PROTECT IP Act May Move Toward Vote in January 2012

On December 17, 2011, Senator Harry Reid (D-Nev.) introduced a "cloture" motion to "bring to a close" the debate on the motion to allow the PROTECT IP Act (S. 968) to be considered on the floor of the Senate, about which Senator Wyden has been successful so far in placing "on hold."

To the non-Washington-insiders among us (myself included), a "cloture motion" is an archaic expression that requires definition. According to Black's Law Dictionary (West 6th ed. 1991), a cloture is a "legislative rule or procedure whereby unreasonable debate (i.e., filibuster) is ended to permit vote to be taken." The term filibuster is defined as "tactics designed to obstruct and delay legislative action by prolonged and often irrelevant speeches on the floor of the House or Senate." Id.

Certainly, after Senator Wyden announced that he intended to place a "hold" on floor consideration of the bill, a cloture would be the necessary next step to initiate a Senate-wide vote on the bill.

According to the Congressional Record, the cloture vote is scheduled for January 24, 2012, beginning at 2:15pm. Congr. Rec. S8783 (Dec. 17, 2011) ("Mr. REID. Mr. President, I ask unanimous consent that the cloture vote on the motion to proceed to S. 968 occur at 2:15 p.m. on Tuesday, January 24--that is the day after we start the session--and that the mandatory quorum under rule XXII be waived. . . . The PRESIDING OFFICER. Without objection, it is so ordered.").

Immediately after the cloture was introduced, Senator Wyden again expressed his intent to filibuster the bill. Press release, Dec. 17, 2011 ("Therefore, I will be working with colleagues on both sides of the aisle over the next month to explain the basis for this wide-spread concern and I intend to follow through on a commitment that I made more than a year ago, to filibuster this bill when the Senate returns in January.").

This statement is repeated in the Congressional Record immediately following Sen. Reid's request for scheduling, but the Record incorrectly categorized his statement as relating to the "Personal Information Protection Act" (presumably because Sen. Wyden used the acronym "PIPA" in his remarks). Given the duplication between Sen. Wyden's press release (specifically referring to the Protect IP Act) and this statement on the public record, it appears that the Congressional Record is simply mistaken in this instance.

Manager’s Amendment to SOPA Makes Big Changes

On December 12, 2011, Representative Lamar Smith, chairman of the House Committee on the Judiciary, introduced a "Manager's Amendment" to the pending Stop Online Piracy Act (H.R. 3261), in advance of a scheduled hearing and markup session before the Committee on December 15 and 16, 2011. On December 14, he issued a press release challenging the opposition that had garnered significant press attention. In it, he denounced the opposition, claiming that it is either mistaken about the actual contents of the bill or that its complaints are simply outdated because of the changes made in the Manager's Amendment.

With regard to Google, one of the loudest opponents of both the PROTECT IP Act and SOPA, Chairman Smith stated, "In August, Google paid half a billion dollars to settle a criminal case because of the search engine giant's active promotion of foreign rogue pharmacies that sold counterfeit and illegal drugs to U.S. patients.  Their opposition to this legislation is self-serving since they profit from doing business with rogue sites that steal and sell America's intellectual property."

Webcasts for the hearing and markup sessions may be found in the Committee's hearing notices, although news reports indicate that the first session ran a "marathon" twelve hours, so be prepared for the long session. Tamlin Bason, "Rep. Lamar Smith Delays SOPA Markup, Will Consider a Hearing on DNS Blocking," 83 BNA Patent Trademark & Copyright Journal 261 (Dec. 23, 2011) (subscription access required). Draft transcripts are available for both the December 15 (459 pages) and December 16 (58 pages) sessions. An additional markup session originally scheduled for December 21, 2011, was postponed "due to House schedule" (presumably referring to the recess taken on December 20.) A summary of the proposed amendments and vote count can also be found on the Committee's hearing page.

