IPCreport 2004

THE IP COALITION REPORT I:
COPYRIGHT IN THE PHILIPPINES 2004

The IPC Philippine Report Series
November 2004
THE IP COALITION REPORT I: COPYRIGHT IN THE PHILIPPINES 2004
A Report Written Under a Study Grant from Microsoft Philippines to

Upecon Foundation
In cooperation with the Intellectual Property Coalition of the Philippines
2
PREFACE
The intellectual property rights (IPR) concerns have been gaining popularity internationally, but intensive studies on
IPR issues have not yet been fully developed in the Philippines. In response to this need for information, the
Intellectual Property Coalition (IPC), in partnership with the UPECON Foundation, conducted this analysis on the
protection of intellectual property rights in the country. The IPC is the leading federation of IP Rights Stakeholders and
Organizations in the Philippines, and is composed of the following organizations, namely: COMPACT; Filipino Society
of Composers, Authors, and Publishers (FILSCAP); Philippine Association of the Recording Industry Inc. (PARI);
AVIDPHIL; Business Software Alliance; Asosasyon ng Musikong Pilipino Foundation; Philippine Entertainment Industry
Foundation, Inc.; Brand Protection Association; KATHA; Movie Producers and Directors Association of the Philippines
(MPDAP), Philippine Software Industry Association, Inc. (PSIA), Quezon City Chamber of Commerce and Industry,
Inc., American Chamber of Commerce and Industry, and Microsoft, Inc.
The IPC Report focused on the issue of IPR protection in the country, specifically in the area of copyright. First, brief
profiles of the copyright-based industries in the Philippines, namely the software, music/recording and video industries,
were presented using statistical data from government and private agencies. Included in this section are the analyses
of the effects of piracy on the economic performances of the identified industries.
The second part of the research, which is considered as the heart of the study, examined the state of IPR protection.
An Intellectual Property Rights Protection Model was devised to serve as a framework for the analysis. The model
identified three cornerstones of IPR protection, namely: 1) Policy and Regulation, 2) Enforcement and Adjudication,
and 3) Public Information and Education Campaign. Under the Policy and Regulation section, the different IPR laws
and regulations in the Philippines were determined, including the most recent ones that have been passed in the
Philippine legislation. This section encompasses laws concerning copyright and patents, and other legislative
measures regarding border controls and electronic commerce. Meanwhile, the different IPR enforcement activities, by
both the government and private sectors, were presented under the section Enforcement and Adjudication. Here, the
relationships between the piracy rates (software, music and video piracy rates) and the enforcement activities were
analyzed. Lastly, the section on Public Information and Campaign identifies the various efforts of the government, IPR
stakeholders, and private organizations, in educating and informing the public on IPR issues and concerns.
The paper also presented Insights on the Intellectual Property Rights Protection discussing the interrelationships
between and among the legal, social, and economic aspects of the endeavor. The legal side involves the laws
governing the IPR and the judicial processes involved in trying IPR cases. These are the de jure institutional
arrangements wherein the government is the recognized main authority on the subject. The social side of IPR deals
with the social attitudes and customs towards the legitimacy of the rights on intellectual property. In this section, it was
stressed that in intellectual property rights, or any property rights issue for that matter, one vital concern is the
acceptance of society that intellectual property is an asset in which rights can be allocated to. That it is an income
stream that needs management, hence, the provision of the rights. It is significant, therefore, that this knowledge or
thinking be ingrained in the value system or norms of the society. On the economics side, the demand and supply of
intellectual property assets were discussed.
In general, the study determined the importance of intellectual property rights protection in the Philippines; and how the
government, as well as the private sector, responded to the need for it.
3
Table of Contents
4
BACKGROUND
Before discussing the issues covering the intellectual property rights protection, one must first understand the concept
of property rights itself and the intricacies involved in the system of its implementation. A property right is the authority
to undertake particular actions related to a specific field. It is an instrument of society; and derives its significance from
the fact that this right helps man to form expectations that he can reasonably hold in his dealing with others. The said
expectations find expression in the laws, customs, and traditions of a society. An owner of property rights holds the
consent of his fellowmen to allow him to act in particular ways.
As Schlager and Ostrom (1992) stated, there are two components vital to the understanding of property rights: one is
the authority scheme and the other is the specific domain. For every right a person holds, rules exist that authorize or
require particular actions in exercising that property right. The rules pertain to the instructions that create authorization.
For property rights, there are two relevant rule structures, namely, the operational rules and collective-choice rules.
Operational rules define who can participate in which situations, what participants may, must or must not do, and the
reward and punishment scheme involved in the actions (Tang, 1991, as cited by Cuevas, 1994). On the other hand,
collective choice rules specify who may participate in changing the operational rules and the level of agreement
required for their change (Schlager and Ostrom, 1992).
Both the operational and collective choice rules form a system called institutional arrangements. Ostrom (1990) defined
these to be the set of working rules that are used by society to determine: 1) who is entitled to make decisions in some
arena, 2) what actions are permitted or constrained, 3) what aggregation rules will be used, 4) what processes will be
followed, 5) what information must and must not be provided, and 6) what pay-offs will be given to individuals
depending on their actions (as cited in Cuevas 1994). Accordingly, institutional arrangements of property are a public
system of rules specifying permissible and forbidden actions in relation to ownership, use rights, responsibilities, and
obligations of individuals and groups. They include mechanisms for defining and enforcing property rights; hence, they
involve both the formal procedures and social customs and attitudes concerning the legitimacy and recognition of those
rights (Feder and Feeny, 1991). Therefore, like the rules that comprise it, an institutional arrangement's main function is
to define one individual vis--vis others, both within the group and with individuals outside the group (Bromley and
Cernea, 1989).
Institutional arrangements are classified into two, the de jure and de facto arrangements - the former being the rules
and regulations recognized and legitimized by the state, while the latter are arrangements that have evolved into norms
that have been accepted and affirmed by the people in the community and society as laws. It is perceived that between
the two, the de facto system has a stronger impact on society's behavior. A de facto arrangement is an established and
stable phenomenon which everyone conforms to, and which everyone expects others to obey.
With this discussion, how do we now deal with the issues involving intellectual property rights?
Vital to this concern is the acceptance of society that intellectual property is an economic asset in which rights can be
allocated to. That it is an income stream that needs management, hence, the provision of the rights. As an asset it is a
good and/or service with definite economic value, and with implications for trade and competition in the market. 1
This leads us to the importance of protecting intellectual property rights. Safeguarding the rights of scientists, artists,
and other holders of IP encourages more intellectual property creations. This means more inventions, innovations,
discoveries, and scientific discussions that will develop our indigenous science and technology (Optical Media Bill FAQ
Primer). In addition, the creative geniuses of Filipinos in the fields of arts and music are also promoted to emerge and
thrive. Therefore, by protecting the IPRs, we not only develop our economy though the economic revenues generated
by the endeavors, but we also support the growth of our culture.
1
Intellectual Property and Economic Growth with Special Attention to Copyright and Related Rights. Lecture prepared by
Dr. Mihaly Fiscor, Director, Center for Information Technology and Intellectual Property (CITIP), Budapest for the WIPO-
ESCWA Arab Regional Conference on Recent Developments in the Field of Intellectual Property, Beirut, May 5 and 6,
2003.
5
Figure 1. CONCEPTUAL FRAMEWORK:

Industry Inter-relationship in the Economy
Pharmaceutical
Industry
Biotechnology
Chemical Industry
Industry
Licensing
Patents
Licensing Licensing
Patents Patents
Copyright Movie
Manufacturing Trademarks Industry
Industry Patents
INTELLECTUAL
PROPERTY
RIGHTS
Copyright Copyright
Licensing
Information
Technology Copyright Music Industry
Software Industry
Literary/
Publishing
Industry
IPR protection also allows efficient and effective technology transfers. A country would only be willing to export its
technology if it is confident that it will be able to receive the just economic rents. Numerous studies have concluded a
direct relationship between IP protection and foreign direct investments. 2 Hence, foreign investment decisions are also
dependent in the state of IPR infringements in a country.
With the growing globalization and rapid development in the international distribution systems, intellectual property
assets are of central importance in many industries. These industries dependent on intellectual property rights are also
becoming significant contributors to the economies of many nations. To stress this point, the framework presented in
Figure 1 shows that the various industries in the economy are inter-related through the institutional arrangements that
govern the intellectual properties/resources of the players. As earlier defined, these institutional arrangements include
the mechanisms for defining and enforcing property rights; that is, they include both the formal procedures and the
social customs and attitudes concerning the legitimacy and recognition of those rights. Through these institutional
arrangements, different industries in the economy are perceived to be major players in protecting and benefiting from
intellectual property rights. These rights are the determining factors in claiming economic rents from their intellectual
assets.
With the significance of IPR in industries, countries move to protect these rights. Such movements include the creation
of international copyright treaties like the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS),
and the formation of international organizations like the World International Property Organization (WIPO) that
advocate intellectual property rights (IPR) protection. In fact, the TRIPS agreement has taken a pivotal role in fighting
piracy worldwide as it sets the minimum standards for IP protection among countries. Meanwhile, the WIPO has
chartered the promotion of people's creativity and invention. It promotes the development of IP laws and administers
international treaties in order to generate an environment conducive for intellectual property growth. 3
2
Such studies include: 1) The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and
Technology Transfer by Keith E. Maskus which was prepared for the Conference entitled: Public-Private Initiatives After
TRIPS: Designing a Global Agenda, Brussels, July 16-19, 1997; 2) Composition of Foreign Direct Investment and
Protection of Intellectual Property Rights: Evidence from Transition Economies by Beata K. Smarzynska, World Bank,
2002; 3) How Strongner Protection of Intellectual Property Rights Affects International Trade Flows by Carsten Fink and
Carlos A. Primo Braga.
3
For more information on the WIPO, visit www.wipo.org
6
The Philippines has long recognized the significance of IPR protection, especially with the country's relevant pool of
talents in the fields of science, information technology, biotechnology, engineering, arts, and music. It has been a
member of the Berne Convention (Literary and Artistic Works) since 1951; Paris Convention (Industrial Property),
1965; WIPO Convention, 1980; Rome Convention (Performers, Producers and Phonograms and Broadcasting
Organizations), 1984; TRIPS Agreement, 1995; PCT (patents), 2001; WCT (WIPO Copyright Treaty), 2002; and the
WPPT (WIPO Performances and Phonograms Treaty) in 2002.
However, even with these efforts, the state of IPR infringements in the country continues to be a serious concern. In
fact, the Philippines has remained under the Priority Watch List of the U.S. Trade Representative (USTR) 2004
Special 301 Report4 on global intellectual property protection.
At present, among the rampant IPR infringements in the country are: 1) optical media piracy, 2) copyright and
trademark violations of all types, 3) importation of counterfeit merchandise, 4) software piracy of all types, and 5)
bootleg cable television. The aforementioned are the ones that have the immediate attention of the government and
private sectors in the Philippines. Meanwhile, the affected industries of these IPR violations are: 1) Software and IT
Services, 2) Music and Recording, 3) Movie and Video, 4) Literary and Publishing, and 5)
Merchandising/Manufacturing Industries.
Hence, with the increasing significance of intellectual property assets and IPR protection in the economy of the
Philippines, this paper presents an assessment of the IPR protection in the country. Specifically, the study:
profiles the IPR dependent businesses such as the business software, music and movie industries;
determines how piracy affects or influences the performance of the identified industries;
estimates the music and video piracy rates in the country;
identifies the efforts of both the government and private sectors in protecting intellectual property rights;
analyzes how the IPR protection endeavors influence the performance of the IPR based industries; and
assesses the effectiveness of the IPR protection efforts in lessening piracy in the country.
The output of the study provides a profile of three of the copyright dependent industries in the Philippines. This is a
step towards organizing information in the IPR system. Indicators to monitor the sector, specifically the copyright
aspect, were developed; therefore, producing concrete and quantifiable facts that may be used to assess the sectors
significance, growth, and economic contributions. Moreover, as this study evaluates the individual sectors
performance, information that will support the creation of laws and regulations for IPR protection, are made available.
Meanwhile, the assessment of the IPR protection activities, and their effects on the state of piracy in the country,
provides useful information for evaluating present efforts and planning for future IPR protection endeavors.
INDUSTRY PROFILES
SOFTWARE INDUSTRY
The cumulative number of establishments in the Philippines registered with the SEC, as engaged in providing IT-
related goods and services, grew by 61 percent between the 1996 and 1998. The number nearly doubled from 1,739
companies in1999 to 3,311 in 2002 (Table 1). These establishments are those in the business of providing hardware
consultancy, software consultancy, software development, data processing and conversion, database activities, other
computer-related activities, and the maintenance and repair of office, accounting and computing machinery. To better
4
The Special 301 Report addresses significant concerns with respect to its trading partners, which includes the
Philippines. The report notes that the United States will consider all options, including but not limited to initiation of dispute
settlement consultations with countries that do not appear to have implemented fully their obligations under the WTO
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).
7
understand the establishment classifications, Table 2 presents the descriptions as provided by the 1994 Philippine
Standard Industrial Classification (PSIC)5.
The number of companies under the software consultancy and development classification grew by almost 300 percent
in just three years, from 1999 to 2002. This showing indicates that the software and related IT services sub-sector is a
thriving industry, and has attracted a substantial number of players in the business. Similarly, the establishments
involved in other computer related services significantly expanded in number, from 65 in 1999 to 852 in 2002. Also,
those companies undertaking database activities and data processing and conversion, climbed by 234 percent and 2
percent, respectively. However, the number of establishments under the hardware consultancy category has been cut
by 74 percent.
New Investments and Employment

