INTERNATIONAL PIRACY : A business problem difficult to resolve. An academic proposal UANL – FACPYA Graduate division
“ Mexico exports pirate movies” <ul><li>El Norte Newspaper (February 13, 2008) .- Mexico is a major exporter ... But for pirate movies. The country has become a source of pirated films dubbed in Spanish and subtitled for the Spanish-speaking market, especially for Guatemala and other Latin American countries, as was mentioned in a special study on this subject by the International Alliance for Intellectual Property . "Mexico is the largest market for illegal film recording in Latin America, which were quickly distributed via the Internet", according to the Special 301 Report of the organization . </li></ul>
Illegal Production : <ul><li>The main growth of illegal recording comes from Internet cafes, where even cd’s are sold there to burn downloads contents. </li></ul><ul><li>The growth from imports of recordable devices, such as CD and DVD, came to an estimated one billion units in 2007. </li></ul><ul><li>According to Motion Picture Association (MPA), by 2005, it was estimated that piracy distribution already controlled 62% of the market and losses caused to the industry were up to 483 million dollars. </li></ul>
Table of contents <ul><li>Definition of Piracy. </li></ul><ul><li>The Piracy, crime difficult to punish. </li></ul><ul><li>How does it affects the economy? </li></ul><ul><li>Legal context. </li></ul><ul><li>The food and beverage industry. </li></ul><ul><li>Software Industry. </li></ul><ul><li>Recording Industry. </li></ul><ul><li>Remarks. </li></ul><ul><li>Literature references. </li></ul>
DEFINITION “ Piracy is the execution of criminal acts against intellectual property, such as editions or reproductions without the permission of the author or owner”. Source: IMPI, México
PIRACY, CRIME ALMOST PUNISHED <ul><li>Internet does not change the rules, there are no laws that protect copyrights and intellectual property, as well of the work of creativity, research and technological innovation who also requires large investments, must be protected against plagiarism and mutilation. </li></ul><ul><li>Household computing, facilitates pirated or illegal reproduction of works of various kinds, an action that should be punished as in any other way, but there is an unwillingness on the part of foreign and national authorities to solve this social and economic problem, which currently involves eight million people engaged in the informal economy. </li></ul>
PIRACY, CRIME ALMOST PUNISHED <ul><li>This kind of informal economy is nourished by four types of illegal goods: </li></ul><ul><li>- illegal imports (bootleg) </li></ul><ul><li>- piracy </li></ul><ul><li>- stolen goods, and </li></ul><ul><li>- adulterated goods, such as wine and perfumes. </li></ul><ul><li>In the case of the Internet, the problem is purely material and is a violation of copyright. Before, during and after the emergence of this technology there are no identified variants in terms of Law and Ethics, the Internet poses new challenges for the authorities that had not faced before, because it has encouraged the conditions for unauthorized reproductions of works , mutilations and unauthorized or illegal sites. </li></ul>
PIRACY, CRIME ALMOST PUNISHED <ul><li>W e believe that this has start to develop an understanding of the current copyright rules, which represents a prosecution on a criminal case. . While piracy is on the Internet, it is becoming increasingly feasible to locate the source. In Mexico, there is the PGR and the Federal Preventive Police, with a District Attorney for computer crimes, which is responsible for monitoring the network and normally using technology, clarifies investigations for illegal downloads from the Web. Investigations began to prosecute perpetrators of child pornography, currently route, is detected or identifies the physical location of the computer from which leaves certain information. </li></ul>
PIRACY, CRIME ALMOST PUNISHED <ul><li>We strongly believe, that t he piracy problem can be solved with determination, however, we also believe that there is no "desire to eradicate it”. The reason is that the authorities do not want to do it because it "would create a huge social problem, which involves eight million Mexicans employed or has a source of living form the informal economy.“ </li></ul><ul><li>For every ten street vendors of merchandise in the informal economy, eight are pirated, with smuggled goods, stolen or illegally manufactured. Breaking this scheme represents a important change in the future of eight million Mexicans who also represents the same number of families working in this type of economy. </li></ul>
Important points to avoid piracy in the economy: <ul><li>First, it is essential to modify the legal system. </li></ul><ul><li>Create “piracy” specialized police units, well paid and trained. </li></ul><ul><li>To overcome piracy, it will require systematic and scientific research. </li></ul><ul><li>Buyers must have some kind of legal certification for purchased merchandise. </li></ul>
HOW PIRACY AFFECTS THE ECONOMY ? ( source: International Alliance for Intellectual Property) <ul><li>In these 7 years, the music industry ranked first in losses, with 1;415.8 million dollars, </li></ul><ul><li>followed by the software business with 908.7 million. </li></ul><ul><li>Third is the entertainment software, with 685.8 million dollars in losses. </li></ul><ul><li>Forth the film industry with 388 million and eventually the industry of books, with $ 252 million in losses. </li></ul><ul><li>However, between 2002 and 2003, Mexico improved its international position, from third to sixth place from a list of 63 countries. </li></ul><ul><li>But this situation to change in 2007…… .. </li></ul>