According to a Summary statement issued by the Committee on the Judiciary, the Manager's Amendment makes the following changes:

1. Clarifies that the bill does not require that users of a targeted website be directed or redirected to another site;
2. Establishes a "kill switch" that would allow an ISP to decline to carry out any court order that it finds would "impair the security or integrity of the system" – thus protecting the security and integrity of the DNS (domain name system);
3. Applies only to foreign websites;
4. Adds new savings clauses – a) providing no duty to monitor illegal activity on a provider's network or service; b) does not impose a technology mandate on any party; and c) leaves all DMCA safe harbors in place for intermediaries;
5. Removes the pre-suit notification provision to "encourag[e] parties to engage in voluntary, completely market-based solutions;"
6. Removes language in the private right of action that provided liability in cases of willful blindness or engaging/facilitating in the infringement/counterfeiting;
7. Limits the definition of intermediaries that could be subject to this bill;
8. Provides that ISPs cannot be ordered to block a subdomain;
9. Provides that search engines would be allowed to continue to deliver links to any legitimate subdomains or portions of the site that do not infringe; and
10. Clarifies that the ISPs may only be required to take measures that they determine are the "least burdensome, technically feasible, and reasonable."

People in the IP community have asked why the DMCA (Digital Millenium Copyright Act) can't simply be applied to seek takedowns of infringing/counterfeiting sites such as these. Chairman Smith answered that question in a December 15 public statement about the necessity for legislation such as the Stop Online Piracy Act:

"While the DMCA helps, it only applies in limited circumstances:

• It provides no effective relief when a rogue web-site is foreign-based and foreign-operated like PirateBay - the 89th most visited site in the U.S.;
• It doesn't protect trademark owners and consumers from counterfeit and unsafe products like fake prescription medications available on legitimate-appearing but unlicensed "online pharmacies";
• It doesn't assist copyright owners when foreign rogue sites are devoted to the theft of intellectual property on a massive scale;
• And, finally, it does nothing to address the use of intermediaries such as payment processors and Internet advertising services that are employed by criminals to fund illegal activities."  

Id. (bullets added).

Chairman Smith indicated at the close of the December 16 session that he may entertain additional markup sessions, but as Congress is now in recess, these sessions will likely be scheduled after the next session begins on January 17, 2012.

The Judiciary Committee's "Rogue Websites" page has some interesting links to various articles demonstrating support for SOPA and various summaries and fact sheets about the bill. The page does not purport to be an unbiased recitation of commentary to date about SOPA (for instance, it does not catalog the various positions articulated in opposition to the bill), it provides a useful one-stop-shop for statements in support that may not be available together elsewhere.

Alternative to PROTECT IP Act and SOPA Proposed by Bipartisan, Bicameral Group

On December 8, 2011, a group of Senators and Representatives proposed an alternative bill aimed at combating foreign websites that engage in counterfeiting or infringement of U.S. trademarks or copyrights. The new bill, entitled "The Online Protection and Enforcement of Digital Trade Act" (the OPEN Act) was launched by U.S. Senators Cantwell, Moran, Warner and Wyden and U.S. Representatives Chaffetz, Campbell, Doggett, Eshoo, Issa, Lofgren and Polis. (Senator Wyden had previously announced his intent to block any request for unanimous consent to consider the currently-pending PROTECT IP Act in the Senate, but has proposed this bill as an alternate.)

What's so unusual about this bill? It's not currently available on Thomas.gov, although a recent press release available on Sen. Wyden's website has identified the bill as having been "introduced."  [Searches of Thomas.gov indicate that the bill will be numbered S. 2029 and will be available once received from the Government Printing Office.]  Instead, the current text of the bill can be accessed through a website called http://www.keepthewebopen.com/. Visitors to the site can create an online profile and submit suggestions for improvement of the bill. At the site, in big red letters is a button inviting users to "PARTICIPATE" and the press release announcing the launch of the website describes it as "providing an unprecedented opportunity for members of the public and stakeholders to participate in the legislative process."

The text of the bill can be found in PDF format, and a summary document entitled, Fighting the Unauthorized Trade of Digital Goods While Protecting Internet Security, Commerce and Speech, explains the purpose of the bill. (An additional section-by-section summary of the bill can be found on the Keep the Web Open site.)

The bill sponsors explained that this bill is intended to place jurisdiction over policing imports into the U.S. from these foreign web sites back in the hands of the International Trade Commission (ITC), thereby allowing this process to use already existing ITC procedures instead of creating new frameworks – thus potentially increasing due process protections and consistency of rulings among the arbiters. The bill also authorizes the dramatic increase of staffing in the ITC in order to permit it to absorb the new responsibilities.

