Trade Barriers to Exports of U.S. Filmed Entertainment
Motion Picture Association of America
Introduction by Dan Glickman
About the MPAA
Trade Barriers – By Region
Western Hemisphere Overview
Asia Pacific Overview
MOTION PICTURE ASSOCIATION
OF AMERICA, INC.
1600 Eye Street, NW
Washington, DC 20006
Chief Executive Officer
November 18, 2009
Dear Ambassador Kirk:
The creativity and magic of American motion pictures continue to delight audiences
worldwide, in addition to providing powerful stimulus to the U.S. and global economies. The six
major studios of the Motion Picture Association of America (MPAA) member companies
generate billions of dollars annually from filmed entertainment distributed to more than 150
countries around the globe, returning a positive balance of trade in nearly every country in which
the companies do business. Notwithstanding this singular achievement, the U.S. movie industry
faces daunting barriers in many markets as well as relentless challenges to the integrity of its
product, challenges extracting an increasingly unbearable cost.
On behalf of MPAA and its members, I want to express our appreciation for the critical
assistance the U.S. government provides to the industry‟s efforts to grow its foreign sales. We
welcome this opportunity to present our assessment of priority foreign trade barriers for
consideration as you and your staff compile the National Trade Estimate Report on Foreign
Trade Barriers. In reviewing our submission, I note that while we have made substantial
progress over the last year -- and I heartily applaud the commitment you and your colleagues in
the Administration have made to protecting our members‟ content -- many barriers identified in
this report we have identified in past years‟ reports.
I am familiar with your interest in promoting small and medium sized enterprises. One of the
most unique characteristics of the motion picture and television industry is its decentralized
nature. More than 115,000 businesses in all 50 states comprise the US motion picture and
television industry - 81 percent of which employ fewer than ten people.
Before highlighting key points in MPAA‟s annual assessment of trade barriers facing its
members, which MPAA is filing electronically today, let me elaborate on the unprecedented
threat piracy continues to pose to MPAA members, and all U.S. creative industries. The
economic and cultural vitality of the creative industries is, I believe, one of our nation‟s most
valuable assets; however, its unique value is under attack by thieves, at home and abroad.
Thievery, particularly in the form of illegal camcording in theaters and the expanding scourge of
peer-to-peer file-sharing and illicit video streaming and user generated content sites on the
Internet, can devastate the creation and innovation of new works, and in turn the nation‟s
There is a significant national, as well as global, dialogue on the penetration of broadband to
foster economic growth, connectivity, and trade. Compelling content is an essential ingredient in
the consumer Internet experience and a key driver of broadband adoption. It is the content that
flows over and through the Internet that makes this breakthrough technology so potentially
powerful. While reviewing the barriers identified in this report, please bear in mind the real
impact these barriers and challenges to the integrity of our members‟ content have on successful
In attacking movie theft, MPAA is committed to a strategy that couples anti-piracy
enforcement with improving market access. In many important markets, pirates have,
effectively, a significant competitive advantage over MPAA member companies and other
legitimate businesses; the pirates operate unencumbered by quotas, duties, internal taxes,
distribution restrictions, licensing requirements, and other government policies which impose a
cost of doing business on legitimate companies. Moreover, market access restrictions that limit
the ability of MPAA members to enter markets have absolutely no affect on restricting the
availability of pirate content in the market: pirates freely supply the market without heed to or
burdened by the policies applied to legitimate businesses. Indeed, one of the most effective
tactics in fighting piracy is ensuring that thieves do not have the market to themselves.
As you develop your strategy for the coming year, the MPAA offers its full assistance and
cooperation toward combating the threat of theft of intellectual property, securing effective
copyright protection, and ensuring a competitive global market. MPAA believes the following
issues merit priority attention:
CANADA: Canada has taken almost no steps toward bringing its copyright laws up to
date with the realities of the global networked environment. Unlike its major trading
partners, Canada does not have any legislation or developed jurisprudence which clearly
provides an effective means for copyright holders to protect themselves from on-line
piracy and enable the legitimate market place to develop. This legal void has made
Canada an attractive location for illicit websites and Canada has regrettably become
know as a “safe haven” for Internet pirates. There is an urgent need for amendments to
the Copyright Act to comply with the WIPO Internet Treaties and to ensure copyright
owners can effectively combat online piracy by enacting an effective legal framework
governing ISP liability and responsibility.
CHINA: China remains one of the most restrictive markets in the world for the US
entertainment industry, as well as being one of the worst offenders in failing to provide
adequate protection to copyrighted audio-visual works. MPAA remains committed to the
actions you have taken at the WTO that would open the Chinese market and liberalize the
most restrictive of the measures limiting our access to this market and that would ensure
that China meets its international obligations with respect to measures to deter copyright
infringement on a commercial scale.
INDIA: India‟s market is plagued with a patchwork of restrictions, particularly on the
television side, which holds enormous potential for the US industry. In addition, the
disparity between the policies of the various states and the national government imposes
a bureaucratic burden that greatly disadvantages the industry. Indian tax and customs
policies often discriminate against the US industry. Nonetheless, the MPAA believes
India will become an increasingly important market to our industry.
MEXICO: Optical disc piracy in Mexico is among the worst in the world and getting
worse largely integrated with organized criminal networks. Disturbingly, Mexico has
also become the Western Hemisphere‟s leading source of films illegally recorded in
theaters negatively impacting not just the Mexican market, but markets throughout Latin
America. It is imperative that Mexico pass its long pending anti-camcording legislation.
RUSSIA: The November 2006 US-Russia IP Side Agreement constructively articulates
the areas where Russia must improve its intellectual property regime in order to be
compliant with the WTO TRIPS Agreement and before Russia can accede to the WTO.
While Russia has made some progress, much works remains, particularly with regard to
enforcement, i.e. systematic raids resulting in lasting plant closures and deterrent
sanctions consistently imposed against the owners, and implementation of an optical disc
licensing regime that provides effective control over plants‟ operations. Russia is also
plagued with rampant Internet piracy and lacks the capacity or political will to address
SPAIN: U.S. and Spanish creators are gravely concerned about Spain‟s rampant Internet
piracy problem. Peer-to-peer (P2P) piracy is widely perceived as an acceptable cultural
phenomenon and this situation is exacerbated by the Spanish government‟s policy of
decriminalizing illicit P2P file sharing. Moreover, Spain has not properly implemented
minimum EU-level requirements regarding ISPs under the E-Commerce Directive.
Spanish ISPs, far from showing willingness to collaborate in the fight against Internet
piracy, instead make use of their file sharing and downloading service capabilities to
promote their businesses. The Government of Spain must foster legitimate online
commerce and improve the protection of intellectual property rights in Spain.
In addition to these specific barriers, I want to draw your attention to an increasingly
worrisome trend that potentially presents a new guise for a familiar barrier: protectionism
against MPAA‟s products cloaked in the name of cultural promotion. While I firmly believe
international trade disciplines will prevail, I am concerned that in some quarters, governments
may attempt to use other international agreements as justification for erecting new barriers to the
U.S. filmed entertainment industry. This protectionist inclination has striking implications for
our member companies‟ business models, which are increasingly utilizing electronic commerce
to deliver digitally MPAA products. We are committed to countering those possibilities, just as
we are committed to the promotion and protection of cultural diversity; indeed, I believe the
wealth and scope of the diversity of the filmed entertainment the U.S. produces each and every
year is prima facie evidence of that commitment.
On behalf of the millions of men and women MPAA member companies employ, the
companies and their investors, the staff of MPAA, and the billions worldwide who continue to
thrill at the enduring genius of the U.S. film industry, I extend our collective deepest appreciation
for the invaluable assistance of the dedicated men and women at USTR. While USTR
spearheads these efforts, I am not unmindful of the valuable contribution of so many others in
the Executive Branch: The Departments of Commerce and State, which negotiate and enforce
market access and high standards of intellectual property protection and are the industry‟s
frontline advocates. The copyright experts in the Patent and Trademark and Copyright Offices
and the enforcement agencies are critical to the important gains we have made improving
intellectual property protection and enforcement around the globe.
As always, the Motion Picture Association of America and I look forward to continuing to
work with these friends and supporters in confronting the challenges that lie ahead. If we can
assist you in this work, please let me or my staff know.
With best personal regards, I am
Chairman and Chief Executive Officer
The Honorable Ron Kirk
United States Trade Representative
600 Seventeenth Street NW
Washington, D.C. 20508
As with last year, the MPAA has focused its trade barrier submission on those countries and
issues where it and its member companies are most actively engaged. Therefore, the countries
included in this year‟s filing are commercially significant markets or potentially commercially
Each year, MPAA works under the aegis of the International Intellectual Property Alliance
(IIPA) to recommend to the US government those countries‟ policies and practices that merit
Special 301 listing. With this in mind, MPAA‟s Trade Barriers submission highlights principal
concerns with countries‟ intellectual property regimes and defers to the Special 301 process a
comprehensive discussion of countries‟ adequate and effective protection of US intellectual
ABOUT THE MPAA
The Motion Picture Association of America (MPAA) is a trade association representing six of
the largest producers and distributors of filmed entertainment in the world: Walt Disney Studios
Motion Pictures, Paramount Pictures, Sony Pictures Entertainment Inc.,
Twentieth Century Fox Film Corporation, NBC Universal, and Warner Bros Entertainment Inc.
These companies employ hundreds of thousands of US workers, entertain millions across the
globe, and, unique among US industries, generate a positive balance of trade in virtually every
country in the world.
For further information about this report, contact Greg Frazier, Executive Vice President for
Worldwide Government Policy, 1600 Eye St., NW, Washington, DC 20006, or Anissa Whitten,
Vice President of International Affairs and Trade Policy, 1600 Eye St., NW, Washington, DC
20006. This document is protected by copyright. It may, however, be reproduced or quoted with
GLOBAL ISSUES 2010
This submission is the Motion Picture Association of America‟s (MPAA) twenty-seventh
contribution to the National Trade Estimate Report on Foreign Trade Barriers. The filing is
based on reports from MPAA‟s member companies, MPAA‟s global network of offices, and
information from entities with whom MPAA collaborates. This year‟s report provides an
overview of those measures and trade practices that most distort international trade in
audiovisual entertainment and that most negatively impact MPAA‟s member companies and the
livelihoods of hundreds of thousands of American men and women who work in the filmed
Two of MPAA‟s priorities for its own operations in 2010 include:
One, enhance the protection of the intellectual property that fuels this American industry by
further developing innovative strategies and tactics to detect, stop, and deter Internet piracy and
by encouraging cooperation with Internet Service Providers.
Two, redouble efforts to enhance the industry‟s access to foreign markets and to prevent the
erosion of current terms of access, particularly with regard to electronic commerce.
MPAA and its members depend upon and greatly appreciate the active and energetic cooperation
of the US government. To help MPAA meet its objective to improve the protection of American
intellectual property in international markets, MPAA directs US government attention to the
attacking peer-to-peer (P2P) piracy and piracy through video streaming and user
generated content sites by encouraging governments to establish and enforce legal
protections for copyright that will be effective in the modern digital environment;
facilitating ISP-rights holder cooperation, fostering implementation of the graduated
response mechanism, and technological controls as appropriate;
ensuring that data protection rules do not prevent meaningful cooperation with ISPs;
encouraging adoption of effective anti-camcording legislation to make the illicit
camcording of motion pictures in theaters, which is the source of 90% of available
pirated motion pictures, a criminal offense;
encouraging adoption of optical disc legislation in key countries; and
ensuring that new trade agreements contain high standards of intellectual property
protection appropriate to the digital environment, that governments comply with the
terms of existing trade agreements, and that countries comply with the World Intellectual
Property Organization (WIPO) agreements.
MPAA and its member companies place the highest priority on securing both the legal and
practical tools necessary to protect intellectual property rights in the digital age. Internet piracy
has emerged as the fastest growing threat to the filmed entertainment industry; particularly in key
markets where broadband infrastructure is spreading rapidly including North America, Europe,
South Africa, South Korea and Taiwan.
There is no one silver bullet to eradicate the online theft of creative content. There is, however, a
range of technological tools and policy approaches that can and should be used to address online
infringement. These efforts, which include graduated response policies as well as technologies
such as watermarking and filtering, require the cooperation of Internet Service Providers, have
proven to be successful in various contexts around the world.
MPAA believes Government has a vital role in addressing the online theft of creative content. It
is critical that the US government continues to work with foreign governments to establish
adequate legal protections for copyright owners, and to enforce those laws in an aggressive and
effective manner, including:
adequate notice and takedown provisions,
clearly defined Internet service provider (ISP) liability guidelines,
protection of temporary copies,
“making available” right, and
provisions against circumvention of technological protection measures.
These protections are essential elements of a legal framework capable of responding to the
demands of the digital environment. Without these protections, the industry‟s viability will be
undermined, no matter what it might do on its own. These protections serve both to protect an
important US economic asset, and deter harmful activity in host countries, including tax evasion,
consumer fraud, and unfair competition – activities that threaten local cinema owners, video
store proprietors, and broadcasters, too.
In this regard, MPAA strongly supports the inclusion of online provisions in the Anti-
Counterfeiting Trade Agreement which are critical to raising the level and effectiveness of
copyright enforcement in the digital and online marketplaces.
The illicit recording of a movie at a theater – remains the single most prolific source of movie
piracy. As a result of camcorder piracy, illegal copies of many motion pictures become available
over the Internet, as well as on street corners and flea markets around the world, within days of
US theatrical release. Camcorder pirates are often sophisticated criminals who sell the master
recordings to release groups which then upload the illicit recording to the Internet, marrying the
video with various audio tracks from different countries undermining a film‟s success in markets
around the world. One illicit recording of a first-run motion picture spread through the Internet
and on street corners can destroy the producer‟s ability to recoup the investment made in its
production. Put another way, the losses are exponentially greater than the selling price of a
pirated product or single act of theft; the economic harm affects the complete lifecycle of a film,
eroding all aspects of the economic value chain and impacting the thousands of jobs that produce
and distribute the product.
MPAA expects illegal camcording to continue to increase outside the United States due to three
its illicit lucrative nature – for example, a camcorder caught in the US confessed that he
was offered $2,000 by a source in Asia to camcord a movie still showing in the theaters;
current marketing practices are reducing the time between US and international theatrical
release of movies; and
camcording is now a federal offense in the US and in over two-thirds of the states.
To facilitate enforcement and prosecution of illegal camcording, MPAA has set as one of its
strategic objectives the adoption in priority countries of effective anticamcording legislation,
which includes jail sentences, preferably up to a year or longer for the first offense, and a higher
penalty for any subsequent offense. Priority countries for anti-camcord legislation include
Australia, China, Indonesia, Mexico, Thailand, United Kingdom and Ukraine.
Electronic commerce is integral to the business models of MPAA member companies and
MPAA members‟ efforts to respond to consumers‟ evolving consumption demands. MPAA
places high priority on ensuring that this critical means of distribution is not jeopardized by
discriminatory regulations nor prejudiced by initiatives that aim to exclude audiovisual products
under the guise of cultural promotion.
It is priority that audiovisual goods are included in any market opening disciplines and
negotiations for digital media and electronic commerce. This is particularly important as regards
US trade policy, both Free Trade Agreements (FTA) and the WTO, as well as more narrow
bilateral initiatives. MPAA and its members firmly believe that audiovisual products must be
included in any APEC digital products initiative; exclusion would severely prejudice the US
motion picture and television industry; potentially hobble MPAA members‟ distribution models;
and, bar an opportunity to address the above-discussed customs valuation problem.
Locking-in the film industry‟s market access for electronically delivered products is all the more
important given the global trend towards cultural protectionism most recently exemplified by the
UNESCO cultural diversity convention.
Customs Duties Valuation
MPAA‟s members frequently find that customs officers assess ad valorem duties based on
potential royalties generated rather than solely on the value of the carrier medium, i.e. the
physical materials which are being imported. The economic consequence of such policies can
mean hundreds of thousands of dollars per film. For example, if a country levies a 12.5 percent
ad valorem duty on a US blockbuster film expected to generate US$2 million in that country‟s
theaters, that duty could exceed US$250,000. This is a far cry from a duty levied solely the
value of the carrier medium, which generally would be US $200 for each copy of the film
imported. This is, unfortunately, not an uncommon practice. Acceding WTO members, such as
Russia, and WTO members, such as Argentina, India, Ukraine and Uruguay, currently apply ad
valorem duties on projected revenues.
Unfortunately, as governments look for additional revenue sources, it is far too easy to target
foreign products entering their market and assess duties on projected royalties. After changing
their valuation schemes, India and Ukraine have demanded “overdue” payments for retroactive
valuation of audiovisual products entering their market, a galling practice that disrupts
participation in the market and penalizes US companies for their prior success.
In addition to the financial implication of an ad valorem duty applied to expected royalties, such
policies are burdensome, subjective, and create unfair taxation. Because royalties are subject to
remittance, withholding and income taxes, such duties are a form of double taxation. The
International Chamber of Commerce recognized in a policy statement, The Impact of Customs
Duties on Trade in Intellectual Property and Services, that such a practice distorts markets,
increases costs for suppliers and buyers, depresses commercial activity, and impedes the
availability of intellectual property in the country imposing the tariffs.
WIPO Internet Treaties
New digital technologies offer growth and opportunity for creative industries on a global scale;
however, the creative industries can thrive only if the intellectual property rights are respected.
The plague of digital piracy threatens to blight this growing marketplace.
