ZDNet Article

ZDNet
17 September 2002
Matt Loney
http://comment.zdnet.co.uk/story/0,,t479-s2122461-p1,00.html

Rip up that shrink-wrap licence

A distinguished group of academics, government representatives and businesspeople this week came out with a set of recommendations which, if taken seriously by governments around the world, could have a drastic effect on the software industry.

The proposals, by the Commission on Intellectual Property Rights, would also have a drastic effect on the lives of millions of people in the developing world.
All areas of intellectual property are addressed in the Commission's report -- including health, as well as agricultural and genetic resources and traditional knowledge. All these issues receive intermittent coverage in the mainstream Western media (usually when some tribal uprising threatens to affect a company's stock price) and most had an airing at the recent summit on sustainable development in Johannesburg.

What is less often talked about is the effect that technology has on development. The opportunity is vast: it took centuries, if not a full millennium, for books to reach an audience of millions, thereby spreading knowledge, scholarship and development throughout the Western world. Television accomplished a similar degree of penetration within decades, and the Internet in a matter of a just few years.

But while the opportunity for developing nations to benefit from the spread of the Internet and IT in general is huge -- witness India's software industry -- Western corporate interests threaten to stymie the Internet revolution in developing nations before it starts. This is why the Commission's proposals are so interesting, and why they should be applauded.

Basically, the Commission's proposals would see the dreaded shrink-wrap contracts that restrict what people can do with the software they buy declared void; reverse engineering would be encouraged, as would government sponsorship of open-source software; and copyright protection would be significantly relaxed. For a start, that would mean a stop to the spread of laws such as the Digital Millennium Copyright Act, which makes it illegal in the US to circumvent copyright protection mechanisms, even when the purpose of circumvention does not violate copyright laws. That particularly heinous piece of legislation is currently making its way to Europe in the form of a new directive which is likely to be enacted in the national laws of member states next year.

Whatever the claims for protection of intellectual property in the West, copyright laws have -- with a few exceptions like Bollywood -- failed to stimulate the growth of copyright-protected industries in the developing world, according to the Commission on IP Rights.

Most developing countries, especially the smaller ones, are net importers of copyrighted materials and the main beneficiaries are foreign rights holders, who are overwhelmingly based in rich Western nations.

International treaties such as the Berne Convention call for flexibility in copyright enforcement to allow some copying for personal educational use -- this is the "fair use" concept that all copyright laws contain. Sadly, fair use is being eroded by media and software industries too arrogant to believe that laws and international treaties apply to them.

Take Microsoft's Palladium platform, which is being developed for Digital Rights Management. Like much e-book software currently available and in development, Palladium enables to copyright holder to claim all his or her (or its) rights, but removes the fair use rights of the individual. Some products allow for an e-book, for instance, to be 'lent' from one PC or PDA to another, but this is hardly suitable for educational use. And it is entirely unsatisfactory for many in the developing world.

Some organisations are taking steps in the right direction. The extension of free online access to academic journals for developing countries is a good example of what can be achieved, says the Commission. There is also of course Project Gutenberg, the brainchild of Michael Hart, who in 1971 decided that it would be a really good idea if lots of famous and important texts were freely available to everyone in the world.

Sadly, many media organisations seem more infatuated with the idea of hacking the PCs of anyone who dares to share their intellectual property with a friend, than with aiding the spread of knowledge and art.

Indeed, software and media industries in the West prefer to avoid the issue of fair use rights in technology and if pressed, they will say there is no easy solution. But according to the Commission on IP Rights there is -- for the developing world at least: simply tip the scales back in favour of individuals and institutions who need access to software, e-books and so on for their development.

Weak levels of copyright enforcement have had a major impact on the diffusion of knowledge and knowledge products throughout the developing world, according to the Commission. The Commission is unequivocal in its assessment: stronger protection of and enforcement of international copyright rules would have a damaging effect on the ability of developing countries to develop their human resources and technological capacity.

The price of software is singled out as a major problem in developing countries. It is, says the Commission, the principal reason for illicit copying. I can believe that, having worked in a developing country for an NGO that had no option but to break shrink-wrap licence agreements and install a single piece of software on several Macs. Given the choice between honouring a software shrink-wrap contract and producing information on how to avoid typhoid to people living in some of the remotest regions on earth, I would happily break the contract every time.

And this is exactly what the Commission on IP Rights recommends: governments should declare many of the more onerous shrink-wrap licences void.

