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Asia Perspective: The USSFTA and the Swing of Software Adoption

A PERSPECTIVE FROM ASIA

In January 2004, the U.S.-Singapore Free Trade Agreement (USSFTA) came into effect. It is significant coming right after the Iraq war, where the Bush administration is giving firm handshakes to allies, including Singapore. It is also significant as it is the first FTA signed between the U.S. and an Asian country. The FTA seeks to create transparency in bilateral trade, especially in high-tech areas, between the two countries, erasing many of the trade barriers that still existed on the side of the U.S.

While both governments lauded the landmark agreement as a positive first step towards a more synergistic and more profitable bilateral economy, analysts and journalists began to examine the deeper level of the USSFTA to see how it would stand up in practice when it comes into effect.

Lengthening the Life of Authorship

Under the USSFTA, the terms of copyright protection for most works will be increased another 20 years to the “life of the author” plus 70 years, or 70 years after first publication, broadcast, or performance.

While copyright enforcement is a necessary evil in today’s competitive world, the lengthening of copyright ownership can have a retarding effect on progress. For example, the recent case of the obscure 906 patent by small independent software developer Eolas (www.eolas.com) concerns the use of embedded multimedia content in a web page. Winning a landmark suit against Microsoft created a major turmoil in the web development community. The patent was so pervasive and yet so limiting that even the World Wide Web Consortium (w3.org) had to step in to request a reexamination of the obscure patent.

In the same light, lengthening the copyright ownership to 70 years may also mean that the cross-referencing of information for commercial, or even educational purposes, may need more legal intervention, retarding the possibility of moving forward with derivative and augmented works.

Netting Commercial Copyright Infringement

The FTA also dictates that there may be criminal penalties for willful copyright piracy on a commercial scale, including the use of infringing works. This basically means that if a company is found to be using multiple copies of pirated or unlicensed commercial software, it may amount to “significant and willful” infringement, and may invite criminal charges.

Under the terms of the FTA, statutory damages also precede actual damages awarded to the copyright owners when pursuing copyright infringers. Statutory damages are almost like punitive damages, which are designed to punish and send clear signals to the community, and are NOT directly related to actual losses, which may be quite small. For example, if a record company sues an infringing user under statutory damages, they can perhaps get $150,000 per song, regardless of how little money they actually lost. This can be draconian, and does not send the right message in terms of equitable awards for equitable damages.

On the surface, this is very necessary as licensing is the lifeblood for commercial software vendors. It is almost impossible to create a world-class company sustaining thousands of people in meaningful careers, unless the vendors charge a reasonable licensing fee for the rightful use of their software.

However, the problem is that many commercial software users are priced out of the market. For example, the likes of commercial enterprise resource planning (ERP) software, which are critical for running medium-sized (or even small) companies involved in manufacturing and managing raw materials and produced goods, are often priced in the range of tens or hundreds of thousands of dollars. A quick check on meta search engines showed that there is reasonable open source ERP software available at no charge. Many are also rather capable in terms of features, cross-platform compatibility (running on server scripts or Java), and even end-user support (often by fellow users and developers).

With the demand for open source software going up because of the unrealistic pricing model of many commercial software vendors, even the mainstream vendors are beginning to wise up to the open source “competition.” For example, Microsoft has smartly created “Student and Teacher Editions” for their Microsoft Office product, providing three licensed serial numbers in a single retail product. It is not difficult to see that Microsoft has faced competition from the likes of OpenOffice (openoffice.org) and ThinkFree (thinkfree.com).

So rather than relying on the FTA as a punitive measure, vendors are independently beginning to realize that they need to see the world in the perspectives of their customers. If pushed into a corner, unable to use unlicensed software (especially since many mainstream software come equipped with user tracking serialization technologies to reduce piracy), these users simply move on to open source. Who loses in this aggressive approach? The mainstream vendors!

What is the true spirit of “free trade,” if not to further the good of many, rather than the few? Will a free trade agreement incite many to simply turn away and embrace alternatives? Would a more conciliatory and middle-path approach have worked better for the governments, the big corporations, and the community at large?

By Seamus Phan

Based in Singapore, Seamus Phan is
one of Asia’s leading thinkers and practitioners
in business leadership, Internet security, and marketing.

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