International Journal for the Semiotics of Law VoI.X no.28 [1997]

INTELLECTUAL PROPERTY PIRACY: T H E NARRATIVE CONSTRUCTION OF DEVIANCE

by

D EBORA HALBERT*

As long as there has been a concept of intellectual property there has been piracy. In fact, it can be argued that the notion of the proprietary author developed on the backs of pirates. Law does not emerge fully formed to address the injustices of the world, rather, law is created through stories that manufacture injustice. In the case of intellectual property, it is impossible to separate the construction of intellectual property deviants from the construction of intellectual property rights. The two deviant types used to understand intellectual property in the information age are the hacker and the pirate. This article will be focusing on intellectual property piracy. 1 Focusing on intellectual property pirates lends insight into how the law of copyright is narratively constructed at the international level. The notion of an intellectual property pirate developed over a century ago, however, we are witnessing the expansion of this label as the information age provides new products and pirating possibilities.

As intellectual property products become one of the United States' most important export commodities, a corresponding increase in piracy can be detected. Because new technology products can be perfectly duplicated, the traditional notion of intellectual property, specifically copyright, is experiencing an unparalleled threat. Given the threat posed by a new era of technology prone to exchanging and duplicating products, copyright owners are finding it necessary to utilize their narrative abilities to help expand the notion of copyright into previously uncharted territories. Developing piracy as a threat and strictly

:#

Debora Halbert is an Assistant Professor of Political Science at Otterbein College.

1 Hackers have also been constructed as deviants for the purposes of providing intellectual property boundaries. For my treatment of the hacker threat please see Debora Halbert, "Discourses of Danger and the Computer Hacker," The In~rmation Society 13 (1997), forthcoming.

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enforcing the laws regulating piracy is an important aspect of expanding the notion of intellectual property. More importantly, as the United States flexes its muscles via international organizations and treaties, it imposes the American version of intellectual property on the rest of the world. Not only does the U.S. export cultural products via intellectual property industries, it also exports intellectual property laws and the American understanding of how these concepts should be protected.

This article deals specifically with the narrative construction of the intellectual property pirate as an international threat. I will look at how the intellectual property discourse operates and how the pirate helps justify a specific privileging of property. A narrative framework helps clarify the current U.S. approach to piracy and the implications of this approach. I am not arguing that piracy should go unchecked. I want to look at how the pirate is used by the U.S. to extend their version of intellectual property laws into the world arena. The U.S. version of piracy informs the way international agreements are written, which in turn has implications for other countries, especially those labelled as pirates.

A Few Words on Narrative

As Stanley Fish notes, "we live in a rhetorical world." 2 Scholars in a variety of disciplines frame human interaction as occurring within a socially constructed, linguistically created world. Narrative analysis is important for several reasons. First, narratives have an immediate impact on the individuals involved. Narratives often describe the actions of real people. Second, the narrative paradigm uncovers hegemonic processes. As Sara Cobb and Janet Rifkin state, "The storytelling metaphor allows the hegemonic processes in discourse to come into focus."3 Third, the notion of neutrality in narratives is challenged. Stories have political impacts and once we begin evaluating how narratives influence our perception of events, these impacts become

2 S. Fish, Doing What Comes Naturally: Change, Rhetoric, and the Practice of Theory in Literary and Legal Studies (Durham and London: Duke University Press, 1989), 25. 3 S. Cobb and J. Rifkin, ~Neutrality as a Discursive Practice: The Construction and Transformation of Narratives in Community Mediation", Studies in Law, Politics, and Society 11 ( 1991), 81:

INTELLECTUAL PROPERTY PIRACY: THE NARRATIVE OF DEVIANCE 57

more visible. Fourth, once it is understood that stories are strategic; the need to create alternative stories becomes dear. Again, Cobb and Rift<in are enlightening: "Unless alternative stories are elaborated, persons are co-opted into identities they did not author and cannot transform. "4 Finally, the ability to interpret a narrative event is an important critique of power that helps clarify the underlying assumptions in the dominant narrative. Ultimately, narratives serve as boundary m a r k e r s - they authorize actions and stake out limits which cannot be crossed.5 A narrative approach makes it possible to more dearly understand how power operates in the intellectual property narrative.

The Intellectual Property Narrative

Property narratives provide clear distinctions between what is mine and what is yours. Intellectual property narratives attempt to extend this clear cut ownership into the world of abstract property. Defining "good users" and "deviant users" is especially important in the area of intellectual property law because the property these laws deal with is very abstract. How, for example, do you really own an expression of an idea? Technology further confounds the problems of ownership by fundamentally challenging the very notion of intellectual property. Technology challenges intellectual property by making it infinitely easier to duplicate and "pirate" creations with the end result exactly the same as the original product. Given the possibilities for exchange, it is important for industries to construct deviants in order to shore up their property rights. Stories about authorship and ownership of computer technology are told in order to naturalize proprietary ownership in this new information age. These stories are an important step in enveloping new technologies within the already existing discourse on intellectual property (codified in American law).

Getting Americans to understand intellectual property needs the force of law. Anyone who has copied computer software knows that the reproduction is an exact duplicate of the original. Anyone who has used a VCR knows they can tape copyrighted programs off the television "for

4 Supra n.3, at 74.

5 M. de Certeau, The Practice of Everyday Life, trans. Steven Rendall (Berkeley, Los Angeles, London: University of California Press, 1984), 123, 125.

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free", yet these are illegal activities labelled "piracy". Considering the difficulties American industry has had convincing Americans to "play by the rules", it should be obvious that convincing other countries, who do not operate on the same intellectual property premises as the U.S., to follow American laws has been problematic at best. In order to protect a relatively abstract notion of property, the law must be involved. Thus, the narrative of the pirate emerges to help justify expanding U.S. intellectual property protection beyond U.S. borders.

