2. the principle of national treatment; and3. the establishment of minimum rights.

Harmonization of Disparate Nationalintellectual Property Systems

Although rooted in various philosophical tra-ditions, the intellectual property systems ofdifferent nations have been harmonized overthe years under international intellectual prop-

— — . — —A g r e e m e n t - Revis ions

— — . — —Copyright agreements:The Berne Convention for the Protectionof Literary and Artistic Works (1886)

1896: Paris Additional Act andIn terpre ta t ive Dec lara t ion

1908 Berlin Act1914 Berne Addi t ional Protoco l1928: Rome Act1948: Brussels Act1967 Stockholm Act1971 Paris Act

The Rome Convention for the Protection ofPerformers, Producers of Phonograms, andBroadcast ing Organizat ions (1961)

N o n e

The Universal Copyright Convention (1957)1971: Paris

The Convention for the Protection ofProducers of Phonograms Against theUnauthorized Duplicatlon of TheirPhonograms (1971)

None

Table 8-1 .—International Intellectual Property Agreements— .

Protected subject matter— . — —

“This Convention obliges Contracting States to protect theexpression of literary and artistic works [which include] everyproduction in the literary, scientific, and artistic domain, whatever maybe the mode or form of its expression, such as books, pamphlets,and other writings: lectures, addresses, sermons and other worksof the same nature, dramatic or dramatlco-musical works:choreographic works and entertainments in dumb show; musicalcompositions with or without words, cinematographic works to whichare assimilated works expressed by a process analogous tocinematography: works of drawing, painting, architecture, sculpture,engrawng, and Iithography, photographic works to which areassimilated works expressed by a process analogous to photography;works of applied art, Illustrations, maps. plans, sketches, and three-dimensional works relative to geography, topography, architecture,or science. ” Article II

This Convention obliges Contracting States to extend protection:“a) to performers who are its nationals, as regards performances

taking place, broadcast. or first fixed. on its territory,b) to producers of phonograms who are its nationals, as regards

phonograms first fixed or first published on its territory,c) to broadcasting organizations which have their headquarters on

its territory, as regaras Broadcasts transmitted from transmitterssituated on its territory “ Article II

“Each Contracting State undertakes to provide for the adequate andeffective protection of the rights of authors and other copyrightproprietors in literary, scientific, and artistic works, including writing,musical, dramatic, and cinematographic works, and paintings, engrav-ings, and sculpture. ” Article 1.

“Each Contracting State shall protect producers of phonograrns whoare nationals of other Contracting States against the making ofduplicates without the consent of the producer and against theImportation of such duplicates, provided that any such making orImportation IS for the purpose of distribution to the public, and againstthe distribution of such duplicates to the public. ” Article Il.

U S membership Comments— — . — — . —

N o Basic principles established underthe Berne Convent Ion1 Principle of national treatment2. Principle of automatic protection

(with no formalities)3 Principle of Independence of

protection4 M i n i m u m r i g h t s

N o

Yes The primary purpose of the UCC wasto join the United States and theLatin American countties with thecountries of Europe, Asia, and Africain a Single multinational agreement.

Like the Berne Convent Ion, the UCCIS based on national treatment andminimum rights. Unllie the BerneConvention, the UCC has severalformalities, such as a not icerequlirement

Yes

A g r e e m e n t R e v i s i o n s

Inter American Copyright Convent IonsThe Montevideo Convention (1889)

N o n eThe Mexico City Convent Ion (1 902)

N o n eThe RIO de Janeiro Convent Ion (1 906)

N o n eThe Buenos Aires Convention (1910)

N o n eThe Havana Convention (1928)

N o n eThe Washington Convention (1946)

N o n e

The Convent Ion Relating to Distributionof Program-Carry ing S ignalsTransmitted by Satellite (1974)

N o n e

Patent and Trademark Agreements:The Paris Convent Ion for the Protect Ionof Industrial Property (1 883)

1900: Brussels1911 Washington1925 The Hague1934 London1938 Lisbon1967 Stockholm

Table 8-1 .—International Intellectual Property Agreements—Continued

Protec ted sub jec t mat ter U.S. membership C o m m e n t s

This Convent Ion obliges Contracting States to protect the expres- N o The Buenos Ai res Convent Ion

S ion of Iiterary and artistic works which include books, writings,p a m p h l e t s of al I Kinds, whatever may be the subject of which theytreat and whatever the number of their pages, dramatic or dramatico-musical works choreographic and musical compositions with orW ithout words, drawings paintings scuIpture engravingsphotographic works ast ronomica l and geographica l g lobes. p lanssketches or plastic works relating to geography geology or

topography archiItecture or any other science and finalIy alIproductions that can be published by any means of Impress Ion orreproduct ion Ar t ic le I I

of I1910 remains the basic Pan

N o Amer ican copyr ight Ins t rument

The Convent Ion obliges Contracting States to take adequate and Yes

effective measures to prevent the distribution on or from its territoryof any program-carrying signal by any distributor for whom the signalemitted to or passing through the satell ite IS not In tended."

During the past 20 years there hasN o

been a clear trend away from these

Yesreg iona l copyr igh t convent ions I n

f a v o r o f w o r l d w i d e a g r e e m e n t s

N oC o n s e q u e n t l y i n m a n y I n s t a n c e st h e U C C h a s r e p l a c e d t h e P a n -

N oA m e r i c a n c o n v e n t i o n s a s t h e

operat ive agreement

The protection of industrial property has as Its object patents, utility Yesmodels industrial designs, trademarks, service marks, trade namesindications of source or appelIations of origin. and the repression ofunfa i r compet i t ion.

Industrial property shall be understood in the broadest sense andshall apply not only to industrial and commerce proper but Iikewiseto agricultural and extractive Industries and to all manufactured ornatural products for example. wines, grain, tobacco leaf fruit cattle.minerals, mineral waters, beer, fIowers, and flour

P a t e n t s s h a l l I n c l u d e t h e v a r i o u s k i n d s o f I n d u s t r i a l p a t e n t srecognized by the laws of the countries of the Union such as patentsof importation patents of [improvement, patents and certif icates ofaddition etc." Article I

The Patent Cooperation Treaty (1 978)N o n e The Treaty facilitates the filing of the applications for patents on the Yes

same Invent Ion in member count r ies by prov id ing among otherthings for centralized fiIing procedures and a standardizedapplication format

SOURCE Off Ice of Technology Assessment

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218 ● Intellectual Property Rights in an Age of Electronics and Information—

Table 8-2.— Membership in the Berne Convention, the Universal Copyright Convention,and the Paris Convention for the Protection of Industrial Property

Country Berne UCC

Algeria . . . . . . . . . . . . . . . . . . . .Andorra. . . . . . . . . . . . . . . . . . . .Argentina . . . . . . . . . . . . . . . . . .Australia. . . . . . . . . . . . . . . . . . .Austria . . . . . . . . . . . . . . . . . . .Bahamas . . . . . . . . . . . . . . . . . .Bangladesh . . . . . . . . . . . . . . . .Barbados . . . . . . . . . . . . . . . . . .Belgium . . . . . . . . . . . . . . . . . . .Belize . . . . . . . . . . . . . . . . . . .Benin . . . . . . . . . . . . . . . . . . . . .Brazil . . . . . . . . . . . ... . . . . . . .Bulgaria . . . . . . . . . . . . . . . . . . .Burkina Faso . . . . . . . . . . . . . . .Burundi . . . . . . . . . . . . . . . . . . . .Cameroon. . . . . . . . . . . . . . . . . .Canada . . . . . . . . . . . . . . . . . . . .Central African Republic . . . . .Chad . . . . . . . . . . . . . . . . . . . . . .Chile . . . . . . . . . . . . . . . . . . . . . .Colombia . . . . . . . . . . . . . . . . . .Congo . . . . . . . . . . . . . . . . . . . . .Costa Rica. . . . . . . . . . . . . . . . .Cuba . . . . . . . . . . . . . . . . . . . . . .Cyprus . . . . . . . . . . . . . . . . . . . .Czechoslovakia . . . . . . . . . . . . .Democratic Kampuchea . . . . .Denmark . . . . . . . . . . . . . . . . . . .Dominican Republic . . . . . . . . .Ecuador . . . . . . . . . . . . . . . . . . .Egypt . . . . . . . . . . . . . . . . . . . . .El Salvador. . . . . . . . . . . . . . . . .Fiji . . . . . . . . . . . . . . . . . . . . . . . .Finland . . . . . . . . . . . . . . . . . . . .France . . . . . . . . . . . . . . . . . . . .Gabon . . . . . . . . . . . . . . . . . . . . .Germany, Democratic

Republic of. . . . . . . . . . . . . . .Germany, Federal

Republic of . . . . . . . . . . . . . .Ghana . . . . . . . . . . . . . . . . . . . . .Greece . . . . . . . . . . . . . . . . . . . .Guatemala . . . . . . . . . . . . . . . .Guinea . . . . . . . . . . . . . . . . . . . .Haiti . . . . . . . . . . . . . . . . . . . .Holy See... . . . . . . . . . . . . . . .Hungary . . . . . . . . . . . . . . . . . . .Iceland . . . . . . . . . . . . . . . . . . . .India . . . . . . . . . . . . . . . . . . . . . .Indonesia . . . . . . . . . . . . . . . . . .Iran . . . . . . . . . . . . . . . . . . . . . . .Iraq . . . . . . . . . . . . . . . . . . . . . . .Ireland. . . . . . . . . . . . . . . . . . . .Israel . . . . . . . . . . . . . . . . . . . . . .Italy . . . . . . . . . . . . . . . . . . . . . . .Ivory Coast . . . . . . . . . . . . . . .Japan . . . . . . . . . . . . . . . . . .Jordan. . . . . . . . . . . . . . . . . . . . .Kenya . . . . . . . . . . . . . . . . . . . . .

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Paris

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Korea, Republic of . . . . . . . . .Laos . . . . . . . . . . . . . . . . . . . . . .Lebanon . . . . . . . . . . . . . . . . . . .Liberia. . . . . . . . . . . . . . . . . . . . .Libya . . . . . . . . . . . . . . . . . . . . . .Liechtenstein. . . . . . . . . . . . . . .Luxembourg. . . . . . . . . . . . . . . .Madagascar . . . . . . . . . . . . . . . .Malawi . . . . . . . . . . . . . . . . . . . .Mali . . . . . . . . . . . . . . . . . . . . . .Malta. . . . . . . . . . . . . . . . . . . . . .Mauritania . . . . . . . . . . . . . . . .Mauritius . . . . . . . . . . . . . . . . . .Mexico . . . . . . . . . . . ..., ...,Monaco . . . . . . . . . . . . . . . . . . . .Morocco . . . . . . . . . . . . . . . . . . .Netherlands . . . . . . . . . . . . . . . .New Zealand . . . . . . . . . . . . . . .Nicaragua. . . . . . . . . . . . . . . . . .Niger. . . . . . . . . . . . . . . . . . . . .Nigeria . . . . . . . . . . . . . . . . . . . .Norway . . . . . . . . . . . . . . . . . . . .Panama. . . . . . . . . . . . . . . . . . . .Pakistan . . . . . . . . . . . . . . . . . . .Paraguay . . . . . . . . . . . . . . . . . .Peru . . . . . . . . . . . . . . . . . . . . . . .Philippines . . . . . . . . . . . . . . . . .Poland . . . . . . . . . . . . . . . . . . . .Portugal . . . . . . . . . . . . . . . . . . .Romania. . . . . . . . . . . . . . . . . .Rwanda. . . . . . . . . . . . . . . . . . . .San Marine. . . . . . . . . . . . . . . .Senegal . . . . . . . . . . . . . . . . . . .Singapore . . . . . . . . . . . . . . . . . .South Africa . . . . . . . . . . . . . . .Soviet Union ..., . . . . . . . . . . .Spain.. . . . . . . . . . . . . . . . . . . . .Sri Lanka . . . . . . . . . . . . . . . . . .Suriname . . . . . . . . . . . . . . . . . .Sweden . . . . . . . . . . . . . . . . . . . .Switzerland . . . . . . . . . . . . . . . .Syria ..., . . . . . . . . . . . . . . . . . .Tanzania. . . . . . . . . . . . . . . . . .Thailand . . . . . . . . . . . . . . . . . . .Togo . . . . . . . . . . . . . . . . . . . . .Trinidad and Tobago . . . . . . .Tunisia . . . . . . . . . . . . . . . . . . . .Turkey . . . . . . . . . . . . . . . . . . . . .Uganda . . . . . . . . . . . . . . . . . . . .United Kingdom . . . . . . . . . . . .United States . . . . . . . . . . . . . . .Upper Volta . . . . . . . . . . . . . . . .Uruguay ..., . . . . . . . . . . . . . .Venezuela, . . . . . . . . . . . . . . . . .Viet Nam . . . . . . . . . . . . . . . . . .Yugoslavia . . . . . . . . . . . . . . . . .Zaire . . . . . . . . . . . . . . . . . . . . . .Zambia . . . . . . . . . . . . . . . . . . . .Zimbabwe . . . . . . . . . . . . . . . . . .

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Ch. 8—Impact of New Technologies on the International Intellectual Property System . 219— —

erty agreements. This harmonization was pos-sible because each of the national systemsshared a common set of goals. In general, na-tions have advanced four major rationales tojustify intellectual property protection. Thesehave generally been accepted in most coun-tries, but nations weigh them differently.5

Based on these justifications, three tradi-tions of intellectual property law have evolved.These include: the droit d’auteur system, whichplaces the emphasis on the principles of natu-ral justice; the Anglo-Saxon or copyright sys-tem, which is based on economic arguments;and the socialist system, which places the em-phasis on socialist doctrine and the importanceof the author in terms of his social role. Thereare, however, considerable variations amongdifferent countries that follow the same sys-tem.6 Although both the justifications for andthe actual systems of protection may differfrom nation to nation, overall internationalagreement is possible because the end resultor goal is the same–to protect intellectualproperty.

Principle of National Treatment

The second shared characteristic of these in-ternational agreements is the principle of na-tional treatment. In practice, this principle wasadopted to achieve two goals: 1) to facilitateinternational judicial interpretation; and 2) to

“First, the principle of natural justice says that the authoris the creator of the work, which is the expression of his person-ality, and therefore he should decide whether and how his workis commercialized and prevent any injury and mutilation of hisintellectual offspring. The royalties he receives are the wagesfor his intellectual work, Second, the economic justification forprotection is based on the argument that the investment in creat-ing works, as well as in disseminating them to the public, wouldnot be undertaken unless creators have a reasonable expecta-tion of recouping investments and earning a reasonable profit.The third justification for protection is based on the argumentthat creative works are a considerable national asset, and there-fore it is in the public interest to encourage and reward creativityas a contribution to the national culture. The fourth is basedon a social argument that the dissemination of works to manydiverse sectors of the public improves social cohesion and ad-vances the society. Stephen Stewart, The Law of InternationalCopyright and Neighboring Rights (London: Butterworth & Co.(Publishers) Ltd., 1983), pp. 3-6.

‘Stephen Stewart, The Law of International Copyright andNeighboring Rights (London: Butterworth & Co. (Publishers)Ltd., 1983), pp. 6-11.

unify laws among countries that offer differ-ing levels of protection.7

National treatment facilitates internationaljudicial interpretation because it requires thatjudicial decisions be made within the countrywhere the rights holder seeks protection, re-gardless of his nationality. As a result, judg-ments are more consistent and more certain;the courts can more effectively interpret theirown laws as opposed to those of other nations.

Second, many nations adhere to nationaltreatment because they believe it leads to bet-ter political relations and unifies levels of pro-tection among countries. Nations believe thatthis will occur because rights owners in coun-tries of low-level protection, who receive higherlevels of protection in other countries, willpress their governments to raise their domes-tic levels of protection. Thus, it is believed thatnational treatment will give rise to a more uni-fied and higher common level of protectionamong nations.