The World Intellectual Property Organization Copyright Treaty (WCT) and the WIPO
Performances and Phonograms Treaty (WPPT) provide essential tools for ensuring the protection
of copyrighted content in the digital age. The treaties require countries to provide adequate legal
protection and effective legal remedies against the circumvention of effective technological
protection measures that are used by copyright holders in the exercise of their rights. The
treaties also require countries to protect copyright management information embedded in
copyrighted materials, both electronically and physically and to enable creators, performers and
producers on a national treatment basis to control the use of their property in electronic
commerce, regardless of the means used to make these products available.
These treaties help ensure that creators, performers, producers and the public benefit fully from
the development of new means of disseminating creative works. To date, 71 countries have
adhered to the WCT and 69 have adhered to the WPPT. MPAA is actively working with
governments around the globe to bring them into compliance with the terms of these important
treaties, which provide the global minimum standards for the protection of intellectual property
in the digital environment.
Optical Disc Piracy
Large-scale pirate replication of optical discs (OD) remains a serious problem. Asia continues to
be the leading region for factory production of pirated optical discs and China, Pakistan and
India specifically are significant sources of export piracy. Russia is also a major center for pirate
MPAA urges the US government to add its support and influence to the global campaign MPAA
has undertaken to encourage governments to regulate optical disc production as a tool for
controlling piracy and to mount intensive operational enforcement efforts against illegal
While large-scale replication in factories, often controlled by organized criminal groups, remain
a major threat, MPAA has also noted the emergence of optical disc burning operations. These
burning labs are individually smaller in scale and more local in their business plans than the
factory-replication problem. However, the sheer number and coordination of such operations
confirm that elements of organized criminal activity are often still present.
Optical disc piracy is also directly linked with Internet piracy. Pirates can copy feature films,
each representing an enormous investment approaching $100 million, when the films are first
released, whisked via digital networks to clandestine production facilities, duplicated by the
millions, and then distributed to consumers over the Internet. A comprehensive approach to
fighting piracy requires addressing both the replication of digital content in hard goods formats
while also addressing Internet piracy.
MPAA strongly supports the US government‟s free trade agenda, from its pursuit of bilateral and
regional FTAs to its pursuit of global trade reform within the World Trade Organization (WTO).
In particular, MPAA notes and supports the provisions in recent FTAs that effectively raise
international standards of legal protection for copyright in the digital age, and note that it is
critical that countries adhere to FTA obligations regarding copyright protection.
Examples of key areas where the FTAs are raising the bar for legal protection of intellectual
property well above the standards set in the WTO agreements include:
1) extending the term of copyright protection, 2) providing explicit legal protection for the
technological protection measures that content owners employ to safeguard their content, 3)
setting clear rules governing cooperation between content owners and Internet Service Providers
in the fight against Internet piracy, 4) regulating the production of optical discs in regions where
there is a high risk of this form of piracy, and 5) making the possession or use of recording
equipment and devices in movie theaters a crime, that is, anti-camcording disciplines.
While not a Free Trade Agreement, the Anti-Counterfeiting Trade Agreement (ACTA) is of the
utmost interest to the MPAA and its member companies as it has the potential to improve the
protection and enforcement of intellectual property rights in major markets around the world.
Our interests in a robust ACTA are broad, ranging from ex-officio authority for law enforcement
and customs officials to securing both the legal and practical tools necessary to protect
intellectual property rights online.
Trade negotiations are critical in lowering market access barriers which, in a multitude of forms,
continue to restrict and encumber the free flow of commerce in US-produced filmed
entertainment. In particular, while MPAA strongly supports the promotion of local cultural
expressions, MPAA notes that some governments may seek to mask trade barriers and
protectionist measures behind a veil of promoting cultural diversity. These protectionist
tendencies have the potential to undermine MPAA member companies‟ emerging business
Integral to these emerging business models is electronic commerce, which has transformed
MPAA member companies‟ production and distribution processes. MPAA places high priority
on ensuring that this critical means of distribution and production is not jeopardized by
regulations that purport to promote cultural diversity. Central to this effort are the FTA and
WTO negotiations and MPAA strongly supports USTR‟s efforts to secure the film industry‟s
market access for digitally delivered products.
MPAA notes its support of the Trans-Pacific Partnership (TPP) FTA. MPAA‟s interests in the
TPP FTA cut across several FTA chapters including intellectual property, services and
investment, electronic commerce, customs, and goods.
The main challenges facing the entertainment industry, which MPAA seeks to call to the
attention of the US Government in this submission, include the need to establish measures to
confront rampant piracy on the Internet, to develop a comprehensive strategy to prevent the
assessment of customs duties on projected royalties of audiovisual products entering a market,
and to prevent the illegal camcording of motion pictures in theaters.
The tenets of free trade in audiovisual works should be promoted and defended, as they are
challenged under the guise of culture protection and through national protectionist policies that
threaten to undermine the distribution of American film exports throughout the world. The U.S.
motion picture industry will continue to take every opportunity to advise and to seek the
assistance of U.S. trade negotiators to anticipate unforeseen difficulties and to act expeditiously
to meet these continuing challenges.
The Western Hemisphere continues to be a challenging region for the MPA. While these are
generally smaller markets for MPA member companies, negative government policies in these
territories have a real impact on the global policy framework. For instance, we saw a disturbing
spike in interest among Caribbean countries in the Bahamas compulsory license scheme for
encrypted pay television signals which was, thanks to US government assistance, repealed.
There is growing government interest in some territories, notably Brazil and Argentina, of
promoting the local audiovisual industry at the expense of free market principles and to the
detriment of the US motion picture industry. Proposed measures include limitations on foreign
ownership, additional fiscal burdens, and a movement towards rethinking the ideal scope of
In Brazil, selective suspension of intellectual property rights has been posited as a remedy to
settle a trade dispute. The precedent of such an action could have negative ramifications around
the world. Another declared measure in that country could make it financially unfeasible to
maintain the rights to older film product, including those of titles no longer on the market. These
tendencies, if brought to fruition, could significantly interfere in the commercial activities of
MPA member companies in the region.
In several economies in this region, notably Brazil, Argentina and Venezuela, governments have
introduced discriminatory legal frameworks for television and pay television. These proposals
create disparate systems for foreign and domestic programmers on taxation matters, impose
burdensome quotas and performance requirements, and insert heavy government intervention
into commercial matters.
Screen quotas, one of the most traditional trade barriers, are generally attenuated by lack of
enabling legislation in some countries and by sketchy enforcement in others. It continues to be
the case that with regard to Venezuela‟s copying obligation for theatrical prints, a key feature of
a much-feared Film Law in 2005, non-compliance, due to inadequate copying facilities, has met
with no negative action by the authorities.
Camcording as “source piracy” has grown exponentially over the last few years in Latin
America, particularly Mexico and Brazil, tracking the development of camcorder technology
which makes detection difficult and copies near perfect. Mexico has surpassed Puerto Rico as
the territory with the most significant camcord piracy problem in the region. However, the spike
in Brazilian-sourced camcords over the past year is also startling. In 2008, MPA also saw the
first camcords come out of Chile and Peru.
Anti-camcording legislation is critical to addressing the rapid increase in camcording. Some
countries, such as Argentina and Canada, have legislative frameworks that have fostered
effective enforcement against this damaging source piracy. Other territories, notably Mexico,
suffer from an absence of a legislative framework criminalizing illicit camcording in theaters. It
is clear that illicit camcording in Mexico will continue growing unrestrained if camcording is not
made a criminal offense with requisite deterrent penalties.
The importation of blank media into the region, especially Mexico, continues to be a challenge.
Much of the blank media enters Mexico via the United States to benefit from the NAFTA and to
avoid taxes. Moreover, blank media from China, India, Hong Kong and Taiwan is transshipped
through Panama into Mexico. Brazil‟s market suffers from blank media transshipped from
Paraguay. Chile‟s Iquique port is a transshipment point for blank media from Asia entering
Colombia, Peru and Bolivia.
Over the past year, MPA has seen better organized online piracy in the region and the formation
of Internet release groups. Release groups have appeared in Argentina, Chile, Mexico, Peru, and
Puerto Rico. These groups are distinguished from European and American counterparts because
they are overtly profit driven and utilize different distribution channels; rather than topsites, these
groups have public websites, working at the P2P level. In Canada, Internet piracy continues to
escalate in severity as Canada becomes perceived globally as a piracy safe haven. The context of
this is Canada‟s continued failure to implement any amendments to its Copyright Act consistent
with international standards to comply with the WIPO Internet Treaties and to ensure copyright
owners can effectively combat online piracy by enacting an effective legal framework governing
ISP liability and responsibility.
MARKET ACCESS BARRIERS
Proposed Audiovisual Communications Services Law – The Executive sent to Congress on
August 27, 2009, the bill for the Audiovisual Communications Services Law. The first draft of
this bill released in Mary 2009 included several problematic elements. The August version sent
to Congress is even worse. The bill establishes a new regulatory framework for radio, television
and pay television, giving the Government the ability to regulate monthly subscriber fees as well
as the type of content a cable operator can exhibit via a screen quota for national movies. It
includes new quotas for Argentine programming and restricts commercializationof foreign
advertising. Moreover, the bill includes a local presence requirement and creates a disparate
system for foreign and domestic programmers on taxation matters.
Customs Duties – The Argentine Customs Valuation Code requires that all audiovisual works,
excluding computer software, must pay an ad valorem customs duty based on the value of the
“authors‟ rights”, that is, on the potential royalty generation of the film, rather than solely on the
value of the physical materials which are being imported. MPA opposes this burdensome
practice, which is a form of double taxation since royalties are subject to remittance, withholding
and income taxes. Customs duties should be based on specific fees, such as weight or lengthy,
or, if ad valorem, be based on the value of the carrier medium only. Because of this duty, MPA
member companies import negative prints on a temporary basis and copy positive prints locally.
There have been no new developments in this matter in 2009 to date.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – The entrance into Argentina of blank media, which feeds the pirate supply
market, is a major concern and should be a target of permanent focus of Argentine Customs
Proposed Criminal Code Amendment – MPA and IFPI presented an amendment to the Criminal
Code in 2007 that would increase penalties for copyright piracy and provide criminal sanctions
for the circumvention of technological protection measures. Importantly, the proposal also
includes an anti-camcording provision that would make the recording of a motion picture in a
theater a criminal offense. MPA welcomes US government support in advocating for the
passage of this legislation. No further action has been taken on this amendement since its
MARKET ACCESS BARRIERS
National Content Quota for Pay TV Bill – PL 29/07 would impose local content quotas for pay
television to be enforced by ANCINE, the national film agency, and delegate to ANCINE
unprecedented powers to limit advertising and direct business activities. It would also set rules on
technological convergence, opening the way for telephone companies to compete with cable
operators in offering content, and more importantly from a revenue standpoint, broad band service.
The House of Deputies‟ Science and Technology Commission is considering this bill, which will
also need review by the Constitutionality and Justice Commission, as well as the Senate. While
MPA supports expanding the number of platforms on which consumers can enjoy legitimate
content, MPA is concerned that local content quotas will limit the consumer experience and push
consumers towards illegitimate sources of content.
INTELLECTUAL PROPERTY PROTECTION
Importation of Blank Media – Blank digital media imports have increased over the last four
years with the import price per unit dropping 40% over the past two years. There are strong
indications that much of this blank media is used for counterfeiting products.
Camcord Piracy – Unauthorized camcording in theaters in Brazil is a serious concern to MPA and
is likely due in part to the reduced interval between US and international theatrical releases.
Successful execution of the National Council Against Piracy‟s campaign will depend on the
Government‟s will to implement public policies to protect and enforce intellectual property rights.
While this initiative is important and MPA is supportive, some critical areas to improved
enforcement – such as coordination between federal and state police, creation of a dedicated IP
Police Department and an IP Court, deterrent sentences and rules to reduce the timing and costs of
inquiries and lawsuits – remain untouched.
In December of 2007, the Ministry of Culture created the National Copyright Forum, a series of
conferences and workshops aimed at informing amendments to the Copyright law.
Recommendations for amendment include: creation of a private copy levy; national exhaustion of
rights; authorization to circumvent TPMs for fair use; and, creation of a compulsory license for
works used in an abusive way by copyright holders. The public consultation is expected by the
end of 2009.
Proposed Selected Suspension of TRIPS Obligations – In mid 2007, the Administration
presented a bill (PL 1893/07) which, if passed, would permit cross-retaliation measures against
the United States. The law would authorize the suspension of intellectual property protection in
Brazil for US rights holders. The scope and application of the proposed measures are still
unclear, but the bill‟s language would appear to permit the possibility of suspending the
copyright protections upon which the audiovisual industry depends in order to conduct business.
MPA believes that there is a fundamental difference between retaliation that restricts market
access and raises tariffs and retaliation, as that contemplated by Brazil, that undermines the
normative rules of the international trading system. If a WTO member were to abrogate its
TRIPS obligations, it would be in contravention of the Berne Convention as well as the
principles of property rights protections fundamental to a rules based international trading
system. This bill has been approved by two of the four necessary Commissions in the House of
Deputies and must still go through the Senate.
MARKET ACCESS BARRIERS
Internet Retransmission – The Canadian Radio-television and Telecommunications Commission
(CRTC) reviewed the New Media Exemption Order in 2009 and determined that it continues to
apply to Internet retransmitters and also that it applies to mobile point-to-point broadcasting
services. Consequently Internet retransmitters and mobile point-to-point broadcasting services
(whether or not they are Internet-based) are ineligible for the compulsory retransmission license.
Television Content Quotas – The CRTC imposes quotas that determine both broadcasters‟
minimum Canadian expenditure and the minimum amount of Canadian programming that
licensed Canadian broadcasters must carry. The CRTC requires that all over-the-air television
broadcasters program at least 60% of their annual broadcast time with Canadian programming.
From 6pm to midnight privately owned over-the-air broadcasters must carry Canadian
programming during no less than 50% of that time, and 60% for the CBC.
Cable networks and pay TV services are subject to individual Canadian programming quotas
(time or expenditure or both), which vary depending upon their respective license conditions.
Such quotas are discriminatory and artificially inflate the total spend on Canadian programming.
Canadian Signal Quotas and Preference – The CRTC‟s Canadian Broadcasting Act regulations
and policies discriminate against US signals and services by restricting their distribution in
Canadian distribution undertakings, such as cable and direct-to-home (DTH) satellite, must
ensure that each subscriber receives a majority of Canadian signals and services overall.
Television signal distributors must give priority to Canadian local and regional over-the-air
signals on the basic tier.
A second discretionary set of US network signals may be delivered only to subscribers who also
receive at least one signal of each large multi-station Canadian broadcasting group originating
from the same time zone as the US signal. The number of eligible US originated signals and
services carried on any discretionary tier may not be greater than the number of Canadian over-
the-air signals and specialty services on that tier. However, up to five US originated signals and
services may be packaged with Canadian pay TV services.
US originated signals and services delivered to Canada by satellite may only be carried on a
discretionary tier by cable or DTH and must be selected from the Lists of Eligible Satellite
Services approved by the CRTC and updated periodically. A service will not be added to the
Eligible Lists if a competitive Canadian service has been licensed, although in 2008 the CRTC
relaxed this restriction with respect to non-Canadian news services. Further, a service may be
removed from the Eligible Lists if it changes formats and thus becomes competitive with a
Canadian pay or specialty service.
Program Pricing Controls – Pay-per-view services are prohibited from acquiring “exclusive or
other preferential rights” to programming. This regulation is intended to artificially reduce the
price that would otherwise be paid for US entertainment programming. Similarly, a non-
Canadian specialty service may be removed from the Lists of Eligible Satellite Services if it
holds or tries to obtain preferential or exclusive programming rights.
Québec Distribution Restrictions – The Québec Cinema Act severely restricts the ability of non-
Québec based film distributors to do business directly in Québec. Since 1986, MPA member
companies may apply for a Special License for any film produced in English that meets the less
restrictive requirements sent out in an Agreement between the MPA and the Québec Minister of
Culture. The Agreement was revisited in 2008 and was extended for five years.
Broadcasting Investment Limitations – The Broadcasting Act provides that “the Canadian
broadcasting system shall be effectively owned and controlled by Canadians”. Broadcasters,
cable operators and satellite television distributors must be licensed by the CRTC. Canada has
significant senior management limitations: (1) a licensee‟s CEO must be Canadian; (2) at least
80% of a licensee‟s Directors must be Canadian; and, (3) at least 80% of the licensee‟s voting
shares and votes must be beneficially owned and controlled by Canadians. If the licensee is a
subsidiary corporation, its parent must be Canadian and at least 66 2/3 % of the voting shares and
votes of the subsidiary must be beneficially owned and controlled by Canadians.
INTELLECTUAL PROPERTY PROTECTION
Amendments to the Copyright Act to: (1) permit ratification of the WIPO Internet treaties; and,
(2) to ensure Canada enacts a legal framework for ISP liability that is fully consistent with its
major trading partners, are imperative. Moreover, substantive legislative, regulatory, and policy
changes are required to ensure there is an adequate enforcement framework for intellectual
property rights and the resources necessary for the effective enforcement of those rights across
Optical Disc Piracy – Rights holders, in conjunction with local police forces, have made a
concerted effort over the past year to reduce the availability of counterfeit DVDs in the Greater
Toronto Area, which has an international reputation for large scale commercial hard goods
piracy. Despite these efforts, hard goods piracy is still not an enforcement priority for police and
Internet Piracy – Internet piracy is a substantial problem in Canada. The use of pirate P2P
networks is extensive, and Canada is home to some of the world‟s most popular online
illegitimate file-sharing Internet sites. These networks facilitate a staggering amount of
unauthorized filing sharing in Canada and around the world. Canada is viewed by pirates as a
country in which the laws to address digital piracy are weak, ineffective and non-existent. For
this reason, many illegal sites, or information sources about them, claim they have moved to
Canada to more easily and legally conduct business.
