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The United States Trade Representative‟s “Special 301” reports are shown to consistently include ASEAN members on lists of nations with high prevalence of IP infringement. However, prominent court cases reviewed show that IP is a real right with possible remedies in ASEAN states. Legal issues relating to procedure and interpretations are found partially at cause for differences between western enforcement and that found in the majority of ASEAN. Economic and organized crime aspects of commercial infringement are then considered in attempts to understand the phenomenon of IP infringing markets found in SE Asia. Dangers associated with non-genuine goods are assessed along with social contributory causes for widespread acceptance of infringing goods. Conclusions are realistic about the future of protection in ASEAN – where there is opportunity but perhaps insufficient motivation to lead internationally. Keywords: Intellectual Property, Business Ethics, Corruption, ASEAN Case Law, Piracy and Counterfeiting Introduction “A man hated the way he walked and decided to learn how people in the city of Handan carried themselves. The result was, however, not only did he fail to learn the new style, but he also forgot his own way of walking.” - 邯郸学步, Chinese proverb (Yuan, 2009) Infringement of copyright and trademark are global problems which attract attention from many directions, from profit-seeking criminals to private, governmental and international organizations. Multiple researchers have gathered information, engaged in development projects, furthered protection of intellectual property rights (IPR), and advocated change in policy and application thereof. Executive branch (i.e. police and customs) interests worldwide are supported in part by private interest, business and academic groups. Enforcement actions in jurisdictions lacking public funds are sometimes collaborative efforts between government and private industry. Stakeholders in the intellectual property (IP) economy recognize the need for protection and enforcement of rights, and some actively pursue enhanced IP regimes
domestically and internationally. Criminal individuals and groups recognize the profitability of infringement and take action to secure supply chains and capitalize on demand unmet by licit businesses. Worldwide, struggles between these two opposing sides manifest corruption, public outrage against IP legislation, severe sentences for relatively minor private-use infringement, new treaties and privacy rights debates. With the letter of the law on one end, and a demand for free market economies and perfect competition on the other, the middle ground can be difficult to hold as interest parties consistently pull and push for their ideas to be exclusively represented. IP is an economic issue in times when public expenditures generally go toward health care, welfare, social security, and military. Mainstream global media coverage to big cases like that against Megaupload (2012) is one of the few ways the general public is directly exposed to administration of IP law. Treaties like the 2011 Anti-Counterfeiting Trade Agreement, which was signed by 8 original parties including Singapore, are met with resistance by segment of the public that wants lower priced goods by any means. Nonetheless, the pursuit of intellectual property rights continues. Each of the 10 ASEAN members has promulgated domestic statutes in support of some degree of protection of IP. World Trade Organization (WTO) membership among most ASEAN states compelled legislatures to enact laws. The legislative framework in leastdeveloped countries (LDC) – Cambodia, Laos, Myanmar – is significantly weaker than in the other seven nations. Likewise, IPR legislation in Singapore and Malaysia is significantly more comprehensive than that in the poorer, less economically-active nations. This article examines the piracy and counterfeiting in ASEAN. The United States Trade Representative‟s “Special 301” reports are shown to consistently include ASEAN members on lists of nations with high prevalence of IP infringement. However, prominent
court cases reviewed show that IP is a real right with possible remedies in ASEAN states. Legal issues relating to procedure and interpretations are found partially at cause for differences between western enforcement and that found in the majority of ASEAN. Economic and organized crime aspects of commercial infringement are then considered in attempts to understand the phenomenon of the IP infringing markets found in SE Asia. Dangers associated with non-genuine goods are assessed along with social contributory causes for widespread acceptance of infringing goods. Conclusions are realistic about the future of protection in ASEAN – where there is opportunity but perhaps insufficient motivation to lead internationally. IIPA & Special 301 The International Intellectual Property Alliance (IIPA) is a seven member organization which represents more than 1,900 American companies interested in protecting copyright laws. IIPA advocates enforcement reform and has assisted the US government in matters relating to the WTO agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS), and at the WIPO Diplomatic Conference regarding the 1996 “internet treaties”. Members also frequently take independent action outside of IIPA. Since 1989, IIPA has submitted annual reviews to the Office of the United States Trade Representative (USTR) in preparation for the USTR‟s “Special 301” report on IP protection outside of the US. Special 301 features rankings of threat levels that nations pose to American economic interests in the way of copyright infringement. The “Priority Watch List” is the highest threat grade and the “Watch List” is the second-highest threat category.
Table 1: ASEAN Member Status in USTR Special 301 Reports Brunei Indonesia Malaysia Philippines 2001 PWL PWL PWL 2002 PWL WL PWL 2003 PWL WL PWL 2004 PWL WL PWL 2005 PWL WL PWL 2006 PWL WL WL 2007 WL WL WL 2008 WL WL WL 2009 WL PWL WL WL 2010 WL PWL WL WL 2011 WL PWL WL WL WL = "Watch List", PWL = "Priority Watch List" Cambodia, Laos, Myanmar, and Singapore not on lists.