Here's how it would work:  a U.S. rights holder who believes that a particular web site violates its rights may submit a complaint to the ITC, which will launch an ITC investigation into the operation of the site. If the ITC determines that the site indeed qualifies as an "Internet site dedicated to infringing activities," it may generate a cease and desist order directing that the site stop its infringing activities. This order can then be served on financial transaction providers or Internet advertising services. The ITC will also submit its determination, the record upon which it is based, and any cease and desist order that it generates to the President, who may "disapprove" of the determination and cease and desist order, causing the order to be terminated. [These provisions were present in a version of the bill available on http://www.keepthewebopen.com/ as of December 28, 2011.]

In some respects, this bill follows the main tenets of the PROTECT IP Act and the Stop Online Piracy Act and adopts some of its structure, with a major difference being the use of the ITC as arbiter over the allegations made against the allegedly infringing website, instead of the myriad federal district courts across the country. (Additional differences are summarized in this chart.) The theory seems to be that the ITC is used to disputes over IP claims, and therefore would be an appropriate judge of the presence of infringing or counterfeiting content – where not all district courts and district court judges are experienced in intellectual property disputes.

Related Bills

Somewhat simultaneously, a manager's amendment to the Stop Online Piracy Act was introduced on December 12, 2011, prior to the House Committee on the Judiciary's December 15 and 16, 2011 markup meetings. More on that revision in the next post.

‘Tis the Season for . . . Anti-Counterfeiting Legislation?

In the past several weeks, several major legislative proposals have been introduced in both the House and the Senate to provide additional anti-counterfeiting enforcement tools for law enforcement and private rights holders alike. Two of these bills – the PROTECT IP Act (S. 968) and the Stop Online Piracy Act (H.R. 3261) – have already been discussed in detail in this blog. (See posts under the Online Piracy tag.)

Details about the remaining legislative proposals follow (listed chronologically):

• Protect American Innovation Act of 2011 – introduced in the Senate on November 8, 2011 as S. 1830 by Sen. Deborah A. Stabenow (D-Mich.)
  • Focuses on the Treasury Department, and particularly U.S. Customs and Border Protection ("CBP") and U.S. Immigration and Customs Enforcement ("ICE")
  • Contains provisions relating to coordinating IP rights enforcement, enhancing training in the Treasury Department and amending 19 U.S.C. § 1526 (Tariff Act; Merchandise Bearing American Trademark) to expand prohibitions on importation, exportation and transshipment of counterfeit or pirated goods.
  • Of particular note are the following provisions:
    • Coordination of IP Rights Enforcement (Subtitle B)
      • Requires coordination of CBP and ICE IP enforcement efforts through a new Director of IP Rights Enforcement (within the U.S. Department of the Treasury) (§ 111)
    • Regulatory and Policy Improvements re Combating Counterfeiting and Piracy (Subtitle C)
      • Allows CBP to set up regulations about making information and samples of seized goods available to IP owners for purposes of inspection and analysis. (§ 123)
      • Creates a system to identify "low risk importers" who could be subject to reduced inspections by CBP. (There would be a self-certification and third-party verification process put in place.) (§ 125)
      • Creates a "watch list" database of participants in import, export and transshipment process "whose activities [CBP] determines merit special scrutiny at ports of entry because of the risk of importation or transshipment of goods that violate" IP rights or exclusion orders. (The Secretary of the Treasury will have 180 days from enactment to develop a plan to implement the database.) (§ 126)
      • Provides that civil fines imposed by 19 U.S.C. § 1526(f) may not be mitigated, dismissed or vacated except in extraordinary cases or when ordered by the court. (§ 127)
    • New Legal Tools for Border Enforcement (Subtitle E)
      • Amending 19 U.S.C. § 1526 (Tariff Act) to apply the definition of counterfeiting that comes from the crimes code (18 U.S.C. § 2320) and to provide for enhanced penalties for counterfeiting (§ 141)
      • Makes conforming amendments to copyright law to include "exports and transshipments" along with imports as regulatable conduct (§ 141(b)).
      • Enhances the requirements for declarations required under the Tariff Act (§ 142)
      • Permits the seizure and forfeiture of devices designed to circumvent intellectual property rights protections (§ 143)
    • Administrative Provisions (Subtitle F)
      • Requires establishment of an advisory committee to provide advice to the Secretary of the Department of Treasury, to CBP and ICE on all matters involving the enforcement of import safety standards and IP rights by CBP and ICE (§ 151)
      • Requires the advisory committee to submit an annual report describing the operations of the Committee in the past year and set forth any recommendations about the enforcement of import safety standards and IP rights by CBP and ICE (§ 151).
      • Allows for staffing enhancements at both CBP and ICE (§§ 152 and 153)
    • Title II – Increased Penalties for Certain Unfair Trade Practices
      • Expands the exclusion orders. In addition to banning the importation of certain goods into the U.S. this provision also provides that the Secretary of State shall deny a visa to the U.S. and the Secretary for Homeland Security shall exclude from the U.S. "any alien that is an officer or member of the board of directors of the person that violated this section or an exclusion order under this section." (§ 201)
      • Enhances penalties for each day on which the importation or sale of counterfeited goods occurred (19 U.S.C. § 1337(f)) from "$100,000 or twice [the domestic value of the articles entered or sold on such day in violation of the cease and desist order]" to "$500,000 or three times [the same domestic value]." (§201(b))
  • Status: Referred to the Committee on Finance on November 8, 2011.
     