Canada is now home to 5 of the 10 top Bittorrent sites operating in the world. Operators of these
sites have commented that they have moved their services to Canada because of the legal regime,
or lack of one, in Canada. In 2008, the operator of a popular Canadian Bittorrent site brought an
application for a declaration that the actions of the site do not infringe the Copyright Act. The
context of this action is Canada‟s continued failure to implement any amendment to its
Copyright Act governing ISP liability and responsibility that would ensure copyright owners can
effectively combat online piracy consistent with international standards.
In 2007, two separate Parliamentary Committees issued unanimous reports with specific
recommendations on legislative, regulatory, and policy initiatives necessary to adequately
address counterfeiting and piracy in Canada. The Government endorsed the position that
appropriate mechanisms and legislation were needed to ensure a robust framework for IP rights,
but broad changes have yet to be implemented. There is an urgent need to act on the
Criminal Enforcement – Historically, the Department of Justice and the RCMP had a Copyright
Enforcement Policy which indicated that “infringement at the retail level is not an enforcement
priority in its own right.” Though this policy no longer appears to be the Department of Justice‟s
official position, the procedures that were established under this policy continue to impact
enforcement practices. General intellectual property crimes are not a strategic or operational
priority for the RCMP unless those crimes occur on a commercial scale and are related to either
organized crime or health and safety.
The RCMP has published a policy document indicating how it will proceed in respect to
intellectual property crimes. Pursuant to this document they encourage rights holders to seek
civil remedies even though the subject infringements constitute a criminal offense. The RCMP
policy on enforcement provides that investigation will be prioritized only where the piracy is
occurring on a commercial scale and where it can either be 1) linked to criminal organizations or
2) shown to pose a serious threat to public health and safety. Rights holders continue to face
difficulty demonstrating to law enforcement that there is a strong link between “retailers” and
“manufacturers”, both of which are engaged in piracy on a commercial scale. The policy
challenges are compounded by the fact that RCMP and the Department of Justice are not
provided with adequate financial and human resources to address piracy and counterfeiting.
Border Enforcement – Most pirate DVD products that are imported into Canada come from Asia.
This activity generates substantial revenue. The packaging quality on pirate DVDs has improved
considerably in the past year and can easily penetrate the video retail market unrecognizable to
the consumer as a pirate product.
Satellite Signal Theft – The Radiocommunication Act, which prohibits the decryption of
encrypted satellite television signals without the authority of a lawful Canadian distributor, is not
enforced adequately. There is no national strategy. Moreover, Federal Crown prosecutors wish
to target only large organizations, which do not necessarily represent the bulk of satellite pirates.
Satellite providers have taken new steps to use technological protection for their signals that have
proven effective as of late.
Copyright Act – The WIPO Internet Treaties were signed by Canada in 1997. Canada has still
not implanted the treaty obligations. Moreover, amendments to Canada‟s Copyright Act are
urgently required in order to clarify ISP liability and responsibility to ensure that copyright
owners can effectively protect their rights in the online marketplace.
In June 2008, the Conservative Minority Government introduced amendments to the Copyright
Act in the form of Bill C-61. Bill C-61 represented a substantial improvement over Bill C-60,
introduced by the previous Liberal Minority Government, in critical respects such as the
protection of technological protection measures consistent with WIPO Treaties. The
Government‟s objectives provided for in Bill C-61 included ensuring that Canada‟s copyright
framework for the Internet is in line with international standards. The Bill‟s drafting as initially
introduced, however, failed to achieve this objective. C-61‟s deficiencies included overly broad
exceptions for online service providers, the absence of any notice and takedown regime to deal
with online piracy, and the failure to ensure ISPs who were granted new exceptions from liability
would establish effective measures to deal with repeat infringers.
Bill C-61 never proceeded past the introductory stage as a federal election was called in
September 2008. Accordingly, Canada still has not enacted revisions to its Copyright Act that
would make its laws consistent with those of its major trading partners. Given the current
environment in Canada, it is essential that the Copyright Act be amended as soon as possible so
as to clarify the obligations of ISPs and permit ratification of the WIPO Internet Treaties.
Trademarks Act and Copyright Act – Customs authorities have no ex-officio power to take action
against the importation of pirate and counterfeit products. The legislative provisions that
currently exist are ambiguous, impractical, and completely ineffective at stopping infringing
products from entering Canada through its expansive borders.
MARKET ACCESS BARRIERS
New “Unified Business Tax” – The Unified Business Tax entered into force in January 2008.
Under this legislation, royalties remitted by MPA member companies cannot be deducted from
the tax base. This tax is an additional burden on distributors of filmed entertainment product and
has impacted distributors‟ earnings.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Mexico has one of the worst optical disc piracy problems in the world.
The main distribution centers for optical disc piracy are well known to law enforcement
authorities: Tepito, Plaza Meave, Eje Central, Lomas Verdes in Mexico City, CAPFU in Puebla,
and San Juan de Dios in Guadalajara. Pirates also set up shop in the subway stations of Mexico
City. The Office of the Attorney General continues to carry out high-volumes raids of hard
goods, but with no apparent effect on piracy levels. Organized criminal groups are active in the
production and distribution of pirate optical discs.
Camcord Piracy – Mexico continues to be a source of illicit camcords that feed pirate markets
throughout the Western Hemisphere.
Anti-Camcording Legislation – A bill was presented in the Mexican Senate in October 2009 to
reform both the Criminal Code and the Copyright Law, establishing penalties for camcording
and explicitly removing camcording from the right of the “private copy.” The bill is now before
the Justice Committee. This legislation will facilitate the enforcement of intellectual property
rights, reducing the strain on already stretched Mexican law enforcement.
Ex-Officio Legislation – Ex Officio legislation received overwhelming approval by the Upper
House in 2009 and is now only pending on the Lower House‟s approval (Justice Commission).
EUROPEAN UNION (EU)
MPAA member companies, as firms with major European operating entities, have welcomed the
European Union‟s goal of creating a single market to foster European economic and political
unity. However, there are concerns that the harmonization process does not always fully take
into account the concerns of non-European producers and distributors of audiovisual
MARKET ACCESS BARRIERS
European Content Quotas – The EU Directive on Broadcasting, initially adopted on October 3,
1989, and referred to as the Television Without Frontiers (TWF) Directive, established European
content quotas for broadcast television programming.
All EU countries have implemented this directive, which discriminates against US program
suppliers and US television channels entering the market.
Some EU Member States, such as France, Italy, and Spain, have taken measures which are far
more restrictive and discriminatory than required by the basic provisions of the TWF Directive.
These measures include the imposition of: (1) primetime programming requirements; (2) feature
film quotas; and, (3) domestic language sub-quotas.
On December 19, 2007, amendments to the TWF Directive entered into force, i.e. in the form of
an Audiovisual Media Services (AVMS) Directive. The AVMS Directive replaces the TWF
Directive and its implementation deadline at the national level is December 19, 2009. The
AVMS Directive extends the scope of the TWF Directive (which already included traditional
broadcasting, whether delivered by terrestrial, cable or satellite means) to also cover audiovisual
media services provided on-demand, including via the Internet.
The AVMS relies on a two-tiered approach to regulation with a set of basic obligations applying
to all content delivery services (e.g. protection of minors and human dignity), and specific
requirements that apply only to traditional broadcasting or to on-demand services. The European
content quotas for broadcasting remain in place. On-demand services are subject to a somewhat
less restrictive provision, which does not set any strict content quota but still requires Member
States to ensure that on-demand services encourage production of, and access to, European
works. This could be interpreted to the financial contribution made by such services to the
production and rights acquisition of European works or to the prominence of European works in
the video-on-demand services‟ catalogues.
“Rome II” Regulation – In 2007, after years of intensive and controversial debate, the Council
and the European Parliament adopted a Regulation on the Law Applicable to Non-Contractual
Obligations (Rome II). This Regulation lays down rules for solving conflict of laws in the area of
torts as well as non-contractual obligations. It includes a specific rule applicable to intellectual
property rights infringements. While the provision seems consistent, and even seemingly
clarifies, Article 5(2) of the Berne Convention, MPAA remains concerned about the complexity
of this instrument‟s rules and its potential for undermining Internal Market principles. This
regulation also leaves a high degree of discretion to the national courts, particularly to interpret
the “mandatory rules.” This could lead to a considerable degree of legal uncertainty. Rome II,
which binds all EU Member States with the exception of Denmark, impacts not only companies
established in the EU but also foreign companies trading in the EU regardless of where they are
Electronic Commerce VAT Reform – Since July 1, 2003, EU Member States have had to comply
with Council Directive 2002/38/EC. This Directive imposes value-added taxation (VAT) on
companies established in a third country that sell and deliver services within the EU, including
movies, pay broadcasting, and music, over the Internet. The measure does not apply to business-
to-business transactions (90% of the market).
In essence, companies with annual sales of more than 100,000 euros that have not established
themselves in the EU are required to register in the Member State of their choice and pay VAT at
the rate applicable in the Member State where the consumer is resident (ranging from 15% in
Luxembourg to 25% in Sweden), whereas European companies or foreign companies established
in the EU pay only their home country‟s VAT. The country of registration is required to
reallocate the VAT revenue to the country of the customer.
INTELLECTUAL PROPERTY PROTECTION
On the whole, EU IP Directives provide a satisfactory level of protection for rights holders. In a
number of cases, certain Member States fail to implement correctly key provisions of the
Directives, undermining the intentions of the legislation.
Enforcement Directive – On April 26, 2004, EU Member States formally enacted the
Enforcement Directive. This law establishes a community-wide minimum standard for civil
procedures. Member States had until April 2006 to implement this Directive. The Enforcement
Directive establishes a good minimum level of civil enforcement tools, providing for the right of
information and for injunctive relief to force ISPs to block infringements. These tools are
invaluable to combating Internet piracy. The Directive provides a number of other benefits,
including asset freezing injunctions, search and seizure orders, presumptions of ownership for
holders of related rights, and publication of judgments. Member States are free to apply more
stringent provisions in civil law and to impose criminal or administrative sanctions.
Despite strong advice from rights holders, Member States declined to make the system
identification code mandatory for optical discs manufacturers, preferring a voluntary code of
practice. The Directive also fails to significantly improve the Community‟s damages regime.
With regards to the dissuasiveness requested by the Directive, it would have been preferable if
more Member States had, similar to Austria, Greece, Lithuania, Poland, Romania, and Slovenia,
taken the opportunity to grant damages exceeding just one hypothetical license fee. These missed
opportunities are highly regrettable and should be rectified when the Directive is reviewed, as it
must be, three years after the date for implementation.
As of October 2009, all Member States have implemented the Directive.
However, many Member States have not implemented correctly the right of information
provision, a basic tool for the obtaining of information about infringers (e.g. Bulgaria, Finland,
Electronic Commerce Directive – The E-Commerce Directive provides a general legal
framework for Internet services in the Internal Market. All EU countries have implemented the
Directive. The Directive establishes rules on commercial communications, establishment of
service providers, electronic contracts, liability of service providers, codes of conduct, out-of-
court dispute settlements, and enforcement. The Directive fully recognizes the country-of-origin
principle and expressly requires Member States not to restrict the freedom to provide information
society services from a company established in another Member State.
Several exceptions to the country-of-origin principle are, however, included in the Directive‟s
annex. Member States can derogate from the country-of-origin principle in case of contractual
obligations concerning consumer contracts and unsolicited commercial communications by e-
mail. These exceptions could lead to Internal Market fragmentation. Furthermore, the
Directive‟s Internal Market clause applies to information society services provided by service
providers established in the territory of a Member State. US companies are not considered under
the Directive and the EU Treaty as established in the EU and, therefore, do not benefit from this
Internal Market clause and could have their services restricted by individual EU Member States.
This could subject such services to discriminatory treatment and more onerous regulation than
those of companies established in the EU.
With respect to Internet Service Provider (ISP) liability, the Directive provides conditions on the
limitation of liability of service providers (i.e. safe harbor) for hosting, mere conduit, and
caching. Some countries failed to implement these conditions correctly. Finland and Spain failed
to implement the constructive knowledge standard for hosting and inappropriately limited the
means of obtaining knowledge of copyright infringement from the service provider. Moreover,
Finland‟s Act, in contravention of the Directive, does not expressly require that the safe harbor
criteria for caching and mere conduit to be cumulative. It also provides a statutory notice and
takedown procedure that is cumbersome for copyright holders and organizations acting on behalf
of copyright holders. As a result, these countries‟ implementations create limitations on liability
for service providers that go beyond what is allowed under the Directive and make it even more
difficult to combat piracy in the EU.
EU Copyright Directive/WIPO Implementation – The principal objectives of this legislation are
the harmonization and modernization of copyright law in the digital age. This includes the
implementation and ratification by the European Union and its Member States of the 1996 WIPO
Internet Treaties – the EU is now in the process of ratifying these Treaties. All EU Member
States have implemented the Directive.
The digital age presents major challenges to the audiovisual industry in terms of securing the
digital transmission of its copyright works. It is, therefore, vital that Member States do not
weaken the exclusive rights of reproduction and communication to the public (including the
making available right) when implementing the Directive into national laws. Notably, the
Directive contains an exception for digital private copying that, if implemented incorrectly, could
violate the TRIPS/Berne 3-Step test. In some countries, the provisions regarding the private copy
exception are too broad and could allow the making of copies for the benefit of third parties
thereby contributing to the illegal transmission of works on the Internet. Specifically, the
German private copy exception expressly permits the beneficiary of an exception to use a third
party to make the copy which is too broad.
The Directive also establishes legal protection for technological protection measures necessary
for the protection of copyright material in the digital environment. However, this protection is
threatened by possible undefined and varied Member State intervention to regulate technological
protection measures. Such intervention may not respect the TRIPS/Berne 3-step test and may
require the modification of technological protection measures developed on the basis of inter-
industry agreements and international standards. In the event that an important technological
protection measure was excluded from legal protection under the Copyright Directive as
implemented in certain Member States, the goal of harmonization and uniform legal protection
of technological protection measures across the EU would be seriously jeopardized.
At the national level, some countries fail to provide appropriate measures for the legal protection
of technological protection measures. They do not provide adequate sanctions against the act of
circumvention and preparatory acts facilitating circumvention (this is the case in Germany and
Luxembourg). Some (Finland, Sweden) do not provide adequate protection against the acts of
circumvention. Other countries (Belgium, United Kingdom, Spain and France), establish a broad
power for national authorities to intervene and dictate to rights holders how to make their works
available. In Germany, the act fails to provide appropriate sanctions against the act of
circumvention and preparatory acts facilitating circumvention. It also provides a right of action,
which entered into force on September 1, 2004, for individuals and associations against rights
holders who fail to accommodate certain exceptions.
The Copyright Directive requires the provision of injunctions against intermediaries whose
services are used by a third party to infringe copyright even where an intermediary‟s activities
may be exempt from liability under the Copyright Directive. Some laws are not worded to
ensure these injunctions, which are a key tool in the fight against digital piracy, e.g. Finland,
Germany, Spain, and Sweden.
Copyright Enforcement and Privacy Rules - Privacy has always been a major issue in the
European Union. EU Member States have implemented a number of privacy directives to
protect individuals‟ personal data. One of these instruments is the Framework Directive on Data
Protection which was adopted in 1995. It was completed by another Directive in 2002 on
privacy and electronic communications, (which has just been reviewed as part of the EU‟s
Telecoms Package). Differences between the two texts are now being interpreted to make it
virtually impossible civil enforcement actions for Internet infringements of not only IPRs but
many other areas.
All EU Member States have detailed data protection laws. These rules, often very strict, are
subject to the interpretation of the national data protection authorities. These authorities, which
have significant discretionary power, work together and regularly adopt opinions and
recommendations at the EU level. Most of them consider IP addresses as personal data and
believe that the privacy rules apply to their use.
In recent years, the situation has become very problematic for copyright holders and their
representatives in many EU countries and at the EU level. Many national data privacy
authorities in Italy, Germany, and France strictly interpret data protection rules and tend to
believe that privacy rules are more important than other norms. In 2005, EU national privacy
authorities published a working document which illustrated their restrictive attitude even on the
legitimate question of privacy and enforcement of rights. Telcos/ISPs constantly invoke data
protection rules to avoid any meaningful cooperation with the content sector, claiming that
privacy rules prohibit them from disclosing their customers‟ IP addresses.
Such restrictive interpretations may preclude meaningful cooperation with telcos/ISPs, in
particular cooperation to combat piracy including educational campaigns. Somewhat
encouragingly, in January 2008, the ECJ in Telefónica vs Promusicae, clarified that privacy rules
and the protection of other fundamental rights, such as effective access to judicial procedures,
have to be appropriately balanced and that it is up to lawmakers in the first instance, and judges
if necessary, to strike that appropriate balance. While this ECJ judgment is very important for the
respect of privacy and the protection of private property (in this case copyright protected
content), it should be said that there remains a risk of fragmentation throughout the EU‟s Internal
Market as Member States take divergent approaches (e.g., some Member States may allow the
processing of personal data for enforcement in civil cases, while other Member States might
choose to restrict the processing of personal data to criminal cases only).
