Music piracy: a worldwide issue, different means but same results

MUSIC PIRACY: A WORLDWIDE ISSUE, DIFFERENT MEANS BUT SAME RESULTS

Three hundred years ago, ruthless buccaneers hoisting the Jolly Roger sailed the Caribbean in search of plunder en route from the New World. Today a new breed of pirates continues to capture its bounty among the azure seas and swaying palms of Latin America.^1(*) These new pirates use another's production, invention or conception in an unauthorized form resulting in an infringement of a copyright. This paper discusses music piracy in Peru as an example of how piracy works in most of Latin America, the legal scheme in Peru that has been designed to prevent copyright infringement and its enforcement, music piracy as a universal issue, and recommendations to face this problem.

Concept of music piracy

The term music piracy refers to the illegal duplication and distribution of sound recordings.^2(*)

Peru is a democratic unitary state of 1'285, 216 square km that ranks the country among the world's 20 largest nations. Peru possesses a rich culture not only for being heir of the Inca empire which left a legacy of their wisdom and art all over the country but also for being the principal metropolis in America during colonial times.^3(*) Peru also has an extraordinary variety of ecosystems in which shelters a wide variety of animals and plants.^4(*)

Even with its rich history and great potential, Peru over the last 20 years has suffered one of the biggest economic crises of its entire history. Political corruption and terrorist groups, such as Sendero Luminoso (The Shining Path)^5(*) have been major factors in the establishment and continuation of this crisis. Many politicians have seen their chief role to be to increase their fortunes at the expense of the national treasury. Terrorists, who thought violence was the solution to establish a new social order, created disorder and scared away national and foreign investment.

Thus, many unemployed found a way to survive the crisis: music piracy. Even though, it is illegal, piracy continues as a means for Peruvians to support their families. Street vendors are the nexus between pirates' producers and customers. The cost of music also contributes to the continuation of piracy. Street vendors^6(*) offer a CD for 3 soles (less than 1 U.S. $) while record stores in Peru charge an average of 19 dollars per CD.

Modus operandis

Pirates only need a copy of a disc to start production at plants near their target market. Within a few hours of an original release or even earlier, pirated products appear, on the market, much more rapidly than legal editions.

On the other hand, legal industries generally ship albums from where they are produced by land or sea, slowing delivery. Producers may send albums by air but this increases their costs. Thus, it is almost impossible for legal industries to offer their albums as inexpensively as the pirated ones.^7(*)

CD piracy is gaining strength from the advent of a new device called the CD recordable (CD-R), introduced in 1997.^8(*) The CD-R is a home recording machine, which costs around three hundred dollars, and can easily copy music and other sounds onto blank CDs for as little as one dollar.^9(*) The CD-R is commonly known as a burner because laser for the CD-R machine burns information onto the CD-R disc.

Consumers have a right to copy music onto a CD-R for their personal use. This is a right recognized in the Audio Home Recording Act of 1992 (AHRA).^10(*) The AHRA^11(*) does not prohibit the manufacture, buying, or use of CD-R's.^12(*) A different situation arises when «the burner» is used for commercial purposes.

The Supreme Court in Sony v. Universal City Studios already decided the validity of personal use of this kind of innovative devices by consumers. In this case, Sony invented the Betamax video tape recorder for home use. Universal sued Sony alleging that it infringed copyright. The supreme Court said: « if Betamax were used to make copies for a commercial or profit- making purpose, such use would be presumptively be unfair» but «a use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create.»^13(*)

It is interesting to note that CDs appeared in the eighties but they were not as successful as was hoped due to their high price. Most of them were made in Japan, they had a high defect rate and approximately one out of every three discs was discarded before leaving the CD factory. Early on this led to an industry decision to continue paying recording artists a royalty rate based on the sale price of vinyl disc (9.98 U.S.$) instead of the higher sale price of compact discs.^14(*) But, in 1989 everything changed. CDs were everywhere.^15(*) As CDs took over, the major labels acquired their own domestic CD pressing plants and the defect rate dropped to almost zero so the cost of manufacturing compact discs dropped dramatically as well. One would have expected the retail price of CDs to also drop and for the profits to be split evenly and fairly with the musicians who were making all the music.^16(*) However, this did not happen. CD prices have continued to rise while manufacturing costs have dropped to less than it costs to manufacture a $9.98 vinyl release.^17(*)

Beneficiaries of music piracy

a. There is an obvious benefit to consumers: counterfeited products are cheaper than legally made alternatives.^18(*)

b. Piracy has increased the size of product markets by making goods available to people who might not otherwise be able to afford them. According to a retailer in Bangkok «if I sold (the real thing), I wouldn't even sell 10 percent of what I'm selling now.»^19(*)

c. While pirate manufacturing and supply chains are not always domestic, they are least regional, so a person buying music in Hong Kong could be supporting a factory in China or Malaysia, with smuggling, distribution and sales taking place in between.^20(*) In the case of Peru, replication of the music is accomplished locally.^21(*)

Victims of music piracy

a. Those most affected by piracy are the music recording industry. The total global music pirate market in 2001 was estimated to be worth US$ 4.3 billion against 4.2 US$ billion in 2000. A total of 1.9 billion pirate recordings, including discs and cassettes, was sold in 2001 up slightly from 1.8 billion in 2000.^22(*) This means that two of every five recordings sold worldwide is an illegal copy.^23(*)

Legal production plants of CDs, which are supposed to work together with the music recorders, are also involved in piracy. For example, they may be less strict in adhering to copyright laws when taking orders. This is due to a surplus of CD production plants; approximately double the industry's demands. ^24(*)

The domestic market suffers the most harm because music piracy obliges local producers to raise their prices more and more in order to cover their costs. Local producers are, in most cases, interested in searching for and producing local talent. This phenomenon not only occurs in Peru, it is global. For instance, the good news for the Brazilian artists is that the domestic market consumes 65% domestic product, up from 55% ten years ago. The bad news is that 90% of the sales of music in the country are pirates.^25(*) As a result, domestic music will die out while the flood of imports continues without a crackdown on piracy. In the late 1980s in Africa, the government did not enforce copyright laws and music piracy killed the Ghanaian record industry.^26(*)

In this context, it is logical that, the record labels may be forced to reduce their artist roster because it is impossible to compete against theft.^27(*) It is likely that they will seriously consider whether it is worth investing if they know that little to nothing will be gained.

b) The musical artists themselves are also hurt. They lose royalties they would have received if a legitimate recording had been purchased. Steven Albimi, an independent record producer who produced «In Utero» of Nirvana, wrote a very illustrative article about how much money a band receives to sign with a major record label. He says:

With the help of a video, the album went like hotcakes. They sold a quarter million copies! (...) The band is now ¼ of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties.^28(*)

Artists must negotiate their contracts in the best way possible.