Minimum Rights

All international intellectual property agree-ments also establish a common set of minimumrights that may be claimed in all adhering coun-tries, regardless of national legislation. Al-though convention countries are not requiredto grant minimum rights to their own nation-als, all foreign member country nationals areentitled to these minimum rights. These mini-mum rights attempt to ensure that nationaltreatment does not lead to any imbalances inlevels of protection among nations. Withoutthem, national treatment, which exclusivelycalls for equal treatment of foreigners and na-tionals within a convention country, could notprevent large discrepancies in levels of protec-tion among countries.8 Consequently, mini-

‘Ibid., p. 39.“The principle of national treatment without minimum

rights might produce a serious imbalance which States wouldfind unacceptable. For exampIe:

If countries A and B were members of a [international] conven-tion which provides only for national treatment and has no mini-mum rights and country A grants performance and broadcastingrights as well as a reproduction right, the effect would be thatthe nationals of country B would enjoy performance and broad-casting rights in country A, but nationals of country A would

[continued on next page)

220 ● Intellectual Property Rights in an Age of Electronics and information

mum rights work in conjunction with nationaltreatment to achieve the greatest possible uni-formity of intellectual property protectionamong countries.9

Minimum rights also provide a flexible mech-anism for unifying and increasing levels of in-ternational protection as needed. Starting witha small number of minimum rights, a conven-tion can add others as new rights are requiredand as the level of international agreementrises. For example, beginning with the trans-lation right, the Berne Convention later addedthe rights of public performance and broad-casting, the droit moral (moral rights), and the

— —.—.— —-(continued from pre~’ious page)

not enjoy these rights in country B because the nationals of coun-try B do not enjoy them either. This could produce a serious dis-equilibrium which would be unacceptable to country A.

Ibid., pp. 40-41.“A history of copyright and neighboring rights bears this out . . .When the Universal Copyright was negotiated 60 years after [the13erne Convention], the difference in the level of protection withrights covered by the convention became less marked, and thusless stringent measures to insure against unacceptable differencesin the level of protection were required.

Ibid., p. 40.

cinematographic right. The Universal Copy-right Convention (1952 text) originally pro-vided only for the translation right; its revisedversion (1971 text) added the reproductionright, the broadcasting right, and the publicperformance right. ’”

The harmonization of different national in-tellectual property systems, the principle ofnational treatment, and minimum rights haveenabled the periodic revision of internationalconventions, which has given the internationalsystem the flexibility needed to adapt overtime to technological change and changing atti-tudes about intellectual property protection.However, with the development of many newways of creating, reproducing, and exploitingintellectual works, the international intellec-tual property system is currently experienc-ing a number of new and perhaps more seri-ous stresses. Questions arise, therefore, as towhether U.S. domestic policy and participa-tion in the existing international system candeal with such changes.— — .

“’[bid., p. 40.

STRESSES ON THE INTERNATIONAL INTELLECTUALPROPERTY SYSTEM

Recent technological developments are cre-ating pressures on the international intellec-tual property system. Such developments andtheir effects include:

1.

2,

3.

4.

the increasing flow of information andinformation-based products and servicesamong nations;the growing economic importance of in-formation and related products and serv-ices, both within and between nations;the increasing cultural and political sig-nificance of information and related prod-ucts and services;the emergence of new information-basedproducts and services that do not cor-respond to traditional categories of pro-tection;

5. the increasing difficulty of enforcing in-tellectual property rights at the interna-tional level; and

6. the growing convergence of internationalintellectual property issues with other in-ternational issues.

Greater in magnitude than those of the past,today’s technological developments pose noveldifficulties that challenge the relative stabil-ity of the international system. Such develop-ments affect not only the international legalsystem, but also international economic andpolitical relations. Consequently, these devel-opments may affect the U.S. role in the inter-national intellectual property system as wellas domestic intellectual property policy. Abrief description of these developments and

Ch. 8—Irnpact of New Technologies on the Intemational Intellectual Property System “ 221

their potential implications for U.S. interna-tional and domestic policies are providedbelow.

Increasing Flows of Informationand Information-Based Products

and Services Between Nations

Technological advances in and the growingconvergence of information and communica-tion technologies have greatly increased theflow of information and information-basedproducts and services across national borders.Increases in international trade, as well as thedevelopment of satellite, broadcast, fiber op-tics, and other telecommunication technol-ogies, have combined with more powerful in-formation storage, processing, and distributiontechnologies to bring about international ex-changes of intellectual property. As illustratedin figure 8-1, these developments have led togreater international exchanges of informationand technology and international inter-dependence.

Although exact measurements of computer-ized data flows are difficult to attain, manyinquiries reveal that their rate of growthexceeds the growth rate of nonvoice communi-cations. 11 The growing number of installed ter-minals, telecommunication facilities, databasesearches, and computer services all reflect theincreasing flow of information.

For example, the number of network termi-nating points (points of connection betweenuser equipment and telecommunication trans-mission facilities) in Western Europe increasedfrom 393,000 in 1979 to 832,000 in 1983 andis projected to reach 1,620,000 in 1987. Thetotal number of bits sent per average workingday grew from 1,310 billion in 1979 to 3,970billion 1983 and is expected to reach 9,820 bil-lion in 1987. In North America and WesternEurope, the number of data searches increased

Cees *J. 1iamelink, Translational Data F’lows in the Infor-mation ,4ge (Sweden: Studentlitteratur AH, Chartwell-Bratti,td., 1984), p. 44.

“M. Renedetti, “Ejurodata ’79: The Growth of Data Com-munications in W’estern Europe, paper for the I B I Conferenceon ‘1’ranshorder Flow Policies, Rome, June 1980.

from 3.3 million in 1973 to 12.5 million in 197613

and the number of users of database servicesincreased from 10,000 in 1965 to 2 million in1978.14 Exports by U.S. information servicescompanies increased by 9 percent between1982 and 1983, and are expected to continueto increase by 9 percent annually through1987.15 The U.S. software industry also reportedan increase in exports that represented 30 per-cent of total sales by 1982.16 In addition, theuse of satellite technology is greatly increas-ing the electronic exchange of entertainmentprograms internationally. Sky Channel, for ex-ample, provides by satellite many Europeancable systems with programs intended for theentire European market. 17 Estimates place the1985 transatlantic flow of television programsat approximately 20,000 to 30,000 hours annu-ally. 18

Other indications of international informa-tion exchanges are reflected in increases ininternational trade of computers and telecom-munication equipment, as well as by the grow-ing international exchange of patents, scien-tific information, technology, and culturalproducts. ” For example, between 1978 and1982, U.S. exports and imports of computersand equipment increased by 21.2 and 29.8 per-cent, respectively .20 U.S. exports and imports———-————

‘ ‘Paul B. Silverman, “international Telecommunications asa Tool for Technology Transfer, paper for the Technolog~ E x-change ’78, Atlanta, February 1978.

“P.]. van Velse, “Aspects of a European Information In-dustry, paper for the Commission of the European Communi-ties, Luxembourg, September 1979.

“US. Department of Commerce, International Trade Ad-ministration, “A Competitive Assessment of the U.S. informa-tion Services Industry’ (J$’ashington, DC: (J. S. GovernmentPrinting Office, 1984), p. 35.

“’U.S. Department of Commerce, International Trade Ad-ministration, “A Competitive Assessment of the U.S. SoftwareIndustry’ (Washington DC: U.S. Government Printing office,1984), p. 35.

“Michael Schrage, “Murdoch Reaches for Sky in EuropeanTV Battle, ” The tlrashington Post, Nlar. 3, 1985, p. F, 1, 6, 7.

IKKalba Bowen Associates, The Economist: Connections:U’orid Communications Report, No. 32, May 24, 1985, p. 8.

“For a detailed analysis of these trends, see U.S. Congress,Office of Technology Assessment, Information TechnologyR&D: C1-iticd Trends and Issues, OTA-CIT-268 (WashingtonDC: U.S. Government Printing Office, February 1985).

“’U.S. Department of Commerce, International Trade Ad-ministration, “High Technology Industries: Profiles and Out-looks: The Computer Industry” (Washington DC: U.S. Gov-

ernment Printing office, 1983), p. 24.

222 ● Intellectual Property Rights in an Age of Electronics and Information

Figure 8-1 .—Shrinking of Our Planet by Humans’ Increased Travel and Communications

Miles per hour

- 150,000

- 17,000

- 2,000

- 1,500

- 1,000

- 500

- 100

- 50

“ 25

- 5

Year - Represents population growthStages in human communication

r 1

I Word of mouth, drums, smoke, relay runner,drawings and hand printed material prior to 1441 I

Mechanized printing

,

I Use of electro-magnetic communications-telephones, radio, and television

“intelligent” telecommunications networksthrough computerization-virtually worldwide

SOURCE: John McHale, World Facts and Trends (New York: Collier Books, 1972), p 3, as cited in Magda Cordell McHale, Facts and Trends: The Changing InformationEnvironment: An Information Chartbook (Rome Intergovernmental Bureau for Informatics, 1985), p 2.

of telecommunication equipment increasedfrom 1977 to 1983 by 22.1 and 35.3 percent,respectively .21 Between 1966 and 1981, thenumber of U.S. patents granted to foreign na-tionals increased from 13,722 to 26,546.22 TheU.S. use of foreign scientific and technical liter-—.——-——

21U.S. Department of Commerce, International Trade Ad-ministration, “High Technology Industries: Profiles and Out-looks: The Telecommunications industry” (Washington DC:U.S. Government Printing Office, 1983), p. 21.

‘zNational Science Board, National Science Foundation, SU”-ence Indicators-1982 (Washington DC: U.S. Government Print-ing Office, 1983), p. 206; and Office of Technology Assessmentand Forecast, U.S. Patent and Trademark Office, “Indicatorsof the Patent Output of U.S. Industry IV (1963 -81),” 1982.

ature increased 6 percent between 1973 and1980;23 the U.S. technology transfer exports(patents and management or consulting fees)equaled approximately $3,034 million in 1973.24

U.S. exports of cultural products (motion pic-tures, television programming, prerecorded en-tertainment, published materials) have alsogrown dramatically over the last few years: forexample, the foreign revenues for U.S. motion

———. —‘Sh-ational Science Board, National Science Foundation,

Science Indicators-1982 (Washington DC: U.S. GovernmentPrinting Office, 1983), p. 12.

“Marc Uri Porat, “Global Implications of the InformationSociety, ” Journal of Communications, winter 1978, p. 78,

Ch. 8—impact of New Technologies on the International Intellectual Property System ● 223

picture studios rose from $820 million to $1,420million from 1978 to 1983.25

Policy Implications

The increasing flow of information and in-formation-based products and services arebreaking down national boundaries, thus chal-lenging the traditional theories of internationalrelations, which are based on the nation-state.26

With the erosion of national sovereignty, eventstaking place in one country will increasinglybe felt in others. Consequently, intellectualproperty decisions, that were once consideredexclusively domestic concerns, will now haveto be made with international considerationsin mind.

Currently, U.S. participation in internationalintellectual property fora is relatively limited.No longer a party to the United Nations Educa-tional and Cultural Organization (UNESCO),the United States might not have as muchpolitical leverage in the Universal CopyrightConvention (UCC), which is administered byUNESC0.27 Although the U.S. withdrawaldoes not preclude the United States from ob-serving UCC activities, it does prevent theUnited States from participating in theUNESCO General Conference, which reviewsand approves the various budgets and admin-istrative bodies of UNESCO, including theCopyright Division. As a result, the U.S. abil-it y to influence other nations in its favor mightbe weakened. Because the United States is nolonger funding UNESCO activities, a reduc-

-.——“CBS, inc., “Trade Barriers to U.S. Motion Picture and

Television, Prerecorded Entertainment, Publishing and Adver-tising Industries, ” September 1984, p. 10.

“The theory of the nation-state or the state-as-the-only -ac-tor approach was first advanced by Arnold Wolfers. Accordingto his theory, the most important characteristic of States istheir sovereignty, which is considered indivisible and absolute.The model further implies that because States do not recognizeany higher authority, they are consistently in an internationalstate of conflict and competition. Consequently, there is almosta complete separation between politics within nations and poli-tics between nations. Arnold Wolfers, ll~scm~ m(i Collfi~or8-.tion: Essays in International Politics (Baltimore: Johns Hop-kins University Press, 1962).

‘-The increasing politicization that polarized UNESCO wasa major impetus of the U.S. decision to withdraw from UNESCOin late 1984. Seymour Finger, “Reform or Withdrawal, ” For-eign Service Journal, vol. 61, June 1984, pp. 18-23.

tion in funding for studies on emerging copy-right issues which are traditionally sponsoredby the UCC might also occur. Moreover, theUnited States might lose some of its abilityto influence decisions about which substantiveissues such studies will address. For example,recent U.S. efforts to convince the UCC Inter-governmental Committee to undertake studieson the copyrightability of computer softwarehave not yet been successful.

Magnifying the problems arising out of theU.S. withdrawal from UNESCO is the fact thatthe United States is not a member of the onlyother major international copyright conven-tion, the Berne Convention. Although, overtime, the United States has amended its do-mestic copyright laws to be more compatiblewith those of the Berne Convention, severalmajor attributes of U.S. copyright law impedeU.S. ratification of the Berne Convention.These attributes include, for example, the for-malities required to obtain protection underU.S. copyright law, such as registration andthose enumerated in the manufacturing clause.28

As a nonmember of the Berne Convention, theUnited States can only observe Berne policydecisions; it cannot directly influence the de-velopment of policy concerning internationalprotection of new technologies.

Given the increasing internationalization ofintellectual property issues, the United Statesmay want to take greater steps to influencetheir resolution. There are several options theUnited States might pursue to strengthen itspresence in international intellectual propertyorganizations. First, the United States mightconsider rejoining UNESCO. Because UNESCOhouses not only the governing body of theUniversal Copyright Convention, but alsoother agencies that oversee related matters ofinternational information and communicationspolicy, joining UNESCO might place the UnitedStates in a more advantageous position from

“Statement of Ralph Oman, Register of Copyrights, Assis-tant Librarian for Copyright Services, Library of Congress, Hear-ing on S. 1822 and S. 1938 Bills to Make Permanent the Manu-facturing Clause of the Copyright Act, before the Subcommitteeon Patents, Copyrights and Trademarks, Senate Committee onthe Judiciary, Jan. 21, 1986, p. 35.


which to influence the decisionmaking proc-ess of such agencies, Rejoining UNESCO,moreover, might relieve much of the resent-ment harbored by many developing countriesfor the United States and its historical lackof international participation in the interna-tional intellectual property system.

Rejoining UNESCO, however, is not with-out political and economic tradeoffs. Addition-al funding, for example, would be required ifthe United States were to become a memberof UNESCO. In addition, the United Stateswould most likely need to make further politi-cal and perhaps economic concessions to ad-dress the concerns of the developing nations.

A second option to strengthen U.S. partici-pation in the international intellectual prop-erty system would be to ratify the Berne Con-vention. This would benefit U.S. internationalcopyright relations in several ways. First, theadministrator of the Berne Convention, theWorld Intellectual Property Organization(WIPO), would provide a more favorable fo-rum for dealing with international intellectualproperty issues because it specializes only inintellectual property rights and it is consid-ered to be less politicized than UNESCO. Sec-ond, the Berne Convention provides the high-est levels of international copyright protection.Third, ratification of the Berne Conventionwould also provide the United States with theopportunity to influence major policy devel-opment with regard to new technologies. Fi-nally, joining the Berne Convention wouldshow other nations, particularly developing na-tions, that the United States is indeed verycommitted to the protection of internationalintellectual property rights and that it is cog-nizant of the growing need for its system ofintellectual property rights to operate withinan international context.29 For these reasonsand others, there is wide agreement amongthose dealing with intellectual property issues,particularly at the international level, that a

‘sDonald Quigg, Acting Assistant Secretary and Commis-sioner of Patents and Trademarks, testimony on “U.S. Adher-ence to The Berne Convention, ” before the Subcommittee onPatents, Copyrights, and Trademarks, Senate Committee onthe Judiciary, May 16, 1985.

number of benefits would accrue to the UnitedStates if were to adhere to the Berne Conven-tion.30

At the same time, there are several trade-offs associated with U.S. ratification of theBerne Convention. The major disadvantage ofsigning would be the legislative adjustmentsneeded to bring the present U.S. copyright lawinto compliance with the Berne Convention.Although Congress has over the years soughtto make U.S. law more compatible, several le-gal adjustments are still required. These in-clude the need to remove copyright formali-ties embodied in the U.S. law—such as noticeand deposit, compulsory licenses, and the man-ufacturing clause— and the need to add moralrights.31 The Department of State’s Ad HocWorking Group on U.S. Adherence to theBerne Convention, which is made up of repre-sentatives of the copyright community, is cur-rently exploring how these adjustments canbe made while preserving traditional U.S. lawsand practices as much as possible.

