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Real Crimes with Real Victims

One of the great misconceptions about intellectual property theft is that it is little more than a nuisance crime. By this faulty reasoning, there’s no real harm in using commercial products without paying for them, and it’s no big deal if someone sets up shop to sell cheap knockoffs of the real thing.

But the White House has put the lie to such misconstrued notions by unveiling an important new series of legislative proposals that would increase criminal penalties for IP offenses that, among other things, threaten public health and safety, affect national security, or are committed by organized criminal enterprises or gangs.

Released by US Intellectual Property Enforcement Coordinator Victoria Espinel, the Administration’s recommendations would not be necessary if they did not address very real threats: Counterfeit pharmaceuticals kill people. Counterfeit products in the military supply chain can compromise national defense. And dangerous criminal gangs are generating big profits by stamping out cheap, illegal copies of software, movies and music.

Espinel’s report cited the example of one of the world’s most brutal drug cartels — Mexico’s La Familia — which hauls in $2.4 million per day by manufacturing and selling counterfeit software programs.

These are real crimes with real victims.

In the case of software, the harms associated with counterfeiting and piracy are far-reaching. The theft has an obvious impact on all the software makers, distributers, retailers and service providers whose livelihoods directly depend on legal software sales. But the damage actually goes well beyond that because of software’s unique role as a tool of production for businesses in every sector of the economy.

As I testified yesterday before Congress, we have a terrible competitive imbalance between the United States — where the vast majority of companies pay for the software they use to run their operations — and high-piracy countries, where most companies do not. (The piracy rate in China, for example, is 79 percent, according to the BSA-IDC Global Software Piracy Study. In the United States, it is just 21 percent.) This creates an unfair cost advantage for companies in high-piracy countries, which undermines US product sales and displaces US jobs.

The Administration has done us all a great service by recommending policy responses commensurate with the gravity of intellectual property crimes. I urge Congress to take action on these new proposals.

Robert Holleyman

Author:

As President and CEO of BSA | The Software Alliance from 1990 until April 2013, Robert Holleyman long served as the chief advocate for the global software industry. Before leaving BSA to start his own venture, Cloud4Growth, Holleyman led the most successful anti-piracy program in the history of any industry, driving down software piracy rates in markets around the world.

Named one of the 50 most influential people in the intellectual property world, he was instrumental in putting into place the global policy framework that today protects software under copyright law. A widely respected champion for open markets, Holleyman also was appointed by President Barack Obama to serve on the President’s Advisory Committee for Trade Policy and Negotiations, the principal advisory committee for the US government on trade matters.

Holleyman was a leader in industry efforts to establish the legal framework necessary for cloud-computing technologies to flourish. He was an early proponent for policies that promote deployment of security technologies to build public trust and confidence in cyberspace. And he created a highly regarded series of forums for industry executives and policymakers to exchange points of view and forge agreements on the best ways to spur technology advances and promote economic growth.

Before heading BSA, Holleyman was a counselor and legislative adviser in the United States Senate, an attorney in private practice, and a judicial clerk in US District Court. He holds a bachelor’s degree from Trinity University in San Antonio, Texas, a J.D. from Louisiana State University, and has completed the Stanford Executive Program at the Stanford Graduate School of Business.

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