Statement of Marybeth Peters
The Register of Copyrights
before the
Subcommittee on Intellectual Property,
Committee on the Judiciary
United States Senate
109th Congress, 1st Session
May 25, 2005
Piracy of Intellectual Property
Mr. Chairman, Senator Leahy, Members of the Subcommittee,
thank you for the opportunity to speak with you today about one of
the most pressing issues in copyright today—international piracy.
It is always a pleasure to appear before you, and I was pleased to
see the reinstallment of the Subcommittee, and wanted to congratulate
you on your Chairmanship.
I. Introduction
Mr. Chairman, in the nearly forty years that I have worked in the
Copyright Office, piracy, and especially global piracy, is probably
the most enduring problem I have encountered. As with some other
illegal activities, there will always be at least a small segment
of any population who cannot be deterred from this theft of others'
creativity. Thus, I fear that it is simply not realistic to speak
of eliminating all piracy around the world, or even within the United
States.
What we can and should strive for is the reduction of piracy to
the lowest levels possible; levels that will not rob authors and
copyright owners of the incentive to create and distribute the works
that have made America's creative industries the envy of the world.
The Copyright Office has a long history of working toward this goal,
both on its own initiative and in cooperation with the other agencies
of the Federal Government. My testimony today will describe those
efforts and their effectiveness.
II. Legal Framework
Broadly speaking, there are two elements to the protection of copyright.
The first element is a legal framework that provides the basic rights
to copyright owners and establishes procedures for the enforcement
of those rights. Those procedures must provide the opportunity to
obtain adequate remedies when those rights are violated as well as
the possibility of punitive monetary judgments and, in appropriate
cases, imprisonment of the infringer. The second element of copyright
protection is the application of these legal rules to ensure that
copyright owners have actual, effective protection against infringement
of their rights.
In the ten years since the conclusion of the Uruguay Round of the
WTO, and the concomitant adoption of the TRIPS Agreement,(1) there
has been tremendous improvement worldwide in countries' legal framework
for copyright protection. By incorporating the substantive copyright
obligations of the Berne Convention, and supplementing them with
civil, criminal, and border enforcement obligations, TRIPS established
a minimum standard against which all countries' copyright regimes
could be judged.
Since 1995, the number of WTO
member countries has nearly doubled. By including the TRIPS Agreement
in the WTO obligations, and thus subjecting the obligations therein
to international dispute resolution, we have been able to advance
copyright protection in all 148 WTO member countries further
and faster than would have been possible without it.
The Copyright Office is proud
of its contributions to this success, which include participation
in the negotiation of the TRIPS Agreement and other copyright
treaties and agreements, as well as training of foreign officials.
Our main program for training foreign copyright officials is
our International Copyright Institute (“ICI”). This week-long
program exposes foreign officials from developing countries and
countries in transition to a wealth of copyright knowledge and
information, presented by U.S. Government, and foreign and domestic
industry experts. Thanks to the Congress, we are able to attract
the best participants from around the world by offering this
training program at no cost to them or their governments.
Part of the reason the ICI is
such a success is that it is not merely a week of lectures. We
provide ample time for the delegates to interact and learn from
each other. Similarly, we learn valuable information about the
law in their countries, including new developments not necessarily
available to the public. Perhaps most important of all, we strengthen
the relationship with those countries. Many ICI participants
have been high-ranking officials or have gone on to high-level
government positions. The relationships we establish at the ICI
enhance our ability to negotiate with the officials and countries
we have hosted.
In addition to the ICI, the
Copyright Office makes its experts available to speak around
the world at various conferences and training programs. In the
past twelve months, we have spoken at WIPO seminars, academic
conferences, and events sponsored by other U.S. Government agencies,
such as a State Department Intellectual Property Roundtable and
the Patent and Trademark Office's Visiting Scholars program.
I personally have been very active in the State Department's
Distinguished Speaker program, giving presentations in Chile
and Uruguay last year, and am scheduled to speak in Germany,
Brussels, and Brazil this year.
We also supported USTR's free
trade agreement (“FTA”) negotiations by providing technical
assistance to our negotiating partners. We were pleased to send
experts to the two intellectual property and telecommunications
programs that the State Department organized for its embassy
officers throughout Europe and east Asia.
The Copyright Office is also
a major contributor to the strengthening of copyright protection
through international organizations, notably the World Intellectual
Property Organization (“WIPO”). The Copyright Office
played a key role in the negotiation of the WIPO Copyright Treaty
(“WCT”)
and the WIPO Performances and Phonograms Treaty (“WPPT”).
