Derb Ghallef Valley

On the Crisis Between Commerce and Creativity in Morocco

Derb Ghallef is an iconic permanent flea market in the city of Casablanca. This is the kind of places in Morocco (there are many of them in every major city) people visit to buy everything from smart phones to furniture, to laptops, to counterfeit sportswear to pirated DVDs. It is often bustling with people from all walks of life.

In recent years some people started calling the place “Derb Ghalef Valley,” as it became the hub of a creative new breed of IT wizards, high-tech hackers, iPhone jail-breakers, skilled handypersons, many of whom are unemployed graduates.

Derb Ghallef is somehow the symbol of Moroccan informal economy, but it is also a byword for a flourishing counterfeiting industry. It’s a tolerated black market operating in the open–a haven for pirates and counterfeiters.

Everybody seems to enjoy it though. Why indeed buy a patented operating system in the regular market for example when you can have the exact same copy at a 500 time lower price in Derb Ghallef?

Morocco has been steadily opening its market to global competition recently. It has already signed a number of treaties regarding intellectual property (IP) and at some point down the road it will have to comply with regulations imposed by the World Intellectual Property Organization (WIPO), the United Nations’ body administrating international treaties on IP.

What would happen should the TRIPS (Agreement on Trade-Related Aspects of Intellectual Property) requirements, ratified by Morocco, be fully implemented (as they should have been 7 years ago)? Will places like Derb Ghalef simply vanish? What would happen to the people who make a living out of counterfeiting and piracy? Would the Moroccan consumer be better off without Derb Ghallef? Is there a way to strike a good balance between a restrictive intellectual property rights (IPRs) regime and a complete laissez faire policy?

In an article published in 2003 titled Intellectual Property in the Arab World, authors E. Gardeno and F.J. Pietrucha contend that what keeps Arabs from advancing is not the legacy of colonial rule nor the lack of natural resources but it is mainly the poor development of human capital. The future economic status of the region, they argue, will depend more on the ability of the Arab countries to utilize the intellectual resources they possess, rather than on their natural wealth or the level of advancement of their manufacturing industries. A “shifting of sources of economic prosperity” must then occur rapidly in favor of a knowledge-based economy, at the basis of which lies a wealth of intangible forms of property.

Derb Ghallef epitomizes a surplus of human capital in a region plagued by underdevelopment. Souks like Derb Ghallef are very common across the region and employ talented young people who can’t find jobs in the regular economy despite their undeniably useful scientific and technical skills.

The region suffers from an enormous “brain drain” because the political and economic environment is not yet conducive for creating incentives for a real knowledge-based economy.

It is no surprise then that many skilled Arabs want to emigrate. In fact “the employed, entrepreneurial and educated are the ones most likely to express a desire to migrate,” according to a 2010 cross-regional Gallup poll (31% of respondents working full time compared with 17% who are not in the workforce).

Arguably, one way to create that environment would be to put in place an intellectual property rights regime that would be beneficial for both the creators and consumers, building an incentive to creativity and invention.

What is intellectual property?

Intellectual property is a concept that can be traced back centuries ago. It covers three different sets of rights regarding patents, copyrights and trademarks. These are intangible properties as opposed to tangible assets (which comprise real estate and private property). Intellectual property rights are meant to foster creativity and protect creators, inventors and innovative businesses.

The term intellectual property has a fascinating history. The struggle between proponents and antagonists of IP laws in the late 18th century during the struggle for the reform of the patenting regime in Great Britain. Even today, it still raises criticism among activists and scholars.

According to the Electronic Frontier Foundation the controversy stems from the inaccuracy of the term, as it covers different sets of rights for different sets of assets, and also because it can be misleading as it it suggests that patents, copyrights and trademarks can be treated as real property.

Morocco at the WIPO

Morocco as a member of the WIPO is signatory of many international agreements and treaties meant to standardize and enforce the implementation of an internationally coherent IPRs system, most notably the TRIPS agreements.

The official page of the Moroccan Permanent Mission to the WIPO boasts that…

The Kingdom of Morocco is one of the first developing countries to fully meet all its obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and this, since the promulgation in December 2004, of the enforcement Decree of the Act 17-97 on Industrial Property.

