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					High Tech Products and
 Intellectual Property
     Erinn Woodcock
        Rick Nortz
      Paula Ramko
      Lance Gomes
         Agenda


• Argentina’s Hardware Industry
• Argentina Software Industry
• Intellectual Property Issues
  – Argentina
  – Brazil
  – Mexico
• Conclusion
                 Overall IT Market
                 1999

  Consumables (7%)                             Total IT Market :
                             Hardware          – Grew at 11% in 1999
                              (36%)
                                               – Total Market $3.84
                                                 Billion in 1999
                                               – Expected growth of
                                                 10% through 2000

Services (41%)          Software (16%)




                                         Source: U.S. & Foreign Commercial Service
        Argentina Hardware Market


1999 Hardware Market
  – $1.6 Billion Market
User Segments:
  – Multi-users: $294 million in purchases
  – Single-users: $1 billion in purchases
        Hardware Market
        Trends

• 3.6 Million PCs in the Market
• 800,000 PCs sold in 1999
  – Total market penetration about 10 %
• Volume increase 10% in PC sales
  demonstrates growth of market
  – Residential market and small and medium-sized
    businesses responsible for the growth
           Hardware Market
           Trends


• Government Initiatives
  – Science and Technology Secretariat and the Banco
    Nacion will work together to:
     •   Reduce overall costs of ownership
     •   Provide financing
     •   8% growth projected for the sector
     •   Goal of 1 million homes with PCs and Internet
         connection
         Argentine Hardware Market
         Exports


• Basically nonexistent
• “Export” imported products
  – These are customized solutions to specific
    clients’ subsidiaries located in bordering
    countries
• Export sales of $4.8 million in 1999
         Argentine Hardware Market
         Imports


• Total Hardware Import market
  – $1.45 billion in 1999
• US accounts for 67 % of computer import
  market
• 1999: $1 billion in sales of US Hardware
  products
• 1999-2000: Argentina increased hardware
  imports by 8%
           Country of Origin
           Hardware
                  Others (6%)
     China (7%)


 Mexico (10%)



Brazil (10%)


                                               USA (67%)



                                Source: U.S. & Foreign Commercial Service
          Hardware Market
          Import vs. Export

1400

1200
1000

 800                                                  Import
 600                                                  Domestic
                                                      Exports
 400
 200

   0
       1997    1998   1999          2000




                              Source: U.S. & Foreign Commercial Service
              Hardware Market
              Mexico and Brazil
1800
1600
1400
1200
1000
800
600
400
200
   0
       1998    1999   2000

5000

4000

3000

2000

1000

   0
       1998    1999   2000


                              Source: U.S. & Foreign Commercial Service
        Argentina Software Market


1999 Software Market
  – $459 Million Market
  – Expected Growth 10% per year
User Segments:
  – Banks, Large Firms, Government Agencies
  – Medium and Small Companies(PyME)
  – Residential (SOHO)
                 End User Market
                 Hardware and Software

           SOHO (13%)
                                        Large Firms (35%)


Sm & Med Sized
Companies(28%)




                                Banks (19%)
    Government (5%)
                                 Source: U.S. & Foreign Commercial Service
        Software Market
        Trends


• 3 Market Segments
  – Software for manufacturing
  – Vertical software market
  – PC software
• End-User Changes
  – Mostly large or small-medium corporations
        Software Market
        Trends

• Growth of PyME Market
  – Creates alliances between major US software
    vendors and banks, vendors and resellers
  – Customized solutions
• Decrease in Piracy
  – 1997 70%
  – 1998 Software piracy law passed
         Argentine Software Market
         Exports

• No Software Export Market
• Local Production
  – 1998: $30 Million
  – 1999: $35 Million
  – 7.2% share of local market
• Intersoft
  – Most important local software company
  – Will be expanding into Brazil, Paraguay,
    Venezuela
         Argentine Software Market
         Imports

• Total software import market
  – $459 million in 1999
• US accounts for 77% of software import
  market
• 1999: $350 million in sales of US software
• 1999-2000: Argentina increased software
  imports by 10%
           Country of Origin
           Software
               Others (5%)
      Spain (6%)


Germany (12%)




                                       USA (77%)



                             Source: U.S. & Foreign Commercial Service
         Software Market
         Import vs. Export

500
450
400
350
300
                                                     Import
250
                                                     Domestic
200
                                                     Exports
150
100
 50
  0
      1997    1998   1999         2000