Thailand WL WL WL WL WL WL PWL PWL PWL PWL PWL
Vietnam WL WL WL WL WL WL WL WL WL WL WL
“Notorious physical markets” in ASEAN commonly cited in Special 301 reports include Quiapo, Greenhills, Binondo, Makati Cinema Square, and 168 Mall in Manila, Philippines; Harco Glodok in Jakarta, Indonesia; “Red Zones” – Pantip Plaza, Klong Tom, Sapan Lek, MBK Center, Patpong, Seelom, Sookoomwit, and Baan Maw in Thailand, among others. IIPA (2011b) mentioned an alleged association between pirate gangs and government in Brunei. Indonesian IP courts lacked transparency according to IIPA (2011c). In the Philippines, in 2010, IIPA did not find any criminal convictions for copyright piracy. The largest criminal fine ever imposed in the Philippines for copyright piracy was found to be less than US$5000, and in only two cases were defendants found to have been sentenced to prison (IIPA, 2011g). In both Thailand and Vietnam, physical piracy was found to “dominate the market” (IIPA, 2011f, 2011h). I was able to independently verify the Special 301 and other findings on Thai markets, which implies information about other ASEAN locations is likely accurate. Mandhachitara, Phil and Blois (2000) found that the Thai government was aware of high volume sales of counterfeit and pirated goods at Bangkok‟s Pantip Plaza, where shop
owners are often tipped off before raids occur, and where “selling of pirated software normally resumes within a few hours of a police raid.” One can infer that corruption and trade in infringing goods are correlated given the blatancy of the criminal behavior over time and the failure of police agencies and courts to design initiatives which effectively reduce criminal behavior. In Russia between 2006 and 2007, we saw another good example of government collusion with infringing gangs, where raids cleared out lower tiered supply chain operations in pirated products, but top producers and distributors stayed with police protection (Social Science Research Council, 2011). The longevity of infringer businesses in notorious physical markets suggests bribes are paid for inaction on statutes. Reducing physical market infringement is an onerous task for executive branches, and one could easily argue that reduction cannot occur prior to broad economic growth. Nevertheless, legislation throughout ASEAN clearly prohibits unauthorized commercial exploitation of protected works. ASEAN Cases The ASEAN Project on the Protection of Intellectual Property Rights (ECAP III) started in 2010, funded by the European Commission and ASEAN Secretariat. ECAP III supports ASEAN with information management, language translation, IP enforcement coordination and administration, and education as part of a developmental plan for the region. ECAP III offers a database of recent ASEAN IP case law, providing further evidence that IP law is part of caseloads in ASEAN, including those nations most severely affected by piracy and counterfeiting. For the purposes of supporting a regional IP-focus and strategy, and to establish regional norms rather than pure secularism, cases in this section are analyzed together and considered within the jurisdiction of ASEAN. Although an ASEAN court proper does not yet
exist, in order to support further development of the international union where jurisdiction could be shared among ASEAN members, the importance of the nation of origin with regards to cases mentioned herein is considered minimal. Media Piracy The most flagrant infringements in physical markets are the illicit slave-copying and subsequent sales of software and media on optical discs. Blatant acts of piracy – unauthorized reproduction and distribution of media – are committed in plain view of the public, including on streets and in districts where police regularly patrol and have sub-stations. Malls and other commercial developments often contain shops and persons whose primary or only good or service is pirated content. A 2010 survey of 25 pirated disc shops in Bangkok‟s MBK shopping center found the mean average age of such criminal businesses at MBK was 6 years, with a range of between 2 months and 14 years within the sample. Shops surveyed paid more than 1.4 million Baht total per month in rent to MBK, ranging between 12,000 and 200,000 Baht monthly per unit. More than 1,000 customers daily were reported served among the 25 shops, which employed 81 people (Tanielian, 2010). Public Prosecutor, Office of the Attorney General v. Ms. Tuanchai Mensaeng (TH, 1999) showed that selling, offering, or occupying for sale infringing optical discs (i.e. CD, CD ROM, DVD ROM) is a crime. Public Prosecutor, Office of the Attorney General v. Midy Multi-Media Shop Limited Partnership, et al (TH, 2000) showed that such sale of pirated discs is a crime when it occurs in a high-profit shopping mall such as Panthip Plaza in Bangkok. Onestop Software Solutions (M) Sdn Bhd & Anor v Masteritec Sdn Bhd & Ors (MY, 2009) clearly showed that copying a part of one computer program in compilation of another entitles the owner of the first program to injunction, and thus adaptations are
prohibited. Pubic Prosecutor, Office of the Attorney General v. Mr. Thongchai Srichaiya (TH, 2003) showed that selling or offering for sale for profit or commercial purposes literary works in the form of Play Station games is a crime. Rose Video Co., Ltd. V. Seven Media Entertainment Co., Ltd., et al (TH, 2003) demonstrated that infringement of the copyright of only one motion picture constitutes a criminal offense. Public Prosecutor, Office of the Attorney General v. Mrs. Lamduan Linprachya (TH, 2002) showed that police may seize video CDs as evidence in criminal trials. These cases encompass the entire business of reproducing, distributing and offering for sale infringing optical discs. Between 2007 and 2012, I made a series of physical market inspections throughout Thailand and found that legitimate software is nearly absent, while pirated software occupies 90% or more of the shelf space. Independent computer sales shops most frequently offer packaged pirated software and or custom installation of pirated software, although Microsoft Corporation v. Niyom Thai Hitech Co., Ltd., et al (TH, 2002) showed that such practices are criminal. Microsoft Corporation v. Atee Computer Co., Ltd., et al (TH, 2000) further showed that cases involving sales of slave-copies of software are both criminally and civilly actionable, although without police cooperation during investigation, the rules on taking evidence in criminal cases may cause legitimate cases to be excluded from the court docket. Between 2005-2006 and 2007-2012, I worked at 15 primary and secondary schools – 4 private and 11 public – in 10 provinces in Thailand and found that all schools had computers containing pirated Microsoft Windows and or Office hacked by “ILLUSION” or “GODZILLA” or “MOZARD”. Eight of the fifteen schools used photocopied textbooks. University bookstores in Thailand were also found selling photocopied textbooks, although Public Prosecutor v. Mr. Somsak Thanasarasenee (TH, 2000) established such sales are criminal offenses. Pham Thi Ha v. the Culture and Information Publishing House (VN, 2006) showed that unauthorized use or reproduction of an author‟s works, including when renamed,
is civilly actionable. Book piracy was considered problematic throughout the ASEAN region in IIPA reports (2011b, 2011c, 2011d, 2011e, 2011f, 2011g, 2011h). Counterfeit Brands Less obvious than slave-copies of optical discs in physical markets, yet remarkably salient to persons looking for such things, are counterfeit clothes, shoes, bags, wristwatches, calculators, and other replicas of patented and trademarked goods. Tailor shops in tourist districts in Thailand most frequently market their in-house products by showing customers catalogues of Hugo Boss, Ralph Lauren, Versace, Armani and other high fashion suits. Those tailor shops most often display signage containing trademarks and names of famous high fashion brands, though it is exceedingly doubtful that tailors have obtained permissions and licenses to advertise their products as having affiliation with high fashion brands. Cases involving infringement of trademarks, service marks, and names have shown that business owners want to identify their products and services with established foreign brands, but they do not want to pay licensing fees or satisfy the requirements for such comprehensive licensing schemes. In Public Prosecutor v. Subway the Western Restaurant Company Limited, et al (TH, 1999), the defendants operated a restaurant under a counterfeit “SUBWAY” trademark – clearly a crime. Unscrupulous business practices such as counterfeiting may not always pose a significant public health or safety risk, but in cases involving foods, medications, auto or other heavy machine or electrical parts, hygiene and beauty products, a legitimate threat is posed to the consumer such that a criminal offense is committed. In Unilever Co., Ltd., Lao People’s Democratic Republic, Lao Inter Consul Co., Ltd., and Sendala office Supplies Shop v. Mr. Dian Zho Zhang, Mr. Dian Li Zhang and Mr. Dian Zhong Zhang (LAO, 2009), defendants sold and possessed equipment for manufacture of
counterfeit Clinic, Sunsilk, and Pantene shampoo, Colgate and Darlie toothpaste. Those three counterfeiters were sentenced to prison and assessed fines. In Public Prosecutor, Office of the Attorney General v. ML Technical & Supply Co., Ltd., et al., Ariya Electric & Supply Co., Ltd., et al., Siam Huat Electric Ltd. Part., et al (TH, 2000), four corporate defendants were found to have offered and occupied for sale circuit breaker boxes bearing forged “SQUARE D” trademarks, which constituted a major criminal offense and a public safety risk. Trademark infringement tarnishes the good reputation of name brands. Levels of quality required of licensees are not likely achieved by infringers which offer a similarlooking product at an extremely low price when compared to the original. This price difference should tip-off consumers to the truer nature of certain products. Astute consumers inherently understand that price often correlates with quality, and when intelligent shoppers see famous international brands for sale at rock-bottom prices, especially in notorious markets where counterfeiting is ubiquitous, they cannot help but infer that the products are not genuine. Police and prosecutors have accepted the same as probable cause for further inquiry. Courts have also recognized the price disparity as indicating a high level of likelihood that goods are counterfeit in Public Prosecutor, Office of the Attorney General v. Mr. Suthi Chor-ruangsak (TH, 2004). In Levi Strauss and Co., et al v. Mr. Cherd or Cherdsiri Maneerattanaprud, et al (TH, 2002), counterfeit Levis marks were the subject of court action. Public Prosecutor, Office of the Attorney General v. Mr. Piroj Bramasuwan (TH, 2003) showed that persons counterfeiting one label, such as Levis, may also be counterfeiting other trademarks, such as Nike and Adidas. Public Prosecutor, Office of the Attorney General v. Mrs. Youpa Kitlammee (TH, 2002) showed that counterfeiting a trademark registered in a foreign country can be considered a crime, thus validating international registration and recognition of foreign IP under treaties.
