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Thursday, December 15, 2011

Online Copyright Infringement and Counterfeiting: Legislation in the 112thCongress

Brian T. Yeh
Legislative Attorney

The global nature of the Internet offers expanded commercial opportunities for intellectual property (IP) rights holders but also increases the potential for copyright and trademark infringement. Piracy of the content created by movie, music, and software companies and sales of counterfeit pharmaceutical drugs and consumer products negatively impact the American economy and can pose risks to the health and safety of U.S. citizens. Although rights holders and law enforcement agencies currently have some legal tools to pursue domestic infringers, they face difficult challenges in enforcing IP laws against actors located abroad. Many websites trafficking in pirated copyrighted content or counterfeit goods are registered and operate in foreign countries. These foreign “rogue sites” sell or distribute subject matter protected by federal IP laws to people located within the United States—without the authorization of the IP rights holders—yet the website operators remain beyond the reach of U.S. courts and authorities.

Some believe that legislation is necessary to address the jurisdictional problem of holding foreign websites accountable for piracy and counterfeiting. In 2010, the Combating Online Infringement and Counterfeits Act (COICA) was approved by the Senate Judiciary Committee, but the full Senate took no action on the bill before the end of the 111th Congress. On May 12, 2011, Senator Leahy introduced S. 968, the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (PROTECT IP Act), which is similar to COICA in several respects. The PROTECT IP Act would allow the Attorney General to seek an injunction from a federal court against a domain name used by a foreign website that promotes infringement or the sale of counterfeit goods; such court order may then be served on U.S.-based domain name servers, Internet advertisers, search engines, and financial transaction providers, which would be required to take certain appropriate actions such as preventing access to the website or suspending business services to the site. Intellectual property rights holders may also bring an action against the owner, registrant, or operator of an Internet site dedicated to infringement (whether domestic or foreign), and obtain a cease and desist order against them.

On October 26, 2011, Representative Lamar Smith introduced H.R. 3261, the Stop Online Piracy Act (SOPA). SOPA is similar to the PROTECT IP Act yet, it is broader in scope by including several provisions not found in S. 968, such as those that increase the criminal penalties for online streaming of copyrighted content, create criminal penalties for trafficking in counterfeit drugs, increase penalties for foreign espionage, and require the appointment of dedicated intellectual property personnel in U.S. embassies or diplomatic missions. SOPA also allows intellectual property rights holders to send a written request to financial transaction providers and Internet advertisers asking them to terminate business relationships with a website (whether domestic or foreign) that is dedicated to theft of U.S. property; if such request is ignored, or if the website files a counter notification, the rights holder may then file a lawsuit against the domain name registrant, the owner/operator of the site, or the domain name itself.

There has been considerable public debate about the PROTECT IP Act and SOPA. Critics claim these legislative measures amount to “Internet censorship” and that they would impair free speech rights. There are also concerns that focusing on intermediary services, such as non-authoritative domain name servers, will disrupt the technical integrity of the Internet. Opponents believe that these problems will be exacerbated by the legislative measures’ inclusion of a private cause of action for rights holders. Supporters of the bills, however, argue that in order to reduce digital piracy and online counterfeiting, new enforcement mechanisms are vital for U.S. economic growth and needed to protect public health and safety.

Date of Report: December 5, 2011
Number of Pages: 28
Order Number: R42112
Price: $29.95

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