Piracy Stifles Innovation in Asia

The CEO of anti-piracy group Business Software Alliance says the region lags because software developers dont have confidence that their intellectual property will be protected

Robert Holleyman, president and CEO of the anti-software piracy trade group, said in an interview with ZDNet Asia: "The domestic market in the region is not as innovative as it could be. The innovation for new, packaged software and products in the market is just not as high as in other parts of the world."

Holleyman explained that Asia has been lagging because of the high piracy rates that are lowering confidence in the region's protection of intellectual property rights.

"Issues like corruption and the lack of law enforcement make [some] countries not so attractive to companies that want to take risks," said Holleyman.

And countries stand to gain from lowering piracy rates, he insisted. Quoting IDC figures, Holleyman said a 10 percent reduction in PC software piracy rates in Asia over the next four years would translate to an extra 435,000 new jobs, equivalent to some US$1 billion in new IT revenue.

He added that China, which cut piracy by 10 percent within three years benefited with a resultant 3.5 times growth in software profits in 2006. And that was still at a rate of 82 percent piracy, showing the country has vast opportunity for growth by way of cutting piracy rates, Holleyman added.

Microsoft, which is a BSA member, has been working with vendors to encourage interoperability between its proprietary products and other software.

Brad Smith, Microsoft head legal counsel for anti-trust, intellectual property and Asia, noted the Asian IT scene is "very dynamic", with users accustomed to a range of devices with different form factors, such as handhelds and portables.

"The scene here is much more heterogenous than it was say five to 10 years ago, so companies that have high-volume products like Microsoft need to think more proactively," Smith told ZDNet Asia.

And in working with other IT vendors, interoperability is only really possible by way of respecting intellectual property, to stay on the right side of the law. "We would benefit from a broader dialogue on how better to deal with interoperability issues and how patent licenses should become more available for commercial use," said Smith.

"By and large there are good laws [in Asia], but there remains room for improvement in the enforcement," he asserted, saying governments need to play a major role in both enforcement and education of the public.

Holleyman held up the United States as a positive example of a country with a very low software piracy rate. "When IP and copyrights are generally respected, innovation and creativity starts. We believe those are directly related."

With Asia already a global outsourcing hub, Holleyman said the region is seeing a boom in young IT graduates, who are "driving the potential for innovation in Asia".

"Asia's largest opportunity is in building a domestic software industry that has good export [value]...which will supplement the domestic market," said Holleyman.

The BSA said in a report mid last year that the increase in downloaded pirated software due to the proliferation of broadband Internet access in the Asia-Pacific region was causing a rise in revenue losses. The estimated revenue loss rose sharply by 44 percent to US$11.6 billion in 2006 over US$8.1 billion the year before, according to the BSA.

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