New Copyright Legislation In The Works

Tuesday, June 1, 2004 - 01:00

Earlier this spring, the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (the "Subcommittee") approved three significant bills related to copyrights. The approved bills all focus on controlling infringement, albeit in different ways. One bill would aim to assist law enforcement authorities to track down operators of web sites on which criminal activity and/or copyright infringement might be occurring. A second bill would further tighten an existing prohibition on the trafficking of counterfeit labels for sound recordings, computer programs, motion pictures and similar works. Finally, a third bill would aim to close a perceived "loophole" regarding peer-to-peer ("P2P") file sharing and introduce severe penalties for those who share files on a P2P basis.

Fraudulent Online Identity Sanctions Act

The bill designed to assist law enforcement agencies in tracking down operators of web sites displaying illegal and/or otherwise infringing content is called the Fraudulent Online Identity Sanctions Act (H.R. 3754). While it is true that the Internet Corporation for Assigned Names and Numbers (ICANN) requires individuals and companies registering a domain name to publish contact information in the public WHOIS online database, not all domain name registrants provide accurate information. The ability of registrants to provide inaccurate and/or falsified contact information can make it difficult for law enforcement officials to locate a web site operator who is engaging in criminal and/or infringing activity. This bill attempts to limit the ability of individuals to provide falsified contact information by amending the Lanham Act, amending the Copyright Act, and amending the sentencing guidelines of the federal crimes and criminal procedure statute.

The amendments to the Lanham Act1 would create a new subsection 35(e), which would establish that the provision of false contact information with regard to a domain name registration is a willful violation of the Lanham Act. Likewise, on the copyright side, the bill would also amend 17 U.S.C. §504(c)(2) to state that the provision of false contact information would constitute a willful violation under the Copyright Act.

Although the intent of the proposed legislation is laudable, the bill does pose some cause for concern. While law enforcement officials may have a need for accurate contact information for domain name registrants, critics have rightfully expressed concerns about the potential chilling effects of the legislation. There may be a number of valid reasons why individuals may wish to publish information anonymously on the Internet. For example, individuals and/or entities may wish to publish parodies of copyrighted works, criticize trademark holders and/or publish a web site where information regarding health conditions or other sensitive information can be exchanged. If writers and publishers are prevented from making such information available through the Internet on an anonymous basis, they may be reluctant to publish it at all.

Anti-Counterfeiting Amendments Of 2003

The Subcommittee also approved the Anti-Counterfeiting Amendments of 2003 (H.R. 3632). At present, 18 U.S.C. §2318 already includes a prohibition on the trafficking in counterfeit labels for sound recordings, computer programs, motion pictures, and similar works. However, current statutory provision is not broad enough to cover a situation in which the seller of pirated works somehow acquires genuine certificates of authenticity and packages them with unauthorized copies.2

The Anti-Counterfeiting Amendments of 2003 would attempt to address this perceived loophole by inserting a provision banning the unauthorized use of "a genuine certificate, licensing document, registration card, or similar labeling component ... that is used by the copyright owner to verify that a phonorecord, a copy of a computer program, a copy of a motion picture or other audiovisual work, or documentation or packaging is not counterfeit or infringing of any copyright."3

The bill provides that a copyright owner who is injured or who is threatened with injury by a violation of the legislation may bring a civil action. It establishes that the court may award the aggrieved party actual damages and any additional profits of the violator or statutory damages. In computing actual damages, the court would be instructed to multiply: (i) the value of the phonorecords or copies which are, or are intended to be, affixed with, enclosed in, or accompanied by any counterfeit labels or counterfeit documentation or packaging, by (ii) the number of phonorecords or copies which are, or are intended to be, affixed with, enclosed in, or accompanied by any counterfeit labels or counterfeit documentation or packaging.

In lieu of collecting actual damages, the injured party would be permitted to elect, at any time before final judgment is rendered, to recover an award of statutory damages in a sum of not less than $2,500 or more than $25,000, as the court considers appropriate. The bill further provides that a court may increase an award of damages under this subsection by three times the amount that would otherwise be awarded, as the court considers appropriate, if the court finds that a person has subsequently violated this section within three years after a final judgment was entered against that person for a violation.

Piracy Deterrence And Education Act Of 2004

Finally, pursuant to a 14-4 vote, the Subcommittee also approved the Piracy Deterrence and Education Act of 2004 (H.R. 4077) or "PIRATE Act." This bill proposes to target individuals who make copies of copyrighted works available for download on P2P file-sharing networks.

At present 17 U.S.C. 506 requires a showing that the retail value of the copies is more than $1,000. However, P2P providers do not track how frequently particular songs are downloaded over the network, making it difficult to determine the number of infringing copies spawned by any one user. Some proponents of the new legislation claim that this is a loophole that needs to be addressed. Accordingly, the bill would amend the Copyright Act to allow criminal prosecution of someone who "with reckless disregard of the risk that such conduct will result in infringement, knowingly traffics in or makes available to the public one or more copyrighted works having a total retail value of $10,000 or more, or 2,500 or more copyrighted works." Quite significantly, this bill would allow for the imprisonment for up to three years of anyone making US $1,000 in copyrighted materials available for download, as well as fines of up to US $250,000.

The proposed legislation would also make it an offense to record, transmit or make copies of a motion picture in a theater with an audiovisual recording device. Furthermore, it would enhance criminal enforcement of copyright laws and require the Department of Justice to educate the public about copyright infringement.

Further Tightening Ahead?

These three recent bills demonstrate clearly that significant attention is still being focused on legislating further protections for copyright owners. At the same time, U.S. Attorney General John Ashcroft also recent announced the creation of a task force that will focus on violations of copyrights. This new task force will examine the ways in which the Department of Justice has been responding to issues of piracy, file sharing, software, movies, and music. Amid all of this increased activity, it is an opportune time to reevaluate current policies and procedures for using copyrighted materials and for obtaining proper clearances. It is unlikely that this increased scrutiny will be reduced significantly anytime soon; rather, it seems quite probably that it will be enhanced even further in the months and years to come. 1 15 U.S.C. §1117(e).
2 Under the present provision, the term ''counterfeit label'' is defined only as an identifying label or container that appears to be genuine, but is not.
3 §2318(B)(1)(b).

Mary J. Hildebrand is a Partner with Goodwin Procter LLP, where she practices in the Intellectual Property Practice Area. She may be reached for comment via email at mhilde brand@goodwinprocter.com. Jacqueline L. Klosek is an Associate with Goodwin Procter LLP, where she practices in the Intellectual Property Practice Area. She is the author of The Legal Guide to eBusiness (Praeger Publishing, 2003) and Data Privacy in the Information Age (Greenwood Publishing, 2000). She may be reached for comment at jklosek@goodwinprocter.com.