Japan’s “compulsory licensing” of content proposal ‘misreported’

According to officials from the Secretariat of Intellectual Property Strategy Headquarters within the Cabinet Office, reports of Intellectual Property Working Group/Panel making recommendations to introduce the compulsory licensing of content over broadband has been misreported.

The news originally appearing in Japanese newspapers was picked up by English sources such as Variety in a way that suggested the Panel had formally recommended the rule change.

Secretariat officials indicate that the compulsory licensing idea was raised during panel discussions but was not actually a formal recommendation that has been compiled in the final report. (The Headquarters have records of these meeting online in Japanese)

A similar proposal has however, been publicly made by the Chairman of the Keidanren, as mentioned in a May 30 DISCONTENTS entry.

The Strategy Headquarters, who have released their 2007 Intellectual Property Strategic Plan at the end of May (English translation not yet available), have as their goal to change copyright law to allow the greater distribution of content online within 2 years. A concrete way of crafting such legislation into the legal framework has not yet been achieved, and promises to be an uphill battle vis-a-vis opposition from incumbent copyright holders who fear an erosion of their market power.

 

India needs animators? So does Japan!

An article in contentSutra states while Indian animation is attracting investment with tie-ups with US content firms (Turner [see MSNBC article] and Disney [see Variety article]) and Japanese animators, there are not enough animators to compete with competitive animation production centres such as the Philippines, Korea and Taiwan.

The article reiterates a claim in the Economic Times that India needs 10,000 professional animators of international standards.

But India faces a problem with quality, according to director Samanth.

“Barring one or two films, I am not happy with the quality of animated movies being made in the country,” Samanth said. “People are entering into the business just to make quick money. They produce low cost, low quality animation movies.”

The comments remind me of what some would argue to be the case even in Japan, which is often extolled as the world leader of animation, given that some figures put total animation broadcasts around the world as being 60 percent Japanese origin.

The article continues:

Without adequately trained animators, India could end up losing the race to this lucrative business. The Indian production houses inking deals with international companies need to take the initiative to train and retain employees. While it is true that animation houses find India attractive because of the lower labor cost, their Indian partners will have to remember that if they pay peanuts they are only going to get monkeys.

Lucrative business and paying peanuts. Again, there is substantial evidence to suggest that animation subcontracting is not the most lucrative business to be in, precisely because of what it pays: peanuts. This comes despite it being generally perceived as a high-growth high-value sector that policymakers are looking to bolster.

Original research sourced by DISCONTENTS on the animation industry in Tokyo suggests that the industry faces a cost/quality dilemma not too dissimilar (on some levels) to what these news articles depict in India.

Subcontractors face being squeezed by broadcasters and production houses for deadlines, which place emphasis on completion rather than quality. Given this low-cost environment, they can’t afford to train new animators, who are likely to leave if they are offered better (albeit still meagre) compensation. Despite industry reports such as those from JETRO stating that there are shortages of animators, there appears to be a fairly hefty supply of aspiring animators, with many willing to sacrifice higher wages in order to work in the animation industry. What there is a demand for is expert animators, which are in short supply. Given that most animation is for terrestrial broadcast, the vast bulk is based on existing manga characters and stories, meaning production companies get little share of the copyrights, and have little capacity to risk investing in the development of their own intellectual property. Broadcasters are more interested in their core business of satisfying domestic markets and earning advertising revenue so have little incentive to explore international markets with any degree of fervency. Finally, ‘OVA’ (original video animation) has managed to tap a profitable niche market that caters to otaku, which with its proclivity for disturbed and graphic sex and violence, has little hope of rising to mainstream popularity overseas, and is more likely to continue reinforcing stereotypes of Japanese animation as…weird.

This leaves feature-length anime as the most ‘promising’ market. Miyazaki’s Howl’s Moving Castle broke Japanese box-office records grossing 19.6 billion yen. Yet with its high upfront costs, long development timelines, and uncertain returns on investment, and a market dominated by Studio Ghibli, it is a market that is often too risky for investors and too small to house the bulk of those currently employed in the industry.

