Leading State Economic Development Organization Joins the Fight for PROTECT IP

by Vans Stevenson 07/25/2011 08:43 (UTC-08:00) Pacific Time (US & Canada)

Earlier this month, the State International Development Organization (SIDO) sent a letter to the Senate in support of the PROTECT IP Act, the bill crafted to fight foreign rogue websites that traffic in counterfeit goods and stolen films and music.  SIDO is the premiere U.S. organization dedicated to supporting state international trade agencies and is the only national organization focused exclusively on state international trade development.  

“As part of the President’s National Export Initiative, U.S. small and medium-sized exporters (SMEs) are charged with the lofty task of doubling America’s exports by 2015,” SIDO’s leaders wrote. “As such, it becomes increasingly important to identify threats and strengthen enforcement against intellectual property (IP) theft and other harmful practices abroad and that negatively impact American exporters. Criminals have turned to the Internet, abusing its virtually unlimited distribution opportunities to expand their illicit activities.”

As an important vehicle for economic development in the states, SIDO has a first-hand understanding of the importance of protecting legitimate channels of trade by confronting foreign based rogue sites that would rob Americans of jobs and states of revenue.  We commend them and look forward to working with them to get this critical bill passed.

The Enduring Legacy of Harry Potter

by Jordan Aluise 07/21/2011 12:05 (UTC-08:00) Pacific Time (US & Canada)

After Harry Potter and the Deathly Hallows: Part 2 premiered at 12:01 on July 15th, 2011 people across the nation, or better yet, across the world, were saying it was “the end of an era.” After fourteen great years of reading J.K Rowling’s fictional world of wizards and witchcraft, and of watching her story translated into some of the highest grossing films of all time, audiences everywhere have been captivated by this story.

"It was everything you could want to cap off, in our lifetime, one of the greatest film sagas ever that I've experienced," one man gushed to MTV.

 “In a way it’s like my childhood is ending, but whenever I miss it I can always pick up one of the books or watch one of the movies and it brings up all the memories from growing up,” said Val Irigoyen from Chicago.

"You have it pictured one way in your mind, but then seeing it on the screen, just seeing how the directors bring it out, and so far, I've been very pleased," announced filmgoer Bill Croft from Augusta, Georgia.

"Even though I have all of the books and know the ending, Harry Potter doesn't seem over until this movie comes out," explained Amanda from Worchester State University.

This type of reaction from viewers is what every filmmaker hopes for. In many ways, the Harry Potter films are a terrific example of what’s best about the world of the movies - the ability to capture the hearts and imaginations of diehard fans of the book and Potter novices alike, to bring beloved characters and places to life, to unite dazzling special effects with a story driven by relationships and emotional power, and undoubtedly, to bring down the curtain with all of us wanting more.

Even though the Harry Potter film franchise has come to an end, its unforgettable story will never leave us. We’re sure these timeless movies will be watched over and over again, just as the books that started it all will be read and beloved, for generations to come. As Harry Potter creator J.K Rowling once said, “The stories we love best do live in us forever.” Harry Potter is definitely one of those stories.

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Discovery Institute Defends PROTECT IP Act

by Howard Gantman 07/20/2011 13:05 (UTC-08:00) Pacific Time (US & Canada)

The Discovery Institute’s Technology & Democracy Project acknowledged the true economic cost of content theft and defended the approach taken by the PROTECT IP Act in a great article published yesterday by Senior Fellow Hance Haney.

Commenting on content theft’s drain on the U.S. economy, Haney said:

“The fake goods deprive U.S. intellectual property rights holders of billions of dollars per year, many believe. Since the income they would have earned will never be taxed, nor can it be used for investments in new capacity and to expand employment, their economic losses affect all of us.”

On the misdirected focus of Protect IP’s critics, Haney continued:

“So far, many commentators seem to be focusing not on the jobs this bill could create or save throughout the nation's economy, but on how it might impact an Internet culture that wants to believe Internet content ought to be free. Of course the Internet reduces transaction and distribution costs. The Internet places downward pressure on the prices for many products and services. But nothing is free. There are laws of economics just as there are laws of physics.”

Rebutting detractors of the bill, Haney reiterated what the bill would actually do and deflated allegations one-by-one, concluding:

“The PROTECT IP Act is not a nefarious piece of special interest legislation. The unanimous vote in the Senate Judiciary Committee last year reflects the fact that better enforcement of intellectual property rights is in the national interest, particularly during a period of high unemployment. Ultimately, the PROTECT IP Act is about protecting jobs and private investors.”

We agree, and hope to refocus the debate over PROTECT IP on the important economic issues at stake: American jobs, the future of creative investments, and the U.S. knowledge-based economy.

L.A. Times Writer Mischaracterizes LAEDC Study, Ignores Well-Researched Findings

by Vans Stevenson 07/20/2011 12:37 (UTC-08:00) Pacific Time (US & Canada)

Michael Hiltzik, generally speaking, is one of the more thoughtful opinion writers on staff at the Los Angeles Times, but his latest missive, which takes issue with a recent report on California’s film production tax credit prepared by the Los Angeles Economic Development Corporation (LAEDC) and sponsored by the MPAA, needs a reality check. 

