Category Archives: Copyright

Court Certifies Certain Authors as a Class in Google Books Dispute

by Christina Frangiosa


On May 31, 2012, Circuit Judge Denny Chin (now sitting on the Second Circuit Court of Appeals) entered an order certifying a class of authors to proceed in the case as a class. The Authors Guild et al. v. Google, Inc., No. 05 Civ. 8136, slip op. (May 31, 2012). In that case, two motions were decided: the first was Google’s motion to dismiss the association plaintiffs (i.e., The Authors Guild) alleging that they lacked standing to sue. The second was a motion for class certification filed by three representatives (individual members of the association) so that the case could proceed as a class, and that individual class plaintiffs did not need to prove their cases individually. 

In both cases, Google’s argument was the same: that individualized analysis of its “fair use” defense was required, thus rendering the Authors Guild unable to participate, and the individual class members unable to proceed as a group, sharing common interests. In both respects, the court was unpersuaded by Google’s arguments, and ruled against Google.

Motion to Dismiss Authors Guild Claims, Arguing Lack of Standing

In the context of its motion to dismiss, the Court found that “the associations’ claims of copyright infringement and requests for injunctive relief will not require the participation of each individual association member.” Id. at 11. Indeed, the Guild asserted copyright claims on behalf of its members, alleging very broadly that “Google engaged, and continues to engage, in the wholesale copying of books (including an images contained therein) without the consent of the copyright holders, many of whom are association members.” Id. at 12. The Authors Guild only sought injunctive relief (in other words, stop the copying and republishing) and declaratory relief (in other words, for a “declaration” that Google’s activities were unlawful). It is not seeking monetary damages. Notably, “Google does not deny that it copied millions of books – original works – without the permission of the copyright holders. Furthermore, it has displayed snippets of text from these books as well as images contained in the books, without the copyright holders’ permission.”
Id. at 13 (emphasis added).

When it argued that individual participation by association members would be required to respond to Google’s fair use analysis, Google focused on the requirement to prove “the nature of the copyrighted work” and “the effect of the use upon the potential market for or value of the copyrighted work.” Id. at 15. Specifically, Google argued that the difference for fair use purposes between a non-fictional and a fictional work was critical, thus requiring individual proof of market impact. Id. The court was unpersuaded, concluding that it was possible to address these issues by grouping similar works together, thus creating subgroups. Id.

Importantly, the court noted that Google only objected to the Authors Guild’s participation in this case (which it originated seven years ago), was when it became apparent in 2011 that no settlement would be reached. Id. at 17.

The court’s most telling conclusion in this opinion is the following:

. . . [G]iven the sweeping and undiscriminating nature of Google’s unauthorized copying, it would be unjust to require that each affected association member litigate his claim individually. When Google copied works, it did not conduct an inquiry into the copyright ownership of each work; nor did it conduct an individualized evaluation as to whether posting “snippets” of a particular work would constitute “fair use.” It copied and made search results available en masse. Google cannot now turn the tables and ask the Court to require each copyright holder to come forward individually and assert rights in a separate action. Because Google treated the copyright holders as a group, the copyright holders should be able to litigate on a group basis.
 

Id. at 18 (emphasis added).

Motion for Class Certification

In similar fashion, the court discounted Google’s opposition to the motion for class certification filed by Authors Guild members seeking to participate in this case as representatives of a class. Id. at 18-25 (discussion of applicable precedent), 25-31 (application of precedent to the case at hand). Again Google argued that its fair use argument had to be considered as to each plaintiff, on an individual basis. It argued that “most [ ] class members perceive [Google’s copying of their work] as benefit.” Id. at 27. It also submitted the results of a survey it conducted in support of its argument that factual disputes among putative class members would make the class action process “not adequate” to handle this dispute, and therefore argued that class certification should be denied. Id.

This survey revealed that 58% of the authors surveyed (i.e., 500 authors) “approved” of Google’s scanning of their works for search purposes, and about 19% of those surveyed (about 170 authors) “feel that they benefit financially, or would benefit financially, from Google scanning their books and making snippets available in search.” Id.

