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Piracy: One Final Report

Final Report:

Prepare for one hell of a tl;dr. A while back I posted some small blogs on the issue of piracy in the video game industry and informed you all that I would be periodically updating that blog. Well. I didn't update as often as I had planned and for that, I apologize. In response, I have decided to post a sizable portion of my final report. I've made certain headings bolded so you can search for something you are interested in if you want. I will admit, I am posting this more out of personal guilt. Either way, though, enjoy!

If you want to read it, awesome (and good luck to you!). If not, that's okay too (and 100% understandable). At any rate, if you have thoughts or opinions on the topic of piracy in the video game industry and how it should be handled, leave a comment at the bottom.


In 2009, the combined cost of all illegally downloaded software was over fifty billion dollars (“Seventh annual”, 2010). It's often hard to imagine just what a large amount of money that is without some examples. To put it into perspective, using just 1/50th of that money, one could purchase a personal fleet of over 350 predator drones (Herold, 2003). One could also take the kind route and pay off the average debt of nearly every student enrolled in the University of Missouri – Columbia (“Projection on national”, 2010). Leave it to say, the money lost to piracy is a major issue that stands to badly damage any industry that could have it's products pirated, including the video game industry. In this paper, I will address the problem of piracy in the video game industry and prove that through the combined efforts of governments developing international laws that respect citizens rights while pursuing those websites that host copyrighted material illegally and video game developers working to make their games as attractive to the consumer as possible, the problem of piracy can be reduced to the point of being insignificant to the video game industry. To better define my thesis for this paper, there are a few points of analysis that need to be addressed.
Thesis Analysis
First, the act of pirating is defined as “the unauthorized use or reproduction of another's work.”(“Definition for”, 2012). It is important to note that not all piracy requires internet access, as even making a back up of a copyrighted video game for your friend qualifies as piracy. However, for the sake of this topic, I will mainly address the online piracy of video games. The reason behind this specificity is that the use of the internet takes pirated material and makes it accessible to anyone with an internet connection, as opposed to anyone who personally knows the individual who initially pirated the copyrighted material.
Second, it is important to note that nowhere in the thesis does it say that the goal is to stop all piracy. The reason for this is that the act of stopping all piracy is near impossible. One can no more stop all piracy than they can stop all theft. If one truly wishes to commit a crime, that individual will find a way. Instead, the stated goal of the thesis is just to reduce piracy to the point of being insignificant. While the phrase, “the point of being insignificant” is vague, the intention behind it is clear. The thesis's goal is to lower the 50 billion dollar cost of piracy to the point that the money lost is not significant to the video game industry.
Before beginning our analysis of the issue, we have to understand why all people, especially university students, have a stake in how the issue of piracy is handled. In order to find solutions to the issue of video game piracy, we must first understand why people pirate. After discovering why people pirate, an examination of current or potential laws regarding piracy needs to be made. As well, we have to uncover the inherent problems with the current attempts at regulating internet piracy. Afterwords, we will look into how video game developers can help solve the problem of piracy. Then, we will see that, even though developers can help, they can't solve the issue of piracy themselves. Finally, we will see why the cooperation between international laws and video game developers is the only way piracy can be reduced to the point of insignificance.
What's in it for You?

The first question we need to answer is why should anyone care about how piracy in the video game industry is handled. Naturally, if one is an avid gamer and wishes for the video game industry to continue to prosper, one should want to see video game piracy handled in an effective way, but what about those who do not play or enjoy video games? If one does not play video games, but does pirate other media, such as music or movies, they also have a stake in what international laws develop in regards to piracy. The reason those who pirate music or movies should care about this topic is because when laws are made about piracy, those laws will not just pertain to the video game industry, it will pertain to all industries. This means that if a law is put into place that holds the individuals who download the copyrighted materials responsible for the piracy, those who pirate music or movies could find themselves subject to hefty fines or even jail time. If you are or were attending a University, this issue likely applies to you, as it was found in 2009 that about 67% of university students pirate media through habit(Ramayah, Ahmad, Chin & May-Chiun, 2009). Those people who do not play video games and do not pirate any sort of products should still have an interest in this topic. Piracy, being the 50 billion dollar money sink that it is, stands to damage our economy (“Seventh Annual”, 2010). If video game developers are not paid for their work, and publishing companies do not see adequate amounts of money coming in from a game, whole development studios can be closed down and many jobs can be lost. This increases the overall unemployment in the country, which can lead to a decreased standard of living for all citizens. Now that we understand that not just gamers, but all people should have interest in how piracy in the video game industry is handled, we can move into our first point: Why do people pirate?
Why Do People Pirate?

