GrayZone - Quarterly Digest - January-March 1998
Worldwide Update | Internet News
Quick Bits and Bytes
Rarotonga, Cook Islands
Although the video version of the blockbuster hit "Titanic" has not yet been released, the
epic movie has been available on cassette in the remote Cook Islands for the past four months
now. Pirated copies of the movie are a favorite at video outlets that brazenly deal in the
lucrative business of catering to viewers months before the authorized videos are released.
The tapes, usually of poor quality and imported from Fiji and Asia, are rented, when the
bootleggers can get away with it. The Cook Islands is party to international copyright
conventions and the Crown Law Office has finally completed drafting the Cook Islands
Copyright Bill and a Parliamentary Select Committee is now calling for public submissions.
(AFP/ClariNews, February 17, 1998 (Florence Syme-Buchanan)
Copyright Piracy Estimated To Cost U.S. Firms $10.8 Billion
Miami
Copyright piracy of music, books, movies and computer software cost U.S. industry an
estimated $10.8 billion in 1997 the International Intellectual Property Alliance (IIPA) said
recently. The organization listed 55 countries where it said piracy was a problem. In
recommendations to U.S. trade representative Charlene Barshefsky, it said Greece and Bulgaria
should be designated "Priority Foreign Countries" unless significant improvements in
enforcement were made by April 30. U.S. pressure had prodded China to clamp down on pirate CD
factories.
(Reuters - February 24, 1998)
A recent article in February's Allure magazine claims that counterfeit fashion accessories --
such as fake Prada shoes and phony Chanel purses -- are being flaunted by their chic and
often times wealthy owners. One wealthy upper east side Manhattan matron even went so far as
to say, "If you have one original thing, you're very comfortable buying the fake. You've
already proved the point." Despite this recent trend, the famous designers are still taking
the counterfeiters to court.
(Allure, February, 1998 - Lydia Forrest)
Third Quarter Busts
Canadian CD Plant Sued
Washington, D.C.
The RIAA recently filed a civil suit in the U.S. District Court, Central District of
California on behalf of its member companies against Americ Disc, one of the country's
largest commercial CD manufacturing plants, for allegedly pressing pirate discs. Salida-based
Americ Disc and its parent company, Disque Americ (a Canadian CD replication company near
Quebec) are being charged under U.S. and Canadian copyright laws. The RIAA is asking the
court for a permanent injunction and monetary damages to compensate members for infringement.
Based on the 75 titles in the current complaint, the RIAA is seeking a judgment of more than
$7 million.*
Audio Dynamix Seizure
Washington, D.C.
The Bergen County Prosecutors Office, with assistance from the RIAA, seized more than 20,000
alleged pirate CDs from Audio Dynamix, a CD brokerage company. The owners of Audio Dynamix,
husband and wife Ismat and Nevene Gayed, were arrested and charged with violating New
Jersey's True Name and Address Statute, a felony punishable by up to four years imprisonment
and a $250,000 fine.*
Internet Piracy
Washington, D.C.
Marc Ronald Fruchtman of Jeremiah's Record Exchange in Wilmington and Dewey Beach, Delaware
has been indicted for selling bootlegs on the Internet. He had previously been arrested at a
Maryland record convention for selling bootlegs.**
Washington, D.C.
Howie Horowitz, owner of Music Machine in Owings Hills, Maryland has been charged by
Baltimore County Police with 10 counts of violating Maryland's True Name and Address Statute
and the trial is pending. If convicted, potential penalties range from one year in prison and
$2,500 in fines per charge. Horowitz allegedly used trade publications and an Internet site
to conduct business. The Music Machine's search warrants led to the recovery of alleged
bootleg and counterfeit CDs and CD-Rs along with computers and assorted equipment allegedly
utilized to create and distribute product.**
Washington, D.C.
Norman Noplock of East Coast Digital in Baltimore County, Maryland has also been charged with
two counts of violating Maryland True Name and Address Statute by Baltimore County Police
after the raid on his Parkville business. During the raid the Police recovered alleged pirate
CD-Rs along with manufacturing equipment. His trial is pending. Penalties range from one year
in prison and a $2,500 fine per charge.**
(**RIAA Fast Tracks, February 10, 1998)
Artists Corner
Sinatra Gangs Up On Bootleggers
Hollywood
Frank Sinatra's attorney Robert A. Finkelstein confirmed to Daily Variety Senior Columnist
Army Archerd that he is fed up with Sinatra bootleggers and would be issuing a forceful
letter to record distributors and retailers who are "illegally" selling Sinatra's copyrighted
recordings. "We are extremely concerned about the proliferation of unauthorized Sinatra
recordings -- we have adopted a policy of zero tolerance," according to Finkelstein. The
concern is not only over piracy of pre-recorded records but also the sale of bootleg
recordings from live and televised performances. Mr. Finkelstein indicated that there are
over 80 retail outlets that have been illegally selling Sinatra, and he has the list. Swift
action will, no doubt, follow in the next few months.