Growing Importance of Informationand Information-Based Products andServices to National Economies and

International Trade andCompetitiveness

Historically, all nations have viewed the cre-ation of intellectual works as having great cul-—. -. .——.

“’For example, at the Sept. 12, 1984, meeting of the Depart-ment of State’s International Copyright Advisory Panel, theprivate sector representatives from all different parts of the in-tellectual property community were unanimous in their sup-port for U.S. adherence to the Berne Convention. Moreover, allof the witnesses who testified before the Subcommittee on Pat-ents, Copyrights, and Trademarks, Senate Committee on theJudiciary, expressed their support for U.S. adherence to theBerne Convention. Hearing on “U.S. Adherence to The BerneConvention, ” before the Subcommittee on Patents, Copyrights,and Trademarks, Senate Committee on the Judiciary, May 16,1985.

“’’The importance of maintaining the attributes of U.S.copyright law, such as deposit, registration, and recordationprovisions can scarcely be questioned. For these provisions haveserved a most important public function; they have enabled theLibrary of Congress to become the most important repositoryfor U.S. cultural expression as well as for the rest of the world. ”Donald Curran, Associate Librarian of Congress and ActingRegister of Copyrights, Copyright Office, testimony before theSubcommittee on Patents, Copyrights, and Trademark, Sen-ate Committee on the Judiciary, May 16, 1985.

— — .- .-

Ch. 8—Impact of New Technologies on the International Intellectual Property System ● 225

tural and social significance. Recently, how-ever, intellectual products are becoming anincreasingly important component of nationaland international economies .32 A recent studyon the size of the copyright industries reflectsthe same trend. These industries, which relyon the exploitation of the legal protections em-bodied in the copyright law, showed growthin sales from $6.2 million, or 2 percent of thegross national product (GNP), in 1954 to $140.9billion, or approximately 5 percent of the GNP,in 1982.33 An additional $11.3 billion would beadded if semiconductor chips were included.Estimates of the U.S. labor force involved inthe copyright industries suggest that morethat 2.2 million workers are affected by tradein intellectual property .34 The U.S. Departmentof Commerce also estimates that in 1983, theUnited States enjoyed a $4.7 billion favorablebalance of payments in the licensing and as-signment of patent rights, trademarks, andcopyrights. 35

Information and information-based productsand services are not only valuable economiccommodities in and of themselves; their usealso increasingly affects the performance ofother economic sectors. The application of in-formation technology is responsible for vastincreases in productivity y in manufacturing in-dustries, offices, financial services, and scien-

Several major studies completed over the last severalyears document this trend. Daniel Bell was one of the first todescribe the changing role of information in society: “And ifcapital and labor are the major structural features of industrialsociety, information and knowledge are those of the post-industrial society. Daniel Bell, The Corning of Post IndustridSociet~r (New York: Basic Books, 1976), p. xiii. A quantitati~restud~’ b~’ Marc Porat found that by 1967, the primar~r and sec-ondary production, processing, and distribution of information-based products and services constituted approximately 46 per-cent of the G N P and that nearly half of the labor force is en-gaged with informational activities. Marc Uri Porat, Office ofTelecommunications, U.S. Department of Commerce, “The In-formation I+:conomy: Definition and Measurement” (Washing-ton DC: U.S. Go}’ernrnent Printing Office, 1 977).

“Michael H. Rubin, *’The Copyright Industries in theUnited States: An Economic Report Prepared for the Amer-ican Copyright Council, ” 1985, p. 1.

“U.S. Copyright Office “The Size of the Copyright Indus-tries in the IJnited States, ” Subcommittee on Patents, Copy-rights, and Trademarks, Senate Committee on the .Judiciary,December 1984.

‘ Flileen Ilill, *’Commerce Department Seeks Greater Pro-tection for U.S. Intellectual Property Rights, ” Business Amer-ica, Mar. 18, 1985, p. 3.

tific research.36 Because they have become notonly an important component in the U.S. econ-omy, but also a significant productivity fac-tor in many industrial sectors, information andinformation-based products and services havebecome an extremely crucial element in theU.S. economy and its overall international com-petitiveness. 37

Just as information and information-basedproducts and services are of increased valueto national economies, they are also becomingmore important to the world economy. Recentevaluations have found that this complex ofinformation industries is already the thirdlargest in the world economy. In 1980, eachof the industrialized nations spent approxi-mately 4 or 5 percent of its GNP on informa-tion-based products and services.38 Figure 8-2illustrates the large number of sectors in whichmany nations are using information technol-ogies. Another estimate notes that the worldinformation market equaled approximately$350 billion or 18 percent of world trade in1980.39

Policy Implications

Given the growing importance of informa-tion and information-based products and serv-ices to the U.S. economy, its export markets,and thus to its international competitiveness,intellectual property rights are acquiring great-er significance. Policy makers are now recog-

. —“One economist documented these trends by showing that

the introduction of information technology has made work morespecialized and efficient, which in turn has led to greater produc-tivity. Thus, the analysis showed that the quantity of real out-put produced by each production-sector worker in the U.S. econ-omy was 6.4 times greater in the year 1970 than in 1900. CharlesJonscher, “Information Resources and Economic Productivit~”, ”Information Economics and Public Policjr, vol. 1, No. 1, 1983,p. 21.

‘qThe President’s Commission on Industrial Competiti\”e-ness, Committee on Research, Development, and Manufactur-ing, Appendix D, 4’Preserving America’s Industrial Competi-tiveness-A Special Report on the Protection of IntellectualProperty Rights, ” October 1984.

1“Edward W’. Ploman and 1.. Clark Hamilton, Copyright: 1n-te]lectual Propert.v in the Information Age (London: Routledge& Kegan Paul, 1980], p. 217.

‘L’Cees J, Iiamelink, I%msnational Data Flows in an Infor-mation ,4ge i Sweden: Studentlitt.eratur Ab Chartwell-Bratt I.td.,1984), p. 23.

226 • Intellectual Property Rights in an Age of Electronics and Information

Figure 8-2.—Computer Utilization: Selected Countries, 13 Sectors

France(1978)

Mexico I

nizing the importance of factoring intellectualproperty protection into bilateral and multi-lateral trade relations. Similarly, internationaltrade concerns are looming larger in interna-tional intellectual property relations. Suchgrowing linkages may call for greater atten-tion to these relationships and new ways ofcoordinating and addressing the issues towhich they give rise. Thus, the United Statesmight need to reassess its intellectual prop-erty policy at the national and internationallevels to accommodate these new linkages.

:.. ,.,

:

The United States has already taken somesteps toward recognizing the protection of in-tellectual property rights as a major tradeissue. The recent passage of the Trade andTariff Act of 1984 (Public Law 98-573), for ex-ample, allows the President to take into ac-count nations’ laws and practices to adequatelyprotect intellectual property rights as a con-dition for receiving the trade preferencesgranted under the Generalized System of Pref-erences Program (GSP).40 In addition, the Car-

‘“The Trade and Tariff Act of 1984 contains five provisions(continued on next page)

—

Ch. 8—Impact of New Technologies on the International Intellectual Property System “ 227

Figure 8-2.— Computer Utilization: Selected Countries, 13 Sectors—Continued

The Netherlands(1980)

Phil ippines(1980)

Spain(1978)

Switzerland(1978)

Taiwan(1978)

+

●● I I 1.

Venezuela(1979)

= Mini computers 1

1’K e y — - 1– Small computers

-1 ●

—— = Medium computers

= Large computers~ I

1 J

SOURCE U S Department of Commerce, International Trade Administration, Computers and Peripheral Equipment — Various Countries (Washington, DC U S Govern.ment Printing Office, 1980), as cited in Magda Cordell McHale, Facts and Trends: The Changing Informatfin Environment: An informatron Char/book (RomeIntergovernmental Bureau for Informatics, 1985), p 32

ibbean Basin Economic Recovery Act (PublicLaw 98-67) makes the protection of U.S. copy-righted broadcast works a condition for Carib-bean nations to receive U.S. aid.

A number of other strategies are also avail-able to strengthen trade opportunities for U.S.intellectual property products. One such op-tion is to prevent imports of illicit copies ofU.S. products or products illicitly manufac-tured with U.S. patented processes. The pro-posed Process Patent Amendment of 1985 (S.1543 and H.R. 1069), for example, would makeit a violation of patent law to use, sell, or im-port any product made overseas that is pro-duced by an unlicensed patent process.

related to intellectual property protection. Many of the coun-tries that are eligible for GSP benefits are also those countrieswhich do not adequately protect intellectual property rights.These countries include, for example, Argentina, Bangladesh,Brazil, Chile, Colombia, Costa Rica, Egypt, Ecuador, Guate-mala, India, Indonesia, Korea, Mexico, Pakistan, Peru, thePhilippines, Portugal, Sri Lanka, Taiwan, Thailand, Turkey, Uru-guay, Venezuela, and Yugoslavia.

228 ● Intellectual Property Rights in an Age of Electronics and Information— ——

Another recently proposed option is to in-clude information products and services withinthe General Agreement on Tariffs and Trade(GATT). This option has broad support for sev-eral reasons. First, including intellectual prop-erty products in the GATT could provide in-ternational enforcement mechanisms in theform of dispute settlement mechanisms andtrade sanctions as final retaliatory mechanismsfor dealing with infringements—mechanismsthat are not currently provided in internationalintellectual property agreements. Second, un-like many international intellectual propertyagreements, the GATT has a broad represen-tation of the industrialized and developing na-tions as well as a history of consensus-buildingamong its member states. Third, the GATTtakes into account the economic developmentneeds of the developing countries, allowingthem differential treatment as a means of as-sisting their development.

There are, however, some negative aspectsto such approaches. Linking the granting oftrade preferences or foreign aid to the protec-tion of intellectual property rights might pro-voke political discord between the UnitedStates and developing nations. Including in-tellectual property products within the GATTalso conflicts with many developing countries’notions of information and information-basedproducts and services and might lead to polit-ical unrest and various forms of retaliation.

Increasing Cultural and PoliticalSignificance of Information and

Information-Based Productsand Services

Historically, there have been political ten-sions between nations whose role as produc-ers of intellectual property allowed themgreater access to such products and nationsthat imported intellectual property products,and had only limited access to them. When theUnited States was still a relatively young anddeveloping country, for example, it refused torespect international intellectual propertyrights on the grounds that it was freely enti-tled to foreign works to further its social andeconomic development.

Developing nations make the same argu-ment today. Many believe they should be ex-empt from measures protecting intellectualproperty created outside their borders. Theyargue that access to information is vital to theirdevelopment. Championing this viewpoint, de-veloping nations were able to get revisions inthe Berne Convention at Stockholm in 1967and in the Universal Copyright Convention in1971. Moreover, the influence of these coun-tries has been felt at meetings of the UnitedNations Conference on Trade and Develop-ment (UNCTAD) and at the recent meeting torevise the Paris Industrial Property Conven-tion.41

As information and information-based prod-ucts and services become more important tosocial and economic development, questionsof information access, which were formerlyquite distinct from political considerations, areacquiring greater political significance.42 Be-cause both developed and developing nationsview intellectual property protections as a ma-jor mechanism for regulating and controllingthe flow of and access to information and in-formation-based products and services, thereis growing political pressure on the interna-tional intellectual property system.43

A case in point is the information gatheredby remote sensing satellites. In 1972 the UnitedStates launched the Land Remote Sensing Sat-ellite (Landsat) as part of a broader resource

“For example, the provisions for developing nations thatwere added to the Universal Copyright Convention in 1971 in-clude exemptions that fall into three categories: 1 ) translationrights subject to compulsory licensing; 2) reprint rights sub-ject to compulsory licensing; and 3) compulsory licensing in gen-eral. Subcommittee on Patents, Copyrights, and Trademarks,Senate Committee on the Judiciary, hearing on “Oversight onInternational Copyrights, ” Sept. 24, 1984, pp. 61-62.

4’Rita Cruise O’Brien and G. K. Helleiner, “The PoliticalEconomy of Information in a Changing International EconomicOrder, ” International Organization, vol. 34, No. 4, Autumn 1980,p. 446.

“These access tensions, for example, have given rise to dis-cussions of a New World Information Order in which develop-ing nations call for freer access to technical and educational ma-terials as well as a redress of the imbalances in the internationalflow of news and cultural products and a New World Interna-tional Economic Order which calls for greater controls over andaccess to technology transfer to Third World nations. Both ofthese orders are intended to strengthen the self-sufficiency ofdeveloping nations.

———

Ch. 8—impact of New Technologies on the International lntellectual Property System ● 229

monitoring and assessment system .44 Uncopy-rightable raw data on all countries generatedby this series on the Earth Resources Satel-lite Program are disseminated to governments,firms, or individuals at very low prices. AsLandsat is currently being transferred fromgovernment ownership to the private sector,data that have been processed and analyzed(by private sources), and thus are copyright-able, such as field-by-field analyses of crop-lands, blight, drought, and mineral resources,are available at a much higher price. Becauseless developed nations have difficulty payingthese prices, or lack the computer technologiesneeded to process and interpret the data them-selves, they often cannot gain access to suchdata. As a result, they believe that they arepotentially at a disadvantage in world agricul-tural commodity markets, where private firmsand wealthier governments can afford and usethe data to make more well-informed, strate-gic decisions:

The importance of information lies in itsrole as a central factor in decision-making, in-cluding all matters related to development.Information is a precondition for identifyingalternatives, reducing uncertainties abouttheir implications, and facilitating their im-plementation. As such, information is a criti-cal resource, not least for enhancing the ne-gotiating capabilities of developing countriesin the pursuit of clearly defined objectives,in particular in dealing with translational cor-porations.45

Many governments of developing countriesalso view information-processing and commu-nication technologies as means to achieve ma-jor societal goals. Likening these technologiesto a change in the “entire nervous system ofsocial organization, many governments con-sider the establishment of information infra-structures to be crucial for development.46

“For a detailed analysis of international remote sensing sat-ellite issues, see U.S. Congress, Office of Technology Assess-ment, Remote Sensing and the Private Sector: Issues for Dis-cussion– A Technical Memorandum, OTA-TM-I SC-20(Washington, DC: U.S. Government Printing Office, March1984).

“United Nations Center for Transnational Corporations,Transborder Data Flows: Access to the International On-1ineDatabase Market (New York: United Nations, 1983).

“Simon Nora and Alain Mine, The Computerization of So-cietj’ (Cambridge, MA: MIT Press, 1980).

These nations want to use information andcommunication technologies for such thingsas: national integration; administrative effec-tiveness; the delivery of formal and informaleducation; teacher training; agricultural infor-mation; medical and health care services; re-gion-specific cultural programming; and cop-ing with natural disasters.47 Many developingcountries believe, therefore, that internationalintellectual property protection, which can actas a regulator of information flows, might in-hibit such use and act as a barrier to devel-opment.

For these same reasons, many developingcountries are wary of certain product patents.They contend that royalty payments requiredby patents should be relaxed for products thatare necessary for development, and in somecases, human survival.48 Many industrializednations oppose this point of view. Having in-curred large costs in the research and devel-opment of products, they believe they are en-titled to recoup their investments by sellingin foreign markets.

One product that caused such a problem isthe patented pharmaceutical product Tagamet(generic name, cimetadine, an anti-ulcer drug),developed by the U.S. company SmithKline-Beckman. By the time the company was readyto market its product in Argentina, 48 percentof its market had already been undercut by alocal firm selling the product at a much lowerprice. Due to Argentina’s lack of patent pro-tection for pharmaceuticals, the local compa-nies could take the product and sell it at a lowerprice because they did not have to recoup de-velopment costs or pay royalty fees. Smith-

“Jorg Becker, Information Technolom’ and a iVew Interna-tional Order (Sweden: Studentlitteratur A13, Chartwell-BrattLtd., 1984), pp. 109-111.

