知识产权的终结 the End of Intellectual Property Challenges Beyond the “China Model”*

Copyright © 2011 by Feng Xiang 《知识产权的终结》 “The End of Intellectual Property” International Critical Thought Vol. 2, No. 1, March 2012, 99-106 知识产权的终结 The End of Intellectual Property Challenges beyond the “China Model”* Feng Xiang** Abstract A new reef the luxury cruise ship “Rule of Law” has hit, called the unenforceability of intellectual property rights. This article argues that instead of the often misnamed and misunderstood scapegoat, the “China model”, it is two global trends, the internet and outsourcing, that have led to the historical clashing and overcoming of the law. As a result, important revisions to our conception and use of the law and a new faith in universalism must be contemplated. Key words: intellectual property; rule of law; internet; outsourcing; revisionism; universalism. I Intellectual property is demising. Or at least, that form of intellectual property rights (IPR) as taught at our law schools and propagated by powerful state machines – a complex web of statutorily defined property and moral rights, entitled to official respect and protection in all “civilized nations”, according to a long list of treaties and international conventions signed into effect by members of global trade communities such as the World Trade Organization (WTO) – has come to its end. The fact is undeniable. Today, few people in good conscience can conduct normal business or enjoy a day of leisure without breaching a commandment of intellectual property by, for example, running a computer program, choosing a branded handbag or sharing a song with friends on the internet. This is so not only in China and other emergent economies, but increasingly in the United States and developed markets in general, as amply documented by academic researchers and industry analysts. The situation of IPR in China, therefore, is essentially no different from elsewhere on this over- wired blue planet, though for various reasons, there is often more media attention paid to it, in China as well as in the west, than deeper economic and social problems, such as what triggered the “Occupy Wall Street” demonstrations. 1 A couple of months ago, I remember, the BBC reported a case in the city of Kunming, Yunnan Province, southwestern China, in which 22 fake Apple stores were shut down in a crackdown by the local industry and commerce administration. The tips came from a foreign tourist who discovered some alterations in the layout and “signature” features in one of those “Apple stores” (BBC news, 12 Aug 2011). Given the freewheeling business environment, however, we may reasonably expect that similar bootleg operations will soon mushroom to fill in the void, right there or in nearby towns. The consumer market demands that. So, who would purchase “genuine” software at exorbitant prices under a lawyer-drafted license in mysteriously tiny print, when there are countless free downloading sites of the same on the internet? Greed is no longer a valid justification, for open and free access to “pirate” copies has become “our daily bread” (Matthew 6:11). Let “genuine” goods and services be a luxury for the law-abiding upper classes, a marking of social status of the well-to-do. But even there, the attitude is changing. At Xiushui Street in Beijing, that pageant of piracy, western tourists as well as Chinese white-collar flock in to select their favorite counterfeit international brands, from Swiss watches to Italian shoes to French couture, what not. There, fashion-conscious consumers are having a good time, a carnival of sacrificing IPR. The demise of intellectual property is testified to by the relevant industries themselves. According to the US International Trade Commission (USITC) statistics, in 2009 alone, the US copyright and software industry suffered losses in revenue of $48 billion due to IPR infringement in China, and as a result or in connection therewith 2.1 million jobs were lost in the United States, with $500 million additional costs on US companies dealing with the said infringement (SSTN news, 19 May 2011). Similar allegations against China by US trade groups, politicians and mass media have been commonplace for over two decades. Academic researchers tend to dismiss such claims as tactics of trade negotiation and market access battles, seeing them as driven by domestic or electoral politics rather than as accurate data that indicate any meaningful trend. These claims, after all, are based on the absurd assumption that users and consumers in China (and other developing societies) are able and willing to pay the same prices for software, movies, music, video games and other copyright material that apply on the US market. Even so, I think we should allow the claimants the benefit of doubt, for as a matter of fact IPR violation is indeed widespread in China, as in many markets, east and west. What I mean to say is: such unverifiable statistics, if true, show precisely that efforts to enhance IPR protection in China and elsewhere amount to beating a dead horse. Were