COPYRIGHT = MONOPOLY
After having now been implemented for a month and a half, media scrutiny of the Intellectual Property (Miscellaneous Amendments) Ordinance 2000 is finally beginning to ease. However, summarising the discussions of various media, two areas of concern have been highlighted: the use of pirated computer software, and illegal copying of printed and electronic media. As pointed out by the public and media at the time, the government did not make a close enough study of the Ordinance before implementing it and seriously underestimated its effects on industry.
However, while implementation of
the Ordinance in cases of copyright infringement on film, the
downloading of songs from the Internet, and the use of pirated computer
software proceeded as scheduled, Secretary for Industry and Trade Chau
Tak-Hay was forced to make an embarrassing about-face on Government
plans to classify reproduction through photocopying or downloading from
the Internet as a criminal offence. Public criticism was so great that
he made an open apology in a panel meeting of the Legislative Council
and announced a deferral of implementation of related parts of the
legislation.
As a graphic designer, it does not seem proper
for me to criticise the criminalisation of pirating movies or
downloading songs. However, I believe computer software piracy is
another matter.
Looking back on the mid-1980s, when Apple
Computers were first introduced to Hong Kong, the issue of software has
been a source of numerous challenges for the designer, both in terms of
operation and money involved. It is s subject upon which designers have
long voiced their worries. Yet until this tangled relationship is
properly resolved, it is shocking to find that the designer could find
himself as a criminal, facing financial penalties and possibly prison.
The
problems are particularly acute for small and medium-sized enterprises
(including design, printing and publishing firms), who, faced with a
limited range of suitable software on the market, have little
bargaining power with the big software suppliers in Hong Kong.
Of
course, no one is questioning the idea that the use of pirated software
is illegal. The spirit of the legislation is to protect intellectual
property rights, which, as a designer, I entirely support. What I am
not in favour of, however, is the granting of unfair privileges that
assist companies in making unreasonable profits at the expense of the
consumer and a properly balanced system. Sadly, it is not a subject the
Government believes worth review, and it has clearly stated that the
commencement of the new law will not be deferred. Yet the question
persists of whether there exists excessive protection of software
producers' intellectual property rights.
A recent seminar on
the practice of competition law and surveillance of fair trade, The
Competition Policy of Hong Kong: Review and Forecasting, raised some
interesting points. In his paper, Professor Tsang Shu-ki, Chairperson
of Competition Policy Committee, explained that traditional approaches
to competition policy encompass three key points: structure, conduct
and performance.
In order to check whether unfair trade
practices have occurred one must first find evidence of unreasonable
market concentration within a few suppliers. These suppliers must then
be scrutinsed for operating restrictive trade practices, such as
vertical and horizontal restraints. Vertical restraints include resale
price maintenance, tie-in sales and exclusive dealings. Horizontal
restraints include price-fixing, collusive bidding and division of
output and market. Finally, one must judge whether products offer
reasonable value for money and how far - if at all - producers gain
abnormally high profits.
Let me use the above three criteria to examine the computer software market in Hong Kong.
Structure
It
is common knowledge that several very large producers control a market
where few suitable substitutes are available. It is claimed - most
often by the software producers themselves - that this situation is the
result of widespread piracy, which in turn has limited the amount of
space available in the market for alternative software. The inference,
in effect, is that users are suffering the consequences of their own
actions.
Ostensibly, the above opinion is quite rational.
However, I also believe the situation has been exacerbated, and even
encouraged, by the ambitions of large software companies. Take Apple
Computer as an example. In the mid-1980s, when Apple was launched to
huge fanfare in Hong Kong, one of the strategies used to ensure high
occupy before other competitors joined the market was a lax attitude
towards piracy prevention. Partly as a result of this, Apple Computers
and software rapidly became indispensable in many industries,
especially the printing, design and publishing industries.
Today,
with the now widespread use of Apple software, producers can demand
more vigorous prohibition of piracy in the knowledge that companies
will not want the disruption or expense of switching to alternative
software. However, I imagine that if the Government had pursued the
same policy when Apple just entered the market, all software producers
would have quickly voiced their opposition.