The court did not discuss the basis for the survey, how the participants were selected, its statistical significance or what percentage of the total putative class was surveyed. Elsewhere in the opinion, however, the court reported the undisputed fact that Google has already scanned more than 12 million books. Id. at 2 (emphasis added). Leaving aside that many of these may be in the public domain, the court also noted that “millions of the books scanned by Google were still under copyright.”  Id. at 3 (emphasis added). Even if you assume that half of these books were written by authors who had written more than one book, 500 authors seems to be a very low sample on which to rely for a survey. (More details about the survey are likely continued in the declaration that Google submitted with the survey evidence, but I have not accessed it.)

Regardless, the court remained unpersuaded by Google’s survey evidence, calling it “without merit.” Pointedly, the court noted that Google had not identified any conflicts between the class members and the rest of the class and concluded that the fact that “some class members may prefer to leave the alleged violation of their rights unremedied is not as basis for finding the lead plaintiffs inadequate.” Id. 28. Indeed, any class member who feels that he or she does not want to participate in the class action may voluntarily exclude themselves by opting out.

Google’s final argument – that some of the publishing contracts which some of these authors may have signed create varying degrees and types of ownership – was similarly rejected. The court found that while these differences might exist, they did not predominate over the common issues shared by the putative class members. Id. at 31. In response to Google’s argument that the display of snippets of the copyrighted works were promotional use (a beneficial interest held by the publisher, not the author) would facilitate sales, the court noted the absence of any proof that such display actually facilitated sales and admonished, “while these authors may have authorized a publisher to promote their works, they have not authorized Google to do so.” Id.

Recommended Reading 

A Study in Counterfeiting Remedies – Denmark’s Approach

by Christina Frangiosa


This is the first in a series of articles on remedies considered for online counterfeiting and piracy, in light of the dismantling of the proposals set forth in the Protect IP Act (PIPA) and the Stop Online Piracy Act (SOPA) from earlier this year. For more on PIPA and SOPA, please see the prior posts on these topics.

The purpose of these articles is to explore potential ways to combat online counterfeiting and piracy, and in particular the type of counterfeiting and piracy that occurs overseas, but is directed at a U.S.-based audience. The most notable example in recent months is Megaupload, which has been taken down in a cooperative effort of seven countries. (For more on the Megaupload take-down, visit The Guardian (UK)’s Megaupload Page and the US Department of Justice’s news release announcing the indictment. For more about the U.S. Immigrations and Customs enforcement take-downs, see ICE’s news releases about its intellectual property enforcement efforts.)   

However, cooperative effort across borders is only possible with countries that share the U.S.’s protection of intellectual property rights. Not all countries do. So, what are trademark and copyright owners to do to protect their IP rights in the online world, where geographic borders mean very little?

This series will examine enforcement efforts in other countries as an illustration of possible enforcement mechanisms that might be available, depending on how new legislation on this topic might be written.

Danish Maritime & Commercial Court Decision

A few days ago, Norsker & Co. (a Danish law firm) posted an article about a recent case, Hublot SA Geneve v. Bronsztejin in the Maritime and Commercial Court (May 3, 2012). According to the article, Danish purchasers ordered counterfeit Hublot watches from a Chinese online service. They paid Dkr$2,250 (USD $2,664.41) for these five watches. When the watches arrived at Danish customs, they were seized, pending proof that they had been purchased for private use. The purchasers did not provide such proof and the counterfeits were destroyed. 

The court then punished the purchasers of these counterfeit watches, by assessing monetary fines and destroying the counterfeit watches. There does not appear to be any action taken against the sellers or any other entities in the distribution chain. The purchasers were required to pay the Danish Customs Office’s cost to destroy the counterfeit goods (Dkr2,500 = USD $438.34), damages for the trademark violation (presumably paid to the trademark holder) in the amount of Dkr5,000 (USD $ 859.49) and “costs” (presumably the court costs) in the amount of Dkr15,500 (USD $ 2,664.41). (Currency converter used here was accessed on May 22, 2012).

As a result, it appears that in Denmark, the courts have chosen to punish the purchasers of the counterfeit goods, and not the intermediaries in the distribution chain. The summary did not mention any other defendants – such as the payment processor who processed the credit card payment, or the shipping service that carried the goods across borders.

