Roadshow Films, the New Zealand distributors of LOTR, are considering taking legal action but said it was too early to comment further.
Because of antiquated copyright laws in the Cook Islands, pirating videos is not illegal. Before films even make it to the cinema they are usually available on video and often shown by the island nation's six television stations, some of which are nothing more than a basic monitor, transmitter and antenna serving as few as 200 people.
The Herald was unable to contact Mr Rua but he told the Cook Islands Herald he was not the only businessman making money from pirated films, just the only one who admitted to it.
Cook Islands Copyright Committee chairman Geoffrey Bergin, who leads a lonely campaign to protect intellectual property, described the 1962 Copyright Act as a "toothless tiger" because it did not safeguard new technology, such as DVDs, CDs and videos. A new act was drafted five years ago but has yet to be made law.
New Zealand Motion Picture Association spokesman Kevin Holland said if the Cook Islands Government passed legislation in line with copyright law in New Zealand and Australia, they would provide support for the police and customs officials.
But until that happens there is little that can be done to punish those who make use of the loophole, especially as Cook Islanders, who rely on pirate films and television shows for much of their entertainment, do not complain.
Years of watching incomplete films with barely audible dialogue - often recorded off cinema screens with handycams - has taught residents not to expect too much.
Cook Islands Television owner George Pitt, who does not air films until the cinema and video shops have had first crack at them, says there is no political will to clamp down on dodgy DVD screenings of Hollywood's latest offerings because voters like watching TV.
"What else is there to do on the outer islands?"
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