[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
STOP ONLINE PIRACY ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
ON
H.R. 3261
__________
NOVEMBER 16, 2011
__________
Serial No. 112-154
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TIM GRIFFIN, Arkansas LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania [Vacant]
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
MARK AMODEI, Nevada
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
C O N T E N T S
----------
NOVEMBER 16, 2011
Page
TEXT OF THE BILL
H.R. 3261, the ``Stop Online Piracy Act''........................ 3
OPENING STATEMENTS
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Chairman, Committee on the Judiciary....... 1
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Ranking Member, Committee on
the Judiciary.................................................. 22
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Member, Committee on the Judiciary.. 37
The Honorable Melvin L. Watt, a Representative in Congress from
the State of North Carolina, and Member, Committee on the
Judiciary...................................................... 39
WITNESSES
The Honorable Maria Pallante, Register of Copyrights, U.S.
Library of Congress
Oral Testimony................................................. 47
Prepared Statement............................................. 50
John P. Clark, Chief Security Officer and Vice President of
Global Security, Pfizer, Inc.
Oral Testimony................................................. 60
Prepared Statement............................................. 62
Michael P. O'Leary, Senior Executive Vice President, Global
Policy and External Affairs, Motion Picture Association of
America (MPAA)
Oral Testimony................................................. 68
Prepared Statement............................................. 71
Linda Kirkpatrick, Group Head, Customer Performance Integrity,
Mastercard Worldwide
Oral Testimony................................................. 80
Prepared Statement............................................. 82
Katherine Oyama, Copyright Counsel, Google, Inc.
Oral Testimony................................................. 98
Prepared Statement............................................. 101
Paul Almeida, President, Department for Professional Employees
(DPE), American Federation of Labor, Congress of Industrial
Organizations (AFL-CIO)
Oral Testimony................................................. 113
Prepared Statement............................................. 115
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Material submitted by the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 24,25
Prepared Statement of the Honorable J. Randy Forbes, a
Representative in Congress from the State of Virginia, and
Member, Committee on the Judiciary............................. 41
Prepared Statement of the Honorable Zoe Lofgren, a Representative
in Congress from the State of California, and Member, Committee
on the Judiciary............................................... 42
Prepared Statement of the Honorable Henry C. ``Hank'' Johnson,
Jr., a Representative in Congress from the State of Georgia,
and Member, Committee on the Judiciary......................... 44
Material submitted by the Honorable Howard L. Berman, a
Representative in Congress from the State of California, and
Member, Committee on the Judiciary............................. 131
Material submitted by the Honorable Zoe Lofgren, a Representative
in Congress from the State of California, and Member, Committee
on the Judiciary............................................... 144
Material submitted by the Honorable Darrell Issa, a
Representative in Congress from the State of California, and
Member, Committee on the Judiciary............................. 204
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Ron Wyden, a U.S. Senator
from the State of Oregon....................................... 261
Prepared Statement of Terry Hart, Creator of Copyhype............ 263
List of submitters contributing material in association with the
consideration of H.R. 3261..................................... 272
STOP ONLINE PIRACY ACT
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WEDNESDAY, NOVEMBER 16, 2011
House of Representatives,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to call, at 10:06 a.m., in room
2141, Rayburn Office Building, the Honorable Lamar Smith
(Chairman of the Committee) presiding.
Present: Representatives Smith, Coble, Goodlatte, Lungren,
Chabot, Issa, Forbes, King, Franks, Gohmert, Jordan, Poe,
Chaffetz, Griffin, Marino, Gowdy, Ross, Adams, Quayle, Amodei,
Conyers, Berman, Nadler, Watt, Lofgren, Jackson Lee, Waters,
Cohen, Johnson, Quigley, Chu, Deutch, and Sanchez.
Staff present: (Majority) David Whitney, Counsel; Olivia
Lee, Clerk; and (Minority) Jason Everett, Counsel.
Mr. Smith. Good morning. The Judiciary Committee will come
to order. Without objection, the Chair is authorized to declare
recesses of the Committee at any time.
I am going to recognize myself for an opening statement,
then the Ranking Member, and then the Chairman and the Ranking
Member of the appropriate Subcommittee.
Today's hearing is on legislation that will help protect
one of the most productive sectors of the American economy.
