A Barrage of Lawsuits Against Video Pirates : Foreign-language tape distributors and dealers turn to the courts

Nick Roberts, a former Pasadena cop and now a private eye hired by the United States distributor of Asia’s biggest producer of TV shows, had been staking out an upscale Glendale home from a hidden vantage point and things were starting to add up.

For one thing, Roberts said, the crates being unloaded in the driveway and stored in the garage by the home’s Asian residents contained far more tape than even the most avid home video copycat might need for personal use. The volume of incoming video supplies, he concluded, suggested pirating on an industrial scale.

A search of the home’s garbage provided the clincher that San Francisco-based Hong Kong TV Video Program Inc. needed to get a U.S. district judge to issue a civil seizure order. Wads of counterfeited HKTV video label backings were found, a clear trademark violation. Several days later, federal marshals raided the home, said Jonathan L. Kirsch, HKTV’s attorney.

In a backroom crowded with metal shelves, they found 44 VCRs copying, via a studio quality signal-switcher and a tangle of cables, an HKTV tape from a master VCR unit. Also warehoused within were 7,000 tapes copied from HKTV and other Asian film makers.

A settlement, which included the payment of damages and the forfeiture of the offending tapes and VCRs, was reached between HKTV and the piraters--their names and damages paid remain confidential. The Glendale raid represented just one of dozens coordinated in the last two years by Kirsch’s Century City law firm for HKTV in Los Angeles--virtually all of which have resulted in making piraters pay damages through court judgments or out-of-court settlements.

For better or worse, HKTV’s strategy of filing civil suits to enforce the law represents the only effective weapon available to video distributors, ethnic or otherwise.

“What we do is raise the cost to the bootlegger,” Kirsch said. “If (the video industry) just gives up, the problem will become worse.”

Many licensed dealers, whether purveyors of Indian, Vietnamese, Arab or Japanese-language tapes, have all but given up on the FBI--the lead agency in charge of policing the pirates. For most video dealers, this means no prosecution at all because they simply lack the financial resources to cover lengthy investigations and civil lawsuits.

These factors, together with the rapid acquisition of VCRs by those in ethnic communities eager for a link to their homelands, say video distributors, have spawned a marketplace where the dividing line between victims, small-time, back-of-the-shop bootleggers and big-time piraters is obscured by regulatory neglect and the lure of easy money.

“It’s so serious I have to work night and day,” said Kaitee M. Jung, HKTV’s in-house attorney. “It’s ruining our reputation because the pirated tapes are very fuzzy. It’s not putting us out of business, but it is hurting us.” If Jung’s assessment sounds bleak, then consider the following:

* Although the Motion Picture Assn. of America, the chief watchdog for the Hollywood studios, estimates that pirating losses account for $300 million, or 10%, of U.S. video sales, non-English language video distributors are reporting losses of as high as 50%. Rafael Rivera, president of Condor Video, a distributor of Spanish-language videos, predicted routine sales of 2,500 copies for Condor’s better selling movies would jump to 4,000 units without pirating.

HKTV declined to specify its yearly income, but Jung said the firm loses $2 million a year to piraters. Los Angeles is HKTV’s biggest market with more than 20 shops licensed to retail its videos--it’s also “our worst territory as far as pirating goes,” Jung said.

* Apathetic overseas video producers and cumbersome paperwork also slow the video pipeline for legitimate dealers while providing a huge window of opportunity for piraters.

Brant Reiter, a spokesman for Fuji Sankei Communications International, the Los Angeles branch of Japan’s Fuji-TV network, said the red tape involved in paying royalties, adding English subtitles and going through U.S. Customs delays the arrival of Japan’s freshest shows by up to three weeks. It’s tough getting viewers to watch Fuji-TV shows on KSCI Channel 18 in Los Angeles or KDOC Channel 56 in Anaheim when they’ve already rented them from bootlegged tape dealers, Reiter bemoaned.

* A lot of pirating occurs in the very shops distributors rely on as prime customers. Condor’s Rivera cites his experiences in the Spanish-language video industry--the biggest players in the non-English language video business, posting annual sales of $30 million. “There are about 4,000 Latino video stores” in the U.S., he said. “They may be buying three or four tapes legally and making five or six more (pirated copies) in the back of the shop.”

