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Rogue websites facilitating illegal behavior cost jobs and the U.S. economy billions of dollars a year, and legislation is going to be reintroduced in this Congress to help curb such activity, Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) said at a Feb. 16 Senate Judiciary Committee hearing titled “Targeting Websites Dedicated to Stealing American Intellectual Property.”
Sen. Tom A. Coburn (R-Okla.) called for “more aggressive” congressional action, singling out internet service providers like Google and Yahoo! for their absence at the hearing.
Leahy said that “inaction is not an option, and we must pass online infringement legislation in this Congress before rogue websites harm more businesses, and result in more lost jobs.” The hearing was focused on legislation that Leahy introduced last year (S. 3804)--and is likely to reintroduce in the coming months--which was aimed at combating infringement and bolstering law enforcement tools to suspend infringers' access to unsuspecting American consumers.
“If someone breaks into a warehouse and steals hundreds of thousands of dollars, you would want to go after that,” he said. “Well, these websites are doing the same thing, but stealing millions.” He added that the problems associated with online infringement, like the issues addressed in the patent reform legislation currently awaiting action in the full Senate (81 PTCJ 451, 2/11/11), have raised congressional concerns on both both sides of the aisles.
“I want to hear from all sides as we move forward, but I refuse to accept that addressing the problem is too difficult because people who want to steal will always find a way,” Leahy said. “That is like saying that we should not prosecute drug crimes or child pornography because bad people will find a way to do bad things anyway. I am a former prosecutor, and that line of argument is unacceptable.”
During the hearing, several senators said that there will be a second round of discussions on this topic to be held at a later date.
Last September, Leahy and Sen. Orrin G. Hatch (R-Utah) introduced the Combating Online Infringement and Counterfeits Act (S. 3804), which sought to authorize the U.S. Department of Justice to file an in rem civil action against a domain name, and seek a preliminary order from a federal court that the domain name is being used to traffic infringing material (80 PTCJ 679, 9/24/10). The bill would also have provided for safeguards allowing the domain name owner or site operator to petition a court to lift the order, and safeguards against abuse by allowing only the Justice Department to initiate an action, and by giving the court the final say about whether any particular website would be cut off.
In November, the Senate Judiciary Committee reported favorably a substitute version of the bill (81 PTCJ 103, 11/26/10), but the full Senate failed to act on the legislation the Congressional term ended.
“Piracy and counterfeiting also can present serious health and safety concerns. Counterfeit products such as ineffective pharmaceuticals, defective electrical products, and sub-par materials, all pose a danger to the American public,” Ranking Minority Member Sen. Chuck Grassley (R-Iowa) said at the Feb. 16 hearing. “Addressing the problem would help protect consumers against harmful counterfeit and pirated products.”
He added that the global value of pirated goods amounted to $650 billion last year.
Sen. Tom A. Coburn (R-Okla.) said that the Bush administration did not do a good job in protecting and promoting IP and that this administration has not done a good job either. “We need to be more aggressive,” he said, adding that he was upset that representatives of internet search providers, such as Google and Yahoo!, were not at the hearing to discuss this “important” issue. He said that he was planning on sending a letter to Google and will go as so far as to subpoena it if he does not get answers to certain questions he has.
Chief Executive Officer of Rosetta Stone Inc., Tom Adams, said in his testimony that his company, which sells language-learning software, is constantly under attack by pirates and counterfeiters that have appropriated Rosetta Stone's name and “used the ecosystem here, in the United States, to trick the consumer.”
“While we support all aspects of legislation being offered, we feel that almost all websites are discovered through search engines,” he said, adding that the most common way for rogue websites, especially those based overseas, to reach out to American consumers is through paid advertisements on search engines such as Google. He said that search engines thus misappropriate value created by Rosetta Stone by selling its trademark as advertising keywords to counterfeiters.
“The key point is that without the ability to buy paid advertisements on search engines using the brand names of the pirated products, these infringing websites would not be able to easily reach American consumers, and likewise, it would be much less likely that American consumers would become aware of the existence of these websites,” he said. “Therefore, it is critical that this legislation empowers the DOJ to prevent rogue websites from using search engines as their gateway to American consumers.”
In his testimony before the committee, Author's Guild president and best-selling author Scott Turow offered personal observations about rogue websites and intellectual property theft, saying that the digital revolution has brought peril to authors and has made American publishing “wobbly” in terms of stability. In an accompanying written statement, he said that the Authors Guild urges the committee to consider making online file sharing service providers liable for facilitating the trafficking in stolen books, music, and movies. The guild also would favor requiring online file sharing service providers to register an agent for service of process for copyright infringement actions with the Copyright Office as a condition to accepting credit card payments from the U.S. or ad feeds from U.S. online advertising suppliers. It also advocates removing certain Digital Millennium Copyright Act safe harbors for ISPs that provide routine access to websites guilty of trafficking and that have not registered an agent.
The general counsel for GoDaddy.com, Christine Jones, said that her company--an internet domain registrar and web hosting company--takes an aggressive approach to protecting IP rights against the “often elusive” online infringers. “We sit at the onramp of the internet … and we understand how easy it is for the bad guys to copy a few books or foreign language CDs, launch a business, and start collecting money.”
That said, she added that GoDaddy supports a “hybrid approach” to addressing the problem of rogue websites. Any legislation should clarify that hosting providers will not be expected to affirmatively monitor their customers' hosted websites in order to avoid the risk of secondary liability for trademark or copyright infringement, she said. Further, “I don't think we can make progress on [effectively combating online infringements and counterfeiting without our online counterparts joining] the fight,” she said. She called on the “Big Five” major players online--domain name registrars, hosting service providers, payment card processors, ISPs, and online advertising providers--to institute efforts similar to those used by GoDaddy.
