[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
PRIORITIZING RESOURCES AND ORGANIZATION FOR INTELLECTUAL PROPERTY ACT
OF 2007
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
ON
H.R. 4279
__________
DECEMBER 13, 2007
__________
Serial No. 110-76
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
MAXINE WATERS, California DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts CHRIS CANNON, Utah
ROBERT WEXLER, Florida RIC KELLER, Florida
LINDA T. SANCHEZ, California DARRELL ISSA, California
STEVE COHEN, Tennessee MIKE PENCE, Indiana
HANK JOHNSON, Georgia J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois TOM FEENEY, Florida
BRAD SHERMAN, California TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota
Perry Apelbaum, Staff Director and Chief Counsel
Joseph Gibson, Minority Chief Counsel
------
Subcommittee on Courts, the Internet, and Intellectual Property
HOWARD L. BERMAN, California, Chairman
JOHN CONYERS, Jr., Michigan HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia TOM FEENEY, Florida
ROBERT WEXLER, Florida LAMAR SMITH, Texas
MELVIN L. WATT, North Carolina F. JAMES SENSENBRENNER, Jr.,
SHEILA JACKSON LEE, Texas Wisconsin
STEVE COHEN, Tennessee ELTON GALLEGLY, California
HANK JOHNSON, Georgia BOB GOODLATTE, Virginia
BRAD SHERMAN, California STEVE CHABOT, Ohio
ANTHONY D. WEINER, New York CHRIS CANNON, Utah
ADAM B. SCHIFF, California RIC KELLER, Florida
ZOE LOFGREN, California DARRELL ISSA, California
BETTY SUTTON, Ohio MIKE PENCE, Indiana
Shanna Winters, Chief Counsel
Blaine Merritt, Minority Counsel
C O N T E N T S
----------
DECEMBER 13, 2007
Page
TEXT OF THE BILL
H.R. 4279, the ``Prioritizing Resources and Organization for
Intellectual Property Act of 2007''............................ 2
OPENING STATEMENTS
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Chairman, Committee on the
Judiciary, and Member, Subcommittee on Courts, the Internet,
and Intellectual Property...................................... 20
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Ranking Member, Subcommittee on
Courts, the Internet, and Intellectual Property................ 22
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 25
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Chairman, Subcommittee on Courts,
the Internet, and Intellectual Property........................ 27
The Honorable Rick Boucher, a Representative in Congress from the
State of Virginia, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 28
The Honorable Darrell Issa, a Representative in Congress from the
State of California, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 30
The Honorable Brad Sherman, a Representative in Congress from the
State of California, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 31
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 32
The Honorable Sheila Jackson Lee, a Representative in Congress
from the State of Texas, and Member, Subcommittee on Courts,
the Internet, and Intellectual Property........................ 32
The Honorable Zoe Lofgren, a Representative in Congress from the
State of California, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 33
WITNESSES
Ms. Sigal P. Mandelker, Deputy Assistant Attorney General,
Criminal Division, U.S. Department of Justice, Washington, DC
Oral Testimony................................................. 35
Prepared Statement............................................. 38
Mr. James P. Hoffa, General President, International Brotherhood
of Teamsters, Washington, DC
Oral Testimony................................................. 54
Prepared Statement............................................. 56
Ms. Gigi B. Sohn, President and Co-Founder, Public Knowledge,
Washington, DC
Oral Testimony................................................. 63
Prepared Statement............................................. 65
Mr. Rick Cotton, Executive Vice President and General Counsel,
NBC Universal, New York, NY
Oral Testimony................................................. 81
Prepared Statement............................................. 83
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Howard Coble, a
Representative in Congress from the State of North Carolina,
and Ranking Member, Subcommittee on Courts, the Internet, and
Intellectual Property.......................................... 23
Prepared Statement of the Honorable Lamar Smith, a Representative
in Congress from the State of Texas, and Member, Subcommittee
on Courts, the Internet, and Intellectual Property............. 26
Prepared Statement of the Honorable Betty Sutton, a
Representative in Congress from the State of Ohio, and Member,
Subcommittee on Courts, the Internet, and Intellectual Property 34
APPENDIX
Material Submitted for the Hearing Record........................ 129
PRIORITIZING RESOURCES AND ORGANIZATION FOR INTELLECTUAL PROPERTY ACT
OF 2007
----------
THURSDAY, DECEMBER 13, 2007
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:11 a.m., in
Room 2141, Rayburn House Office Building, the Honorable Howard
Berman (Chairman of the Subcommittee) presiding.
Present: Representatives Conyers, Berman, Boucher, Watt,
Jackson Lee, Johnson, Sherman, Schiff, Lofgren, Sutton, Coble,
Feeney, Smith, Goodlatte, Cannon, Chabot, and Issa.
Staff present: Perry Apelbaum, Majority Staff Director and
Chief Counsel; Shanna Winters, Subcommittee Chief Counsel;
David Whitney, Subcommittee Minority Counsel; Joseph Gibson,
Minority Chief Counsel; and Rosalind Jackson, Professional
Staff Member.
Mr. Berman. I would bang the gavel, but I can't find the
gavel. The hearing of the Subcommittee on Courts, the Internet,
and Intellectual Property will come to order. I would like to
begin by welcoming everyone to this hearing on H.R. 4279, the
``Prioritizing Resources and Organization for Intellectual
Property Act of 2007,'' known as PRO-IP.
[The text of the bill, H.R. 4279, follows:]
I
110th CONGRESS
1st Session
H. R. 4279
To enhance remedies for violations of intellectual property laws, and
for other purposes.
__________
IN THE HOUSE OF REPRESENTATIVES
December 5, 2007
Mr. Conyers (for himself, Mr. Berman, Mr. Smith of Texas, Mr. Schiff,
Mr. Feeney, Mr. Issa, Mr. Chabot, Mr. Cohen, Mr. Keller of Florida,
Ms. Jackson-Lee of Texas, and Mr. Goodlatte) introduced the
following bill; which was referred to the Committee on the
Judiciary
__________
A BILL
To enhance remedies for violations of intellectual property laws, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Prioritizing
Resources and Organization for Intellectual Property Act of 2007''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Reference.
Sec. 3. Definition.
TITLE I--ENHANCEMENTS TO CIVIL INTELLECTUAL PROPERTY LAWS
Sec. 101. Registration of claim.
Sec. 102. Registration and infringement actions.
Sec. 103. Civil remedies for infringement.
Sec. 104. Computation of statutory damages in copyright cases.
Sec. 105. Treble damages in counterfeiting cases.
Sec. 106. Statutory damages in counterfeiting cases.
Sec. 107. Exportation of goods bearing infringing marks.
Sec. 108. Importation and exportation.
TITLE II--ENHANCEMENTS TO CRIMINAL INTELLECTUAL PROPERTY LAWS
Sec. 201. Criminal infringement of a copyright.
Sec. 202. Harmonization of forfeiture procedures for intellectual
property offenses.
Sec. 203. Directive to United States Sentencing Commission.
Sec. 204. Trafficking in counterfeit goods or services.
TITLE III--COORDINATION AND STRATEGIC PLANNING OF FEDERAL EFFORT
AGAINST COUNTERFEITING AND PIRACY
Subtitle A--Office of the United States Intellectual Property
Enforcement Representative
Sec. 301. Office of the United States Intellectual Property
Enforcement Representative.
Sec. 302. Definition.
Subtitle B--Joint Strategic Plan
Sec. 321. Joint Strategic Plan.
Sec. 322. Reporting.
Sec. 323. Other intellectual property activities.
Sec. 324. Savings and repeals.
Sec. 325. Authorization of appropriations.
TITLE IV--INTERNATIONAL ENFORCEMENT AND COORDINATION
Sec. 401. Intellectual property attaches.
Sec. 402. Duties and responsibilities of intellectual property
attaches.
Sec. 403. Training and designation of assignment.
Sec. 404. Coordination.
Sec. 405. Authorization of appropriations.
TITLE V--DEPARTMENT OF JUSTICE PROGRAMS
Subtitle A--Coordination
Sec. 501. Intellectual Property Enforcement Officer.
Subtitle B--Law Enforcement Resources
Sec. 511. Local law enforcement grants.
Sec. 512. CHIP units, training, and additional resources.
Sec. 513. Transparency of prosecutorial decisionmaking.
Sec. 514. Authorization of appropriations.
Subtitle C--International Activities
Sec. 521. International intellectual property law enforcement
coordinators.
Sec. 522. International training activities of the computer crime
and intellectual property section.
Subtitle D--Coordination, Implementation, and Reporting
Sec. 531. Coordination.
Sec. 532. Annual reports.
SEC. 2. REFERENCE.
Any reference in this Act to the ``Trademark Act of 1946'' refers
to the Act entitled ``An Act to provide for the registration of
trademarks used in commerce, to carry out the provisions of certain
international conventions, and for other purposes'', approved July 5,
1946 (15 U.S.C. 1051 et seq.).
SEC. 3. DEFINITION.
In this Act, the term ``United States person'' means--
(1) any United States resident or national,
(2) any domestic concern (including any permanent domestic
establishment of any foreign concern), and
(3) any foreign subsidiary or affiliate (including any
permanent foreign establishment) of any domestic concern that
is controlled in fact by such domestic concern,
except that such term does not include an individual who resides
outside the United States and is employed by an individual or entity
other than an individual or entity described in paragraph (1), (2), or
(3).
TITLE I--ENHANCEMENTS TO CIVIL INTELLECTUAL PROPERTY LAWS
SEC. 101. REGISTRATION OF CLAIM.
Section 410 of title 17, United States Code, is amended--
(1) by redesignating subsections (c) and (d) as subsections
(d) and (e), respectively; and
(2) by inserting after subsection (b) the following:
``(c)(1) A certificate of registration satisfies the requirements
of section 411 and section 412 regardless of any inaccurate information
contained in the certificate, unless--
``(A) the inaccurate information was included on the
application for copyright registration with knowledge that it
was inaccurate; and
``(B) the inaccuracy of the information, if known, would
have caused the Register of Copyrights to refuse registration.
``(2) In any case in which inaccuracies described under paragraph
(1) are alleged, the court shall request the Register of Copyrights to
advise the court whether the inaccuracy of the information, if known,
would have caused the Register of Copyrights to refuse registration.
``(3) Nothing in this subsection shall affect any rights,
obligations, or requirements of a person related to information
contained in a registration certificate except for the institution of
and remedies in infringement actions under sections 411 and 412.''.
SEC. 102. REGISTRATION AND INFRINGEMENT ACTIONS.
(a) Registration in Civil Infringement Actions.--Section 411(a) of
title 17, United States Code, is amended--
(1) in the section heading, by inserting ``civil'' after
``and'' ; and
(2) in subsection (a), by striking ``no action'' and
inserting ``no civil action''.
(b) Technical and Conforming Amendment.--Section 411(b) of title
17, United States Code, is amended by striking ``506 and sections 509
and'' and inserting ``505 and section''.
SEC. 103. CIVIL REMEDIES FOR INFRINGEMENT.
Section 503(a) of title 17, United States Code, is amended--
(1) by striking ``and of all plates'' and inserting ``of
all plates''; and
(2) by striking the period at the end and inserting the
following: ``, and records documenting the manufacture, sale,
or receipt of things involved in such violation. The court
shall enter an appropriate protective order with respect to
discovery by the applicant of any records that have been
seized. The protective order shall provide for appropriate
procedures to assure that confidential information contained in
such records is not improperly disclosed to the applicant.''.
SEC. 104. COMPUTATION OF STATUTORY DAMAGES IN COPYRIGHT CASES.
Section 504(c)(1) of title 17, United States Code, is amended by
striking the second sentence and inserting the following: ``A copyright
owner is entitled to recover statutory damages for each copyrighted
work sued upon that is found to be infringed. The court may make either
one or multiple awards of statutory damages with respect to
infringement of a compilation, or of works that were lawfully included
in a compilation, or a derivative work and any preexisting works upon
which it is based. In making a decision on the awarding of such
damages, the court may consider any facts it finds relevant relating to
the infringed works and the infringing conduct, including whether the
infringed works are distinct works having independent economic
value.''.
SEC. 105. TREBLE DAMAGES IN COUNTERFEITING CASES.
Section 35(b) of the Trademark Act of 1946 (15 U.S.C. 1117(b)) is
amended to read as follows:
``(b) In assessing damages under subsection (a) for any violation
of section 32(1)(a) of this Act or section 220506 of title 36, United
States Code, in a case involving use of a counterfeit mark or
designation (as defined in section 34(d) of this Act), the court shall,
unless the court finds extenuating circumstances, enter judgment for
three times such profits or damages, whichever amount is greater,
together with a reasonable attorney's fee, if the violation consists
of--
``(1) intentionally using a mark or designation, knowing
such mark or designation is a counterfeit mark (as defined in
section 34(d) of this Act), in connection with the sale,
offering for sale, or distribution of goods or services;
``(2) intentionally inducing another to engage in a
violation specified in paragraph (1); or
``(3) providing goods or services necessary to the
commission of a violation specified in paragraph (1), with the
intent that the recipient of the goods or services would put
the goods or services to use in committing the violation.
In such a case, the court may award prejudgment interest on such amount
at an annual interest rate established under section 6621(a)(2) of the
Internal Revenue Code of 1986, beginning on the date of the service of
the claimant's pleadings setting forth the claim for such entry of
judgment and ending on the date such entry is made, or for such shorter
time as the court considers appropriate.''.
SEC. 106. STATUTORY DAMAGES IN COUNTERFEITING CASES.
Section 35(c) of the Trademark Act of 1946 (15 U.S.C. 1117) is
amended--
(1) in paragraph (1)--
(A) by striking ``$500'' and inserting ``$1000'';
and
(B) by striking ``$100,000'' and inserting
``$200,000''; and
(2) in paragraph (2), by striking ``$1,000,000'' and
inserting ``$2,000,000''.
SEC. 107. EXPORTATION OF GOODS BEARING INFRINGING MARKS.
Title VII of the Trademark Act of 1946 (15 U.S.C. 1124) is
amended--
(1) in the title heading, by inserting after
``IMPORTATION'' the following: ``OR EXPORTATION''; and
(2) in section 42--
(A) in the first sentence--
(i) by striking the word ``imported''; and
(ii) by inserting after ``custom house of
the United States'' the following: ``, nor
shall any such article be exported from the
United States''.
SEC. 108. IMPORTATION AND EXPORTATION.
(a) In General.--The heading for chapter 6 of title 17, United
States Code, is amended to read as follows:
``CHAPTER 6--MANUFACTURING REQUIREMENTS, IMPORTATION, AND
EXPORTATION''.
(b) Amendment on Exportation.--Section 602(a) of title 17, United
States Code, is amended--
(1) by redesignating paragraphs (1) through (3) as
subparagraphs (A) through (C), respectively, and moving such
subparagraphs 2 ems to the right;
(2) by striking ``(a)'' and inserting ``(a) Infringing
Importation and Exportation.--
``(1) Importation.--'';
(3) by striking ``This subsection does not apply to--'' and
inserting the following:
``(2) Importation or exportation of infringing items.--
Importation into the United States or exportation from the
United States, without the authority of the owner of copyright
under this title, of copies or phonorecords, the making of
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, actionable under sections 501
and 506.
``(3) Exceptions.--This subsection does not apply to--'';
(4) in paragraph (3)(A) (as redesignated by this
subsection) by inserting ``or exportation'' after
``importation''; and
(5) in paragraph (3)(B) (as redesignated by this
subsection)--
(A) by striking ``importation, for the private use
of the importer'' and inserting ``importation or
exportation, for the private use of the importer or
exporter''; and
(B) by inserting ``or departing from the United
States'' after ``United States''.
(c) Conforming Amendments.--(1) Section 602 of title 17, United
States Code, is further amended--
(A) in the section heading, by inserting ``or exportation''
after ``importation''; and
(B) in subsection (b)--
(i) by striking ``(b) In a case'' and inserting
``(b) Import Prohibition.--In a case''; and
(ii) by striking ``if this title had been
applicable'' and inserting ``if the copies or
phonorecords had been made in the United States''.
(2) The item relating to chapter 6 in the table of chapters for
title 17, United States Code, is amended to read as follows:
``6. Manufacturing Requirements, Importation, and Exportation ........
601''.
TITLE II--ENHANCEMENTS TO CRIMINAL INTELLECTUAL PROPERTY LAWS
SEC. 201. CRIMINAL INFRINGEMENT OF A COPYRIGHT.
Section 2319 of title 18, United States Code, is amended--
(1) in subsection (b)(2), by inserting ``is a felony and''
after ``offense'' and by striking ``paragraph (1)'' and
inserting ``subsection (a)'';
(2) in subsection (c)(2), by inserting ``is a felony and''
after ``offense'', and by striking ``paragraph (1)'' and
inserting ``subsection (a)'';
(3) in subsection (d)(3), by inserting ``is a felony and''
after ``offense'', and by inserting ``under subsection (a)''
before the semicolon; and
(4) in subsection (d)(4), by inserting ``is a felony and''
after ``offense''.
SEC. 202. HARMONIZATION OF FORFEITURE PROCEDURES FOR INTELLECTUAL
PROPERTY OFFENSES.
(a) Trafficking in Counterfeit Labels.--Section 2318 of title 18,
United States Code, is amended--
(1) by amending subsection (d) to read as follows:
``(d) Forfeiture and Destruction; Restitution.--
``(1) Civil forfeiture proceedings.--(A) The following
property is subject to forfeiture to the United States:
``(i) Any counterfeit documentation or packaging,
and any counterfeit label or illicit label and any
article to which a counterfeit label or illicit label
has been affixed, or which a counterfeit label or
illicit label encloses or accompanies, or which was
intended to have had such label affixed, enclosing, or
accompanying.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of a violation of subsection (a).
``(iii) Any property used, or intended to be used,
to commit or facilitate the commission of a violation
of subsection (a) that is owned or predominantly
controlled by the violator or by a person conspiring
with or aiding and abetting the violator in committing
the violation.
``(B) The provisions of chapter 46 relating to civil
forfeitures shall extend to any seizure or civil forfeiture
under subparagraph (A). At the conclusion of the forfeiture
proceedings, the court shall order that any forfeited
counterfeit labels or illicit labels and any article to which a
counterfeit label or illicit label has been affixed, or which a
counterfeit label or illicit label encloses or accompanies, or
which was intended to have had such label affixed, enclosing,
or accompanying, be destroyed or otherwise disposed of
according to law.
``(C) In this paragraph, the term `aiding and abetting'
means to knowingly provide aid to the violator with the intent
to facilitate the violation.
``(2) Criminal forfeiture proceedings.--(A) The court, in
imposing sentence on a person convicted of an offense under
this section, shall order, in addition to any other sentence
imposed, that the person forfeit to the United States the
following property:
``(i) Any counterfeit documentation or packaging,
and any counterfeit label or illicit label, that was
used, intended for use, or possessed with intent to use
in the commission of an offense under subsection (a),
and any article to which such a counterfeit label or
illicit label has been affixed, which such a
counterfeit label or illicit label encloses or
accompanies, or which was intended to have had such
label affixed, enclosing, or accompanying.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of an offense under subsection (a).
``(iii) Any property used, or intended to be used,
to commit or substantially facilitate the commission of
an offense under subsection (a).
``(B) The forfeiture of property under subparagraph (A),
including any seizure and disposition of the property and any
related judicial or administrative proceeding, shall be
governed by the procedures set forth in section 413 of the
Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
U.S.C. 853), other than subsection (d) of that section. At the
conclusion of the forfeiture proceedings, the court shall order
that any counterfeit label or illicit label and any article to
which a counterfeit label or illicit label has been affixed,
which a counterfeit label or illicit label encloses or
accompanies, or which was intended to have had such label
affixed, enclosing, or accompanying, be destroyed or otherwise
disposed of according to law.
``(3) Restitution.--When a person is convicted of an
offense under this section, the court, pursuant to sections
3556, 3663A, and 3664, shall order the person to pay
restitution to the owner of the marks or copyrighted works
involved in the offense and any other victim of the offense as
an offense against property referred to in section
3663A(c)(1)(A)(ii).'';
(2) by striking subsection (e); and
(3) by redesignating subsection (f) as subsection (e).
