APPENDIX MOTION PICTURE PIRACY ESTIMATION METHODOLOGY

APPENDIX

MOTION PICTURE PIRACY ESTIMATION METHODOLOGY

IIPA Methodology

1. 
   For developed markets:
   

1. 
   The number of stores that rent pirate videos and the number of shops and vendors that sell videos are multiplied by the average number of pirate videos rented or sold per shop or vendor each year.
   
2. 
   The resulting total number of pirate videos sold and rented each year in the country is then multiplied by the percent of those pirate videos that would have been sold or rented legitimately and adjusted to reflect the US producer’s share of the market.
   

Total pirate videos sold/rented = # of stores/shops that sell and rent pirate videos * ave. # of pirate videos rented/sold per shop each year

2. 
   For partially developed markets:
   
   1. 
      The number of legitimate videos sold or rented in the country each year is subtracted from the estimated total number of videos sold or rented in the country annually to estimate the number of pirate videos sold or rented annually in the country.
      
   2. 
      The resulting total number of pirate videos sold and rented each year in the country is then multiplied by the percent of those pirate videos that would have been sold or rented legitimately and adjusted to reflect the US producer’s share of the market.
      

Total pirate videos sold/rented = estimated total # of videos sold/rented  # of legitimate videos sold/rented

3. 
   For fully pirate markets:
   

IPC VIDEO PIRACY ESTIMATION METHODOLOGY

National Statistics Office data (1994) on the Proportion of HH by Ownership of Radio, TV, VCR, and PC

1. 
   Determine the growth in sales of VHS, VCD player, and DVD players and PCs
   
2. 
   Determine the frequency of movie patronage of Filipinos (either per day/month/year)
   
3. 
   Determine the number of units of videos and VCDs sold/rented per year
   
4. 
   Determine the Total Revenue from video sales
   

Formula:
General Concept:
Demand = Supply
Demand  Supply = Undersupply
Excess demand will be supplied by the underground economy (pirated videos)

Where:
Base year_t – % of # of HH owning VCRs and PCs at year t

VCR (and other appliances used for video viewing) and PC Ownership_x = Number of HH with VCRs and PCs at year x = (t+1)
DEMAND_V,x – demand for film videos (V) at year x = (t+1)
SUPPLY_V,x – units of videos/VCDs sold at year t+1

Formula:
VCR = (Base year_t * Total # of HH_t) + Total number of appliances for video viewing sold
PC Ownership_{x =} Number of Installed PCs
VCR and PC Ownership₁₉₉₅ = (% of HH owning VCRs and PCs at year 1994) + number of VCRs sold (in units)₁₉₉₅ + Number of Installed PCs
DEMAND_V,x = VCR and PC Ownership_x * frequency of movie patronage at year t+1
Total Pirated Movies = DEMAND_{V,x } SUPPLY_V,x
Piracy Rate = (Total Pirate Movies/ DEMAND_V,x) * 100

MUSIC/RECORDING PIRACY

IIPA METHODOLOGY

The RIIA generally bases its estimates on local surveys of the market conditions in each country. The numbers produced by the music industry generally reflect the value of sales of pirate product rather than industry losses, and therefore undervalue the real harm to the interests of record companies, music publishers, performers, musicians, songwriters, and composers.
Where RIIA has sufficient information relating to known manufacture of pirate recordings that emanate from a third country, this loss data will be included in the loss number fro the country of manufacture rather than the country of sale.
In certain instances appropriate, RIAA employs economic data to project the likely import or sale of legitimate sound recordings, rather than merely reporting pirate sales. In these instances, projected unit displacement is multiplied by the wholesale price of legitimate articles in that market rather than the retail price of the pirate goods.
IPC METHODOLOGY
General Concept:
Demand = Supply
Demand  Supply = Undersupply

Given : TR = R^L + R^P

Where: R^L - Revenue of Legitimate activity; R^P – revenue of piracy
R^P = TR - R^L
(R^P / TR) * 100 = piracy rate

1 “Intellectual Property and Economic Growth with Special Attention to Copyright and Related Rights”. Lecture prepared by Dr. Mihaly Fiscor, Director, Center for Information Technology and Intellectual Property (CITIP), Budapest for the WIPO-ESCWA Arab Regional Conference on Recent Developments in the Field of Intellectual Property, Beirut, May 5 and 6, 2003.

