2. Piracy and Counterfeiting as Obstacles to Development Jeffrey Hardee Vice President & Regional Director Business Software Alliance October 25, 2004

3. Agenda  Who is the BSA?  Piracy stunts opportunities  Software as an economic driver  No Short Cut: Policy, Public Awareness. Enforcement

4. Who is the Business Software Alliance?  A non-profit organization promoting a safe and legal digital world  BSA educates consumers on software management and copyright protection, cyber security, trade, e-commerce and other Internet- related issues  Founded in 1988  Presence in 65 countries worldwide

5. BSA Members

6.  Total software installed on computers: US$80 billion  Total software paid for: US$51 billion For every US$2 worth of software purchased legitimately, US$1 worth is obtained illegally  Total packaged software loss: US$29 billion  GLOBAL PIRACY RATE: 36% 2003 Worldwide Software Piracy Figures

7.  E. Europe: 70%  Latin America:63%  Middle East/Africa55%  Asia/Pacific: 53%  W. Europe: 36%  US/Canada23%  Worldwide36% PC SW Piracy By Region

8. PC SW Piracy Rankings Top 20 Pirating CountriesBottom 10 Pirating Countries

9.  W. Europe: $9,600  Asia/Pacific: $7,553  US/Canada:$7,232  E. Europe: $2,111  Latin America:$1,273  Middle East/Africa:$1,026  Worldwide$28,794 PC SW Losses By Region

10. Value of Pirated Software Piracy of $100 Million or More* * Low piracy countries, because of the size of their markets can have high values for pirated software

11. CountryPiracy RatePiracy Losses ($M) Vietnam92%$41 China92 %$3,823 Indonesia88 %$157 Pakistan83 %$16 Thailand80%$141 Other AP76%$37 India73%$367 Philippines72%$55 Malaysia63%$129 Hong Kong52%$102 Korea48%$462 Taiwan43%$139 Singapore43%$90 Australia31%$341 Japan29%$1,633 New Zealand23%$21 Regional Average/Total53%$7,553 Software Piracy in Asia Pacific

12. Global IT market large and growing – 2003 IDC Study Globally – IT contributes $932 billion Employs over 9 million people in more than 1 million companies Raises $700 billion in tax revenues

13. Economic Benefits of Commercial Software – IDC Study Software is a key driver of IT sector growth In 2001, software and IT services accounted for more than 60% of IT sector spending US$180 billion for the packaged software industry

14. Asia’s IT market growth led by software IT $175 billion industry Employs 3 million people Generates $95 billion in taxes Software industry alone $25 billion sector and fastest growing component of IT industry Between 2002-2006, IT sector projected to grow by 54% BUT with 10 point reduction in piracy levels IT sector could grow by 94%, nearly twice as fast

15. Harnessing IT economic benefits Key Finding: A country’s software piracy rate is a key differentiator between countries that enjoy vast IT economic benefits and those yet to unleash them.

16. What a 10 point drop in piracy could mean for Asia economies Directly contribute an additional $170 billion to Asia’s economies Create 1.1 million new jobs Increase local industry revenues by nearly $120 billion Generate $15 billion in taxes

17. Invest in Protection Asia would enjoy greater economic benefits if it invests more in IP protection Governments should play an active role in combating piracy and supporting IT industry

18. BSA’s role in reducing software piracy Three-Prong Approach  Public Policy Copyright Protection TRIPS and WIPO Treaties: criminal penalties, statutory damages, ISP liability, temporary copy protection, ACM, RMI Optical disc legislation  Education Educational campaigns to create IPR awareness Work closely with government and industry on joint activities to educate businesses on software piracy. This includes joint poster campaigns, road shows and direct mailer campaigns  Enforcement Support law enforcement to counter piracy Conduct own anti-piracy activities