(b) Criminal Infringement of a Copyright.--
(1) In general.--Section 2319 of title 18, United States
Code, is amended by adding at the end the following:
``(g) Forfeiture and Destruction; Restitution.--
``(1) Civil forfeiture proceedings.--(A) The following
property is subject to forfeiture to the United States:
``(i) Any copies or phonorecords manufactured,
reproduced, distributed, sold, or otherwise used,
intended for use, or possessed with intent to use in
violation of section 506(a) of title 17, and any
plates, molds, matrices, masters, tapes, film
negatives, or other articles by means of which such
copies or phonorecords may be made and any devices for
manufacturing, reproducing, or assembling such copies
or phonorecords.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of a violation of section 506(a) of title 17.
``(iii) Any property used, or intended to be used,
to commit or facilitate the commission of a violation
of section 506(a) of title 17 that is owned or
predominantly controlled by the violator or by a person
conspiring with or aiding and abetting the violator in
committing the violation.
``(B) The provisions of chapter 46 of title 18 relating to
civil forfeitures shall extend to any seizure or civil
forfeiture under this section. At the conclusion of the
forfeiture proceedings, the court shall order that any
forfeited infringing copies or phonorecords, and any plates,
molds, matrices, masters, tapes, and film negatives by means of
which such unauthorized copies or phonorecords may be made, be
destroyed or otherwise disposed of according to law.
``(C) In this paragraph, the term `aiding and abetting'
means to knowingly provide aid to the violator with the intent
to facilitate the violation.
``(2) Criminal forfeiture proceedings.--(A) The court, in
imposing sentence on a person convicted of an offense under
subsection (a), shall order, in addition to any other sentence
imposed, that the person forfeit to the United States the
following property:
``(i) Any copies or phonorecords manufactured,
reproduced, distributed, sold, or otherwise used,
intended for use, or possessed with intent to use in
the commission of an offense under subsection (a), and
any plates, molds, matrices, masters, tapes, film
negatives, or other articles by means of which the
copies or phonorecords may be reproduced, and any
electronic, mechanical, or other devices for
manufacturing, reproducing, or assembling such copies
or phonorecords.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of an offense under subsection (a).
``(iii) Any property used, or intended to be used,
to commit or substantially facilitate the commission of
an offense under subsection (a).
``(B) The forfeiture of property under subparagraph (A),
including any seizure and disposition of the property and any
related judicial or administrative proceeding, shall be
governed by the procedures set forth in section 413 of the
Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
U.S.C. 853), other than subsection (d) of that section. At the
conclusion of the forfeiture proceedings, the court shall order
that any forfeited infringing copies or phonorecords, and any
plates, molds, matrices, masters, tapes, and film negatives by
means of which such infringing copies or phonorecords may be
made, be destroyed or otherwise disposed of according to law.
``(3) Restitution.--When a person is convicted of an
offense under this section, the court, pursuant to sections
3556, 3663A, and 3664, shall order the person to pay
restitution to the copyright owner and any other victim of the
offense as an offense against property referred to in section
3663A(c)(l)(A)(ii).''.
(2) Conforming amendments.--(A) Section 506(b) of title 17,
United States Code, is amended by striking all that follows
``destruction'' and inserting the following: ``of property as
prescribed by section 2319(g) of title 18.''.
(B) Section 509 of title 17, United States Code, relating
seizure and forfeiture, and the item relating to section 509 in
the table of sections at the beginning of chapter 5 of title
17, United States Code, are repealed.
(c) Unauthorized Fixation and Trafficking.--
(1) In general.--Section 2319A of title 18, United States
Code, is amended--
(A) by striking subsection (c) and redesignating
subsections (d), (e), and (f) as subsections (c), (d),
and (e), respectively; and
(B) by amending subsection (b) to read as follows:
``(b) Forfeiture and Destruction; Restitution.--
``(1) Civil forfeiture proceedings.--(A) The following
property is subject to forfeiture to the United States:
``(i) Any copies or phonorecords of a live musical
performance described in subsection (a)(1) that are
made without the consent of the performer or performers
involved, and any plates, molds, matrices, masters,
tapes, and film negatives by means of which such copies
or phonorecords may be made.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of a violation of subsection (a).
``(iii) Any property used, or intended to be used,
to commit or facilitate the commission of a violation
of subsection (a) that is owned or predominantly
controlled by the violator or by a person conspiring
with or aiding and abetting the violator in committing
the violation.
``(B) The provisions of chapter 46 relating to civil
forfeitures shall extend to any seizure or civil forfeiture
under paragraph (1). At the conclusion of the forfeiture
proceedings, the court shall order that any forfeited
unauthorized copies or phonorecords of live musical
performances, and any plates, molds, matrices, maters, tapes,
and film negatives by means of which such unauthorized copies
or phonorecords may be made, be destroyed or otherwise disposed
of according to law.
``(C) In this paragraph, the term `aiding and abetting'
means to knowingly provide aid to the violator with the intent
to facilitate the violation.
``(2) Criminal forfeiture proceedings.--(A) The court, in
imposing sentence on a person convicted of an offense under
this section, shall order, in addition to any other sentence
imposed, that the person forfeit to the United States the
following property:
``(i) Any unauthorized copies or phonorecords of a
live musical performance that were used, intended for
use, or possessed with intent to use in the commission
of an offense under subsection (a), and any plates,
molds, matrices, masters, tapes, and film negatives by
means of which such copies or phonorecords may be made.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of an offense under subsection (a).
``(iii) Any property used, or intended to be used,
to commit or substantially facilitate the commission of
an offense under subsection (a).
``(B) The forfeiture of property under subparagraph (A),
including any seizure and disposition of the property and any
related judicial or administrative proceeding, shall be
governed by the procedures set forth in section 413 of the
Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
U.S.C. 853), other than subsection (d) of that section. At the
conclusion of the forfeiture proceedings, the court shall order
that any forfeited unauthorized copies or phonorecords of live
musical performances, and any plates, molds, matrices, masters,
tapes, and film negatives by means of which such unauthorized
copies of phonorecords may be made, be destroyed or otherwise
disposed of according to law.
``(3) Notification of importation.--The Secretary of
Homeland Security shall issue regulations by which any
performer may, upon payment of a specified fee, be entitled to
notification by U.S. Customs and Border Protection of the
importation of copies or phonorecords that appear to consist of
unauthorized fixations of the sounds or sounds and images of a
live musical performance prohibited by this section.
``(4) Restitution.--When a person is convicted of an
offense under this section, the court, pursuant to sections
3556, 3663A, and 3664, shall order the person to pay
restitution to the performer or performers involved, and any
other victim of the offense as an offense against property
referred to in section 3663A(c)(1)(A)(ii).''.
(2) Applicability.--Section 2319A(e), as redesignated by
paragraph (1) of this subsection, is amended by inserting
before the period the following: ``, except that the forfeiture
provisions under subsection (b)(2), as added by the
Prioritizing Resources and Organization for Intellectual
Property Act, shall apply only in a case in which the
underlying act or acts occur on or after the date of the
enactment of that Act''.
(d) Unauthorized Recording of Motion Pictures.--Section 2319B(b) of
title 18, United States Code, is amended to read as follows:
``(b) Forfeiture and Destruction; Restitution.--
``(1) Civil forfeiture proceedings.--(A) The following
property is subject to forfeiture to the United States:
``(i) Any copies of a motion picture or other
audiovisual work protected under title 17 that are made
without the authorization of the copyright owner.
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of a violation of subsection (a).
``(iii) Any property used, or intended to be used,
to commit or facilitate the commission of a violation
of subsection (a) that is owned or predominantly
controlled by the violator or by a person conspiring
with or aiding and abetting the violator in committing
the violation.
``(B) The provisions of chapter 46 relating to civil
forfeitures shall extend to any seizure or civil forfeiture
under this section. At the conclusion of the forfeiture
proceedings, the court shall order that any forfeited
unauthorized copies or phonorecords of a motion picture or
other audiovisual work, or part thereof, and any plates, molds,
matrices, masters, tapes, and film negatives by means of which
such unauthorized copies or phonorecords may be made, be
destroyed or otherwise disposed of according to law.
``(C) In this paragraph, the term `aiding and abetting'
means to knowingly provide aid to the violator with the intent
to facilitate the violation.
``(2) Criminal forfeiture proceedings.--(A) The court, in
imposing sentence on a person convicted of an offense under
this section, shall order, in addition to any other sentence
imposed, that the person forfeit to the United States the
following property:
``(i) Any unauthorized copies of a motion picture
or other audiovisual work protected under title 17, or
part thereof, that were used, intended for use, or
possessed with intent to use in the commission of an
offense under subsection (a).
``(ii) Any property constituting or derived from
any proceeds obtained directly or indirectly as a
result of an offense under subsection (a).
``(iii) Any property used, or intended to be used,
to commit or substantially facilitate the commission of
an offense under subsection (a).
``(B) The forfeiture of property under subparagraph (A),
including any seizure and disposition of the property and any
related judicial or administrative proceeding, shall be
governed by the procedures set forth in section 413 of the
Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
U.S.C. 853), other than subsection (d) of that section. At the
conclusion of the forfeiture proceedings, the court shall order
that any forfeited unauthorized copies or phonorecords of a
motion picture or other audiovisual work, or part thereof, and
any plates, molds, matrices, masters, tapes, and film negatives
by means of which such unauthorized copies or phonorecords may
be made, be destroyed or otherwise disposed of according to
law.
``(3) Restitution.--When a person is convicted of an
offense under this chapter, the court, pursuant to sections
3556, 3663A, and 3664, shall order the person to pay
restitution to the owner of the copyright in the motion picture
or other audiovisual work and any other victim of the offense
as an offense against property referred to in section
3663A(c)(1)(A)(ii).''.
(e) Applicability.--The amendments made by this section shall apply
only in a case in which the underlying act or acts occur on or after
the date of the enactment of this Act.
SEC. 203. DIRECTIVE TO UNITED STATES SENTENCING COMMISSION.
(a) Review and Amendment.--The United States Sentencing Commission,
pursuant to its authority under section 994 of title 28, United States
Code, shall review and, if appropriate, amend the Federal sentencing
guidelines and policy statements applicable in any case sentenced under
section 2B5.3 of the Federal sentencing guidelines for exporting
infringing items in violation of section 602(a)(2) of title 17, United
States Code, to determine whether a defendant in such case should
receive an upward adjustment in the offense level, on the grounds that
exportation introduces infringing items into the stream of foreign
commerce in a manner analogous to the manner in which manufacturing,
importing, and uploading such items introduces them into the stream of
commerce.
(b) Authorization.--The United States Sentencing Commission may
amend the Federal sentencing guidelines under subsection (a) in
accordance with the procedures set forth in section 21(a) of the
Sentencing Act of 1987 (28 U.S.C. 994 note) as though the authority
under that section had not expired.
SEC. 204. TRAFFICKING IN COUNTERFEIT GOODS OR SERVICES.
(a) In General.--Section 2320 of title 18, United States Code, is
amended--
(1) in subsection (a)--
(A) by striking ``Whoever'' and inserting ``
``(1) In general.--Whoever'';
(B) by moving the remaining text 2 ems to the
right; and
(C) by adding at the end the following:
``(2) Serious bodily harm or death.--
``(A) Serious bodily harm.--If the offender
knowingly or recklessly causes or attempts to cause
serious bodily injury from conduct in violation of
paragraph (1), the penalty shall be a fine under this
title or imprisonment for not more than 20 years, or
both.
``(B) Death.--If the offender knowingly or
recklessly causes or attempts to cause death from
conduct in violation of paragraph (1), the penalty
shall be a fine under this title or imprisonment for
any term of years or for life, or both.''; and
(2) in subsection (b)(l)--
(A) by redesignating subparagraph (B) as
subparagraph (C); and
(B) by inserting after subparagraph (A) the
following:
``(B) Any property constituting or derived from any
proceeds obtained directly or indirectly as a result of
a violation of subsection (a).''.
TITLE III--COORDINATION AND STRATEGIC PLANNING OF FEDERAL EFFORT
AGAINST COUNTERFEITING AND PIRACY
Subtitle A--Office of the United States Intellectual Property
Enforcement Representative
SEC. 301. OFFICE OF THE UNITED STATES INTELLECTUAL PROPERTY ENFORCEMENT
REPRESENTATIVE.
(a) Establishment Within Executive Office of the President.--There
is established within the Executive Office of the President the Office
of the United States Intellectual Property Enforcement Representative
(in this title referred to as ``the Office'').
(b) United States Intellectual Property Enforcement
Representative.--The head of the Office shall be the United States
Intellectual Property Enforcement Representative (in this title
referred to as the ``IP Enforcement Representative'') who shall be
appointed by the President, by and with the advice and consent of the
Senate. As an exercise of the rulemaking power of the Senate, any
nomination of the IP Enforcement Representative submitted to the Senate
for confirmation, and referred to a committee, shall be referred to the
Committee on the Judiciary. The IP Enforcement Representative shall
hold office at the pleasure of the President, shall be entitled to
receive the same allowances as a chief of mission, and shall have the
rank of Ambassador Extraordinary and Plenipotentiary.
(c) Duties of IP Enforcement Representative.--
(1) In general.--The IP Enforcement Representative shall--
(A) have primary responsibility for developing,
coordinating, and facilitating the implementation, by
the departments and agencies listed in subsection
(d)(2), the policies, objectives, and priorities of the
Joint Strategic Plan against counterfeiting and piracy
under section 321;
(B) serve as the principal advisor to the President
on domestic and international intellectual property
enforcement policy;
(C) assist the United States Trade Representative
in conducting negotiations on behalf of the United
States relating to international intellectual property
enforcement, including negotiations on any intellectual
property enforcement matter considered under the
auspices of the World Trade Organization or in the
course of commodity and direct investment negotiations
in which the United States participates;
(D) issue and coordinate policy guidance to
departments and agencies on basic issues of policy and
interpretation that arise in the exercise of domestic
and international intellectual property enforcement
functions to the extent necessary to assure the
coordination of international intellectual property
enforcement policy and consistent with any other law;
(E) act as the principal spokesperson of the
President on domestic and international intellectual
property enforcement matters;
(F) report directly to the President and the
Congress regarding, and be responsible to the President
and the Congress for the administration of,
intellectual property enforcement programs;
(G) advise the President and the Congress with
respect to domestic and international intellectual
property enforcement challenges and priorities;
(H) report to the Congress, as provided in section
322, on the implementation of the Joint Strategic Plan,
and make recommendations to the Congress for
improvements in Federal intellectual property
enforcement efforts;
(I) chair the interagency intellectual property
enforcement advisory committee established under
subsection (d)(2), and consult with such advisory
committee in the performance of the functions of the IP
Enforcement Representative; and
(J) carry out such other functions as the President
may direct.
(2) Sense of congress.--It is the sense of the Congress
that the IP Enforcement Representative should--
(A) be the senior representative on any body that
the President may establish for the purpose of
providing to the President advice on overall policies
in which intellectual property enforcement matters
predominate; and
(B) be included as a participant in all economic
summit and other international meetings at which
international intellectual property enforcement is a
major topic.
(3) Delegation.--The IP Enforcement Representative may--
(A) delegate any of the IP Enforcement
Representative's functions, powers, and duties to such
officers and employees of the Office as the IP
Enforcement Representative may designate; and
(B) authorize such successive redelegations of such
functions, powers, and duties to such officers and
employees of the Office as IP Enforcement
Representative considers appropriate.
(d) Coordination of Intellectual Property Enforcement Actions.--
(1) In general.--In carrying out the functions of the IP
Enforcement Representative, the IP Enforcement Representative
shall coordinate the allocation of interagency resources for
intellectual property enforcement, including identifying, and
referring to the appropriate Federal department or agency, for
consideration with respect to action, violations of
intellectual property laws.
(2) Advisory committee.--For purposes of assisting the IP
Enforcement Representative in carrying out the functions of the
IP Enforcement Representative, there is established an
interagency intellectual property enforcement advisory
committee composed of the IP Enforcement Representative, who
shall chair the committee, and senior representatives of the
following departments and agencies who are involved in
intellectual property enforcement, and are appointed by the
respective heads of those departments and agencies:
(A) The Department of Justice (including the
Intellectual Property Enforcement Officer appointed
under section 501).
(B) The United States Patent and Trademark Office
and other relevant units of the Department of Commerce.
(C) The Office of the United States Trade
Representative.
(D) The Department of State (including the United
States Agency for International Development and the
Bureau of International Narcotics Law Enforcement).
(E) The Department of Homeland Security (including
U.S. Customs and Border Protection and U.S. Immigration
and Customs Enforcement).
(F) The United States International Trade
Commission.
(G) The Food and Drug Administration of the
Department of Health and Human Services.
(H) The United States Copyright Office.
(I) Such other agencies as the IP Enforcement
Representative determines to be substantially involved
in the efforts of the Federal Government to combat
counterfeiting and piracy.
(e) Identification of Countries That Deny Adequate Protection of
Intellectual Property Rights.--Section 182(b)(2)(A) of the Trade Act of
1974 (19 U.S.C. 2242(b)(2)(A)) is amended by inserting ``the United
States Intellectual Property Enforcement Representative,'' after
``shall consult with''.
(f) Powers of IP Enforcement Representative.--In carrying out the
responsibilities under this title, the IP Enforcement Representative
may--
(1) select, appoint, employ, and fix the compensation of
such officers and employees as may be necessary to carry out
those responsibilities;
(2) request the head of a department, agency, or program of
the Federal Government to place personnel of such department,
agency, or program who are engaged in intellectual property
enforcement activities on temporary detail to the Office of the
IP Enforcement Representative to assist in carrying out those
responsibilities;
(3) use for administrative purposes, on a reimbursable
basis, the available services, equipment, personnel, and
facilities of Federal, State, and local government agencies;
(4) procure the services of experts and consultants in
accordance with section 3109 of title 5, United States Code,
relating to the procurement of temporary and intermittent
services, at rates of compensation for individuals not to
exceed the daily equivalent of the rate of pay payable under
level IV of the Executive Schedule under section 5315 of title
5, United States Code, and while such experts and consultants
are so serving away from their homes or regular place of
business, to pay such employees travel expenses and per diem in
lieu of subsistence at rates authorized by section 5703 of
title 5, United States Code, for persons in Government service
employed intermittently;
(5) issue such regulations as may be necessary to carry out
the functions vested in the IP Enforcement Representative;
(6) enter into and perform such contracts, leases,
cooperative agreements, or other transactions as may be
necessary in the conduct of the work of the Office and on such
terms as the IP Enforcement Representative considers
appropriate, with any department, agency, or instrumentality of
the United States, or with any public or private person, firm,
association, corporation, or institution;
(7) accept voluntary and uncompensated services,
notwithstanding the provisions of section 1342 of title 31,
United States Code;
(8) adopt an official seal, which shall be judicially
noticed; and
(9) accept, hold, administer, and use gifts, devises, and
bequests of property, both real and personal, for the purpose
of aiding or facilitating the work of the Office.
(g) Compensation.--Section 5312 of title 5, United States Code, is
amended by adding at the end the following:
``United States Intellectual Property Enforcement
Representative.''.
SEC. 302. DEFINITION.
For purposes of this title, the term ``intellectual property
enforcement'' means matters relating to the enforcement of laws
protecting copyrights, patents, trademarks, other forms of intellectual
property, and trade secrets, both in the United States and abroad,
including matters relating to combating counterfeit and pirated goods.
Subtitle B--Joint Strategic Plan
SEC. 321. JOINT STRATEGIC PLAN.
(a) Purpose.--The objectives of the Joint Strategic Plan against
counterfeiting and piracy that is referred to in section 301(c)(1)(A)
(in this section referred to as the ``joint strategic plan'') are the
following:
(1) Eliminating counterfeit and pirated goods from the
international supply chain.
(2) Identifying individuals, financial institutions,
business concerns, and other entities involved in the
financing, production, trafficking, or sale of counterfeit or
pirated goods.
(3) Identifying and sharing information among the relevant
departments and agencies for the purpose of arresting and
prosecuting individuals and entities that are knowingly
involved the financing, production, trafficking, or sale of
counterfeit or pirated goods.
(4) Disrupting and eliminating counterfeit and piracy
networks.
(5) Strengthening the capacity of other countries to
protect and enforce intellectual property rights, and reducing
the number of countries that fail to enforce laws preventing
the financing, production, trafficking, and sale of counterfeit
and pirated goods.