While the Digital Millennium Copyright Act does provide some
relief to copyright owners whose works are infringed, it only
helps in limited circumstances. The DMCA provides no effective
relief when a rogue website is foreign-based and foreign
operated, like The Pirate Bay, the 89th most visited site in
the U.S. It does not protect trademark owners and consumers
from counterfeit and unsafe products, like fake prescription
medicines and misbranded branded drugs that are often presented
to the public by unlicensed online pharmacies. Nor does the law
assist copyright owners when rogue websites contribute to the
theft of intellectual property on a massive scale.
And, finally, this does nothing to address the use of
certain intermediaries, such as payment processors and Internet
advertising services, that are used by criminals to fund the
illegal activities.
Mr. Scott. Mr. Chairman, I am having trouble hearing your
statement.
Mr. Smith. I would not want anyone to miss my statement, so
I will make sure that the sound system is working and that I am
close enough to the mic.
Mr. Scott. Turn his mic way up.
Mr. Smith. That is where the Stop Online Piracy Act comes
in. This bill focuses not on technology, but on preventing
those who engage in criminal behavior from reaching directly
into the U.S. market to harm American consumers. We cannot
continue a system that allows criminals to disregard our laws
and import counterfeit and pirated goods across our physical
borders, nor can we fail to take effective and meaningful
action when criminals misuse the Internet.
The problem of rogue websites is real, immediate, and wide
spread. It harms all sectors of the economy, and its scope is
staggering. One recent survey found that nearly one-quarter of
global Internet traffic infringes on copyrights. A second study
found that 43 sites classified as digital piracy, generated 53
billion visits per year, and that 26 sites selling just
counterfeit prescription drugs generated 51 million hits
annually.
Since the United States produces the most intellectual
property, our country has the most to lose if we fail to
address the problem of these rogue websites. Responsible
companies and public officials have taken note of the corrosive
and damaging effects of rogue websites. One of our witnesses
today represents MasterCard Worldwide, a company that takes
seriously its obligation to reduce the amount of stolen
intellectual property on the Internet. MasterCard deserves
thanks for its commitment to support legislation that addresses
the problems of online piracy.
In contrast, another one of the companies represented here
today has sought to obstruct the Committee's consideration of
bipartisan legislation. Perhaps this should come as no
surprise, given that Google just settled a Federal criminal
investigation into the company's active promotion of a rogue
websites that pushed illegal prescription and counterfeit drugs
on American consumers. In announcing a half billion dollar
forfeiture of illegal profit, the U.S. Attorney, Peter Neronha,
who led the investigation, stated, ``Suffice it to say that
this is not two or three rogue employees of the consumer
service level doing this. This was a corporate decision to
engage in this conduct.''
Over several years, Google ignored repeated warnings from
the National Association of Boards of Pharmacy and the National
Center on Addiction and Substance Abuse at Columbia University,
that the company was violating Federal law. The company also
disregarded requests to block advertisements from rogue
pharmacies, screen such sites from searches, and provide
warnings about buying drugs over the Internet.
The Wall Street Journal reports Mr. Neronha characterized
Google's efforts to appear to control unlawful advertisements
as window dressing since ``It allowed Google to continue
earning revenues from the allegedly illicit ad sales, even as
it professed to be taking action against them.'' Given Google's
record, their objection to authorizing a court to order a
search engine to not steer consumers to foreign rogue sites is
easily understood.
Unfortunately, the theft of America's intellectual property
costs the United States economy more than $100 billion annually
and results in a loss of thousands of American jobs. Under
current law, rogue sites that profit from selling pirated goods
are often out of the reach of U.S. law enforcement agencies and
operate without consequences. The Stop Online Piracy Act helps
stop flow of revenues to rogue websites and insurers. The
profits from American innovations go to American innovators.
Protecting America's intellectual property will help our
economy, create jobs, and discourage illegal websites.
That concludes my opening statement, and the gentleman from
Michigan, the Ranking Member of the Judiciary Committee, is
recognized for his opening statement.
[The text of the bill, H.R. 3261, follows:]
HR 3261 IH ___________________________________________________
I
112th CONGRESS
1st Session
H. R. 3261
To promote prosperity, creativity, entrepreneurship, and innovation by
combating the theft of U.S. property, and for other purposes.
