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HATTIE: (Voiceover while we see Daniel Walker playing the piano in his Santa Monica studio.) What you hear is thought translated. It is real. It has value. To learn how we small business owners can protect our intellectual property in this digital world, we talked with composer Daniel Walker and publisher Bob Tarcea. We went to MacroVision in Silicon Valley and to Microsoft in Redmond and to the law firm of Mitchell, Silberberg and Knupp in Los Angeles.

GEORGE BORKOWSKI: Intellectual property is essentially intangible creativity.

MARK LITVACK: Be it software, be it movies, be it games, music, it drives this economy.

GEORGE: Fundamentally it really is a creative impulse or a creative idea that's manifested somehow and once it's manifested then as you identify, the challenge of protecting it is what becomes important.

MAGGIE SANCHEZ: It's huge. Software piracy in particular -- about 35% of software installed on PCs worldwide is pirated.

DANIEL WALKER: But the way that I protect myself is I don't put enough of it on there to be of use to anyone.

GEORGE: It's a real place with real problems. Similar problems to the ones you have in the physical world.

BOB TARCEA: And if you get into litigation the numbers are staggering.

STEVE WEINSTEIN: Everybody is facing large problems right now. All of the industries are under siege.

MARK: The copyright idea is in the constitution. We took the idea originally from England but the framers of the constitution early on recognized the importance of copyright. It's a right given to Congress. They understood to encourage people to create intellectual property you have to protect that property.

HATTIE: (Voiceover) And in the digital world, it is almost impossible. Millions of small business owners are delivering goods and services via DVD or the web which makes us vulnerable to thieves. Mark Litvack came to Mitchell, Silberberg and Knupp from the Motion Picture Association.

MARK: In the old days, talking about tapes, it took two hours to make a pirate copy of a tape because it was taped in. real time. So you would hook up a machine and you would go two hours. Today in the digital world I can stamp out thousands and thousands of identical originals to a movie, to software, to a game and flood a market, pirate wise, before a legitimate market can even develop.

In 1998 at the MPA we had a raid in Hong Kong of 24 million discs. The scope of that--in this country we'd pick up a couple of hundred thousand pirate tapes a year. 24 million disks in one raid was astronomical. It showed us how far ahead the pirates were getting in their ability to replicate millions of discs so quickly, so cheaply. This was something we were going to have to deal with.