The piracy narrative is one of many that is currently operating to construct expanded intellectual property boundaries. By analyzing the piracy narrative, and by understanding law as a narrative process, it is possible to begin uncovering the manner in which piracy stories are used to cement the notion of ownership in the information age.6 Absent a clear understanding of who owns copyrighted technological products (such as software, data bases, TV programs, and videos), the average person will mistakenly believe they can do what they want with their "property". Potential uses of this property include making copies for friends or taping movies off HBO for a permanent collection. The piracy narrative operates no~ only to halt widespread commercial piracy, but to outline the boundaries for law abiding citizens as well. "¢9~ho benefits from these property arrangements is largely obscured or ignored.

Some General Background

For hundreds of years a theory of intellectual property has existed based upon the assumption that creation is facilitated by the provision of a temporary monopoly which ensures the author will benefit monetarily from the original creation. 7 Among the most powerful metaphors used to explain this intangible right was the Lockean concept of landed

6 Or, as Cobb and Rifkin put it, to uncover how hegemonic processes work. See supra n.3, at 69-91. 7 This language is used in almost every analysis of copyright. For example: "Intellectual property rights are society's attempt to achieve a balance in this fundamental tension among information providers and users. Patents, trademarks, and copyrights allow creative interests to extract a return to their investments in exchange for making available new technologies, products, and artistic efforts." See K.E. Maskus, "Normative Concerns in the International Protection of Intellectual Property Rights", Worm Economy (September 1990), 387.

INTELLECTUAL PROPERTY PIRACY: THE NARRATIVE OF DEVIANCE 59

property. This metaphor was used to justify the extension of proprietary rights in intellectual property. The metaphor of a landed estate has helped individuals for centuries become accustomed to the ownership of ideas. 8

Intellectual property has been the subject of international conventions and agreements for over 100 years and piracy has been problematic the entire time. 9 Until 1891 the United States would not recognize foreign copyrights, 10 meaning foreign literary work could be freely published in the U.S, without royalties returning to the copyright owner. America had strong copyright laws protecting citizens and residents, however foreigners and foreign products were explicitly excluded from protection by American law. 11 During this period, Americans legally pirated British work. 12 As one commentator on copyright put it, "as long as the work of a foreign author was not legally protected it was common property; it was no more piratical for a publisher to print it than for a peasant to graze his pigs on common land." 13 While some foreigners found ways around the law (such as co- authoring a work for copyright reasons with an American), most British work was blatantly pirated in the U.S. and sold for less than the British could ask until 1891.14

In 1891 the U.S. passed the ChaceAct which provided protection for

8 For a closer look at these original metaphors see M. Rose, Authors and Owners: The Invention of Copyright (London and Cambridge: Harvard University Press, 1993).

9 The Berne Convention, an International agreement on copyright, has existed since 1886. 17 U.S.C~. provides the amendment to include the Berne Convention in U.S. Copyright statutes. The World Intellectual Property Organization CWIPO) was created in 1967 and the Universal Copyright Convention (UCC) was created and administered by UNESCO beginning in 1952. See R.P. Benko, Protecting Intellectual Property Rights: Issues and Controversies (Washington D.C.: American Enterprise Institute for Public Policy Research, 1987), 1-8. 10 Supra n.9, at 6.

11 S. Nowell-Smith, International Copyright Law and the Publisher in the Reign of Queen Victoria (Oxford: Clarendon Press, 1968). 12 W.P. Alford, "Intellectual Property, Trade and Taiwan: A GATT-FIy's View", Columbia Business Law Review (1992), 107.

13 Supra n.11, at 15, quoting Mr. Graham Pollard. 14 Supra n.11, at64-84.

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foreign authors. Even then, American copyrights were not considered profitable. As one publisher of the time noted, Americans were used to books sold at significantly reduced prices. In order for British publishers to print copyrighted works in America they would have to raise prices or forego profits. Raising prices would choke off potential buyers. Thus, even with copyright available in America, it was not in the publisher's best interest to procure an American copyright when the volume could be sold in Britain at a profit. 15

Sometime between 1891 and 1988 the United States made the transition from pirate to police and consequently underwent a significant change in the way it viewed intellectual property. 16 So much has changed, in fact, that the United States has become the international advocate of strong intellectual property protection. This advocacy has been the motivating force behind the inclusion of intellectual property rights in the GATT, the United States-Canada Free Trade Agreement, NAFTA, and numerous other treaties. 17 While it should come as no surprise that the U.S. shifted its approach to intellectual property as it moved from a user to a producer, it remains ironic that the U.S. should be the world enforcer of intellectual property rights when at one time they were among the world's worst pirates.

The emergence of intellectual property as a critical international issue to the United States occurred in the mid-1980s, when intellectual property leapt from obscurity to a central place on the national agenda. Congress made the protection of intellectual property a principle negotiating objective of the Trade and Tariff Act of 1984 and defined

15 Supra n.11, at 77.

16 To highlight this transition it is interesting to note that the United States didn't join the Berne Convention on the protection of copyright until 1988, 100 years after it was written and signed by most major participants. Even after signing the Berne Convention, the U.S. continued to reject one of its major components- moral rights. Moral rights give certain rights to the author, even after the copyright has been sold. Since the Berne convention requires all signatories to harmonize their laws in concordance with the convention, the moral rights posed a problem for U.S. compliance. Finally, it was decided that the U.S. met the moral rights requirement through a combination of federal and state laws. See P. Goldstein, Copyright, Patent, Trademark and Related State Doctrines (Westbury, NY: The Foundation Press, 1993, 3rd ed.), 771.

17 S.W. Waller and N.J. Byrne, "Changing View of Intellectual Property and Competition Law in the European Community and the United States of America", Brooklyn Journal of International Law 20 ( 1993 ), 8.