The question of why people pirate is complex because there is no one specific reason for piracy and, even if there was, it would be difficult to prove that all those who pirate do so for that one specific reason. Luckily, Gallup conducted a poll where they asked individual citizens why the choose to use/buy counterfeit goods, rather than the real thing (Stewart, 2005). This applies to piracy in the video game industry because obtaining a product from a torrent or other means of piracy is attempting to receive the same, or similar, product at a lower price from a source other than the one who originally created the game. This essentially means that a pirated video game could be viewed as a counterfeit product. What Gallup found from it's polling was that there were three major reasons behind why people chose to buy or use counterfeit goods. These reasons were that the counterfeit goods were easily accessible(78%), the same quality for a better price(73%), and that the genuine product price was too high(68%) (Stewart, 2005).
When looking at Gallup's results there are two distinct groups of pirates that we can identify. The first group pirates because piracy is easily accessible. The kind of people we could expect to see in this group are those that could reasonably buy the products legally, but actively chose not to buy their video games legally. With this group, it does not matter how good or bad the product, company or service provided is because, so long as the ability to pirate is available, the individuals in this group will still choose to pirate. The second group pirates because they feel the product, company, or service provided is inadequate in justifying the price of the product. As it is common for video games to release anywhere between fifty to one-hundred dollars, this mindset is not wholly unjustified. For this group of pirates, the availability and ease of pirating has no significant impact on the choice to pirate. This is because the group feels justified in their actions and are willing to put in the extra work to find a way around obstacles in order to pirate the video game they want. In order to reduce piracy to a point of insignificance, both of these groups, these reasons to pirate, have to be dealt with. If only one group of pirates is addressed, piracy will continue in large number due to those members of the other group still having reason to choose piracy. Next, lets examine our current attempts at law enforcement trying to solve the issue of piracy.
Law Enforcement: SOPA

If you will remember back to January 2012, you might recall the Stop Online Piracy Act. The Stop Online Piracy Act was a bill that was being used in an attempt to stop United States citizens from posting, hosting, and accessing copyrighted materials online (“Sopa protests”, 2012). On January 18th, the bill saw its first public opposition as prominent websites such as Google.com and Wikipedia.com chose to censor themselves in protest as a means of spreading information about the bill. The websites homepages claimed that the bill penned by Lamar Smith limited the freedom of speech on the internet and set a bad precedent for future laws regarding the internet. While Wikipedia and Google did not go into find detail of how bad the Stop Online Piracy Act was, the Stanford Law Review did. As stated by Lemley, Levine, and Post:
The Supreme Court has made it abundantly clear that governmental action suppressing speech, if taken prior to an adversary proceeding and subsequent judicial determination that the speech in question is unlawful, is a presumptively unconstitutional “prior restraint.” [...] it is the “most serious and the least tolerable infringement on First Amendment rights,” [...]The Constitution requires a court “to make a final determination” that the material in question is unlawful “after an adversary hearing before the material is completely removed from circulation (Lemley, Levine & Post, 2011).
In layman's terms, what Lemley, Levine, and Post are proving here is that the Stop Online Piracy Act's ability to amend or censor someones speech without a court trial or hearing violates the rights granted to all United States citizens under the constitution.
While examining the full text of the Stop Online Piracy Act online via the Government Printing Offices website, one might notice another major problem with the bill. In the table contents the bill has sections 102 and 103 which address protecting U.S. Customers (Smith, 2011). However, these sections lack one of the essential portions of any copyright law, a fair-use clause. While there are other examples of fair use in United States law, it is necessary that each law that would develop new methods of prosecuting and pursuing copyright infringement, as the Stop Online Piracy Act does, explain how fair use fits into the new law. The Stop Online Piracy Act's exclusion of any fair use clause leaves citizens in a situation where they have no direct method to defend themselves against accusations of copyright infringement.
The constitutional violations of the Stop Online Piracy Act don't stop there. Lemley, Levine, and Post went on to explain that the Stop Online Piracy Act also violated the right the accused websites have to due process (2009). Stanford Law points this out by showing how the law allows for court proceedings to occur in rem. What this means is that the individual(s) who own the website will not be the defendant in the court case. Instead, the domain name (the website itself) will be the defendant and will not be represented in the court by anyone. Beyond that, the Stop Online Piracy Act does not make it necessary to inform the individual who owns and operates the website that they are being prosecuted before action is taken against their website. This essentially means that the individual who owns the website can have their site taken down without being given the opportunity to defend themselves and the site in the court of law. This is a primary violation of the right to due process.
All things considered, the general intent and wishes of the Stop Online Piracy Act are not bad. The bill is trying to stop a crime and attempting to find new methods of going about doing that. If the law had sought to more securely protect citizens rights to freedom of speech, fair use, and due process, it likely could have passed and ushered in a new era of copyright protection. What this law could have done was made piracy less available and less prevalent in the online community. Of course, as is always the case, even with law enforcement as strong as the Stop Online Piracy Act could have posed, there will always be ways around law enforcement.
Why Laws Alone Cannot Work