(6) Working with other countries to establish international
standards and policies for the effective protection and
enforcement of intellectual property rights.
(7) Protecting intellectual property rights overseas by--
(A) working with other countries to ensure that
such countries--
(i) have adequate and effective laws
protecting copyrights, trademarks, patents, and
other forms of intellectual property;
(ii) have legal regimes that enforce their
own domestic intellectual property laws,
eliminate counterfeit and piracy operations,
and arrest and prosecute those who commit
intellectual property crimes;
(iii) provide their law enforcement
officials with the authority to seize, inspect,
and destroy pirated and counterfeit goods,
including at ports of entry;
(iv) provide for the seizure of property
used to produce pirated and counterfeit goods;
and
(v) are not on the Priority Watch List
issued by the United States Trade
Representative under section 182 of the Trade
Act of 1974 (19 U.S.C. 2242);
(B) exchanging information with appropriate law
enforcement agencies in other countries relating to
individuals and entities involved in the financing,
production, trafficking, or sale of pirated or
counterfeit goods;
(C) using the information described in subparagraph
(B) to conduct enforcement activities in cooperation
with appropriate law enforcement agencies in other
countries; and
(D) building a formal process for consulting with
companies, industry associations, labor unions, and
other interested groups in other countries with respect
to intellectual property enforcement.
(b) Timing.--Not later than 6 months after the date of the
enactment of this Act, and not later than December 31 of every third
year thereafter, the IP Enforcement Representative shall submit the
joint strategic plan to the President, to the Committee on the
Judiciary and the Committee on Appropriations of the House of
Representatives, and to the Committee on the Judiciary and the
Committee on Appropriations of the Senate.
(c) Responsibility of the IP Enforcement Representative.--In
developing the joint strategic plan, the IP Enforcement
Representative--
(1) shall consult and coordinate with the appropriate
officers and employees of departments and agencies represented
on the advisory committee appointed under section 301(d)(2) who
are involved in intellectual property enforcement; and
(2) may consult with private sector experts in intellectual
property enforcement.
(d) Responsibilities of Other Departments and Agencies.--To assist
in the development and implementation of the joint strategic plan, the
heads of the departments and agencies identified under section
301(d)(2) (including the heads of any other agencies identified by the
IP Enforcement Representative under section (d)(2)(I)) shall--
(1) designate personnel with expertise and experience in
intellectual property enforcement matters to work with the IP
Enforcement Representative; and
(2) share relevant department or agency information with
the IP Enforcement Representative, including statistical
information on the enforcement activities of the department or
agency against counterfeiting or piracy.
(e) Contents of the Joint Strategic Plan.--Each joint strategic
plan shall include the following:
(1) A detailed description of the priorities identified for
activities of the Federal Government relating to intellectual
property enforcement.
(2) A detailed description of the means and methods to be
employed to achieve the priorities, including the means and
methods for improving the efficiency and effectiveness of the
Federal Government's enforcement efforts against counterfeiting
and piracy.
(3) Estimates of the resources necessary to fulfill the
priorities identified under paragraph (1).
(4) The performance measures to be used to monitor results
under the joint strategic plan during the following year.
(5) An analysis of the threat posed by violations of
intellectual property rights, including targets, risks, and
threats of intellectual property theft, and the costs to the
economy of the United States resulting from violations of
intellectual property laws and the threats to public health and
safety created by counterfeiting and piracy.
(6) An identification of the departments and agencies that
will be involved in implementing each priority under paragraph
(1).
(7) A strategy for ensuring coordination between the IP
Enforcement Representative and the departments and agencies
identified under paragraph (6), including a process for
oversight of, and accountability among, the departments and
agencies carrying out the strategy.
(8) Such other information as the IP Enforcement
Representative considers important in conveying to the
recipients of the report, and to the people of the United
States, the costs imposed on the United States economy and the
threats to public health and safety created by counterfeiting
and piracy, and the steps that the Federal Government will take
over the period covered by the succeeding joint strategic plan
to reduce those costs and counter those threats.
(f) Enhancing Enforcement Efforts of Foreign Governments.--The
joint strategic plan shall include programs to provide training and
technical assistance to foreign governments for the purpose of
enhancing the efforts of such governments to enforce laws against
counterfeiting and piracy. With respect to such programs, the IP
Enforcement Representative, in developing the joint strategic plan,
shall--
(1) seek to enhance the efficiency and consistency with
which Federal resources are expended, and seek to minimize
duplication, overlap, or inconsistency of efforts;
(2) identify and give priority to those countries where
programs of training and technical assistance can be carried
out most effectively and with the greatest benefit to reducing
counterfeit and pirated products in the United States market,
to protecting the intellectual property rights of United States
persons and their licensees, and to protecting the interests of
United States persons otherwise harmed by violations of
intellectual property rights in those countries;
(3) in identifying the priorities under paragraph (2), be
guided by the countries identified by the United States Trade
Representative under section 182(a) of the Trade Act of 1974
(19 U.S.C. 2242(a)); and
(4) develop metrics to measure the effectiveness of the
Federal Government's efforts to improve the laws and
enforcement practices of foreign governments against
counterfeiting and piracy.
(g) Dissemination of the Joint Strategic Plan.--The joint strategic
plan shall be posted for public access on the website of the White
House, and shall be disseminated to the public through such other means
as the IP Enforcement Representative may identify.
SEC. 322. REPORTING.
(a) Annual Report.--Not later than December 31 of each year, the IP
Enforcement Representative shall submit an report on the activities of
the Office during the preceding fiscal year. The annual report shall be
submitted to the President and the Congress, and disseminated to the
people of the United States, in the manner specified in subsections (b)
and (g) of section 321.
(b) Contents.--The report required by this section shall include
the following:
(1) The progress made on implementing the strategic plan
and on the progress toward fulfillment of the priorities
identified under section 321(e).
(2) The progress made toward efforts to encourage Federal,
State, and local government departments and agencies to accord
higher priority to intellectual property enforcement.
(3) The progress made in working with foreign countries to
investigate, arrest, and prosecute entities and individuals
involved in the financing, production, trafficking, and sale of
counterfeit and pirated goods.
(4) The manner in which the relevant departments and
agencies are working together and sharing information to
strengthen intellectual property enforcement.
(5) An assessment of the successes and shortcomings of the
efforts of the Federal Government, including departments and
agencies represented on the committee appointed under section
301(d)(2), in fulfilling the priorities identified in the
applicable joint strategic plan during the preceding fiscal
year.
(6) Recommendations for any changes in statutes,
regulations, or funding levels that the IP Representative
considers would significantly improve the effectiveness or
efficiency of the effort of the Federal Government to combat
counterfeiting and piracy and otherwise strengthen intellectual
property enforcement.
(7) The progress made in strengthening the capacity of
countries to protect and enforce intellectual property rights.
(8) The successes and challenges in sharing with other
countries information relating to intellectual property
enforcement.
(9) The progress of the United States Trade Representative
in taking the appropriate action under any trade agreement or
treaty to protect intellectual property rights of United States
persons and their licensees.
SEC. 323. OTHER INTELLECTUAL PROPERTY ACTIVITIES.
If in any other case in which the IP Representative identifies
other intellectual property initiatives of the Federal Government that
include enforcement activities similar or identical to the activities
described in this title, the IP Representative shall consolidate those
activities into the work of the Office of the IP Representative in
order to prevent duplication. Other activities that may improve
intellectual property enforcement may continue outside of the Office of
the Intellectual Property Enforcement Representative, including--
(1) capacity building in other countries (other than
activities to carry out the objectives described in section
321(a)(7); and
(2) bilateral and multilateral cooperative efforts.
SEC. 324. SAVINGS AND REPEALS.
(a) Repeal of Coordination Council.--Section 653 of the Treasury
and General Government Appropriations Act, 2000 (15 U.S.C. 1128) is
repealed.
(b) Current Authorities Not Affected.--Except as provided in
subsection (a), nothing in this title shall alter the authority of any
department or agency of the United States to investigate and prosecute
violations of laws protecting intellectual rights.
(c) Register of Copyrights.--Nothing in this title shall derogate
from the duties and functions of the Register of Copyrights.
SEC. 325. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for each fiscal year such
sums as may be necessary to carry out this title. By not later than the
date on which the President submits to Congress the budget of the
United States Government for a fiscal year, the IP Representative shall
submit to the Committees on the Judiciary of the House of
Representatives and the Senate the projected amount of funds for the
succeeding fiscal year that will be necessary for the Office to carry
out its functions.
TITLE IV--INTERNATIONAL ENFORCEMENT AND COORDINATION
SEC. 401. INTELLECTUAL PROPERTY ATTACHES.
The Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office (in this
title referred to as the ``Director''), in consultation with the
Director General of the United States and Foreign Commercial Service,
shall appoint 10 intellectual property attaches to serve in United
States embassies or other diplomatic missions. The 10 appointments
shall be in addition to personnel serving in the capacity of
intellectual property attache at United States embassies or other
diplomatic missions on the date of the enactment of this Act.
SEC. 402. DUTIES AND RESPONSIBILITIES OF INTELLECTUAL PROPERTY
ATTACHES.
The intellectual property attaches appointed under section 401, as
well as others serving as intellectual property attaches of the
Department of Commerce, shall have the following responsibilities:
(1) To promote cooperation with foreign governments in the
enforcement of intellectual property laws generally, and in the
enforcement of laws against counterfeiting and piracy in
particular.
(2) To assist United States persons holding intellectual
property rights, and the licensees of such United States
persons, in their efforts to combat counterfeiting and piracy
of their products or works within the host country, including
counterfeit or pirated goods exported from or transshipped
through that country.
(3) To chair an intellectual property protection task force
consisting of representatives from all other relevant sections
or bureaus of the embassy or other mission.
(4) To coordinate with representatives of the embassies or
missions of other countries in information sharing, private or
public communications with the government of the host country,
and other forms of cooperation for the purpose of improving
enforcement against counterfeiting and piracy.
(5) As appropriate and in accordance with applicable laws
and the diplomatic status of the attaches, to engage in public
education efforts against counterfeiting and piracy in the host
country.
(6) To coordinate training and technical assistance
programs of the United States Government within the host
country that are aimed at improving the enforcement of laws
against counterfeiting and piracy.
(7) To identify and promote other means to more effectively
combat counterfeiting and piracy activities under the
jurisdiction of the host country.
SEC. 403. TRAINING AND DESIGNATION OF ASSIGNMENT.
(a) Training of Attaches.--The Director shall ensure that each
attache appointed under section 401 is fully trained for the
responsibilities of the position before assuming duties at the United
States embassy or other mission in question.
(b) Priority Assignments.--In designating the embassies or other
missions to which attaches are assigned, the Director shall give
priority to those countries where the activities of an attache can be
carried out most effectively and with the greatest benefit to reducing
counterfeit and pirated products in the United States market, to
protecting the intellectual property rights of United States persons
and their licensees, and to protecting the interests of United States
persons otherwise harmed by violations of intellectual property rights
in those countries.
SEC. 404. COORDINATION.
(a) In General.--The activities authorized by this title shall be
carried out in coordination with the United States Intellectual
Property Enforcement Representative appointed under section 301.
(b) Report on Attaches.--The Director shall submit to the Congress
each year a report on the appointment, designation for assignment, and
activities of all intellectual property attaches of the Department of
Commerce who are serving at United States embassies or other diplomatic
missions.
SEC. 405. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for each fiscal year such
sums as may be necessary for the training and support of the
intellectual property attaches appointed under section 401 and of other
personnel serving as intellectual property attaches of the Department
of Commerce.
TITLE V--DEPARTMENT OF JUSTICE PROGRAMS
Subtitle A--Coordination
SEC. 501. INTELLECTUAL PROPERTY ENFORCEMENT OFFICER.
(a) Establishment.--There is established within the Office of the
Deputy Attorney General in the Department of Justice the ``Intellectual
Property Enforcement Division''. The head of the Intellectual Property
Enforcement Division shall be the Intellectual Property Enforcement
Officer (in this title referred to as the ``IP Officer''). The IP
Officer shall be appointed by the Attorney General and shall report
directly to the Deputy Attorney General.
(b) Duties.--The IP Officer shall--
(1) coordinate all efforts of the Department of Justice
relating to the enforcement of intellectual property rights and
to combating counterfeiting and piracy;
(2) serve as the lead representative of the Department of
Justice on the advisory committee provided for in section
301(d)(2) and as the liaison of the Department of Justice with
foreign governments with respect to training conducted under
section 522; and
(3) carry out such other related duties that may be
assigned by the Deputy Attorney General.
(c) Transfer of Functions.--
(1) Criminal intellectual property enforcement.--There are
transferred to the Intellectual Property Enforcement Division
those functions of the Computer Crime and Intellectual Property
Section of the Criminal Division of the Department of Justice
that relate to the enforcement of criminal laws relating to the
protection of intellectual property rights and trade secrets,
including the following:
(A) Section 506 and 1204 of title 17, United States
Code.
(B) Section 2318 through 2320 of title 18, United
States Code.
(C) Sections 1831 and 1832 of title 18, United
States Code.
(D) Any other provision of law, including the
following, to the extent such provision involves the
enforcement of any provision of law referred to in
subparagraphs (A) through (C) or comparable provision
of law:
(i) Section 1341 of title 18, United States
Code, relating to frauds and swindles.
(ii) Section 1343 of title 18, United
States Code, relating to fraud by wire, radio,
or television.
(iii) Section 2512 of title 18, United
States Code, relating to trafficking in
interception devices.
(iv) Section 633 of the Communications Act
of 1934 (47 U.S.C. 553), relating to the
unauthorized reception of cable service.
(v) Section 705 of the Communications Act
of 1934 (47 U.S.C. 605), relating to the
unauthorized publication or use of
communications.
(2) Intellectual property enforcement coordinators.--The
Intellectual Property Law Enforcement Coordinators of the
Department of Justice to whom section 521 applies shall also be
in the Intellectual Property Enforcement Division.
Subtitle B--Law Enforcement Resources
SEC. 511. LOCAL LAW ENFORCEMENT GRANTS.
(a) Authorization.--Section 2 of the Computer Crime Enforcement Act
(42 U.S.C. 3713) is amended--
(1) in subsection (b), by inserting after ``computer
crime'' each place it appears the following: ``, including
infringement of copyrighted works over the Internet''; and
(2) in subsection (e)(1), relating to authorization of
appropriations, by striking ``fiscal years 2001 through 2004''
and inserting ``fiscal years 2008 through 2012''.
(b) Grants.--The Office of Justice Programs of the Department of
Justice shall make grants to eligible State or local law enforcement
entities, including law enforcement agencies of municipal governments
and public educational institutions, for training, prevention,
enforcement, and prosecution of intellectual property theft and
infringement crimes (in this subsection referred to as ``IP-TIC
grants''), in accordance with the following:
(1) Use of ip-tic grant amounts.--IP-TIC grants may be used
to establish and develop programs to do the following with
respect to the enforcement of State and local true name and
address laws and State and local criminal laws on anti-piracy,
anti-counterfeiting, and theft of goods protected by any
copyright, patent, trademark, service mark, trade secret, or
other intellectual property right under State or Federal law:
(A) Assist State and local law enforcement agencies
in enforcing those laws, including by reimbursing State
and local entities for expenses incurred in performing
enforcement operations, such as overtime payments and
storage fees for seized evidence.
(B) Assist State and local law enforcement agencies
in educating the public to prevent, deter, and identify
violations of those laws.
(C) Educate and train State and local law
enforcement officers and prosecutors to conduct
investigations and forensic analyses of evidence and
prosecutions in matters involving those laws.
(D) Establish task forces that include personnel
from State or local law enforcement entities, or both,
exclusively to conduct investigations and forensic
analyses of evidence and prosecutions in matters
involving those laws.
(E) Assist State and local law enforcement officers
and prosecutors in acquiring computer and other
equipment to conduct investigations and forensic
analyses of evidence in matters involving those laws.
(F) Facilitate and promote the sharing, with State
and local law enforcement officers and prosecutors, of
the expertise and information of Federal law
enforcement agencies about the investigation, analysis,
and prosecution of matters involving those laws and
criminal infringement of copyrighted works, including
the use of multi-jurisdictional task forces.
(2) Eligibility.--To be eligible to receive an IP-TIC
grant, a State or local government entity must provide to the
Attorney General--
(A) assurances that the State in which the
government entity is located has in effect laws
described in paragraph (1);
(B) an assessment of the resource needs of the
State or local government entity applying for the
grant, including information on the need for
reimbursements of base salaries and overtime costs,
storage fees, and other expenditures to improve the
investigation, prevention, or enforcement of laws
described in paragraph (1); and
(C) a plan for coordinating the programs funded
under this section with other federally funded
technical assistance and training programs, including
directly funded local programs such as the Local Law
Enforcement Block Grant program (described under the
heading ``Violent Crime Reduction Programs, State and
Local Law Enforcement Assistance'' in title I of the
Departments of Commerce, Justice, and State, the
Judiciary, and Related Agencies Appropriations Act,
1998 (Public Law 105-119)).
(3) Matching funds.--The Federal share of an IP-TIC grant
may not exceed 90 percent of the costs of the program or
proposal funded by the IP-TIC grant, unless the Attorney
General waives, in whole or in part, the 90 percent
requirement.
(4) Authorization of appropriations.--
(A) Authorization.--There is authorized to be
appropriated to carry out this subsection the sum of
$25,000,000 for each of fiscal years 2008 through 2012.
(B) Limitation.--Of the amount made available to
carry out this subsection in any fiscal year, not more
than 3 percent may be used by the Attorney General for
salaries and administrative expenses.
SEC. 512. CHIP UNITS, TRAINING, AND ADDITIONAL RESOURCES.
(a) Evaluation of CHIP Units.--The Attorney General shall review
the allocation and activities of the Computer Hacking and Intellectual
Property (in this section referred to as ``CHIP'') units that have been
established in various Federal judicial districts, with the goals of--
(1) improving the effectiveness of CHIP units in
investigating and prosecuting criminal offenses arising from
counterfeiting or piracy activities;
(2) ensuring that CHIP units are established and funded in
every judicial district in which they can be effectively
deployed;
(3) upgrading the training and expertise of Department of
Justice personnel participating in CHIP units; and
(4) improving the coordination of the activities of CHIP
units with corresponding efforts of State and local law
enforcement agencies operating within the Federal judicial
district in question.
(b) Requirements.--In addition to any initiatives undertaken as a
result of the review conducted under subsection (a), the Attorney
General, in consultation with the Director of the Federal Bureau of
Investigation, shall ensure that--
(1) each CHIP unit is assigned at least 2 additional agents
of the Federal Bureau of Investigation to support such unit for
the purpose of investigating intellectual property crimes;
(2) each CHIP unit is assigned at least 1 additional
assistant United States attorney to support such unit for the
purpose of prosecuting intellectual property crimes or other
crimes involved in counterfeiting or piracy activities;
(3) CHIP units are established and staffed in at least 10
Federal judicial districts in addition to those districts in
which CHIP units exist on the date of the enactment of this
Act; and
(4) an operational unit is created consisting of not less
than 5 agents of the Federal Bureau of Investigation, attached
to the headquarters of the Federal Bureau of Investigation in
Washington, DC, and dedicated to working with the Intellectual
Property Enforcement Division established by section 501 on the
development, investigation, and coordination of complex, multi-
district, and international criminal intellectual property
cases.
(c) Coordination With State and Local Authorities.--The United
States attorney for each Federal judicial district in which a CHIP unit
is in operation shall ensure that the activities of that unit are
coordinated with the corresponding activities of State and local law
enforcement agencies operating within that Federal judicial district in
the investigation of intellectual property crimes and other crimes
involved in counterfeiting or piracy, including by coordinating
Federal, State, and local operations and intelligence sharing to the
extent appropriate.
(d) Additional Responsibilities of the Attorney General.--The
Attorney General, in consultation with the Director of the Federal
Bureau of Investigation as appropriate, shall ensure the following:
(1) All agents of the Federal Bureau of Investigation, and
all assistant United States attorneys, who are assigned to CHIP
units have received advanced training, on an annual basis, in
the investigation and prosecution of intellectual property
crimes and other crimes involved in counterfeiting and piracy.
(2) A comprehensive training program on the development and
investigation of criminal offenses involved in counterfeiting
and piracy is provided for all agents of the Federal Bureau of
Investigation.
