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A recent report by the Business Software Alliance (BSA), titled “Expanding Global Economies: The Benefits of Reducing Software Piracy,” makes a compelling argument that lessening the rate of software piracy can help create new jobs and business opportunities that, in turn, generate spending and new tax revenues. According to the BSA, information technology (IT) driven by the software sector is a “proven engine” for economic growth and prosperity when software piracy is kept at bay. THE IT SECTOR’S ECONOMIC IMPACT The BSA’s report provides findings from an analysis assessing the impact of IT in 57 countries across the globe and the economic benefits that inure to the benefit of countries that more closely enforce their intellectual property laws. According to the report, the IT sector already employs more than 9 million people, raises more than $700 billion in taxes per annum, and contributes almost $1 trillion dollars a year to global economies. Furthermore, between 1996 and 2002, the IT sector reportedly grew 26 percent, creating 2.6 million new jobs and providing a cumulative of $6 trillion to world economies. The report points out that the software sector alone grew six times faster than the hardware sector between 1996 and 2002. Indeed, software and related IT services currently comprise 60 percent of IT spending. Unfortunately, the report states that 40 percent of software copies are pirated, with piracy rates ranging within countries from 25 percent to 94 percent. The BSA explains that countries with the lowest piracy rates have larger IT sectors, with accompanying greater tax bases, more jobs and other economic advantages. MAJOR FINDINGS The BSA has come up with six major findings in its report. First, IT growth accelerates with software piracy reductions. Thus, the IT sector, which is projected to grow 34 percent between 2001 and 2006, supposedly could grow 15 points faster, or 49 percent, with a 10-point piracy reduction. Moreover, nearly two-thirds of countries would see greater than 50 percent IT sector growth with such piracy reduction. Second, faster IT growth delivers new jobs, taxes and economic expansion. A 10-point piracy drop from 40 percent to 30 percent over four years apparently could lead to 1.5 million more jobs, $64 billion in greater tax revenues, and $400 billion in additional economic growth. Third, countries with the highest rates of piracy would receive the greatest benefits from piracy reduction. Therefore, eight of the 10 countries with the highest piracy rates would rank in the top 10 countries that would benefit from a 10-point piracy reduction, according to the report. Fourth, countries with low piracy rates already have achieved proven benefits. Thus, countries such as England, Japan and Egypt, that already have reduced software piracy, have achieved significant economic benefits and are poised for further IT sector growth. Fifth, every region could benefit from piracy reduction. The report notes that Asia-Pacific, followed by Eastern and Western Europe, would see the greatest relative benefits from piracy reduction. Sixth, 10-point piracy reduction is achievable. Indeed, the report points out that two-thirds of the 57 countries reduced piracy already 10 points since 1996. INFORMATION IS POWER Perhaps the information provided by the BSA’s report will provide further impetus for countries with relatively high piracy rates to start cracking down on software pirates. The report helps to clarify that the failure to enforce a country’s own intellectual property laws when it comes to software piracy only means that that country is cheating itself economically. Eric Sinrod is a partner in the San Francisco office of Duane Morris ( www.duanemorris.com), where he focuses on litigation matters of various types, including information technology disputes. Mr. Sinrod’s Web site is www.sinrodlaw.com, and he can be reached at [email protected]. To receive a weekly e-mail link to Sinrod’s columns, please type Subscribe in the subject line of an e-mail to be sent to [email protected].

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