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How virtual is your reality? Modern electronic trading institutions illustrate one of the problems of 'going digital'. On the stock exchange, before the Big Bang, the jobber and the broker talked to one another, did the trade, and then each made a written record of the transaction.
Now, large sections of that industry have dumped the analogue world - traders conduct business on-screen. On being told that the 'talking' data which records their deals may be the subject of licence terms, their comments concentrate on the irrelevance of these issues to what they and their customers want and do and the ways in which they do it, and tend to end with: "How are you going to stop me?"
Why has the concept of intellectual property licensing intruded upon the world of exchanges and financial transactions? With the move by stock, financial and some commodity markets from analogue to digital trading, certain institutions have attempted to raise revenues by claiming ownership of 'digital acts'.
Previously, nobody had tried to claim ownership of transient analogue acts or deeds. The Dramatic and Musical Performers Protection Act 1925 gave musicians and actors protection against bootleg recordings of live performances, but this is not a property right - unlike, for example, copyright in 'works', which are the concrete products of their creators' activity.
Digital acts are as transient as analogue acts. If I buy shares over a networked system, the transaction is as fleeting as if I tell someone verbally that I am going to buy their car and shake hands on it. If worried about evidence of either transaction, we arrange to keep records of what we have done. In either case, nobody tries to claim copyright in the act of sale.
To date, the intrusion of intellectual property rights into the digital environment has been affected by the publishing industry, which is concerned that its economic structure should not be shattered as its products move from paper to networked digital data.
Then, because computer programs were defined as 'literary works' (Copyright Designs and Patents Act 1988), the computer software industry made common cause with the paper publishers, and sought to raise revenues from copyright licences. In making this alliance, the computer industry seems to have forgotten two facts: first, that as well as artefacts (programs and other 'works') electronic space contains acts - actions and deeds; and, second, that in digital space it is impossible to differentiate acts and artefacts.
Digital data are merely sets of on/off signals. When these simple signals are swilling around in an electronic system it is impossible to tell whether they are instructions (conventionally referred to as programs) or text.
To date, users of systems have maintained a polite fiction that the difference is clear, and until recently, have got by fairly well. Now that the incidence of acts on networked systems predominates over the incidence of artefacts and records, observance of the polite fiction is nothing more than a hindrance in the digital industries. It will have to go.
Furthermore, it is pointless to allocate property or other rights in entities which actually cannot be located or identified.
The IT managers of trading houses are the people who have had to negotiate (and attempt to impose conformity on) 'licences' of volatile data; that is the verbal part of the transaction. They are accustomed to signing copyright licences for use of computer programs and probably saw data licences as the same kind of thing.
These licences will prove to be no more than a temporary aberration, but they are important as the first attempts to develop legal rules appropriate for the digital environment in the financial industry.
Such problems will recur as other businesses go digital.
Gillian Bull is a consultant at Tarlo Lyons Solicitors