A good example of an onerous shrink-wrap licence is -- you guessed it -- the one that comes wrapped around Windows. Microsoft discovered just what people think of its shrink-wrap licence when in July 2001 when it faced widespread criticism for threatening legal action against Australian charity PCs for Kids, which refurbished old computers for disadvantaged children and was re-installing Windows without paying a new licence fee to Microsoft (which at the time by the way had some $40bn in cash in the bank).
Realising it was in for a public relations hiding, Microsoft relented and said it would provide 150 packs of Windows 95 and ten refurbished computers which it claimed was worth a total of AU$65,000 (£22,000) as a "gesture of goodwill" to Australian charity organisations. Just how ten old PCs and 150 copies of an outdated operating system that is not even sold any more could possible be worth £22,000 is quite beyond me. Windows 95 was obsolete even in 2001; Microsoft did not want to sell it any more, and if it had not provided these would the charities have spent £22,000 minus the cost of ten PCs on newer versions of Windows? Probably not.

Obviously Australia is not a developing nation, but this episode illustrates the problem with the price of software in developing nations: that many people -- and particularly those involved in development work, such as NGOs -- simply cannot afford to buy it. Software that is illicitly copied in such circumstances does not detract from the profits of the software industry because the people doing the copying would never be able to pay the real price of the software. The software company concerned would simply have fewer users.

The software industry would do well to learn from other groups that provide services to developing nations. Take the voluntary sector, which is an important provider of skills to the developing world; a widely used rule of thumb here is that professionals, who would command good salaries in the West, are paid the same wage while working abroad as an average teacher in the area where they work.

It would be refreshing to see a major software company with the courage to price its products according to the means of the people in the area in which the software is being sold. Of course, there are dangers in such a system -- some of this cheap software would almost certainly find its way back to rich nations, and that would indeed hurt the profits of the company concerned. But then there are always those shrink-wrap licences which can be used to curb such activity and which are, of course, much more easily enforceable in rich nations.

What it boils to is that necessity is the mother of invention. To date, the invention has been no more than figuring out how to illicitly copy software. But increasingly, invention is likely to mean developing open-source alternatives.

The longer it takes software companies to wake up to the benefits they stand to reap from taking a socially responsible attitude to the developing world, the more developing nations and their nationals will turn to open source. This is good for the people, but not so good for the software companies who will only be able to look forward to more and better cheap alternatives to their products.

Note: ZDNet kindly waived its fee for permission to use this article.