Future Articles

The articles to follow in this series will consider enforcement mechanisms imposed in other countries – and perhaps competing types of enforcement within the same jurisdiction – to see what other enforcement possibilities have been considered. Please note that I take no position on the effectiveness or fairness of any of these measures, but instead am collecting a laundry list of possible sanctions and targets of those sanctions for research purposes.

Second Circuit Partially Overturned Viacom vs. YouTube Case

by Christina Frangiosa

In an April 5, 2012 opinion, the Second Circuit concluded that the district court erred in part by granting summary judgment in YouTube’s favor in its August 10, 2010 judgment and remanded the case in part for further proceedings. Viacom Int’l et al. v. YouTube, Inc. et al., No. 10-3270, slip op. (2d Cir. Apr. 5, 2012).

The Second Circuit affirmed certain parts of the underlying opinion – particularly the district court’s conclusion that the DMCA’s § 512(c) safe harbor requires “knowledge or awareness of specific infringing activity” and its conclusion that three of YouTube’s four software functions at issue in this case qualified for the safe harbor – but vacated the opinion in at least one important way. Specifically, the Second Circuit reversed the district court’s interpretation of the “right and ability to control infringing activity” to require “item-specific” knowledge. It also remanded the case to the district court for further fact-finding on whether the fourth software function qualified for a safe harbor. Id. at 2.

In the underlying case, Viacom was joined by several other film studios, television networks, music publishers, and sports leagues in alleging direct and secondary copyright infringement “based on the public performance, display, and reproduction of approximately 79,000 audiovisual ‘clips'” that appeared on Youtube between 2005 and 2009. Id. at 8. Plaintiffs sought damages in the form of statutory damages under § 504(c) or, alternatively, actual damages – as well as declaratory and injunctive relief. Id. at 9.

After considering the arguments on appeal, the Second Circuit vacated the order granting summary judgment in YouTube’s favor because 1) an issue of fact existed whether YouTube had actual knowledge or awareness of specific infringing activity on its website (thus making summary judgment inappropriate), 2) the “right and ability to control” provision does not require “item specific knowledge” and 3) further fact-finding was required before a conclusion could reasonably be reached about whether YouTube’s fourth software process qualified for the safe harbor. Id. at 9.

The Court spent a fair amount of time discussing the evidence presented showing that YouTube officials may have had more than a general understanding that someone might post infringing material to their site. Id. at 19-22. Among other facts, the Court pointed to the following as persuasive that a jury could conclude that YouTube was on notice that infringing content probably existed on their site:





  • YouTube Founder, Jawed Karim, prepared a March 2006 report in which he explained that several “well-known shows” could still be found on YouTube. He stated, “although YouTube is not legally required to monitor content . . . and complies with DMCA takedown requests we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism.” Id. at 20-21. He added that a “more thorough analysis” was required before any content could be removed. Id. at 21.
  • Another YouTube founder, Chad Hurley, concluded in 2005 that certain videos containing the titles “budlight commercials” should be rejected as potentially infringing, but another co-founder, Steve Chen, asked “can we please leave these in a bit longer? Another week or two can’t hurt,” after which time, Karim replied that he “added back in all 28 bud videos.” Id.
  • Finally, the court described another 2005 email exchange in the following way: [Id.]
    • First, “Hurley urged his colleagues ‘to start being diligent about rejected copyrighted/inappropriate content,’ noting that ‘there is a cnn clip of the shuttle clip on the site today, if the boys from Turner would come to the site, they might be pissed?'”
    • Then, his colleagues responded: “but we should just keep that stuff on the site. I really don’t see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down.”
    • Finally, Karim agreed, stating “the CNN space shuttle clip, I like. we can remove it once we’re bigger and better known, but for now that clip is fine.”

Based on these and other similar facts, the Court found that plaintiffs had presented sufficient evidence for “a reasonable juror . . .[to] conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent.” Id. at 22. As a result, the grant of summary judgment in YouTube’s favor was simply “premature.” Id.

