Combating Online Infringement And Counterfeits Act

Statement Of Senator Patrick J. Leahy (D-Vt.),

Chairman, Committee On The Judiciary,

On Introduction Of The Combating Online Infringement And Counterfeits Act
September 20, 2010

Few things are more important to the future of the American economy and job creation than protecting our intellectual property.  The Chamber of Commerce estimates that American intellectual property accounts for more than $5 trillion of the country’s gross domestic product, and IP-intensive industries employ more than 18 million workers.   Each year, online piracy and the sale of counterfeit goods cost American businesses billions of dollars, and result in hundreds of thousands of lost jobs.  Studies recently cited by the AFL-CIO estimate that digital theft of movies and music alone costs more than 200,000 jobs.  This is unacceptable in any economic climate.  It is devastating today.

The severity of the problem continues to increase and businesses of all types and sizes – and their employees – are the victims.  In Vermont, companies like Burton Snowboards and the Vermont Teddy Bear Company are well recognized brands that depend on the enforcement of our intellectual property laws to keep their businesses thriving.

The growth of the digital marketplace is extraordinary and it gives creators and producers new opportunities to reach consumers.  But it also brings with it the perils of piracy and counterfeiting.  The increased usage and accessibility of the Internet has transformed it into the new Main Street.  Internet purchases have become so commonplace that consumers are less wary of online shopping and therefore more easily victimized by online products that may have health, safety or other quality concerns when they are counterfeit.

Today, I am introducing the bipartisan Combating Online Infringement and Counterfeits Act, which will provide the Justice Department with an important tool to crack down on websites dedicated to online infringement.  This legislation will protect the investment American companies make in developing brands and creating content and will protect the jobs associated with those investments.  Protecting intellectual property is not uniquely a Democratic or Republican priority – it is a bipartisan priority.

The Justice Department is currently limited in the remedies available to prevent websites dedicated to offering infringing content.  These websites are often based overseas yet target American consumers.  American consumers are too often deceived into thinking the products they are purchasing are legitimate because the websites reside at familiar-sounding domain names and are complete with corporate advertising, credit card acceptance, and advertising links that make them appear legitimate.

The Combating Online Infringement and Counterfeits Act will give the Department of Justice an expedited process for cracking down on these rogue websites, regardless of whether the website’s owner is located inside or outside of the United States.  This legislation authorizes the Justice Department to file an in rem civil action against the domain name, and to seek an order from the court that the domain name is used to access a website that is dedicated to infringing activities.  Once the court issues an order against the domain name, the Attorney General would have the authority to serve the domain name’s U.S. based registry or registrar with that order, which would then be required to suspend the infringing domain name.

Where the registry or registrar is not located in the United States, the Act would provide the Attorney General the authority to serve the order on other specified third parties at its discretion, including Internet service providers, payment processors, and online ad network providers.  These third parties, which are critical to the financial viability of the infringing website’s business, would then be required to stop doing business with that website by, for example, blocking online access to the rogue site or not processing the website’s purchases.

This legislation will provide the Department of Justice with an important tool to protect American consumers, American businesses, and American jobs.  We should not expect that enactment of the legislation will completely solve the problem of online infringement, but it will make it more difficult for foreign entities to profit off American hard work and ingenuity.   This bill targets the most egregious actors, and is an important first step to putting a stop to online piracy and sale of counterfeit goods.

I look forward to working with all Senators to pass this important, bipartisan legislation.

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Section-By-Section Summary of the Combating Online Infringement and Counterfeits Act

Section 1. This section provides that the legislation may be cited as the “Combating Online Infringement and Counterfeits Act”.

Section 2. This section amends chapter 113 of title 18 by adding a section 2324 with the following subsections:

Subsection (a).  This subsection provides the definition for an internet site that is “dedicated to infringing activities” as referenced elsewhere in section 2324.  Under this definition, an internet site is “dedicated to infringing activities” if (1) the website would constitute property that is subject to civil forfeiture under section 2323 of title 18 (subsection (a)(1)), or (2) the website’s central purpose is to offer infringing goods and services, or counterfeit products (subsection (a)(2)).

