Primitive forms of intellectual property (IP) date back thousands of years to pre-Islamic times when poets in the Arab world were paid for the commercial reproduction and distribution of their works. Free-riding, counterfeiting and piracy were frowned upon even in ancient times, when forgers and scoffl aws were shunned from artistic society. Although trade volume throughout history was only a small fraction of that in modern times, and intellectual property rights (IPRs) of past centuries similarly limited in scope, various nations and systems have long-recognized ownership of intangibles such as copyright, patent, and trademark.
Recently, predominantly Muslim nations around the world have promulgated domestic laws and joined international treaties in support of IPRs and protection thereof. The Qur'an obliges Muslims to honor such treaties in 9:4, Excepted are those with whom you made a treaty among the polytheists and then they have not been defi cient toward you in anything or supported anyone against you; so complete for them their treaty until their term [has ended]. Indeed, Allah loves the righteous [who fear Him].
This is Shari'a law from the highest source and cannot be derogated from or abrogated in any way. As such, State members of the Berne Convention, Paris Convention, Madrid Agreement and other WIPO-administered treaties, among parties to the WTO TRIPS Agreement undertake to carry-out their duties and responsibilities under the treaties.
These commitments entail development, implementation and continued support for national intellectual property systems. IP rights are registered with domestic authorities and unauthorized use of IP is subject to civil and/ or criminal legal actions. Governments are required to institute measures designed to prevent and reduce infringement, meaning criminal penalties must be written into domestic laws. This article offers a brief examination of the topic of IPRs in Muslim nations. Theological and theoretical justifi cation for IPRs in Muslim nations is discussed. Economic and legal rationale for non-enforcement of some laws is touched upon. The Qur'an is cited in support of IPRs and in defense of tolerance for infringement. Domestic statutes from Indonesia, Malaysia and Saudi Arabia are cited regarding criminal penalties for IP infringement.
WIPO Lex was used for online retrieval of legislation. General principles of Shari'a and Islamic accounting are not found incompatible with IPRs. Conclusions advocate a more innovative society through broader support for IPRs in Muslim nations. Expansion of academic and social conversations on issues relating to accounting valuation of intangible IP assets and benefi ts of innovation are suggested.
SHARI'A, FIQH AND IJTIHAD
Jurisprudence, or fi qh, is created not only by the words of the Prophet as contained in the Qur'an, but also through an evaluation of philosophical concepts of justice and fairness. Whereas Shari'a is indisputable, the humancentered fi qh may be contested. This is where IPRs experience some trouble. Modern fi qh was developed using a combination of sources of Shari'a: Qur'an, Sunna, Ijma and Qiyas.
Ijtihad, often defi ned as "effort" and sometimes as "independent reasoning", provides the analytical framework with which scholars and legal practitioners bridge the gap between the divine and practical civic laws. This process of justifying new rules (i.e. Darura) often consists of assessments of the greater public good or interest (Maslaha), and through seeking the best for the community (Istihsan).
Neither the Meccan nor Medinese verses of the Qur'an explicitly reference IP by classes as we know them today (i.e. copyright, patent, trademark) and as such, many objectors may claim that the entire theory of IP is inherently fl awed and not part of Allah's divine rule. However, both the Qur'an and Hadiths contain certain moral propositions that can be read to support IPRs. Commercial ethics of honesty and fair dealing also compelled faqihs and others to institute IP regimes as it is in the interest of the public to protect economic growth and development. IPR protection and enforcement under statute thus is a function of a Muhtasib, or protector of the market.
Opinions vary regarding the extent to which IP is protected as property in the traditional sense of the word (i.e. land, cattle, physical objects), and the extremity of moral turpitude in usurpation offenses. Upon inspection of the nature and purpose of grants of IPRs, it is not diffi cult to understand how they came to be acceptable under Shari'a considering that both hard work and individual property rights are fundamental to Muslim tradition.
