NBC Universal Chief Addresses Piracy Summit

GENEVA, January 30: In
Geneva, Switzerland, today, Bob Wright, the chairman and CEO of NBC Universal
and the vice chairman of GE, addressed the Third Global Congress on Combating
Counterfeiting and Piracy, organized by the World Intellectual Property
Organization. Read the full transcript of his speech, entitled “‘Hear No Evil’
No Longer.”

It is a pleasure to have
this opportunity to address such a distinguished gathering. First let me
express my thanks to the World Intellectual Property Organization for
organizing this year’s meeting with support from the World Customs Organization
and Interpol. And of course thanks to the Swiss Confederation for hosting today’s
meeting and showing such leadership in the fight against piracy and
counterfeiting.

I am glad to be able to join
you today … not just because Geneva is a beautiful city and it’s a pleasure to
be here, although this is certainly true. But, more important, because I firmly
believe that the rising tide of intellectual property crime today—counterfeiting
and piracy in all their forms—threatens the future of global economic
growth and security.

The technology-based,
information-based society of tomorrow depends on innovation, invention, and
creativity. These are the drivers of growth and progress. If they are not
protected, tomorrow’s world will suffer greatly. And from where I sit, we are
losing ground in this battle. Much more urgent and concerted action must be
taken if we are to turn back a rising global surge of counterfeiting and
pirating, which threatens not just to dampen but to seriously threaten the fire
of innovation and invention that creates economic growth.

This morning I want to
discuss two key building blocks for progress. First, working together, we must
find ways to propel the issue of intellectual property protection to the
absolute top of the public policy agenda. As part of that effort, business
leaders must put it at the top of their agendas—within individual companies, within the sectors that are
afflicted by counterfeiting, and within the business community as a whole. And
then we have to do a much better job of explaining and documenting the nature
and extent of the threat to growth, jobs, and economic well-being, both in
advanced economies and in developing countries as well.

Second, we must bring to the
table in this battle key private sector players that enable, facilitate, or
otherwise benefit from the distribution and sale of counterfeit and pirated
goods. Law enforcement efforts will be severely hampered if broad sets of
private actors close their eyes and facilitate trade in counterfeit and pirated
goods. We need sectors such as retail, shippers, Internet auction sites,
financial intermediaries, and broadband telecommunication providers to become
active parts of the solution, and to take affirmative steps not to be part of the problem. The days of “hear no
evil, see no evil” must end.

Let me elaborate briefly on
these points.

Raising the profile of the
vast extent of intellectual property theft—and explaining and quantifying
the threat—represents our crucial first challenge. The scale and extent
of the threat simply do not today command the level of attention and commitment
from public officials that these issues deserve and need. I am, of course,
fully aware and am heartened by the fact that important progress is being made.

Two years ago, under the
leadership of Jean-René Fourtou, the ICC established BASCAP, which had its
second annual Global Leadership Group meeting yesterday. Two years ago, under
Tom Donohue, the U.S. Chamber of Commerce organized the Coalition Against
Counterfeiting and Piracy, which recently tapped my colleague and general
counsel Rick Cotton as its chairman. Over the same time period, with the
support of WIPO Director General Kamil Idris and his deputy Michael Keplinger,
and of course Interpol Secretary General Ron Noble and WCO Secretary General
Michel Danet, this conference has become the leading global gathering on this
issue. As we just heard, the Organization for Economic Development and
Cooperation is near completion of an extensive study on the costs of counterfeiting
and piracy around the world. And just last week at the World Economic Forum,
the topic of intellectual property rights and protection was the focus of a
number of sessions. I personally was involved in five different sessions on
this issue.

So this issue has a level of
concern and momentum that greatly exceeds where we were two years ago.

I think there is a good
parallel with the issue of global warming, which was talked about for years but
where momentum gradually grew so that now governments and businesses are
discussing stronger and stronger measures to address this threat. But we are
still far from where we need to be. We need more from public officials than
just acknowledging that there is a problem. We need action. And we need far
more than modest measures. We need major commitment and bold engagement, with
significant legal reforms and major commitments of sophisticated law
enforcement resources.

