Text: Dickinson on Internet Piracy of Music, Software

(He says U.S. will challenge pirates) (2550)







Under Secretary of Commerce Q. Todd Dickinson says the computer

software and music industries are the U.S. copyright industries that

suffer the greatest harm from Internet piracy.





And the problems associated with this form of intellectual property

right (IPR) piracy "are not just going to wither away," Dickinson said

July 19 in testimony before the U.S. House International Relations

Subcommittee on Economic Policy and Trade.





Industry estimates indicate the software industry worldwide loses

$12,000 million annually from all types of piracy, he said, and the

music industry estimates losses at $4,100 million annually.





"These losses mean lost income for creative Americans -- authors and

composers -- as well as lost jobs, revenues and foreign royalties for

American workers and industry," said Dickinson, who is under secretary

for intellectual property and director the U.S. Patent and Trademark

Office.





Dickinson said that given these industry trends, the United States

"had determined to challenge the pirates by working with Congress to

equip American intellectual property owners and law enforcement

authorities with better legal tools to address piracy." Additionally,

he said the United States will also strengthen its relationships with

the World Intellectual Property Organization (WIPO) and the World

Trade Organization (WTO) to fight global intellectual piracy.





Following are terms and acronyms used in the text:







-- billion: 1,000 million.







-- GDP: gross domestic product.







Following is the text of Dickinson's remarks as prepared for delivery:





(begin text)







STATEMENT OF



Q. TODD DICKINSON, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL

PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE





THE COSTS OF INTERNET PIRACY FOR THE MUSIC AND SOFTWARE



INDUSTRIES







BEFORE THE SUBCOMMITTEE ON ECONOMIC POLICY AND TRADE



COMMITTEE ON INTERNATIONAL RELATIONS



WASHINGTON, D.C.



JULY 19, 2000







Madam Chairman, Members of the Subcommittee, it is a pleasure to be

here today to discuss what the U.S. Patent and Trademark Office

(USPTO) is doing to help protect American intellectual property here

and abroad.





The Computer Industry Almanac predicts that worldwide Internet usage

will grow to 349 million users by the end of this year, with more than

120 million users in the United States and Canada alone. This trend

brings significant opportunities for expanding electronic commerce and

for providing an ever wider variety of public and private information

sources. Clearly, the impact of the Internet's growth on the U.S.

economy and jobs will be immense. The intellectual property intensive

information and entertainment industries are already large users of

the Internet for electronic commerce. As their usage increases, they

stand to reap significant benefits from worldwide commerce in their

goods and services.





According to a 1999 report, prepared for the International

Intellectual Property Alliance (IIPA), the core copyright industries

accounted for $348.4 billion in value added to the U.S. economy, or

approximately 4.3 percent of the Gross Domestic Product (GDP) in 1997.

The total copyright industries accounted in 1997 for $529.3 billion in

value added, or approximately 6.53 percent of GDP. Employment in the

core copyright industries grew three times the rate of national

employment growth between 1977 and 1997, and more than 6.9 million

workers were employed by the total copyright industries, about 5.3

percent of the total U.S. work force. The core copyright industries

generated an estimated $66.85 billion in foreign sales and exports in

1997 and preliminary estimates for foreign sales and exports for 1998

is $71.0 billion.





As the title of this hearing indicates, two of the U.S. copyright

industries most intensely affected by piracy and the unauthorized use,

reproduction and distribution of their works on the Internet are the

software and music industries. For example, the Business Software

Alliance and the Software and Information Industry Association

estimate losses to the worldwide software industry of $12 billion from

all types of piracy, while the Recording Industry Association of

America reports losses of $4.1 billion. Overall, the IIPA estimates

the U.S. copyright industries worldwide losses to piracy at $22

billion. These losses mean lost income for creative Americans --

authors and composers -- as well as lost jobs, revenues and foreign

royalties for American workers and industry.





These problems are not just going to wither away. The growth of the

Internet and the use of intellectual property on many sites is

continuing to increase. Moreover, this growth does not come without

controversy. The matter of how U.S. copyright law applies to such

uses, how fair use is to be determined in cyberspace, and other

related questions are presently before the courts. Just last week, on

July 11, the Senate Judiciary Committee convened a hearing to discuss

the issue of the use of copyrighted sound recordings on the Internet

through technologies like MP3, Napster and Gnutella. The sense of

those hearings seemed to be that business models are still evolving

and the market should have more time to develop licensing mechanisms

to ensure that consumers would have easy access to music without

imposing unreasonable burdens on the technology and still ensuring

that the creative community continues to receive the incentive they

need to continue to create new music.





