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Obama Administration Releases Trade Report On Worst Copyright Offenders

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WASHINGTON – The Office of the United States Trade Representative (USTR) today released its “Special 301 Report,” an annual effort designed to highlight the inadequate copyright protection measures of U.S. trade partner nations.

“This report is an essential contribution to the ongoing efforts to better protect the rights of the global creative community,” said Neil Turkewitz, Executive Vice President, International, Recording Industry Association of America (RIAA).  “Through its commendable efforts, USTR helps raise awareness about the need for critical reforms that enhance our culture and promote economic development and employment.”

In its report, the USTR identified a variety of legal and enforcement deficiencies by which countries allow illegal services to operate. This has had devastating consequences in countries like Russia and China where services like vKontakte (Russia), Xunlei’s Gougou (China) and Sohu’s Sogou (China) effectively prevent the development of healthy competition in the provision of online music services.

“vKontakte, Gougou and Sogou each operate extremely well-known and popular unlicensed music services that permit their users to access, stream or download millions of illegal titles,” said Turkewitz.  “While they employ different techniques, the result is the same in each case—the stunting of the growth of legitimate online services unable to compete against this form of unfair competition.  Each of these services deliberately gain market share by providing access to copyrighted works without any form of licensing.”

ADDITIONAL BACKGROUND PERSPECTIVE ON THE USTR REPORT BELOW:

This has been an interesting year in the evolution of copyright protection, marked by both highs and lows. But there has been one constant even amidst the turmoil and sometimes acrimonious public debates—a steady evolution towards an understanding of the need for greater accountability in the online space, and a greater awareness of the economic and cultural importance of safeguarding the interests of the world's cultural sectors. While there may not yet be a consensus on the best means of achieving greater order in the online marketplace, there is increasingly little doubt that societies around the globe are demanding the application of laws in a technologically neutral manner, and are rejecting the notion that the internet can operate as a law-free zone. That is good news for creators around the world, and for promoting access to culture in ways that sustain cultural production.

The Special 301 Report is an important contributor to this evolution, and we express our great thanks to USTR and all of the agencies involved for their role in raising awareness of the need for critical reforms that enhance the sustainability of cultural production and promote economic development and employment. Thanks in great part to the work of the U.S. government over the past couple of decades, there are fewer and fewer places that are truly hospitable to piracy. This is not to suggest that the problems have been resolved, but it does reflect that for the most part, nations are principally engaged in a discussion about how to address piracy, and not whether they should do so. There is increasingly broad recognition that fueling creativity through the protection of objects of creativity is an essential component of a nation's ability to economically compete in the 21st century, and for sustaining cultural diversity. Even some of the countries that have languished the longest on the Special 301 Priority Watch List have undertaken efforts to improve the situation. China has adopted structural changes to enhance its ability to fight piracy, and has issued draft laws and regulations that will add important new tools to address online theft. Indian courts have protected the Indian market by blocking access to infringing sites, and we are witnessing real growth in the Indian music market. Even Russia has raised the need to address piracy and has floated some ideas about how to enhance the role of service providers in addressing the theft taking place over their platforms. And Canada appears poised, after many years, to finally adopt copyright amendments that will at least partially modernize their legal regime.

Against this backdrop, we do highlight a couple of key aspects of today’s report. China and Russia, notwithstanding the fact that there has been some progress, remain as two of the biggest IPR offenders in the world—places where piracy, and market access barriers in the case of China, thoroughly stunt the development of the music market. We are hopeful that changes to China's legal and regulatory structure will soon be adopted—particularly ensuring liability on the part of actors that induce or promote infringement, thereby preventing the operation of services based on providing access to infringing music like Xunlei’s Gougou and Sohu’s Sogou. But we also call on China to abandon certain market access barriers, including onerous and discriminatory censorship procedures that have no practical effect other than to ensure that Chinese society only has access to infringing content. And similarly in Russia, we highlight the importance of ensuring that proposed changes to the Civil Code provide no safe harbor to services like vKontakte who have been permitted to earn money by providing access to infringing materials for far too long.

We underscore USTR's concerns about lack of progress in Italy, and join their call for Italy to "adopt and implement the AGCOM regulations expeditiously," and to ensure that those regulations "create an effective mechanism against all types of copyright piracy over the Internet.”

Finally, let us comment quickly on two countries that were not placed on any lists in USTR’s Report today—Spain and Switzerland. These are countries on opposite trajectories. The Spanish market has been decimated by piracy over the past decade as the Spanish government bore silent witness to the desecration of its cultural heritage. The Spanish music industry was—or perhaps is—on the precipice of collapse. In one of its first official acts, the Rajoy administration brought into effect new procedures designed to address online piracy, and we salute the Spanish government for this important first step, and encourage them to employ these tools in the most robust fashion. On the other side of the coin is Switzerland which has thus far manifested little understanding of the gravity of the online piracy problem and no urgency in addressing the fact that there are few, if any, existing remedies. Hopefully this is a situation that will quickly be resolved.

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The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members are the music labels that comprise the most vibrant record industry in the world. RIAA® members create, manufacture and/or distribute approximately 85% of all legitimate recorded music produced and sold in the United States.

In support of this mission, the RIAA works to protect the intellectual property and First Amendment rights of artists and music labels; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies. The RIAA® also certifies Gold®, Platinum®, Multi- Platinum™ and Diamond sales awards as well as Los Premios De Oro y Platino™, an award celebrating Latin music sales.

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