Intellectual Property and E-commerce: Analysis of The Pirate Bay Case

This report concerns with the critical issue of piracy of copyrights over the internet. The report analyzes the case of piracy of copyrighted content by the Pirate Bay company. The company allowed the customers free access to numerous number of copyrighted songs, movies, TV shows, and video games. TPB was accused of copyright violation. The report provides an analysis of the case of TPB through the analysis of its stakeholders, the ethical issues and their impact, the legal concerns and a final justification for the case.

Intellectual property and e-commerce 1
INTELLECTUAL PROPERTY AND E-COMMERCE
Abstract
This report concerns with the critical issue of piracy of copyrights over the internet. The
report analyzes the case of piracy of copyrighted content by the Pirate Bay company. The
company allowed the customers free access to numerous number of copyrighted songs, movies,
TV shows, and video games. TPB was accused of copyright violation. The report provides an
analysis of the case of TPB through the analysis of its stakeholders, the ethical issues and their
impact, the legal concerns and a final justification for the case.
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Contents
Introduction......................................................................................................................................3
First: Stakeholder analysis...............................................................................................................4
2. Ethical issues and impacts...........................................................................................................5
a. Identification of the ethical issues of TPB case.......................................................................5
b. Using the structured approach to analyze the ethical dilemmas of TPB and suggestions.......6
c. The suggested ethical principles that might be applied............................................................7
3. Identification of all the legal issues described in the TPB case or that might arise from, the
case..................................................................................................................................................8
a. Analysis of each legal and regulatory issue the case might highlight......................................8
b. Identification and description of pertinent Australian laws that might relate to each issue and
description of the possible effect of each on The Pirate Bay.......................................................9
c. Other pertinent legal cases that support the justification.......................................................10
4. An argument of TPB position....................................................................................................11
Conclusions....................................................................................................................................12
References......................................................................................................................................13
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Introduction
The internet revolution has changed the world making rise to an unprecedented problem
in the global arena. The economics of knowledge are different from the classical laws of
economics, with knowledge there is a possibility of wide ranging effect on people, which is
different from tangible products. With the introduction of the internet, millions of users were
able to copy information free of cost and this increased the level of piracy, which resulted in an
increased number of copyright violations. A problem occurs due to the legal punishments for
copyright violations that contradict human rights for obtaining information, education and
publishing (Andreichicova & Alexander, 2012).
Ethical issues concern with the way people deal with each other and how it should be in
general. Determining the best cause of action is sometimes difficult because we need to relate
actions to the ethics that differentiate between what is right and what is wrong. That is why using
informed ethical decision-making processes assist in making good and moral judgments
(Dunsford, 2015). Business ethics are concerned with people's behavior in the business world of
commerce and moral dilemmas whilst conducting business activities. Business ethics on the
micro-level deals with organizational employee behavior. Mid-level business ethics, is concerned
with the organizational governance structures, whilst the macro-level, involves market structures
and their regulations (Norman, 2013).
This report will focus on and discuss issues concerning the case of The Pirate Bay (TPB)
company, previously it was one of the world's best-known pirated music and media content sites.
It hitherto offered its customers free access to numerous copyrighted songs and movies,
television shows, and video games. But participating in these activities was illegal and involved a
copyright violation that resulted in the shutting down of the site and sending its owners to jail.
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The following section provides an analysis of the case of TPB through the examination of its
stakeholders, the ethical issues and their impact, the legal concerns and a final justification for
the case.
First: Stakeholder analysis
The stakeholders of the business are the individuals or groups that affect the
organizational decision-making processes. Stakeholders can access and mobilize different
organizational resources and can be categorized according to their functional role. The
stakeholders' opinion in a public decision-making process is very important in tackling the
challenges that affect property rights (Ferretti, 2016).
Freeman (1984), as cited in Alonso & Austin (2016), referred to stakeholders as any
group or individual who can influence the organization's business goals and who may be affected
by them. Freeman’s theory of ethics and organizational management stresses the importance of
values in conducting business. The proposed model by Freeman considereds the owners,
customers, suppliers, management, employees, the local community, governments, political
groups and trade associations. The normative approach introduced two fundamental ideas; the
stakeholders are groups or individuals who have legitimate interests of the business activities and
these interests have intrinsic values. Accordingly, stakeholders deserve to be considered for their
stake and their ability to influence other groups.