(3) All relevant units of the Department of Justice are
allocated sufficient funding and other resources as may be
necessary to provide expert computer forensic assistance,
including from nongovernmental entities, in investigating and
prosecuting intellectual property crimes in a timely manner.
For purposes of this paragraph, the term ``all relevant units''
includes those officers and employees assigned to carry out the
functions transferred by section 502(a)(1), CHIP units, offices
of the United States attorneys, and units of the Federal Bureau
of Investigation that are engaged in the investigation of
intellectual property crimes.
SEC. 513. TRANSPARENCY OF PROSECUTORIAL DECISIONMAKING.
(a) In General.--The Attorney General shall direct each United
States attorney--
(1) to review the formal or informal standards currently in
effect in that Federal judicial district for accepting or
declining prosecution of cases involving criminal violations of
intellectual property laws;
(2) to consider whether the standards should be modified or
applied more flexibly--
(A) to ensure that significant violations are not
being declined for prosecution inappropriately; or
(B) in light of the broader impact of individual
cases on the overall strategy to combat counterfeiting
and piracy; and
(3) to review the practices and procedures currently in
place for providing information to complainants and victims in
cases and investigations involving criminal violations of
intellectual property laws regarding the status of such cases
and investigations, including the practices and procedures for
apprising interested parties of the decision to decline
prosecution of such cases.
(b) Construction.--(1) Nothing in this section shall be construed
to impinge on the appropriate exercise of prosecutorial discretion with
regard to cases involving criminal violations of intellectual property
laws or to require the promulgation of formal standards or thresholds
regarding prosecution of any cases.
(2) Nothing in the section shall give rise to any claim, cause of
action, defense, privilege, or immunity that may be asserted by any
party to Federal litigation.
SEC. 514. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for each fiscal year such
sums as may be necessary to carry out this subtitle.
Subtitle C--International Activities
SEC. 521. INTERNATIONAL INTELLECTUAL PROPERTY LAW ENFORCEMENT
COORDINATORS.
(a) Deployment of Additional Coordination.--The Attorney General
shall, within 180 days after the date of the enactment of this Act,
deploy 5 Intellectual Property Law Enforcement Coordinators, in
addition to those serving in such capacity on such date of enactment.
Such deployments shall be made to those countries and regions where the
activities of such a coordinator can be carried out most effectively
and with the greatest benefit to reducing counterfeit and pirated
products in the United States market, to protecting the intellectual
property rights of United States persons and their licensees, and to
protecting the interests of United States persons otherwise harmed by
violations of intellectual property rights in those countries. The
mission of all International Intellectual Property Law Enforcement
Coordinators shall include the following:
(1) Acting as liaison with foreign law enforcement agencies
and other foreign officials in criminal matters involving
intellectual property rights.
(2) Performing outreach and training to build the
enforcement capacity of foreign governments against
intellectual property-related crime in the regions in which the
coordinators serve.
(3) Coordinating United States law enforcement activities
against intellectual property-related crimes in the regions in
which the coordinators serve.
(4) Coordinating with the activities of the intellectual
property attaches appointed under title IV in the countries or
regions to which the coordinators are deployed.
(5) Coordinating the activities of the coordinators with
the IP Officer.
(b) Authorization of Appropriations.--There are authorized to be
appropriated for each fiscal year such sums as may be necessary for the
deployment and support of all International Intellectual Property
Enforcement Coordinators of the Department of Justice, including those
deployed under subsection (a).
SEC. 522. INTERNATIONAL TRAINING ACTIVITIES OF THE COMPUTER CRIME AND
INTELLECTUAL PROPERTY SECTION.
(a) Increased Training and Technical Assistance to Foreign
Governments.--The Attorney General shall increase the efforts of the
Department of Justice to provide training and technical assistance to
foreign governments, including foreign law enforcement agencies and
foreign courts, to more effectively combat counterfeiting and piracy
activities falling within the jurisdiction of such governments.
(b) Conduct of Programs.--The increased training and technical
assistance programs under subsection (a) shall be carried out by the
Intellectual Property Enforcement Division established by section 501,
as well as through such other divisions, sections, or agencies of the
Department of Justice as the Attorney General may direct.
(c) Priority Countries.--The Attorney General, in providing
increased training and technical assistance programs under this
section, shall give priority to those countries where such programs can
be carried out most effectively and with the greatest likelihood of
reducing counterfeit and pirated products in the United States market,
of protecting the intellectual property rights of United States
persons, and of protecting the interests of United States persons
otherwise harmed by violations of intellectual property rights in those
countries.
(d) Authorization of Appropriations.--There are authorized to be
appropriated for each fiscal year such sums as may be necessary to
carry out this section.
Subtitle D--Coordination, Implementation, and Reporting
SEC. 531. COORDINATION.
The IP officer shall ensure that activities undertaken under this
title are carried out in a manner consistent with the joint strategic
plan developed under section 321.
SEC. 532. ANNUAL REPORTS.
Not later than 1 year after the date of the enactment of this Act,
and annually thereafter, the Attorney General shall submit to the
Committees on the Judiciary of the Senate and the House of
Representatives a report on actions taken to carry out the requirements
of this title, including a report on the activities of the IP Officer.
Mr. Berman. At this point, I would like to recognize the
chief sponsor of this legislation, the Chairman of the full
Judiciary Committee, and our great friend and champion on these
issues, Chairman Conyers.
Mr. Conyers. Thank you very much, Howard Berman, Committee
Chair on Intellectual Property. I may be the one that put this
bill out, but I didn't name it PRO-IP, the Prioritizing
Resources and Organization for Intellectual Property Act of
2007. We have strong support on both sides of the aisle and we
think this is very important in the fight to maintain our
competitive edge in a global marketplace.
By providing additional resources for enforcement of
intellectual property, we ensure that innovation and creativity
will continue to prosper in our society. I don't even know why
I am talking about why we need this legislation. It is pretty
clear, or it ought to be. Contrary to popular views expressed
online, this bill is for the American people, not a specific
industry. Counterfeiting and piracy cost the United States
750,000 jobs. Secondly, it hits the economy of our country
somewhere between $200 billion and $250 billion every year in
lost sales.
Moreover, counterfeiting of items such as pharmaceuticals,
aircraft, and auto parts is placing human lives at risk. Right
now, fake and unsafe drugs, inadequate brake pads, aircraft
parts, undetectable to the average unsuspecting citizen--are
being passed off as the real thing. Consumer Reports
investigators have seized brake pads made of kitty litter,
sawdust, dried grass; smoke alarms with phony product safety
certifications; toothpaste made with a chemical found in
antifreeze; cell phone batteries that have a potential to
explode.
We have two options. The first is we can sit on our hands
and do nothing, or we can try to make a difference. This bill
is our attempt at the latter. There are concerns over some of
these provisions that I just want mentioned. First, there are
some people claiming that section 104 of this legislation, the
provision allowing a court to consider whether to award
statutory damages for each work in a compilation will result in
opportunistic lawsuits that would drive some smaller companies
out of business.
Well, we are always watching lawyers that are hustling the
system, so that goes with the turf. That is part of the
problem. But, I believe the current law is outdated. Damages
need to reflect the fact that we live in a world where music
and published works are being consumed in bite-size pieces, not
just in albums or whole books. I understand the concerns, and I
want everyone to know that I am committed to working further on
the issue.
On the issue of civil forfeiture, some think the bill will
allow the seizure of a family's general purpose computer in a
download case. Well, it is already in the law. We want to make
sure that it is not abused. H.R. 4279 builds this current civil
forfeiture law by enabling the seizure of property used to
commit or facilitate violations of law. A warehouse used to
store counterfeit goods could be seized. Property used to
transport goods would be subject to forfeiture.
We have carefully crafted the language in these sections to
allow seizure only if the property was owned or predominantly
controlled by the infringer. We have worked with a lot of
different parties--civil rights organizations, Internet service
providers--to arrive at the language that we are going to
examine here this morning. In fact, the provisions were the
subject of extensive negotiations, and I feel comfortable about
it, but we are going to continue discussions. As everybody
knows, you don't start off a bill written in concrete to begin
with.
I am aware of the concerns within the administration over
restructuring the IP enforcement efforts. Yes, we create a new
office of the U.S. intellectual property enforcement
representative in the executive office of the President, as
well as a key leadership position at the Department of Justice.
The new Intellectual Property Enforcement Division that we
envision is to provide better national planning and more
effective coordination and accountability.
So I want to work with DOJ and the administration on how we
can accomplish these goals. Your constructive comments are
going to be carefully considered. We have worked hard. We have
a bipartisan bill. We have the Teamsters, the Directors Guild,
AFTRA, SEIU, United Here, laborers, AFM, OPEIU, the Coalition
Against Counterfeiting and Piracy, the Motor Equipment
Manufacturing Association, even PhRMA, NBC Universal, and
others.
These are the ideas that I have that I am happy to start
this discussion off with this morning, Mr. Chairman. I
appreciate your courtesy.
Mr. Berman. Thank you very much, Chairman Conyers.
I am now pleased to recognize the Ranking Member of our
Subcommittee, Howard Coble.
Mr. Coble. Thank you, Mr. Chairman. I want to initiate my
comments by thanking you for the leadership that you have
demonstrated in chairing what I regard as the Judiciary's best
Subcommittee generally. I want to thank you specifically for
having convened this hearing today. On the rare occasions, Mr.
Chairman, that you and I have not seen eye to eye on certain
issues, we have without exception disagreed agreeably.
Along with my colleagues who are cosponsors of this
bipartisan bill, I share the view that this Congress must act
to provide more effective tools and resources for those charged
with combating piracy and counterfeiting. Indeed, I support the
overwhelming majority of the provisions contained in this bill,
and I hope to be able to add my name to that growing list at
some point in the near future.
Prior to doing so, however, I believe it is in the
interests of copyright holders and users to have further
conversation and to develop a better understanding about the
potential impact of section 104, which relates to the
computation of statutory damages in certain categories of
copyright infringement actions. This, Mr. Chairman, as you and
I have discussed earlier, is a complex issue.
I appreciate your understanding of my concerns and your
suggestions that the Copyright Office should, as soon as
practicable, commence a roundtable dialogue among the broad
cross-section of interested stakeholders, with the goal of
providing further recommendations to our Subcommittee. I
support this process, and want to take this opportunity to
publicly encourage anyone with concerns about section 104 to
fully participate in this proposed dialogue.
Mr. Chairman, earlier this year, you will recall that
Attorney General Gonzales appeared before the full Judiciary
Committee to discuss a range of issues involving the Department
of Justice. During the question and answer period, I asked the
Attorney General to specifically address concerns that his
department may lack the necessary tools to investigate and
prosecute high-level intellectual property cases. I also asked
him for guidance as to what steps we could take to more
successfully prevent or prosecute counterfeiting and
intellectual property piracy crimes within the United States
and abroad.
I was impressed with the breadth and candor of General
Gonzales' unscripted response. He talked about the importance
of increasing our level of cooperation with friends and allies
around the world, as well as the need to improve communications
and education efforts targeted at American consumers. He
stressed the determination and sophistication of criminals and
terrorists who will pay to advance technology by offering top
dollar for the top innovators.
The Attorney General described the department's engagement
as an escalating real war that is being waged over the Internet
through technology, and he candidly offered, ``I do sometimes
worry that we don't have the best minds on this. We don't have
adequate resources, and I think this is something that I would
love to talk to the Congress about because I worry about this
very much.'' General Gonzales also noted that you always need
more FBI agents because these are very, very complicated cases.
Mr. Chairman, the bill before us today is one that has been
drafted with a high degree of deliberation, thought and
sensitivity to the concerns expressed by former Attorney
General Gonzales. I might add that they have been shared by
many of us on this Subcommittee for some time. The views of the
department, as well as other executive branch agencies and
entities involved in enforcing and protecting IP rights have
been weighed and given a great deal of consideration.
That said, the bill includes two bold new proposals. The
first will establish an Office of the United States
Intellectual Property Enforcement Representative in the
executive office of the President that is modeled, but on a
much smaller scale, after the organic legislation that
established the Office of the United States Trade
Representative.
The second will establish a new IP Enforcement Division at
the Department of Justice that will ensure that IP enforcement
issues, which are often forced to compete with other valid
departmental priorities for scarce investigative and
prosecutorial resources, will be able to receive a high level
of dedicated attention, resources and priority that is
commensurate to their importance to United States rights
holders and to United States law enforcement interests.
Mr. Chairman, I am sure much will be said as we continue to
plow this field, but for the moment I look forward to hearing
from our distinguished panel. I again thank you, Mr. Chairman,
for having convened this hearing, and I yield back.
[The prepared statement of Mr. Coble follows:]
Prepared Statement of the Honorable Howard Coble, a Representative in
Congress from the State of North Carolina, and Ranking Member,
Subcommittee on Courts, the Internet, and Intellectual Property
Thank you, Mr. Chairman, for convening this hearing on the newly-
introduced anti-counterfeiting and piracy bill, your friendship and
your leadership of this Subcommittee.
On the few occasions you and I have not seen eye to eye on an
issue, I have respected the fact that we have, as they say back home,
been able to disagree without being disagreeable.
Along with my colleagues who are cosponsors of this bipartisan
bill, I share the view that this Congress must act to provide more
effective tools and resources to those charged with combating piracy
and counterfeiting.
Indeed, I support the overwhelming majority of provisions contained
in this bill and I hope to be able to add my name to that growing list
at some point in the near future.
But before doing so, I believe it is in the interests of copyright
holders and users to have a further conversation and to develop a
better understanding about the potential impact of section 104, which
relates to the computation of statutory damages in certain categories
of copyright infringement actions.
This is a complex issue. I appreciate your understanding of my
concerns and your suggestion the Copyright Office should, as soon as
practicable, commence a dialogue among a broad cross-section of
interested stakeholders with the goal of providing further
recommendations to our Subcommittee.
I support this process and want to take this opportunity to
publicly encourage anyone with concerns about section 104 to fully
participate in this planned dialogue.
Mr. Chairman, earlier this year, General Gonzales appeared before
the full Judiciary Committee to discuss a range of issues involving the
Department of Justice.
During the Q and A period, I asked the Attorney General to
specifically address concerns that the Department may lack the
necessary tools to investigate and prosecute high-level intellectual
property cases.
I also asked for guidance as to what steps we can take to more
successfully prevent or prosecute counterfeiting and intellectual
property piracy crimes within the U.S. and abroad.
I was impressed with the breadth and candor of General Gonzales'
unscripted response.
He talked about the importance of increasing our level of
cooperation with friends and allies around the world as well as the
need to improve communications and education efforts targeted at
American consumers.
He stressed the determination and sophistication of ``[c]riminals
and terrorists [who] will pay to advance technology'' by offering ``top
dollar for the top innovators.''
The Attorney General described the Department's engagement as an
escalating ``real war that is being waged over the Internet'' through
technology and he candidly offered:
I do sometimes worry that we don't have the best minds on this,
we don't have adequate resources. And I think this is something
that I would love to talk to Congress about because I worry
about this very much.
General Gonzales also noted, ``[y]ou always need more [FBI] agents,
because these are very, very complicated cases.''
Mr. Chairman, the bill before us today is one that has been drafted
with a high degree of deliberation, thought and sensitivity to the
concerns expressed by General Gonzales. Concerns, I might add, that
have been shared by many of us on this Subcommittee for a long time.
The views of the Department as well as other executive branch
agencies and entities involved in enforcing and protecting IP rights
have been weighed and given a great deal of consideration.
That said, this bill includes two bold new proposals.
The first will establish an Office of the U.S. Intellectual
Property Enforcement Representative (USIPER) in the Executive Office of
the President that is modeled, but on a much smaller scale, after the
organic legislation that established the Office of the U.S. Trade
Representative.
The second will establish a new IP Enforcement Division at the
Department of Justice that will ensure that IP enforcement issues,
which are often forced to compete with other valid departmental
priorities for scarce investigative and prosecutorial resources, will
be able to receive a level of dedicated attention, resources and
priority that is commensurate to their importance to U.S. rights-
holders and to U.S. law enforcement interests.
Mr. Chairman, I plan to have much more to say later about the
specific solutions contained in H.R. 4279 but for now, I'm interested
in giving our witnesses an opportunity to speak. With that, I yield the
balance of my time.
Mr. Berman. Thank you very much, Mr. Coble.
Now, I am pleased to recognize the Ranking Member of the
House Judiciary Committee, and a cosponsor of this legislation,
Congressman Lamar Smith.
Mr. Smith. Thank you, Mr. Chairman. I want to thank you, as
well as Ranking Member Coble, for having a hearing on this
important bill. I notice that it is, of course, bipartisan.
There are five Republican and five Democrat original
cosponsors, which augurs well for its success in this Congress,
or more likely next year.
I also want to point out, and I don't know who came up with
it, that the acronym for H.R. 4279 is PRO-IP, which is very
appropriate, and not a surprise. One of my favorite quotes is
from the last days of the 19th century, in 1899, when the
patent commissioner himself, Charles Duell, said ``Everything
that can be invented has been invented.'' With all due respect
to Mr. Duell, over 100 years later, it is abundantly clear that
he was wrong.
As we stand at the dawn of the 21st century, lawmakers must
be willing to reexamine assumptions and consider new
initiatives that help promote America's vital national and
economic interests. Doing more of what has been done before is
simply not good enough. We must work to improve the policies
and institutions of the past to promote the ideas of the
future.
One specific area that should be provided more permanence
and priority in our government is the promotion, protection and
enforcement of intellectual property rights. The value of U.S.
intellectual property is estimated at between $5 trillion and
$5.5 trillion--an amount that is about 45 percent of our
country's gross domestic product. America's IP industries
provide valuable employment opportunities to tens of millions
of our citizens.
One recent study attributed 40 percent of the growth in GDP
achieved by all private industry to U.S. IP industries alone.
That same study concluded that nearly 60 percent of U.S. export
growth is driven by international demand for the products and
services created by our IP entrepreneurs. Significant
investments are required to create and produce world-leading
intellectual property. Unfortunately, those investments are in
stark contrast to the easy, massive, unauthorized reproduction
and distribution of fraudulent and unlicensed products and
services. It is undisputed that the theft of U.S. IP costs
American businesses their markets and American citizens their
livelihoods.
In cases that involve products such as fake
pharmaceuticals, auto parts or aircraft parts, American
consumers may even face debilitating injuries or even death.
The ill-effects of counterfeiting and piracy cannot be
catalogued by merely reciting statistics and cold mathematical
calculations of economic costs alone. Neither, as I stated
earlier, can we meet the new challenges and techniques employed
by sophisticated counterfeiters and pirates by merely doing
more of what has been done before.
Our response to these threats must be proportionate to the
harm inflicted. Among other efforts, our private and public
activities must be directed towards, one, improving consumer
education; two, enhancing communication and coordination among
government departments and agencies involved in IP enforcement;
and three, providing the resources to meet the challenges of
protecting IP in an age of advanced technologies and
globalization.
Chairman Conyers, if he is still here--he is gone--but in
any case, I want to commend him for the deliberate and
transparent manner in which this bill was drafted. I also
commend the work of the Bush administration, which has done
more to elevate IP enforcement than any previous
administration, in my judgment.
Finally, I want to recognize the work of the Coalition
Against Counterfeiting and Piracy, which succeeded this year in
enlisting and uniting hundreds of businesses, associations and
labor organizations in the fight against global IP theft.
Protecting intellectual property is critical to preserving a
strong economy. This bill protects American jobs, encourages
innovation, and creates strong policies to protect the ideas of
the future.
Unlike Mr. Duell, I believe that we have merely scratched
the surface of creativity and invention. I look forward to a
productive discussion about ways to promote the efforts of
American businesses and help preserve a strong American
economy.
Mr. Chairman, thank you for yielding to me, and I will
yield back.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of the Honorable Lamar Smith, a Representative in
Congress from the State of Texas, and Member, Subcommittee on Courts,
the Internet, and Intellectual Property
Thank you, Mr. Chairman and Ranking Member Coble, for scheduling
this important legislative hearing on H.R. 4279, a bill known as the
PRO-IP Act.
During the waning days of the 19th century (1899), the Patent
Commissioner, Charles H. Duell, remarked ``everything that can be
invented has been invented.''
With all due respect to Mr. Duell, over 100 years later it is
abundantly clear that he was wrong.