The Philippines has four investment promotion agencies (IPAs), which register new investments. These are the
Philippine Export Zone Authority (PEZA), Board of Investments (BOI), Subic Bay Metropolitan Authority (SBMA), and
the Clark Development Corporation (CDC). The succeeding discussion focuses only on new investments registered
with the Bureau of Investments.
Table 3 presents the levels of new investments and the jobs these created in the IT Services industry, as reported by
the Board of Investments (BOI). From 1998 to 2003, the Software and Related IT Services 6 sub-sector accounted for
an average of 52.3 percent of the total BOI registered new investments in the IT Services sector. Software and Related
IT Services contributed most to the sector in both 1998 and 1999, with a 100 percent investment share each year, and
the least in 2002, at 11.2 percent. The sub-sector registered growth rates of 53 percent, 34 percent, and 38 percent in
1999, 2000, and 2001, respectively. However, the level of new investments slid by 54.4% in 2002 and further declined
by 28.5% in 2003.
5
The Philippines Standard Classification (PSIC) is a classification of all economic activities in the country. It was
developed for use in the classification of establishments according to the type of economic activity they are engaged in. It
is intended to serve as a framework in the collection, compilation, and analysis of data on economic activities to secure
uniformity and comparability of statistics presented by various government and private agencies.
6
This sub-sector includes software development, application and system software services, web designs, database
designs, and computer animation.
8
The total new IT Services investments took a dive in 2002, at PhP5.40 billion, from the PhP10.96 billion figure
registered in 2001. On the Call Centers and Related IT Communication Services category, only six projects were
recorded in 2001. Though the number of projects rose to twelve (12) in 2002, the top investment value was only worth
P481.66 million. This is relatively small compared to the biggest single investment in 2001, valued at PhP1.46 billion.
However, the Other IT Services sub-sector experienced the steepest slide in the number of projects registered, from 19
in 2001 to only five (5) in 2002.7 The decline further continued in 2003, at P1.42 billion. Like in 2002, lower new
investments were experienced in all the three sub-groups.
One of the factors that may have affected the investment decisions in 2002 was the poor performance of the whole ICT
sector in 2001. A P7.97 billion loss was posted by the top 500 IT companies during the year, and the loss on sales was
one centavo per peso. The loss performance of the industry continued in 2002, though at a lesser extent than in the
previous year. As the Annual Sourcebook of the Philippine Information Technology Community reported (IT Resource
Philippines, 2003):
Sales of nearly half of the top IT companies dwindled in 2002, while many of the firms took a turn for
the worse as they ended the year with negative bottom lines. Both hardware and software spending
remained weak as most users took a cautious cost cutting approach. Price competition among
vendors continued to restrain revenue growth, while fluctuations in the peso-dollar rate resulted in
huge foreign exchange losses for manufacturers and suppliers. Burdened by these unfavorable
developments, the IT industry was again caught in a downward spiral in 2002.
The countrys top 500 IT companies registered an aggregate loss during the year of P7.25 billion. A third of the
companies experienced excess in expenses over revenues, most of which were the telecommunications and
networking, on-line services, and electronic industries.
7
Table 1 data is on cumulative number of establishments. Accordingly the observed increase of establishments in 2002
may have occurred particularly in 2000 and to some extent 2001, and this is consistent with the observed rise in new IT
investments in those years, respectively. Table 1 doesnt have any information about the increase of the number of
establishments between 2001 and 2002. It is possible that rise in number of establishments from 2001 and 2002 would
have also declined compared to that in 1999 to 2000 and 2000 to 2001.
9
Table 3 also shows that the total number of

jobs created by the software industry in 2003
was estimated by Board of Investments at
515 jobs. Another estimate using data from
the four investment promotion agencies puts
the new employment in the industry in 2003
at 2,775. Thus it would seem that the BOIs
estimate would only account for nearly 19
percent of the total jobs the industry created
in 2003. Call centers created 8,079 jobs, of
which BOI registered investments
accounted for 3,629 jobs or 44.92%. The
other IT services contributed 1,939, 1,824 of
which were reported by the BOI. The total
new employment generated by new
investments in the software, call centers and
other IT services summed up to 12,793, and
of this, data from the BOI accounted for
nearly 47%.
The BOI figures show that the Software and

