Intellectual Property: Political Excesses - Or: Let Schum...

Current German Law on Copyright and Neighboring Rights (Gesetz über Urheberrecht und verwandte Schutzrechte) not only comprises Sections governing traditional copyright protection for works meeting usual criteria for a certain threshold of originality but also a chapter devoted to so-called auxiliary copyright law (Leistungsschutzrechte).

Those auxiliary copyright provisions are not meant to provide exclusive rights for creativity or originality but for investments. Examples are:

• Sect. 70 - Scientific Editions: Editions which consist of non-copyrighted works or texts are protected if they represent the result of scientific analysis and differ in a significant manner from previously known editions of the works or texts.
• Sect. 71 - Posthumous Works: Any person who causes a work which has not previously been published to be legally published for the first time or performs it in public for the first time after the expiry of the copyright has the exclusive right to exploit it. The same clause applies to works which have not been previously published and which were never protected in the territory to which this Law applies, but whose authors have been dead for more than 70 years.
• Article 72 - Photographs: Photographs and products manufactured in a similar way to photographs are protected. The right belongs to the photographer.
• Article 74 - Transmission by Screen or Loudspeaker: Public communication of performance by screen, loudspeaker or similar technical device in a place other than that in which it takes place shall requires the consent of the performer.
• Article 85 - Right of Reproduction and Distribution: The producer of an audio recording has the exclusive right to reproduce and distribute the recording.

Now, in their fight to preserve their traditional business model, German publishing companies are lobbying intensely for the introduction of a new kind of auxiliary copyright protection in particular for but not limited to newspapers.

German Government - represented by German Minister of Justice, Ms. Sabine Leutheusser-Schnarrenberger - have already signalled that they are open to introduce a new kind of auxiliary copyight law into the statutes by end of this year.

Organisations of German publishing companies were internally discussing the question of drafting and introducing a new kind of auxiliary copyight protection since last year; however, for a long period no detailed explanations of what might be subject-matter of such new exclusive right were available. Only in May this year a frist draft written by a think-tank of the publishers was leaked and published on the Internet by irights.info. Additional details have appeared just today on the netzpolitik.org blog. However, many details still remain to be unclear.

It looks as if publishers might really be lobbying for obtaining a new exclusive right conferring the power to monopolise speech e.g. by assigning a right to re-use a particular wording in the headline of a news article anywhere else without the permission of the rights holder. According to the drafts circulating in the internet, permission hall be obtainably exclusively by closing an agreement with a new collecting society which will be founded after the drafts have matured into law. Depending on the particulars, new levies might come up for each and every user of a PC, at least if the computer is used in a company for commercial purposes.

Well, obtaining monopoly protection for sentences and even parts of sentences in a natural language appears to be some kind of very strong meat. This would mean that publishers can control the wording of news messages. This comes crucially close to private control on the dissemination of facts.

But it deserves to be well noted that the desire of publishing companies is not the most extremist position publicly available when it comes to fighting the Internet in order to restore obsoltete business models.

One important problem for the publishing companies is lack of unanimity due to logic of economy and competition. If each and every publisher in the German speaking territories closes its contents in behind a paywall, German speaking people seeking to read news in German were forced to accept that they ought to pay. However, in such scenario there would be a huge incentive for all players on the publisher's side to moot breaking out of the cartel and offer content for free, in combination with advertising generating revenues. As long as a single publisher is the only one to offer free contents on the web it will get huge click rates and the advertising business will bring enough money to survive. And, after a few weeks or months, the cartel of paywall-only publishers will dissolve because of the insurmountable attractivity of the single one company initially refusing to stay within the cartel any longer.

Mr Oliver Castendyk is Professor at the University of Potsdam, Germany, and acts as Director of the Erich Pommer Institut for Media Law and Economy of the Media. Frurthermore, he is CEO of section entertainment of the Allianz Deutscher Produzenten – Film & Fernsehen e.V. and is also a practising lawyer at the Berlin office of Nörr Stiefenhofer Lutz. In addition to this, Castendyk is legal advisor to the Verband Technischer Betriebe für Film und Fernsehen e.V. (association of technical service providers for Film and TV in Germany), a member of the supervisory board of X-Verleih AG and co-editor of the journal 'MultiMedia und Recht' as well as a member of the advisory board of the journal 'ZUM'. Before taking up his current position, he worked in the legal department of the Kirch Group and was also senior legal advisor to ProSieben Media AG as well as managing director of its subsidiaries Seven Pictures and VG Satellit. Appreciating this curriculum vitae, I think it is fair to say that Mr Castendyk is a distinguished and most experienced lawyer capable of expressing and analysing the desires of the media Industries to which he is so close.