‘“Because many developing nations believe they need to ac-quire technology from the advanced nations, they tend to re-tain patent, trademark, and copyright laws because they pro-vide some security that helps to continue to attract foreignenterprise. However, the intellectual property protection is fre-quently modified. They may offer, for example, compulsorylicense requirements, curbs on the manner in which the royal-ties are paid, exclusion of certain products or subject matterfrom protection, or official examination of the terms on whichforeign rights owners establish their own local operations orgrant licenses to local enterprises. W.R. Cornish, IntellectualPropert-v: Patents, Cop-vright, Trademark, and Allied Rights(London: Sweet & Maxwell, 1981), p. 17.


Kline-Beckman claimed it lost approximately$50 million in revenues because of the lack ofpatent protection in many developing na-tions.49

Growing political tensions between nationsare also occurring with regard to intellectualproperty rights for plants. The United Statesand the other industrialized nations have nonative primary crops. As a result, Western na-tions have traditionally used plant varietiesfrom the Third World to genetically engineernew and better seeds for farm crops. Becausemany of the developing nations do not havethe technology for seed development, they aregenerally forced to buy many of these geneti-cally engineered seeds from the industrializednations. Political tensions between nationsarise because developing nations believe thatthe industrialized nations are exploiting theThird World’s natural resources. They attrib-ute the problem to the granting of intellectualproperty rights:

How is it that we farmers [from the MiddleEast] spent 10,000 years cultivating andbreeding our plants, then someone else fromthe West works on it for 10 years, and onlythen is it called “intellectual property” andbecomes patentable?50

Although most tensions arising out of intel-lectual property rights have been primarily be-tween industrialized and less developed na-tions, political issues related to such rightshave recently begun to emerge between devel-oped nations as well. A case in point involvesthe Strategic Defense Initiative (SDI) researchprogram. Among other goals, political comityand support among nations for defense are ma-jor goals of the SDI research program. For thisreason, the United States is seeking other na-tions’ cooperation and participation in the SDIresearch program.

“Gerald Mossinghoff, President of the Pharmaceutical Manu-facturers Association, testimony ‘on the BenefiCiw CountvI+actices, before the General System of Preferences Subcom-mittee of the Trade Policy Committee, June 24, 1985.

‘OPhillip Hilts, “Battles Sprout Over World Seed Supply:Bureaucrats and Nations Grapple With Charges of Neglect andGenetic 1mperkilism,” The Washington Post, Nov. 4, 1985, p.A3.

However, one of the major impediments togaining the support of other nations is the is-sue of ownership of technology. For example,the United Kingdom made it clear to theUnited States that it would not participate inthe SDI program unless the terms for therights to the technology were stipulated at theoutset of the research. The United States, how-ever, believes that this would be incompatiblewith the Defense Department’s regulations,which do not allow blanket patent and tech-nology transfer guarantees and require con-sideration on a case-by-case basis. Thus, intel-lectual property rights are the source of somepolitical pressures among nations and may ac-tually preclude international political cooper-ation and participation in the SDI program.51

Policy Implications

There are no simple solutions to the politi-cal issues raised by intellectual property rights.Although U.S. economic interests would mostlikely be served better by strict enforcementof intellectual property protections in other na-tions, political relations may also be a consid-eration. Many U.S. intellectual property prod-ucts, for example, help promote U.S. cultureabroad:

Books have unique qualities enabling themto provide foreigners substantive perceptionsand insight into American society and gov-ernment policies which they can get no otherway. . . [T]hey smooth the path for the pur-suit of our foreign policies. It has been saidthat next to people, books are our best am-bassadors of international enlightenment andgoodwill.52

— .5’Karen DeYoung, “British, American Officials Hit Snags

on SDI Cooperation: Allies at Odds Over Contract Terms, Own-ership of Technology, ” The Washington Post, Oct. 26, 1985, A5.

“Curtis Benjamin, U.S. Books Abroad: Neglected Ambas-sadors (Washington, DC: U.S. Library of Congress, 1983), p.72. Recognizing the importance of books to increased under-standing of the United States, the U.S. Government throughthe U.S. Information Agency distributes books worldwide in57 languages; by 1971 it had published and disseminated 19,220editions totaling 157,200.000 copies. Nicholas Henry, ~p~’ght,Information Technology, Public Policy, Part 1: Copyright-PublicPolicies (New York: Marcel Dekker, Inc., 1967), p. 5.


Similarly, copyrighted musical works, audio-visual works, sound recordings, and patentedtechnical works also further international un-derstanding and an appreciation of U.S. cul-ture, and so might aid U.S. relations with bothdeveloping and industrialized nations.

Although many consider it unfair to expectproducers of intellectual property to absorblarge losses in international markets in orderto foster international relations, the culturaland political significance of these productsmight require striking a new balance betweenproducers and importers of intellectual prop-erty products. Political and cultural consider-ations as well as economic concerns might needto be taken into account when adjusting theinternational intellectual property system.These considerations might also need to be fac-tored into U.S. domestic intellectual propertypolicy and international trade and politicalrelations.

Recognizing how important U.S. culturaland educational products are to its relationswith other nations, the United States has es-tablished several programs within the U.S. In-formation Agency (USIA). These programs aredesigned to promote international understand-ing by providing developing and industrializedcountries with American films, radio pro-grams, television programs, music, books, andcultural programs at low or no cost. These pro-grams, however, have been greatly reducedover the last few years. The USIA-sponsoredbook publishing program, for example, whichincludes translation programs and low-pricedbook programs, was reduced from 6,621,000copies in 1956 to 525,000 copies in 1980.53 Asa result, many people have criticized the U.S.Government for failing to meet the ThirdWorld’s cultural and educational needs. Oneformer U.S. ambassador, for example, assertedthat the U.S. Government’s recent neglect ofits overseas book, educational, and culturalprograms denies our foreign policy “one of ourgreatest sources of strength as a nation.”54

“’Curtis Benjamin, U.S. Books Abroad: Neglected Ambas-sadors (Washington, DC: Library of Congress, 1984), p. 91.

“’’’Selling America in the Marketplace of Ideas, ” New YorkTimes Magazine, Mar. 20, 1983.

Another U.S. diplomat pointed out that otherindustrialized nations, such as France, theUnited Kingdom, and West Germany, devotea greater proportion of their national budgetsto public distribution of information productsfor diplomatic purposes than does the UnitedStates.”

The United States has several options foraddressing the political issues raised by newtechnologies. If the United States wishes toaddress the informational needs of developingcountries, for example, it might increase USIAinformation distribution programs, and includeprovisions for the distribution of informationin other international development programsfor education, agriculture, medicine, transpor-tation, etc. Moreover, USIA might implementnew programs to help nations to develop in-formation and communication infrastructures,so they can utilize information in electronicforms such as databases, videotapes, and soft-ware programs:

Information access is easier to transfer tothe developing world than was agriculture orindustrial know-how. While it is not possibleto put the Third World on an equal footingwith the First World in the next ten years,it is possible to communicate the needed ex-pertise now. The best mathematicians in theworld could create expert systems and makethem available to the poorest countriesthrough existing satellite networks and earthstations, relayed by telephones to low-costterminals. Medical diagnosis and training orengineering design could also be redistributedthroughout the world at a unit cost withinnational budgets.56

Another option that the United States mightpursue would be to earmark funds that weretraditionally allocated for foreign aid for thepurchase of intellectual property products.This would give developing countries accessto information and information-based productsand services and at the same time instill re-

5’Allen Hansen, Jr., USIA Public Diplomacy in the Comput-er Age (New York: Praeger Press, 1984).

“Jerome Glenn, “Helping Countries Help Themselves:Keys to Third World Development, ” The Futurist, December1985, pp. 33-35.

232 ● Intellectual Property Rights in an Age of Electronics and Information.-

spect for the protection of intellectual prop-erty rights.

Although these options address the grow-ing political issues relating to intellectual prop-erty rights, they might also conflict with U.S.trade and economic views of intellectual prop-erty. For if the United States contributes manyof its information-based products and servicesto developing countries, it cannot receive theinternational market value of such highlysought after products and services. This, inturn, could have a negative effect on the U.S.balance of payments.

Emergence of New Information-BasedProducts and Services That

Do Not Correspond to TraditionalIntellectual Property Protections

Although rooted in different philosophicaltraditions, the intellectual property systemsof different nations have been harmonized overthe years through the international intellec-tual property system. This cooperation, madepossible by a shared set of goals as well as bynational treatment, led in the past to generalagreement among nations on what constitutedprotectable subject matter, infringement activ-ity, and the like. This process of reaching in-ternational agreement is generally slow, de-pending on years of interplay between nationaland international laws and policies.57

The unprecedented rapid and large-scale de-velopment of new information and information-based technologies, which is illustrated in fig-ure 8-3, has disrupted this formerly stable sys-tem. Such rapid and large-scale technologicalchange has forced nations to respond fasterand perhaps more dramatically in interpret-ing and legislating intellectual property pro-tection. Some nations have enacted intellec-tual property legislation to protect emergingtechnologies, while other nations have not.These divergent reactions have led to great in-consistencies among nations, which, in turn,

“This slow and elastic process of unifying national intellec-tual property law and policies is cited as one of the most impor-tant aspects of the international intellectual property con-ventions.

have made agreement at the international levelmore difficult.

Intellectual property protection for comput-er software is one often-cited example of thediffering levels of protection nations havegranted a new technology:

The debate on both the possibilities and ap-propriate form for protection of software hasnow been continuing for nigh on 15 years.. . . Despite the harmonization of national leg-islation . . . we are still faced with a wholegamut of divergent solutions ranging fromthe full recognition of the patentability ofsoftware and its protection under copyright,through various intermediary solutions, to aradical refusal of any protection for computersoftware. 58

Because the United States was one of thefirst countries where computer software be-came a large and important market, it was herethat the debate over its protection first tookplace.59 Like many other industrialized nations,the United States explored the possibilities ofprotecting software by drawing analogies be-tween the characteristics of software and otherintellectual properties that are protected byexisting legal frameworks, such as copyright,patent, and trade secrets. After many heateddebates and commissioned studies, the UnitedStates, in a 1980 amendment to the 1976 Copy-right Act, explicitly granted copyright protec-tion for software.60

— .——5MKolle, “Computer Software Protection–Present Situation

and Future Prospects, Copyright 13, 1977, p. 70.“In 1982, the worldwide revenues from software amounted

to $13 billion and is projected to quadruple by 1987. U.S. com-panies garner approximately 70 percent of the market. UnitedStates Trade Representative, “USTR Seminar on InternationalCopyright Issues in Computer Software, ” Sept. 24, 1984.

‘The United States implicitly extended copyright protec-tion to computer software in the Copyright Act of 1976, 17 U.S.C.jj 101-810. The National Commission on New TechnologicalUses of Copyrighted Works (CONTU), created by Congress torevise comprehensively the copyright laws of the United States,stated in its final report that “it is clear that. . . those who haveadmini:~tered the portions of the 1909 act concur in the posi-tion that programs are copyrightable. The Copyright Act wasamended in 1980 to expressly state that computer programswere to be included as copyrightable works: Section 101 of theAct was amended by addition of the word “computer program, ”and a definition of that term; Section 117 was amended by theaddition of certain limitations on exclusive rights pertainingspecifically to computer programs. The U.S. courts have alsorecognized copyright protection for software.

Ch. 8—Impact of New Technologies on the Irrternational Intellectual Property System ● 233

Figure 8-3.— The Speed of Change: Intervals Between Discovery and Application in Physical Science

SOURCE John McHale, World Facts and Trends (New York Collier Books, 1972) p 3, as cited in Magda Cordell McHale Facts and Trends The Changing Information

Environment: An Information Chartbook (Rome Intergovernmental Bureau for lnformatics 1985) p 4

Although most nations have not explicitlyamended their copyright laws to include soft-ware, some either consider it to be protecta-ble under copyright law through judicial inter-pretation and/or are actively pursuing copy-right protection.61 These countries include Aus-tria, Canada, Colombia, France, Finland, theFederal Republic of Germany, Italy, India, Ja-pan, Korea, Mexico, the Netherlands, SouthAfrica, Spain, Sweden, and the United King-dom.”— — — —

‘ ‘Currently-, Australia, Hungary, the Philippines, and Tai-wan have amended their copyright laws to include computersoftware as protectable subject matter.

‘“United Nations Educational, Scientific, and Cultural Orga-nization (UN F; SC()), World Intellectual Property Organization(WI PO), Group of Experts on the Copyright Aspects of the Pro-tection of Computer Programs, Michael S. Keplinger, “A Sur-vey and Analysis of N’ational I.egislation and Case Law, hlarch1985; and Michael S. Keplinger, “Authorship in the Informa-tion Age: Protection for Computer Programs Under the Berneand the Universal Copyright Conventions, Copyright, March1985, pp, 119-128.

Among those nations that are consideringprotection for software, there is a wide vari-ety of schemes envisioned. Some nations wouldoffer such protection, but with limitations. Awhite paper prepared for the Canadian Gov-ernment, for example, proposes to limit copy-right protection for object code (machine-readable language) to 5 years.63 Other nationshave declared that they will not protect soft-ware under the copyright law, although theymay grant it some type of sui generis protec-tion. Other nations may not protect softwareat all. Brazil, for example, is considering leg-islation that would establish a sui generis formof protection that would require compulsorylicensing of software to Brazilian companiesand compulsory registration of both source and

‘ Consumer and Corporate Affairs and Department of Com-munications, Government of Canada, ‘‘From Gutenburg to Tel-idon: A Guide to Canada’s Copyright Revision Proposals" (Ot-tawa: Ministry of Supply and Services, 1984).


object codes. The proposed protection, more-over, would be for a very short duration. Suchvaried approaches to protecting—or not pro-tecting—software and other rapidly changingtechnologies might impede attempts to reachan international agreement on software pro-tection. 64

The introduction of reprographic technol-ogies offers another example of how new tech-nology is complicating the harmonization ofnational intellectual property law at the inter-national level. The increasing use of these tech-nologies has undermined owners’ rights to col-lect remuneration for the reproduction of theirworks. To cope with these problems, many na-tions have legislated new rights enabling cre-ators to collect compensation for the use oftheir works. The Federal Republic of Germany,for instance, has dealt with the problem byamending its copyright law to include a com-pulsory license that allows authors to collectequitable remuneration for the commercial re-production of their works. In contrast, Francehas introduced a tax on the sale and importa-tion of all reprographic copying machines inits 1976 Finance Act. Part of the collected rev-enues from the tax are paid to the copyrightowners. This law applies only to French copy-right holders, even though France is a mem-ber of both international copyright con-ventions.

Although both of these solutions aim to en-sure rights owners remuneration, they are le-gally inconsistent with one another, and thuswill cause difficulty for international agree-— — —

“The fact that WIPO’S 1978 proposed draft Treaty for theProtection of Computer Software (which includes rules for theminimum protection of software that are closely related to thoseof copyright and unfair competition) has not been ratified illus-trates the problems of finding an adequate protection for soft-ware that can be agreed on internationally. The draft Treatyproposed that in view of the large degree of uncertainty gener-ally related to the existence and form of protection under copy-right, that a special system of protection of software similarto copyright should be set up at national and international levels.The draft Treaty, moreover, calls for the international depositof software. Some individuals believe, however, that Article 11of the Berne Convention is applicable for the international pro-tection of software. Cynthia L. Mellema, “Copyright Protec-tion for Computer Software: An International View, SyracuseJournaf of International Law and Commerce, vol. 11, summer1984, p. 90.

ment. The West German compulsory license,although under the rubric of copyright law,would be incompatible with the solutionenacted by the French. The more serious diffi-culty, however, arises with solutions like thatadopted by France. Because the right to com-pensation is introduced under legislation out-side of the copyright law, the principle ofnational treatment, on which the entire inter-national intellectual property system is built,is seriously undermined.65 The principle of na-tional treatment is challenged because the com-pensation for the reproduction right does notarise from a copyright, and thus foreigners can-not collect compensation for use of their works.In general:

If that device is generally used by govern-ments when dealing with the new uses ofcopyright material arising from new technol-ogy and new means of communication, thefundamental principle of national treatmentand with it the [international] copyright con-ventions based on it, could be seriously erodedin the near future. 66

Another problematic situation arises fromapplying patent law to activities in outer space.Domestically, the National Aeronautics andSpace Administration (NASA) has adopted a

— —“Another example of how a right to remuneration has been

taken out of the copyright sphere can be seen in the rights manycountries have granted to enable creators to receive remunera-tion from home taping activities. In the case of home taping,a levy on recording equipment or blank tape can be treated asroyalty to be divided among copyright holders as in West Ger-many or Austria. However, it can also be treated largely as atax, as in Sweden, where 90 percent goes to public funds and10 percent goes to the rights owners (authors, performers, andphonogram producers). Public lending rights (although an in-direct response to the introduction of reprographic technologies),which entitle authors of literary works to receive a royalty whentheir books are borrowed from a library, have also caused difficul-ties for international harmonization. For example, in the Fed-eral Republic of Germany this right is granted in their copy-right law, and therefore as the Federal Republic of Germanyis a member of both the Berne and UCC Conventions, foreign-ers are entitled to remuneration if their books are borrowed.The Scandinavian countries and the United Kingdom, however,which also grant a public lending right, have chosen to do soby separate legislation outside of the copyright laws and there-fore are not bound to grant the right to foreigners; althoughlike the Federal Republic of Germany, they are also membersof both conventions, Stephen Stewart, The Law of IntematiomdCop~”ght and Neighboring Rights (London: Butterworth & Co.(Publishers) Ltd., 1983), pp. 42-43, 282.

