RIYADH, 31 January 2006 — In accordance with the Kingdom’s accession to the World Trade Organization (WTO), representatives of the International Intellectual Property Alliance (IIPA) were invited to Saudi Arabia to discuss issues concerning the implementation of international obligations under the Trade Related Aspects of Intellectual Property Rights (TRIPs), a part of the WTO agreement.
Eric Smith, IIPA president, was pleased with the reception that the IIPA received last week. He said of the meetings, “The government was very cooperative, very understanding and very progressive about these issues. We noticed a really significant change in tone and attitude in this area from all levels of government here and we are looking forward to future productive cooperation.”
The IIPA is a coalition of seven US trade associations that represent the US copyright-based industries. This was Smith’s third visit to the Kingdom. He made a particular effort to praise the directions issued by Riyadh Governor Prince Salman to immediately establish a special committee to look into the problem of the enforcement of copyrights and other laws against copyright piracy within the Kingdom. The committee will include in its membership a representative from the prince’s office, another from the Ministry of Culture and Information, a representative from the Ministry of Commerce and Industry and representatives of the copyright holders. This committee will meet soon to consider reforms in the enforcement system to ensure that Saudi Arabia’s enforcement regime is consistent with its new obligations under WTO membership and that investment is fostered in the knowledge sectors of the Saudi economy.
During his stay, the IIPA president had several days packed with meetings that included such high level officials as SAGIA Governor Amr Al-Dabbagh, Acting Minister of Culture and Information Abdul Mohsen Al-Akkas, Minister of Commerce and Industry Hashem Al-Yamani, CITC Governor Dr. Mohammed Al-Suwaiyel, Director General (Customs Department) Salih ibn Ali Al-Barrak and Saudi Arabia’s chief WTO negotiator Dr. Fawaz Al-Alamy. In the meetings, Smith and his team discussed with the Saudi officials a number of concerns that IIPA members and copyright holders in general had with the current enforcement system.
“Basically we raised two issues,” explained Smith. “The first issue was that the penalties that are imposed by the government on infringers are far too light to be deterrent. Under the TRIPs agreement, deterrent penalties must be imposed. There has never been a sentence of imprisonment in the Kingdom for piracy. The highest fine that has ever been issued, according to the government, is SR50,000. In Dammam in September there was a raid in which 2.28 million pirated units of DVDs and software were seized from a warehouse. They were worth approximately $37 million at retail. Obviously a SR50,000 fine against the person who is dealing in 2.28 million units of pirated product is not a deterrent. The person who does that kind of business would just laugh at such a penalty. What’s happened of course is that because the penalties have historically been so low, piracy levels in the Kingdom have stayed constantly very high, generally over 50 percent in all categories.”
The second issue the IIPA discussed was transparency. According to Smith, currently if a copyright holder goes to the government and asks for a raid to be conducted, it is done. But after the product is seized, neither the copyright holders nor their representatives ever receive any information as to what has happened to the case. The government has said that copyright holders have the right to appeal an inadequate sentence to a board of grievances, but no information is ever given out about the cases. “I believe that will change,” Smith said. “Failure to do so would be a violation of Saudi Arabia’s WTO obligations.”
The IIPA had market information to back up its position. In addition to high piracy figures, the organization put forward the results of a recently completed survey called the “Fear Factor.” For the survey, interviews were done with 800 retail outlets, street vendors and others working in the pirate trade in Saudi Arabia. The questions were carefully designed to elicit whether or not those people who engaged in this criminal conduct felt that the penalties that were being imposed by the government were serious enough to deter them from selling pirated products. The results were astounding. No one surveyed felt any serious concerns at all in regards to committing piracy in the Kingdom. With fines averaging only SR10,000, no prison time and few deportations, the risks are nothing compared to the profits from selling pirated software and DVDs.
South Asians are most often the front men for the local trade in pirated products. Was this rich US organization suggesting that poor people trying to earn a meager living be sentenced to years in prison?
“I don’t think it will be poor South Asians who will be the first ones to go to prison,” Smith remarked sternly. “The people who will go to prison will be the people who are running major pirate operations in the Kingdom. These are people who make millions of dollars in this business. The government might go after the guys on the street, but they aren’t going to put a street vendor in prison. That’s not what we are asking for. Right now the most that happens to a street vendor is deportation or the imposition of a small fine. With street vendors you do have to make the penalties severe enough so that it will discourage people from staying in that business and they will look for a legitimate occupation.”
Advertisements aiming to inform the Saudi public about the piracy issue are appearing on satellite entertainment channels. Some of these ads discuss the religious ruling issued on the illegality of disregarding copyrights. Other announcements are more aggressive, emphasizing possible penalties for piracy. Smith had his own idea about the best method to get out the message that piracy is criminal behavior.
“I think one of the most effective ways of educating the public about these issues is to enforce the law. That hasn’t been happening at an adequate level within the Kingdom. As a result there have been a lot of people making a lot of money stealing the intellectual property of other people and it’s wrong,” he said.
The IIPA is recommending that Saudi Arabia increase the penalties for piracy to make a strong statement that the Kingdom will no longer tolerate such illegal trade within its borders.
“The maximum jail term in Saudi Arabia is six months, which is not a deterrent for somebody who is making SR50 million per year. The penalties here are among the lowest in the world,” Smith claimed. “In Indonesia the maximum jail term is eight years. In China it’s five years. Of course that is irrelevant unless the penalties are actually imposed and they are not in China. In Saudi Arabia no imprisonment penalty has ever been imposed either.”
While the IIPA was firmly pointing out the best use of the stick instead of the carrot, Smith was quick to mention that bringing down piracy could have benefits for the Kingdom.
“The message that I delivered to everyone I met during my visit here was that it is clearly in the interest of the Kingdom and its citizens to legalize the market for music, movies and software” Smith advised. “Local creators, local performers, local software developers can’t make a decent living in a situation where you have an over 50 percent piracy rate. Stopping piracy is going to help the Kingdom. This is going to help its reputation, which will aid in securing foreign direct investment, particularly in the IT sector.”
Benefits aside, the truth is that the Kingdom doesn’t have a choice but to begin a major crackdown on piracy. If those pirated DVDs don’t disappear and companies don’t start using licensed software, the consequences will be dire.
“If steps aren’t taken to bring down piracy, I think it will hurt investment. It will hurt the reputation of the Kingdom,” said Smith. “It could at the end of the day result in a WTO dispute settlement case. If penalties are not imposed at a deterrent level then Saudi Arabia will not be meeting the international obligations that it just signed.”
And that’s the scuttlebutt as we have it. Pirates, it looks like either you’ll have to toe the line or they’ll be keel hauling you in a wee minute.