I say to this audience that
we will not get what we need unless our collective voices are louder than they
have been in the past, unless we are more unified than we have been in the
past, unless our message is more vigorous and better documented and
communicated than it has been in the past, and unless our commitment is
sustained now and into the future.

We must hammer home the
message that piracy and counterfeiting must not be viewed as nuisances or
unavoidable leakage. The facts demonstrate that these losses are overwhelming
in scale, and should be seen for what they are—widespread economic crime
with profound consequences for governments, businesses, and indeed the people
of the world.

To move these issues up the
policy agenda we must get better at delivering three key messages that many
people at this gathering are familiar with:

One: This is an issue with
far-reaching economic implications, not just for developed nations but for any
nation looking to build a vibrant economy.

Two: This is an issue that
threatens the health and safety of the general public.

And three: Intellectual
property theft has emerged as the new face of economic crime around the world,
in scale greatly exceeding traditional property crime, which has historically
been the focus of law enforcement resources. Public policy has struggled to
recognize the magnitude of this seismic shift in the patterns of criminal
activity and to adjust resources and strategies.

Let me say a few words about
each of these themes.

First, the economic
implications.

We’ve made great strides
documenting the vast extent of IP theft and the corrosive effect it has on
growth, jobs, and tax revenues. There has been a gradual recognition that IP
protection is a paramount issue of global economic security. The fact is,
intellectual property is at the heart of high-value, high-wage economic growth,
both in developed and developing economies. We know this, but we need to
document it, quantify it, and convince policymakers to act on it.

I want to mention two
studies we at NBC Universal were closely involved in that have helped advance our
understanding of this issue in significant ways, and I want to urge that we
work together to expand this analysis in countries around the world.

Two years ago, when I first
started speaking out about the threat to intellectual property and economic growth,
there wasn’t a great deal of solid data. To fill this need, we commissioned a
study, designed to answer an important question: How dependent is the U.S.
economy on those industry sectors that are driven by innovation, invention and
creativity? To the global audience gathered here today, let me say we chose the
U.S. to study not out of parochialism or nationalism, but only because we had
easiest access to its data and because at that moment we were focused on
influencing U.S. policymakers.

I believe the results of the
study can be replicated in any advanced economy and with respect to the
high-wage components of the economies of developing countries.

The study aggregated the “IP
industries”—industries that rely heavily on copyright or patent
protection—and measured their revenue, employment, compensation to
workers, and growth.

The study found that these
industries are essential contributors to U.S. GDP, responsible for 40% of the
contribution of U.S. exportable products and services to GDP. It found that
they are the most important growth drivers in the U.S. economy, contributing
nearly 60% of the growth of U.S. exportable products and services. And it found
that these industries pay wages that are 40% more than the average wage in the
U.S.

This study put numbers on
what was already quite evident: IP industries drive growth in today’s world and
hold the keys to a nation’s future economic well-being.

These sectors are also the
driving force behind long-term global competitiveness—meaning a country’s
ability to sell goods and services around the world and have those sales drive
high-wage jobs at home. And they are precisely the sectors most at risk of
counterfeiting and piracy.

But I want to make a further
point. Nearly every study I have seen of counterfeiting and piracy speaks in
terms of lost revenue or reduced global trade.

Talking about the impact of
counterfeiting and piracy solely in these terms vastly understates the impact
on a nation’s economy. What does this mean in terms of lost output? What does
it mean in terms of lost jobs? What does it mean in terms of lost tax revenue?

It is much greater than is
often realized. Because there is a ripple effect that greatly magnifies the
losses suffered by any individual sector of the economy. As a rule of thumb,
one could predict that for every dollar a nation’s industry loses to
counterfeiting and piracy, that nation will lose at least three dollars of GDP.

For example, when a movie
studio loses revenues to piracy, it doesn’t have that money to reinvest into
making more movies and television. Not only does this affect the individual
studio but it also impacts all the companies that would have contributed to or
benefited from these unmade productions. It reduces the revenue of the upstream
suppliers to movie producers, and of the downstream industries, like movie
theaters, DVD retailers, and video rentals.