__________
IN THE HOUSE OF REPRESENTATIVES
October 26, 2011
Mr. Smith of Texas (for himself and Mr. Conyers, Mr. Goodlatte, Mr.
Berman, Mr. Griffin of Arkansas, Mr. Gallegly, Mr. Deutch, Mr.
Chabot, Mr. Ross of Florida, Mrs. Blackburn, Mrs. Bono Mack, Mr.
Terry, and Mr. Schiff) introduced the following bill; which was
referred to the Committee on the Judiciary
__________
A BILL
To promote prosperity, creativity, entrepreneurship, and innovation by
combating the theft of U.S. property, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Stop Online Piracy
Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Savings and severability clauses.
TITLE I--COMBATING ONLINE PIRACY
Sec. 101. Definitions.
Sec. 102. Action by Attorney General to protect U.S. customers and
prevent U.S. support of foreign infringing sites.
Sec. 103. Market-based system to protect U.S. customers and prevent
U.S. funding of sites dedicated to theft of U.S. property.
Sec. 104. Immunity for taking voluntary action against sites
dedicated to theft of U.S. property.
Sec. 105. Immunity for taking voluntary action against sites that
endanger public health.
Sec. 106. Guidelines and study.
Sec. 107. Denying U.S. capital to notorious foreign infringers.
TITLE II--ADDITIONAL ENHANCEMENTS TO COMBAT INTELLECTUAL PROPERTY THEFT
Sec. 201. Streaming of copyrighted works in violation of criminal
law.
Sec. 202. Trafficking in inherently dangerous goods or services.
Sec. 203. Protecting U.S. businesses from foreign and economic
espionage.
Sec. 204. Amendments to sentencing guidelines.
Sec. 205. Defending intellectual property rights abroad.
SEC. 2. SAVINGS AND SEVERABILITY CLAUSES.
(a) Savings Clauses.--
(1) First amendment.--Nothing in this Act shall be
construed to impose a prior restraint on free speech or the
press protected under the 1st Amendment to the Constitution.
(2) Title 17 liability.--Nothing in title I shall be
construed to enlarge or diminish liability, including vicarious
or contributory liability, for any cause of action available
under title 17, United States Code, including any limitations
on liability under such title.
(b) Severability.--If any provision of this Act, or the application
of the provision to any person or circumstance, is held to be
unconstitutional, the other provisions or the application of the
provision to other persons or circumstances shall not be affected
thereby.
TITLE I--COMBATING ONLINE PIRACY
SEC. 101. DEFINITIONS.
In this title:
(1) Domain name.--The term ``domain name'' has the meaning
given that term in section 45 of the Lanham Act (15 U.S.C.
1127) and includes any subdomain designation using such domain
name as part of an electronic address on the Internet to
identify a unique online location.
(2) Domain name system server.--The term ``domain name
system server'' means a server or other mechanism used to
provide the Internet protocol address associated with a domain
name.
(3) Domestic domain name.--The term ``domestic domain
name'' means a domain name that is registered or assigned by a
domain name registrar, domain name registry, or other domain
name registration authority, that is located within a judicial
district of the United States.
(4) Domestic internet protocol address.--The term
``domestic Internet Protocol address'' means an Internet
Protocol address for which the corresponding Internet Protocol
allocation entity is located within a judicial district of the
United States.
(5) Domestic internet site.--The term ``domestic Internet
site'' means an Internet site for which the corresponding
domain name or, if there is no domain name, the corresponding
Internet Protocol address, is a domestic domain name or
domestic Internet Protocol address.
(6) Foreign domain name.--The term ``foreign domain name''
means a domain name that is not a domestic domain name.
(7) Foreign internet protocol address.--The term ``foreign
Internet Protocol address'' means an Internet Protocol address
that is not a domestic Internet protocol address.
(8) Foreign internet site.--The term ``foreign Internet
site'' means an Internet site that is not a domestic Internet
site.
(9) Including.--The term ``including'' means including, but
not limited to.
(10) Intellectual property enforcement coordinator.--The
term ``Intellectual Property Enforcement Coordinator'' means
the Intellectual Property Enforcement Coordinator appointed
under section 301 of the Prioritizing Resources and
Organization for Intellectual Property Act of 2008 (15 U.S.C.
8111).