(Daily Variety, February 3, 1998 - Army Archerd)
Simply Red Singer Asked to Join UK Music Task Force
London
Simply Red's Mick Hucknell has been asked by the British Prime Minister's Labor Party to join
a task force to help review government policy affecting England's music industry.
A discussion forum composed of prominent people in Britain's music scene including lyricist
Tim Rice, will, along with Hucknell team up with Chris Smith, Secretary for culture, media
and sport to monitor an industry that contributes more than $5 billion to the U.K. economy
and employs upward of 160,000 people.
(Reuters, January 14, 1998; Yahoo/Reuters, February 6, 1998 - Paul Majendie; So What Media
(Company Press Release), February 9, 1998)
Worldwide Update
Argentina could become the software
piracy capital of the world after its Supreme Court judges ruled that copying software is not a
criminal offense. According to studies by Price Waterhouse, about 70% of computer programs in
Argentina are pirated, costing software companies more than $160 million each year. The study
concluded that $68 out of ever $100 spent on software in Latin America goes to pirates.
(The London Times, February 11, 1998)
Asia
Asian Crisis Brings Boom Times For Music Pirates
Music piracy, which costs the global recording industry as much as $5 billion a year in lost
sales is rising quickly due to Asia's economic crisis. Apparently the currency devaluations
in Asia are acting as a catalyst for CD piracy in that region, according to an analyst with
Paine Webber Inc. For instance, a legitimate Madonna CD which may have sold for $20 in the
Hong Kong market before the crash, may now cost as much as $40, while a pirate copy of the
same CD will sell for just $12.
(Yahoo/Reuters, February 19, 1998 - Sue Zeidler)
Brazil
Brasilia
President Fernando Henrique Cardoso signed legislation in February that will dramatically
improve the copyright environment in that country. The legislation has been under consideration
for many months. The so-called "Software Law" makes computer software piracy a tax fraud crime
for which offenders can be jailed for a maximum of four years and fined up to 3,000 times the
value of the each illegal copy they produce. Another law on authorship rights covering music
and films will also bring Brazil into line with international copyright norms and put into
place new mechanisms for erasing piracy.
(Yahoo/Reuters, February 19, 1998 - Joelle Diderich; RIAA Fast Tracks, February 24, 1998)
China
Shanghai
Shanghai cinema's box office receipts plummeted 20% last year to their lowest level in 20 years
as people stayed home to watch pirated video compact discs (VCDs) rather than go out to the
movies, a newspaper reported recently. The report said nine out of 20 people interviewed
indicated they had not gone to the cinema at all last year. The interviewees said that there
were a lot of titles available on VCDs so they did not have to waste money going to the
movies.
(ClariNet/Agence France-Presse, February 6, 1998)
Beijing
As many as 32 Chinese factories that were turning out pirate CDs have converted to producing
legally approved goods, following a period of closure, according to the official Xinhua news
agency. Last year, the authorities closed 50 factories turning out pirated CDs, mostly in
Guangdong, Xinhua said. China has mounted an anti-piracy "winter campaign" to last until this
month. In January, Chinese media reported that more than five million pirated CDs had been
seized throughout the country during 1997.
(ClariNet/Agence France-Presse, February 3, 1998)
Paraguay
Washington, D.C.
The United States has accused Paraguay of failing to provide adequate protection against
copyright piracy and said it has launched an investigation that could lead to trade sanctions.
U.S. Trade Representative, Charlene Barshefsky, said in a statement that Paraguay had failed to
enact adequate and effective intellectual property laws. She also said Paraguay needed to take
more forceful action against counterfeiters and to police its borders. Enforcement has not been
good enough to stop rampant production and export of counterfeit goods, according to
Barshefsky. Paraguay is a major trans-shipment point for pirated goods to the rest of the
region.