El Norte, February 12th, 2008 <ul><li>MEXICO .- Losses by piracy in Mexico rose 16.8 percent in 2007 over the previous year, according to figures from the International Alliance for Intellectual Property. </li></ul><ul><li>Thus, the country secured fourth place among economies more prone to this illegal activity, after China, Russia and Italy. </li></ul><ul><li>Mexico occupies that position for his figures in illegal sale of piracy in music, software, entertainment software, films and books, said the IAIP. </li></ul><ul><li>According to the Special 301 report, last year the country recorded losses as a result of piracy per thousand 266 million. </li></ul>
El Norte, February 12th, 2008 <ul><li>Due to these figures, for the second consecutive year, the IAIP placed Mexico in the "Priority List surveillance," which is the third highest of four, in their classification. </li></ul><ul><li>Moreover, it is the prelude for the United States applied economic sanctions. </li></ul><ul><li>The main causes of piracy in Mexico, said the 301 report, are the lack of cooperation between the various institutions in charge of combating such activity and the few state and local actions against it. </li></ul><ul><li>Another weakness in this area is the lack of preparation in the judiciary system to prosecute such cases, said the body which enrolls 800,000 American companies. </li></ul>
Economic losses for piracy by country, 2003: Country Amount (Millions of dollars) China 1,893.3 Russia 1,039.9 Taiwan 847.9 Italia 783.8 Korea 736.8 México 717.9 Brazil 715.2 Poland 520.6 India 375.8 Indonesia 259.9 Source: International Alliance of Intellectual Property.
The informal economy in Mexico: <ul><li>The informal economy in Mexico represents 26% of the Gross Domestic Product (GDP), according to a study released by the Tax Administration Service (SAT). </li></ul><ul><li>The SAT announced that dimensioned in a 2.28% of GDP evasion of VAT (IVA) in Mexico and estimated that the informal economy represents a potential raised 42% of GDP by taking into account VAT and Income Tax (ISR). </li></ul><ul><li>All that indicates that the added value of the informal sector in 2003 was 441 million 642 thousand pesos. </li></ul>
Workers in the informal sector: <ul><li>The SAT research indicates that in México there are 14,022,885 workers in the informal sector, which accounted for 48.3% of the total employed population. </li></ul><ul><li>However, it noted that only 11 million workers from that group, are potentially audited. </li></ul><ul><li>It indicates that cities with more than 100 thousand inhabitants represent a potential for the Treasury raised of 335 million pesos a month. </li></ul>
Growth of the underground economy in Mexico: The underground economy in Mexico has represented between one sixth and one quarter of GDP since 1995. 1993 1.4% 1994 4.7% 1995 15.7% 1996 17.2% 1997 16.6% 1998 20.2% 1999 19.6% 2000 19.8% 2001 26.0% Source : Banco de México
International Organization <ul><li>The World Intellectual Property Organization (WIPO) is an international organization dedicated to promote the use and protection of works of the human intellect. </li></ul><ul><li>These intellectual works are expanding the bounds of science and technology and enriching the world of literature and the arts. </li></ul><ul><li>Through its work, WIPO plays an important role in enhancing the quality and enjoyment of life, in addition to generating wealth for nations. </li></ul><ul><li>With its headquartered in Geneva (Switzerland), WIPO is one of the 16 specialized agencies of United Nations organizations. </li></ul><ul><li>It is responsible for the administration of 23 international treaties dealing with different aspects of intellectual property protection. The Organization has 179 Member States. </li></ul>
Intellectual Property <ul><li>Intellectual property comes from creations of the mind: inventions, literary and artistic works, symbols, names, images and designs used in commerce. Intellectual property is divided into two categories: </li></ul><ul><li>Industrial property, which includes inventions, patents, trademarks, industrial designs and geographical indications of origin; </li></ul><ul><li>And copyright, which includes literary and artistic works such as novels, poems and plays, films, musical works, works of art, such as drawings, paintings, photographs and sculptures, and architectural designs. Rights related to copyright are the rights of performers in their performances, the rights of producers of phonograms in their recordings, and the rights of broadcasters on their radio and television. </li></ul>
Trademark <ul><li>A trademark is a distinctive sign which identifies certain goods or services as those produced or provided by a person or company. Its origins go back to ancient times, when craftsmen reproduced their signatures or "marks" on their products utilitarian or artistic. Over the years, these brands have evolved to set up the current system of registration and protection of trademarks. This system helps consumers to identify and purchase a product or service that, by its character and quality, as indicated by its single brand, it is adapted to their needs. </li></ul><ul><li>Source: NOM. Secretaría de Economía </li></ul>
Patent <ul><li>A patent is an exclusive right granted for an invention, which is a product or a process that provides a new way of doing something, or a new technical solution to a problem. </li></ul><ul><li>A patent provides protection for the invention to the patent holder. In Mexico, the protection is granted for a limited period, generally 20 years. </li></ul><ul><li>Source: NOM. Secretaría de Economía </li></ul>