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intellectual property inadequacies as unfair trade practices. 18 These goals were reaffirmed in the 1988 Act. 19 Section 301 of the Trade and Tariff Act allows the United States to sanction countries which violate U.S. intellectual property laws (regardless of the intellectual property laws in the country where the violation occurs).

Intellectual property rights were also made a priority by Ronald Reagan in a trade statement on September 23, 1985.20 Additionally, the report of the President's Commission on Industrial Competitiveness in January of 1985 argued that "strengthening of intellectual property rights at home and abroad should be a priority item on the nation's policy agenda. 21 Why did intellectual property become an issue in the mid- 1980s?

In the mid-80s, the United States was undergoing a transformation from an industrial to an information economy. Waning indust r ia l competitiveness hurt U.S. companies and international trade. The U.S. began searching for new areas of commerce which would maintain competitiveness. Intellectual property emerged as "a new basis of comparative advantage." 22

There were several intellectual property related industries, namely the entertainment industry (records and movies), pharmaceutical companies, and the computer industry who were becoming extremely important contributors to the U.S. economy. Computer technology, for example, was a huge growth industry during the mid-80s as personal computers hit the market, computer programs became hot items, and computer software emerged as a commercial product with a high level of economic return. 23 The computer industry had already begun to assert

18 Intellectual Property and International Issues, Subcommittee on Intellectual Property and Judicial Administration of the House Judiciary Committee, May 15 and 16, 1991, Testimony of John H. Barton, 199. 19 Supra n.18, at 199.

20 Supra n.9, at 1.

21 Supra n.9 at 1, quoting President's Commission on Industrial Competitive- ness, Global Competition, The New Reality (Washington D.C., 1985), 52. 22 A. Subramanian, "The International Economics of Intellectual Property Right Protection: a Welfare-Theoretic Trade Policy Analysis", World Development 19 (1991), 945.

23 Bill Gates claims that software is the country's sixth largest manufacturing business, having grown nine times faster than the rest of the U.S. economy between 1982 and 1993. A.R. Edge, "Preventing Software Piracy Through

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its muscles nationally as issues such as copyright of computer code hit the courts. 24 These industries were finding that they dealt in products easily copied or replicated.

Since a significant portion of foreign trade was in countries with little or no intellectual property laws, U.S. companies became frustrated with international piracy, which they argued kept them from maximizing potential profit. New technologies helped subvert traditional methods of proprietary control and caused great concern among intellectual property industries such as movies, music, software, and pharmaceuticals.

The trade problems of the United States created the perfect justification for putting intellectual property rights at the top of the American trade agenda. Professor William P. Alford notes,

The realization that trade and intellectual property concerns were linked did not spring full blown from the head of Ronald Reagan in the 1980s (as if much of anything did) ... But what did occur in the 1980s that brought these issues together in a politically powerful fashion was a conjunction of interest between industry and government. American exporters heavily reliant upon intellectual property. - - such as the computer, entertainment and pharmaceutical industries - - were growing ever more frustrated with both legitimate competition and proliferating piracy, while the White House found itself casting about for a politically painless way to address the growing trade deficit. ~

The emergence of intellectual property as a trade issue during the mid- 80s is related to the growing U.S. trade deficit, the transformation of the U.S. economy, and the increasing ability to pirate intellectual works made possible by new technologies. With all these insurmountable problems knocking on the U.S. foreign policy door, international piracy provided a clean answer to why America was having difficulties in the world market. Piracy also provided Americans with a villain which

Regional Trade Agreements: The Mexican Example", North Carolina Journal of International Law and Commercial Regulation 20 (Fall 1994), 175. See also Steven Levy for a review of the beginning of the computer industry. S. Levy, Hackers: Heroes of the Computer Revolution (New York: Anchor Press, 1984).

24 Apple Computer Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983). The court decided that Franklin's Macintosh compatible operating system infringed upon Apple's copyright by directly copying the code. Franklin claimed there was no protection of computer code under copyright.

25 Supra n.12, at 99.

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could be fought, unlike the murky domestic and economic issues at the root of the problem.

Today, intellectual property has become a primary motivating factor behind the United States' position on international trade, and it informs treaties at both the bilateral and multilateral level. Implicit in this change of heart has been an increased concern over enforcement of intellectual property rights and a focus upon piracy. The pirate emerges as a threat as the U.S. finds itself competing in a new environment where legal and illegal competition are infringing upon its ability to maintain market share. The pirate is especially threatening in countries lacking the legal framework which provides incentives for creating intellectual property and punishments for violating these "rights".

The economic condition of the United States in the 80s established the groundwork for its intellectual property relationships into the 90s. Perhaps most dramatic is the clash between the U.S. and China over intellectual property piracy. The Chinese drama illustrates how copyright has become a set of beliefs which the U.S. feels the entire world should embrace. Through its link with international trade and piracy, the U.S. version of the intellectual property story is moving beyond U.S. borders and being forced upon the developing (and some developed) nations of the world.

China and Piracy

Pirates enter the story as a significant problem for U.S. companies attempting to do business internationally, especially in Asia and the developing world. The International Intellectual Property Alliance noted that in 1993 the U.S. lost $110 million in computer program revenue to China alone, and the figures are similar for other Asian countries including Japan, Taiwan, Indonesia, Philippines, and Thailand. 26

In May of 1989, the occupation of Tiananmen Square brought the eyes of the world to China. Even as the Bush Administration expressed concern about interfering with China's internal affairs in regards to Tiananmen Square, they were threatening the PRC with "massive and

26 D. Smith, "News: Corporate Losses due to International Copyright Piracy", Cu Digest 6.57 file://etext.archive.umich.edulpublCuD/Cud/index.html#files 0une 26, 1994).

