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DELTA SECURITY MANAGEMENT (PVT) LTD
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PROPOSALS
For Revenue Genneration Through
Intellectual Property Right Related Business
By
ROYAL IPR SECURITY SERVICES (PVT) LTD
(RIPRSS)
 
  1. ROYAL IPR SECURITY SERVICES (PVT) LTD has been incorporated and registered with the Registrar Joint Stock Companies under Companies Act XLVII of 1948. Team of professionals having vast experience in their respective fields manages the Company. A service-oriented company deals specifically in investigative activities, safety, security, protection of IPR and safeguarding of Copyrights. Having two main divisions; Operational & Legal, the company handles all IPR cases from collecting evidence of offences through investigations, enforcement of law of land to registration of criminal cases and pursuing the cases in courts, all over the country. Retired senior government officer having vast experience in security, intelligence and law enforcement heads the management. The Operational Division consists of trained and motivated investigators having ample experience in carrying out corporate investigations, locating pirates, detecting the counterfeits, organizing the anti piracy raids. Similarly, a well-trained and thorough professional penal of lawyers, is handling all IPR related criminal or civil cases, in Legal Division. The main office is located at, A-4, 4th Floor, Carlton Court Building # 52, Phase II Ext, D.H.A, Korangi Rd, Karachi, Pakistan,, having appropriate infra structure in shape of large office space, vehicles, telephones/Fax and E-mail. The regional offices are located at Lahore, Rawalpindi, Islamabad and Quetta.
  2. Royal has the honoured and distinction to provide, for the first time in Pakistan, an easily accessible relief to Intellectual Property owners through "single window operations" on a well orgnised way. At present, "Royal" has to its credit investigative activities carried out or anti piracy raids conducted and criminal cases registered against criminals in all major towns of Pakistan like Karachi, Lahore, Quetta, Peshawar, Multan, Islamabad/Rawalpindi, Faisalabad, Jehlum, Chakwal, D I Khan, Sukker and Hyderabad. These activities, through law enforcers, are being directed towards the criminals indulging in various crimes including audio, video, software, pharmaceuticals, consumers' goods, satellite channels and book piracy/counterfeit. Some of our past and present clients include, Harcourt Publishers, Mc Graw Hill, LWW Publishers, Pearson Education, Oxford University Press, Paramount Books, Nelson Publications, Red Spot Publications, John Willey UK, Stanford UK, Microsoft, Auto Desk, Proctor & Gamble, STAR TV, HBO, PEHLA PLUS Satellite Channels, Sound Master, DJ Music, Sonic, HeRA, CA Sports, Hitachi, Sanyo, Sony and host of local firms/IPR owners. There is 100% conviction rate of all criminal cases registered through "Royal"!!!
SOME FACTS ABOUT HOME ENTERTAINMENT INDUSTRY VHS FORMAT
3. The major source of revenue losses in the country is the piracy in VHS format (videotapes). The nation gets Rs 100.00 in one legally released video print as various taxes like, Sales, Duties and Censorship fee, while the pirates pay nothing! There are approximately 40000 video film outlets in the country, (with one of the biggest video pirate market at Rainbow Center Karachi, followed by Rafi/Zaitoon Plaza, Lahore and Imperial Market Rawalpindi, having trillions of rupees as annual "Tax free" turn over). So, modestly speaking, even if each shop purchases one legal print, (minimum 30 video titles are being released per month at present) the nation can get revenues to the tune of Rs 120000000.00 per month (triple of this amount, so far going to the pirates)! This example is based on minimum sale, while maximum sale can yield billions and even trillions. However unfortunately triple of this amount so far, is going to the pirates and smugglers!
LASER DISCS (LDs) / VIDEO COMPACT DISCS (VCDs / DIGITAL VIDEO DISCS (DVD) FORMATS
4. Another source of revenue losses is the infringement in shape of rampant smuggling in of LDs, VCDs and DVDs. There are many outlets in the country, with major concentration at Karachi, Lahore and Islamabad/Rawalpindi, dealing in LDs, VCDs and DVDs. These shops are not only selling/renting out uncensored and smuggled films to the public, but also providing an easy access for a high quality back to back piracy for pirates. As per careful survey, about 15000 shops are dealing in LDs/VCDs/DVDs, in the country. Each shop at any given time has about 500 units of these discs. The governments' share in shape of taxes is, about Rs 97,00 per legal unit. Going by the above mentioned calculations, if every shops buys one legal Disc than the government would get (minimum) Rs 52.38 millions per year. Triple of it is being lost to pirates so far. Additionally, of late, many VCD manufacturing/replicating/duplicating plants have started operating locally. Almost all these plants are operating illegally, violating Copyright, Motion Pictures, Custom and Excise laws, hence major revenue losses. Out of eight such major plants, only two are on record with the Registrar of Companies, while others have no record, yet doing roaring business.
Cable Networks
5. Yet another source of revenue losses is, the Cable Networks. Although the Pakistan Telecommunication Authority (PTA) has made mandatory to get license for running cable networks but in the absence of any effective policing or law, these networks have arisen with mushrooming effects all over the country. Unfortunately the PTA has no means to exercise any control over any of the cable network. Their job seems to have ended after collecting the license fee and issuance of license. PTA can not even know if some one keeps running the cable network after cancellation or expiry of license. In various cities of Pakistan the kind of money made by a small to medium sized Cable operator is phenomenal. Some facts about these illegal operators are: -
a. Average numbers of connections 8000
b. Average non refundable connection charges Rs 2,500.00
c. Total non refundable charges (2500x8000) Rs 20,000,000.00
d. Average monthly subscriptions Rs 250.00
e. Total monthly subscriptions (250x8000) Rs 200,000.00 PM

