Congress Focuses on Rogue Sites
Wednesday, February 16, 2011 3:17 pm | By Kelsey Zahourek

The problem of “rogue” websites that offer counterfeit and pirated content continues to be a growing problem. The websites where illegal content often appears are for-profit websites that have the look and feel of a lawful site and stay afloat by raking in hundreds of millions of dollars through advertising and subscription-based revenue. A recent study conducted by MarkMonitor estimated that these sites attract billions of visits per year and cost legitimate businesses an estimated $135 billion in lost revenue annually.

This is theft, pure and simple and as Sen. Leahy stated during today’s Senate Judiciary Committee hearing on intellectual property infringement, “Inaction is not an option.”

Last Congress, the Senate Judiciary Committee unanimously passed out of committee Senator Leahy’s “Combating Online Infringement of Counterfeits Act.” The legislation would provide the U.S. Department of Justice the ability to target any site whose sole purpose is the criminal distribution of infringing materials. Once these sites are identified, the DOJ must prove to a federal judge that the site’s central purpose is IP infringement before an injunction against the website can be issued. Much of the bill is targeted towards websites that are largely based offshore but the domain name registrar or registry is based in the United States. The legislation has yet to be re-introduced this Congress but Leahy made clear that a new bill would be arriving shortly.

This is an important issue and I am glad to see the Judiciary Committee holding hearings to give all the stakeholders in e-commerce from domain name registrars and registers to Internet service providers to payment processors the opportunity to layout their concerns.

Representatives from Rosetta Stone, the Author’s Guild,, Visa, and Verizon all testified and recognized the threat of these websites to the online ecosystem. But how to go after online infringers continues to be a hotly debated issue and as Verizon’s Tom Dailey made clear, there is no 100 percent solution when it comes to online infringement. Law enforcement indeed has a role to play in protecting property rights online but it is not the be-all and end-all solution and it definitely should not be the first line of defense. Recent industry-led efforts to target rogue sites that specialize in peddling counterfeit pharmaceuticals and stop them from doing business offers a promising model and this sort of collaborative effort should be expanded upon to combat all forms of intellectual property theft.

Reasonably crafted legislation coupled with cooperation amongst private actors will go a long way in combating online theft. I am looking forward to future hearings regarding digital theft in both the Senate and the House.

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Hernando de Soto on Egypt's Extralegal Economy
Friday, February 4, 2011 11:04 am | By Kelsey Zahourek

In yesterday’s Wall Street Journal, world-renowned Peruvian economist Hernando de Soto penned an op-ed revisiting his 2004 study on Egypt’s extralegal economy and how the events unfolding today could have been shaped by the government’s failures to act on key policy recommendations that would have brought Egypt’s citizens and businesses into the legal market.

In the article de Soto notes the 2004 study found:

He then goes on to explain:

The key question to be asked is why most Egyptians choose to remain outside the legal economy? The answer is that, as in most developing countries, Egypt's legal institutions fail the majority of the people. Due to burdensome, discriminatory and just plain bad laws, it is impossible for most people to legalize their property and businesses, no matter how well intentioned they might be.

The Property Rights Alliance is honored to have the privilege of offering an annual fellowship named after de Soto to a graduate student interested in the areas of intellectual and physical property rights and global affairs.

Each year the fellow produces the annual International Property Rights Index, a comparative study that measures the significance of both physical and intellectual property rights and their protection for economic well-being. In order to incorporate and grasp the important aspects related to property rights protection, the Index focuses on three areas: Legal and Political Environment (LP), Physical Property Rights (PPR), and Intellectual Property Rights (IPR). The 2010 study analyses 125 countries around the globe, representing ninety-seven percent of world GDP.

In the 2010 edition, Egypt ranked 67th with a score of 5.0 out of a possible 10.0. Egypt’s LP score remains fairly low with an outcome of 4.7 with the report noting, “While the other sub-components of the score increased, overall positive change was hampered by a diminution in the Control of Corruption sub-component.”

The entire WSJ article is worth a read. I also encourage you to visit de Soto’s organization, the Insitute for Liberty and Democracy’s website to check out his, as well as the ILD staff’s great work in empowering the world's poor through property rights.

The 2011 edition of the IPRI will be released on March 22.

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The Ninth Freest Country
Friday, January 14, 2011 9:32 am | By Katerina Bricker

The Heritage Foundation released their 2011 Index of Economic Freedom. They briefly define economic freedom as the fundamental right of every human to control his or her own labor and property and in an economically free society they are free to work, produce, consume, and invest in any way they would like, which is protected. This has been tracked for over a decade by the Wall Street Journal and The Heritage Foundation.

Economic freedom is measured from ten components and is assigned a grade from 0 to 100, where 100 is the maximum level of freedom. The ten component scores are averaged to give an overall economic freedom score for that particular country. The ten components to economic freedom are listed below.
  1. Business Freedom
  2. Trade Freedom
  3. Fiscal Freedom
  4. Government Spending
  5. Monetary Freedom
  6. Investment Freedom
  7. Financial Freedom
  8. Property Rights
  9. Freedom from Corruption
  10. Labor Freedom
The property rights component is the ability of individuals to accumulate private property, secured by laws that are fully enforced. The degree to which a country’s law protect private property rights and the degree to which it is enforced are taken into account for the grade of freedom. The more protection of private property rights, the higher that country will score. Out of the 183 countries assessed, New Zealand scored a 95 on the property rights score with 14 other countries trailing with a 90. The US scored an 85.
The United States’ overall score for the ten components is 77.8 percent, which is well above world and regional averages. This makes the US the 9th freest country in the 2011 Index. It has gone down .2 percent from last year. The recent spending spree of the government and the interventionist responses to the economic slowdown has hurt economic freedom. There has been no change in the property rights component since last year. According to the Index the US scored an 85 because their property rights are guaranteed, contacts are secure, and the judiciary is independent.
Reports such as Heritage’s Index of Economic Freedom laid the groundwork for other indices such as PRA’s own International Property Rights Index (IPRI) to be created. The 2010 IPRI analyzes data for 125 countries around the globe on their protection of physical and intellectual property, representing ninety-six percent of world GDP.

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