Pirates Block Path to WTO Entry

Just below the growling Russian baritone you can make out the fluting tones of a Hollywood starlet. The picture seems the wrong size for the screen. And surely the cast members aren't supposed to have that greenish hue?

You get what you pay for, sir.

In Russia's flourishing bootleg industry, the latest films, tunes and games are all for sale just days after their release and all at knock-down prices.

But without quality guarantees.

"Spider-Man," "Star Wars -- Attack of the Clones," and every other Hollywood blockbuster around are hawked as videos and DVDs on street corners and in metro stations across Moscow, alongside pirated CDs and cassettes, business software and computer games. And at the Gorbushka market, pirated goods can be found alongside their genuine, licensed counterparts.

Copyright piracy in Russia is rampant, socially acceptable and often run by highly organized crime syndicates.

"I can't think of any other crime [whose product] is available openly at a market in the city center without the authorities doing anything about it," John Kennedy, president and chief operating officer of Universal Music International, said during a visit to Moscow.

Russia is one of 15 countries on the United States' 2002 Priority Watch List of states believed to have problems with intellectual property protection.

The International Intellectual Property Alliance, a U.S. pressure group, estimates that Russia's total trade losses resulting from copyright piracy in 2001 were $849 million, up from $637 million in 2000.

Trade losses aside, the lack of laws to stop copyright piracy is a major hurdle to Russia's bid to join the World Trade Organization, which it hopes to do next year after a decade of negotiations.

According to the IIPA 2002 report, piracy in Russia accounts for 64 percent of the music industry, 80 percent of films, 83 percent of business software and 90 percent of entertainment software.

Its runaway pace is both cultural and legal.

In a country where the average wage is around $100 per month and Western consumer goods are highly desirable, the price gulf between "real" and pirate versions of software, music or films is a significant factor.

"When I told my children I was looking for a video in a shop, they told me I was mad. They said: 'Why pay all that money when everyone else buys copies?'" said Marina, a university teacher in Moscow.

Pirate videos cost between 180 to 200 rubles ($5.75 to $6.39), about a third of the price of a newly released original.

And the advent of DVDs now means that poor picture quality is becoming less of an issue as perfect copies can now be pressed from the original. And some pirates are even dispensing with the bad, monotone dubbing until now typical of illegal copies.

IIPA says Russia's capacity for optical media piracy -- music CDs, videogames, video CDs and DVDs -- continued to grow in 2001, partly as a result of production plants migrating from neighboring Ukraine as it tried to crack down on the industry under pressure from the United States.

Some 17 optical media plants are now active in Russia, churning out at least 150 million units per year.

Industry officials say Russia's biggest weakness in the war on piracy is its largely toothless legislation protecting intellectual property, as well as a failure to enforce existing laws.

"Russia's laws for protecting intellectual property are weak, they lack strong criminal sanctions and are not well enforced," said Universal's Kennedy.

"Active steps have to be taken by the state to draw up laws and make these laws work," said Microsoft representative Yevgeny Danilov.

The IIPA says WTO accession by 2003 will require a major legislative push by Russia to toughen its anti-piracy laws.

"The most significant problem in Russia continues to be the lack of deterrence in the criminal justice system, with low penalties meted out and currently only a small number of jail sentences for piracy," the IIPA report says.

Jason Berman, chairman and CEO of the International Federation of the Phonographic Industry, said in Moscow that changes to intellectual property laws are vital for Russia to prove to the world that it really is tackling piracy.

The IFPI, which works to combat music piracy, estimates that two out of three recordings in Russia are pirated.

"We believe Russia is serious about joining the WTO, and in order to fulfill its obligations for membership, it will have to make changes to its laws and to the way its laws are enforced," Berman said.

Universal's Kennedy said police evidence showed that most pirates in Russia belonged to organized crime groups with links to the full range of criminal activities from money laundering and pornography to prostitution and "even terrorism."