(Since the whole business being illegal, neither the IPR owners nor the nation get any thing out of these billions. Every Cable operator is not only causing revenue losses, but also destroying the moral fibers of our society by flooding each household with vulgar obscene and uncensored films/programmes. The licensing authority; PTA has no means to police them.)

STEPS TAKEN SO FAR BY RIPRSS

6. RIPRSS, on its part, is trying its best to not only protect the interest of the member companies but also, in the process, generate more revenues in shape of taxes. Its set up in Pakistan is dependent on local police force for enforcement, which, on written complaint, conduct anti piracy raids on outlets and register criminal cases under Copyright law.

Criminal cases registered so far =4763

Expenses on these cases =Rs 142890000.00

Results (convictions/decided) =4600

a. Fine(Average sum) =Rs 2300000.00

b. Imprisonment =Nil

c. Piracy / Tax evasion/Smuggling=Continues unabated

process, generate more revenues in shape of taxes. Its set up in Pakistan is dependent on local police force for enforcement, which, on written complaint, conduct anti piracy raids on outlets and register criminal cases under Copyright law. There are over 4763 criminal cases registered in major urban areas. However, the desired effects have not been achieved despite utilization of vast resources. The primary reasons had been lack of interest by the local police and inherent lacuna in Copyright laws. Despite open law violation, the local police relegate this crime to the last rung of priority ladder. To them, crimes like minor traffic violation pick pocketing or petty stealing is more important than broad day robbery of one's life long savings in shape of intellectual property. To overcome this problem, on our request, in 1996, Ministry of Interior issued directives to all provinces for constituting special police teams. Those arrangements brought in tremendous results. However, these teams worked only for a couple of month. On the other hand, when the Copyright case comes for decision in the magistrates' courts, an extremely lenient view is taken while announcing the judgement. The accused is let off for as cheap as Rs 50 fine. This is being done because the law does not guaranty minimum mandatory penalty and has left it to the presiding magistrates' discretion. Unfortunately this discretion is always used in favour of the convicted person. Ministries of Education and Culture have been approached with suggested minor amendments in the law to make it more meaningful. The final draft of proposed amendments is ready for necessary legislation.
PAK FILMS PRODUCERS, PLAYRIGHTS & ARTISTS
7. The work being done by the RIPRSS for English language films is giving a tremendous boost to Pak film industry and works. The protection of local IPR will help promoting our traditions and culture. The local film industry, artists, musicians and creators are already producing world class works. With the proper laws in place more Pak talent would be encouraged. Better creativity shall take place when our talented artists, writers and film producers know that their life long investments would not be looted. In addition, the nation would not only get the better quality of products but also more revenues in shape of taxes.
POSSIBLE REVENUE SOURCES
8. The Government of Pakistan, to begin with, can get/raise extra revenues amounting to approximately Rs 9.5 Billions, without incurring any extra cost. The areas from where these revenues can be generated easily are: -
SOURCES
Rs in Billions PA
Home Entertainment Industry
a. English Home Entertainment Films
b. Other Home Entertainment Films