‘Ibid., p. 43.

Ch. 8—Impact of New Technologies on the International Intellectual Property System • 235.

clear policy of providing maximum protectionfor intellectual property rights to encouragethe use of and commercialization of NASA-supported and developed technology. How-ever, as more research, particularly interna-tional cooperative research, is performed inspace, it may become more difficult to deter-mine which national legal jurisdiction of pat-ent protection applies to it. For example, sec-tions 102 and 104 of the U.S. Code 35 statethat the factors used to determine patentabil-ity under U.S. law or to establish priority ininternational conflicting claims to inventioninclude where an invention was conceived, re-duced to practice, or used. In addition, underthe U.S. patent law patents protect use or man-ufacture only in the United States. As moreU.S. and international research and develop-ment is performed in space, the question arises,therefore, as to how to obtain and enforce U.S.patent rights in space.67

Policy Implications

The speed and scale of technological change,now and in the future, together with the rapiddevelopment of national and international law,are likely to heighten the pressures for the de-velopment of international intellectual prop-erty law.68 As technological change promptsmore need for rapid international consensus,greater international action and coordinationwill become necessary. Consequently, theUnited States might have to participate to the

‘“’’The Applicability of U.S. Patent Laws in Outer Space, ”Telecom Highlights, June 19, 1985, p. 4; and Barbara Luxen-berg (Special Assistant to the Assistant Secretary and Com-missioner of Patents and Trademarks, U.S. Department of Com-merce), “Protection Intellectual Property in Space: PolicyOptions and Implications for the United States, ” presented tothe Georgia Institute of Technology Conference, 1985, Inter-national Space Policy: Options for the Twentieth Century andBeyond, May 16, 1985.

‘After approximately a century without any major copy-right reform, the reform of national copyright laws to adjustthe law to advancing technology has speeded up considerablyin the last three decades. For example, new copyright acts passedin France in 1957, the United Kingdom, 1956; India, 1957; theScandinavian countries, 1959/1960; Germany 1965; Australia,1968; Japan, 1971; the Soviet Union, 1973; and the UnitedStates, 1976; and many Latin American countries, 1970s areevidence of this trend. Stephen Stewart, The International La wof Copyright and Neighboring Rights (London: Butterworth& Co. (Publishers) Ltd., 1983), p. 281.

fullest possible extent in international intel-lectual property fora so that it can both influ-ence international decisions and keep abreastof national and international developments.The United States, moreover, might need totake greater account of how its domestic in-tellectual property legislation could affect orbe affected by the international system.

As discussed above, the extent of U.S. par-ticipation in international intellectual propertyorganizations is relatively limited because ofits withdrawal from UNESCO and its absti-nence from the Berne Convention. This lackof participation might seriously impede theUnited States from monitoring developmentsin international agreements. Moreover, it mayalso weaken the U.S. ability to influence deci-sions about which rights might be incorporatedinto the international agreements with respectto new technologies.

In addition to its lack of international par-ticipation, recently proposed and already legis-lated U.S. intellectual property policies mightbe inconsistent with international intellectualproperty norms. The recent passage of theSemiconductor Chip Protection Act of 1984(Public Law 98-620), for example, created a suigeneris protection for semiconductor chips. Al-though this new type of protection maybe wellsuited for the functional nature of chips, thereis a trade-off with respect to its consistencywith the system of international agreements.Because the Semiconductor Chip ProtectionAct of 1984 is a sui generis approach and doesnot fall under the rubric of copyright or pat-ent law, there is no international agreementunder which the protection of chips can beorganized at the international level. Moreover,section 902 of the act states that foreignersmay only receive protection if their nation alsoprotects mask works. This reciprocity clauseis inconsistent with the principle of nationaltreatment which requires all nations to pro-vide foreigners with the same protection astheir citizens. Exacerbating these problems,some nations, such as the United Kingdom,disagree with the sui generis approach, con-sidering chips to be protected under copyright

236 ● Intellectual Property Rights in an Age of Electronics and Information——

law.69 To date, only one other nation, Japan,has legislated a sui generis protection for semi-conductor chips.

The International Software Protection Actof 1985 (S. 339, 99th Congress) is another ex-ample of a proposed policy that might causeproblems for the present system. This billwould amend the U.S. copyright law to pro-tect a foreign nation’s computer software onlyto the extent that such a nation protectssoftware-the so-called “rule of the shorterterm. ” It also stipulates that, if a nation pro-tects software for a period of less than 25 years,the U.S. will suspend all protection for thatnation’s software. Like the reciprocity clauseof the Semiconductor Chip Protection Act, thisconflicts with the principles of national treat-ment called for in the international intellectualproperty agreements.

The recently proposed renewal of the manu-facturing clause also illustrates how a U.S. in-tellectual property policy might negatively ef-fect U.S. international intellectual propertyrelations. First introduced in the 1891 Copy-right Act, this clause required that literaryworks be printed in the United States in orderto enjoy U.S. copyright protection. The gen-eral purpose of the manufacturing clause wasto protect those who feared that granting un-restricted copyright protection to foreign (spe-cifically British) authors would enable foreignpublishers to dominate the U.S. book market.Recognized by many as a type of “xenopho-bic trade barrier” the manufacturing clause hasbeen weakened over time, and most recentlywas set to expire in July 1986 (Public Law 97-215). 70 However, Congress is currently consid-ering legislation that would extend the manu-facturing clause or make it permanent (S. 1938,S. 1822, H.R. 3465, H.R. 3890, 99th Congress).

The manufacturing clause has created sev-eral difficulties for U.S. international intellec-tual property relations. Because it imposes for-malities (the requirement of U.S. publication)

“R. Hart, “Legally Protecting Semiconductor Chips in theUK, ” European Intellectual Property Review, vol. 9, 1985, pp.258-263.

“’Benjamin Kaplan, An Unhurried View of Copyright (NewYork: Columbia University Press, 1967), p. 124.

on works of foreign origin, it impedes U.S. ad-herence to the Berne Convention. For to jointhe Berne Convention, member nations can-not impose formalities as a condition of copy-right. The manufacturing clause has also beenthe subject of complaints of unfair trade prac-tices by the European Economic Community(EEC), and found to be an import restraint thatis inconsistent with Article XI of the GeneralAgreement on Tariffs and Trade (GATT) .7’ Be-cause it restricts the protection of foreignworks and precludes the United States fromratifying the Berne Convention, this clausemight also lead other nations to believe thatthe United States is disingenuous in its at-tempts to convince other nations to ratify in-ternational intellectual property conventions.

If the United States proceeds with policiesthat are incompatible with either internationalagreements or other nations’ domestic lawsand practices, it might jeopardize its abilityto incite other nations to protect U.S. intellec-tual property products. For unlike many otheritems of international trade, the financial re-turns from intellectual property products arelargely dependent on other nations’ laws andenforcement actions. Therefore, the UnitedStates must ensure other nations’ cooperationand support for the international protectionof intellectual property rights. A coercive ap-proach or the imposition of U.S. policies onother nations might not necessarily serve toelicit other nations support for the interna-tional protection of intellectual property, asone copyright analyst points out:

Of course it would be pure folly to expectall nations of the world, including the newones, to introduce at the present stage thesame copyright regime as we and other well-endowed old-timers are-or, in the case of theSoviet Union, should be–willing to accept.We should recall that in 1891 that this coun-try, claiming to be a have-not, provided nolegal protection whatever for the publishedworks of foreigners. When our legislation of1891 finally did grant rights to such works,— .

“’Ralph Oman, Register of Copyrights, Library of Congress,testimony on “Bills To Make Permanent the ManufacturingClause of the Copyright Act, ” before the Subcommittee on Pat-ents, Copyrights, and Trademarks, Senate Committee on Judi-ciary, .Jan. 21, 1986, p. 7.

—

Ch. 8—Impact of New Technologies on the International Intellectual Property System ● 237—

it was on the condition, in the case of booksamong certain other productions, that man-ufacture be carried out in the United States. . . . But I have brought in the manufactur-ing clause to suggest by example that har-monization is bound to have its difficultiesand, beyond that, to propose that we [theUnited States] ourselves should take anotherstep toward international pacification.72

Ratifying the Berne Convention and rejoin-ing UNESCO are possible to options to bringU.S. law into line with international intellec-tual property law. As previously discussed,these options would have both positive andnegative effects on the U.S. position in the in-ternational intellectual property system.

Another option to address the legal issuesraised by new technologies would be to estab-lish a critical review of how proposed legisla-tion would affect and be affected by the inter-national system; accordingly, legislation mightbe modified to that effect. However, similarto the negative outcomes associated with join-ing the Berne Convention, conforming U.S.laws and practices to international intellectualproperty norms might threaten the integrityof traditional U.S. intellectual property lawsand practices.

Increasing Difficulty of EnforcingIntellectual Property Rights Caused

by Emerging Information andCommunication Technologies

Traditionally, nations granted intellectualproperty rights on the assumption that theycould, in fact, be enforced. In the past, this wastrue; copyright holders could more easily col-lect for uses and detect infringements of theirworks. This was the case because uses of crea-tive works were easily monitored, and infringe-ments easily detectable, and because the geo-graphic scope of use was generally confinedwithin national boundaries.

“’Benjamin Kaplan, “An Unhurried View of Copyright (NewYork: Columbia University Press, 1967), pp. 123-124.

While facilitating the international exchangeof intellectual property, new communicationand information technologies have also under-mined the traditional ways of enforcing intel-lectual property rights. The same technologi-cal advances contributing to economic growth,trade, and international access have also madeit easy and inexpensive to reproduce and pi-rate intellectual property .73 Moreover, thesetechnologies, such as satellites, cable, photo-copying, recording audio and video devices,computers, and electronic storage, retrieval,and distribution systems, are more powerfulthan their predecessors, engendering problemsof enforcement that are much larger and moreinternational in scope.

The level of legal protection for intellectualproperty in many nations also contributes tointernational piracy of U.S. copyrighted works.The problems U.S. copyright owners face abroadwith respect to these conditions can be classi-fied into three categories:

1. nonexistent (ineligibility) copyright pro-tection in a foreign country;

2. inadequate protection in a foreign coun-try; and

3. ineffective copyright protection in a for-eign country .74

The growing problem of international en-forcement is exemplified in the apparent rapidincrease of international piracy of protectedworks. Many U.S. industries have reportedlarge losses due to foreign private copying,commercial piracy, and counterfeiting of theirintellectual property products.75 The U.S. In-

“’International Intellectual Property Alliance, “Internation-al Intellectual Property Alliance: U.S. Government Trade Pol-icy: Views of the Copyright Industries, 1985, p. 10.

“’Subcommittee on Patents, Copyrights, and Trademarks,Senate committee on the Judiciary, “Oversight on InternationalCopyrights: How To Protect the Nation’s Creativity by Pro-tecting the Value of the Intellectual Property, ” Sept. 25, 1985,p. 86.

“Although piracy and counterfeiting each constitute theftof intellectual property, there are small differences in their mean-ing. In addition, private copying, which is not clearly definedas a legal or an illegal practice under most nations’ laws, alsohas a potential impact on the sales of intellectual property prod-ucts. Piracy refers to unauthorized reproduction for commer-cial gain of literary, musical, artistic, and other copyright works.Because pirates do not pay royalties and bear no developmentcosts, they can easily sell their products more cheaply than the

(continued on next page)

238 . Intellectual Property Rights in an Age of Electronics and /formation

ternational Trade Commission estimates U.S.domestic and foreign sales losses due to pat-ent and copyright infringements at between$6 billion and $8 billion per year.76 Figure 8-4shows the level of infringing activities andsome frequently counterfeited products. TheInternational Anti-Counterfeiting Coalitionand the U.S. Customs Service place losses dueto the infringement of intellectual propertyrights closer to $20 billion annually .77 Anothersurvey undertaken by the International Intel-lectual Property Alliance of the losses due topiracy of U.S. copyrighted records and tapes,motion pictures, and books in 10 selected na-tions estimates annual losses at $1.3 billion(see table 8-3). A poll of the motion picture andtelevision, prerecorded entertainment, andpublishing and advertising industries also re-vealed that 100 percent of the executives sur-veyed cited intellectual property rights in-fringements abroad as a major barrier to salesof their products in international markets78 (seetable 8-4).

Although these estimates provide a generalapproximation of the extent of the piracy prob-lem, there are relatively few data on specificindustries in individual countries and on theactual amounts of revenue lost due to privatecopying, commercial piracy, and counterfeit-ing. Evidence of private copying and piracy(continued from previous page)

rights owners. Counterfeiting refers to unauthorized duplica-tion of a product’s trademark to give a similar appearance ofa specific product. In addition to directly undercutting the origi-nal rights owner’s market, counterfeiters by producing lowerquality imitations of products may also damage the productsquality reputation and further undercut the original market.Although not illegal, private copying generally refers to homecopying of intellectual property products solely for individualconsumption. It has resulted from the ready availability to theconsumer from 1964 onwards of magnetic tape reproductionequipment coupled with blank cassettes, videotape recorderscoupled with blank cassettes, personal computers coupled withblank software, etc. See Gillian Davies Private Copying of Soundand Ad”oviswd Recordings (Oxford: ESC Publishing Limited),1984.

“U.S. International Trade Commission, “The Effects ofForeign Product Counterfeiting on U.S. Industry” (Washing-ton, DC: U.S. International Trade Commission, January 1984).

“Eileen Hill, “Intellectual Property Rights: Commerce De-partment Program Seeks Greater Protection for U.S. Intellec-tual Property Rights, ” Business America, Mar. 18, 1985, p. 4.

““CBS, Inc., “Trade Barriers to U.S. Motion Picture andTelevision, Prerecorded Entertainment, Publishing and Adver-tising Industries, ” September 1984, p. iii.

is generally gathered indirectly: by measuringthe increase of sales and availability of hard-ware that permits easy and inexpensive copy-ing; the increase of sales of blank audio andvideo tapes; the decreasing sales of published,audio, and video works; the decreasing num-ber of journal subscriptions in different coun-tries; the widespread availability of unautho-rized copies of American creative works; or thelevel of ineffectiveness or inadequacy of pro-tection offered in different countries. Thesemeasurements, however, do not directly indi-cate what percentage of the purported piracyis of U.S. products. In other instances, whenoverall estimates of revenues lost to piracy arepresented, the methodology or definitions ofharm used to extrapolate such figures are ofteninconsistent throughout the calculations or arenot readily apparent. For example, much of thesurvey data on the effects of unauthorizedcopying on producers must be carefully inter-preted in light of the way in which harm isdefined:

Two possible definitions [of harm] are sug-gested. Under the first, harm is measured bythe reduction in profits of the producer be-low their level prior to a new unauthorizeduse. Under this definition, harm does not oc-cur if the unauthorized use leaves profits fromall previous uses unaffected. . . Under a sec-ond definition, harm occurs if the new use re-duces profits below the level they would havereached had the producer been able to exploitthe market served without authorization. . .Clearly, these alternative definitions can givevery different answers to the question ofwhether an unauthorized use has harmed theproperty owner. The distinction betweenthem must be kept in mind when examiningthe various claims of harm.79

The definitions of piracy also vary greatlyfrom nation to nation, and they are generallydependent on each country’s intellectual prop-erty laws and on international norms. It wouldseem, therefore, that because American prod-ucts garner a relatively large percentage of for-eign markets, foreign piracy of U.S. intellec-

“Stanley Besen, “Economic Issues Relating to New Tech-nologies and Intellectual Property, ” contract prepared for OTA,Dect!mber 1984, pp. 45-55.