                             Source: U.S. & Foreign Commercial Service
                  Software Market
                  Mexico and Brazil
350

300

250

200

150

100

50

  0
          1998     1999    2000

2000


1500


1000


 500


      0
           1998     1999    2000


                                   Source: U.S. & Foreign Commercial Service
         Intellectual Property Guidelines
WTO (World Trade Organization)
   • Sets guidelines for international trade rules

TRIPS (Trade-related Aspects of Intellectual Property Rights)
   • Established in 2000
   • Covers treatment of copyrights, patents, trademarks,
   layout of integrated circuits
   • A company or individual in a WTO country can patent a
   product/process to prevent others using, selling or
   importing without the owner’s consent
            Intellectual Property Law

• 1933 Law on Intellectual Property
       - Provides copyright protection
       - Nov. 1998 revision: copying software is illegal

•   1981 Law on Technology Transfer
       - Governs agreements providing for the transfer,
       assignment or licensing of technology or
       trademarks.
• 1981 Law on Trademarks and Designations
       - Ownership of a trademark begins at registration.
          Intellectual Property Law

• 1998 IPR Protection for Software
     - Explicitly included software in protected area
     - Reduced software piracy by 8%
• Software Legal
     - Private sector group representing local software
     interests
     - Will initiate legal action against companies using
     pirated software.
     - Claims 15,000 companies are using pirated
     software.
     - Launched 170 piracy lawsuits since 1998, has
     won only one case.
            Intellectual Property
            Argentina

• Level of software piracy
   - 1998: 62%
   - 1999: 55%-60%
• U.S.’estimated retail losses from software piracy:
   - 1998: $124M
   - 1999: $250M

• 2000 - Black market for computer programs is est.
$1.5B/year.
• The government paid the software industry over $5M
for using 22,525 versions of pirated software.
            Intellectual Property Law
            Brazil
• April 1996 - Law protecting layout of designs of
integrated circuits
• May 1997 - Industrial property law covering patents
and trademarks
• February 1998 - Software law protecting computer
programs as “literary works” with 50 year protection
• Draft of Bill in 2000 - Broaden criminal penalties and
streamline judicial process
        Intellectual Property
        Brazil
• Level of software piracy
   - 1998: 61%
   - 1999: 58%
• U.S.’estimated retail losses from software piracy
   - 1998: 367M
   - 1999: $392M
• Has one of the largest piracy rates in the hemisphere
• Local industry groups
   •Business Software Alliance
   •Brazilian Software Companies Association
           Intellectual Property Law
           Mexico

• NAFTA (North American Free Trade Agreement)
  - Mexico must provide effective border enforcement
•December 1996 Copyright Law:
  - Substantially increased protection for computer programs
  - Criminal penalties were increased
•March 1998 “Reglamentos”
  -Most significant change to Mexican copyright law
  - Tripled the number of inspectors
            Intellectual Property Law
            Mexico

• May 1999 Penal Code Update - Substantially increased
penalty for IPR violations
• November 1999 Law of Industrial Property (reformed)
   - More jurisdiction in copyright law

   - Original law brought Mexico’s patent and trademark
          legislation in line with NAFTA
            Intellectual Property
            Mexico

• Level of software piracy
   - 1998: 60%
   - 1999: 56%
• U.S.’estimated retail losses from software piracy
   - 1998: $147M
   - 1999: $134M
• Mexico piracy is below the 80% average in Latin America
•Violations have been reclassified as a felony
           Conclusion

• Hardware and Software in Argentina
   – Dependent on the US for Hardware and Software
   – Target Markets Changing
   – New Initiatives/Alliances
• Intellectual Property
   – Software Piracy was Rampant in the mid 90’s
   – New Software Piracy Laws in many Latin American
     Countries
   – Piracy is decreasing
   – Enforcement remains an issue
                     Sources:

• US Department of State, FY2000; Country Commercial Guide -
Argentina and Mexico
• The Economist Intelligence Unit - from Country Commerce;
Argentina: June 22, 2000 and June 30, 1999; Mexico: September
30, 2000,
• SourceMex, May 12, 1999; www.ladb.unm.edu
• US Trade Representative 2000 national Trade Estimate Report
on Foreign Trade. (Brazil)
• US & Foreign Commercial Services (Industry Sector Analysis:
Hardware and Software for Argentina)
Thank You

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posted:9/5/2011
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