But as we stand at the dawn of the 21st century, lawmakers must be
willing to reexamine assumptions and consider new initiatives that help
promote America's vital national and economic interests.
Doing more of what's been done before is simply not good enough. We
must work to improve the policies and institutions of the past to
promote the ideas of the future.
One specific area that should be provided more permanence and
priority in our government is the promotion, protection and enforcement
of intellectual property rights.
The value of U.S. intellectual property (IP) is estimated at
between $5 and $5.5 trillion--an amount that is about 45 percent of our
country's Gross Domestic Product (GDP).
America's IP industries provide valuable employment opportunities
to tens of millions of our citizens.
One recent study attributed 40 percent of the growth in GDP
achieved by all U.S. private industry to U.S. IP industries. That same
study concluded that nearly 60 percent of U.S. export growth is driven
by international demand for the products and services created by our IP
entrepreneurs.
Significant investments are required to create and produce world-
leading intellectual property. Unfortunately, those investments are in
stark contrast to the easy, massive unauthorized reproduction and
distribution of fraudulent and unlicensed products and services.
It is undisputed that the theft of U.S. IP costs American
businesses their markets and American citizens their livelihoods.
In cases that involve products such as fake pharmaceuticals, auto
parts or aircraft parts, American consumers may even face debilitating
injuries or even death.
The ill effects of counterfeiting and piracy cannot be catalogued
by merely reciting statistics and cold mathematical calculations of
economic cost alone. Neither, as I stated earlier, can we effectively
combat the new challenges and techniques employed by sophisticated
counterfeiters and pirates by merely doing more of what's been done
before.
Our response to these threats must be proportionate to the harm
inflicted. Among other efforts, our private and public activities must
be directed towards:
1) improving consumer education;
2) enhancing communication and coordination among government
departments and agencies involved in IP enforcement; and
3) establishing vigorous new organizations and leadership that
are engineered to capitalize on the solid foundation laid by
this Administration and providing the resources to meet the
challenges of protecting IP in an age of advanced technologies
and globalization.
Chairman Conyers, I commend the deliberate and transparent manner
in which this bill was drafted. I also commend the work of the Bush
administration, which has done more to elevate IP enforcement than any
previous administration.
Finally, I want to recognize the work of the Coalition Against
Counterfeiting and Piracy (CACP), which succeeded this year in
enlisting and uniting hundreds of businesses, associations and labor
organizations in the fight against global IP theft.
Protecting intellectual property is critical to preserving a strong
economy. This bill protects American jobs, encourages innovation and
creates strong policies to protect the ideas of the future.
Unlike Mr. Duell, I believe that we have merely scratched the
surface of creativity and invention. I look forward to a productive
discussion about ways to promote the efforts of American businesses and
help preserve a strong American economy.
With that, I yield the balance of my time.
Mr. Berman. Thank you, Mr. Smith.
I will recognize myself for an opening statement at this
point.
From Chairman Conyers, Howard Coble and Lamar Smith, we
have had a good picture of the devastating impact of
counterfeiting and piracy on our economy, on our health and on
our safety. I share their desire to prioritize and better
coordinate U.S. efforts at enforcing our intellectual property
rights here and abroad.
We will be hearing from the witnesses shortly to get their
thoughts about this legislation and speak to any problems they
see with it. I would like to note a couple of issues at the
outset, rather than focus on that which has already been said.
There were many suggestions proposed, such as allowing
wiretapping for intellectual property crimes, or criminalizing
attempted copyright infringement--both of which were purposely
not included in this bill. I fought very hard to make sure that
the death penalty would not appear either. [Laughter.]
The Chairman and the Ranking Member of the Committee and
their staffs worked very hard at trying to vet through many
proposals to find an appropriate balance. Therefore, in
addition to what was excluded from the bill, there were a
number of provisions which underwent significant revisions to
accommodate additional concerns. Furthermore, we met with the
Department of Justice about some of their apprehensions, and
our door remains open to try and constructively resolve our
mutual concerns.
My Ranking Member, Mr. Coble, has raised a good point about
examining the possible effect of the change in statutory
damages language in section 104 of the bill. In the course of
the discussion of the provision, it became clear that there are
a number of questions about the state of current law and the
scope of this change as it relates to compilations and
derivative works.
But in this age where technology makes it possible and
appealing to offer and purchase copyrighted materials either in
compilations or in disaggregated formats or both, it would be
irresponsible to ignore the policy implications of a provision
that limits damages for compilations which in reality contain
any number of valuable works. As such, I have asked, as Mr.
Coble has mentioned, the Copyright Office to convene a series
of meetings about this issue with the various parties.
An additional point: While the bill represents a good
compromise on a number of issues, I believe we shouldn't
overlook many of the main issues facing owners and users today.
As we approach the 10th anniversary of the Digital Millennium
Copyright Act, we should be analyzing some of the protections
we gave to intermediary services such as ISPs, and some
exemptions provided to educational institutions, and the
effectiveness of the takedown notice and procedure.
We should also examine whether filtering technologies have
advanced enough today that there should be some obligation to
adopt them where appropriate. Mr. Boucher and I have even
talked about this, and if he and others on the Committee feel
that the review by the Librarian of Congress every 3 years on
the ability to make fair use of copyrighted works, protected by
digital rights management, is inadequate, we should look at the
review process and discuss H.R. 1201 at that time as well.
In other words, there are a number of issues this bill
isn't addressing that come down on both sides of the debate
that goes on about copyright in this new digital age. We don't
want this bill to keep from having a discussion about those
issues, but I think there is a logic to dealing with those
issues in a separate framework.
We saw recently a number of user-generated content sites
and copyright owners sit down and negotiate an agreement which
acknowledged the need for filtering and the importance of fair
use. It would be nice if more companies could strive for the
gold standard in terms of corporate copyright policy. With IP
being one of America's top exports and the source of numerous
jobs employing a huge sector of the economy, I don't see how we
can afford not to prioritize intellectual property enforcement.
Now, I think, contrary to the usual practice in the
Committee, we may have other Members who want to make opening
statements. Mr. Boucher, might you be one of them? I recognize
Congressman Boucher.
Mr. Boucher. Mr. Chairman, in the interest of bipartisan
harmony, if there are Republican Members who would like to make
a statement, it probably is time for the transition to go to
that side of the aisle.
Mr. Berman. Well, I hesitated, as we had done two on that
side of the aisle, and now we are----
Mr. Boucher. You are looking for balance here, is what you
are saying.
Mr. Berman. Go ahead.
Mr. Boucher. I thank both gentlemen very, very much.
Thank you, Mr. Chairman. There is much in this legislation
that I support, and I also want to commend you and Chairman
Conyers and Mr. Smith and Mr. Coble for bringing it forward.
Let me also say that I appreciate the suggestion that you
just made, Chairman Berman, that we should look perhaps at a
broader range of issues. I welcome the suggestion that perhaps
elements of H.R. 1201 and the fair use protections that it
involves could be examined as a part of this overall
comprehensive discussion.
I want to make just a couple of comments today about some
concerns that I have about the increase in statutory damages
for compilations that would be contemplated by section 104 of
the bill. That increase in statutory damages, in my opinion,
would do little or nothing to deter willful infringers. There
are already ample statutory damages directed at them. Those
statutory damages are not deterring their conduct. They frankly
don't think about that. They don't fear enforcement. The
increase in statutory damages is not going to cause them to
change.
But there are legitimate companies that make devices that
have the ability to record from TiVos to iPods to software
products that facilitate the devices that have recording
functions and that involve transmissions over the Internet,
that always weigh the risk of a finding of secondary copyright
infringement that would arise because of the infringing conduct
of the users of those devices or software products or services,
and then weigh that particular risk against the fair use
privilege that they also have in the law to introduce those
products or services.
A balance based on that analysis is achieved, and then the
decision is made as to whether or not to introduce that product
and to involve themselves in that level of innovation. If we
increase the statutory damages, we inevitably will increase the
risk component of that analysis. And the effect on innovation
will be real and it will be adverse. I would direct Members'
attention to the letter that this Committee received from
America's leading technology companies that produce software
and services that involve copying and transmission as evidence
of the effect that this measure would have on innovation.
I think that perhaps as a part of the general larger
conversation that the introduction of this bill might engender,
that the time may have arrived when we consider a change in the
way that we apply statutory damages. Bear in mind that anyone
who can show actual damages because of either direct copyright
infringement by an infringer, or because of secondary copyright
infringement by a manufacturer of a product or service, can
already get the actual damages that that individual can show he
or she has sustain. We would not interfere with that.
But the time may have arrived when we consider de-coupling
the award of statutory damages for direct infringers on the one
hand--the people who are willfully infringing copyright
directly, and the award of statutory damages for indirect
infringement, which would be secondary liability of device
manufacturers. I have actually introduced a bill--Mr. Berman
referenced that--that would remove the statutory damage
liability with regard to secondary infringement. Perhaps the
time for that de-coupling has now arrived. If we do that, that
would address the concerns of the technology companies that
have raised objections to section 104.
There are other problems with section 104, which I won't
burden the Committee with at this point, and we can discuss
those at the proper time. I am sure some of the witnesses today
will have some comments about those as well. But I would simply
like to suggest that we not run the risk through this measure
of retarding American innovation. That innovation is incredibly
important.
There was a study released last year that shows that
companies that depend upon fair use as the legal foundation for
their products or services, contribute fully 16 percent of
American gross domestic product. They have annual combined
revenues of $2.2 trillion per year. They employ one of eight
Americans. It is critically important that we not dampen the
innovation that has led to that economic success and that
engenders that amount of economic contribution.
Thank you, Mr. Chairman. I yield back.
Mr. Berman. Thank you.
I would remind the Committee that there is no mandate for
any particular technology in this bill, and there is no mandate
in the Committee rules that every Member needs to have an
opening statement.
With that, I recognize for an opening statement Mr. Issa.
Mr. Issa. Thank you, Mr. Chairman. Thank you for
recognizing my wanting to be recognized.
I want to associate myself, oddly enough, with both Mr.
Boucher and with the Chairman, because I believe that both are
essential when the final passage of this bill occurs. I am a
cosponsor of this bill and very proudly so. I believe that we
have to put real teeth into enforcement.
I do share the concern of Mr. Boucher that statutory
damages for real disputes about what is or isn't fair use.
Statutory damages, when you are dealing with, let's just say
$100 million-plus companies on both sides, who might also be
dealing in patent at the same time as they are dealing in
copyright. We have no statutory rules, no per-piece minimum
damages on a patent infringement. As a patent holder, some
might say we should. But it is very clear that we do have to
look carefully at the difference between a dispute about what
is legitimate use and what isn't, versus those who wantonly use
somebody else's intellectual property.
Now, many people know that I came out of hardware
production. I came out of the consumer electronics industry,
which I note is one of the signatories to this grand alliance
of companies with concerns. I would say that one of the things
that people don't understand is that although the industry has
concerns, the industry is also constantly being adversely
affected.
Taking only my former company that I have no economic
interest in at all today, but I have a history. That history
includes having my own voice that said ``protected by vipers,
stand back'' stolen and used by others for profit, with no
payment. I also had my major brand names, and in fact clones of
my car security products, high-end home audio and car audio
products duplicated, mostly in China, but not exclusively, and
brought to this country to not only be sold, but for the
defectives to come back to me, never having made the original
sale.
Those occur every day and they are not covered by patents,
that in fact teeth in protection of copyright, trade dress and
other protections are equally essential to patent protection on
products, and particularly as consumer electronic products tend
to become commoditized, except for their origin or source. The
name Sony or Panasonic, et cetera, mean something and give you
a premium over something produced somewhere in mainland China
and delivered with a name that usually is not known.
I believe therefore that we do have to make a
differentiation between a dispute of a product like Slingbox,
the dispute of a product like TiVo, where in fact the court
needs to be available to both sides to enter into whether or
not they are fairly using and fairly paying for intellectual
property. But it is very, very clear that we should not be
putting additional statutory demands that would simply cause
these products not to be innovated.
Therefore, I look forward to working not just on the
bipartisan basis of the 10 of us who cosponsored this bill, but
with those who are presently concerned, to make this bill not
just good, but as close to revolutionary in protecting
intellectual property, both here and on that 60 percent of
products that we export.
With that, I would yield back, in the nick of time.
Mr. Berman. I don't know how many revolutionary efforts my
heart can stand working with you, Mr. Issa. [Laughter.]
Mr. Issa. Well, three or four ought to do it. And we can
look at the death penalty again if we can't get statutory.
Mr. Berman. I know Mr. Sherman had an opening statement, so
I will recognize Mr. Sherman.
Mr. Sherman. Thank you, Mr. Chairman.
The theft of intellectual property and counterfeiting costs
U.S. businesses $250 million annually. It is 6 percent to 9
percent----
Mr. Issa. Billion.
Mr. Sherman. Did I say ``billion''?
Mr. Issa. You should.
Mr. Sherman. I should say ``billion.'' Thank you, Mr. Issa.
It accounts for 6 percent to 9 percent of world trade
annually. It steals 750,000 American jobs, including 200,000 in
the auto industry and the auto parts industry, and 106,000 jobs
just in the Los Angeles area, robbing our area of $5.2 billion
in productivity, according to a Gallup study.
As Chairman Conyers pointed out, it is also a consumer
safety issue. Worldwide some 10 percent of all pharmaceuticals
are counterfeit, 2 percent of all airplane parts are
counterfeit as well. And finally, it is a threat to national
security. The 1993 World Trade Center bombings were partially
financed through the sale of counterfeit goods, and just a
couple of years ago over $1 million of counterfeit brakes were
found in Lebanon with the profits earmarked for Hezbollah.
So clearly, we ought to do all we can. I commend the
Chairman for introducing this legislation. Several months ago,
I introduced, along with Mr. Chabot, Mr. Cohen, and Mr.
Donnelly, the Intellectual Property Rights Enforcement Act. We
have the support of the National Manufacturers Association, and
the AFL-CIO.
I take, however, no particular pride of authorship in this
bill, because it is a 100 percent rip-off of the Bayh-Voinovich
bill introduced in the Senate. This does not mean that I don't
respect intellectual property rights. I am a fully licensed
user of the Bayh-Voinovich bill. We could spend a lot of time
worrying about the differences between the two approaches.
Frankly, I think those can get ironed out rather quickly, and I
think the greatest sage in America today is Larry the Cable
Guy, when he said, ``git'er done.'' Let us move forward and get
a bill passed that organizes the American government to deal
with this major problem.
I yield back.
Mr. Berman. I thank the gentleman.
Mr. Goodlatte?
It would be great if we could finish opening statements
before we have to go for our 15-minute and three 5-minute
votes. I think we ought to come back and hear the witnesses.
[Laughter.]
Mr. Goodlatte?
Mr. Goodlatte. Thank you, Mr. Chairman. I will abbreviate
my statement.
Because the United States has been the pioneer for
intellectual property protections, it is no surprise that
copyright industries are so successful and are so crucial to
our national economy. The U.S. copyright industry has created
millions of high-skilled, high-paying U.S. jobs and has
contributed billions to our economy.
However, the proliferation of copyright piracy in America
is growing and is threatening to undermine the very copyright
protections our founding fathers envisioned. The same fast
Internet connections and innovative technologies that continue
to bring us wonderful new products can also be used to
download, upload and otherwise share illegal copies of songs,
movies, games and software at an unprecedented level.
To combat this rising theft, I am pleased to cosponsor this
legislation which strengthens many provisions in the law,
including increasing penalties for civil violations and repeat
offenders, allowing treble damages in counterfeiting cases,
increasing statutory penalties in counterfeiting cases, and
increasing the maximum penalties for trafficking in counterfeit
goods when those offenses endanger public health and safety.
The bill creates an Office of U.S. IP Enforcement
Representative within the executive office of the President to
coordinate all the various agencies and departments that work
on IP enforcement issues and to serve as the President's
principal advisor for IP matters. In addition, it increase the
number of IP liaisons from the Patent and Trademark Office in
U.S. embassies around the world, and enhances the Department of
Justice's computer crime units to make sure they are equipped
and being used to prosecute IP violations.
While I am a cosponsor of this legislation and believe it
is a very good start, I also acknowledge that the bill is not
perfect, and note that some of the technology and online
sectors and the Internet users community have raised concerns
about the effect that some of the damages provisions in the
bill could have on innovation and their legitimate operations.
I look forward to working with the Chairman and others on these
issues as we consider this comprehensive update of our Nation's
intellectual property laws.
I yield back.
Mr. Berman. I thank the gentleman.
The gentlelady from Texas, Sheila Jackson Lee.
Ms. Jackson Lee. Thank you very much, Mr. Chairman.
I am very pleased to join as an original cosponsor of this
legislation. As I look at the witnesses and can imagine the
diversity of their statements, I might offer the thought that
Americans are not absolutely against trade. They just want it
to be a two-way street and they want it to work for them.
The same thing with this question of piracy and the
stealing of our creativity. What it does is it dumbs down the
American genius and simply we have to protect that. That is
what this legislation stands for--the opportunity for us to be
creative and the opportunity for trade to be a two-way street.
Enforcement has to be the key of moving us into the 21st
century to ensure that more of us create and more of us have
our creations protected.
I thought one of the glaring insults of this piracy and
trademark violation had to do with the incident in June, where
counterfeit toothpaste containing a dangerous chemical was
distributed and sold to U.S. consumers under a trademark owned
by the company Colgate-Palmolive. The trademark holders were
forced to apologize for the ill-effects of a product they had
no part in creating or distributing, and the company suffered a
loss of both reputation and sales.
As we make our way through this legislation, I am
considering and would hope that we would consider an
enhancement of penalties on the trademark violation if, for
example, there is an injury, a physical injury or an injury in
some other form, so that there is an increased penalty, not a
tort action, but an absolute increased penalty as it results in
the harm to the individual who may have consumed the particular
product.
Mr. Chairman, I think this is an important step forward.
Enforcement has to be the key to protect what is ours, and
certainly to build our trade and effectively protect our
creativity. I believe this is an important step and important
legislative initiative.
With that, I will yield back.
Mr. Berman. Thank you.
We have about 7 minutes. I don't want to put my friend from
California under the notion of what she says----
Would you like to make your statement when we come back?
Ms. Lofgren. I will make a statement of about 2 minutes.
Mr. Berman. You got it.
Ms. Lofgren. I just would like to say that the hearing we
had in October I thought was a good one, focusing on
international piracy and what can bring us together. One of the
things I note is that when we inspect less than 1 percent of
the containers coming into the United States, this bill is not
going to stop the piracy that we see that infuriates us,
especially in China and in Russia. There are parts of this bill
that I think are important. I would like to say I am deeply
troubled by section 104 and I would ask unanimous consent to
put in the record a letter signed by myself, Congressman
Sensenbrenner, and Congressman Boucher, including a letter
signed by 25 law intellectual professor law professors,
expressing concern on section 104.
Mr. Berman. That will be included in the record.
[The information referred to is available in the Appendix.]
Ms. Lofgren. Thank you.
I do believe, as Mr. Boucher has indicated, that the
statutory damages would have the effect of chilling innovation
and preventing economic growth. It is of grave concern to me.
There are other elements of the bill that I am sure we can
work together on, but absent some modification, these statutory
damages would provide for $1.5 million in statutory damages for
a single CD. I think that is unreasonable, and I look forward
to continuing to work with my friend from California on this.
I would yield back.
Mr. Berman. I can't resist pointing out that the 104
authority is a discretionary authority. It is not a mandate.
Ms. Lofgren. If I could just note, the courts have plenty
of discretion right now and this section is unnecessary, but we
will have a long dialogue on this, I am sure.
Mr. Berman. I am sure we will. I didn't want my silence to
be acquiescence. [Laughter.]
I would recognize the gentlelady from Ohio, Ms. Sutton.
Ms. Sutton. Mr. Chairman, I will put my statement into the
record. Thank you.
Mr. Berman. Okay. Thank you very much.
[The prepared statement of Ms. Sutton follows:]
Prepared Statement of the Honorable Betty Sutton, a Representative in
Congress from the State of Ohio
Mr. Chairman,
Thank you for calling this important hearing today. I would like to
thank the panelists for their participation and for their thoughtful
remarks.
H.R. 4279, the ``Prioritizing Resources and Organization for
Intellectual Property Act of 2007,'' will help to reduce counterfeiting
and piracy and increase our Nation's economic strength. I want to thank
the Chairman for his efforts to preserve the jobs of my constituents
through enforcement of our intellectual property laws. I hope that we
can continue to work together toward the goal of eliminating
counterfeiting and piracy for the safety and security of all Americans.
