U.S. Said to Be Losing Battle Against Global Piracy

“The overall picture of global counterfeiting and piracy is generally unchanged from a decade ago,” Trainor said. He also urged amending relevant trademark, copyright and customs laws to authorize enforcement actions against infringing goods that are being exported and moving in-transit; increasing IP-dedicated Customs and Border Protection and Immigration and Customs Enforcement to IP enforcement; and providing Department of Homeland Security and CBP attorneys the authority to collect administrative fines and seek court seizure of infringing goods, including in cases where the Department of Justice declines to prosecute.

Committee Chairman Howard Berman, D-Calif., cited statistics from the Intellectual Property Alliance that copyright infringement in 43 countries resulted in an estimated loss of $18.3 billion. The MPAA reported the film industry lost 6.1 billion in 2005. The music industry estimated there were more than 40 billion illegal downloads in 2008. Only one in 20 downloads are legal. “IP piracy has become an issue over a large cross section of the U.S. economy, in places far from Hollywood and Broadway,” Berman said. “The U.S. Chamber of Commerce estimates 750,000 American jobs were lost due to the trade of counterfeited goods. IP protection is an economic stimulus. It is imperative we ensure American innovations are protected internationally” and that content creators be compensated so they can continue creating content.

China and Russia were taken to task for their tacit acceptance of piracy and counterfeiting. While commending Russia for increasing raids against counterfeiters, Berman said criminal enforcement, especially in the online space, has been insufficient: “While Russia did shut down allofmp3.com, which sold music without rights holders’ authorizations, several others took its place almost immediately, becoming a game of whack-a-mole.” He also noted Russia has failed to certify a legitimate collecting rights organization. “Russia needs to live up to the intellectual property rights agreement it made with the United States in November 2006, if it would like to be considered ready to join the World Trade Organization,” added Berman.

China remains the world’s leading infringer, with piracy increasing as more Chinese go online. It is estimated that 85-95 percent of U.S. copyrighted works sold in China in 2007 were pirated. However, Berman noted that NBC reported that only one percent of online viewing in the U.S. occurred on copyright infringing sites. The lack of significant piracy surrounding the 2008 Beijing Olympics proves that China can enforce piracy when it chooses to, he said. But piracy is increasing and becoming more sophisticated in other spots across the globe, such as in Thailand, where there are movie channels airing pirated films.

Film Director Steven Soderberg called on the government to give the film industry legal authority to pursue pirates. “This is what we know -- litigation is slow and the Internet is fast,” he said. “I don’t think it makes sense for the film industry to ask the government to be the police. What we'd like is to be deputized to solve our own problems, with perhaps a graduated mechanism along the lines of the French model. The infringer gets a first warning online, then the next time gets a letter and after the third time is banned from the ISP for a year. Any solution that involves suing people or taking them to court won’t work. And on a public relations level, it’s disastrous.” Rep. Adam Schiff, D- Calif., however, said while the idea of deputizing the industry is intriguing, he was concerned over potential free speech and litigation issues that surround a system that blocks Internet access. “What kind of due process would be necessary?” Soderberg equated it to the security guard at Target. “How many times does the Target security guard have to catch a shoplifter before the Target has the right to ban them from the store?”

Soderberg also said the entertainment industry has proven to be self-reliant, citing as an example the development of the MPAA and the movie ratings system. Soderberg said: “It works and it doesn’t cost the taxpayers a penny. This problem won’t get solved until a fresh approach is taken and government and rights holders interact in a more effective way.” Soderberg pointed out that the entertainment business as a whole generates over $30 billion in wages per year for more than one million workers. The entertainment industry also maintains an annual trade surplus of $9 billion. Especially now, the government should view piracy prevention as a top priority. “If the automobile industry told you 25 percent of its cars had gone missing between the assembly line and the car lot, you'd have the Justice Department doing wind-sprints trying to fix it.”

Rep. Dana Rohrabacher, R-Calif., agreed infringement is an urgent issue. “America’s creative genius has always been our greatest asset,” he said. “For the last ten years we've failed to adequately address piracy. We can no longer turn a blind eye to this situation. American law should be on the side of our creative citizens, who are valuable national assets that we should defend against foreign and domestic looters.”

While China and Russia are known infringers, Rohrabacher said, even friends of America have contributed to the problem. “One of the worst violators of letting their country become a trans-shipment depot [of counterfeit goods coming into the U.S.] is Canada, one of our best friends. We need to hold them responsible because of the dramatic economic impact on our economy and workers.”

Universal Music Group President Zach Horowitz said Canada has the highest level of online piracy in the world. “But amazingly, Canada still has not modernized its copyright law for the digital age,” he said, calling Canada a haven for unauthorized music Web sites. Horowitz said some countries are exploring ways ISPs can be enlisted to prevent copyright theft occurring on their networks and some countries have brokered agreements between ISPs and content providers, and he suggested the U.S. could learn from such policies. Walt Disney Studios Chairman Richard Cook noted that under the DMCA, ISPs have safe harbor, but he reported ongoing talks between studios and ISPs over possible solutions.