Federal Agencies Failing to Combat Piracy Abroad—GAO
Federal agency efforts to enforce intellectual property trade agreements other than through a longstanding review process have been largely unsuccessful, a Hill panel was told Thurs. The Govt. Accountability Office (GAO), asked by the House Govt. Reform Committee to examine the issue, told the committee in a report and testimony that inter-agency govt. efforts such as the National Intellectual Property law Enforcement Coordination Council (NIPLECC) has failed to make a dent in the billions of dollars the content industry loses every year to piracy abroad, which the Internet is enabling. Rep. Simmons (R-Conn.), testifying at the hearing as a witness, put it in stronger terms: “You can pass all the laws you want but if there’s no enforcement… if there’s no punishment for doing that, it’s a worthless piece of paper.”
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GAO Dir.-International Affairs & Trade Loren Yager said it didn’t seem that NIPLECC members “have really established what they should be doing in this process.” Formed in 1999, the NIPLECC was intended to coordinate the efforts of multiple federal agencies in enforcing intellectual property laws and trade agreements; this was the Govt. Reform Committee’s jurisdictional connection to the issue, although ranking Democrat Waxman (D-Cal.) has Hollywood studios in his district and Chmn. Davis (R-Va.) has software vendors in his. Not helping NIPLECC, Yager said, is that it has been unfunded since its creation. The Senate Commerce-Justice-State appropriations bill for FY 2005 would give NIPLECC $20 million, but Davis said “money alone doesn’t solve the problem.”
Yager was more supportive of efforts by the U.S. Trade Representative in its Special 301 review, which involves annual assessments of the intellectual property protection of U.S. trade partners. Calling that process “credible,” he said “it really does get the attention” of trading partners, and that “even the threat of sanctions with the Special 301 seems to have had an effect” on stemming piracy. USTR and other agencies still face the challenge, however, of dealing with sophisticated pirates whose goods are so authentic in appearance that sometimes the representatives of the manufacturers can’t immediately identify them as fraudulent, Yager said. The problem is particularly difficult with digital goods, he said, due to the ease of distribution and reproduction. The GAO report released Thurs. is titled “Intellectual Property: U.S. Efforts Have Contributed to Strengthened Laws Overseas but Challenges Remain.”
Yager and Simmons were the only govt. witnesses at the hearing. Davis said he invited agencies participating in NIPLECC to testify, but they all declined. “I'm disappointed by their absence,” he said. Davis was in China over the Aug. recess and said he saw counterfeit goods firsthand, and his staff saw similar problems in Russia and Poland. He expressed optimism that as countries with growing economies began developing their own intellectual property industries, they might be more cooperative with the U.S. protection efforts. Yager said that’s been the case in Brazil, where the large and popular local music industry has launched a campaign against piracy.
Intellectual property agreements “are only as useful as they are enforced,” said Waxman, singling out China and Russia for criticism. He blamed corruption in these countries for part of the problem, but also said there’s been “a lack of training for investigators and prosecutors.” Like Yager, he said the threat of trade sanctions has been somewhat helpful, but also said law enforcement has benefitted by “the tremendous amount of investigative work done by the IP industry itself.”
MPAA Senior Vp-Worldwide Anti-Piracy John Malcolm said MPAA and its international partner MPA has cooperated with local law enforcement “in nearly 32,000 raids” and “I fully expect the number of raids and seizures to go up significantly this year.” Malcolm previously was with the Dept. of Justice as a Deputy Attorney Gen. overseeing the Computer Crime & Intellectual Property Section. Taking Waxman’s statement a step further, he said the corruption has gotten to the point of industry investigators being shot at in Russia, spouses kidnaped in Mexico, cars forced off the road in Thailand, and a face being slashed in Malaysia.
But underlying the piracy industry, Malcolm said, is the Internet, which is “seamless and borderless.” P2P enables pirates around the world to burn hard-copy goods of pirated materials within hours of their posting, and “sophisticated international encoding groups, often referred to as warez groups, take a perverse pride in being the first to steal copyrighted material.” Malcolm called for aggressive law enforcement, praised the Sec. 301 process, and said the U.S. could also leverage its assignment of Generalized System of Preferences (GSP) benefits to countries. He also praised recent trade agreements, which have contained tough IP language.
Business Software Alliance (BSA) Vp-Public Policy Robert Cresanti said the last 2 years have seen “the global spread and growth of the online piracy of software,” largely driven by P2P. He said that in Feb., BSA’s web crawler found 173,992 infringing software programs being offered in 149 countries. While faulting P2P as a tool enabling global piracy, he also said the technology has legitimate uses, citing scientists using it to find cures for Alzheimer’s, cystic fibrosis and mad cow disease.