____________

Indian Animation Industry stats:

• Predicted to reach $869 million by 2010, (compounded annual growth rate of 25 percent over 2006-2010).
• Current industry has 300 small, medium and big animation companies employ approximately 12,000 people in India.
• “Could use 3,00,000 professionals in content development and animation by 2008, up from 27,000 in 2001”
  [NB these figures are from the Economic Times article but I can’t vouch for their accuracy]

 

Compulsory Licensing proposal: pre-authorisation of content distribution in Japan

Variety has reported that one of the Intellectual Property Strategy Headquarter expert panels has recommended that pre-authorisation for re-use of copyrighted content over internet channels be scrapped, requiring potential redistributors to simply pay royalties to copyright holders for content they stream on webcasts rather than gain prior authorisation. (see posts in VarietyAsiaOnline and commentary on ars technica)

According to a Nikkei BP publication article, a similar proposal has been put forward by Japan’s Keidanren‘s chairman Fujio Mitarai and Itochu chairman Uichiro Niwa , has been put forward as a way to both allow for the full utilisation of copyrighted content that may otherwise be ‘gathering dust’, and as enabler to fill the ever-expanding distribution channels with ‘much needed’ digital content.

[The government should establish new legislations that include a] “more simplified, convenient procedure that could replace pre-authorization by each right owner” in a bid to promote the distribution of digital contents.

The IPSH’s Intellectual Property Strategic Plans have long stated the aim to maximise the distribution of content over digital broadband channels (see Chapter 4 of the 2006 Strategic Plan (in pdf)).

The proposal was criticised by a group of 17 copyright organizations including the Japan Writer’s Association and JASRAC (Japanese Society for Rights of Authors, Composers and Publishers). Free-to-air commercial broadcasters are likely to be against the proposal as well as it not only loosens their control of content for which they own broadcast rights, but also threatens to erode their traditional business model of selling content-viewing audiences to advertisers.

Which situation is better for the sustainable development of the content industry is not a simple question to answer. On the ‘rights’ front, one school of thought would suggest content holders should be able to maintain control of their products and distribute them in a way that they see fit. At the opposite end of the spectrum, opinons abound that third parties should be able to redistribute content provided copyright holders are being paid for its use.

While it makes sense for a corporation to have control of its product portfolio and use it in ways it sees fit in order to maximise return (or minimise losses), allowing content to be reused by third parties may actually prove to be a profitable way for copyright holders to reap returns both on popular content and in particular on content that has not proved so profitable and has been consigned to be ‘locked in the vault’. While the knee-jerk reaction of incumbent rights holders would be to reject the new proposal, it might well be worth their while to consider the merits of a system that (on a limited basis?) provides them with new channels to distribute and gain revenue from their content.

—-

Skipping from content in Japan to pharmaceuticals in Thailand (see articles on compulsory licensing in Bankok Post and a Huffington post on IPR and access to medicines), parallels can be drawn between the two, where a government passes legislation that allows local firms to distribute the intellectual property developed by one patent/copyright holder provided they pay royalties for fair use. While ensuring the supply audio-visual programming on the one hand and the availability of life-saving (generic) medication at a low price on the other seem worlds apart, they also share common economic properties: high upfront development costs, extremely low marginal costs that make them both ripe for unauthorized use and compel developers to maintain firm control of distribution.

 

Japan and India sign MoU on Intellectual Property Rights

A press release on the Indian Press Information Bureau has announced that Japan and India have signed a memorandum of understanding on Intellectual Property Rights in Tokyo.

The MoU covers three areas of capacity building, human resource development, and public awareness programs, with each government pledging to draw up annual action plans to implement the MoU.

If you take a look back through many of the Government of Japan’s Intellectual Property policy statements, the three areas mentioned in this MoU are some of the cornerstones of Japan’s IP reforms. Ever since Koizumi’s announcement of the ‘Nation Built on Intellectual Property’ policy in 2002, human resource development, public awareness, and even in it’s unstated form capacity building have carried through to one of the more recent policy documents, the 2006 Intellectual Property Strategic Plan.

The News (Pakistan) article also quotes an Indian Government official:

“The agreement consists of Japan’s support in areas such as the introduction of an electronic application system of intellectual property rights and education of Indian officials in the field,” the official said.