EU Data Retention Directive – This directive was adopted in March 2006 and aims to harmonize
data retention obligations for ISPs and telecom operators. Data shall be kept for at least six
months and be available for the investigation, detection, and prosecution of serious crimes. The
Directive does not expressly include the obligation to retain data for prosecution of IPR
infringements. Data protection lobbyists argue that right holders should not profit from the data
stored pursuant to the Directive. Should this view prevail, enforcement of online copyright
infringements would be seriously hampered. The deadline for the transposition of the Directive
was September 15, 2007. However, each Member State may postpone application of the
Directive for the retention of communications data relating to Internet access, Internet telephony
and Internet e-mail.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Pirate labs in Brussels supply pirate discs to street vendors, stores, video
Internet Piracy – File sharing via P2P and cyber lockers is a significant challenge for
Police cooperation is generally good although IP cases tend to be a lower priority. A huge
backlog in the courts, especially in the Brussels area, results in intellectual property cases
receiving lower priority or simply being dismissed by the prosecutor‟s office. Moreover,
Belgium‟s judicial system is too slow to allow for real enforcement against “lower tier” Internet
piracy (auction sites and smaller sites).
EU Enforcement Directive - Belgium implemented the Enforcement Directive in May 2007. The
implementation provides a number of benefits for civil action against piracy, however, the right
of information can only be applied after the judge has found that an infringement has been
committed. In practice, this requires hearings on the merits first (and, as a result, it can cause a
significant loss of time), before the judge orders the provision of the information. In the context
of proceedings against peer to peer users, in particular, such a loss of time/ energy could
constitute a serious inconvenience.
EU Copyright Directive Implementation – Belgium has implemented the Copyright Directive.
Although elements of the three-step test are referred to in some exceptions, the law does not
include an express provision on the three step test. The mechanism to deal with the relationship
between technological measures on copyrighted content and exceptions could also be
Privacy – The Belgian Privacy Commission condemns certain anti-piracy activities against file-
sharing effectively leaving rights holders with no ability to fight P2P piracy. The Commission
posits that Internet Protocol (IP) addresses are personal data under the Belgian Data Protection
Law and that when collected in the context of suspicions of copyright infringement, they
constitute “legal data” which can only be processed for the conduct of legal proceedings.
However, since Belgium has implemented the Enforcement Directive, there is a legal basis for
the communication of user data from ISPs to rights holders.
INTELLECTUAL PROPERTY PROTECTION
High rates of broadband penetration make the illicit sharing of large quantities of motion pictures
on P2P networks, particularly the BitTorrent system, and via cyberlockers, streaming sites a
concern in Denmark.
Most actions against Internet piracy are civil. It has become increasingly difficult to convict
infringers on a civil basis, however, because recent case law states that right holders must have
very significant evidence to convict a person committing copyright infringements by using an IP
The Danish police force has increased its focus on copyright infringements. This has resulted in
a growing number of successful criminal convictions. Nonetheless, the police assign low
priority to actions and investigation related to copyright infringements.
MARKET ACCESS BARRIERS
Broadcast Quota – French broadcast quotas far exceed the requirements established by the EU
Broadcast Directive. Fourty percent of the total number of feature films and the total
transmission time allocated to audiovisual works must be of French origin. In addition, 60% of
feature films and audiovisual works broadcast must be of EU origin. Thus, 40% must be
exclusively of French origin, and an additional 20% must be of EU origin.
The prime time application of the quota has impeded MPAA member companies‟ sales efforts in
France. This is further burdened by a 192 movies per channel per year cap (and hourly sub-
quota). Certain days and time slots are also closed to feature films, and similar constraints apply
to pay television through use of multiple watersheds depending on the nature of the channel (e.g.
heritage, first-run, cinema).
MPAA does not support any type of quota restrictions that limit the ability to distribute film
product based on market demand.
Screen Quota – By Government decree, agreements with the French Centre National de la
Cinematographie (CNC) have led cinemas to reserve five weeks per quarter for the exhibition of
European feature films, therefore a total of approximately 30-40% of the films shown in the cinema
must be European, or four weeks per quarter for theaters that include a French short-subject film
during six weeks of the preceding quarter. In practice, this rule has not posed a problem for
MPAA member companies.
Additionally, operators of multiplexes and cinemas agreed to a CNC undertaking by which any one
film will not be shown with more than two prints, or through interlocking, in such a way as to
exceed 30% of the multiplex‟s weekly shows. MPAA does not support any type of quota
restriction that limits the ability to distribute film product based on market demand.
Video-on-Demand (VOD) – The French government, through the CNC, is encouraging
regulation of the supply of VOD over the Internet through inter-industry agreements (the last
one-year agreement expired in December 2006 and failed to be renewed). These agreements
impose a number of constraints including a required release window, minimum pricing levels
and artist remuneration, investment requirements, and other constraints. MPAA opposes such
constraints because they hinder the growth of this new medium, which is in the early stages of
development. The Government has, however, recently provided more flexibility on release
windows, but they nevertheless remain statutory.
Subsidies – The French government provides extensive aid and subsidies to assist local film
producers. In 2008, the film industry continued to contribute to subsidy funds through: (1) dues
levied on distributors, exhibitors, exporters, newsreel producers, and dubbing studios; (2) fees for
censorship, visas, permits, and registration; (3) special admission tax revenues; and, (4)
repayment of prior loans or advances. MPAA opposes the imposition of de-facto discriminatory
taxes or levy schemes on the film industry to finance CNC operations and generate revenues for
local film subsidies. Subsidies should be generated and allocated on a non-discriminatory basis.
Film Rental Terms – The CNC determines the terms under which a film may be licensed (the
percentage of gross box office revenues remitted to the film distributor). All French cinemas
have been limited to a maximum of 50%. Film distributors should have the freedom to negotiate
film rental terms based on market conditions.
Ban on Advertising Feature Films on Television – Advertising on television is controlled by
statutory limitations, many of which were drafted to protect French press revenues. A variety of
goods and services are not allowed to promote their activities on television. The advertising ban,
which includes advertising for theatrically released feature films, continues to be detrimental to
film distributor interests in France since television advertising is a particularly effective means of
marketing motion pictures. Home video releases are not subject to the advertising ban, in
addition, the ban cannot be enforced against broadcasts emanating from outside of France.
In the face of a challenge to these regulations by EU retailers before the European Commission,
the French government has maintained the advertising ban for theatrically released feature films,
in spite of having liberalized for other similarly affected sectors (e.g. press, publishing, retailing).
The European Commission is in a position where it might decide to bring the matter before the
European Court of Justice. The French government defends the ban on film advertising based on
cultural diversity arguments. MPAA encourages lifting the ban on television advertising of
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Internet piracy is a major source of concern in France as a result of high
broadband penetration and the popularity of P2P systems. According to a 2008 ALPA study,
there are approximately 440,000 daily illegal downloads from France (nearly as many as daily
cinema admissions). In late 2008 a French study attributed the loss of 10,000 jobs in France to
the illegal copying of digital goods. The situation has prompted the Government to adopt
groundbreaking legislation in 2009. A set of two laws is expected to educate Internet users
through successive notifications and as a last resort in the case of repeat infringement, fines and a
suspension of Internet access. The increased use of direct download services is expected to be
tackled through Art. 10 of Law 2009-669 (injunctions against facilitators).
Optical Disc Piracy – There is a continued online/offline convergence with seasonal sales of
pirate DVD-Rs in flea markets especially in the north and south of France. Movies are mostly
sourced from the Internet and pirates are using state of the art packaging techniques to
increasingly confuse consumers.
EU Copyright Directive Implementation – France implemented the EU Copyright Directive in
August 2006. France has very usefully strengthened the language of Art. 8.3 of the Copyright
Directive (injunctions against facilitators) in Law 2009-669 of 12 June 2009.
EU Enforcement Directive Implementation – France has implemented the Enforcement
EU E-Commerce Directive Implementation – France has implemented the EU E-Commerce
The deterrent effect of criminal enforcement in France is limited by weak sentences imposed by
French courts. Fines are low and prison sentences are suspended for first time offenders.
However, the suspension mechanism encourages offenders not to repeat the offense (any new
prison sentence cancels the previous suspension).
In practice, the most effective deterrent to piracy has been civil damage claims. Courts tend to
grant immediate interim enforcement of their decisions on the civil side, which discourages
pirates from lodging systematic appeals for procedural obstruction and delay.
As regards illegal Internet piracy, France deployed enormous effort to pass two pieces of
legislation (2009-669 and 2009-1311), establishing a graduated response mechanism whereby
Internet subscribers involved in illegal sharing of copyrighted content, or failing in their duty of
care, are notified twice before being fined in the case of repeat infringement. Their Internet
access can also be suspended for up to one month and in certain cases, one year. This system is
expected to be rolled-out in earnest around mid-2010.
MARKET ACCESS BARRIERS
Subsidies – To promote German film production and cinema rehabilitation, the German
government provides aid for film promotion and other related activities through levies on gross
box office and video established in a film subsidy law. These levies, which pursue government
cultural goals at the industry‟s expense, are not helpful to market development.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Internet exchange of illegal copies is the primary piracy concern in Germany.
Camcord Piracy -- Local release groups, which record local soundtracks and encode them with
camcords to create unauthorized copies of films in current theatrical release, are a top concern
because they are original source material for much of the illegal material on German P2P
networks. Mass distribution follows soon after encoding, via other servers connected to P2P
networks and facilitated by portal sites.
Optical Disc Piracy – Pirate films from the Internet are also a source for burning operations of
DVD-R for flea markets. Although street sales in Germany are generally down, the Czech and
Polish border markets, which target German consumers, continue to cause concern.
Law enforcement authorities, especially the police, are generally aware of piracy problems,
although it is not treated as a priority. German judges‟ interpretations of the law and issuance of
deterrent sentences have improved.
In October 2009, the Government determined that it would not allow for URL blocking
significantly impeding efforts to combat online piracy.
Copyright reform (2nd basket draft legislation) – Copyright reform was adopted in September
2007 and entered into force in 2008. The legal protection for technological measures is
inadequate. Moreover, the private copy exception is too broad (i.e. no exclusion of copying by
third parties) and therefore may violate the TRIPS three step test.
To strengthen the law, Germany should provide specific civil remedies for illegal acts relating to
the circumvention of technological measures: (1) provisions for seizure, delivery and destruction
of illicit devices that serve to circumvent technological protection measures; and, (2) there
should be strictly no copying from unlawful sources permitted under the law.
EU Enforcement Directive Implementation – The Act implementing the Enforcement Directive
entered into force on September 1, 2008. The Directive provides for a right of information
which might be directed against infringers and intermediaries. The law fails to implement
correctly the right of information as it grants the right of information only with regard to
infringements committed on commercial scale. Under the German implementation, rights
holders contemplating legal action against Internet pirates in Germany might still face difficulties
in identifying infringers due to restrictions imposed by Germany‟s data protection law. The right
of information and the double commercial scale test are currently being tested before different
regional courts. Rights holders may file a criminal action and the prosecuting authorities may
reveal an end user‟s identity at the conclusion of their investigation but this will invariably take
much longer. Further, the law enforcement authorities tend to dismiss applications for file access
since they are overburdened.
Moreover, the Directive sets out that rights holders must apply for an injunction against
intermediaries whose services are used by a third party to infringe an intellectual property right.
As for the similar obligation under the European Copyright Directive, the government fails to
specifically implement the right to injunction and refers rights holders to the general liability
Finally, in October 2009, the newly elected coaltion government on the fedaral level has
comitted itself to not implement any kind legislative duty to set up URL blocking for whatever
reason, limiting the options of fighting international online piracy.
MARKET ACCESS BARRIERS
Broadcast quota – In July 2009, Italy implemented Broadcasting law art 44 which reserves 50%
of the monthly transmission time for EU works. Newscasts, sports, game shows, advertising,
teletext services, and teleshopping are excluded from the EU-works calculation. 10% of the
“prime time” monthly transmission quota (20% for RAI) must be reserved to the EU works
produced during the last five years. Within this quota, 20% of the time has to be reserved for
Also introduced were new investment quotas for Pay-TV broadcasters and Telecoms. For
Telecoms, in particular, the principle is that during the next three years the 5% of revenues from
audiovisual content must be invested in the production and acquisition of EU works.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Locally burned DVD-Rs are Italy‟s biggest piracy issue. Organized
criminal groups dominate the OD piracy market, from production to distribution, using illegal
immigrant networks to sell their products. These syndicates, due to increased enforcement, have
adapted their production and distribution methods to evade large seizures.
Internet Piracy – Internet piracy, as a means to deal in hard goods and circumvention devices, is
increasing, as is Internet downloading of pirate product, especially via peer-to-peer systems.
One of the major challenges in Italy is addressing a widespread perception that illegal
downloading is not harmful to the creative community and educating politicians themselves on
the need and value of IP protection.
Enforcement efforts in Italy still suffer from a lack of deterrent sentencing by the courts.
Many Italian judges remain reluctant to impose deterrent sentencing, especially where a large
corporation owns the copyright. Moreover, significant delays throughout the legal process
reduce the deterrent value of raids.
The lack of prosecutorial discretion to decide whom to prosecute and prosecutors‟ inability to
offer small offenders immunity or lower sentences in exchange for testimony against major
pirates also hamper intellectual property rights enforcement in Italy.
It is imperative that Italy remedy the sentencing problem and improve the legislative framework
for the protection of copyrighted works in the digital environment.
Italy has implemented the European Copyright Directive and the Enforcement Directive.
Implementation of the Enforcement Directive provides a number of benefits for civil action
against piracy, particularly obtaining information about infringers. However, Italy‟s data
protection law is an obstacle to efficient enforcement.
In September 2007, the Data Protection Authority Garante issued regulations prohibiting ISPs
from disclosing information about their subscribers for civil or administrative purposes. These
regulations are questionable in the light of the obligations of Italy pursuant to the Enforcement
On March 1, 2008, an amendment to Article 71-septies of the Italian Copyright Act on private
copy levy entered into force. The new provision extends the private copy levy regime to “remote
videorecording systems”; the intention was to avoid the need for direct licensing of such
“systems”. This provision violates EU and international norms in several respects, going beyond
the terms of the private copy exception in the European Copyright Directive (3rd party copying)
and reducing the making available right to remuneration.
E-Commerce Directive Implementation – The Decree implementing the E-Commerce Directive
requires takedown procedures to be subject to a prior notice by the „relevant authorities‟. This
referral to an intervention by an undefined judicial or administrative authority is contrary to the
E-commerce Directive and prejudicial to cross-industry agreements on takedown procedures.
MARKET ACCESS BARRIERS
Video Taxes – Three different sets of taxes or levies continue to be imposed on home video sales
in Norway: (1) a 25% value-added tax (VAT) on both the rental and the sale of videocassettes
and optical discs; (2) a fixed price levy of NOK 3.50 per videocassette or optical disc (rental and
sell-through), payable by the distributor; and, (3) a registration fee of NOK 0.60 per both rental
and sell-through cassettes and optical discs, distributed as subsidies to the theatrical and home
video market. US copyright holders receive no benefit from the fixed levy. The high VAT and
the licensing scheme for retail outlets continue to burden the video rental market and stifle the
development of a healthy sell-through market in Norway. For online sales of movies, Norway
applies the VAT plus additional taxes . Norway also assesses two additional taxes to distributors
(both online and hard goods) that are directed to the Norwegian Theater and Movie Foundation.
Fair Compensation – Norway no longer imposes a levy on equipment or blank media. Instead,
rights holders‟ compensation for legal reproductions made for private use is funded through
yearly allocations in the government budget. The Ministry of Culture and Church Affairs has,
however, stated that only rights holders that are citizens or domiciled within the European
Economic Area, or companies with their registered office in the EEA, are entitled to such
compensation. This contravenes Norway‟s international national treatment international
obligations under the Berne Convention and the Trade-Related Aspects of Intellectual Property
Rights. A possible compromise that MPAA could support is using the US share to fund anti-
piracy activities in Norway in collaboration with the Norwegian Anti-Piracy Organization.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Internet piracy is a significant problem in Norway. Peer-to-peer networks using
BitTorrent are popular and Norway is home to many encoding/release groups that seek to release
early copies of motion pictures on the Internet. The number of networks based on the Direct
Connect-protocol has decreased significantly after a successful effort targeting those networks in
Camcord Piracy – Norway saw the first camcording cases in 2008, and several releases
originating from Norwegian camcords found their way onto open and closed file sharing
networks, such as The Pirate Bay last year.
Law enforcement authorities have recently demonstrated a willingness to act on piracy cases
although it is not a priority. There are significant differences in the local police districts‟ ability
and willingness to investigate and prosecute intellectual property cases, but the central police
unit, although it has limited resources, has shown increased interest in investigating major cases
of copyright infringement, investigating two top site cases in 2009. Unfortunately, law
enforcement has been reluctant to investigate “source piracy” (i.e. release groups) related cases
Advocacy groups, including the Pirate Group Norway, are somewhat vocal in their opposition to
effective copyright enforcement in the digital realm.
EU Enforcement Directive Implementation –The Norwegian government does not consider itself
obligated under the Agreement to implement the Enforcement Directive, but there are currently
discussions between the EFTA countries on this issue.
Copyright Directive Implementation – Norway adopted amendments to the Copyright Act
intended to implement the EU Copyright Directive. However, the legal protection for
technological measures falls short of the level required by the WIPO Internet Treaties. Further,
Norway has not implemented Article 8(3) of the Copyright Directive on injunctive relief against
intermediaries, but the Ministry of Culture, with support from the Ministry of Justice and the
Ministry of Trade and Industry, has stated that such injunctive relief is nevertheless possible
under the current legislation. These principles were tried recently in a injunctive relief case
against the largest Norwegian ISP, Telenor, but the court decided against the rights holders. The
court stated that the legislator should clarify the law on this point. The Ministry of Culture and
Church Affairs should heed the Court‟s advice and amend the law to bring Norway into
compliance with its international obligations.
