19 June 2012
Archive

Intellectual Property theft, what & who causes it, who aids and abets it and what needs to happen to resolve it? An opinion piece by Maxine Horn, CEO, Creative Barcode

I have avidly followed & participated in the UK IP review. I have also followed the media stories pouring in from around the world reporting on the review of IP systems which most consider to be no longer fit for purpose in the digital age.

Some if not all, government agencies find themselves playing catch-up – caught off-guard by how rapidly the internet has opened up consumer & business access to content and knowledge on the one hand but on the other has posed a significant threat to the economic infra-structure of the world’s creative industries and innovators.

In the USA, the Stop Online Piracy Act (SOPA) caused uproar in two distinct for and against camps.

In the against SOPA camp sat internet portal owners from Wikipedia to Google and alongside them the mavericks and others who demand the freedom to download and share files regardless of the commercial interests & rights of Creators. Some even publically demanded the right to view any illegal web-site whether pirate or hard-core child pawn claiming an invasion of their freedom & privacy rights if government made ISP’s take action to pull the plug on such sites.

The ISP’s and portal owners fought for their commercial interests to protect revenues they earn from illegal sites. They appeared to display scant interest in taking responsibility for damage caused to others.

Not surprisingly, sitting in the for SOPA camp were many 1000’s of Creators whose work such as music & film, design, photography, illustrations & products were being ‘stolen’. In some instances fraudsters were cloning genuine product sites and over-laying their own payment systems causing theft from both the genuine site owner and consumers whose payment for goods would never be fulfilled and whose credit card details fell into the hands of the fraudsters.

Some of the comments published in online forums displayed a high level misunderstanding about who benefits commercially from copyright works & goods. One particular myth is that all musicians, actors and designer product creators are wealthy beyond the reach of the average person and therefore purchase of fake products sold cheap or access to pirate music and film sites was a fair right of the less wealthy.

Whilst there are some wealthy Creators, they represent the minority. The majority of talented Creators are way down the revenue food chain.  It is the large production companies involved in commercialisation that gain the lion’s share of revenues.  

And let’s be honest, it is not the poverty stricken that are predominantly purchasing fake goods or pirating film and music instead it is the employed with internet access, electronic devices and the financial means to go on holiday returning with counterfeit products. And those who have the financial means and resources to fake the goods and set-up pirate sites in the first place who are the biggest culprits of aiding and abetting copyright left.

Copyright and creative industries have found themselves dragged into a worldwide dispute concerning privacy and freedom of speech – but regardless of the for and against differences of opinion – the focus of attention in my mind should be one of ‘reasonable responsibility’ or what criminal law might refer to as ‘aiding and abetting’ a crime - which brings us back to copyright theft and what really causes it.

The need for a focus on ‘new’ IP business models and infrastructures

It has been and can be argued that the commercialisation leaders have been exceptionally slow to adapt their revenue models & reduce costs to the consumer whilst benefitting from ever falling production costs brought about by a digital age. For example, most consumers agree that the move from Vinyl to CD should have decreased the cost of music not increased it. Those that shut down Napster sat back in smug satisfaction rather than learn from it and review their business models.

And authors rose up against the publishing giants such as Amazon and demanded more equitable royalty deals when plummeting book publishing costs was replaced by digitised e-books. Rightly so.

The more recent launch of Netflix has proved that consumers are willing to pay for films reasonably priced, rather than risk using low quality & illegal pirate sites. New business models ought to be the focus of attention for the commercialisation firms to make pirate sites and illegal file sharing less attractive and significantly reduce intellectual property theft. Simply introducing tougher laws and targeting consumers leaves the problem residing in a negative environment rather than focusing on balanced, fair and positive business model change.

 

Creative Barcode took the new business model approach to address theft and cavalier attitudes towards the value of Creators ideas and concept innovation and to take the cost & complexity out of protection for individual Creators, micro-businesses up to the largest business worldwide.  Creative Barcode demonstrates that the IP environment for Creators does not have to be so costly and complex so long as balance, fairness and ethics are applied.