Willful Blindness
The Court also analyzed the issue of whether “willful blindness” was equivalent to actual knowledge for purposes of imposing liability for direct or vicarious liability – an issue that the Court labeled as “an issue of first impression.” Id. at 22-24. Relying on Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93, 109 (2d Cir. 2010), the Court explained that when a service provider “has reason to suspect that users of its service are infringing a protected mark, it may not shield itself from learning of the particular infringing transactions by looking the other way.” Viacom, No. 10-3270 at 23 (citing cases).

The Court further clarified that “willful blindness” could not be defined as “an affirmative duty to monitor.” Id. at 24.

The Court ultimately held that “the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.” Id. The Court did not reach the conclusion of whether YouTube actually had been willfully blind to this type of infringing behavior of its users, but instead only that willful blindness could serve as a basis for liability under the right conditions, and thus remanded the case to the district court for consideration of whether the defendants “made a deliberate attempt to avoid guilty knowledge.” Id. 

Right of Control

As the Court stated, the § 512(c) safe harbor provides that eligible service providers must “not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” Id. at 24. The district court considered this argument only briefly, and concluded that this “right and ability to control” required item-specific knowledge. Id. (quoting 718 F. Supp. 2d at 527).

In the appeal, the Court rejected both of the competing interpretations suggested by the parties, concluding that the language neither: 1) requires the ISP to know of the particular infringing content before being able to control it (as proffered by defendants) – because such construction would render this provision (§ 512(c)(1)(B)) duplicative of § 512(c)(1)(A), a result which would be disfavored as a matter of statutory interpretation; nor 2) that this provision merely codifies the common law doctrine of vicarious copyright liability (as proffered by plaintiffs). In its analysis of the common law doctrine, the Court quipped, “Happily, the future of digital copyright law does not turn on the confused legislative history of the control provision.” Id. at 26.

The Court instead concluded that “the right and ability to control infringing activity under § 512(c)(1)(B) ‘requires something more than the ability to remove or block access to materials posted on a service provider’s website.'” Id. at 27 (quoting Capitol Records, Inc. v. MP3tunes, LLC, __ F. Supp. 2d __, 2011 WL 5104616, at *14 (S.D.N.Y. Oct. 25, 2011), among other cases).

The Court acknowledged that the “something more” still needed to be defined, although two cases had found specific activity that courts have concluded rose to a level sufficient to find “right and ability to control.” Id. at 28 (citing Perfect10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d 1146 (C.D. Cal. 2002) and MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)). Rather than setting a specific definition in this opinion, the Court remanded this case to the district court to consider whether plaintiffs “adduced sufficient evidence to allow a reasonable jury to conclude” that YouTube met the “right and ability to control” test, and whether it received a financial benefit directly attributable to this activity. Id. at 28-29.

Summary
    
The Court held the following:

1) Knowledge or awareness of facts/circumstances that indicate specific and identifiable instances of infringement is required by § 512(c)(1)(A);

2) A reasonable jury could conclude that YouTube had knowledge or awareness with respect to a handful of specific clips; the case was remanded to determine whether YouTube had the requisite knowledge or awareness with respect to the clips actually at issue in this case;

3) The willful blindness doctrine can be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement; the case was remanded to determine whether the willful blindness doctrine was applicable here;

4) The district court erred by finding that the “right and ability to control” required item-specific knowledge of the infringing material; the case was remanded for further fact-finding on this issue;

And,

5) The district court was correct that three of the four software functions qualify for the safe harbor; the case was remanded for consideration of whether the fourth function so qualified.

Id. at 34-35. In connection with the remand, the Court left it to the district court’s discretion whether additional discovery would be required. The Court did not award reimbursement of costs to either party.

SOPA – Dying on the Vine?

by Christina Frangiosa


I, for one, hope not. While we in the intellectual property law community may differ as to the best method to combat foreign online counterfeiting and piracy, the basic fact is that this type of theft is not currently enforceable using existing U.S. law. The conduct itself is illegal under the Lanham Act (15 U.S.C. § 1116(d)) and the Copyright Act (17 U.S.C. §§ 501, 512, 1201), and rights holders today can enforce these rights against U.S. based infringers. However, obtaining jurisdiction over a foreign entity is the challenge that bills like SOPA, PROTECT IP and OPEN are aiming to address.

