Skin in the Game: the Upside to the Youku-Tudou Copyright Fight

0 Comment

In the face of decades-long problems with intellectual property infringement in China, patience has worn thin among IP owners, industry and foreign governments. For those who have counseled patience, one common argument is that not only is China’s IP legal system still relatively new and needs more seasoning (not to mention resources), but also China’s economy as a whole is still developing. Only when the economy has matured to the point where domestic IP owners can exert significant influence on relevant policy, the argument goes, can the IP enforcement regime get to the next level.

I’ve always been attracted to this argument. There’s no question that it takes a while for all of this to gel. You need adequate laws, sufficient resources, strong institutions and highly trained individuals. But none of this is possible with an economy that doesn’t value the protection of IP, and this has been slow to develop.

“Skin in the game” (a term attributed to investor Warren Buffett) refers to the situation where an executive/insider has some of his own money in the company he is running. The idea is that if an individual has a personal stake in the outcome, he will have the same interests as other shareholders and approach management from that perspective.

The same pecuniary interests that drive business managers with “skin in the game” also motivate IP owners.

Although this is anecdotal evidence at best, I this the ongoing copyright struggle between the rival file-sharing sites Youku and Tudou suggests that the “just wait for domestic IP owners” theory outlined above does have merit:

Tudou and the Taiwanese TV station Cti TV jointly announced Friday that they would take legal action against Youku for allegedly reposting episodes of a popular Taiwanese entertainment show “Kangxi is Coming” on Youku’s platform.

Tudou said it will ask for a compensation of up to 150 million yuan ($23.63 million).

Following that, Youku announced that it will file a lawsuit against Tudou, accusing the latter of allegedly pirating more than 60 television serials from Youku.

A few caveats are appropriate. First, this is certainly not the first time that IP litigation has visited China entertainment sites; video file sharing platforms themselves have been subject of many IP suits over the years.

Second, the process by which file sharing sites have teamed up with content owners began a couple of years ago, and not because these operators suddenly “got religion” about IP enforcement. No, both Youku and Tudou realized that public listing in the United States and widespread copyright infringement were not a good mix, and that it was time to clean up their content.

Third, as you may have noticed, the Tudou/Youku story is not about heightened IP enforcement in the country as a whole, but rather a private lawsuit between two business rivals. As such, it doesn’t directly prove the notion that when Chinese domestic IP owners proliferate, policy will undergo a sea change.

All that being said, the lawsuit does tell us something. When a company has a stake in what happens with content it either owns or, in the case here of Tudou, content it licenses, it is then motivated to enforce those rights. In doing so, when these firms run up against the same endemic problems that have faced other IP owners over the years, it stands to reason that these newcomers to the IP game will lend their strong voices to additional legal reforms or stepped-up enforcement.

One could view this lawsuit as just another example of online copyright theft. In the spirit of the holiday season, though, let’s keep our focus on the bright side.

5 responses on “Skin in the Game: the Upside to the Youku-Tudou Copyright Fight

  1. Marius Schutz

    I have no personal stake in this – however, I sometimes wonder whether this whole IP business is overblown.

    Copying is the highest form of flattery.

    If accountants stopped condoning inflating company values because of IP and, worse, goodwill, the problem would be solved, no doubt to the dissatisfaction of the legal profession.

    Moreover, in today’s fastmoving world, this morning’s invention is this afternon’s abacus. So who cares?

    Let’s go back to Dickens’ times in America!

    1. Stan Post author

      I do have a stake in all this of course.

      However, if push came to shove, we could probably manage just fine without trademarks. Next to go would be copyright, although we might lose out on some artistic works (not all, and probably not the best). But when it comes to patents, I think we need them. We wouldn’t have a modern pharmaceutical industry (warts and all) without patents, for example. That’s probably a good thing.

        1. Stan Post author

          Yes, the pharma industry is much too aggressive on the IP side (hence my ‘warts and all’ aside). Its actions, for example, with respect to AIDS and compulsory licensing/Doha Declaration has made Big Pharma appear quite heartless. However, this doesn’t detract from the point that we wouldn’t have that industry at all, at least in its modern form, without patent protection.

  2. S.K. Cheung

    I agree that copying (or was it imitation) is the highest form of flattery. But flattery doesn’t pay your bills. If I spent a couple of hours and copped together a you-tube video, flattery may be the best I could expect, and that alone may suffice. But if I spent vast sums on R&D for a product, or on production values for some form of artwork, my guess is I would require and expect something more than flattery alone in return for the privilege of using that product or enjoying that work of art.

    Of course, at one time, people said you could never make money from the internet. So humans are certainly capable of conceiving of creative ways to monetize something. If we did away with all manner of IP protections, people may come up with alternate methods to profit from their work.

    And there are probably some people for whom financial gain from their work is not an objective, and to whom IP protection is irrelevant. But those people already have the option now in our current paradigm of simply not seeking it. There is certainly no obligation to protect your work, if you choose not to.

    On the other end of the spectrum, there is no shortage of slimy people who would happily leech off of others for their own financial gain, but for legal IP provisions that prevent them from doing so. I don’t feel too sorry for these folks.

    In the end, as with most things, a happy medium is probably what we seek (or should seek). In the meantime, i agree with Stan. IP protection is probably pretty nebulous unless and until you create something yourself that you want to protect, and is worth protecting.