Related IT Services sub-sector has generally
created more jobs per million investment
than the other IT categories from 1998-2001
(Table 4). In 2000, a million peso investment in Software translated into four (4) employees, while only about one was
registered in each of the other categories. The following year, three (3) jobs were provided per million peso investment
in the Software and Related IT Services classification, while two people were employed in the Call Center and Related
Communication Services sub-sector. On the other hand, it took three (3) million worth of investments to generate an
employment in the Other IT Services category.
In 2002 and 2003 respectively, the Call Center and Related IT Communication Services and Other IT Services sub-
sectors generated the most employment for every million investment.
It has been pointed out that call centers operate at least two to three shifts a day.8 A million peso investments can
support about four workstations, each manned by a one person. Given this, the estimates of jobs per million peso
investments in Table 4 for the call centers would seem to understate the actual number of jobs that may be created by
the new investments. If the additional work shifts are considered, these estimates may be adjusted upwards by a
factor of 2 to 2.5. This adjustment would seem to be corroborated by information that in 2003 about twenty thousand
graduates in Metro Manila took jobs in the various call centers of the country.
The Philippine Information and Communication Technology (ICT) sector received a total of PhP34.1 billion new
investments in 2003. These investments were registered in the four major IPAs, namely, the Philippine Export Zone
Authority (PEZA), Board of Investments (BOI), Subic Bay Metropolitan Authority (SBMA), and the Clark Development
Corporation (CDC). Of this value, 68.0 percent came from the manufacturing sub-sector; 19.4 percent, from the IT
Services9; 8.6 percent from the Services; 4.0 percent, from Telecommunications; and a minimal 0.02 percent from
Trade.
The IT Services sub-sector recorded a PhP6.6 billion approved new investments during the year (Table 5). The largest
amount of new investments was from the Other IT Services 10, at PhP2.6 billion, or 39.2 percent. This is followed closely
by the figures from the Call Center and Related Communications Services category, with a 38.2 percent share, and the
Software and Related IT Services, at 22.6 percent.
8
The source of information is Ms. Emma Teodoro, Philippine Software Industry Association.
9
Software and Related IT Services investments are accounted in the IT Services Classification
10
Other IT Services Subsector includes Data Processing and Conversion, Medical Transcription Services, Business
Process Outsourcing and the like.
10
The bulk of new investments in the Software and Related IT Services classification, 70.4 percent, were made by
foreigners. This percentage share is more than enough to dictate the investment performance of the category. Of the
PhP1.5 billion new investments in 2003, only PhP442.8 million were local. At least two million local investments were
registered per million foreign investments during the year.
Foreign investments also had the lions share, 92.1 percent, in the new investments in Call Center and Related
Communication Services. Conversely, the local investments made up majority, 85.4 percent, of the investments in the
Other IT Services group.
IT Human Capital
Through the years, the IT industry has been attracting people, as evidenced by the increasing number of students that
engaged in the IT related discipline. During the Academic Year 1994-1995, the number of students that enrolled in
Mathematics and Information Technology was 5.2 percent, or 97,853, of the total number of tertiary students that
enrolled during the year. In School Year 2000-2001, the figure increased to 218,675, or 8.3 percent of the total (Table
6).
On the other hand, the number of graduates under the discipline reached 28,231 in 2001 from 21,338 in 1995. This
composed 7.3 percent of the new graduates during the year.
11
In addition, enrollment in higher IT and Related Programs had been climbing from AY 1998-1999 to 2001-2002 (Figure
2). The students analyzed had registered in either of the following disciplines: Computer Science, Computer
Technology, Information and Computer Science, Computer Applications, Information Management, and Information
Technology. A greater part of the graduate students enrolled in the Masters Level during AY 1998-2002, while twelve
people registered in the Doctorate program during the AY 2001-2002.
The total number of enrollees reached 2,579 in AY 2001-2002, a 228.54 percent rise from the 785 figure posted in AY
1998-1999.
According to the Bureau of Exports and Trade Promotions (BETP), the Philippines has over 567,802 IT labor force as
of 2002, 99% of which are college graduates. They are described as professionals proficient in working on
mainframes, minicomputers, and microcomputers11, and who are also known for their technical and business skills for
ICT projects.12
The Philippines also pride itself with high performing I.T. professionals with excellent industry track record 13.
The credibility and expertise of our IT professionals are recognized worldwide as proven by the satisfied customers in
the fields of advertising, banking, communication, defense, education, finance, government, health, insurance,
manufacturing, mining, public utility, realty, science and research, shipping stocks, and trading. Manila is recognized as
a major outsourcing center for companies in the U.S., Japan, and Europe (Information Technology Service Profile,
www.tradelinephil.dti.gov.ph/betp).
11
BETP Information Technology Services Profile at www.tradelinephil.dti.gov.ph/betp
12
Filipino IT Workers Rank High in Survey. Philippine Daily Inquirer, June 1, 2002.
13
BETP Information Technology Services Profile at www.tradelinephil.dti.gov.ph/betp
12
The country ranked 8th among 47 countries in the Knowledge Jobs14 category of the 2000 Global New Economy Index
15
(GNEI). Ranking in this category is determined by the performance of a country based on the following factors:
qualified engineers16, availability of IT skills17, availability of senior management18, and higher education enrollment
(see Table 7).
According to the analysis made by the Rubin Systems Inc., the Philippines is a global leader in the Knowledge Jobs
category, with an impressive pool of engineers, workers skilled in information technology, and competent managers.
Moreover, the nation performed well in education, an important component of the Knowledge Jobs category.
Education helps create and cultivate the knowledge workers of the next generation, and a good education system is an
invaluable asset in the knowledge based New Economy.
In 2003, the Philippines ranked 12th in same category of the Global Information Technology Economy Index 19 (GITEI).
This index ranks 48 nations based on the results of a composite index comprising 33 factors organized into the same
categories that of the GNEI, with the addition of the Visionary Government Category. The Knowledge Jobs category in
this index slightly differs with that of the GNEI, with the inclusion of the Science degrees 20 and University education21
factors in the formula.
14
Knowledge jobs and information based jobs are related to information, communications and/or engineering, with an
increasing need for qualified senior management.
15
The factors that comprise the GNEI are organized into the following categories: Knowledge Jobs, Globalization,
Economic Dynamism and Competition, Transformation to a Digital Economy, and Technological Innovation Capacity. For
more information, visit www.forecastcenter.com/public/guest/GNEI.htm
16
The availability of engineers in a countrys labor market.
17
The availability of qualified information technology workers in a countrys labor market.
18
The availability of competent senior managers in a countrys labor market.
19
The 2003 GITEI measures the technological, sophistical and global integration of 48 nations based upon the following
six indicators: Knowledge Jobs, Globalization, Enterprise Dynamism and Competition, Transformation to a Digital
Economy, Technological Innovation Capacity, and Visionary Government. The overall GITEI ranking is based upon a
weighted value of a nations combined scores in each indicator. It is also considered to represent an important measure of
the economic strength, technological capabilities, and the ability and commitment of the national leadership to promote
technological advancement and global economic engagement for each of the 48 countries under consideration.
20
Percent of total bachelors degrees awarded in science and engineering.
21
Does/not meet the needs of a competitive economy.
13
These results show that the Philippines has a comparative advantage with regards to the quality of IT professionals in
the country. With the increasing number of people engaging in Math and Information Technology Courses, and the
relatively high ranking of Filipino IT professionals internationally, the sector shows its potential employment significance
to the country.
Meanwhile, the Software and Related IT Services industry has employed an estimated 22 52,110 people in 2002 (Figure
3). This approximation includes employment of establishments engaged in software design and development, systems
integration, and IT services such as animation and graphics, CAD/engineering services, and the like. This figure is a
19.17 percent climb from the estimated number in 1999, of 43,727.
Moreover, this 2002 employment composed 9.18 percent of the total IT labor force (567,802) estimated by the BETP
during the year.
Software Piracy
Trends in Piracy
Software piracy in the Philippines had been declining for the five consecutive years, 1996 to 2000, based on data in
Table 8. Indeed, the Philippines recorded the largest rate decline among the countries in the Asia/Pacific region in
1999-2000. For reasons that are explained below, piracy has been rising at least for the period from 2001 to 2003.
According to the Business Software Alliance (BSA), the decline in piracy rate in 1997-1998 was primarily attributed to
the enactment of the new copyright law23 and the improved awareness on IPR in the country among the members of
the judiciary (Computerworld, 1999)24. The intensified enforcement of the law and improving Intellectual Property
protection also contributed to this decreasing trend. From 8,944 firms being monitored by government agencies for IP
Code Violations in 1998, the number increased to 14,876 in 2000. However, the number dropped by 1,192 from 13,684
in 2001, the year when the piracy rate in the country started to increase.
22
Estimates were based on the regression analysis with sales/revenues as the independent variable used to project the
level of employment. Detailed employment estimation methodology is presented in the Appendix.
23
Intellectual Property Code of the Philippines in 1998
24
Ramos, G., Piracy talk With Philippines, October 28, 1999. Posted in www.cw.com.hk
14
Effects on Investments
Based on BSA and BOI data, there is an apparent high negative 25 correlation26, of -0.87162, between the levels of
piracy and new investments in software development in the Philippines. Level of new investments quadrupled in 2000,
when the piracy rate posted a 7 percentage point decline in 1999. Similarly, investments in 2001 climbed by 38.2%
when piracy rate dropped by 9 percentage points in 2000. On the other hand, the investment level decreased in 2002,
when the Philippines posted a higher piracy rate in 2001, of 63%, from its 61% rate in 2000. It further declined by
28.5% in 2003 as the rate of piracy further rose to 68% in 2002 (Figure 4). 27
25
As the software piracy rate in the country declines, the level of new investments in the software sector rises, and vise-
versa.
26
Correlation is an analysis tool that is used to determine whether two ranges of data move together; 1) whether large
values of one set are associated with large values of the other (positive correlation), 2) or whether small values of one set
are associated with large values of the other (negative correlation), or 3) whether values in both sets are unrelated
(correlation near zero). A perfect direct relationship produces a correlation co-efficient of +1.00; a perfect inverse
relationship produces an r of -1.00. A co-efficient of 0 means there is no relationship at all between the two variables.
27
Release of the piracy rate estimates has a one year lag. Current year's investment decisions will be based on previous
year's piracy estimates.
15
Similarly, the level of new employment in the software sector rose as the software piracy rate dropped, although at a
decreasing rate. In 1999, it climbed by 117.3%; 2000, 89.7%; and 2001, 0.3%. Meanwhile, the number of new hiring
was cut by more than half in 2002, when piracy rate climbed to 63% in 2001 from 61% in 2000. Likewise, a drop in
2003, of 65.2%, in new employment was registered when piracy rate further rose to 68% in 2002.
The same reaction to the piracy rates was observed for the total 28 IT services new investment and employment levels
during the years analyzed. From 1997-2000, when the piracy rates were decreasing, total levels of new IT investments
and employment continued to increase. The reverse occurred in 2002-2003 when the piracy rates rose to 63% and
68% in 2001 and 2002, respectively. This means that the whole IT industry, and not only the software development and
service sub-sector, is affected by the infringement in software copyright. However, correlation analysis showed that the
intensity of the influence of piracy rates on the level of investments is greater in the software sub-sector, at -0.81726,
compared to its effect on the whole IT industry where the correlation value is lower at negative 0.5224.
The said observations are consistent with the study29 conducted on the software sector in Mexico, which stated that:
Looking across numerous countries, we find that as software piracy rates decline, IT investment
increases. Every 10 percent decline in the software piracy rate, e.g. from 70 percent to 63 percent,
increases the IT investment share of GDP 13.4 percent, e.g. from 2 percent to 2.26 percent Even
modest success in providing stronger protection of IPR can have a sizeable impact on IT
investment and GDP.
The importance of effective IPR protection as a determinant to foreign direct investments is highlighted in a recent
study by Correa.30 The study examined the investment and IPR chapters of several bilateral investment treaties (BITs).
The author observed that these agreements have provisions that even go beyond international standards such as
those in the WTOs TRIPS agreement. They incorporate the "national treatment" principle without the exceptions
provided for under international treaties. Interestingly, the "most favored nation" clauses in BITs contribute to a global
elevation of IPR protection standards. These bilateral treaties are setting the standards for the highest protection of
IPR. They highlight how sensitive investors are to the protection of IPRs. Indeed, if negotiations on investment were
initiated in the framework of the WTO, for instance, pressure to replicate the highest levels of investment protection for
IPRs, as currently found in the bilateral treaties, can be expected, the study observed.
With the observed reaction of the IT market to the levels of software piracy, a framework on the relationship between
intellectual property protection and investment decisions is thus formulated (Figure 5).
The framework shows that the creation of IPR laws is a tool by which the Intellectual Properties of economic agents
are protected from infringements. Condition or extent of IPR protection 31, in turn, provides economic entities with
information regarding the probabilities of return or forecasts of their activities.
One of the major concerns of IT investors is the rate by which their investments are protected. IPR protection builds the
investors' confidence on the country's market and the government's dedication and capabilities toward the cause.
Economic decisions, such as the levels of IT demand and investments are affected by speculations that arise from
forecasting the psychology of the market. A low market confidence can lead to lower capital inflows and labor demand.
Therefore, the primary agenda for IPR protection in IT is the building of investor confidence in the Philippine IT market.
28
Includes all three subsectors namely: Software Development and Service, Call Center and Related Communication
Services, and Other IT Services. Includes all three subsectors namely: Software Development and Service, Call Center
and Related Communication Services, and Other IT Services.
29
The Critical Role of the Software Industry in Economic Growth: Focus: Mexico by Sallstrom and Damuth, 2003.
30
Correa, C. Bilateral Investment Agreements: Agents of New global Standards for the Protection of Intellectual Property
Rights? August 2004 in http://www.grain.org/briefings/?id=186.
31
IPR protection in this framework is reflected by the level of software piracy in the country, as estimated by the Business
Software Alliance. The higher the piracy rate, the less is the perceived IPR protection in the IT industry.
16
MUSIC INDUSTRY
At present, there are 38 record companies in the Philippines giving livelihood to more than 15,000 people - from the
composers, singers, musical arrangers, musicians, to the record bar girls, technicians, and recording studio personnel
(Philippine Association of the Recording Industry Inc., PARI).
These record companies comprise the Philippine Association of the Record Industry, Inc. (PARI), a non-profit, non-
stock, and purely private industry organization formed in 1972. For more than 30 years, PARI has 1) promoted and
developed a legitimate and viable music industry, 2) endorsed and improved the Filipino music to world class status for
it to be able to penetrate the world market, 3) protected copyright owners against unauthorized use, reproduction, and
sale of music and sound recordings, and 4) maintained musical sound recording as a medium that provides
wholesome entertainment and positive values to the public (Position Paper of PARI on the OMB 32, 2002).
32
Optical Media Bill, House Bill 5225 and Senate Bill 2586
17
The Philippine music industry has provided employment to Filipino talents, and has also contributed to the local
economy through the taxes (VAT) remitted to the government. From 1994-2003, hundred millions of pesos, in the form
of value added tax (VAT), were collected from the record sales of the industry. The highest estimated tax collection was
registered in 2000, at P212 million, while the lowest was in 1990, at P45 million. Estimated tax payment from the music
industry has also been increasing from 1990 to 1998 (Table 9).
Based on the data collected from PARI, the Philippine music market has generally been dominated by the foreign
records/albums. As presented in Table 10, the share of local sales has been declining since 1995. In 2000, however,
this market share expanded to 42.7%, but not enough to overtake the sale of foreign albums.
Music Piracy
The declining sales share of the local records has generally been attributed to piracy. According to the Music Piracy
Situationer prepared by PARI (2002), the Philippine music industry was a thriving industry before the vicious tentacles
of music piracy choked it to near collapse.
PARI also said that piracy in the Philippines has been a problem since twenty years ago, when vinyl album and then
cassettes were pirated (Position paper on OMB, 2002). Music IPR infringement was in the form of cassette piracy that
was contained or limited to sidewalks, public markets or door-to-door selling. However, due to optical media
technology, duplication capabilities of IPR violators have increased a hundred-fold (Optical Media Bill FAQ Primer).
In 1997, pirate CDs from China, and bootlegs from the United Kingdom and Germany started flowing in the Philippines
(IIPA Special 301 Recommendation, 1997). During the succeeding years, public markets, major steers, and malls in
the country were flooded with pirate CDs (Music Piracy A Situationer, April 2002, by PARI).
Recent developments showed that the country no longer just imports pirated CD products but manufactures them as
well, as pirate CD plants started to emerge all over the Philippines. This resulted to the existence of rampant CD
piracy; and sale of these illegal products has extended to legitimate malls and popular flea markets, in addition to the
vending stalls in the streets.
Until recently, the vast majority of pirate optical media products were smuggled or otherwise
imported into the country from abroad. This is no longer the case. There are believed to be at least
eighteen active production lines for optical media products in the Philippines, more than twice as
many a year ago, and perhaps many more than that ... The recording industry estimates that at
least half of the pirate music CDs circulating in the Philippines are locally manufactured; the rest
are imported from Malaysia, Taiwan, Indonesia and Hong Kong (IIPA 2001 Special 301 Report:
Philippines).
With these changes, it is assumed that cassette piracy in the Philippines is being substituted by CD piracy during the
latter years of 1990s up to the present. IIPA reported that in 1999, 45% of all music CDs sold in the Philippines are
pirate, in contrast to the piracy rate of 13% for the cassette format (IIPA 2000 Special 201 Report: Philippines). This
has also been consistent with the rising preference of the public in buying CDs as opposed to cassette tapes. Further,
with the optical media technology, replication of music records in CDs has become so easy and less costly than the
illegal reproduction using the cassette medium.
18
An investigation on the medium used by consumers in listening to music was conducted to determine whether there is
an increasing preference for music in CD format. The sales figure of music appliances compatible for CD playing was
the factor used in this analysis. It was observed that the sales, of the set of appliance mentioned, have been improving
through the years, creating a more favorable market for the CD records. According to the National Statistical
Coordination Board (NSCB) statistics33, the share of this music component to the overall audio appliance sales rose
from 23.0% in 1996 to 57.7% in 2003.
How serious is the music piracy in the Philippines? Based on Figure 6, music piracy rate has been increasing from
1997 until 2003. This trend is observed in the Intellectual Property Coalition 34 (IPC) Music Piracy Estimates. From
14.1% piracy rate in 1997, it climbed to 29% in 2001, and further rose to 40% 35 in 2003. Meanwhile, the music piracy
rate estimates by the International Intellectual Property Alliance 36 (IIPA) were pegged at 20% from 1997-2000.
However, the figure shot up to 33% in 2001, further climbed to 40% in 2002, and settled to that level in 2003.
MOVIE/VIDEO INDUSTRY
Aside from providing the country international recognition, the movie industry is also significant to the local economy. In
2000, it was estimated that the film business employed 130,000 people, 65.4% of which are in the film making and
theatrical sub sector, 19.2% in video distribution, and 15.4% engaged in cable services provision. During the same
year, it was estimated that the annual payroll expended in the business was PhP9.72 billion, while the industry's
estimated total tax contribution amounted to PhP3.5 billion (Sazon, Eduardo D. 2000) 37.
33
Economic Indicators Publication (December Issues 1997, 1998, 1999, 2000, 2001, 2002, 2003)
34
The Intellectual Property Coalition is an organization in the Philippines composed by private IP stake-holders.
35
2003 piracy rate was an estimate by PARI.
36
The International Intellectual Property Alliance (IIPA) is a private sector coalition that represents the U.S. copyright
based industries that calculate piracy levels in various countries.
37
Eduardo D. Sazon is the Executive Director of the Association of Video Distributors of the Philippines (AVIDPHIL) , a
national trade association devoted to the promotion and advancement of the nations video industry. He is also the Vice-
Chairman of the Intellectual Property Coalition.
19
The government has been perceived to be one of the sectors that benefit most from the development and expansion of
the film making business. It receives 30% amusement tax, 10% VAT, and 10% withholding tax from the theatrical
proceeds, in addition to the 30% amusement tax and 10% VAT on video distribution. Furthermore, a 10% VAT is also
paid by cable service providers.
According to the report of the Film Ratings Board on the Local Film Industry (undated), the estimated amusement
taxes collected from Filipino films shown in Metro Manila have been decreasing. From P215 million worth of taxes in
1997, the collection declined by 16.7% in 1998. The government income slightly climbed, by 2.2% in 1999, but the
value again dropped by 9.3% the following year. By 2001, only P147 million tax income was collected (Table 11).
This decreasing tax collection trend may primarily be attributed to the dwindling number of local films produced in
recent years. As presented in Figure 7, the production of local films has been slashed by more than 50% from 1997-
2003.
Several factors may explain the declining trend in the local movie production. One is the high cost of film production
and the low turn-overs. In 1997, the average cost of producing a movie was P9 million. Of the local movies produced in
that year, only 10% made money, 41% broke even, while 70% did not fare well in the market. It is said that in order to
break even, a P9 million movie must gross 342% of production costs, or P30,802,139. For every additional peso
earned, only P0.21 goes back to the producer for distribution and operation cost (Sazon, Eduardo D., 2000). Hence,
film production has not been very lucrative for investors.
Video Piracy
Another reason for the decline in movie production is the widespread occurrence of video piracy in the country. Like in
the recording industry, piracy is a threat to the movie/film business. With the improvements in image copying, IPR
20
infringement has become a relatively easy task. Without the burden of the fixed costs, pirating entails minimal or only
the marginal costs of production.
Figure 8. IPC Video Piracy Rates: 1994-2003
80
59 68
64 60
60 59
in percent
49
44
40 41
20
0
1996 1997 1998 1999 2000 2001 2002 2003
Video piracy in the Philippines exhibited a decreasing trend since 1998 up to the present (Figure 8). The highest
decline was registered in 2000-2001, at 10.6 percentage points, while the lowest drop was recorded at 1.2 percentage
points, in 1999-2000. The IPC38 estimates cover piracy of movies through the video cassette and optical disc media.
Note that video piracy rates started to drop the year the Intellectual Property Code of the Philippines was enacted,
which was in 1998. However, extensive investigation of this association will be developed in later sections of the paper.
The IIPA39 estimated that the motion picture piracy in the country has been constant at 65% for four consecutive years,
from 1996-1999. It climbed to 70% in 2000, and further rose by 10.0 percentage points the following year. The 2002
estimates remained at 80%, while the 2003 rate climbed to 89%. 40 These estimates cover the entire motion picture
business, including video, television and cable, and public performance .
The proliferation of piracy in the Philippines was encouraged by the change in the Filipinos' movie watching preference
during the early 90's. As substitutes, movie theater watching has slowly been replaced by home video viewing.
According to the National Statistics Office (1994 Functional Literacy, Education and Mass Media Survey, FLEMMS),
exposure of the public to movie theaters has decreased by 4.6% in 1994 from the 1989 figures. In contrast, video tape
exposure increased by 2.4% during the same period. This placed video tape (7 th position) ahead of movies (8th) in the
1994 ranking of the mass media forms that Filipinos patronize.
38
The Intellectual Property Coalition is an organization in the Philippines composed by private IP stake-holders.
39
The International Intellectual Property Alliance (IIPA) is a private sector coalition that represents the U.S. copyright
based industries that calculate piracy levels in various countries.
40
The two piracy estimates are not comparable for in the IPC figures only cover piracy in video, while the IIPA estimates
the piracy in the entire motion picture business, including video, television and cable, and public performance.
21
As home video watching became popular, so did the unit sales of appliances for video viewing. From Table 12 it can be
observed that in 1997 and 1998, VHS unit sales increased by 15.6% and 1.5%, respectively. However, it dropped
slightly, by 3.2% in 1999, as the VCD player was introduced in the market. The declining trend in the VHS volume sales
continued until 2001, as the VCD player sales prospered. But due to the fast development in technology, a new
medium of video viewing was presented to the market in 2002, which is the DVD player. Unit sales of the DVD player
reached 41,900 during the year. As expected, VCD player unit sales started to drop during the same year, from
238,500 in 2001 to 194,300 in 2002, and will be expected to lose popularity as the DVD player gains an audience. The
pattern of movie video medium is also expected to follow this trend as the preference of movie watchers change from
video cassette tape, to VCD, and eventually to DVD. This hypothesis is supported by the 2003 figures, wherein VHS
unit sales dropped to 1,150 and VCD to 93,400. Conversely, DVD unit sales shot up to120,800 during the said year.
Due to the apparent shift from movie watching to home viewing, one would expect that video distribution will thrive as a
business. However, according to the statistics provided by VIVA Video Inc., the number of registered video
establishments was affected by piracy as they started to dwindle in 1994. From the 6,402 figure, it declined by 45.3%
to 3,500 in 1998.
It is evident that video piracy does not only affect film production, but the industry as a whole. It affects the theatre
revenues, the video manufacturing and distribution business, and the actual movie production.
INTELLECTUAL PROPERTY RIGHTS PROTECTED
Rampant intellectual property infringements affect both the domestic and international economies. Due to piracy, there
is a transfer of revenues from the legitimate businesses to the free-riders (IPR violators). Piracy also results in
government losses, in the form of taxes.
Piracy and other IPR

