Introducing BSA's TechInsights
In ways large and small, technology policy is at the center of the debate in Washington these days -- and software is at the center of technology policy. As an industry, software is the most innovative in the United States, according to the National Science Foundation. It provides technology solutions that drive growth in every other sector of the economy.
Each quarter, the Business Software Alliance (BSA) will issue TechInsights to provide a look at the policy issues and trends that are most important for the software industry -- from the economic impact of piracy in emerging markets to new opportunities for growth around cloud computing.
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President and CEO, Business Software Alliance
Turning Points in the Struggle to Protect Intellectual Property Rights
Intellectual property concerns have rarely been more prominent on the US policy agenda than they are now -- and the 2010 BSA Global Software Piracy Study shows one big reason why they deserve to be: Theft of software for personal computers leapt 14 percent globally in 2010 to a record commercial value of $59 billion.
Emerging economies have been driving the trend, because that is where the personal computer market is growing fastest. But the most common form of software piracy worldwide is when people buy a license to install a program on one computer, but then install it on many more. In enterprise settings, that quickly adds up to hundreds or even thousands of copies, which has broad implications for the whole US economy, not just for the software industry, as I explained in a recent column in The Hill.
Software is an essential tool of production for businesses of all sorts. When companies in places like China pirate software, they are gaining an unfair advantage over companies that buy all their software legally. More often than not, they are stealing tools from one US-led industry to compete against other US industries. That helps explain why the issue of enterprise software piracy was near the top of the agenda last December during ministerial negotiating sessions of the US-China Joint Commission on Commerce and Trade, and why it was up for discussion again this month when the two countries sat down for their annual Strategic and Economic Dialogue.
With its piracy rate hovering close to 80 percent, China has made a series of commitments to promote licensed software use in government agencies, state-owned enterprises and the private marketplace. Yet, the software industry has seen no corresponding uptick in sales. This cannot be allowed to continue.
The US International Trade Commission recently completed a yearlong investigation into the US economic impact of intellectual property infringement and indigenous innovation policies in China. The Commission's final report found that in 2009 US industries lost $48.2 billion to IPR infringement in China. Of that amount, the largest share -- $23.7 billion -- involved copyright infringement for products such as software. The ITC concluded that if China were to bring its standards for protecting intellectual property rights in line with US practices, it would boost US product sales and exports to China by more than $100 billion and create up to 2.1 million US jobs. These findings are a stunning confirmation that IP theft has far-reaching consequences. What we need now is a commensurate response.
What should the US response entail?
First, the ITC has authority under US trade law to take legal action against imports that infringe on US intellectual property. It should use that authority -- and its targets should explicitly include products made with unlicensed software.
Next, there are additional policy options that would signal to China that it should not take its access to the US market for granted. In fact, state governments are already looking into whether Chinese products are competing fairly in their markets. Washington State recently passed legislation to prevent companies that use unlicensed software or other stolen information technology from competing unfairly with local manufacturers. Louisiana has passed a similar law, and several other states are considering them too.
Finally, in addition to rampant enterprise software theft in emerging economies, there is also growing concern in policy circles about the spread of piracy and counterfeiting on the Internet. So-called "rogue websites" -- sites whose main line of business involves infringing activities -- represent a problem that is in real need of a legislative solution. That is why Sens. Patrick Leahy (D-Vt.), Orrin Hatch (R-Utah), and Chuck Grassley (R-Iowa) are to be commended for introducing the PROTECT IP Act, which focuses on the worst of the worst rogue sites. BSA looks forward to working with the senators as their bill moves through Congress to ensure it curbs illegal activity in a way that does not inhibit legitimate business activity or stifle new technology innovation.
On all fronts, software piracy and counterfeiting has become a commercial epidemic. The good news is policy solutions are available. Our pressing challenge is to enact them.
Featured post on BSA's TechPost Blog: "Forget Mom's Maiden Name," by Katherine McGuire
The Obama Administration has unveiled the final iteration of its National Strategy for Trusted Identities in Cyberspace. This is a huge step forward because it will give people better ways of authenticating themselves online, thereby strengthening security and privacy, which are the cornerstones of trust and confidence in cyberspace.
A Look Ahead...
BSA will be rolling out a number of new initiatives in the coming weeks and months, including:
- BSA European Cybersecurity Forum
On June 14 in Brussels, BSA will host a forum for policymakers and technology leaders to explore privacy and security issues in the age of cloud computing. The event will feature keynote addresses by top US and European officials and industry executives. Panel discussions will delve into topics such as the tension between privacy concerns and security imperatives, and the legal and policy implications of cloud-enabled international data transfers. You can register for the event here.
- 2011 BSA CTO Forum
In September, BSA will hold its seventh annual CTO Forum, bringing together top technologists from the public and private sectors for a series of meetings to discuss high-priority policy issues related to cybersecurity, privacy and cloud computing.