Economics theory versus copyright law

I was privileged to listen to the presentation made by Dr. Wayne Fu, a distinguished professor from Nanyang Technological University of Singapore, on the topic "Contemporary Trends of Copyright Economics Research in the Digital ‘Era’ during a recent conference on New Paradigms of Copyright Law held in Taipei recently, Academia Sinica (Taiwan), Max Planck Institute (Germany) and IP Academy (Singapore) organized the conference. Dr. Fu and I were both resource speakers. Dr. Fu holds MA and PhD degrees in telecommunications from Northwestern University (USA).

The paper of Dr. Fu focused on "the role and logic of economic analysis in copyright." He was of the view that understanding the logic of economics would make a "better integrated approach to copyright (issues)."

Dr. Fu recognized the differences in the views of lawyers and economists in treating copyright issues. He cited an authority that said law and the legal profession is primarily concerned with "equity and justice" and in protecting personal and property rights. He also said that the subject of economics is primarily concerned with maximizing the benefits that arise from the creation of a copyrighted work: i.e., profits that a creator earns or expects to earn and the utility that consumers receive from the consumption of the copyrighted work.

Since Dr. Fu’s paper was prepared adopting an economist’s viewpoint, I immediately noticed discussion areas in conflict with legal principles governing copyright. To illustrate, he was of the view that unauthorized reproductions of music and video products should be initially allowed in the market to create demand for it. As an example, Dr. Fu cited the Chinese market whereby the "rampant circulation of illegal copies" of American video products effectively created "a high appetite among the Chinese mass for American productions."

I certainly have strong reservations on the view taken by Dr. Fu. I recognized certain disparities, from a legal perspective, in some of his economics ideas. Due to these disparities, some of his views are inconsistent with basic norms of justice and equity, the disregard of which would lead to disorder and unfairness in our society.

I was given the opportunity to discuss these concerns further with him after the seminar. He confirmed that in his view authors are, in a sense, considered sources of products and commodities. The author’s products are his intellectual creations such as books, software programs, video products, etc. It is an economist’s primary concern to stimulate market economy by facilitating the efficient circulation of goods in the market. From my discussions with him, it is his view that royalties due to authors are of secondary importance; and that the concept of exclusive rights in copyright laws impedes the efficient circulation of these goods in the market. Hence, from an economist’s perspective, it is justifiable to circulate pirated goods in the market, if only to stimulate market activity.

It was at this point that I mentioned to him the foundation of the legal principle behind copyright law. I said that authors or creators are treated as persons. The author’s intellectual creations are extension of his personality and naturally belong to him. His creations are his property and are protected by law against theft or infringement. Hence, any person desiring to copy the copyrighted work must compensate the author out of justice and equity. It is outside the concern of copyright law whether or not the copyrighted works ultimately become saleable and whether a market develops for it. Hence, my strong exception against his view that piracy can be justified if only to stimulate market activity.

We ended up respecting each other’s views and we "agreed to disagree" taking into account our differing perspectives because of our different professional calling. In the end, it will be government policy makers who will eventually shape and reshape our laws and policies in approaching copyright issues. To achieve a desired common good, the government must carefully weigh the implications of adopting the economics theory insofar as it will undermine the personal rights of authors.

In any case, my view is that economic activity must be pursued within the broader context of human development. While an efficient exchange of goods and services is indispensable for economic development, efficient market activity is not fair by itself. It can only be fair when it conforms to the demands of social justice such as recognizing the right of the authors and creators to be secure in the protection of their intellectual creations. Ultimately, economic activity must foster the development of people and not only of markets.

(Atty. Fider is a partner of ACCRALAW. He obtained his LLB from UP (1986) and LLM from Queen Mary College University of London (1990). He can be contacted at telephone 830-8000 or e-mail [email protected].)