F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

From Copyright EVIDENCE
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The issue

The optimal way to enforce the private right of copyright, when someone uses protected work without permission, remains a topical and debatable issue. Copyright enforcement influences the quantity and quality of new products, the volume of sales, innovation, creativity and ultimately welfare. The existing empirical literature focuses on some of these factors in isolation. However, practice, policy and research suggest that the evidence on the overall impact of copyright enforcement is far from being conclusive.

The existing theories and legal traditions emphasize the importance of different aspects of enforcement, such as the detection, deterrence, rehabilitation, and punishment of criminals and infringers. According to Weatherall et al. (2009) the literature has focused on very broad copyright issues, such as intellectual property (IP) rights as a whole, and on very narrow cases where court judgements have been made, leaving the interesting area in between unexplored. Hall et al. (2014) examine this overlooked region by contrasting formal and informal IP. They reveal that costly litigation practices in several occasions tend to encourage secrecy over patents. An interlinked crucial but challenging feature of law enforcement relates to prevention and its association with awareness, education and technology. Unambiguously, technological progress has boosted the volume of piracy but it has also facilitated the prevention of unauthorised copying, through takedowns of infringing websites, for instance. In particular, this type of technological enforcement has become increasingly important over the past decade.


Policy interventions

Recent policy interventions focus mainly on measuring unlawful behaviour and quantifying infringement, separating copyright infringements from copyright criminal offenses, distinguishing commercial from non-commercial use, calculating intermediary liability, enhancing education, digital literacy and awareness, comparing different enforcement practices, such as demand- and supply-side sanctions, graduated responses, sites blocking, mediation versus litigation and court proceeding, among others.

Copyright policy interventions are concentrated on both consumption and production. Demand-side sanctions target individual subscribers via graduated response letter warnings, slowing down Internet speed for infringers (throttling back), termination of access, fines and imprisonment. Supply-side sanctions, on the other hand, focus on infringing companies via blocking sites, targeting intermediaries (follow the money approach), legal action, and increasing consumers’ awareness with clean sites lists, among others. Different countries follow different approaches. In continental Europe enforcement is undertaken mainly by agencies of the state, whereas in Anglo-Saxon countries they work jointly with private actors (see IPO, 2015).

A major policy challenge relates to intermediary liability. The extent to which communications platforms, such as Google, Twitter, Facebook or open Wi-Fi administrators, are liable for their users’ behaviour remains a hotly debatable subject, while its association with innovation, freedom of expression and aggressive online activity, renders this issue as a key concern for enforcement. Among other interventions governments attempt to receive assistance from intermediaries for the implementation of copyright law. The introduction of the 1998 Digital Millennium Copyright Act (DCMA) in the US and the 2000 Electronic Commerce Directive in the EU, which implemented treaties of the World Intellectual Property Organization (WIPO), focus precisely on intermediary liability and criminalise both the dissemination of protected material without permission and the circumvention of copyright controls in response to notices and takedowns.

In the presence of infringement and when copyright exceptions do not apply, enforcement can be imposed in different forms. When infringement is detected and the rights holders choose action instead of inaction, an important distinction relates to the type of action and in particular to the option between judgement and settlement. Settlement and resolution of the matter with infringers directly can save time and money before starting court proceeding – this includes Alternative Dispute Resolutions (ADR), such as arbitrations and mediations. If, however, such efforts are unsuccessful, litigation through the court system might be a more efficient but also a costlier and lengthier way to resolve the dispute.


Existing evidence

Recent evidence suggests that the transition to a global digital economy is associated with new challenges for enforcement. Online user behaviour and copyright infringement take new forms, as, for instance, physical activity becomes digital in an increasing pace, posing additional threats to the implementation of copyright law. Criminal IP offenses (also known as counterfeiting or piracy), which are often connected with organised crime, manufacture, distribution and commercial sale, have changed dramatically too, as technological progress simplified the production of unauthorised copies and digitization widened the market considerably.

