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  • 8/2/2019 Internet Piracy and Counterfeiting


    Presented by:

    Rajeshwar Nandan

    LLM 1st year

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    Contents Internet piracy and counterfeiting: Meaning Economic Impacts of Internet piracy and counterfeiting.

    Prevention of Internet Piracy and Counterfeiting. WIPO Copyright Treaty. SOPA PIPA

    Criticisms ACTA Indian position. Conclusions.

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    HypothesisAlthough there are numerous international and

    domestic legislations dealing with the issue ofcopyright infringement yet the issues of Internetpiracy and counterfeiting have been largelyunaddressed until recently till the US governmentcame up with two legislations namely SOPA and PIPAwhich have not been implemented and have beenhighly criticized.

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    What is Internet Piracy? Piracy conducted via the Internet

    What do the Digital Pirates Do?

    Since pirates steal. Digital pirates steal digital data by transferring files back

    and forth

    downloading without paying

    Stolen files include: music, video, pictures, texts, and software

    sensitive material, industrial secrets, government secrets

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    The Types of Pirated Files


    2001, music files formed the largest category ofpiracy on the Net

    MP3 files traded using peer-to-peer (P2P)technologies


    Next biggest footprint on the bandwidth scale

    belongs to video

    anything from latest DVDs to sports games to musicvideos to pornographic videos

    far fewer pirates trade video than audio (bandwidth


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    Types of Pirated Files (2) Pictures

    The next in the chain, many are pictures of celebrities,movie stars, rock stars, and pornographic pictures


    Next after pictures


    least popular form of piracy people dont like to read a large amount

    most books are cheap compared to music, DVDs, andsoftware

    much harder to get a book into a file than music or video

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    Internet Piracy

    Economic ImpactsEstimated losses:

    Difficult to estimate

    OECD estimates 5% - 7% of world trade is in piratedgoods

    Gieschen Consultancy 2006 14% of all internet tradevalued at US$100 billion

    Trend towards using the internet as a medium ofdistribution

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    Global ImpactThe extent of software piracy and losses due to such piracycannot be given in exact quantitative terms though it is believedthat piracy in this sector is wide spread. In Europe alone thesoftware industries lose an estimated $ 6 billion a year.

    In fact, Europe holds the dubious distinction of accounting forabout 50 per cent of world wide losses from software piracy,more than any other region including the number two Asia.

    According to a study of Software Publishers Association, a USbased body, losses due to piracy of personal computer businessapplication softwares nearly equalled revenues earned by theglobal software industry.

    In 1996, piracy costed the software industry US $ 11.2 billion, a 16percent decrease over the estimated losses of US $ 13.3 billion in1995.

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    Global Impact The country-specific data show that in 1996 Vietnam

    and Indonesia had the highest piracy rate of 99 percent and 97 percent respectively, followed by China

    (96%), Russia (91%), Thailand (80%) etc. In India software piracy is costing the IT industry

    quite dear. According to a survey conducted jointly byBusiness Software Alliance (BSA) and NASSCOM in

    May 1996, total losses due to software piracy in Indiastood at a staggering figure of about Rs. 500 crores (US$ 151.3 million) showing about 60 per cent piracy ratein India.

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    Internet Piracy -ReasonsReason for online piracy

    the ease at which pirates may maintain anonymity;

    the ability to be located any where in the world; the potential size of the market; and

    the ability to reach a global audience at marginal costs.

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    PreventionCriminal action

    Reporting the sale of pirated products to police

    Police investigates Police takes action

    Civil process

    Third party discovery proceedings

    Civil proceedings against infringer

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    Criminal actionAdvantages

    Exercise of police powers results in greater

    investigation efficiency

    Speed of action

    Deterrent effect


    Volume and bandwidth

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    Civil proceedingsAdvantages

    Potentially possible to recover damages and cost

    Disadvantages Confidentiality issues which prevents disclosure of

    third party information

    High legal cost

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    Industry self-regulationTake-down provision currently exist Copyright Act

    Useful against taking down illegal uploads of pirated

    digital media Less useful against other types of sale of counterfeit

    products in the internet

    Some auction sites have implemented take-down

    provisions: eBay Verified Rights Owner (VeRO)

    Yahoo report on auction abuse

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    WIPO Copyright TreatyIn 1996, in direct response to the growing threat of Internetpiracy, the World Intellectual Property Organization(WIPO) adopted new copyright treaties to enable better

    enforcement against digital and online piracy. WIPO lists seventy countries as having ratified the WCT.