Thank you.
Mr. Berman. We will recess for votes. We will be back to
hear the reason we came.
[Recess.]
Mr. Berman. We will resume the hearing. I would like to
introduce our excellent panel of witnesses. For one of the
introductions, I would like to recognize the Chairman of the
Committee, Mr. Conyers.
Mr. Conyers. Thank you, Mr. Chairman.
It is my pleasure to introduce James Hoffa, a Michigander.
He joined the union when he was 18 years old. My father knew
his father. My dad was an international representative for the
United Automobile Workers. Of course, I knew James Hoffa's
father as well. And so I am very proud of him. He is more than
just a powerful labor leader. His interest in human rights,
civil rights, and other issues makes him someone that I am
proud to say comes from Detroit. We have had a good working
relationship for a number of decades now.
Thank you.
Mr. Berman. Thank you, Mr. Conyers.
Going back to the other panelists, Sigal Mandelker is
Deputy Assistant Attorney General in the Criminal Division of
the Department of Justice, and has been since July of 2006. She
supervises the child exploitation and obscenity section, the
computer crime and intellectual property section, the domestic
security section, and the Office of Special Investigations.
Prior to joining the Department of Justice, Ms. Mandelker
served as counselor to the Secretary of Homeland Security, was
an Assistant United States attorney in the Southern District of
New York, and clerked for Justice Clarence Thomas on the United
States Supreme Court, and the Honorable Edith Jones on the
United States Court of Appeals for the Fifth Circuit.
Ms. Mandelker received her bachelor's degree from the
University of Michigan and her law degree from the University
of Pennsylvania.
Chairman Conyers has introduced Mr. Hoffa, who we are very
pleased to have as part of our panel.
Next to him is Gigi Sohn, who is President and Co-founder
of Public Knowledge, a nonprofit organization that addresses
the public stake in the convergence of communications policy
and intellectual property law. Ms. Sohn's comments and articles
on intellectual property and telecommunications matters have
appeared in a variety of publications, including the New York
Times and The Washington Post.
Ms Sohn is a nonresident fellow at the University of
Southern California Annenberg Center, and a senior fellow at
the University of Melbourne faculty of law in Melbourne,
Australia. Ms. Sohn holds a BS in broadcasting and film from
Boston University and a law degree from the University of
Pennsylvania Law School. You can all get together.
Richard ``Rick'' Cotton is Executive Vice President and
General Counsel of NBC Universal. He supervises the NBC
Universal law department, among other duties. Prior to his
appointment, Mr. Cotton held other positions within NBC,
including President of London-based CNBC Europe.
Prior to his work for NBC, Mr. Cotton was in private
practice and served as Deputy Executive Secretary of the United
States Department of Health, Education and Welfare, and was law
clerk to another of my favorite judges, Judge J. Skelly Wright
of the U.S. Court of Appeals for the District of Columbia, and
law clerk to one of my favorite judges, Justice William Brennan
of the United States Supreme Court.
Mr. Cotton holds a law degree from Yale Law School.
None of that should be taken as any comment about either
Edith Jones or Clarence Thomas. [Laughter.]
Without objection, I authorize myself to declare a recess
of the hearing at any point.
I would ask the witnesses now to let you know that your
prepared statements will all be made part of the record in
their entirety. I would ask you now, if you would, to summarize
your testimony in 5 minutes or less. To help you stay within
that time, there is a timing light at your table. When 1 minute
remains, the light will switch from green to yellow, and then
red when 5 minutes are up.
We welcome all of you, and Ms. Mandelker, why don't you
start?
TESTIMONY OF SIGAL P. MANDELKER, DEPUTY ASSISTANT ATTORNEY
GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE,
WASHINGTON, DC
Ms. Mandelker. Thank you, Chairman Berman, Chairman
Conyers, Ranking Member Coble, and Members of this Committee.
Thank you for the opportunity to discuss the efforts of the
Department of Justice to protect intellectual property rights
through criminal enforcement. This Committee has been an
important partner in this effort, and I look forward to
discussing ways in which we can further enhance our efforts to
combat IP theft.
The proliferation of harmful counterfeit products entering
our marketplace, the emergence of organized criminal syndicates
increasingly financed by IP theft, and the exponential growth
of IP crime worldwide emphasize the importance of criminal
enforcement to protecting IP rights.
In addition to establishing the intellectual property task
force within the department to focus greater attention to IP
enforcement efforts, the department plays a key role in
targeted and coordinated administration efforts. First, we are
an integral part of President Bush's strategy targeting
organized piracy, or STOP initiative. We work closely with our
partners in other departments, local and national law
enforcement's rights-holders, and our international partners in
a coordinated and aggressive strategy to fight global
intellectual property crime.
Second, we have significantly increased our domestic
enforcement efforts. We now have over 230 computer hacking and
intellectual property, or CHIP, prosecutors dedicated to these
crimes, and 25 specialized CHIP units spread across the
country. In the Criminal Division, where I work, we have 40
prosecutors in the computer crimes and intellectual property
section, including 14 who are specifically dedicated to
combating IP theft. These efforts are yielding results. In
fiscal year 2007, 287 defendants were sentenced on IP charges,
representing a 35 percent increase over fiscal year 2006 and a
92 percent increase over fiscal year 2005.
Third, with the advent of the Internet and the steady
increase in counterfeit products smuggled across our borders,
we are placing great emphasis on our international efforts. We
now have two intellectual property law enforcement coordinators
stationed overseas--one in Bangkok and one in Sofia, Bulgaria.
Indeed, I just got back from Bangkok, where we launched a new
intellectual property crime enforcement network in Southeast
Asia, with high-level law enforcement and customs officials
from 13 countries.
Of course, IP theft in the People's Republic of China
remains a key concern to the department and the administration.
So we have enhanced our law enforcement relationships with
China's ministry of public security. This past summer, these
efforts resulted in the largest-ever joint FBI-MPS
international piracy operation, resulting in the seizure of
over $500 million worth of counterfeit software and the
dismantlement of what is believed to be one of the largest
piracy syndicates in the world.
Fourth, we are working closely with victim rights-holders,
both by putting on joint training conferences, and most
importantly through our aggressive enforcement actions.
We are also working, of course, with this Committee and
Congress on new policy initiatives and legislative tools to
improve our enforcement efforts. While we are still in the
process of reviewing the PRO-IP Act introduced last week, and
hope to be able to provide more comprehensive comments at a
later time, I wanted to share the administration's preliminary
views toward this legislation.
First, we greatly appreciate that the PRO-IP Act
incorporates a large number of legislative recommendations
contained in the administration's Intellectual Property
Protection Act of 2007. These include provisions to increase
penalties, harmonize and strengthen forfeiture and restitution
provisions, and ensure that exportation and transshipment of
pirated goods to the U.S. are subject to criminal penalties.
I thank you, Chairman Berman and Chairman Conyers, on your
remarks regarding working with the administration on other key
provisions in this bill. As my written testimony reflects, we
do have significant concerns with title V of the act, which we
believe could have a detrimental effect on how the department
conducts intellectual property enforcement.
I see that my time has expired, so in conclusion I would
like to thank you and other Members of the Committee for your
leadership on protecting IP rights. We look forward to
continuing to work with this Committee on the PRO-IP Act and to
identify ways in which to advance our common goal of providing
owners of intellectual property with the robust legal
protections that they deserve.
[The prepared statement of Ms. Mandelker follows:]
Prepared Statement of Sigal P. Mandelker
Mr. Berman. Thank you very much, Ms. Mandelker.
Mr. Hoffa?
TESTIMONY OF JAMES P. HOFFA, GENERAL PRESIDENT, INTERNATIONAL
BROTHERHOOD OF TEAMSTERS, WASHINGTON, DC
Mr. Hoffa. Thank you very much, Chairman Berman, Ranking
Member Coble, and Members of the Subcommittee. It is a great
honor to be here today. I want to thank you for the opportunity
to testify about this very important bill, H.R. 4279. It is
very important because it protects intellectual property rights
and raises the fines for stealing copyrights.
I am here on behalf of the Teamsters Union and our 1.4
million members. I am also speaking for all workers who are
lucky enough to belong to a union, and those who belong to a
guild or an association. I am also speaking for those that are
not as lucky to belong to a union, but we are here to protect
them, too.
Intellectual property theft is a terrible problem for
American workers. As Chairman Conyers said, over 750,000 jobs
have been lost. By the way, I say hello to my great friend, the
great congressman from Michigan, John Conyers. We go back many,
many years.
You know, we are talking about where do we go from here?
How do we protect these jobs at a time that we see America
losing jobs? We see trade deficits out of control. Where do we
start? One of the ways to start is to stop the counterfeiting
and stop the invasion of these products and all the different
things we see coming into our markets.
I also appreciate the fact that there has been tremendous
work done by the Coalition Against Counterfeiting and Piracy.
The job they have done in documenting many of the things that
we are talking about here today is very important. They have
spoken out about these crimes that hurt corporate profits and
take American jobs.
Some people might think that it is no big deal to buy a
knockoff handbag or a fake DVD, but it is. These crimes kill
jobs. They take good jobs and it is in the hundreds of
thousands. As part of our fight for good jobs, my union and
many other unions have battled against so-called ``free trade
agreements'' that open the door for piracy. We fought NAFTA and
we fought PNTR. We have said all along that they kill American
jobs and hurt the American economy, but even in my wildest
dreams did I ever think the damage would be as severe as it is,
or that counterfeiting would be as widespread as it is today.
China is now the biggest source of knockoff products and
pirated goods in the world. There are 88 different companies in
China that make knockoff Yamaha motorcycles. Can you imagine
that? Almost all the personal computers in China use pirated
operating systems. When the Chinese government tried to crack
down on counterfeiting last year, they confiscated 85 million
books, movies and computer discs.
In the United States, if we hadn't agreed to PNTR with
China, we might not now be dealing with tainted food, exploding
cell phone batteries, toxic toothpaste, and defective tires.
Today, China's aggressive export agenda is more than our
country can handle. The part of the bill that creates new
intellectual property enforcement positions within the
executive branch will do much to control and address the
problems we are talking about.
Changes in civil and criminal law to keep pace with new
technologies is also important. This bill is particularly
relevant to my union. We represent workers in many industries
that are hurt by counterfeiting and piracy. Teamsters work very
hard to keep good-paying jobs in this country. We are very
active in the motion picture industry. We also have many
members that are animal handlers, location managers, and
drivers who transport actors around the sets. We are very
active in that industry and we have seen layoffs because of
counterfeiting and knockoffs.
People who steal movies may think that they are not hurting
anyone, but they are. They are stealing 140,000 jobs a year.
They are also stealing millions of dollars from pension and
health and welfare funds that have revenues that are linked to
the sales of DVDs.
The recording industry has been hit even harder than the
motion picture industry. In the past few years, EMI Group,
Warner Music, Sony Music, and Universal Music Group have laid
off thousands of American workers because of theft and
counterfeiting. All told, the American entertainment industry
loses 370,000 jobs to pirates and counterfeiters every year.
Some people think that they have a right to information on
the DVDs and CDs, stuff they can take right off their computer.
They don't think that they are hurting anybody, but in the end
they really are. I think that is wrong. People have a right to
earn money from the intellectual property that they create. By
the way, the Teamsters Union supports our brothers who are very
active in this strike with the Writers Guild. The television
and motion picture industry wouldn't exist without the content
that these proud union members provide.
The Teamsters represent several hundred thousand truck
drivers. According to the Consumer Reports, there is a growing
problem with counterfeiting of brake pads. There are brake pads
that are even made with kitty litter, and we find out that
many, many people have had this problem and we see that there
are problems there.
I see that my time has run out. Let me summarize by saying
this is a continuing problem, and what we have to do is to have
strong legislation to address it. But we have to do more than
that. We have to do something with trade. We have to inspect
what comes into this country, whether it comes across the
border from Mexico or whether it comes in from the Far East. It
is a global problem that all of us can address, and I think
that this bill is a very important beginning to enforcement and
to stop counterfeiting.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Hoffa follows:]
Prepared Statement of James P. Hoffa
Mr. Berman. Thank you, Mr. Hoffa. It is great to have your
support.
And speaking of support, I recognize Gigi Sohn.
TESTIMONY OF GIGI B. SOHN, PRESIDENT AND CO-FOUNDER, PUBLIC
KNOWLEDGE, WASHINGTON, DC
Ms. Sohn. Chairman Berman, Chairman Conyers, Ranking Member
Coble and other Members of the Subcommittee, thank you for
inviting me to speak today on H.R. 4279. I want to thank you
first for keeping the process of looking at this bill open and
inclusive, and I do want to praise you, both Chairmen, for you
and your staff's work in deleting some of the most onerous
provisions, as you mentioned before, Mr. Berman. Thanks are
definitely due to both of you.
While I agree that enforcing IP laws is essential to
encouraging creativity and promoting economic growth, certain
parts of the bill could undermine these goals by threatening
ordinary consumers and legitimate innovators with broad and
inappropriate penalties. I would like to focus specifically on
three provisions.
First, section 104 of the bill would disaggregate the parts
of a compilation or derivative work for the purposes of
calculating damages, multiplying the already massive statutory
damages associated with copyright infringement. Increasing
damages this way will have a severe chilling effect on
legitimate users of copyrighted work and on innovation. This
stands in stark contrast not only to the legislative history of
the 1976 Copyright Act, but also to the goals of the Patent
Reform Act of 2007. The apportionment of damages in that bill
recognizes the harm to innovators inherent in disproportionate
damages awards.
Second, section 202 significantly expands the forfeiture
provisions attached to four different kinds of IP violations,
applying the exact same standards to each. This expansion risks
even further upending rational copyright remedies and ignores
the significant differences between copyright, trademark and
anti-bootlegging laws. Section 202 allows forfeiture of
materials only remotely connected to an infringement, including
materials and devices merely intended to be used in
infringement. It also creates a new civil forfeiture remedy
with a far lower burden of proof.
Third, section 102 eliminates the requirement that
copyrights be registered before criminal enforcement proceeds.
Copyright registration is critical to informing the public of a
work's copyright status and its proper owner. Without a vibrant
copyright registry, users of a work are often unable to find
the copyright owner and obtain permission to use that work.
This leads to orphan works that can no longer be exhibited,
reproduced, or seen. Reducing the incentives for creators and
authors to register their works can only worsen this problem.
These three provisions represent a step away from a
rational, realistic copyright regime, one that can allow a
copyright law enacted before the invention of the VCR to adapt
to a post-YouTube world.
Numerous problems confront current copyright law, but
increased enforcement is not a cure-all. When the mere act of
forwarding your e-mail or posting pictures on your blog can
infringe copyright, it makes more sense to have the law comport
with reality before increasing the sanctions for infringement.
While a complete review and overhaul of copyright law might
be an ideal, I propose a set of six more modest reforms for the
immediate future. They include, one, reforming fair use. With
the introduction of new technologies, courts have recognized
newer forms of fair use like time-shifting and other personal
transformative and incidental uses of copyrighted works yet
these uses continue to be challenged by litigious plaintiffs.
These fair uses should be expressly added to section 107. Fair
use should also be restored to section 1201 of the DMCA and
passing H.R. 1201 would be good place to start. I was pleased
that that is something you might consider, Mr. Chairman.
Two, placing reasonable limits on secondary liability.
Innovators should not be afraid to innovate. Congress should
codify the standards set out in Sony, that technologies with
substantial noninfringing uses are not liable for infringement
committed by others.
Three, preventing copyright abuse. Copyright owners should
be discouraged from filing spurious DMCA takedown notices or
from threatening copyright lawsuits in order to suppress
speech.
Four, providing for fair and accessible licensing.
Licensing provisions need to be clear, simple and rational for
creators and users. The fee that webcasters pay to composers
and performers should be reduced to a reasonable level, and
performing artists should be compensated for public
performances of their works regardless of the medium on which
they are played.
Five, addressing the problem of orphan works. I discussed
that already.
Six, informing consumers of digital restrictions on their
media. Consumers should know before they buy digital media
whether it is restricted by DRM and they should know the legal
penalties for removing it.
Each of these proposals directly addresses a situation
where a consumer innovator might face the already draconian
sanctions of copyright law. If the disconnect between the law
and the reality of copyright isn't tackled first, increasing
the severity of those sanctions further does very little good.
Thank you again for the opportunity to testify and I look
forward to your questions.
[The prepared statement of Ms. Sohn follows:]
Prepared Statement of Gigi B. Sohn
Mr. Berman. Thank you.
Mr. Cotton?
TESTIMONY OF RICK COTTON, EXECUTIVE VICE PRESIDENT AND GENERAL
COUNSEL, NBC UNIVERSAL, NEW YORK, NY
Mr. Cotton. Chairman Berman, Ranking Member Coble and
distinguished Members of the Subcommittee, I thank you for
inviting me here today to testify on H.R.4279. My day job is
executive vice president and general counsel at NBC Universal,
but I appear here today in my role as the chair of the
Coalition Against Counterfeiting and Piracy, or CACP.
The CACP is a broad cross-sector business coalition led by
the U.S. Chamber of Commerce and the National Association of
Manufacturers. The CACP now numbers more than 500 companies and
associations from two dozen different sectors across the
economy who have come together to fight the vital economic
battle against counterfeiting and piracy. I might note that our
coalition includes technology companies, both software and
hardware, all of whom have IP that deserve and need protection.
At the outset, let me quickly emphasize four points, many
of which were addressed by Committee Members in their opening
statements. First, the economic future of the U.S. rests on our
technological invention, our creativity, and our innovation.
Counterfeiting and piracy corrosively and perniciously
undermine that future. IP theft is a jobs issue and that is
what brings the business community and the labor community
before you today united in support of stronger IP enforcement.
IP-dependent sectors drive 40 percent of the growth of the U.S.
economy and 60 percent of the growth of our exportable goods
and services.
Second, counterfeiting and piracy constitute a health and
safety issue that presents a clear and increasing danger to the
public, from counterfeit toothpaste laced with antifreeze to
exploding batteries.
Third, counterfeiting and piracy is the new face of
organized crime. Organized crime goes where the money is, and
today that means piracy and counterfeiting.
And fourth, and this I submit should drive a lot of the
attention of the Committee, counterfeiting and piracy today
simply represent a global pandemic that is getting worse, not
better, in every sector which it afflicts. Over the past 20
years, advances in technology, manufacturing capabilities, and
transportation have allowed organized criminal gangs,
counterfeiters and pirates to escalate the scale and the scope
of their operations to tidal wave proportions. It is not a
criticism to say that our current enforcement is not stemming
the tide. Our efforts to counter this pandemic have simply not
kept pace.
Despite the daunting scope of the challenge there is hope
and a clear path forward. If we are to turn the tide in this
country, we must radically escalate our efforts on many fronts
to protect the economic fruits of our innovation and our
creativity--efforts in the private sector in developing
technology and at the forefront of our discussion today,
government action.
The PRO-IP Act is a needed declaration of war, escalating
the priority of this vital public policy and deploying
dedicated enforcement resources to the battle. We commend the
Committee leadership and their staff who have worked so hard to
pull this important and comprehensive bill together. While the
act does not contain everything the CACP had proposed, it does
recognize three fundamental steps that our government must
undertake in order to make a difference.
Number one, the act creates key leadership positions to
address the challenge of counterfeiting and piracy at the White
House level and within the Department of Justice.
Number two, it mandates a dramatic reorientation of
government strategy to focus on dedicated specialized
resources, including FBI agents and Federal prosecutors
dedicated to IP investigations, money for state and city IP
enforcement programs and international specialists based in
U.S. embassies in key countries around the world.
Number three, it updates several laws that have failed to
keep pace with the burgeoning threat of counterfeiting and
piracy.
In conclusion, two final points. First, these steps are
strongly supported by a powerful new study released today by
Dr. Laura Tyson, former chair of the Council of Economic
Advisors. That study concludes that for every dollar invested
in IP enforcement, Federal tax revenues would increase by four
dollars to five dollars. U.S. economic output would increase
anywhere from $40 to more than $120 for every dollar invested,
and state and local revenues would increase by nearly $1.5
billion.
