International Piracy: The Challenges Of Protecting Intellectual Property In The 21st Century
Mi2N
Executive Summary Testimony of Eric H. Smith International Intellectual Property Alliance (IIPA) before the Subcommittee on Courts, the Internet, and Intellectual Property United States House of Representatives

The IIPA is a coalition of seven trade association representing over 1,900 U.S. companies that rely on strong global copyright protection and enforcement. IIPA has been representing the U.S. copyright industries before the U.S. and foreign governments since 1984.

* Piracy continues to rage on a global basis, damaging the U.S. economy, reducing GDP, lowering growth and hurting U.S. jobs. The copyright industries are one of the fastest growing and most important sectors of the U.S. economy, contributing in 2005 over $819 billion to GDP (6.5% of GDP), 5.38 million U.S. jobs (over 4% of U.S. employment), and $110 billion in foreign sales and exports, larger than any other major sector of the economy. The copyright industries contributed over 13% of all economic growth in the U.S. in 2005.

* The cost of piracy to the U.S. economy, from a recently-released study, amounted to at least $58 billion in 2006, cost 373,375 jobs and 16.3 billion in earnings, and resulted in lost government tax revenue of $2.6 billion. Reducing piracy globally is an economic and policy necessity.

* Congress has provided many trade and other tools to help in this fight but our government cannot succeed alone in protecting U.S. creators, their industries and U.S. jobs. While there have been success stories over the last 20 years, we are not doing as good a job as we should be in reducing piracy losses globally. We must do better to meet the challenges facing these industries.

* These challenges and initiatives to meet them include (1) securing effective and deterrent enforcement in every trading partner; (2) creating the legal tools, enforcement mechanisms and political will to fight rapidly growing, global Internet piracy; (3) effectively regulating optical disc production in target countries to reduce vast excess production capacity fueling global trade in pirate products; (4) adopting new and effective techniques to fight the organized criminal syndicates that control so much of the piracy in many countries; (5) improving enforcement against government and enterprise use of unauthorized business software and of "end-user" piracy of other copyrighted products, particularly on the Internet; (6) escalating the fight against piracy of books and journals; (7) bringing countries into full compliance with their TRIPS obligations and with the improved standards of protection and enforcement in the Free Trade Agreements; and (8) securing full market access for legitimate copyrighted products -- a necessary condition to fighting effectively against illegal, pirate product.

* Countries which pose particularly significant challenges to the U.S. government and our industries are China and Russia, the subject of two prior hearings in 2005 before this Subcommittee.

* Problems in China are immense ($2.4 billion in losses in 2006) and, while some progress has been made in improving the situation there for business software, U.S. cultural products continue to face 80%-90% piracy rates and onerous market access barriers. China's flawed administrative enforcement system, with low deterrent fines, is not working and China must turn to relying on its criminal law if it is to significantly lower piracy rates as promised. This still has not happened.

* Russia is still a piracy hotspot (almost $2 billion in losses), and despite the negotiation last year of a binding Bilateral IPR Agreement setting out what Russia needs to do to lower piracy rates, most commitments remain unfulfilled. These commitments must be met before Russia joins the WTO and, unless met, its GSP benefits should be revoked, pursuant to an IIPA petition filed seven years ago.

* Canada, among developed countries, is a major problem with an antiquated copyright law unsuited to the Internet world and an ineffective enforcement system. India's economy is rapidly growing along with its piracy problem.

* There are, however, success stories, where effective enforcement has significantly reduced piracy rates overall, or piracy in key sectors. Countries include Singapore, Taiwan, and in some areas, Brazil and Pakistan
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