The stakeholder analysis is considered an approach to understanding the system and the
required changes through the identification of the stakeholders and the assessment of their
interest in the system of analysis. It defines who should be involved and describes the most
effective and efficient ways of involvement and the type of involvement within the stages of
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business processes. The political and legal aspects control the degree of intervention of the
groups of stakeholders (Maguire, Potts, & Fletcher, 2012).
TPB stakeholders are the business owners who invest in the business and generate profits.
The customers use the website to access the desired content without the need to pay for
copyrighted content for free. It provides an easy access by downloading a software that enables
peer to peer (P2P) networks around the world where the customers can search and find the
desired content. By clicking on a selected link, the users can access the copyrighted digital
content. In addition, the copyright owners are among the stakeholders, as they have the legal
right to claim for piracy and violation of their copyrights. The government is also a stakeholder,
due to the imposition of legislation that controls the copyrights of the products.
2. Ethical issues and impacts
a. Identification of the ethical issue of TPB case
Primary stakeholders regularly interact with the business activities, while secondary
stakeholders are important for specific issues, for example, the government interest of applying
the law. The stakeholders are networked through the organizational activities (García, Gómez, &
Molina, 2012). They represent a wide array of stakeholders that exist in different countries
around the world. They are joined by a complex link across the company website.
TPB commenced operation to make money, the business was designed to generate profits
for its owners who were the founders of the business. TPB heavily relied on advertisements as
their major source of revenue. Although the aim of the business was making profits, the Swedish
first court declared that the founders of TPB were guilty of copyright infringement. The founders
were imprisoned and a $3.5 million fine was imposed on the company. The features of the TPB
website allowed easy upload, storage and tracking of copyrighted content and this was deemed .
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harmful to the copyright content owners and considered a violation of the law. The customers
had been encouraged to violate copyright laws and then they consequently lost an easy to access
source of digital media. It was found by the court that the primary objective of TPB was to
violate copyright laws to make profits.
b. Using the structured approach to analyze the ethical dilemmas of TPB and suggestions
Assessment of the ethical issues can be achieved by keeping with ethical theory. In
addition, procedures that require examination include; how the organizations, resources, values,
stakeholders and roles affect the work process (Heintz, et al., 2015).
Mid-level ethical aspects are concerned with the business ethics on a business level, with
a focus on the leaders and stakeholders' rights. The stakeholders' theories focus on the firm level,
it considers that the firm is owned by investors, the managers have to advance the owners'
interests according to the law. Also, they have to balance between the other stakeholder groups
which is a complex role (Norman, 2013).
The literature shows a switch of interest away from a universal code of ethics and more
toward sectional interests, situational interests and critical realities of ethics. The alternative
notions of ethics, involves the virtue ethics or the desirable characteristics and consequentialist
ethics (Jeanes, 2017).
The impact assessment (IA) is a structured process that considers the economic, social,
environmental and technological considerations of a certain action at a certain stage where
modification could take place and be applied to large projects. The environmental impact
assessment considers the positives and negatives of activities through prior planning. The social
impact assessment involves analysis, monitoring and managing the social impact of business
activities. Technology assessment is developed to measure and evaluate the impact of the use of
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new technology. The economic assessment considers the efficiency of business activities
(SATORI, 2015).
The violation of the copyrights by TPB took place on the macro-level, it had a social,
economic and technological impact. The U.S. government enforced the Swedish government to
improve its copyright laws to prevent rampant downloading. TPB did not cease its illegal
business even after it was accused of copyright violation in the first time. But it conducted a
chain of site start-ups and shutdowns from different countries, including France, Denmark, Italy,
Germany, Finland, the U.K, Ireland, and Greece. These countries refused to let TPB operate
within their boundaries even though TPB’s servers were located in other countries. The action of
these governments lowered the social impact of copyrights piracy. As a result of preventing its
operations, new companies working with similar mechanisms chose a more legitimate process.