To save me explaining the detail in this article, here is a link to a recent and in-depth article by a creative industries lawyer turned editor about the Creative Barcode model, how it works and its benefits

http://tinyurl.com/bocqzut - It is a great account of how it works and why this new IP business model is considered so important that it has been endorsed by the World Intellectual Property Organisation and is hailed as the first innovation in the IP sector for more than 3 decades.

Inadvertent copyright breech & portal owners’ terms and conditions

Copyright breach by consumers in particular & naïve businesses is often inadvertent. It can be caused by businesses that launch portals that are genuinely offering fun, social and network community platforms but aid and abet inadvertent copyright theft amongst consumers and businesses.

Most consumers and to lesser extent business users of internet portals are entirely unaware of the difference between free to access, free to view and that of free to download, use, re-use, re-mix others creative work found on the internet.

Portal owners don’t help the situation in fact many of them make it worse.  Many pay scant regard for communicating lay-person Intellectual Property guidance in the full knowledge that consumers have virtually no idea what Intellectual Property is. Even businesses have a very low level understanding of IP.

None-the-less portal owners, by and large, tend to make their site users responsible for intellectual property breach. In many instances owners’ terms and conditions of use state that anything uploaded by the user to their site grants the site owner worldwide rights to use content uploaded in any manner they see fit & without payment or permission required. And they do so regardless of whether the site user owns the items uploaded or thereby has authorisation to grant such usage rights to site owners.

 

This is exactly the issue that caused a major row between Pinterest & users of their social media site. A photographer, who also happened to be a lawyer, read their terms and conditions and discovered that not only would she be responsible for any inadvertent breach of copyright by pinning a work owned by a Creator without their permission and any legal costs involved if a copyright owner take action but she would also be responsible for any action taken against Pinterest and for their legal costs!

Businesses who launch portals that involve copyright works and file sharing, without any regard for intellectual property are ‘aiding and abetting’ their site users to breach copyright.

Governments are now encouraging portal owners to take more responsibility – and not before time. They have not bowed to claims that ‘open-source’ and so called ‘USA determined fair –use’ opens up innovation and creativity and therefore IP laws should be entirely relaxed.  Governments are aware of the commercial interests involved and that a push by portal owners for relaxed IP is a self-interested approach to protect their advertising revenues, data gathering & selling and building of their user bases upon which their acquisition value is based.  Hence the reason that 2 year old start-up firm Instagram with its 30 million users but zero income was bought by Google for an astonishing £1billion in April 2012.

Recently Appellate Court USA gave a preliminary decision favouring Viacom International supporting its case against YouTube Inc. It ruled that YouTube, owned by Google, could be liable for copyright infringements in relation to online material appearing on their Website.

This potentially ground-breaking case revolved around the extent of YouTube’s knowledge about infringement of material. And thereby it did not allow You Tube to hide behind the so called ‘safe harbour’ clauses of the US Digital Millennium Copyright Act which limits the liability of online service providers.

The Court delivered a definitive, common sense message – intentionally ignoring theft is not protected by law.’

 

Currently each breach has to be considered upon its own merit and that ‘knowledge’ regards the breech is required rather than general awareness of a possible breach.  

What constitutes item specific knowledge and what rights and ability to control copy right infringement a portal owner has, will likely become a contentious issue.

However, it is a step in the right direction that should at least make portal owners sit up & take a bit more responsibility for aiding and abetting copyright infringement.  

 

The UK IP Review and content Creators

In the UK implementation of the Hargreaves recommendations is being explored following several ‘calls for evidence’ from Creators, lawyers, representative trade & professional bodies and large commercial organisations such as image libraries, music and entertainment firms.

