Strategy for Information Markets/Piracy

Copyright infringement, Is any violation of the rights secured by a copyright. Infringement involves engaging in one of the practices that are exclusively reserved for a copyright owner, without a license to do so. The violation includes but not limited to, transmission, distribution, or storage of any information, data or material

Another term, bootlegging is also used in the context of copyright infringement, the term originally came from concealing hip flasks of alcohol in the legs of boots and later adopted for covert actions regarding avoidance of control and taxation of alcohol in the US, later it was widely used, in the pre-digital era, for live concert recordings (audio or video), that would be otherwise unavailable (no concurrency with the creators and mostly fan based activity), this was later extended to screening and today there is no special differentiation to the term piracy beyond continuing to imply a concealed or covert activity.

Counterfeiting on the other hand, is restricted to unauthorized duplication or copy with the intent to substitute the original, mostly to unaware consumers.

What are Intellectual Property Rights?

As covered in the Intellectual Property section of this book, Intellectual Property (IP) refers to someone who owns the rights of an invention or creation of something. In other words, it is the protection of utilitarian work. The goal of Intellectual Property is to encourage the creation of new ideas, products and services. Without property rights, people would be able to copy anything without being held liable and there would be fewer incentives for new inventions and technology to be created. Intellectual Property is an asset which can be bought, sold, exchanged, and licensed, similar to any other property. The owner has, among others, the right to prevent the unauthorized use or sale of the property. The difference from other properties is that IP is intangible. That is, one cannot actually see it. However, Intellectual property includes four different types that are protected: copyrights, patents, trademarks, and trade secrets.

Copyrights are someone's exclusive rights to express ownership over their original work. Copyrights exist to protect not only the intellectual property but the owner and the consumer and public interests, including literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished.

Patent is a sort of contract between the society and the individual inventor that is issued by the Patent and Trademark Office. The term of a new patent is 20 years from the date on which the application for the patent was filed in the United States. This contract gives someone the exclusive right to prevent others from using or selling the patent invention for a fixed period of time.

Trademark is a word, name, symbol or device which is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. Trademark rights may be used to prevent others from intentionally or unintentionally using a similar mark, but not to prevent others from making the same goods or from selling the same goods or services under a clearly different mark.

The legal rights to intellectual property via patents, trademarks and copyright are not designed or intended to offer complete and unrestricted control over creations. Sharing ideas is at the core of most human interactions and it is how culture evolves.

History of copyright law

The first modern copyright law, called The Statute of Anne, was enacted in 1710 in Great Britain. This law applied only to books and made it illegal for anyone to copy them without the author's permission. Initially the law granted a 28 year period during which the work could not be reproduced without consent and after which the work became public domain.

Since the birth of the United States, copyright law has been expanding. It was included in the U.S constitution that authors have exclusive rights to their writings. Since that point, the law has been revised many times, most notably 1909 and 1976. The 1909 copyright law in the United States granted protection for unpublished works, but also allowed for any published work that did not have a copyright note to become public domain. This law was eventually changed in again in 1976. This revision of the law was one of the most dramatic steps forward in the expansion of copyright law. The 1976 Copyright Act in the United States accounted for not only literary works, but it also included musical works, choreographed works, motion pictures and sound recordings. Aside from copyright protection granted to digital media this was the biggest change in copyright law to date. However, this was only effective in the United States.

In 1967, the World Intellectual Property Organization (WIPO) was founded by the United Nations as a means of policing intellectual property around the world. It is currently the largest international copyright enforcement body. The WIPO's most significant contribution to world copyright law came about in 1996 with its Copyright Treaty, which set international guidelines for copying and distributing both print media and digital media.

The Digital Millennium Copyright Act followed the 1976 act and was based on the Treatise signed by the WIPO. The DMCA was created to apply protection to digital media and to control online copying. The law was signed into legislature in 1998, completely changing the concept of copyrights within digital media and became the basis for the modern copyright laws we know today. It accounts for websites, web code, and any other form of digital intellectual property.

Who are the "Pirates" ?

Though the terms “pirate” and “piracy” may conjure up images of swashbucklers sailing the Seven Seas in search of booty, when applied to the replication of information goods that image is far from reality. The pirates of intellectual properties can range from the shady character selling bootleg DVDs on the side of the road to a mother of five sharing songs over the Internet. The law and sanctions for the infringement of copyrights is the same. Even more problematic is the legal alteration that removes the obligation to clearly indicate copyright ownership. All works must then be assumed to be under copyright protection, this has eroded the use, dissemination and value of the intellectual and artistic goods under the public domain.