Even if a law similar to the Stop Online Piracy Act had been passed, it still could not have reduced piracy to the point of insignificance. As was said previously, there is always a way around law enforcement. For example: the Stop Online Piracy Act's main enforcement was through Domain Name System(DNS) blocking. After just one Google search with the text “How to bypass DNS Blocking” I came to the website Activepolitic.com. Activepolitic provided a step by step instructional system for bypassing DNS blocking the would render the Stop Online Piracy Act's entire method of enforcement useless (BSOD, 2012). However, the method of getting around the blocking is complex and takes much time and effort on the part of the individual searching for a pirated video game. For those individuals who pirate simply because pirating is available and easy, law enforcement is a good way to stop them from pirating. However, those who feel that their reason for pirating is justified, and are willing to put in the effort, will not be deterred by laws.
Beyond United States laws not stopping those who feel they have a justified reason for pirating, there is a more fundamental problem with trying to stop piracy via United States law. This inherent flaw was presented best by the Stanford Law Review when they said “These drastic consequences [of the Stop Online Piracy Act] would be imposed against persons and organizations outside of the jurisdiction of the U.S. Courts” (Lemley, Levine & Post, 2011). As it stands now, the United States is trying to impose its laws upon the whole of the internet and would therefore be attempting to put websites hosted outside of the United States on trial, when the nation the website is hosted in may have no laws regarding the copyright infringement. United States law can only effectively try citizens of the United States. This restriction makes it clear that the process of creating copyright law that could effectively reduce piracy has to take place on an international level. To add to this, Nation Master did research and compiled a list of nations and their rates of piracy vs their rates of legally installed software to come up with a percentage of pirated software in each nation (“Software piracy rate”). On this chart of 107 nations, the United States was dead last with a piracy percentage of only 20 percent. At the top of the chart there was Armenia, who had a 93 percent piracy percentage. What this shows is that, while reducing piracy in the United States is important to the overall process, it is only one small piece of the overall international problem. Furthermore, if we were to focus on fixing the issue of piracy in just the United States, piracy would still be a very significant problem for the video game industry because of the rate of piracy in other nations. Now that we have fully examined the issue of law enforcement on the issue of piracy, we need to look specifically at the video game industry and what developers are doing to stop piracy.
Video Game Developer's Attempts at Curbing Piracy