In Fronsac Investment SA v. Mr. Thavisak Thosaponpaisarn (TH, 2008), the court applied provisions of the law which protected foreign trademarks registered abroad prior to registration in the domestic system. In Hackett Company Limited v. Mr. Sommai or Ithipong Lertpisitkul (TH, 2005), a foreign brand never distributed domestically was found to have priority over a domestic trademark applicant. Similarly, in Yuxi Hungta Tobacco (Group) Co. Ltd./Yht v. PT. Permona/PTP and Department of Law and Human Rights/Directorate General of Intellectual Property Rights/Directorate of Copyright, Industrial Design, IC Layout Design, and Trade Secret/DGIPR (ID, 2006), a well-known Chinese tobacco brand, “HONGTASHAN” was granted exclusive rights over its trademark in Indonesia, despite domestic competition bearing a confusingly similar name. A tour of the counterfeit museum at Tilleke and Gibbins law firm in Bangkok showed the problem as far wider-reaching that even the brightest of street and mall shoppers may have guessed. Clothing, footwear, apparel, and accessories in the museum included Lacoste, Levis, Timberland, Playboy, Gucci, Casio, Dr. Martens, Ray Ban, Seiko, Converse, Adidas, Puma, and New Balance. Other items found in the museum were more surprising, however. An entire motorcycle was on display featuring the name “JAD”. An entire Honda motor, Mercedes rims and pedals, a Volvo oil filter, NGK sparkplugs, and Peak antifreeze were present. Sanyo and Panasonic batteries, Philips lights and fuses, Nokia and Motorola phones, Casio calculators, a Kingston flash memory drive, a Yamaha guitar, and Canon ink were found. Perfumes, drugs, Marlboro cigarettes, Loreal cosmetics, assorted shampoos and powders, Johnnie Walker Red and Stoli Vodka were also found. Ubiquitous Infringement Given the high prevalence of counterfeit goods in developing and third world ASEAN markets, suspicion is drawn to products which may not be infringing, but become associated
with infringement by way of location in the same shopping complex, or placed alongside infringing products. When a citizen of an OECD nation sees Microsoft Windows Vista available for 179 Baht or Adobe Illustrator at 99 Baht at Carrefour, or 8 movies on DVD for less than 100 Baht at Big C or Tesco Lotus, suspicion is likely to arise regardless of the nature of the retailer. When Popeyes does not serve chicken, but only fried fish balls, which are not on its menu in the United States, suspicion results. When famous cartoon characters like Mickey Mouse, Bugs Bunny, Foghorn Leghorn, Yosemite Sam, Daffy Duck, Garfield, Superman, Donald Duck, Goofy, Pluto, Doraemon, and assorted anime heroes are airbrushed on the sides of buses in a market where licensing is a last resort far behind infringement, simple questions of legitimacy and or law result. When CDs, DVDs, software, obviously counterfeit goods, forged diplomas, IDs and travel documents are available for sale at street level in plain sight of thousands of passersby and police, and at several locations on a single tourist block like Kaosan Road in Bangkok, suspicion is unavoidable. When it seems that every mall except for one in an entire country is engaged in sales of pirated and counterfeit goods, market integrity and image is relegated to something associated primarily and perhaps exclusively with the usual suspects. Civil Remedies Private use exclusions to copyright infringements throughout ASEAN make individual liability for downloading virtually impossible, but online offenses are not the most prominent ones today. Unfortunately for victims of infringement, local courts may be similarly unsympathetic to complaints against commercial infringers in physical markets. For example, in Public Prosecutor v. Mrs. Ngamjit Somsakraksanti (TH, 2000), the court dismissed a charge of criminal infringement of a “Winnie the Pooh” cartoon which was sold
on balloons by the defendant, holding that a natural creature could not become the object of IP protection. The court may have provided some element of equity for an impoverished class of street vendors who peddle crude adaptations and renderings of protected works, but the opinion appears to preclude the possibilities of protecting any cartoon animal at all, which leaves open multiple questions. Due to various complications with infringement prosecution, civil remedies may be more appealing to injured parties. ECAP III documented several civil trademark cases from the ASEAN region which show the relevance of international treaties and the validity of domestic IP legislation in the face of rampant unchecked infringement. In Bayerische Motoren Werke Aktiengesellschaft v. BMW Ltd Part. et al (TH, 1999), the court found that infringement includes use of a trademark or name which is translated into a different language when it decided defendants were not permitted to operate a business entitled “BMW” written in the Thai language. Unilever N.V., et al. v. Lion (Thailand) Limited, et al (TH, 2009) covered similar legal questions relating to language on laundry detergent packaging. American Cyanamid Company v. Shaft Formulator Co., Ltd., et al (TH, 2005) brought a decision regarding the common consideration of easily mistakable trademarks. The plaintiff complained about the defendant‟s use of the word “ABATE” among other packaging designs in production and sales of pesticides. The court decided that in a worst case scenario, the public could be misled about the origin or nature of the goods, and the defendant could then free ride on the reputation and publicity of the plaintiff, and thus the defendant was found to have infringed upon the plaintiff‟s rights. Leo Pharmaceutical Products Ltd A/S v. Kotra Pharma (M) Sdn Bhd (MY, 2009) dealt with a passing-off issue relating to drugs, namely FUCIDIN, FUSIDIC, FUCICORT, and FUSI-CORTE. Confusion was found to be
likely due to the similarity of the names of the drugs made by both the defendant and plaintiff. Other cases have resulted in decisions not in favor of the plaintiff regarding the potential for public confusion. Esso Standard Eastern, Inc. v. The Honorable Court of Appeals and United Cigarette Corporation (PH, 1982) may be an outdated case but it found that within the law it is “implicit” that goods must be similar for confusion to result from use of a name. The court confirmed that use of an identical mark, “ESSO”, on cigarettes whereas Esso deals in petroleum, is not infringement. Despite the fact that Esso stations may sell cigarettes, the design and coloring of the marks were distinctly different, and so the ruling was made on a name alone. In spite of the earlier Filipino court‟s contention regarding potential for infringement in separate classes of goods, Walton International Ltd. v. Yong Teng Hing t/a Hong Kong Trading Co. & Registrar of Trade Marks (MY, 2010) decided that well-known marks, to wit “GIORDANO”, are protected in classes other than those to which they are registered, and goods may not be registered with such well-known names or marks in categories other than those which the well-known marks are registered. In Besniere SA Co., Ltd., v. Uni-President Enterprise Co., Ltd. (TH, 1999), the court ruled against the plaintiff because the essential and prominent parts of two trademarks, both featuring the three letters “UNI” and the word “PRESIDENT”, were distinctly different and thus were not likely to be confused. Levi’s Strauss & Co. v. Mrs. Ranjuan Wongrat (TH, 2001) featured argument regarding two back-pocket embroidery patterns on jeans, one which consisted of two twin arch lines that looked like bird wings and the other which consisted of straight lines like the letter “V”. The court ruled that it was unlikely that the defendant‟s mark was an adaptation of the plaintiff‟s.
