Why Would Attorney General Eric Holder Cite Debunked Stats About 'Piracy'?

by Mike Masnick, Techdirt
Oct. 22, 2010

As part of the latest effort by the US to get China to respect US patent, copyright and trademark laws, it's apparently sent Attorney General Eric Holder to Asia to make speeches that are blatantly ridiculous. You can read the text of the speech that Holder recently gave in Hong Kong, and try not to gag at the claims he makes that are either blatantly misleading or simply outright falsehoods. The Attorney General is supposed to enforce the law -- not lie to protect the interests of a few companies.

After kicking it off with (yet another) conflation of serious counterfeiting issues (that actually put people's lives in danger) with file sharing of music, movies and software, he simply parrots the totally debunked BSA's stats on unauthorized software:

The global software industry is a prime example.

Indeed. If you look at open source software and how they've been able to put together incredible businesses, and enable all sorts of innovation by being the core building blocks of the internet, the web, email and giant companies like Google and Facebook, it really is a prime example of how "piracy" isn't a legal issue, but a business model one. Or wait, did you mean something different?

According to recent industry reports, it is now estimated that, worldwide, more than 40 percent of all software installed on personal computers is obtained illegally -- with forgone revenues to the software industry topping $50 billion.

Yes, according to industry reports. But not according to reality. The "foregone revenue" number is based on a simply laughable claim of a 1:1 ratio of unauthorized copies to "foregone revenue." No intellectually honest person would suggest that number is accurate.

These are funds that could have been invested in new jobs and next-generation technologies.

Right, except Holder ignores the fact that those funds didn't disappear. It's just that rather than going to a few companies with gov't granted monopolies, they went into actual companies doing stuff with the software. That means, those funds did get invested in new jobs and next-generation technologies. In fact, some of the evidence suggests that the money went towards creating even more jobs than it would have if it had gone towards paying for software.

And software piracy affects more than just the software industry -- since, for every $1 of PC software sold, it's estimated that more than $3 of revenues are lost to local IT support and distribution services. Other IP and support industries are seeing the same ripple effect of losses -- and current trends are alarming.

Oh, wait, so you do understand ripple effects. It's just that Eric Holder seems to think ripple effects only go in one direction. They don't. And, um, you do realize that counting "ripple effects" is blatantly misleading in that it's really recounting the same dollars multiple times. Could it be that US Attorney General Eric Holder doesn't understand basic economics and math? Or is he simply accepting widely-debunked claims from an industry that clearly benefits from folks like him repeating those claims? Neither answer seems particularly flattering to Holder.

He then goes on to scold China (without naming them directly) for not doing enough to prop up American businesses. Well, that's not how he puts it, of course, but it's what he's basically saying. Apparently, he hasn't realized that China has been a quick study in figuring out how to use intellectual property laws to hold back foreign companies operating in China -- including many US companies. Encouraging China to respect intellectual property laws is simply encouraging them to harm American companies and innovation, while giving the government more tools to suppress free speech. This is really troubling and dangerous. And, what's most upsetting is that folks like Holder don't even seem to have considered these sorts of reactions.

Next up, he simply makes stuff up to win political brownie points:

As many of you know, last year, President Obama created a new leadership role in the White House -- Intellectual Property Enforcement Coordinator -- and appointed Victoria Espinel to fill this position.

Except, um, that's not true. President Obama did not create that role. It was created by the (problematic) ProIP bill, which was signed by President Bush, not Obama. Now, Obama did hire the first IP czar, and figure out which department it would go in, but only in response to the law signed by his predecessor. To claim he created the role is blatantly false. This may be a minor point, but it highlights that Holder seems to have filled this entire speech with statements that seem to show a disconnect from reality.

Last December, Vice President Biden convened the administration's first intellectual property summit, which brought together cabinet officials and industry leaders to discuss intellectual property rights and policies

Right. The "summit," which only brought in one side of the debate and kicked out the press. The Attorney General is supposed to uphold the law, right? He must have learned at some point that the entire point of copyright and patent laws is to benefit the public by "promoting the progress of science and the useful arts," right? So, if you're going to convene a "summit" about such intellectual property, wouldn't you expect that the real stakeholders should be present as well -- rather than just a few industry folks seeking regulatory capture and an increase in monopoly rents at the expense of the public?

To build on the contributions and achievements of our prosecutors and investigators, in February of this year, I reestablished the Justice Department's Task Force on Intellectual Property.

Right, at the same time that you were de-emphasizing the importance of things like stopping identity fraud and finding missing persons. But helping prop up a few companies who contribute a lot to political campaigns? We'll get right on that...

There's a lot more like that in the speech, but honestly, the whole thing is shameful. It's a pure propaganda piece for a few industries, at the expense of the public good.