American Industries Overstating Harm from China Software Piracy?

It's common belief that software and other types of digital piracy in China costs American companies significant revenue. But in an interesting turn of events, several experts argued before the U.S. International Trade Commission this week that industry estimates of loss are overstated, perhaps grossly so.

The Business Software Alliance, for one, claimed that almost 80 percent of software installed in China last year was not paid for, basically a $7.6 billion theft based on retail value.

But Harvard Business School professor C. Fritz Foley took to task the basic argument that every sale of a pirated piece of software or CD blocks the sale of a legitimate product.

"It seems a bit crazy to me to assume that someone who would pay some low amount for a pirated product would be the type of customer who'd pay some amount that's six or 10 times that amount for a real one," Foley testified on Tuesday. "Be careful about using information the multinational [companies] provide you. I would imagine they have an incentive to make the losses seem very, very large."

Read the Computerworld account of the hearing, Panel Eyes Intellectual Property Violations in China.

No one argues China's innocence, except China. But it helps no one when public policy is based on distorted claims. Are American industries overselling their losses, and killing credibility in the process?