Senate Judiciary Committee Report Recommends Passage of Protect IP Act of 2011

The Senate Judiciary Committee on July 22, 2011 filed a favorable written report on the newly introduced anti-copyright infringement bill Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act, or PROTECT IP Act of 2011 recommending that it be passed.

“The Committee on the Judiciary, to which was referred the bill (S. 968), to prevent online threats to economic creativity and theft of intellectual property, and for other purposes, having considered the same, reports favorably thereon, with an amendment in the nature of a substitute, and recommends that the bill, as amended, do pass,” the report said.

In its conclusion, the report stated: “The Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act will provide the Justice Department and rights holders with an important new mechanism for combating online copyright infringement and the sale of counterfeit goods.

The legislation,  introduced by Senators Patrick Leahy (D-Vt.), Orrin Hatch (R-Utah), and Chuck Grassley (R-Iowa) on May 12, 2011, aims to crack down on rogue websites dedicated to the sale of infringing or counterfeit goods.

The bill 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.

Background

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.

Also See:

FCC Adopts New Rules Permitting TV Channel Sharing by Broadcasters; Enacts First Step Towards Freeing UP Spectrum under Incentive Auction

FCC Modernizes Broadcast Television Public Inspection Files to Give the Public Online Access to Information Previously Available Only at TV Stations

Copyright Office Conducts Proceedings on Exemption to Prohibition on Circumvention of Copyright Protection Systems

Legislation to Deregulate Television Market Introduced in House and Senate

Copyright Office Proposes New Fee Schedule