Congress Considers Legislation To Toughen IP Enforcement

Wednesday, October 1, 2008 - 01:00

Congress is considering several bills purporting to strengthen the rights and remedies available to copyright and trademark holders and make it easier to prosecute repeat offenders by creating a new federal agency to oversee intellectual property enforcement. The House measure, HR 4279, known as the Prioritizing Resources and Organization for Intellectual Property Act of 2008 or the "PRO-IP" Act, was passed by the House of Representatives by a vote of 410 to 11 on May 8, 2008 and currently awaits consideration in the Senate Judiciary Committee. A somewhat less expansive companion bill, the Enforcement of Intellectual Property Rights Act of 2008 (S. 3325), was introduced in the Senate on July 24, 2008. The bill appears to be moving in this Congress.

The bill seeks to facilitate and coordinate the enforcement of intellectual property violations, expand the forfeiture of property involved in or derived from infringement and the impounding of records related to copyright infringement, provide relief for copyright owners who provide inaccurate information to the Copyright Office and increase trademark damages.

The bill appears to be a response to lobbying efforts of various intellectual property-based industries, such as the music and motion picture industries, aimed at demonstrating their importance to the United States economy. The bill's sponsors view the legislation as an attempt to shore up efforts to combat infringement, piracy and counterfeiting. Those opposed to the legislation consider it an unjustified increase in penalties as well as a needless expansion of government bureaucracy.

Increased Government Enforcement Oversight

Perhaps the most far-reaching aspect of the proposed House legislation is the creation of a new department in the Executive Office of the President, headed by a cabinet-level "IP Czar." The United States has had a Coordinator for International Intellectual Property Enforcement since 2004. Section 301 of the legislation, however, creates the U.S. Intellectual Property Enforcement Representative - an office apparently modeled after the U.S. Trade Representative - which would (among other things) create and implement a Joint Strategic Plan for intellectual property enforcement, speak for and advise the President on intellectual property matters and work with representatives of the U.S. Trade Representative, the Department of Justice (DOJ), the Department of State and other departments and agencies in an Intellectual Property Enforcement Advisory Committee to coordinate U.S. and international intellectual property policy. The new Senate bill similarly creates an Intellectual Property Enforcement Coordinator position in the Executive Office supported by an advisory committee drawn from various government departments and agencies.

The House bill also calls for the creation of an Intellectual Property Enforcement Division within the DOJ to prosecute intellectual property infringers. The bill also provides for grants to local law enforcement for training in intellectual property enforcement and requires the DOJ to review and improve its Computer Hacking and Intellectual Property units throughout the country. Similarly, the Senate bill gives the Attorney General authority to bring civil actions against anyone whose conduct constitutes criminal copyright infringement. Thus, the Attorney General would have the right to initiate civil suits against alleged infringers on behalf of copyright owners such as the Motion Picture Association of America or the Recording Industry Association of America, at the lower "preponderance of the evidence" standard of proof than is required in a criminal proceeding.

In order to increase the level of intellectual property enforcement overseas, the House bill provides for the appointment of ten intellectual property attachés, who would serve in U.S. embassies worldwide to coordinate intellectual property enforcement efforts with foreign governments and protect U.S. intellectual property rights abroad.

The DOJ has come out strongly in opposition to the administrative provisions of the proposed legislation, in particular the proposed reorganization of the DOJ itself. Insisting that its current organization is effective in prosecuting infringement, the DOJ asserts that the reorganization would remove interdepartmental synergies and may result in duplication of effort. It also has criticized the placement of intellectual property enforcement power in the White House, claiming that such a move would undermine the DOJ's independence.

Civil and Criminal Forfeiture

Both bills seek to heighten civil and criminal forfeiture provisions in copyright and trademark infringement cases by subjecting to government seizure and forfeiture not only infringing copies or items, but also proceeds of infringing activities and items used in the infringement that bear a substantial connection to the infringement and that are owned or predominantly controlled by the person committing the offense. In addition, under the House's PRO-IP Act, forfeiture in criminal copyright proceedings is expanded to resemble the harsh forfeiture provisions in the drug laws, encompassing infringing copies, equipment used to make the infringing copies, the proceeds of the infringement and any other property used to commit or substantially facilitate the criminal copyright infringement. These forfeiture provisions also apply to property involved in the unauthorized recording of live musical performances or unauthorized recording or copying of motion pictures ( i.e ., movie bootlegging). Under the Senate bill, the government may seize property used in an offense if it is owned or predominantly controlled by the violator or a conspirator, and the bill requires the government to establish a substantial connection between the property and the violation. Opponents of this provision claim that the forfeiture provisions are overly broad and not only apply to expensive equipment used in large-scale piracy operations, but also could result in seizure of a family's home computer used to illegally download music files.

