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STEVE: So welcome to our video test lab.

HATTIE: (Voiceover) Steve Weinstein, Executive Vice President of Entertainment at MacroVision, explains how it has worked with the motion picture industry to protect intellectual property.

STEVE: Starting in 1983 John Ryan founded MacroVision to prevent people from stealing videotapes. What you want to do is slow it down or add friction. How hard and how much of a barrier you're going to go through to copy something. That's the problem. The question is if it's very easy-- like on peer to peer networks -- to get music easier than buying it. During the first few years you couldn't buy it during the early Napster years. It was easier to get your music by stealing it. If the friction gets less to buy something or the problem of recording or stealing it is harder, you then go to an alternative.

BOB: We encrypt our DVD with something called CSS encryption and that really discourages -- and you notice I use the word discourages not prevents-- but discourages individuals from blatantly copying our materials.

HATTIE: (Voiceover) Bob Tarcea is founder of Sign2Me. It's number one seller is a kit for parents called Sign with Your Baby.

BOB: When the mom puts it in her computer and tries to copy it, the typical reaction is that it's too discouraging and too difficult and they probably won't do it. However, the person who wants to blatantly rip off your intellectual property certainly has those same tools--which are not necessarily good or bad-- but they can use those tools to break our encryption.

STEVE: Your house has windows and door locks. It doesn't prevent somebody from robbing your home but it kind of stops the majority of people from robbing your home. That's the same idea with copy protection or rights management. You increase the barriers to stealing and decrease the barriers to sharing or using it in a legal manner.

MacroVision is copy protection or rights limiting, it is not an encryption. So the discs are not encrypted. It is just that when you put a DVD into a player, a signal comes out telling the next person down the line that they should not copy it. When you get into the digital realm like PC ripping tools that's a little more problematic.

HATTIE: We're talking about pirating software or pirating a game?

STEVE: Pirating games, pirating videos, pirating music off the PC. Now it becomes a little more problematic. Everybody's fighting you and trying to get the content free.

HATTIE: (Voiceover) Many small business sites, like done.com.au use protection that makes it difficult for users to snarf words or pictures.

STEVE: Things like Microsoft Windows and Adobe Photoshop and products like that are stolen multiple times. So for every one copy there might be 3 or 4 illegal copies.