A short visit to Derb Ghallef will convince anyone that actually the Kingdom of Morocco is nowhere near meeting any of its obligations under the WTO. There are many reasons for this lack of compliance that I will be touching upon later.

Free Trade Agreement with the US

Moreover, Morocco has ratified a Free Trade Agreement (FTA) with the US in 2004. It came into effect in 2006. The agreement provided assurances for U.S. businesses with regards to intellectual property. Under the agreement, Americans could lobby for Morocco to conform with existing international standards for the protection of intellectual property rights, consistent with U.S. law.

Moroccan daily L’Economiste published a series of detailed articles in 2006 raising many concerns on the impact of the agreement on the Moroccan economy.

One area where concerns seemed the more pressing was health. Moroccan pharmaceutical companies have expressed concerns over increased penalties for intellectual property and patent violations, saying the agreement could undermine access to cheap medicines for Moroccan citizens.

NGOs and human rights organisations warned that the agreement could seriously undermine measures taken by the Moroccan government to ensure access to affordable medicine, calling on the Moroccan government to undertake “independent human rights impact assessment of the effect of trade-related intellectual property rules on access to medicines and the enjoyment of the right to health.” It is not clear whether the Moroccan government has responded to such calls and whether an estimation of the risk has indeed been undertaken.

Another important area is the software market. While Americans recognize that the Moroccan authorities have made ​​commendable efforts to strengthen IPRs protection in the software industry, they lobbied for sweeping reforms covering Import duties, communication, distribution, the duration of the protection for the copyrighted work, in addition to technological protection measures in accordance with a controversial U.S. 1998 law called DMCA (Digital Millennium Copyright Act) that criminalizes any circumvention of the measures that control access to copyrighted work.

The Moroccan government, however, has been dragging its feet. There are many reasons for that:

  • The fear of the loss of monopoly over key sectors of the economy by certain powerful “oligarchs” who benefit from the status quo by tapping into the informal economy. They would rather keep things unchanged;
  • The genuine perception associated with strong IP protection regimes often perceived as a tool designed to create monopolies that are only beneficial to powerful industrial nations. Some argue it is a modern form of economic imperialism;
  • The strong belief that piracy is an immediate and affordable tool for acquiring advanced technology and creating jobs;
  • The fear that a strong IPRs system would increase prices well above what most of the Moroccan population can afford;
  • The asymmetrical nature of such regimes: An exporter from a developing country who wants to protect his product internationally is compelled to file patents, trademarks, copyrights in all parts of the world, which implies a large budget and therefore limits the protection to some confined geographical areas, leaving the creator vulnerable to theft anyway.
While some of these concerns are well founded, studies do not give a clear answers as to alternatives. Between a strict IP regime and a laissez faire system, opinions are divided.
According to a study commissioned by the Office of the US Trade Representative and conducted in 2003 by the Business Software Alliance (BSA) (not without an obvious conflict of interest), reducing software piracy would create billions of new wealth while adding hundreds of thousands of new high-tech jobs and generating billions in new tax revenues, benefiting mainly local economies. The study concludes urging governments to conduct “a concerted action to ensure strong protection for IP and to reduce software piracy…— sooner rather than later.”
Other studies point out the dangers for consumers of using unwarranted goods and products and explain that government condoning or ignoring piracy miss out on foreign investments opportunities.

While the FTA gives very powerful incentives for the Moroccan government to modernize itself and implement an effective IPRs system, many still question the benefits the Moroccan economy will eventually reap from such an asymmetrical accord.

A certain number of far-reaching questions are still a matter for concern:

– Is the State ready for the transition at the speed with which it is taking place?

– What about the thousands of young people working in the informal sector, who despite their skills lack formal qualifications to enter the labor market?

– What are the expected political, economic and social consequences of such a transition?

– Will access to medicine, education or knowledge be undermined?

– Is the judiciary ready to face the challenges ahead of the major changes to come?

– Has the legislation been adapted?

