Monday, April 04, 2005

Copyright protection 

Following up on my previous post “Cinemas and the Competition Act”, Han at Wannabe Lawyer has an interesting take on the situation.

He points out that competition for cinemas come not only from each other but also from substitute products like CDs, DVDs, rentals etc. Therefore, even if there is cartel-like behaviour involved, competitive conditions still exist in the overall entertainment industry and “Government intervention in this scenario would certainly be unwarranted”.

The last point is probably debatable, since it depends on whether one views these alternatives as good substitutes for the cinema. But his next statement is interesting: “... I would argue that this current state of affairs is a direct result of government intervention in the market”.

What does he mean?

“Copyrights are artificial monopolies created by government statute,” he writes. He implies that by enforcing copyright law and driving out VCD pirates — one of the cinema operators’ competitors — the government has empowered cinemas to raise ticket prices. “Strong copyright ‘protections’ are [a] barrier [to entry for new market players], and should be weakened.”

But what of the rights of the originator of the idea, which copyright is supposed to protect? Han is not too concerned.

“Ideas and expression of ideas are inherently non-rival and non-excludable,” he writes. An idea is non-rival because when someone other than the originator uses it, the originator does not lose the use of his idea. An idea is non-excludable if people cannot be selectively excluded from using it (although some might say that this argues for stronger copyright protection).

However, Huichieh of From a Singapore Angle says that while there is no cost in replicating an idea, there is a cost in generating the idea. That justifies some sort of copyright protection.

Ultimately, I think, it is all about balance. Too little protection and ideas are under-produced, as non-rival, non-excludable goods tend to be. Too much protection and you create monopolies of ideas, an anti-competitive situation that results in ideas being underutilised.

At the moment, intellectual property laws are mainly being driven by businesses and their lawyers, especially those in the United States. As a result, the trend is towards greater protection. Han’s recent post, as well as some of his other posts in his Copyfight category, is helpful in reminding us that there is a downside to this trend.


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