Eric H. Smith Eric H. Smith International Intellectual Property AllianceInternational Intellectual Property Alliance

Greenberg Traurig LLPGreenberg Traurig LLP

World BankWorld BankJune 5, 2008June 5, 2008

Copyright Protection, Global Piracy Copyright Protection, Global Piracy and Economic Developmentand Economic Development

IIPA represents the IIPA represents the COPYRIGHTCOPYRIGHT--BASED INDUSTRIESBASED INDUSTRIESAssociation of American Publishers (AAP)Association of American Publishers (AAP)Business Software Alliance (BSA)Business Software Alliance (BSA)Entertainment Software Association (ESA)Entertainment Software Association (ESA)Independent Film & Television Alliance (IFTA)Independent Film & Television Alliance (IFTA)Motion Picture Association of America (MPAA)Motion Picture Association of America (MPAA)National Music PublishersNational Music Publishers’’ Association (NMPA)Association (NMPA)Recording Industry Association of America (RIAA)Recording Industry Association of America (RIAA)

TodayToday’’s Discussions DiscussionCopyright Protection and Economic Copyright Protection and Economic DevelopmentDevelopment●● Survey of studies on the role of copyright Survey of studies on the role of copyright

and copyright industries in local economies: and copyright industries in local economies: US and WIPO country studiesUS and WIPO country studies

●● BSA study and anecdotal evidence of the BSA study and anecdotal evidence of the positive role of copyright protection in positive role of copyright protection in economic and cultural developmenteconomic and cultural development

Copyright piracy, from hard goods to the Copyright piracy, from hard goods to the internetinternet

TodayToday’’s Discussions DiscussionInternational Efforts by Copyright Industries International Efforts by Copyright Industries and the U.S. Governmentand the U.S. Government●● Special 301 and Special 301 and FTAsFTAs●● TRIPSTRIPS●● WIPO TreatiesWIPO Treaties’’ ratification and ratification and

implementationimplementation●● Enforcement cooperation and trainingEnforcement cooperation and training

Economic and Social Benefits of Strong Economic and Social Benefits of Strong Copyright Protection and Effective Copyright Protection and Effective

EnforcementEnforcementRewards creatorsRewards creatorsDevelops local economy and national cultureDevelops local economy and national culturePromotes cultural diversityPromotes cultural diversityCreates local jobs and incomeCreates local jobs and incomePromotes foreign investmentPromotes foreign investmentGenerates tax revenuesGenerates tax revenuesEstablishes structure of commercial practicesEstablishes structure of commercial practicesSupports integration with the world trading Supports integration with the world trading systemsystemEncourages transfer of technologyEncourages transfer of technology

Copyright Industries in the U.S. Copyright Industries in the U.S. Economy: The 2006 ReportEconomy: The 2006 Report11

The U.S. The U.S. ““corecore”” copyright industries accounted copyright industries accounted for an estimated for an estimated $819.06 billion or 6.56%$819.06 billion or 6.56% of of the U.S. gross domestic product (GDP) in 2005the U.S. gross domestic product (GDP) in 2005The U.S. The U.S. ““totaltotal”” copyright industries accounted copyright industries accounted for an estimated for an estimated $1.38 trillion or 11.12 % of $1.38 trillion or 11.12 % of GDPGDP in 2005in 2005The The ““corecore”” copyright industries employed copyright industries employed 5.385.38million workersmillion workers in 2005 (in 2005 (4.03%4.03% of U.S. of U.S. workers). workers). ““TotalTotal”” industries industries 8.49%8.49%Estimated average annual wages for a worker in Estimated average annual wages for a worker in the core copyright industries in the U.S.: the core copyright industries in the U.S.: $69,839$69,839in 2005in 2005

1 By Stephen Siwek for IIPA

Copyright Industries in the U.S. Copyright Industries in the U.S. Economy: The 2006 ReportEconomy: The 2006 Report

Contribution to growth by the core Contribution to growth by the core industries industries -- 12.96%12.96% -- was was almost doublealmost doublethe amount of real growth of the U.S. the amount of real growth of the U.S. economyeconomyContribution to growth by the Contribution to growth by the ““totaltotal””copyright industries was copyright industries was 23.78%23.78% in 2005.in 2005.In 2005, estimated foreign sales and In 2005, estimated foreign sales and exports of the core copyright industries exports of the core copyright industries increased to at least increased to at least $110.8$110.8 billionbillion

