A pirated copy of Microsoft Windows Vista for sale in Hong Kong. Mike Clarke / AFP
A pirated copy of Microsoft Windows Vista for sale in Hong Kong. Mike Clarke / AFP
A pirated copy of Microsoft Windows Vista for sale in Hong Kong. Mike Clarke / AFP
A pirated copy of Microsoft Windows Vista for sale in Hong Kong. Mike Clarke / AFP

Where piracy pays off with no guns in sight


Daniel Bardsley
  • English
  • Arabic

While the perilous waters off Somalia often grab the headlines when bandits seize a ship or a dramatic rescue is made, there is another form of piracy that attracts less attention but has economic effects that are anything but trivial.

Software piracy is thought to cost manufacturers more than US$50 billion (Dh183.64bn) a year worldwide, of which more than $600 million is accounted for by the Gulf, with more than two thirds of copies of software being illegal in some parts of the region.

While the UAE ranks lowest in the Gulf in the rate of software piracy, at an estimated 36 per cent, according to 2009 figures from the Business Software Alliance (BSA), the losses in the country still add up to $155m annually.

That figure pales when compared with the number for China, where in the same year the commercial value of illegally copied software was estimated at $7.6bn, thanks to a piracy rate estimated to be 79 per cent.

The issue was even raised during the recent visit to the US by Hu Jintao, the Chinese president. Microsoft's chief executive, Steve Ballmer, told the Chinese president the piracy rate for his company's software in the world's most populous country was as high as 90 per cent.

Given that pirated versions of Microsoft products are openly sold on the streets of the Chinese capital, it is tempting to wonder whether even Mr Ballmer's figure is an underestimate.

Microsoft has tried to reduce software piracy by introducing to China in 2008 its controversial "Windows genuine advantage" system, which causes the desktop backgrounds of PCs running certain types of pirated operating systems to go black.

Legislators in the world's most populous nation have also been busy tackling counterfeiters. But although there is no lack of legal sanction in China against piracy, the BSA says the problem is that enforcement is inadequate.

Piracy is "very common and the situation is not getting much better", says Peter Lu, the managing partner of the Beijing company China IntelliConsulting. "People are not ashamed of using pirated software. The Chinese government, maybe they are determined to stop pirated software, but I think it will be years to actually achieve something."

Combating piracy is a formidable task in a country where fakery dates back to at least the fifth century, when fraudsters used various techniques to make Chinese calligraphy look older than it was.

In the present day, copying can be seen in a wide range of products including cars produced by some Chinese manufacturers and the fake North Face waterproof jackets freely on sale in clothes markets.

"Certainly textiles and clothing is a big one, but that's just the consumer side because we can see it," says Bryan Mercurio, a professor in the faculty of law at the Chinese University of Hong Kong, whose interests include intellectual property rights.

"Car parts are another big one that the consumer doesn't see and that's because you don't necessarily know they are fake. They violate [intellectual property] but also health and safety."

While it faces an uphill task, the Chinese government insists it is serious about cracking down on violations of intellectual property rights, in particular those involving pirated software.

Late last year, the ministry of finance announced that software bought by government departments would be counted as fixed assets, making it subject to annual checks by the offices of the State Council, the country's cabinet. This, the authorities hope, will curtail the widespread use of counterfeit software by the public sector.

China's state intellectual property office has stepped up the campaign by saying inspections to detect pirated software would be carried out in central government offices this month and next month, while local governments will come under the spotlight in May and June.

Already, in a pilot scheme, the authorities in Qingdao, a coastal city in Shandong province south-east of Beijing, are reported by state media to have spent tens of millions of yuan on more than 15,000 items of licensed software, most of it made by Microsoft.

Another government agency, the ministry of public security, has been highlighting intellectual property violations, with its economic crimes department announcing this month that 4,000 people had been arrested since a clampdown was launched in October.

Some observers have said licensed software, while affordable in developed countries, is too expensive in nations such as China, where per capita incomes are much lower.

As a result, it has been argued that confronting the issues requires greater efforts to promote the development and sale of software from Chinese manufacturers, in the hope this will be more affordable in China.

However, the BSA has said software innovation in the Asia-Pacific region is stifled by the prevalence of piracy. Companies are less willing to invest in developing products if they know most of their potential revenue is going to be siphoned off by counterfeiters.

Prof Mercurio believes, in the short term at least, the authorities will not make much headway against software piracy.

"These actions are more for show," he says of the various government initiatives, although he believes stopping the use of pirated software in government departments is a realistic goal.

"But for the population at large, that's incredibly difficult," he says.

THE BIO

Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.

Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.

Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.

Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.

 

 

What are NFTs?

Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.

You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”

However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.

This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”

This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.

Countries recognising Palestine

France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra

 

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Name: Peter Dicce

Title: Assistant dean of students and director of athletics

Favourite sport: soccer

Favourite team: Bayern Munich

Favourite player: Franz Beckenbauer

Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates 

 

'Shakuntala Devi'

Starring: Vidya Balan, Sanya Malhotra

Director: Anu Menon

Rating: Three out of five stars

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