[Solar-general] Fwd: Today's Senate hearing on enforcement

Mie Jul 16 14:29:35 CEST 2008

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From: Seth Johnson

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Subject: [A2k] Today's Senate hearing on enforcement
Date: Tue, 15 Jul 2008 18:45:19 -0400
From: Manon Ress <manon.ress en keionline.org>
To: a2k discuss list <a2k en lists.essential.org>

Today's hearing at the Senate Finance Committee "International
Enforcement of Intellectual Property Rights and American
Competitiveness"
July 15, 2008 at 10:00 a.m., in 215 Dirksen Senate Office Building
    Member Statements:
    Max Baucus, MT
    Charles Grassley, IA
    Witness Statements:
    Andrew Lack, Chairman, SONY BMG Music Entertainment, New York, NY
    Jeffrey Kindler, Chairman & Chief Executive Officer, Pfizer Inc.,
New York, NY
    John Barton, George E. Osborne Professor of Law, Emeritus,
Stanford Law School, Stanford, CA
    J. Walter Cahill, International Vice President, International
Alliance of Theatrical Stage Employees, Moving Picture Technicians,
Artists and Allied Crafts, Washington, DC

http://finance.senate.gov/sitepages/hearing071508.htm

Andrew Lack:

QUOTE
The content community, governments, consumers, and ISPs themselves are
beginning to respect the notion that the carriers of digital content
must play a responsible role in curbing the systemic piracy that is
threatening the future of all digital commerce. Industry has been hard
at work on these critical issues, but we need the help of the U.S. and
foreign governments to make the Internet safe for e-commerce in
copyrighted material by encouraging marketplace solutions to take
hold.
END of QUOTE

Testimony of Andy Lack
Chairman, SONY BMG Music Entertainment
before the Senate Finance Committee on
International Enforcement of Intellectual Property Rights
and American Competitiveness

July 15, 2008

Good morning. My name is Andy Lack, and I am Chairman of SONY BMG
Music Entertainment.

Thank you for the opportunity to address the Committee on the issue of
intellectual property protection in global markets. I commend Chairman
Baucus, Ranking Member Grassley, and the members of the Committee for
recognizing that this issue is of great importance to the entire U.S.
creative community, as well as to the U.S. economy and to U.S. society
as a whole. This Committee has been a tremendous champion for strong
and effective copyright protection in global markets, and I thank you
for your leadership.

Sony BMG is a recorded music joint venture that operates in more than
40 markets around the world and employs approximately 2300 workers in
the United States. Headquartered in New York, SONY BMG is one of the
four major record companies in the music industry. I think it's
worthwhile to highlight that, even though SONY BMG is a global company
with integrated interests in all facets of the music business,
ultimately our assets are thoroughly intangible because they are based
in the creative work of the artists themselves. For this reason,
economic survival in the music industry is reliant upon the adequate
protection of intellectual property.

The stakes for our national economy are high. It has been reported,
and the Administration has so testified before Congress, that roughly
40% of the U.S. economy is dependent upon IP protection in one way or
another, and the core copyright industries are alone responsible for
an estimated 6% of U.S. GDP. But the continued growth of this vital
economic sector is seriously at risk. This Committee has highlighted
the importance of the global fight against piracy, and we need your
help now more than ever. My industry's story is but one, yet it is
telling: While people listen to more music today than at any point in
recorded history, paid consumption is sharply down, as piracy and the
acquisition of music through illegal channels continues to skyrocket.
Creating opportunities for business growth is critical to ensuring the
survival of one of the world's most vital, diverse and competitive
industries.

The record industry currently faces a piracy phenomenon on two fronts.
One involves the physical marketplace, in which we confront
increasingly organized and multinational criminal enterprises involved
in massive production and trafficking of pirate CDs and other optical
media. The second front of the piracy war exists in the online
marketplace. Here, too, global criminal organizations are engaged in
illegal distribution directed at generally law abiding citizens who,
in the privacy of their own homes, are now actively involved in
trading or sharing unauthorized recorded music files. It is necessary
that any global IP protection regime address the piracy problem on
both the physical and digital fronts.