(11) Internet.--The term ``Internet'' has the meaning given
that term in section 5362(5) of title 31, United States Code.
(12) Internet advertising service.--The term ``Internet
advertising service'' means a service that for compensation
sells, purchases, brokers, serves, inserts, verifies, clears,
or otherwise facilitates the placement of an advertisement,
including a paid or sponsored search result, link, or
placement, that is rendered in viewable form for any period of
time on an Internet site.
(13) Internet protocol.--The term ``Internet Protocol''
means a protocol used for communicating data across a packet-
switched internetwork using the Transmission Control Protocol/
Internet Protocol, and includes any predecessor or successor
protocol to such protocol.
(14) Internet protocol address.--The term ``Internet
Protocol address'' means a numerical label that is assigned to
each device that participates in a computer network that uses
the Internet Protocol for communication.
(15) Internet protocol allocation entity.--The term
``Internet Protocol allocation entity'' means, with respect to
a particular Internet Protocol address, the entity, local
internet registry, or regional internet registry to which the
smallest applicable block of Internet Protocol addresses
containing that address is allocated or assigned by a local
internet registry, regional internet registry, or other
Internet Protocol address allocation authority, according to
the applicable publicly available database of allocations and
assignments, if any.
(16) Internet search engine.--The term ``Internet search
engine'' means a service made available via the Internet that
searches, crawls, categorizes, or indexes information or Web
sites available elsewhere on the Internet and on the basis of a
user query or selection that consists of terms, concepts,
categories, questions, or other data returns to the user a
means, such as a hyperlinked list of Uniform Resource Locators,
of locating, viewing, or downloading such information or data
available on the Internet relating to such query or selection.
(17) Internet site.--The term ``Internet site'' means the
collection of digital assets, including links, indexes, or
pointers to digital assets, accessible through the Internet
that are addressed relative to a common domain name or, if
there is no domain name, a common Internet Protocol address.
(18) Lanham act.--The term ``Lanham Act'' means the Act
entitled ``An Act to provide for the registration and
protection of trademarks used in commerce, to carry out the
provisions of certain international conventions, and for other
purposes'', approved July 5, 1946 (commonly referred to as the
``Trademark Act of 1946'' or the ``Lanham Act'').
(19) Nonauthoritative domain name server.--The term
``nonauthoritative domain name server'' means a server that
does not contain complete copies of domains but uses a cache
file that is comprised of previous domain name server lookups,
for which the server has received an authoritative response in
the past.
(20) Owner; operator.--The terms ``owner'' or ``operator'',
when used in connection with an Internet site, includes,
respectively, any owner of a majority interest in, or any
person with authority to operate, such Internet site.
(21) Payment network provider.--
(A) In general.--The term ``payment network
provider'' means an entity that directly or indirectly
provides the proprietary services, infrastructure, and
software to effect or facilitate a debit, credit, or
other payment transaction.
(B) Rule of construction.--For purposes of this
paragraph, a depository institution (as such term is
defined under section 3 of the Federal Deposit
Insurance Act) or credit union that initiates a payment
transaction shall not be construed to be a payment
network provider based solely on the offering or
provision of such service.
(22) Service provider.--The term ``service provider'' means
a service provider as defined in section 512(k)(1) of title 17,
United States Code, that operates a nonauthoritative domain
name system server.
(23) U.S.-directed site.--The term ``U.S.-directed site''
means an Internet site or portion thereof that is used to
conduct business directed to residents of the United States, or
that otherwise demonstrates the existence of minimum contacts
sufficient for the exercise of personal jurisdiction over the
owner or operator of the Internet site consistent with the
Constitution of the United States, based on relevant evidence
that may include whether--
(A) the Internet site is used to provide goods or
services to users located in the United States;
(B) there is evidence that the Internet site or
portion thereof is intended to offer or provide--
(i) such goods and services,
(ii) access to such goods and services, or
(iii) delivery of such goods and services,
to users located in the United States;
(C) the Internet site or portion thereof does not
contain reasonable measures to prevent such goods and
services from being obtained in or delivered to the
United States; and
(D) any prices for goods and services are indicated
or billed in the currency of the United States.
(24) United states.--The term ``United States'' includes
any commonwealth, possession, or territory of the United
States.