COMMISSION ON INTELLECTUAL PROPERTY RIGHTS

		ZDNet 17 September 2002 Matt Loney http://comment.zdnet.co.uk/story/0,,t479-s2122461-p1,00.html Rip up that shrink-wrap licence A distinguished group of academics, government representatives and businesspeople this week came out with a set of recommendations which, if taken seriously by governments around the world, could have a drastic effect on the software industry. The proposals, by the Commission on Intellectual Property Rights, would also have a drastic effect on the lives of millions of people in the developing world. All areas of intellectual property are addressed in the Commission's report -- including health, as well as agricultural and genetic resources and traditional knowledge. All these issues receive intermittent coverage in the mainstream Western media (usually when some tribal uprising threatens to affect a company's stock price) and most had an airing at the recent summit on sustainable development in Johannesburg. What is less often talked about is the effect that technology has on development. The opportunity is vast: it took centuries, if not a full millennium, for books to reach an audience of millions, thereby spreading knowledge, scholarship and development throughout the Western world. Television accomplished a similar degree of penetration within decades, and the Internet in a matter of a just few years. But while the opportunity for developing nations to benefit from the spread of the Internet and IT in general is huge -- witness India's software industry -- Western corporate interests threaten to stymie the Internet revolution in developing nations before it starts. This is why the Commission's proposals are so interesting, and why they should be applauded. Basically, the Commission's proposals would see the dreaded shrink-wrap contracts that restrict what people can do with the software they buy declared void; reverse engineering would be encouraged, as would government sponsorship of open-source software; and copyright protection would be significantly relaxed. For a start, that would mean a stop to the spread of laws such as the Digital Millennium Copyright Act, which makes it illegal in the US to circumvent copyright protection mechanisms, even when the purpose of circumvention does not violate copyright laws. That particularly heinous piece of legislation is currently making its way to Europe in the form of a new directive which is likely to be enacted in the national laws of member states next year. Whatever the claims for protection of intellectual property in the West, copyright laws have -- with a few exceptions like Bollywood -- failed to stimulate the growth of copyright-protected industries in the developing world, according to the Commission on IP Rights. Most developing countries, especially the smaller ones, are net importers of copyrighted materials and the main beneficiaries are foreign rights holders, who are overwhelmingly based in rich Western nations. International treaties such as the Berne Convention call for flexibility in copyright enforcement to allow some copying for personal educational use -- this is the "fair use" concept that all copyright laws contain. Sadly, fair use is being eroded by media and software industries too arrogant to believe that laws and international treaties apply to them. Take Microsoft's Palladium platform, which is being developed for Digital Rights Management. Like much e-book software currently available and in development, Palladium enables to copyright holder to claim all his or her (or its) rights, but removes the fair use rights of the individual. Some products allow for an e-book, for instance, to be 'lent' from one PC or PDA to another, but this is hardly suitable for educational use. And it is entirely unsatisfactory for many in the developing world. Some organisations are taking steps in the right direction. The extension of free online access to academic journals for developing countries is a good example of what can be achieved, says the Commission. There is also of course Project Gutenberg, the brainchild of Michael Hart, who in 1971 decided that it would be a really good idea if lots of famous and important texts were freely available to everyone in the world. Sadly, many media organisations seem more infatuated with the idea of hacking the PCs of anyone who dares to share their intellectual property with a friend, than with aiding the spread of knowledge and art. Indeed, software and media industries in the West prefer to avoid the issue of fair use rights in technology and if pressed, they will say there is no easy solution. But according to the Commission on IP Rights there is -- for the developing world at least: simply tip the scales back in favour of individuals and institutions who need access to software, e-books and so on for their development. Weak levels of copyright enforcement have had a major impact on the diffusion of knowledge and knowledge products throughout the developing world, according to the Commission. The Commission is unequivocal in its assessment: stronger protection of and enforcement of international copyright rules would have a damaging effect on the ability of developing countries to develop their human resources and technological capacity. The price of software is singled out as a major problem in developing countries. It is, says the Commission, the principal reason for illicit copying. I can believe that, having worked in a developing country for an NGO that had no option but to break shrink-wrap licence agreements and install a single piece of software on several Macs. Given the choice between honouring a software shrink-wrap contract and producing information on how to avoid typhoid to people living in some of the remotest regions on earth, I would happily break the contract every time. And this is exactly what the Commission on IP Rights recommends: governments should declare many of the more onerous shrink-wrap licences void. A good example of an onerous shrink-wrap licence is -- you guessed it -- the one that comes wrapped around Windows. Microsoft discovered just what people think of its shrink-wrap licence when in July 2001 when it faced widespread criticism for threatening legal action against Australian charity PCs for Kids, which refurbished old computers for disadvantaged children and was re-installing Windows without paying a new licence fee to Microsoft (which at the time by the way had some $40bn in cash in the bank). Realising it was in for a public relations hiding, Microsoft relented and said it would provide 150 packs of Windows 95 and ten refurbished computers which it claimed was worth a total of AU$65,000 (£22,000) as a "gesture of goodwill" to Australian charity organisations. Just how ten old PCs and 150 copies of an outdated operating system that is not even sold any more could possible be worth £22,000 is quite beyond me. Windows 95 was obsolete even in 2001; Microsoft did not want to sell it any more, and if it had not provided these would the charities have spent £22,000 minus the cost of ten PCs on newer versions of Windows? Probably not. Obviously Australia is not a developing nation, but this episode illustrates the problem with the price of software in developing nations: that many people -- and particularly those involved in development work, such as NGOs -- simply cannot afford to buy it. Software that is illicitly copied in such circumstances does not detract from the profits of the software industry because the people doing the copying would never be able to pay the real price of the software. The software company concerned would simply have fewer users. The software industry would do well to learn from other groups that provide services to developing nations. Take the voluntary sector, which is an important provider of skills to the developing world; a widely used rule of thumb here is that professionals, who would command good salaries in the West, are paid the same wage while working abroad as an average teacher in the area where they work. It would be refreshing to see a major software company with the courage to price its products according to the means of the people in the area in which the software is being sold. Of course, there are dangers in such a system -- some of this cheap software would almost certainly find its way back to rich nations, and that would indeed hurt the profits of the company concerned. But then there are always those shrink-wrap licences which can be used to curb such activity and which are, of course, much more easily enforceable in rich nations. What it boils to is that necessity is the mother of invention. To date, the invention has been no more than figuring out how to illicitly copy software. But increasingly, invention is likely to mean developing open-source alternatives. The longer it takes software companies to wake up to the benefits they stand to reap from taking a socially responsible attitude to the developing world, the more developing nations and their nationals will turn to open source. This is good for the people, but not so good for the software companies who will only be able to look forward to more and better cheap alternatives to their products. Copyright © 2002 CNET Networks, Inc. All Rights Reserved. Note: ZDNet kindly waived its fee for permission to use this article.