Piracy is done on two levels: the private smaller scale level and the larger organized crime scale. Small scale, non-profit-oriented piracy makes up the largest portion of entertainment copyright infringement. This is done primarily through file sharing done on peer to peer (P2P) networks and the Internet in general. Most cases against individuals deal with the illegal downloading or sharing of protected material. Large websites that index BitTorrents, such as The Pirate Bay, are considered by most of the publishing and entertainment industry as large scale criminal organizations. There is nonetheless a subset of authors and copyright owners, as well as a large part of the public, that do not share that view. They consider the unfair practices and unjustified profit margins of those industries, the lack of rational limitations to copyright and the need to guarantee free access to information as a good justification for political action and civil disobedience against copyright laws and intellectual property rules. This has also resulted in the appearance of Pirate parties in several countries, as an attempt to match the incredible and so far unopposed lobbying power of the industry on governance, since public goods will never have economic interests to defend them.

Definition of Piracy

In this context the term is partial, since piracy invokes the concept of taking something by force, and implies a direct subtraction to the owner, a theft. In fact, the reality is that the term does not correctly reflect what copyright infringement is. There is no subtraction of the good from the owner, but instead only an abuse of control over the creation and its distribution that may result in economic losses but that depends on the size of the target market and the quality and availability of the original product or the fidelity of the duplicates. For instance, software may not perform as the original or movies may not reflect the state of the product intended for distribution by the owner. Piracy ultimately exist because of the high cost of policing and the incapacity to change consumer behavior. As we will see, there are several reasons behind the phenomenon.

The use of the word piracy also hides the distinctions regarding scale, intention to profit and methodologies for the copyright infringement. When examining the topic, we want to target specific aspects. Those aspects include the general aspect, the industry aspect, the legal aspect and the international aspect. It is important that we look at the topic from the perspective of all those involved so that we can obtain a better understanding of how piracy works, who it affects, why it is a growing problem, and what governments and other legal authorities, both here and abroad, are doing to stop it.

Monetary losses due to copyright infringement cannot be directly correlated to the unlicensed number of copies detected, except when dealing with physical counter-faction of the media, that is itself related to market demand, and incurs production and distribution costs. This is often referred as industrial piracy and because of its complexity and requirement of funds is correlated with organized crime.

Works that are mostly affected by copyright infringement are digital goods, since technology has made copying and distribution easy and nearly costless. In order of degree of prevalence, these goods consist of music, movies, photos or electronic books. On the Internet, these copyright infringements can take various forms: starting with individuals who illegally upload or download music online, the use of unlicensed content and some online companies have evolved businesses models that can foment users to break the law.

Who are the stakeholders and what are the effects of piracy on them?

The stakeholders in piracy are the customers, the various industries (music, movies, software developers, etc.), the government of a given country, and the economy of that country. Industries suffer from piracy in terms of lost sales, and rising intellectual property protection costs which are passed on to the customer. The U.S. government suffers from piracy due to the lost tax revenue and increased enforcement costs associated with piracy.

The negative effects of piracy are well known and well documented in the various studies and estimated losses that governments and various industries have done. However, if there are negative effects, then there must be some people that feel the positive effects of piracy. The question becomes: who benefits from piracy? When examining the effects piracy has on information goods it would appear that some customers feel positive effects from piracy. Instead of having to wait the long months for a movie to be released on DVD, especially if it is a region limited distribution, a customer could potentially buy it in bootleg form before it has even left the theaters. What’s more than that, is that instead of having to pay the usually new DVD price of $19.99 or more, pirated copies of movies go for as low as $1 to $5. The same is true for CD’s and various software applications. Customers of pirated information goods also don’t run as high of a safety and health risk like those customers of other pirated goods. Pirates bring high demanded products to demanding customers for a fraction of the price that the industries charge, allowing customers to save money, ignore DRM, and registration or format limitations.

Piracy does another important thing for customers: lowering the cost of experience goods. Several information goods could be considered experience goods, which means that the only way one gets value out of it is by actually using it first hand. This can be expensive, and sometimes this ends up with a person not liking the good, essentially wasting their money. Pirated goods are sold typically at such a lower price than their legal counterparts that the cost of trying it out is low enough that a person who otherwise would not try it will. For all industries this can be a huge benefit since their product is exposed to several new potential customers. The trick ends up being able to offer a legal product that those potential customers will have to buy because the pirated good is inferior and not even worth being practically free.

