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Congress's New Weapon in the War on Piracy

December 13, 2007 - by Donny Shaw

A bill to drastically increase the penalties for violating U.S. intellectual property laws appears to be on the fast track to being made a law. The Prioritizing Resources and Organization for Intellectual Property Act of 2007 (aka the PRO IP Act) was introduced only one week ago, and today a hearing was held on the bill in the Intellectual Property subcommittee — expect to see it marked up by the Judiciary Committee and on the House floor soon.

It’s got the backing of all the right members of Congress to make sure that it gets acted on, and quickly. Among its 12 bipartisan co-sponsors are IP subcommittee chairman Howard Berman (D-CA), Judiciary Committee Chairman John Conyers (D-MI) and Judiciary Committee Ranking Member Lamar Smith (R-TX). With supporters like that, it’s not going to have much problem advancing to the House floor.

But its impressive, bipartisan backing in Congress belies its controversial nature. Many citizens and consumer groups have serious concerns with the effects this bill would have on small-time infringers if it became law. One of the most controversial provisions would disaggregate pieces of a compilation or derivative work for the purpose of calculating penalties. William Patry, Google’s Senior Copyright Counsel, wrote on his blog about how the disaggregation provision would effect the penalties for infringing the copyright of a single CD:

>…where a CD had twelve tracks, there was [under current law] only one award of statutory damages possible. Under the [PRO IP] bill, there may be 25: there would be 12 for each track on the sound recording, 1 for the sound recording as a whole, and 12 for each musical composition. Under this approach, for one CD the minimum award for non-innocent infringement must be $18,750, for a CD that sells in some stores at an inflated price of $18.99 and may be had for much less from or iTunes. The maximum amount of $150,000 then becomes three million, seven hundred and fifty thousand dollars per CD.
>Now multiple that times a mere ten albums, and one gets a glimpse at the staggering amount that will be routinely sought, not just in suits filed, but more importantly in thousands for cease and desist letters, where grandmothers and parents are shaken down for the acts of their wayward offspring. These private non-negotiable demands don’t see the light of day, but they have resulted in “settlements” wherein ordinary people have paid abnormal amounts of money rather than be hauled into court and thereby incur costs that will bankrupt them.

Another controversial provision would allow the government to seize and destroy the computers and “any property used, or intended to be used” to infringe on copyrights. Arguing against this provision in a statement, Gigi Sohn of Public Knowledge, said that, “seizing expensive manufacturing equipment used for large-scale infringement from a commercial pirate may be appropriate. Seizing a family’s general-purpose computer in a download case, as this bill would allow, is not appropriate.”

The bill would also the government to seize “any property constituting or derived from any proceeds obtained directly or indirectly” from a copyright violation. Patry argues that this could include almost anything a defendant owns. “How could one disprove that any property purchased in the relevant time period was not indirectly derived from infringement,” he writes.

Of course, this bill also has its fans. Guest-blogging at the Copyright Alliance blog, Richard Cotton, the Executive Vice President and General Counsel for NBC Universal and one of the witnesses at today’s hearing, listed three reasons why the PRO IP Act’s expanded penalties for copyright violations are crucial:

>First, IP theft is a jobs and economic security issue, with hundreds of billions of dollars a year and millions of high-paying jobs at stake.
>Second, IP theft is a health and safety issue that presents a clear and increasing danger to the public, from counterfeit toothpaste laced with antifreeze to exploding batteries and other dangerous consumer goods.
>Third, IP theft is the new face of organized crime. Organized crime goes where the money is, and today that is high-value IP-dependent commerce such as bootleg DVDs and counterfeit medicine.

And writing on The Hill’s Congress Blog today, Rep. Tom Feeney (R-FL), a co-sponsor, said:

>Studies show that the intellectual property industries are responsible for 40% of the growth achieved by all U.S. private industry. With annual economic losses due to piracy and counterfeiting numbering billions of dollars and hundreds of thousands of American jobs, Congress must tackle intellectual property theft to ensure that the U.S. remains a global power.

For a rundown of what was said in today’s hearing, see this article from Sean Gallagher at Internet News.

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  • adelie 03/12/2008 11:56am

    What a great scam! I wonder if the IRS will let me claim everything I ever didn’t get as a LOSS. Hmm… Wonder if congress can help me with that cause last I heard people who try to do that go to jail for fraud.

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