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unprecedented trade sanctions if China did not promise to devise legal protection of computer software to America's liking." 27 As William Alford puts it,

The decisions that led the. U.S. government to pay insufficient heed to the epochal events culminating on June 4, 1989, and instead to devote a goodly portion of its available leverage to securing promises about software, were neither inadvertent nor passing tactical errors. On the contrary, they exemplify the high priority that intellectual property protection has assumed in American foreign policy with respect to the Chinese world and beyond since the mid 1980's, and the concomitant conviction that the key to securing such protection is the passage of new legislation, through pressure if need be. 28

While 1989 was not the first time pressure had been put on China to make and improve its intellectual property laws, 29 this new pressure, which has carried into the Clinton Administration, illustrates the importance of intellectual property in international policy making. The 1989 negotiations were not the last.

On April 26, 1991 the United States government used Section 301 of the 1988 Trade Act to place China on the priority list of countries with problematic intellectual property laws. 30 The U.S. gave China a November 26, 1991 deadline to comply with U.S. demands or face trade sanctions. Secretary of State James Baker visited China in November of 1991 and "Baker informed the Chinese that the misuse of American intellectual property stood with the sales of weapons of mass destruction to international outlaws such as Iran and abuses of fundamental human rights as one of three issues impeding better bilateral relations. "31 One month later, the United States Trade Representative (USTR) gave China its u l t i m a t u m - either "rewrite its Intellectual Property laws to the satisfaction of Washington of face the imposition of hundreds of

27 W.P. Alford, To Steal a Book is an Elegant Offense: Intdlectual Property Law in Chinese Civilization (Stanford: Stanford University Press, 1995), 112.

28 Supra n.27, at113.

29 Alford does an excellent job of illustrating the pressure put on China since the early 1900's to pass intellectual property laws which favour Western countries. Supra n.26, at 30-55.

30 India and Thailand were also placed on the priority list, but made moves towards stronger protection quickly. Even though Thailand continues to be closely watched, both countries were taken off the priority watch list in 1994.

31 Supra n.27, at 113.

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millions of dollars of punitive tariffs." 32 China, for its part, was already improving its intellectual property

laws. In 1991 they implemented their own copyright code, in part because of Section 301 threats in 1990.33 The 1991 threat ended when China agreed to outlaw theft of computer software and protect patents of agricultural chemicals and pharmaceuticals if the U.S. agreed to take China from the "priority list". 34 Chinese officials were less than happy, however, at what they saw as a violation of their sovereignty.

It was predicted that China's new stance against piracy would create a climate more amenable to U.S. investment. China even executed a man caught selling fake Maotai, a brand name liquor, in 1992 during an anti-piracy campaign. This strong stance against piracy made companies like Walt Disney feel safe enough to reinvest in China. In 1993 Walt Disney granted 20 licenses to manufacturers in China to produce Walt Disney products. 35 However, the issue of intellectual property piracy reared its ugly head again in 1995.

In 1995, China and the U.S. were on the brink of another trade war because of intellectual property piracy. The U.S. accused China of failing to protect products as far ranging as Disney's The Lion King to Microsoft's computer programs. At issue was enforcement of the intellectual property laws China had already put on the books. The U.S. felt China had not tried hard enough to eliminate piracy. Again, the U.S. used its Section 301 club to "investigate" China's intellectual property record and possibly impose sanctions if China did not comply. China listed its retalatory measures if the U.S. imposed sanctions and in January of 1995 a trade war looked imminent. 36

Faced with $1.1 billion in sanctions if it did not agree to U.S. demands, China capitulated to the. U.S., making "the China market

32 Supra n.27, at 113.

33 S. Awanohara and L. Kaye, "Patently Hostile: Washington Set to Impose Sanctions on China", Far Eastern Economic Review (September 5, 1991), 69-70.

34 p. Engardio, ~Yankee Traders Breathe a Sigh of Relief", International Business (February 3, 1992), 39, 42. 35 "Mickey Mouse Back in China", Far Eastern Economic Review (November 4, 1993), 46. 36 K. Huus, "Back to Normal: U.S.-China Trade War Looms Closer", Far Eastern Economic Review (January 19, 1995), 52.

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safer for American computer programmers and pop stars. "37 America emerged victorious again. However, the price was high. China may have given in to U.S. pressure on intellectual property, but it retained its diplomatic dignity by rejecting an attempt to ban nuclear weapons tests and by publishing a report, "timed to coincide with the copyright accord, that China has no political or religious prisoners. "38 The possible $1 billion returned to U.S. companies due to decreased piracy may make an "enormous impact" on the trade deficit we have with China. 39 However, as one diplomat stated: When you add up the costs and benefits of the intellectual property accord, I wonder if it's really worth it. "4°

The U.S. has been threatening trade war with China over intellectual property for many years. Not surprisingly, this hard-line attitude towards China is about trade, barriers, and untapped markets, as pointed out by Awanohara and Kaye:

Outclassed by Japan in consumer products and unable to vie with the easy- credit terms of European capital-manufacturers, the US' only hope of narrowing its growing trade deficit with C h i n a - US $10 billion last year and projected at nearly US $15 billion this y e a r - must lie in technology exports. 41

Because technology is often protected by intellectual property, the U.S. uses intellectual property as a club to open China's markets. The much publicized fact that China and Taiwan are the most blatant pirates, especially of computer programs and books, justifies U.S. pressure. However, our rocky intellectual property relationship with China can in part be attributed to the very notion of intellectual property itself.

The United States has a well defined intellectual property system with a long European history. The U.S., now that it is a leading exporter of intellectual property, is concerned that other nations of the world understand intellectual property as Americans understand it. It is the U.S. insistence that the rest of the world follow its intellectual property story which causes the problems. The U.S. intellectual

37 L. Kaye, "Trading Rights: Beijing Exacts a High Price for Copyright Accord", Far Eastern Economic Review (March 9, 1995), 16. 38 Supra n.37, at 16.