19. Types of Piracy Organizational end-user piracy Businesses and organizations using pirate or unlicensed software in the office. Hard disk loading Loading of illegal copies of software onto the hard disk of computers by computer sellers Retail Piracy Sale of pirated software on a retail level Software Counterfeiting Illegal manufacture and distribution of software Internet Piracy Unauthorized downloading/uploading of software, Internet sites offering infringing software, unauthorized sharing of files

20. Organizational End-user Copying 6

21. Company Network Legal Network Usage Organizational End-user Network Use License Agreement

22. Company Network Illegal Network Usage Organizational End-user Network Abuse License Agreement

23. Examples Of Manufacture/Retail Piracy Burned CDs (including compilations) Counterfeit Product “ Hard-Disk Loading ”

24. Mail Order CDs

25. GNUTELLA A Once connected, the user becomes part of a large interconnected network of other users. File Sharing Services

26. Matches are displayed as they are found, while the message continues through the rest of the network. GNUTELLA A F G C B D H E Search: “Norton Anti Virus” Match! File Sharing Services

27. Legal Tools - Berne Convention Traditional rules: under the Berne Convention copyright laws should give right holders the following exclusive rights which other people cannot exercise without the author’s consent -Reproduction Right – right to authorize or prohibit copying of a work in any manner or form -Adaptation Right – right to authorize or prohibit translations, adaptations and other modifications of a work -Communication Right – right to authorize or prohibit public performance and broadcasting of a work

28. TRIPS Agreement WTO TRIPS Agreement (Trade Related Aspects of Intellectual Property Rights) first major international treaty to go beyond the definition of basic rights to address procedures and remedies necessary to secure those rights against infringement TRIPS requires procedures and remedies that actually work in practice to deter and prevent infringement Members required to adopt enforcement procedures that “permit effective action” against infringements, including “expeditious remedies to prevent infringements” and “remedies which constitute a deterrent to further infringements” -surprise searches in civil and criminal proceedings (ex parte)

29. TRIPS Agreement -damages that compensate the right owner and deter infringements (recovery of full actual costs and higher (even “pre-determined”) damages in civil cases -Criminal penalties required “at least in cases of copyright piracy on a commercial scale” -Expeditious remedies and procedures that do not entail unwarranted delays In short, TRIPS requires government commitment to enforcement by providing “effective action” and “expeditious remedies” to deter and prevent infringement.

30. WIPO Treaties WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT) Adopted in December 1996 to bring copyright law into the electronic commerce age by granting new exclusive rights, including: -Making Available Right: the right to authorize or prohibit the making available of a work by wire or wireless means, such that members of the public may access a work at the time and place they choose -Protection of works in digital form: Berne convention covers reproduction in any manner or form and WIPO treaties confirm reproduction right “fully applies in the digital environment including electronic storage of digital works

31. -Technical Protection Rules: Treaties prohibit the circumvention of technological measures used by authors to protect against unlawful reproduction, distribution and use of their works -Distribution Right: The right to authorize or prohibit distribution of copies of a work

32. Optical Disc Legislation License OD plants to operate under certain conditions SID Code requirement Tracking of replication equipment Authority to inspect plants with powers of seizure of mfg equipment and discs Revocation of licenses for breaches PRC, Hong Kong, Taiwan, Malaysia, Macau, Singapore, Philippines

33. Developments in Region China -Document 18 and State Council Document 47 to promote growth of software industry refers to IP -Series of decrees on legal use of software -Improvements in copyright legislation and software regulations in preparation for WTO entry -Judicial interpretations -April JCCT Talks: 1) significantly reduce IPR infringement levels; 2) lower criminal thresholds and apply criminal sanctions to on-line piracy; 3) ratify and implement WIPO treaties ASAP; 4) extend ban on use of pirate SW to local gov’ts; 5) launch national campaign to educate citizens on importance of IPR

34. Developments in Region FTAs – Singapore, Australia, Thailand TIFAs - Malaysia Korea – Strong enforcement BSA joins with governments and local industry associations to increase public awareness (SAM training Singapore, Thailand, Indonesia…) WIPO Seminars

35. BSA – IPOS Radio Ad on SAM

36. THANK YOU