1.25

1.75
Book Publishing Industry
0.50
Software Industry
1.25
Music Industry
1.00
Textile Related Industry
0.75
Consumer Industry
3.00
Total
9. 50
PROBLEMS & ISSUES INVOLVED

9. At present following issues and irritants are not only acting adversely in controlling the blatant piracy but also creating hindrance in generating additional revenues for the nation: -
a. ENFORCEMENT OF LAW: - The enforcement of Copyright laws has been entrusted to the local police. Despite simple, cognizable and non-bailable requiring a police officer not below the rank of Sub Inspector to conduct the raid, the enforcement level remains very poor. The basic reasons for this are: -

  1. The local police, being over committed in "other matters" seldom accord any priority to this crime.
  2. Lack of education or knowledge about Copyright law among local police, becomes impediments to prepare them for initiating criminal cases against the law violators. A considerable time and resources are spent in liaison, education and training of the police officials, but frequent postings/transfers of these official result into restarting the whole process hence wastage of resources and delay.
  3. Later, after registration of cases, submission of "challans" to the courts are delayed considerably due the official's heavy commitments elsewhere or postings/transfers.
  4. The delay in filing of "challans" to courts, results in "justice delayed" indefinitely and the law violators continue doing illegal activity with complete immunity.
  5. This situation results into unnecessary wastage of national resources and encourages lawlessness.

b. COURT DECISIONS. The results of anti piracy criminal cases become redundant, due to the delay in case decisions or negligible sentences. Some of the reasons for such results are: -

  1. Magistrates, who are also Executives of their respective sub divisions, being committed in other "pressing" jobs, are not available for proceeding with the copyright cases regularly.
  2. The offenders continue to break the law blatantly, due to non-disposal of case quickly and in time.
  3. Prolonged hearing dates, not only fades out the effects of criminal case but also result in encouragement to law violation.
  4. Due to lack of proper training and education about the Copyright law, punishments awarded by the magistrates so far in some decided cases had been terribly insignificant, thus encouraging more law violation.

c. LACUNA IN LAWS. There is an inherent lacuna in Copyright law. The minimum mandatory punishment upon conviction is not been given and has been left to the discretion of presiding magistrates. Unfortunately, for various reasons, the advantage of this lacuna invariably is going to the law violator, who is invariably let off with paltry fine of Rs 100.00. It would be interesting to note that out of 4763 criminal cases registered so far, the courts with 100 % convictions have decided 4600 cases. However unfortunately, the there had not been a single imprisonment and even the fines imposed had been negligible. Had there been minimum of Rs 50,000.00 as fine in each case, (which each pirate can easily afford to pay), the nation could have been richer by Rs 230.000,000.00. Revenue to the tune of Rs 8,150,000.00 can still be generated from just 163 pending cases without causing any burden on treasury. A lot more can be achieved from the future cases.)

d. RAMPANT SMUGGLING. Another cause of revenue losses in shape of lost taxes is the rampant smuggling of LDs, VCDs, DVDs and CD-ROM. Despite having some degree of enforcement under Copyright law, the piracy continues to flourish in various forms. The fresh consignment of infringing copies fill in the space immediately while the shelves are emptied through raids on the VHS format of piracy. The main cause of this vicious circle is, massive smuggling in, of LDs, VCDs and DVDs, through land, air and sea. Any body can bring any kind of film into the country under the garb of personal baggage. The counterfeit VCDs or DVDs, being identical to computer CDs (CD-ROM) can easily be smuggled in. A normal size briefcase is enough to smuggle the films in DVD or VCD format, worth millions of rupees. Not only that, but the smuggling in of these films on VCD/DVD becomes a major source of back-to-back piracy, resulting into phenomenal revenue losses. The smuggled LDs, VCDs and DVDs have flooded the market. The number is rising with each passing day, thus causing colossal damage to the national economy in shape of lost taxes.