MARKET ACCESS BARRIERS
Broadcast Quotas –Poland's broadcasters must dedicate at least 33% of their quarterly
broadcasting time to programming produced originally in the Polish language. This provision,
which goes beyond what is prescribed in the EU‟s Television without Frontiers Directive (even
under its new form as the Audiovisual Media Services Directive), impedes market access.
Discriminatory Tax Treatment of US Audiovisual Works – The 2005 Film Law includes taxes on
box office and on video/DVD sales to finance subsidies for Polish and European films. These
taxes, besides having a detrimental effect on the Polish audiovisual market, unfairly burden MPA
member companies with the cost of financing the government‟s cultural policy. Further, the
language of the text appears to allow a double taxation burden on distributors, including MPA
Foreign Ownership Restrictions – Foreign ownership in a broadcasting company is limited to
49%. MPA promotes the reduction and elimination of such restrictions in order to stimulate the
foreign investment necessary for the continued development of the television industry.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Locally burnt discs, which increasingly contain multiple titles, and
imported Russian-made pressed discs, are still a problem in Poland and impose a threat to the
theatrical and home entertainment markets. However, it should be noted that this threat has
diminished in the past couple of years due to effective enforcement and the uptake of internet
The vast majority of pirate optical discs are sold at public markets in Wroclaw and Krakow, and
at bazaars along the Polish-German border. This illegal trade is controlled by criminal gangs.
Internet Piracy – Internet piracy is steadily growing. BitTorrent is currently the most popular
way of pirating movies in Poland but linking sites (direct download) are very much on the rise.
Sites offering illegal Polish subtitles are also a serious concern as the uploading of pirate copies
of new releases are invariably followed by the posting of a Polish language dialogue list,
enabling the creation of localized subtitled pirate copies.
Camcord Piracy – Within last year, three audio tracks of MPA member company films were
made in Poland. Illegally camcorded local Polish films can be found in local bazaars, and on the
Internet days after their local release, underscoring the need for an anti-camcording law.
There has been a noticable increase in government will to fight IP crime, especially in relation to
Internet with the establishment in April 2009 of a working group of ISPs, government officials
and rights holders. However, this has yet to result in any significant changes to the government‟s
positions on IPR matters. Strengthening the police Internet teams with additional personnel and
technical resources (including training) is needed.
The Polish courts are seriously backlogged. While the majority of piracy cases brought to court
conclude with guilty verdicts, sentences are insufficient. There is a real concern that police will
become disinterested in working with local anti-piracy organizations as a result of languishing
court cases and disappointing sentences.
Copyright Law – Poland‟s copyright law enforcement provisions need to be strengthened. In
particular, police must have the right to initiate investigations ex officio which is not currently the
case. In addition, the unauthorized downloading of copyrighted files onto personal computers
should be added to Article 118 of the Copyrights and Related Rights Act. Moreover, Article 70
makes it difficult for foreign works to resist collective management of author and performer
EU Copyright Directive – There are significant problems with Poland‟s implementation of the
Directive. The principal problems are: (1) inadequate legal protection of technological measures
(the language suggests that circumvention for private use may be legal); (2) inadequate protection
of rights management information; (3) new exceptions; (4) too broad of a private copy exception;
and, (5) no express implementation of the three-step test.
EU Enforcement Directive – On July 20, 2007, Poland ratified and implemented the EU
Enforcement Directive. Polish law does not correctly implement Articles 9 and 11 of the
Enforcement Directive on injunctions, since it requires the establishment of liability or co-
liability of intermediaries. According to the Enforcement Directive (and the European Copyright
Directive), injunctive relief is granted irrespective of the liability of the intermediaries.
Optical Disc Regulations –Although the Optical Disc Decree is a useful legal instrument for
controlling the production of optical discs, sanction provisions should be introduced to ensure
Anti-Camcording Legislation – To facilitate enforcement and prosecution of illegal camcording,
anti-camcording legislation requiring jail sentences, preferably up to a year or longer for the first
offense and a higher penalty for any subsequent offense, should be adopted.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy - Portugal is seeing a significant increase in the use of the Internet for illegal file
exchange, with an increase in the number of facilitator sites providing access to illegal copies
and FTP servers providing direct download of illegal copies.
Optical Disc Piracy - Local production of burned optical discs, primarily DVD-Rs, continues to
be a concern. Most of this product is sold at flea markets and public fairs across the country and
duplicated in small pirate labs mainly in the regions of
EU Copyright and E-Commerce Directives Implementation - The implementation of the critical
provisions on Internet Service Provider (ISP) liability, which are vital to Internet enforcement
efforts and cooperation with ISPs, is problematic. With respect to ISP liability, the provision on
hosting seems to fall short of the Directive (no obligation to remove infringing content
expeditiously, and an inappropriate implementation of the constructive knowledge standard).
Portugal has not yet implemented the Enforcement Directive, although the time limit for
implementation expired in April 2006. The European Commission has therefore launched
infringement proceedings against Portugal before the European Court of Justice in June 2007.
MARKET ACCESS BARRIERS
Customs Duties – Russia‟s customs authorities continue to assess duties on the royalty value of
imported audiovisual materials, such as television master tapes, DVDs, etc., rather than solely on
the physical value of carrier medium. This is contrary to international and European legal
standards. Such assessments are a form of double taxation, since royalties are also subject to
withholding, income, value-added and remittance taxes. Equally important, they are a barrier to
further growth of the Russian audiovisual market.
Foreign Ownership Restrictions –Foreign legal entities are prohibited from: (1) sponsoring
television or video programs; (2) establishing television channels capable of being received
reliably in a territory with more than 50% of Russia‟s population; and, (3) broadcasting over a
territory comprising more than 50% of the Russian population. The law also forbids the
transference of stock in favor of a sponsor of a television or video program, or of a television
organization, if such transfer results in 50% or more foreign ownership. MPAA opposes such
restrictions because they are discriminatory and unreasonably favor local investors.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Russia remains one of the world‟s largest producers and distributors of
illegal optical media and piracy continues to threaten Russia‟s developing legitimate home
entertainment market. Pirate DVD production in Russia is the US motion picture industry‟s
number one problem and priority issue for the Russian market, with the local market inundated
with pirate DVDs that are sold everywhere including street markets, kiosks, and over the
Internet. Although the overall situation in Moscow and St Petersburg has improved, retail piracy
remains very problematic.
Internet Piracy – Internet piracy is rapidly growing in Russia. This will be fueled by the
government‟s program to improve the existing communication cables. Securing greater
cooperation from ISPs in Russia is a priority as pirate websites are increasingly migrating to
Camcord Piracy – Russian pirates obtain good quality pirate copies by camcording films in
cinema halls, and from local theater screens. The telecine problem has disappeared as a result of
dramatic improvements in the handling and delivery of theatrical prints, but unauthorized
camcording is a serious and growing issue with 28 camcords sourced from Russia since the
beginning of 2009 up dramatically from 9 during the same period last year
Russia needs to increase its enforcement activity well beyond current levels to provide adequate
and effective enforcement of IPR violations, including the imposition of criminal deterrent
penalties. While Russia is undertaking some enforcement activity, much more needs to be done
to meet the US-Russia IPR Agreement‟s requirements, including developing an optical disc
licensing regime. Full implementation of the US-Russia IPR Side Agreement before Russia
accedes to the World Trade Organization is a priority for the MPAA and its member companies.
The current lack of clear authority for optical disc licensing and inspections significantly
prejudices enforcement of optical disc production and distribution in Russia and the situation has
become more obfuscated since December 2008 when the President signed Federal Law 293
which mandates that a commercial company may be inspected only after approval of a
prosecutor or a court decision. Corruption amongst law enforcement authorities, from police to
judges, is a major issue.
MPAA firmly supports IIPA‟s recommendations that the Government of Russia improve its IPR
enforcement. Prosecutors need to: (1) coordinate their efforts with the police; (2) bring more
IPR cases; and, (3) conduct expeditious investigations. The development of instructions by the
MOI and the General Prosecutor‟s Office with an updated and detailed methodology for
investigations of copyright infringements would help to increase the quality and effectiveness of
IPR enforcement activities. Further, the appointment of IPR special prosecution investigators
and police officers, at both the federal and regional levels, throughout Russia would be useful.
Authorities should begin undertaking actions against unauthorized camcordings because the new
Civil Code Part IV entries have come into force and the private copy exception may no longer be
An intensification of criminal investigations and obtaining criminal convictions against
principals is sorely needed. There needs to be a focus on criminal enforcement targeted against
corrupted LEAs and organized crime syndicates.
The ability of wrongdoers to simply modify their Internet sites and continue to
operate in violation of the law, manifests a clear need for reform. More and
improved criminal proceedings in general, along with speedier investigations and
trials are needed. Jurisdiction for Internet piracy is not consolidated. MPAA
recommends establishment of a sub-unit within Department K to deal exclusively
with IP Internet cases.
Last, we recommend that the General Prosecutor‟s Office appoint a government liaison with IP
rights holders to more effectively bring criminal investigations and trials to successful
Russia has made progress on several important legal reforms including amendments to the
Criminal Code and a Supreme Court resolution that provides guidance on IPR enforcement.
However, more progress is needed.
Optical disc regulation – Optical disc regulations, which would properly regulate: (1) licensing
of plants, their equipment, and raw material used in production; (2) surprise inspection of plants;
3) closure of illegal plants; and, (4) sanctions to include criminal penalties, are imperative.
Customs ex-officio authority – The Customs Code must be amended to add ex officio authority.
MPAA understands that this amendment is now pending in the Duma.
Part IV of the Civil Code – With regard to enforcement, Part IV lacks provisions that clearly
spell out a basis for third party infringement. The law fails to clarify whether non-Russian works
and objects of neighbouring rights receive national treatment with regard to rights to
remuneration, the protection of TPMs and rights management information. An amendment
should be introduced allowing rightsholders to file claims for injunctive relief against internet
intermediaries, without prejudice to questions of liability or other remedies that may be
available. Moreover, an amendment should be introduced prohibiting the production,
distribution or promotion of piracy-inducing software or services.
MARKET ACCESSS BARRIERS
Film Dubbing (Catalunya) -- The Catalan regional government is proposing new restrictions on
films released in Catalunya. Basically they are planning to require that for any film released in
more than 15 prints (which means most films), half must be dubbed into Catalan. This is costly
and not warranted by public demand. Details of the proposals are just emerging. While
promoting “linguistic access” is the goal and not something we question, the means are not
suitable or fair.
Investment Obligation – Spain maintains discriminatory investment provisions whereby
audiovisual media service providers, including broadcasters, must annually invest five percent of
their revenues in the production of European and Spanish films and audiovisual programs. In
addition, 60% of this allocation should be directed towards productions in any of Spain‟s official
languages. These investment obligations also apply to future digital terrestrial channels.
Screen Quota – For every three days that a non-EU country film is screened, in its original
language or dubbed into one of Spain‟s languages, one European Union film must be shown.
This is reduced to four to one if the cinema screens a film in an official language of Spain and
keeps showing the film at all sessions of the day in that language. Non-observance of the screen
quotas is punishable by fines. These discriminatory measures ignore market demand for US and
non-EU country films and stifle development of Spain‟s theatrical market.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Internet piracy in Spain is among Europe´s worst. Peer-to-Peer (P2P) piracy is
widely perceived as an acceptable cultural phenomenon and this situation is exacerbated by the
Spanish government‟s policy of decriminalizing illicit P2P file sharing. Spanish ISPs show
unwillingness to collaborate in the fight against Internet piracy. The situation in Spain is
untenable and demands urgent attention.
Optical Disc Piracy – Street piracy has become more organized, controlled by criminal groups
using illegal immigrants for distribution. However, consistent police investigation and municipal
enforcement have countered its growth, especially in larger cities.
Enforcement of IP rights in street piracy and Internet piracy are stark contrasts. While national
and municipal police and prosecutors have made great efforts against street piracy, including two
of the largest raids in EU history against organized production, the efforts against Internet piracy
show a dramatically opposite stance.
Virtually nothing in the Spanish legislative or judicial systems provides a foothold against
Internet piracy. Judges and prosecutors continue to dismiss cases against link/facilitator sites
based on the Attorney General´s prosecution policy decriminalizing the exchange of
unauthorized files although there has been an important Appelate reversal of such a dismissal,
Spain‟s Attorney General continues to insist on a policy that decriminalizes the exchange of
unauthorized copies and facilitation of such exchange. Moreover, legislators fail to act on
incorrectly implemented EU Directives (see below) leaving no viable process for rights holders.
A combination of incorrect laws and the Attorney General‟s policy has made it nearly impossible
to protect content on Spain‟s Internet.
Recently, Spain‟s government has shown signs of interest in finding reasonable solutions to
reign-in internet piracy. Concrete measures are to be established by year‟s end.
EU E-Commerce Directive – Spanish e-commerce law (Ley de Servicios de la Sociedad de la
Información y de Comercio Electrónico, “LSSI”) creates a limitation of liability for ISPs that
goes beyond that permitted by the EU E-commerce Directive in that it fails to correctly
implement the constructive knowledge standard and imputes liability only on the basis of
“effective knowledge.” In addition, Spain does not require ISPs to respond to any take-down
request that is not accompanied by an order from a “competent body” which has been interpreted
to mean a Court Order. ISPs have broadly interpreted Spain‟s law to apply to all illegal P2P
traffic, virtually eliminating cooperation with content providers to address P2P piracy.
EU Enforcement Directive – Spain‟s implementation of the right of information is inconsistent
with the Directive to the extent that it grants the right of information on the condition that the
infringements have been committed for commercial purposes and that the acts carried out by the
intermediary have to be infringing. Apart from referring to commercial “purposes,” rather than
“commercial scale” (a major problem in itself), the Spanish formulation misses a fundamental
principle of the Directive; intermediaries who are acting on a commercial scale are liable to
provide information on their customers, whether the latter are acting on a commercial scale or
not. Furthermore, the right of information should not be conditioned on commercial activity by
Spanish Data Protection Law – This law does not allow a civil party to collect and process
infringers‟ IP numbers on the basis that such numbers are personal, confidential data. As a
result, rights holders have no viable action against Internet users who infringe on copyright.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy - Sweden is a major contributor to worldwide Internet Piracy. Due to its widely
known status as a safe haven piracy, significant Internet piracy source infrastructure and group
membership have flourished in Sweden.
Topsites, highly specialized servers with massive storage and extremely high bandwidth, are
used by release groups for the first release of pirate content on the Internet. This stolen source
content is then passed down using a series of couriers from Topsites to Internet Relay Chat,
Newsgroups and P2P networks. MPA estimates that approximately a third of all European
Topsites are hosted in Sweden.
Sweden is also the host country of the tracker servers of website ThePiratebay.org
ThePirateBay.org, the world's largest BitTorrent tracker and one of Sweden's largest web sites.
In addition, Sweden is the home of the third largest number of Direct Connect hubs (P2P
facilitators) and the most Direct Connect users in the world.
Rights holders contemplating legal action against Internet pirates in Sweden face grave
difficulties in identifying infringers due to restrictions imposed by the Electronic Communication
Act. Rights holders cannot obtain from Internet service providers (ISPs), via a civil procedure,
the identity of an infringing end user upon communication to the ISP of an IP address. Such
information, which is critical to effective Internet enforcement, can only be obtained by a public
prosecutor or the police in the course of a criminal investigation, although even this procedure is
unavailable unless the offense being charged carries the possibility of a sentence of
In Spring 2006, the authorities raided the Pirate Bay and seized their servers. Despite a
conviction, the Pirate Bay continues its activities. The police lack the resources to investigate
crimes. None of the promised 15 investigative services have been added.
Copyright Legislation – Sweden‟s implementation is disappointing, particularly as it pertains to
the legal protection of technological measures and the absence of a specific injunctive relief
remedy against ISPs. The legal protection of technological measures is also inadequate and falls
short of the norms set by the WIPO Internet Treaties.
Although it is illegal to sell or repair pirate smart cards, it is nevertheless legally permissible to
possess them, insofar as the police believe that the quantity indicates no intent to sell. Despite
industry complaints, the Swedish government has failed to close this loophole piracy.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Switzerland is a viable location for top-level piracy oriented towards the
German market. German release groups use Switzerland as a base for recording soundtracks and
establishing their file servers.
The comparatively low level of copyright protection, especially with regard to the private copy
exemption, makes enforcement difficult. Notably, camcording a film is not an offense.
Consequently, pirates camcord films in Swiss theaters directed towards the German market.
Law enforcement authorities lack expertise on digital piracy issues and the country‟s cantonal
structure and three main languages make a centralized approach to this problem difficult.
Copyright Law – The Swiss Parliament passed the law aiming to implement the WIPO
Copyright Treaty and the WIPO Performances and Phonograms Treaty in October 2007, which
entered into force in July 2008. The Law does not provide for adequate protection of
technological protection measures. Technological measures may be circumvented for private
use. Furthermore, the law‟s private copying exemption is overly broad providing no requirement
that a legal copy must be the basis for a private copy. While the preparatory acts section was
improved, right holders‟ efforts to include a legal source condition, or at least to include the
condition that a source shall not be manifestly illegal, failed. As a result, the passed law provides
an inferior level of protection and violates the three-step test.
Anti-Camcording Legislation – Switzerland has been traced as a source for unauthorized
camcording. Switzerland should adopt an anti-camcording law that requires jail sentences,
preferably up to a year or longer for the first offense, and a higher penalty for any subsequent
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – The Netherlands houses both locally-oriented pirate Internet sites and several
international pirate Internet sites. The Netherlands was for years considered "safe haven" for
Internet piracy but with improved cooperation with hosting providers, many sites have left
Netherlands (although the number of pirate sites hosted in Netherlands is still high). Notably,
downloading for private use is not illegal in the Netherlands, even if the offer or upload is
The police and prosecutor‟s office are reluctant to become involved in Internet piracy cases.