* Piraters can be technically sophisticated and ruthlessly organized. Spanish-language video distributors say that piraters are known to bribe theater projectionists to make video copies. The employees at Latin American movie studios are also bribed into “lending” master film prints, permitting piraters to have fraudulent copies on the streets before legitimate distributors can even begin advertising the same film.

* The FBI and U.S. Attorney General, the non-English-language dealers complain, haven’t considered video pirating a priority at any level. “We are talking millions of dollars in losses,” Rivera said. “The entire industry is frustrated. The FBI doesn’t do anything. We are second-class citizens for these people. I hate to be blunt, but that’s how it is.”

Until recently, the FBI’s anti-pirating efforts were constrained by guidelines that rejected cases not worth more $500,000 in tapes and evidence of trafficking in at least three states. Moreover, U.S. Attorneys can modify these guidelines in their own jurisdictions, said Fred Reagan, an FBI public information officer in Los Angeles.

“The FBI only investigates piracy cases that it feels will provide a strong impact on the community or involves a street value over $1 million,” Reagan said. “The agency met with the MPAA a year ago and made them aware that the U.S. Attorney’s office didn’t have sufficient agents to enter every investigation.”

The FBI’s guidelines were so strict, MPAA officials have said, that the number of criminal copyright prosecutions dropped from 85 in 1980 to 24 last year. But late last year, the FBI revised its 8-year-old guidelines for investigating pirating violations, cutting minimum monetary losses in half and discarding the need to show cross-state trafficking.

“After a meeting with the MPAA (in January), in which they expressed their concerns, we changed our criteria,” said Bill Carter, an FBI spokesman. “Whether it means more cases will be investigated, I don’t know. Each U.S. attorney establishes their own criteria. If he or she could better use their manpower looking into organized crime,” then so be it.

U.S. Attorney Robert Bonner, chief federal prosecutor for Los Angeles--the nation’s biggest pirating market--declined to comment on whether he will implement the new guidelines.

“It’s the policy of this office not to disclose our guidelines for prosecution of criminal copyright violations, whether involving videocassettes, sound recordings or any other area,” said Bonner, adding that disclosing them would inform criminals how to avoid prosecution.

Still, he didn’t hesitate putting piracy into perspective: “This federal district no doubt has more video piracy than any other in the nation, but we also have more . . .drug trafficking, more. . .drug money laundering, more defense procurement fraud, more fraud on . . savings and loans, all of which are priority areas for federal prosecution.”

Consequently, video distributors of all stripes must fend for themselves by financing their own war against the piraters.

The MPAA has done well by this game, netting more than 65,000 illicit tapes worth $3.3 million last year after raiding piraters in Guam, Puerto Rico and other mainland cities.

Earlier this month, the MPAA reached an agreement that will permit it to carry out anti-piracy raids on behalf of 10 independent home video manufacturers, including the U.S. representative of Hong Kong’s Golden Harvest Group and Spanish-language operators such as Condor Video.

But recent attempts by some video distributors to form their version of the MPAA’s anti-pirating unit have had less than stunning results even when legally successful.

Last June, shop owners plying Mandarin-language videos staged a short-lived boycott against International Audio Visual Communications Inc., distributor for Taiwan’s TV networks. Paul Chang, owner of Video Land in Monterey Park, claimed the boycott was caused by the exorbitant cost of leasing International Audio Visual’s tapes.

Yung Chiang Kin, International Audio’s president, suspects that raids and civil prosecution of several video shop owners prior to the boycott was the real reason for the backlash.

“They (U.S. marshals) caught a lot of shops” with our tapes, Chiang Kin said. “The court issued a restraining order,” he said, which put some shops out of business. “So they formed a video association against me,” he said, pressuring International Audio to lower its leasing fees by 10%.

HKTV spends about $400,000 a year for its enforcement program, recouping half of its expenses from cash settlements extracted from piraters, a company official said.

Such is the price of popularity. Jung said HKTV’s videos are among the most sought after by piraters--many of whom are recent immigrants hungry for HKTV’s best dubbed or subtitled in Vietnamese, Cambodian, Japanese or Mandarin.

But even she acknowledged that filing too many lawsuits against clients can be counterproductive. She instead stressed the need to educate shop owners about U.S. copyright laws. For the criminally recalcitrant, however, civil prosecution is the only antidote.

“HKTV invests a great amount in licensing rights,” said Kirsch, HKTV’s attorney. “But the value of those rights can only be maintained by policing. Since the FBI will not make this an enforcement priority, it falls on the company to protect its rights under the law.”