In conclusion, a plea to the Subcommittee. Every generation
faces new threats and is judged by how quickly it recognizes
and responds to them. Make no mistake about it. The U.S.
business community and the U.S. labor movement have come here
today with a single and simple message: Global counterfeiting
and piracy have reached epidemic proportions and will choke off
future economic growth and future job growth if current trends
continue.
It is not too strong to say that the unprecedented and
explosive scale of counterfeiting and piracy represent a dagger
aimed at the heart of America's future economic security and
the health and safety of our people. My plea to the
Subcommittee is to confront this threat and to take strong,
swift action to enact the PRO-IP Act in this Congress.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Cotton follows:]
Prepared Statement of Richard Cotton
Mr. Berman. Thank you, Mr. Cotton. In your comments about
the revenue impacts of dollars spent on enforcement, I am
wondering if we couldn't calculate the benefits of this bill in
dealing with our appropriations process in these last days--the
creative scoring that frequently has been----
Mr. Cotton. Well, we would ask that Dr. Tyson's study be
included in the record and it might help in that respect, Mr.
Chairman.
Mr. Berman. Good. We will do that.
[The information referred to is available in the Appendix.]
Mr. Berman. I will recognize myself for 5 minutes.
Ms. Sohn?
Ms. Sohn. I am ready. [Laughter.]
Mr. Berman. You made a number of interesting suggestions
and helped set the framework for some of the discussions. I
want to focus on the registration issue first.
I agree we have to turn to orphan works and this Committee
plans to do this early next year. But I am curious about two
aspects of your testimony dealing with your opposition to the
provision in this bill on registration. You talk about the
orphan works problem, and that it is crucial to require
registration before criminal enforcement because you can
minimize the orphan works problem that way. If that is the
case, and I see your point, would you support a carve-out for
registered works from being considered orphaned?
Ms. Sohn. Would I consider a carve-out for registered
works?
Mr. Berman. In other words, you are concerned about us
removing the registration requirement to allow enforcement that
creates potential for many more orphan works, and so then I
say, is the flip-side true? Once it is registered, then it
really isn't orphaned.
Ms. Sohn. That is an interesting idea, but here is the
problem. As you well know, photographers who I know have spoken
to you and who have the most objection to orphan works, fixing
the orphan works problem, it is because the Copyright Office
only has a text-based registry. It is almost impossible, even
if you do a good-faith search, to find that work. So if I am a
photographer and I have a picture of the Statue of Liberty, the
way I register it is a picture of the Statue of Liberty in
text.
So part of the problem is that the current copyright
registry doesn't make it easy to find certain works that are
already registered. So in my mind, it would be unfair to punish
somebody who wanted to use, let's say for a history book, a
picture of the Statue of Liberty, did a good-faith search, but
could not find the owner because there is no way to actually
right now find a picture. I think there is technology that will
allow you to actually scan that picture, but we don't have it
right now.
Mr. Berman. What if you narrowed the carve-out. I take your
point, but there are a lot of works that the act of
registration means you know where the owner is, and you don't
have the problem that you have just raised in those areas.
Ms. Sohn. That is correct. And at that point, a reasonable
search under the last bill we had on orphan works--I am using
the language from that--a reasonable search would come up with
that. That shouldn't be a problem. The problem is that there
are certain instances, particularly visual arts as you well
know, where it is not that easy to find it on the copyright
registry.
Mr. Berman. One more issue on registration. You talk about
the disincentive to register because of the ability to proceed
in criminal enforcement cases without a registration. Yet on
statutory damages, where a registration is required in order to
receive statutory damages or attorney's fees, you talk of the
possibility of damages being so draconian that it forces
excessive damages or settlement and is enough to stifle
innovation.
Wouldn't the possibility of statutory damages and attorney
fees be motivation enough for a copyright owner to register
their work? Isn't the ability to get those statutory damages
and attorney fees far going to exceed the incentive to not
register? And wouldn't this change about the requirement of
registration to bring a criminal case not have repercussions? I
am wondering, given the balance of incentives.
Ms. Sohn. I would agree with you, and that is why I don't
understand why this provision is in this bill.
Mr. Berman. There are some good reasons and I am going to
let--I think rather than go to my next question, I will let Mr.
Cotton develop the reason. It is a narrow, but very important
situation why the provision is in the bill. My only point was,
I can't buy the notion that it is such a huge disincentive for
people who would otherwise register their works not to register
them, given that they lose the chance for statutory damages and
attorney's fees if a registered work is infringed, and they
don't have that opportunity if it is not registered.
But Mr. Cotton, why don't you just----
Ms. Sohn. As you know, you can always register after
infringement happens. Okay? This eliminates the need to, or
might. So if you are not registered and somebody infringes on
your work, you have time to basically fix that and then
register.
Mr. Berman. I think if the infringement--and I am not sure
I know what you think I know, because I am not sure that if the
infringement comes before the registration, I am not sure if
for that infringement you can collected attorney's fees and
statutory damages, but we will find that out.
Mr. Cotton?
Mr. Cotton. Mr. Chairman, I would make two points. From a
public policy point of view, there is simply no reason to tie
the hands of a prosecutor from taking action when there has
been a clear action of copyright infringement, whether or not
there has been a registration. The question is whether there
has been an infringement. In many cases, certainly in the
industry that I come from, where there can be a pre-release
theft of a very valuable piece of work when in fact the
registration cannot have taken place, and there may be very
urgent need for the prosecutor and investigators to move
quickly. There is no reason to tie their hands.
Secondly, from the point of view of incentive, I would just
have to say that I can't conceive that anyone who was
interested in preserving and protecting their IP and which
would allow them access to statutory damages would make the
decision not to register based on the highly uncertain question
as to whether a prosecutor might or might not take up a
criminal case to protect their particular work.
So I would say, (A), from a public policy point of view
there is no reason not to allow prosecution in serious cases.
And secondly, the notion that there is an incentive which would
cause a copyright owner not to register because they would be
relying on the highly unpredictable notion of whether or not
there would be a criminal prosecution is just not in the real
world.
Mr. Berman. My time has more than expired.
Mr. Coble?
Mr. Coble. Thank you, Mr. Chairman, and I thank the
witnesses for appearing this morning.
Ms. Mandelker, it is my belief that IP-related criminal
offenses traditionally have not enjoyed a high prosecutorial
priority. I do believe, however, that has improved in recent
times. With that in mind, what percentage of the department's
resources are dedicated exclusively to the investigation and
prosecution of IP-related criminal offenses?
Ms. Mandelker. Mr. Coble, I can't give you a specific
percentage, but I can tell you what resources we do have
dedicated to this important problem. We have 230 computer
hacking and intellectual property prosecutors spread throughout
the country in the various U.S. attorneys' offices. Each U.S.
attorney's office has at least one prosecutor who is specially
trained to work on these types of cases. In addition, within
the U.S. attorneys' offices, we have 25 units of CHIP units,
prosecutors of two or more who are again specially focused on
IP theft.
Within the Criminal Division where I work, we have 40
prosecutors in the computer crimes and intellectual property
section, 14 of which are exclusively dedicated to IP theft. Of
course, this is an issue that is a priority within the
department, and so we have a task force of individuals across
the department who are focused on this problem, including
myself, including somebody in the Attorney General's office and
also in the Deputy Attorney General's office.
Mr. Coble. Thank you.
Ms. Sohn, let me get your opinion. Do you know whether
websites may be considered to be a compilation under the
Copyright Act, (A), and if so, do you know whether website
owners actually register their sites with the Copyright Office
and whether they would be conceivably entitled to statutory
damages in the event of infringement?
Ms. Sohn. Certainly, I don't see why a website couldn't be
considered a compilation. I don't really know if website
owners--I assume some website owners would register their
websites with the Copyright Office, sure.
Mr. Coble. Some critics of section 104 have alleged that it
might have the effect of intervening in ongoing copyright
litigation. What do you say to that?
Ms. Sohn. Could you repeat the question? I am not quite
sure I understand.
Mr. Coble. I said some critics of section 104 have alleged
that this section, if enacted, might have the effect of
intervening in ongoing copyright litigation that has been
initiated. What is your response to that?
Ms. Sohn. That is entirely possible. I mean, it depends on
whether you want to make it retroactive or not. Obviously,
Google is being sued in the Google book search case, they are
being sued. YouTube is being sued by Viacom. So it is possible
it might have an effect.
Mr. Coble. I was going to ask Mr. Cotton a question. I am
having a senior moment. I was going to ask you a question, Mr.
Cotton, but I cannot grasp it for the moment. So with that in
mind, Mr. Chairman, I will yield back before the red light
appears.
Mr. Berman. Thank you, Mr. Chairman, Mr. Coble.
Mr. Coble. Thank you, sir.
Mr. Berman. You were Chairman for a long time. [Laughter.]
The great days when you were Chairman, I remember them
well.
Mr. Coble. Thank you, sir.
Mr. Berman. Mr. Watt, the gentleman from North Carolina.
Mr. Watt. Thank you, Mr. Chairman.
Mr. Chairman, I find myself in much the same position with
respect to this bill as I did at the outset of our discussion
about the patent reform bill. My sense is that there is a
substantial amount of need to reform and do something to
address the problems that exist. Yet, the technicalities of
what need to be done there is substantial disagreement about.
So I am here really to try to learn more about what those
technicalities should be, what the concerns are, and try to get
enough basic knowledge before I really start going through the
details of the bill to try to figure out where some of those
inquiries and concerns might be addressed.
So with that, I think I will yield my time to the chair,
who can ask some of those technical questions. He had a long
list. I knew he had a long list and needed more time to explore
it. So I think I will yield him the balance of my time and I
will sit and listen like I intended to when I came in.
Mr. Berman. That is very nice of you, and I accept. But I
would say the one difference between this and the patent bill
is that here I would say 90 percent of the bill is not
particularly controversial. I wish I could have said that about
the patent bill. [Laughter.]
Mr. Watt. Well, that is what you told me at the outset of
the patent bill. [Laughter.]
Mr. Berman. It is my line. This one isn't as controversial.
Mr. Watt. The more I looked at it, and the more I talked to
people, the less I believed you. [Laughter.]
Mr. Berman. And the less I believed myself.
I want to take a little time here on 504. You were kind
enough not in your public testimony to argue that which you
argued in your written testimony that my approach on damages in
copyright is somehow inconsistent with my approach to damages
in the patent bill. Other than the hobgoblin argument, I
actually don't think they are that inconsistent.
It seems to me section 504 now--that phrase--``for the
purposes of this subsection, all parts of compilation or
derivative work constitutes one work.'' I think that language
has a bias in favor of the infringer, rather than the owner. I
understand a very different time when technology was very
different why it was done. Somebody was infringing the sixth
edition of a book, because there were five other earlier
editions in circulation, you shouldn't be charged with
infringing all six versions of the book.
But what is the policy reason to distinguish between
infringer ``A'' who takes 20 photos from one site, and
infringer ``B'' who takes 20 photos, one each from 20 Web
sites? Under current law, ``A'' infringer would be liable for a
single statutory damage award, as determined by the court, not
mandated by this bill, and infringer ``B'' would be subject to
20 separate statutory damage awards as determined by the court.
There may be objections to the overall level of the
statutory damages, but accepting for the moment that we are
going to have some statutory damages, how is that disparity
justified?
Ms. Sohn. Well, I think the disparity comes from what kind
of threats one copyright holder can make to a legitimate user
or somebody at least who thought they were using copyright work
legitimately, or an innovator. I mean, you talk a lot about the
judicial discretion, but the fact of the matter is that most of
these cases don't ever go to court. The threat is held over the
innovator's head or the user's head, and it never goes
anywhere. There is a settlement. The person no longer uses the
copyrighted work.
So to me, the judicial discretion doesn't really solve the
problem, and it is the same problem in the patent context, is
that the threat is enough to stop people from innovating and
the threat is enough to get people to settle even though they
might have a good case in court. They won't test the bounds of
the law.
Mr. Berman. All right. Well, we will continue this
discussion. But in the patent context you never argued that and
you were a great supporter of that legislation----
Ms. Sohn. And I continue to be.
Mr. Berman. You never argued that we should, on a
counterfeit product that infringed 50 different patents because
it was all in one product, consider it as one patent violation.
Our goal in the patent bill was simply to give the court the
discretion that courts here have to decide on how to calculate
the damages. But I think I have used Mr. Watt's time.
And now, Mr. Goodlatte.
Mr. Goodlatte. Thank you, Mr. Chairman.
I wonder if Ms. Mandelker--is that how you pronounce it?
Ms. Mandelker. Yes.
Mr. Goodlatte. Would you explain in some more detail some
of the concerns you have about the provisions in the bill that
require reorganization within several Federal agencies? What
are your specific concerns?
Ms. Mandelker. Yes, thank you for that question.
In particular, I would note that we have a current
structure of coordination within the administration that works
quite effectively. As it currently stands, we have an IP
coordinator who sits in the Department of Commerce, and who
regularly ensures that we as an administration convene and
coordinate as appropriate.
So for example, I meet personally monthly with my
colleagues in the other departments. We coordinate regularly on
international programs. We work very closely, for example, with
the State Department in the deployment of our intellectual
property law enforcement coordinators. We recently put on a
conference both with the Patent and Trademark Office and the
State Department in Bangkok, Thailand in which we launched a
new regional network. That type of coordination is very
important and it is happening at very high levels within the
administration.
Our concern with putting an office within the executive
office of the President is in particular for the Department of
Justice, we are always going to be concerned when you have
somebody at the White House who may be in the position of
directing our enforcement priorities or directing what cases we
should do and what cases we shouldn't do. That would be
contrary to the longstanding tradition of the department,
making independent decisions when it comes to law enforcement
decisions.
In addition, as I noted, what we have right now is actually
quite effective. While we don't coordinate with the USTR, for
example, on all matters, we do contribute to the section 301
process. We do provide them guidance as necessary when it comes
to criminal enforcement policy that they seek to promote
overseas, and likewise with the State Department.
But what we have really right now is a flexible
coordination process that can adjust to the changing needs of
the different departments, and it doesn't impose unnecessary
bureaucratic reporting structures.
Mr. Goodlatte. Thank you.
Mr. Cotton, we have been talking about the compilations,
and I wanted to give you an opportunity to explain the
rationale for allowing damages for each individual piece of
those compilations. I wonder if you might explain the nature of
what compilations are and the rationale.
Mr. Cotton. Well, let me just speak carefully here, Mr.
Goodlatte. The change in the law was not part of the original
CACP proposals, which is the organization I am representing
today. We have strongly endorsed the Committee leadership's
bill, including 104. In doing so, we really are focused not
necessarily on the specifics of that provision, but on the
anomaly really that the Chairman reflected, which is it does
seem a problem to us in terms of the fact that the current
penalties for a compilation, which may include 12 or 16 or many
multiples of that in terms of individual works, is the same
penalty as for the infringement of a single work. And those
works in a compilation may have different owners and different
creators.
And so in terms of resolving that anomaly, we do think it
is worth the effort to try to find a resolution which does
recognize the fact that it is in many circumstances a more
extensive violation of copyright in the context of compilation
than in the infringement of an individual work.
Mr. Goodlatte. Ms. Sohn?
Ms. Sohn. Yes, I think I finally have the answer to Mr.
Berman's question. I think it will also answer yours.
The reason that a compilation is looked at as one work is
because you are looking and differentiating that from engaging
20 different or 10 different acts of infringement, is that you
look at the act. You don't want to punish somebody 10 times for
one act of infringement. So if I am infringing on 20 separate
photographs, I have engaged in 20 different acts of
infringement. If I have infringed on one album, I have engaged
in only one act of infringement.
It seems to me to be a pretty dangerous tool, again getting
back to the answer that I originally gave you, to a copyright
holder to all of a sudden turn one act of infringement into 10
or 20 or, you know, depending on how big compilation is even
more.
Mr. Goodlatte. Do you want to respond to that, Mr. Cotton?
Mr. Cotton. Yes. I think the law's tradition has been
precisely to make those kinds of tradition. Petty larceny is
not viewed the same as grand larceny. So the precise question
that gets addressed in a criminal assessment is exactly the
extent of the damage and the extent of the criminal act. And
certainly one likely, I would say, grounds on which to make
that assessment is the number of infringements involved, and
therefore the extent of the damage to what, as I say, may be
multiple different owners and creators.
Mr. Goodlatte. Thank you.
Thank you, Mr. Chairman.
Mr. Berman. Thank you.
The gentlelady from Texas, Sheila Jackson Lee.
Ms. Jackson Lee. Thank you, Mr. Chairman.
I thank the witnesses for their testimony. I was detained
in another meeting, but in reviewing briefly your statements, I
appreciate very much your presence here today.
Mr. Hoffa, you have had a long history of speaking what we
call truth to power. As I reviewed your statement, it was
provocative because I begin my remarks about the devastating
impact that piracy and trademark violation has had in the
American economy. I think the mood is very sour in the United
States right now in terms of our economy and generating jobs.
I would just like you to pointedly repeat again or to focus
on how you think this legislation can be a viable component in
saving jobs, in producing jobs, and the impact that you have
seen in, for example, certainly we know that your home,
Michigan, or your beginnings, was at the top of the heap as
many of us grew up. We will never forget that first shiny car
coming from, obviously from Detroit, but whatever showroom it
was, maybe some of us got a shiny used car, but how proud we
were of that vehicle.
And where we are now as it relates to that whole effort,
even though we might not attribute that to trademark violation.
But what kind of piercing impact has trademark violation and
piracy done from your perspective?
Mr. Hoffa. Well, thank you, congresswoman. I think it is
all tied together. The idea of unfair trade and the fact that
we do not build in strong enough protections in our trade bills
are all related. That is why we have fought a number of the
trade bills that are before Congress, whether it goes from
NAFTA to PNTR to the recent Peru agreement. And we have talked
about the fact that we must have ways to, number one, protect
our economy.
And when we talk about that, we are talking about
copyrights. We are talking about counterfeiting. And we are
also talking about the idea that trade should open up markets
of countries that we make agreements with. And too many of our
agreements are one-sided. They basically open up our economy to
a flood of goods from all over the world, as we see with China
and Mexico, and especially India.
So much of that material is counterfeit. We all know that
we can go on the streets of New York in Manhattan. We can go
over here to Georgetown and we see whole stalls of counterfeit
material that looks like something that has been made by a
major manufacturer. The answer is, we are not policing and
protecting ourselves. Trade has been a major issue of labor
talking about how do we protect American jobs. We have seen a
hemorrhaging of millions of jobs going to cheaper economies,
going to Mexico, going to India.
That is part and parcel of the same problem of copyrights
and counterfeiting. That counterfeiting--and what we are
talking about is part of the same problem because when you open
these economies, whether they come in legally or illegally,
they are coming in and just flooding into this economy.
I have testified before Congress about how we don't police
what comes into this country. The container--90 percent of what
comes in comes in containers. And if you have been to the ports
of Port Elizabeth in New Jersey or you have been to Long Beach,
you see all these containers coming in.
Ms. Jackson Lee. Yes.
Mr. Hoffa. Much of this stuff is in that stuff, and they
are only protecting and inspecting 1 percent. And if we had
better inspection, then we could find out where these
counterfeit goods are and confiscate them at the border. The
answer is we are not doing that, and that is why there is such
a flood of counterfeit goods in this country.
Ms. Jackson Lee. This legislation moves us in that
direction.
Mr. Hoffa. That is right.
Ms. Jackson Lee. Thank you.
Let me quickly ask questions of the final three witnesses.
I want Ms. Sohn to give us the most troubling feature in this
legislation from your perspective. Ms. Mandelker, if you would,
I mentioned earlier the incident with the Colgate-Palmolive
toothpaste, and the impact as it relates to the consumer.
Someone injured. We don't know if there was any loss of life,
any long-term damage.
My thought was, not from the tort perspective or liability
perspective, but the injured party may have, but the enhanced
penalties if, for example, it does result in the injury and-or
death of an ultimate consumer of that pirated product or that
trademark violation product. Why don't you comment on that? And
Ms. Sohn, if you could. Let me go to Ms. Mandelker first,
please.
Ms. Mandelker. We agree with you, Congresswoman. In fact,
that is why we were so pleased to see enhanced penalties in
this bill for instances where there is a knowing or reckless
injury, serious bodily injury. So we think it is quite
appropriate to have enhanced penalties when our citizens are
being harmed by these products.
Ms. Jackson Lee. And it separates it from a tort action. It
triggers under the actual trademark violation, which I think is
very important.
