Just before the holiday recess, the U.S. House of Representatives introduced and held hearings on the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act, H.R. 4279. The proposed legislation would substantially increase criminal and civil penalties for copyright infringement, eliminate the registration requirement to pursue criminal penalties, and create a White House-level executive position to lead the fight to protect U.S. intellectual property interests.
The proposal could be viewed either as an IP diamond in one’s holiday stocking or as a lump of coal. The analogy is fitting: Coal and diamonds are made of the same basic carbon material, and this bill offers proposals that could be beneficial or damaging depending on the final version and/or how the proposals are implemented.
The nearly 70-page bill (available at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:H.R.4279:) was introduced with bipartisan support and was sent to the House Judiciary Committee’s Subcommittee on Courts, the Internet, and Intellectual Property, which held hearings on the bill on Dec. 13, 2007. Testifying at the hearings were representatives of the Justice Department, organized labor, the Coalition Against Counterfeiting and Piracy (CACP; www.thecacp.com), and Public Knowledge (www.publicknowledge.org), a digital rights advocacy organization.
The bill proposes a number of steps to strengthen the enforcement of copyright, trademark, and patent laws and to increase criminal and civil penalties for copyright infringement.
On the enforcement side, the bill would establish an "Office of the U.S. Intellectual Property Enforcement Representative" in the White House. This office would coordinate IP enforcement activities through a number of government and international agencies. This office would also be charged with developing a "Joint Strategic Plan" to identify, disrupt, and/or eliminate persons and businesses involved in trafficking of counterfeit and pirated goods and sharing information among relevant agencies. The plan would also work with other countries to strengthen IP enforcement and reduce the number of countries that fail to enforce anti-counterfeit and piracy laws.
The bill would also create an Intellectual Property Enforcement Division within the Justice Department and would appoint IP attachés to work with foreign governments on anti-piracy efforts.
Criminal penalties for copyright infringement would be enhanced through a number of methods. The bill would eliminate the requirement that copyrighted works be registered before they could be the subject of a criminal action against an infringer. It also strengthens the government’s ability to seize property that is "used or intended to be used" for copyright infringement, and it broadens the amount of property that can be seized. Finally, it would be easier for the courts to order seized property to be forfeited to the government and disposed of.
A controversial proposal would change the civil penalties for copyright infringement of compiled works. The current law recognizes a compiled work as a single act of infringement, even though there may be more than one work that was infringed in order to create the compilation. The proposal would penalize each separate act of infringement in a compiled work. For example, a website that infringed on five copyrighted works would be subject to five times the penalty than currently applies. Other proposals would double or treble the damages available in trademark counterfeiting cases.
At the Dec. 13 hearing, all of the committee members and witnesses supported the intention of the act to strengthen anti-copyright and anti-piracy efforts. It was noted that intellectual property infringement costs the U.S. economy as much as $600 billion a year and 750,000 jobs.
Richard Cotton, general counsel for NBC Universal and chairman of CACP, pointed out that counterfeiting and piracy do not just affect the media industries. Counterfeit pharmaceuticals, auto parts, consumer goods, aircraft parts, animal foods, and other products not only create economic damage but, in some cases, result in life-threatening situations. He complained that IP enforcement often "falls off the radar screen" of law enforcement agents who are tasked with many other priorities. He said that the PRO-IP bill represents a "declaration of war" against pirates and counterfeiters.
In its testimony, the Justice Department outlined recent efforts and successes in intellectual property enforcement. The department has created 25 "Computer Hacking and Intellectual Property" units around the country with more than 230 prosecutors. These units also provide assistance to prosecutors, judges, and investigators from 107 foreign countries. While the department supported the increased criminal penalties of the PRO-IP Act, it raised concerns that the creation of the White House IP executive position and the Justice Department IP Office might actually dilute enforcement efforts and unnecessarily increase bureaucratic and administrative costs.
Gigi Sohn, president of Public Knowledge, a public interest organization representing the interests of content users, raised a number of concerns. While affirming the need for the effective enforcement of intellectual property laws, she voiced concerns that the PRO-IP Act would ensnare "ordinary consumers" in overly broad laws.
Sohn raised particular concerns about the proposal to enhance damages for compilations. She pointed out the already high damages for copyright infringement, particularly when contrasted with proposals to reduce excessive damages for patent infringement which have been incorporated into the present patent reform proposals. More to the point, she argues that higher damages will chill legitimate uses of copyrighted materials, while having little deterrent effect.
She also argued that eliminating the copyright registration prior to criminal enforcement would reduce incentives for copyright registration. This in turn could lead to an even larger "orphan works" problem than already exists. (Sohn’s written testimony is available at www.publicknowledge.org/node/1306.)While at least one commentator suggested that this bill may be more about politics and lobbying by media interests, the bipartisan sponsorship and support of both content and technology providers may indicate otherwise. Further action is not expected until later in spring, when the proposal comes up again for committee action. What will be particularly telling is whether later versions will change to reflect the concerns raised at the December hearings.