Some cases seem to indicate that corporations which own well-known marks have at least occasionally launched frivolous lawsuits which lack sufficient merit. For example, in Ford Motors Company of Canada Limited v. Mr. Yingsan Ratapipat (TH, 2005), the Ford Company argued that it was the sole owner of the three letters “F-O-R” in succession in the field of automotive parts and accessories. The court disagreed and denied the claim. In McCurry Restaurant (KL) Sdn Bhd v. McDonald’s Corporation (MY, 2009), McDonald‟s sued, unsuccessfully, over use of the prefix “Mc” in the restaurant industry although McCurry served Indian food rather than American-style fast food and there were no other similarities in signage design or menu names which would cause confusion to the public. Revlon sued over its rights to exclusive use of the word “CHARLIE” in Revlon Consumer Product Corporation Co. Ltd. v. Mrs. Au-am Ang-Suntikul (TH, 2004), although the defendant‟s mark was not found to be similar or confusing, nor did it feature the word “CHARLIE” but instead “ROYAL CHARLE”. Wording and semantics may be troublesome in the ASEAN region where English is a second or foreign language, yet many of the most well-known brands use English on packaging and in marks. What some second- and foreign-language speakers consider a generic term or non-defining characteristic of a mark, multinationals clearly define otherwise. Language questions were brought up in both Societe des Produits Nestle, S.A. and Nestle Philippines, Inc. v. Court of Appeals and CFC Corporation (PH, 2001) and Societe des Produits Nestle SA v. Department of Intellectual Property et al. (TH, 2002) when two courts in the region examined the words “TRUSTY” and “MASTER”. In both cases, the words were considered distinctive as part of the Nestle trademark, and in the Philippines case “MASTER” was found to be so distinctive that it formed an essential part of the mark where consumers could have been confused had there been another product in the same class bearing the word “MASTER”.
Raids and Seizures Enforcement operations are routinely conducted by local and national police or special investigation forces, often with assistance and cooperation from international and foreign agencies. Law enforcement is generally not undertaken ex officio by police who are merely trying to do their jobs to the best of their ability. Instead, court orders and comprehensive planning and inter-jurisdictional cooperation are often required before seizures and raids occur. When raids do happen in ASEAN, they generally serve as an example and part of a larger international political effort while the day-to-day compliance among civilians is kept on the honor system, which we have seen implies rampant infringement. One satisfactory reason for low enforcement rates may be the low financial efficiency of the processes. With ubiquitous piracy and counterfeiting in physical markets among primarily small business owners and operators, the likelihood that private or public bodies would recover costs of investigation and court trials is virtually nil. When people sell illegal goods as part of a subsistence lifestyle, they cannot afford to pay fines or damages, and when such a multitude of people make selling such goods their occupation, government budgets cannot support comprehensive prison sentencing. In most individual cases, damages caused by point-of-sale transaction cases are of lower monetary value than costs of pursuing enforcement, and thus it is cheaper to allow infringement to continue at street level. Distributors and manufacturers are substantially more difficult to track down and produce evidence against when compared to end-line salespeople, so the counterfeiting dilemma continues although IP caseloads worldwide are showing activity. Counterfeit medicines are obviously in the highest priority group for enforcement since they pose a real significant public health risk. “Operation Storm” in 2008 resulted in 27
arrests and seizure of more than 16 million pills in Cambodia, China, Laos, Myanmar, Singapore, Thailand and Vietnam (INTERPOL, 2008). “Operation Storm II” in 2010 yielded 33 arrests and more than 20 million packs of counterfeit medicines confiscated from more than 100 illegal pharmacies in the same countries (Bennett, 2010). Optical disc seizures are often easy to conduct and yield millions of units. Numerous reports of successful CD/VCD/DVD raids since 2008 are available. In Malaysia in 2008, one million pirated CDs were seized (INTERPOL, 2009). Six optical disc replicating lines and 500 burners were seized in Thailand (MPA-i, 2009). 100 sacks of pirated VCDs and DVDs were seized in the Philippines (Alcober, 2012). The case log goes on for pages. The International Chamber of Commerce (ICC) Commercial Crime Services provides a counterfeiting seizure information system where online users can view various enforcement efforts worldwide. 2010 ASEAN seizures included pharmaceuticals in Thailand; more than RM20 million in pirated DVDs and equipment in 3 instances, RM500,000 in fake shoes, and miscellaneous fake sports goods in Malaysia; in Singapore, electronics, clothing and other miscellaneous counterfeit goods valued at over S$4 million; 18,000 pirated books and the biggest CD pirating operation in Ho Chi Minh, Vietnam; about P100 million or more in fake Louis Vuitton, P32 million in computers, and assorted cosmetics in greater Manila, Philippines (ICC-CCS, 2010). Although data is insufficient to make further conclusions, we can see that seizures and raids have and do occur on a regular basis, thus suggesting the letter of the law is valid. Clearly, given the high prevalence of sales and offering or displaying for sale of counterfeit and pirated goods, enforcement efforts have proven ineffective in managing the problem. Consequently, a vast number of complaints and criticisms of regional enforcement strategies and policies are present.