Engines of Growth:Engines of Growth:Economic Contributions of the U.S. Intellectual Economic Contributions of the U.S. Intellectual

Property IndustriesProperty Industries11

The copyright industries and the patentThe copyright industries and the patent--based industries based industries contribute nearly contribute nearly 40%40% of the growthof the growth achieved by all U.S. achieved by all U.S. private industry and nearly private industry and nearly 60%60% of the growthof the growth of U.S. of U.S. exportable highexportable high--valuevalue--add products and services;add products and services;1010--year growth estimates would be approximately 30% year growth estimates would be approximately 30% lower than current predictions without the contributions of lower than current predictions without the contributions of these industries;these industries;These industries are responsible for These industries are responsible for 20%20% of the total U.S. of the total U.S. private industryprivate industry’’s contribution to GDP and s contribution to GDP and 40%40% of the of the contribution of U.S. exportable highcontribution of U.S. exportable high--valuevalue--add products add products and services to GDP;and services to GDP;They are among the largest and highestThey are among the largest and highest--paying paying employers in the country, representing employers in the country, representing 18 million workers18 million workerswho earn on average who earn on average 40% more than all U.S. workers.40% more than all U.S. workers.

1By Stephen Siwek for NBC Universal

WIPO Economic StudiesWIPO Economic StudiesWIPO published a guidebook in 2003 on the WIPO published a guidebook in 2003 on the economic parameters to develop studies economic parameters to develop studies examining the impact of the copyrightexamining the impact of the copyright--based based industries on local economiesindustries on local economies

The WIPO template is based on the U.S. The WIPO template is based on the U.S. modelmodel

The WIPOThe WIPO--funded studies demonstrate the funded studies demonstrate the significant role that the significant role that the ““creativecreative”” industries industries play in local economiesplay in local economies

Source: WIPO

Contribution of Copyright Industries to GDP

11.12

5.7

4.54

6.67

4.92

3.42

4.77

6.06

4.75 4.425.1

0

2

4

6

8

10

12

USASingap

oreCan

ada

Latvia

HungaryPhilip

pinesBulgari

aMex

ico

Russia

Leban

onCro

atia

Jamaic

a

Source: WIPO

Contribution to National Employment

8.49

5.8 5.554.5

7.1

11.1

4.31

11.01

7.3

4.49 4.65

3.03

0

2

4

6

8

10

12

USASingap

oreCan

ada

Latvia

HungaryPhilip

pinesBulgari

aMex

ico

Russia

Leban

onCro

atia

Jamaic

a

WIPO Country Studies in WIPO Country Studies in ProgressProgress

As of end of 2007:As of end of 2007:●● FinlandFinland●● MoroccoMorocco●● MalaysiaMalaysia●● KenyaKenya●● South AfricaSouth Africa●● Peru Peru ●● ArgentinaArgentina●● NigeriaNigeria●● UkraineUkraine●● KoreaKorea●● ChinaChina

BSA/IDC Software Study BSA/IDC Software Study The January 2008 IDC study for BSA, The January 2008 IDC study for BSA, The Economic Benefits The Economic Benefits of Reducing PC Software Piracyof Reducing PC Software Piracy shows that economies can shows that economies can grow significantly with just a 10% reduction in the piracy rategrow significantly with just a 10% reduction in the piracy rate..

2006 Piracy

Rate %

Contribution to GDP

($Millions) New Jobs

Additional Tax Revenue

($ Millions)Russia 80% $8,503 12,484 $355Italy 51% $4,056 6,169 $1,123UnitedStates 21% $41,185 32,031 $6,701Brazil 60% $2,882 11,502 $389China 82% $20,532 355,179 $1,575Vietnam 88% $623 1,867 $31

