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Split of total estimated trade losses due to copyright piracy (Source: IIPA)

Per capita U.S. dollar loss due to copyright piracy (Source: DailyTech)

Estimated per capita loss against GDP (PPP) per capita (Source: DailyTech)
Canada is the world's largest piracy offender per capita

Last week, the International Intellectual Property Alliance (IIPA) submitted recommendations to the Bush administration in its “Special 301” review of copyright piracy and market access problems around the world. The IIPA report recommended that 16 countries be placed on a “Priority Watch List,” for piracy offenses. Canada, Mexico and Israel joined China and Russia as countries severely plagued by piracy.

“The annual Special 301 process continues to be the primary means for the U.S. copyright industries to advise U.S. government agencies about the principal impediments to adequate and effective protection in global markets,” noted Eric H. Smith of the IIPA. “Many of the key markets around the world that are infected with high levels of copyright piracy or deny effective market access to copyright industries.”

At first inspection of the figures released by the IIPA, the $2 billion estimated trade losses due to copyright piracy in China and Russia are more than double that of any other nation. Smith comments, “China and Russia are again this year the two countries that are of the greatest concern to the copyright industries, as they were in 2006. While there have been developments in both these key markets over the year, the bottom line is that piracy levels have not come down at all or only marginally, and some problems have grown worse.”

Upon further examination, however, we find that there is more to the Priority Watch List than just raw loss numbers. For example, China leads all nations in piracy with an estimated $2.2 billion lost due from piracy -- but China is also the world’s most populated nation. Could it be that China’s piracy problem is explained by its huge populace? After all, it would be easy to say that China is the world’s biggest consumer of rice because it has the most citizens. While China’s population has a strong role to play in the country’s rice consumption levels, it would be erroneous to attribute the statistic to just a single factor. There are usually several forces at play to explain statistics, as in the example presented with China and rice, culture can be one of them. One raw statistic alone, such as rice consumed or dollars lost, is meaningless without context.

Taking a deeper look into the IIPA’s figures to bring some weight and context behind its estimates show that the Priority Watch List numbers from the Special 301 report are imperfect. Aside the fact that dollar estimates are not an exact science, the IIPA’s lists do not include any figures for the motion picture industry’s losses, has incomplete data for entertainment software and books and features no data for the music industry in Canada. Out of the five categories of copyright piracy, the IIPA only has complete data for business software.

Plotted below is the IIPA’s estimated total business software trade losses due to copyright piracy during 2006 against population and gross domestic product (GDP) at purchasing power parity (PPP).

Nation

2006 Estimated Total Losses (U.S. dollars millions)*

Population**

Loss Per Capita (U.S. dollars)

GDP (PPP) Per Capita (U.S dollars)***

Canada

551

32,830,400

16.78

34,273

Russia

2180.1

142,400,000

14.80

11,041

Israel

98.4

7,100,000

13.86

23,474

Mexico

1005.6

108,700,000

9.25

10,186

Argentina

301

40,060,000

7.51

14,109

Ukraine

320

46,481,000

6.88

7,213

Venezuela

174.6

27,483,200

6.35

6,186

Costa Rica

27.1

4,327,000

6.26

10,434

Chile

95.6

16,432,674

5.82

11,937

Saudi Arabia

140

27,019,731

5.18

15,229

Thailand

219.7

64,631,595

3.40

8,368

Turkey

243

72,600,000

3.35

7,950

Dominican Republic

20.9

9,183,984

2.28

7,627

China

2207

1,315,844,000

1.68

7,198

Egypt

90

78,887,007

1.14

4,317

India

496.3

1,103,371,000

0.45

3,320

*International Intellectual Property Alliance
**Latest data available on Wikipedia and CIA Factbook
*** International Monetary Fund, World Economic Outlook Database, September 2006

The table is sorted according to dollars lost per capita, and it’s immediately apparent as to why the IIPA is so critical of Canada. Not only does Canada have the greatest loss per capita at $16.78, but its citizens also have the greatest purchasing power. While the IIPA may be concerned about its loss per capita from Canada, the report the coalition filed expressed frustration with Canadian legislation. The IIPA says that pirates have taken advantage of the gaps in Canadian law to become a “leading exporter” of camcorder bootleg movies and modchips for video game consoles.

On the other hand, China, the world leader in dollars lost from piracy, only manages $1.68 lost per person. Of course, incidents of piracy are likely to be spread very unevenly in a nation with huge disparity between urban and rural areas. The IIPA also points to China as a large exporter of pirated goods to Eastern and Western Europe.

The IIPA has spelled out exactly what it believes China must do, including taking deterrent “criminal” actions against pirates instead of fines, which the coalition believes are meaningless. “So far, it is clear that the Chinese government has not devoted sufficient resources to combat rapidly advancing Internet piracy and needs to further clarify underlying legal rules and enforcement procedures, as well as to expand the opportunity for U.S. copyright based industries to offer legitimate materials to the Chinese public,” the IIPA wrote to the Bush administration.

