Last week, the French National Assembly approved a bill that would force online music vendors to make their music compatible with any music player. The law is a clear shot across the bow of Apple Computer Inc., the company whose iTunes software and iPod players have revolutionized the music industry.

Resident Scholar Kevin A. Hassett

The French, apparently unhappy that an innovative American company is so popular in France, have decided to engage in piracy. If real property rather than intellectual property were at stake, the French move would be considered an act of war.

There was a time when computers were the scourge of the music industry. But then Apple figured out a clever solution. It enabled its iPods and iTunes music store with an encryption technology called FairPlay. This makes Apple's ubiquitous iPod incompatible with music downloaded from any site other than iTunes, and songs downloaded from iTunes incompatible with other players.

The result is Apple's whopping 70 percent share of the market for digital music downloads.

Much Better

If you haven't tried iTunes, you should. It is simply a much better way to organize and play music. If you want to hear an old favorite like "Radar Love," you go to the iTunes store and for 99 cents download it to your computer, which sends it to your iPod. And there you are, bopping along, on the move, to that great Golden Earring number.

Innovators make new things because they hope to profit. Apple has profited handsomely from its breakthrough, recently celebrating the sale of its one billionth song. But other music vendors (and device makers) have been jealous of Apple's success.

The recent trouble began in June 2004, when VirginMega, a French online-music store, filed a complaint with the French Competition Council. VirginMega, a joint venture of Richard Branson's Virgin Group Ltd. and French media company Lagardere SCA, alleged Apple was harming competition when it refused to license FairPlay to others. Of course, it might help the competition to share technology, but why should Apple do that? If you build a better mousetrap, you shouldn't have to share the design with everyone else.

Thrown Out

Correctly, the French Competition Council threw out VirginMega's case. Despite--or because of--the decision, the surly French politicians decided to pass a law attacking Apple. If the French Senate agrees with the National Assembly, then Apple will probably be forced to pull out of France.

Imagine if someone built a resort so beautiful that vacationers swarmed to it, and the French passed a law requiring the resort owners to let French citizens stay at the resort for free. This ruling is essentially the same thing. The French are trying to rob an American company.

In this new economy, foreign actions to undermine U.S. innovation are increasingly stressing to trade officials. Yet the Washington trade community has proven better at protecting bras than intellectual property. The Apple case may be the outrage that forces American policy makers to fix the system.

If the French can steal Apple's property in this way, it will cost U.S. shareholders and workers billions. The president should instruct trade officials to signal their extreme displeasure, and threaten retaliation if the French continue down this path.

Not About Competition

The French can pretend this is about competition, but it's not. In the U.S., a wide array of cell phone operators are already lining up to use their wireless networks to zap music to devices that combine the functionality of an iPod and a cell phone. You can bet that some clever innovator will find a way to construct a cell-phone interface that attracts millions of customers.

That's how the system is supposed to work. Creative companies like Apple make money, and others are motivated to compete for those new profits. The constant drive for innovation makes everyone better off.

The whole thing comes crashing down if we allow piracy. More and more, foreign governments themselves are the pirates. It's time for the U.S. government to take a stand.

Kevin A. Hassett is a resident scholar and director of economic policy studies at AEI.