First, some context.  We asked the LAEDC, a highly respected, decades-old think tank whose policy and economic expertise has been relied upon by government agencies, educational institutions, and businesses for many years, to analyze whether the production tax credit enacted by the California legislature in 2009 and signed into law by Governor Arnold Schwarzenegger was producing a benefit to the economy, the workforce and government. 

In keeping with its reputation for rigorous, high-quality research, LAEDC employed the IMPLAN economic impact modeling system, a respected and widely-accepted methodology for local economic analysis.

Based on this analysis, LAEDC found that the production tax credit program is a pretty good deal for California: The first $200 million spent by the state (discounted to $198.8 million) generated more than $1.5 billion in production spending and more than $3.8 billion in total economic output.  Even more importantly, it generated over 20,000 jobs. 

The program is not a subsidy of motion picture and television production –  in fact, it generates a POSITIVE return on the state’s investment:  for every $1.00 the state invests in qualified motion picture and television projects, state and local government get $1.13 back.  If Mr. Hiltzik’s question is whether that’s a good use of taxpayer funds, that kind of return on investment should be a pretty convincing answer.  Indeed, the study’s conclusions are very conservative; LAEDC did NOT include tourist related follow-on economic activity, nor did it include capital expenditures by entertainment companies.  So actual economic benefits to California from supporting film production could be even greater.

Unfortunately, Mr. Hiltzik’s column didn’t provide any evidence that LAEDC’s results were incorrect.  Instead, he took shots at the integrity of the researchers.  That doesn’t feel like a productive contribution to the discussion, to us.

As with any public policy program, it’s always possible that the production tax credit could be improved.  While LAEDC’s job was not to make recommendations on how to do that – perhaps the Times could assist LAEDC with resources to undertake such a study – the researchers did analyze two types of production that are ineligible for the production tax credit: large budget feature films and network television series. LAEDC found both types of productions would return a positive investment for state and local government.

It’s also worth noting that this year, in the face of steep budget deficits, many states have sustained and in many cases, improved and enhanced their production incentives, finding them to be sound investments in jobs and economic development, including, Pennsylvania, Oregon, Wisconsin, Ohio, Georgia, South Carolina, North Carolina, Rhode Island, Connecticut, New Mexico, and Massachusetts. 

It’s disappointing that Mr. Hiltzik seems so eager to discount a solid, well-researched report by a highly reputable group of researchers.  And it’s a shame for California’s economy and the talented industry workers struggling to do their jobs closer to home that he can’t see the benefit in this modest and cost-effective program.

Independent Filmmaker Shares His Take on the Impact of Content Theft

by Jordan Aluise 07/20/2011 09:19 (UTC-08:00) Pacific Time (US & Canada)

We listened to a great podcast today with Jason Stall, an independent filmmaker who talked with Music Technology Policy’s Chris Castle about his recent documentary, Blood Into Wine, and how content theft has affected his work and the commercial success of his films.

After talking briefly about what went into creating Blood Into Wine, a documentary about Maynard James Keenan, a singer turned successful winemaker, Castle got right down to business, bluntly asking Stall, “When you released the picture, was it pirated?”

Stall laughed before he replied with the inevitable yes: “I wish I was more shocked but even during the time we were screening it in the theaters, a copy that had been signed for and everything else had made it out before we were even done with our theatrical screening… We thought we had done everything [to prevent content theft] but we turned our heads for a second and it was out there… the explosion was crazy.”

“Once we had a DVD release, within the first week a site popped up that had 23,000 downloads within a very short period of time,” he said.

To help listeners fully understand the way in which content theft affects independent filmmakers, Stall explained the process step by step:
“When you can no longer present on the front end a business model that has a potential as a return for anybody, it becomes pretty hard to find the investors, so that’s the money side of it. Then let’s take the creative side. If you can’t raise the money you did before, quality is going to go down, quantity is going to go down and you’ve crushed the creative process.”

Independent filmmakers like Jason Stall depend on the revenue they earn from viewers who pay to watch their movies and documentaries.

When their films are stolen at such an overwhelming rate, it becomes much more difficult for producers like Jason to persuade investors to back future projects – meaning fewer great new films for all of us.

If you would like to find out more about Blood Into Wine, visit the film’s website here!

Cablevision amicus brief largely backs studios in Zediva case

by Ben Sheffner 07/18/2011 17:02 (UTC-08:00) Pacific Time (US & Canada)

In a very interesting development, Cablevision today filed an amicus brief that largely backs the positions taken by the MPAA member studios in their lawsuit against the unlicensed video-on-demand service Zediva. Cablevision’s brief strongly supports the studios’ position in several respects. First, it agrees with us that Zediva’s service transmits movies “to the public” within the meaning of the Copyright Act. Second, it agrees with us that Zediva is a video-on-demand service, not a bricks-and-mortar “rental” service like Blockbuster. As the brief states on page 3, “conventional video-on-demand systems have always been understood to require public performance licenses” – licenses Zediva did not obtain. While we don’t agree with or endorse everything in Cablevision’s brief, the fact that it largely supports the studios’ positions is particularly significant given that Cablevision was on the opposite side from the studios in The Cartoon Network LP, LLLP v. CSC Holdings, Inc. (the “Cablevision case”). The hearing on the studios’ motion for a preliminary injunction is set for July 25 in federal court in Los Angeles.