violations are economic
Legislative Bra nch/Offices
(Government)
POLICY AND
REGULATION
issues that affect both the
private and government
sectors. The protection of
Law Enforcement Agencies intellectual property,
(Government)
therefore, lies not only in the
hands of the government, but
ENFORCEMENT also of the private entities.
Intellectual Property Office
(IPO)
AND
The importance of the
ADJUDICATION
(Government)
Total cooperation between the two
is presented in Figure 9, in
IP R the Total IP Protection Model
IIndividual IP Stakeholders Protection this paper conceptualized.
(Private Sector)
As shown in the model, there

PUBLIC are three cornerstones of IPR
INFORMATION
AND protection, namely: 1) Policy
EDUCATION
Intellectual Property Rights
Related Organizations CAMPAIGN and Regulation, 2) Public
(NGOs) Information and Education
(Private Sector)
Campaign, and 3)
Enforcement and
Figure 9. INTELLECTUAL PROPERTY RIGHTS PROTECTION MODEL
Adjudication41. In addressing these issues, the government should mobilize all its branches, with an emphasis on the
legislative and executive branches. The legislative branch of the government is responsible for the placement of
41
Identified cornerstones of IPR protection during the Anti-Piracy Action Planning Workshop in 2001. The main product of
the workshop was the Strategic Action Plan to Strengthen Public Awareness and Enforcement of IPRs which was
presented to Executive Secretary Alberto Romulo.
22
adequate laws and regulations for the safeguard of intellectual property rights. Meanwhile, the law enforcement
agencies, and IPR concerned government agencies, have the duty to implement the said rules.
However, government efforts will not be effective without the support of the individual stakeholders and other private
sector entities, especially those belonging to the industries affected by IPR infringements. Thus, on the side of the
private sector, the individual IP stake-holders and the IP related organizations must actively take part in the endeavor.
And to involve the whole society in the cause, the above mentioned sectors must cooperate in informing and educating
the public regarding IPR protection.
Policy and Regulation

The Philippine government has been protecting intellectual property rights since 1947, when the first laws on the
protection IPR were enacted42. Such laws include:
Republic Act No. 165 otherwise known as An Act Creating a Patent Office,
Prescribing its Powers and Duties, Regulating the Issuance of Patents and
Appropriating Funds Therefore
Republic Act No. 166 otherwise known as An Act to Provide for the
Registration and Protection of Trademarks, Trade Names and Service Marks,
Defining Unfair Competition and False Marking and Providing Remedies
Against the Same, and for other Purposes
IPR promotion and protection have also been made a state policy as the 1973 Constitution provides that
The exclusive rights to inventions, writings and artistic creations shall be

secured to inventors, authors, and artists for a limited period.
The 1987 Constitution, meanwhile, explicitly mandates that the State shall
protect intellectual property43.
The major turning point in the protection of IPR in the Philippines is the passing and signing into law of the Intellectual
Property Code of the Philippines (Republic Act 8293) in 1997. The IP Code repealed the old IP and IP-related laws
such as the Republic Act 165 (Patents Law); Republic Act 166 (Trademarks Law); Presidential Decree 49
(Copyright/Related Rights Law); Presidential Decree 285 (Textbook reprinting Law); and Articles 188 and 189 of the
Revised Penal Code (on unlawful competition/infringement). Consequent to this was the establishment of the
Intellectual Property Office that would administer and implement the State policies declared in the Act. The significant
changes in the IPR protection in the country, as a result of the implementation of the IP Code, are presented in Table
13.
42
Intellectual Property Rights in the Philippines: Brief Background. Chan Robles Virtual Law Library.
43
Ibid.
23
The IP code was later followed by the attempt to combat internet piracy through the Electronic Commerce (E-
Commerce) Act, Republic Act No. 8792, in June 2000. The law provides specific provisions to fight copyright piracy in
the internet. As stated in Section 33 (b) of the E-Commerce Act:
Piracy or the unauthorized copying, reproduction, dissemination, distribution, importation, use,
removal, alteration, substitution, modification, storage, uploading, downloading, communication,
making available to the public, or broadcasting of protected material, electronic signature or
copyrighted works including legally protected sound recordings or phonograms or information
material on protected works, through the use of telecommunications networks, such as, but not
limited to, the internet, in a manner that infringes intellectual property rights shall be punished by a
minimum fine of One hundred thousand pesos (P100,000.00) and a maximum commensurate to
the damage incurred and a mandatory imprisonment of six (6) months to three (3) years.
In another legislative effort to protect IPR, the Senate and House of Representatives passed in 2001 the Republic Act
9150 - "An Act Providing for the Protection of Lay-out Designs (Topographies) of Integrated Circuits, Amending for the
Purpose Certain Sections of Republic Act No. 8293, Otherwise Known as the Intellectual Property Code of the
24
Philippines and for other Purposes". The law took effect on August 31 of the same year. Moreover, the Patent
Cooperation Treaty (PCT) was ratified by the Senate and was implemented, also in 2001. The PCT is a treaty for
rationalization and cooperation among contracting states with regard to the filing, searching and examination of patent
applications and the dissemination of the technical information. 44
Intellectual property rights encompass a broad range of concern that includes invention and innovation in the field of
science. Hence, in June of 2002, to protect the plant breeders rights, Congress passed the Republic Act No. 9168, the
Plant Variety Act. This is an Act that aims to protect the exclusive rights of plant breeders with respect to their new plant
variety. This plant breeders right is an exclusive right that enables the holder of the right to prohibit others from
exploiting or using the protected plant variety without any permission or license from the rights holder. 45 The agency
that will manage the implementation of the law is the National Plant Variety Protection Board (NPVPB).
On the judicial aspect of IPR protection, the Philippine Supreme Court passed the A.M. 46 No. 02-1-06-SC. It is a
Resolution on the Proposed Rule on Search and Seizure in Civil Actions for the Infringement of Intellectual Property
Rights that took effect on February 15, 2002. With this Rule, the copyright holder may apply ex parte for the issuance
of a search warrant to an alleged infringing defendant, wherein a delay is likely to cause harm to the IPR holder or
where there is enough risk of the evidence being destroyed.
In another effort to combat IPR violations, the Philippine Bureau of Customs has issued guidelines on border control
measures through the Customs Administrative Order 6-2002. As a follow-up regulation, the Bureau also issued the
Customs Special Order No. 24-2002. The Order intends to strengthen customs border control over imports containing
goods suspected to be infringing upon the IPR of owners as defined by the IP Code and related Laws, through the
creation of an Interim Intellectual Property Unit (IPU) in the BOC. Meanwhile, as of September 12, 2003, the Bureau
had approved the Customs Special Order 19-2003 that transformed the Interim IPR unit to a Permanent Intellectual
Property Unit. This would centralize border policy development and implementation for better monitoring and
interdiction of possible IPR violations at the ports of entry.
This significant progress equips the BOC to efficiently concentrate on the concerns and issues surrounding IPR in the
area of border control. As a specialized unit, the IPU will be able to effectively monitor IPR related activities through the
creation of an IPR database system, and hence, be able to competently coordinate with other agencies and
organizations that have same purpose. Moreover, a permanent IPU will result to a swifter response of the Bureau on
complaints by IP stakeholders on piracy and trademark infringements, among others
On the other hand, the Revised Implementing Rules and Regulations of R.A. 47 No. 9160 (Anti-Money Laundering Act of
2001) as amended by R.A. No. 9194 (Anti-Money Laundering Law) includes among its provisions the following:
Rule 3.i Unlawful activity refers to any act or omission or series or combination thereof involving or having relation, to the
following:
(K) Violations under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000;
(K.2) Piracy, which refers to:
(58) the unauthorized copying, reproduction,