2 Such studies include: 1) “The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer” by Keith E. Maskus which was prepared for the Conference entitled: Public-Private Initiatives After TRIPS: Designing a Global Agenda, Brussels, July 16-19, 1997; 2) “Composition of Foreign Direct Investment and Protection of Intellectual Property Rights: Evidence from Transition Economies by Beata K. Smarzynska, World Bank, 2002; 3) “How Strongner Protection of Intellectual Property Rights Affects International Trade Flows by Carsten Fink and Carlos A. Primo Braga.

3 For more information on the WIPO, visit www.wipo.org

4 The Special 301 Report addresses significant concerns with respect to its trading partners, which includes the Philippines. The report notes that the United States will consider all options, including but not limited to initiation of dispute settlement consultations with countries that do not appear to have implemented fully their obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

5 The Philippines Standard Classification (PSIC) is a classification of all economic activities in the country. It was developed for use in the classification of establishments according to the type of economic activity they are engaged in. It is intended to serve as a framework in the collection, compilation, and analysis of data on economic activities to secure uniformity and comparability of statistics presented by various government and private agencies.

6 This sub-sector includes software development, application and system software services, web designs, database designs, and computer animation.

7 Table 1 data is on cumulative number of establishments. Accordingly the observed increase of establishments in 2002 may have occurred particularly in 2000 and to some extent 2001, and this is consistent with the observed rise in new IT investments in those years, respectively. Table 1 doesn’t have any information about the increase of the number of establishments between 2001 and 2002. It is possible that rise in number of establishments from 2001 and 2002 would have also declined compared to that in 1999 to 2000 and 2000 to 2001.

8 The source of information is Ms. Emma Teodoro, Philippine Software Industry Association.

9 Software and Related IT Services investments are accounted in the IT Services Classification

10 Other IT Services Subsector includes Data Processing and Conversion, Medical Transcription Services, Business Process Outsourcing and the like.

11 BETP Information Technology Services Profile at www.tradelinephil.dti.gov.ph/betp

12 “Filipino IT Workers Rank High in Survey”. Philippine Daily Inquirer, June 1, 2002.

13 BETP Information Technology Services Profile at www.tradelinephil.dti.gov.ph/betp

14 Knowledge jobs and information based jobs are related to information, communications and/or engineering, with an increasing need for qualified senior management.

15The factors that comprise the GNEI are organized into the following categories: Knowledge Jobs, Globalization, Economic Dynamism and Competition, Transformation to a Digital Economy, and Technological Innovation Capacity. For more information, visit www.forecastcenter.com/public/guest/GNEI.htm

16 The availability of engineers in a country’s labor market.

17 The availability of qualified information technology workers in a country’s labor market.

18 The availability of competent senior managers in a country’s labor market.

19 The 2003 GITEI measures the technological, sophistical and global integration of 48 nations based upon the following six indicators: Knowledge Jobs, Globalization, Enterprise Dynamism and Competition, Transformation to a Digital Economy, Technological Innovation Capacity, and Visionary Government. The overall GITEI ranking is based upon a weighted value of a nation’s combined scores in each indicator. It is also considered to represent an important measure of the economic strength, technological capabilities, and the ability and commitment of the national leadership to promote technological advancement and global economic engagement for each of the 48 countries under consideration.

20 Percent of total bachelor’s degrees awarded in science and engineering.

21 Does/not meet the needs of a competitive economy.

22 Estimates were based on the regression analysis with sales/revenues as the independent variable used to project the level of employment. Detailed employment estimation methodology is presented in the Appendix.

23 Intellectual Property Code of the Philippines in 1998

24 Ramos, G., “Piracy talk With Philippines’, October 28, 1999. Posted in www.cw.com.hk

25 As the software piracy rate in the country declines, the level of new investments in the software sector rises, and vise-versa.

26 Correlation is an analysis tool that is used to determine whether two ranges of data move together; 1) whether large values of one set are associated with large values of the other (positive correlation), 2) or whether small values of one set are associated with large values of the other (negative correlation), or 3) whether values in both sets are unrelated (correlation near zero). A perfect direct relationship produces a correlation co-efficient of +1.00; a perfect inverse relationship produces an r of -1.00. A co-efficient of 0 means there is no relationship at all between the two variables.

27 Release of the piracy rate estimates has a one year lag. Current year's investment decisions will be based on previous year's piracy estimates.

28 Includes all three subsectors namely: Software Development and Service, Call Center and Related Communication Services, and Other IT Services. Includes all three subsectors namely: Software Development and Service, Call Center and Related Communication Services, and Other IT Services.

29 “The Critical Role of the Software Industry in Economic Growth: Focus: Mexico” by Sallstrom and Damuth, 2003.

