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Former USSR: Theft Of U.S. Intellectual Property Higher Than Estimated

Washington, 7 February 1997 (RFE/RL) - An organization of U.S. industries which produce copyright-based products says that intellectual property rights piracy around the world is far worse than anyone previously thought, costing American companies alone more than $14 billion in 1995. The countries of Eastern and Central Europe and the former Soviet Union were responsible for 13 percent, or more than $1.8 billion of those losses.

The International Intellectual Property Alliance (IIPA), based in Washington, says it was stunned by the level of the losses it found in its first detailed study of the problem. Previously, the U.S. government had estimated the losses to American companies in 1995 at around $2 billion worldwide.

The alliance represents publishers, movie studios, computer software producers, music publishers and recording companies.

The president of IIPA, Eric Smith, says the survey for 1995 does not reflect recent progress against copyright piracy in some countries, but says the problem is still pervasive.

"In Russia, the estimated piracy levels for home videos, business software, and entertainment software all exceed 90 percent," says the alliance, "meaning that fewer than one-tenth of the products in these categories in the Russian market are legitimate."

Other countries with a piracy level over 90 percent for more than one product category include Bulgaria, Romania and Slovenia.

Bulgaria in 1995 was considered one of the worst sources of piracy of music CDs, films, videos, and computer software and the alliance says it calculates losses to American companies exceeded $186 million there alone. It says 80 percent of all music products -- CDs, tapes and records -- in Bulgaria were counterfeit, with 95 percent of all computer software found to be illegal. (See related series: Pop Culture Piracy )

Similarly, in Romania, over 90 percent of all motion pictures and computer software was counterfeit, while music products were 85 percent pirate.

In Russia, the alliance says, 99 percent of all motion pictures and 94 percent of all computer software was pirated, while only 73 percent of all music products were counterfeit. It says Russian piracy in 1995 cost American producers over $943 million.

The American association says that while the former Eastern bloc was bad, it didn't hold a candle to China, which accounted for losses exceeding $2.3 billion.

The United States imposed trade sanctions against China in 1996 because of the seriousness of its intellectual property piracy, but dropped them when Beijing agreed to move decisively against pirates.

The president of the National Music Publishers Association, Edward Murphy -- a member of the alliance -- says the data supports the warnings that intellectual property producers have been sounding for ten years.

"The losses to U.S. creators and copyright owners are truly staggering," he said.

The head of the Business Software Alliance, Robert Holleyman, said the losses exceed "the combined revenues of the 10 largest personal computer software companies" in the United States.

The president of the Motion Picture Association of America, Jack Valenti, said that "while progress has been made in the international war against piracy, these figures make it clear that a vast amount of work remains to be done before we can declare victory over the plague of foreign piracy.

The alliance says it is the process of surveying the losses in 1996 and hopes to be able to show if there really has been any improvement in the past year.