In light of the online protests – in the form of site blackouts – that occurred on January 18, 2012, both the Senate and the House have tabled their bills pending additional communications with the technology community to find solutions that the community can support. (Note that the OPEN Act is proceeding under a different format – and appears to be continuing on its path to a vote.)

PROTECT IP Act – Current Status

The Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011 (“The PROTECT IP Act”) (S. 968) had been scheduled for cloture (see prior post explaining process) on January 24, 2012. Sen. Harry Reid has confirmed that the vote has been postponed. A new date has not yet been set.

In announcing the postponement, Sen. Reid made the following statement (emphasis added):

“In light of recent events, I have decided to postpone Tuesday’s vote on the PROTECT I.P. Act.
    There is no reason that the legitimate issues raised by many about this bill cannot be resolved. Counterfeiting and piracy cost the American economy billions of dollars and thousands of jobs each year, with the movie industry alone supporting over 2.2 million jobs. We must take action to stop these illegal practices. We live in a country where people rightfully expect to be fairly compensated for a day’s work, whether that person is a miner in the high desert of Nevada, an independent band in New York City, or a union worker on the back lots of a California movie studio.
    I admire the work that Chairman Leahy has put into this bill. I encourage him to continue engaging with all stakeholders to forge a balance between protecting Americans’ intellectual property, and maintaining openness and innovation on the internet. We made good progress through the discussions we’ve held in recent days, and I am optimistic that we can reach a compromise in the coming weeks.” (Jan. 20, 2012)

Sen. Leahy issued several public statements just before – and in the wake of – the Jan. 18 protests:

SOPA – Current Status

The Stop Online Piracy Act (“SOPA”) (H.R. 3261) was the bill most clearly targeted by media coverage and the Internet blackouts in the last few days. The bill is currently on hold, and no hearings are currently scheduled to finish the markup process, in which a Manager’s Amendment had been proposed, followed by several amendments to it. The amendments would have modified the Manager’s Amendment, which would then be introduced formally as a new version of SOPA.

Rep. Lamar Smith, Chairman of the Judiciary Committee, similarly issued several press releases on SOPA recently that explain further the progress of this bill through the Committee:

  • Dec. 15: SOPA Has Strong Support
  • Dec. 16: Markup Shows Strong Support for SOPA
  • Jan. 13: Smith to Remove DNS Blocking from SOPA
  • Jan. 14: SOPA Meets White House Requirements
  • Jan. 17: Stop Online Piracy Act Markup to Resume in February
  • Jan. 19: OPEN Act Increases Bureaucracy, Won’t Stop IP Theft
  • “The problem of online piracy is too big to ignore. American intellectual property industries provide 19 million high-paying jobs and account for more than 60 percent of U.S. exports. The theft of America’s intellectual property costs the U.S. economy more than $100 billion annually and results in the loss of thousands of American jobs.  Congress cannot stand by and do nothing while American innovators and job creators are under attack. 
        The online theft of American intellectual property is no different than the theft of products from a store.  It is illegal and the law should be enforced both in the store and online.
        The Committee will continue work with copyright owners, Internet companies, financial institutions to develop proposals that combat online piracy and protect America’s intellectual property.  We welcome input from all organizations and individuals who have an honest difference of opinion about how best to address this widespread problem.  The Committee remains committed to finding a solution to the problem of online piracy that protects American intellectual property and innovation.
        The House Judiciary Committee will postpone consideration of the legislation until there is wider agreement on a solution.”

The House Committee on the Judiciary maintained an Issues page on its web site focusing on rogue websites. Among other things, the website contains an article entitled, “Dispelling the Myths Surrounding SOPA,” which provides a cogent summary of the arguments in favor of the SOPA bill.

 OPEN Act – Current Status

The Online Protection and Enforcement of Digital Trade Act (“the OPEN Act”) was introduced in the Senate by Senator Wyden on December 17, 2011 as S. 2029. A nearly identical version (with minor changes) was introduced by Rep. Issa in the House on January 18, 2011 as H.R. 3782. At present, the bills have been referred to committees for further consideration. The House bill has been “[r]eferred to the Committee on Ways and Means, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.” Status Report for H.R. 3782.

