Leahy, Hatch, Grassley Unveil Targeted Bill To Counter Online Infringement
WASHINGTON (Thursday, May 12, 2011) – Senate Judiciary Committee leaders Thursday renewed bipartisan efforts to counter the illegal online sale of counterfeit goods. Legislation introduced by Senators Patrick Leahy (D-Vt.), Orrin Hatch (R-Utah), and Chuck Grassley (R-Iowa) aims to crack down on rogue websites dedicated to the sale of infringing or counterfeit goods.
The Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act, or PROTECT IP Act, follows bipartisan legislation introduced in 2010, which won the unanimous support of Senate Judiciary Committee members. The PROTECT IP Act narrows the definition of a rogue website, while ensuring that law enforcement can get at the “worst-of-the-worst” websites dedicated to selling infringing goods. Copyright infringement and the sale of counterfeit goods reported cost the U.S. economy billions of dollars and hundreds of thousands of jobs, as well as billions of dollars in lost tax revenue for federal, state and local governments.
“This legislation will protect the investment American companies make in developing brands and creating content and will protect the jobs associated with those investments,” said Leahy. “It will also protect American consumers, who should feel confident that the goods they purchase are of the type and quality they expect. The PROTECT IP Act targets the most egregious actors, and is an important first step to putting a stop to online piracy and sale of counterfeit goods.”
“With this legislation, we are sending a strong message to those selling or distributing counterfeit goods online that the United States will strongly protect its intellectual property rights,” said Hatch. “Just because it’s on the Internet doesn’t mean it’s free. Fake pharmaceuticals threaten people’s lives. Stolen movies, music, and other products put many out of work. This is why protecting property rights is a critical imperative and is why we’ve come together in introducing this common-sense bill.”
“The online distribution and sale of pirated content and counterfeit goods imposes a huge cost on the American economy in terms of lost jobs, lost sales, lost innovation and lost income. Piracy and counterfeiting can also present serious health and safety problems for consumers,” Grassley said. “This legislation will add another tool to the toolbox for going after these criminals and protecting the American public.”
The PROTECT IP Act will provide law enforcement with important tools to stop websites dedicated to online piracy and the sale of counterfeit goods, which range from new movie and music releases, to pharmaceuticals and consumer products. Key updates to the PROTECT IP Act include:
- A narrower definition of an Internet site “dedicated to infringing activities”;
- Authorization for the Attorney General to serve an issued court order on a search engine, in addition to payment processors, advertising networks and Internet service providers;
- Authorization for both the Attorney General and rights holders to bring actions against online infringers operating an internet site or domain where the site is “dedicated to infringing activities,” but with remedies limited to eliminating the financial viability of the site, not blocking access;
- Requirement of plaintiffs to attempt to bring an action against the owner or registrant of the domain name used to access an Internet site “dedicated to infringing activities” before bringing an action against the domain name itself;
- Protection for domain name registries, registrars, search engines, payment processors, and advertising networks from damages resulting from their voluntary action against an Internet site “dedicated to infringing activities,” where that site also “endangers the public health,” by offering controlled or non-controlled prescription medication.
Online infringement legislation proposed in the last Congress was strongly supported by a broad spectrum of stakeholders and organizations, including labor unions, the Newspaper Association of America, the U.S. Chamber of Commerce, the music, movie and television industries, authors and publishers, and anti-piracy organizations.
Leahy and Hatch introduced legislation to counter online infringement in September 2010, and in November 2010, the Senate Judiciary Committee unanimously approved the legislation by a vote of 19-0. In February, the Senate Judiciary Committee held a hearing examining the impact of online infringement and counterfeit sales. The PROTECT IP Act builds on the consensus legislation approved by the Committee last year, while incorporating provisions in response to concerns raised by stakeholders.
The PROTECT IP Act is cosponsored by Senators Chuck Schumer (D-N.Y.), Dianne Feinstein (D-Calif.), Sheldon Whitehouse (D-.R.I.), Lindsey Graham (R-S.C.), Herb Kohl (D-Wis.), Christopher Coons (D-Del.), and Richard Blumenthal (D-Conn.)
Leahy is the Chairman of the Senate Judiciary Committee. Hatch is a former Committee Chairman and a senior Republican on the panel, and Grassley is the Committee’s Ranking Member. Leahy is expected to schedule Committee consideration of the PROTECT IP Act soon.
The text of the PROTECT IP Act is available online.
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The PROTECT IP Act
Summary, For Background Purposes Only
The Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (“PROTECT IP Act”) authorizes the Justice Department to file a civil action against the registrant or owner of a domain name that accesses a foreign infringing Internet site, or the foreign-registered domain name itself, and to seek a preliminary order from the court that the site is dedicated to infringing activities. For an order to issue, the Justice Department must also show that the Internet site is directed at U.S. consumers and harms holders of U.S. Intellectual Property. The Department would be required to serve notice of the action promptly after filing.
If the court issues an order against the registrant, owner, or domain name, resulting from the DOJ-initiated suit, the Attorney General may seek permission of the court to serve that order on specified U.S. based third-parties, including Internet service providers, payment processors, online advertising network providers, and search engines. These third parties would then be required to take appropriate action to either prevent access to the Internet site (in the case of an Internet service provider or search engine), or cease doing business with the Internet site (in the case of a payment processor or advertising network).
The Act similarly authorizes a rights holder who is the victim of the infringement to bring an action against the owner, registrant, or Internet site dedicated to infringement, whether domestic or foreign, and to seek a court order against the domain name registrant, owner, or the domain name. However, if the order issues, the rights holder may seek the court’s permission to serve that order only on a payment processor or online advertising network, and not an Internet service provider or search engine (as available for a DOJ-initiated action).