The appropriate scope of copyright protection is a matter of debate (see Exceptions). To what extent non-commercial activities should come within the ambit of enforcement requires particular attention. Importantly, non-profit organisations, such as universities or the education sector as a whole, may engage in activities which are considered to be commercial, thus falling under the same copyright rules as commercial enterprises. There is a tension between the generation of income pursued by these organisations, and the (desirable) promotion of education, scientific knowledge and innovation. At the same time it raises distributional deliberations regarding the access to education and the equality of opportunity, as different institutions, which typically educate students from certain socioeconomic backgrounds, might have dissimilar capacities to stay within copyright law. The accessibility of resources through open data and open access publishing remains one of the most topical issues about copyright enforcement and its relation to knowledge, science and innovation (see Frosio, 2014).

Shifting attention to distinctively commercial activities and in particular to the music industry Liebowitz (2014) shows that global recorded music sales decreased by 50% in the ten years after the introduction of Napster in 1999, while before that they were on an upward trend. In response to this during the past decade there have been several antipiracy policy interventions, while researchers have evaluated the effectiveness for only a small subset of them. Among the demand side antipiracy legislations are HADOPI and IPRED, both of which have been passed in 2009 in France and in Sweden, respectively. The former has been implemented via graduate responses and has been evaluated by Danaher et al. (2014), who provide evidence of a 25% increase in legal sales after the introduction of HADOPI for France, while there is no such effect in other countries with a similar pre-policy sales trend. Adermon and Liang (2014) find comparable results for IPRED, which increased post-policy sales by 36% and decreased piracy by 32% in Sweden, relative to Norway and Finland. Two of the main supply side interventions are the shutdown of the Megaupload and the UK site blocking, both of which have been implemented in 2012. The main difference between the two policies is that the former is a worldwide intervention, while the latter is restricted in the UK only. Danaher et al. (2015) suggest that global interventions, such as the Megaupload are more effective than national policies, such as the UK site blocking, which focus on a particular country or geographic region.

The Hargreaves (2011) report commissioned by the UK government, which is in harmony with earlier recommendations by the Gower’s review (2006), focuses on evidence related to enforcement and emphasizes: i) the need for market transactions to be faster, more automated and cheaper, in order to establish a UK digital copyright market which facilitates the resolution of disputes without costly litigation, ii) the demand for easier cross-border licensing in the EU. The report also acknowledges that small and medium size enterprises should have easier access at a lower cost to the court system and recommends the establishment of a small claims track for copyright to better resolve the many lower-value IP disputes emergencing from self-employed professionals and relatively small firms.

Copyright enforcement is associated with large pecuniary costs from approximately £0.8m per year in Italy and £2.5m in the UK, to £5.6m in France and £12.7m per year in South Korea (see IPO, 2015). However, the evidence on copyright and economic activity is still inconclusive, perplexing the role of enforcement. For instance, Rob and Waldfogel (2006) and Oberholzer-Gee and Strumpf (2007), among others, suggest that there is no evidence that music or file downloading harms either the volume of sales or the quality of goods produced. According to Waldfogel (2012) an explanation might be that the digitization of the music industry brought not only piracy but also large reductions in the costs related to the production, distribution, and promotion of music, while it has also widened the market. This piece of evidence raises further considerations about copyright policy, the associated cost of enforcement and its welfare implications.


Evidence needed

Both the probability of being caught and the sanctions vary, even across comparable jurisdictions offering researchers a unique source of variation and allowing them to establish causal links between enforcement and other key variables of interest, such as sales, innovation and welfare. However, a common weakness in the existing literature and a key methodological challenge for future research is the inability to construct a convincingly appropriate control group to compare the results between treated and untreated countries. Several studies argue that they select two comparable countries, one of which implements an enforcement policy (treatment group), while the other does not (control group), and they evaluate the impact of the policy by contrasting variables of interest before and after the adoption of the intervention. Yet, there is generically a degree of arbitrariness associated with the selection of the reference or control country. One way to deal with such issues is the formation of a synthetic control group, which by construction deals with the appropriateness of the control group (a synthetic control group is comprised of different countries, which jointly form a group that is directly comparable to the treated country). Surprisingly enough, none of the existing studies on copyright follows this approach.

Additionally, in the digital age enforcement in one jurisdiction is likely to generate global spillover effects through the Internet. In the UK, for instance, IP crimes can be fined with up to £50,000 and lead to custodial sentence of up to 10 years (CDPA, 1988), while in other countries sanctions might be less or more severe. This disparity influences incentives and forces piracy to be organised in particular areas, while the derivative products can be easily distributed widely across the world.

