Market Watch

Spanish Anti-Piracy Law Finally Passed

March 16, 2011

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Spanish parliament has voted through the much-debated anti-piracy law, known as the Ley Sinde, part of the larger Sustainable Economy Law (SEL). An earlier version of the law was rejected by the opposition in December 2010, forcing the government to submit an amended version of the law; it is this latest version that has now been fully approved by a majority of parliamentary parties and the Spanish Senate.

The amended version of the Ley Sinde shifts the ultimate responsibility for authorising enforcement from the proposed Ministry of Culture body overseeing the legislation (called the Intellectual Property Committee, IPC) to the judicial courts.

The Ley Sinde aims to protect IP rights on the internet by allowing IP rights owners to report suspected IP breaches on the internet formally to the IPC. The approved version of the law enables the IPC to request websites suspected of being in breach of IP rights to remove offending content within 48 hours, during which the defendant may also present opposing evidence. Within three days the IPC must issue a resolution and the appointed judge will rule whether the suspected website is guilty of breaching IP rights. The IPC may also request court orders in order to identify owners of suspected piracy websites and order websites to withdraw pirated content on websites. In these latter instances the appointed judge must approve or decline court orders within 24 hours. Therefore, any final decisions by the IPC must be ratified by a judge.

Publication of SEL was on 5 of March 2011, but the law will only come into effect in during the summer of 2011.

Analysis
The current decline in the Spanish media market is thought to be due to rampant piracy. Spain has a long tradition of counterfeit piracy going back to the days of the VHS, but piracy attained sky-high levels with DVD. By mid 2000s, sellers of counterfeit CDs and DVDs had become a heavy presence on streets across Spain. More recently, according to feedback from the industry, physical piracy in Spain has virtually been wiped out owing to the popularity of P2P online piracy.

Notably Spanish bandwidth growth has lagged developments elsewhere in Europe, but the growth in online piracy appears to be more the result of Spanish consumer's lax attitudes to online intellectual property rights. Under the previous legislation covering the issue of online piracy (the Information Society Services Law) prosecution was time-consuming and ineffectual. Furthermore, greater publicity about the law and its shortfalls were the signal to Spanish consumers that the internet was a free-for-all without any risks of prosecution.

Consumer spending in Spain on home video has dropped by nearly 60% in value since 2003. As a consequence, the video industry is rethinking the importance of Spain - traditionally one of the five largest video markets in Europe - as indicated by Universal's recent exit. The studio has instead opted to partner Paramount for distribution of its products in the territory. Agreement by the Spanish government on a final version of the Ley Sinde should be seen as good news to industry.

In contrast to previous Spanish legislation (which focused on individual internet users), Ley Sinde targets websites that host or link to copyright content. Targeting the point of distribution of piracy is an approach that has yielded some positive results in South Korea (the most extreme case of home video market collapse in the wake of the world's fastest broadband speeds).

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