Real Crimes with Real Victims

posted by in Intellectual Property March 17, 2011
Mar 17

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.

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