Organized Crime and Terrorism “With rare exceptions,” said John Malcolm, senior vice-president and director of worldwide anti-piracy operations for the MPAA, “the people procuring, producing, and distributing this pirated material are affiliated with large and dangerous international criminal syndicates…[which] have no qualms whatsoever about resorting to violence or bribery to conduct operations” (ibid). Violent tendencies of people selling counterfeit and pirated goods were seen in Public Prosecutor v. Midy Multi-Media (TH, 2000) when enforcement authorities were assaulted during a raid at Pantip in Bangkok. Authorities in Indonesia found that pirate and counterfeit gangs had broad public appeal and support when a 2000 Glodok shopping area VCD raid resulted in severe rioting, burning and looting in the area (Kusumadara, n.d.). Numerous reports document the relationship between piracy, counterfeiting, organized crime, and terrorism. “Counterfeiting has become the preferred method of financing for terrorist organizations,” said Christophe Zimmerman, a Customs expert from the European Commission, who mentioned that the Irish Republican Army (IRA) was producing and selling fake CDs, DVDs, and other consumer goods (Baguioro, n.d.). The UNODC (2010) reported counterfeit products among trafficking in persons, smuggling of migrants, cocaine, heroin, firearms, environmental resources, maritime piracy, and cybercrime. Criminal groups naturally take up the cause of accruing illicit proceeds, and so it follows that such groups in any dimension would also be funding their activities with counterfeiting and piracy. The South American Barakat network reportedly raised funds for Hezbollah through selling pirated goods along with other contraband. South Asia‟s mafia godfather, Dawood Ibrahim, and his D-Company reportedly bring in revenues through piracy
of Bollywood and Hollywood films (Gregory F. Treverton, 2009). Japanese, Italian, Chinese, and Nigerian organized crime groups often have cells or partners in foreign territory where they can exploit markets for counterfeit goods (UNAFEI, 2000). ASEAN is certainly not immune to the influence of organized crime. Although illicit incomes from piracy & counterfeiting may only reach between 0.02% and 0.1% of total criminal proceeds, the nominal monetary values are significant at between US$38 million and US$100 million annually in countries like Germany and the US, respectively (UNODC, 2011). Pierre de Bousquet de Florian, Head of the French Direction de la Surveillance du Territoire said Afgan terrorist groups were able to survive “as a result of crime, hold-ups, credit copying and even counterfeiting designer clothes.” In the month following Pierre‟s statement, a container of counterfeit clothing belonging to former members of the Salafist Group was seized in Greater Paris (Union des Fabricants, 2004). Extremist and terrorist groups in Kosovo, Chechnya, North Africa and Europe, and al-Qaeda were reported to have earned money directly through sales of counterfeit consumer goods or indirectly from organizations which sell counterfeit goods (Noble, 2003). Showing global connections, a forgery gang in Thailand supplied fake passports to terrorists who carried out 2004 Madrid and 2008 Mumbai attacks (MCOT, 2010). IP crime has been called a contender for the preferred method of financing some terrorist groups (OECD, 2007). Notwithstanding cases and theory available on the subject, Pollinger (2008) found the relationship between counterfeiting and acts of terrorism “inconclusive”. Links between piracy, counterfeiting, and international organized crime, however, are indisputable. Economics of Piracy and Counterfeiting
In the first roughly 45 years of cases involving brand counterfeits, this segment of the black market economy gained between 5%-7% of world trade according (Eisend & Schuchert-Guler, 2006; IACC, 2012; OECD, 1998). Including digitally pirated products, estimated values of counterfeit and pirated goods in 2008 topped US$650-$775 billion annually, forecasted to rise to US$1.77-$1.89+ trillion by 2015 (Frontier & BASCAP, 2011). Between 2000 and 2007, the volume of counterfeit and pirated physical products more than doubled worldwide and the market share of counterfeit/pirated products increased by about 10% (OECD, 2009). Global statistics often include only cross-border trade and all information about illegal trades are merely rough estimates. The Sixth Global Congress on Combating Counterfeiting and Piracy (GCCCP, 2011) Paris Outcomes Statement said “there is a strong need for empirical evidence” on the subject, which is difficult to obtain and in short supply (Gentry, Putrevu, Shultz, & Commuri, 2001). Research into the buying behavior and cognition among consumers of pirate/counterfeit goods is limited primarily to qualitative studies with most evidence pointing toward price being the biggest motivating factor in making decisions to purchase fake goods. One can easily infer that in a society where per capita income is lower (i.e. developing and third world nations), counterfeit luxury goods would gain a sizeable foothold on the domestic market as the general population demands access to status symbols yet lacks sufficient monetary means to acquire the genuine articles. Cultural attributes have been loosely associated with IP economic topics. Santos and Ribeiro (2006) characterized a counterfeiter country as one in which there is lower power distance, uncertainty avoidance, and individualism. However, these findings are not valid under all conditions and do not fully represent virtual market activity. Nonetheless, when
discussing disrespect for private and personal property, commentators often enough bring up the Chinese Confucian and Communist systems (Yu, 2003), perhaps serving special political interests of the Occident along with a pro-IPR interest. We can plainly see that, in general, wealthier nations with companies that invest more in R&D value IPRs more actively and thus have lower rates of physical market infringement. For example, BASCAP (2007) ranked the top ten most favorable countries for IP – USA, UK, German, France, Japan, Canada, Switzerland, Netherlands, Singapore, Australia. Proserpio, Salvemini, and Ghiringhelli (2005) found that perceptions toward piracy depended on complex relationships between legal, cultural and socio-economic factors. But the bottom 10 countries – Ukraine, Turkey, Pakistan, Taiwan, Vietnam, Indonesia, Brazil, India, Russia, China – showed that per capita income or technological advancement are not the only factors contributing to poor IP protection, considering the inclusion of Taiwan. Haque, Khatibi, and Rahman (2009) found that social influences, price, economy, and personality all play a role in piracy. Relating to software piracy, Moores (2003) found that although there is a cultural component influencing behavior and attitudes, the dominant factor is economic. BASCAP (2009) summed up consumer attitudes about counterfeiting and piracy as reflecting a lack of resources, lack of legal recourse or deterrent, and lack of moral/ethical remorse. Consumers were found to be motivated away from buying counterfeits and pirated goods when and if there was physical harm associated with the purchase (i.e. fake drugs, dangerous toys), a reduced supply of fake goods, or threat of prosecution for consumption. In the context of world trade, piracy may be seen as a “victimless crime” but more so, it may be seen as a nationalistic undertaking whereby infringement of foreign IP is considered patriotic or beneficial to the national economy. The US International Trade Commission (Horan, Johnson, & Sykes, 2005) considered foreign IPR infringement as a
“nontariff measure”. Foreign IP infringement has been considered expropriation by business persons, investors, proprietors and others (Anton & Yao, 1994) and stands as an artificial barrier to trade whether enacted by state or naturally occurring in the market. Music & Film Many of the 2.5 million or more jobs lost to piracy and counterfeiting in G20 nations (BASCAP, n.d.; Frontier & BASCAP, 2011) are in the music and film industries as both digital and physical piracy are normalized into the heterogeneous consumer market. In 1996, at the beginning of the internet‟s expansion, 12.5% of music sales and 33% of total music units offered to markets worldwide were pirated (OECD, 1998). By 2005, music and movie piracy rates in selected ASEAN nations were as high as 100% (Proserpio et al., 2005).
Table 2: 2005 Piracy Rates in Selected ASEAN States ID MY PH SG Music 63% 61% 32% Movies 90% 80% 74%
TH 20% 25% 43% 63%
VN 100% 100%
Worldwide, online media piracy is far more prevalent than physical market piracy. IFPI (2009) found that 16% of all European internet users in 2008 reported having regularly used file-sharing services for retrieval of free pirated music. P2P file sharing may account for up to 80% of ISP network traffic, theoretically costing the industry billions in revenues. A 2008 MTV Networks Asia survey found that youth in the target Asia Pacific region were demanding more media but unwilling to pay, preferring instead free downloads (Television Asia, 2008). The effects of digital and other piracy are certainly quantifiable to some extent regardless of immeasurability of the problem at its furthest limits. Between 2003 and 2010, global top 50 debut album sales fell 77%. Between 2004 and 2010, the total value of the global recorded music industry fell by 31% (IFPI, 2011).