The first report is Phase One of the Richard Hooper assessment of the value chain and potential for Digital Copyright Exchanges (DCE). Phase One can be downloaded from http://www.ipo.gov.uk/types/hargreaves.htm

It is an excellent piece of work, and whilst it does not incorporate the design & advertising sectors it does give a clear picture of the photography, music, film and publishing copyright market place.

Most noteworthy is the illustration (shown below) found on page 15 of the Richard Hooper Phase One report. The top of the value chain clearly shows Creators /Rights holders.

Creators, in the majority, are individuals or co-creators running micro-sized, SME and start-up businesses. They need less complex & more affordable Intellectual Property mechanisms which open-up innovation not restrict it. They also need the attitudes of commercialisation organisations to shift from bullish exploitation to a far more balanced, ethical and fair trading environment.

 

Imagine if the Creator, fed-up of consistent misappropriation of their work, dis-respectful attitudes towards the value of creativity & innovation concepts & unfair exploitation, ceased to produce or make any work available. What would all those sitting beneath this illustration, particularly in categories A & B, be left to commercialise? Or, Creators bandied together and set-up their own direct to consumer and direct to business online sales models? The internet makes it easy for any Creator to open an online shop and sell their work direct to consumers. And if the large intermediary firms do not adapt their revenue models they may well start facing stiff competition from Creators who circumvent them and go direct to the consumer. 

All ideas are free – right? –

Wrong.

 

Businesses who continue to make no distinction between unarticulated ideas generated by the lay-person and creative & innovation concepts generated by the professional creative industries or knowledge-based sectors are surely self-serving when they argue that all ideas should be free as they have no value until they are commercialised. To an extent the latter is true enough in context of without commercialisation no-one is able to purchase a product, service or piece of creative work – however, it is not true in context of concepts having no value. If that were the case, no-one would invest in commercialisation of value-less works. They invest to generate revenues and profits.

All innovation is collaborative irrespective of whether the innovation is incremental, evolutionary, revolutionary or disruptive. And no singular party ever brought a new product, service; process or business model to market single-handedly. So it’s a division of labour which always begins with the articulated concept before better resourced parties step in to commercialise it. Take either party out of the equation and we reach stale-mate.

 

 

Intellectual Property has become a battle ground played out predominantly between the largest commercial organisations seeking to usurp their competition where more often than not the result is the consumer becomes the biggest loser.  In the creative industries intellectual property theft is crippling their income where once again the consumer would be affected if they have less & less access to creative works. 

A re-education of both consumer and business internet users regards the difference between free to access and free to view from free to download and use works commercially or non-commercially without payment or permission of the Creator needs to become a primary focus of attention.

On the other side of the fence, Creators themselves need to take more responsibility for protection of their work. Too many Creators send materials to businesses, engage in ‘pitches’, and upload content without any formal terms of use in place. And far too many Creators rely on unregistered copyright and unregistered design rights in the misguided belief that concepts are protected under those laws. They are not.

Creators also have a habit of entering into co-creation projects on a hand-shake between friends and come unstuck, ruining many a good relationship due to misunderstandings and assumptions made regards the terms the parties were working too.  

Non-complex, easy to use and affordable mechanisms such as that offered by Creative Barcode should be a no-brainer option for every Creator to authenticate & safe-guard their work and equally benefit from the support of the World Intellectual Property Organisation (WIPO) should a breach of its terms occur. No breach has occurred since its launch in September 2010 despite attracting users from more than 18 Countries across 5 continents.

 

And whilst it is only 18 months since its launch and it has attracted users from more than 18 Countries across 5 continents, it is the entrepreneurs, start-ups and publishing sector that have been the first movers to fully adopt it. The creative sector lags behind not because Creative Barcode is complex or unaffordable - it is not, it couldn’t be easier or more affordable - in fact it has been described by many a Creator as ‘genius’. The lag is most likely caused because Creators fear IP protection as they simple find it all too complex. So even a non-complex, positive solution still resides in a negative environment where miss assumption in the sector it is designed for loom large.   