Prominent game development studio Ubisoft, the creators of games such as Assassin's Creed and Splinter Cell, does its best to use DRM to reduce piracy on its video games(Senior, 2012). DRM stands for Digital Rights Management, which is software that is placed upon a video game in order to prevent piracy. For an analogy, think of Digital Rights Management software as a lock and the video game as the room the lock blocks off. If you have a key given to you by Ubisoft for legally purchasing their game, you can get in. However, if you do not have a key, you would have to pick the lock to gain access to the game. Digital Rights Management comes in many forms, but the for the Ubisoft chooses to use is what it calls “always-on DRM.” With this system of Digital Rights Management, the person who legally bought the game must have a constant internet connection that links them to Ubisoft's servers in order to play the game they have. This system has cause a lot of backlash and problems including periods where players, whether they had a good internet connection or not, could not play their games (Senior, 2012). This form of Digital Rights Management is restrictive and, as we will see, part of the problem rather than a solution.
Gabe Newell, the founder and CEO of Valve Software, in his keynote speech at the DICE video game developer conference in 2009 addressed the issue of piracy, Digital Rights Management, and turning games into a service (Bozon, 2009). Newell addressed how companies like Ubisoft are handling piracy and how those methods are ineffective. He outlined that companies, like Ubisoft, treat their video games as just an end product. What he means by this is that the video game developer creates one product, presents it to the consumer, takes the consumer's money, and then walks away without providing any sort of further service. An extension of this line of thought that typical video game developers have is that all the developer needs to do to protect their product from piracy is place a lock (DRM) on their product. What these companies fail to see that Newell points out is that by doing this the developer is treating the legal consumer as a potential criminal and only lessening the value of the service provided by the developer. On this note, Newell acknowledges that the mindset of treating customers as potential criminals will not help stop piracy.
Instead, Newell talks about the idea of turning video games into a service and how the developer needs to be aware of the fact that they are constantly in competition with pirates. He outlines this service struggle with an example from the popular British television program Doctor Who:
I'm a big fan of Dr. Who. The Christmas special for Dr. Who just came out. As a customer in the United States I can't get that product. […] In terms of being a customer and wanting to purchase a product from them, I can't, unless I go to the pirates. Within about five minutes of the show being broadcast in Britain, the pirates had an HD version up and available to anyone in the world. Within a day or two they […] added subtitles for Russian. [...] A couple months later through traditional mechanisms [...] it still isn't available to an eager customer in the United States with disposable income (Bozon, 2009. papa. 5).
What this example displays is what Newell means when he says that piracy is a “service issue” (Bozon, 2009). If the British Broadcasting Company had more open communication with their United States customer base, they could have made the Doctor Who Christmas Special available for purchase online. This would have increased their income and reduced the piracy rates of their television special. This example displays the importance of open communication between developers and their customer base and how simple communication can help reduce piracy. If the developer knows what their customer base wants, they can tailor their product to their customers, thus providing a better, or at least equal, service than pirates could offer.
Newell goes on further to explain how price fluidity is a part of turning games into a service by providing data regarding one of his company's most popular games of the time Left 4 Dead (Bozon, 2009). Newell, through his company's digital distribution platform, Steam, discounted the game Left 4 Dead by 50% for just one weekend. During this one weekend, Newell saw a 150% increase in sales over when the game was initially released (Bozon, 2009). What this suggests is that by practicing price fluidity and occasionally moving away from the traditional 60 dollar price tag video game's have these days, a video game developer can increase the sale of their game. This is good news for reducing piracy, as if someone purchases the game legally, they have no reason to pirate it. Thus, Newell provided data proving that price fluidity reduces piracy.
When summing up all of this information regarding turning games into a service, what it shows is that by practicing open communication with one's customer base and price fluidity, a video game developer can effectively reduce piracy. What this open communication does is helps make the customer feel involved, respected, and properly serviced when purchasing a video game legally. This helps manage and mitigate the second group of pirates we talked about in the “Why do people pirate” section of the paper. Those who pirate because they feel the service involved in purchasing a game legally is inadequate could be swayed away from piracy if the developer followed the example of Newell and Valve Software. This approach is non-invasive and inviting to customers and is a large part of the process of making purchasing a video game legally as attractive as possible. Newell's approach of turning games into a service also empowers video game developers, giving them tools to be proactive in reducing piracy, rather than being reactive by doing things such as including obtrusive Digital Rights Management software to a game just so the developer can feel confident their game will not be pirated. However, this alone does not mean that the developer has enough power to reduce piracy all the way to the point of insignificance.
Why Developers Can Not Solve for Piracy