39 Supra n.37, at 16. 40 Supra n.37, at 16.

41 Supra n.33, at 69.

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property story is especially important to American businesses who endlessly repeat its assumptions as fact, however, it is not the only way to view intellectual property. China, with a strong history of government censorship and control over ideas, and its lack of private property fights, looked upon intellectual property as a collective good owned by the state, if it thought about intellectual property at all. China wrote their first intellectual property laws in the beginning of the 20th century under pressure by foreign governments. 42 They have added and "improved" these laws only at the pressure of foreign governments. Thus, it can be surmised that significant problems will erupt when two such opposing viewpoints dash.

The conflict with China is about more than the moral issue of whether Chinese consumers should have access to cheap pirated copies of The Lion King. There is no doubt that some level of regulation is necessary. What is important is how the U.S. manages to export its notions of intellectual property- and aggressively assert that other countries, with completely different interpretations of property, adhere to the U.S. approach. The consequence of disobeying the U.S. position is to be depicted as a nation of pirates and thrust into a trade war. The U.S. holds all the narrative cards and the concept of piracy helps justify U.S. intervention.

Additionally, for most developing countries, the pace at which intellectual property laws emerge is an important question. Developing countries are disadvantaged by having to adopt strict intellectual property laws before their own industries are fully developed. 43 Conversely, developed countries use strict intellectual property laws to ensure their continued monopoly over intellectual property products. Thus, from an economic point of view, developing countries are acting rationally when they maintain low protection of intellectual property fights. 44 To further confound the complexity of what is often described as the "free rider" problem, there is little proof that increased regulation of intellectual property would actually do what the narrative of intellectual property asserts will happen - - increase innovation. 45 Thus,

42 Alford's book details this history. Supra n.26.

43 E. Helpman, "Innovation, Imitation, and Intellectual Property Rights", Econometrica 16 (November 1993), 1247-1280. 44 Supra n.7, at 388.

45 Supra n.7, at 405.

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what is at stake in the intellectual property battles with China and other developing countries? Let us take a closer look at who benefits from the construction of piracy in the United States.

Piracy and Intellectual Property

Technology has made more sophisticated piracy possible. Not only are computer programs, movies, CD's, and videos easily pirated and sold, but technology makes it possible to rapidly reproduce books as well. The computer industry is among the most threatened because its products are so easily replicated and sold. Software companies have highlighted their plight in China and Taiwan, estimating that 90% of software in these countries is pirated. 46

Critical to the piracy narrative is a survey done to discover the extent of piracy. The U.S. International Trade Commission (ITC) did a study for the USTR which asked American businesses to estimate the amounts they lost per year to piracy. The ITC reported that 431 companies responding to a questionnaire suffered losses of more than $23.8 billion in 1986 due to piracy. 47 From these numbers, the ITC estimated that overall, the United States lost between $43 billion and $61 billion from piracy each year. 48 While there are serious questions about the methodology used in the ITC study, 49 these numbers were picked up and used uncritically by politicians and special interests. 50

The ITC survey proved that piracy was costing American industries millions, if not billions, per year. The identifiable evil involved corrupt

46 Supra n.26, at 104.

47 G.M. Hoffman, Curbing National Piracy of Intellectual Property, The Report of the International Piracy Project, (The Annenberg Washington Program, 1989), 9. 48 Supra n.47, at 9.

49 Members of the Annenberg Antipiracy Project felt these numbers were insufficiently valid to base policy recommendations upon. See supra n.47, at 25. In the words of Alford, the USTR not only asked companies to estimate themselves, but used the full price of the object to calculate the amount lost to piracy. This method ignores the fact that many people who can afford the pirated version of an item would be unable to afford the "real" version and thus refrain from buying it (this would be true even if U.S. goods are sold for less than their U.S. rate in foreign countries). See supra n.12, at 99. 50 Supra n.12, at 99-101.

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pirates and even more important, the lax intellectual property laws found around the world, but found especially in Asian countries. As a study by the Annenberg school puts it: "Though piracy occurs in every country, it is most concentrated in nations like Taiwan - - developing countries with active commercial sectors. "51 The Intellectual Property Alliance has helped the USTR identify other "problem" countries. Korea, Taiwan, Thailand, Saudi Arabia, Philippines, India, People's Republic of China, Malaysia, Indonesia, Egypt, Brazil, and Nigeria have all been identified at one time or another as problem countries. 52 While piracy occurs everywhere, a disproportionate number of countries singled out for action are developing countries centred in Asia, making this a story based upon developing/developed lines. Additionally, the problem is conceptualized in two distinct ways: blatant disrespect for the law, and the lack of law altogether. Thus, in the emerging piracy narrative, the most obvious solutions are more intellectual property laws for developing countries. How the United States situates itself as a victim at the hands of developing countries can be seen through the narratives presented in government documents on the subject.

The 1986 government hearing on "Intellectual Piracy Involving Intellectual Property" established the piracy problem as one which pits hard working Americans against lazy foreigners, ultimately costing America jobs and creating trade deficits. 53 Pirates, in the American narrative, steal from hard working Americans. 54 Making foreign piracy a moral issue instead of a legal one is an important step in distinguishing the good from the bad. If the international piracy story were to focus exclusively on the legal aspects of the situation there would be no case. After all, respect for national sovereignty dictates one country should not interfere with the laws of another country. Also, as U.S. history

51 Supra n.47, at 11.

52 Supra n.47, at 29-31.

53 "The focus of our hearing this morning is piracy. We are going to stop piracy of intellectual property rights. The copyright industries in this Nation provide jobs, they provide entertainment, they contribute significantly to what would be a favourable balance of trade, or at least a far more favourable one were it not for the fact that this piracy goes on." International Piracy Involving Intellectual Property, Hearing before the Subcommittee on Trade, Productivity, and Economic Growth of the Joint Economic Committee. 99th Congress, March 31, 1986, Statement of Pete Wilson, I. 54 Supra n.53, at 1-2. Statement of Pete Wilson.

