A recent example involved a lawsuit filed against a popular online file-hosting service provider, Scribd, for copying and inserting copyrighted work into an internal filtering system.  Ironically, this filtering system was in place to help the cyberlocker detect copyright infringement on their site.  The suit, filed by an author, maintained that the act of filtering her copyrighted material was a form of copyright infringement and that Scribd failed to stop illegal downloads of her book.  This closely watched lawsuit was eventually dropped.

Scribd lawyers asserted that the DMCA provided safe-harbor protection and also stated, “They didn’t realize that Scribd had a very strong protection under the law.”  The quote appears to ring true and is in line with the outcome of two similar cases decided in the U.S. earlier this year.  The first case included another popular online file sharing provider RapidShare vs. media company, Perfect 10.  The second was a highly visible case involving YouTube vs. entertainment giant, Viacom.  In both cases, the online service provider prevailed.

The message is clear. The DMCA continues to protect the online service provider provided the online service provider takes down copyrighted material once notified.  The burden remains on the copyright owner to police the Internet to detect cases of infringement online.

Dan Brown’s novel is hardly the only fiction bestseller targeted by pirates. Stephenie Meyer’s Twilight books were reportedly the most downloaded fiction books on BitTorrent in 2009, being downloaded somewhere between 100,000 and 250,000 times. While none of J.K. Rowling’s Harry Potter books are officially available as e-books, pirates have scanned all of her books and converted them into PDF files which can be viewed on any e-book reader. All told, one-third of Publisher’s Weekly’s 2009 top 15 bestselling fiction books were found available for download.

For better or worse, pirates do not discriminate when it comes to book genre. In addition to bestsellers, pirates also make available illegal copies of textbooks, professional books (such as medical books and technical guides), business and investment books, and general fiction and non-fiction books.

What’s driving the uptake in e-book piracy? One plausible factor is the emergence and growing popularity of several e-book readers over the past couple of years. An interesting TorrentFreak study examined the impact of the recent iPad launch on the levels of e-book piracy. The study looked at the level of illegal downloads of e-books several days before and after the e-reader’s official launch on April 3, 2010. The study found that 6 of the top 10 bestselling business paperback books were in fact pirated, and that illegal downloads of these books grew 78% after the launch. (Curiously enough, the study did not find any of the top 10 all-around best selling books were pirated at the time.) For example, illegal downloads of David Allen’s book Getting Things Done increased 57% after the launch from 277 to 435 per day. Downloads of Freakonomics jumped 140% from 187 to 381 after the launch.

While the surge in illegal downloads may seem staggering, the absolute volume of illegal e-book downloads is actually relatively small when compared to downloads of popular music and film releases, which can reach more than 1 million downloads in one week. A likely reason for this is that the installed base of e-readers is still relatively small when compared to the installed base of MP3 and DVD players. Another potential reason is that most books are not yet available as e-books, legally or not. Unlike other digital formats which take just minutes or a couple of hours to pirate, creating an illegal e-book can take hours upon hours to scan, convert to readable characters (via an OCR application) and proof, or for determined hackers, at least some effort to crack the DRM technology.

E-book piracy has indeed had some initial traction, but has not spun out of control – yet. Authors, publishers and book sellers still have an opportunity to get this right and have already taken several steps in the right direction, including offering legal e-books at an attractive price and making them convenient to access (as Apple did with music sales via its iTunes store). In tandem, the publishing industry should continue to aggressively defend its rights online by detecting and quickly responding to illegally hosted copies of their copyrighted works. Otherwise, it risks allowing e-book piracy to become firmly established and accepted by readers, which will be harder to address down the road.

So, what did we find? Roughly 17% of the paid search ads for popular consumer products – such as designer handbags and shoes, music, movies, and hi-tech gadgets – led to sites likely offering counterfeit or pirated goods. This number gets even higher for certain categories, such as “designer handbags,” where an eye-opening 32% of the paid search ads led to sites appearing to sell fake handbags.

Another way to stir up more ads for counterfeit or pirated goods is by adding terms like “cheap,” “discount” or “wholesale” to a product name or category. Across all 20 product searches, for example, the share of paid search ads linking to sites selling counterfeits increased from 17% to 19% when these terms were added. In the designer handbag example, the share of paid search ads linking to suspect counterfeit sites jumped from 32% to 49%.

From these results, it is evident that counterfeiters have mastered the art of targeting buyers looking for unbelievable deals. As such, consumers need to be that much more vigilant if they’re seeking authentic products at good prices. Brand owners also need to be cognizant of the strategies employed by fraudsters and monitor not only for the use of their trademarks or product categories as keywords, but also in conjunction with terms signaling counterfeit or pirated products.

What may be lesser known is that many major online marketplaces – including business-to-business changes – also have a decent track record for removing infringing listings.  Based on our own research of the major auction and exchanges sites accounting for roughly 75% of all marketplace traffic (as measured by Alexa), the overall compliance rate of over 170,000 de-listing requests between June and July 2009 was 83%.  

