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New intellectual property crime strategy

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The UK government's first intellectual property (IP) crime strategy was launched today by industry minister Jacqui Smith. Described as a blueprint to crack down on the trade in fake goods, the scheme involves closer inter-agency co-operation in the fight against pirates and bootleggers.

Intellectual property crime cheats consumers, costs jobs and helps fund organised crime, according to the government. It reckons piracy and counterfeiting (including counterfeit DVDs, perfumes, clothing and alcohol) costs the UK economy "billions of pounds" and undermines the success of many of the UK's best companies. Here the government is quoting industry figures which are wide open to question, as we'll see.

Today's national strategy, developed by the Patent Office, brings together brand owners, police, trading standards and customs to improve training; increase the sharing of intelligence and co-ordination between different agencies and to monitor progress and success by publishing an annual national enforcement report. The government doesn't say how much money has been earmarked to fund its anti-piracy strategy but pledges that efforts to put bootleggers out of business will be stepped up.

Jacqui Smith said: "Pirates and bootleggers cheat consumers and place a drain on our economy. We cannot and we will not simply turn a blind eye to copyright and trade mark crime."

"Intellectual property crime is not victimless. As well as cheating consumers, the trade in counterfeit goods costs UK companies billions of pounds and thousands of jobs every year. That is why we are working together with industry and law enforcement agencies to clamp down on this illegal trade," she added.

Loss leader

Music industry chiefs like EMI chair Eric Nicoli were quick to welcome the scheme and the Anti-Counterfeiting Group were at hand with helpfully alarming statistics. "Rights owners estimate that last year alone counterfeiting and piracy cost the UK economy £10bn and 4,000 jobs," it asserted.

Lobbyists like the Anti-Counterfeiting Group and the Business Software Alliance, which last month said that UK software piracy costs software publishers $1.6bn ($29bn globally) a year, have a vested interest in talking up the scope of the problem in their (largely successful) attempts to cajole politicians into action. "IDC estimated that a 10 point reduction in the piracy rate would generate an additional £10bn toward UK GDP, a further £2.5bn in tax revenues and 40,000 jobs in the IT sector within three years," the BSA asserted.

Compelling stuff. Or is it? It turns out that the study assumes that every piece of pirated software is a "lost sale". But IDC (which was commissioned by the BSA to conduct the study) reckons only one of 10 unauthorized copies might be a lost sale. Instead of describing the $29bn number as sales lost to piracy, John Gantz, director of research for IDC, said: "I would have preferred to call it the retail value of pirated software."

Robert Kruger, vice president for enforcement at the Business Software Alliance, was rather defensive when the New York Times questioned the conclusions it drew from IDC's research. "I don't think anyone in our industry has ever argued that every pirated copy is a lost sale. But even if the number is a little lower than $29bn, it is still a big problem," he said.

Piracy is a problem but maybe not to the extent the BSA or the entertainment industry says it is. And that in itself is a problem when misleading figures are allowed to influence policy formulation. The end result is draconian copyright laws that could inhibit the development of open source software, among other things. Meanwhile the disparity of CD and DVD prices between Europe and the US goes unchallenged because industry lobbyists have the ear of government. ®

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