“Helping India in strengthening its policy on intellectual property rights is in the interest of Japanese companies considering investment in India,” he added.

This goes part of the way to answering the question why an MoU on IP with India? It would be interesting to know how much Japanese content IP is pirated in India and whether Japanese technology is also being used without paying royalties to patent holders.

Given Japan’s significant deficit in the terms of trade in copyrights, the government – and the industry – appear keen no prevent any unlawful use of Japanese copyrighted goods including content – just think back to JASRAC–YouTube incidents.

The protection agreement was Japan’s first with a developing country, he said.

 

Japan’s steps toward becoming a World Content Super-Power

The Content Taskforce (my translation of コンテンツ専門調査会)- a working group under the Japanese Cabinet Office’s Intellectual Property Strategy Headquarters (知的財産戦略本部) – released material associated with its March meeting.

A powerpoint presentation in PDF format entitled “About ‘Becoming a World-Leading Content Super-Power’” (my translation) summarises the strategy that is being put forward by the Cabinet Office committee to bring Japan to the forefront of the world content producing nations.

Below is a translation (all errors and strange English are mine) of the 6 points (found on pages 2-4) that outline the ideal situation for realising the creation of this Japan as a ‘content super-power’:

1. An environment where citizens can enjoy content

• Citizens should be able to access rich content and create their own content from mobile devices and PCs independent of time and place.

2. Development of Human Resources

• A variegated supply of human resources from outside and within flows into the content industry, allowing various parties to learn from each other.
• Creators from overseas are drawn to Japan, allowing the nation to become a content creation hub.
• Produce a large number of creators and producers that are able to use a variety of media to make a significant impact on the world stage.
• Produce a large number of entertainment lawyers that have the knowledge and skills to negotiate internationally on fair terms.

3. Transactions and Contracts

• Fair contracts need to be reachable across the whole of the content industry.
• Based on a principle of ‘multi-use’, allow contracts to be signed where creators obtain faiｒ remuneration.

4. “Business Chance”

• Have Japanese content accepted throughout the world while content from overseas can be freely introduced into Japan.
• “International Content Carnivals” and such events that hold international prestige would allow for content of various nations to be introduced and traded in Japan.
• For capital to flow to the content industry from a variety of sources both domestic and international in origin.
• The proliferation of a ‘business scheme’ that allows for online processing of rights and payments and a fair remuneration for creators while distributing a wide variety of content.
  

5. Eradication of pirated goods

• Through the development of protection technology and system reforms including raising awareness amongst citizens, the production and distribution of pirated content will disappear

6. Education

• Preparing the ground for the creation of rich content through nurturing creativity in school education.
• Establish a climate whereby the rights of creators are respected.
• Promote the improvement of basic morals for the enjoyment of digital content.

 

Malaysia announces establishment of animation centre

On the 9th March during a visit to Seoul, the Malaysian Deputy Prime Minister Datuk Seri Najib Tun Razak announced the establishment of an animation centre in the Malaysian Multimedia Super Corridor (MSC) town of Cyberjaya.

The press release on the MSC website indicates the Malaysian Government’s belief that the content industry can be a significant source of growth, innovation, and augment economies to produce higher value-added products and services to compete internationally.

The content industry has a huge global market and the setting up of the centre will give our people, who have a high level of creativity, numerous opportunities to venture into the existing market.

And in a move to an intellectual property-driven economy, animation appears to be the ‘industry of choice’ for various governments to make a foray into supporting content industries. The dominance of Japanese animation in world markets and the emergence of Korea as a competitive ‘animation-nation’ has undoubtedly prompted various policymakers in Asia to adopt a “me-too” (?) approach. This combined with the steady rise in international animation trade, and the ‘ease of entry’ into animation (both from technical and export market adaptability perspectives) has resulted in a number of countries looking to animation as a key to entry into international media content markets.

Another notable item in the press release was the announcement of collaborative agreements and MoUs between Malaysian and Korean animators, and the Malaysian Multimedia Development Corporation (MDeC) and the Korea Culture and Content Agency (KOCCA)
With more and more nations looking to morph their inward-looking local content industries into ‘vibrant’ ‘competitive’ industries situated in ‘global media cities’, one has to wonder about the potential for “success” in an environment where multinationals, investors, and creative talent have an ever expanding suite of options to choose from.