“We can‟t compete with free. That‟s an economic paradigm that doesn‟t work,” said 20th Century Fox Films Co-Chairman James Gianopulos (Smith & Telang, 2009). Castro (2010) quoted that same outlook in a report arguing that copyright enforcement leads to more innovative media content and services for consumers. Accounting and management surely knows it‟s impossible to compete with free, and creative may argue that some declines in the artistic quality of media since the advent of the internet may be a result of widespread infringement and reduction of potential to capitalize on certain types of content in a market where free is the demand price. A&R spending at global record labels has been about 16% of sales revenues (IFPI, 2010), which is a higher than the average R&D expense in pharmaceuticals and biotechnology. A new pop act might cost about US$1 million for an advance, initial recording session, 3 videos, tour support, promotion and marketing. For superstar acts, those costs can easily rise to over US$4.5 million without tour support. When albums are leaked onto the internet before the release date, those costs are more difficult to recover. When physical markets in a certain region are dominated by pirated content, then marketing costs essentially cannot be recovered, and potential markets may not be entered by licit providers. In 2004, the MPA funded a study to provide an assessment of the film industry‟s losses to piracy. The report concluded that US motion picture studios lost US$6.1 billion in 2005 due to piracy. 80% of those losses were from overseas while 20% were from within the USA. 62% of the 2005 losses were from hard goods like DVDs while 38% were from internet piracy. Piracy rates were highest in China (90%), Russia (79%), and Thailand (79%). Worldwide, MPA estimated film industries lost US$18.2 billion to piracy. In 2005, internet piracy had begun taking a large market share among viewers of infringing media, which led to reductions in large volume CD and DVD seizures in the EU (EUROPA, 2006).
According to MPAA, worldwide box office sales with or without increased piracy, increased by 25% between 2006 and 2010, so there is still hope for the industry. However, in nations with lax IP controls, recordings of films in cinemas are more common, which leads to increased competition from entertainment pirates. Post-cinema rental revenues are also impeded by tolerance of rental shops which stock primarily or only pirated DVDs. Piracy has also been shown to reinforce the oligopoly structure of the entertainment market because boutique developers have may not profitably enter and survive in markets dominated by piracy, whereas large multinational studios can sustain enormous budgets to market and distribute expensive content (Social Science Research Council, 2011). Software Microsoft, Adobe and other major American software companies have over 90% market share in core business software. Experts do not agree that use of pirated software threatens economic growth more or less than the use of licit software. “It is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole,” the US Government Accountability office (2010). As was the case with music and film, piracy has widespread software market impact. Just as the big firms cannot compete with nearly free versions of their own software, neither can new firms compete with high quality software at nearly free prices. R&D budgets the size of those at major software companies are impossible to develop and sustain at smaller firms, especially those without access to foreign markets where costs can be recovered in licit sales at full retail price. Microsoft estimated that for every US$1 that the company realizes from reduced software piracy, other companies in the software ecosystem will realize US$5.50 from increased revenues and lower costs. Companies and governments alike probably prefer revenues and tangible rewards over network effects.
According to the Social Science Research Council (2011) “Piracy acts as a barrier to entry for competition, especially „free‟ open-source alternatives that have no upfront licensing costs…all the major companies could adopt stronger online authentication measures, making it more difficult to use and maintain pirated software…but strong versions of these options go unexercised for a variety of reasons, including fear of alienating paying customers, fragmenting the installed-code base, and diminishing the other positive network effects of widespread use.” An operating system and business software package are parts of essential infrastructure in the modern working environment. High courts in Spain, Finland, and France declared internet access a fundamental right, a view that 79% of respondents in a BBC survey in 26 countries shared. People inherently understand that freedom of occupation is a human right and one protected by treaty, so moral/ethical boundaries of using pirated software are
Table 3: Estimated Software Industry Growth Rate (2011-2015) MY PH SG TH VN 49% 47% 49% 47% 106% blurred. Even at the big firms, however, accountants and managers are not very likely to
adopt the “network-effect good, profit bad” outlook. Nobody who isn‟t giving it away for free by choice is looking forward to getting it ripped off. Domestic authorities in ASEAN have a major interest in domestic and maybe regional products before foreign brands from the Occident. Treaty and statute protection could be provided to multinational firms, but it‟s likely only to happen following stronger protection for domestic firms. In order for domestic firms to qualify for protection, they need to work more, develop more, and produce economic effects locally. Emerging markets have potential to establish new brands and create value via providing competition. According to Business Monitor International (2011a-e), software is a major growth in industry in the ASEAN group. Building a sustainable competitive advantage in the software industry as an ASEAN-based
company will take a different approach, work ethic, and creative pricing and promotion strategy through the first decade of offering premium products, but without further opportunity to retrieve licensing and retail fees, without more market protection upon entry, companies are stuck with few options. A chicken-or-egg paradox may exist.
Table 4: BSA Statistics for Selected Countries and Regions (2006-2010) 2006 2007 2008 2009 2010 Piracy Rates BR 67% 68% 67% 66% ID 85% 84% 85% 86% 87% MY 60% 59% 59% 58% 56% PH 71% 69% 69% 69% 69% SG 39% 37% 36% 35% 34% TH 80% 78% 76% 75% 73% VN 88% 85% 85% 85% 83% NA 22% 21% 21% 21% 21% WE 34% 33% 33% 34% 33% CN 82% 82% 80% 79% 78% Montary Value (US$m) BR $13 $15 $14 $19 ID $350 $411 $544 $886 $1,322 MY $289 $311 $368 $453 $606 PH $119 $147 $202 $217 $278 SG $125 $159 $163 $197 $233 TH $421 $468 $609 $694 $777 VN $96 $200 $257 $353 $412 NA $8,104 $9,144 $10,401 $9,379 $10,623 WE $10,642 $11,655 $13,023 $11,750 $12,771 CN $5,429 $6,664 $6,677 $7,583 $7,779 "NA" = North America (excluding Mexico); "WE" = Western Europe; "CN" = China
Software piracy statistics at a glance share similarities with movie and music piracy but emerging market software piracy rates tell a story of unmet demand more than with entertainment piracy. According to Business Software Alliance (BSA/IDC, 2010, 2011), rates
in emerging economies are two and a half times higher than in developed economies. Economic benefits of licensing and licit software use include revenues to private industry and major tax revenues. Monetary value of BSA-estimated software piracy in countries like Indonesia and Thailand is above 0.1% of GDP. The economic value created through use of pirated software in businesses is unknown but likely above 10% of GDP. If 70% or more of the computers in a country are running pirated software, the effects of a sophisticated type of malware targeting illicit operating systems, or of a new fast-paced comprehensive active enforcement strategy are potentially devastating for entire districts and in some cases whole nations. Using dollar values as a basis of comparison and judgment, the EU and United States are by far the world‟s biggest pirate markets. By using rates, the focus may be more easily put on jurisdictions like China and those in ASEAN which consistently rank among nations most severely affected by piracy. In terms of threats to growth in percentages (i.e. on stock exchanges), one may guess that higher rate win-lose offender nations pose the most significant risks, whereas in terms of lost tax revenues and jobs one may posit that lower rate winners are worse. If monetary growth is accompanied by only minor reductions in rate, China may be the first high rate winner up for assessment, but until such a mega-establishedcriminal presents itself in nation form, conclusions about the relative harms are more often subjective than universally verifiable. Plainly one can deduce that retail sales increase some economic livelihood at the individual and small-business level, although given the criminal nature of the trade, there is low potential for sustainability. Criminal proceeds are often laundered and funneled into unsound investments and public offices are robbed of their funding through tax evasion, but macroeconomic policy is not well developed in the developing world, and European or