So, what does Mr Castendyk propose?

Well, in an article recently published on Carta he gives advice to the print media publishing companies that they are demanding too little, not too much. I won't go too much into the details here; in the effect Mr Castendyk concludes that even if the envisaged auxiliary copyright protection for newspaper language enters into law, the resulting additional revenue streams probably would be insufficient to rescue the publishing companies. He then goes a step further and postulates that publishing companies enjoy a quasi-constitutional guantee due to their role in the society insofar the state has the obligation to maintain the conditions for their existence forever. As I'm not a constitutional lawyer I won't comment this here but, with all due respect, I would not be very much surprised if such sentence turns out to be lobbyist speech. Utilising the leveraging effect of this postulated quasi-constitutional guarantee, Castendyk demands to amend cartel law in order to enable a global 'pooling' of all exclusive rights of all newspaper publishers in Germany in order to block any attempt to defect from the paywall cartell by single competitor as discussed above.

This appears to me as some sort of inappropriate overstating the rank and weight of established business models. First, a group of companies is living on the basis of a certain sort of business model. Then, a technical revolution occurs. After that, the business model does not work any longer. Now, this group of companies cries foul, ultimatively demanding new laws to protect their deprecated business model despite the changed technological and social environment. And, if critics argue that such new laws might cause severe collateral damages elsewhere, they simply don't care.

It is apparent that the German publishers don't like the Internet. However, it is here and won't go for a while. All this ado currently put on stage by the lobbyists of the newspaper publishing companies might well be understood as a sly strategy to undermine the transformative effects of the Internet in the digital society and halt the pressing need for true reforms at least for a while.

All this barely has reached media mainstream. I guess that most patent and trade mark people are unaware of this development.

OK, auxiliary copyright matters are quite a long distance away from day-to-today work with patents and trade marks.

However, on the stage of politics, intellectual property laws are normally seen as grouped closely together, and an average politician having difficulties to understand the substantial difference between copyright, patent and trade mark law will likely be tempted to lump all these legal provisions together when fishing for voters.

Extremists from the publishing Industries like those currently promoting additional auxiliary copyright laws and, on top of that, draconian measures in cartel law to discipline dissenting publishing companies are actually giving a strong disservice to the system of IP law in its entirety. And in view of the bad reputation IP law already has in the Internet-savvy younger generation this might, in later years, be another coffin to this field of law as we know it.

Newspaper publishing companies should not be allowed to preserve their old-fashioned business models by bringing the entire field of IP laws into disrepute.

Therefore I do think that every patent and/or trade mark professional as well as their institutes would be well advised to keep an eye on those developments which are, at a first glance, not at all related to their own field of expertise.

Finally, this debate points to another important matter. Which role should the state play when it comes to deciding on to foster or hamper certain particular and identifiable business models?

Admittedly the quality of the article or Mr Castendik lies in the fact that the has organised his arguing around the centre concept of 'business model'. I don't like the results of Mr Castendyk's mooting but it is important that we today base every discussion on perils and benefits of IP laws on the relativity of business models.

According to Wikipedia, the term business model describes a broad range of informal and formal models that are used by enterprises to represent various aspects of business, such as operational processes, organizational structures, and financial forecasts. Although the term can be traced to the 1950s, it achieved mainstream usage only in the 1990s. Many informal definitions of the term can be found in popular business literature, such as the following:

A business model is a conceptual tool that contains a big set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams." Ostenwalder, Pigneur and Tucci (2005)

In other words as used by Vadim Kotelnikov, the business model spells-out how a company makes money by specifying where it is positioned in the value chain.

Chesbrough and Rosenbloom specify six functions of a business model:

1. to articulate the value proposition
2. to identify a market segment
3. to define the structure of the firm’s value chain
4. to specific the revenue generation mechanisms
5. to describe the position of the firm within the value network
6. to formulate the competitive strategy.

It makes sense to assume that intellectual property law should ever be discussed in its relationship to certain business models.

But what should be the role of the state when discriminating business models?

I do not have a full answer to that question but I am convinced that the state never should give private interests the power to curb innovation and technological progress just because of this would harm their old-fashioned business models. Let Schumperter's creative destruction do its work.

(Photo: (C) 2007 by DRB62 via Flickr, licenced under terms of a CC licence)