Therefore, almost all enforcement efforts must be civil. Local ISP cooperation on “hosting” is
improving, but is lacking on “access.” Positive precedents have been established regarding
cooperation from hosting providers and liability of Internet sites. Initiatives regarding
“Graduated Response” are stalling.
EU Copyright Directive – The Netherlands implementation of the Copyright Directive includes a
problematic definition of reproduction right. With respect to the interface between technological
measures and exceptions, the Minister of Justice is empowered to introduce, by decree, a
requirement for copyright holders to provide the means which enable certain exempted acts.
Thus, there is a threat of unclear government intervention. Also problematic is that
copying/downloading of film and music for private use is allowed even if from an illegal source.
This overly broad notion of the private copy exception is a clear violation of the three-step test
enshrined in TRIPS Article 13.
EU Enforcement Directive – The Netherlands implemented the Enforcement Directive in May
Customs Valuation – In November 2009, Ukrainian customs authorities stated that it had
changed its rules for customs valuation; rather than assessing duties on the underlying carrier
medium, they will assess valuation on projected royalties. To further complicate matters,
Ukrainian customs officials stated that this new “ruling” is supposedly retroactive three years
with serious penalties applied to those situations where valuation was based on the carrier
Foreign Ownership Restrictions – Direct ownership or establishment of television stations in
Ukraine is prohibited to foreign companies and foreign investment is limited to 30%. There also
appear to be domestic film broadcast quotas (no less than 30%), and requirements for Ukrainian
language in television broadcasts.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Pirate films continue to appear in Ukrainian kiosks within weeks of their
US theatrical release. Video retail stores stock pirate product including pre-release material that
is available within days of US theatrical release. Recent seizures and market monitoring reveal a
disturbing increase in the number of multiple title DVDs. Markets are regularly raided but
corruption complicates any long-term closure.
Ukraine is a transshipment point for pirate Russian DVDs on their way to Poland, Romania,
Moldova, Hungary, Slovakia, and beyond.
Anti-Camcording -- Source piracy from Ukraine remains one of the biggest concerns for MPA
members. Fifteen camcords have been traced to Ukraine in 2009. Many of these recordings are
found on the Internet impacting MPA members‟ business in the global marketplace.
Internet Piracy – Both peer-to-peer services and illegal hosting sites are growing problems in
Ukraine, targeting audiences in Western Europe and the U.S.
Broadcast Television Piracy – A large number of cable operators continue to transmit pirated
product without authorization.
The two most significant enforcement challenges in Ukraine are (1) the absence of criminal
prosecutions and deterrent sentencing, and (2) ineffective border enforcement, especially against
large-scale pirate operations.
The Government of Ukraine should provide the specialized intellectual property rights unit
within the customs service with the mandate, and operational competence, as well as sufficient
resources to take ex officio actions against intellectual property rights crimes. This step is
necessary for effective enforcement at the border.
Ukraine‟s Hologram Sticker law complicates enforcement efforts in Ukraine to the detriment of
rights holders by allowing suspect companies to receive stickers to illicitly obtained MPA
member company content. Also, the holograms are vulnerable to counterfeiting and the
procedures for obtaining legitimate stickers are complex, opaque, and highly burdensome.
ISP liability framework – Adoption of an ISP liability framework that lays out the role and
responsibilities of ISPs with respect to cooperative efforts with rights holders in addressing
Internet piracy is necessary to effectively respond to Ukraine‟s Internet piracy problem.
Anti-Camcording Amendment -- An amendment to Ukraine‟s Copyright Act is pending before
parliament that would specifically exclude camcording from the scope of Ukraine‟s private copy
exception. Such an amendment is essential to effectively combat illicit camcording in Ukraine
and is a priority for MPA and its member companies.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy –Locally burned DVD-Rs are often mastered from imported pirate product
or Internet downloads. The UK pirate market is extremely lucrative with heavy involvement of
organized criminal groups.
Markets are largely unregulated by authorities and often not policed. There is evidence that
some market operators, organizers and land owners have been complicit in the sale of illegal or
infringing goods on their makets. The Chinese organized crime groups control the whole supply
chain, selling directly to the consumer on the street, at transport hubs, in pubs and cafes and in
and around markets.
Internet Piracy – Online piracy is a very problem in the UK. While streaming is the prevalent
for of piracy, P2P piracy is also popular. Pirated films are also downloaded, burnt onto discs and
sent through the mail.
The UK Government recently has attempted to facilitate ISP-rights holder cooperation to
discourage internet piracy and promote the emergence of a stronger legal online market.
Legislation enacting measures contained in the Digital Britain report earlier in the year will be
announced on November 20th.
Camcord Piracy – The UK is a well-established source of surreptitiously recorded copies of
motion pictures and soundtracks. Internet-based release groups are closely linked to camcord
Despite clear evidence of organized criminal groups‟ involvement in piracy, law enforcement
authorities often treat intellectual property offenses as a low priority. This, coupled with a low
number of criminal prosecutions, fosters the perception that piracy is of limited public concern.
The main agencies tasked with enforcement are the Trading Standards Departments, which are
local enforcement officers who deal with trading offenses at the point of sale. They are not
nationally coordinated and are unable to rise to the challenge of the well-networked, traveling
criminal gangs who now dominate the market.
Pirate product is readily available at many of the weekend markets held across the country.
Rights-holders continue to press for an improved “occasional sales” registration scheme,
requiring owners and organizers of such markets to provide advance notification and to maintain
adequate records pertaining to dealers and goods for sale. An age restriction should also be
introduced to ensure that individuals providing registration details are at least 18 years old. Such
age restrictions would, in part, address traders‟ practice of using under-age children as a front for
their illegal activity in order to avoid liability. The UK government should also be urged to
empower Trading Standards Officers to close down occasional sale markets after adequate
The UK should reverse the burden of proof in cases of individuals detected in possession of
infringing product. Section 97(2) of the Copyright Designs and Patents Act 1988 should be
amended to allow the court full discretion to award aggravated or exemplary damages. This
amendment is needed because punishments imposed by the criminal courts are not always
deterrent and there is no clear consensus on how the “additional damages” referred to in the
current statute should be applied.
EU Enforcement Directive Implementation – Unfortunately the UK government opted for a
minimalist approach in implementing the Enforcement Directive. There remain areas, such as
damages, where the law fails to live up to the TRIPS Article 41 obligation on deterrent measures.
Anti-Camcording Legislation –Anti-camcording legislation that requires jail sentences,
preferably up to a year or longer for the first offense, and a higher penalty for any subsequent
offense should be adopted. However, the Government remains of the opinion that the current
Fraud Act would apply against a camcording charge, but that remains to be seen.
Digital Britain Legislation – Following extensive consultations, the Government released the
Digital Britain Report in the summer of this year. The report addressed online piracy, and
included a commitment to reducing online piracy via file-sharing by 70%.
Legislation is due to be introduced in the Queen‟s Speech later this month and should be
presented to the House of Lords in late November. The Bill will require ISPs to co-operate with
rights-holders to identify, and send warning notices to, subscribers as part of a strategy educate
end users and discourage repeat infringements. The Bill will also require ISPs to implement
technical measures against subscribers who ignore the warning notices and persist infringing
copyrighted content. The time line for enacting the legislation remains a challenge.
MARKET ACCESS BARRIERS
Broadcast Quota – The Independent Communications Authority of South Africa (ICASA)
published local content regulations for subscription television in 2006. These regulations
introduce local content regulations for satellites and revise the quota for terrestrial and cable
subscription services. MPAA maintains that market forces should determine programming
allocation rather than discriminatory quota regimes.
Foreign Ownership Restriction – The Independent Communications Authority of South Africa,
ICASA, submitted a proposal to the Minister of Communications to increase, at the discretion of
the Minister, the current 20% foreign ownership limitation of South African broadcasters on
receipt of a submission that shows good cause. This proposal was submitted some three years
ago and has yet to receive response. Barring this intervention, the limit of foreign ownership of
South African broadcasters remains at 20% of any entity. Foreign investment restrictions are
discriminatory, limit competition, and inhibit the potential growth of the television industry.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – The increasing number of households with Internet connectivity either through
fixed line, or increasingly popular mobile broadband, gained impressive momentum in 2008 and
2009. The landing of large capacity undersea cables will dramatically increase bandwidth speeds
and reduce costs. When coupled with the lax controls over corporate and university bandwidth
abuse, the potential for a dramatic increase in online piracy is very high.
Optical Disc Piracy – The availability of pirate content on optical disc remains the major
problem facing the territory, predominantly through locally burned DVD-Rs.. While imports of
pressed discs have declined dramatically during the past few years, there are indications of an
increase in the importation of multi titled pressed discs primarily originating in the far east and
transshipped through Nigeria to South Africa. Even as significant progress has been made in
reducing blatant trade in pirated films, a great deal still needs to be done to achieve significant
reductions in the level of piracy. The attitude of the vast majority of consumers continues to be
that this is a victimless crime.
There is an increased acceptance of film theft as a crime and therefore an increased motivation of
the law enforcement community to pursue those involved in all levels of film theft.
Notwithstanding this significant improvement, the criminal court system remains overburdened
and judges and prosecutors in non-specialized courts do not view piracy as a serious crime.
Copyright Legislation – Although South African law provides reasonable copyright protection,
the Copyright Law is not very useful for enforcement of individual copyright claims as it lacks
evidentiary presumptions. Such presumptions are available through a title registration system
that is unnecessarily complex and expensive. The Copyright Law should be amended to provide
clear presumptions of copyright subsistence and ownership, as well as to include: 1) protection
against unauthorized parallel imports; and, 2) sufficient remedies against piracy of audiovisual
product over the Internet, including notice and take down provisions and Internet Service
Provider liability that is clearly defined.
Counterfeit Goods Act – Most enforcement actions are currently taken under the Counterfeit
Goods Act. On its face, this is a relatively strong piece of legislation that appears to provide the
necessary foundation to protect intellectual property rights. Though sufficient in many respects,
the Counterfeit Goods Act contains some cumbersome requirements, including providing strict
time limits and requiring complainants to pay storage costs of seized goods.
Parallel Imports– There is no direct protection against unauthorized parallel importation for local
distributors under the Copyright Law. The industry has sought protection against parallel
imports through the publication certification process required under the Film and Publications
Act, which provides seizure and administrative fines.
The South African Parliament completed its consideration of requested amendments for
classification of films, making it compulsory to prove distribution rights to the Publications
Board. The regulations for classification require proof of ownership or distribution rights as a
prerequisite for classification.
Until the copyright legislation is amended to include protection against parallel imports, there is
an urgent need for the relevant authorities to enforce the existing legislation consistently and not
to permit an unfair competitive environment. The problem of parallel imports, which to some in
the local industry is becoming a bigger threat to their businesses than piracy, will be helped with
the implementation of regulations requiring specific warnings and notification to consumers on
the product and in advertising of the product.
The diverse Asia Pacific region offers significant opportunity for MPA members. There are real
economic growth and enhanced trade opportunities throughout the region. Too often, however,
the potential of these markets is hobbled by a dizzying web of market access barriers and
inadequate protection of intellectual property. Asia Pacific economies too frequently turn to high
tariffs, restrictive quotas and foreign investment limitations to promote domestic film and
television industries to the detriment of the industries these policies purportedly aim to protect.
While MPA appreciates the interest and right of economies to regulate to protect their citizens,
the censorship regimes of some Asia Pacific economies are opaque, unpredictable and slow.
Content regulation must include clear, consistent and expedient processes in line with
international practices. MPA encourages economies utilizing censorship regimes, to consider a
shift to industry self regulation in line with international best practices.
Too frequently in the region, regulatory decision making occurs without adequate opportunity
for foreign industry input. In India, for instance, MPA members have been precluded from
participating in the rules making process for India‟s broadcast regulations and optical disc
licensing regime. In Indonesia, the government introduced, without consulting with US industry
stakeholders, an extremely flawed and burdensome Film Law that, if enacted, will seriously limit
foreign participation in various film businesses. It is essential that the US government work
bilaterally with economies to encourage the adoption of good governance procedures that will
benefit both US and host government industries.
While MPA is grateful for USTR‟s attention in addressing China‟s burdensome market access
restrictions, the American film industry remains beset by a wide variety of non-tariff barriers
which threaten the development and realization of that market‟s true potential. Notwithstanding
the proliferation of pirate product cutting across all media sectors, the dearth of legitimate
product resulting from government policy and design remains the far greater concern for MPA
member companies in China. Little progress has been made in this respect during the past
twelve months. However, MPA remains hopeful that the WTO process will ultimately prompt
meaningful changes that will allow its member companies to compete fairly for a greater share of
this exciting consumer market.
The web of market access barriers and onerous censorship requirements creates a void of
legitimate content that is unfortunately filled with illegal copies. The Asia Pacific region is
plagued with unacceptably high piracy rates. Retail and street piracy has beleaguered the home
entertainment market in India and Indonesia and China, Indonesia, Malaysia, and the Philippines
remain major export centers, feeding the global market with an onslaught of illegal DVDs. MPA
continues to press governments in the region to adopt and enforce strict optical disc regulatory
controls. Indonesia, the Philippines, Singapore, and Thailand have all adopted such legislation in
recent years, but India, notably, has not. MPA is also concerned about Vietnam, Laos,
Cambodia, Burma, and Pakistan who are without present plan or intention to adopt controls on
optical disc piracy.
As elsewhere in the world, Internet piracy has emerged as the fastest growing threat to the
audiovisual industry, especially in markets with enhanced broadband penetration such as
Australia, South Korea and Japan. Downloading platforms (such as P2P sites) and streaming
platforms including User Generated Content sites have gained popularity and migrated
consumers away from sites focused on the sale or distribution of hard goods.
MPA continues to press governments to enact effective laws and regulations to protect
copyrighted content on the Internet, including provisions designed to encourage cooperation
between copyright owners and Internet service providers in response to identified instances of
unauthorized or illegal activity over the internet. Such legislation is increasingly important as
MPA members‟ business models evolve and e-commerce becomes integral to their business
strategies. Such considerations are especially important for Australia, China, Hong Kong, Japan,
and New Zealand. In South Korea and Taiwan, it is critical that these laws are effectively
Asia-Pacific is the slowest region in the world to ratify and implement the WIPO Internet
Treaties, which raise the threshold for protection of copyrighted content and provide essential
tools for ensuring the protection of copyrighted content in the digital age. Recognizing the
strong linkages between organized crime and copyright infringement throughout the Asia Pacific
region, MPA would appreciate US government assistance in securing copyright infringement as
a predicate offense under organized crime laws or money laundering laws.
Camcorder piracy is as a serious problem in Asia. MPA is working with governments bilaterally
and within the APEC framework to ensure effective laws to stop it, whether by ensuring that
current laws are sufficient or by pushing for stand alone anti-camcording legislation. Australia,
Malaysia, the Philippines, and Thailand are priority countries for this push.
As demonstrated by the high standards achieved by Free Trade Agreement (FTA) negotiations
with Singapore, Australia, and Korea, the FTA process can provide an important means for
enhancing intellectual property rights protection in the digital age in Asia. These agreements
also create critical opportunities for MPA members to participate in the marketplace.
MPA‟s interest in the Trans Pacific Partnership FTA cuts across several FTA chapters including
intellectual property, services and investment, electronic commerce, customs, and goods.
Eliminating tariffs on filmed entertainment product, removing foreign direct investment
limitations and eliminating discriminatory quotas will foster the development of the
entertainment industries in these trading partners.
MARKET ACCESS BARRIERS
Broadcast Quota – Section 9 of the Australian Broadcasting Authority‟s Content Standards
requires that 55% of all free-to-air television programming broadcast between 6:00 a.m. and
midnight be of Australian origin. In addition, under Section 102 of the Broadcasting Services
Amendment Act, pay television channels which include more than 50% drama programs in their
schedules, are required to spend 10% of their programming budget on new Australian drama
The Australia-US Free Trade Agreement (FTA) capped broadcast quotas for analog TV at the
existing 55% level; sub-quotas also remain capped at existing levels. Australia negotiated the
right to extend these quotas to digital broadcast TV, but the obligation can apply to no more than
three multi-plexed channels of any current broadcaster. Investment obligations for pay TV
channels were not capped at the existing 10% level under the FTA. Australia reserved the right
in the FTA to increase the investment quota applicable to pay TV services 10 to 20%. Australia
also preserved the option to expand the genre types subject to the investment obligations to
include arts programming, educational programming, children‟s programming, and
documentaries, in addition to the existing requirement for dramatic programming.
Potential Internet Quota – In respect of Internet based services, Australia also reserved the right
under the FTA to impose new measures, if preceded by a finding that Australian content is not
readily available to subscribers. The finding process, if ever initiated, must be transparent and
INTELLECTUAL PROPERTY PROTECTION
The key piracy problems in Australia are locally replicated discs, which now account for
approximately 98% of the illegal discs seized by law enforcement authorities, and Internet
Australia now accounts for the highest instance of P2P infringement of MPA member company
films, both in terms of total infringements as well as total population and internet population
ratios, of any territory in the Asia-Pacific region.
Difficulties remain in obtaining police assistance for intellectual property enforcement and
insufficient penalties are applied in the cases that do go to court.
Magistrates and Federal Courts rarely apply sufficiently deterrent penalties. Inadequate
sentences such as good behavior bonds with no recorded conviction combined with low-level
fines are the usual consequence of a criminal piracy conviction. Difficulties are magnified by
undue delays by some Federal Police when referring matters to the Federal Director of Public
Prosecutions; cases can take over two years to come before Court.