Striking the right Balance… 

According to economist Mark A. Lemley, it is “highly probable that intellectual property increases innovation and creation relative to a world without intellectual property rights, though it is hard to say by how much. Economic theory tells us that we must balance those rights if we are to achieve efficiency, granting intellectual property rights only to the extent necessary to enable creators to cover their average fixed costs. Anything more does harm and no good.”

The author also explains that an extensive literature review could not find a consensus on the scope, strength or duration of intellectual property protection, which probably depended more on the context of each market and the particular nature of each product, invention, innovation.

That is to say that scholars themselves are divided over the notion of an internationally calibrated intellectual property law.

WIWO as a middle ground?

On October 4, 2004, the General Assembly of the WIPO agreed to adopt a proposal offered by Argentina and Brazil. It is a step forward in recognizing that the whole approach to intellectual property as it has been framed under the auspices of the World Trade Organization was somehow wrong. The very concept of intellectual property ought to be revisited.

The proposal, also called “The Geneva Declaration“, calls on WIPO to focus more on the needs of developing countries:

Enormous differences in bargaining power lead to unfair outcomes between creative individuals and communities (both modern and traditional) and the commercial entities that sell culture and knowledge goods. WIPO must honor and support creative individuals and communities by investigating the nature of relevant unfair business practices, and promote best practice models and reforms that protect creative individuals and communities in these situations, consistent with norms of the relevant communities.

Delegations representing the WIPO member states and the WIPO Secretariat have been asked to choose a future. We want a change of direction, new priorities, and better outcomes forhumanity. We cannot wait for another generation. It is time to seize the moment and move forward.

Some have gone so far as to call for the abolition of the WIPO altogether, like the Free Software Foundation Europe, which suggested its replacement by a new entity it called the “World Intellectual Wealth Organization” (WIWO):

A World Intellectual Property Organisation will always, understandably, lean towards applying the pre-selected tool-set of monopolisation that it refers to as Intellectual Property; a term that we find to be ideologically charged and dangerously oblivious to the significant differences that exist between the many areas of law that it tries to subsume. While it may look at better, possibly more socially sustainable ways of granting ownership-like monopolies over different forms of knowledge, WIPO will not have an easy time looking for alternative solutions. WIPO is not what we need.

We need a World Intellectual Wealth Organisation, dedicated to the research and promotion of novel and imaginative ways to encourage the production and dissemination of knowledge. Granting limited monopolies and limited control over some kinds of knowledge may be part of this new organisation’s tool-set, but not the only one, and maybe not even the most important one.

Towards a new paradigm…

Resistance to old models is emerging, communities are organizing outside of the corporate realm to create new wealth of creative intangible assets. Creative Commons has been leading the battle by expanding the range of creative works available for others to build upon legally and to share. The Pirate Parties have been leading struggle on the political front, advocating reform of laws regarding copyright and patents, the right to privacy, and the transparency of state administration.

Derb Ghallef, which is as much a place for counterfeiting and piracy as it is a breeding ground for creation, is also an allegory of the Moroccan way of life. Inventions are not created in a vacuum. They build on existing technology and ideas. No one knows who invented the processes of making couscous, preparing mint tea, manufacturing djellabas or Belghas (Moroccan distinctive slippers). We came to believe that these were common unintelligible assets that anyone can make use of and benefit from. Invention and creativity should be rewarded of course but to the extent that that reward does not impinge on general public good.

We are on the verge of a defining crisis between commerce and creativity. A crisis that may reconfigure the market of ideas in the years to come. Adrian Johns, author of “Piracy: The Intellectual Property Wars from Gutenberg to Gates” (P. 498) has an interesting take on that crisis. He writes:

Measures adopted against piracy can sometimes impinge on other, equally valued, aspects of society. Indeed, it is possible that they must do so, given the nature of the task. When that happens, however, they can trigger deeply felt reactions. The result is a crisis, with the potential to create a moment of genuine transformation. We have seen that such moments have arisen before. But the change is liable to be all the greater when the scope of antipiracy action has been so enlarged. We may therefore be about to experience a profound shift in the relation between creativity and commerce. It will be the most radical revolution in intellectual property since the mid-eighteenth century. It may even represent the end of intellectual property itself.

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