Musicians

Musicians tend to have a love/hate relationship with their music being pirated. On one hand, by having their music pirated, there is the potential loss of profits associated with that. This loss of profits is not only for the music label, but the artist as well. On the other hand, thanks to simplified peer-to-peer networks, social media, and new forms of media outlets (such as YouTube), musicians have gained significantly more exposure than what they were receiving when being promoted only by the record labels. The loss in profits due to lower legal CD sales is offset by an increase in ticket sales to live concerts due to the increase in exposure the musician has received through their music being shared and downloaded. This is especially useful for musicians that are on smaller labels or who are not household names yet to get exposure.

Movie watchers

The piracy of movies allows for movie goers to see films that they may otherwise not see due to the cost of going to see a movie, or because of movie distribution issues. Bootleg DVD’s give people a wide range of variety as well as the ability to bring a movie that was just released in the theaters home with them without having to wait for the DVD release. An issue of pirated movies for customers is the quality of the product. Bootleg DVDs are notorious for being filmed in the movie theatre with handheld video cameras, which results in bad quality.

What are the motivations?

1. In case of duplication with the purpose of distribution, it can signify large profits by copying and distributing unauthorized data or media. Depending on how the product is to be distributed, making and distributing unauthorized copies can have little to no fixed cost, and a very low marginal cost. This allows the pirates to enjoy a high profit margin, especially since no revenue will be collected on those sales.
2. Many people share the belief that downloading unauthorized media from the Internet for private use is harming anybody. Furthermore, some people do not think about it at all. Many individuals would rather use a cheap or even free pirated version than pay a full high price for an original one.
3. Economic recession in the developed countries, and low income in the less developed countries encourage the use of unauthorized digital music and media. Many people simply cannot afford paying for the original copy, especially in countries where the price represents a high percentage of the individual's income. For instance paying $1 for an I-Tunes song, $5 for a game, or $10 for a movie represents a relatively low percentage of an individual’s income in the United States, but it represents a relatively high percentage of an individual’s income in places like China, India, and most countries in Africa.
4. A political statement in opposition to existing IP laws, culture is a public good and information should be as free as possible. Most defendants of this view do oppose industrial piracy or infringement with the objective of obtaining unlawful profit, and support that authors should receive due compensation and recognition for their productions.

Why is it continuing to go on/grow?

The reason piracy is so rampant in the United States, and to some degree globally, is because the United States has become, since WWII, the greatest producer of content, and because English is, for now, the lingua franca of our interconnected world. This combined with the fact that globalization and the evolution of communication and transport technology, including the Internet, have eroded local cultures by promoting homogenization.

• The growth of online file sharing websites and P2P software such as Scour, Morpheus, Audiogalaxy, Kazaa, and Napster in the late 1990s enabled the general public to share digital media and music files over the Internet easier and faster than ever before. Users of P2P networking technology, especially since Napster appeared (approximately 20 million users in 2000), did not think that sharing digital files over the Internet was a form of piracy, contrary to what the companies in the music industry believed.
• The music and movie industry logic was, “we charge you a given price for private use only. We do not charge you for sharing. Therefore, you have no right to share the digital files you buy.” However, the users had different logical reasoning: “I can share my own digital music and movies with friends and family over the Internet.” Actually, they believed that they had the right to share it with whomever they chose. The bottom line is that they argued that it is sharing and not stealing.
• Probably one of the most significant reasons Internet piracy continues to grow is that it is very difficult for the authority to track and identify the crime, the sides involved, or any physical evidence. For instance, with a piece of software like “switch-proxy,” pirates can do any kind of activity over the Internet using an anonymous IP Address, and with the aid of a piece of software such as Ram-cleaner, they can clear their RAM and Cache Memory. In other words (destroying the evidence can’t get any easier)
• An essay done by Charles W. Moore's, on copyright law shows that one of the main reasons piracy is widespread is that most people never report someone for doing it.

Unfortunately, despite the efforts to fight it and the alternatives that are being offered, internet piracy remains rampant. An estimated 2.6 billion music files are downloaded through P2P networks each month, and more than 400,000 movies are downloaded each day. These figures will probably rise as computers become more powerful and as broadband Internet access becomes more widespread.

