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Appealing to consumers' better nature may be a more effective way to curtail rampant piracy.

December 23, 2007

In the latest version of what has become a biennial ritual, Hollywood studios and major record labels are pressing Congress to crack down on copyright infringement. In particular, they want the Justice Department to prosecute more cases, local police and sheriffs deputies to launch more investigations, and lawmakers to provide tougher penalties for civil and criminal infringers. The difference this go-around, though, is that they've got company. Led by the U.S. Chamber of Commerce, a coalition of manufacturers, software firms and labor unions has joined the entertainment industry in lobbying for a measure dubbed the Prioritizing Resources and Organization for Intellectual Property Act of 2007 -- PRO-IP for short.

It's not surprising to see concern about piracy spread beyond copyright holders. As the markets for more products go global, more brands are being counterfeited in developing countries, and more knockoffs are finding their way into the United States. Consumers have an interest too. Although bootlegged music and movies pose only an economic threat, counterfeit drugs, brake shoes and chargers can be lethal.

Still, tougher penalties don't seem to be the right answer to the problems caused by piracy. In fact, they may only make the public less receptive to the entertainment industry's message about the value of copyrights and society's need to protect them.

We may not accept the coalition's outsized estimates of the damage inflicted by counterfeit and bootlegged products, but we don't dispute for a moment that piracy is widespread, growing and, for many commercial infringers, immensely profitable. Each year, billions of songs, TV shows and movies are downloaded or streamed online for free without the copyright owners' permission. Some of those are lower-quality bootlegs, others are pristine copies -- some even in high definition. The sale of counterfeit physical goods is brisk too, on streets and in markets around the world. The inventory consists of just about anything with a recognizable brand, character or star, from daily necessities such as detergent or pharmaceuticals to luxury goods.

The general public and intellectual property owners share an interest in reducing this kind of parasitic crime. Consumers are being harmed by shoddy fakes, and the underground economy of piracy helps support a broad spectrum of crimes and criminals. That's why it makes sense to put more effort into enforcing existing laws against piracy, selling counterfeit products, fraud, unfair business practices and the importation of illegal goods.

The proposed legislation (HR 4279 and SB 2317), however, would do more than just direct more resources into enforcement. It would provide for greater penalties for infringing copyrights and trademarks, which already are subject to stiff, even draconian, statutory damages -- amounts that copyright and trademark owners can claim even when the infringement causes no measurable loss. Those increases threaten to undermine the efforts by intellectual property owners to win the hearts and minds of the millions of people who routinely violate their rights.

Advocates of tougher penalties say the current ones don't provide enough of a deterrent. The situation with music piracy teaches a different lesson. Surveys show that most people who download music illegally know they're violating the law, yet they're confident they won't be caught. That's why millions continue to do so in the face of penalties of up to $150,000 a song. If that isn't a deterrent, what penalty could be?

Consider the recent case of Jammie Thomas, a single mother in Minnesota whom the major record companies accused of making 24 songs available for others to copy online. The jury found her liable and set a penalty on the low end of the available range -- $9,250 a song. The result was a $222,000 judgment that, in spite of Thomas' piracy, generated a wave of sympathy for her and outrage at the labels.

The most important task for intellectual property owners is to convince the public that it's wrong to support piracy, whether it be through "sharing" works online or buying cheap fakes from a street peddler. It's a tough sell that starts in the schools and the marketplace, not on Capitol Hill.

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