The low price of faking it

Constable Bryan Ward was involved in the first case in which a trader was jailed. Picture / Richard Robinson

On the outskirts of the Otahuhu markets, the pirate kept his booty hidden. Inside his jacket, Zheng Wang concealed a clasp of DVDs, splayed like a fan for ease of display to a potential customer. They were copies of popular movies - Tom Cruise and Jamie Foxx in Collateral, Alien Vs Predator and The Day After Tomorrow - some of which had not even been released in New Zealand cinemas at the time.

Wang was about to star in his own epic drama. Watching him was Constable Bryan Ward, of the Otahuhu police, who had been tipped off about Wang's business.

"We walked up behind him, saw him offering DVDs to people and handcuffed him," Ward says.

When Wang appeared in the Manukau District Court late last year he became the first person in New Zealand jailed for selling pirated DVDs. Judge David Harvey sentenced the 20-year-old to 15 months' prison, denying him the right to apply for home detention. Wang is appealing the sentence, but Harvey's ruling delighted the movie industry and those few people in New Zealand concerned with enforcement in the counterfeit goods market.

By some accounts, piracy has become endemic in New Zealand. Last year the Customs Service detained tens of thousands of discs, part of a massive increase in the intellectual property rights breaches detected over the past five years. From 1999 to 2004, there was a more than 750 per cent hike in the number of intellectual property cases Customs became involved in.

However, many people get away without conviction.

Movie pirating is estimated to cost more than US$3 billion ($4 billion) a year. Hollywood studio chiefs have halted a time-honoured practice of sending out advance DVDs to members of the Oscar-voting Academy because of fears it was fuelling the black market.

In New Zealand, copies are available through markets, phone order or the internet. The quality varies greatly - those originating from master copies are hard to distinguish from the real thing, while others are dubious. Some filmed by video cameras inside cinemas include silhouettes and the sound of people chatting.

Of two movies obtained by the Weekend Herald, Spiderman 2 would not play. The sound and picture quality of Charlize Theron's Monster was okay, but the jacket was the giveaway, proclaiming "Arnold's back and better than ever"(even though Governor Schwarzenegger is nowhere to be seen).

The "Engrish" language blurb for the movie says: "The abnormal killer of super woman". The credits are for yet another movie, Matrix Reloaded.

Many New Zealanders buy in bulk while in Asia. A Herald staff member in Malaysia in January bought 30 pirated new-release movies from Kuala Lumpur shopping malls.

At three for 10 ringget ($3.50), he bought Meet the Fockers, The Aviator, Paparazzi, Alfie, Team America, The Incredibles and others. "Some of them won't work, but the price you are paying, it doesn't really matter," he said. Meet the Fockers was for sale in New Zealand on a website in January for $55. Street prices in Auckland for new releases range from $15-$40.

The public never sees one of the best collections of new and popular movies. Locked away at Custom House in Auckland, it is a feast for film buffs. Stacked in boxes this week were, among others, the new Bill Murray comedy The Life Aquatic, Johnny Depp in Finding Neverland, Ray and Garden State.

DVDs, fake label clothing, bags, toys and trading cards are piled high in the storeroom of the Custom Service's general investigations unit, whose responsibilities include counterfeit goods.

Team leader Mark O'Toole says about 45 per cent of goods detained on suspicion of breaching the Trademarks Act or the Copyright Act are discs, mostly DVDs.

Fake products are flooding across the border at such a rate that there is now a 10-week backlog between when a Customs officer intercepts a consignment and when an investigation into its authenticity can begin. Most of the products come from Asia.

Most people responsible for importing illegal goods, including DVDs, seem to be running otherwise legitimate businesses, O'Toole says. "[DVDs are] another product they have got access to and it's cheap so it's not going to ruin the business [if it gets intercepted]."

Both Customs and Kevin Holland, Auckland representative of the Motion Picture Association, have noticed a correlation between the rise in dubbed movies and the number of overseas students.

Holland says the switch from bulky videotape to sleek DVDs has regenerated the black market, as has the internet, with traders downloading films and burning them to order. The industry believes more than 8 per cent of the DVD movies sold in New Zealand are counterfeit.