Industry aspect

Information and digital goods can be very costly to create, but once initial fixed costs of production are incurred, distributing is the extremely low cost and can be done without many of the intermediaries that other products incur.

A consumer who buys a good and decides to reproduce it without proper consent is only paying for one unit of the good. If he or she chooses to redistribute that good for a given price below the market value, they may be undercutting the producer's price and possibly driving their profits down, with the due recognition that the access to market is restricted, as in most places copyright infringement is illegal. The consumer of the unlicensed duplicate does not contribute to the high initial costs of production, therefore there price is enough of an incentive to illegal duplication of books, movies, or music on the Internet. Because of this, companies are taking many different approaches to make the process of copyright infringement as difficult as they can, even to the detriment of the legal consumers, since some of the approaches including the use of digital rights management (DRM), that not only increases the price of the goods but makes its utilization harder and prone to technical problems.

Goals for managing intellectual property

The goals of managing intellectual property is to obtain profit and force attribution and recognition for the creation to its creator. Companies that manage intellectual property focus on the terms and conditions that maximize the value of their intellectual property, this requires the exertion of conditions that maximize the protection of the rights on distribution and derived works, as they tend to erode the value of the "original" product.

But the economics of non-physical products, like content or concepts is completely different, as it relates directly to demand, visibility and uniqueness. A non-physical product has distinct properties. For instance, it cannot be scarce unless scarcity is artificially created by exerting control on distribution. They are also products of an economy of scale, not on the production side but on the consumption side. Since duplication and distribution is easy, the most important factor becomes demand and the number of potential consumers. As an example of this shift in paradigms we can examine the fear that Hollywood had about video sales and rentals but they have now become a big profit source for them, but require the exertion of control on the distribution volume. This is also demonstrated by the creation of distribution regions in DVDs, creating artificial barriers for the utilization of content.

A good way to manage the lower distribution costs created by digital technology is to use it to your advantage by promoting your products more effectively and using techniques such as giving away free samples of your product instead of castigating those who are able to find ways to access your product for free. For example bookstores discovered that they can sell more books by allowing their customers to browse through their collection of books. Companies should focus on the terms and conditions that maximize the value of their intellectual property and not focus on the terms and conditions that maximize the protection. Hollywood once feared the video sales and rentals but now has become a big profit source for them.

Control over demand

Unification of the consumer markets creates a broader base to sell content. If we take for instance the way TV content is sold or how the movie industry controls the movie distribution in cinemas in the US, it becomes clear that the control of the distribution channels and requirements in regards to access to content can aid to control and shape demand.

Industries affected

Music

In the past two decades, there has been a dramatic shift in the way people choose to consume music products. During the 1980's and early 1990's the two primary options were radio, record players and cassette players. Other than those, no other form of music for personal consumption really existed. After the arrival of the Compact Disc, the entire music industry shifted to the use of this new technology. The first albums on CD were released in the US in early 1983 along with the very first CD players. Throughout the 1990's up until the mid-2000s, virtually every major-label album recorded and released has been sold in CD format, thereby causing an immense boom in the music industry.

But just as the preferred form of possessing music had shifted from Cassette tape to CD, it did the same with the invention of MP3 players, beginning with Audio Highway's Listen Up personal audio system in 1997. The Listen Up player was the first portable MP3 player that was able to download MP3 music files from a computer to the device. This gave rise to a new, more convenient way for consumers to store and listen to music.

Along with devices that were new means of carrying music, new platforms for obtaining music also became available. Peer-to-peer applications such as Napster and Limewire have made it extremely easy for almost anyone to download music using the Internet without actually paying for it, since they create decentralized networks over the Internet, they reduce the risk to infringer.

Over the last ten years, there has been a steady decline in CD sales along with a decline in revenue for major music labels, of course this decline cannot be only attributed to copyright infringement, the world economy has been extremely volatile since 2001 and the CD as a medium for music is rapidly losing ground to down-loadable content and a resurrection of the vinil. Another interesting facts may be the over-commercialization of music, that has reduced overall quality and each year that passes public domain sources start to become available and some works started to be produced under more liberal licensing. The Federation of the Phonographic Industry published a study to support their theory that pirated music led to a 10% decrease in global music sales in 2009 and a 30% decline in global music sales from 2004 to 2009. Most of the reports and paper linking piracy with economic losses, citing unrealistic numbers have a source in the industry and are often created and used as a leverage to press governments to increase sanctions against infraction. For this reason, some people are convinced that piracy has a direct effect on distributors of music, forgetting the historical relation that existed between the music industry and radio, that exposition (and control of it) guarantees sales and promotes the products.