(Yahoo/Reuters, February 18, 1998)
Russia
IFPI Director General Nic Garnett warned that Russia is in danger of becoming the next
world center for pirate CD production unless immediate action is taken by the Russian
authorities. According to Garnett, "We must do everything possible to prevent Russia becoming a
problem like Bulgaria and China, where overcapacity in CD manufacturing and poor enforcement of
copyright laws have created a pirate CD industry targeting markets worldwide. In Russia, this
can be avoided if we can eradicate local piracy and start building strong demand for legitimate
CD production." There has been a significant increase in anti-piracy activity in Russia. In
1997, action by the Russian enforcement bodies, assisted by IFPI, led to the seizure of 300,000
pirate cassettes, 800,000 CDs, 1,000 music CD-ROMs, 650,000 inlay cards and over 900 pieces of
professional recording equipment used for piracy with a value of over $4 million. In addition,
customs prevented over four million pirate CDs from being imported into Russia.
(IFPI Press Release, January 27, 1998)
United States
Sony Files Suit With Software Pirates
Hollywood
Sony Corporation's American electronic gaming division, Sony Computer Entertainment America,
filed several civil lawsuits against six separate alleged software counterfeiters. Sony
attorneys allege that the "pirates" engaged in illegal sales of cloned games for the hit
PlayStation gaming console, and the perpetrator's main avenue for sale was the Internet.
Billed as back-up copies, "these clones were sold to registered owners of PlayStation
consoles and games who could then give the duped copies to their friends," according to Sony
lawyers.
(Reuters/Variety, December 17, 1997 - John Voland)
Student Jailed For Photocopying $20 Bills
New York
A former Columbia University student was sentenced to 15 months in prison after pleading
guilty to counterfeiting $20 bills at the journalism school, according to the federal
prosecutor's office. Mary Jo White, U.S. Attorney for the Southern District of New York, said
in a statement that Clifford Evans, 26, was also sentenced to three years of supervised
probation after he admitted to participating in the scheme with friends and fellow students
at Columbia University. The group used a photocopy machine at the school to produce the fake
money.
(Yahoo/Reuters, February 10, 1998)
Vietnam
Hanoi
A senior Vietnamese official said recently that Hanoi was still awaiting a response from
Washington to its December ratification of a joint copyright accord. The U.S.-Vietnamese
copyright agreement was signed by Secretary of State Madeleine Albright in Hanoi last June 27.
Pirated films, CDs, books and computer software are widely available in communist Vietnam, and
to date the copyright agreement has had little impact. Much of the piracy was carried out by
state-owned firms, including those under the Ministry of Culture itself.
(Yahoo, December 5, 1997; Yahoo/Reuters, January 19, 1998 (Andy Soloman); Yahoo/Reuters,
February 3, 1998)
Internet News
Beck Albums Targeted By Internet Copyright Activists
Beck has been targeted by a group of activist re-mixers who are selling re-worked tracks from
his Odelay and Mellow Gold albums without his permission. The group, called rtmark, are
offering for sale a 13-track CD called Desconstructing Beck on their web site,
www.detritus.net. The group are devoted to what they term "subversion of restrictive
copyright laws." Their spokesman, Philo T. Farnsworth, say they targeted Beck "because he's
good, but still a product." The unofficial CD has resulted in a swift and angry response from
Beck's representatives. Brian McPherson, Beck's attorney, said what rtmark have done
basically amounts to theft. According to McPherson, "Bragging about copyright infringement is
incredibly stupid, you [rtmark] will be hearing from me..."
(NME.com, February 27, 1998 http://www.nme.com/newsdesk/)
Computer and Electronics Giants Reach Digital Anti-Piracy Pact
Los Angeles
Major consumer electronics companies have moved to prevent digital pirating of movies and
music on the Internet, easing fears in Hollywood about potential theft of its most valuable
offerings. In a breakthrough for the entertainment industry, Intel Corp., Sony Corp.,
Hitashi, Ltd., Matsushita Electric Industrial, Co. Ltd. and Toshiba Corp. announced a joint
encryption -- or encoding -- standard aimed at protecting digitally distributed music and
videos. Using various encryption techniques, the method would protect movies and music while
it is sent from companies to people's homes by scrambling the content making it impossible to
descramble without a particular software key.
(Yahoo/Reuters, February 19, 1998 - Sue Zeidler; Yahoo/Reuters, February 27, 1998 -
Christopher Stern)
Internet Music Licensing Trial
London
The Performing Rights Society (PRS) in England has announced a new framework for licensing
on-line music use, including the Internet. According to the PRS, which issues licenses for
the public consumption of all music in the U.K., anyone wanting to use music on the Internet
can now apply to it for an "On-line Trial License," which will be issued according to several
defined bands of music use. Licensees, which vary to the according to the level of use, range
from $85 to $1,700, officials claim. According to PRS officials, any use of copyright music
on the Internet always needs to be licensed by the writers and publishers of that music. For
further information the PRS' website is http://www.prs.co.uk/.
(Newsbytes News Network, December 3, 1997)