Specially, local artists are affected. The international recording invests hundreds of millions of dollars- up to 15% of its turnover in some countries - in new talent.^29(*) But, lower profits for selling of legitimate copies means less budget to discover new artists.

In the case of bootleg recordings, they damage the artist's privacy rights.^30(*) For example, an artist who comes across one of his or her bootlegged performances might feel as though it does not accurately reflect his or her talents and should not be heard or seen. There are two reasons behind this: the poor quality of the recording and the poor quality of the performance.^31(*)

Once, David Bowie bought a bootleg video of his own show and was so disturbed at the quality that he made an official complaint to his record company and the salesman was arrested.^32(*) A spokesman also stated «like all artists, {Bowie} secretly quite enjoys listening to unauthorized recordings of his shows, but on this occasion he was concerned about his fans being ripped off.^33(*)

Artists have a disincentive to create music if their creativity will provide no reward. Pirates will take all of the profits. Therefore, piracy suppresses creativity, the most precious attribute of man. This is its most dangerous and far - reaching consequence.^34(*)

Luciano Pavarotti reasserted this concept: »...artists and composers particularly the younger ones will not stand a chance of creating music in the future if their recordings are simply stolen.»^35(*)

Some artists and commentators believe that copyright is Human Rights.^36(*) Thus, this right would deserve better protection by the States.

c) Governments lose a great amount of money. Value added tax, income tax and company taxes would be received if legal commercial transactions of sound recordings occurred. Pirates affect governments, because the distribution of pirated goods avoids regular channels of commerce and a state loses millions in tax revenues. Thus, local governments are robbed of an important part of their tax base, and local economies are placed in jeopardy.^37(*)

This fiscal loss and the diminished incentives to invest in the creation of new products leads to less direct and indirect employment in the entertainment industries and other skilled, high income employment fields.^38(*) A drop in piracy is directly and indirectly related to the creation of new jobs. Lastly and on a more general level: piracy holds back economic growth.^39(*) Piracy acts as a brake on investment, growth and jobs. In today's global economy, intellectual property is an engine of growth.^40(*)

d) Although it may sound contradictory, consumers are also the victims of piracy. The price of legitimate recordings has increased because of the financial loss suffered by the record industry.^41(*)

Piracy affects consumers, who have no redress for fake video products or virus-ridden software or incomplete audio-CDs, etc. They also do not receive any after-sales service.^42(*)

Moreover, consumers get less diversity and less choice because of the reduction of artist's roster offered by the record producers.

The state of music piracy in Peru

Peru currently holds the dishonor of being one of the worst pirates in Latin America.^43(*) Latin America itself has been the market where there was a sharp increase in the number of discs decommissioned.^44(*) The recording industry reports that Peru continues to have one of the highest levels of audio piracy in the world ^45(*) - approximately 97% in the national market are pirated CDs.

During 2001, the legitimate market industry in Peru sold only 884,000 units, compared to the 5.6 million units sold in 1987.^46(*) In 2001, the market decreased by 44 percent from 1.6 millions unit sold in 2000.^47(*)

Estimated trade losses due to record piracy in Peru were $ 57 million in 2001.^48(*) Over recent years, many recording companies (at least 10) have closed because they could not compete with the overwhelming levels of piracy.^49(*) In addition, over 350 businesses that sold legitimate recordings have closed because there is, in effect, no market for legitimate recordings.^50(*)

Music piracy in Peru is so out of control that thousands of pirated audiocassettes and illegal music CDs are sold in the neighborhood of Mesa Redonda, the biggest illegal Peruvian pirate market; located in plain downtown one block away from the Police and the Public Ministry's headquarters.^51(*) In Mesa Redonda, one can find a complete CD collection including the Red Hot Chili Peppers, Offspring, Madonna, Placido Domingo, Eminem and Phil Collins. One can also find local artists like Pedro Suarez, Los Morunos or Los Toribianitos.

There are two kinds of pirates in Peru: large CD's plants and smaller scale «producers».^52(*) The first ones concentrate on pirating music by major international artists that they can export.^53(*) The smaller producers are dedicated to capturing the market for domestic artists.^54(*)

Pirate audio product in Peru appears in all formats - cassettes, CDs and now mostly CD-Rs. (recordable CDs) Customs figures indicate that were more than 10 blank CD-Rs legally imported into the country for every CD sold.^55(*)

Legal Regime in Peru

Peru follows the civil law tradition of France and Italy. In keeping with Peru's civil law tradition, case law is not binding. Similar to the United States, the judicial system is divided into lower courts, appellate courts and supreme courts, with some specialized courts in specific areas such as Criminal, Civil and Family Law.^56(*)

Peru's copyright law, embodied in Legislative Decree N° 822, defines the scope of covered scientific, literary, and works or combinations thereof. Peru`s 1996 Copyright law covers a broad range of economic rights in favor of the author/ producer, as well as some of the highest levels of criminal penalties in Latin America.^57(*) This comprehensive legislation raised the level of protection towards the standards of both TRIPS and the Andean Community decision 351.^58(*)

The Legislative Decree N° 822 created the INDECOPI Copyright Office^59(*) (Oficina de Derechos de Autor), which has the power to impose sanctions to the violators of the copyright, but not indemnities for copyright holders.^60(*) In addition, this office administers the National Register of Copyrights where works can be inscribed. This registration is optional for authors; it`s only a means of publicity and a proof of former right.^61(*) Hence, its omission doesn't harm the full enjoyment or exercise of the economic or moral rights of authors.^62(*)

Rights of authors or titleholders of artistic and literary works are protected irrespective of their nationality or their domicile. Copyright is independent and compatible with Trademark and Patent over the same work.^63(*)

Article 5 enumerates the works that deserve protection under this decree such as: choreographic works, works embodied in phonograms, sculptures, paintings, architectural works, maps. Also slogans or phrases if they have characteristics of originality and any other work in the artistic or literary domain that is original and can be divulged or reproduced by any means already known or later developed.

Independent of the author's economic rights, and even after the transfer of those rights, the author has the right to claim to be identified as the author of a work, except where omission is dictated by the manner of the use of the work, and to object to any distortion, mutilation or other modification of his work that would be prejudicial to his reputation.^64(*)

The rights granted to an author in accordance with article 22 of the Legislative Decree N° 822 shall, after his death, be maintained, at least until the expiration of the economic rights, and shall be exercisable even by his heirs. The economic rights of the author last for the life of the author plus seventy years after his death, irrespective of the country of origin of the work. In joint works, the period of protection will be counted from the death of the coauthor.^65(*) Administrative and criminal actions can be filed at the same time.^66(*)

The Peruvian Criminal Code was modified by Legislative Decree N° 822 making punishments for infringements of Copyright Laws more severe. Peruvian legislation is now comparable to legislation such as that of U.S., where felonious infringements for commercial advantage or private financial gain are the reproduction or distribution in a 180- day period of 10 copies (at least) of one or more copyrighted works with a total retail value of $2,500.^67(*) Such felony infringement is punishable by a maximum five-year prison term, or fines of not more than $250,000 ($ 500,000 per organization), or both, for a first offense; for a second or subsequent offense, the maximum prison term is 10 years.^68(*)

Article 217 of the Peruvian Criminal Code establishes for those who modify, reproduce or distribute a copy of a copyrighted work without the authorization of the author or the title holder a penalty of not less than two years nor more than six years in jail, and a fine of 30 to 90 times the average daily income for most infringements.