    However, 68% of the countries that the BSA tracks thathave ratified the WCT have shown no change or only a

    minor increase or decrease in software piracy rates. Thethree countries that showed a significant decrease areRussia (which only ratified in February), China (whichratified in 2007), and Qatar (which ratified in 2005).

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    SOPA SOPA places a burden to protect IP rights from foreign

    infringement on service providers. Internet search engines,payment network providers, and internet advertising

    services. It could expand secondary liability under copyright law.

    Immunizes blocking of websites by service providers,payment network providers, internet advertising services,

    advertisers, internet search engines, domain nameregisters, and domain name registrars.

    Places liability on payment network providers and internetadvertising services.

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    PIPA The bill is intended to combat rogue websites

    operated overseas, the text of the bill, as currently

    written, has a much wider application. The bill is apotential burden on many bootstrapped startupcompanies, as it imposes compliance requirementson any site that either processes financial

    transactions, sells or serves online advertising, orprovides even a single link to content thatsomehow infringes upon an intellectual propertyright.

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    ACTAACTA is a multinational treaty for the purpose of

    establishing international standards for intellectualproperty rights enforcement. The agreement aims toestablish an international legal framework fortargeting counterfeit goods, generic medicines andcopyright infringement on the Internet, and wouldcreate a new governing body outside the existing

    forums, such as the WTO, the WIPO or the UnitedNations.

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    Criticisms The applicable definitions for infringing sites include the word

    facilitate, which can encompass a wide array of websites including usergenerated sites.

    SOPA imposes on sites in which only a small portion of the site is

    infringing. Conceivably, an entire website containing thousands ofpages could be targeted because of a small part being infringing. Severe practical problems arise for sites with substantial user generated

    content, such as facebook, twitter and youtube and for blogs that allowusers to post videos, photos and other materials.

    SOPA encourages over enforcement by making companies immunefrom suit for mistakenly punishing sites outside the bills scope.

    SOPA is a violation of the First Amendment because it allows a privateparty to suppress speech without prior notice or a judicial hearing.

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    Criticisms Where notice to the owner/operator of the site is required

    under the PIPA, there is no corresponding opportunity forthe aggrieved site operator to be heard before the allegedlyoffending site or link is removed from the internet.

    Under SOPAs private right of action, no notice is necessarybefore a plaintiff can have a site cut off from paymentnetwork providers and internet advertising services.

    In defining an infringing website, SOPA uses word likefacilitate and enable. There is potential that a site could

    qualify under the statutory definition but not meet therequirements for secondary liability under existing law. Inthis regard, SOPA could cause a lot of uncertainty in thelaw.

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    Criticisms The DMCA provides a take-down and counter-notice

    procedure. There is no counter notice procedurecontemplated in PIPA, and thus no chance for an aggrievedsite operator or owner to protest the removal. The DMCA

    also provides for immunity for system caching, while PIPAdo not contemplate system caching. Furthermore, theDMCA also provides penalties for those who knowinglymisrepresent a copyright violation, which are absent inPIPA and can lead to abuse of claims.

    Under certain situations, SOPA and PIPA may require aservice provider to block access to a foreign infringing sitesdomain name. Some have argued that DNS blocking couldcompromise the architecture of the internet.

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    Indian Position The International Intellectual Property Alliance has

    recommended in their Special 301 report that Indiaremain on the Priority Watch List in 2011.

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    Priority ActionsPriority actions to be taken in 2011:


    Create a national anti-piracy task force with goals to reducepiracy, inter alia, by working with State nodal officers,providing them with significantly increased resources;provide more accountability and power to the recentlyconstituted task force by FICCI under the aegis of the

    Ministry of Human Resource Development (MHRD). Reinvigorate IPcells within the state police, provide them

    with significantly increased resources, and establishspecialized IP prosecutors.

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    Priority Actions Continue training police authorities to be more effective in

    addressing rapidly growing mobile device and Internetpiracy

    Increase the number of suo-moto raids, including againstcorporate end-user software piracy.

    Encourage judicial reform, including accelerating theadjudication process in criminal and civil cases, andimposing deterrent fines and imprisonment; and establishspecialized IP courts, judges, and prosecutors.

    Legalize use of books and journals at educationalinstitutions.

    Empower customs to effectuate ex officio seizures, followedby destruction, of pirate goods.