Most recently, Sen. Wyden made the following public statements:

Similarly, Rep. Issa, the Chairman of the House Oversight Committee, has issued a few public statements, but the OPEN Act was only introduced in the House six days ago, leaving him little time to comment in the interim:

CONCLUSIONS

It appears, therefore, that the debate about the right mechanism to combat foreign online piracy and counterfeiting is not completely off the table, although it is hard to imagine the PROTECT IP Act or SOPA proceeding unaltered. Any debate on the issue – regardless of what bill is associated with the debate – will raise questions of effectiveness of the solution, ability to enforce the bill, if enacted, against foreign entities, and whether there is unintended harm that must be avoided. At base, however, this is a problem that warrants a legislative solution.

Stop Online Piracy Act Introduced to Combat Online Piracy and Counterfeiting

by Christina Frangiosa

This is the second in a series, discussing the two new Bills proposed in Congress to deal with online pirates and counterfeiters. (View the first article relating to the PROTECT IP Act here.)

On October 26, 2011, Representative Lamar Smith introduced the Stop Online Piracy Act (H.R. 3261) (“SOPA”). Other sponsors of the Bill upon its introduction were Ranking Member John Conyers, IP Subcommittee Chairman Bob Goodlatte, Rep. Howard Berman, Rep. Marsha Blackburn, Rep. Mary Bono-Mack, Rep. Steve Chabot, Rep. Ted Deutch, Rep. Elton Gallegly, Rep. Tim Griffin, Rep. Dennis Ross, and Rep. Lee Terry.

The Bill followed several public hearings this year alone (one in the Senate and two in the House), each focused on the problems created by unfettered counterfeiting and piracy, including by foreign web sites, of U.S. rights holders’ marks and copyrighted works and aimed at crafting mechanisms to combat that significant loss in U.S. income.

SOPA proposes two additional sections that were not included in the PROTECT IP Act. First, it provides “savings clauses” that mandate that this bill should not be construed to enlarge or diminish the legal obligations or liabilities imposed by 1) the First Amendment; or 2) copyright law (Title 17 of the U.S. Code). Notably absent is a similar provision relating to trademark law (Title 15 of the U.S. Code).

Second, it provides a new mechanism to require qualifying plaintiffs seeking to initiate a private action against the piratical/counterfeiting web site to provide pre-suit notification to certain Internet intermediaries. (More on this is below, in the section on the private right of action.)

INJUNCTIONS PERMITTED

The SOPA provides for injunctions against any continued activities by an owner of a domain name used by an Internet site found to be engaging in prohibited activities. Under the Attorney General’s cause of action, this site must be a “foreign infringing site” while under the private right of action, this site must be “dedicated to the theft of U.S. property.” There are different tests for each type of site that must be analyzed separately. Once an order is obtained declaring the Internet site in question to qualify for action under this Bill, the order can be served upon the owner, operator or registrant of the site, but also upon certain Internet intermediaries requiring them to stop doing business with these sites.

Under the private right of action section, qualifying plaintiffs must provide pre-suit notification (which recipients are required to act on within 5 days), followed by a formal complaint and a motion for an injunction.  This pre-suit notification can only be provided to two of the four intermediaries:  Internet advertisers or payment network providers.

ATTORNEY GENERAL’S ACTION (Section 102)

The U.S. Attorney General may only obtain injunctions against “foreign infringing sites,” which are: 1) “U.S.-directed sites used by users in the United States,” 2) have owners/operators who: traffic in counterfeit or illicit labels, or counterfeit documentation/packaging; commit criminal copyright infringement; traffic in counterfeit goods or services; or steal trade secrets in violation of the Economic Espionage Act; and 3) would be subject to seizure if they were domestic.