Usage of the Internet is growing not only in the United States and

Europe, but also increasingly in Latin America, Africa and Asia. For

example, Newsbytes Asia estimates that internet users in Asia will

increase by 422 percent over the next six years. The International

Data Corporation estimates that Internet usage in Latin America will

"skyrocket" to 29.6 million users by 2003, and SangoNet estimates that

there are 1.72 million people on line in Africa.





Given these trends, the Administration has determined to challenge the

pirates by working with Congress to equip American intellectual

property owners and law enforcement authorities with better legal

tools to address piracy here at home. For example, we have worked with

Congress to ensure the passage of the Digital Millennium Copyright

Act, which brings our copyright law into the 21st century, and the No

Electronic Theft Act, which addresses a variety of illegal actions on

the Internet.





Through our work with international organizations such as the World

Intellectual Property Organization (WIPO) and the World Trade

Organization (WTO) we are moving to provide similar legal norms at the

international level. We cooperate with other agencies including the

United States Trade Representative (USTR) and the Department of State

to ensure that our trading partners implement these norms reflected in

the recent WIPO Copyright Treaty (WCT) and the WIPO Performances and

Phonograms Treaty (WPPT) -- known as the WIPO Internet Treaties -- and

the Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPs Agreement). Each of the new WIPO Treaties requires 30 countries

to ratify the treaty before it becomes effective. As of today,

including the United States, 19 countries have ratified the WCT and 16

countries have ratified the WPPT. Secretary Daley committed the

Department of Commerce to working internationally to reach the 30

country threshold for each treaty, and the USPTO will continue that

effort in coordination with the State Department and USTR.





Legal norms alone are not enough, however. Therefore, let me describe

some of our efforts to ensure that our trading partners have the

technical means and the political will to use these legal tools in

practice.





International enforcement has become even more critical because, as of

January 1, 2000, all developed and developing countries who are

members of the WTO are required to have domestic laws and enforcement

mechanisms that comply with the international standards set forth

under the TRIPs Agreement. Consequently, we are receiving even more

requests for technical assistance in reviewing intellectual property

(IP) legislation and assisting countries in developing an integrated

enforcement system -- consisting of civil, criminal and administrative

procedures and remedies, and border measures.





The assistance provided by the USPTO includes training enforcement

personnel and conducting workshops sponsored by international

organizations. These workshops aid countries in meeting their

obligations from both a structural point of view (by having the laws

and procedures in place to conform with TRIPs requirements) and from

an effective enforcement point of view (by having the experience and

capability to enforce IP rights using the structural mechanisms

established in compliance with TRIPs.)





In addition, because of the growing problem of Internet piracy, many

of these countries are also seeking assistance in developing

enforcement mechanisms to deal with technological advances in IP

protection and enforcement, including IP protection in knowledge-based

economies. These countries will also need assistance in understanding

and implementing the WIPO Internet Treaties to establish the legal

framework to combat these problems. Accordingly, the focus of our

Internet-oriented efforts has been to assist countries in adapting the

enforcement models appropriate for conventional hard goods (CDs,

cassettes, floppy disks) to the realities of cyberspace transmission

of copyrighted works.





To meet our technical assistance requirements under TRIPs and to

continue to assist developing countries in establishing IP protection

regimes, we have built on the strength of our activities discussed at

the hearing you held on IP Protection last October and expanded those

activities to meet the heightened need for technical training

generated by the Year 2000 deadline for TRIPs compliance and other

bilateral and multilateral treaties. We are also targeting our

enforcement training efforts to focus on problems of Internet

enforcement in other regions where the usage is rapidly expanding --

Latin America, Asia and Africa. We are doing this by conducting the

programs discussed below.





USPTO INTELLECTUAL PROPERTY ENFORCEMENT PROGRAMS







On May 22-26, 2000, the USPTO worked with WIPO to provide law

enforcement and other government officials from a wide range of

developing economies with a Washington-based, week-long program on

developing a TRIPs compliant and effective enforcement regime. This

program built on the highly successful similar program offered in

1999.





On July 24-27, 2000, we will partner with WIPO to provide law

enforcement and other government officials from Africa with a week

long program in Dakar, Senegal on developing a TRIPs compliant and

effective enforcement regime. This program, like the Washington-based

effort builds on a similar program offered last year in Mombassa,

Kenya.





The goals of these programs are:







-- To provide government officials with an in-depth review of the

TRIPs standards for enforcing intellectual property rights.