By major region, marketplaces hosted in the Americas showed the best enforcement compliance rate of 94%, compared with 78% for European-based sites and 73% for Asia Pacific-based sites.  The compliance rate of individual online marketplaces within each region, however, did vary considerably – from 6% to 100% in the Americas and Asia Pacific where most enforcements were sent.  It is interesting to note, too, that the marketplaces with the largest enforcement volumes have the highest enforcement success rates.  That’s good news for brand owners, as the vast majority of their enforcement efforts are acted upon by the major online marketplaces.

Enforcement Compliance Rates of Major Online Marketplaces By Region* 

*Based on a sample of over 170,000 de-listing requests between June and July 2009.  **Average compliance rate is weighted by percent of enforcements per online marketplace. 

Source:  MarkMonitor.

Under Section 512(d)(3) of the DMCA, “information location tools” such as search engines and directories are not liable for infringement of copyright-protected materials they may link to, as long as they follow the DMCA’s takedown procedures when they receive complaints from rights owners.  These are essentially the same conditions that apply to ISPs who may unknowingly host websites containing infringing copyright content.  However, rather than identifying the infringing copyrighted material itself, rights owners must instead identify the search result or directory page which links to a webpage containing the infringing material.  For example, this would require providing the keyword or keyword phrase used in a search or directory query, plus the URL(s) which point to the infringing websites in the DMCA complaint.

Some search engines make it easier than others to submit this information to them.  Google, for example, requires DMCA notices to be sent via fax or snail mail, with a couple of exceptions;  complaints of copyright infringement found on Blogger can be submitted via an online form, and only brand owners with a prior agreement with Google may submit complaints via email.  Both Yahoo! and Bing allow brand owners to submit complaints via email in addition to via fax and mail; however, it appears that the first submission to Yahoo! and Bing must be submitted by mail or fax so that they have a legal copy of the brand owner’s signature on file.

Once the DMCA notice has been received by the search engines, they will “expeditiously” remove the website listing from its search engine index, although no timeframe is provided.   Anecdotal information suggests that removal takes on average 10 days.  Furthermore, both Google and Bing will provide copies of the DMCA notice to the website owner in case they would like to file a counter notification, whereas Yahoo! may do this at its discretion. 

It is also important to note that both Google and Yahoo! may provide copies of the DMCA notice to Chillingeffects.org, with personal identification information removed, where it may be posted and annotated.  (Apparently, with Google’s Blogger, all DMCA notices are forwarded to Chillingeffects.org.)   Google goes one step further and indicates at the bottom of the relevant search engine page that certain listings have been removed due to copyright infringement and provides a link to Chillingeffects.com for consumers to view the actual DMCA notice. 

Of course, brand owners can always submit DMCA notices directly to ISPs hosting infringing websites to have the copyright content removed or to disable access to the websites.  While this is also effective, brand owners may find themselves sending multiple enforcements to multiple ISPs to cover all copyright infringement associated with their brands.  By submitting DMCA notices to just the major search engines, in contrast, brand owners can effectively block access to 98% of infringing websites accessed through search.  Submitting to Google alone gets you 78% of the way there.  Of course, the one drawback with sending DMCA notices to the search engines is that while links to the infringing content are removed, the actual infringing content remains.

Perhaps the best approach is to take a one-two punch.  By sending DMCA notices to both the major search engines and the ISPs hosting the infringing websites, brand owners can practically guarantee that consumers will not be able to find or – in the case of pirated music, movies, programming content, software and games – download the infringing content.  This applies also to sites leveraging copyrighted product photos or images to sell counterfeit merchandise.  Not a bad place to start for protecting a company’s most valuable asset.

Links to Search Engines’ DMCA Policies:

• Google
• Yahoo!
• Bing

• Even though global software piracy increased overall in 2008, the piracy rate actually dropped in 52% of the 110 countries studied and stayed the same in 35% of them
• The impact of the global economic recession on software piracy is so far mixed, as reduced buying power is just one of many factors affecting piracy
• Sites offering access to pirated software also spread malware.  According to a 2006 IDC study, 29% of websites and 61% of P2P sites offering pirated software attempt to distribute malware.
• While the US has the lowest piracy rate in the world – 20% – it suffered the largest revenue loss in 2008 due to piracy given its leadership position in the global software industry

Brand owners are not standing by idle, however.  There have been a number of recent lawsuits against popular BitTorrent sites used to disseminate software, movies and music; just last month, the owners of the world’s most high-profile file sharing site – the Pirate Bay – were found guilty of copyright infringement and sentenced to one year in jail and fined $4.5 million.  Brand owners in conjunction with the Department of Justice have also been successful in obtaining 34 convictions involving the selling of pirated software on auction sites.  The BSA itself has been active in sending more than 1.9 million takedown notices in 2007 to Internet Service Providers (ISPs) to remove illegal software and has successfully shutdown thousands of illegal online auction listings.  

So, what can other brand owners from software and other industries learn from this?  Keep fighting the fight.  While piracy increased overall and in emerging countries, piracy actually went down in 57 countries and didn’t get worse in 39 countries.  This is due to the proactive brand protection efforts – both online and off – of leading global corporations.  By actively enforcing their rights online and implementing proven strategies involving consumer education, customer and channel programs, technology advances, and government partnerships, brand owners can reverse the tide in the illegal distribution of their brands.