Outlook on copyrights enforcement

December 31, 2007

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Only three years ago, Pakistan was known as the great hub of rampant piracy of intellectual property rights –– a distinction that tends to demolish an enabling environment for foreign investment in a developing country. Pakistan still remains a haven for pirates but of lesser degree and is on its way to wash off the stigma.

With the creation of Intellectual Property Organisation (IPO), Pakistan, on April 8, 2005, there has occurred a radical improvement in the protection and enforcement of copyrights and other IPRs, particularly of foreign origin. However, what should constitute a right and how it should be protected is quite problematic.

Even in the US, the great protagonist of IPRs, for instance, it is illegal to copy your own CDs on to your own iPod. Obviously, this is a law that is broken all the time in the US because otherwise nobody there would ever buy an iPod. Then, the gap between a developing country buyer’s capacity and that of a developed country’s creates critical problems at least in case of books and the question a society faces is whether students should receive modern education or not? Obviously, education is a top priority in the Third World, respecting IPRs comes later.

United States was the first country to formally appreciate, in a non-paper to Islamabad, the copyright enforcement measures taken by the IPO, which functions with close coordination of Federal Investigation Agency (FIA) and Pakistan Customs. It decided to close a petition for withdrawal of GSP concessions to Pakistan on its exports as a gesture of support. The petition was filed by American private sector to punish Pakistan for inaction on the copyright front.

And later, on the recommendation of the International Intellectual Property Alliance (IIPA), a coalition of 1,900 American companies, the US Trade Representative’s office removed Pakistan from its Special 301 Watch List (worst status) in 2006 and placed it back on Watch List (ordinary monitoring) in recognition of its effective actions. An out-of-cycle review of the situation was conducted in September this year to assess progress of copyright enforcement.

The IIPA noted in its comments to the USTR in its October 15 communication that although copyright piracy problems were still severe in certain sectors, yet the progress was satisfactory. It is because of this newly-created optimistic environment that EMI and AuVitronics, the world’s two l

eading music companies have restarted their operations in Pakistan after a decade. Both the companies had shut down their businesses in 1996, after suffering losses from rampant piracy in the country. Other foreign music companies have also assured the government that they were ready to invest in Pakistan and would be marketing their products within six months in the country.

The IPO, with a lead role of the FIA, took unprecedented actions in 2005, and shut down six pirate factories in Karachi, raided warehouses, and oversaw the closure of four other plants, all of which were found engaged in illegal activities. Plant raids commenced on May 5, 2005, hardly a month after IPO’s existence, and continued throughout the year. In the initial raids, 150,000 pirate optical discs and over 6,000 pirate stampers were seized from six plants; nine individuals were arrested and warrants issued for the arrests of the owners of the plants. As a result of these extraordinarily successful enforcement actions, pirate optical disc factory production virtually came to a halt. During the last half year of 2005, the import of polycarbonate (used to make optical discs) declined by about 95 per cent as compared to the figure in the same period in 2004. The International Federation of the Phonographic Industry, a UK-based coalition, has certified that the export of pirated discs from Pakistan has “completely dried up.” These discs were exported to 48 countries including the US. According to IIPA, the estimated losses to its member companies, owing to piracy, have come down to $25 million (2005, 2006) from $70 million (2003, 2004) in respect of records and music. Domestic availability of the illegal products has also reduced significantly. And whatever is available in small quantities comes from Indonesia or Malaysia.

In respect of books, Pakistan is considered the worst market in terms of piracy. Large-scale photocopy piracy and print piracy make the market virtually untenable for copyrighted publishers. All types of books are pirated. English language novels and trade books are popular among pirates, and as a result, US publishers of mainstream commercial fiction and non-fiction are struggling. Their estimated losses went up to $55 million in 2005 and 2006 from $44 million in 2002 and 2003.

Of significance is the fact that some pirates are now able to produce better quality books that are difficult to differentiate from the legitimate versions. Elementary and high school courses taught in English routinely feature pirate versions of books. Piracy at the university level is quite high, with rates soaring over 90 per cent. The government is not inclined to take harsh actions against pirates simply because in that case most of the students will be without the prescribed books. So, there is almost total lack of criminal prosecutions, even in cases where pirates are arrested and fines imposed.

The government amended its copyright ordinance in 2000 to include Section 36(3) that allows a royalty-free compulsory licence of books but this amendment was passed without giving an opportunity to publishers to express their opinion. This provision, the multinationals are of the view, further narrows for them a market already almost over-run by piracy. This royalty-free compulsory licence, they claim, violates the Berne Convention and Trips agreement.

By contrast, the sale of copyrighted reference materials to libraries has gone up enormously. This is so because this market is unattractive for pirates for reasons of small profits. This may also be due to the Pakistani government’s Education Policy 1998-2010 under which it wants university libraries to be equipped with the latest reading materials. The Urdu bazaars in Karachi (350 booksellers) and Lahore (700 sellers) are the main source of pirated books and have remained relatively untouched by raid actions of the past few years.

In a development, considered ‘positive’ by foreigners, the National Book Foundation (NBF) seems to have stopped commissioning unauthorised reproduction of books. To ensure that copyrights were being protected, industry representatives want a written commitment from the NBF that it would honour copyright and engage in transparent business practices.

Multinationals, however, insist that the IPO has not been much effective so far and, in the view of some of them, has completely failed. They say the IPO Board has not held a general meeting for nearly a year and that the organisation still lacks a chairman, although an Executive Committee has been meeting throughout 2007 and has helped coordinate training events.

They complain that the court cases against the CD plant owners are not being expeditiously pursued. What the owners have done is that they have filed a constitutional petition in the high court challenging the legislation under which they were arrested.

Another agitating problem for the foreign companies is the piracy of cable and satellite broadcasting signals in Pakistan. Local cable companies transmit without authorisation 94 to 97 per cent of the programming they provide to end-users. There are around 50,000 satellite dishes receiving external programmes and over 10 per cent of Pakistani households have unauthorised cable TV connections. In 2006 and into 2007, such piracy remained pervasive in the absence of any enforcement of the copyrights.

The illegal cable operations are serviced by “lead walas” who obtain cable feeds from a cable operator with hardware facility (head end). The IPO cannot take action against this kind of piracy at the moment because it offers political dividends to the government of the day. The cable operators willingly stop relaying those TV channels which the government wants to be shut for being too critical of it. In lieu of that, they are given freedom to transmit any programme and relay any advertisement illegally.

The intellectual property protection laws in Pakistan would remain a weak link unless there were mandatory minimum sentences. Judges often impose only nominal fines which have less deterrent value. In respect of business software, the estimated or claimed losses suffered by American companies in Pakistan are too high. They went up to $78 million in 2006 from $14 million in 2004.