Additionally, it lowered the negative impact of modern technology and its misuse.
c. The suggested ethical principles that might be applied
There are two major ethical approaches; the non-consequentialists that reflect the human
effort, to be honest, and the consequentialists that reflect the efforts of promoting for the value of
honesty. There is a conflict between promoting for honesty and honoring it. Promoting for the
ethical values assists in ending unethical behavior (Kalajtzidis, 2013).
According to Pettit, theories as cited in sepielli (2013), consequentialist indicate the
agents who promote the values but not a must to honor them. They could be against their own
nature, but they are devoted to promoting them. The arguments of the ethical theories are
complex, but they could be classified towards values.
The consequentialism was designed based on some ethical organizing principles.
Deontology is concerned with the moral aspects of activities that differentiate between what is
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right and what is wrong. For example, why keeping promises is a right action? And breaking
them is the wrong action? Deontology is conformity to the moral principles. It is considered
among the non-consequentialist views, they agree on many principles. The deontologists are
people who advocate the right and differentiates it from the wrong (Crisp, 2015).
It is suggested that governments and NGOs promote for the ethical values of using the
internet for the individual and businesses. Individuals should be aware of their mistakes in using
illegal methods to obtain copyrighted content. Business companies should be encouraged to use
legal processes from the start of their business in order not to violate the rules and face
punishment such as imprisonment, fines, business shut down or tarnished reputation.
3. Identification of all the legal issues described in the TPB case or that might arise from, the
case.
a. Analysis of each legal and regulatory issue the case might highlight
The property rights approach is concerned with the cost and revenue and the expressive
aspects of the product. The intellectual property rights to collect resources that create the
property and generate a larger return compared to their costs. There is a conflict in recognizing if
the property rights are a source of social benefit or economic benefit. Therefore, protecting
intellectual property is not overly considered by the economists, however, they are closer to the
legal rules that govern intellectual property. If the product creator did not protect the intellectual
property, the law would not be able to protect it (Posner, 2005). The copyright of the 'fair use'
allows a large amount of unauthorized copying of the copyrighted product. In legal terms, it
might be ruled as fair use, if the unauthorized copying of a copyrighted product was obtained
after failing in negotiating with the owner of the copyright to get it. Before the copyright expires,
the product owner has the right to establish the kind of registry to protect it from the abandoned.
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Many important applications are involved in the fair use doctrine, it allows the copyrighted work
to be copied without getting a license from the owner.
The violation of copyright by TPB resulted in bankruptcy for the company and it was
prevented from operation worldwide. In addition, the world’s largest advertising agencies acted
against TPB and similar other websites by boycotting them. This solution is practical as it leads
to sever company losses.
The fair use is a doctrine of limiting the scope of copyright, it allows copying the ideas,
not the expression that is protected against copying. In the domain of the copyrights, the ideas
are generally not specific to the owner. The copyrights limit the access to empowering the
inventor or the owner to price his invention and exceed the marginal cost to generate profits
(Sakata, Sasaki, & Kajikawa, 2012; Cross & Miller, 2011).
The music distribution witnessed a change in its pattern by progressing in music sales in
a purely digital format. For example, Apple's iTUnes delivers music online and allows for
download or cloud streaming, which is compatible with the argument of the product being
copyrighted but ideas are not copyrighted.
b. Identification and description of pertinent Australian laws that might relate to each issue and
description of the possible effect of each on TPB
Australia is part of the world economy that devotes much concern to intellectual property.
The Commonwealth has to conform to the international standards of protecting the copyrights
(Brudenall, 1997).
Australia Copyright Act (1968) states that any original literary, dramatic, musical, artistic
materials, published films, TV and radio broadcasts and videos are legally protected. Although,
the owner has a limited monopoly on the reproduction. The section 13(2) of the same law, allows
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the owner an exclusive right to engage in an activity related to a work that occurs directly or
indirectly through involving another party. Sections 36(1) and 101 of the Act allow an individual
to infringe a copyright without the permission of the owner. Sections 36(1) and (1A) are similar
to section 101(1) and (1A), but the concern with the copyright of the literary, dramatic, artistic
and musical materials (Kariyawasam & Austin, 2011).
