The Italian government is finally cracking down on rampant audiovisual piracy following widely publicized warnings last month from Motion Picture Export Assn. of America chairman Jack Valenti of possible U.S. government trade sanctions against Italy in retribution for millions of dollars of lost revenues.

On Saturday, Italian police made the country’s largest anti-piracy raid ever, seizing 526 VCRs, 70,000 blank cassettes and about 100 masters of films apparently awaiting illegal duplication at three Rome-area pirating operations.

Most of the masters were for animated Walt Disney pix, from “Peter Pan” to “Beauty and the Beast,” latter still in theatrical release.

Four arrests were made. Police put the commercial value of the confiscated tapes at $ 4 million.

Investigators discovered that many of the pirated pix had been taped on old porn-film cassettes, creating the nightmarish spectacle of a children’s program that ended up with a bit of hardcore visible after the final credits.

The raid came about 10 days after MPEAA reps met with Italian government officials in Rome to discuss the problem.

An MPEAA official at the meeting said the Italian government has “shown concern” about Valenti’s complaints.

Though Italo police make hundreds of raids against pirates each year, the timing and scope of the recent bust seem to indicate that the Italo government is determined to get tough on audiovisual piracy.

Despite intense efforts on the part of the Italian Copyright Assn. (SIAE) and anti-piracy federation FAPAV, homevideo piracy in Italy remains at 40% of the legit market, according to MPEAA estimates.

“In the past, there hasn’t really been any serious commitment from the Italian government to fight homevideo piracy. Now they’re demonstrating some intent to do their best to deal with the problem. We’re waiting to see what happens,” said Walid Nasser, MPEAA’s VP for the Mediterranean and the Middle East.

The MPEAA has made specific requests to the Italian government that it increase legal penalties and improve the enforcement of existing laws, a source said, pending a decision in April on which countries will be included on the so-called “301 petition” by new U.S. trade representative Mickey Kantor.

This means that if Italy does not make visible improvements in its track record against fighting piracy, it will find itself on the designated list of worst copyright violators — something that leads to top-level government trade negotiations to find a solution and to eventual sanctions and fines if no solution is forthcoming.

In Italy, Francesco Fanti, president of homevideo trade association Univideo, demanded that homevid shops caught selling pirated cassettes of films still in theatrical release lose their license.

The Intl. Intellectual Property Alliance, actively lobbying to get Italy onto the designated list of worst offenders in the 301 petition, says Italy is second on the world’s list of biggest copyright offenders — behind Taiwan and ahead of Poland, the Philippines and Turkey. Italo pirates siphon off an estimated $ 266 million in revenues annually.

Short prison sentences and tiny fines are the reason why piracy continues to run rampant in Italy, say sources at the Italo Copyright Assn.

Despite efforts by police and copyright agents to shut down duplication operations and confiscate tapes, the pirates usually walk out of the courtroom scot-free.

For example, 126 people were convicted on piracy charges in 1990 and 1991. All had their sentences suspended, and not one went to jail.

Not that they would have suffered long in jail had the convicted pirates served time: They were sentenced to two months in prison and a fine of 400,000 lire, or $ 266.

Legal efforts went slightly better in 1992.

A special pool of magistrates was set up in Milan to prosecute owners of duplication centers in Milan, Naples and in the nearby Republic of San Marino. Police conducted 1,137 raids last year — 54% more than the previous year.

At the end of the year, the courts handed down six piracy convictions with longer sentences. But that was only because the defendants were repeat offenders.

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