Music companies are not alone in confronting the pernicious threat of
counterfeit products and digital theft. A coalition spearheaded by the
U.S. Chamber of Commerce and the National Association of
Manufacturers, The Coalition Against Counterfeiting and Piracy (CACP),
has highlighted the broad scope of the threat that counterfeiting and
digital theft poses to the U.S. across more than two dozen sectors of
the U.S. economy. The Coalition has emphasized that the threat from
counterfeiting and digital theft robs the U.S. economy of hundreds of
billions of dollars of GDP and hundreds of thousands jobs, threatens
health and safety in many sectors, and is driven by organized crime.

SONY BMG has employed a multi-pronged strategy to address these
challenges. First, we are expanding legitimate avenues for digital
distribution through creative new business models and experimental
licensing arrangements. Second, we are educating the public and our
industry partners about the risks involved with piracy and steps they
can take to curb infringement. And, finally, we are taking enforcement
actions against infringers, and against services that effectively
encourage or induce infringement.

However, a company like SONY BMG, and copyright industry bodies like
RIAA, cannot fight piracy on our own. Today's pirates often operate
through multinational criminal syndicates simultaneously involved in
replication, printing and distribution around the globe. They rely on
traditional means of avoiding punishment such as bribery and other
forms of corruption, but also have new tools in their arsenal that
increase their stature -- force and other threats of violence, and the
ability to rapidly change the location of the various components of
their enterprises when confronted with governments prepared to tackle
piracy issues. Pirates actively seek out jurisdictions in which either
the law, lax enforcement of the law, or the general inefficiency and
corruption of the judicial system, offer relative safety for their
operations. Company representatives and counsel have in some countries
already experienced threats on their lives or physical intimidation
when their investigations began to make progress. In some cases, this
has prevented any enforcement activity by the private sector.

We therefore look to the U.S. Government for leadership, at home and
in bilateral and multilateral settings, to keep intellectual property
protection at the top of the enforcement agenda and ensure that law
enforcement agencies have the necessary tools and underlying legal
framework to accomplish their goals. Adequate enforcement requires
adequate resources, and to that end we believe that law enforcement
must have dedicated personnel who are focused on seeking out and
stopping illegal trafficking in pirated goods. The U.S. Government
should encourage countries with existing organized crime laws and
investigative procedures to bring them to bear against syndicate
operations involved in piracy. And where such laws and procedures are
not in place, the U.S. Government should encourage governments to
adopt them and to include, among predicate offenses, intellectual
property rights violations.

Aggressive and constant monitoring of the implementation of bi- and
multilateral trade agreements by our trading partners to ensure
compliance is of paramount importance, and we salute the work that
USTR, working with other U.S. Government agencies, does in this
regard. We also applaud the U.S. Government for the actions it has
taken to make China accountable for its piracy problem, specifically
through the filing of actions at the WTO.

Congress can continue to play a role in helping to ensure that our
trading partners meet their obligations to provide adequate and
effective copyright protection by holding oversight hearings such as
this, by ensuring that the Administration has adequate resources to
safeguard this unique American asset, and by ensuring that all trade
programs provide maximum leverage to require beneficiary countries to
provide effective copyright protection. Unilaterally extended U.S.
benefit programs crafted by Congress continue to play a key role in
providing incentives to countries to meet their IPR obligations.
This Committee should also continue to pay close attention to Russia's
accession to the World Trade Organization (WTO). The Russian
government wishes to join the WTO; however, to date they appear
unwilling to take sufficient actions against rampant copyright piracy
as they are required to do by the bilateral IPR agreement concluded
between Russia and the United States in November 2006. We strongly
advocate that the U.S. Government not complete the WTO accession
process with Russia until Russia takes actions that effectively
address this critical problem. There have been some promising
developments in Russia, but compliance with the bilateral agreement
that has been called the "roadmap to WTO accession" has not yet been
achieved. We are particularly concerned by the lack of government
action against the individuals responsible for allofmp3.com and other
similar online sites, and against the rogue licensing societies that
purported to grant licenses for content that they did not control.

SONY BMG, in line with the industry as a whole, has been adapting our
business to the dramatic changes brought about by the digital age. In
the US, only five years after the music download business first
emerged in a commercially meaningful way, 23 per cent of all recorded
music sold is online or mobile. Record labels are becoming broad-based
entertainment companies, developing new revenue streams. The consumer
has better choice, availability and flexibility in enjoying music than
ever before. Our digital revenues are growing and diversifying as our
business model changes from one dominant format to hundreds of
channels and products.