Inaccuracy In Copyright Registration

Section 101 of the proposed House legislation and Section 201 of the Senate bill permit plaintiffs to sue based on copyright registrations containing inaccurate information unless: (1) the inaccurate information was proffered knowingly by the registrant, and (2) the correct information would have caused the Copyright Office to deny registration on that basis. This provision purports to provide a larger safety net to copyright holders who include inaccurate information on applications for registration. The provision has been criticized as providing an incentive to knowingly provide false information that would not cause the Copyright Office to reject the registration outright, such as a misleading statement of authorship.

Registration Not Required For Criminal Infringement

Section 102 of the House bill and Section 201 of the Senate bill confirm that registration of a copyrighted work is not necessary for a criminal infringement action to proceed. The DOJ has expressed concern over whether the current law, which provides that registration is a prerequisite of any "action for infringement of the copyright," applies to civil infringement actions only or whether it pertains to criminal prosecutions as well. HR No. 110-617 at 23 (2008). On the other side of the argument is the concern that copyright registration is beneficial and allows the claims of the copyright owner to be examined and verified, makes identification of allegedly infringed works easier and combats the problem of orphan works. Therefore, the critics claim, it is wise to provide additional incentives for copyright owners to register their works.

Impounding Of Records In Copyright Infringement

Section 103 of the House bill and Section 202 of the Senate bill seek to harmonize the Copyright Act with the Lanham Act (governing trademarks) by providing courts with a similar authority to seize and impound records documenting the manufacture, sale or receipt of things involved in infringing activities. Proponents hope that this change in the law will combat the destruction of evidence in infringement operations, although critics point out that current discovery rules should be sufficient in preventing the destruction of and making available the necessary evidence in an infringement suit.

Increased Trademark Damages

Sections 104 and 105 of the House bill and Sections 203 and 204 of the Senate bill increase statutory damages available in the recently added anti-counterfeiting provisions in the Lanham Act. Treble damages would be available where the defendant is shown to have intentionally violated or intentionally induced another to violate these provisions. In addition, the bills raise the minimum statutory damage award in a counterfeiting case from $500 to $1,000, the maximum award for using a counterfeited mark from $100,000 to $200,000, and the maximum award for willful use of a counterfeited mark from $1,000,000 to $2,000,000.

The original version of the House bill called for significant changes to the manner in which statutory damages are computed in copyright cases. Section 104 of the bill sought to reverse the rulings in the 2000 MP3.com litigation, which allowed one award of statutory damages for copying of a single CD (but still provided for thousands of statutory damage awards in the tens of millions of dollars). At the apparent urging of the music industry, the bill would have allowed multiple awards for a CD: one for each track on the sound recording, one for the sound recording as a whole and one for each musical composition. This provision was deleted in the House markup in the face of strong opposition.

Exportation and Importation of Copyright Infringing Goods

Finally, the bills both seek to amend the Copyright Act to provide that unauthorized importation into or exportation from the United States of copies or phonorecords, which either constituted an infringement of copyright or would have constituted an infringement of copyright if the copies or phonorecords had been made in the United States, is an infringement of the exclusive right to distribute copies or phonorecords under section 106 of the Copyright Act. Section 203 of the House bill also would direct the U.S. Sentencing Commission to consider whether enhanced penalties that are currently available in the case of the manufacture, importation, or uploading of infringing items also should be available in the case of exportation.

We will continue to monitor this legislation as it progresses through Congress.

Jennifer L. Elgin , Of Counsel to Wiley Rein's Intellectual Property Practice, handles trademark, copyright and other complex litigation, as well as intellectual property prosecution, licensing and counseling.She specializes in opposition and cancellation proceedings before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office and advises clients on right of publicity and privacy compliance, internet/new media related issues, licensing, work-for-hire and other rights-related agreements. Matthew J. Astle , an Associate in Wiley Rein's Intellectual Property Practice, represents clients in connection with copyright and Federal Communications Commission regulatory issues. He is actively involved in matters involving the use of music on the Internet and in satellite radio.

Please email the authors at jelgin@wileyrein.com or mastle@wileyrein.com with questions about this article.