-- To assist government officials in developing effective IP

enforcement systems based on an interdisciplinary approach in which

civil, criminal, administrative and border measures work both together

and separately; and





-- To expose government officials to the challenges posed by enforcing

intellectual property on the Internet and building the requisite legal

framework in their domestic laws to meet the Internet challenge,

including through implementation of WIPO Internet Treaties. This will

include a heavy focus on practical applications in the digital

universe.





On September 18-19, 2000, the USPTO in cooperation with WIPO will hold

an Asian Pacific regional conference in Phuket, Thailand for officials

from the judiciary, the public prosecutor's office, administrative

offices charged with domestic enforcement, and private rights holders.

This conference will explore the practical problems in developing and

implementing effective intellectual property enforcement mechanisms in

today's changing digital and technological environment. The goals of

this program are:





-- To strengthen regional and international cooperation for the

improvement of the enforcement of intellectual property rights in

order to meet international treaty obligations, including those under

TRIPs;





-- To provide Asia Pacific countries with a detailed review of the

emerging intellectual property regimes of the digital age, emphasizing

their use in protecting the products of a knowledge-based economy;





-- To assist government officials from Asia Pacific countries in

developing effective enforcement systems in which civil, criminal,

administrative and customs measures will work together and separately

to assist in protecting and growing a knowledge-based economy;





-- To provide government officials with the opportunity to cooperate

in exchanges of information, training and technical assistance

regarding the enforcement of intellectual property rights in a

knowledge-based economy, in order to meet international treaty

obligations;





-- To discuss ways to improve the enforcement of intellectual property

rights generally throughout the region; and





-- To encourage strong industry participation in digital piracy and

trademark/domain name infringement, including the development and

implementation of investigatory techniques.





On September 11-12, 2000, the USPTO will convene the second

Intellectual Property Symposium of the Americas here in Washington.

This is a hemispheric conference for officials from the judiciary, the

public prosecutor's office, administrative offices charged with

domestic enforcement, and private rights holders. The conference will

explore the practical problems in developing and implementing

effective intellectual property enforcement mechanisms in today's

changing digital and technological environment. This conference will

also build on the highly successful similar conference offered in

1996. The goals of this conference are:





-- To strengthen regional and international cooperation for the

improvement of the enforcement of intellectual property rights in

order to meet international treaty obligations, including those under

TRIPs;





-- To provide government officials from the Western Hemisphere with

the opportunity to discuss the challenges posed in developing workable

methods for protecting and growing a knowledge-based economy utilizing

intellectual property laws as the keystone;





-- To provide Western Hemisphere countries with a detailed review of

the emerging intellectual property regimes of the Digital Age,

emphasizing their use in protecting the products of a knowledge-based

economy. Included among the topics are the WIPO Copyright Treaty, the

WIPO Performances and Phonograms Treaty, database protection,

pharmaceutical patents, business methods patents and "traditional

knowledge;"





-- To assist government officials from the Western Hemisphere in

developing effective enforcement systems based on an interdisciplinary

approach in which civil, criminal, administrative and border (customs)

measure work together and separately to assist in protecting and

growing a knowledge-based economy;





-- To provide government officials from the Western Hemisphere with

the opportunity to cooperate in exchanges of information, training and

technical assistance regarding the enforcement of intellectual

property rights in a knowledge-based economy, in order to meet

international treaty obligations; and





-- To discuss ways to improve the enforcement of intellectual property

rights generally throughout the Hemisphere.





INTERAGENCY COOPERATION







While the USPTO and other Federal agencies regularly consult on

intellectual property-related enforcement activities, the

Treasury/Postal Appropriations bill (P.L. 106-58) establishes a formal

inter-agency coordination effort. The law creates the National

Intellectual Property Law Enforcement Coordination Council with the

mandate of coordinating domestic and international intellectual

property law enforcement among Federal and foreign entities.





The Council membership consists of USPTO and our colleagues at the

Justice Department, State Department, USTR, Customs, and the

Department of Commerce. The Council is directed to consult with the

Register of Copyrights on copyright-related issues and must report

annually on its activities to the President and the House and Senate

Committees on Appropriations and the Judiciary.





We look forward to working with our colleagues on this important

effort. We believe that, in the future, the Council will serve as a

vehicle through which Federal agencies can coordinate their

enforcement efforts and also partner with industry to develop

effective strategies for addressing Internet piracy.





CONCLUSION







Thank you, Madam Chairman, for this opportunity to discuss how the

USPTO is working to ensure the protection and enforcement of

intellectual property and promote trade in products protected by

intellectual property rights. I will be pleased to answer any

questions that you or the Subcommittee may have.





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