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    Priority Actions - Legislation Ensure the Copyright Bill 2010 contains WCT- and WPPT-

    consistent protections, and takes into account right holderscomments to the Standing Parliamentary Committee.

    Adopt effective anti-camcording provision, either as part ofCopyright Bill or as standalone bill.

    Adopt statutory damages in civil cases; allow restitution to beawarded in criminal cases; and establish enhanced penalties for

    pre-release piracy. Reject attempt to recast unauthorized imports as non-infringing,

    as would result from the proposed revision of Section 2(m).

    Adopt an optical disc law.

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    Priority Actions

    Market Access

    Eliminate market access barriers, including thoseimposed on motion pictures, entertainment softwareand business software.

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    Legal Position - CounterfeitingThe primary legislation in India that deals withcounterfeiting are:

    The Trademarks Act 1999;

    The Copyright Act 1957; and

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    Trademarks Act, 1999The Trademarks Act provides remedies for theinfringement of a registered trademark, as well as acommon law remedy of passing off to protect against

    infringement of an unregistered trademark.

    Section 27(2) recognizes the common law remedy ofpassing off against any person dealing in counterfeitgoods. Section 29 mentions the various acts thatamount to the infringement of a registered trademark.

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    Trademarks Act, 1999 Section 135 provides for civil remedies in case of either

    infringement or passing off.

    These remedies include injunction, damages, deliveryup and rendition of accounts. Section 103 provides forcriminal remedies such as imprisonment of up to threeyears and fines of up to Rs200,000 (around $5,000) incase of counterfeiting.

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    Copyright Act Section 51 of the Copyright Act envisages the various acts

    that amount to infringement of copyright vested with theowner. Further, Section 53 restricts the importation ofcopies which would infringe copyright. The act also

    provides both civil and criminal remedies against softwarecounterfeiting.

    Section 55 provides for civil remedies by way of injunction,damages, rendition of accounts and delivery up. As far ascriminal remedies are concerned, Section 64 empowers

    the police to seize all counterfeit software copies, whileSection 63 provides for imprisonment of up to three yearsand fines of up to Rs200,000 in case of infringement orabatement.

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    Judicial Position The Indian judiciary has become diligent in

    dealing with software piracy. The Delhi HighCourt, in particular, has granted in numerous

    instances ex parte ad interim injunctions, as wellas Anton Piller orders in software counterfeitingcases. In 2005 the Delhi High Court also put anend to the Indian courts culture of refusing toaward damages. Since then, the court hasawarded damages in various IP cases, includingsoftware piracy cases such as the following:

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    Cases Microsoft Corp v Pawar (Case 530/2003) in this case the

    court awarded Rs20 million to Microsoft; Microsoft Corp v Vahi (Case 817/2004) in this case the court

    awarded Microsoft Rs23.62 million plus 9% per year from the

    date of the order until payment is made; Microsoft Corp v Mayuri (Case 1027/ 2005) in this case the

    court awarded Microsoft Rs500,000 in compensatory damagesand Rs500,000 in punitive damages, as well as costs; and

    Microsoft Corp v Popat (Case 2005 (30) PTC 245 (Del)) inthis case the court awarded Microsoft Rs19.75 million plus 9%interest per year from the date of the order until payment ismade.Other Indian courts have since followed suit and now awarddamage s to IP owners in counterfeiting and piracy cases

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    Conclusion India has adequate IP laws and an effective judicial

    system in place to tackle counterfeiting. However,much has still to be done to curb the problem, in

    particular with regard to software piracy. To counterpiracy, a four-pronged approach should be adopted.

    Firstly, efforts should be made to increase IP awarenessthroughout the country. This could be achievedthrough education programmes, newspapers, circularsand pamphlets organized or distributed bygovernment agencies and non-governmental agencies.

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    Conclusion Secondly, it is of paramount importance that the legal fraternity and

    the enforcement agencies are fully aware of and equipped to deal withthe various aspects of IP law. This could be achieved by organizingtraining programmes for judges and police personnel on a regular


    Thirdly, efforts to speed up trials should be made; this would enhancethe efficiency of the legal system by ensuring the early prosecution ofcounterfeiters and pirates.

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    Conclusion Lastly, more specialized police cells should be

    created to deal with IP and other economicoffences in various cities around the country.Existing specialist departments should be givenadequate powers. Further, the courts should beequipped with modern technologies to handle

    various IP issues more effectively.

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