International Law

China Intellectual Property Theft. The Statistics Are Damn Lies.

By Dan

PC World Magazine has an excellent article on the costs of intellectual property (IP) violations in China. The article is entitled, "US Panel Looks at Intellectual Property Violations in China," and what it essentially says is that the value of China's stolen IP has been grossly exaggerated.  

The PC World article was written on the heels of a recent meeting of members of the U.S. International Trade Commission (USITC) on "how to measure the effect of copyright and other intellectual property infringement in China." The article starts out by pointing out the central flaw flaw with typical industry numbers: 

The estimates of monetary damages released by many U.S. industries often assume that a pirated copyright of a product like software or a music CD blocks the sale of an authorized copy, when that may not be the case, said Fritz Foley, a professor in the Harvard University business school.

"It seems a bit crazy to me to assume that someone who would pay some low amount for a pirated product would be the type of customer who'd pay some amount that's six or 10 that amount for a real one," he said during the first day of a two-day USITC hearing on the impact of Chinese intellectual property infringement on the U.S. economy. "Be careful about using information the multinational [companies] provide you. I would imagine they have an incentive to make the losses seem very, very large."

Let's get things straight. The woman who pays 70 RMB (approximately USD$10) for a badly made fake Gucci purse is not the same person who contemplates paying USD$1,750 for the real thing.  

The article then discusses movie pirating and how that may actually help the United States:

Although the U.S. movie industry is hurt by copyright infringement in China, the U.S. may benefit in other ways....Some U.S. workers may be employed by companies counterfeiting products in China, some U.S. companies may sell raw materials used by counterfeiters, and some counterfeited U.S. entertainment products may spread democratic ideals in China....

Counterfeiting in China is a huge problem, but let's get the numbers straight.

Full post as published by China Law Blog on June 24, 2010 (boomark / email).