For the reproduction or distribution of illegal copies of a copyrighted work involving commercial purposes or the fabrication or modification of devices that prevent or restrict to make illegal copies of works of authorship Article 218 specifies that the sanction is not fewer than two years or more than eight years in jail and fine of 60 to 120 average daily income wages.

Article 221 provides the prior seizure of illegal copies and the devices or means employed to commit the crime. In addition, the law allows a judge to order a raid where the crime is being committed, at the Public Ministry's request. In case of a condemnatory sentence, the illegal duplications could be given to the titleholder whose copyright has been violated. This delivery won't have the character of indemnity.

However, these provisions are not actually imposed as a matter of practice by Peruvian judges. In a few cases involving video piracy, defendants have been issued sentences ranging from one to two years in jail.^69(*) Under Article 57 of the Peruvian Criminal Code, sentences of four years or less are suspendable. The results in these cases have been that the courts suspend the defendant's sentence. The only deterrent factor is that the defendant is prohibited from leaving the country (even this deterrent is suspended if the defendant files and appeal).^70(*)

Copyright Conventions ratified by Peru

Peru is a signatory of the most important conventions subscribed in copyright matters. In fact, Peru is a contracting party of the International Union for the Protection of Literacy and Artistic Works (Berne Convention).^71(*) The International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, known as the Rome Convention subscribed at Rome on October 26, 1961 was also ratified by Peru on August 7, 1985.^72(*)

The World Intellectual Property Organization (WIPO), a specialized agency of the United Nations, promoted the signature of a new convention: the Copyright Treaty and Agreed statements concerning the WIPO Copyright Treaty (herein after the WIPO Copyright Treaty) adopted in Geneva on December 20, 1996. Peru has been a party of this convention since March 6, 2002. This treaty doesn't prejudice any rights and obligations under any other treaties.^73(*)

Article 20 of this convention established that this treaty would enter into force three months after 30 instruments of ratification or accession by States have been deposited. Today, this convention is fully effective. 36 countries have already deposited its instruments with the Director General of WIPO, as was required.

Besides, Peru also has signed the WIPO Performances and Phonograms Treaty and Agreed Statements concerning the WIPO Performances and Phonograms Treaty,^74(*) on July 18^th, 2002.^75(*) The contracting parties subscribed to this convention as a desire to develop and maintain the protection of the rights of performers^76(*) and producers of phonograms.^77(*) Both WIPO treaties provide the basic framework for the transmission of content in e-commerce.^78(*) WIPO's copyright treaties make clear that copyright applies in the digital world as it did in the world of physical distribution, that record producers have the right to decide whether and how their recordings should be put on the Internet, and that technologies which help copyright owners control unauthorized copying should themselves be protected.^79(*)

Finally, Peru is a full member of the General Agreement on Tariffs and Trade (GATT). The revenue lost to piracy and other intellectual property rights infringements made it clear that a more effective solution to the piracy crisis was necessary.^80(*) Developed nations classify the lack of international copyright protection as a trade issue with defined economic effects.^81(*) After eight years of negotiations the Uruguay round of the GATT ended on December 15^th, 1993; GATT included an intellectual property agreement called Trade related Aspects of Intellectual Property Rights (TRIPS). On January 1^st, 1995 the World trade Organization (WTO) replaced the GATT, overseeing the same trade agreement that all WTO members must follow.^82(*)

The GATT option to international copyright infringement offers legally binding obligations, creating a much higher standard of relief by international agreement than in the Berne Convention, its amendments, or the UCC.^83(*) Under GATT, a signatory country cannot openly disregard its obligations without the threat of sanctions imposed by the GATT mechanism.^84(*) An offended copyright owner's nation can threaten the non-complying state with the imposition of the GATT disputes settlement provisions, which if ignored, can lead to trade sanctions.^85(*)

Many developing countries did not and still do not, fully comprehend the concept of copyright.^86(*) Developed countries, such as the United States,^87(*) respond to the economic injuries they suffer from pirates by using forceful retaliatory measures such as threats of trade sanctions.^88(*)

Enforcement in Peru

A special police unit was created in May 1997 to fight piracy and other economic crimes, and this unit was trained in Intellectual Property Rights (IPR) enforcement issues.^89(*) However, the police unit trained in IPR is ineffective in handling street piracy. The IPR industries agree that there is a need to create a special IPR unit in the police in order to conduct effective anti-piracy investigations.^90(*)

In early 1999, a huge CD plant commenced operations in Lima. After investigations were conducted by the recording industry, a judge agreed to issue a search warrant to raid this CD plant, suspected of manufacturing pirated CD product of major artists for export to Brazil, Paraguay, Bolivia, Ecuador, and the U.S. At the time of the raid, 125,000 pirate CDs had already left the plant. The success of this raid was the result of industry's patience in waiting for the right time to work this case with a judge, prosecutor and select police officers that were willing to enforce the copyright law. The CD plant had admitted its problems and has committed to implement strict methods to protect copyright. ^91(*)

Regarding the 1999 and 2000 pending criminal cases, the court issued five decisions.^92(*) In all five cases, the court sentenced the pirates to two years in prison that were suspended because of the said article 57 of the Criminal Code.^93(*)

Moreover, in April 2000, any copyright Industry associations in Peru joined with several Peruvian governmental entities in establishing special commission called the Comisión contra la Adulteración, Falsificación y Piratería (CONTRACOPIA)^94(*) Functions of this commission include analyzing the problems of each industry sector, proposing solutions to combat piracy, conducting economic studies on the extent of piracy and counterfeiting and reviewing current legislation.^95(*) Also, CONTRACOPIA has introduced a bill to modify the criminal code to increase penalties imposed for intellectual property crimes; the bill proposes sanctions as high as the ones imposed in the copyright law.^96(*)

In June 2001, the Peruvian National Police, raided el Hueco market and seized more than 1 million CD-Rs, almost 100,00 cassettes, 76,000 jewel boxes, 2 million inlay cards, and over 24,000 pirated music videos.^97(*) These operations are constantly undertaken every week all over the country.