The problem with the method of turning video games into a service is that it provides no guarantee that piracy will stop. Rather, this method acknowledges that piracy has a right to exist, and treats piracy as competition. The problem comes in when we have to deal with people who pirate simply because piracy is an available option. As Newell's method does nothing to make piracy less available, those people who pirate because they can will still pirate and, if the Gallup poll we examined in the “Why people pirate” section is any suggestion the number of people in that group is not insignificant. Essentially, this means that Newell's method stands no chance of being able to reduce piracy to insignificance. While it might seem absurd that someone would choose to pirate a video game from a company that actively tries to make the product as appealing as possible to the consumer, it is not uncommon. For example, take the case of the Humble Indie Bundle in 2010.
The Humble Indie Bundle is a yearly pack of independently developed video games that is put online to be purchased by anyone coming to the Humble Indie Bundle's website (“The Humble Botanicula). The money gained from the bundle goes to the independent developers and and one charity selected for each bundle. The one trait that makes the Humble Indie Bundle truly unique in the video game industy is that the customer gets to choose what they want to pay for the pack of games. This means that a customer could literally pay one cent for all of the games provided in the bundle. The Humble Indie Bundle is the premier example of price fluidity in the video game industry and also does its best to take in the thoughts and considerations of its customer base regarding such things as what games are selected and what charity is chosen for each bundle. According to Newell's theory of turning video games into a service, the Humble Indie Bundle should be the last title that should experience a problem with piracy.
Unfortunately, in 2010, the operators of the Humble Indie Bundle reported that over 25 percent of the downloads of the bundle came from sources who used an exploit on the Humble Indie Bundle's website to gain access to all the games without paying so much as one cent (Kuchera, 2010). This data did not include all of the people who gained the bundle through the more typical pirating methods, such as through torrenting programs. What this situation suggests is that making games a good service is not enough to reduce piracy in the video game industry to the point of insignificance. Now that we have examined the flaws with both law enforcement and with turning video games into a service we can talk about the final solution.


Side note to Dtoid: this is easily my weakest section. I apologize

Before getting into the details of the final solution, it is necessary to review what are conditions for success are. In the “Why Do People Pirate,” section it was reveled via a Gallup poll that there are three reasons for pirating. One, pirating is easily accessible. Two, pirating allows for the consumer to purchase a product of comparable quality for a lesser price. Three, the price of the genuine product is too high. In order to reduce piracy to the point of insignificance in the video game industry, we have to address all of these different reasons to pirate. The best way to do this is to take the three reasons and see how they break down into two distinct groups: Those who pirate video games because they can, and those who pirate because they feel the service provided in buying a game legally doesn't justify the price. After breaking down the two groups, we have to find the best methods for addressing these issues.
As we saw in the section on United States law, and law in general, law enforcement similar to the Stop Online Piracy Act could serve to make piracy less available. This method effectively addresses the first group of pirates who pirate because they can. However, it was also discovered that the most advanced forms of blocking available today can still be gotten around. This means, if the members of the second group of pirates feel justified in their actions and are willing to put in the effort, they will still be able to access and download pirated video games. This means that law enforcement, at its absolute best, would only address half of the problem.
After that section we saw that Gabe Newell's idea of treating video games as a service and addressing piracy as a service issue can serve to increase the value of buying a video game legally. Newell's method suggests that the video game developer themselves have the power to stop people from pirating their video games by practicing open communication and price fluidity. This method of piracy prevention is designed to address people in the second group of pirates. Those who feel that the service involved in buying a video game doesn't justify the price can be pacified and encouraged to buy legally through Newell's method. However, as the case of the Humble Indie Bundle showed us, this method cannot account for those who chose to pirate simply because they can. This means that, much like law enforcement, treating games as a service and making the product as attractive as possible to the consumer will only account for half of the problem.
While the situation seems bleak, as neither option can reduce the issue of piracy to the point of insignificance in the video game industry, there is a silver lining. As law enforcement addresses one half of the problem, and treating games as a service addresses the other, the best solution is cooperation. If both of these methods were to occur together on a large scale, piracy would not only be unavailable, but piracy would decrease in the video game industry as developers began improving the service of buying video games. This is a very general overview of the solution, so what specifics need to be present?
First, law enforcement cannot take place within just one nation. While it seems that each nation is attempting to pass their own laws on piracy, none of the nations are working together to create one unified law that would allow for the level of law enforcement required by the global community that is the internet. Through either multilateral agreements between nations or through laws created via the United Nations, international law needs to develop regarding how piracy should be handled. There is the added benefit that, due to the creation of this law now incorporating numerous nations, there is less chance that a law would be passed that specifically benefits one nation over another. With international law set into action, the availability of access to pirated video games would decrease substantially, because we are no longer simply restricting access to a website in one nation we are restricting access to a website devoted to piracy around the world.
The law itself can be similar to the Stop Online Piracy Act, but must make a few changes in order to work as intended. In order to prevent this law from creating backlash similar to the backlash the Stop Online Piracy Act received, it is essential that the burden of proof lie with the company prosecuting a particular website/website operator and that the website have proper representation in each and every court hearing. Furthermore, it is essential that the websites in question not be taken down or removed until it is proven in a court of law that the website violates a companies copyright. Finally, the law must include provisions for fair use, so that it is made clear to media outlets, as well as to regular individuals how much of any piece of given content they are allowed to use before they are violating copyright law. With these provisions, we could help ensure that individual citizens rights to speech and due process are respected in court proceedings.
The issue of changing how developers view their video games on a large scale is more complicated. As there is no unified organization of video game developers already in place, we have to find methods to encourage developers to move towards treating their games as a service. Naturally, the best way to motivate any company is though increased sales. This means that in order to encourage sales, video gamers will have to actively chose to support developers, such as Valve Software, that practice price fluidity. Likewise, consumers can join together and boycott games from developers who choose to use things like invasive Digital Rights Management software, such as Ubisoft. The most powerful force a consumer has is their wallet, and by using it to support companies that treat the process of selling games as a service, they can use that force to guide the video game industry towards addressing the second group of pirates.
In this scenario, where both international laws and video game developers have changed in the ways specified, all of the major reasons for pirating will have been addressed. While it is true that piracy will still occur, it will be on such a small scale that it will be insignificant to the video game industry as a whole. Knowing this, there are some substantial impacts of this scenario coming to fruition.