Success StoriesSuccess StoriesKorea: Korea: ●● 19801980’’s saw s saw 90%90%--100%100% piracy rates with no protection piracy rates with no protection

for foreign worksfor foreign works●● 2000: piracy down to 2000: piracy down to 15%15% or less for audio and videoor less for audio and video●● Today: strong film, publishing, music and videogame Today: strong film, publishing, music and videogame

industriesindustriesTaiwan:Taiwan:●● 19801980’’s saw piracy rates at s saw piracy rates at 90%90%--100%100%●● 1997: piracy down to 1997: piracy down to 15%15% or less for audio and videoor less for audio and video●● 20002000--2004: massive growth of industrial optical disc 2004: massive growth of industrial optical disc

piracy, rates back up to piracy, rates back up to 50 %50 %●● Today: software piracy down to Today: software piracy down to 40%40%; music to ; music to 21%21%

Egypt:Egypt:●● Software piracy rate reduced Software piracy rate reduced 30%30% from 1996from 1996--20022002●● Software industry grew Software industry grew 160%160% -- fastest in the Middle fastest in the Middle

East, with IT sector doubling in sizeEast, with IT sector doubling in sizeHungary: Hungary: ●● Software piracy rate reduced Software piracy rate reduced 21%21% from 1996from 1996--20022002●● Software sector largest percentage of IT sector in the Software sector largest percentage of IT sector in the

Eastern European regionEastern European region●● IT revenues grew IT revenues grew 27%27% creating 9,000 new jobscreating 9,000 new jobs

Indonesia:Indonesia:●● From a base of near zero in the early to midFrom a base of near zero in the early to mid--1980s, 1980s,

local music and musical recordings now hold, local music and musical recordings now hold, according to 2000 data: according to 2000 data: ⎯⎯ 53%53% of the market in Indonesiaof the market in Indonesia⎯⎯ 22%22% in Singaporein Singapore⎯⎯ 66%66% in Taiwanin Taiwan⎯⎯ 63%63% in Korea andin Korea and⎯⎯ 77%77% in Thailandin Thailand⎯⎯ 96%96% in India.in India.

Source: Source: 2001: The Recording Industry in Numbers2001: The Recording Industry in Numbers, IFPI , IFPI (2001).(2001).

IndiaIndia11

●● Indian software and service industry grossed U.S. Indian software and service industry grossed U.S. $8.26$8.26 billion in 2000billion in 2000--01 representing growth of 01 representing growth of 55%55%over the prior year. Butover the prior year. But……exports alone (exports alone ($8.6$8.6 billion) billion) exceeded this sum in 2003. exceeded this sum in 2003.

CyprusCyprus●● In Cyprus, in 1990, prior to its implementation of a In Cyprus, in 1990, prior to its implementation of a

stronger copyright law and the commencement of a stronger copyright law and the commencement of a government antigovernment anti--piracy campaign, only two theaters piracy campaign, only two theaters had survived the onslaught of skyhad survived the onslaught of sky--high levels of video high levels of video piracy. In 2004 there were 34 theaters, with the piracy. In 2004 there were 34 theaters, with the development of more multiplexes in the works.development of more multiplexes in the works.11Source: Source: Software Industry ThrivesSoftware Industry Thrives, available at , available at http://www.businessweek.com/adsections/indian/infotech/2001/thrihttp://www.businessweek.com/adsections/indian/infotech/2001/thrives.htmlves.html and and http://www.tribuneindia.com/2003/2003/229/login/main1.htmhttp://www.tribuneindia.com/2003/2003/229/login/main1.htm

Global Copyright Piracy: What is it Global Copyright Piracy: What is it and What is its Impact and What is its Impact

Hard goodsHard goodsInternet issuesInternet issuesInfluence of organized crime in production Influence of organized crime in production and distributionand distributionAdequate and effective enforcement Adequate and effective enforcement neededneeded●● Criminal sanctions Criminal sanctions ●● Border measuresBorder measures●● Civil remediesCivil remedies

Economic Studies on PiracyEconomic Studies on Piracy11

““True Cost of Copyright Industry Piracy to the U.S. True Cost of Copyright Industry Piracy to the U.S. EconomyEconomy””●● The U.S. economy loses The U.S. economy loses $58$58 billion in total output billion in total output

annually; output includes revenue and related measures annually; output includes revenue and related measures of gross economic performance. of gross economic performance.

