Internet Governance

Let a Thousand Flowers

A recent misunderstanding at the NETMundial Internet Governance conference in Brazil focused on the meaning of the phrase ‘permissionless innovation’.

‘Permissionless innovation’ is a key technical principle that has guided the Internet’s development and evolution ever since its inception. As Jari Arkko, chair of the Internet Engineering Task Force (IETF) has argued: “Most of the applications in the Internet are the results of grass-roots innovation, start-ups, and research labs. No permit had to be applied, no new network had to be built, and no commercial negotiation with other parties was needed […]”.

At NETMundial, some chose to interpret this long-standing phrase to advocate innovation without any form of permission – imagine some sort of digital anarchy — for instance, without regards for existing intellectual property rights to recorded music or movies. As the Internet Society’s Chief Technology Office, Leslie Daigle pointed out at the time: “[Permissionless innovation] is about fostering innovation, not prompting anarchy”.

This is a significant detail.

Because, the fact is that ‘permissionless innovation’ is about the freedom to experiment and test the limits of human imagination. As Konstantinos Komaitis, Policy Advisor at the Internet Society suggested on another blog post: “It is about allowing people to think, to create, to build, to construct, to structure and to assemble any idea, thought or theory and turn it into the new Google, Facebook, Spotify or Netflix.”

While the immediate issue was resolved at NETMundial, a more recent announcement raises the more profound question of what does ‘permissioned innovation’ look like. On 1 May 2014, the Guardian reported that, a streaming music service in the UK, shut down after its main investor pulled the plug. The services had accumulated more than 1.1 million users in the UK in just over a year, and licensing deals with major record labels, but could not cover the resulting payments. The CEO noted in particular that ‘massive scale’ is required to justify a business case.

Thus, even with permission from the record labels, the resulting economies of scale led to entry barriers that could not surmount, and its main investor could not countenance. While had what, in almost any commercial pursuit would be considered an excellent start – an impressive 1.1 million customers in 16 months – other innovative startups never even reach the launch stage.

In “Copyright and Innovation: The Untold Story”, US scholar Michael Carrier argued that extensive litigation – whether threatened or pursued – focused on companies using digital content has been detrimental to investment and entrepreneurship. The result is that investors are not willing to invest in this area due to legal and economic uncertainty, which in turns reduces the number of startups and innovation.

As described in the term ‘permissionless innovation’, the Internet removes barriers to entry – technical or otherwise – allowing Jeff Bezos to start Amazon in his garage in Washington, Mark Zuckerberg to start Facebook in his dorm at Harvard, and Larry Page and Sergey Brin to start Google in their lab at Stanford. ‘Permissionless innovation’ produces a significant economic effect and creates the conditions for additional points of entry and access.

Digital music – whether streamed or downloaded – requires no physical inventory like Amazon books; no network of friends and family like Facebook; and no ‘secret sauce’ like the PageRank algorithm that propelled Google. Why should permission to sell digital bits not scale with the size of the seller?

In 2012, global revenues of recorded music increased for the first time since 1998, based on the increase in online distributed music. Thus, there is a market for online music, and no reason to restrict the market to just a few large players. With innovative new business models, the industry should be able to bloom.

Economy Public Policy

The significance of footnote 10 of the World Copyright Treaty in the final text of the Treaty of the Visually Impaired Persons.

There is a ‘book famine’ – in the North, apparently, less than 5% of the books published are available in a form accessible by the blind community. In the South, this figure is no more than 1%. The WIPO Treaty to Facilitate Access to Published Works by Persons with Print Disabilities[1]will hopefully address this issue as Member States are negotiating a final text before the Diplomatic Conference in Marrakech in June 2013.

Before June, however, WIPO Member States still have to agree on the text of the Treaty, the most controversial aspects of which appear to relate to the definition of an ‘authorized entity’ and the ‘three step test’. Both issues do not come free of their own problems and controversy. Especially, the three-step test has the academic and policy world split.

