Copyright in the Internet Age

Digital piracy (the online theft of creative property) poses one of the single greatest threats to the success of the information economy. It undermines the confidence that creators and consumers place in their commercial interactions over networks.

The very nature of the online world that makes it so attractive in the marketplace also renders the work of copyright violators easier. Now that unlimited, flawless copies of creative works in digital form can be made and distributed globally in a matter of seconds, intellectual property on the Internet can be at great risk. Internet piracy is real, acute, and growing, demanding strong protections in the digital arena.

Software Piracy Is the Industry’s Most Serious Problem

Piracy is the most significant problem facing the software industry globally. Every day, pirates steal millions of copies of copyrighted computer programs. Some of these are stolen by users making illegal copies personally, others by professional counterfeiting, and still others via illicit sales or auctions on the Internet.

For example, International Planning and Research recently found that 48 percent of all software loaded onto computers globally in 2002 was pirated. In many countries, the piracy rate exceeds 80 percent. The resulting economic losses, according to IPR, were staggering: over $23 billion lost internationally, with $4.3 billion attributable to piracy in the United States alone.

Widespread software theft harms not only America’s leading e-commerce technology developers, but also its consumers. They risk purchasing defective, counterfeit products and losing the benefits enjoyed by purchasers of legitimate software, such as customer support and product upgrades.

But, the economic impact of software piracy extends far beyond the confines of the software industry and its consumers. Piracy distorts e-commerce technology economies worldwide by robbing governments of legitimate tax revenues and citizens of badly needed jobs.

A recent study by PricewaterhouseCoopers found that software piracy cost the U.S. economy over 200,000 jobs, more than $5 billion in lost wages, and nearly $2 billion in foregone tax revenues. The study concluded that, by 2009, these losses would grow to 286,000 jobs, $8.4 billion in lost wages, and $2.7 billion in lost tax revenues. Conversely, PricewaterhouseCoopers concluded that reducing piracy could produce at least two million additional jobs and nearly $36 billion in additional government revenues worldwide by 2006.

Governments Must Combat Copyright Theft

Stemming these massive losses requires a concerted, multifaceted effort to combat the theft of copyrighted material. Although technological measures to fight piracy and increased public education about copyright are essential, the key to copyright protection lies in governments worldwide adopting and vigorously enforcing strong laws prohibiting this theft.

Copyright Laws Must Be Enforced

Strong words in a statute are not enough. These laws must be backed by vigorous enforcement by governments and must allow private parties to pursue fast and inexpensive remedies when their rights have been infringed. Strong copyright protection includes:

• Deterrent civil and criminal penalties.

• Sustained criminal enforcement.

• Copyright-related law enforcement efforts must be funded sufficiently.

• Court-ordered and court-appointed piracy inspections must be available.

The WIPO Copyright Treaties Must Be Implemented

With the Internet, copyright theft has become a global phenomenon. The World Intellectual Property Organization (WIPO) recognized that fact when it adopted “digital” copyright treaties to create an international legal standard, covering online intellectual property. Now, the nations of the world must ratify them.

The treaties were designed to promote online commerce by ensuring that authors are able to determine how their works are sold and distributed online. The WIPO treaties reinforce the fact that copyright protects all copies of a work, whether they are considered “permanent” or “temporary,” “tangible” or “digital.” The treaties also ensure that authors retain the right to determine the point at which their copyrighted works are placed on the Internet, in the same way that authors determine the locations at which tangible copies of their works may be distributed.

The WIPO treaties also recognize that, to protect intellectual property from theft, owners need to employ e-commerce technology that guards against unauthorized access and copying. Because such e-commerce technology-based protections are an extremely effective means to prevent theft, the treaties recognize that attempts by pirates to break these technical defenses must be outlawed.

Because many international copyright laws do not specifically protect creative materials distributed over the Internet, global adoption of these treaties is essential to promoting the safe and legal growth of Internet commerce. Under provisions of the treaties, a total of 30 signatory countries must ratify the treaties in order for their provisions to become enforceable worldwide. To date, over 36 countries have taken this step.

Governments Must Lead By Example

Governments are among the largest purchasers of computer-related services and equipment the world over. Not surprisingly then, many governments internationally have taken the important step of directing their public administrations to effectively manage software resources. High-profile government software management policies have been issued in the People’s Republic of China, Spain, Taiwan, Ireland, Colombia, Jordan, Thailand, the Czech Republic, and Paraguay, among other nations. A number of other governments are drafting similar policies, which have served as a catalyst for enhancing software protection in both the public and private sectors in those nations.

For example, in 1998, the United States issued an Executive Order requiring U.S. government agencies and contractors to effectively manage their software resources and, in so doing, to use only legal, licensed software. Several U.S. states, including California and Nevada, issued similar orders applicable to state government agencies and related entities. These policies have had a powerful impact on the health of the software industry in the United States and, importantly, have set the tone for proper software management practices in America’s private sector.