Ch. 8—Impact of New Technologies on the International Intellectual Property System “ 239— . —.—— — — - ——.— —

Figure 8-4.—The Level and Location of International Counterfeit Activity of U.S. Products

1

Un

L

S e m i c o n d u c t o r s

Canada I

.uxury goods A i rc ra f t M a c h i n e E l e c t r o n i c \ y ~ ~ ’

ited States parts parts{

uxury goods Spor t ing

Mexico goods

porting goods

Brazil

Most act ive Moderate ❑, / Light M i n i m a l,/

SOURCE International Trade Commission. as cited in Business Week, Dec. 16, 1985

tual property products is also sizable. Theseuncertainties notwithstanding, the major avail-able statistics on piracy and counterfeiting inthe publishing, recording, motion picture, andsoftware industries are summarized below.

The Publishing Industry

According to publishing industry officials,the introduction of technologies such as pho-tocopying, and new electronic storage andprint technologies has led to vast internationalpiracy and private copying of texts and liter-ary works.80 Compounding this is the marriage

80Literar~ works are defined in § 101 of the 1976 CopyrightAct as “. . . works other than audiovisual works, expressed in

of communication technologies with electronicinformation storage and retrieval systems,which has led to more and faster international

words, numbers, or other verbal or numerical symbols or indi-cia, regardless of the nature of the material objects, such asbooks, periodicals, manuscripts, phonorecords, film, tapes, disks,or cards, in which they are embodied. ”

Internationally, literary works are protected under the UCCof which the United States is a member: “Each ContractingState undertakes to provide adequate and effective protectionof the rights of authors and other copyright proprietors in liter-ary, scientific, and artistic works, including writings, musical,dramatic, cinematographic works, and paintings, engravings,and sculpture. Article I, Universal Copyright Convention,Paris, 1971. Literary works enjoy a higher international levelof minimum protection under the Berne Convention of whichthe United States is not a member.

240 • Intellectual Property Rights in an Age of Electronics and /formation

❑

mmalc‘3:

— -—

Ch. 8—Impact of New Technologies on the International Intelectual Property System Ž 241—

exchanges of printed works, The third factorcontributing to piracy is the lack of adequate,effective, or indeed, any legal protection forU.S. literary works in many nations.

The Association of American Publishers,Inc. (AAP) estimates that the industry loses$1 billion each year to piracy of English-lan-guage books worldwide. Of this, AAP esti-mates that U.S. works account for 70 percent.The AAP also suggests that estimates of lostrevenues would be greater if calculated on thebasis of U.S. legitimate prices instead of onthe basis of estimated revenues earned by pi-rates. The publishing industry has also com-pleted a country-by-country analysis of thepiracy of published or literary works.” Al-though the AAP does not calculate direct evi-dence of actual harm to the industry, its re-port indicates that piracy is more common insome nations than in others. The majority ofthe piracy reported takes place in developingor newly industrializing nations. For example,over 27 U.S. publishers reported evidence ofpiracy of their materials in Taiwan:

‘ .4ssociation of American Publishers, Inc., “Piracy of CopJT-righted Material: A Report Prepared at the Request of the U.S.Department of State,” 1985.

An estimate of at least 560 titles from refer-ence, professional, trade, personal computerand college textbooks have been pirated inTaiwan with approximately 48,000 pirate cop-ies in English and Chinese. . . [in addition]Taiwan is illegally exporting pirated booksto Australia. The books are business and com-puter-related and are published by well-knownAmerican publishers.”In addition to pirating of domestic sales, Tai-

wan as well as other A SEAN countries pirateproducts to export to other nations.83 Approx-—

‘“ Ibid~, ‘p~6.“ASl?AN (Association of Southeast Asian Nations) coun-

tries are Brunei, Indonesia, Malaysia. the Philippines, Singa-pore, and Thailand.

“In January 1983, the Taiwanese police seized a containerbound for Nigeria, purportedly carrying water filter cups andcrash helmets. Hidden inside were 54,000 copies of five Britishtitles that had not been authorized by the copyright holdersfor export from Taiwan. The cargo was valued at $48,000. (Itsselling price in Nigeria would have been at least $250,000). Af-ter long and expensive litigation the penalty for this offensewas 1 year’s imprisonment, but the sentence was suspended.The infringing cargo was destroyed, but no printing plates wereconfiscated and only a small fine was assessed for false declara-tion. If 20 to 40 such shipments are smuggled out of Taiwaneseports each month, then the export value of these shipments atpirate prices would amount to a figure between $60 million and$120 million per year. ” Association of American Publishers,Inc., “Detailed Information on Worldwide Piracy of CopyrightedMaterial and the Copyright Laws and Penalties, ” June 11, 1985,pp. 19-20.

242 . Intellectual Property Rights in an Age of Electronics and Information

Table 8-4.—Countries and Regions That Infringe Copyrights of U.S. Motion Picture and Television,Prerecorded Entertainment, Publishing, and Advertising Industries

Copyright infringement

. — .Algeria. . . . . . . . . . . . . . . .Andean Pact . . . . . . . . . . . . .Argentina . . . . . . . . . . . . . . .Australia . . . . . . . . . . . . . . .Austria. . . . . . . . . . . . . . . . .Belgium. . . . . . . . . . . . . . . . .Brazil . . . . . . . . . . . . . . . . . . .Canada . . . . . . . . . . . . . . . . .Caribbean Region . . . . . . . .Chile . . . . . . . . . . . . . . . . . . .Colombia . . . . . . . . . . . . . .Denmark . . . . . . . . . . . . . . . .Dominican Republic . . . . . .Eastern Block. . . . . . . . . . . .EEC . . . . . . . . . . . . . . . . . .Egypt . . . . . . . . . . . . . . . . . .Finland . . . . . . . . . . . . . . . . .

France. . . . . . . . . . . . . . . . . .Germany, Federal

Republic of . . . . . . . . . .Greece. . . . . . . . . . . . . . .Hong Kong . . . . . . . . . . . . . .India. ..., . . . . . . . . . . . . .Indonesia . . . . . . . . . . . . . .Iran ., . . . . . . . . . . . . . . . . .Iraq ., . . . . . . . . . . . . . . . . . .Israel ., . . . . . . . . . . . . . .Italy . . . . . . . . . . . . . . ..., . .Jamaica . . . . . . . . . . . . . . . . .—.-— — —— .

I

[1

11

[ 1

—-— . . — —Japan . . . . . . . . . . . . . . . . . . .Kenya . . . . . . . . . . . . . . . . . .Korea . . . . . . . . . . . . . . . . . . .Lebanon . . . . . . . . . . . . . . . .Malaysia . . . . . . . . . . . . . . . .Mexico . . . . . . . . . . . . . . . . .Netherlands . . . . . . . . . . .New Zealand . . . . . . . . . . .Nigeria . . . . . . . . . . . . . . . . .Norway . . . . . . . . . . . . . . . . .Pakistan . . . . . . . . . . ..., . .People’s Republic

of China . . . . . . . . . . . . . .Peru . . . . . . . . . . . . . . . . . . . .Philippines . . . . . . . . . . . . . .Portugal . . . . . . . . . . . . . . . .Saudi Arabia. . . . . . . . . . . . .Singapore . . . . . . . . . . . . .South Africa. . . . . . . . . . . . .Spain . . . . . . . . . . . . . . . . . . .Sweden . . . . . . . . . . . . . . . . .Switzerland . . . . . . . . . . . . . .Syria . . . . . . . . . . . . . . . . . . .Taiwan. . . . . . . . . . . . . . . . . .Tanzania . . . . . . . . . . . . . . .Thailand . . . . . . . . . . . . . . .United Kingdom. . . . . . . . . .Venezuela . . . . . . . . . . . . . . .

—

I

1

■[1■[ 1

9

■■

■

■■■■

■L■[1■

■

■■■

■ -- Primary problem country or region identified by interviewed executive= Primary problem country or region identified in literature reviewed

SOURCE Columbia Broadcasting Co., lnc, “Trade Barriers to US Motion Pictures and Television, Prerecorded Entertainment, Publishing and Advertising Industries," 1984

imately 16 American publishers reported in- and other costs-not to mention royalties—fringement activity in Korea: that original publishers do pay. They provide

books to stores on consignment, making itIt is estimated that pirates sell at least $100 easy for retailers. They also sell directly from

million of books annually, and sales are ris- catalogs. One such catalog distributed in Ko-ing each year. Importers’ sales are an esti- rea, entitled Il Won Books Information, listsmated $5 million to $8 million annually, but over 8,000 pirated books.84

are plunging. Foreign book pirating flourishesbecause it is legal. This country hasn’t signed Other countries where American publishersany international copyright convention and have discovered infringements include Argen-local law does not protect copyrights of for- —“Ass~ciation of American Publishers, Inc., “Pir~cy ofeign publishers. Korean publishers can copy Co~yrightedMaterial:A Report Prepared attheRequest of thebooks without paying advertising, promotion U.S. Department of State,” 1984, pp. 2-3.


tina, Australia, Brazil, Chile, China, Colombia,Costa Rica, the Dominican Republic, Ecuador,Egypt, West Germany, Greece, Holland, HongKong, India, Indonesia, Iran, Iraq, Jamaica,Japan, Malaysia, Mexico, Nigeria, Pakistan,Panama, Peru, the Philippines, Saudi Arabia,Singapore, Thailand, Venezuela, and the So-viet Union.85

The Recording Industry

As in the publishing industry, recordingcompanies report widespread international in-fringements of sound recordings. The introduc-tion of broadcasting and of less expensive,high-quality duplicating hardware have led toincreased international piracy, counterfeiting,and private copying of sound recordings.86

Another major contributing factor to thispiracy is the lack of adequate or effective pro-tection for U.S. audio works in many countries.Half of the member countries of the UnitedNations, for example, do not yet recognize thereproduction right in sound recordings. Manyof the nations that do not provide adequateprotection for U.S. literary works are also thosethat do not protect U.S. sound recordings.87

..— . ——“’Association of American Publishers, Inc., “Piracy of

Copyrighted Material: A Report Prepared at the Request of theU.S. Department of State, ” 1984.

“ Under U.S. law sound recordings were first explicitly pro-tected by a 1971 amendment (Public Law 92-140, 85 Stat. 391)and under § 101 of the 1976 Copyright Act are thus defined:“material objects in which sounds, other than those accompany-ing a motion picture or other audiovisual work, are fixed byany method now known or later developed, and from which thesounds can be perceived, reproduced, or otherwise communi-cated, either directly or with the aid of a machine or device.

Internationally, sound recordings are protected under the 1971Convention for the Protection of Producers of PhonogramsAgainst Unauthorized Duplication of Their Phonograms ofwhich the United States is a member. The 1961 InternationalConvention for the Protection of Performers, Producers ofPhonograms and Broadcasting Organizations, better known asthe Rome Convention, protects sound recordings internation-ally, as a neighboring right. The United States, however, is nota member of this Convention.

“-These countries include Argentina, Bolivia, Brazil, Chile,Cyprus, Egypt, Greece, India, Indonesia, Italy, Korea, Kuwait,Lebanon, Malaysia, Mexico, Morocco, Nigeria, the Netherlands,Panama, Peru, Philippines, Portugal, Saudia Arabia, Singapore,Taiwan, Thailand, Tunisia, Turkey, and Venezuela. Statementof the Recording Industry of America, Inc., before the U.S. De-partment of State International Copyright Panel, “The Piracyof Copyrighted Sound Recordings in Foreign Countries, ’ Mar.22, 1985, pp. 2-8.

Because many of the developing and newlyindustrializing countries do not afford ade-quate protection for U.S. sound recordings,these countries also are the sites of the major-ity of piracy and counterfeiting of these works.

Singapore is an excellent example of themagnitude of the problem, where it is esti-mated that 70 million counterfeit and piratesound recordings were exported in 1984. Thisincredible total, plus an additional 15 millioncounterfeit units produced in Singapore forinternal consumption, accounted for 90 per-cent of sound recordings manufactured orsold in Singapore last year. A large percent-age of the unlawfully duplicated products wasU.S. owned. This situation exists despiteenergetic efforts of the IFPI (InternationalFederation of Phonogram and VideogramProducers) to combat the problem.88

Several Latin American countries are also re-sponsible for large numbers of pirated andcounterfeited U.S.-owned audio works:

In Panama, as much as 80 percent of themusical tape market is dominated by coun-terfeit and pirate goods. In Peru, the percent-age of illicit tape recordings is approximately70 percent. Bolivia and Chile both report thatapproximately 50 percent of the tape record-ings manufactured and sold there are coun-terfeit or pirate, The huge Mexican markethad a 40 percent penetration of counterfeitand pirate tapes in 1982—equaling approxi-mately 11 million units of $30 million in lostsales.89

In addition to citing specific problems indifferent nations, the Recording Industry ofAmerica, Inc. (RIA) has reported overall sta-tistics on the extent of foreign piracy and coun-terfeiting of U.S. sound recordings. The esti-mated total sales of counterfeit and piratedU.S.-owned sound recordings overseas in 1982was, according to the RIA, well over $250 mil-lion. Based on worldwide market shares for

‘Statement of the Recording Industry of America, Inc., be-fore the U.S. Department of State International CopyrightPanel, “The Piracy of Copyrighted Sound Recordings in For-eign Countries, Mar. 22, 1985, p. 2.

**Statement of the Recording Industry of America, Inc., be-fore the U.S. International Trade Commission, “The Impactof Foreign Product Counterfeiting on the U.S. Recording In-dustry,” Sept. 19, 1983, p. 10.

244 Ž Intellectual Property Rights in an Age of Electronics and Information——

different nations’ music, it is probable that ap-proximately 50 percent of the estimated $515million in counterfeit and pirate sales outsideof the United States in 1982 relates to record-ings originally created and owned by U.S. re-cording companies, performers, lyricists, andcomposers. 90

The Motion Picture Industry

Like the publishing and recording industries,the motion picture industry is also experienc-ing international private copying, piracy, andcounterfeiting of U.S.-owned audiovisual works.91

The Motion Picture Association of America,Inc. estimates, for example, that worldwidelosses due to film and video piracy are now ap-proaching $1 billion per year.92 In addition tothe lack of adequate legal protection of audio-visual works in many nations, the major fac-tor leading to international infringements ofU.S.-owned audiovisual works is the introduc-tion and increased use of information and com-munication technologies. Used individually ortogether, videocassette recorders (VCR), sat-ellites, and cable technologies have been re-ferred to by some analysts as an electronictriad, or the unholy trinity, for copyrightholders of motion pictures.93

— — — —.—“Statement of the Recording Industry of America, Inc., be-

fore the U.S. Department of State International CopyrightPanel, “The Piracy of Copyrighted Sound Recordings in For-eign Countries, ” Mar. 22, 1985, p. 1, 6.

“Motion pictures and other audiovisual works are a protect-able subject matter under the U.S. Copyright Law and weredefined under the 1976 Act in § 101 as “. . . works that consistof a series of images which are intrinsically intended to be shownby the use of machines or devices such as projectors, viewers,or electronic equipment, together with accompanying sounds,if any, regardless of the nature of the material objects, suchas films or tapes, in which the words are embodied. ”

Internationally, motion pictures and audiovisual works un-der Article 1 of the Universal Copyright Convention (1952 and1971 texts) of which the United States is a member: “Each Con-tracting State undertakes to provide adequate and effective pro-tection of the rights of authors and other copyright proprietorsin literary, scientific and artistic works, including writings, mu-sical, dramatic and cinematographic works, and paintings, en-gravings and sculpture. ” Audiovisual works are also protectedinternationally under Article 2 of the Berne Convention for Liter-ary and Artistic Works of which the United States is not amember.