(59) the unauthorized dissemination, distribution,
(60) the unauthorized importation,
(61) the unauthorized use, removal, alteration, substitution, modification,
(62) the unauthorized storage, uploading, downloading, communication, making available to the public, or
(63) the unauthorized broadcasting of protected materials, electronic signature on copyrighted works, including legally
protected sound recordings or phonograms or information material on protected works, through the use of
telecommunication networks, such as, but not limited to, the internet in a manner that infringes intellectual property rights.
These rules were approved by the Senate and the House of Representatives on August 6, 2003.
44
Intellectual Property Office (IPO) Office Order No. 13, Series of 2002
45
Southeast Asia Regional Initiatives for Community Empowerment (SEARICE) Primer, as cited by Basilio, Robert JA,
Jr. , June 24, 2002. www.cyberdyaryo.com
46
A.M. - Administrative Matter
47
R.A. Republic Act
25
Acknowledging the importance of technology in the proliferation of IPR violations, new laws are being geared towards
regulating the processes by which pirated products are produced. In fact, the Optical Media Act of 2003 or Republic Act
9239, has been ratified into law last February 10, 2004. This legislation focuses on the unregulated mastering,
manufacture of and replication in optical media of copyrighted materials in the Philippines, wherein the importation and
exportation of optical media are among the activities to be licensed by the Optical Media Board. The new law is
expected to help curtail piracy in the software, music and video/movie industries.
The law component of IPR protection also includes the membership of a country in international copyright treaties and
enforcement measures. The Philippines has been actively participating and joining such agreements, such as the
World Trade Organization Trade-Related Aspects of Intellectual Property Rights (WTO-TRIPS Agreement) 48. As
stated in the IAC-IPR 1999 Executive Summary Report, in compliance with the WTO-TRIPS Agreement, the IPR Laws
namely: PD 49, - Copyright Laws as amended by PD 1988; RA 165 Patent Laws; RA 166 Laws on Trademarks,
Trade names, and Service marks; Articles 188 and 189 of the Revised Penal Code; and PD 1987 Videogram
Regulatory Board Law were simplified and rolled into one law called, RA 8293, otherwise known as the Intellectual
Property Code of the Philippines. The latest international treaty in which the country participated in are the WIPO
Copyright Treaty, WCT, and the WIPO Performances and Phonograms Treaty, WPPT, in October of 2002.
Among the different IPR laws listed in Table 14, the Optical Media Act is the law that tackles, not the intellectual
property itself, but the medium in which the IP is stored. The Act seeks to regulate the technology and medium through
which the songs, movies, software and all other such IPR materials, are recorded and transmitted/transferred, which is
the Optical Media. The development of the optical media has made the mass production of optical discs fast and easy,
taking no more than four (4) seconds to replicate one disk. Currently, the minimum number of copies a replicating
machine can duplicate is 60,000 (OMB Primer). This number is reproduced at marginal costs to the pirate hence, the
activity becomes very lucrative.
Through the OMB better IPR protection is expected to be achieved through:
the expanded jurisdiction of the concerned government agency in its arrest and seizure activities;
the greater punishment rendered to the pirates; and
better licensing system for the machines used for replication and production.
Concern for IPR protection does not only involve the national government, but the local government units (LGUs) in the
Philippines as well. During the last quarters of 2003, LGUs in the country passed anti-piracy ordinances in their
jurisdictions. The first anti-piracy LGU ordinance, Ordinance 2003-092 49, was passed and adopted in Naga City last
September 3, 2003. The ordinance requires that all business licenses and permits issued by the City government must
48
The WTO-TRIPS Agreement is the most detailed and comprehensive multilateral agreement on intellectual property to
date, which sets the minimum standards for IP protection among counties.
49
Ordinance 2003-092, entitled "An Ordinance Imposing Penalties Upon Persons and Establishments for the Sale,
Rental, Transfer, Distribution, Manufacture and/or Production of Counterfeit or Fake Goods, Articles, and for Other
Purposes".
26
carry the express condition that the licensee(s) will not engage in the sale, rental, transfer, distribution, manufacture
and/or production of pirated counterfeit or fake goods, articles or services. It also prohibits other persons to commit
said acts within the licensees business establishment or premises.
A breach of these conditions may be grounds for the revocation or suspension of the business permit. Moreover, the
ordinance provides authority to the local government to seize or confiscate pirated or counterfeit goods of any person
engaged in any business or trade.
The same type of local law was passed in Iloilo City last December 2003. It is expected that other cities and
municipalities will follow suit with the passage of Department of Interior and Local Government (DILG) Memorandum
Circular (MC) No. 2003-229, entitled Protection of Intellectual Property Rights last December 8, 2003. This MC
endorses the anti-piracy LGU ordinance and enjoins all LGUs in the country to help enforce IPR protection.
Enforcement and Adjudication

Government Sector Efforts on Enforcement
An Intellectual Property Office was created to administer and implement the State policies declared in the IP Code. The
agency was first placed under the supervision of the Department of Trade and Industry (DTI) during its initial creation,
but was later transferred to the Office of the President, specifically under the Office of the Executive Secretary.
The IPO is commissioned to implement the changes introduced by the IP Code, such as: 1) the streamlining of the
procedure in registering trademarks by abolishing the Supplemental Register; 2) the overhaul of the patent system
from first-to-invent to first-to-file system; and, 3) the liberalization of the registration of technology transfer
arrangements. The IPO also executes a policy-making role and exercises quasi-judicial jurisdiction for violation of all
kinds of intellectual property rights. The agency has the authority of hear and decide on:
administrative cases involving violations of intellectual property rights where the claim for damages is
P200,000 and above;
opposition and cancellation cases for trademarks;
cancellation of patents, utility models and industrial designs; and
compulsory licensing
It also has the authority to settle disputes involving technology transfer payments and authors rights to public
performance or other communication to the public of his works. 50
The agency is the main coordinating body for IPR enforcement activities done by the government and, to some extent,
those of the private sectors as well. In July of 2002, the Intellectual Property Rights Enforcement Action Panel
(IPREAP) was formed to further advance the IPR advocacy and protection in the country. The IPREAP consists of
government agencies and private representatives from the academe, Research and Development Institutions and
business/trade organizations, and IP organizations. At present, the following sit in the panel as members: Intellectual
Property Office (IPO), National Bureau of Investigation (NBI), Department of Justice (DOJ), National
Telecommunications Commission (NTC), Videogram Regulatory Board (VRB), Philippine National Police (PNP),
Bureau of Customs (BOC), Intellectual Property Coalition (IPC), Council to Combat Piracy and Counterfeiting of
Patents, Copyrights and Trademarks (COMPACT), Intellectual Property Association of the Philippines (IPAP),
Philippine Internet Commerce Society (PICS), Electronics Industry Association of the Philippines (EIAP), Quezon City
Chamber of Commerce and Industry (QCCCI) and Davao City Chamber of Commerce and Industry (DCCCI).
The IPO has taken the lead in all the said activities of the IPREAP. The agency also created an Intellectual Property
Enforcement Unit in its organization, under the Office of the Director General, for a more effective execution of the
other strategies in the agency's master plan.
50
Information lifted from the IPO General Information Brochure.
27
Earlier efforts in enforcing IPR laws include the creation of the Presidential Inter-Agency Committee on Intellectual
Property Rights (PIAC-IPR) through the Executive Order No. 60 in February 26, 1993. 51 The PIAC-IPR monitored IPR
infringement activities and enforced the IP Laws, thus, generating a good business environment beneficial to both local
and foreign IP stakeholders. The PIAC-IPR was composed of nine (9) government agencies namely: the Department of
Trade and Industry - Bureau of Trade Regulation and Consumer Protection (DTI-BTRCP), Videogram Regulatory
Board (VRB), Department of Justice (DOJ), National Telecommunications Commission (NTC), Bureau of Customs
(BOC), National Bureau of Investigations (NBI), Philippine National Police (PNP), Economic Intelligence and
Investigation Bureau (EIIB), and the Bureau of Food and Drugs (BFAD). When the PIAC-IPR was abolished in 2002,
the said agencies continued to individually implement the IPR laws.
Among the law enforcement agencies, the DTI, DOJ, NBI, PNP, EIIB respond to search warrant raids 52, while the
NTC and VRB are able to use their own mandates to enforce their authority. The two latter agencies execute their
individual monitoring and arrest activities. However, joint agency inspection and seizure efforts are also performed.
The DTI-BTRCP activities were carried out in the whole country by the regional offices of the said department. This
agency has an extensive jurisdiction over the confiscation of trademarked goods, from wristwatches, wines/liquors,
construction materials, clothes, accessories, etc., to copyrighted and licensed materials such as CD-Rom software
programs, playstation CDs, music cassette tapes and CDs, and video VCDs and DVDs. Similarly, the NBI, EEIB, PNP,
and BOC had been able to seize the same types of fake goods during their enforcement activities.
On the other hand, the BFAD has authority over the arrest of specific kinds of establishments and people, such as
those reproducing and distributing fake drugs, food, cosmetics, and various pieces of medical device. Lastly, the VRB
was the lead agency concentrating on curtailing video piracy, and has apprehended establishments engaged in this
particular kind of IPR infringement53.
How did the government conduct its IPR enforcement activities?
During the time when the PIAC-IPR was still active, two of its main enforcement activities were to monitor and
apprehend firms for violation of IPR laws. From 1993-2001, the number of firms monitored for IPR violations has been
51
However, the PIAC-IPR was abolished in 2002 through the Executive Order No. 72.
52
IAC-IPR 1999 Executive Summary; The IPR enforcement activities of the mentioned agencies need a filed complaint
(filed to the DOJ) from the IP stake-holder/s before they are executed. Hence, their raids are carried out with search
warrants.
53
The VRB had been abolished with the enactment of the Optical Media Act of 2003. The agencys activities and
responsibilities are now carried out by the Optical Media Board (OMB).
28
increasing. This is true except during 1996 and 2001 when the figure dropped by 1.3% and 8.2%, respectively. On the
other hand, the number of apprehended firms reflected a wave-like trend. The trend reached its twin peaks during the
years 1995, at 2,145, and 2000, at 1,480 (Figure 9).
Among the agencies, the Department of Trade and Industry (DTI) registered the highest number of firms monitored. On
average, it inspected 77.7% of the total from 1996-2001, followed by the Videogram Regulatory Board (VRB), at 15.1%
(Table 15). This suggests that the over-all trend in the monitoring performance of the PIAC-IPR, during the years
presented, was generally determined by the operations of DTI.
On the other hand, Table 16 shows that most of the raids conducted from 1996-2001 was accomplished by the
Department of Justice (DOJ) and the National Bureau of Investigation (NBI). They carried out an average of 28.6% and
23.4% of the total operations, respectively. These are the two agencies that generally influenced the performance of
the PIAC-IPR regarding apprehending firms that commit IPR violations.
More recent enforcement activities54 of the government include the intensified search and arrest operations of the VRB
in 2002, at 259, compared to the 37 cases recorded in 2001 (Figure 10). This resulted in the confiscation of eleven (11)
optical disk lines and a number of CD burners. In addition, 4.31 million units of video discs were also seized during the
year. However, there was a 25.9% decline in the figure during 2003 wherein the number of search warrant operations
was recorded at 192. The number of confiscated machines from these activities registered at 218 pieces, while that of
the confiscated equipments was 36 pieces.
54
With the abolition of the PIAC-IPR in 2002, data collection of government enforcement activities had been done in a per
agency basis.
29
The VRB experienced a 22.7% decline in their monitoring/inspection activities in 2002. These operations resulted to
the confiscation of 1.7 million units of video discs, and 55 pieces of A/V equipment. On the other hand, the number of
operations rose by 423 in 2003, registering at 1,957. Consequently, there was an increase in number of confiscated
goods and A/V equipment to 2.3 million units and 248 pieces, respectively. Furthermore, 60 pieces of machineries
were also seized.
The operations conducted by the NBI in 2002 declined by -8.83%, from the 419 figure in 2001 (Table 17). However, the
number rose by 5.24 in 2003. The PNP has more than doubled its efforts in enforcing IPR protection as the operations
carried out rose by 120% in 2002, from 177 in 2001. Enforcement activities of the agency were further intensified by
7.2% in 2003. Meanwhile, the BOC conducted additional operations in 2002, at 10, compared to the 9 operations
registered in 2001. However, the figure slid by 20% in 2003.
One of the relevant achievements of the PNP, among the raids it conducted in 2002, was the seizure of the counterfeit
videogram materials in Meycauayan, Bulacan estimated to worth PhP1 billion. Case for violation was filed before the
DOJ against 12 foreign nationals caught in the activity.
Figure 11. Enforcement Activity Flow Chart
Stage 1. IP Stage 2. Stage 3. Stage 4. Preparation of

stake- Evidence Complaint of necessary requirements
holder's gathered is private sector for the granting of a
investigator evaluated by IPR is evaluated search warrant (made by
lawyers for
monitors a complaint filing to
by the both the NBI/PNP and the
presumed gov't agencies NBI/PNP complainant).
IPR violator
Stage 7. Stage 6. When a