Once IP is formally considered property, and its unauthorized use unlawful, then this offense is contemplated by the Qur'an at 2:188, And do not consume one another's wealth unjustly or send it [in bribery] to the rulers in order that [they might aid] you [to] consume a portion of the wealth of the people in sin, while you know [it is unlawful].
Passing-off goods is also an offense by way of the Qur'an chapter 83 on the defrauding.
Woe to those who give less [than due], Who, when they take a measure from people, take in full, But if they give by measure or by weight to them, they cause loss.
The Qur'an explicitly forbids theft at 5:38, [As for] the thief, the male and the female, amputate their hands in recompense for what they committed as a deterrent [punishment] from Allah. And Allah is exalted in might and wise.
However, this harsh punishment is clearly inappropriate for IP cases, such as those involving unauthorized publication of a copyright-protected work, as the conventional defi nition of "thief" does not include a person who violates an IPR. This conclusion runs contrary to what many IPR advocates would have the public believe - that IP infringement is identical to theft - and Ijtihad was the avenue by which fi qahs formulated their opinion on the matter. Accordingly, penalties for infringement of IPRs in nations following the Islamic system consist not of amputation, but rather of injunction, fi nes and imprisonment.
A NECESSARY INFRACTION?
Patent infringement is not generally considered a criminal offense, whereas trademark and copyright infringement are more frequent and are considered criminal. One should note that the length of imprisonment available under statute, alongside the oft-international nature of piracy and counterfeiting, qualifi es many IP crimes as "serious crimes" under the United Nations Convention against Transnational Organized Crime, and thus these offenses may attract more attention internationally where treaty applies.
In addition to criminal penalties, nations also provide civil remedies for injured parties including injunction and monetary damages.
Worldwide - in all regions - intellectual property has faced opposition from many directions. While legislative branches of secular governments have been more uniform and consistent in promulgation of IP-related laws, executive and judicial branches have been less precise in their enforcement and adjudication of IPRs. Differences between written laws and practical applications thereof exist primarily due to confl icts of interest between IPR owners and the needs of society.
As the Qur'an teaches us in 2:173 that necessity permits the forbidden, so too does the Law of Necessity require some ignorance of infractions of civil laws.
"He has only forbidden to you dead animals, blood, the fl esh of swine, and that which has been dedicated to other than Allah. But whoever is forced [by necessity], neither desiring [it] nor transgressing [its limit], there is no sin upon him. Indeed, Allah is Forgiving and Merciful."
Piracy and counterfeiting signifi cantly threaten copyrights and trademarks, but proliferate both online and in physical markets. According to the US Trade Representative's Special 301 annual report, counterfeit products are staples in "notorious markets," primarily across East Asia and South America. The International Chamber of Commerce estimates that counterfeit products may account for up to 5% of world trade. Some of these products threaten consumer health and safety, such as those in pharmaceuticals, hygiene products and automotive parts.
Luxury goods and designer fashion manufacturers claim that counterfeiting threatens revenues and brand image.
Publishing, motion picture and recording industry groups claim that unauthorized reproduction and distribution of copyright-protected works via the internet and optical discs likewise threatens profi tability and market development.
In patents, compulsory licensing of pharmaceuticals has led to similar political confrontations. Notwithstanding treaties and domestic laws designed to support and protect IPRs in their many forms, police agencies and courts have been reluctant to implement measures to eradicate these criminal trades. Rhetoric in favor of lenience and tolerance worldwide relies upon the same greater good that the Maslaha teaches. Many internet download sites and physical market counterfeit shops are allowed to operate as profi table businesses without police interference, with exceptions of goods that threaten public health and safety, which again reinforces the concept of the public good. A multitude of professionals support selective and restricted enforcement of criminal IP infringement due to the direct net positive economic impact of these trades in areas where poverty is rampant. Although not a strictly legalistic approach, necessity makes the illegal possible to overlook for many authorities when income from infringing products may satisfy basic needs (food, water, shelter, hygiene, transportation, education, etc.). Surely, it is through Ijtihad that police and judges determine the appropriate level of enforcement and adjudication of IPrelated offenses.
