Industry urges government to address conterfeit conundrum

Australia leads the pack in the proliferation of business software piracy - ahead of the US, Canada and the UK – highlighting the need to push for strong copyright enforcement legislation, according to the chairman of the Business Software Association of Australia (BSAA), Jim Macnamara.

More government action was needed to help crack down on copycats, Macnamara said at an industry event about the cost of counterfeiting toys, business software, and computer and video games in Australia and its associated effect on industries, consumers and government.

He said Australia needed to develop sentencing guidelines for judges and to enforce statuatory damages – similar to moves initiated in the Canadian courts.

President of Interactive Association of Australia (IEAA), Michael Ephraim, said the legistion and penalties handed down in Australian courts are not in line with other countries around the world.

On the business software front, Macnamara said piracy ranked seven per cent higher (pegged at 33 per cent) than in other markets around the world including the US (24 per cent), Canada (25 per cent) and the UK (25 per cent). Forms of IP theft of software include end-user copying; hard-disk loading; formal duplication; and downloads.

The overall industry numbers were equally grim, he said.

In 2002, counterfeiting in the Australian toy, software and video game industries resulted in $677 million of lost sales, according to findings by the Allen Consulting Group in a study commissioned for BSAA, along with IEAA and the Australian Toy Association (ATA), that was released at the event.

Lost sales in the business software industry amounted to $445.7 million. Another $100 million was lost in the computer and video games industry and $131.7 million in the toy industry, the study said.

Conservatively, these lost sales represented $200 million in lost profits, the report said.

“There is no question we’re going into an age where is intellectual property is important,” Macnamara said.

The theft rate of IP in Australia was high and therefore unattractive to potential investors, he said.

“The government needs to look at their losses,” Ephraim said.

Current piracy levels in Australia were scaring off private sector investment, he said.

“If multinationals are to keep investing, we need government to protect us on our main revenue stream,” Ephraim said.

He indicated the interative industry reached $830 million at retail this year.

Macnamara said Australia could be at the cutting-edge of innovation if the government recognised the problems, it could grow the economy, boost R&D in IT industries and create jobs.

Allen Consulting Group director, Jeremy Thorpe, said a reduction in counterfeiting of one-third over five years would reap significant benefits to the Australian economy -- and bring the country in line with New Zealand.

The US Real GDP would increase by $41 million per year (representing a gain in net present value terms of $466.3 million to the Australian economy) he said.

Government tax revenues would be $34.4 million higher per year.

“Counterfeiting is not a victimless crime,” he said. “It impacts legitimate industry with the loss of sales and profits for firms that make and distribute original products; it affects government [lose tax revenue as counterfeiters operate outside tax net]; and consumers are deceived into buying non-original or inferior goods – resulting in no trail and no redress for consumers.”

As such, he said the costs of counterfeiting far exceed the benefits.

The channel, meanwhile, also suffers debilitating effects as a result of counterfeiting, Macnamara said.

Separate BSAA research suggests the Australian channel loses about $180 million per year in lost sales – in total, vendors lose about $350 million a year.

He said the association was also clamping down on unscrupulous dealers that were illegally loading software.

Service and support opportunities for resellers are diminished thanks to counterfeiting, Autodesk Australia’s South Asia-Pacific regional director, Andre Pravaz, said.

He said Autodesk software had an 80 per cent piracy rate around the world – AutoCAD has the higest pinch rate.

The latest offerings – Autodeskinventor and Autodeskrevit – were also popular with copycats, he said, and could be purchased on the illegal market before the release dates.

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Jennifer O'Brien
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