Copyright Industries Identify Top Countries Contributing to Piracy; "Special 301" Filing Describes Legal and Enforcement Deficiencies

WASHINGTON--(BUSINESS WIRE)--Feb. 10, 2005--The video game industry singled out Malaysia and China as among the worst havens for piracy in the 2005 "Special 301" filing submitted to the U.S. Trade Representative by the Entertainment Software Association (ESA) and other copyright-based industries. The purpose of the report is to underscore areas of concern about market access and high piracy rates, which exist in some countries at levels at or in excess of 90%.

"Despite efforts by the U.S. Government over the years, it's deja vu all over again as these countries continue to skirt their global obligations to protect intellectual property," said Doug Lowenstein, president of the ESA, the U.S. trade association representing computer and video game publishers. "We hope that this year's report will prompt the U.S. to crack down even further. Our industry makes substantial contributions to the U.S. economy, but piracy closes off promising markets, artificially limiting our industry's ability to contribute even more economic growth to the American high tech economy."

The annual report of the International Intellectual Property Alliance (IIPA) identifies many forms of commercial piracy, including factory production of optical discs (such as CDs and DVDs); CD-R and DVD-R "burning"; cartridge counterfeiting; Internet downloading and file trading; as well as Internet cafe piracy as contributors to piracy levels in domestic markets that exceed 80% and even 90% in parts of Asia, Eastern Europe, the Middle East, and Central and South America.

Specifically cited in the report:

-- Syndicates operating in Malaysia remain the world's number one manufacturer and exporter of factory-produced, pirated optical disc product. Exports of these pirated goods were seized in over 20 countries, throughout Asia, Europe, the Middle East, Latin America, South Africa, and even the U.S.

-- In China, while the industry seeks to capitalize on the growing popularity of online games, it must endure several problems, including retail piracy rates upward of 90% on hard goods products for the PC and handheld devices, unlicensed Internet cafes using pirated product and unauthorized servers for online games. U.S. publishers also face an arduous content review process that often takes several months to complete, giving pirates an exclusive distribution window for freshly pirated product that has not gone through such reviews.

-- China also remains the world's center for production of counterfeit cartridge-based product. Ongoing investigations by ESA members have turned up millions of infringing items in seizures conducted in 2004.

Factory production and distribution of pirated PC and console games, often undertaken by organized criminal syndicates, remains a leading concern for all industries that make copyrighted works available on optical media such as CDs and DVDs. IIPA's report identifies a number of countries in addition to those mentioned above that are critical to the game industry, including Russia, which house factories responsible for the illegal production of hundreds of millions of infringing discs per year. Also, during 2004, increases in commercial "burning" of pirated entertainment software contributed to high piracy rates in Brazil (74%), India (86%) and Saudi Arabia (68%).

"These forms of piracy have one natural and common enemy, and that's enforcement," said Lowenstein. "Factory inspections and seizures resulting in the prosecution of upstream targets and disruption of their businesses will allow the industry to compete with, and force out, illegal operators. Freeing these markets from the pirates' stranglehold will also help empower a local video game economy."

Country-by-country analysis is included in the Special 301 report of the Washington-based International Intellectual Property Alliance (IIPA) to be filed with the United States Trade Representative (USTR) on Friday, February 11. The group reports on piracy conditions and evaluates legal reform efforts that have been undertaken to improve copyright protection and enhance enforcement efforts. The IIPA's report, soon to be available at www.iipa.com, details in separate chapters the IP legal and enforcement-related deficiencies of more than 50 countries. Under the "Special 301" trade law, the U.S. Trade Representative can impose trade sanctions following an investigation and consultation period.