IPRS IN INDONESIA
Law No. 19 of 2002 on Copyright outlines criminal penalties in Chapter XIII. Fines range from one million to fi ve billion Rupiahs. Persons who unlawfully reproduce, distribute, broadcast and otherwise make economic gains on protected works may face imprisonment of up to seven years.
Materials and properties related to the crimes may also be seized and destroyed.
Law No. 15 of 2001 on Marks, Chapter XIV contains criminal provisions pertaining to fraudulent passing-off or counterfeiting of marks. Criminals may face fi nes of up to one billion Rupiahs and imprisonment of up to fi ve years.
MALAYSIA
Malaysia is one of a growing number of countries whose Constitution features provisions on IP. Patents, trademarks and copyright are explicitly mentioned in the Ninth Schedule on trade, commerce and industry.
Pursuant to the Copyright Act Article 41, criminals may face penalties of up to ten years imprisonment and variable fi nes based upon the amount.
ISLAMIC EVOLUTION
of infringing material possessed. The Optical Discs Act supplements criminal penalties for unauthorized reproduction of discs. Offenders may face up to three years imprisonment and fi nes for crimes involving discs. Offenses may be compounded.
The Trademark Act authorizes police to take ex offi cio action, to make seizures and conduct independent investigations.
Offenders may face imprisonment of up to three years and fi nes, penalties which may be doubled for repeat offenses, under Article 18 of the Trade Descriptions Act.
SAUDI ARABIA
Where a criminal violation is found, the Copyright Law Royal Decree No. M/41 2 Rajab, 1424, Article 22 provides penalties of up to six months and fi nes of up to two hundred fi fty thousand Riyals in addition to confi scation of materials and closure of establishments. These penalties may be doubled in cases of repeat offenders.
Part Nine of the Law of Trademarks Royal Decree No. M/21 28 Jumada I 1423/7 provides punishments of up to one year imprisonment and fi nes of between fi fty thousand and one million Riyals for registering, using or offering for sale forged or imitation trademarks.
Imprisonment of up to three months and fi nes of between twenty and two hundred fi fty thousand Riyals are applicable in cases of use of unregistered counterfeits or passing off of labels. Double penalties are available for repeat offenders.
Toward a More Innovative Society Arguments favoring reliance upon a classical Islamic system of finance are abundant, and have roots in Shari'a.
The Hadith forbidding the sale of fruit before it is ripe is well known. Gharar, the speculative risk associated with accounting for any intangible asset is unacceptable in the minds of many Muslims. It can be argued through Hadith that what is decided as good among the Muslims will be good in the eyes of God, and that the community will never agree in error. However, a closer inspection of this debate yields insight into the nature of civilizations - there is always disagreement among people. Thus, on modern issues like IP, there is opportunity for new revelation and development of principles. At a base level, risk is inherent to any of life's undertakings, commercial activities being no exception. A tangible property may be destroyed by fi re or other natural disaster. Liquid assets may be stolen. Immoveable properties may be submerged by fl ood or rising sea level at some yet undetermined point in time.
A home, offi ce, factory or oil refi nery could be reduced to worthless rubble in a moment following political uprising. Entire cities may be demolished in a brief military campaign. A simple car accident may claim both human life and assets. Plague, famine and even extinction, although improbable, are entirely possible. There is also uncertainty in any assessment of loan qualifi cations because the backing collateral asset may be at any time destroyed, stolen or otherwise rendered inoperable.
Risk is unavoidable and some risk is necessary to continue living and to be productive. Hence, reasonable risks have been accepted in Muslim commerce so long as deals are transparent and parties are aware of the details of agreements.
Modern business methods help to quantify the relative risk of certain transactions, and the relative certainty of production, supply, sales and consumption. The increased accuracy and reliability resulting from application of modern methodologies creates greater opportunities by mitigating risks.
