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Attorneys

Jack Bauer to Hunt Down DVD Pirates?

November 5, 2008

Sometimes a law is passed which tackles incredibly complex issues and causes seismic shifts in entire industries. Unfortunately, nothing like that happened in time for this article. However, early this month President Bush signed into law Senate Bill 3325 – the Enforcement of Intellectual Property Rights Act of 2008. This new law amends existing federal intellectual property laws to enhance remedies for violations of intellectual property rights and creates a Cabinet level position to coordinate protection of intellectual property, both domestically and abroad, to promote education and to facilitate criminal prosecution of infringers. This bill was backed heavily by the RIAA, MPAA and other organizations who represent content owners. A summary of the changes implanted by the act are as follows.

Enhancements to Civil Intellectual Property Laws

The first section of Title I of the Act makes some modifications to the requirement that prior to instituting copyright infringement action a plaintiff must have registered the work being infringed. First, the Act limits the registration requirements for civil actions, meaning that the government can pursue criminal copyright infringement actions without the copyright owner having ever filed and obtained a copyright registration for the work being infringed. Second, the Act introduces a harmless error provision to the registration requirement. An infringer can no longer avoid liability if the registration covering the work allegedly infringed contains inaccurate information.

The second section of Title I of the Act introduces a new tool for copyright owners combating infringement. Under the newly revised Section 503(a) of the Copyright Act, a court may now impound all of allegedly infringing copies or phonorecords, all plates, molds, masters, and other means or methods of which the allegedly infringing copies or phonorecords were made, and all records documenting the manufacture and sale of the allegedly infringing copies or phonorecords. These new tools were previously only enjoyed by trademark owners who sought to impound counterfeit goods under the Lanham Act.

The third and fourth sections of the Act address the civil penalties that may be imposed in counterfeiting cases under the Lanham Act. Section 35(b) of the Lanham Act has been amended to impose treble damages not only against individuals who engage in the sale or distribution of counterfeit goods, but also against those who provide the goods or services necessary for the sale or distribution of counterfeit goods. The Act also doubles statutory damages available under the Lanham act in counterfeiting cases. Now, in cases involving use of a counterfeit mark, the plaintiff is entitled to an award of statutory damages of not less than $1,000 (up from $500) but no more than $200,000 (up from $100,000) per counterfeit mark per type of goods or services sold or distributed. If the court finds that the use of the counterfeit mark was willful, the court may now award up to $2,000,000 (up from $1,000,000) per counterfeit mark per type of goods or services sold or distributed.

The Act also amends Section 602 of the Copyright Act which previously addressed the importation of infringing copies or phonorecords. The Act now provides that the importation into the United States, and now the exportation from the United States, of copies or phonorecords which, if sold within the United States would be infringing goods, shall constitute copyright infringement.

New Forfeiture Laws

Title II of the Act adds a new forfeiture provision for civil and criminal infringement. Under the new forfeiture provisions not only are infringing copies or counterfeit items subject to forfeiture and destruction, but also any property used or intended to be used in any manner to commit or facilitate the infringement. Also subject to forfeiture are the proceeds from the infringing activities. The new forfeiture provision also provides for the forfeiture and destruction of property involved in the unauthorized recording of live musical performances or motion pictures.

Creation Of An Intellectual Property Enforcement Coordinator and Budget Appropriations

Title III contains the most controversial provision of the Act; the creation of a Cabinet level position to oversee and coordinate the enforcement of intellectual property. The “IP Czar” has quite a job description. This person shall be responsible for coordinating the development of a strategic plan to combat and reduce counterfeit and infringing goods in the domestic and international markets, disrupting and eliminating domestic and international counterfeiting and infringing networks, working with foreign nations to establish international standards and policies for the protection and enforcement of intellectual property rights, and taking active steps to protect United States Intellectual Property rights in foreign nations.

Also included in the Act are appropriations totaling $275,000,000 ($55,000,000 per fiscal year beginning in 2009 and continuing through 2013) for the Department of Justice and FBI to combat intellectual property infringement. The Department of Justice shall have access to $25,000,000 per year to make grants available to the states and local law enforcement entities for training, prevention, enforcement, and prosecution of intellectual property theft and infringement crimes. The FBI and the Attorney General for the Criminal Division of the DOJ get a total of $30,000,000 per year in appropriations for the investigation and prosecution of intellectual property crimes, including adding 10 additional operational agents of the BBI designated to support the Computer Crime and Intellectual Property Section of the Criminal Division of the DOJ in the investigation and coordination of intellectual property crimes; ensuring that at least one FBI agent provides support to the Computer Hacking and Intellectual Property Crime Unit in the DOJ for investigating and prosecuting computer hacking or intellectual property crimes; for FBI training in investigating and prosecuting intellectual property crime; and for the assignment of at least two assistant United States attorneys to each United States Attorneys Office who shall be responsible for investigating and prosecuting computer hacking and intellectual property crimes.

Senator Lahey who sponsored the bill stated that “intellectual property makes up some of the most valuable, and most vulnerable, property we have” and that we “need to do more to protect it from theft and abuse if we hope to continue being a world leader in innovation.” According to Lahey, the protection of intellectual property has an impact on the U.S. economy. “If we make better and stronger efforts to combat counterfeiting and piracy”, Lahey stated “we will also enjoy more jobs, greater returns, productivity, and more taxes being paid rather than having infringers and thieves enjoy the financial gains of wrong doing.” According to the Recording Industry Association of America (RIAA) “global piracy of copyrighted material costs the U.S. economy $58 billion per year and more than 370,000 jobs and $16 billion in earnings for U.S. workers.”

As a lawyer who represents business engaged in the creation and exploitation of copyrighted content and branded products, I concur that intellectual property are incredibly valuable assets and that companies in the content creation and exploitation business contribute significantly to the economy. But given the current economic situation, should the government spend $275,000,000 to help the RIAA and MPAA members combat global privacy? Do we really want Jack Bauer hunting down DVD pirates in China?