Copyright Legislation – Australia amended the Copyright Act in December 2006 to include
strengthened enforcement measures, as well as FTA provisions concerning circumvention of
technological protection measures and format shifting exceptions for private and domestic use of
films from VHS to electronic formats. Proposed exceptions permitting format shifting for films
from DVDs or from online download formats were rejected by the Australian Government in
Anti-Camcording Legislation – Australia should adopt anti-camcording legislation. While
illegal copying is already a violation of the Copyright Act, more meaningful deterrent penalties
are required. Australia‟s first conviction in 2007 for unlawfully posting a pirate camcording onto
the Internet within hours of its global premiere in Australia, where it was viewed more than 70,
000 times before being removed, resulted in a mere AUD 1,000 fine. More recently, a defendant
convicted of camcording films on behalf of an international release group was only fined AUD
5,400 and placed on an 18-month good behavior bond. These relatively lax penalties fail to
recognize the devastating impact that this particular crime can have on the film industry.
MARKET ACCESS BARRIERS
Foreign Investment Restrictions – China limits foreign ownership in cinemas and in video
distribution companies to 49%. In the television sector, companies that are wholly or jointly
owned by foreign entities are strictly prohibited from investing in the broadcast industry. Such
discriminatory foreign investment restrictions limit competition and inhibit the film industry‟s
Import Quotas – Limits on the number of imported films into China remain unchanged in 2009,
with China permitting no more than 20 foreign revenue sharing films into the country each year.
Import Duties – Import duties on theatrical and home video products are sometimes assessed on
the potential royalty generation of an imported film, a method of assessment which is excessive
and inconsistent with international practice of assessing such duties on the value of the
underlying imported physical media. Excessive import duties place a severe drag on investments
and impede distribution of legitimate filmed entertainment product thus increasing demand for
Taxation – The theatrical and home video industries are subject to excessive duties and taxes in
China that hinder market access.
Regulations on Home Video Licensing Agreements – The Ministry of Culture (MOC) requires
that copyright owners enter into home video license agreements of not less than three years
duration with their licensees in China– an unnecessary intrusion into copyright owners‟
Retransmission of Foreign Satellite Signals – Local cable networks may not carry foreign
satellite channels without government approval or landing permits, which currently are limited to
Guangdong and a handful of foreign channels. Moreover, foreign satellite channels beaming
into China are required to uplink from a government owned encrypted satellite platform. The
annual fee for each channel remains excessively high at $100,000.
Television Quotas – China restricts foreign television drama and film programming to no more
than 25% of total airtime, and other foreign programming to no more than 15% of total air time.
Foreign programming is banned during prime time and may not constitute more than 30% of pay
television channels. Foreign animation is restricted to no more than 40% of total airtime and
importers of foreign animation must produce a like amount of domestic animation.
Screen Quota – The government sets strict guidelines for the public screening of foreign films.
The total annual screen time for foreign films must not exceed one-third of the total screen time.
Government Film Importation and Distribution Monopoly – The State Administration of Radio,
Film, and Television (SARFT) permits only one film importer and two film distributors (which
are both components of the same monopoly managed by SARFT) to operate in China. Inter-
connected SARFT agencies include: the Film Bureau, which oversees the China Film
Distribution and Exhibition Corporation; China Film Export and Import Corporation; China Film
Co-Production Corporation; Huaxia Film Distribution Corp.; China Television Service; and, the
China Television Authority.
For theatrical releases, this monopoly importer and distributor dictates the films that will be
imported, when they will be released in the market, and the box office revenue sharing terms in a
master contract agreement imposed unilaterally and uniformly on foreign distributors by the
government, currently fixed at 87% to China Film and 13% to US rights holders; the lowest
sharing ratio in the world and a major barrier to the Chinese theatrical market.
Most cinemas are controlled by the China Film Corporation and its regional subsidiaries,
although the number of privately owned cinemas is increasing. China Film dictates the
contractual terms, play dates, and other aspects of film exhibition.
Regulations against direct distribution by non-Chinese companies of foreign theatrical films,
home video, public performance video, and television product remain in force.
Restrictions on Retailers – Foreign retailers are precluded from selling home video products
without entering into a qualifying joint venture with a Chinese firm. The number of legitimate
distribution points remains far less than the number of pirate distribution points. It is essential
that the government eases the restriction against selling legitimate audiovisual products in
convenience stores, hyper-markets, super markets, and other chain stores.
Blackout Periods During Peak Seasons – The Chinese government has historically decreed
“black-out periods” during which no new revenue-sharing blockbuster foreign films may be
released, to prevent competition with Chinese films released during the same period. Such
blackouts typically occur during national holidays or coincide with political events. For
example, foreign films were blacked out during the National People‟s Congress in March and
China‟s 60th Anniversary in October 2009.
Banning the release of new foreign titles during peak season not only drives down theatrical
revenues, it contributes to increased piracy, as pirates meet consumers‟ demand for foreign
Censorship – The SARFT, the General Administration of Press and Publications, and Chinese
Central Television all perform various censorship functions of film, video, and television
content. Pirates freely and easily move stolen content into the market with no censorship
concerns and no delays. China should improve its censorship system help develop the local
market and deter piracy.
Video Rights – When Chinese entities contract for the rights to distribute film and television
titles in various home video formats, the differentiation between rights for home use or public
use are often ignored. MPA continues to find its member companies‟ products being used for
public performance exhibitions in mini-cinemas and by some pay TV operators providing to
hotels. The Chinese government should ensure that home video contracts are fully respected and
that home video product is not used for public exhibition or performance.
Local Printing/Duplication Requirement – China continues to require that film prints be made in
local laboratories, reducing rights holders‟ ability to control the quality of a film copy and the
Internet Censorship – China has attempted to regulate and censor content on the Internet through
regulatory and technological controls. While MPA respects the rights of China to ensure that its
population is not subject to content that may be questionable under Chinese values, the breadth
of China‟s restrictions are unprecedented and, unfortunately, have done little to suppress the
availability of pirate content over the Internet.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Illegal downloading and streaming of MPA member company films remain an
increasing concern in China. A growing number of websites provide fee-based or free download
and streaming services without permission. A high volume of “user generated content” sites
with business models built around the provision of unauthorized content are hosted in China.
Finally, Internet cafes are also significant sources for consumers‟ viewing and downloading of
pirate movies, particularly in Guangzhou and Shenzhen.
Due to the scale and volume of Internet piracy in China, MPA‟s strategy has shifted to focus on
investigating high impact sites offering significant inventories of illicit product for streaming,
downloading and hard goods distribution. Copyright owners have begun coordinating referrals of
infringing Internet activity to the National Copyright Administration of China (NCAC), but thus
far the result has been unimpressive.
Chinese Internet Service Providers (ISPs) are also hosting infringing websites targeting users
outside of China, which implicates China in the “export” of pirate content, damaging MPA
members business in third country markets.
Export Piracy – The export and transshipment of pirate optical discs from and through China
continues to grow, especially pirate DVDs of US films. Transshipments flow out of China to
destinations worldwide, including the US, through express mail and courier companies. The
recent emergence of high-quality, counterfeit Blu-ray DVDs supplied in large volumes to
businesses and consumers throughout the world over Chinese retail and auction websites
including Alibaba is among the latest examples of China‟s export piracy problem.
Pirate Optical Disc Manufacturing – In addition to unauthorized replication by licensed factories,
burner labs are on the rise. The March 2007 case involving a factory raid, during which
enforcement authorities seized 1.8 million pirate optical discs and 30 SID code eraser machines
from an underground facility located in Guangzhou, resulted only in a RMB 15,000 fine
(approximately USD 2,200) and an official warning, which can hardly be characterized as
Television Piracy – Many of China‟s 300 government controlled television stations make
unauthorized broadcasts that include popular member company titles. These stations use pirate
DVDs or false “letters of authorization” or “broadcast rights” from companies in Hong Kong,
Thailand or Taiwan which purport to convey broadcast rights. Some stations also try to hide
behind the “fair use” exception, broadcasting heavily edited versions of MPA member company
films under the guise of being an “introduction to the film.” Additionally, cable TV operators in
China serving more than 383 million households routinely include pirate product in their
The lack of a coordinated, transparent and adequate enforcement program remains one of the key
causes for the failure of piracy rates to decline in China. China should strengthen focus, co-
ordination and effectiveness of the various enforcement agencies through strong direction from
the top Chinese leadership.
This problem is exemplified when trying to address challenges with the Internet. China has more
than ten different government bodies claiming control or influence over the Internet, with
inconsistent policies, which creates uncertainty for potential investors and limits investment and
growth in the sector. China would benefit with the development of consistent, centralized, and
transparent regulation of the Internet with one authority with clear administrative powers.
Internet policies are necessary components of the legitimate audiovisual industry, as digital
piracy severely curtails the growth of the new and existing marketplaces for entertainment
To address its optical disc piracy problem, China should intensify governmental supervision of
licensed optical disc manufacturers and initiate criminal prosecutions against those engaged in
illegal replication activities.
To effectively deter piracy, China should lower the high threshold of commercial piracy
necessary to trigger a criminal prosecution; and establish stronger penalties beyond the current
fines that are not of deterrent value.
Moreover, to address its Internet piracy problem, China must provide adequate protection in the
digital environment by criminalizing end-user piracy, adding reference to the exclusive rights
provided in the law, criminalizing violations of the anti-circumvention provisions for TPMs and
rights management information, criminalizing Internet offenses that are without “profit motive”
but that have impact on rights holders “on a commercial scale”, and eliminating distinctions
between crimes of entities and individuals;
To foster legitimate electronic commerce, it is imperative that China establish adequate liability
for ISPs for piracy related offenses and satisfactory measures for notice-and-takedown of
websites offering pirate materials. Such provision will foster a responsible partnership between
the content industries and the delivery networks.
MARKET ACCESS BARRIERS
Broadcast Regulations – The Indian government regulates uplink and downlink of satellite
signals beaming into India. Foreign broadcasters are required, among other things, to set up
offices in India, licensed by the government, and pay prescribed fees per channel beaming into
In August 2006, the Ministry of Information and Broadcasting (MIB) released a draft Broadcast
Services Regulatory Bill, established a Broadcast Regulatory Authority (BRAI) tasked with
setting policies on programming codes, licensing conditions, content regulation, and censorship.
The MPA made a submission urging careful consideration of the existing restrictive nature of the
marketplace, noting that further restrictive provisions in the draft Bill such as content quotas,
foreign ownership limitations would have a significant impact the growth and expansion of the
Also in August 2006, the Ministry of Information and Broadcasting issued a notification to
broadcasters that only films rated “U” can be broadcast on TV channels, reportedly in response
to public concern over increasingly offensive scenes shown on television. In addition, the
Mumbai High Court issued a judgment that same month requiring broadcasters to recertify all
films through the Central Board of Censors to ensure that only “U” rated films are aired. These
decisions, unfortunately made without industry consultation and without supplementing Censor
Board resources, have introduced uncertainty and disruption in the marketplace.
Telecommunication (Broadcasting and Cable Services) Interconnection Regulation – In 2007, the
Telecom Regulatory Authority of India (TRAI) issued regulations prohibiting broadcasters from
granting exclusive contracts with any distributors and obligating broadcasters to provide channel
programming to all requesting distributors on a non-discriminatory basis. The exclusive contract
prohibition, along with “must provide” requirements, eliminates all potential for competition and
any incentive to develop programming or buy any “rights.” The MPA presented nine
submissions over several years, opposing restrictions in the functioning of India‟s cable and
satellite market, arguing that the draft regulation would remove private parties‟ ability to
negotiate standard free market transactions and opining that any restriction on exclusivity limits
the quality and quantity of content available to consumers. These recommendations were
summarily disregarded. Consultations on tariffs for non-CAS areas are ongoing.
Additionally, the MIB amended the Direct to Home (DTH) Guidelines to include, among other
things: prohibitions against DTH operators from entering into exclusive contracts with any
broadcaster; prohibitions against DTH operators carrying signals of any broadcaster who has
entered into any exclusive contracts with any distribution medium and/or against whom any
litigation is pending in such regard.
The above regulations and guidelines limit choice and undermine anti-competition laws.
Rate Regulation – In 2002 when TRAI was given control over the television industry, they
instituted a price freeze across the entire industry. They have subsequently introduced price caps
for pay channels in areas with set-top-boxes, and also price bands for firms that offer bouquets
(to ensure that the price per individual channels isn‟t much higher than the price of a bouquet).
TRAI says they‟ll relax the price controls once other television platforms are widely adopted
(satellite TV, Internet TV). Such rate regulation of a clearly competitive industry stifles its
growth. TRAI should make a strong commitment to “adoption targets” for when they will relax
price controls as the U.S. FCC did when we deregulated cable TV rates.
Foreign Ownership Restrictions – Foreign ownership of cable systems is limited to 49%. There
is a 20% sectoral cap on DTH platform ownership by foreign companies while total direct and
indirect foreign ownership of a satellite platform cannot exceed 49%. The TRAI sent its
recommendations to the Government of India on privatization of terrestrial television
broadcasting where it also suggested a 20% FDI cap. MPA opposes such ownership restrictions,
which ignore the fact that significant capital infusion, which may be accessed from international
markets, is necessary to further develop the television industry in India.
A task force in the Ministry of Information and Broadcasting (MIB) was set up to re-examine the
foreign ownership caps in broadcasting, particularly in electronic commerce, but there have been
no reports of its conclusions.
Customs Print Valuation – Mumbai‟s Customs Department continues to value DVD masters,
television products, and electronic promotional kits of MPA members based on the transactional
value of commercial agreements (including the license fee, advance minimum guarantees, and
royalty amounts) rather than the physical value of the carrier medium. Local customs authorities
are applying this valuation retroactively and demanding such “overdue” payments. As a result
and despite extensive bilateral engagement between the governments of the United States and
India and intensive lobbying by MPA, some MPA member companies and their customers have
been forced to pay prohibitively higher and unreasonable import costs for their product imported
Entertainment Taxes – Entertainment taxes vary widely among Indian States, ranging from 15 -
40% in some key markets, 40 - 70% in other states, and in a small number of states, to 100% or
more of the admission price. The average tax rate, computed on a country-wide basis, is
estimated to be between 27-36%, and constitutes a significant disincentive to the much needed
cinema construction. MPA, in association with the Film Federation of India, continues to
encourage the federal and various state governments to rationalize the high taxation levels and
the Government of India has also stepped in to persuade various state governments to impose a
uniform entertainment tax not exceeding 60%. Citing revenue considerations, however, most
states are reluctant to conform.
Discriminatory Entertainment Taxes – At the request of their local state film industries, some
states discriminate between local and non-state films, charging nil or lower tax rates for local
films while assessing higher rates for non-state language films.
Income Tax Appeals – Following expiration of an agreement with the Central Board of Direct
Taxes (CBDT) whereby MPA member companies would be taxed on a “deemed profit”
calculated as 25% of gross film rental receipts, the CBDT assessed and demanded MPA
companies pay taxes based upon actual net profits. Despite MPA and US government petitions,
the Indian tax authorities persist in isolated cases to assess taxes on net income.
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – Pirate optical discs of popular titles are available in major cities well
before their local theatrical release. Due to the lack of optical disc legislation, optical disc
factories operate without any government interference. There are 36 optical disc plants and pirate
production facilities are believed to be operating in India. In addition, pirate optical discs are
imported from Malaysia and other Asian countries.
Rental piracy – Rental piracy is so rampant that despite the fact that virtually every locality
around the country has a rental library, there is virtually no legitimate rental business in India.
Small video parlors in small and medium sized cities often screen pirate product. These parlors
are often licensed by state governments and compete with legitimate theaters.
Cable Piracy – The approximately 40,000 cable systems in India (the majority of whom are “last
mile operators”) often transmit MPA member company product without authorization. These
cable systems seriously affect all MPA member company business in India, including theatrical,
home video, and legitimate television. Restraining orders issued by the Civil Court (Delhi High
Court) against entire networks (including all franchisees, distributors and cable operators
forming part of the network) as a result of MPA civil actions have proven to be a deterrent.
However, the constant monitoring and initiation of new criminal prosecutions for copyright
violation and contempt of court proceedings is a costly and time consuming process.
Internet Piracy – With the increased penetration of broadband there is increasing concern that
illegal Internet downloads and Internet-based hard good sales of optical discs will become more
of a threat to legitimate sales and distribution.
The lack of criminal enforcement continues to be a significant problem. The police in most
jurisdictions typically only seize raided pirate goods when a specific complaint has been made.
An additional difficulty is that criminal enforcement in India is a state matter; there is no national
coordination or enforcement standard, which results in a wide divergence in capability and
outcomes throughout India.
Processing a defendant is time consuming and often poorly managed. It can take police up to a
year to prepare the charge sheet and the related post-arrest investigations are often cursory. If
and when charge sheets are finally presented in court, cases are routinely dismissed. It can take
up to 12 years for a case to proceed to conviction in the overburdened Indian court system.
Cable Piracy Legislation – The Cable Television Networks (Regulation) Act 1995 has a
significant loophole. Section 18 of the Act provides that no court can recognize any offense
under the Act except upon a written complaint by an Authorized Officer. Since criminal
procedure requires the personal presence of the complainant at all relevant hearings throughout
the subsequent prosecution, the Authorized Officers are reluctant to become complainants.
Optical Disc Legislation – India has been pressed for at least eight years to adopt an optical disc
law like its neighbors in Asia. In 2005, the MIB tasked the local industry association, FICCI,
with heading a drafting committee for a new optical disc law. MPA appreciates continued US
government assistance in ensuring that India promptly adopts an effective optical disc law to
prevent pirate optical disc production.