Those treaties supplemented the Berne Convention and the TRIPS
agreement with updated obligations that are especially important
in the digital age. As you know, the United States implemented
the WCT and WPPT through the Digital Millennium Copyright Act
(“DMCA”),
which stands as a model for the world. Those treaties and the
model of the DMCA have also been the source of a substantial
improvement of the legal framework for the protection of copyright
in numerous countries around the world. The work at WIPO neither
began nor ended with the WCT and the WPPT, and the Copyright
Office continues to work in support of the proposed treaties
on audio-visual performances and on broadcasting, cablecasting,
and webcasting, among many other initiatives.
There are also many opportunities
to promote copyright protection through the World Trade Organization
(“WTO”). The Copyright Office works closely with
the U.S. Trade Representative's Office (“USTR”) to take
full advantage of each of them. As countries not currently in
the WTO seek to join, we evaluate their existing copyright laws,
advise USTR of TRIPS deficiencies, and support pre-accession
negotiations. Once countries are WTO members, they are subject
to a periodic review of their laws. Again, we advise USTR of
any TRIPS deficiencies and draft questions for those countries,
seeking explanations from their governments and highlighting
the problems in a global forum. Most seriously, if and when the
dispute resolution procedure of the WTO is invoked for a copyright
issue, we support USTR in this litigation effort with our expertise.
The Copyright Office also works
hand-in-hand with USTR on bilateral and regional trade negotiations,
including negotiations and implementation of FTAs. In the past
twelve months, we participated in bilateral negotiations with
Russia, Saudi Arabia, China, South Korea, Japan, Taiwan, Philippines,
Vietnam, Germany, Israel, Kazakstan, Brazil, Yemen, and Kuwait.
During that time, we played a key role in negotiating the intellectual
property chapters of the FTAs with Panama, the Andean FTA group,
Oman, United Arab Emirates, and Thailand. We have also worked
hard to ensure the proper and full implementation of our FTAs,
most notably with Singapore and Morocco.
I am confident that we have
a lot to show for our efforts and I am proud of that. American
creative industries now have improved legal regimes around the
world, increasing their opportunity to sell their products and
services on a level playing field. This generates an incentive
to create and distribute new and better works for the benefit
of Americans and the world. It also creates jobs, both here and
abroad.
My discussion of the legal frameworks
for protecting copyright would not be complete if I did not add
a few words about the U.S. Copyright Act. While there are many
ways to approach an issue and many good laws around the world,
I believe that on the whole, the U.S Copyright Act does the best
job of providing appropriate protections to authors and copyright
owners, while still allowing for fair and reasonable use of copyrighted
materials.
But our law is not perfect,
and when we go to other countries seeking improved copyright
protection, they are quick to point out the deficiencies and
gaps in our law. For example, the U.S. has not amended its law
to remove a provision of section 110(5), an exemption for performing
musical works in public places like bars and restaurants that
was broadened in 1998. A dispute resolution panel of the WTO
ruled that the expansion of the exemption was inconsistent with
the United States' TRIPS obligations. Also, although we ask foreign
governments to extend all the rights they afford under their
law to their domestic right holders in sound recordings to American
right holders as well, many countries point out that the scope
of such rights under U.S. law is narrower than theirs, depriving
their right holders of the reciprocal protections in the United
States. I know that these are controversial subjects, but if
we are going to take a frank look at how to solve the problems
of international piracy, we need to look at our own deficiencies
as well.
III. Enforcement
The second element to the protection
of copyright is the enforcement of the rights provided by the
law. We all recognize that without adequate and effective enforcement,
the laws are not worth very much. Accordingly, we place a great
deal of emphasis on enforcement in our conversations with foreign
officials.
The TRIPS agreement
was the first international instrument to contain extensive copyright
enforcement obligations, covering the necessary authority of
policing, customs, and judicial authorities, setting standards
for the application of criminal penalties, and establishing the
overall standard that countries must provide “effective
action against any act of infringement . . . and remedies which
constitute a deterrent to further infringements.” (2)The
TRIPS agreement has been a tremendously valuable tool in advancing
the development of legal structures to support enforcement of
copyright around the world. There remains, however, substantial
work to be done in making sure that those structures provide effective enforcement
of copyright.