On November 28, 2001, the Public Ministry and INDECOPI created a Special IP Prosecutor's Office, and appointed two special prosecutors. Before that, there was only one IPR prosecutor for the entire country, and this prosecutor was limited in his jurisdiction to the city of Lima.^98(*)

The action of the administrative authority charged with enforcing the copyright law, the INDECOPI Copyright Office (1^st instance) is promising, and for some of the copyright industries, did actually improve with respect to running raids.^99(*) However, troubles continue with the INDECOPI Appellate Tribunal (2^nd instance), which is slow in issuing decisions.^100(*)

Main problems to combat music piracy, effectively, in Peru

a. Delay in judicial system. - Under the criminal procedure code, courts delegate preliminary investigations to prosecutors, but the prosecutor must consult the court at each step in a case. Even though this would appear merely to reflect the traditional inquisitorial role played by judges in Civil Law jurisdictions, and therefore it is unlikely to change merely for the sake of enforcing Copyright Law.

b. Another problem exists at the prosecutorial level. After the police conduct the raids, the system breaks down. The prosecutors pursue few cases through judgment.

c. In Peru and many countries of Latin America, judges have had very little exposure to technology. Many judges, unfamiliar with the development of science, may lack a clear understanding of the economic harm resulting from copyright infringement. Thus, it is a common practice for Peruvian judges to make an undervaluation of the harm caused to the right holder. The Judiciary does not appreciate the complexities of calculating torts, damages and indemnities that are the products of contractual and extra contractual responsibility.^101(*)

d. Peruvian authorities don't make an exhaustive control of their borders. They permit that illegal products to enter the domestic market. The contraband of goods is killing the national industry and in this case, is directly affecting the music industry. Investigations show that every week thousands of blanck tapes and CD-Rs are smuggled into the country through Tacna from Chile (Iquique-Arica) and then are distributed for illegal duplication around the country.^102(*)

e. Additionally, music piracy also has been linked to organized crime and passive tolerance of piracy worsens crime and public safety. Often money paid for pirate CD's will be channeled into the drugs trade, money laundering or other forms of serious organized criminal activity.^103(*) Access to loans is difficult, thus pirates often look to organized crime for funds to start a «business» in return, mafias use pirate businesses for laundering money.

In fact, in late 1999 Latin American authorities tore down an illicit CD- producing factory in Paraguay. Taiwanese nationals employed by a Chinese organized crime syndicate ran the factory, which produced CD's for the Brazilian market.^104(*) The Italian mafia, Russian mobs, and Chinese triads are reportedly behind some of the largest pirating operations in the world.^105(*)

f. Music piracy is often considered a victimless crime because the infractors often come from the working class. Street vendors are people without a formal job. They do not choose to work illegally in the streets without benefits such as medical or pension plans. Street vendors perform this kind of activity because of necessity, as a way of surviving.

At the same time, pirated products are cheaper, so even the low-income families can purchase music. The general concept of a pirate is that of a good person who makes music accessible to people and music is indispensable for Peruvians.

g. There is also a problem of strategy for those who fight piracy. The authorities pursue only street vendors or producers at small scale. However, they do not take on the «big fish», the manufacturers at large scale. Without a rethinking of the strategy of fighting pirates, the war is already lost.

The menace of Internet

Even though Internet has provided great solutions (to increase the number of commercial transactions and reduce its costs; to get families and friends closer no matter the distance; to be better informed about what is happening all around the world; to make our lives easier to the entire world); it also has posed the biggest problem to the music industry in its way to combat and eradicate music piracy.^106(*)

Well-funded online services, such as Kazaa,^107(*) Music Match, Gnutella or Audio Galaxy,^108(*) have sprung up. Those business models promote widespread unauthorized copying of music without permission from or payment to the record companies, composers or artists that developed the music.^109(*) Online piracy is the unauthorized uploading of a copyrighted sound recording and making it available to the public,^110(*) or downloading a sound recording from an Internet site even, if the recording isn't resold.^111(*) Downloading, for personal use, is not a crime in Peru.^112(*) Even so, widespread downloading hurts legitimate CD sales and the development of legitimate online music services.^113(*) While it was enough when one person could make a copy of a song and give to a friend, now the same person can upload a song and make it available to millions on the Internet.^114(*) Internet piracy is not just a bit of harmless copying. It' s taking the music created by others and distributing it around the world without the artists having any choice in the matter.^115(*)

Digital Interactive Fingerprinting^116(*) (DIF) seems to be a strong solution to combat music piracy on line. It is providing the means to trace the identity of the person who downloads a copyrighted file which appears on an unauthorized website.^117(*) However, it is impractical, almost impossible to sue millions of people.

The music industry has responded by offering now online music distribution via Presplay (Sony and Vivendi Universal) and MusicNet (AOL Time, Warner, EMI, Bertelsmann's BMG, and Real Networks).^118(*) The problem that faces these digital services is that consumers expect the same breadth of selection and portability that websites as Aimster, Lime Wire and Bear Share offer. Consumers can find albums on these websites that are not longer in the retailers' stores because they are out of catalog. It is also questionable how much the consumers are willing to pay for these services.^119(*) To make legal downloading more affordable, convenient and attractive than illegal downloading is the answer.

Online piracy in Peru is «rudimentary» yet because access to computers is a privilege that few Peruvians has and access to Internet is a dream that has not come true for millions of Peruvians.^120(*) The situation is similar in Ecuador, Bolivia and most of the countries of Latin America and it may not dramatically change for a number of years to come. There is still time to find a real solution to Internet music piracy.

Universal Problem

As we can see, music piracy does not differentiate between third world countries and developed countries. For instance, Italy and Spain occupy the unhonorable sixth and seventh positions in the world's largest pirate markets. United States has a piracy problem too. In the United States CD-R piracy increased significantly in 2001: 2.8 million-pirate CD-R discs were seized, up from 1.6 million in 2000.^121(*)

Piracy is an issue worldwide. The problem is the same in Eastern Europe or in South Asia.

Means used by pirates can vary but the results are the same. In most countries of Latin America, street vendors favor the rapid increase of piracy. In the United States, where high technology is available and is widespread around the country; burners, computers and Internet at home plus purchases of CD-R's^122(*) cause the same damage.

To sign international treaties and to procure enforcement via raids in Peru or to impose one of the highest fines in the world for copyright infringement (if not the highest) and to utilize developed devices to detect piracy in the net by the United States will not provide a 100% effective solution to this problem. These measures are part of a more integral solution.

Nowadays, Peruvian authorities are making a big effort (certainly it could be better) conducting raids more frequently, having a special police unit that takes care of copyright infringements and increasing the number of IP prosecutors. However, it is not only with the enforcement of laws by the Governments that the problem will be resolved.

Piracy exists not only because there are persons who want to break the law expressly. There are other factors such as the cultural. Copyright in some countries is a completely alien concept.^123(*) For example, many people ignore that if they have a little business (nothing fancy, something that just permits the owners to survive) and they play some music to make the customers and themselves more comfortable, they have to pay a license fee.

Economics is another factor must be taken into account. It is not that people around the world prefer to purchase a pirate musical edition, they don't have another choice. Their budget is so tight that the cost of a «legal CD» is unaffordable. The option that many people have is music or no music? What would you choose in that case?

