Rich Fiscus
14 Apr 2010 7:30
Last year in the US the PRO-IP bill was signed into law. It created a new head of copyright enforcement in the Justice Department and called for public input on ways to address intellectual property infringement.
It also mandated that the GAO (Government Accountability Office) identify and quantify the presumed harm to the US economy from IP infringement. In a report issued on Monday they were critical of both government agencies and industry groups for promoting facts and figures.
On the government side they looked at three figures which have been widely used to argue in favor of increased IP enforcement. According to the GAO, none of the numbers stand up to scrutiny because they, "cannot be substantiated or traced back to an underlying data source or methodology."
These include a FBI estimate that US businesses lose $200 to $250 billion annually due to counterfeiting. These figures were originally found in a FBI press release, but the agency, "has no record of source data or methodology for generating the estimate."
Other reports from US Customs and Border Protection and the Federal Trade Commission were similarly criticized for being short on facts, and even discredited by the agencies themselves.
However, the report also noted that this hasn't stopped other government agencies and a number of trade groups from citing them as fact.
And how do government officials actually arrive at these figures since they appear not to be collecting any data on the subject? According to the GAO they rely heavily on numbers supplied by various industry groups, even though those groups, "do not always disclose their proprietary data sources and methods, making it difficult to verify their estimates."
The industry provided information GAO auditors were able to examine didn't hold up very well to serious scrutiny. This should come as no surprise to anyone who has examined the assumptions used by organizations like the BSA (Busines Software Alliance) and MPAA.
Of BSA numbers, which are revised annually, the report noted, "it uses assumptions that have raised concerns among experts we interviewed, including the assumption of a one-to-one rate of substitution."
The rate of substitution is how many people who have a pirated or counterfeit good would have bought the legitimate good. A one-to-one rate of substitution means every piece of pirated software installed is counted as a lost sale.
A 2005 report issued by the MPAA is also mentioned, although that organization's later admission of errors in their conclusions interestingly isn't.
The GAO does note that "It is difficult, based on the information provided in the study, to determine how the authors handled key assumptions such as substitution rates and extrapolation from the survey sample to the broader population."
Unfortunately none of this is really new information. Criticism of the various figures and studies used to promote stronger IP protection is easy to find if you are looking.
And it was just as easy to find when PRO-IP was passed. The bigger question is who Justice Department officials will be listening to.
Given the number of high ranking officials at the Department of Justice who have been integral to RIAA and MPAA lawsuit campaigns it's probably not the GAO.
They've already increased DOJ's involvement in RIAA lawsuits by arguing in favor of ludicrous copyright infringement damages for file sharing.