Copyright Legislation – The Indian government plans to ratify the WIPO Internet treaties and
amend its Copyright Act accordingly. The government constituted a Core Group of local
government and industry representatives to discuss appropriate amendments to the Copyright
Act, but did not permit international participation or access to the draft being discussed. MPA
believes the government can benefit from the wide experience of foreign right holders and urges
the Government of India to release the draft amendments immediately,
Critical to the MPA and its members are: protection for temporary reproductions; defining the
scope of the “communication to the public” right; presumptions to assist right holders in
exercising and enforcing their rights; providing for the full and treaties-compatible protection for
technological protection measures; the protection of rights management information; the
application of limitations and exceptions to subject matter, including computer programs, and
rights in the digital environment; and, the establishment of clear secondary liability of Internet
Service Providers and an effective notice and takedown system. MPA continues to urge the US
government to engage immediately with the Government of India on these critical issues before a
draft is introduced into the Indian Parliament.
There are disturbing indications that the HRD Ministry tasked with drafting the Copyright
Amendment Bill has included provisions in its draft that could allow the camcording of movies
in theatres as an acceptable “fair use” (s52 of the draft). Camcording is a particularly damaging
form of piracy and MPA has protested the inclusion of this provision to the MIB in recent
submissions and has also provided the MIB with model anti-camcording legislation. The
proposed s52 amendment must be withdrawn and it is hoped that the GOI will adopt the model
anti-camcording provisions as part of the Copyright Act amendment process
Information Technology (IT) Bill – Recent amendments to this law in December 2008 served to
both limit the liability of network service providers and impose certain measures of performance
for the removal of infringing content from their networks. However, the precise interpretation of
these requirements requires further clarification and remains the subject of discussion with the
Ministry of Communications & Information Technology.
MARKET ACCESS BARRIERS
Film Law – In September 2009, the Indonesian Parliament hastily passed a burdensome and ill-
conceived film law. Implementing regulations are currently being considered. As enacted, this
law will continue to seriously limit foreign participation in various film businesses in
contravention of the US-Indonesia Agreement on Market Access for Films and Videos.
The law includes a 60% local content quota for local exhibitors. While industry has been
assured that this quota will not be enforced, this is not satisfactory solution. Similarly, the draft
law aims to limit imported films to the benefit of domestic films. Content quotas limit local
industry‟s exposure to the expertise and skills of foreign producers, harm local theaters and
The law includes some ambiguous provisions that purportedly aim to limit unfair trade practices
or monopolistic conduct. While MPA agrees with these objectives, MPA believes the
promulgating regulations should recognize international best practices, notably the exclusive
right of rights owners to determine whether, how and where their works are made available. The
law‟s restriction on vertical integration could have unintended consequences including restricting
foreign participation in the market and curbing business efficiency.
MPA also objects in principle to Article 44 of the draft law which bans dubbing of imported
films. Dubbing of imported films into a local language is a commercial decision that should not
be unduly regulated.
Local Replication requirement (Regulation Number PM 55) – On November 25, 2008,
Indonesia‟s Minister for Culture and Tourism issued a Regulation requiring that all theatrical
prints and home video titles released in Indonesia be replicated locally with effect from January
1, 2009. The effective date was later postponed until January 1, 2010. This regulation, if it came
into force, would limit or possibly eliminate the importation of films printed outside of Indonesia
and have serious negative consequences on the long-term viability of Indonesia‟s burgeoning
film industry, most immediately on MPA member companies‟ 2010 release schedule for the
country. This harmful regulation, which appears to have been incorporated into the Film Law,
should be formally and permanently abrogated as soon as possible.
Withholding Tax – Recent amendments to Indonesia‟s tax law broadened the definition of
“royalties” in a manner that resulted in the imposition of a new withholding tax on theatrical
exhibition fees. While the full effect of the amendments have not yet been quantified, any
potential indirect impact on overseas suppliers could detrimentally impair the further growth of
the theatrical sector.
LACK OF INTELLECTUAL PROPERTY PROTECTION
Optical disc piracy – MPA estimates that Indonesia‟s capacity of operating optical disc lines in
Indonesia is about 20 times greater than legitimate domestic demand.
Retail Piracy – Piracy in retail malls continues to mushroom in Indonesia. The lack of any
concerted enforcement efforts over the past twelve months has served to increase the problem.
Cable TV piracy – An estimated 600,000 to one million households receive illegal cable feeds
yet there is very little government enforcement. Additionally, television signals are being pirated
from neighboring countries (overspill) or from domestic satellite (DTH) signals to feed
illegitimate provincial cable operators. The government must send the message that these
provincial cable operators must be legalized and need a contract with an authorized
programming distributor in order to distribute pay-TV programming.
In addition, there is open sale of piracy devices, such as set-top boxes and smart cards, in
Indonesia‟s markets. Police need to work with Indonesian pay-TV platform companies to repress
blatant sale of these devices, whose importation and sale are (we understand) illegal under
While Indonesia‟s Optical Disc Regulations were implemented some years ago, continued
widespread piracy in the country is testament to the total lack of effective enforcement of the
Regulations. There appears to be little effort to seriously implement the regulations or take any
form of administrative or criminal actions against factories and owners who are found to be in
violation of the regulations.
Landlord Liability – Sporadic actions by the police against retail establishments engaged in
piracy provoke immediate closure of stalls but shut-downs are generally short-lived. The
enforcement climate in Indonesia would be vastly improved by the introduction of landlord
liability for infringements of copyright by tenants. This includes the introduction of both civil
and criminal liability for landlords.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – Japanese consumers are very technologically proficient. Easier Internet access
has led to a dramatic increase in online pirate activities. Many pre-release pirate DVDs are sold
on Internet auction sites or downloaded using popular file sharing software named “Winny” and
Optical Disc Piracy – Street vendor piracy has reemerged. Pirate videos dubbed into foreign
languages for immigrants and temporary workers are also a problem.
Public Performance Piracy – Unauthorized public performances of motion pictures remains a
problem. Hotels, public health facilities, and tour buses continue to exhibit unauthorized
Generally, although police are cooperative, they will only initiate enforcement actions after a
copyright owner files a complaint, which must be presented to the authorities by a locally-
qualified attorney. Copyright owners must bear the burden of filing such complaints and paying
associated legal costs before prosecutors will pursue piracy cases. This requirement is a
substantial impediment to effective law enforcement, severely limiting the number of copyright
offenders who can be prosecuted.
Copyright Legislation – It is imperative that downloading pirate audiovisual content is made a
criminal offense in Japan. Under the Japanese Copyright Law, Article 23, Paragraph 1, an
individual who uploads an unauthorized motion picture file can be held liable. Although an
individual who downloads “sound and visual recordings” will no longer be protected by the
Private Use exemption under Article 30 with effect from January 1, 2010, further clarification on
associated penalties is still required. The growing prevalence of peer-to-peer piracy makes it
imperative that Japan close this loophole.
WIPO Internet Treaties – Japan‟s law does not provide for criminal penalties against the
unauthorized circumvention of technological protection measures on copyrighted content.
Specifically, the Copyright Law and the Anti-Unfair Competition Law remain deficient in their
failure to fully cover the act of circumvention of technological protection measures, in their
spotty remedies (e.g. no criminal action for trafficking in access control circumvention tools and
copy control circumvention tools), as well as in other ways.
Internet Service Provider Liability – Japan should amend its Internet Service Provider (ISP)
liability law to require ISPs to act more expeditiously in response to rights holders‟ requests to
remove infringing content and disclose the identity of suspected infringers where feasible.
MARKET ACCESS BARRIERS
When implemented, the Korea-US Free Trade Agreement (FTA) will produce notable
liberalization in some areas, allowing the US motion picture industry to compete better in the
Korean entertainment market.
Screen Quota – Notably, the Korean government already agreed in 2006 to reduce by half its
screen quota to 73 days prior to the FTA negotiations. While still limiting full access to and
competition within its market, this measure is a significant opening of the Korean theatrical
Television Quotas – The FTA, when implemented, will liberalize Korea‟s television market.
However, some troubling restrictions, including quotas on free-to-air broadcasting, quotas on
foreign programming applied by genre of programming, restrictions on the number of foreign
channels cable and satellite operators may transmit, and limits on the foreign programming cable
and satellite operators may retransmit, will remain.
Foreign Investment Restrictions – Additionally, if ratified and implemented the FTA will open
the Korean market to greater foreign investment in the television market, though the remaining
limitations will still restrict US investors to minority status.
INTELLECTUAL PROPERTY PROTECTION
The FTA will also require Korea to make reforms to its copyright laws. Most significantly for
the motion picture industry, Korea will criminalize the unauthorized recording of films in
theaters, extend the term of copyright protection for protected works, and enhance efforts to
combat Internet piracy.
Internet Piracy – Internet piracy continues to grow rapidly. Korea has the second highest
broadband household penetration rate in the world, 97.2%. As broadband penetration increases,
the capacity for data transmission also increases.
Optical Disc Piracy – Pirate optical disc burning laboratories are a predominant source of piracy
in this territory and of such magnitude that they compete directly with legitimate duplicators for
a share of the video market.
The Korean authorities aggressively enforce anti-piracy laws and the prosecutor‟s office reacts
quickly to information concerning pirate activity. Korean courts typically issue administrative
penalties for piracy offenses without opting for more significant penalties, which would more
properly reflect the gravity of the offense.
The Korean government has begun more strenuous efforts to address pervasive levels of online
piracy that, if sustained, should be highly effective.
Copyright Legislation – Korea amended its copyright law in June 2007 and again in 2009. These
changes obligate peer-to-peer network operators to apply measures against the distribution of
infringing copies on their networks when requested by the rights holder. The 2009 amendments
include a “notice and takedown” provision, “safe harbor” liability limitations, and a graduated
response requirement for special online service providers whose customers repeatedly exchange
infringing content. These ground-breaking amendments, which have only just been
implemented, should help foster the continued development of legitimate online commerce.
MARKET ACCCESS BARRIERS
Broadcast Quota – Broadcast stations are required, through a licensing agreement, to devote 70
to 80% of terrestrial airtime to local Malaysian programming. Broadcast stations are banned
from broadcasting foreign programming during prime time. Such restrictions significantly limit
expansion of the television sector. The market should determine programming allocations and
MPA appreciates US government assistance to eliminate such quotas.
Cinema Entertainment Tax – The entertainment tax for theater admissions, at 20% of the gross
ticket price, is among the highest in the region and limits the growth of the theatrical industry by
artificially increasing box office prices. The Malaysian government has made no attempt to
reduce this tax for the past several years.
Foreign Ownership Restriction – Foreign investment in terrestrial broadcast networks is strictly
prohibited. The government imposes a 20% limit on foreign investment in cable and satellite
operations through licensing agreements.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – With the continued penetration of broadband both in homes and Internet cafes,
illegal Internet downloads and Internet-based hard good sales will become more of a threat to
legitimate sales and distribution.
Optical Disc Piracy – Malaysia remains one of the major producers and suppliers of pirate
optical discs, including for the export markets. Despite persistent enforcement, licensed and
unlicensed factories continue to produce pirate products.
Retail Piracy – The retail piracy situation remains bleak. In several fixed premise locations in
Klang Valley (particularly in Bangsar, Sg Wang, Petaling Jaya, and Shah Alam), Penang
(Perangin Mall) and Johor Bahru (Holiday Plaza) pirates openly sell illegal products.
Although enforcement against unlicensed factories is encouraging, serious problems remain with
prosecutions against licensed operations. The government has yet to exercise its powers under
the optical disc law against errant licensed factories. The Ministry of Domestic Trade,
Cooperatives, and Consumerism (MDTCC) must utilize their powers to issue warnings and
eventually cancel licenses.
Prosecution remains slow and ineffective. MPA continues to work with the Attorney General‟s
Chamber and the MDTCC to resolve older matters and move important new cases through the
Labeling Requirements – Four years into the program, many problems remain and industry
representatives still press for the law‟s review. MPA generally discourages governments from
such mandatory labeling schemes as they tend to introduce additional bureaucratic layers and
increase distribution costs, and costs to consumers without providing proportional benefits.
MPA filed a memorandum with the former MDTCA in 2006 seeking a reduction of the price of
hologram “originality” sticker. The issue was raised again during a meeting with the new
MDTCC Minister and MPA will forward its concerns to the Ministry of Finance.
WIPO Internet Treaties – Malaysia has not yet ratified the WIPO Internet Treaties although it
has inserted language directly from the Treaties into its copyright law; unfortunately, this is not
sufficient to implement the Treaties. The Copyright Act must provide sufficient remedies
against piracy of audiovisual product over the Internet, including ISP liability, notice and take
down provisions, temporary copy protection, and protection for technological protection
measures, for example.
Anti-Camcording Legislation – Malaysia is a proven source of camcorder piracy, with 49
separate interdictions throughout the country over the past three years. Legislation making the
illicit camcording of a film in a theater a criminal offense is crucial.
INTELLECTUAL PROPERTY PROTECTION
Internet Piracy – As broadband penetration in both homes and Internet cafes expands, illegal
Internet downloads and unauthorized peer-to-peer transmissions continue to increase and
threaten legitimate sales and distribution.
Optical Disc Piracy – The availability of, and demand for, pirate locally-burned optical discs
continues to increase.
Copyright Act – The New Zealand government amended its Copyright Act in April 2008,
maintaining the prohibitions against the parallel import of films, recognizing a technologically
neutral right of communication, strengthening prohibitions against the communication of
technological protection measures, and enhancing protections for rights management
information. Format shifting for audiovisual works was not permitted. However, provisions
clarifying ISP responsibilities were held in suspense and remain pending. Such provisions will
establish a responsible partnership between the content industries and the delivery networks
where each plays its role and shares the burden of dealing with repeat infringers.
MARKET ACCESS BARRIERS
Foreign Ownership Restriction – Foreign investment in terrestrial broadcast networks is
prohibited and proposed changes in the law would still severely limit such investment to only
25% a share.
Motion Picture and Video Act (MPVA) – Section 9(5) of the new MPVA went into effect on
July 1, 2008, and allows the Film Board to establish ratios and quotas against foreign films. The
MPVA also imposes onerous ratings and censorship requirements on films and other audiovisual
INTELLECTUAL PROPERTY PROTECTION
Optical Disc Piracy – There has been a significant rise in the number of manufacturing facilities
in Thailand, most of which run pirate operations. Retail piracy is now entrenched, with little or
no enforcement undertaken by the authorities in traditional “hotspot” areas throughout
metropolitan Bangkok and in outlying provinces.
Camcord Piracy – Thailand is a significant source of pirate camcording in the region, with 11
recordings forensically matched to cinemas in Thailand this year.
Television/Public Performance Piracy – Cable piracy, predominantly the illegal retransmission
of broadcast signals, remains a notable problem outside Thailand‟s main cities. In addition,
public performance piracy continues to be a problem with many hotels outside Bangkok
retransmitting unauthorized videos over in-house movie systems and bars in tourist areas openly
exhibiting films without authorization. A growing number of bars and restaurants have also
added “private” rooms to screen illegally MPA member company product.
MPA recommends that the Thai government make permanent the special task force created by
the Central Investigation Bureau of the Royal Thai Police to ensure the sustained effectiveness of
Copyright Legislation – MPA is urging the government to amend the Copyright Act to ensure
that intellectual property infringement becomes a state offense, thus enabling the police to act on
their own initiative. In addition, Thailand needs to implement the WIPO Internet Treaties to
provide for sufficient remedies against piracy of audiovisual product over the Internet.
Landlord liability and minimum penalty provisions – These provisions support more meaningful
Anti-Camcording Legislation – There is an immediate need to enact standalone mechanisms,
independent of the copyright law, in Thailand to enforce against rampant and increasing
instances of illegal camcording in Thailand.
MARKET ACCESS BARRIERS
Quotas – In the television sector, foreign content is reportedly limited to 50% of broadcast time,
and foreign programming is not allowed during prime time.
Foreign Investment Restriction – Foreign investors may invest in cinema construction and
operation through joint ventures with local Vietnamese partners, but these are subject to
government approval and a 51% ownership ceiling.
A foreign investor cannot establish a distribution network if they do not engage in manufacturing
and foreign investors may only engage in videotape, VCD, and DVD production in Vietnam in
the form of a joint venture with local interests.
The Vietnamese government owns and controls all television stations in the country; it does not
allow private or foreign-owned TV stations or foreign investment in broadcast stations.
Censorship Process/Classification – All imported films are subject to censorship by the
Department of Cinema under the MOCI. The results are unpredictable and arbitrary, and
inevitably becomes highly dependent on personal relationships. Films that require editing are
subject to a re-review, though importers are not assured a right of appeal. MPA believes a
classification and rating system would spur development of the theatrical market.
INTELLECTUAL PROPERTY PROTECTION
Optical disc piracy – The majority of pirate VCDs and DVDs are imported from China, however
the lack of optical disc legislation and production capacity in Vietnam, may stimulate the
development of an indigenous pirate manufacturing base.
Television piracy – The unauthorized reception and redistribution of foreign satellite channels
using illegal decoders remains a problem throughout the country.
Copyright Legislation – Vietnam‟s copyright regime is not compliant with some international
IPR agreements. Vietnam did, however, recently amend its IP law to extend the term of
copyright protection (from 50 to 75 years from their date of publication), clarify the rights of
producers of video recordings, and strengthen administrative penalties and remedies.
Optical Disc Legislation – Given the concern about the possible migration to Vietnam of optical
disc manufacturing facilities engaged in illegal activities and expanded production capacity,
adoption of optical disc regulations is pressing.