●● The U.S. economy loses The U.S. economy loses 373,375373,375 jobs; of this amount, jobs; of this amount, 123,814123,814 jobs would have been added in the copyright jobs would have been added in the copyright industries or in downstream retail industries, while industries or in downstream retail industries, while 249,561249,561 jobs would have been added in other U.S. jobs would have been added in other U.S. industries in support of the copyright industries. industries in support of the copyright industries.

●● American workers lose American workers lose $16.3$16.3 billion in earnings annually; billion in earnings annually; of this total, of this total, $7.2$7.2 billion would have been earned by billion would have been earned by workers in the copyright industries or in their downstream workers in the copyright industries or in their downstream retail industries while retail industries while $9.1$9.1 billion would have been billion would have been earned by workers in other U.S. industries. earned by workers in other U.S. industries.

1By Stephen Siwek for IPI

Economic Studies on PiracyEconomic Studies on Piracy““True Cost of Copyright Industry Piracy to the U.S. True Cost of Copyright Industry Piracy to the U.S. EconomyEconomy””●● Federal, state and local governments lose at least Federal, state and local governments lose at least $2.6$2.6

billion in tax revenues annually; of this amount, billion in tax revenues annually; of this amount, $1.8$1.8billion represents lost personal income taxes while billion represents lost personal income taxes while $0.8$0.8billion is lost corporate income and production taxes. billion is lost corporate income and production taxes.

WIPO working on methodologyWIPO working on methodologyOECD wants to be a player tooOECD wants to be a player too

38%38% of the world's software is pirated of the world's software is pirated ((65% 65% in Latin America; in Latin America; 68%68% in in Central/Eastern Europe; Central/Eastern Europe; 60%60% in Middle in Middle East; East; 59%59% in Asia; in Asia; 21%21% in North America). in North America). Nearly Nearly $48 billion$48 billion in global lossesin global lossesMedian global piracy rate is Median global piracy rate is 71%71%EndEnd--user piracy is the most damaging touser piracy is the most damaging tothe business software industry. the business software industry.

Source: Source: Business Software Alliance/IDC Study, May 2008.Business Software Alliance/IDC Study, May 2008.

Business Software Piracy Business Software Piracy

Motion Picture PiracyMotion Picture Piracy

Optical disc piracy Optical disc piracy –– especially especially ““OD OD burningburning”” (industrial production down)(industrial production down)““CamcordingCamcording”” in theaters in theaters Internet piracy, such as P2P downloadingInternet piracy, such as P2P downloadingCable and satellite piracyCable and satellite piracyUnauthorized public performances (e.g. Unauthorized public performances (e.g. hotels, tourist buses)hotels, tourist buses)

Entertainment Software Entertainment Software PiracyPiracy

Optical disc piracy Optical disc piracy –– ““burningburning”” of games of games and some continuing overproduction at and some continuing overproduction at OD plants (mostly in Asia)OD plants (mostly in Asia)Internet piracy, including sale of infringing Internet piracy, including sale of infringing hard goods (like hard goods (like ““mod chipsmod chips””) and software ) and software as well as P2P downloading (as well as P2P downloading (““warezwarez””))Unauthorized importation and/or assembly Unauthorized importation and/or assembly of cartridgeof cartridge--based gamesbased gamesInternet cafInternet cafééss

Piracy of Music Piracy of Music and Sound Recordingsand Sound Recordings

Optical disc piracy Optical disc piracy ---- CD CD ““burningburning””Internet piracy, P2P downloadingInternet piracy, P2P downloadingMassive importation of blank optical media, Massive importation of blank optical media, which is often not reported and/or involves which is often not reported and/or involves falsified documentsfalsified documentsMobile piracy (mobile phones, handheld Mobile piracy (mobile phones, handheld devices e.g., China and Korea)devices e.g., China and Korea)Unauthorized public performances Unauthorized public performances Challenges in collecting remuneration for public Challenges in collecting remuneration for public performances locally performances locally

Commercial photocopying in and Commercial photocopying in and around educational institutionsaround educational institutionsPrint piracyPrint piracyDigital / electronic piracyDigital / electronic piracy

Piracy of Books and JournalsPiracy of Books and Journals

Changing factors in technology, consumer Changing factors in technology, consumer patterns, business models, for example: patterns, business models, for example:

Illegal downloads on the riseIllegal downloads on the riseIncreasing broadband penetrationIncreasing broadband penetrationMobile devicesMobile devicesGrowth in social networking (e.g. Growth in social networking (e.g. FacebookFacebook, , MySpace)MySpace)User Generated Content (e.g. YouTube)User Generated Content (e.g. YouTube)New business models developing for the New business models developing for the delivery of legitimate copyrighted content in delivery of legitimate copyrighted content in the online worldthe online world

Internet PiracyInternet Piracy

World Internet World Internet Penetration % by RegionPenetration % by Region

InternationalInternationalEfforts by Copyright Industries Efforts by Copyright Industries

and the U.S. Governmentand the U.S. GovernmentSpecial 301 and Special 301 and FTAFTA’’ss; ; TRIPSTRIPSWIPO Internet TreatiesWIPO Internet Treaties’’ ratification and ratification and implementationimplementationImproving global enforcement Improving global enforcement ●● Cooperation and trainingCooperation and training●● AntiAnti--Counterfeiting Trade Agreement (ACTA)Counterfeiting Trade Agreement (ACTA)

Special 301 and Special 301 and FTAFTA’’ss

Section and Special 301: major gains in Section and Special 301: major gains in protection preprotection pre--TRIPS (1984TRIPS (1984--1994)1994)●● Korea, Singapore, Indonesia, Malaysia, Korea, Singapore, Indonesia, Malaysia,

Taiwan and othersTaiwan and othersFree Trade Agreements: Clarifications of Free Trade Agreements: Clarifications of TRIPS plus WIPO Treaties and TRIPS plus WIPO Treaties and strengthened enforcement obligations. strengthened enforcement obligations. ●● For copyright owners and industry: the Gold For copyright owners and industry: the Gold

StandardStandard

TRIPSTRIPSPut IPR on the global economic policy map but Put IPR on the global economic policy map but is now 18 years old (is now 18 years old (DunkelDunkel text of 1990 text of 1990 unchanged in 1994)unchanged in 1994)Virtually all WTO members are in compliance Virtually all WTO members are in compliance with TRIPS with TRIPS ““substantivesubstantive”” obligationsobligationsMany, however, are not in compliance with Many, however, are not in compliance with TRIPS TRIPS ““enforcementenforcement”” obligationsobligations●● 5 WTO cases brought to improve copyright 5 WTO cases brought to improve copyright

enforcement; China case is the most recentenforcement; China case is the most recent

WIPO Internet Treaties Ratification WIPO Internet Treaties Ratification and Implementation and Implementation

Industry views these treaties as key to growth of Industry views these treaties as key to growth of global eglobal e--commerce.commerce.65 countries currently are members of the WCT; 65 countries currently are members of the WCT; 63 countries are members of the WPPT (14 EU 63 countries are members of the WPPT (14 EU countries to join soon). countries to join soon). Key Issues:Key Issues:●● Protection of Temporary CopiesProtection of Temporary Copies●● Prohibition Against Circumventing Technological Prohibition Against Circumventing Technological

Protection MeasuresProtection Measures ((TPMsTPMs))●● Protection for Rights Management InformationProtection for Rights Management Information

(RMI)(RMI)●● Right of Communication to the Public/Right of Communication to the Public/““Making Making

AvailableAvailable”” RightRight

Improving Global Improving Global EnforcementEnforcement

Training and Increased Cooperation with Training and Increased Cooperation with trading partnerstrading partners●● FBI and DOJ actionsFBI and DOJ actions●● ProPro--IP Bill in CongressIP Bill in CongressAntiAnti--Counterfeiting Trade Agreement Counterfeiting Trade Agreement (ACTA)(ACTA)●● A A ““best practicesbest practices”” agreement among likeagreement among like--

minded countries on the range of enforcement minded countries on the range of enforcement issuesissues

Thank You!

International Intellectual Property Alliance (IIPA)

www.iipa.com

Greenberg Traurig LLPwww.gtlaw.com

Contact: Eric H. Smithesmith@iipa.com

smithe@gtlaw.com202 833 4198202 452 4880