The Napster effect

Napster, which was developed in 1999, evolved into one of first online public large scale copyright infringement engines, mostly due to the lack of alternatives created by the music industry. By permitting the selection of individual tracks, it allowed users to share music files online without having to pay for the files themselves. Users would be able to share songs in the Internet that anybody with access to Napster, which was free to download, would be able to search and download it. Napster lasted about two years, and was shut down in 2001 because of massive copyright infringements.

Napster opened to the public the reality that had existed previously only in the darknet, it was a game changer that has evolved into technologies that today's still permit people to illegally download music, video, and software online without pay. Even though Napster led to the recognition of the online phenomenon of free and often illegal downloads and was an evolution of the distribution methods it also forced the industry to slowly change.

Movies

When one thinks of movie piracy there are several thoughts that come to mind. Some people may think "Evil Pirates, making money off the hard work of artists", while others may think “I got to watch free films". The subject of how piracy effects the film industry is a wide debate, for one reason it has two-sided impacts, both “negative and positive” on the film making industry. Another reason is that technically speaking, “not every pirated copy is a lost sale for the industry.”

The first argument about the piracy impact is as follows: On the one hand, there is no doubt that movie piracy can decrease the legitimate revenue stream because the pirated movie user may not watch a theatrical movie, buy/rent the movie when it comes out on DVDs, or even watch it through a legitimate channel such as Netflix. Also the impact it has on artist is debatable, as the lion share of the profits are claimed by the producer, the artists (not only the actors) in general have a guaranteed contractual fixed income. In fact the US film industry (from 1995–2010) has shown increased returns, even discounting some creative accounting that is generally labeled as Hollywood accounting that itself is damaging to artists and to the general public as it reduces taxation.

On the other hand, however, piracy increases the legitimate sales of the movie product through the impact of network externalities and the diffusion of information and forces an increase in general quality. We can think about it this way, those people who watch the movie for free, can be regarded as a testing ground for other consumers, also they can expand the network and enable the movie to reach its critical mass very quickly. Since movies also fall under the category of experience goods, we know that one must "experience" a movie before judging if they like it or not. If a person who watches a movie for free thinks it's really enjoyable, they will likely spread the word to their friends, and thus expand its popularity.

Since both positive and negative impacts of piracy on the sales of movie products coexist at the same time, the overall impact of piracy on sales will depend on which impact is superior. A mathematical model was developed by Hui and Png’s model for the overall impact of movie piracy on the theatrical movie industry estimate utilizing data on movie sales, admission price, video penetration, piracy rate of movies, and Internet penetration of 25 countries for 5 years through “a two-stage least square model analysis”. Positive impact and negative impact of movie piracy on the theatrical movie industry were not estimated, however overall piracy impact resulting from the substitution between both impacts of piracy is estimated. The surprising results show that the overall impact of piracy is slightly positive. This leads to the counter-intuitive conclusion that theatrical movie sales have at least slight benefits from movie piracy

Another argument is that “not every pirated copy is a lost sale for the industry,” for the very simple reason that many of the people who use the pirated copy or watch the movie for free, were either not able or not willing to pay full price for the legitimate copy. In other words, those people were not going to pay for a movie ticket or a legitimate DVD in the first place, and the only way they were going to watch the movie is when they can get it for free. Therefore it can’t be considered a "lost sale" if there was no demand for it in the first place.

BSA/IDC study on the Economic Impact of piracy in 2003 shows that While not every piece of formerly pirated software will be purchased if piracy rates go down, some will be substituted, and some will not be used. At the same time lower piracy rates yield more economic activity that stimulates more software production and purchase. The two countervailing forces seem to cancel each other out. The data collected showed that the old assumption that 1 unit of pirated good = 1 unit of loss is fundamentally wrong, the actual findings were that 1 unit of pirated CD = 0.42 unit loss in sale

Literature

Online literature has become a blossoming industry during the last decade. Companies have come out with E-Readers, digital copies of book that one can have on the go, which have revolutionized the way people view literature and information media. With this increase though there has been an increase in piracy of copyrighted works.