There is some evidence from a small minority of countries on the effectiveness of different enforcement practices. For instance, stakeholders suggest that graduated response letters are relatively successful. As far as supply-side sanctions are concerned, evidence shows that making it easier, quicker and cheaper for rights holders to act against infringers is effective but also challenging. A key policy concern relates to the reflexes of enforcement authorities in response to changing technology, behaviour and legislation, as well as to the fact that so far reactions have been mainly therapeutic rather than preventive.

Despite the significant progress made by some groups of researchers, such as the OHIM infringement observatory projects and the Ofcom/Kantar/IPO infringement tracker surveys, we still lack rigorous evidence and data related to copyright and users’ behaviour. In particular, there is an increasing demand for more data and evidence, from more countries and the use of new research methods for the design of future policies. Importantly, evidence-based policies require the identification of causal effects for particular policies and the examination of both direct and indirect welfare implications, as copyright enforcement is linked to innovation, privacy, civil liberties and freedom of speech, among others, which perplexes further the evaluation of policy effectiveness.


References

Adermon, A., & Liang, C. Y. (2014). Piracy and music sales: The effects of an anti-piracy law. Journal of Economic Behavior & Organization, 105, 90-106.

CDPA (1988), Copyright, Designs and Patents Act 1988.

Danaher, B., Smith, M. D., Telang, R., & Chen, S. (2014). The effect of graduated response anti‐piracy laws on music sales: evidence from an event study in France. Journal of Industrial Economics, 62(3), 541-553.

Danaher, B., Smith, M. D., Telang, R. (2015). Copyright Enforcement in the Digital Age: Empirical Economic Evidence and Conclusions. WIPO/ACE/10/20.

Frosio, G. (2014). Open Access Publishing: A Literature Review. CREATe Working Paper 2014/01.

Gowers, A. (2006). Gowers Review of Intellectual Property. The Stationery Office

Hall, B., Helmers, C., Rogers, M., & Sena, V. (2014). The choice between formal and informal intellectual property: a review. Journal of Economic Literature, 52(2), 375-423.

Hargreaves, I. (2011). Digital Opportunity. A Review of Intellectual Property and Growth.

IPO (2015). International Comparison of Approaches to Online Copyright Infringement: Final Report.

Liebowitz, S. (2014). The Impacts of Internet Piracy. In The Economics of Copyright: A Handbook for Students and Teachers, Watt, eds. Edward Elgar Publishers, pp. 225-240.

Oberholzer-Gee, F., & Strumpf, K. (2007). The effect of file sharing on record sales: An empirical analysis. Journal of Political Economy, 115(1), 1-42.

Rob, R., & Waldfogel, J. (2006). Piracy on the High C’s: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students. Journal of Law and Economics, 49(1), 29-62.

Waldfogel, J. (2012). Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster. Journal of Law and Economics, 55(4), 715-740.

Weatherall, K., Webster, E., & Bently, L. (2009). IP Enforcement in the UK and Beyond: A Literature Review. Strategic Advisory Board for Intellectual Property Policy Report, Number EC001.


Evidence Based Policy Areas

F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness) is an evidence based policy area defined within the Copyright Evidence wiki.

The following studies are related to this issue (439):

 Citation
Acilar (2010)Acılar, A. (2010). Demographic Factors Affecting Freshman Students' Attitudes towards Software Piracy: An Empirical Study. Issues in Informing Science and Information Technology, 7, 321-328.
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Adermon and Liang (2011)Adermon, Adrian, Che-Yuan Liang. 2014. Piracy and Music Sales: The Effects of an Anti-Piracy Law. Journal of Economic Behavior and Organization, 105, 90-106.
Adum et al. (2019)Adum, A.N., Ekwenchi, O., Odogwu, E., and Umeh, K. (2019) Awareness of Copyright Laws among Select Nigerian University Students. 86 Journal of Law, Policy and Globalization 183
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BOP Consulting and DotEcon (2015)BOP Consulting, DotEcon (2015). International Comparison of Approaches to Online Copyright Infringement: Final Report, commissioned by the Intellectual Property Office.
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Bodo, Antal and Puha (2020)Bodo, B., Antal, D. and Puha, Z. (2020) Open access is not a panacea, even if it’s radical – an empirical study on the role of shadow libraries in closing the inequality of knowledge access. Amsterdam Law School Research Paper No. 2020-39
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