Intellectual Property Still Remains a Major Issue
Friday, February 25, 2011 11:57 am | By Katerina Bricker

With the recent Senate Judiciary hearing on rogue websites and the upcoming hearing in the House Judiciary’s IP subcommittee regarding the White House’s IP office, intellectual property continues the remain at the forefront of policy debates.

Theft of intellectual property is a huge problem in the United States, as well as the world. Doing a simple Google search, you will find articles, citing fake cigarettes, pirated DVDs/CDs, fake purses, counterfeit pharmaceuticals, fake iPads, fake sports jerseys, and the list goes on. This is an ever-growing issue in the U.S. and keeps getting worse the more technology seems to advance.
A report released by the IPEC on Intellectual Property Enforcement states that in 2010, the U.S. Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI) opened 1,033 intellectual property investigations, which lead to 365 arrests, 216 indictments, and 170 convictions. In 2009, 730 investigations were opened, 266 arrests took place, 116 indictments, and 164 convictions. The numbers speak for themselves. The ICE’s intellectual property investigations increased by more than 41% and arrests increased by more than 37% from 2009. The FBI’s intellectual property investigations increased by more than 44% from 2009.
Intellectual property drives this economy. IP accounts for half of our exports and employs nearly 18 million workers. But this is not an issue that affects the U.S. alone. The 2010 International Property Rights Index, released by PRA, found people in countries that protect their physical and intellectual property enjoy a GDP per capita up to eight times greater than those without legal protection. As Congress considers rogue sites legislation and the administration looks to move forward on the Anti-Counterfeiting Trade Agreement, the debate on intellectual property rights won't fade away anytime soon.

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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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