• American Growth, Recovery, Empowerment and Entrepreneurship Act ("AGREE Act") – introduced on November 15, 2011 in the Senate as S. 1866 by Sen. Chris Coons (D-Del.) (text, as introduced, is here) and on November 18, 2011 in the House as H.R. 3476 by Rep. Richard L. Hanna (R-NY) (text, as introduced, is here).
• Amends the Trade Secrets Act to explicitly allow U.S. Customs and Border Patrol to share suspected counterfeit materials with rights holders in order to determine authenticity.
• Specifically, these bills provide:
  • if U.S. Customs and Border Protection ("CBP") suspects a product of being imported or exported in violation of 15 U.S.C. § 1124, the Secretary of Homeland Security would be authorized to "share information on, and unredacted samples of, products and their packaging and labels, or photos of such products, packaging and labels, with the rightholders (sic) of the trademark suspected of being copied or simulated, for purposes of determining whether the products are prohibited from importation under that section." § 601(1).
  • Further, once items are seized by CBP under 17 U.S.C. § 1201(a)(2) or (b) (both relating to devices allowing users to circumvent digital rights management information), the Secretary of Homeland Security is "authorized to share information about, and provide samples to affected parties, as to the seizure of material designed to circumvent technological measures or protection afforded by a technological measure that controls access to or protects the owner's work protected by copyright under such title." § 601(2).
  • Both of these provisions are made "subject to applicable bonding requirements."
• Under current law, these materials could not be disclosed for any purpose to rights holders.
• Current Status of Each Bill:
• The Senate Bill was referred to the Committee on Finance on November 15, 2011. Senator Coons' remarks in introducing the Bill appear in the Congressional Record at pages S7594-7596.
• The House Bill was referred to the House Committee on Ways and Means, Committee on the Judiciary and Committee on Financial Services for consideration. No hearings have yet been announced.
   