Regardless of arguments against, IP is a real right. Through application of broader principles relating to balancing divine and earthly realities, scholars came to the conclusion that IP shall be protected as property, and thus that it may have some known value. And the civil law shall be obeyed by the religious community.
International standards in accounting and financial reporting contain rules on depreciation and amortization of intangible assets. Nations like Indonesia, Malaysia and Saudi Arabia have taken such global practices into consideration and recognize IP in the intangible assets category, subject to taxation. As entrepreneurship expands in the Islamic business sectors, and Western multinational corporations face increasing competition from local and Islamic businesses, arguments about the value of intangibles will likely require attention. Valuation of these intangible assets may be an undertaking more appropriate at the local and national rather than international level, where auditors and other authorities may take into consideration unique, secular protection and enforcement standards among other factors. Whatever is to come of IP-valuation methodologies, recognition of there being legitimate value in these intangibles is within the scope of the modern fi qh and civil laws, and thus Islamic accountancy.
Whether or not higher-order reasoning allows one to question the underlying validity of a piece of legislation, the law itself is valid until a time that it is repealed.
Therefore, whether or not a particular portion of a society agrees with IP law is irrelevant to its effect. Intellectual property is real property and its ownership is as legitimate as the ownership of other forms of property. The next steps in development are likely dependent upon the community embracing its own good by promoting more respect for IPRs, and upon financial institutions devising new adaptations to old methods that allow for increased investment in research and development projects. In other words, Ijtihad - "effort" or "independent thought" - will be necessary to improve quality of life again.
Greater utilization of and support for IP does not mean reliance upon the fruit that is not yet ripe, especially since IP is not literally fruit, nor was modern technology likely contemplated in millennia past.
A key part of this shift lies in accepting that potential is a real force and has real value that can be converted into kinetic fl ow. The amount of potential that can be converted varies from case to case, but it can be quantifi ed within some margin of error. Just as state oil companies do not known precisely the amount of petroleum in their reserves, nor exactly how much can be extracted before enhanced recovery methods need to be utilized, nor the energy input to output ratio throughout the lifespan of a well, thus leaving the actual value of the well largely unknown, the nominal value of an invention, or piece of literature, a sound recording, fi lm, or logo is not known to decimal point. But experts can determine a reasonable range and take a reasonable risk to keep business going forward.
Considering that IP and economic prosperity are undoubtedly related, and also that nations have an interest in securing the wealth and stability of their citizens, there is a valid argument under the doctrines of greater good (Maslaha) and seeking the best for the community (Istihsab) that favors a system which provides incentives for innovation. Both direct and indirect benefi ts can make investments in research and development attractive for businesses. In order to move forward and create a new drive toward innovation economies, nations and their leaders will likely need to justify new rules and regulations (Darura), employ independent thinking and show both personal and collective effort (Ijtihad).
If the people of the Muslim world fi nd a way to develop a more innovation-friendly economic policy, then surely the disparity that leads to protest and revolution can be reduced. Financial benefits come to those who create their own, and to those who learn to live more self-suffi ciently as nations. But for the true-believers, the real reward of development is the sense of accomplishment, the confi dence that comes from being competent and competitive in this world. God truly bestows grace upon those who make their own. As the Prophet was reported to have said,
"Nobody has ever eaten a better meal than that which one has earned by working with one's own hands."
About The Author
Adam Tanielian is 33 years old and works as a secondary school mathematics teacher near Bangkok, Thailand. He was born in Michigan, USA. Adam earned his bachelor's degree from Michigan Technological University, where he studied electrical engineering, business, psychology, and Japanese while also playing varsity football as a scholarship athlete. Since 2005, Adam has worked as an English math and science teacher for 6 years in Thailand, including 10 months of volunteer teaching, and 1 year in China. He was awarded a Master's Degree in Business Administration from the Institute of International Studies at Ramkhamhaeng University in 2010 and expects to complete his Doctorate in Law in 2012. adam.tanielian@iis.ru.ac.th
© Business Islamica 2013