SEC. 102. ACTION BY ATTORNEY GENERAL TO PROTECT U.S. CUSTOMERS AND
PREVENT U.S. SUPPORT OF FOREIGN INFRINGING SITES.
(a) Definition.--For purposes of this section, a foreign Internet
site or portion thereof is a ``foreign infringing site'' if--
(1) the Internet site or portion thereof is a U.S.-directed
site and is used by users in the United States;
(2) the owner or operator of such Internet site is
committing or facilitating the commission of criminal
violations punishable under section 2318, 2319, 2319A, 2319B,
or 2320, or chapter 90, of title 18, United States Code; and
(3) the Internet site would, by reason of acts described in
paragraph (1), be subject to seizure in the United States in an
action brought by the Attorney General if such site were a
domestic Internet site.
(b) Action by the Attorney General.--
(1) In personam.--The Attorney General may commence an in
personam action against--
(A) a registrant of a domain name used by a foreign
infringing site; or
(B) an owner or operator of a foreign infringing
site.
(2) In rem.--If through due diligence the Attorney General
is unable to find a person described in subparagraph (A) or (B)
of paragraph (1), or no such person found has an address within
a judicial district of the United States, the Attorney General
may commence an in rem action against a foreign infringing site
or the foreign domain name used by such site.
(3) Notice.--Upon commencing an action under this
subsection, the Attorney General shall send a notice of the
alleged violation and intent to proceed under this section--
(A) to the registrant of the domain name of the
Internet site--
(i) at the postal and electronic mail
addresses appearing in the applicable publicly
accessible database of registrations, if any,
and to the extent such addresses are reasonably
available; and
(ii) via the postal and electronic mail
addresses of the registrar, registry, or other
domain name registration authority that
registered or assigned the domain name of the
Internet site, to the extent such addresses are
reasonably available; or
(B) to the owner or operator of the Internet site--
(i) at the primary postal and electronic
mail addresses for such owner or operator that
is provided on the Internet site, if any, and
to the extent such addresses are reasonably
available; or
(ii) if there is no domain name of the
Internet site, via the postal and electronic
mail addresses of the Internet Protocol
allocation entity appearing in the applicable
publicly accessible database of allocations and
assignments, if any, and to the extent such
addresses are reasonably available; or
(C) in any other such form as the court may
provide, including as may be required by rule 4(f) of
the Federal Rules of Civil Procedure.
(4) Service of process.--For purposes of this section, the
actions described in this subsection shall constitute service
of process.
(5) Relief.--On application of the Attorney General
following the commencement of an action under this section, the
court may issue a temporary restraining order, a preliminary
injunction, or an injunction, in accordance with rule 65 of the
Federal Rules of Civil Procedure, against a registrant of a
domain name used by the foreign infringing site or an owner or
operator of the foreign infringing site or, in an action
brought in rem under paragraph (2), against the foreign
infringing site or a portion of such site, or the domain name
used by such site, to cease and desist from undertaking any
further activity as a foreign infringing site.
(c) Actions Based on Court Orders.--
(1) Service.--A process server on behalf of the Attorney
General, with prior approval of the court, may serve a copy of
a court order issued pursuant to this section on similarly
situated entities within each class described in paragraph (2).
Proof of service shall be filed with the court.
(2) Reasonable measures.--After being served with a copy of
an order pursuant to this subsection, the following shall
apply:
(A) Service providers.--
(i) In general.--A service provider shall
take technically feasible and reasonable
measures designed to prevent access by its
subscribers located within the United States to
the foreign infringing site (or portion
thereof) that is subject to the order,
including measures designed to prevent the
domain name of the foreign infringing site (or
portion thereof) from resolving to that domain
name's Internet Protocol address. Such actions
shall be taken as expeditiously as possible,
but in any case within 5 days after being
served with a copy of the order, or within such
time as the court may order.
(ii) Limitations.--A service provider shall
not be required--
(I) other than as directed under
this subparagraph, to modify its
network, software, systems, or
facilities;
(II) to take any measures with
respect to domain name resolutions not
performed by its own domain name
server; or
(III) to continue to prevent access
to a domain name to which access has
been effectively disabled by other
means.
(iii) Construction.--Nothing in this
subparagraph shall affect the limitation on the
liability of a service provider under section
512 of title 17, United States Code.