Anyone who follows copyright discussions has heard of the three-step test. First introduced in the Berne Convention of 1886, it has been consistently applied in subsequent WIPO Copyright Treaties, the EU Copyright Directive and has even made it into the WTO TRIPS Agreement. The three-step test is a formula that was originally created to address the question of permissible limitations to the general right of reproduction. However, ever since its conception, the three-step test has proven vague and problematic and no attempt has been made to provide an internationally accepted approach. Actually, the only time the test was interpreted was in a WTO dispute, which has received extensive commentary and criticism.

The lack of active participation by Observers and NGOs during the substantive discussions of the last intersessional SCCR meeting in February, did not allow us to have a full picture on where the discussions focused. However, various Member States did confirm that mostly they deliberated on the three-step test and the way it would be written in the Treaty.

On the last day of the session some agreed language on the text appeared to have emerged. According to the latest version of the document, submitted during the closing Plenary, the Member States have conceded to the following:

“In adopting measure necessary to ensure the application of this Treaty, a Contracting party may exercise the rights and shall comply with the obligations that the Contracting Party has under the Berne Convention for the Protection of Literary and Artistic Works, the Agreement on Trade-Related Aspects of Intellectual Property and/or the WIO Copyright Treaty, so that: accordance with Article 9.2 of the Berne Convention for the Protection of Literary and Artistic Works, a Contracting Party may permit the reproduction of works in certain special cases provided that such reproduction does not conflict with the normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author; accordance with Article 13 of the Agreement on Trade-Related Aspects of Intellectual Property, a Contracting Party shall confine limitation or exceptions to exclusive rights to certain special cases which do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author; accordance with Article 10.1 of the WIPO Copyright Treaty, a Contracting Party may provide for limitations of or exceptions to the rights granted to authors under the WCT in certain special cases, that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate rights of the author;

4. in accordance with Article 10.2 of the WIPO Copyright Treaty, a Contracting Party shall confine, when applying the Berne Convention, any limitations of or exceptions to rights to certain special cases that do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.”

Essentially, the Member States compromised by making reference to the various international law instruments where the test appears. This compromise might end up being the catalyst in concluding the Treaty in Marrakech.

Notwithstanding this positive development, there is one major concern with the text as it currently stands. In the original wording of Article 10 of the WTC there is a footnote, which is as significant as the text it refers to, yet it did not make it into the current version of the text. Whether this was an act of negligence or one of intention we cannot be sure; nevertheless, its incorporation is not only significant but also essential for making the Treaty relevant in the age of Internet and digital communication technologies.

Under footnote 10 of the Agreed statement concerning Article 10 of the World Copyright Treaty (WCT):

It is understood that the provisions of Article 10 permit Contracting Parties to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable under the Berne Convention. Similarly, these provisions should be understood to permit Contracting Parties to devise new exceptions and limitations that are appropriate in the digital network environment.

It is self-evident why this language must be included in the Treaty. It is this footnote that signals the desire to make room for the exploitation of copyright works in an environment where digitization is key and where persons with print (and other) disabilities are given more opportunities and means for accessing works that were inaccessible before; it is through this footnote that issues of accessibility are being addressed not just in the physical layer of the Internet but, more importantly, in the content layer; and, finally, it is this footnote that makes room for contracting parties to exercise their discretion by taking into account future technological developments.

Although one could arguably challenge the application of article 10 of WCT without its accompanying footnote, we believe that this argument misses one small, albeit important, detail: in the context of the Internet, policy is additionally conducted through an inclusive framework and, to this end, any form of policy should provide language with a much wider audience in mind. Such additional tools facilitate more informed decisions. So, the addition of the footnote is not superfluous– instead, it is informative and provides clarity concerning the scope, boundaries and application of limitations and exceptions.

This omission must be addressed in the next intersessional meeting in April. We need to remember that international law instruments, including this Treaty need to be, first and foremost, relevant and this means reflecting existing and future technological advancements. They also need to be simple, so they manage to address real issues, like the book famine the visually impaired community has been subjected to for a long time. And, finally, they need to be implementable, which requires a functioning text, so that they can organically creep into national legal frameworks.

Konstantinos Komaitis, Policy Advisor, Internet Society