Disputes over intellectual property are fast turning into a political hot potato. The Pirate Party - which won a surprise seat in the European Parliament in Sweden - has just launched in the UK.
The party campaigns to legalise non-commercial internet file-sharing and has branches in 25 countries. Now it plans to contest the next general election in the UK after winning 7.1% of the vote in Sweden on the back of publicity over the trial of the founders of Pirate Bay, the file-sharing site.
Pirate Bay sentenced to year in jail
The four men behind Pirate Bay were sentenced to one year in jail and told to pay damages of SEK30m Swedish (£2.3m, €2.7m) to entertainment companies such as Warner Bros and Sony Music Entertainment.
The party says it wants to reform copyright and patent law and believes peer-to-peer networking should be encouraged rather than criminalised.
It also wants to introduce an alternative to pharmaceutical patents throughout Europe because, it says, it will cut governments’ drug spend.
Sign of the times
Dan Trueman, IP specialist with Lloyd’s insurer Kiln, says the rise of the Pirate Party is a sign of the times. “Consumers today have such wide access to music, film and data. The result is that nowadays rights holders are confronted by a new form of consumer who believes they have a ‘right’ to free content,” he says. “The Pirate Party is riding the groundswell of opinion coming out of a new economy where the global cities are virtual.”
Businesses need to respond, according to Trueman. “They have to change their behaviour by, for example, closing down the windows of opportunity [to illegal filesharers] and making sure that they license their rights more effectively,” he advises.
Unrest over IP ownership is everywhere. As a counterpoint to the Pirate Party’s aims, the UK inventor Trevor Baylis recently made the headlines with a call for a draconian change to the law on IP theft. He’s written to the UK government’s business secretary asking him to criminalise the law on patents.
Currently, people like Baylis (who invented the wind-up radio) have to sue those they believe have stolen their idea through the civil courts. Baylis wants to make IP theft a white collar crime instead so that the state, not the individual, bears the cost of going to court.
Criminalisation not the answer
But that’s a dangerous way to go, as patent infringement can often be quite innocent and unintended, according to Luke Foord-Kelcey, partner and IP specialist at broker Jardine Lloyd Thompson.
“It is unlikely multinational companies would want the criminalisation of patent infringement. They want to be able to come to a deal. They don’t want to see a competitor’s directors go to prison, they want to receive financial compensation through licensing their IP or recovering past lost profits,” Foord-Kelcey says.
A recent case, involving the drinks company Diageo and retailer Sainsbury, demonstrates how delicately IP disputes can be handled. The drinks giant took legal action against the supermarket chain after alleging it broke copyright rules regarding the Pimm’s brand with the launch of its own gin-based summer drink. Sainsbury’s said it would vigorously defend the claims while Diageo said the case should not affect its relationship with Sainsbury’s, “a key customer”!
JLT’s Foord-Kelcey says that inventors would not benefit from a criminal prosecution. “There is no financial incentive to press criminal charges. The inventor will not be remunerated through a licence or royalty agreement even if he wins,” Foord-Kelcey points out. “Perhaps Baylis is simply looking for a deterrent – but it isn’t workable in the real world of imperfect patent offices across multiple jurisdictions. Which individuals can be targeted with a criminal prosecution?”
On the separate question of filesharing and the prosecution of teenagers copying music or films, the companies seeking prosecution under criminal law clearly do want to present a deterrent. But pressing criminal charges brings them no financial reward – indeed the legal process is very costly.
That’s why media companies are more likely to want to bring joined civil actions against the larger facilitators of filesharing like Pirate Bay: a few well aimed, larger actions by groups of injured claimant companies means less administration. “So, we’re back at the current system,” says Foord-Kelcey.
A global IP legal system?
Dan Trueman believes the recent upsurge in uncertainty and anger about IP theft is the result of a lack of clarity around IP law, and especially the differences in approach in different jurisdictions. “There is no global IP legal system,” he says. “Perhaps these recent events will start the move towards one.”
Until that happens the onus is on businesses to develop their IP risk awareness, to identify and put a value on their IP assets. Find out where the residual risks are and then protect against them. “From our standpoint as an insurer we see more businesses doing that and we are responding with more risk transfer solutions,” Trueman adds.
