Strict monitoring by corporate users of compliance with, rather than government

Report looks at Philippines software piracy

Strict monitoring by corporate users of compliance with, rather than government’s enforcement of intellectual property laws, could be a better method of curbing software piracy in The Philippines, according to a report by local private sector-led group IP Coalition.

The report, the first in a series of studies the IP Coalition intends to publish, profiled the level of piracy in three industries most affected by copyright infringement: information technology (software development, in particular), the music and movie industries.

The report made a correlation between existing statistics on software piracy in the Philippines and the level of foreign investments in the country in the past six to seven years.

The IP Coalition presented the report in a gathering attended by representatives from various industry groups. A copy of the report was also submitted to the Office of the President through senior deputy executive secretary Waldo Flores.

In his presentation of the report, lawyer Teodoro Kalaw IV, IP Coalition’s secretary-general, noted the inverse correlation between the level of piracy and the total amount of investments in the local IT and IT-enabled services sectors.

Based on figures from the Board of Investments (BOI), total new IT investments rose steadily from 1998 until 2001 when it peaked to more than P10.9 billion. Total investments, however, declined rapidly in the next two years, falling to just P1.4 billion in 2003 (the latest figure available).

Meanwhile, the software piracy rate in the Philippines declined from 92 per cent in 1996 to an all-time low of 61 per cent in 2000, according to the annual global software piracy study conducted by the Business Software Alliance (BSA).

However, the piracy rate rose steadily thereafter and the Philippines recorded a 72 per cent piracy rate in 2003. Thus, the report concluded that there is a “high correlation” between piracy and IT investments, and noted that as the software piracy rate increases, the level of investments in the IT sector decreases.

Similarly, the report stated that the level of employment in the IT sector rose when piracy rates declined. In 2001, when the IT sector reported its highest investment figure ever, the industry generated more than 12,000 new jobs.

“Statistics also show that total new IT investments declined in the last three years even though there was a growing business in the IT sector as indicated by the increase in the number new businesses,” Kalaw added.

He specifically pointed to period between 1999 and 2002 when the total number of businesses engaged in software development rose significantly from 99 to 523 companies.

During the same period, the number of local companies engaged in database activities also increased from 120 to 401 companies, according to figures from the Securities and Exchange Commission (SEC). Monitoring

The report prescribed monitoring software use among corporate users as a better alternative to law enforcement action by the government.

“Monitoring here refers to users voluntarily complying and reporting their use of software,” Kalaw said.

The report likewise noted an inverse relationship between monitoring activities and piracy as it stated that as the number of monitored firms for IPR (intellectual property rights) violations increased, software piracy rates declined.

According to the report, the number of monitored firms rose from 1,000 to about 1,500 from 1998 to 2000.

On the other hand, the report said there “appears no discernible relationship between apprehension activities, such as search warrant enforcement actions, and the piracy rate.”

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