Is there a hint of location tournaments in the air? The issue raises a series of questions.

• What policy instruments are governments using to attract industry players?
• How much effort is being placed on the development of human capital and building of capacity locally?
• To what extent are generic policies that encourage free movement of capital, freedom of expression, education, and a high standard of living being used compared to specific industry policies that provide incentives, tax concessions, and subsidies for local firms or multinational entrants?

The answers to these questions are a start to deciphering some of the government rhetoric and determining which policy settings are suited not just for foreign investors but for the growth of domestic industries and local economic development.

 

Japan’s efforts to boost animation exports

This article ‘Japan looks to keep sun up on animation exports‘ is an old one from 2005, but the key issues are still relevant, and highlight some of the themes in a forthcoming chapter in a book to be published in 2007 by Asia Pacific Press.

But the question remains how successful it will be to treat animation as another Japanese industry like selling hard drives or motorcycles, as animation has thrived — artistically, at least — leaving artists to their own devices.

What is behind the push however, is the perceived lack of exploitability of Japanese ‘soft’ know-how, and a considerable deficit in the terms of trade in copyright goods. This is compounded by a competitive imperative to earn more revenue from intellectual property rather than straight manufactures, given that neighbouring economies such as China appear on the verge of emerging as more than just the world’s production house/s.

A few key facts and figures quoted in the article are:

According to the Digital Content Association of Japan:

• Japan’s total Content business in animation, film, publishing and music was at 14.7 trillion yen ($140bn) in 2003
• Animation (including manga cartoons, films, videos and character products) accounted for 2.7 trillion yen ($26bn), according to the Digital Content Association of Japan.
• This compares with 50 trillion yen ($474bn) in the US, – 40% of the world total
• Despite the strength of Japanese animation competition is bound to emerge from other Asian nations like South Korea and China, where Japanese animation companies turn to for labour.
• China’s culture ministry last year started a university programme to boost China’s animation industry, including via tie-ups in Japan.

It is not just Japan that is turning to other countries for, what is still referred to by some in the industry as “grunt work”. Australian and Singaporean animators and game developers often outsource work to China given the significant cost difference. This comes despite Singapore not yet being an “established” media content region, and significant government efforts to promote the industry. Yet, similarly to Japan, both policymakers and industry players seem to realise that the only way ‘forward’ is to focus on the high-end ‘creative’ aspect of IP creation and the retaining of copyrights.

For Japan (as for Singapore) the strategy for policymakers surely lies in capacity building rather than excessive control of industry activities.

 

British TV exports jump 20 percent – led by format sales?

Exports of UK television programming increased 20 percent in 2006 according to the UK trade association PACT.

Data referred to in the PACT press release, as does the reporting in World Screen News, indicates that this has been driven by a dramatic increase in revenue earned from sales of program formats.

The 87 percent leap in format sales is certainly notable, but it’s important also to look at the relatively small proportion of total export sales it accounts for.

Format trade was worth 56 million pounds in 2006 according to the “Sales by Type” disaggregated figures. If you do the math, this is about 9.5 percent of the total – an sizeable increase from 6 percent in the previous year, but can one say that it is driving export growth?

Sales of formats has received considerable attention in recent years and it is being looked at increasingly by producers as a way to increase exports by breaking into markets less receptive to foreign content, or similarly making headway into genres that tend to be locally produced.

“We make great shows that audiences throughout the world are watching and the UK distribution industry has benefited from the fact that, as rights owners, production companies are increasingly conscious of the international marketplace when they are developing ideas.”

Louise Pedersen
(managing director, All3Media International /
chair, PACT Exports Policy Group)

Exporting the intellectual property or idea of content for reproduction overseas also has governments all around the world excited, particularly those nations whose balance of payments are characterised by a significant deficit in trade in services, such as Japan for example.

Focusing on the international market is bound to make domestic industries more competitive, yet as an increasing number of production companies look to export their content via formats, several problems may well be on the horizon. I will leave addressing these issues to another post.