If the scenario suggested by my thesis comes to fruition, the impacts could be extremely beneficial to the world economy. In the status quo, individuals who chose piracy simply because it was available do not have to pay for products they play even though they may have the money to pay for the product. After my thesis is applied, piracy is no longer an easily available option, meaning that the group of pirates who would have pirated just because the option was available will now have to purchase the products legally, thus putting money into the economy. In the status quo, there were also individuals who chose to pirate because the service of buying the game legally was not adequate enough to justify the high price tag of the games. When my thesis is applied, video game developers begin talking to their customer bases, practicing price fluidity and, in general, making their video games as attractive as they can to consumers. This means that the pirates who previously pirated because the service involved in buying legally was poor will now be willing to legally purchase the products, thus funneling more money through the economy. An improved economy can lead to a higher standard of living for everyone, which means my thesis stands to benefit all people.
In this paper, I have proven that the most effective way to reduce piracy to the point of insignificance in the video game industry is through the combined efforts of governments developing international laws that respect citizens rights while pursuing those websites that host copyrighted material illegally and video game developers working to make their games as attractive to the consumer as possible. This was shown first by examining why people pirate and discovering that there are two major reasons: Piracy is easily available, and the price of the genuine product is too high. After this, I examined current attempts that the United States has made to address internet piracy and how laws by themselves can only make piracy less available, but can't make the service involved in buying a video game better. Then I examined how developers can go about making their products as attractive as possible to the consumer by following the lead of Gabe Newell and turning their games into a service. However, I also exposed the fact that, while turning games into a service can make the product more valuable to the consumer, it cannot prevent people from still choosing to pirate simply because piracy is available. Finally, by putting the two pieces together, law enforcement and developer responsibility, I showed that we can address both of the issues involved in piracy and thus reduce piracy to the point of insignificance.

Thanks for reading!

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Senior, T. (2012, February 02). Ubisoft server switch to render always-online drm games unplayable next week. PC Gamer, Retrieved from http://www.pcgamer.com/2012/02/02/ubisoft-server-switch-to- render-always-online-drm-games-unplayable-next-week/
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Smith, L. Government Printing Office, (2011). H.r.3261. Retrieved from website: http://www.gpo.gov/fdsys/pkg/BILLS-112hr3261ih/pdf/BILLS-112hr3261ih.pdf
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Stewart, C. (2005, March 1). Brand piracy: A victimless crime?. Gallup, Retrieved from http://www.gallup.com/poll/15088/brand-piracy-victimless-crime.aspx
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About jbokingone of us since 4:20 PM on 10.19.2009

I am a law student in my final year. I've spent my time studying Intellectual Property Law (Copyright, Trademark, etc.). I like writing on those subjects.

Note: I'm not your, nor anyone's lawyer. Don't take anything I write as the word of law.
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