Intellectual property rights under attack worldwide

February 2, 2005

Free Market Foundation

Nations around the world are allowing the illegal pirating of goods to run rampant, costing American companies billions of dollars, says Raymond Keating of the Small Business & Entrepreneurship Council.

Whether the products are American movies, computer software, golf clubs or even cars, pirated versions are becoming commonplace in many countries. Keating observes that China, Ukraine and Paraguay are the biggest pirates, with their economies essentially becoming dependent on such illegal activity:

According to the Business Software Alliance, China has a software piracy rate of 92 percent, Ukraine 91 percent and Russia 87 percent; meanwhile, worldwide losses from software piracy reached $29 billion in 2003.

The Congressional Research Service reports that U.S. drug firms lose $1 to piracy for every $3 of products shipped internationally; the World Trade Organization estimates that 6 percent of pharmaceuticals sold globally are counterfeit.

The Office of the U.S. Trade Representative says that pirated goods cost legitimate businesses in the United States about $200 billion to $250 billion annually.

Keating suggests property rights violations stem from cultural and historical prejudices. For example, in communist countries or former communist countries, the concept of private property is neither well understood nor valued.

Source: Raymond J. Keating, Intellectual Property and the International Marketplace, Small Business & Entrepreneurship Council, January 2005.

For text: http://www.sbecouncil.org/media/pdf/SBSC_policy_series_17-IP41.pdf

For more on International: Culture and Political Systems: http://www.ncpa.org/iss/int/

FMF Policy Bulletin/ 25 January 2005