Russia, the other leader in piracy, stays near the top of the list with $14.80 lost. The U.S. government announced in November 2006 a joint program with Russia to fight piracy. The IIPA acknowledges the development, but continues its disparaging tone, saying, “Despite the repeated efforts of industry and the U.S. government to convince the Russian government to provide meaningful and deterrent enforcement of its copyright and other laws against optical disc factories and all types of piracy -- including some of the most open and notorious websites selling unauthorized materials in the world, such as www.allofmp3.com -- little progress has been made over the years in convincing Russia to take the  enforcement actions that could reduce these high piracy levels.”

Despite Israel’s relatively low $98.4 million loss, its smaller population results in a per capita loss of $13.86. The IIPA’s main concern, however, appears to be the Israeli government’s inaction and indifference to U.S. copyright laws. Specifically, the IIPA is dissatisfied with a bill that “would discriminate against foreign producers of sound recordings specifically, and potentially violate Israel’s bilateral obligations to the United States.”

Mexico places fourth on the list of loss per capita at $9.25 and an overall third in terms of overall losses at over $1 billion, but even then, the country’s ranking may be under rated. Going back to the IIPA’s 2005 report, Mexico posted the highest numbers for movie piracy at $483 million—nearly double that of China. The 2006 IIPA report does not include any information about motion pictures, underscoring the potentially incomplete nature of the coalition’s statistics.

Nevertheless, the IIPA has gathered its stats and focused its attentions on the black markets and reigning governments of Argentina, Canada, Chile, China, Costa Rica, the Dominican Republic, Egypt, India, Israel, Mexico, Russia, Saudi Arabia, Thailand, Turkey, Ukraine and Venezuela.

“The unwillingness of the countries identified in our submission to curb high rates of piracy – in most countries, through more effective and deterrent enforcement – saps the U.S. economy of the high-paying jobs and strong growth rates that make this sector critical to the health of the U.S. economy,” said Smith.



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RE: yawn
By Justin Case on 2/20/2007 3:41:42 PM , Rating: 0
Actually the US does not lead the world's economy, the EU does (since 2004). And China is likely to overtake both in a decade or two. But that's not the point.

The reason why the US has a strong economy has nothing to do with intellectual property rights. If country X doesn't recognize those rights, it can use all the patented products and processes, and compete against the USA. So the "protection" given by US laws inside the US doesn't apply to competition between countries (look at China). If you want to make a case for patents being a source of wealth, you need to compare cases within the USA. And what you'll find is that they only help large, established corporations.

The problem with patents (which are very different from copyright) is not the concept itself. It's the amount of stupid, excessively broad patents granted every year. If you can hire a good lawyer, you can patent the act of breathing. If you're a small company or an individual with a great idea, you have virtually no way to protect your intellectual property from the large corporations. Chances are anything you invent is "sort of" covered by some pre-existing, vague, abstract patent, owned by some large company, and if they think your idea can be profitable, and if you refuse to sell it to them, they can afford to drag you through the courts for years, not only preventing you from benefiting from your invention, but actually bankrupting you in the process.

Copyright generally good, patents generally bad.

There's nothing wrong with letting a pharmaceutical company patent a process or a molecule they developed. But a lot of patented drugs actually occur naturally, or were known long before that company started selling them as a cure for "X". Just because you find that a certain product can be used for a certain purpose, that should not give you the right to prevent other people from producing or using it.


RE: yawn
By thebrown13 on 2/20/07, Rating: 0
RE: yawn
By masher2 (blog) on 2/20/2007 4:04:01 PM , Rating: 3
> "Actually the US does not lead the world's economy."

Until the EU is a single nation, the US leads the world economy.

> "The reason why the US has a strong economy has nothing to do with intellectual property rights."

False. IP is the US's single largest export. From software to Hollywood movies to recorded music to patent licensing fees-- all contribute to the growth of the US economy.

This should be apparent, simply by looking at the fact that, over the past several decades, manufacturing and nearly all other sectors have declined, yet the economy still grows. That growth comes from IP.

> "the "protection" given by US laws inside the US doesn't apply to competition between countries..."

False on two counts this time. First of all, protection under US law is the impetus that allows most of this IP to be created in the first place. An event that generates economic growth domestically, even if that IP is never sold overseas. Secondly, due to bilateral trade and IP protection agreements, US and international law are very often synonymous.

> "If you can hire a good lawyer, you can patent the act of breathing"

Coming from someone who holds a number of US and foreign patents, I can safely say this is incorrect. :p

> "Just because you find that a certain product can be used for a certain purpose, that should not give you the right to prevent other people from producing or using it..."

There are several tens of billions of chemicals found naturally in the environment. And several hundred thousand diseases, syndromes, and conditions potentially in need of treatment. That results in several trillion possible combinations, each of which needs to isolated, identified, refined, and subjected to a multi-year, costly $100M+ process of testing for efficacy and side effects.

Creating a new chemical is trivial in comparison. The real work is in finding a potential use for it, and whether or not its safe for human consumption. We reward that work with a patent...and if we didn't, no one would ever do it.