NBI/PNP and warrant is granted, Stage 5. NBI/PNP file
private NBI/PNP and private for a search warrant.
complainants cooperate to execute Special IPR court hears
file a complaint enforcement the case.
affidavit operations
Stage 7.a.
Complainant and
defendant agree on a
settlement
Stage 8. DOJ/
Fiscal evaluate the
probable cause and
decides if there is a
case
30
The flow chart55 in Figure 11 shows the series of activities conducted before an IPR case is tried in the IPR courts.
Simultaneous with the filing of a criminal case is the filing of a civil one, wherein the client in the former is the
government and in the latter, the private infringed party. Due to the numerous cases handled by the state prosecutor,
the private prosecutors are given permission by the courts to handle both the criminal and civil aspects of the cases.
This occurs to about 80%-90% of the total IPR cases.
Most often than not, about 60%-70%, the IPR cases do not continue to formal court trial proceedings. This is because
at Stage 8, of the flow chart, the parties involved agree on a settlement. As a rational economic individual, one would
engage in a transaction that will minimize his costs and maximize his benefits. An IPR case, like any other case,
entails not only financial, but other transaction costs to both parties involved in the proceedings. When the private
complainant settles before the case is formally filed in the courts, the state is left with no complainants and no case.
Although the state may continue to file criminal charges against the violators and prosecute, it is now left with no willing
witnesses. The same occurs even when the private complainants do continue with the criminal and civil cases, but
settle in the middle of the trial. The civil charges against the violators may be dropped, but the criminal case may still
be 0continued by the state. Again, with no cooperation from the private complainants, the IPR criminal cases are no
longer pursued.
Government Sector Efforts on Border Control

With the new regulations in place such as that of the border control 56, additional trainings for BOC employees were
conducted for the effective and efficient implementation of the law. Orientation training seminars on border control were
conducted in key cities in the Philippines such as Manila, Cebu and Davao last December 28-29, 2002, January 16-17,
2003, and February 12-13, 2003, respectively. The training seminars were attended by 441 BOC officials and private IP
stakeholders.
To further strengthen border control in the country, the BOC conducted the training/workshop entitled "The New
Intellectual Property (IP) Border Control Measures" last October 3, 2003. The activity aimed to familiarize the BOC IP
Unit officials and personnel on:
the key functions and responsibilities of the IP Unit as mandated in the CSO 19-2003;
the rudiments of the IP Code;
the importance of protecting intellectual property rights; and
the salient provisions of the CAO 6-2002 on border control measures. This will ensure that a uniform and
effective implementation of the regulation is applied in customs ports, nationwide.
This workshop is basically a capacity-building activity for the BOC's IP Unit. It is expected that the training seminar will
increase the IP Unit's awareness on IPR issues, and further strengthen their commitment in protecting IPR at the
border.
Government Sector Efforts On Mediation

Due to the problems in the judicial system, i.e. judicial bottlenecks and backlog of cases, the IPO started to develop its
capacity for resolving IPR infringement disputes. This is also in view that the IPOs increased use of the mediation
process will help promote a climate of confidence among investors regarding the intensity of IPR protection in the
country.
55
Flow chart has been formulated based on personal interviews with IPR lawyers. Consequently, succeeding discussions
are also based on the said interviews.
56
Customs Special Order 19-2003 that transformed the Interim IPR unit to a Permanent Intellectual Property Unit
31
In 2003, the IPO conducted the mediation internship program which produced twenty-six (26) highly trained mediators.
The program resulted to an 85% settlement rate; of the twenty (20) cases that were fully mediated, 17 were settled,
while only three (3) cases failed. The mediation process that transpired during the program proved to be more
expedient than the current adjudicative process regarding IPR cases. Prior to the mediation program, the same IPR
cases have been pending at the Bureau of Legal Affairs (BLA) for an average of 4.9 years. On the other hand, the
cases were settled during the program within an average rate of twenty-one (21) working days, from the date the cases
were assigned to mediation until the agreements were signed.
The IPO also conducted mediation workshops/seminars in 2003 which discussed concerns such as: 1) the principles of
conflict, its typologies, and the basic responses to and motives of conflict, 2) the types of negotiations, 3) principles of
interest-based mediation and the types of mediations, 4) the various tools in mediation, the ethics involved, and 5) the
challenges of a mediator. These activities are efforts to strengthen human resource capabilities in handling mediation
processes concerning IPR.
Effects of Enforcement Activities on Piracy Rates
As seen from Figure 12, an inverse relationship between the number of monitored firms for IPR violations and the
software piracy rate is observed. As the number of monitored firms increased, the software piracy rate estimated by the
Business Software Alliance (BSA) declined. The two variables also registered high negative correlation (-0.96507),
which indicates a strong relationship between the two 57.
However, the same cannot be said about the association between the apprehension activities and the piracy rates
(Figure 13). No distinct relationship between the number of raids and the piracy rate was observed. Furthermore, the
statistical analysis between the two variables resulted to a 0.456932 correlation. This suggests that the large values in
the piracy rates may be associated with the large values of the number of apprehended firms, although this relationship
is weak 58.
57
Correlation is an analysis tool that is used to determine whether two ranges of data move together; 1) whether large
values of one set are associated with large values of the other (positive correlation), 2) or whether small values of one set
are associated with large values of the other (negative correlation), or 3) whether values in both sets are unrelated
(correlation near zero). A perfect direct relationship produces a correlation co-efficient of +1.00; a perfect inverse
relationship produces an r of -1.00. A co-efficient of 0 means there is no relationship at all between the two variables.
58
Ibid
32
From this comparison, it can be observed that piracy rates relate more to the monitoring, rather than the apprehension
enforcement activities.
Figure 14 shows that the number of monitored firms and level of new BOI investments in Software Development and IT
Services trends are moving in the same direction. As the number of monitored firms rises, the level of new investments
also increases, though with a one year lag. Meanwhile, when the monitoring activities declined in 2001, the level of
investments followed the same direction in 2002. This is an evidence of an association between IPR protection and
investment decisions in the Software Development sector.
This strengthens the IPR Protection conceptual framework presented earlier (Figure 6) -- that market perceptions and
speculations are significant issues that affect demand for software products and services. Investment decisions, made
by risk-averse investors, do not only depend on economic elements but on security factors as well. Hence, decision-
makers also take note of the government efforts on the totality of IPR protection through the legislation passed and
enforcement activities conducted.
The level of piracy in the Music/Recording Industry has continued to climb since 1997 until 2003. In the IIPA estimates,
piracy rates had been consistent at 20% until 2000, but rose by 13.0 percentage points in 2001, and eventually
reached 40% in 2002. The 2003 rate remained at 40%. IPC estimates coincided with the IIPA level in 1999 and 2003.
The IPC rates, however, rose to 21% in 1999, and also climbed by 8.2 percentage points in 2001 (Table 18).
33
Comparative analysis of the IPC music piracy rates and government enforcement activities showed that as the number
of apprehended firms declines, music piracy rate increases (Figure 15). When the raid activities climbed in 2000, piracy
rate still rose but only by 0.31 percentage points, the lowest registered increase in rates from 1997-2001.
On the other hand, IPC estimates of video piracy showed an association with the monitoring activities of all IPR
enforcement agencies (Figure 16). In 1998, a year after the implementation of the IP Code, the video piracy rate slid by
4 percentage points, while the number of monitored firms for IPR violations rose to 10,138, from the 8,944 figure in
1997. As the monitoring activities intensified, video piracy, on the other hand, declined. This was observed until the
year 2000. In addition, analysis showed a 0.716 correlation between the two variables.
Figure 17 shows that the number of apprehended firms for IPR violations, by selected agencies with jurisdiction in
confiscating pirated video products, had an opposite trend that of the estimated video piracy rates. When the raid
operations of the VRB, NBI, PNP and
BOC declined from 1,148 in 1996 to
213 in 1997, the piracy rate rose by 8.6
percentage points. Moreover, as the
arrest operations of the identified
agencies increased, piracy rates
experienced a slowdown. Analysis
showed a 0.71747 correlation
between the two variables.
In 2000, the impact of the increase in

the number of arrests was intensified
by the confiscation of 10 replicating
machines, worth approximately PhP80
34
million each. The seizure of 6 replicating machines in 2001 had a similar effect on the state of movie copyright
infringement in the country. Furthermore, in 2003, the VRB was able to seize a large number of machines and A/V
equipment in both their inspection and arrest operations, of 278 and 284 pieces, respectively. This also helped in the
decline of video piracy rate during the year.
It is observed that music piracy rates responded to the apprehension activities of all the IPR enforcement agencies.
The declining trend of the total apprehension activities has encouraged the proliferation of the infringements. On the
other hand, movie piracy rates reacted more to the total monitoring activities of all agencies active in the PIAC-IPR
from 1997-2001.
But it should be noted that, with the existence of the VRB, there was a lead agency that concentrated on combating
video piracy. Hence, there are relatively more efforts in enforcement with regards to curtailing video piracy. As seen in
Figure 17, the video piracy rates responded to the apprehension activities of agencies (VRB, NBI, PNP, BOC) with
jurisdiction over video piracy.
Private Sector Effort

The private sector has also been active in the enforcement activities regarding IPR protection. It has been working
hand-in-hand with the government agencies in their monitoring and apprehension activities.
The organizations composing the Intellectual Property Coalition (IPC) 59 help in the IPR protection in their individual
capacities. The Philippine Association of the Recording Industry (PARI) has been active in enforcement of IP laws, and
has assisted the VRB and NBI in their arrest and seizure activities. In 1999, it had worked with the NBI, EIIB, and DOJ
in confiscating pirated music CDs. It has also provided rewards for information leading to illegal replication operations.
Another member organization, the Filipino Society of Composers, Authors, and Publishers FILSCAP, has the
Intellectual Property Foundation which aims to assist the government modernize IP legislation. Moreover, it seeks to
help the government build capabilities in IP administration and enforcement, and take regional and international
initiatives in IP. Its effectiveness, however, has been hampered by the lack of resources.
Meanwhile, the IP-stakeholders themselves, and their companies, individually maintain pools of investigators primarily
for IPR protection. These people provide monitoring services against IPR infringements, for them to report to the
government enforcement agencies. They also help the government gather enough pieces of evidence in support for
the court to grant a search warrant. Moreover, for additional man-power, they cooperate with the NBI or PNP in the
agencies' raid activities.
Public Information and Education Campaign
Government Effort
The government educates and informs the Philippine society on issues regarding the Intellectual Property Rights and
the IP Code through series of seminars, workshops, trainings, exhibits, and the like. The main government agencies
that organize such activities are the DTI and IPO.
An example of such is the trade fair organized by the DTI-CWTRG in 2001. The fair, entitled "Empowering Consumers,
Enabling Business", showcased the products of the Philippine Standards (PS) licensee holders, goods for which
appropriate patents, trademarks and copyrights have been served, and the manufacturers and services of selected
companies duly accredited by appropriate government agencies. Meanwhile, to strengthen government and private
partnership in the fight against piracy and counterfeiting, an "Action Planning Workshop to Strengthen Public
59
The Intellectual Property Coalition will be discussed extensively in the succeeding sections of the report.
35
Appreciation and Enforcement of IPRs" was conducted in the same year by the PIAC-IPR. The workshop came up with
"A Resolution and Strategic Action Plan to Strengthen Public Awareness and Enforcement of Intellectual Property
Rights. This plan, which was submitted to the Office of the President, was formulated to operate as the master plan
that records the programs and activities aimed to curtail piracy and advocate IPR protection in the country.
When the PIAC-IPR was abolished60 in 2002, the IPREAP continued to implement the activities that were formulated in
the Strategic Action Plan. Hence, during the IPR week in October of 2002, the IPO (the main coordinating body of the
IPREAP) conducted the following:
Exhibit of Filipino Industrial Designs and Creative Utility Models with the theme: Bilog at Parisukat,
Disenyong Nakakagulat: Isang Kalipunan ng mga Original na Disenyong Gawang Pinoy held at the IPO
Building Lobby, Makati City;
On-the-Spot painting contest for high school students with the theme: IP in the National Development held
at the 2nd Floor, IPO Building;
2nd Nationwide Essay Writing Contest on Intellectual Property Rights; and
organized the Regional Symposium on Copyright held at the Westin Philippine Plaza Hotel on October 24-
25, 2002.
The same year, the IPO also sponsored several "Seminars on the IP Code" in Regions CAR, I, IV, VI, VII, and XI.
To further promote awareness on IPR, the Intellectual Property Office, though the IPREAP and the help of the IP
Coalition and the IP Alliance of Cebu City, conducted the IP Campaign Caravan 2003. The activity was a series of
roundtable discussions on Intellectual Property Rights and the various projects of IPREAP that were held in major key
cities in the country, namely: Iloilo, Cebu, Baguio, Naga, Metro Manila, and Davao City. Attendees of the seminars
were local government officials, representatives from government enforcement agencies, business organizations, and
Intellectual Property (IP) stakeholders.
The projects of IP-REAP discussed during the roundtable discussions were:
Local Government Unit (LGU) Template Ordinance, a legislation that seeks to address problems in IPR
infringements by curtailing the sale, rental, transfer and distribution of pirated, counterfeit or fake goods,
articles and services within the local governments territorial jurisdiction;
IP Seal and Education Campaign,
Communication Plan, and
Optical Media Bill (OMB).
The campaign resulted to the passage and adoption of LGU anti-piracy ordinance in Naga City, the first Intellectual
Property (IP) friendly city in the country. Meanwhile, the city government of Iloilo also issued an anti-piracy local
government ordinance to restrain the sale, rental, production and manufacture of counterfeit and fake goods in the
local market. The anti-piracy ordinances require that all business licenses and permits issued by the City/Municipal
governments to carry the express condition that the licensee(s) will not engage in the sale, rental, transfer, distribution,
manufacture and/or production of pirated counterfeit or fake goods, articles or services. The creation of the ordinances
was a step towards the local governments active participation in the fight against IPR infringements. These local laws
are expected to promote a better business environment for the manufacture, production and trade of legitimate IPR-
based goods and commodities.
Another important outcome of the campaign was the endorsement of the Department of Interior and Local Government
for intellectual property rights protection. The Memorandum Circular (MC) No. 2003-229 issued last December 8, 2003,
60
Executive Order No. 72 that abolished the Presidential Inter-Agency Committee on Intellectual Property Rights (PIAC-
IPR).
36
was a product of the Metro Manila seminar on IPR. This MC endorses the anti-piracy LGU ordinance and enjoins all
LGUs in the country to help enforce IPR protection.
Private Sector Effort