Conduct
Have
the software suppliers carried out any restrictive practices in trade?
It is difficult to answer this question because it is difficult to
prove. When Microsoft installed a mandatory Internet browser in their
Windows software, Internet Explorer, the company was sued by the State
Government for creating a monopoly. The case, which attracted massive
worldwide attention, dragged on for months and cost the US taxpayer a
huge amount of money before it was found that Microsoft s strategy of
providing a tie-in sale imposed a vertical restraint. The case has
clearly demonstrated the difficulties in proving restrictive practices.
In Hong Kong, software suppliers raised their prices soon
after the commencement of amended copyright laws. Was this a simple
case of demand exceeding supply or the result of resale price
maintenance? Consider Adobe Font Folio 9.0, which, when compared with
the earlier - and now discontinued - 8.0 version, consists of a number
of rarely used types, yet is 40 percent more expensive (i.e. about
HK$20,000). Is this actually another form of a tie-in sale or a
necessary a commercial mechanism deployed by software producers to
compensate their rapid development of a new product? It is difficult to
judge.
Performance
Performance is an even more
difficult quality to ascertain. Being ordinary users, we have no way of
knowing whether software producers are earning abnormally huge profits
- although Bill Gates might seem like evident enough that they are. Is
one license for one computer a measure of abnormal profit? Or is "three
computers per one piece of licensed software" a case of no profits? It
is beyond our knowledge. The question of whether computer software is
genuinely value for money is another highly complex issue.
So
how is the price of software set? Why does Freehand 9.0 cost only
HK$2,000, whereas Pagemaker 6.5 costs over HK$4,000? Does the latter
function better than the former, or help the user to generate more
profits? Not necessarily. The price of the software is actually
determined by cost and profit to the producer, rather than to any
benefit it might finally bring the user.
As a result, the
question arises of how far computer product development is driven by
the market or by production? The late designer Marcello Minale once
said that in general, products were invented and designed to meet the
user s need. Yet is this the case with the computer? Did designers ever
demand such a thing? Minale questioned whether computers actually
brought more harm than good. One might not totally agree with him, yet
do we ever really question whose decision it is to have a new version
of the same software when we still do not fully understand the previous
one? Has Freehand 8.0 failed to meet our design needs to such an extent
that Freehand 9.0 is indispensable? Does design quality rise
continuously as software functions increase?
The discussion
can ramble on, but it does serve to bring out the core concern of
whether software is value for money; whether it meets our needs and
gives added value to our products or services? Besides increasing
operational cost, does the frequent upgrading of software bring more
problems than it solves? Put another way, is rapid upgrading a result
of users needs or it is a surviving strategy of the software companies?
Until now, there is no compelling evidence to suggest that
the behaviour of software companies has infringed competition laws. The
aim of this article is to highlight unreasonable phenomenon in the
software market by making competition law a point of reference. The
main problem is that of a monopolised market - something that may not
entirely be the result of software piracy.
Perhaps, under
the international trade pressure, the Hong Kong Government cannot but
criminalise piracy (Hong Kong is a member of World Trade Organisation
and a result copyright law is closely scrutinised). The pressure may
perhaps come form Western capitalistic hegemony through the process of
globalisation. A fully accountable government should be rigorous in
setting the right balance between the public interest and business
interests. It should not solely afflict the users. Legislator Audrey Yu
succinctly expressed the issue when she asked: "Should laws and tax
payers' money be used to assist software companies to monopolise the
market?"
About this article
Reprinted with permission from XPress.
About the Author
Eddy Yu Chi-kong is a 41 years old graphic desiger from Hong Kong. He
obtained Master of Design at the The Hong Kong Polytechnic University.
He is Design Director at the Alan Design Company (Hong Kong, China).
About Xpress
The Xpress is a design journal published by the Hong Kong Designers
Association. The Journal is distributed free to members, design
schools, design associations, professional bodies, creative industries,
sponsors and overseas design institutions.