Recommendations

Recording Industry Actions. -

- The recording industry must reduce its prices if it does not want to go out of business. People are willing to purchase CD's for themselves or to give them as gifts but CDs are not the only necessity in their lives.

CDs have to be marketed at a reasonable price. Consumers want quality and they don't want to cause harm to all the people involved in the music business. Alternatively, for the people of low economic resources, the recording industry should make popular editions at lower cost.^124(*)

- The recording industry has tried different approaches in its goal to defeat piracy. The use of encryption as a means of protection against illegal duplications is being tried. The results are not favorable because decryption has been converted in another step on the modus operandis of pirates. Putting holograms onto the CDs is another way that has been used to recognize pirated CDs.^125(*) This does not help to eradicate piracy.^126(*) Watermarking digital certifications have also failed in the fight against music piracy. However, technology offers immense possibilities, there may be a technological solution in the future.

Government focus. -

- In the absence of a functioning judicial system and with the inactivity of other governmental representatives, manufacturers must take it upon themselves to reduce piracy. A good example of self-help is FLAPF (Federación Latino Americana de Productores de Fonogramas). Affiliated with IFPI, the FLAPF began a succesful anti-piracy campaign in mid-1996, with 50 people working full-time to combat the problem. The campaign began with a focus on Argentina, Brazil, Mexico, and Paraguay, with the last being identified as the worse case.^127(*)

Peruvian authorities lack the capacity to deal with this problem and the Peruvian Government does not have the economic resources to train adequately its personal involved in the fight against piracy. Other Latin American Governments face a similar situation. The RIAA, the FLAPF and/or the IPFI can offer training to judges, prosecutors and police in order to expedite criminal prosecutions for piracy.

- Online Piracy in not a major problem in Peru or in most countries of Latin America. . The Peruvian Congress must enact Internet p1iracy legislation before it becomes a serious challenge. In the meantime, the recording industry and others affected by piracy must work towards a more efficient solution. A solution that prevents infringement without restricting access, in order to avoid an open conflict with consumers.

- As long as there is consumer demand for pirated prices, counterfeiting will exist at some level. The best way to combat effectively piracy is to educate consumers, to create a customer's culture.

- Piracy is a threat to countries' development. It discourages innovation by rewarding imitation. Intellectual Property infringement is an obstacle to a nation's prosperity.  

What kind of society do we want? Cultural aspects aside, I am sure everybody agree we want a society in which the effort and hard work of each individual is respected and compensated.

* ¹ Kenneth D. Ebanks, Pirates Of The Caribbean Revisited: An Examination of The Continuing Problem of Satellite Signal Piracy In The Caribbean & Latin America, L. & Policy Intl. Bus. 33(1989).

* ² Sound recordings are properly defined by 101 of the Copyright Act of 1976 as «works that result from the fixation of a series of musical, spoken or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as discs, tapes, or other phonorecords, in which they are embodied». Thus, a sound recording could be the performance of a literary work as the poems of the Peruvian Cesar Vallejo. However, they involve typically musical works.

* ³ Peru.Com, Turismo <http://www.peru.com/turismo/english/elperu/> (accessed Oct. 11, 2002).

* ⁴ Id. In addition, Peru features one of the world's richest fishing grounds, thanks to its special climatic conditions and a wealth of nutrients that have give rise to a staggering number of fish species (more than 900), mollusks, crustaceans and 33 species of sea mammals.

* ⁵John Pike, Sendero Luminoso (SL) Shining Path < http://www.fas.org/irp/world/para/sendero_luminoso.htm> (last updated Sept. 22, 2002).

* ⁶ Instituto Nacional de Estadística & Informática (INEI), Peru En Cifras < http://www.inei.gob.pe/> (accessed November 01, 2002). In Peru, the minimum salary is 410 soles (114.75 U.S. dollars) per month. This amount t is received by a big percentage of the population. The average-salary received monthly by a person working for the Peruvian Government is 888.73 soles (248.94 US dollars). Only 68.5% of the population, able to work, has employment. Is true that the cost of living in Peru is low, but not low enough to live properly with only 410 soles.

* ⁷ Yvan Cohen, Software Pirates Pile Up Profits In Afflicted Asia, Christian Science Monitor, Dec. 29, 1997, quoted in Rama John Ruppenthal, Trips Through The Far East: High Tech Product Piracy & The End for Alternative Regional Solutions, 20 Wis. Intl. L. J. 152 (2001).

* ⁸ Recording Industry Association of America (RIIA), Releases Year-End Anti-Piracy Statistics 1997 < www.riaa.com/apyr97.htm>, quoted in Jeanmarie Lovoi, Competing Interests: Anti-Piracy Efforts Triumph Under TRIPS But New Copying Technology Undermines The Success, 25 Brook. J. Intl. L. 453 (1999).

* ⁹ RIAA, CD-R Piracy < http://www.riaa.com/Protect-CDR.CFM> (accessed Oct.13, 2002).

* ¹⁰ Audio Home Recording Act 1992, 17 U.S.C. 1008 (1992).

* ¹¹ Audio Week, Warren Publishing, Inc. October 28, 2002. On the day of enactment, AHRA was heralded as landmark legislation to spur developing mass market in consumer digital audio recorders, free from threat of litigation from music copyright holders. Ten years later, AHRA's birthday has come and gone with little notice from recording industries that worked hard on drafting that compromise legislation. One reason as that markets that developed for consumer digital audio recording products covered under AHRA's scope such as Digital Compact Cassette, Minidisk and Audio CD Recorders, were a lot less significant than anyone would have imagined.

* ¹² No action may be brought under this title (Copyright Act) based on the manufacture, importation or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium or based on the non-commercial use by a consumer of such a device or medium for making digital music recordings or analog musical recordings.

* ¹³ Sony Corp. of America v. Universal City Studios, Inc, 464 U.S. 417 (1984).

* ¹⁴Negativland, Shiny, Aluminum, Plastic & Digital < http://www.negativland.com/minidis.html (accessed Oct.18, 2002).

* ¹⁵ Id. Negativland has its own theory about this sudden change. «It was not because of the customer's preference. There is a common business practice between distributors and record stores. Stores can buy something from a label, and if they don't sell, they can return it. However, in the spring of 1989 all seven major distributors (i.e. Sony, Warner, Emi, etc) announced that they would no longer accept returns on vinyl and also they began deleting much of the vinyl versions of their catalog. These actions literally forced record stores to stop carrying vinyl. They could not afford the financial risk of purchasing releases on vinyl because if they didn't sell they would be stuck with them. The consequence of this was that the customer no longer had a choice.»

* ¹⁶ Steven Albini, The Problem With Music, Negativland < http://www.negativland.com/albimi.html> (accessed Oct.19, 2002). Albimi, an independent producer, says that when he talks to a band who are about to sing with a major label, he imagine a faceless industry lackey at the other end holding a pen and a contract waiting to be signed. Nobody can see what `s printed on the contract, he adds.

