Category Archives: Counterfeiting

A Study in Counterfeiting: ISP Blocking Orders in the U.K.

by Christina Frangiosa

This is part two in a series. For other posts in this series, click here. 
  
In the past few months, there have been several public debates over whether ISPs could be – or should be – ordered to block access by any user in the United States to a website that is accused of copyright infringement (in this context, it’s generally referred to as “piracy,” although that term is not defined in the Copyright Act) or trademark counterfeiting (as that term is defined by 15 U.S.C. § 1116). This topic was considered by the Senate Judiciary Committee during its February 16, 2011 hearing on “Targeting Websites Dedicated to Stealing American IP,” including in testimony delivered by Thomas M. Dailey of Verizon. Mr. Dailey recommended that the ability to obtain a court order directing ISPs to prevent an IP address from resolving should be limited to actions undertaken by the Attorney General’s office, so that private litigants would not “drain” ISP resources. Testimony at 2.

Recall that the proposed Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011 (“PROTECT IP Act” or “PIPA”) (S. 968) and Stop Online Piracy Act (“SOPA”) (H.R. 3261) foundered upon a fairly widespread opposition launched in mid-January 2012 to certain terms believed to be in the bills, including provisions for DNS blocking. Interestingly, only the Attorney General had the right – in both of these bills – to seek a court order mandating an ISP to block certain websites (as well as against three other types of intermediaries: financial payment processors, search engines and Internet advertisers). Under both bills, private rights holders were restricted to seeking court orders requiring actions to be undertaken by payment processors and Internet advertisers alone.

As a result of dramatic public pressure, proponents of the bill removed the so-called “DNS blocking provisions” before final markup sessions had occurred. See e.g., Press Release, “Smith to Remove DNS Blocking from SOPA, Retains Strong Provisions to Protect American Technology and Consumers,” Jan. 13, 2012 (“After consultation with industry groups across the country, I feel we should remove Domain Name System blocking from the Stop Online Piracy Act so that the Committee can further examine the issues surrounding this provision. We will continue to look for ways to ensure that foreign websites cannot sell and distribute illegal content to U.S. consumers.”); see also Center for Democracy and Technology (“CDT”), “Copyright Bill Advances, But Draws Plenty of Criticism,” May 26, 2011; CDT, “The Open Internet Fights Back,” Jan. 16, 2012.

As a result, proposals to require ISPs to block content in U.S. civil actions – even with a court order in hand – have essentially become dormant.

Nonetheless, it’s an interesting exercise to explore what other jurisdictions have done in this regard.

Orders Requiring ISPs to Block Access to Sites Providing Infringing Content (UK)

For instance, at least three opinions issued in U.K. cases relatively recently required ISPs to block access to websites that facilitated file sharing or other infringement of copyrighted materials. They are:

* The Studios originally sought an order that said, “The Defendant shall prevent its services being used by users and operators of the website known as NEWZBIN and NEWZBIN2 to infringe copyright.” [¶ 11].
*The day before the hearing, the requested order was amended as follows:
“1. The Respondent shall adopt the following technology directed to the website known as Newzbin or Newzbin2 currently accessible at www.newzbin.com and its domains and sub domains. The technology to be adopted is:
(i) IP address blocking in respect of each and every IP address from which the said website operates or is available and which is notified in writing to the Respondent by the Applicants or their agents.
(ii) DPI based blocking utilising at least summary analysis in respect of each and every URL available at the said website and its domains and sub domains and which is notified in writing to the Respondent by the Applicants or their agents.
2. For the avoidance of doubt paragraph 1(i) and (ii) is complied with if the Respondent uses the system known as Cleanfeed and does not require the Respondent to adopt DPI based blocking utilising detailed analysis.
3. Liberty to the parties to apply on notice in the event of any material change of circumstances (including, for the avoidance of doubt, in respect of the costs, consequences for the parties, and effectiveness of the implementation of the above measures as time progresses).” [¶ 12]

 
* Ultimately, the Court agreed that a blocking order was warranted, but found, “As I think counsel for the Studios accepted, the drafting of paragraph 1 still leaves a certain amount to be desired; but, as counsel for BT accepted, it is now reasonably clear what it is that the Studios are asking the court to order BT to do.” [¶ 13]
* In its case before the England and Wales High Court, L’Oreal sought: “a ruling, first, that eBay and the individual defendants are liable for sales of 17 items made by those individuals through the website www.ebay.co.uk, L’Oréal claiming that those sales infringed the rights conferred on it by, inter alia, the figurative Community trade mark including the words ‘Amor Amor’ and the national word mark ‘Lancôme’.” [Case No. C-324/09 ¶34.]

* “Second, L’Oréal submits that eBay is liable for the use of L’Oréal trade marks where those marks are displayed on eBay’s website and where sponsored links triggered by the use of keywords corresponding to the trade marks are displayed on the websites of search engine operators, such as Google.” [Id. ¶ 38]

 
* With respect to ISPs, the Court reached the following conclusions:
139. First, it follows from Article 15(1) of Directive 2000/31, in conjunction with Article 2(3) of Directive 2004/48, that the measures required of the online service provider concerned cannot consist in an active monitoring of all the data of each of its customers in order to prevent any future infringement of intellectual property rights via that provider’s website. Furthermore, a general monitoring obligation would be incompatible with Article 3 of Directive 2004/48, which states that the measures referred to by the directive must be fair and proportionate and must not be excessively costly. 
140. Second, as is also clear from Article 3 of Directive 2004/48, the court issuing the injunction must ensure that the measures laid down do not create barriers to legitimate trade. That implies that, in a case such as that before the referring court, which concerns possible infringements of trade marks in the context of a service provided by the operator of an online marketplace, the injunction obtained against that operator cannot have as its object or effect a general and permanent prohibition on the selling, on that marketplace, of goods bearing those trade marks.