American style tax bureaus are not likely appropriate for ASEAN. Those higher rate offenders with lower dollar values have less effect at the macro level in absolute terms, but as a percentage of potential tax revenues, as a portion of GDP, and as an economic loss proportional to current accounts the damage can appear greater. ASEAN Markets Reflect Methodological Discrepancies Although none could argue to successful conclusion that piracy and counterfeiting result in nil losses to businesses and economies, the precise nominal value of damages is unclear and arguably incalculable. BSA (2010, 2011) quoted monetary values for software piracy are calculated using a very simple formula multiplying the estimated number of unlicensed software units by standard licit market prices. Unlicensed software units are estimated by comparing the hardware sold against the number of software units sold legally. The simplicity of the methodology is brilliant, but on the other hand it does rely on a base assumption that substitution rate is virtually 100%, that is pirated products are normal goods. Substitution Rates I suspect pirated products are inferior goods which would be consumed less as incomes among consumers rise. Furthermore, it is impossible to accurately and reliably estimate the substitution rate among global consumers of pirated/counterfeit software, although one may be able to rely on the logical conclusion that it is low considering that the only benefit of pirated/counterfeit software is the price and serious threats are incurred to obtain the good at the satisfactory price, suggesting a lack of ability to obtain the genuine product. Economically speaking, it is virtually impossible to imagine wealthy individuals and organizations deriving the same utility from counterfeit/pirated software as impoverished individuals and struggling organizations. In the same vein, higher education and computer literacy may be inversely correlated with propensity to use pirated/counterfeited software.
Substitution rates for other products may be higher considering that there is a lesser privacy and financial security threat posed by non-genuine garments, handbags, and other media than there is with software. Substitution rate for pharmaceuticals may be nearly 100%, but the substitution then is most often not a conscious one, and consumption is coerced through fraud by the tertiary seller or previous seller on the supply chain. Hygiene products and other topical liquids and gels may also have a substitution rate nearer to 100%, but again via deception. Consumption of luxury goods increases as income increases. Given access to cash and credit to purchase genuine articles, consumers of pirated/counterfeit goods may sustain consumption of genuine products and curtail use of frauds, but this artificial scenario lacks empirical verifiability. To be accurate and reliable, it is imperative that arguments are kept within the constraints of the practical world, wherein counterfeit goods purchasers do not generally have sufficient funds to acquire genuine luxury items. Herein lies the lower bound of real substitution rates among all products when the purchaser consciously and knowingly chooses the counterfeit/pirate over the real good: zero. Counterfeit/pirate goods purchases are only that whereas genuine product purchases are the only potential or active purchases of the real items. We cannot discern whether or not licit market would grow if illicit market were reduced or eradicated. For these reasons, genuine goods and fake or unlicensed goods are separate categories of goods to be viewed as mutually exclusive. Illegal goods, the economics thereof, and interactions with the legal goods economy are not knowns by scientific standards. Cases are known and numbers of cases are growing, but some unknown parts exist from each perspective of the criminalauthority-institution meshwork. “Economic” Losses
The “dismal science” of economics is an imprecise and contradictory soft-science of facts rather than of legitimate theories and laws by natural scientific standards. Civil law is largely a set of self-validating dictums which sometimes complement and at other times confound other similar self-validating maxims. Psychology and sociology similarly rely on base assumptions which cannot be fully proven but can be disproven with surprising effect. To a noticeable extent, sufficient means are lacking to analyze, interpret, and report as a scientist on issues like black market behavior and criminal influence on mainstream licit markets. “Losses” to businesses from counterfeits are economic losses. Opportunities are lost, but translating opportunity into a static monetary value may be impractical if not impossible. Accountants cannot include such “losses” due to economic conditions on balance sheets or to receive tax write-offs. Accounting and economic costs are very different and should not be confused for one another. Accounting costs are real, provable, measurable, finite and most importantly, recognized under GAAP. Economic costs, while not wholly illusory, are more psychological or systemic in nature. Economic costs cannot be pinpointed for their precise magnitude in each case, especially for an entire industry. One Person’s Loss Is Another Person’s Gain From the perspective of a single account, when a sale goes to another account at another business with price the main motivating factor for the switch, a mainstream businessperson might easily consider that a “lost sale”, but in fact it was a sale at a different account, and in the larger economy that value was not lost, it was simply redirected. Thus, counterfeiting and piracy are not “stealing” per se because no party‟s fixed-quantity real property is taken up without permission and transferred directly to another. Goods obtained through piracy and counterfeiting are either done so for free on the internet or as straight cash
purchases in physical markets. One party‟s reproduction does not restrict another party‟s potential to reproduce. The IPR owner(s) or holder(s) can continue to have and sell their products at the same time as counterfeiters and pirates have and sell their products. There is no “lost inventory” which has been stolen in the average piracy or counterfeiting case. Furthermore, in an open or free market economy, consumers have choices among competing businesses, so theoretically there is little or nothing constraining purchasing behavior. One account‟s credit does not necessarily translate directly to a loss of credit on another, and one‟s credit certainly does not imply another‟s debit. A false dilemma has been proposed whereby there are only two choices – counterfeit and genuine product X – and consumers may only choose to purchase the genuine item or a substitute (i.e. they may not discontinue use or significantly alter consumer behavior). In the same way, jobs “lost” to counterfeiting and piracy are more accurately jobs not created by specified businesses in specific industries, but those businesses may not have created the jobs had there been no piracy or counterfeiting at all. First, a false cause may have been found, leading to conclusions that infringement caused job losses simply because both infringing goods and demand for jobs existed in the marketplace. Then, the logic of evaluating “losses” was founded upon a classic denying the antecedent fallacy whereby one concludes that not P implies not Q merely because P implies Q (i.e. if counterfeiting implies jobs lost, then reduced counterfeiting implies jobs created). In fact, there is no clear evidence that counterfeiting and labor market activity vary inversely. Counterfeiting and piracy remain largely unknown in marketing and business. Companies could be making ad hoc arguments based on limited valid information for the purposes of quelling social unrest about their high profitability versus unspectacular job creation practices while at the same time seeking further profits by discrediting IPR