Our FTAs have built upon the
TRIPS enforcement text by adding specificity to what is found
in TRIPS, and other obligations not found in TRIPS at all. For
example, where TRIPS requires criminal penalties for all “wilful
. . . copyright piracy on a commercial scale...” (3),
the FTAs specify that criminal penalties must be available for
all wilful infringements for purposes of commercial advantage
or private financial gain, or significant wilful infringements,
regardless of motivation. This reflects the experience in the
U.S. in dealing effectively with various forms of piracy and
is broader than many countries' existing criminal copyright provisions.
The FTAs also provide us with
the flexibility to address enforcement problems that are particularly
problematic in a given country or region. For example, some of
our FTAs include a side letter imposing a unilateral obligation
on our trading partner to regulate the manufacture of optical
discs. (4) This
is a reflection of the fact that much of the world's pirated
optical discs are manufactured in certain regions, perhaps most
notably, southeast Asia.
In another example, one that
is specific to a single country, there is a provision in the
Singapore FTA which was carefully crafted to address the serious
concerns with pirated products being trans-shipped through Singapore
and out to the rest of the region and the world.
A.
Serious Challenges Remain
Despite all these accomplishments,
the fact remains that copyright enforcement in too many countries
around the world is extremely lax, allowing staggeringly high
piracy rates and massive losses to American companies. In its
most recent Special 301 submission, the International Intellectual
Property Alliance (“IIPA”) estimated that global piracy
cost U.S. copyright industries over $13 billion in 2004 alone.
1.
China
China is a good example of how
laws are not enough—enforcement is absolutely essential to
the protection of copyright. As China joined the WTO in 2001,
the Copyright Office worked with the USTR-led interagency team
to provide technical advice and to urge the Chinese government
to amend its law to be TRIPS-compliant. While it fell short in
several important respects, the law is more than sufficient to
provide some meaningful protection to copyrighted works if it
is properly enforced. Unfortunately, China's enforcement efforts
remain inadequate as is illustrated by the industry reports that
the piracy rates continue to hover around ninety percent for
all forms of copyrighted works, as they have for years.
Last year, China made a number
of commitments to improve various aspects of its intellectual
property regime, most notably in regards to enforcement. Shortly
before the meetings at which those commitments were made, the
Copyright Office hosted a delegation of Chinese copyright officials
led by the National Copyright Administration of China (“NCAC”).
We have enjoyed a cooperative relationship with the NCAC for
nearly 25 years, and that relationship has helped to promote
greater understanding between our governments. We have learned,
though, that China's government is complex, and that the NCAC
frequently does not have the final say on copyright policy and
enforcement in China.
China's implementation of last
year's commitments has been incomplete. For example, a major
impediment to increased criminal copyright prosecutions has been
a series of Judicial Interpretations of the criminal code, which
set minimum monetary thresholds for the scope of infringements
capable of giving rise to a criminal conviction. While a new
set of interpretations with lower thresholds was issued, it contains
several flaws, such as calculating whether the thresholds are
met based on the artificially low pirate price, rather than the
price of the legitimate version of the product being infringed.
Further, while Vice Premier Wu Yi did hold public events to draw
attention to the problem of piracy in China, the government has
still not ratified the WCT or WPPT.
2.
Russia
Russia has been on the Special
301 Priority Watch List since 1997. Today Russia's copyright
piracy problem remains one of the most serious of any country
in the world. According to the IIPA, piracy rates in Russia for
most sectors are estimated at around 80% in 2004 and losses exceed
$1.7 billion. In the past few years there has been an explosion
in the growth of illegal optical media disc plants run by organized
crime syndicates with widespread distribution channels. Russia
has also developed a serious online piracy problem, as exemplified
by the offering of pirated materials on the website, "allofmp3.com," which
has yet to be taken down by Russian authorities.
The U.S. Copyright Office is
a committed member of the United States Government interagency
efforts to combat intellectual property violations in Russia.
There have been some positive steps in Russia which include passing
copyright amendments last year that, among other things, remedied
a long-standing and serious deficiency in the protection of pre-existing
works and sound recordings of U.S. right holders. Statements
by President Putin and other high-ranking government officials
indicate that the Government of Russia comprehends the serious
adverse effects of piracy and counterfeiting on U.S. companies,
Russia's domestic creative industry and its economy. Not all
of these encouraging statements have produced the desired results,
such as the Russian Government's statement that it would eradicate
all music piracy within two years. Now, two years since then,
piracy has not decreased, but instead has increased by 30%, and
industry estimates that Russia is now the world's largest exporter
of pirated music products. Nevertheless, we must encourage the
Russian Government to remain committed, and meet its enforcement
problems head-on. We will continue to work with USTR using every
possible forum to build on the positive steps Russian lawmakers
have taken.
