Adequate protection of intellectual property requires the recognition or protection of a specific property right and an effective enforcement mechanism for that property right.(1) Traditional examples of countries denying adequate protection to intellectual property include Pacific Rim countries, such as Korea and Taiwan, where counterfeit goods are commonplace.(2) In many countries throughout the world, however, firms lack adequate protection of their intellectual property. In the case of computer software, estimates are that pirated computer programs account for up to fifty percent of all those in use in certain countries of the European Economic Community (EC).(3) In 1989, computer software piracy cost producers over $4.5 billion in seven EC countries.(4)
Adequate protection of computer software is important to all producers, particularly those in the United States. Computer software firms in the United States generate approximately one third of their annual income, or nine billion dollars, from sales overseas.(5) These U.S. firms supply seventy percent of the computer software worldwide and fifty-five to sixty-five percent of the software in EC countries.(6) Software firms in the United States lose approximately 800 million dollars annually as a result of inadequate intellectual property protection overseas.(7) Surprisingly, much of this is not lost in Pacific rim countries, but countries,(8) which do not adequately protect computer software.(9)
On May 14, 1991, in response to the problem of computer software protection in the European Community, the EC Parliament approved a directive (EC Directive) requiring individual EC countries to grant copyright protection to computer software.(10) The twelve EC member-states have until January 1, 1993 to implement the directive through national legislation.(11) This Note will analyze the protection for computer software proposed in the EC Directive and examine the effect that the proposal will have on U.S. computer software firms. First, the Note will examine what computer software is and why it is easily pirated or copied. Next, the Note will analyze the protection granted to computer software under the EC Directive for copyright protection. The Note will then discuss the effect of the EC Directive will benefit computer software industry. The Note concludes that the new EC Directive will benefit computer software firms, because it will provide uniform protection for computer software throughout the EC and that it will benefit consumers because the directive will permit reverse-engineering.
Protection of Computer Software
What is Computer Software?
A typical, modern computer consists of a central processing unit (CPU), which stores information in internal memory, and a device, such as a disk, which stores information externally and transfers it to and from the internal memory.(12) A computer reduces symbols such as numbers, words, or even designs into a series of coded digits that can be manipulated efficiently and accurately at very high speeds.(13) The instructions a computer receives to perform symbolic tasks and to manipulate symbols in a specified order are collectively known as a computer program. In legal terms, a computer program consists of "a set of instructions capable, when incorporated in a machine-readable medium, of causing a machine having information-processing capabilities to indicate, perform or achieve a particular function [or task]."(14) Programs, or "software,"(15) differ from the electronic components, or "hardware", which run programs.
Computer programs exist primarily in two forms: operating systems and application programs.(16) Operating systems, which are generally unseen by the computer user, manage the computer's internal functions and allow different components in the CPU to communicate with each other. Operating systems also translate the data entered into the computer to machine-readable binary code, a stream of on-off signals represented by ones and zeroes. …