Ms. Sohn, what is it that----
Ms. Sohn. Really section 104 is the most troubling. I would
note that the other supporters of this bill actually haven't
mentioned it in their written testimony, something that is
really important to them. I am also pleased to hear Mr. Coble
talk about possible----
Ms. Jackson Lee. Why don't you just go ahead and say 104,
and then how would you fix it or what is your issue with it.
Ms. Sohn. I think it needs to be deleted from the bill.
Right now, I mean, hopefully we will have this roundtable. I am
not sure how you fix it because it is so core, it is so
opposite to what the Copyright Act has been about.
Ms. Jackson Lee. And you feel that it does what? When I say
``does what,'' does what negatively?
Ms. Sohn. It increases the statutory damages for copyright
infringement so much as to place very bad limits, chill
innovation and chill legitimate speech.
Ms. Jackson Lee. So you are thinking that people will be
fearful because they might step on someone's toes and therefore
deny their own creativity because the penalties are so high.
Ms. Sohn. They already are fearful, but this would make it
far worse.
Ms. Jackson Lee. Well, don't you think the counter-impact
that then we would have at least a sanctity around this whole
concept of copyright, patent and the lack of trademark
infringement?
Ms. Sohn. Well, I think we already do. I don't think
anybody is arguing that statutory damages these days are
inadequate. You may have heard about the woman in Minnesota who
was just fined $222,000 for 24 songs she had on a peer-to-peer
network. That was $9,250 a song. I don't think anybody is
arguing that that is inadequate and that is the law today. So I
am not sure that increasing penalties 10-fold or 20-fold does
anything other than stop legitimate innovators and legitimate
speakers or users of copyrighted works, legitimate creators
from creating.
Ms. Jackson Lee. I thank the gentleman. I just would say,
Ms. Sohn, I think it is worthy of consideration of the
provision that you have highlighted. I think what we have seen
in some of the egregiousness of trademark infringement has
moved this Congress to believe that there are larger bodies
other than the unfortunate woman in Minnesota and maybe others,
that we have to make a very strong statement.
I know Mr. Cotton is shaking his head, and I would ask the
Chairman to yield him just a second to comment, because he is
the poster child in terms of this issue. If the Chairman would
yield him a minute.
Mr. Berman. Mr. Cotton for a quick response.
Ms. Jackson Lee. And I thank the Chairman for his
indulgence.
Mr. Cotton. I would just say that I think the emphasis that
the congresswoman placed is the fundamental thrust of what the
big picture of what this bill is all about, which is what we
know right now is that our enforcement regime, both in terms of
penalties and in terms of enforcement resources, is not
stemming the tide that we face collectively.
What is critical is that we step up. We make the penalties
that we create not just a cost of doing business for the
counterfeiters and the organized criminal conspiracies that are
behind the flood that we face, but that we actually make it a
serious deterrent. We apply enforcement across the board. That
is the big picture.
Ms. Jackson Lee. Thank you, Mr. Chairman.
Mr. Berman. The gentleman from Georgia, Mr. Johnson.
Mr. Johnson. Yes, just some thoughts. And certainly I
appreciate the efforts of the Chairman, who has introduced this
legislation to help mitigate some of the loss that Americans
are undergoing as a result of copyright and trademark
infringement. I am fully supportive of efforts to cut that, so
that American businesses can prosper.
I am concerned about the fact that the enforcement
provisions of this law, of this proposal, both civil and
criminal, would go more toward Americans, as opposed to those
in other countries who are responsible for the tsunami, if you
will, of counterfeit products entering this country and
circulating around the world.
So that brings me to my issue of free trade, if you will,
and the agreements that this country signs with other
countries. There seems to be a lack of strong protections in
these trade agreements that would be helpful in stemming the
tide of these counterfeit goods coming here and circulating
around the world.
Would you comment on that, Mr. Cotton?
Mr. Cotton. I would make three very quick points in
response. First, I think the issue that you raise is critically
important, but what I would say to you is that in arguing the
case internationally for stronger IP protection action by
countries internationally, they look to the example of the
United States in terms of what they should do and how they
respond.
Mr. Johnson. Even the Chinese?
Mr. Cotton. Well, ultimately I would say to you yes, that
is to the extent that we wind up with counterfeit goods on our
streets, and to the extent that we ask countries everyplace
from China to many other countries in the world to devote very
significant resources to enforcement and to escalate the
message, for example in----
Mr. Johnson. How do we do that in a free trade agreement?
How do you counter the notion that our free trade agreements
don't go far enough with respect to strong protections?
Mr. Cotton. I am sorry. I would agree with you that it
would be desirable to use every lever that we have available to
us. I guess my only point I was making was that, I would agree
with you that it would be desirable to have our free trade
agreements. It is desirable----
Mr. Johnson. It seems that those are the best route to be
able to stem this tsunami of counterfeit goods coming over here
and circulating around the world, even though I appreciate the
stronger enforcement mechanisms that are a part of this
legislation and the aspirational aspects of this in so far as
international enforcement coordination that is called for under
this bill.
But let me shift now to this issue of the registration of
copyrights as a prerequisite to criminal prosecution, and then
this legislation would remove the registration requirement. I
would ask Ms. Mandelker, normally in a criminal case you have a
need to prove intent. I would assume that that need to prove
intent is a part of the criminal laws, in so far as copyright
infringement that exists now. Would that change under this new
legislation? And if it does not change, how could you prove
intent in a situation where you could not find where, say, a
photograph has copyright protection, but you can't find it due
to the technological limitations of the copyright department
today. How could you prove intent?
Ms. Mandelker. Well, let me just say at the outset that we
actually see this provision as a clarification of existing law.
We think it is important to make it clear in existing law that
proof of registration is not a requirement when we bring our
criminal cases, but we don't think this is actually something
new. It is just, again, a clarification.
Certainly, we need to prove intent, willful intent.
Mr. Johnson. How can you do that without registration,
without a registration requirement?
Ms. Mandelker. I might turn to the--if you have an
individual, for example, who clearly tried or made a good-faith
effort to find out whether or not a particular work was
registered, who wanted to----
Mr. Johnson. They would have a defense, but it would not
protect them from being prosecuted, being hauled off to the
jail, fingerprinted, have to make bond, hire an attorney, and
then present your defense at some point later.
Ms. Mandelker. Let me just say that at the department, we
are really interested in going after willful infringers.
Mr. Johnson. How can you prove willfulness without a
prerequisite of registration? How could a prosecutor make that
assessment without a requirement that the work be registered?
Ms. Mandelker. Again, I would note that we don't think that
it is currently a requirement for prosecutors.
Mr. Johnson. Well, it should be, it would seem to me. It
should be.
Ms. Mandelker. I would also note that in many of our cases,
we are dealing with not just one good, but many counterfeited
goods. As was noted earlier, it would really slow down the
criminal prosecution process to force our prosecutors to go
make that determination. Again, at the department we are not
going to be focused on the example that Ms. Sohn noted of an
individual who took a photograph. We are going to be focused on
those large-scale infringers.
Mr. Johnson. Yes, well, if the state of the law allows you
to go against that small photographer, sometimes it will
happen--a renegade prosecutor, if you will. So I am concerned
about doing away with the registration requirement. I am
concerned about that.
Mr. Berman. The time of the gentleman has expired. We will
be having a vote soon.
I recognize the gentleman from California, Mr. Sherman.
Mr. Sherman. Mr. Chairman, I am one person in this room who
supports section 104, and I think we ought to try to emerge
with as strong a bill as possible. But I am going to focus my
attention on title IV, which deals with the international
provisions.
Mr. Hoffa, we have kind of a procedure here under our
wonderful free trade agreements. Under this bill, we are going
to have 10 new intellectual property attaches for the whole
world. It will go something like this. One of these attaches
will go talk to the Chinese and yell and beg and point to them
where it is their legal obligation, because we are good lawyers
and we believe that paper matters. And point to them how they
are supposed to enforce intellectual property. Then he or she
will leave the room. The Chinese will explode into laughter
because they are good enough diplomats to be able to suppress
that laughter while we are actually in the room.
Then they will put back on their earnest faces. They will
have a press conference. They will announce that they are going
to do something. They may actually go out and grab a few
counterfeit products and put them in a warehouse until they re-
sell them later. And then we repeat the whole process at the
beginning of the next year.
I wonder whether you think that we need to instead think of
some things that go beyond the text of these free trade
agreements and actually, for example, take a boatload or two of
goods coming in from China and turn them around in order to
demonstrate our concern on this issue.
Mr. Hoffa. Well, I think the problem is that in this
country if you find a clear copyright and you buy the
counterfeit goods, you can sue. There is a legal system here
where you can enforce rights. That isn't really true in China.
You are subject to a completely different system. If you do
find a copyright infringement in China, you really are in tough
shape. Our agreements have not done anything to give you any
type of rights to enforce your rights over there.
You might go to the communist government, and they might
say, ``Okay, we have found 1,000 DVDs,'' and then they will run
a steamroller over them for the TV cameras. Or they will set
some DVDs on fire for the video cameras. And that has nothing
to do with enforcement.
There isn't really a way to bring lawsuits over there that
can be effective to stop this. When there are violations found
in China, it isn't the Chinese government that finds them. And
I don't want to single out the Chinese because it is true in
India and it is true in Mexico. The problem is, it is the
industry that finds them. Every major manufacturer has a part
of their company that is devoted to finding knockoffs or
copyrights. So they go and find these and they show the Chinese
or the Indians, ``Look what you are doing. What are you going
to do about that?''
And then you can bring a lawsuit and then they will shut
down two or three factories. But the two or three they shut
down, there are 10 more. So somehow we have to have in our
trade agreements some way either to reciprocate or some way to
protect our products from being copied.
Of course, the best example is the dog food example, where
we had that this summer. We went through and the dog food came
in and the dogs were dying because it had different products in
it. And then we had the issue about the Colgate copyright, with
the antifreeze in it. These were dreadful examples of what can
happen because there isn't anybody in these countries looking
for these violations. Anything goes in these new economies.
Unfortunately, they are early economies. Anything to make money
goes.
Over here, we don't have that problem. We have consumer
safety. We have the Justice Department. We have a lot of
enforcement. We have individual lawsuits, and we have damages.
You know, if somebody does do this and we identify them, they
can be sued for millions of dollars. You really can't do that
in China and you can't do that in India.
So the problem is, how do we put that into a trade
agreement? I think until we figure that out, we ought to stop
doing trade agreements for awhile and realize the problems that
we are losing jobs, and we ought to figure it out.
Mr. Sherman. Should we be forcing a renegotiation of the
trade agreements we have now, or just leave those on the books
the way they are?
Mr. Hoffa. I think that all of them should be. You know, we
have talked about renegotiating NAFTA or terminating it and
starting over again. People cringe at that. Think about it. All
the trade agreements that we have done, have you ever known one
that has ever expired or that we have stopped? I mean, once
they are on the books, they are like no one can ever stop them.
You talk about, well, why don't we just void that
agreement. Every one of these agreements has a provision to end
that agreement. You know, it is a 60-day notice.
Mr. Sherman. I would also point out that every single one
of them has increased our trade deficit with the country
involved.
We have talked a little bit about the need to inspect these
containers. Should the cost of inspecting these containers fall
upon all taxpayers, even the businesses that are in competition
with imports? Or should we have at least the fair cost of
examining the containers fall upon those who are bringing the
containers into the country?
Mr. Hoffa. Well, there are billions of dollars in profits
being made by these large shipping companies. I don't think it
would be wrong that they pay part of this cost. They are the
ones that are bringing in these shiploads of goods in these
containers that are coming from the Far East and all over the
world. If you have been to the ports, and most of us have, you
see how they are piled so high.
The odd thing is, there are shiploads of containers coming
in, but when they go out, they go out empty. That is really a
story about what is wrong with our trade agreements. It is a
one-way deal. They are not buying our products, but we are
bringing their products in. So we have talked about the fact
that large shippers should pay a small portion, or at least a
per-container cost of inspection, rather than have it put on
the American taxpayer.
Mr. Berman. The time of the gentleman has expired.
Mr. Sherman. Thank you.
Mr. Berman. I have an idea. We have been doing it with
terrorism laws and nonproliferation laws. You and I have been
doing it with laws dealing with Iran. We should have
extraterritorial application of our copyright and trademark
laws. [Laughter.]
Mr. Sherman. Mr. Chairman, you surprise me. You are going
one step beyond what I thought was already a pretty extreme
position.
Mr. Berman. The gentleman from North Carolina gave up part
of his time earlier. We have had a string of Democrats. So I am
now going to recognize him because he did have a question he
wanted to ask Mr. Cotton.
Mr. Coble. Mr. Chairman, I apologize for my ineptness. I
misfiled my question. I just wanted to hear from Mr. Cotton. I
don't think it has been addressed.
Mr. Cotton, the decision to require dedicated resources at
DOJ, the White House and elsewhere is somewhat unusual, and
some in the executive branch I think will argue, wrongheaded.
They imply that it will create an inflexible and meddlesome
bureaucracy. I am not convinced that that would be the case.
What do you say in response to that?
Mr. Cotton. I think our experience teaches one lesson very
clearly. It is one that has been reported to me from every
sector of the coalition that I am involved with, which is that
officials that have a general jurisdiction responsibility wind
up having other pressures on them to the extent that IP
enforcement tends to fall down the to-do list. Until there are
both senior policy executives and until there are significant,
dedicated, specialized IP enforcement resources, we will not
make progress in addressing the issues that are on the table.
Mr. Coble. Thank you. That is what I wanted to get in.
Mr. Chairman, I thank you for recognizing me.
Mr. Berman. I appreciate it. The gentleman yields back.
I recognize another gentleman from California, Mr. Schiff.
Mr. Schiff. Thank you, Mr. Chairman.
I join my colleagues in strongly supporting the
legislation, and I congratulate the Chairman on all his superb
work. I appreciate in particular also inclusions of sections
511 and 512 that we proposed parts of to create the state and
local law enforcement grants, as well as strengthen the CHIP
units.
I had a couple of questions, some ideas that we have been
kicking around. It goes a little shy of what Mr. Sherman and
Mr. Berman were just proposing on the international front.
Mr. Berman. I was kidding around.
Mr. Schiff. I know you were. I have a more modest idea I
would like to run by the Committee. Before I do, I just want to
make a comment on section 104, which has some surface appeal to
me, but I am still wrestling with it. When I think about the
analogy, Mr. Cotton, that you mentioned of prosecutors or
judges separating out petty larceny from grand larceny, I also
think about the fact, though, that when we charge someone for
theft of an automobile, we charge them for theft of the
automobile, theft of the radio in the automobile, theft of the
seats in the automobile, or the theft of a briefcase in the
automobile, even though the briefcase might belong to someone
different than the automobile belonged to. It would be theft of
an automobile.
Just looking at the discretion we are giving to the judge
to determine whether distinct works have independent economic
value, you could say that also about objects in a car. So I
think when you think about it a little more, I haven't reached
a conclusion on it. I can see certainly the value to be added
by it.
But I wanted to run some other thoughts by you on the
international front. For example, one of the thoughts that we
were kicking around was the idea of tasking the Commerce
Department with posting a list of Web sites that clearly
infringe. We know many of the most well known. A lot of them
use major credit cards, take major credit cards. A lot of them
have advertisements from major companies. Presumably some of
those companies or credit card agencies aren't aware that these
are Web sites that are dealing in hundreds of thousands of
pirated works every day.
Do you have any feedback on whether you think that kind of
idea, whether it be housed in Commerce or the Copyright Office
or somewhere else, might have some value to it?
And then a second thing I would like to throw out there,
which is I guess more incendiary. We do a favor for some
institutions of higher learning, which are also often very
problematic from an IP point of view, by giving them a broad
safe harbor. Should we require the use of filtering devices if
we are going to allow that safe harbor?
So if I could throw those two ideas out there and get your
feedback.
Mr. Cotton. I am delighted to make a comment because this
entire area is really the second focal point, in addition to
governmental action, of the Coalition Against Counterfeiting
and Piracy. It is a recognition that there are sectors of the
economy that are intermediaries. Frequently, they are actually
business partners of many of the brand owners in the sense of
working with us.
But the question that you pose is whether perfectly
legitimate businesses, but who by virtue of their
infrastructure become the means by which counterfeit and
pirated goods get into the stream of commerce, have some
responsibility to address that issue and to take action to
reduce the degree to which their infrastructure is used.
My primary example of this would be the collective judgment
that we as a society came to concerning financial institutions
and money laundering. Banks are perfectly legitimate and
important institutions. We have imposed on them an obligation
not simply to take cash and close their eyes as to who brings
it to them and what the source of that money was, but to ask
questions about their customers and to ask questions about the
source of cash that may be deposited with them.
The question is a delicate question and I would cite you
the most recent example where I think there was a successful
negotiation between brand owners and intermediaries in the case
of YouTube-like sites, where a number of user-generated content
sites signed a voluntary agreement of principles with content
owners committing to adopt by the end of this year filtering
technology, which they recognize was commercially available and
technologically feasible.
I think the question becomes for other institutions, other
sectors such as the ones you referenced--financial
intermediaries--I think you could ask the same question about
shippers, warehousers, retailers. The question becomes: When is
it reasonable for those sectors? What actions are reasonable
for those sectors to take and how can they work collectively
with brand owners that from the point of view of protecting the
health and safety, in many cases, of consumers and preventing
pirates and counterfeiters from using their infrastructure,
what actions can they take?
Mr. Schiff. Would it be feasible to have a government
agency tasked with developing the IP terrorist watch list that
at least companies would be on notice? Even if there wasn't a
legal prohibition against their doing business, they couldn't
very well claim ignorance if they are processing credit card
transactions or advertising on clearly piracy-oriented sites.
Ms. Sohn. Yes, I think Mr. Cotton just pointed out what the
problem is in doing something like that is that you are just
opening up the floodgates to massive litigation against every
single company that might have any kind of tangential
relationship to copyright infringement. A court in California
in a case involving a pornography site had sued MasterCard and
Visa claiming that because it had given financial services to
other Web sites that had stolen their pornographic pictures,
that they were not liable.
I just think that if you open the floodgates in that way,
then you are just going to be flooding the courts with people
going--copyright trolls, basically patent trolls--copyright
trolls going after every single company which might have the
most tangential relationship to an infringing Web site.
Mr. Schiff. You might be if you enacted some liability for
doing business with someone on the list, but if you post the
list of piracy sites, how does that expand the liability other
than putting people on notice? In other words, if the top 10
Web sites are responsible for 60 percent of all the piracy, and
I am just guessing at a big number, and you can identify those
and you can stigmatize doing business with those, why does that
open floodgates of litigation? If it would deter legitimate
companies from doing business with those Web sites, wouldn't
that be desirable?
Ms. Sohn. I think that might be a good marketplace solution
to the problem. I am not sure government should be involved.
But it might be nice, yes, to do a watch list of a hall of
shame. I have no problem with that.
Mr. Cotton. If I might must make one point. Just to be
clear what I said, which was I was referring to negotiated
agreements between sectors. That is what the CACP is
endeavoring to accomplish before we turn to the question of
legal standards or legal questions.
Mr. Berman. The time of the gentleman has expired.
I have one short question for Sigal Mandelker. You
testified that the department implemented all 31
recommendations from the IP task force report. One of the
recommendations was that the FBI should increase the number of
agents dedicated to IP investigations. Can you tell me how many
FBI agents are dedicated to IP investigations, meaning that is
their full-time job?
Ms. Mandelker. I can't give you a specific number since I
am from the Criminal Division, but I am happy to make that
inquiry and report back to the Committee. I can tell you that
they have increased the number of arrests and indictments, and
I am also happy to provide those statistics.
Mr. Berman. That is important, good and useful, but I would
like just the name and phone number of one FBI agent who has
been told ``full-time, this is your job.'' If you could find
that out, that would be great for me.
There are a lot of comments I could make, but I think we
have a vote coming up. This has been a very useful panel, very
interesting, a lot of issues raised, not all of them resolved.
I appreciate all of you coming.
With that, unless anybody says something different, I am
going to adjourn the hearing.
[Whereupon, at 1:01 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Prepared Statement of the Honorable Steve Cohen, a Representative in
Congress from the State of Tennessee, and Member, Subcommittee on
Courts, the Internet, and Intellectual Property