The Act ensures that third-parties are not overly burdened to comply with an order by stipulating that the party is not required to take action beyond what is technically feasible and reasonable. Additionally, an Internet service provider is never required to modify its network or facilities to comply with a court order. The plaintiff can request the court to compel third-party compliance only where the third party does not make reasonable and good faith efforts to comply with an order. The third-party would not be liable for any action or inaction, unless in contempt of court.
The Act includes safeguards to allow the domain name owner or site operator to petition the court to suspend or vacate the order, including in the situation in which the Internet site at issue is no longer, or never was, dedicated to infringing activities; or the interests of justice require it. Similarly, as site operators subject to an order transition the infringing websites to new domain names, the Justice Department or private party is authorized to bring a related action against the reconstituted domain name, site owner, or registrant, in the same Federal court.
The Act further protects payment processors and Internet advertising networks that voluntarily cease doing business with infringing websites, outside of any court ordered action. Those parties are immunized from damages resulting from actions taken against an Internet site where they have a good faith belief on credible evidence it is dedicated to infringing activities.
Additionally, the legislation protects consumers against counterfeit, adulterated, or misbranded pharmaceutical products sold on the Internet by providing a safe harbor for domain name registries, registrars, search engines, payment processors, and advertising networks to take voluntary action against any infringing website that “endangers the public health” by offering such dangerous medication.
The Act includes a savings clause explicitly stating that it does not limit or expand civil or criminal remedies, or enlarge or diminish vicarious or contributory liability under title 17 (including section 512). Additionally, failure to take voluntary action under the Act does not constitute liability for any party, including vicarious or contributory liability. The Act also provides that nothing in the Act shall serve as a basis for determining the application of section 512 of title 17.
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Statement Of Senator Patrick J. Leahy (D-Vt.),
Chairman, Committee On The Judiciary,
On Introduction Of The PROTECT IP Act
May 12, 2011
Few things are more important to the future of the American economy and job creation than protecting our intellectual property. At a time where our country is beginning to regain its economic footing, businesses face an additional hurdle, the severity of which is increasing by the day – digital theft.
Copyright infringement and the sale of counterfeit goods are reported to cost American businesses billions of dollars, and result in hundreds of thousands of lost jobs. Further, the Institute for Policy Innovation estimates that copyright piracy online alone costs Federal, state and local governments $2.6 billion in tax revenue. In today’s business and fiscal climate, the harm that intellectual property infringement causes to the U.S. economy is unacceptable.
While the growth of the digital marketplace has been extraordinary, and benefits businesses by enabling new opportunities to reach consumers, it also brings with it the threat of copyright infringement and counterfeiting. Internet purchases have become so commonplace that consumers are less wary of online shopping and therefore more easily victimized by online counterfeit products that may have health, safety or other quality concerns when they are counterfeit.
Today, I am introducing the bipartisan PROTECT IP Act, which is based on last year’s Combating Online Infringements and Counterfeits Act. It will provide the Justice Department and rights holders with important new tools to crack down on rogue websites dedicated to infringing activities. This legislation will protect the investment American companies make in developing brands and creating content and will protect the jobs associated with those investments. It will also protect American consumers, who should feel confident that the goods they purchase are of the type and quality they expect.
Both law enforcement and rights holders are currently limited in the remedies available to combat websites dedicated to offering infringing content and products. These rogue websites are often foreign-owned and operated, or reside at domain names that are not registered through a U.S.-based registry or registrar. American consumers are too often deceived into thinking the products they are purchasing at these websites are legitimate because they are easily accessed through their home’s Internet service provider, found through well known search engines, and are complete with corporate advertising, credit card acceptance, and advertising links that make them appear legitimate.
The PROTECT IP Act authorizes the Justice Department to file a civil action against the registrant or owner of a domain name that accesses a foreign rogue website, or the foreign-registered domain name itself, and to seek a preliminary order from the court that the site is dedicated to infringing activities. The court is authorized to issue a cease and desist order against a rogue website. If the court issues that order, the Attorney General is authorized to serve that order, with permission of the court, on specified U.S. based third-parties, including Internet service providers, payment processors, online advertising network providers, and search engines. These third parties would then be required to take appropriate action to either prevent access to the Internet site (in the case of an Internet service provider or search engine), or cease doing business with the Internet site (in the case of a payment processor or advertising network).
The Act authorizes a rights holder who is the victim of the infringement from a rogue website to bring a similar action against the rogue site, whether domestic or foreign. If the court issues a cease and desist order, the rights holder is authorized to serve that order, if authorized by the court, on payment processors and online advertising networks, to cut off the financial viability of the criminal activity.
The legislation will also encourage voluntary action by Internet partners that have credible evidence a rogue website is threatening the public health by trafficking in counterfeit, adulterated, or misbranded prescription medication.
Finally, the PROTECT IP Act will help law enforcement identify and prevent counterfeit products from being imported into the Unites States by ensuring law enforcement can share samples of packaging or labels of suspected counterfeits with the relevant rights holders to determine whether the shipment should be seized at the border. Similarly, it ensures that law enforcement can share anti-circumvention devices that have been seized with affected parties.
This legislation will provide law enforcement and rights holders with an increased ability to protect American intellectual property. This will benefit American consumers, American businesses, and American jobs. We should not expect that enactment of the legislation will completely solve the problem of online infringement, but it will make it more difficult for foreign entities to profit off American hard work and ingenuity. This bill targets the most egregious actors, and is an important first step to putting a stop to online piracy and sale of counterfeit goods.
Protecting intellectual property is not uniquely a Democratic or Republican priority – it is a bipartisan priority. I look forward to working with all Senators to pass this important, bipartisan legislation. I ask unanimous consent that the full bill text be printed in the Record.
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Press ContactDavid Carle: 202-224-3693
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