 

UK cracks down on counterfeits and copyright infringement

The UK Intellectual Property Office issued a press release on 6 April announcing new powers to help tackle counterfeiting and piracy, effective immediately.

£5 million of government funding will make enforcement of copyright infringement the responsibility of Trading Standards and give officers the power to make test purchases, enter premises and inspect and seize goods and documents.

Malcolm Wicks, MP, the Minister for Science and Innovation, said:

“The UK film, music and game industries are among the most creative and innovative in the world, but peddlers of counterfeits are costing those industries up to £9 billion a year. The taxpayer is also losing out to the tune of £300 million. It’s a serious offence, whether committed by small-scale hawkers or international crime organisations.

While the actual amount that the industries lose due to piracy and counterfeiting is debatable (do they compare to previous sales figures, or use an estimate of piracy activities? And in the latter case, piracy does not always mean a loss of sale: there is undoubtably a significant number of people who would be more discriminate about the goods they consumed if they did indeed have to pay (full price) for them), it could also be said that while piracy costs taxpayers 300 million pounds, they may also be saving the difference between the 9 billion and the amount that they paid for the goods. In sum, the “it is costing you money” argument is less likely to convince users of pirated and conterfeit goods of their “loss” than it is likely to persuade “honest consumers” to see the benefits of the new laws.

What is more striking about the announcement however, is the UK’s clear labelling of piracy and counterfeiting as a source of revenue and money laundering for international crime organisations.

Japan’s Intellectual Property Strategy Headquarters has made the same move in recent years, both to educate consumers about whom the money from their purchases of counterfeit goods is likely to flow to, and at the same time cracking down on IP-related crime including copyright and patent infringements.

The UK announcement also shows that, at least at face value, the new measures are aimed at bolstering the Britain’s creative industries.

The UK Policy shift appears to be acting on recommendations in the Gower Report (here in PDF), which urged the government to “take tough action against those who infringe IP rights at a cost to the UK’s most creative industries”.

 

Learning, referencing, or stealing?: the limits of intellectual property rights

Given that all ideas and knowledge often gain their value from having currency, they yield no value to the originator if they are not disseminated in some form.

Likewise from a more altruistic perspective, society – and the world at large – is unable to benefit from the knowledge of an innovator if they do not share it in some way.

The boundaries that deliniate the propagation and spreading of knowledge from its unlawful (or unfair?) misuse through theft are often not as clear as both the originators and re-users of knowledge may like it to be.

Academics, for example, often do not plan or stand to make a direct profit from the ideas that they hold. They publish their works, knowing well that it is past research combined with a unique set of experiences that has afforded them the background and knowledge to produce a potentially innovative idea.

Yet while the copying of physical goods (such as the pirating of CDs and DVDs, or counterfeit branded goods) seems to represent a more blatant infringement than would a movie director taking an idea from film she has previously seen, or a fashion designer using older designs as the basis for new ones, ideas themselves are still very much subject to litigation.

On the 8 March 2007, the Nihon Keizai Shimbun 3M in the US have brought a case of patent infringement to the US International Trade Commission (ITC) against 11 Japanese, American, and Chinese companies including Sony, Hitachi, Matsushita, and Renbo. According to the article (on page 3 of the evening edition), 3M had developed cathodes that allowed for the safe and stable recharging of lithium ion batteries, receiving 2 patents in November 2005. 3M believes the batteries used in the above firms laptop computers now infringes on this patent and are calling for their importation and sale to be stopped.

While high-tech/IT industries are bound to be fraught with IP litigation, the fashion industry provides an example of a sector that does not exhibit such a trend in protecting Intellectual Property Rights and litigating against its infringement (so far as the ‘ideas’ are concerned).

An article in the Taipei Times outlines a paper published by Raustiala and Sprigman, which explains how the fashion industry functions without much IPR protection.

The fashion industry can survive without intellectual property protection because of two interacting factors that they refer to as “induced obsolescence” and “anchoring.”

Raustiala and Sprigman argue that this very lack of intellectual property protection actually promotes the vibrancy of the industry.

So while it is bound to be context and industry-specific, the extent to which learning, referencing, and even ‘honouring’ can be separated from the acts of mimicking, copying, and stealing, is still an open question.