Aziz Ridoun, an 18-year-old immigrant high school student in France, living with his mother in subsidized housing, spent his school vacation in May 2006 meeting with members of the French Parliament, speaking at dozens of media appearances and leading a rally of several hundred protesters. Who is Ridoun? In 2004, Ridoun started Audionautes, a non-profit group that provides legal assistance to those accused of illegally downloading music by the Civil Society of Phonographic Producers (French equivalent of the Recording Industry Association of America.)[1] Ridoun has captured the attention of France and the rest of the world because he represents today’s youth, who are caught in the middle of the heated battles that are taking place around the globe over intellectual property.

The problem of piracy is widespread. The cost of lost sales is estimated at $11 billion to $12 billion annually for the software industry[2], $1 billion annually for the recording industry[3] and $46 billion annually for the pharmaceutical industry[4]. Measuring the value of legitimate sales lost as a result of piracy is a tricky business one can never know if the "pirate" would have spent the money to buy the official product or instead would have bought nothing at all.

In some cases, not just products, but whole companies have been faked. A two-year investigation starting in mid-2004 revealed the creation of a parallel NEC brand with a network of more than 50 counterfeit electronics factories in China, Hong Kong and Taiwan. The parallel company had NEC business cards, commissioned product research and development in the company’s name and signed production and supply orders. Factories paid royalty fees for “licensed” products and had official–looking warranties and service documents. Fake goods made in these factories were on sale in Southeast Asia, North Africa, the Middle East and Europe and were sometimes placed next to legitimate NEC products.[5]

Some pirated goods have genuinely harmful consequences. Consumption of counterfeit drugs, for example, can result in illnesses or even death. In 2005 in Niger, a meningitis epidemic lead to the inoculation of 50,000 people with fake vaccines (received as a well-intentioned gift from another country and thought to be credible) and resulted in in more than 2,500 deaths. A recent study by the World Health Organization notes that counterfeit drugs represent more than 10% of global sales. In developing countries, estimates of counterfeit drugs range from 25% to 50%.[6]

The issue of piracy is being addressed on multiple levels. On the multilateral level, the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement was adopted by 125 countries in the Uruguay Round of the World Trade Organization(WTO) trade talks (1987-1993). TRIPs establishes a minimal level of protection that governments must provide for intellectual property. The agreement addresses “how basic principles of the trading system and other international intellectual property agreements should be applied; how to give adequate protection to intellectual property rights; how countries should enforce those rights adequately in their own territories; how to settle disputes on intellectual property between members of the WTO; and, special transitional arrangements during the period when the new system is being introduced.” [7]

On the national level, France, Sweden and India and are each moving forward on divergent paths. There has been an ongoing battle over Apple Computer’s release of iTunes codes in France. A 2004 study of the Competition Council of France revealed that Apple’s refusal to release iTunes codes did not harm consumers.[8]

Nonetheless, in 2006, the French National Assembly approved legislation that requires Apple Computer to disclose software codes for its iTunes music store so that files will work on other players, besides iPod. A weaker version of the law may be approved in the French Senate.[9] The bill also decreases the maximum fine for illegally downloading music from 300,000 euros (about $371,000) to 38 euros (about $47). Since France represents only 5 percent of Apple’s iTunes sales, Apple will probably just shut down iTunes in rather than release the codes.[10] Ridoun, the French teenager, suggests another route to bring down the price of downloaded music. He recommends starting a fund created by fees from Internet and Internet Service providers to pay artists based on the popularity of their work; a similar system is used by radio stations.[11]

Sweden may be following in France’s footsteps. In fall 2006, the Pirate Party, a new political party advocating the weakening copyright laws, will be participating in Sweden’s general elections. A legal website in Sweden, Pirate Bay, offers users a network of file-sharing for pirated files; according to the Swedish government, the site was used by 10 percent of the Swedish population in the last quarter of 2005. The Pirate Party also supports reducing patent protection from 25 years to five, a move that businesses say would not give them adequate time to recoup lost capital and make long term investments.[12]

India, on the other hand, has been strengthening its intellectual property protection. In the mid-1990’s India began upgrading its intellectual property laws after TRIPs was created in the Uruguay Round. The Indian Copyright Act of 1994 defined the rights of copyright holders and the penalties for infringement of copyrighted software. Indian courts have imposed fines in many intellectual property cases.

In 2005, India decreased the time it takes for a patent to be processed by examiners from five to seven years, to less than three years. The number of Indian patent applications filed in the past 15 years has grown 400 percent. Some speculate that India’s recent economic growth can be partially attributed to its positive regulatory climate for intellectual property. Annual revenues from Indian software exports are expected to reach $50 billion in the coming years.[13]

The industry response to pirated products includes litigation, lobbying and better technologies. Litigation over intellectual property has been common for many years. In United States 8,738 new intellectual property cases were filed in 2000, 8,314, in 2001 and 8,254 in 2002.[14] The reason for the decrease in intellectual property cases is not known.

American businesses have been lobbying the government to push the Russian government to accept stricter intellectual property laws as a precursor to approval of Russia’s joining the WTO. In 2006, there were 52 optical disc plants in Russia, of which 18 are on land owned or leased by the government. These plants produced hundreds of millions of pirated CDs and DVDs exported to more than 27 countries. Intellectual property will continue to be an important issue in Russia's bilateral and multilateral WTO accession negotiations.[15]

In May 2006, Microsoft released a new opt-in anti-piracy check, the Genuine Advantage program, which will be introduced to users via automatic software updates. The anti-piracy check will be required by users who wish to download security updates to their computers or other free Microsoft programs. Users who are found to have unlicensed software, will receive the pop-up message “This copy of Windows in not genuine; you may be a victim of software counterfeiting.” This message will pop-up at boot time, login time and periodically until the user buys a genuine version of the software.

As of March 2006, more than 150 million systems have been validated; approximately 35 million systems failed validation. Anti-piracy products are being planned for various foreign language versions of Windows as well, including Brazilian Portuguese, Czech, Greek, Korean, Simplified Chinese, Russian, and Spanish.[16]

Other new technologies include radio frequency identification technology (RFID) chips and bar codes to tag, track and authenticate drugs. Holograms, color-shifting inks and watermarks are also being used to authenticate packaging. The cost of building the infrastructure needed for RFID and the lack of agreed-upon industry standards has held back RFID adoption in the pharmaceutical industry. In addition, the current price of 30 cents/per RFID tag increases the price of the product and might make it prohibitive for certain medications. [17]

Whether downloading free music on the Internet or borrowing a friend’s copy of a computer software package, many people enjoy the benefits of using a product without paying for it. Some argue that paying $20 for a CD or $230 for Microsoft word is too expensive for an American student budget, let alone the budget of those living in the developing world. While many companies, such as pharmaceutical companies, offer discounted products to developing countries, many drugs and other goods remain beyond the means of millions living on subsistence wages. On the other hand, some argue that the protection of intellectual property spurs entrepreneurship and research and development. Why would someone develop a better product, if they knew that they would not be compensated for their efforts?