Once the Attorney General obtains an injunction against a site deemed to be a foreign infringing site, it may serve the injunction order on service providers (i.e., domain name registrars), Internet search engines (called “information location tools” under the PROTECT IP Act), payment network providers (i.e., MasterCard, Visa or PayPal, called “financial transaction providers” under the PROTECT IP Act), and Internet advertising services (i.e., Google or Yahoo!) requiring that they prevent access by subscribers located within the U.S., prevent the site from being served as a direct hyperlink in a search result, refuse to process payments from users of the site, or decline to distribute advertising to U.S.-based Internet users.

PRIVATE RIGHT OF ACTION (Section 103)

The most notable difference between the PROTECT IP Act and SOPA is the pre-suit notification requirement in order to invoke a private right of action. Under SOPA, a qualifying plaintiff must provide advanced notification to the designated agent of a payment network provider or Internet advertising service before filing suit. The payment network provider and Internet advertising service then has 5 days in which to disable payment transactions from U.S. users or refuse to deliver advertising relating to the Internet site in question to U.S. users.

There is a counter-notification system that allows a defendant to accept jurisdiction in a U.S. court and then to proceed to litigation. If no counter-notification is received, the qualifying plaintiff may simply file suit against the registrant (although if he/she cannot be located, the qualifying plaintiff may take action directly against the web site in an in rem action).

Private rightsholders can obtain injunctions against either foreign or domestic sites, but may only serve the resulting court orders on payment network providers and Internet advertisers as well as the owner, operator or registrant of the domain name – and only after the notification/counter-notification process has been completed.

Some immunity is provided to insulate these Internet intermediaries from liability for certain voluntary enforcement efforts. Monetary damages against either the intermediary or the web site owner/operator/registrant are not available, and monetary sanctions are not available if an intermediary ignores the initial court order and continues doing business with the site named in the court order.

This notification provision mirrors closely § 512 of the Digital Millennium Copyright Act (DMCA), but leaves out certain safe harbors that had been carefully negotiated as part of the drafting of the DMCA over a decade ago. For this reason alone, many copyright practitioners, copyright owners, educators and businesses have opposed the introduction of SOPA, claiming that the bill as currently drafted undermines the protections that have been part of copyright law for the last decade. Some have also claimed that the notification provisions fail to impose certain safeguards that could prevent frivolous litigation or blatantly baseless claims – yet still require the intermediaries to disable access within 5 days of receipt of the notification, perhaps leading to the irreversible loss of income and consumer goodwill by a U.S.-based commercial web site engaged in legitimate operations.

ADDITIONAL PROVISIONS (Title II)

SOPA also provides that unauthorized streaming of copyrighted works qualifies as a crime under Title XVIII, and provides enhanced criminal penalties for such infringement. The Bill also contains provisions relating to inherently dangerous goods (such as military counterfeits) and counterfeit pharmaceuticals. It also mandates the appointment of additional foreign service officers to aid in the enforcement of U.S. intellectual property rights around the world.

STUDY REQUIRED (Section 106)

Under SOPA, the Register of Copyrights, working together with other agencies, is required to issue a report on “the enforcement and effectiveness of this title and on any need to amend the provisions of this title to adapt to emerging technologies.” (Note that the Director of the U.S. Patent and Trademark Office is not included specifically – although participation is implied because it would be one of the “other agencies” – in the development of the study.) This report is due to the judiciary committees of both the House and the Senate within two years of the enactment of this legislation.

NOTORIOUS INFRINGERS (Section 107)

SOPA also provides that the Intellectual Property Enforcement Coordinator (“IPEC”) shall “conduct an analysis of notorious foreign infringers whose activities cause significant harm to holders of intellectual property rights in the United States.” The IPEC shall “solicit” public input “and give consideration to the views and recommendations of members of the public.” The IPEC shall provide the results of this analysis to the judiciary committees of both the House and the Senate within six months of enactment of this bill.