 

PROPOSALS & SOLUTIONS
  • FORMATION OF IPR ENFORCEMENT FORCE, FROM WITHIN EXISTING RESOURCES.
  • ESTABLISHMENT OF IPR COURTS.
  • MINOR AMENDMENTS TO:-
1. COPYRIGHT ORDINANCE, 1962,
2. MOTION PICTURES ORDINANCE, 1979,
3. TRADEMARK & PATENT LAWS.
4. PTA ACT

 

SPECIAL ENFORCEMENT FORCE
Keeping in view the colossal financial as well as reputation losses by piracy, Copyright law being a Federal law, is required to be implemented all over the country in its right spirit and on permanent basis. The enforcement of this law needs a special attention, through a special IPR ENFORCEMENT FORCE. The officials for this force may be sent on deputation for minimum 2 years from existing strength of police and custom staff. It is proposed that: -

a. Central Enforcement Cell may be established as part of the Ministry of Interior & Narcotics Control.

  1. Composition. Existing Joint Secretary with Section Officer and representative of CBR and IPR owners.
  2. Task. To monitor IPR enforcement measures on nation-wide basis.

b. Four Provincial Cells for each province, along with one each cell for ICT, NA and AJK be set up exclusively for enforcement.

(1) Composition per Div.
Police
Customs
(a) Punjab
- Lahore Division
2 Sub Inspectors
8 Constables
2 Head Constables
- Faisalabad Division
same as above
same as above
- Rawalpindi Division
same as above
same as above
- All other Divisions
1 Sub Inspector
4 Constables
1 Head Constable
(b) Sindh
- Karachi Division
4 Sub Inspectors
16 Constables
4 Head Constables
- All other Divisions
1 Sub Inspector
4 Constables
1 Head Constable
(c) N.W.F.P
- All Divisions
1 Sub Inspector
4 Constables
1 Head Constable
(d) Baluchistan
- All Divisions
1 Sub Inspector
4 Constables
1 Head Constable
(e) ICT, NA & AJK
1 Sub Inspector
4 Constables
1 Head Constable
(2) Tasks

(a) Upon receipt of written complaints from IPR owners or their duly authorized agents or the instructions from local administration, conduct anti piracy raids under Copyright Law.

(b) Arrest the accused, seize the infringing material/equipment and get the criminal cases registered in the respective police stations.

(c) Prepare the final challans within 24 hours and present the case for hearing before magistrate.


c. Enforcement of Copyright Law is included in the schedule of Federal Investigation Agency (FIA) so that this force could also become useful against major illegal duplication centers/underground VCDs/DVDs factories.

d. Enforcement of Copyright Law may also be included in the schedule of PATA/FATA.

SPECIAL DUTY MAGISTRATE

The enforcement or registrations of criminal cases against the law violators become an exercise in futility unless the cases are decided and justice delivered in time. As mentioned in the brief, despite registration of many cases the decision from the courts are far less. The main cause for this is the non-availability of presiding Magistrates on hearing dates. To avoid this situation, it is proposed that the IPR Duty Magistrates are earmarked from the existing strength, to preside the IPR cases on fixed days/time of the week. The proposal envisages: -

  • A certain number of Magistrates (Class 1) should be designated as IPR Infringement Magistrates and assigned only the IPR criminal cases. It should be made mandatory for them to preside these criminal cases on daily basis.
  • Conversely, if for some administrative reasons, exclusive IPR magistrates can not be made, than, at least 3 days a week from 9 AM to 1 PM, be given to the special duty magistrates for IPR cases. Such arrangements have been already working in various other fields where magistrates are exclusively working on given days for different tasks.
  • Minimum number of magistrates required in main cities, for this purpose are:-

    City
    # of Magistrates
    Karachi
    3
    Lahore
    2
    Faisalabad
    1
    Multan
    1
    Hyderabad
    1
    Quetta
    1
    Rawalpindi
    2
    Peshawar
    1
    Islamabad
    1

    CONCLUSION

    The proposals if agreed and implemented can produce following results, without costing a single additional penny to the nation: -

  1. Generate an additional amount of Rs 9 billions annually, to begin with.
  2. Documentation of a huge segment of business, so far undocumented, for GST.
  3. Enhancement of Pak prestige among global community, with regards to IPR Protection, according to WTO, TRIPPs etc, thus attracting more foreign investments.
  4. Shall set in a trend for legitimizing the business in Pakistan and help promotion of tax culture.
  5. Shall put an end to the rampant pornography, vulgarity and obscenity so rampant through uncensored, smuggled and pirated films.
  6. Shall help flourishing of Pakistan culture, artists, writers and other related creative enterprises.
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