Buyers of bootleg CDs, DVDs rob companies of billions
Street stalls in Asia tempt shoppers with tantalizing deals on multimedia products. Blockbuster films from “Spider-Man 2” to “Shrek 2” appear on DVD before their official release in U.S. theaters, often for as little as $1 to $4 each. Compact discs in plain sleeves are just as cheap.
And the latest version of Microsoft’s Windows XP is a steal — figuratively and literally — at 60 percent off the retail price asked for at military base exchanges.
For a GI at Thailand’s Cobra Gold looking to beef up his music collection, or a sailor trying to stretch his dollar while on port call to Malaysia, it’s a deal almost too good to refuse. But most of these materials are illegal, part of a high-tech counterfeiting industry sweeping across Asia and elsewhere, destroying domestic markets for music, movies and software and costing companies from Microsoft to Nintendo billions in lost revenue.
Customs inspectors and military officials in Japan say they keep an eye out for pirated goods during baggage checks.
And servicemembers are warned against buying illegal knock-offs prior to temporary duty or port visits in countries known to have a piracy problem.
But, military officials in Japan claim, for the most part, their troops aren’t buying illegal DVDs, CDs or computer software, despite numerous deployments and port calls throughout Asia. If they are, it’s in such small quantity that they’re going undetected.
“I would say that 99.9 percent of the people are doing exactly what they’re supposed to do and they’re not buying it,” said Maj. Joe Milner, the 35th Security Forces commander at Misawa Air Base, Japan.
Seventh Fleet spokesman Lt. Cmdr. Marc Boyd, in an e-mail, said it is a crime for any U.S. citizen to obtain or possess pirated software, including CDs or DVDs.
“We routinely inform our sailors and Marines about the dangers of possessing such material before making port visits in the region,” he said.
Those risks include buying faulty computer software programmed to introduce a worm or virus into one’s hardware, Milner said.
“A lot of people use contraband stuff to introduce things into the U.S.,” he said. “It’s a fine example of how you get a worm or some kind of computer virus that opens your machine up … to identity theft.”
But in interviews with dozens of servicemembers, and a few afternoons spent at street-side vendors in Thailand and South Korea, the problem seems much more pervasive than military officials acknowledge.
On any given weekend in Itaewon, a shopping district just outside the gates of the U.S. Army headquarters in Seoul, hundreds of servicemembers and civilians browse through the racks of a half-dozen DVD vendors, hawking illegal copies of the latest films.
“If it’s not going to come to the base theater for three months and I can get a DVD of it here for 10,000 won (roughly $8), why not? I’ve never heard of anyone being prosecuted for it,” said one GI, checking out a bootleg copy of the movie “Troy.”
But according to trade groups, buying from pirates also may lend a hand to organized crime. According to the International Intellectual Property Alliance’s 2003 “Special 301” report on Thailand, “increasing evidence links pirate optical disc production in Thailand to foreign criminal organizations.”
The practice in Thailand yields incredible profits without the threat of serious penalties due to the country’s lax law enforcement, says the alliance, a private-sector coalition formed in 1984 to represent the U.S. copyright-based industries.
It goes on to suggest that multimedia piracy in Thailand is at an all-time high, with pirate “pre-release” DVDs comprising an estimated 40 percent of the DVD market in Thailand — and selling at five for $12 — and pirate video CDs stealing 70 percent of the VCD market.
Bloomberg News, citing the Washington-based International Anti-Counterfeiting Coalition, reported in early June that across all industries, counterfeiting and piracy cost companies more than $200 billion a year.
The film industry is among the biggest hit, with pirate DVD and video factories in Asia producing an estimated $718 million last year in illegal copies, according to MSNBC News.
Milner said pirates are few and far between in Japan.
“We have not seen a large influx … and there are no dealers that we know of in the local area,” he said. “Japan has been extremely good about abiding by copyright laws.”
