Imitation is the sincerest form of flattery. For several industries, however, imitation has become the biggest form of robbery. Industries that use optical discs such as motion pictures, music, and business software applications experience tremendous losses because of widespread piracy.

Pirates in Town
The 2003 Special 301 report of the International Intellectual Property Alliance (IIPA), an international trade watchdog, recommended that the Philippines be included in the priority list of countries that have high incidences of intellectual property rights violations due to the continued proliferation of pirated optical discs (CDs, VCDs, and DVDs) in the country. Despite the government’s anti-piracy campaign, optical disc piracy continues to operate – big time. The Philippines now exports pirated optical discs to other countries.

It is not so surprising why this is the case. For one, the enforcement of the intellectual property rights law is inefficient. The 2002 Videogram Regulatory Board (VRB) accomplishment report identified 813 filed administrative cases concerning optical disc piracy, but yielded only two convictions. The raids being conducted by VRB on optical disc pirates is beginning to be a “cat and mouse” situation. After every raid of the VRB, pirates just keep coming back. The worst part is, they really sell.

Since pirated optical discs are far cheaper than originals, they are more appealing to the buying public. Never mind that the copy does not have the same sharp qualities of an original – it costs around eight times cheaper anyway.

Another major reason for the increase in piracy activities is that CD-R replication equipment, CD burners and CD-R blank media are now accessible at considerably cheap prices. The advent of cheap and mobile CD-R replication equipment and CD burners spurred the growth of pirated optical disc industry. An individual may now engage in the illegal duplication of optical disc right in the comfort of his home.

The Philippines has yet to have a law that regulates the production of optical discs. The lack of strict law regulating optical discs is making the Philippines a haven for pirated optical disc syndicates. Concurrently, the Philippine Judicial system still needs improvement and training in order to handle cases involving optical disc piracy. On 17 June 2003, the Supreme Court designated 65 Regional Trial Courts as special commercial courts with jurisdiction over cases involving intellectual property rights. But this is still not enough considering the numerous backlogs of cases in the Philippine courts.

Economic woes
The level of piracy in the Philippines has greatly affected several industries. IIPA data shows that in 2002, 80% of the motion pictures materials, 40% of the record and music materials, and 61% of the business software applications being sold in Philippine market were pirated. The volume of pirated CDs in the market has certainly increased during the past few years. The VRB has confiscated almost nine million pirated copies of audio and video discs, 16 replicating machines, and 215 CD burners and writers from January 2002 to August 2003.

The motion picture and music industries bear most of the brunt of optical disc piracy. The Philippines is losing much-needed investments because investors worry about copyright infringements. Piracy saps the life out of the legitimate market.

From January 2002 to August 2003, optical disc pirates earned P42.5 billion. This amount should have been a big help to the legitimate industries producing the original compact discs. Most affected by piracy are the small industry players that are unable to sustain their business operations.

In 2002, the motion picture industry suffered a $30 million loss, while the music industry lost $20.9 million due to piracy in the country. These figures would translate into less motion picture and recording production and, eventually, fewer jobs and investments.

The local movie industry’s movie output has already declined. Local artists fail to reach their target sales, some even finding it hard to break even with the production cost of their albums.

Failure of the government to curb piracy may not be beneficial to the international trade relations of the Philippines. The United States does not like the pilferage of US intellectual property and is willing to impose trade sanctions to any country that fails to control optical media piracy.

Ukraine, for instance, was given a trade sanction in 2001. The US suspended the special duty-free status of Ukrainian products due to Ukraine’s failure to stop the unauthorized production of optical media products in their country. The last thing that we would want the US to do is to give us trade sanctions.

Stashed Economic Development
Subverting optical disc piracy in our country would bring robust benefits to our economy. A study conducted by the International Data Corporation on business software piracy – commissioned by the Business Software Alliance – shows that various sectors would greatly benefit from the decline of business software piracy in the country. Reducing the piracy level of business software applications by ten percent by 2006 would contribute around $363 million to the gross domestic product of the country. It would also give the government an additional $20 million in tax revenues, and the private IT sector an additional $269 million in local industry revenues. The public would also be benefited because reduction in business software application piracy would produce 1,978 new jobs in the IT industry.

The study has also shown that the IT sector should grow in the next three years once the piracy of the business software applications is reduced by at least ten percent. A reduction of at least 2.5% of the piracy of all optical discs every year would give more job opportunities, GDP growth, and added tax revenue for the government.

Putting a Halt
The problem of CD piracy is an offshoot of the advancement of modern technology and the inability of the government to regulate such advancements. The government has to wage a resolute war if they want to put a halt to optical media piracy.

One of the recommendations given by the IIPA is for Congress to pass a law that would regulate the production of optical discs. The Senate and the House of Representatives have already approved on third reading the Optical Media Act (HB 5225 and SB 2586) that will regulate the production of optical discs and give the VRB more power by reorganizing it into the Optical Media Board. Unfortunately, the bicameral version of the bill has yet to be approved.

Intensifying the campaign against optical disc piracy would definitely need a unified and well-coordinated effort from the executive department. The VRB, while it has done well to expose several manufacturers and sellers of pirated optical discs through their raid operations, should strengthen its post-raid operations activities to prevent violators to commit the crime many times over.

The Bureau of Customs (BOC) should also be able to secure the country’s border from the entry of pirated optical discs from foreign countries. A great number of pirated optical discs being sold in the Philippines are coming from neighboring countries through the local ports. Also, the Intellectual Property Office (IPO) should devise a program that will prevent the massive infringement of intellectual property rights in the country.

Finally, there is a need to show the public that the law has teeth. While there have been several exposes on big-time pirates, there are very few convicted violators. People don’t need to see the numbers from the courts to prove that manufacturers and sellers of pirated optical discs refuse to learn. They only need to go to Greenhills, Quiapo, and many other streets within and outside the metropolis to see that optical disc piracy is more alive than ever.

The government must take offensive action to fight optical disc piracy. As the IPO pointed out, the policy of government should be geared not only on punitive actions but also on measures that effectively phase out the unfair business of optical disc piracy.

The Challenge
As in all other societal challenges, enlisting the private sector’s assistance is crucial in containing piracy in the country. To the common man, buying pirated materials is justified because that is all they can afford. The industry will continue to hurt not only due to the continued manufacturing and selling of pirated optical disks, but also because of the people who see nothing wrong with saving up for the more important needs of the family.

Price reduction on optical discs would be a “win-win” situation for both the optical disc producers and the public. Public participation would entail a huge decrease in the level of piracy. The campaign against piracy would be successful once the public stops supporting pirated optical discs.

Subverting optical disc piracy is a tedious task. The answer to the challenge is the dynamic response from the government, the private sector, and the public. And in a world where technology can’t be stopped, protecting it should be prioritized.