He puts a very illustrative example. In his scenario a band sold a 250 thousand copies and this is the balance.

Record Company: $ 710,000

Producer: $ 90,000

Manager: $ 51,000

Studio: $ 52,500

Previous label: $ 50,000

Agent: $ 7,500

Lawyer: $ 12,000

Band member net income cash: $ 4,031.25

* ¹⁷ Negativland, supra n. 14. A CD, with its plastic jewel box, printed booklet and tray card now costs a major label about 80 cents each to make (or less) and a small independent label between $ 1.50 and $ 2.50. Meaning that CDs should now cost the consumer less than their original price over a decade ago.

* ¹⁸ Craig Joyce et al., Copyright Law, 208 (2001). In their opinion record pirates can undersell legitimate companies because they do not have to pay the costs of producing a record, the royalties owed to the performers or the advertising and promotional expenses associated with marketing an album. Additionally, record pirates reproduce only popular albums. Record Companies must use the rare profitable albums to support the costs of producing the many others, which lose money.

* ¹⁹ Ruppenthal, supra n. 7, at 152.

* ²⁰ Id., at 151.

* ²¹ International Intellectual Property Alliance (IIPA), 2002 Special 301 Report Peru < http://www.iipa.com/rbc/2002/2002SPEC301PERU.pdf> (accessed Sept. 11, 2002).

The IIPA in an organization that represents a significant segment of the Copyright Industry, the alliance consists of the Computer Software and Services Industry Association, the American Film Marketing Association, the Computer and Business Equipment Manufacturers Association, the Motion Picture Association of America, the National Music Publishers Association and the Recording Industry Association of America

* ²² Id.

* ²³ International Federation of the Phonographic Industry (IFPI), Global Report Shows Disc Piracy 50% Up Despite Sharp Increase in Enforcement Actions < http://www.ifpi.org/site-content/press/20020611.html> (accessed Oct.19, 2002).

* ²⁴ Rebeca Lim, One Third Of World Piracy Sales Are CDs, The Straits Times, June 14,1994, quoted in Linda W. Tai, Music Piracy In The Pacific Rim: Applying A Regional Approach Towards The Enforcement Problem of International Conventions, 16 Loy. L.A. Ent. L. J. 179 (1995).

* ²⁵ Robin Ann King, Copyright Protection & Piracy In The Latin Music Market < http://www.acceso-access.com/musiccopyright.htm> (accessed Dec. 04,2002).

* ²⁶ Id.

* ²⁷ IFPI, Music Piracy Report 2002, < http://www.ifpi.org> (accessed Sept. 06,2002).

* ²⁸ Albimi, supra n. 16.

* ²⁹ IFPI, supra n. 23.

* ³⁰ RIAA, Copyright Basics, Federal Laws < http://www.riaa.org/Copyright-Laws-2.cfm> (accessed Nov. 01, 2002). The federal Anti-Bootleg Statute {18 USC 2319 A} prohibits the unauthorized recording, manufacture, distribution or trafficking in sound recordings or videos of artists' live musical performances. Violators can be punished with up to 5 years in prison and $ 250,000 in fines.

* ³¹ Clifford A. Congo, Drawing A Distinction Between Bootleg & Counterfeit Recordings & Implementing A Market Solution Towards Combating Music Piracy In Europe, 17 Dick. J. Intl. L. 396 (1999).

* ³² Id.

* ³³ Id.

* ³⁴ Miha Trampuz, Examples & Problems of Copyright Enforcement, Intl. Co. & Com. L. Rev. 174 (2002).

* ³⁵ IFPI, supra n. 27.

* ³⁶ Audrey Chapman, UNESCO, Copyright Bulletin, Approaching Intellectual Property As A Human Right < http://unesdoc.unesco.org/images/0012/001255/125505e.pdf> (accessed Nov. 01, 2002) Artistic and scientific works are not first and foremost economic commodities whose value is determined by their utility and economic price tag. A human right approach recognizes that an author, artist or creator can be a group or a community as well as the individual. A human rights approach also takes the implicit balance between the rights of inventors and creators and the interests of the wider society within intellectual property paradigms and makes it far more explicit and exacting. In conclusion, a human-rights orientation is predicated on the centrality of protecting and nurturing human dignity and the common good and welfare of the society.

* ³⁷ IFPI, supra n. 23.

* ³⁸ Trampuz, supra n. 34, at 175.

* ³⁹ Id.

* ⁴⁰ IFPI, supra n. 27.

* ⁴¹ Trampuz, supra n. 34, at 175.

* ⁴² Id.

* ⁴³ IFPI, supra n. 27. Piracy worsened across Latin America in the 21st century. Brazil is the biggest Latin pirate market, worth US$ 215 million, while Mexico is just behind. The Paraguayan market, though small, has the highest piracy level in the world at 99%. It is a major transit center for pirates in Latin America.

* ⁴⁴ Id. Piracy in Latin America has never been greater, and legitimate music sales never worse. In terms of unit sales and value, the average decrease in Mexico and Brazil, our biggest markets, was 25 percent last year. In Argentina, the third-largest country, the market has pretty much been wiped out.

* ⁴⁵ Id. Moreover, this report shows us that the top five globe largest markets in terms of domestic piracy levels are: China, Ecuador and Pakistan (90%), Bolivia, Indonesia and Lithuania (85%) Russia (65%), and Mexico (60%). South Asia remains at the «summit» of pirate CD manufacturing; this region provides seven of the top ten disc manufacturing countries.

* ⁴⁶ IIPA, supra n. 21.

* ⁴⁷ Id.

* ⁴⁸ Id.

* ⁴⁹ Id.

* ⁵⁰ Id.

* ⁵¹ IIPA, Request For The Review Of The Intellectual Property Rights Practice Of Peru In 1999 Annual GSPCountry Eligibility Practices Review < http://www.iipa.com/gsp/1999_Jun16_cmts_peru.html> (accessed Sept. 25, 2002). Mesa Redonda is comparable to Ciudad del Este, a pirate's paradise located on Paraguay's border with Argentina and Brazil where the city's streets are crowded with vendors hawking fake sneakers, music, clothing, etc. The Mexican District of Tepito is another good example of the level of lawlessness reached in Latin America.

* ⁵² IIPA, supra n. 21.

* ⁵³ Id.

* ⁵⁴ Id.

* ⁵⁵ Id.

* ⁵⁶Emmanuel Publishing Corporation, Emmanuel Law Outlines, Civil Procedure < http://www.aspenpublishers.com/emanuel.asp?promoID=EMANUELREDIR> (accessed Nov. 27, 2002).

* ⁵⁷ IIPA, supra n 21.