“Motion Picture Association of America, Inc., “Film andVideo Piracy: Manual for Investigators and Prosecutors, ” 1984,p. 3.

‘{Edward W. Ploman and L. Clark Hamilton, Copyright: 1n-

—

The relatively recent advent of satellite tech-nology has had the greatest impact on inter-national video piracy.94 Although terrestrialbroadcasting has permitted some spillover intoother countries of U.S. copyrighted materials,the scope of the satellite footprints is muchgreater and allows other nations greater un-authorized access to U.S. works.95 Althoughtechnical advances are improving the accuracyof the satellite beams, it will never be possibleto shape the beams so precisely that they fol-low the contours of a given country.” Conse-quently, U.S. satellite signals are poached byowners of earth station receivers or by cablesystems, which retransmit them to relatively

tellectmd Property in An Information Age (London: Routledge& Kegan Paul, 1980), p. 153.

The various forms of film and video piracy can be groupedinto three main categories: 1 ) film to tape transfers, 2) duplica-tion of legitimate prerecorded videocassettes and videodisks,and 3) videotaping off television. Additional types of film andvidecl piracy include the unauthorized distribution of film prints,the unauthorized public performance of a legitimately ownedfilm print or videocassette or disk, and the unauthorized inter-ception of subscription TV programming. Motion Picture Asso-ciation of America, Inc., “Film and Video Piracy: Manual forInvestigators and Prosecutors, ” 1984, p. 6,

“’Copyrighted programs carried via satellite are protectedinternationally by the Convention Relating to Distribution ofProgramme-Carrying Signals Transmitted by Satellite of 1974.On Oct. 12, 1984, the United States ratified this Conventionwithout any amendment to domestic law. Commonly referredto as the Brussels Satellite Convention, it obligates contract-ing states to take adequate measures to prevent the unauthorizeddistribution of programming carried by satellite on or from theirterritories. The Convention leaves each state free to choose itsown method of implementation, including designation of thespecific beneficiaries of protection. The Convention, however,exempts signals that are intended for direct reception from sat-ellite by the general public; these broadcast satellite signals aregenerally already regulated under the copyright or neighbor-ing rights regimes of most nations. It also does not apply toindividual reception of satellite signals for purposes of privateviewing. Because there are currently only nine contracting statesto this Convention, the international effectiveness of this treatyremains questionable.

“’Satellite footprints are defined as “the area of the earth’ssurface in which satellite transmissions can be received. . . Notethat a footprint is a fluid concept and not a static one. Its sizewill depend on the technical characteristics of the receiving dishand environmental conditions. Therefore, a particular satellitetransmission will have one footprint when 10-foot earth-baseddishes are being used and another one when 3-foot dishes arebeing used. ” Motion Picture Export Association of America,Inc., “MPEAA Memorandum on the Uses of Satellite Technol-ogy, ” 1984, p. 9.

‘Edward W. Ploman and L. Clark Hamilton, Copyright: Zn-tellect ual Property in An Information Age (London: Routledge& Kegan Paul, 1980), p. 155.

Ch. 8—Impact of New Technologies on the International Intellectual Property Systern “ 245

large audiences without compensation to U.S.copyright holders.

Canada, for example, takes advantage of itsgeographic proximity to the United States andthe availability of American satellite signals:

Canadian cable systems under court decisionshave no copyright liability under Canadianlaw for their stock in trade, their distributionto their paying subscribers of copyrightedworks contained in the broadcast signals,both Canadian and American, which they cap-ture from the air.97

Piracy of American signals is also a wide-spread problem in Central America. Costa Ricaand the Dominican Republic, for example,pirate large amounts of U.S.-owned pro-gramming:

The most compromising form of piracy inthis country [Costa Rica] is the unauthorizedretransmission of cable TV signals. These sig-nals carry a wide variety of copyrighted ma-terial. Cable Color, a pirate cable system lo-cated in the capital city of San Jose, has asubscriber count of approximately 10,000,while a similar cable TV system, Supercanal,transmits to 3,000 subscribers. Television Re-ceive Only (TVRO) dishes as well as unautho-rized public performances also present a seri-ous problem to the American motion picture,cable, and television industries.

The theatrical and television markets forfeature films and television programmingcontinue to be severely affected by the sig-nal theft practiced by cable TV Dominicanand Telecable National. These two pirate ca-ble TV systems cumulatively service 20,000subscribers in the capital city of SantoDomingo, as well as the second largest Do-minican city, Santiago. Television ReceiveOnly dishes can be found in large numbersthroughout the city.98

Many Caribbean nations are also responsiblefor pirating U.S. programming by satellite.Jamaica is a prime example:

————‘ CBS, Inc., “Statement of CBS Inc. Before the Canadian

Parliamentary Standing Committee cm Communications andCulture, ” April 1985, pp. 1-2.

“Motion Picture Association of America, Inc., “Brief De-scription of Film Piracy, for U.S. Department of State Inter-national Copyright Panel, Mar. 22, 1985, pp. 1-2.

As with nearly every other island in the Car-ibbean, there is wholesale video and signalpiracy in Jamaica. . . Many homes and com-mercial facilities such as hotels have Televi-sion Receive Only dishes that intercept sat-ellite signals without authorization. One ofthese has been operated by the JamaicaBroadcast Company, a government-ownedoperation that has intercepted motion pictureprogramming and rebroadcast it to the en-tire island without charge. The impact of suchpractices is self-evident.99

In many countries, the widespread consumeruse of videocassette recorders has joined in-adequate or ineffective legal protection inpromoting increased piracy of American audio-visual works. These pirated copies are, in turn,sometimes rebroadcast on cable or local broad-casts. Many of the countries where piracy ofliterary and musical works is rampant also areresponsible for widespread video piracy.

Several ASEAN countries, for instance, aremajor centers of piracy of U.S. audiovisualworks. In addition to pirating for domesticsales, many of these nations export largeamounts of pirated and/or counterfeited copies.Both Korea and Indonesia are well known forthese activities:

Due to the absence of adequate and effec-tive copyright legislation in relation to for-eign works, the videocassette piracy problemin Korea is serious. Pirated copies of Amer-ican films are widely available and service a550,000 VCR population in South Korea. Manyof these are reputed to come from U.S. mili-tary bases in the country. Some hotels areusing videocassettes for in-house entertain-ment without licensing agreement, and thereis unauthorized use of American films bybroadcast television stations. . . .

In a country with 600,000 videocassetterecorders, the piracy of American motion pic-tures is 100 percent. This is due to the absenceof adequate and effective copyright legisla-tion which, in turn, inhibits legitimate mar-ket entry. ’no

Motion Picture Association of America, Inc., "Brief De-scription of Film Piracy, for U.S. Department of State Inter-national Cop}’ right Panel, Mar. 22, 1985, p. 3.1

‘ “’Motion Picture Association of America, Inc., “Brief De-scription of Film Pirac~r, for CJ, S. Department of State Inter-national Copyright Panel, Mar. 22, 198.5, p. 3.


Other countries where video piracy occurs in-clude Brazil, Canada, Costa Rica, Cyprus, theDominican Republic, Egypt, France, HongKong, Indonesia, Israel, Italy, Jamaica, Ko-rea, Malaysia, Mexico, the Netherlands, Nige-ria, Pakistan, Panama, Peru, the Philippines,Saudi Arabia, Singapore, South Africa, Spain,Sweden, Taiwan, Thailand, Turkey, UnitedKingdom, Venezuela, and West Germany.101

The Software Industry

Because few major studies of the problemhave been undertaken, there are few data onthe extent of foreign piracy of U.S. softwareproducts. 102 This is so largely because softwareis a relatively new industry, and also becausemicrocomputers are much less widely usedabroad than in the United States. 103 Recently,however, the International Intellectual Prop-erty Alliance undertook a major study on theextent of international piracy of U.S. softwareproducts. This study found that the U.S. soft-ware industry is losing significant annual salesbecause of copyright violations in Brazil ($35million), Egypt ($3 million), Korea ($20 million),Malaysia ($7 million), the Philippines ($4 mil-lion), Singapore ($20 million), Taiwan ($34 mil-lion), and Thailand ($2 million).104

Given the precedent of foreign piracy of otherU.S. intellectual property products and the ex-

“’lElizabeth Greenspan, “Film and Video Piracy, ” Interna-tional Media Law, 1983.

‘()’Published anecdotal evidence of foreign software piracy isalso rare. Some examples, however, have been cited by the AAP:“Pirated software [in Taiwan] is sold for 1 percent of the U.S.list price, or $3.50 for a best-selling U.S. software product likeVISICALC or WordStar or others that sell for approximately$350 in the United States. Often the pirate gives away 5 or 10pieces of software with a Pineapple (or pirated Apple) comput-er. Pirated computer books may also be included in this pack-age. ” Other countries where software piracy occurs include Bra-zil, Greece, Korea, and Singapore. Association of AmericanPublishers, “Piracy of Copyrighted Material, ” a Report Pre-pared at the Request of U.S. Department of State, ” Mar. 22,1985.

‘(’’’The Software Publishers Association informally estimatesthat for every legitimate copy of U.S. software abroad thereare approximately 5 to 10 pirated copies, telephone conversa-tion, July 8, 1985.

‘“’ International Intellectual Property Alliance, “Piracy ofU.S. Copyrighted Works in Ten Selected Countries: A Reportby the International Intellectual Property Alliance to the UnitedStates Trade Representatives, ” August 1985.

pected growth of foreign demand for comput-ers and computer products, the piracy of soft-ware abroad may soon become a larger concernto U.S. software manufacturers. Consequently,over the long term more in-depth analysis anddocumentation can be expected. With such in-formation, U.S. software manufacturers mightmore effectively deter international piracy.

Policy Implications

Although these statistics can only measurethe harm from private copying and piracy in-directly, they make it clear that piracy is a moreserious problem at the international level thanat the domestic level. Because of the increas-ing importance of information-based productsand services to the U.S. economy and interna-tional trade, deterring foreign piracy of U.S.intellectual property products will most likelybecome a high priority for the United States.As new technological developments erode tra-ditional enforcement mechanisms and permitgreater international dissemination of suchproducts, the United States will need to seekto improve enforcement of U.S. intellectualproperty rights abroad. Moreover, given theinadequacy of enforcement abroad, the UnitedStates might want to pursue ways of ensur-ing that countries strengthen their legal pro-tection and enforcement mechanisms for bothforeign and domestic works.

Currently, the United States is taking someaction to ensure adequate protection. It is, aspreviously discussed, using the granting oftrade preferences as an incentive for the estab-lishment of legal protection and increased en-forcement efforts to protect intellectual prop-erty products. Moreover, the United States hasbegun a series of bilateral discussions withother nations concerning international enforcement. These include discussions with Japanon the protection of software under Japanesecopyright law; discussions with Canada on theissue of protecting cable retransmissions ofU.S. broadcast programming; and discussionswith Caribbean nations on the unauthorizedinterception and retransmission of U.S. sat-ellite-transmitted motion pictures and otherprogramming. These meetings have proved

Ch. 8—impact of New Technologies on the International Intellectual Property System ● 247

successful: Japan has decided to protect soft-ware under copyright; Canada is consideringthe copyright status of cable retransmissions;and the Jamaican broadcasting authorities arebeginning negotiations.105

The United States is also initiating educa-tional seminars on intellectual property rightsfor industry and government representatives,local attorneys, and educators of developingcountries. In early 1985, for example, U.S. dele-gations from the Copyright Office, the Patentand Trademark Office, and the Department ofState went to Indonesia, Malaysia, and Thai-land to present lectures on crucial internationalintellectual property legal issues and the needto provide adequate and effective laws and en-forcement mechanisms to deter infringement.These have been particularly useful becauseeach of these nations is considering revisionsto its copyright laws and is examining how tobest protect new technologies, such as com-puter software.106 In addition, the U.S. Gov-ernment has recently begun to offer trainingprograms for patent, copyright, and trademarkadministrators of other nations.

There are also other options the UnitedStates might pursue to mitigate internationalpiracy. The United States, for example, couldmore actively participate in international in-tellectual property for a, the positive and neg-ative aspects of which have already been dis-cussed.

To complement these efforts, the UnitedStates could also encourage U.S. industry,both producers and users of intellectual prop-erty products, to participate more actively ininternational associations that fight interna-tional piracy. Such associations include, for ex-ample, the International Federation for Phono-gram and Videogram Producers (IFPI), theFederation Against Software Theft (FAST),

‘f’r’Michael Kirk, Assistant Commissioner for External Af-fairs, United States Patent and Trademark Office, Departmentof Commerce, testimony on “Copyright Enforcement, beforethe Subcommittee on Patents, Trademarks, and Copyright, Sen-ate Committee on the Judiciary, Apr. 17, 1985, p. 7.

‘ “’For a good case study of U.S. bilateral efforts to reducepiracy in a nation, see “Protection From Commercial Counter-feiters in Taiwan for U.S. Firms, ” Law and Policy in Interna-tional Business, vol. 16, No. 2, 1984.

and the Federation Against Copyright Theft(FACT).107

The United States might also expand cur-rent talks with developing countries on intel-lectual property law and piracy of U.S. prod-ucts. These seminars, which might be eitherbilateral or sponsored through a multilateralagency, could provide developing countrieswith information on how to construct adequateand effective intellectual property laws and en-forcement mechanisms. They might also beused to outline the importance of protectingintellectual property rights for developing na-tions as international trade partners, as wellas for the growth of their domestic intellectualproperty industries.

A more coercive option would be to imposetrade sanctions or other retaliatory measureson nations that do not enforce U.S. intellec-tual property rights. This option, however, en-tails trade-offs in terms of the political dis-cordance that such sanctions might provokebetween developing nations and the UnitedStates. Some trade experts, for example, warn“that with no international consensus on howto defend intellectual property rights, any at-tempt to impose U.S. views on others couldjeopardize efforts to improve agricultural andmanufacturing trade. ’’108

Growing Convergence of InternationalIntellectual Property Issues With

Other International Issues

Nations have come to view information andinformation-based products and services ascomponents for improved productivity and

‘“7A current example of industry efforts to reduce interna-tional piracy of U.S. prcducts is Ashton Tate’s cooperation withthe International Trade Administration, the Association of DataProcessing Service Organizations (ADAPSO), Lotus Develop-ment Corp., MicroPro International, and other software com-panies to develop a series of seminars on intellectual propertyrights and regulations for exporting software. They are alsoconsidering the establishment of ‘{an industry-financed war chestto provide funds to fight piracy through Iegal channels as weIIas through public education. “ “Ashton-Tate Fights at Homeand Abroad, ’ Download, March 1986, pp. 11-12.

‘“’Bruce Stokes, “Intellectual Piracy Captures the Atten-tion of the President and Congress, ” National Journal, Feb. 22,1986, pp. 443-445.


international competitiveness, internationaltrade, and as a means to achieve major socie-tal goals. As a result, international intellectualproperty issues are increasingly tied to inter-national competitiveness, trade, development,and political issues. These linkages, togetherwith the growing convergence of communi-cation and information technologies, are cre-ating new intersections between internationalintellectual property issues and other interna-tional issues, such as space and telecommuni-cation issues.

The convergence of information and infor-mation-based products and services and com-munication technologies is largely due to theoverall goal shared by many nations to buildinformation infrastructures for both social andeconomic development.109 As information andinformation-based products and services areincreasingly used with electronic communica-tion systems, the communication policies thatgovern such systems intersect with intellec-tual property policies. Thus, products and serv-ices that have traditionally been regulatedseparately are now used in new combinations:

Current changes in technology are produc-ing new patterns, with traditional services be-ing combined into unexpected hybrid shapesand uses, in defiance of the established cate-gories. . . Cable systems can be combinedwith terrestrial broadcasting, and either oneor both of these with satellite systems. Thecombination of technical systems corre-sponds to an integration of services: televi-sion and facsimile combine in telefacsimile;the data bases used for electronic photocom-posing can also be used for information re-trieval. The combination of television andtelephone is at the origin of the videophone,and these, together with computerized datasystems, result in teletext and videotex serv-ices. In fact, certain videotex services alreadyrepresent a combination of telecommunica-tions, computer, broadcasting, print, and in-formation systems.110

‘@In an information society, such that it is envisioned, therewill be a greater interdependence between information and com-munication technologies as nations seek to construct what theFrench Government calls “the entire nervous system of socialorganization. ” Simon Nora and Alain Mine, The Computeriza-tion of Society (Cambridge, MA: MIT Press, 1980).