Using analytical tools
developed by the U.S. Bureau of Economic Analysis, a second study quantified
this ripple effect in the U.S. movie industry. It determined that the overall
economic cost of movie piracy is actually three times the cost to the movie
industry alone. That is, the estimated $6 billion in piracy losses suffered by
U.S. movie studios actually amounts to a $20 billion loss in overall economic
output to the U.S. economy.

The studies haven’t been
done yet, but the same is true in other countries. Think about it: For every
euro lost to the French movie industry due to piracy, the French economy loses
three euros because French post-production houses lose opportunities to work on
more films, French catering firms lose opportunities to provide food service on
location, French trucking firms lose the business of transporting productions,
and so on.

This is a much more realistic
and informed way to think about the economic costs of piracy. It starts to
indicate the true extent of the damage. Our study used U.S. data and focused on
the movie industry, because that data was readily available. But this is an
excellent model for future analysis in other sectors.

Imagine if we included the
losses of other industries that are hit hard by IP theft, such as software,
luxury goods, and automotive parts. The numbers would be staggering.

We need similar studies to
be carried out across industries and across countries. The watch and
pharmaceutical and food industries here in Switzerland, for example. Or the
Italian fashion industry. Or automotive parts in Germany. Or filmmakers and
software developers in India. Virtually every high-tech, high-value-added
industry around the world could do a study such as this and get similar
results.

The primary point is that
global counterfeiting has now reached such a scale across all sectors that
government policymakers must be made to recognize that society’s response has
to be escalated.

And here I want to emphasize
the importance of the voices of today’s Global Congress, of the International
Chamber of Commerce, and the U.S. Chamber of Commerce. Our voices together—across
all sectors of the economy—are much more powerful and much more difficult
for policymakers to ignore. The message that we carry together is far more
powerful than the messages individual sectors carry separately.

Second, health and safety.
This is a second point that we must bring much more to the forefront of policy
discussions. The fact is, a huge amount of counterfeiting and piracy poses a
real threat to public health and safety. While stolen movies and music stifle
creativity and economic growth globally, pirated drugs and other consumer goods
have a deadly and disproportionate impact in developing and least-developed
countries.

According to the World
Health Organization, in parts of Africa, Asia, and Latin America, up to 30% of
the medicines on sale are counterfeit. As with movies and other products, these
counterfeiters and their allies know they are committing a crime and
aggressively seek to avoid detection. They engage in elaborate conspiracies to
disguise their activities. They establish fictitious businesses and front
companies. They exploit weaknesses in border control whenever governments try
to promote world commerce by reducing border inspections. In sum, their actions
disguise the extent of crime and makes detection and reporting extremely
difficult.

We hear about new tragedies
every week, from counterfeit milk formula killing babies to ineffective or
dangerous counterfeit drugs giving rise to drug-resistance strains of AIDS and
malaria and in many cases simply killing the patient. The economic costs and
human toll should spur us all to crack down on the production and trafficking
of all counterfeit goods. These incidents must be publicized, and the
perpetrators prosecuted.

Gathered here today are many
of the world’s leaders in the fight against counterfeiting and piracy. One hero
in the developing world is Mrs. Dora Akunyili, Professor and Director General
of the National Agency for Food and Drug Administration and Control of Nigeria.
She has worked tirelessly to protect her citizens from the impact of
counterfeit medicines and made real progress.

We all need to be as
aggressive and resourceful in stopping and prosecuting the counterfeiters.

But let’s acknowledge a
problem. Many sectors with severe counterfeiting problems that raise health and
safety issues do not want to talk loudly about this in public. Yet by not
consistently and vigorously raising the health and safety dimension of the
counterfeiting issue with the public and with public officials, we again allow
its importance to be downplayed.

And this brings me to my
third point: We must convince policymakers and the law enforcement community
itself that counterfeiting and piracy must move higher on the law enforcement
agenda. We’re not just talking about economic losses. We’re talking about
criminal activity. Crime goes where the money is … and the money is in piracy
and counterfeiting.

