Criminal websites threaten free enterprise

Don Nickles | Chairman and CEO, Nickles Group

The theft of personal and business property and its distribution for profit far predates the development of the Internet. But what’s new to the Internet age is the ease with which stolen property or counterfeit goods ranging from fake drugs to substandard military equipment can be distributed on a massive scale throughout the world.

Bad actors operating offshore manipulate the Internet and technology to profit from American intellectual property without having to bear any of the production cost, sweat equity or consumer safety standards involved in designing, researching, building and distributing products to American consumers. Meanwhile, they are taking millions from our nation’s economy and our nation’s workers.

Left unchecked, this widespread theft challenges the property rights our nation’s founders knew were essential to liberty and free enterprise.

I have owned and operated three small businesses in my lifetime, including my family’s manufacturing business. I have known the opportunity of free enterprise in America, and how that can change lives. We competed with other companies designing products in the same field, and that competition made us work harder, innovate and create even better products.

But today, American small businesses, manufacturers, and content developers are trying to compete not just with other legitimate businesses, but with thousands of rogue websites trafficking in illegal counterfeit and pirated products. The scope of the problem is difficult to comprehend. A recent report by Envisional estimates that nearly one-quarter of all Internet traffic is consumed with infringing content.

Competition in the free enterprise system is healthy. Turning a blind eye as American businesses struggle to enforce their property rights against international criminals operating outside international business norms amounts to unilateral surrender to foreign competitors.

U.S. businesses of all sizes and fields lose $135 billion in revenue annually due to these sites, according to a study by brand protection firm MarkMonitor. The Institute for Policy Innovation estimates more than $58 billion is lost to the U.S. economy every year due to copyright theft alone, resulting in more than 373,000 lost American jobs, $16 million in lost employee earnings, and $3 billion in lost tax revenue.

The potential impact is staggering. The International Chamber of Commerce earlier this year released a report predicting that by 2015, the annual economic impact of piracy and counterfeiting will reach $1.7 trillion and put 2.5 million jobs at risk each year.

Leaders in the U.S. House and Senate are responding to this threat to free enterprise. Two bipartisan bills, the Stop Online Piracy Act in the House, and PROTECT-IP in the Senate, have been introduced to give American businesses a fighting chance against these foreign rogue websites. While there are differences in the two bills, the ultimate goal is the same:  to protect the American workers and businesses whose jobs are in jeopardy.

Critics of the legislation have fired a fusillade of inaccurate accusations charging that the bills will undermine Internet freedom. Protecting free expression online and protecting intellectual property rights are not mutually exclusive goals and suggesting they are is a false choice.

Freedom of speech has coexisted with intellectual property protection since our nation’s beginnings. Our founders in fact respected the principle of intellectual property protection so much they included it in Article I, Section 8 of the Constitution. And founders from John Adams to George Washington wrote and commented on the integrally linked concepts of freedom, liberty and property rights. Theft of intellectual property is not protected speech any more than breaking into someone’s home.

No, the real choice here is between lawlessness and free enterprise — between respecting property rights or accepting a model based on theft and trespassing.

At a time of economic uncertainty and widespread unemployment, it is critical that our nation’s leaders provide the legal tools to support our nation’s businesses by limiting the ease and illegal availability of counterfeit products online.

Property rights have been core to our free enterprise system throughout America’s history. Now is not the time to abandon them.

Former Senator Don Nickles is the chairman and CEO of The Nickles Group, LLC.

*Update: A Motion Picture Association of America (MPAA) spokesperson confirmed to The Daily Caller that the MPAA secured consulting services from The Nickles Group, LLC. as of Dec. 1.

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