30 Correa, C. “Bilateral Investment Agreements: Agents of New global Standards for the Protection of Intellectual Property Rights?” August 2004 in http://www.grain.org/briefings/?id=186.

31 IPR protection in this framework is reflected by the level of software piracy in the country, as estimated by the Business Software Alliance. The higher the piracy rate, the less is the perceived IPR protection in the IT industry.

32 Optical Media Bill, House Bill 5225 and Senate Bill 2586

33 Economic Indicators Publication (December Issues 1997, 1998, 1999, 2000, 2001, 2002, 2003)

34 The Intellectual Property Coalition is an organization in the Philippines composed by private IP stake-holders.

35 2003 piracy rate was an estimate by PARI.

36 The International Intellectual Property Alliance (IIPA) is a private sector coalition that represents the U.S. copyright based industries that calculate piracy levels in various countries.

37 Eduardo D. Sazon is the Executive Director of the Association of Video Distributors of the Philippines (AVIDPHIL) , a national trade association devoted to the promotion and advancement of the nation’s video industry. He is also the Vice-Chairman of the Intellectual Property Coalition.

38 The Intellectual Property Coalition is an organization in the Philippines composed by private IP stake-holders.

39 The International Intellectual Property Alliance (IIPA) is a private sector coalition that represents the U.S. copyright based industries that calculate piracy levels in various countries.

40 The two piracy estimates are not comparable for in the IPC figures only cover piracy in video, while the IIPA estimates the piracy in the entire motion picture business, including video, television and cable, and public performance.

41 Identified cornerstones of IPR protection during the Anti-Piracy Action Planning Workshop in 2001. The main product of the workshop was the Strategic Action Plan to Strengthen Public Awareness and Enforcement of IPRs which was presented to Executive Secretary Alberto Romulo.

42 “Intellectual Property Rights in the Philippines: Brief Background”. Chan Robles Virtual Law Library.

43 Ibid.

44 Intellectual Property Office (IPO) Office Order No. 13, Series of 2002

45 Southeast Asia Regional Initiatives for Community Empowerment (SEARICE) Primer, as cited by Basilio, Robert JA, Jr. , June 24, 2002. www.cyberdyaryo.com

46 A.M. - Administrative Matter

47 R.A. – Republic Act

48 The WTO-TRIPS Agreement is the most detailed and comprehensive multilateral agreement on intellectual property to date, which sets the minimum standards for IP protection among counties.

49 Ordinance 2003-092, entitled "An Ordinance Imposing Penalties Upon Persons and Establishments for the Sale, Rental, Transfer, Distribution, Manufacture and/or Production of Counterfeit or Fake Goods, Articles, and for Other Purposes".

50 Information lifted from the IPO General Information Brochure.

51 However, the PIAC-IPR was abolished in 2002 through the Executive Order No. 72.

52 IAC-IPR 1999 Executive Summary; The IPR enforcement activities of the mentioned agencies need a filed complaint (filed to the DOJ) from the IP stake-holder/s before they are executed. Hence, their raids are carried out with search warrants.

53 The VRB had been abolished with the enactment of the Optical Media Act of 2003. The agency’s activities and responsibilities are now carried out by the Optical Media Board (OMB).

54 With the abolition of the PIAC-IPR in 2002, data collection of government enforcement activities had been done in a per agency basis.

55 Flow chart has been formulated based on personal interviews with IPR lawyers. Consequently, succeeding discussions are also based on the said interviews.

56 Customs Special Order 19-2003 that transformed the Interim IPR unit to a Permanent Intellectual Property Unit

57 Correlation is an analysis tool that is used to determine whether two ranges of data move together; 1) whether large values of one set are associated with large values of the other (positive correlation), 2) or whether small values of one set are associated with large values of the other (negative correlation), or 3) whether values in both sets are unrelated (correlation near zero). A perfect direct relationship produces a correlation co-efficient of +1.00; a perfect inverse relationship produces an r of -1.00. A co-efficient of 0 means there is no relationship at all between the two variables.

58 Ibid

59 The Intellectual Property Coalition will be discussed extensively in the succeeding sections of the report.

60 Executive Order No. 72 that abolished the Presidential Inter-Agency Committee on Intellectual Property Rights (PIAC-IPR).

61 Lifted from the IPC Brochure.

62 Ibid

63 As mentioned earlier, this is also a part of the IPREAP activities, though the main mover of the endeavor is the IPC. It should be noted that the IPC has been an active participant in the “2003 IP Campaign Caravan”, and has involved itself in the conduct of the seminars in all the cities visited.

64 For more information on the BSA Philippines, visit www.bsa.org/philippines

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