““Edward W. Ploman and L. Clark Hamilton, Cop~ight:lnt.elkctuaf Property in an information Age (London: Routledge& Kegan Paul), p. 151.

Because of these new combinations, new usesand distribution channels are developing thatmay have been unanticipated by the legal sys-tem. Consequently, two traditionally unrelatedlegal or regulatory regimes are now in contactwith each other. Conflicts may arise when theseregimes have mutually exclusive policy ob-jectives.

A case in point is the unavoidable satellitespillover or footprints that cut across nationalfrontiers. While this spillover is not materiallydifferent from spillover in terrestrial broadcast-ing, it is, however, much greater in scope andsubject to different legal protections and re-gimes. Under the Radio Regulations of the In-ternational Telecommunications Union (ITU),space is considered common property, for ex-ample, which cannot be owned by individuals,corporations, or governments.111 Althoughsuch regulations recognize the privacy of trans-missions, there are no enforcement mecha-nisms or remedies for the violation of rights.Not finding this spillover acceptable and want-ing to enforce their rights, rights owners haveinsisted on extended protection. Their de-mands, however, conflict with the internation-ally agreed upon principle of the law of the com-mons, which has developed in the context ofspace and telecommunications law. Thus, ef-forts to protect the intellectual property em-bodied in satellite signals may need to be han-dled in widely differing legal and regulatorycontexts. 112

Also exemplifying the multifaceted natureof intellectual property issues is the increas-ing number of institutions that deal with suchissues. At present, the World Intellectual Prop-erty Organization deals with the administra-tion of rights; the United Nations Educational,Scientific, and Cultural Organization overseesinternational information flows for the bene-fit of education, science, and culture, and de-velops communications policies for the devel-opment of infrastructures; the InternationalTelecommunications Union allocates frequency

“’see Article N28/7 of the Radio Regulations, also the FinalActs of the World Administrative Radio Conference—Broad-casting Satellites, 1977.

“’Edward W. Ploman and L. Clark Hamilton, Copyright:Intelkctual Property in the Information Age. (London: Rout-ledge & Kegan Paul, 1980), p. 155.

— —


bands and promulgates technical standards inthe area of telecommunications; the United Na-tions Centre on Translational Corporationsoversees transborder information-related serv-ices; and the United Nations Conference onTrade and Development and the General Agree-ment on Tariffs and Trade regulate the tradeof some information-based products and serv-ices.113

Policy Implications

Because the present set of international le-gal and regulatory regimes and institutions aregenerally linked to a particular technology, newcombinations of older technologies might, likenew technologies, create inconsistencies be-tween traditionally separate policies and in-stitutions. To deal with such cross-cuttingissues, the international protection for intel-lectual property may need to be considered ina larger social, legal, and technical context. TheUnited States, therefore, might want to de-velop an integrated approach or policy to dealwith the cross-cutting nature of internationalissues. In addition, it may need to improve thecoordination among domestic agencies that areresponsible for international and intellectualproperty issues.

Currently, there is no agency in the U.S. Gov-ernment that has centralized responsibilitiesfor dealing with the cross-cutting internationalintellectual property issues. Instead, variousFederal agencies perform different and sepa-rate functions with respect to international in-tellectual property rights. ’l’

The Department of State plays a lead rolein coordinating other Federal agencies and rep-resenting the United States at multilateral andbilateral intellectual property negotiations.Both the Patent and Trademark Office and theCopyright Office are responsible for monitor-ing international legal developments, repre-senting the United States in their respective

——“‘Gregorio Garzon Clariana, “Legal Framework for Interna-

tional Information, ” Translational Data Report, vol. 8, No. 2,pp. 101-107.

“’These agencies are each described in more detail in Chap-ter 9, “The Federal Role in the Administration of IntellectualProperty Rights. ”

—

international conventions, and advising Con-gress and the Administration on developinginternational intellectual property policy.

The National Telecommunications and In-formation Agency (NTIA) plays an importantrole in the protection of copyrighted materialtransmitted outside the United States via tel-ecommunication technologies. It also partici-pates in negotiations of international agree-ments on the use of satellites for rebroadcastmaterials.

For trade-related international intellectualproperty issues, the U.S. Trade Representa-tive plays a major role. Its responsibilities in-clude monitoring foreign nations’ efforts toprotect intellectual property and then, accord-ing to such an analysis, recommending whethersuch nations should be eligible to receive tradepreferences. The International Trade Admin-istration also monitors international enforce-ment of intellectual property rights and pro-vides this information and counseling onexport opportunities and problems to the busi-ness community. The U.S. International TradeCommission is an independent quasi-judicialagency that determines whether unfair tradeacts related to imports, which often involvepatent, trademark, or copyright infringements,are harmful to U.S. industries.

The U.S. Information Agency takes primaryresponsibility for culturally oriented intellec-tual property policy. It oversees the distribu-tion of U.S. intellectual property products suchas films, books, and music to other nations forthe promotion of better understanding theUnited States and its citizens.

Recognizing the fragmentation of policyresponsibilities for international intellectualproperty issues within the Federal Govern-ment, several policy coordination groups forintellectual property policy have been recentlyformed. These groups include the CabinetCouncil on Commerce and Trade (WorkingGroup on Intellectual Property), the Trade Pol-icy Committee (Subcommittee on IntellectualProperty), and the Senior Interagency Groupon Communication and Information Policy(Working Group on Copyright and IntellectualProperty).

250 . Intellectual Property Rights in an Age of Electronics and Information— —

These efforts to coordinate area good starttowards recognizing the many issues involvedin international intellectual property policy.However, given the increasing legal, social, po-litical, and economic factors affecting intellec-tual property rights, the current U.S. Govern-ment organization for international intellectualproperty issues might make it very difficultto address these multifaceted issues in a com-prehensive fashion.

To deal with these cross-cutting issues, theUnited States might establish a governmentalagency responsible for both domestic and in-ternational intellectual property rights. Thisagency would subsume all the administrativeresponsibilities of the Copyright Office, thePatent and Trademark Office, and the respon-sibilities of other agencies involved with intel-lectual property rights. Internationally, itwould represent the United States on all mat-ters that relate to intellectual property rights.

Such an agency would also have centralizedin-house capabilities to analyze the effects ofnew technological developments on the inter-national intellectual property system and theU.S. position in relation to the system. Usingthis analysis, it could advise Congress on pos-sible domestic and international intellectualproperty strategies.

At the same time, the establishment of suchan agency has several drawbacks. The consoli-dation of responsibility for intellectual prop-erty rights, for example, would take expertiseon intellectual property rights from agenciesthat need it, such as the Department of Com-merce and the Library of Congress. Similarly,consolidation might also inhibit existing ac-cess to expertise on legal, trade, and foreignpolicy, made possible by multi-agency involve-ment. Finally, such a proposal would probablymeet resistance from the agencies themselves.

IMPLICATIONS FOR FUTURE U.S. INTERNATIONALINTELLECTUAL PROPERTY POLICY

As described throughout this chapter, theUnited States is undertaking and consideringmany options to address international intel-lectual property issues. Table 8-5 summarizessome of the major policy strategies availableto the United States for dealing with many ofthe international intellectual property issuesbrought about by new technologies. It furthergives major examples, issues or stresses thatwould be addressed, and suggests both posi-tive and negative outcomes of such strategies.

There is no single, clear-cut strategy that theUnited States could adopt to comprehensivelyaddress all of the international intellectualproperty issues engendered by new technol-ogies. A policy strategy designed to deal withinternational trade and enforcement issues,such as those already legislated (sections ofthe Trade and Tariff Act of 1984 and the Carib-bean Basin Economic Recovery Act), for ex-ample, fails to address any of the internationalpolitical issues presented by new technologies.

Strategies designed to focus on political issues,moreover, do not readily address internationalintellectual property trade issues.

In fact, many policy strategies designed toaddress specific issues may exacerbate otherstresses on the international intellectual prop-erty system. Treating intellectual property, forexample, solely as international trade issuescould provoke problems of international polit-ical relations, even to the point of incitingretaliation from other nations; but focus on in-ternational political relations might forecloseexport opportunities for the U.S. domestic in-tellectual property industry. Similarly, treat-ing international intellectual property issuesas separate from other international policiesmight lead to conflicts with international in-formation and communication policies andother foreign policies.

Although many of the policy strategies foraddressing international intellectual propertyissues are not mutually exclusive, the United

for Addressing International Intellectual Property Issues

P o l iCY a c t i o n

Ratify the Berne Convent Ionfor the Protection of

Literary and Artistic Works

Rejo in Uni ted Nat ionsEducat ional and Cul tura lOrganizat ion (UNESCO)

Nego t i a t i ons , educa t i on –

seminars, and trainingprograms on intellectualproperty rights forother nations

Bilateral intellectual propertyagreements with nations thatare not members of anyinternational Intellectualproperty agreements

Legislation with specificinternational reciprocityclauses

Table 8-5.—Policy Options

ExamplesIssues or stresses

to be addressed

Internat ional izat ionof in te l lectualproperty

Pol i t icalLegalEnforcement

Internationalizationof intellectualproperty

PoliticalLegalEnforcement

property could organize seminars and train -iIng programs for foreign officials responsi-ble for the administration of Intellectualproperty rights, such as those alreadyundertaken in Indonesia, Malaysia, andThailand.

Where countries are not members of interna-tional Intellectual property conventions, theUnited States could establish specificbilateral Intellectual property agreements,such as those already established withRomania, South Africa. and Thailand.

Domestic Iegislation that would make specificin te l Iec tua l proper ty r igh ts in the Uni ted

States available to foreign nationals only iftheir nation granted comparable rights toU S nat iona ls , such as those rec iproc i tyclauses in the Semiconductor Chip Protec-tion Act (Public Law 98-620) and the pro-p o s e d I n t e r n a t i o n a l C o m p u t e r S o f t w a r eProtec t Ion Act o f 1985 (S. 399, 99 thCongress)

LegalEnforcement

LegalEnforcement

Possible positive outcomes Possible negative outcomes

U.S. would appear more genuine in its support Disrupts traditional U S intel -for international Intellectual property pro- Iectual property laws andtection, and consequently it might be more practices, such as registra-

e f fec t ive in conv inc ing o ther nat ions to tion and deposit

enact legal and enforcement measures forIntellectual property protection and to ratifyIn ternat iona l in te l lec tua l proper ty agree-men ts

U.S. might have more political strength fromwhich to Influence International Intellectualproper ty po l icy deve lopment .

U.S. would appear more genuine in its support U S would need to make eco-for international Intellectual property pro- nomic and political conces-tection, and consequently it might be more sions particularly to addresseffective in convincing other nations to the concerns of developingenact legal and enforcement measures for nationsIntellectual property protection and to ratify Requires additional fundinginternational intellectual property agree-ments

U.S. might have more political strength fromwhich to influence International Intellectualproperty policy development

U.S. might Increase its ability to Influence thenumber and subjects of studies on copy-right and new technologies undertaken bythe UCC

Prov ide o ther count r ies wi th an unders tand- Requi res add i t iona l fund inging of the importance of protecting intellec-tual property rights.

Promote in ternat iona l harmonizat ion o f na-tions’ domestic Intellectual property laws

Permit the establishment of Intellectual prop- Disrupts Integrity of traditionalerty relations with countries that are cur- system of international lntel-rently not members of any international In- Iec tua l proper ty ageements .te l lec tua l proper ty agreements

Provide leverage to induce other nations to Disrupts in tegr i ty o f t rad i t iona lenact adequate and/or enforce international system of in ternat iona lintelIectual property rights In te l lec tua l proper ty

agreements

Table 8-5.— Policy Options for Addressing International Intellectual Property Issues—Continued

Issues or stressesto be addressedPolicy action

Trade preferences contingenton nations’ laws and effortsto enforce InternationalIntellectual property rights

Examples—Where countries receive trade preferences

and/or foreign aid and do not have adequatelaws or enforcement measures for the pro-tection of Intellectual property, the UnitedStates could make the receiving of suchbenefits contingent upon the improvementof Intellectual property laws and enforce-ment efforts, as called for in the Trade andTariff Act of 1984 (Public Law 98-573) andin the Caribbean Basin Economic RecoveryAct (Public Law 98-67).

Information-based products and services

Possible positive outcomes

Provide leverage to induce other nations toenact adequate legal protection and/or en-force International Intellectual propertyrights

Possible negative outcomes

Provokes new difficulties forU.S. international political re-Iations

Trade and EconomicEnforcement

Trade sanctions againstnations which do notrespect internationalIntellectual property rights

Trade and EconomicEnforcement

Provide a retaliatory mechanism against na-tions that do not have adequate legal pro-tection and/or do not adequately enforce in-ternational intellectual property rights.

Provokes new difficulties forU.S. International political re-Iations and/or retaliationfrom other nations, particu-Iarly from developingnations

could be included in international tradeagreements that have trade sanction penal-ties already in place, such as in the GeneralAgreement on Tariffs and Trade (GATT),

Imposition of trade penalties on nations thatimport goods that infringe U.S. intellectualproperty rights, such as the penalties calledfor in the Process Patent Amendment(S.1543 and H R. 1069, 99th Congress).

Increased funding with focus on–developingcountries’ specific needs for information -based products and services, such as those

Strengthen U.S. Government-sponsored informationdistribution programs

Political Promote International political and culturalunderstanding.

Provide incentives for countries to respect in-ternational Intellectual property rights.

Requires additional funding

distibution programs sponsored by theU S information Agency (US! A), the PeaceCorps, and the Library of Congress.

Funding for developing countries specificallyearmarked for the purchase of information -based products and services.

Foreign aid to nations forpurchase of Intellectualproperty products

Political Promote International political and culturalunderstanding.

Provide incentives for countries to respect in-ternational Intellectual property rights.

Promote the development of domestic intel-lectual property industnes in other nations.

Provide a forum for better coordination amongthe governmental agencies responsible forvarious aspects of international intellectualproperty protection

Requires additional funding.

Permanent coordinating bodyfor all governmentagencies involved withintellectual property issues

Standing coordinating body that would con-sist of representatives from all agencies in-volved with Intellectual property rights Is-sues, such as the working groups of theCabinet Council on Commerce and Trade,the Trade Policy Committee, and the Inter-agency Group on Communications and In-formation Policy

Institutional Complicates decisionmakingprocess for International in-tellectual property policy bydecentralizing Individualagencies’ policymakingresponsibilities

Establishment of governmentagency for Intellectualproperty

Institutional Provide a mechanism for presenting a moreunited U.S. position on international intel.

Loss of direct access to exper-tise or Intellectual propertyprotection needed by individ-ual government agencies

Combining under the jurisdiction of one gov-ernmental agency alI of the responsibilitiesfor the administration of Intellectual prop-erty rights, includlng all International intel-lectual property policies,

Iectual property issues.Provide a mechanism to centralize expertise

on foreign policy and Intellectual propertywithin the Federal Government.

SOURCE Office of Technology Assessment

Ch. 8—Impact of New Technologies on the International Intellectual Property System ● 253—

States must recognize the trade-offs involvedin choosing one policy strategy over another,or the possibility that two policy strategiesmight conflict. Given such potential policy con-flicts, the United States will need to make fun-damental decisions about how it wishes to viewintellectual property (for example, as an itemof trade, an item to enhance its foreign diplo-matic relations, etc.) and design its overall in-ternational intellectual property policy strat-

egies accordingly. Such decisions are likely tobecome more important in light of the enhancedrole of the new technologies in economic andsocial development. Decisions about interna-tional intellectual policy, moreover, will needto be made in conjunction with many otheraspects of U.S. foreign policy—from interna-tional issues of defense, trade, and foreign aidto issues of international information and com-munication policy.

Documents

Intellectual Property Rights in an Age of Electronics and Information