The Predatory Effects of Copyright Piracy

Developing countries are often considered non-stakeholders in effective copyright enforcement because they have not built up robust copyright industries, and copyright piracy therein mostly targets the works of foreign copyright owners. It is also argued that, while copyright piracy mainly undermines the incentive to produce and the ability to compete on the part of foreign firms, local firms might actually have a competitive edge and be able to enjoy a healthier growth. Although various international treaties such as the Berne Convention and the TRIPS Agreement have harmonized national copyright laws at a rather high level, many developing countries regard such legislative initiatives only as a trade-off in international trade negotiations. In exchange for stronger copyright protection to secure export markets for intellectual products from developed countries, developing countries receive lower tariffs on their own exported products such as textile and agriculture.It turns out that multinational firms, which hold dominant positions in the copyright market, are not in a hurry either to enforce their copyrights against piracy in developing countries. Bill Gates once indicated that “although about 3 million computers get sold every year in China, people don't pay for the software. Someday they will, though. As long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade.”This article argues that, contrary to conventional wisdom, piracy of foreign works often poses a threat to the livelihood of domestic firms in a more formidable way than to foreign firms. Furthermore, unwarranted toleration of copyright piracy will likely drive small domestic developers out of the market, erect entry barriers, and eventually enhance the market power of multinational firms. To this extent, dominant firms may have the tendency to strategically acquiesce or even encourage copyright piracy, which could have significant anticompetitive effects in the same way as predatory pricing does