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Washington, D.C. -
Mr. Chairman,
I commend you for putting together another fine hearing.
I want to particularly thank you for inviting Joan Borsten to testify. Joan is a constituent and a good friend from way back. She brings a valuable perspective to this hearing: that of an American entrepreneur whose business has been dramatically impacted by a foreign government's sustained campaign to steal her rights to intellectual property. Because we usually hear about copyright piracy from large corporations or wealthy celebrities, we often lose sight of the impact that piracy has on individual American entrepreneurs or copyright owners.
While international hard-goods piracy may seem a dull subject to some, it is a critical issue to U.S. copyright holders. The aggregate hard-good piracy losses suffered by U.S. copyright industries in foreign nations are pretty astounding. According to the International Intellectual Property Alliance, or IIPA, "losses due to piracy of U.S. copyrighted materials around the world are estimated to reach $20-$22 billion annually (not including internet piracy.)"
Even more astounding are the piracy numbers for individual foreign nations. In 2002, the U.S. motion picture, recording, music, software, and book publishing industries collectively suffered piracy losses of $1.85 billion in China; $800 million in Italy; $771 million in Brazil; $757 million in Taiwan; and $756 million in the Russian Federation.
The percentage of pirated goods in these five nations provides another disturbing measure of the severity of the problem. In 2002, 93% of business software sold in China, 47% of music sold in Taiwan, and 80% of movies sold in the Russian Federation were pirated. In 2001, 99% of entertainment software sold in Brazil was pirated; while in 2002, 55% of entertainment software sold in Italy was pirated.
As piracy percentages climb in a particular nation, it becomes increasingly difficult for U.S. copyright owners to establish a legitimate market. In some cases, as with entertainment software in Brazil, U.S. copyright owners have had to abandon the market entirely. U.S. copyright owners simply cannot justify the expense of maintaining a presence in a nation where the demand for their copyrighted works is almost entirely met by vastly cheaper, pirated versions.
The piracy-related inability of U.S. copyright owners to access a legitimate market in many foreign countries results in real harm to the U.S. economy. The core copyright industries make a tremendous contribution to the U.S. economy - accounting for more than 5% of U.S. GDP, 3.5% of total U.S. employment, and $89 billion in foreign sales and exports in 2001. How much greater would their contributions to the U.S. economy be if U.S. copyright owners could access foreign markets otherwise dominated by pirate product?
Rich LaMagna of Microsoft will, I understand, try to answer this question with some real numbers. I don't want to steal his thunder, but I cannot help remarking on his estimate that in 2008 software piracy will cost the U.S. $1.6 billion in lost tax revenue. While $1.6 billion may only be a small portion of the federal budget deficit currently forecast for 2008, it nonetheless represents significant revenue that could fund critical government priorities.
I realize these numbers and percentages are dry, and their sheer size sometimes begs skepticism. That is why Joan's presence here is so important.
Joan's personal story of intellectual property theft by the Russian government provides a context to these numbers, just as she provides a face for U.S. victims of international copyright piracy. While I don't want to steal Joan's thunder either, I do want to highlight some of the issues that I think her particular situation presents.
In Joan's case, the thief of her intellectual property rights is not some private syndicate operating in distant shadows within a foreign nation, but is a foreign government itself - the Russian Federation government. Through the establishment of dummy corporations, fraudulent license transfers, and illegal pressuring of Russian courts, the Russian Federation government has attempted to deprive Joan of her valid license to copyrights for a library of Soviet-era animation.
Where a foreign government is itself stealing intellectual property from a U.S. citizen, it is particularly appropriate for the U.S. government to demand that the foreign government stop the theft. Conversely, it would be entirely inappropriate for the U.S. to grant any special trade privileges, such as WTO accession or GSP benefits, to a foreign nation whose government is stealing intellectual property from a U.S. citizen.
Mr. Chairman, I know your particular focus today is on the links between organized crime, terrorism, and international copyright piracy. In that regard, I wish to note that intellectual property theft by a government represents the very essence of organized crime. In any nation, there is typically no bigger organization than its government, and no greater power. Thus, when the government steals intellectual property, it is engaging in organized crime of the highest magnitude.
Thank you, Mr. Chairman, and I yield back the balance of my time. |