infringement. Counterfeit and pirated goods, artificial differentiation, may be unique economic phenomena not easily explained within the current paradigm which the most profitable businesses and industries have major interests in maintaining support for. Although such arguments are not held valid in the Western and developed world, we see strong evidence in the prevalence and persistence of physical market infringement in the poorer and Eastern world that this argument has at least two legitimate sides. Limitations of IPR Enforcement Among 3 primary stakeholders, bigger businesses and government have a 2/3rds majority over consumers who want to have lower-priced counterfeit and pirated goods. If we add-in a fourth stakeholder, small business, which may split on the issue, arguments against counterfeits and pirated goods can still outweigh arguments for. Legislative framework at the domestic and international levels reflect the apparent majority opinion which holds that counterfeit/pirated goods are more damaging than helpful in the economy, although implementation of the TRIPS and other treaties has not been completed in many jurisdictions in the ASEAN and elsewhere. ASEAN Courts have validated and upheld statutes, but to a lesser extent than those in the US and EU. Executive branches remain the most obvious obstacle in pursuing more cases for more change in the market, and it appears that executive branches which are not acting in an ex officio and comprehensive fashion may be in the minority, opposed by legislative branches and not well supported by the judiciaries. Many Constraints Contradictions among branches of government may reflect larger social conflict or juxtaposition of broader socio-economic issues against IPRs. More public enforcement means more fines, more criminal penalties, more active police and other enforcement agents, which could stir greater unrest in countries still transitioning from military regimes to civil
democracy. Where education levels are low, raids on small retailers may appear to be unconstitutional. If livelihoods are threatened, many people who are generally ignorant of formal laws may direct their patriotism toward complaining about perceived abuses among the police and government. Riot, coup and uprising are serious threats in ASEAN and shuttering doors on small businesses could spark serious unrest. Secondary education levels in the ASEAN region are generally low, which makes it easier for foreign government and bodies corporate to disregard the popular opinion. Domestically, governments are compelled to allow citizens to provide for their own and their families‟ basic needs. It is improbable that domestic economies could provide good-paying jobs to people with very few marketable skills or intellectual abilities. Luckily for some, although at the “cost” of others, black market economic niches provide these living wages to people who may otherwise be out of a job, more desperate, and more predisposed toward violence or other property crime. Public Awareness Campaigns Offer Hope Despite all of the weaknesses in and threats to models of lawful behavior and compliance, IP awareness, advocacy and development initiatives have grown and expanded their knowledge, financial positions and political influence worldwide in numerous
Table 5: Percent of population ages 25 or older with at least a secondary education, ASEAN (UN, 2010) Females Males BR 66.60% 23.50% KH 11.60% 20.60% ID 24.20% 31.10% LAO 22.90% 36.80% MY 66.00% 72.80% MR 18.00% 17.60% PH 65.90% 63.70% SG 57.30% 64.80% TH 25.60% 33.70% VN 24.70% 28.00%
languages. The internet alone has driven growth in publishing many times over in less than 20 years, and offers a wealth of information on any number of topics, including IP. Microsoft funds studies and other projects on counterfeiting and piracy, focusing primarily on the risks (e.g.Waterman, 2007). UNESCO and other UN programmes fund studies and provide high-quality analysis (e.g.Throsby, 2002). The UN library offers readers of the Journal of World Intellectual Property access to case studies like the Kappa sportswear company‟s experience with counterfeiting (Sindico, 2005). The OECD offers unclassified reports online regarding economic impacts of counterfeiting and piracy (OECD, 2007). Interpol conducts operations on the project (e.g.Newton, 2010; Noble, 2008). Media production companies create original content on the subject (e.g.BBC, 2011). Secular governments and international partnerships routinely meet and act on the subject of IPR development, enhancement, protection and enforcement (e.g.APEC, 2010; Fowler, n.d.; WTO TRIPS Council, 2006). A real cooperative effort has occurred and is continuing to occur in IP. Bridges between parties, inroads between countries, links between institutions and organizations have been and are continuing to be made. Alas, providing free information is not a profitable endeavor. Public funds or private charitable contributions including individual researcher time is why we have such a wealth of knowledge and articles available online. It is somewhat ironic that so much of the pro-IPR research is provided for no cost to consumers, but for the time being, there is no feasible alternative. Conclusion There is a lot of opportunity in IP, including in black market economies. There are opportunities also for police to arrest, for prosecutors to try, and for judges to sentence to fines and or prison. There are opportunities to seize products for no other reason than because
it is an officer‟s duty. Opportunities to accept corrupt payments also exist, as do opportunities to gain a foothold – and not a bit more – on control of the mafia. There are also opportunities to strengthen the system, and opportunities to create sustainable opportunities, which are opportunities on which interested parties should capitalize. If the present-day market order presupposes a legal order (Kinsella, 2011), then we have competition presupposing a competitor. Opportunity results at the judicial level where rules can be applied to protect people‟s rights to compete. An opportunity to create broader transparency exists if judicial officials can muster the ambition to allow more comprehensive defense arguments into the courtrooms. If the legal order which the market presupposes is corrupt, fundamentally misguided, volatile, or one which uses ultra vires techniques, then the market shall follow. In the Sino-centric world, society may be perceived as preparing the crime whereas the criminal may be perceived to have acted only out of opportunity. In areas where legal origins are Confucian, right living may be perceived as being capable of coming only from within the individual. In both Taoist and Confucian systems, people may be inherently distrustful of formal law (Dammer & Albanese, 2011). Such legal orders seem to point toward laissez faire economics, but communism and moreover militarism effectively suppressed that natural exchange throughout ASEAN in the 20th century when capitalism was loathed by much of the impoverished population. Borrowed and turbulent pasts can significantly limit the extent to which the majority of the region develops successfully. Enormous masses of people throughout history have made the mistake of trying to copy others when independent action is required. Untold numbers not only failed to imitate another but also lost their own ways in the cycle of mediocre envy and vanity. Losing one‟s own walking style is no laughing matter. There is
nothing glamorous about being wretched, pitiful, poor, blind and naked (Revelation 3:17, New International Version). Education was the big initiative at Microsoft in 2011, and education was on the top 5 projects to sponsor at a slew of our most philanthropic organizations. With some hard work and a lot of luck, but probably only with an education people can learn to walk again. However, due to financial conditions, people need free education, and volunteers are in short supply compared to the real demand (i.e. lack of education = need = demand). There is then, of course, a real dilemma which the people of ASEAN alone must resolve. References Alcober, N. (2012). 100 Sacks of Pirated Discs Seized Retrieved January 2012, from http://www.manilatimes.net/ American Cyanamid Company v. Shaft Formulator Co., Ltd. et al, No. 661/2548 (Supreme Court, Thailand 2005). Anti-Counterfeiting Trade Agreement, MOFA JP (2011). Anton, J., & Yao, D. (1994). Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights. The American Economic Review, 84(1), 190-209. APEC. (2010). APEC - IPEG Survey on Copyright Limitations & Exceptions Report on Copyright L&E in APEC Economies. Retrieved from http://publications.apec.org/ Baguioro, L. (n.d.). Terrorists 'selling pirated goods to get money'. (ECAP III). Manila: Retrieved from http://www.ecap-project.org BASCAP. (2007). Global Survey on Counterfeiting & Piracy. ICC, Paris, France. BASCAP. (2009). Research Report on Consumer Attitudes and Perceptions on Counterfeiting and Piracy. ICC, Paris, France.
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