(iv) Text of notice.--The Attorney General
shall prescribe the text of any notice
displayed to users or customers of a service
provider taking actions pursuant to this
subparagraph. Such text shall state that an
action is being taken pursuant to a court order
obtained by the Attorney General.
(B) Internet search engines.--A provider of an
Internet search engine shall take technically feasible
and reasonable measures, as expeditiously as possible,
but in any case within 5 days after being served with a
copy of the order, or within such time as the court may
order, designed to prevent the foreign infringing site
that is subject to the order, or a portion of such site
specified in the order, from being served as a direct
hypertext link.
(C) Payment network providers.--
(i) Preventing affiliation.--A payment
network provider shall take technically
feasible and reasonable measures, as
expeditiously as possible, but in any case
within 5 days after being served with a copy of
the order, or within such time as the court may
order, designed to prevent, prohibit, or
suspend its service from completing payment
transactions involving customers located within
the United States or subject to the
jurisdiction of the United States and the
payment account--
(I) which is used by the foreign
infringing site, or portion thereof,
that is subject to the order; and
(II) through which the payment
network provider would complete such
payment transactions.
(ii) No duty to monitor.--A payment network
provider shall be considered to be in
compliance with clause (i) if it takes action
described in that clause with respect to
accounts it has as of the date on which a copy
of the order is served, or as of the date on
which the order is amended under subsection
(e).
(D) Internet advertising services.--
(i) Required actions.--An Internet
advertising service that contracts to provide
advertising to or for the foreign infringing
site, or portion thereof, that is subject to
the order, or that knowingly serves advertising
to or for such site or such portion thereof,
shall take technically feasible and reasonable
measures, as expeditiously as possible, but in
any case within 5 days after being served with
a copy of the order, or within such time as the
court may order, designed to--
(I) prevent its service from
providing advertisements to or relating
to the foreign infringing site that is
subject to the order or a portion of
such site specified in the order;
(II) cease making available
advertisements for the foreign
infringing site or such portion
thereof, or paid or sponsored search
results, links, or other placements
that provide access to such foreign
infringing site or such portion
thereof; and
(III) cease providing or receiving
any compensation for advertising or
related services to, from, or in
connection with such foreign infringing
site or such portion thereof.
(ii) No duty to monitor.--An internet
advertising service shall be considered to be
in compliance with clause (i) if it takes
action described in that clause with respect to
accounts it has as of the date on which a copy
of the order is served, or as of the date on
which the order is amended under subsection
(e).
(3) Communication with users.--Except as provided under
paragraph (2)(A)(iv), an entity taking an action described in
this subsection shall determine the means to communicate such
action to the entity's users or customers.
(4) Enforcement of orders.--
(A) In general.--To ensure compliance with orders
issued pursuant to this section, the Attorney General
may bring an action for injunctive relief--
(i) against any entity served under
paragraph (1) that knowingly and willfully
fails to comply with the requirements of this
subsection to compel such entity to comply with
such requirements; or
(ii) against any entity that knowingly and
willfully provides or offers to provide a
product or service designed or marketed for the
circumvention or bypassing of measures
described in paragraph (2) and taken in
response to a court order issued pursuant to
this subsection, to enjoin such entity from
interfering with the order by continuing to
provide or offer to provide such product or
service.
(B) Rule of construction.--The authority granted
the Attorney General under subparagraph (A)(i) shall be
the sole legal remedy to enforce the obligations under
this section of any entity described in paragraph (2).
(C) Defense.--A defendant in an action under
subparagraph (A)(i) may establish an affirmative
defense by showing that the defendant does not have the
technical means to comply with this subsection without
incurring an unreasonable economic burden, or that the
order is not authorized by this subsection. Such
showing shall not be presumed to be a complete defense
but shall serve as a defense only for those measures
for which a technical limitation on compliance is
demonstrated or for such portions of the order as are
demonstrated to be unauthorized by this subsection.
(D) Definition.--For purposes of this paragraph, a
product or service designed or marketed for the
circumvention or bypassing of measures described in
paragraph (2) and taken in response to a court order
issued pursuant to this subsection includes a product
or service that is designed or marketed to enable a
domain name described in such an order--
(i) to resolve to that domain name's
Internet protocol address notwithstanding the
measures taken by a service provider under
paragraph (2) to prevent such resolution; or
(ii) to resolve to a different domain name
or Internet Protocol address that the provider
of the product or service knows, reasonably
should know, or reasonably believes is used by
an Internet site offering substantially similar
infringing activities as those with which the
infringing foreign site, or portion thereof,
subject to a court order under this section was
associated.