Speaking from the perspective of an ISP who would need to respond to judicial orders to restrict access to websites, should a bill become law, Thomas M. Dailey, deputy general counsel of Verizon Communications Inc., said that there were several changes necessary in last year's bill so that it will be narrowly focused to target the worst offending sites:
• Judicial orders to restrict access to domain names should be limited to U.S.-based domain name system servers.
• The bill should expressly prohibit private rights of action and ensure that domain name restrictions are imposed only where they are the least burdensome form of remedy.
• Proper implementation of the list of non-domestic domain names and proper notification to service providers of domain names no longer subject to restriction are critically important.
• The bill should limit the number of domain names to which access can be restricted and provide for cost recovery.
Denise Yee, senior trademark counsel of Visa Inc., took what was the most defensive stance of those testifying at the hearing, stating that Visa's policy was unequivocal: “Our system must not be used for illegal actions, [and] we are committed to getting rid of parties who are performing illegal actions.”
She said that Visa agrees with the purpose of last year's COICA bill--targeting and expelling rogue websites. However, imposing a regulatory framework on top of the existing voluntary procedures may have some unintended negative consequences, she said--such as retaliation by other countries' governments by the extraterritorial application of U.S. law, the creation of the unrealistic expectation that payment systems can permanently eliminate online infringement, and an increased likelihood of payment systems being subject to conflicting legal obligations.
In a separate statement issued the day of the hearing, Visa added that a more effective long-term solution would involve government-to-government discussions that harmonize IP laws, sustained international cooperation among law enforcement agencies, and collaboration among parties involved in international commerce on the internet.
Leahy asked the witnesses whether they thought the private sector solutions had been sufficient at curbing rogue websites from infringing.
Adams said, and Turow agreed, that they had not. Jones said that not everyone has the scale to do what GoDaddy currently does, so legislation to help “pick up the slack” is important. Dailey said he believed that the current laws are set up to deal with U.S.-cited websites, but the real problem comes to a head when dealing with foreign domains. Yee added, “ We believe that with the objectives of COICA and the collaboration of private sector we can combat infringing content on the internet.”
Grassley similarly questioned whether the Prioritizing Resources and Organization for Intellectual Property Act of 2008 and DMCA were “enough to fight rogue websites” or whether additional legislation, like S. 3804, is necessary.
Adams said that since most of rogue sites operate overseas, current law “does not help us as we are unable to cut off actual merchants.” Turow said that the safe harbor provisions of the DMCA, though well intended, have “not functioned well.” “If you want to do business in the United States, you should be amenable to process here.”
Jones said that the DMCA has worked well for GoDaddy, and Yee and Dailey said that they agreed.
However, Turow said that those who comply with requirements such as those last year's COICA bill should be granted immunity. The safe harbors under current law are not as strong as those proposed in that legislation, he suggested.
Adams added that search engines should not be allowed to continue to do business with domains that are involved in criminal activity. “This [practice] must cease,” he said. “There must be serious consequences for companies like Google for activity like that.”
The day before the Judiciary Committee hearing, the public interest organization Public Knowledge released a statement asking the Senate to “use caution” in the enforcement of copyright policy that involves online and digital copyright.
Such enforcement should take into account issues surrounding free speech and the technical requirements of the internet, Public Knowledge's Deputy Legal Director Sherwin Siy said in the statement. Public Knowledge is “particularly concerned with ensuring that copyright enforcement mechanisms work with, and not against, free speech and the technical requirements of the Internet,” he added.
“Remedies must take into account the 'evolving nature of the Internet' and take into account 'the technical structure of the Internet' to make certain that speech is not chilled, that investment is not chilled and that Internet users are not harmed,” the statement said. “Copyright-enforcement laws need to make certain that 'good faith actors' are not caught up in enforcement actions without an ability to defend itself in court.”
Siy also cautioned against using the “Domain Name System” routing service to route traffic away from particular domains, as was proposed in S. 3804 last year. “Such an approach could create a 'national blacklist' for a domain while creating cybersecurity risks as well,” he concluded.
In a statement released the day of the hearing, Steven M. Tepp, senior director of internet counterfeiting and piracy at the U.S. Chamber of Commerce's Global Intellectual Property Center, said that with one fourth of all online traffic worldwide infringing IP and at a time when America's need for jobs is great, effectively combatting piracy and counterfeiting is necessary to promote legitimate commerce and job growth.
“Ideally, all countries would improve their IP protection and enforcement systems with the result that the number and reach of rogue sites globally would diminish substantially. Until such time, the United States has a duty to protect its market and consumers from these sites,” he said.
Tepp called Leahy's introduction of S. 3804 and its unanimous approval by the Judiciary Commmittte “a critical step forward,” adding that the GIPC looks forward to helping the committee craft and enact “the best possible legislation” this year.
The Chamber also on Feb. 15 delivered a letter to all members of Congress on behalf of over 80 businesses and professional labor organizations indicating their support for legislation halting rogue sites.
In addition, letters expressing support for COICA and Leahy's efforts to combat illegal infringement online were sent to Leahy in the past week by attorney Floyd Abrams of Cahill Gordon & Reindel, New York, the American Federation of Labor and Congress of Industrial Organizations, Daniel Castro of the Information Technology and Innovation Foundation, author Nora Roberts, and the Motion Picture Association of America Inc.
U.S. Chamber of Commerce's statement at http://pub.bna.com/ptcj/ChamberRogueFeb16.pdf
Public Knowledge's statement at http://pub.bna.com/ptcj/PKSenJudFeb15.pdf
Letter by 80 businesses at http://pub.bna.com/ptcj/ChamberLetterFeb15.pdf
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