Why do Creative types fear Intellectual Property?

In a conversation with a group of designers discussing this subject they expressed useful insights.

 

The first issue, and one that applies to all businesses regardless of sector, is that Intellectual Property is presented in a negative light not a positive one. It is presented as combative, complex and costly – so even positive and affordable mechanisms such as Creative Barcode are fighting to get out of a negative environment.

There also exists an over-riding fear that adopting & communicating any formal IP policy to potential industry clients pre or even post appointment, might offend. It’s a genuine fear but it is a misperception – not a single organisation regardless of size or location has refused to accept files protected under Creative Barcode. The opposite is the case as prospective clients are re-assured that the works presented to them are authenticated and are the original works of the creative firm with the authority to disclose.  Further it demonstrates professional best practice which protects the commissioning organisations’ own IP position should any later challenge be raised from any other source claiming the concept/works was theirs.  This is particularly important in context of Open Innovation – if recipients of works submitted into open innovation initiatives cannot be assured of its authenticity they run a risk of a legal challenge.

Thousands of businesses who commission external creative agencies to design their brands, services, web sites, products and so forth, rarely undertake a formal assignment of copyright. Instead they operate on a ‘work for hire’ basis where on payment for services it is assumed that all IP is transferred. This is often not the case. Without a formal assignment, if Creators were of a mind to, many brand owners could find that they do not own the IP in the works they have paid for. 

The final insight regards what holds Creators back from taking responsibility for IP was their general lack of knowledge of Intellectual Property. And rather than invest time to understand what is a complex and dull subject they revert to ‘avoid’ mode.

Intellectual Property should become a formal Continuous Professional Development module for any Business but particularly a Creative business.

Directors of creative firms should as a bare minimum equip themselves with a basic understanding of Intellectual Property – it is a critical business subject. The smartest firms would make it part of Continuous Professional Development (CPD) for every junior to senior member of staff. There is after-all a raft of free Intellectual Property events, seminars, work-shops and endless good material available online. So cost is not a barrier to gaining knowledge. Avoidance is.

Yes its complex, yes its dull but avoiding professional responsibility & not improving knowledge for that reason alone is akin to children playing hooky from maths class.   

Creators need to be part of the solutions and that requires that they develop a better understanding of Intellectual Property mechanisms in context to how it applies to their business and that of their clients. Taking professionally responsibility will have a positive impact on their business and reduce misunderstandings at both business and consumer level.

 

It is stated by Government agencies and economists that economic growth is most likely to come from the ‘knowledge economy’.  And when nations shift from a heavy engineering and manufacturing economy to a knowledge economy intellectual property has a fundamental role to play as a trading currency.

So universities, creative industries and knowledge-based innovation sectors should take the lead and team up with commercialisation partners to fill their knowledge gaps. The commercialisation parties need to adopt a more balanced, fair and ethical trading policy and avoid unfair commercialisation that will not serve either party well. 

So in summary whilst this has been a whistle stop tour highlighting some key issues surrounding Intellectual Property – overall, in my humble opinion, developing new business models that reduce the complexities and cost of IP should serve to open up innovation and creativity, not restrict it.  And that is surely good for all involved – the creators, the commercialisation parties and not least of all the consumers.

Links

www.creativebarcode.com

http://en.wikipedia.org/wiki/Stop_Online_Piracy_Act

http://www.ipo.gov.uk/ipreview.htm (UK IP Review - Hargreaves)

Richard Hooper Digital Copyright Exchange – Phase 1 report feasibility study

http://www.ipo.gov.uk/types/hargreaves.htm

http://www.innovationbank.co.uk

Twitter @creativebarcode

Twitter @innovationbank1

 

 

 

 

 



Maxine Horn
Creative Barcode
United Kingdom
team@creativebarcode.com
www.creativebarcode.com

 
 
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