* ⁵⁸ IIPA, supra n. 51. On December 17, 1993 the Andean Community (Peru, Venezuela, Colombia, Ecuador and Colombia) adopted Decision 351, which established a common regime on copyright and neighboring rights. This decision set up rudimentary, enforcement mechanisms, including injunctive relief, seizure and confiscation of unlawful copies and devices, and damages many of which need to be implemented into national legislation.

* ⁵⁹ Instituto Nacional De Defensa De La Competencia & De La Protección De La Propiedad Industrial (Industrial Copyright Office of National Institute for the Defense Competition and the Protection of Intellectual Property) (Indecopi) < http://www.indecopi.gob.pe/> (accessed Sept. 25, 2002).

* ⁶⁰ < http://www.leyes.congreso.gob.pe> (accessed Sept. 29, 2002). Indemnities are reserved to the judiciary. INDECOPI, an administrative entity, can only dictate sanctions: to impose fines, to close the businesses of infractors, to seize pirate's goods. If the right holder wants to obtain compensation, he must go to the judiciary. INDECOPI Copyright Office can proceed ex oficio, not only by petition of a third party.

* ⁶¹ Id., article 170.

* ⁶² Id.

* ⁶³ Id., article 4.

* ⁶⁴ Id., articles 25, 26.

* ⁶⁵ Id., article 52.

* ⁶⁶ Id., article 173.

* ⁶⁷ Julian Millstein, Jeffrey Neuburger & Jeffrey Weingart, Doing Business On The Internet: Forums & Analysis, S 3.02, J. Press (2002).

* ⁶⁸ Id. For felonies infringement for noncommercial purposes is punishable by a maximum three-year prison term or a fine (not more than $250,000 per individual) or both for a first offense; for a second or subsequent offense the maximum prison term is six years.

* ⁶⁹ IIPA, supra n. 51.

* ⁷⁰ IIPA, supra n. 21.

* ⁷¹Berne Convention For The Protection Of Literary & Artistic Works, (Sept. 9, 1886), < http://www.wipo.int/clea/docs/en/wo/wo001en.htm>. The Berne Convention adopted in 1886 represented the firs intent to recognize protections to Copyrights beyond the physical boundaries of a certain country. Peru ratified this convention on August 20, 1988.

* ⁷² Today sixty-nine countries have adopted the Rome Convention.

* ⁷³ WIPO Copyright Treaty & Agreed Statements Concerning The WIPO Copyright Treaty, (Dec. 20, 1996), < http://www.wipo.org/copyright/en/index.html>. Unlike other treaties as The Berne Convention or the Rome Convention, this treaty does not admit reservations.

* ⁷⁴ WIPO Performances & Phonograms Treaty & Agreed Statements Concerning The WIPO Performances & Phonograms Treaty, (Dec. 20, 1996), < http://www.wipo.org/copyright/en/index.html> The WIPO Performances and Phonograms Treaty was adopted in Geneva on December 20^th, 1996. This treaty does not derogate from existing obligations that Contracting Parties have to each other under the Rome Convention.

* ⁷⁵ Thirty-eight states have ratified the WIPO Performances and Phonograms Treaty until October 15^th, 2002. Article 29 of this convention required 30 instruments of ratification or accession by States in order to be enforced.

* ⁷⁶ This treaty define as performers not only singers or musicians. Actors, dancers, and other persons, who act, sing, deliver, declaim, play in, interpret, or otherwise perform literary or artistic works or expressions of folklore are considered within the scope of protection of it.

* ⁷⁷ Producer of a phonogram is the person, or the legal entity, who or which takes the initiative and has the responsibility for the first fixation of the sounds of a performance or other sounds, or the representations of sounds.

* ⁷⁸ IIPA, supra n. 21.

* ⁷⁹ IFPI, supra n. 27.

* ⁸⁰ Marshall Leaffer, Protecting United States Intellectual Property Abroad: Toward New Multilateralism, 76 Iowa L. REV. 273,275 (1991), quoted in Lovoi, supra n. 8, at 456.

* ⁸¹ Peter Gakunu, Intellectual Property: Perspective Of The Developing World, 19 Ga. J. Intl. & Comp. L. 358, 359 (1989), quoted in Tai, supra n. 24, at 173.

* ⁸² WTO, What Is The WTO? < http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm> (accessed Oct. 22, 2002). The World Trade Organization, with 144 members until January 2002, is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

* ⁸³ Mary Mosquera, Piracy Stunt Latin America Software Growth, Tech Web News, Oct. 6, 1999, quoted in Tanya Poth, The Computer Piracy Highway, 28 Denv J. Intl. L. P. 478 (2000).

* ⁸⁴ Mark Damschroder, Intellectual Property Rights & The GATT: United States Goals In The Uruguay Round, 21 Va. J. Intl. L. 367,390 (1988), quoted in Tai, supra n. 24, at 174.

* ⁸⁵ William Stanback, International Intellectual Property Protection: An Integrated Solution To The Inadequate Protection Problem, 29 Va. J. Intl. Law. L. 517,523 (1989), quoted in Tai, supra n. 24, at 174.

* ⁸⁶ John Gurnsey, Copyright Theft 27-28 (1995), quoted in Lovoi, supra n. 8, at 459.

* ⁸⁷ According to The IIPA 2002 Report, estimated loses due to piracy of U.S. copyrighted materials in Peru were $84 million in 2001.

* ⁸⁸ One typical trade related retaliatory measure used by the United States again countries that do not respect intellectual property rights is the section 301 Provisions in the Trade Act of 1974. Section 301 grant the United States Trade Representative (USTR) the authority to take action when she believes than an act or policy of a foreign country denies benefits to the United States under any trade agreement or restricts United States commerce. USTR, 2001 Special 301 Report < http://www.ustr.gov/enforcement/special.pdf> (accessed Oct. 25, 2002). The USTR designates problems countries under a set of categories. The most severe category, the «priority foreign country» is one, which has the most onerous policies in regard to Intellectual Property Rights Protection (IPRP). The next category, «the priority watch list» is reserved for countries without adequate IPRP who nevertheless are not as severe offenders as the priority foreign countries. Finally, the «watch list «designates countries considered to provide better IPRP than those in the other two categories, but which the USTR feels still need to be monitored.

Peru was moved to the Watch List in April 2001, after two years on the Priority watch list because of improvements in Peru's IPR Law.

* ⁸⁹ IIPA, supra n. 21.

* ⁹⁰ Id.

* ⁹¹ IIPA, supra n. 51.

* ⁹² IIPA, supra n. 21.

* ⁹³ Id.

* ⁹⁴ Contracopia < http://www.contracopia.org.pe> (accessed Nov 01, 2002). CONTRACOPIA is compound by governmental entities such as the Public Ministry, the Police, INDECOPI, SUNAT (governmental entity in charge of the collection of taxes) and copyright industry associations such as the Peruvian Association of Authors and Composers, the Business Software Alliance, the Pharmacy Industry Association, the Motion Pictures Association, Peruvian Committee of Producers of Phonograms and Videos, etc.