Industrial Design <ul><li>An industrial design is the ornamental or aesthetic aspect of an article. The design may consist of three-dimensional features, such as the shape or surface of an item, or two-dimensional features, such as patterns, lines or color. . Industrial designs are applied to a wide range of industrial products and handcrafts from technical and medical instruments to watches, jewellery and other luxury items, from housewares and electrical appliances to vehicles and buildings, from textile to leisure goods. To be protected by most national laws, an industrial design must be non-functional. This means that the nature of an industrial design is essentially aesthetic and the law does not protect any technical features of the article to which it applies. </li></ul>
Certificate of Origin <ul><li>Certificate of Origin: A geographical indication is a sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due specifically to their place of origin. Most commonly, a geographical indication consists of the name of the place of origin of products. </li></ul><ul><li>A typical example is the agricultural products that possess qualities that derive from their place of production and are influenced by specific local factors, such as climate and soil. </li></ul><ul><li>The fact that a sign functions as a geographical indication depends on the national legislation and the perception of having that sign consumers. </li></ul><ul><li>Geographical indications may be used for a wide variety of agricultural products, such as "Tuscany" for olive oil produced in a specific area of Italy (protected geographical indication, for example, in Italy, pursuant to Act No. 169 of 5 February 1992), or "Roquefort" for cheese produced in France (protected, for example, in the European Union, under EC Regulation No. 2081/92, and in the United States, according to records of the US certification mark No. 571,798). </li></ul><ul><li>An of course, in Mexico for it’s Tequila </li></ul>
Copyright <ul><li>Copyright is a legal term which describes the rights given to creators for their literary and artistic works. . The type of works covered by copyright include: literary works such as novels, poems, plays, reference documents, newspapers and software, databases, films, music and choreography, artistic works such as paintings, drawings, photographs and sculpture, architecture, advertising, maps and technical drawings. </li></ul>
The Mexican Institute of Industrial Property <ul><li>It is a decentralized public agency with legal personality and its own funding and the legal authority to manage the industrial property system in our country. . It is an agency of the Federal Government that legally protects industrial property through patent, trademark registration, legal and other figures attention to infringements on trade and the promotion and dissemination of the system, providing guidance and advice to individuals, to encourage technological development, commercial and industrial sectors in the country. </li></ul><ul><li>See: www.impi.gob.mx </li></ul>
The Food and Drink The Food and Drink in Mexico presents losses in 2006 by 36 billion pesos, in the past two years, affected by the low prices on their products that have had to make in order to compete with those of piracy. The industry's Piracy accounts for up to 50 percent of the total product offered on the market. Over the last two years have shut down more than 15 per cent of the nine thousand plants producing food and beverages in the country, leaving more than 70 thousand employees and affecting a large number of suppliers that are strung these companies, adding a total of 80 thousand job losses. An example?
Cerveza Cerona…! from China Source: El Norte, Newspaper
The Food and Drink The Food and Drink is one of the largest in the country representing approximately 6 per cent of GDP, yearly estimated at 6 billion pesos. On the dangers posed to humans piracy drinks: “It is not the same as a CD that it may not work or produce damage in an electronic device or like the trousers that were destroyed in just two washings, the health risks caused by adulterated drinks to humans, could generate death”. Source: El Norte, Newspaper
The Software Industry Software piracy is violating the rights of intellectual property. It occurs when : An individual or entity offering illegal copies, CD’s, downloadable applications or serial numbers free, in exchange for cash or commercial acts, An individual provides an educational product without authorization or unauthorized individuals or companies, An individual install or use the software without a license duly authorized.
The Software Industry Types of piracy: The most common types of software piracy are five. Meeting them will help users avoid the problems associated with illegal software: - Piracy end-user, - Excessive use of client-server, - Piracy download from Internet, - Download on the hard disk, - Software Counterfeit.
Record Industry <ul><li>According to data form the Record Industry Association, illegal copying of music accounts for between 15% and 20% of legal sales (For a 62 million legal copies in 2007, some 12 million were illegal). </li></ul><ul><li>A recent example of such arguments: "If 18 million people have downloaded form Napster the song Offspring’s “Pretty Fly For a White, we have stopped selling 18 million records." Say the Association. </li></ul>
Final Remarks <ul><li>Piracy will exists until the consumer needs it. </li></ul><ul><li>Clearly, the industry has not understood (or simply ignore it) the message the consumers are sending it’s clear: "your product is too expensive. However, I am interested and I am willing to buy it, at a reasonable price without care if it is legal or not ". </li></ul><ul><li>We can decide between still having profits losses or a "business opportunity wasted" (such as the Napster case). </li></ul>