RE: yawn
By raven3x7 on 2/21/2007 2:23:32 PM , Rating: 2
As a citizen of the EU i can quite confidently tell you that most of us don't intent the EU to become a single nation, although there are ppl who do try to turn the EU into a Union of semi-independent states similar to the US which still though is not a single nation. What we are working towards( and currently paying for too) is a unified economy a goal which has mostly been achieved. So, as far as economics are concerned the EU is mostly one market really, not several.


RE: yawn
By Fallen Kell on 2/21/2007 3:37:50 PM , Rating: 2
The USA IS a single nation. There is a thing called Federal Law, which trumps State Law when it says it does. The idea is that overall, the locals know what is best for them, but the Federal Government can trump them on any issue if they feel it is necessary to do so. The States themselves each have their own constitutions as well as having signed into the US constitution. It is actually an ingenious system for dealing with such a large and diverse population base as well as physical location issues. It allows State X to have different rules then State Y with regard to issue Z, unless the Federal Government has addressed that issue themselves.

For instance, there might not be a Federal Law prohibiting the use of a new material in construction work. But a study comes out that shows that this material is dangerous to people if they are exposed to it over a number of years. A state can make a law to ban its use in construction of homes in that state giving immediate relief/results to the local people in that state. However, a different state might not want to ban its use because they found that if you coat the material with something else, it still works fine, and removes the exposure issue...

The idea is that it is easier to get a smaller group of people to agree on a law then getting a larger more diverse group of people to need to agree on that same law. This allows smaller regions of the country to enact laws that suit their immediate and particular needs needs better. However, at the Federal level, if a law is passed, all states are covered by that law. It is not like the EU where "guidelines" are passed, which then the member nations are suppose to pass their own version of the rules. It would be as if the EU body itself passed laws that immediately went into effect across all member nations. That is the difference. Now there are also checks in the system to allow the states to challenge Federal laws based on the constitution, and there have been cases where states have directly challenged the enforcement of a Federal law which they have been opposed to (however in the latter case, the states have always lost the fight).


RE: yawn
By jnypts on 2/21/2007 11:00:59 PM , Rating: 2
Hmmm, time to bust out the history books. The federal government cannot just pass laws if they feel there it is necessary. While federal laws do rule supreme, all rights are reserved for the states, unless it is explicitly given to the federal government by the constitution. So unless its an area the constitution allows federal involvement, they can't do anything about it, short of a constitutional amendment. But you are right about having a two (or actually 3-4 when you consider county and even city control) tiered system enabling effective governance over a varied populace.


RE: yawn
By zander55 on 2/22/2007 1:23:28 AM , Rating: 2
hmmmm, time to bust out the old government text books. you're forgetting the "necessary and proper clause." basically the government can do whatever it feels is 'necessary and proper' for the country under the implied powers of the constitution.

link if you don't believe me.
http://en.wikipedia.org/wiki/Necessary-and-proper_...


RE: yawn
By masher2 (blog) on 2/22/2007 2:21:25 PM , Rating: 1
> "basically the government can do whatever it feels is 'necessary and proper' for the country..."

Oops, you've misinterpreted the clause. It only refers to what is necessary and proper to execute the powers previously specified within the Constitution. It's not a blanket clause allowing anything and everything.

Also, you've forgotten Amendment 10 to the Constitution, which specifically bars the Federal Government from any powers not specifically enumerated within.


RE: yawn
By johnsonx on 2/22/2007 4:59:31 PM , Rating: 1
quote:
Also, you've forgotten Amendment 10 to the Constitution, which specifically bars the Federal Government from any powers not specifically enumerated within.


Yes, but the Federal Government has also largely forgotten it too, unfortunately. If they even bother to explain their way around it, they use the 'promote the general welfare' clause to authorize anything they want to do. I do so wish the Framers had left out that little clause.


RE: yawn
By flurazepam on 2/21/2007 10:32:18 PM , Rating: 2
Creating a new chemical is trivial in comparison. The real work is in finding a potential use for it, and whether or not its safe for human consumption. We reward that work with a patent...and if we didn't, no one would ever do it

Really? I do this for a living. I can assure this is not an easy task. To insinuate that no one engages in the persuit of health cures without patents for the express purpose of monentary gain is both naive and misguided. Banting and Best discovered insulin in the 20's. The chemical patent was given to the University of Toronto and not them personally. The reward they earned was that of being Nobel laureates'.


RE: yawn
By Justin Case on 2/27/2007 11:05:40 PM , Rating: 2
Sorry but nope, "economies" aren't measured by countries, they're measured by currencies. As long as the EU uses a single currency and has no internal border controls, it counts as a single economy.

Here, have fun:

http://en.wikipedia.org/wiki/Economy_of_the_Europe...

http://en.wikipedia.org/wiki/List_of_countries_by_...

http://en.wikipedia.org/wiki/List_of_countries_by_...

Hell, even the Department of State agrees:

http://www.state.gov/p/eur/rls/fs/58969.htm

I guess the EU can thank Dubya for devaluaing the dollar by more than 30% in the last 6 years. It actually makes it seem like they're doing a good job.


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