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indicates, a country develops intellectual property laws as its own intellectual property industries develop.

Piracy as a moral issue gives the U.S. a justification for interference. It is probably no surprise that intellectual property is rendered a moral issue. However, it is important to outline how the story creates the identities o f victim, villain, and hero in order to justify intervention.

The generalization from pirates to entire states occurs with the identification of problem countries. The narrative transforms the entire country into the pirate instead of focusing upon piracy within specific countries. The result is a targetable agent for r e t a l i a t i o n - the government of each "problem state". The converse is also t r u e - a relatively small group o f intellectual property industries are generalized into the "U.S."

In order to dearly justify intervention, the story needs to tell why strategic economic retaliation is the best solution. Senator Pete Wilson suggests a rational:

I think the only way we're going to convince them that it is in their interest - - and in the short rather than in the long term, because we can't afford to allow the problem to c o n t i n u e - is by taking very severe retaliatory measures against them, of the kind that you have outlined here with respect to the possible denial of continued preferences, to Korea ...55

Having travelled to Korea, to Taiwan, to Japan, in every instance we found that they were not self-starters in terms of this reform, but that they were aware of the problem, as they could hardly fail to be aware of it, but that they needed the severest kind of show in order to actually make progress ...56

Mr. Good, I think as we have all learned the hard way, they regard rhetoric as cheap and, frankly, not at all persuasive. I think they will be persuaded only by a dear determination to see reform or else to bring about retaliation in order to compel it. That's not the way we like to do business. It's unfortunately apparently the only way that we're going to secure their attention and cooperation ...57

Senator Wilson's statements indicate that force is the only method for dealing with piracy that will be understood.

Turning billion dollar industries into victims is perhaps the most

55 Supra n.53, at 21. Statement of Pete Wilson.

56 Supra n.53, at 22. Statement of Pete Wilson.

57 Supra n.53, at 23. Statement of Pete Wilson.

INTELLECTUAL PROPERTY PIRACY: THE NARRATIVE OF DEVIANCE 71

powerful aspect of the intellectual property piracy narrative. In a feat which defies political economy, multi-million dollar industries become the victims. Despite the fact these companies continue to make millions in profits each year, the piracy narrative places them in the role of victim and alludes to the rapid demise of these industries if swift action is not taken. 58 As Jack Valenti, President of the Motion Picture Association of American in the mid-80's puts it, the result of such piracy is that,

Pirates are skimming the cream off of the American hit pictures and some who "almost" hit. They are devastating the theatrical release of these films, abusing the flow of revenues that would come in the posttheatrical marketplaces. 59

The lack of an intellectual property "shield" makes the movie industry "easy prey for pirates, for unscrupulous businessmen, and moreover Senator, we are prey for legitimate businessmen who, if they break no law in their country by taking that which belongs to us, using it without our authorization, and without giving us any compensation for what they use, they do it. "6°

Senior Vice President of Universal City Studios, Mr. Charles Morgan also bears witness to American victimization. His story is one of cable piracy by a Panamanian company called Rexsa. Rexsa sells television programming it pirates from U.S. broadcasts. Universal City Studios tried to get the Panamanian government to help them stop the illegal piracy, but 10% of Rexsa was owned by two former Panamanian Presidents and a former Foreign Minister. In addition to its political connections, Rexsa makes up to $400,000 per month from pirated products while Universal City Studies must rely upon external sources for litigation funding. This means Rexsa is in a better position to protect itself. As Morgan states, "Our opponent is rich, influential, and adept in using that system to his advantage. We have seen Rexsa transform its losses into delays, and those delays into victories for each month of transmission is another $400,000. "61 Again, the U.S. motion picture industry is placed in this narrative as a victim and a developing nation becomes the victimizer. The testimony of Jack Valenti and

58 See P.E. Ross, "Cops versus Robbers in Cyberspace', Forbes (September 9, 1996), 134-139.

59 Supra n.53, at 26. Statement of Jack Valenti.

60 Supra n.53, at 27-28. Statement of Jack Valenti.

61 Supra n.53, at 50. Statement of Charles Morgan.

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Charles Morgan led Senator Wilson to conclude that we:

[C]annot rely upon the moral probity of the people that we're dealing with to suddenly persuade them to do the right thing. I think it is in the nature of things that they are going to have to see that it is in their economic interest only by being persuaded that there is going to be a tremendous cost to them for failing to operate as they should, ca

The problem is conceptualized as a moral one where innocent American victims are deprived of their rightful property by pirates who not 0nly have no sense of morality, but have government support for their actions.

It is obviously in the best interests of these executives to present their plight in the most pathetic of manners possible. However, this testimony, based upon a narrative of victimology, conceals the larger political economy (and ignores the enormous profits made by all copyright related industries). This narrative places the blame on foreign pirates and thus justifies the use of economic force to extend American notions of copyright onto the developing world.