This report shall include the following:

(1) An analysis of notorious foreign infringers and a discussion of how these infringers violate industry norms regarding the protection of intellectual property.
(2) An analysis of the significant harm inflicted by notorious foreign infringers on consumers, businesses, and intellectual property industries in the United States and abroad.
(3) An examination of whether notorious foreign infringers have attempted to or succeeded in accessing capital markets in the United States for funding or public offerings.
(4) An analysis of the adequacy of relying upon foreign governments to pursue legal action against notorious foreign infringers.
(5) A discussion of specific policy recommendations to deter the activities of notorious foreign infringers and encourage foreign businesses industry norms that promote the protection of intellectual property globally, including addressing—
(A) whether notorious foreign infringers that engage in significant infringing should be prohibited by the laws of the States from seeking to raise capital United States, including offering stock to the public; and
(B) whether the United States Government should initiate a process to identify designate foreign entities from a list of notorious foreign infringers that would be prohibited raising capital in the United States.

 

HOUSE HEARINGS PRIOR TO INTRODUCTION OF BILL 

The House of Representatives Committee on the Judiciary, Subcommittee on Intellectual Property, Competition and the Internet has held two hearings on this topic. The first was held on March 14, 2011 entitled “Promoting Investment and Protecting Commerce Online:  Legitimate Sites v. Parasites, Part I.” The testifying witnesses were (hyperlinks link to prepared statements provided by each witness in advance of the hearing):

  • Maria A. Pallante, then-Acting Register of Copyrights, U.S. Copyright Office
  • David Sohn, Senior Policy Counsel, Center for Democracy and Technology (CDT)
  • Daniel Castro, Senior Analyst, Information Technology and Innovation Foundation (ITIF)
  • Frederick Huntsberry (Chief Operating Officer, Paramount Pictures).

The second hearing (entitled conveniently “Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II“) was held on April 6, 2011. Testifying witnesses during this hearing included:

·        Hon. John Morton, Director of the U.S. Immigration and Customs Enforcement
·        Floyd Abrams, a First Amendment expert who testified on his own behalf
·        Kent Walker, Senior Vice President and General Counsel for Google
·        Christine Jones, Executive Vice President and General Counsel for the GoDaddy Group.  

Chairman Lamar Smith’s prepared remarks were published at the end of the hearing. A webcast of the hearing is available on the Senate Judiciary Committee’s site.

HOUSE HEARING TO CONSIDER MODIFICATIONS TO BILL

The House Committee on the Judiciary also held a third hearing to consider the Bill on November 16, 2011, which lasted about three and a half hours. The webcast is still available on the Committee on the Judiciary’s web site. The witnesses were:

  • Maria Pallante, Register of Copyrights, U.S. Library of Congress
  • John Clark, Chief Security Officer and VP of Global Security, Pfizer
  • Michael O’Leary, Senior Executive Vice President, Global Policy and External Affairs, Motion Picture Association of America (MPAA)
  • Linda Kirkpatrick, Group Head, Customer Performance Integrity, MasterCard
  • Katherine Oyama, Policy Counsel, Google
  • Paul Almeida, President, Dept. of Professional Employees, AFL-CIO

MasterCard was thanked repeatedly for its voluntary efforts at combating these criminals. Google was frequently lambasted for what the various legislators described as Google’s participation in the counterfeiting system for its own financial gain.

The overall take-away from the session was that the efforts to involve various Internet intermediaries in the enforcement of U.S. intellectual property rights were a good start. Legislators asked the panelists for recommendations of specific fixes to the current bill, noting that the more participation by affected industries or businesses in the drafting process, the better the bill would end up being. For instance, Rep. Goodlatte asked Google, through Ms. Oyama, its Policy Counsel, to work with the technology committee to help fix the bill rather than referring broadly to alleged technical problems that the bill created.

He and others lamented the broad challenges to the bill that merely complained that the bill would “break the Internet” without providing any specifics about how it would be broken so that the Congressmen could address those issue. The congressmen overwhelmingly agreed that they did not want to break the Internet, but requested specific details so that they could redraft where appropriate and avoid any disruption to service.

It remains to be seen how the bill will be amended, but it seems as if the legislators are intent on “getting it right” before the bill is enacted so that the dual goals of the bill are effectuated: 1) enforcing U.S. intellectual property rights against erosion by criminals (both foreign and domestic) and 2) ensuring that due process of law and other U.S. constitutional rights are not abrogated by the effort. At the conclusion of the hearing, Chairman Smith indicated that a new version of the bill would be introduced as soon as possible, and would take into account the testimony given during the hearing as well as other comments received to date.