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US Copyright Industries Highlight Intellectual Property Rights Deficiencies in Foreign Markets
“Special 301” Report Requests Reforms
February 15, 2011 – WASHINGTON, DC – Italy, China, Spain and Brazil are leading havens for online game piracy according to a “Special 301” report filed with the U.S. Trade Representative (USTR) by the International Intellectual Property Alliance (IIPA). The U.S. copyright-based industries that comprise the IIPA asked the USTR for assistance in remedying legal and enforcement deficiencies in these countries and 35 other trading partners. The IIPA, of which the Entertainment Software Association (ESA) is a member, proposed that 33 of these countries be placed on USTR’s list of countries that fail to adequately or effectively protect intellectual property rights or provide creators with adequate market access.
The ESA points to extraordinarily high levels of online piracy occurring through the use of popular peer-to-peer (P2P) protocols by subscribers in Italy, China, Spain, Brazil and France. Infringing peer-to-peer sharing of game files in those countries amounted to 54% of this activity observed worldwide during 2010, according to ESA. Entertainment software piracy is facilitated by the widespread availability of circumvention devices, technologies and services that enable the use of illegally copied games on home consoles and handheld platforms.
“Our industry continues to grow in the U.S., but epidemic levels of online piracy stunt sales and growth in a number of countries, including Italy, China, Spain, Brazil and France, where we see crushing volumes of infringing peer-to-peer activity involving leading game titles,” said Michael D. Gallagher, president and CEO of the ESA, which represents U.S. computer and video game publishers. “Game publishers lose opportunities for export sales, and the U.S. loses opportunities to expand our export economy, and consumers in those countries lose local benefits of having a thriving game market.”
U.S. computer and video game sales generated $24 billion in 2010, including an estimated $5.1 billion from software downloads and online subscription charges, according to NPD. These figures do not include several billions more in export sales. The entertainment software industry directly accounts for more than 80,000 American jobs.
Under the “Special 301” trade law, the USTR can impose trade sanctions on certain countries following an investigation and consultation period. In the Report:
• ESA joined with other IIPA members in recommending that Spain be elevated to USTR’s Priority Watch List and that meaningful actions be taken to stem the tide of piracy which threatens Spain’s creative industries. The government must change lax policies which have fostered a culture permissive of piracy, beginning with passage of Spain’s Sustainable Economy Act and its proposed online remedies.
• The group recommended that Italy remain on the Special 301 Watch List, due in large part to extraordinarily high levels of online piracy. During 2010, ESA vendors detected more than 30 million connections by peers participating in unauthorized file sharing of select member titles on P2P networks through Italian ISPs, placing Italy number one in overall volume of detections in the world, as well as number one in detections per capita and detections per Internet user. The Italian government appears to recognize the gravity of the problem and has launched an official consultation to examine potential remedies.
• IIPA recommended that Brazil remain on the Watch List, recognizing that its new Administration will provide an opportunity to bolster protections to the benefit of local and international creators. Brazil should reevaluate market access barriers that result in legitimate products being priced out of reach for many Brazilian consumers. ESA’s P2P studies show Brazil placing fourth in overall volume of detections in the world. Online piracy is further exacerbated by unenforceable anti-circumvention laws that hinder the effectiveness of industry anti-piracy technologies.
• IIPA recommended that Canada remain on the Priority Watch List pending passage of copyright improvements and border enforcement reforms. Border enforcement and enactment of anti-circumvention remedies are a priority for entertainment software publishers, as Canada serves as a transshipment hub for circumvention devices imported from Asian producers.
• ESA joined IIPA in recommending that China be maintained on the Priority Watch List, as it remains the source of much of the world’s supply of counterfeit games and game hardware and circumvention devices.
Other notable aspects of the report were the results of studies performed by the ESA that revealed alarmingly high volumes of unauthorized copying of game titles across the leading P2P platforms. Results are summarized as follows:
• Overall Volume: During CY 2010, ESA vendors detected more than 144 million connections by peers participating in unauthorized file-sharing of select ESA member titles on P2P networks through Internet Service Providers across more than 200 countries and territories globally.
• Leading Countries: Together the top 5 countries (Italy, China, Spain, Brazil and France) accounted for more than 78 million detections -- more than 14 times the number of detections attributable to subscribers in the United States (approximately 5.6 million).
These results are based on connection activity involving approximately 230 of ESA members’ leading game titles on major public P2P networks. The data is broken down, by country, based on the country of operation of the ISP. These figures do not account for copies that are downloaded directly from hosted content, including illegal game files found on “one-click” hosting sites, such as rapidshare.com, which appear to account each year for progressively greater volumes of infringing downloads.
The IIPA's report will soon be available at http://www.iipa.com/ and is being submitted, with Special 301 filings and documents from other parties, via http://www.regulations.gov./.
The Entertainment Software Association is the U.S. association dedicated to serving the business and public affairs needs of companies publishing interactive games for video game consoles, handheld devices, personal computers, and the Internet. The ESA offers services to interactive entertainment software publishers including a global anti-piracy program, owning the E3 Expo, business and consumer research, federal and state government relations and First Amendment and intellectual property protection efforts. For more information, please visit www.theESA.com.
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