• National Defense Authorization Act for Fiscal Year 2012 – introduced in the Senate on November 15, 2011 as S. 1867 (H.R. 1540 in the House). (Text of the current version of the Senate bill as passed has not been published yet.)
• The majority
  of this Bill has nothing to do with counterfeiting, and in fact is an appropriations bill relating to military spending.
• However, Amendment No. 1092 (text available here at S7966-7967) was agreed to in the Senate by Unanimous Consent on November 29. This Amendment inserted a provision (based closely on S. 1228 (Combating Military Counterfeits Act of 2011), which was reported favorably by the Senate Judiciary Committee in July) entitled "Detection and Avoidance of Counterfeit Electronic Parts."
• Among other provisions, this Amendment adds the following requirements:
  • Secretary of Homeland Security shall "establish a risk-based methodology for the enhanced targeting of electronic parts imported from any country . . ." (§ 848(b)(1) – S7966).
  • If CBP "suspects a product of being imported or exported in violation of section 42 of the Lanham Act [15 U.S.C. § 1124], and subject to applicable bonding requirements, the Secretary of the Treasury is authorized to share information appearing on, and unredacted samples of, products and their packaging and labels, or photographs of such products, packaging and labels, with the rightholders of trademarks suspected of being copied or simulated, for purpose of determining whether the products are prohibited from importation pursuant to such section." (§ 848(b)(2) – S7966).
  • Amends 18 U.S.C. § 2320 by adding provisions relating to military goods or services such that
    • If a qualifying offense is committed (by trafficking or attempting to traffic in goods or services and knowingly uses a counterfeit mark, the use of which is likely to cause confusion, to cause mistake or to deceive), AND
    • The good or service "malfunctioned, failed or was compromised" AND
    • Could reasonably be foreseen to cause serious bodily injury or death, disclosure of classified information, impairment of combat operations or other significant harm to a member of the Armed Forces or to national security AND
    • The offender had knowledge that the good or service was falsely identified as meeting military standards or is intended for use in a military or national security application;
    • THEN the following penalties will apply:
      
      • Maximum fines increased from $2 million to $5 million or maximum sentence is increase from no more than 10 years to no more than 20 years, or both (for individuals)
      • For subsequent offenses, individuals would be subject to fines up to $15 million, imprisoned for not more than 30 years, or both.
      • Or, if the offender is other than an individual, the maximum fine remains at $15 million.
      • For subsequent offenses, non-individual offenders would be subject to a fine of up to $30 million.
  • Sentencing Commission required to determine whether Federal Sentencing Guidelines should be amended to reflect the "intent of Congress that penalties for such offenses be increased for defendants that sell infringing products to, or for the use by or for, the Armed Forces" or law enforcement or "for use in critical infrastructure or in national security applications." § 848(f)(2).
  • This Bill did not provide a definition for "counterfeit electronic part," instead requiring the Secretary of Defense to provide such definition. § 848(g)(1).
• Status: S. 1867 as amended was agreed to in the Senate by a vote of 93-7 on December 1, 2011.
   
• Counterfeit Drug Penalty Enhancement Act of 2011 – introduced in the Senate on November 17, 2011 as S. 1886 by Sen. Patrick J. Leahy (D-Vt.) (text, as introduced, is here) and in the House as H.R. 3468 by Rep. Patrick L. Meehan (R-Pa.)
  (text, as introduced, is here)
  
  • Amends 18 U.S.C. § 2320(a) to double the maximum fine to be assessed for trafficking in "counterfeit drugs" (defined under the Food, Drug and Cosmetic Act, 21 U.S.C. § 321(g)(2) to the following: 1) $4 million for individual defendants; and 2) $10 million for "persons other than individuals" (e.g., entities of any sort, including corporations, companies, associations and organizations).
  • Both bills provide that repeat offenses incur increased penalties of $8 million, with a 20 year prison term (individuals) and $20 million (entities), respectively.
  • Differences between the House and Senate Bills
    • The Senate Bill recommends increasing the maximum prison sentence of 20 years, and mandates that the U.S. Sentencing Committee re-evaluate the recommended sentences for all counterfeiting crimes.
    • The House bill recommends that the prison sentence be increased to "life or any term of years." The House bill does not direct any evaluation by the Sentencing Commission.
  • Current law provides that these limits are 1) $2 million with a maximum prison sentence of 10 years for individuals; and 2) $5 million for entities. Repeat offenders incur a maximum fine of $5 million and 20 years imprisonment for individuals, and $15 million for entities. 18 U.S.C. § 2320.
  • Current Status of Each Bill
    • The Senate Bill is scheduled to be considered by the Senate Judiciary Committee on December 8, 2011, at 10:00am in SD-226. (Hearing notice is here – with a link to the webcast, when it's prepared.)
    • The House Bill has been referred to the House Committee on the Judiciary, but a hearing has not yet been scheduled.

Clearly, both houses of Congress have "counterfeiting" on the mind, and it will be interesting to see where these various proposals go. Of course, only if one can keep up.