The increase in young readers which has occurred since the birth of E-Books has academics very pleased, authors however do not feel the same way. They view the tremendous amounts of unlicensed and pirated works out there as a loss of revenue stream. This isn't as much an issue for well known authors, although their work is pirated, because they still earn significant sums for their hardcover works. The piracy affects most of all small publishers and poets; it affects people who rely on a small niche of the population for their livelihood as authors. When even a small percentage of their work is being distributed illegally their income is significantly reduced. The Society of Authors, a British organization representing more than 8,500 authors believes that if there is nothing done soon then authors will discontinue writing. When writing is no longer financially feasible as a source of income, the supply of authors will greatly diminish.

This dilemma is a catch 22 as publishers run a 2 sided network. The more authors there are the more likely people will find a book they like and buy it, and the more people who read the more likely the author is to find a reader who will buy it. With on-line piracy the 2 sided network is being disrupted and the authors are no longer benefiting. This is even exacerbated by the digital age, near zero cost in publishing and the number and availability of free literature.

International aspect

The US as the worlds greatest exporter of intellectual property is doing its part to secure its interests regarding the intellectual works of its citizens and its content industry in general. By consulting with foreign governments and US agencies in all copyright protecting aspects regarding the security and safeguard of intellectual property, the US government have put together and implemented policies and procedures directly involving theft of intellectual property in all its manifestations. Pressuring other countries to adopt stricter policies regarding intellectual property protection.

The Congressional International Anti-Piracy Caucus is defined as “..bipartisan and bicameral group committed to protecting American intellectual property and reducing the scourge of piracy abroad.” 3 This caucus puts out a watch dog list of countries that are direct violation of intellectual piracy laws. The list the notorious websites who knowingly violate anti-piracy laws and put out copyrighted works on their websites. “These websites, among thousands of others worldwide, are used to exchange stolen movies, music, books, software and other copyrighted works instantly.”

If a country has no strong IP laws or fails enforce them, it makes perfect sense to ship counterfeit goods into it. Copyright, trademark infringement is a global problem, more so than patent infringement. It has become an global black market industry.

They are looking for ways to stop the spread of piracy, as it seems they pirates have the upper and hand are quick to release stuff to the general public faster than anticipated, such as new movie releases. With the current state of the economy pirated products are a hot ticket item in the black market. So the qualm the surge they are holding conferences aimed at reducing piracy. They are deploying tactics such as encoding to inhibit the reproduction of music and digital video discs and other copyrighted materials. The need to secure financial backing for intellectual property by investors is much needed, but in order to secure funding the industry needs to be able to say they are enforcing copyright laws and motivating countries to urgently offer stiff penalties for copyright violations.

China

The latest Business Software Alliance (BSA) figures for global software piracy in 2007 clocked China’s PC software piracy rate at 82%, since then that number has grown as software piracy continues to be a growing problem in China. It currently sits as the fifth leading country in the Asian Pacific.

China and Hong Kong being under semi-communist law are the top exporters of said stolen copyrighted intellectual property. One of the many popular features of China, next to the Great Wall of China, is the amazing price that tourists and locals alike can get on counterfeit expensive designer brand items such as, Rolexes, purses, shoes, compact discs, movies, clothing, and all forms of technology and software that are often intended to be shipped out to other countries.

The lure of China as a manufacturing center and not to mention consumer market, if a company doesn’t take the necessary precautions to protect its product, it stands to chance that a version of that product will be on the market for less retail value than originally planned. It is common place for DVD’s of movies that haven’t yet left the theaters circuit to be already packaged in DVD form going at a rate of $1 to $2 on the streets of China (and in most Asia-Pacific countries, originating from China). The same is true for software as well as Microsoft office products and other popular software products.

It is wise to think that China will follow copyright laws if they are being watched from abroad, however if there is no need to protect itself China will not follow through with protecting intellectual property. Especially if China expects to be a big economic powerhouse as remain titleholder to that financial glory.

The big question is how piracy can be allowed to run so rapid in a country such as China. The answer is simple, the lack of interest by the government of China to do anything about the piracy problem, regarding outside products within its borders. Recently there has been a new trend amongst software developers such as Microsoft, big time movie studios, and the like to take a stand and fight back against piracy abroad and there has been more and more pressure on the Chinese government to start enforcing piracy laws and adopt a zero tolerance for piracy.

China has begun taking the necessary strides to crack down on piracy, in its economic self interest, to avoid sanctions or to protect the now increasing national intellectual property, but the sheer size of the piracy problem combined with the lack of funds and man power make trying to tackle the piracy problem extremely difficult for the country.