The PROTECT IP Act Is Good for Emerging American Enterprises

by Howard Gantman 07/15/2011 06:41 (UTC-08:00) Pacific Time (US & Canada)

In a Huffington Post piece published earlier this week, Kauffman Foundation Senior Fellow Paul Kedrosky made sweeping, erroneous accusations about the PROTECT IP Act, what it would do, and who it would affect, finally concluding that the PROTECT IP Act would somehow damage the entrepreneurial ecosystem in this country. 

Nothing could be further from the truth.  

Among the most egregious inaccuracies was Kedrosky’s characterization of the type of websites that would be targeted and how complaints would be handled under PROTECT IP:  “If a site contains a page with illegal content -- say, a link to a pirated movie -- the copyright owner can petition a U.S. court to make that site invisible to people inside the U.S.” 

This is simply not true.  The PROTECT IP Act narrowly targets only foreign sites dedicated to facilitating, enabling, or engaging in copyright infringement for financial gain. 

As Copyright Alliance pointed out in a blog posted yesterday, “This is defined narrowly as sites that ‘have no significant use’ other than infringement – a test derivative of the standard announced by the Supreme Court in the Sony Betamax case, which has long been recognized by consumer electronics and information technology companies as the appropriate standard for distinguishing infringing products from staple articles of commerce.”

We’re talking about sites whose only purpose is to profit from the stolen work of American creators.   

Furthermore, only the Attorney General – not copyright holders – would be able to seek a court order asking search engines and other intermediaries to block these sites from U.S. consumers. 

Kedrosky continued recycling previously debunked myths about the bill, saying, “There is no due process… no presumption of innocence, and no notification requirement,” and claiming that it represents an “overbroad attack on free speech.”

The PROTECT IP Act clearly and explicitly requires notice to domain name owners.  Only “if through due diligence the Attorney General is unable to find” a website or domain name owner can an action proceed without this notice, and as in each and every case under PROTECT IP, a court’s approval would be required before ISPs or other entities would have to take any action. 

When constitutional expert Floyd Abrams weighed in, he found that “[t]he procedural protections under the Protect IP Act are so strong, uniform and constitutionally rooted that it is no exaggeration to observe that any complaints in this area are not really with the bill, but with the Federal Rules of Civil Procedure Itself, which govern all litigants in U.S. federal courts.” 

In the same letter, Abrams also discredited allegations that PROTECT IP would somehow violate free speech rights, stating, “Copyright violations are not protected by the First Amendment.”

Our question to Mr. Kedrosky is this: How is protecting the creative investments of American workers from foreign criminals bad for entrepreneurs?  New, legal online platforms offering movies and TV episodes are cropping up all the time, giving consumers the freedom to watch videos however, whenever, and on whatever they choose. 

Not only do these rogue sites hurt the creators whose work is stolen, they also discourage investment in these innovative startups that offer legal content.  That’s a double-edged sword that’s harming American workers, limiting our potential for economic growth, and slowing down the development of creative enterprises offering new ways for consumers to enjoy legal content. 

As Copyright Alliance put it, “These are criminal enterprises that are profiting from the work of America’s small businesses, artists, authors and entrepreneurs, and that would be subject to felony criminal proceedings (not just civil injunctive relief) if they committed these same acts in the brick and mortar world.  That sort of activity does not fall under any definition of entrepreneurship.”

The PROTECT IP Act will bolster, not harm, American entrepreneurialism by safeguarding intellectual and financial investments in exciting new ventures.

We’re Confident Tech Community Can Help Us Solve Challenge of Rogue Sites

by Paul Brigner 07/14/2011 09:11 (UTC-08:00) Pacific Time (US & Canada)

Authors of a technical white paper on the PROTECT IP Act held a press conference today co-sponsored by the Center for Democracy and Technology and the Internet Society.

The technologists’ report boils down to two main arguments: concerns that the provision of PROTECT IP which requires domain name servers not to resolve to criminal sites will affect developing security standards, and the assumption that the vast majority of Internet users will circumvent the remedies the bill puts in place.

We disagree.

DNSSEC was designed to provide consumers with a secure, trusted connection to services like online banking, commercial transactions, and electronic medical records - not to foreign websites operated by criminals for the purpose of offering counterfeit and infringing works. These evolving protocols should be flexible enough to allow for government, acting pursuant to a court order, to protect intellectual property online. And we have a hard time believing that average Internet users will be willing to reconfigure their computers to evade filters set up by court order when doing so will risk exposure to fraud, identity theft, malware, slower service, and unreliable connections. The PROTECT IP Act makes getting to rogue sites just inconvenient enough that the large majority of users will seek a legitimate option instead.

Here's the bottom line: We rely on the Internet to do too much and be too much to let it decay into a lawless Wild West. We are confident that America's technology community, which leads the world in innovation and creativity, will be capable of developing a technical solution that helps address the serious challenge of rogue sites.

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