Let me once again resort to
U.S. statistics, but I am confident that statistics from any country will
mirror my point. The FBI reports that in the U.S., all traditionally defined
property crimes accounted for $16 billion in losses in 2005. Compare that to
the best estimates we have for losses from piracy and counterfeiting, and I
would suggest to you that the losses from counterfeiting and piracy in the U.S.
dramatically exceed that number by five or ten times.

I can assure you that there
are not five or ten times the amount of law enforcement resources devoted to
combating counterfeiting and piracy as are devoted to traditional property crimes.
We need to change the mindset. We need to change the paradigm. We need to make
the case.

Ron Noble and his staff at
Interpol understand this. The people in this room are well aware of this. Yet
around the world, enforcement organizations are organized to focus on crimes
involving tangible property, not intellectual property.

There’s been a paradigm
shift … but governments have not kept pace and the resources provided to the
law enforcement culture have not fully adjusted. They need to catch up. They need
resources, training, and new tools that are appropriate to fight new kinds of
battles.

This is an enormous
challenge. It requires the reconstitution of a giant worldwide law enforcement
apparatus. It will take creativity, innovation, and money to reshape law
enforcement for the age of IP theft.

Up to now, I have been
talking about the case we must make to government about the urgency of this
struggle. Let me now put on the table a sea change in how we think about
combating counterfeiting and piracy. We cannot look solely to law enforcement.
We need key private sector businesses to become allies.

Much counterfeiting and
piracy depends on legitimate businesses for distribution and resale. It is
these businesses that we need to enlist in reducing trade in counterfeit and
pirated product.

To help educate businesses,
the Coalition Against Counterfeiting and Piracy just released a Supply Chain
Best Practices Tool Kit, which identifies concrete steps businesses can and
should take to assure that they are not trading in or assisting trade in
counterfeit or pirated goods.

Shippers need to make sure
they know their customers. Retailers have a responsibility to be vigilant about
the integrity of their supply chains from pharmaceuticals to food to footwear
to DVDs. In my business, telecom broadband providers need to have effective policies
to discourage illegal download activity, which currently can consume as much as
60% of their bandwidth.

Technology has a big role to
play here. We need technology-based authentication processes. In media, for
example, we have the ability to watermark our content. But we need cooperation
from our partners in the consumer electronics and information technology
industries to detect this watermark and disable the playback of pirated
content.

We are doing our part,
making sure our television programs and movies are available online via a
number of new services, such as LOVEFiLM and Wippit in the United Kingdom and
film2home in Sweden. And we are also conscious about adjusting the price points
for our products in countries such as China and Russia so we can better compete
with the prices charged by counterfeiters for pirated content. We are taking
significant steps to make legitimate product available in the marketplace to
complement enforcement efforts.

Others sectors have to
develop their own tailored technologies, and distributors and resellers have to
participate in this validation process. Dialogue and progress on these fronts
is urgently needed if we are to reduce traffic in counterfeit and pirated
goods.

We need to impress upon the
enablers and facilitators of the distribution and trade in counterfeit and
pirated goods—which are otherwise legitimate businesses—that the
days of “hear no evil, see no evil” must come to an end. The scale of the
epidemic leaves no choice. Legitimate businesses have to step forward and
declare they will not profit on the back of IP theft. They need to develop
codes of conduct for their industries that will help raise the level of vigilance
and security against illegal activity. And if they don’t step forward,
governments need to adopt laws to require cooperation.

To sum up: our clarion call
to government must sound three broad themes. Everyone in this room is familiar
with them, but they can’t be repeated often enough. The rising epidemic of
piracy and counterfeiting threatens our economic security … it’s a health and
safety issue … and it is one that needs to be fought at every level by a
law-enforcement infrastructure that is vastly better resourced and more
sophisticated than what we have now.

We need to educate
consumers, businesses, and governments, so they understand their stake in this
issue. And we need to declare, loud and clear, that when it comes to piracy and
counterfeiting, a response of “hear no evil, see no evil,” will no longer be
acceptable.

Thank you very much for
inviting me here. You have a terrific agenda planned for the next two days. I’m
sure it will lead to many productive discussions and insights, and that when we
gather again for the fourth global
conference, we will together have made significant progress on one of the most
challenging global issues we face.