During the period (1906 to 2005), the subsections number in Australian IP legislation
increased 6-fold, however, the copyright law witnessed the largest increase over this period of
time. The same analysis goes to the patents, design laws and trademarks. If this trend continues
in the future, the IP legislation in Australia is expected to double every 20 years. The review of
the IP legislation results in the introduction of a new legislation that will also be reviewed and
modified. The largest number of IP legislation goes to the patent law, trademarks and designs
law (IP Australia, 2017).
From this analysis, the Australian government copyright law has been modified to align
with the World Intellectual Property Organization (WIPO) principles. This means that the
actions taken by the international governments that prevented TPB from operating its servers and
business within their boundaries would have been the same actions taken by the Australian
Government if TPB business took place in Australia.
c. Other pertinent legal cases that support the justification
In the case of Oracle America, Inc. versus Google Inc., the Federal court found that the
interfaces of the Java programming language are protected for their copyright, but their functions
are non-copyrightable. Which means that the copyright is applied to the written work and
creative works, but the actor in a film, for example, is not subject to the copyright. The modern
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copyright law does not require the owner to take steps for protecting his copyrights, they are
protected from the moment they become tangible (Zekos, 2016).
Moreover, if an individual created a website on a freelance basis, there would be no
agreement that kept the production rights to the service buyer. The copyright would belong to the
developer. If the buyer wanted to modify the website after one year, he/she would need to
receive permission from the developer (Verbauwhede, 2004).
4. An argument of TPB position
The copyright-related legislation is associated with using technology and innovation,
although, the legal copyrights are old and existed before the emergence of the internet.
It is highly important to consider the scope of the copyright, its limitations and expectations,
registration of the copyright and law enforcement. There are different views with regard to the
copyright issues that seek optimal solutions. It is an ethical issue that involves moral aspects and
concerns. Additionally, in some economies, other copyright-related legal issues take place
relevant to data usage and are also argued as to their effectiveness (OECD, 2015).
From the business side, many companies are involved in CSR activities. They have
established ethical business codes that have gained employees, partners and customer
satisfaction. Considering the legal perspective and aligning the business activities with the law is
important because this increases the confidence in the business and ensures its success. The best
decision of the organization is to consider the ethical behavior and legal consequences. Some
companies argue that ethical behavior and compliance with the law are costly, reduce profits, and
act against the real social responsibilities of the organization (Karim, Suh, & Tang, 2016).
The case of TPB requires incorporating a range of policy options to achieve sustainable
and efficient growth, according to Ashcroft & Barker (2014), as follows:
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 Involving changes to the copyright law to oblige an intermediary agent, who can benefit from
dealing in content and materials and fully comply with the law by way of a license or contract.
 Implementation of a mechanism within the existing law that allows the content uploader to
obtain the full rights of the copyright owner.
 The intermediaries should pay a fair compensation to the owner through negotiating the fair
price.
Conclusions
Stakeholders can access and mobilize different organizational resources. They can be
categorized according to their functional role. The political and legal aspects of a business
control the degree of intervention of the groups of stakeholders. TPB stakeholders were the
business owners who invested in the business and generated profits. Their customers used the
website to access the desired content without the need to pay for copyrighted material.
The IA is a structured process that considers the economic, social, environmental and
technological considerations of a certain action at a certain stage where modification could take
place. The legal action of governments lowered the social impact of TPB copyright piracy. By
preventing its operations, new companies working with similar mechanisms will choose a legal
process. It additionally lowered the negative impact of the modern technology and misuse.
The business companies should be advised to use the legal processes from the start of
their business in order not to violate laws and consequently face severe punishment.
The violation of copyright by TPB resulted in bankruptcy for the company that was
prevented from operation worldwide. Moreover, the world’s largest advertising agencies acted
against TPB. This solution is practical as works as a strong deterent.
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Australia is part of the world economy that devotes much concern to the intellectual
property. The Commonwealth must conform to the international standards of protecting the
copyrights.
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