The government is not the only sector that responded to the problems brought about by the widespread piracy. Feeling
the need for IPR protection, the private sector bonded and gathered to form the Intellectual Property Coalition (IPC).
The coalition is composed by organizations of IP stake-holders namely 61:
COMPACT, an association founded in 1987 to safeguard intellectual property rights.
Filipino Society of Composers, Authors, and Publishers (FILSCAP) which represents a number of individuals
and companies in the music and publishing industries;
Philippine Association of the Recording Industry Inc. (PARI) which represents most of the music recording
companies in the country;
AVIDPHIL, the organization of legitimate videogram distributors in the country;
Business Software Alliance, representing the major foreign business software companies;
Asosasyon ng Musikong Pilipino Foundation which is comprised by music performers;
Philippine Entertainment Industry Foundation, Inc. which works to promote the welfare of the entertainment
industry;
Brand Protection Association, an organization of companies working for the protection of their trademarks
and other intellectual properties;
MPDAP, the Motion Picture Distribution Association of the Philippines;
KATHA, an association of Filipino composers; and
The Quezon City Chamber of Commerce and Industry which is an association of businessmen, SMEs and
entrepreneurs in Quezon City;
American Chamber of Commerce and Industry; and
Microsoft, Inc.
The IPC has geared its activities towards the fulfillment of the following objectives 62:
To provide a forum of discussion of intellectual property and related issues between and among industry
circles and the public in general;
To formulate and adopt a strategic action plan that will identify the problems and issues affecting and
afflicting intellectual property rights, and propose solutions and remedial measures therefor;
To participate in all processes and discussions, whether executive or legislative, that are called or designed
to generate or formulate government policy on all matters affecting intellectual property;
To inform the general public of the pernicious effects of infringement of intellectual property rights by
organizing mass media campaigns;
To liaise with government agencies on any or all matters that concern intellectual property rights;
61
Lifted from the IPC Brochure.
62
Ibid
37
To serve as a private sector watchdog to monitor the implementation of laws, rules and regulations for the
protection of IPR by relevant government agencies; to condemn, criticize and expose ineptitude and
corruption; to commend, reward and recognize exemplary performance and dedication to duty; and,
To lend support and assistance to private and government initiatives that will enhance the protection and
promotion of IPR.
The IPC also promotes IPR protection and educate/update the public of IPR issues by participating and providing
television and print interviews. In these activities, the coalition also tries to convey the significance of legislation in the
fight against piracy. With this objective, the coalition adopted some of the programs in the Strategic Action Plan and
conducted activities that support the immediate passage of the OMB into a law.
The coalition has conducted OMB advocacy activities in 2003, such as:
visiting the Philippine senators to discuss the provisions of the bill, and accordingly ask for their support for
the passage of the proposed law. This was held last May of 2003;
participating in the public hearings and consultative meetings conducted by the Senate Committee on Public
Information and Mass Media regarding the OMB; and
releasing an advertorial or public statement for the immediate passage of the bill, entitled, A Plea For Action
that was published in one of the major Philippine dailies last June 3, 2003.
The IPC had been successful in this endeavor, for the Optical Media Act was ratified in February 2004.
As part of the Strategic Action Plan, the IPC also spearheaded the communications plan called Project Jump. This
project63, which was formulated with the assistance of the Ad Foundation of the Philippines, aims to disseminate
information regarding proper IP values and generate public support for Intellectual Property Rights. The main objective
of the plan is to make piracy socially unacceptable. The multi-pronged strategy will be supported by a multi-media
campaign aimed at the AB and C income households with emphasis on youths ages 13 to 30. The media mix plans to
involve all Free TV stations plus HBO, MTV and other cable movie and music channels. The radio, meanwhile, will
cover the urban FM stations. Advertisements and cinema placements at major malls are also being considered. The
plan is being targeted to take-off in 2004.
The private sector's activities also involve advocacy, information dissemination and educating the public of the negative
social and economic effects of this IPR infringement. Example of such endeavor was the "Rock Against Piracy" concert
conducted early last 2002. This was participated by various local artists, small and famous, who voiced out their
opposition against piracy.
Meanwhile, the Business Software Alliance (BSA) Philippines64, a non-profit international organization that promotes
the use of legal software, launched an anti-piracy campaign entitled Assistance in Software Auditing Program (ASAP)
in 2001. According to the BSA, ASAP aimed to help companies conduct software audit in order to adopt proper
software management and be able to legalize if there is a need to do so. Once qualified, the company will be given by
the BSA a Certificate of Clean Bill of Software Health that guarantees a one-year grace period from legal actions
initiated by members of the BSA. In 2002, the BSA conducted the ASAP 2 Campaign.
The BSA has also established an Anti-Piracy Hotline in Metro Manila, wherein the public can report software piracy
occurrences and inquire on issues regarding software compliance and licensing. BSA reported that the anti-piracy
hotline receives a large number of calls from individuals providing leads on organizations that are either using or
distributing pirated software. As an incentive, the BSA provides a reward of up to P1 million to anyone who calls the
anti-piracy hotline and able to provide information leading to a successful enforcement action against a corporate end-
user. As a support activity to the hotline, the organization also launched an as campaign called Speak up. Dont cover
up, wherein the anti-piracy hotline numbers of the BSA are advertised.
63
As mentioned earlier, this is also a part of the IPREAP activities, though the main mover of the endeavor is the IPC. It
should be noted that the IPC has been an active participant in the 2003 IP Campaign Caravan, and has involved itself in
the conduct of the seminars in all the cities visited.
64
For more information on the BSA Philippines, visit www.bsa.org/philippines
38
In addition, the Philippine Network Gaming Alliance (PNGA) also published an anti-piracy advertisement in the
newspapers in March 2003. This informed the public of the consequences of using pirated entertainment software
products. The ad aimed to instill in the consumers minds that piracy of PC games is a serious crime, and the
consequence to offenders are very serious. Information on the length of imprisonment and the amount of fines that
infringers would serve and pay are included in the advertisement.
However, though efforts are being exerted (by both the government and private sectors) in combating IPR
infringements, more legislation and financial support for better enforcement of the IP laws are needed to have an
efficient and effective IP protection. Though the state of piracy in the country seems to respond to the on-going
endeavors, greater results could have been acquired if not for these limitations the government and the private sector
face.
INSIGHTS ON INTELLECTUAL PROPERTY PROTECTION

Figure 18.
INTELLECTUAL PROPERTY RIGHTS
SOCIAL ECONOMIC LEGAL
Social Social Demand Supply Laws Judiciary