it not intellectual property, would Uncle Sam, or for that matter any world power, tolerate such damaging attacks to its leading industries and job market? No, obviously. Instead of patient negotiations and repeated warnings and threats of “super 301” sanctions, stealth bombers and cruise missiles would have been launched, and criminal infringers and counterfeiters named as international terrorists. The fact that the United States has no effective means to lure or force China and other “notorious markets” into submission, and this has been going on since the 1990s, shows that the current international IPR 2 regime is basically unenforceable. The relevant industries, politicians and USITC are all keenly aware of this: over the IPR issues, an all-out trade war with China is not an option, for it will only hurt the two largest economies in the world and US consumers, as well as important geopolitical interests and cooperation. What is more, a large number of infringers and counterfeiters in China are manufacturers and service providers outsourced from the United States, Europe and Japan, or their suppliers and subsidiaries. These companies are simply being rational in the age of outsourcing by moving to China, taking advantage of the much lower IPR cost there, or what I call “lower forms of rule of law” (di fazhi). Through outsourcing, the gap in technology, management and marketing know-how is much narrowed, so that cheap and even quality imitation and generic production become industrially and commercially viable. And thereupon gathers the international investment, the so-called “venture capital”, with first-class legal expertise in its service. As the saying goes, “Wherever the corpse is, there the vultures will gather” (Matthew 24:28). II The question is therefore: why IPR protection is such a difficult business, and why do the laws tend to stay on the books and not be followed in real life? There are several explanations, specifically directed at China, as if loose enforcement were a uniquely Chinese phenomenon and hence worth our consideration here. Is IPR protection a matter of economic transition and development? The accepted wisdom for some commentators is that, when eventually China turns into a sophisticated market economy with more advanced technology, Chinese enterprises and proprietors will demand stricter IPR protection, and law enforcement will be in better shape. This optimistic expectation, however, has nothing to bear it out. China today is much more of a market economy than two decades ago, being full of entrepreneurship, technical innovation and private proprietorship (70% of the nation’s gross domestic product, GDP, is now created by the private sector). Yet piracy and passing-off are flourishing as never before. There is no indication that such activities will abate any time soon. In fact, as discussed below, the market seems quite comfortable with IPR violations. Business operators and chief executive officers (CEOs), authors and publishers, innovators and proprietors alike, must be ready for even fewer IPR barriers and monopolies to come. Moreover, this hypothesis of economic transition is a circular argument. It is based on an untested assumption of “natural” symbiosis between higher IPR protection and advanced economic development, and from there it reaches sweeping conclusions on China and other emergent economies. So the argument is better viewed as ideological propaganda. As such, it wields tremendous power and is crucial to the sustenance of the dominant “rule of law” (fa zhi) ideology embraced by both the Chinese government and its critics. But it has nothing to do with the reality of market competition or technical progress. 3 Another common problematic explanation has to do with certain cultures and values. In the case of China, the traditional culture, or more specifically the nation’s political culture, is said to be hindering full commitment to modern intellectual property. This verdict can be applied to all non-western societies where IPR protection is held not up the WTO rules (TRIPS Agreement), for instance. True, since China “bade farewell to revolution” in the 1980s, a good range of traditional values and practices have revived, including, for example, the de facto polygamy among many businessmen and cadres – I use the term “polygamy”, because the “female companions” concerned are widely accepted not as sexual partners in an extramarital affair, which is not a crime, but as family members of an illegal but socially recognized status called “er nai” or second wives, namely concubines, just as before the revolution. Indeed, rarely has the criminal law intervened, testifying to a recovered social sensibility that harks back to traditional family ideals and institutions. Can China’s weak IPR regime be categorized as an entrenched cultural attitude? The difficulty is two-fold. For one thing, public or state ownership of certain types of expressions, names, brands and innovations is more of socialist practice than traditional values.

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