Can Counterfeiting Be Justified: the Case of the Koreas

I want to begin with a very unKat-like admission. Some 15 years ago, fellow Kat Jeremy and I were both speaking at a conference in Tel-Aviv. There was no pre-conference sharing of the contents of the respective speakers and I found my topic more or less covered by Jeremy's superb presentation, which preceeded my scheduled talk by 45 minutes. What to do?

Two interrelated thoughts crossed my mind (well, there was a third thought, which was head to the nearest exit, but I decided to decline that option). One of the earlier previous speakers had explained how his client, one of the major U.S. sports leagues, stratified its product line by varying levels of quality (in this case, sports hats). The end result was that the same league trademark and logo adorned hats of varying quality.

In light of his comments, I quickly sorted out in my thoughts several ideas that had been percolating for some time about whether one could make analytically plausuble arguments in favor of counterfeiting. I said to myself, "I am sure that, whenever this sports league found unauthorized use of its mark on various merchandise, its lawsuit would recite in talismanic fashion how the defendant's products were of inferior quality, harming the goodwill and reputation, this despite the fact that that very league apparently stratified its own product line based on presumed differences in the quality of the branded hats. Maybe the issue of counterfeiting is more nuanced than at first glance."

And so I quickly reorganized my presentation (this being the pre-PowerPoint era, all I had to was revise the contents in my written notes) to suggest that there might be circumstances in which counterfeiting just might be justified. From the point of view of the producing country I recall arguing that, at a nascent level of national industrialization, industrial policy might plausibly see the manufacturing of counterfeit items as a transitional stage into more "legitimate" manufacturing -- especially where that country's culture had a positive tradition of imitation.

From the vantage of the importing countries, I focused on the issue of enforcement, espcially by the authorities. Depending on the domestic state of a country's internal security and resouce and budgetary allocation, counterfeiting might justfiably be way down the list of national priorities. I was careful to qualify my comments by stating that counterfeiting could never be justified when health and safety issues were involved. No matter. I recall receiving several vituperative hand-wrtten notes ("Anonymous", then as now). Truth be told, I probably deserved those comments. Were I to be offered a chance today for a reprise of that talk, I would certainly decline.

And yet--there remains the question: can there ever be circumstances where counterfeitng might be justified? I thought about that question in reading an item in the November 20 issue of The Economist. Entitled "North American Korean Defectors: No Paradise, but Better than Hell," the article discussed the increasing number of defectors from North to South (to remind us all how rapidly things change, the article appeared before the recent deadly shelling of a South Korean island).

As for the issue of counterfeiting, consider this: Raising the question of why the numbers of defectors have dramatically increased, the article reported that one reason might be "the surprisingly easy access that North Koreans have to South Korean films and television programmes. In recent years, illegally copied DVDs from China have flooded the country, enabling citizens of the world's most repressive state to see how sumptuously their southern cousins live."

And so the question: How should we properly view the role of counterfeiting in these circumstances? Certainly, if such counterfeit copies found their way back to South Korea, the rightsholders in the movies would be justified in taking all possible action against the unlawful copies. But consider the scenario where none of the unlawful copies found its way to South Korea (which in fact might well be the case), but all were directed to North Korea. Further assume that the "export" to North Korea was solely for the commercial gain of the counterfeiters, who perhaps deemed North Korea a more lucrative market, especially when it is assumed that there is no meaningful anti-counterfeiting apparatus in place in North Korea.

Undre such circumstances, is there an argument in favor of the position that the benefit in changing the perception of North Koreans about the standard of living in South Korea (filtered, of course, through the medium of movie scripts) outweighs any claim by for infringement by the rightsholders, even if the counterfeiters could be located? After all, it is presumed that the counterfeiters have a superior distribution channel in North Korea. If so, even if the rightsholders can claim that it is their choice whether or not copies of their films should be distributed in North Korea, as a geopolitical matter, the ultimate affect might be disadvantageous to broader South Korean interests, because fewer copies of their movies will be distributed to willing North Korean viewers.

Stated otherwise, can an analytical case be made for an exemption that allows the act of counterfeiting to take place in such circumstances?