* ⁹⁵ IIPA, supra n. 21.

* ⁹⁶ Id.

* ⁹⁷ Id.

* ⁹⁸ IIPA, supra n. 51.

* ⁹⁹ Id.

* ¹⁰⁰ Id.

* ¹⁰¹ Fortunately, this is beginning to change. With the new globalized era technology is being available in Peru and, in that manner, judges have a better understanding of the damages caused to copyright holders. Also, judges are better paid now making attractive the judicial career. Very capable lawyers, who were working in the private sector, are entering into the Judicature improving the quality of the service of Justice.

* ¹⁰² IIPA, supra n. 21.

* ¹⁰³ IFPI, supra n. 27.

* ¹⁰⁴ Cara Buckley, One Third Of CDs Around The World Are Copies, Miami Herald, October 3,2000, available in Lexis.

* ¹⁰⁵ Id.

* ¹⁰⁶ Retailers and music recorders (specially in the U.S., France, Denmark and Belgium) face, nowadays, the biggest crisis of its history due to Internet piracy.

* ¹⁰⁷ Kazaa < http://www.kazaa.com/us/index.php> (accessed Oct. 24, 2002). Kazaa has started to charge $ 1.99 monthly for a 1-year membership. For that amount, one can download unlimited songs, download full movies, free virus protection and download accelerator.

* ¹⁰⁸ Audiogalaxy < http://www.audiogalaxy.com/> (accessed Oct. 29, 2002). Recently, this web site began to charge for its services. You just type the name of the artist or the name of the song you are looking for and voila! Almost immediately appear the different existing versions of your request.

* ¹⁰⁹ IFPI, supra n. 27.

* ¹¹⁰ RIAA, What Is Piracy? < http://www.riaa.org/Protect-Campaign-1.cfm> (accessed Oct. 24, 2002).

* ¹¹¹ RIAA, supra n. 30. In the U.S., the Digital Millennium Copyright Act delineates the responsibilities of Internet service providers (ISP's) in cases of infringement online. The law formalizes a notice and takedown procedure between ISPs and copyright owners. It is now clear that when an ISP is aware it is posting or transmitting infringing content, the ISP must act to remove the infringing works or it may be liable for any resulting damages. The DMCA also contains the key agreement reached between the RIAA and a coalition of webcasters and satellite audio delivery services. This section provides for a simplified licensing system for digital performances sound recordings, such as those on the Internet and through satellite.

* ¹¹² Id. In the U.S., the No Electronic Theft Act (NET) criminalizes sound recording copyright infringements regardless of whether there is a financial gain from such infringements. A copyright is infringed when a song is made available to the public by uploading it to an Internet site for other people to download, or otherwise reproducing or distributing copies without authorization from the copyright owner. Actually the NET Act defines financial gain as the receipt or expectation of receipt of anything of value. It sets penalties for willful copyright infringement. The infringement can be punished by up to 3 years in prison and $250,000 in fines, even if there is no financial gain. Individual also may be held civilly liable regardless of whether the activity is for profit, for actual damages or lost profits, or for statutory damages up to $150,000 per infringed copyright.

On the other hand, Peruvian Law does not contemplate this type of sanctions. Under article 41 of the Legislative Decree N° 822, individuals can make copies of music recordings for personal noncommercial use (it doesn't matter the devices employed) and cannot be sued for copyright infringement. WIPO's treaties cover these aspects but still they need a Peruvian legislation's adaptation in order to comply with these agreements.

* ¹¹³ IFPI, supra n. 27.

* ¹¹⁴ John A. Tessensohn, A New Dawn In The Japanese Fight Against Digital Piracy, Ent. L. Rev. 1888 (1999).

* ¹¹⁵ IFPI, supra n. 27.

* ¹¹⁶ PAN Network, How To Stop Online Music Piracy < http://www.pan.com/piracy/> (accessed Nov. 25, 2002). The DIF can be installed on any website, and interacts transparently and seamlessly with any media file (i.e. MP3, RA, WMA, etc). The system includes built-in detection of unauthorized files on the Internet by means of a search engine. The search engine constantly scans the Internet for the presence of DIF fingerprinted files and will automatically alert the copyright owner should any of their files be detected on a unauthorized website.

* ¹¹⁷ Id.

* ¹¹⁸ Grace Bergen, Speech, Beyond Napster- The Future Of The Digital Commons (Sacramento, Ca., Oct. 08, 2002) (University of the Pacific, McGeorge School of Law).

* ¹¹⁹ Id. Digital services must work out cooperative agreements. Ex: Pressplay won't allow file sharing, MusicNet will if members share with other paying members of same service. What happens if Pressplay member wants to share with friend who belongs to MusicNet?

* ¹²⁰Pedro Canchari Palomino, Adicción A Internet En Lima Perú < http://www9.gratisweb.com/iadperu/Enperu.htm> (accessed Nov. 25, 2002). Until 1998 the number of PC was calculated in 749,464. The Peruvian National Institute of Statistics (INEI) considers that 3,3 % of the Peruvian population estimated today in 26'748, 972.00 million people, has access to the cyberspace.

* ¹²¹ IFPI, supra n. 23.

* ¹²² In the U.S., nowadays, is a fact that CD-Rs are the most selling item in a retailer store.

* ¹²³ Gurnsey, supra n. 86, at 459.

* ¹²⁴ For example, instead of a fancy booklet add only a sheet with the basic: names of the songs and author; replace the tray card for a plastic wrap to protect the CDs. <http://www.larepublica.com.pe/> (accessed Oct. 29, 2002). Peruvian Newspapers such as «La República» and «El Popular» have begun selling cheaper CDs editions (no more than 12 soles - U.S.$ 3.50 approximately) of the most popular domestic artists. Those campaigns were a success.

* ¹²⁵ The Brazilian Government is discussing a controversial new law. Every CD would require bear an individual number. If this law is approved, CDs cost will increase.

* ¹²⁶ RIAA, supra n. 9. People know when they are purchasing a pirate product. CDs are easy to spot. They are typically gold on one side with a greenish tint on the non-graphic or «read-only» side.

* ¹²⁷ RIAA, Latin Music Piracy < www.riaa.com/Protect-Latin.cfm> (accessed Nov 26, 2002). RIAA follow this type of initiative opening an office in 1998 at Miami, the hub for both the legitimate and illegal music market. This new office was created to best serve the U.S. Latin music industry, including Latin labels, artists, songwriters and producers. The opening of the Miami office has resulted in more effective communication with Latin member companies. As a result, RIAA has seized pirate music. (Nearly 50% of all was Latin).

In addition, the RIAA clamped down on illegal CDs manufactured in the United States and shipped to Latin American music markets. One example of this effort turned up 70,000 counterfeit Brazilian CDs en route to Latin America.