 
141. Despite the limitations described in the preceding paragraphs, injunctions which are both effective and proportionate may be issued against providers such as operators of online marketplaces. As the Advocate General stated at point 182 of his Opinion, if the operator of the online marketplace does not decide, on its own initiative, to suspend the perpetrator of the infringement of intellectual property rights in order to prevent further infringements of that kind by the same seller in respect of the same trade marks, it may be ordered, by means of an injunction, to do so. 
142. Furthermore, in order to ensure that there is a right to an effective remedy against persons who have used an online service to infringe intellectual property rights, the operator of an online marketplace may be ordered to take measures to make it easier to identify its customer-sellers. In that regard, as L’Oréal has rightly submitted in its written observations and as follows from Article 6 of Directive 2000/31, although it is certainly necessary to respect the protection of personal data, the fact remains that when the infringer is operating in the course of trade and not in a private matter, that person must be clearly identifiable.
* Finally, “The third sentence of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade.” [¶ 145(7) emphasis added]. 
  • Dramatico Enter. Ltd v. British Sky Broad., [2012] EWHC 268 (Ch) (Eng. & Wales High Court (CH) Feb. 20, 2012) – concluding that both the users and operators of the Pirate Bay infringed the copyright owner’s rights [¶ 84]; also provides a summary of an expert opinion describing how BitTorrent works [¶¶ 19-20]; summarizes several orders requiring the URL blocking or “blackholing” of the infringing site [¶¶ 3-4]. 

Other Resources
U.S. Customs & Border Protection and U.S. Immigrations and Customs Enforcement, Report on 2011 Counterfeit Seizures, Jan. 12, 2012 (Press Release, Jan. 12, 2012):

“The growth of websites selling counterfeit goods directly to consumers is one reason why CBP and ICE have seen a significant increase in the number of seizures at mail and express courier facilities,” said Acting CBP Commissioner David V. Aguilar. “Although these websites may have low prices, what they do not tell consumers is that the true costs to our nation and consumers include lost jobs, stolen business profits, threats to our national security, and a serious risk of injury to consumers.”

European Commission, Report on EU Customs Enforcement of Intellectual Property Rights, Results at the EU Border, 2011 (released July 24, 2012) (press release) (facts and figures): This report provides summaries of relevant data about seizures by EU customs, broken down by member country or by types of goods, but also reaches conclusions about the impact and nature of the infringement. For instance, it explains, “Counterfeiters do not concern themselves with product development costs, garantees [sic] or advertising. Profit is maximised by the theft and copying of an original idea, often with cheaper materials. Nevertheless, IPR infringing goods are increasingly sold at a price similar to that of the original goods and effectively substitute them on the market.” [at pages 13-14.]

* The report also concludes that of the goods seized at the border, 97% of them (by quantity) infringed trademarks and 93.36% of them (by value) infringed trademarks. [at 18]

European Commission, The EU Single Market, Enforcement of Intellectual Property Rights – focusing on online piracy and counterfeiting.

EU Information Society Directive (2001/29/EC)

The European Observatory on Online Piracy and Counterfeiting, established in 2008.

Specific Disclaimer

 
Note that the author is not licensed to practice in the European Union or its member countries, and therefore does not purport to render a legal opinion about the application of these cases to specific facts. This analysis is provided merely as an example of restrictions on ISPs that courts have ordered with a stated purpose of combating online piracy or counterfeiting based on existing law.

Open Forum at ABA Annual Meeting on Online Piracy and Counterfeiting

by Christina Frangiosa

In August 2012, the Intellectual Property Law (IPL) Section of the American Bar Association (ABA) will be hosting an open forum during the ABA Annual Meeting in Chicago on online piracy and counterfeiting. I will be moderating one panel (on the scope and severity of the problem) and one of my co-chairs of the Joint Task Force on Online Piracy and Counterfeiting, Chris Katopis, will be moderating the other (essentially, on the U.S. government’s response and remedies). During these panels, and through the work of the Task Force, we are focusing on conduct by entities offshore – essentially foreign sites that currently are beyond U.S. jurisdiction, but who may be engaged in significant copyright piracy of U.S. works and/or trademark counterfeiting of U.S. trademarks.
 
More details about the panels can be found on the ABA’s Annual Meeting Site, and in particular, the Intellectual Property Law Section’s description of the IPL programs that will occur during the meeting.

This panel follows a similar panel that I moderated in March, during the IPL Section’s Annual Meeting in Washington, D.C. (page 9). We had excellent attendance and feedback after the program. I am hoping for a similar result from the Chicago panel discussion, and look forward to getting feedback and input from the attendees about these issues.

In the meantime, here are some governmental resources that identify some of the concerns, and the impacts on the U.S. economy of piracy & counterfeiting that originates outside our borders, but is directed to a U.S. audience:

I look forward to seeing you in August.

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.

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.

PROTECT IP Act May Move Toward Vote in January 2012

by Christina Frangiosa


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.