However, while broadband Internet access offers exciting prospects for
the legitimate dissemination of copyrighted materials of all kinds,
too often high-speed Internet connections are being used to distribute
unauthorized copies of sound recordings, software, videogames,
literary material, and motion pictures. The unprecedented growth of
the Internet and increased availability of broadband connections,
coupled with the absence of adequate copyright law and/or enforcement
in the online environment in many countries, has provided pirates with
a highly efficient distribution network to reach the global market.
Pirates offering and distributing infringing product can now reach any
part of the world with ease, regardless of where they are physically
located. Consequently, the U.S. copyright industries face the daunting
task of trying to enforce their legal rights in an online world where
borders and distances have decreasing practical significance, and
where anonymity is claimed.

What tools do we have to address this type of online piracy where
legal action by the industry does not suffice? First, of course, we
have the framework of international trade law discussed above. But
industry and government must also work together to address the
particular legal and technological challenges of the electronic
marketplace.

The so-called WIPO Internet treaties adopted in 1996 set the stage for
fair international digital distribution of music. These treaties
represented significant and necessary improvements in the
international legal structure. Of greatest importance, the treaties
made it absolutely clear that copyright holders are permitted to
control the electronic delivery of their works to individual members
of the public. This both anticipated and responded to the realities of
the electronic marketplace, where copyright owners rely increasingly
on electronic delivery to meet consumer demand. This level of
copyright protection, in conjunction with technical protections (also
addressed in these treaties), is key to encouraging copyright owners
to make their works available through these new media.

It is critical that the marketplace, with government support, continue
to develop its own solutions. To that end, SONY BMG and other content
companies have begun to engage in a dialogue with our industry
partners to find new ways to cooperate in the fight against piracy. In
particular, this past year has witnessed a virtual explosion of global
public interest in developing structures in which Internet Service
Providers (ISPs) can enhance their role in addressing the unauthorized
transmission of copyright content. This is an important development,
because until now ISPs have not adequately responded to the massive
theft that is occurring through their networks.

Today, however, a shift is underway. The content community,
governments, consumers, and ISPs themselves are beginning to respect
the notion that the carriers of digital content must play a
responsible role in curbing the systemic piracy that is threatening
the future of all digital commerce. Industry has been hard at work on
these critical issues, but we need the help of the U.S. and foreign
governments to make the Internet safe for e-commerce in copyrighted
material by encouraging marketplace solutions to take hold.
Furthermore, renewed emphasis on law enforcement training is vital to
giving enforcement authorities the tools they need to quickly locate
infringing Internet sites and pursue actions against the offenders who
commit the most damage and/or refuse to remove the infringing content.
Public education about the dangers of online infringement must be
emphasized as well. As global boundaries continue to lose much of
their practical relevance because of Internet growth, so must the
usual lines separating the roles of industry and government in policy,
enforcement and education. Close coordination will be the key to
success in this challenging new environment.

Finally, I mentioned the broad-based CACP coalition earlier and I
would urge the Committee to give positive consideration to proposals
the CACP has endorsed with respect to the creation of high-level
leadership positions in the Department of Homeland Security, Customs
and Border Patrol and other agencies, as well as the deployment of
dedicated agents with adequate legal tools to protect our borders
against counterfeiting and digital theft.
Page - 5 -

CONCLUSION

Effectively addressing piracy in all of its variants is a key economic
and cultural objective for the United States. Congress, the
Administration and the private sector must work together to achieve
this goal. Trade pressure and capacity-building through effective
training continue to be primary mechanisms for encouraging foreign
nations to address inadequacies in their legal and enforcement
frameworks, and I urge the Committee to ensure that the Administration
has all the possible tools at its disposal to exert such pressure and
to provide necessary training. To this end, it is critical that the
Administration be funded in such a way as to permit them to use their
powers to the maximum extent, and I urge the Congress to appropriate
sufficient funds to protect America's most creative, vibrant and
profitable industries.

We can and must prevail in these initiatives. Once again, I thank you
for inviting me here today, and I look forward to your questions.

***************************************************************************

Manon Ress
manon.ress en keionline.org,

1621 Connecticut Ave, NW, Washington, DC 20009 USA
Tel.:  +1.202.332.2670, Fax: +1.202.332.2673

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