Russia

The latest global software piracy numbers provided by the Business Software Alliance, Russia currently has a piracy rate of 80% (as of 2006). This percent is down from previous years, a result of the Russian government slowly starting to handle the piracy problem within their border. The US Trade Representative places Russia on their “Priority Watch List” right next to China.

Canada

Piracy copyright violations run rampant in the United States and more so in the country of Canada. The methods used by international pirates to violate intellectual property, a term used for the materials which are pirated, are pretty savvy. China and Hong Kong are a major lawbreakers of copyright laws created to protect the intellectual property, such as digital media. But they are not the only countries who stand alone in the quest for making money of pirating media and other goods. Russia, Spain and Mexico also are international contributors to the crime. But a lax of enforcing laws is what spawns the tide of lawbreakers. And Canada is guilty of not enforcing these copyright laws. ““Canada remains an international safe haven for Internet pirates,” the caucus said in a May 9 press release. “It is a leading host of commercial operators of illegitimate file sharing sites.” 1 Therefore, there is no real penalty for getting caught with stolen copyrighted materials.

Canada’s current and most accurate percentage rating along with 105 countries “was at 33%” 2 as compared to China’s 82%.

Legal aspect

Piracy cases against private consumers

• Jammie Thomas
  • Jammie Thomas from Duluth, Minnesota was found liable of downloading 24 songs with resulted in $222,000 in penalties and fines. Although there was no evidence that showed she had downloaded the songs, she was found liable on the fact that she made the songs available for others to download. She was originally contacted by the RIAA to cease downloads and pay fine at a cost of several thousand dollars. After a refusal from Thomas, she was sued by record companies claiming that she had downloaded over 1,702 songs. Arista Records, Capitol Records, Interscope Records, Song BMG, and Warner Brothers Records were all awarded a share of the fine. These recording companies focused on 24 songs, which she was found liable . With the fine at $222,000 for 24 songs, each song cost Thomas $9,250. The trial occurred on October 4, 2007. This was the first time the RIAA had won a case against an accused file sharer

• • In June of 2009, a Thomas was found liable of willful copyright infringement and was ordered to pay almost $2 million in fines. This was for the same 24 songs that she was found liable of making available for download. The original case was retired because U.S. District Judge Michael David decided he had made an error while instructing the Jury.

• • In January 2010, a judge lowered the $1.92 million fine against Thomas to $54,000. U.S. District Judge Michael David stated “The need for deterrence cannot justify a $2 million verdict for stealing and illegally distributing 24 songs for the sole purpose of obtaining free music." Thomas’ attorneys were hoping for a $0 fine and are still deciding whether or not to appeal the new price. Originally the RIAA did not want to take Thomas to trial, but after refusal to pay the original fine handed down to her, they decided to make an example to show that downloading without paying is illegal.

• Sony BMG vs. Tenenbaum
  • In 2003, Joel Tenenbaum downloaded 7 songs in which now Song BMG is suing him for $1 million. The case was originally going to be settled out of court; however refusal from Tenenbaum prompted Song BMG to sue him, the first lawsuit coming in 2007. Tenenbaums’ attorney, Harvard Law professor Charles Nesson, was called out by RIAA spokeswoman Cara Duckworth saying in an email, “This case is about a Harvard professor's crusade to gut the laws that help protect creators and his attempt to transform a courtroom into what some observers have called a ‘three-ring circus. Professor Nesson has resisted our efforts to resolve this case in a manner fair to both sides. He wants a crusade, not a resolution." Tenenbaum was charged with violating the Copyright Act of 1976, to which Tenenbaum filed a countersuit stating that looking for profits past the profits that they lost was unconstitutional. As of now, neither side has reached an agreement nor has a court date been set.

Authorities enforcing the laws

• RIAA
  • Recording Industry Association of America is one of the players trying to police piracy activity. The RIAA is a trust of record labels that they claim “distribute approximately 85% of all legitimate recorded music produced and sold in the United States.” Their main priority is to produce and sell music of their member labels which include EMI, Sony Music Entertainment, Universal Music Group, Warner Music Group. In an attempt to prevent piracy, the RIAA has filed lawsuits with private individuals, internet radio stations, as well as internet file sharing sites. In yet another attempt to prevent piracy, the RIAA is working on a three strike system that would be in association with internet service providers. The three strike system would end with the internet service provider ending internet service for the individual. Unfortunately for the RIAA, they have been unable to have any internet service providers become a partner.