Military officials adhere to U.S. Customs and local Japanese laws to check bags of military personnel re-entering Japan. They’re not looking specifically for pirated goods, but rather anything illegal, from drugs to weapons, military officials said.
At Kadena Air Base, Okinawa, passengers aboard military and military-contracted aircraft, such as World Airlines and the Freedom Bird, are subject to inspection upon arrival. Japanese customs and immigrations laws require a 10 percent baggage check of all aircrew and passengers from most countries, said Charles Steitz, Kadena spokesman, by e-mail.
Military personnel, trained and certified by Japanese customs officials, conduct the searches, which are dictated by a random number from 0 to 9 selected by a customs official each day. When aircraft arrive at Kadena from a country that requires a 10 percent inspection, individuals with the corresponding number as the last digit of their Social Security number have his or her bags searched, Steitz said.
The following high-risk countries require a 100 percent baggage check: Vietnam, Cambodia, Thailand, the Philippines, Hong Kong, Turkey, Taiwan, Indonesia, Malaysia, Singapore, Mongolia, Laos, China and South Korea.
“The countries are considered high-risk because of the threat of illicit narcotics and drug paraphernalia,” Steitz said.
When contraband — such as pirated CDs, DVDs, and software — is found, it is confiscated and turned over to Japanese customs officials. The most common contraband discovered during these bag checks are pirated gaming software CDs and DVDs, Steitz said.
“Persons caught with drugs or weapons are apprehended and processed for possession of those materials. However, military customs officials are only authorized to confiscate pirated or copyright-protected materials and turn them over to Japanese officials for destruction,” he said.
If pirated items are found, the punishment depends on one’s commander and the number of goods, Milner said. One item might be cause for a letter of counseling or reprimand; multiple items, indicating an intent to distribute, likely would result in court-martial, the commander said.
Nearly every military base in the Pacific, however, reported that no servicemembers have been punished criminally or administratively for possession of pirated goods in the past year.
“Based on my own personal experience, from what I have seen, it’s really not an issue,” said Lt. Col. Jay Steuck, a Pacific Command spokesman.
Boyd of 7th Fleet said U.S. Customs requires all personnel to fill out the appropriate customs forms and declare anything that is not legally importable into the United States, including pirated DVDs, CDs and computer software. The customs declarations are distributed to crews by the ship’s customs officer — usually the ship’s legal officer. Aboard aircraft, this responsibility falls to the aircraft commander, and the same rules apply, Air Force officials said.
Random bag checks also are conducted during port visits to “ensure sailors and Marines do not bring such material on board,” Boyd said.
“While security personnel conducting the random bag checks are not specifically searching for pirated material, they do look for those items. However, we do not keep statistics on what, if any, items are found during these searches,” he said.
Sailors and Marines found to be in violation are subject to the Uniform Code of Military Justice and could expect to receive nonjudicial punishment, or an Article 15 hearing depending on the seriousness of their crime, he added.
On a sunny Friday afternoon in Seoul, soldiers strolling through the Itaewon shopping district didn’t appear fazed by the possible punishments for possessing pirated goods, which filled the stands surrounding them.
“Are they going to go through every one of my CDs or movies, and ask me for a proof of purchase or something? When have you ever heard of anyone getting busted?” asked Pfc. Terry White, of the 2nd Infantry Division.
“If you’re asking me if it’s worth the risk to pay seven bucks for a copy of Shrek 2, I’d ask you, ‘What risk?’”
— Hana Kusumoto and Seth Robson contributed to this report.
A big chunk
The Motion Picture Association of America, representing the world’s largest studios and TV production companies, believes Asia now accounts for almost a quarter of the nearly $3 billion lost to film piracy globally each year, MSNBC News reported earlier this year.
Studios, according to the same report, single out China, Malaysia and Taiwan as leaders in mass copying; blockbuster movies such as “Spider-Man” were available in pirated versions before their official release, they said.
— Staff reports