The morality play is further substantiated by the fact that the original creators who are both innovative and creative are deprived of royalties from piracy. Intellectual property rests upon the assumption that monopoly protection provides the incentive to create. As Jack Valenti puts it, "Producers, distributors and most importantly creative artists are cheated of their rightful royalties in the process and so is American trade." 63 The President of the Recording Industry Association of America, Mr. Stanley M. Gortikov agrees. He states,

But despite that universal popularity, the American creators and copyright owners and performers realize virtually no revenue from the sales of their property and their creativity. They are literally robbed every day almost everywhere and seemingly most of the governments in their foreign territories condone the thefts and really just don't give a damn. ~

In such a situation, the pirates benefit and the creators of such uniqueness and innovation end up as "total losers". 65

Finally, Frank G. Wells, President of Walt Disney Co. in the 80's, widely known for its aggressive stance on intellectual property states,

62 Supra n.53, at 50. Statement of Pete Wilson.

63 Supra n.53, at 31. Statement of Jack Valenti.

64 Supra n.53, at 54. Statement of Stanley Gortikov.

65 Supra n.53, at 54. Statement ofStanely Gortikov.

INTELLECTUAL PROPERTY PIRACY: THE NARRATIVE OF DEVIANCE 73

At Disney, story people and artists spend hour upon hour of work in developing a number of character concepts, most of which are discarded for a variety of reasons. Once a concept is preliminarily accepted by our people, stories are created to provide personality and a setting in which the characters can be perceived... As you can see, all of this activity takes enormous dedication and inspiration, as well as large investments of risk capital and the hard work of many Disney employees. 66

Mr. Wells wishes us to empathize with those hard working Disney employees by asking us to "imagine, then, how our Consumer Products division feels when, after having spent all that time, effort, and money, the see "Chinese" or counterfeit copies of their characters on the marketplace." 67

Of course, the President of Walt Disney does not want Congress to hear that the very artists and story designers he refers to work for hire. This means they receive an hourly wage for their creative labour while Disney reaps the millions of dollars in profits from their creativity. Such a division of labour is obscured in the testimony which places the Walt Disney company in the place of the victim.

While the moral ground lies with the protection of creative and innovative work, the reality is that the creators are not the primary benefactors of the intellectual property system. Creation occurs within a fully developed industry where those who make the money are rarely those who create. The political economy of the culture industry is obscured, where the lions share of profits made by the creative work of artists and authors is siphoned off by the industry these creative people make possible. What goes as protection of intellectual property obscures the larger and more complex economic relationships that undergird the U.S. intellectual property system. In its place, a narrative about foreign pirates stealing from Americans leaves little room to think critically about American intellectual property law. Only by describing who benefits from this narrative does the lack of neutrality in intellectual property law become apparent.

A significant part of the story told in the 1986 Congressional hearing is that the United States is morally superior because it values intellectual property rights. The international action it has decided to take is made appropriate via its moral position. Foreign countries, in the U.S. narrative, have no moral fabric and cannot be relied upon to

66 Supra n.53, at 86. Statement of Frank G. Wells.

67 Supra n.53, at 87. Statement of Frank G. Wells.

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"do the right thing." Thus, economic force, euphemistically concealed as "suggestions" for improvements is considered the only option. 68 The fact that Asia, and other developing countries, are heeding American "suggestions" about how to improve their intellectual property laws only fulfils the narrative which makes U.S. industries victims, immoral foreigners villains, and the U.S. government the hero.

Piracy in the I990s

The 1991 government hearings on "Intellectual Property and International Issues" before the Subcommittee on Intellectual Property and Judicial Administration of the Committee on the Judiciary tells a remarkably similar story to the 1986 hearing. The piracy narrative in the 1991 hearing introduces the rhetoric of American as "Number One." The "Number One" rhetoric continues to justify our actions as correct and rational. 69 The language of victim has been replaced with the language of fair trade.

In April of 1991, the USTR used Section 301 of the 1988 Trade Act to identify China, Indian, and Thailand as priority foreign countries. 70 We had trade deficits with all three countries listed by Carla Hills. 71 Hills' testimony, along with numerous other experts, continues to perpetuate the story that Asia and other developing countries are the bad guys. In order to obscure that the U.S. is economically deteriorating and in transition, the attention is drawn to the source of our t r o u b l e s - Asians stealing the soul of A m e r i c a - our ideas. 72 As Jack Valenti puts

68 "I am somewhat cheered to report that with some well-conceived, and I think carefully implemented suggestions from the United States, the Governments of Taiwan, Singapore, Malaysia, South Korea, and the Philippines have enacted, or have pledged they will enact, laws which will be protective of material that's copyrighted." Supra n.53, at 28. Statement of Jack Valenti.

69 "The United States is the world's leader in creativity, both artistic and industrial." Supra n. 18, at 2. Statement of William J. Hughes.

70 Supra n.18, at 9. Statement of CarlaA. Hills.

71 Supra n.18, at 43. Statement of CarlaA. Hills.

72 The link between who we consider piracy threats and the countries we want increase market access to cannot be left unconsidered. American companies wanted access to two markets which represented enormous profit potential - - China and India, but also the Newly Industrialized Countries of South and East

INTELLECTUAL PROPERTY PIRACY: THE NARRATIVE OF DEVIANCE 75

it, pirates deliberately intend to "impede us, to shrink us, to exile us." 73 Unlike 1986, there are several people who voice doubt about the

U.S. intellectual property story. First, while Registrar of Copyrights Ralph Oman, favours strong protection, he also suggests the United States needs to open its markets to foreign intellectual property in order to show that protection is not a one-way street. 74 A more assertive voice of disagreement comes from Stanley M. Besen, a Senior Economist at the Rand Corporation. He points out that the U.S. position on intellectual property is short sighted. It assumes the U.S. will be a technological creditor indefinitely. If we lose the upper hand, we will be disadvantaged by the very intellectual property laws we designed. 75

Mr. Besen suggests that the exchange of knowledge is more important, or should be more important, than immediate royalties. Of course, the outcome of GATT, where all countries agreed to "harmonize" their laws with the U.S., proves Dr. Besen's voice was not successful. Dr. Besen's conservative approach, while rational, does not comply with the intellectual property story U.S. policy makers want to tell. By protecting intellectual property, the U.S. ensures continued hegemony in areas of intellectual property because the law is written in such a manner that favours the innovator. Of course, continued U.S. technological superiority remains to be seen.