• MPAA
  • Picture Association of America is another association that works on preventing piracy; however they are focused on the piracy of films. Some of the larger members of the MPAA include Paramount Pictures, Sony Pictures, Twentieth Century Fox, Universal Studios, Walt Disney Studios Motion Pictures, and Warner Brothers Entertainment Inc. For the prevention of film piracy, the MPAA focused on copyright infringements dealing with VCR’s and have now obviously expanded to internet file sharing. The MPAA warns anyone who breaks their copyright laws that that can serve, “a maximum sentence of up to five years in jail and/or a $250,000 fine.”

snipped from elsewhere

Piracy and Copyright Infringement

The illegitimate use of materials held by copyright is referred to as piracy. For a work to be considered pirated, its illegitimate use must have occurred in a nation that has domestic copyright laws and/or adheres to a bilateral treaty or established international convention such as the Berne Convention or WIPO Copyright Treaty. Piracy primarily targets software, film and music. However, the illegal copying of books and other text works remains common, especially for educational reasons. Piracy has become an increasingly larger problem with the advent of the internet, and recently with social media. These mediums have allowed these works to be spread to a large amount of people very easily. To combat the spread of internet piracy, the government has tried to enact new legislation. These acts include the Stop Online Piracy Act or (SOPA), and the Protect IP Act, or (PIPA). These acts would have expanded the ability of U.S. law enforcement to fight online trafficking in copyrighted intellectual property and counterfeit goods. These acts were met with fierce opposition, and as a result were never put into effect. The penalties for copyright infringement and piracy can be either seen in criminal or civil court. The legal penalties for copyright infringement include: fines for the amount of damages incurred by the act of infringement, a fine between the range of $200 to $150,000, impounding of the illegally used materials, as well as jail time. An example of a recent piracy case, was the founder of Megaupload, Kit Dotcom, who was arrested in early 2012. His site allowed people to upload and share copyrighted media with over 150 million registered users worldwide. This site cost the entertainment business an estimated $500 million, which led to him being arrested, and the seizing of his possesions and millions of dollars that he earned from the site.

In regards to Copyrights regulations there is still a debate due to the rapid growth of the Internet as a means of communication. The cost of copying new products with the Internet in tow has dropped significantly toward zero, making competition fierce enough to wipe out any profits of development. The ongoing legal struggle regarding this can be seen in the between the music recording industry (whom owns the IP rights of music produced by contracted bands) and various pirates operating around the globe copying the music created by those same contracted bands and distributing those copies at or hear the cost of reproduction; nothing. A good breakdown of this problem can be seen in the origins of copyright law in the late 18th century in Germany.

Reference

Braccio (April 2009). "Student's music piracy case still sailing". The Daily Free Press

Cheung (October 2007). "Single mother loses big in piracy case". TG Daily. http://www.tgdaily.com/business-and-law-features/34209-single-mother-loses-big-in-music-piracy-case.

Ernesto (April 2010). "Is piracy really killing the Music Industry? No!". Torrent Freak. http://torrentfreak.com/is-piracy-really-killing-the-music-industry-no-100418/.

Fanner, Eric (January 21 2010). "Music Industry Counts the Cost of Piracy". The New York Times. http://www.nytimes.com/2010/01/22/business/global/22music.html.

Kai-Lung Hui & I.P.L. Png, “Business Software Piracy: Methodology,” Economic Analysis Associates, for Ministry of Law, Singapore, 2003

Knight Dan (March 2006). “the Solution to Piracy is Quality Content and Fair Price”. http://lowendmac.com/musings/06/0314.html

Leeder Michael (March 2008). “How Piracy Threatens The Movie Industry”. http://www.helium.com/items/1795954-piracy-affecting-the-movie-industry

LawMart (Sep 2009). “Copyright vs. Trademark.” http://www.lawmart.com/searches/difference.htm

Motion Picture Association of America. "http://www.mpaa.org/"

Recording Industry Association of America. "http://www.riaa.com/"

Sandoval (June 2009). "Court orders Jammie Thomas to pay RIAA $1.92 million". CNET News. http://news.cnet.com/8301-1023_3-10268199-93.html.

Sandoval (January 2010). "Judge lowers Jammie Thomas' piracy penalty". CNET News. http://news.cnet.com/8301-31001_3-10439636-261.html.