MANILA, Philippines--Despite recent strides made by the government and the private sector in combating piracy, the Philippines remains an intellectual property rights (IPR) hotspot in the region especially in terms of "optical media" and software.
In fact, a quick trip to some of Metro Manila's second-tier shopping centers is all it takes to find pirated DVDs of the latest movie releases as well as bootleg copies of Windows Vista, the latest edition of Microsoft Office, PC games or even video editing software like Avid or Final Cut.
"The piracy rate [in the Philippines] is still relatively high," said Optical Media Board executive director Rosendo Meneses in a recent interview.
While the good news is that the level of software piracy has not gone up over the last three years, he said the bad news is that this level has not gone down either.
"We have been steady at 71 percent," he said. "According to the Business Software Alliance (BSA), this translates to a loss of about P5 billion for the industry each year."
Meneses said his agency notes the "urgent need" to combat software and DVD piracy as part of the broader effort to have the country's stricken off the US' IPR watch list, but conceded that the job is not as easy as it seems.
Nowhere is this urgency felt more than at global software giant Microsoft Corp. whose popular operating systems and office utilities make up a substantial portion of the pirated discs sold locally.
Surprisingly, however, the company, which has been so demonized in the press in recent years for perceived aggressive or heavy-handed business practices, has now taken a more open approach to the issue of piracy.
In an interview with the Philippine Daily Inquirer, Microsoft senior vice president and general counsel Brad Smith explained the rationale of fighting the IPR battle not through the traditional way of battening down the hatches and clamping down further, but by adopting a more open corporate strategy.
"It is [a change in philosophy] in some significant ways and yet it has also other aspects that are a continuation and we're probably thinking a little bit about both pieces," Smith said, explaining Microsoft's twin thrusts of promoting intellectual property rights by encouraging inter-operability among various software platforms.
This move toward inter-operability by the world's largest software firm is something that took the industry by surprise, especially for those who remember the time when Microsoft Word or Excel files would not open on Apple computers, and vice versa.
"It's a big step and a big change in the commitment that we're making to ensure that the connections that we have between products are open so that other programs could plug-in to our own," Smith said.
"It's a big change in terms of taking a lot in what we believe to be valuable trade secret information and making it available free of charge to people on the Web," he added.
On one hand, industry watchers say this shift was due to realization at Microsoft's Redmond, Washington headquarters that its dominance over the PCs the world over, while still overwhelming, is slipping irreversibly.
But according to Smith, the company's recent decision is not a simple "if-you-can't-beat-them-join-them" move.
Smith explained the decision to promote software inter-operability does not mean that the company has gone totally soft on the value it places on its proprietary software, on which it spends billions of dollars.
"The other area in which [the new thrust] reflects continuity is the value placed on intellectual property," he said. "Our approach to patents reflects that."
For example, when working with Microsoft's patented communication protocols, the company will provide a promise or covenant to open-source developers so that they could do their work without further needing to get their patent rights from the company.
"But then if open-source software is distributed commercially, for example by a company or used commercially by a company, then we would expect people to think about our patent rights," Smith said. "And if they need a patent license, they could come and get one from us."
"So we're trying to do new things that would foster inter-operability but we are trying to do it in a way that recognizes that innovation takes a number of forms and that intellectual property should be valued and protected," he added.
The Microsoft official pointed out that this new thrust has profound implications for a country like the Philippines which, although small as markets go, holds a wealth of talent that could potentially form the backbone of future economic development.
"The number one question for a country like the Philippines is what it sees its future potential to be," he said. "Personally I believe that there are lots of very smart people in the Philippines."
"The truth is there are lots of smart people everywhere," he added. "That's one of the great things about the world. The next question to be asked is where would the next Bill Gates come from?"
"Will the next Bill Gates be American, Chinese, Japanese, Russian, or Filipino or from some other country?" Smith asked.
Regardless of what country one is in, he said that it is in the nation's interest to foster the creativity of its own people, especially its next generation of young people, by investing in education.
This will make it easy for them to start their own business and will give them the incentive to create "exciting" new products in their own country and export them elsewhere.
"This requires strong or at least very good intellectual property protection," Smith said.
He explained that, to some degree, the brain drain being experienced by countries like the Philippines is caused by the system's inability to reward and protect the intellectual capital held by the working and thinking middle class.
"The one thing I think countries should really avoid is in effect encouraging their smart young people to leave," he said. "If people are not able to create things at home and protect them, they'll move somewhere else and create them there instead."
For a country like the Philippines whose human resources are appreciated the world over, it is advice worth taking.