Subsection (b).  This subsection provides the Attorney General with the authority to issue a temporary restraining order, preliminary injunction, or injunction against a domain name property that is determined to be “dedicated to infringing activities” in an action commenced under subsection (c).

Subsection (c).  This subsection provides the Attorney General with the authority to commence an in rem action against a domain name used by an Internet site that is “dedicated to infringing activities.”  This in rem authority over a domain name is modeled after the jurisdictional provisions in the Anticybersquatting Consumer Protection Act (ACPA). This subsection specifies that the action must be brought in the judicial district where the domain name registrar or registry is located, or alternatively in the District of Columbia if neither the registrar nor the registry are located in the United States.

Subsection (d)(1).  This subsection, also modeled after the ACPA, outlines criteria to be used to determine a domain name’s situs in an in rem action where either the registrar or registry is located in a judicial district within the United States, or where documents sufficient to establish control and authority regarding the disposition of registration are located in a judicial district within the United States.

Subsection (d)(2).  This subsection provides grounds under which the Justice Department may still bring an action in the District of Columbia to prevent importation into the United States of infringing good and services, even where a domain name does not have a situs in the United States.  Such an action requires that the domain name be used to access an infringing Internet site in the District of Columbia, and that the site’s activities have a commercial effect in the United States, as measured by certain non-exclusive enumerated criteria.

Subsection (e).  This subsection authorizes the Attorney General to deliver a copy of the court order to a domain name registrar or registry (subsection (e)(1)), an Internet services provider (subsection (e)(2)(A)), a financial transaction provider (subsection (e)(2)(B)), and an advertising network services (subsection (e)(2)(C)); and prescribes the action that the respective party must undertake upon receipt of the order.  This subsection further provides the entity taking action under this subsection with immunity from any related cause of action (subsection (e)(3)).

Subsection (f).  This subsection requires the Attorney General to inform the Intellectual Property Enforcement Coordinator (IPEC) of all orders issued under this section, and requires the IPEC to post such names, along with other relevant information, on a publicly available website.

Subsection (g).  This subsection provides the Attorney General with the authority to bring an action against a party that willfully or persistently fails to comply with an order delivered under subsection (e).  This subsection further provides that a showing by the defending party that it does not have the technical means to comply with an issuance of the order serves as a complete defense to an action brought under this subsection.

Subsection (h)(1).  This subsection authorizes the Attorney General to seek a modification of the court order where an Internet site that is “dedicated to infringing activities” is reconstituted under a different domain name(s) to include those additional domain name(s) in the order, and provides criteria for the court to consider in granting such a modification.  This subsection addresses the problem of an Internet site that is “dedicated to infringing activities” otherwise reemerging under a different domain name to avoid the implications of an order that is issued against it.

Subsection (h)(2).  This subsection authorizes the defendant or owner or operator of the domain name to seek a modification, suspension or vacation of the court order where the Internet site associated with the domain name is no longer dedicated to infringing activities, or where the interests of justice require.

Subsection (h)(3). This subsection authorizes a party to move for dismissal of the order where the domain name is deleted following expiration of its registration.

Subsection (i).  This subsection is a savings clause to ensure that this Act is not construed to limit other civil or criminal remedies available under current Federal or State law.

Subsection (j).  This subsection authorizes the Attorney General to maintain a public listing of domain names that the Department determines are dedicated to infringing activities as defined in the statute, but against which it has not brought an action under this section.  This subsection also provides any registrar, registry, Internet service provider, payment system provider or advertising network with the authority to take action with regard to the domain name as if it had received an order under subsection (e), as well as the protection from legal liability provided by subsection (e)(3).  Further, this subsection requires the Attorney General to establish procedures by which the owner or operator of a domain name listed under this subsection can petition for removal from the listing.

Section 3. This section requires the Attorney General to publish procedures and provide guidance to carry out the activities of this section in coordination with those harmed by the illegal activity.

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