B.
Treaties Cannot Compel Enforcement
For all the progress that we
have made through TRIPS, the WCT and WPPT, and our FTAs, the
fact remains that enforcement requires action. Laws do not enforce
themselves. In my experience, there are two causes of inadequate
enforcement: lack of competent police, prosecutors, and/or judges
and lack of political will to enforce copyright. We do our best
through the training programs I have described to address the
first problem. The second, lack of political will, is much more
difficult.
I firmly believe that both history
and logic demonstrate that a good system of copyright protection
is a critical ingredient to developing vibrant domestic creative
industries. Just recently, Bill Gates spoke at the Library of
Congress and questions were raised concerning outsourcing. He
responded that Microsoft would continue to operate out of the
United States because the United States is the country with the
most respect for intellectual property. That statement is a testament
to how intellectual property goes hand-in-hand with substantial
economic development.
We must recognize the reality
that some countries do not share this view. They sacrifice the
long term social and economic development benefits in favor of
instant gratification; pirate operations provide jobs and income
in many developing countries. Some also take the unfortunate
view that paying for legitimate copies of works is just an exercise
in sending money out of their country to foreign right holders.
This approach undermines the ability of copyright to encourage
and develop a nation's own creative industries and culture. It
also overlooks the benefits of tax revenue from legitimate business
and the good jobs and income that come with the increase in foreign
investment that is encouraged by a good regime of copyright protection.
Such countries are simply unwilling
to commit resources to provide effective enforcement of copyright.
At best, they will do the minimum they need to do in order to
prevent excessive trade friction with the United States or other
trading partners. In recent years, some like-minded countries
have worked together to present arguments on the international
level that seek to weaken existing international standards of
copyright protection. Couched in terms of encouraging development
or cultural diversity, these arguments are premised on the notion
that copyright protection is antithetical to the interests of
developing countries. What we are facing is an attempted backlash
against the TRIPS agreement and our other successes. While we
need to continue to work hard for short-term progress on enforcement
in individual countries, we must also keep a close eye on these
attempts to undermine established international standards of
copyright protection.
IV. Not All Piracy Is
Alike
Before I conclude, Mr. Chairman,
I would like to distinguish the type of piracy we see in the
United States and what we see in many other countries. To be
sure, piracy anywhere is serious and cause for concern. I have
testified extensively on the very real dangers of domestic piracy,
particularly the massive amount of piracy that dominates many
peer-to-peer networks. As you know, these issues have given rise
to the type of vigorous public debate on which the United States
prides itself. But all too often, what we see abroad bears no
resemblance to college students downloading their favorite songs
and movies.
Much of the foreign piracy about
which we are speaking today is done by for-profit, criminal syndicates.
Factories throughout China, southeast Asia, Russia, and elsewhere
are churning out millions of copies of copyrighted works, sometimes
before they are even released by the right holders. These operations
are almost certainly involved in other criminal activities. Several
industry reports in recent years suggest that dueling pirate
operations have carried out mob-style "hits" against their criminal
competitors. And, although the information is sketchy at best,
there have been a series of rumored ties between pirating operations
and terrorist organizations.
What is problematic is that
some American commentators who are prone to hyperbole about what
they see as an imbalance in the U.S. Copyright Act are providing
arguments and rationalizations that foreign governments use to
defend their failure to address this type of organized crime.
The confusion wrought by the imprecision and lack of clarity
in these commentators' statements is not helpful to our achieving
the goal for which there is no credible opposition: dramatic
reduction in organized piracy of U.S. copyrighted works abroad.
V. Conclusion
International piracy poses a tremendous
threat to the prosperity of one of America's most vibrant economic
sectors: its creative industries. Accordingly, it deserves our utmost
attention. This attention must be consistent and long-term if it is
to be successful. At the same time, we must be realistic in the goals
that are set, lest we become discouraged in spite of our successes.
While it is not realistic to expect to eliminate all piracy, I do believe
that we can continue to improve the global situation, to the benefit
of authors and right-holders here in the United States and throughout
the world.
1. Trade Related
aspects of Intellectual Property.
2. TRIPS Art. 41(1).
3. TRIPS Art. 61.
4. The
phrase “optical disc” is an umbrella term that includes
DVDs, CDs, CD-ROMs, VCDs, etc. containing movies, recorded music,
computer programs, and videogames.
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