Israel National Technological Innovation Report 2018

Israel National technological innovation report | 79 The ability to realize the commercial potential of intellectual property and to enforce copyright protection is one of the central characteristics determining the quality of the intellectual property regime in different countries. The existence of an effective intellectual property regime is vital to the functioning of diverse economic and cultural branches including software, music, film, book publishing, design and related industries. These industries constitute the clearest expression of intellectual property, for all the products are the result of intellectual activity. Because of the unbearable ease with which it is possible to copy and/or distribute software, films and music illegally, these industries are most vulnerable to pirating, and from this derives the clear need for their protection. In addition, an intellectual property regime is measured by its enforcement of the law against counterfeit merchandise and trademarks. The Legal Framework – The 2007 Copyright Law About a decade ago, the 2007 Copyright Law went into effect, replacing the Mandatory Order from 1911. The law was intended to create, “the required balance between the need to create fair incentives for creation, by granting economic rights on works, and the need to enable the public to use works to advance culture and knowledge, all this while preserving freedom of expression and freedom of creativity, and ensuring free and fair competition.” In the ten years that have passed since the new law went into effect, the courts have been required to achieve the same balance between the need to compensate and provide incentives for creators, and the need to enable the public access to works for the purpose of advancing culture and knowledge and providing the possibility for fair competition. In this chapter, we will survey the weaknesses that have been discovered in the law in light of far-reaching changes in the way consumers today consume copyright-protected content, in comparison to the early 2000s during which the law was discussed in Knesset committees and passed into law. In addition, we will assess the way the law has been interpreted by the courts in Israel in a series of industries and suggest how in our opinion the law should be corrected in order to maintain the balance upon which it is based. Protecting Computer Software and Applications Computer software is a copyright protected work. Copyright provides protection for expression of an original creative idea, that was developed by the copyright holder, usually after great investment of resources and time including planning, specifications and writing the software code. Modern software requires the capability of communication with many other hardware and software applications. Therefore, the work of development becomes more and more complex over the years. Protection through monopoly on the product of the development process is therefore an important incentive for continued investment by software development companies. Up until a number of years ago, Israel was termed in an uncomplimentary way, “a one-program country,” due to the proliferation of illegal software copies. Today, this phenomenon is in decline; according to one estimate, the rate of pirated software in Israel according to 2015 data stands at 29%, a rate similar to the distribution of pirated software in Western Europe that is estimated at approximately 28%. This rate indicates the continuation of the steady decline in use of pirated software in Israel, a trend that has continued since 2006. To understand the economic significance of effectively addressing pirated software, we note that according to the BSA organization, the organization responsible for the issue of copyright for software manufacturers, decreasing the distribution of pirated software from 30% in 2013 to 29% in 2015 resulted in excess economic activity in the software industry in Israel worth 16 million dollars. As will be detailed below, software companies’ transition to cloud-based service platforms, alongside providing effective legal tools to combat the problem of pirating, is behind the steady decline in the rate of use of illegal software in Israel. In the past copyright protection for software focused on the right to “duplicate” that was traditionally considered Because of the unbearable ease with which it is possible to copy and/or distribute software, films and music illegally, these industries are most vulnerable to pirating, and from this derives the clear need for their protection