The software industry provides some final insight into how the piracy narrative relates to real-life action. The Software Publishers Association (SPA) estimates that the software industry lost nearly half its potential sales in 1993, coming to a total of $8 billion world-wide. 76 The concern for profits has led American software companies to push for strong protection at home and abroad. For example, the state of copyright enforcement in Taiwan led computer companies such as Apple, Ashton-Tate, IBM, Lotus Development Corp. and Microsoft to

Asia. These markets remained relatively untapped by American products, but represented our fastest growing markets for exports. These countries also had few, if any, intellectual property laws which meant American law had to be introduced to make the climate safe for American products.

73 Supra n. 18 at 123. Statement of Jack Valenti.

74 Supra n.18, at 137. Statement of Ralph Oman.

75 Supra n.18, at 202. Statement of Stanley M. Besen.

76 Supra n.23, at 175.

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engage in surprise "SWAT" style raids against potential pirates. 77 Not only does the U.S. government force other countries to adhere to its understanding of intellectual property law, but U.S. companies take the force of law into their own hands.

The Final Story

By the end of the 1980s, through speeches, congressional hearings, lobbying efforts, and surveys, piracy and intellectual property were firmly established as important trade issues. The emerging story was complete with plot, villains, innocent victims, and a hero. In this case, foreign countries, especially those located in Asia, were systematically usurping American creativity and technological knowledge. The innocent victims were American companies, such as Microsoft and Walt Disney, whose products were stolen without any recourse. Something had to be done to stop such aggressive and irresponsible behaviour and so the United States government stepped in to save the day. Armed with Section 301 of the 1988 Trade Act and an insistence that intellectual property be protected via the GATT, the United States coerced virtually all Asian countries (and developing countries) to comply with American standards for intellectual property protection. 78 With some grumbling because protection and enforcement will not meet U.S. business standards immediately, the U.S. claimed a trade negotiating victory. Little or no attention has been paid to the impact these laws will have on the developing world.

The U.S. story obscures the political economy of developed and developing nations in which typically the developing nations are considered victims and special considerations are taken to remedy their problems. In the U.S. version, the roles are reversed. The U.S. is a victim and the developing countries are the hostile aggressors which threaten American creativity and ideas. This switch represents a significant departure from what traditionally goes as international trade

77 M. Foster, "U.S. firms batde the pirates of Taiwan', Electronic Business (April 3, 1989), 83-84. 78 For a breakdown of what each ASEAN country did to comply see S.J. La Croix, Intellectual Property Rights in ASEAN and the United States: Harmonization and Controversy, Private Investment and Trade Opportunities (PITO) Economic Brief (Honolulu HI: East-West Center, December, t994).

INTELLECTUAL PROPERTY PIRACY: THE NARRATIVE OF DEVIANCE 77

negotiations where Most Favoured Nation status provides protection for developing countries in order to facilitate development. However, it fits well with conventional U.S. development policy towards developing countries. 79

Developing countries, especially Asia, are allowed to participate in world trade only if they follow the rules established by the United States. These rules include the U.S. version of intellectual property to which the developing world must "harmonize". The extension of the U.S. intellectual property story to developing countries around the world shows how the dependency of developing countries is perpetuated through presumably "neutral" trade laws. The intellectual property story developed in the United States is literally forced upon other countries, regardless of the interests and philosophies of said countries. They become pirates in the U.S. narrative and thus must be fought.

Conclusion

Pirates serve a function in the narrative the United States is writing about intellectual property and the way it ought to be protected internationally. Conceptual fences are being built around intangible property and pirates serve as justification for tough laws and harsh penalties. Norms and practices for dealing with intellectual property in an information age are still in flux.

I am not applauding the actions of pirates. Instead, I wish to point out that they serve a function in the American intellectual property story. They are villains, the aggressors which must be fought in order for

79 William Preston Jr. outlines the U.S. perspective on the position of the third world in international development. He states:

[the United States] offered the Third World] orderly economic growth, stability, technical assistance, and political reform; [the Third World] in turn had to fit into the world economy on [United States] terms, follow the [United States] model of development regardless of their indigenous culture, and stop short of choosing radical political alternatives. Order took the precedence over democracy, and containment against fundamental change in the world system retained a dominant priority. Dollar diplomacy, loan embargoes, and financial sanctions against international agencies offending United States interests served to enhance the latter's pervasive influence.

See W. Preston Jr., Hope and Folly, (Minneapolis: University of Minnesota, 1988), 20.

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upstanding and innocent Americans to practice business. Such a conversation leaves no room to critically assess the world's political economy, the role of multinationals in that economy, the way in which the push for stronger intellectual property laws has specific benefits for a few American corporations at the expense of the developing world, and the long-term interests of the United States.

The construction of pirates as criminals does not occur in a vacuum. There are very specific beneficiaries of such a story. The beneficiaries are those companies engaged in new forms of business reliant upon technology which is easily copied, reproduced and "pirated". It is in their best interest to maximize profits and the fact their products are easily reproduced by pirates cuts deeply.

At the heart of the U.S. government interest in intellectual property lies the fact that despite its efforts to control exchange of intellectual goods, this control will only come at the expense of extremely aggressive laws. We have entered a stage when the very definition of "author" is under question. As computer technology begins to influence the way we create, communicate, and exchange information, new ways of thinking about intellectual property must be created. The U.S. response to date merely reflects a desire to control for the short term benefit of a few industries. It also reflects outdated assumptions about ownership of knowledge and authorship.

While the stories written by the U.S. government are politically persuasive, they will not last in the face of the larger transformation of how knowledge is produced and owned without increasing pressure, legal action, and "education". It is time for the U.S. to critically reflect upon the future instead of playing the international bully and creating rules which ultimately may be detrimental, even to itself.