attitudes Customs
De Jure
De facto Institutional
Institutional
Arrangement
Arrangements
Figure 18 depicts the relationships of the different sectors with regards to intellectual property rights. Basic to this
analysis is the understanding that this concern comprises legal, economic and social issues. The legal aspect of it
involves the laws governing the IPR and the judicial processes involved in trying IPR cases. These are the de jure
institutional arrangements wherein the main authority recognized is the government. The Philippines has confronted
this issue by passing laws that aim to protect the rights of IP stake-holders. The progress in this area is continuous as
the legal system tries to adapt to the changing environment in the different sectors affected by IPR. Further, for better
implementation of the said laws, continuous development of the human capital is being undertaken. However, IPR
concerns are also affected by technological advancements. Legislations dealing with technological changes are
needed for timely and effective regulations to curtail IPR infringements. The Philippine legislation responded to this
need through the passage of the E-Commerce Law and the Optical Media Act.
The social side of IPR deals with the social attitudes and customs towards the legitimacy of the rights on intellectual
property. One of the vital concerns in intellectual property rights, or any property rights issue for that matter, is the
acceptance of society that intellectual property is an asset in which rights can be allocated to. That it is an income
stream that needs management, hence, the provision of the rights. It is significant, therefore, that this knowledge or
thinking be ingrained in the value system or norms of the society. By doing so, individuals will be able form
expectations that one may be hold on in his dealing with others. Creation of de facto arrangements -- that is, self
enforcing rules of property that have evolved out of the interactions of individuals -- regarding the allocation and
management of intellectual property rights is possible as a result of this development.
39
First in this concept is the acceptance and recognition of people that a person has a right and claim over the benefits
and economic rents from his intellectual property. That the song, movie, or design, is a private property of the creator,
and the consumers are only provided with limited rights over it when bought in the market. At a given price, selling
price of the commodity, the consumers are extended with use rights over the property, but not reproduction rights,
management rights, etc. Basically, people gain absolute rights on the medium wherein the intellectual property is
stored, but limited rights over the content. When these ideas are absorbed by society, individuals may develop their
own arrangements in protecting the IPR of stake-holders. However, it should also be mentioned that the responsibility
of protection does not only lie on the consumers, but also on the IP stake-holders themselves. They, too, must be
dedicated in safe-guarding their rights and persevere in the cause. With this, new social practices may evolve with
regards to the interactions of an individual vis--vis other people.
One such arrangement that may possibly emerge is the banning of mall and infrastructure owners on the sale of pirate
and counterfeit products in their establishments. Legal measures need not be put in place -- though they would
definitely strengthen the authority of the arrangement -- but merely the cooperation of the owners themselves can be
an effective measure. They may set up their own set of operational and collective choice rules in dealing with the issue.
Consumers can also bond together and set up their own norms regarding the IP protection.
In this line of thought, education of the public regarding the IPR issues must mainly deal with changing the cultural
perception of society. Consumers do not see that infringing on the rights of other people is stealing, because they are
not directly affected by the violation. Only a small percentage of the population are artists, writers, inventors,
innovators, designers, etc, hence, people do not feel the "real" damage. Moreover, the macroeconomic effects of these
IPR violations, i.e. lost revenues, forgone investments and opportunities, are also abstract in concept to an ordinary
consumer.
In order to prevent this alienation of the consumer to the intellectual property asset, intellectual property protection
must also involve intellectual property development. Filipinos must be encouraged to innovate, invent, and create. The
government needs to invest in R & D in the Philippines for advancement of the Filipino intelligence and creativeness.
Philippine research and development in the IP related industries such as biotechnology, IT, chemical manufacturing,
etc., must be supported for Filipinos to be able to identify with, and better appreciate the concept of intellectual
property protection.
On the economics side, an important factor that helps piracy and other IPR infringements survive is the continuous
support given by society in these activities. Without the demand, no one will produce the supply. This is one area in
which the Philippines also needs to emphasize on. The IPR activities have mainly concentrated in the supply aspect of
the problem, as seen by the increasing intensity of IPR enforcement actions through the years. The different
government agencies involved in IPR protection have targeted the producers and distributors of the pirate and
counterfeit products circulating in the market. This produced positive results, as seen by the declining piracy rates,
specifically in the software and video industries.
However, the piracy rates are not the sole indicator of the state of IPR infringement. To evaluate the situation, we must
use the combination of the different indicators such as: the levels of consumption of pirate and legal goods, their
growth rates, the expansion/contraction of the legal and pirate markets, the price factors, etc. Hence, the demand side
of the market must also be dealt with, for the supply and demand are the major economic forces that influence
economic decisions of individuals.
In considering the demand of consumers, we enter into the area of market prices. We must admit that the primary
cause of the continuous proliferation of piracy is the wide price gap between the legitimate and pirate goods. Though it
is impossible for legitimate products to have a price competitive with that of the pirate goods, producers must
acknowledge this factor, and address the concern in the best possible way.
Taking into account these factors, the task for IP protection is legal, economic and social in nature. Therefore, it is
relevant that we must focus, not only on one aspect the intellectual property rights concept. Efforts must be directed in
all three. Furthermore, it is not enough for the government to fight IPR infringements alone. The support of the IP
stake-holders, and the public as well, is very much important for the effort to be a success.
40
CONCLUSION
Why protect the intellectual property rights? As seen from the software industry profile presented earlier, there seem to
be an inverse relationship between the software piracy rates and the new investments in the industry. The same was
observed in the analysis of the movie and recording industries. And from the literatures studying piracy and foreign
direct investments, the same conclusion has been attained. Foreign direct investments increase as piracy rates
decrease, or put in a different light, FDI also depends on the level of protection on IPR.
Findings in a study conducted by the International Data Corporation (IDC) in 2003 showed that a 10-point reduction in
software piracy results in: 1) acceleration in the IT sector growths, 2) creation of new employment and higher tax
revenues to the government, 3) countries with higher piracy rates obtain larger benefits from piracy reduction, and 4) a
10-point reduction in piracy is achievable as nearly two-thirds of countries studied have done it once.
The same impression may be derived from IPR infringement or piracy reductions in other industries. As in the movie
and recording industries, curtailing piracy would create additional movies, productions, and recording albums in the
industries. More economic activities would translate to more opportunities, jobs, and greater output. Further, additional
tax revenues for the government would also be earned.
A lot of industries, like the manufacturing, biotechnology, chemical and pharmaceutical, are also IPR based. Depending
on the importance of the industry to the over-all economy, an improvement in these business sectors would
significantly help in the development of the macroeconomy. And one of the avenues by which the government can help
these industries achieve development is by intensifying the protection of IPR.
The Philippine government has been a staunch supporter of intellectual property rights. IPR protection has been a
state policy as provided by the Constitution; and more legislation have been put in place in order to adapt to the
changing environment in the IPR system. The E-commerce Act has provisions to address copyright infringement in the
internet, while the Optical Media Bill was ratified to tackle optical disc piracy. The country has also joined international
treaties and agreements in support of IPR.
The government and the private sectors in the Philippines are actively participating in IPR related endeavors. In 2003
alone, the Intellectual Property Office and the Intellectual Property Coalition had conducted several activities regarding
IPR advocacy and information dissemination. Meanwhile, the government enforcement agencies have continuously
conducted monitoring and apprehension activities against IPR infringers. They have also been developing their human
resources through the conduct of seminars and trainings on IPR issues and concerns.
However, a lot still needs to be done in order to curtail piracy and other IPR violations in the country. One of the
downside in the Philippine case, with regards to IPR, is the prevailing social acceptance of IPR infringements. Hence,
efforts must also be geared toward addressing this concern. Enforcement activities, placement of laws and other IPR
endeavors will not be successful if the social aspect of IPR protection will be neglected. Therefore, the legal, economic
and social aspects of IPR protection must all be given emphasis to completely safeguard the rights of intellectual
property rights holders.
Though the focus of the study is on copyright industries and on piracy, it should be noted that the paper supports all
IPR-related industries and advocates for the development of the Philippine intellectual capital/assets. Thus, both the
government and society must give emphasis to protecting the rights of our artists, composers, performers, as well as
our scientists, inventors, researchers, and other innovators.
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Association of Video Distributors of the Philippines (AVIDPHIL)
Bengzon, Anthony D. Bengzon & Negre Intellectual Property Attorneys. Personal Interview
41
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Bureau of Trade and Promotions, Department of Trade and Industry
Calimag, Peter L. Angara Abello Concepcion Regala & Cruz Law Offices. Personal Interview.
Clark Development Corporation
Commission on Higher Education
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2002-2003. Sallstrom Consulting and Nathan Associates Inc. 2002.
E-Philippines Strategic Plan. Information Technology and Electronic Commerce Council (ITECC). February 2003
Economic Indicators. National Statistical Coordination Board. December 1996.
Economic Indicators. National Statistical Coordination Board. October 2003.
Eighth Annual BSA Global Software Piracy Study. June 2003.
Electronic Commerce Act, Republic Act No. 8792.
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Filipino IT Workers Rank High in Survey. Philippine Daily Inquirer, June 1, 2002.
42
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Foreign Direct Investment Quarterly Report of the National Statistical Coordination Board. 2000
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Garcia, Eduardo T., Jr. " An Economic Analysis of the Effects of Audio CD Piracy to the Local Record Industry". A
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UPLB. March 2002.
Information Technology (I.T.) Services Industry Profile, Bureau of Export Trade Promotion, Department of Trade and
Industry
International Data Corporation (IDC). Expanding Global Economies: The Benefits of Reducing Software Piracy. 2003
Intellectual Property Coalition (IPC) Brochure
Intellectual Property Office-Intellectual Property Rights Enforcement Unit. Accomplishment Report. January-December
2002
Intellectual Property Rights in the Philippines: Brief Background. Chan Robles Virtual Law Library.
International Intellectual Property Alliance 2003 Special 301 Reports PHILIPPINES
International Intellectual Property Alliance (IIPA) Comments on Special 301. Out-of-Cycle Review on the Philippines.
October 30, 2002
International Intellectual Property Alliance 2001 Special report METHODOLOGY
Mendoza, Oz. "All About Money". www.philmusic.com
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National Accounts of the Philippines: 1998-2000.National Statistical Coordination Board
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National Statistics Office
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December 1999.
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Philippine Association of the Record Industry, Inc.
Philippine Export Zone Authority
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Piracy talk With Philippines BSA president by Geoffrey P Ramos, October 28, 1999. www.cw.com.hk
Schlager, E. and E. Ostrom. 1992. Property-Rights Regimes and Natural Resources: A Conceptual Analysis. Land
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Seventh Annual BSA Global Software Piracy Study. June 2002.
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Somera, Bienvenido, Jr. President, Philippine Intellectual Property Alliance. Personal Interview.
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U.S. Trade Representative (USTR) 2003 Special 301 Report.
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Industries. 2003.
www.cbbb.org/features/preventpiracy.asp
www.forecastcenter.com/public/guest/GNEI.htm
44
www.Tradelinephil.dti.gov.ph/betp/ITServices
www.tradeport.org/ts/countries/philippines/isa/isar0006.html
www.wipo.org
APPENDIX
MOTION PICTURE PIRACY ESTIMATION METHODOLOGY
IIPA Methodology
Video: The term encompasses movies provided in video cassette as well as in optical disc formats. Losses are
estimated using one of the following methods:
1. For developed markets:

a) The number of stores that rent pirate videos and the number of shops and vendors that sell videos
are multiplied by the average number of pirate videos rented or sold per shop or vendor each year.
b) The resulting total number of pirate videos sold and rented each year in the country is then
multiplied by the percent of those pirate videos that would have been sold or rented legitimately
and adjusted to reflect the US producers share of the market.
Total pirate videos sold/rented = # of stores/shops that sell and rent pirate videos * ave. # of pirate videos
rented/sold per shop each year
Loss due to piracy = Total pirate videos sold and rented per year * (% videos that would have been sold or
rented legitimately)
2. For partially developed markets:

a. The number of legitimate videos sold or rented in the country each year is subtracted from the
estimated total number of videos sold or rented in the country annually to estimate the number of
pirate videos sold or rented annually in the country.
b. The resulting total number of pirate videos sold and rented each year in the country is then
multiplied by the percent of those pirate videos that would have been sold or rented legitimately
and adjusted to reflect the US producers share of the market.
Total pirate videos sold/rented = estimated total # of videos sold/rented # of legitimate videos sold/rented
Loss due to piracy = Total pirate videos rented/sold * (% pirate videos that would have been sold/rented
legitimately
3. For fully pirate markets:

The estimated number of pirate videos of U.S. motion pictures sold or rented in the country each
year is adjusted to reflect the wholesale price of legitimate videos which equals losses due to video
piracy.
IPC VIDEO PIRACY ESTIMATION METHODOLOGY

National Statistics Office data (1994) on the Proportion of HH by Ownership of Radio, TV, VCR, and PC
1. Determine the growth in sales of VHS, VCD player, and DVD players and PCs
2. Determine the frequency of movie patronage of Filipinos (either per day/month/year)
45
3. Determine the number of units of videos and VCDs sold/rented per year
4. Determine the Total Revenue from video sales
Formula:
General Concept:
Demand = Supply
Demand Supply = Undersupply
Excess demand will be supplied by the underground economy (pirated videos)

Where:
Base yeart % of # of HH owning VCRs and PCs at year t
VCR (and other appliances used for video viewing) and PC Ownership x = Number of HH with VCRs and PCs at year x
= (t+1)
DEMANDV,x demand for film videos (V) at year x = (t+1)
SUPPLYV,x units of videos/VCDs sold at year t+1
Formula:
VCR = (Base yeart * Total # of HHt) + Total number of appliances for video viewing sold
PC Ownershipx = Number of Installed PCs
VCR and PC Ownership1995 = (% of HH owning VCRs and PCs at year 1994) + number of VCRs sold (in units) 1995 +
Number of Installed PCs
DEMANDV,x = VCR and PC Ownershipx * frequency of movie patronage at year t+1
Total Pirated Movies = DEMANDV,x SUPPLYV,x
Piracy Rate = (Total Pirate Movies/ DEMAND V,x) * 100
MUSIC/RECORDING PIRACY
IIPA METHODOLOGY
The RIIA generally bases its estimates on local surveys of the market conditions in each country. The numbers
produced by the music industry generally reflect the value of sales of pirate product rather than industry losses, and
therefore undervalue the real harm to the interests of record companies, music publishers, performers, musicians,
songwriters, and composers.
Where RIIA has sufficient information relating to known manufacture of pirate recordings that emanate from a third
country, this loss data will be included in the loss number fro the country of manufacture rather than the country of sale.
46
In certain instances appropriate, RIAA employs economic data to project the likely import or sale of legitimate sound
recordings, rather than merely reporting pirate sales. In these instances, projected unit displacement is multiplied by
the wholesale price of legitimate articles in that market rather than the retail price of the pirate goods.
IPC METHODOLOGY
General Concept:
Demand = Supply
Demand Supply = Undersupply

Given : TR = RL + RP
Where: RL - Revenue of Legitimate activity; RP revenue of piracy
RP = TR - RL
(RP / TR) * 100 = piracy rate
47

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THE IP COALITION REPORT I:

COPYRIGHT IN THE PHILIPPINES 2004

A Report Written Under a Study Grant from Microsoft Philippines to

Figure 1. CONCEPTUAL FRAMEWORK:

estimates the music and video piracy rates in the country;

New Investments and Employment

Table 3 also shows that the total number of

The BOI figures show that the Software and

Figure 8. IPC Video Piracy Rates: 1994-2003

INTELLECTUAL PROPERTY RIGHTS PROTECTED

Piracy and other IPR

As shown in the model, there

Policy and Regulation

The exclusive rights to inventions, writings and artistic creations shall be

(K.2) Piracy, which refers to:

(58) the unauthorized copying, reproduction,

Through the OMB better IPR protection is expected to be achieved through:

the greater punishment rendered to the pirates; and

Enforcement and Adjudication

opposition and cancellation cases for trademarks;

cancellation of patents, utility models and industrial designs; and

How did the government conduct its IPR enforcement activities?

presented, was generally determined by the operations of DTI.

Figure 11. Enforcement Activity Flow Chart

Stage 1. IP Stage 2. Stage 3. Stage 4. Preparation of

Stage 7. Stage 6. When a

Government Sector Efforts on Border Control

the rudiments of the IP Code;

the importance of protecting intellectual property rights; and

Government Sector Efforts On Mediation

Effects of Enforcement Activities on Piracy Rates

investment decisions in the Software Development sector.

In 2000, the impact of the increase in

Private Sector Effort

Public Information and Education Campaign

2nd Nationwide Essay Writing Contest on Intellectual Property Rights; and

The projects of IP-REAP discussed during the roundtable discussions were:

IP Seal and Education Campaign,

Communication Plan, and

Optical Media Bill (OMB).

Private Sector Effort

COMPACT, an association founded in 1987 to safeguard intellectual property rights.

AVIDPHIL, the organization of legitimate videogram distributors in the country;

Asosasyon ng Musikong Pilipino Foundation which is comprised by music performers;

MPDAP, the Motion Picture Distribution Association of the Philippines;

KATHA, an association of Filipino composers; and

American Chamber of Commerce and Industry; and

INSIGHTS ON INTELLECTUAL PROPERTY PROTECTION

INTELLECTUAL PROPERTY RIGHTS

SOCIAL ECONOMIC LEGAL

Social Social Demand Supply Laws Judiciary

Association of Video Distributors of the Philippines (AVIDPHIL)

Bureau of Investments, Department of Trade and Industry

Bureau of Trade and Promotions, Department of Trade and Industry

Clark Development Corporation

Commission on Higher Education

Economic Indicators. National Statistical Coordination Board. December 1996.

Economic Indicators. National Statistical Coordination Board. December 1997.

Economic Indicators. National Statistical Coordination Board. December 1998.

Economic Indicators. National Statistical Coordination Board. December 1999.

Economic Indicators. National Statistical Coordination Board. December 2000.

Economic Indicators. National Statistical Coordination Board. December 2001.

Economic Indicators. National Statistical Coordination Board. December 2002.