Prosecution results are mixed. Some sentences involve hefty fines, and Wang's case is a celebrated example of what the law is capable of, but police targeted him only after a consumer backlash.

Constable Ward says police became involved because market-goers and stall-holders became frustrated, with fights breaking out when dissatisfied customers confronted Wang and other traders.

Others have been luckier. Last year Napier police were tipped off about a woman copying and selling films and PlayStation games. A raid on her house found 1175 copied discs complete with labels and cover slicks. The police decided to warn her rather than charge her.

At the border, despite Customs' increasing efforts to intercept pirated movies, relatively few cases actually result in court action, as its powers to carry out search warrants or controlled deliveries do not apply in the trademark and copyright areas.

Even when Customs catches an importer red-handed, it cannot prosecute. Its involvement ends at the border, too: if officers see blatantly counterfeit goods for sale in the markets, they have no powers to act.

Detaining a dodgy movie relies on the copyright holder or trademark owner having lodged a border protection notice with Customs, notifying the service of its right to exclusively deal in the product.

If it finds a shipment, Customs gives the importer the option of proving the goods are authentic or forfeiting them. Rights holders are also informed and given the option of pursuing civil action. Most don't take court action because of the high costs. In those cases the goods are usually destroyed.

"There is no sanction [the importers] face other than the loss of the goods themselves," says Customs investigations manager Phil Chitty.

Trademark and copyright laws allow for criminal prosecutions, and jail sentences, but most police districts have other priorities.

Intellectual property law specialist Andrew Brown, QC, says that when the legislation was last updated, the Government made much of the increased penalties. "But if there isn't anybody there who is interested, what is the point?"

He has taken civil action on behalf of companies whose trademarks or copyright have been breached, but High Court filing fees alone are $1100.

Brown believes the Government needs to beef up the state's powers to act. "I think what is needed is a small specialist unit." Under his proposal, experts based alongside the national enforcement unit of the Companies Office would liaise with Customs and other agencies to prosecute pirates, and have the power to execute search warrants.

Brown also advocates following European developments, including increasing Customs' powers. Britain recently released an intellectual property crime strategy, warning that the Government could not turn a blind eye to the burgeoning problem. The strategy warned of the growing involvement of organised crime, contributing to an 81 per cent increase in the value of commercial piracy.

The Ministry of Economic Development, which oversees intellectual property policy, says it is reviewing the area and is considering the industry's concern about the enforcement system.

But the Government's position is that trademarks and copyrights are a private property right which companies themselves need to protect.

Ministry senior analyst George Wardle says police do sometimes become involved, usually when other crimes are involved. But it is for the Government to decide how much state involvement there should be.

While the review goes on, the Motion Picture Association is determined to fight the pirates. In the past six months, says Holland, it has been visiting markets as part of an international crackdown called Operation Eradicate, catching several major dealers. One would drive around Avondale township on Sunday mornings in a black BMW supplying a team of students who would sell fake movies in the carpark at the popular racecourse markets.

Government agencies from police to Inland Revenue have shown an interest in the individuals caught. Internal Affairs has taken action against people for selling movies without the proper censorship warnings, destroying more than 10,000 discs. And Holland says 80 charges have been laid in the past year.

The association has also been monitoring the internet. Holland says a specialist search engine allows the association to quickly and regularly find any movies for sale. More than 2000 notices have been sent to website owners to take down the offending advertisements.

He believes that has helped to send a clear message and will hopefully keep organised crime groups out of New Zealand. "I would like to think law enforcement has put them on notice."

About six weeks ago at the Avondale market, the Weekend Herald encountered a stallholder discreetly selling new-release movies. Customers in the know would go out the back of his stall and peruse a list of available movies.

If he had the desired choice, the stall-holder would fetch it from stock concealed in his vehicle and hand it to the customer in a nondescript wallet.

One man bought Elektra, which had only that week been released in cinemas.

When an undercover Weekend Herald reporter asked about buying a new release, the stallholder indicated he sold only to people he knew. He suggested it was better to make an order, although he later was reluctant to go through even with that.

"It's just too dangerous, you know?" he said.

Ah, the perilous life of a pirate.