(5) Immunity.--
(A) Immunity from suit.--Other than in an action
pursuant to paragraph (4), no cause of action shall lie
in any Federal or State court or administrative agency
against any entity served with a copy of a court order
issued under this subsection, or against any director,
officer, employee, or agent thereof, for any act
reasonably designed to comply with this subsection or
reasonably arising from such order.
(B) Immunity from liability.--Other than in an
action pursuant to paragraph (4)--
(i) any entity served with a copy of an
order under this subsection, and any director,
officer, employee, or agent thereof, shall not
be liable for any act reasonably designed to
comply with this subsection or reasonably
arising from such order; and
(ii) any--
(I) actions taken by customers of
such entity to circumvent any
restriction on access to the foreign
infringing site, or portion thereof,
that is subject to such order, that is
instituted pursuant to this subsection,
or
(II) act, failure, or inability to
restrict access to a foreign infringing
site, or portion thereof, that is
subject to such order, in spite of good
faith efforts to comply with such order
by such entity,
shall not be used by any person in any claim or
cause of action against such entity.
(d) Modification or Vacation of Orders.--
(1) In general.--At any time after the issuance of an order
under subsection (b), a motion to modify, suspend, or vacate
the order may be filed by--
(A) any person, or owner or operator of property,
that is subject to the order;
(B) any registrant of the domain name, or the owner
or operator, of the Internet site that is subject to
the order;
(C) any domain name registrar, registry, or other
domain name registration authority that has registered
or assigned the domain name of the Internet site that
is subject to the order; or
(D) any entity that has been served with a copy of
an order pursuant to subsection (c) that requires such
entity to take action prescribed in that subsection.
(2) Relief.--Relief under this subsection shall be proper
if the court finds that--
(A) the foreign Internet site subject to the order
is no longer, or never was, a foreign infringing site;
or
(B) the interests of justice otherwise require that
the order be modified, suspended, or vacated.
(3) Consideration.--In making a relief determination under
paragraph (2), a court may consider whether the domain name of
the foreign Internet site has expired or has been re-registered
by an entity other than the entity that is subject to the order
with respect to which the motion under paragraph (1) is
brought.
(4) Intervention.--An entity required to take action
pursuant to subsection (c) if an order issues under subsection
(b) may intervene at any time in any action commenced under
subsection (b) that may result in such order, or in any action
to modify, suspend, or vacate such order under this subsection.
(e) Amended Orders.--The Attorney General, if alleging that a
foreign Internet site previously adjudicated in an action under this
section to be a foreign infringing site is accessible or has been
reconstituted at a different domain name or Internet Protocol address,
may petition the court to amend the order issued under this section
accordingly.
(f) Law Enforcement Coordination.--
(1) In general.--The Attorney General shall inform the
Intellectual Property Enforcement Coordinator and the heads of
appropriate law enforcement agencies of all court orders issued
under subsection (b), and all amended orders issued under
subsection (e), regarding foreign infringing sites.
(2) Alterations.--The Attorney General shall, and the
defendant may, inform the Intellectual Property Enforcement
Coordinator of the modification, suspension, expiration, or
vacation of a court order issued under subsection (b) or an
amended order issued under subsection (e).
SEC. 103. MARKET-BASED SYSTEM TO PROTECT U.S. CUSTOMERS AND PREVENT
U.S. FUNDING OF SITES DEDICATED TO THEFT OF U.S.
PROPERTY.
(a) Definitions.--In this section:
(1) Dedicated to theft of u.s. property.--An ``Internet
site is dedicated to theft of U.S. property'' if--
(A) it is an Internet site, or a portion thereof,
that is a U.S.-directed site and is used by users
within the United States; and
(B) either--
(i) the U.S.-directed site is primarily
designed or operated for the purpose of, has
only limited purpose or use other than, or is
marketed by its operator or another acting in
concert with that operator for use in, offering
goods or services in a manner that engages in,
enables, or facilitates--
(I) a violation of section 501 of
title 17, United States Code;
(II) a violation of section 1201 of
title 17, United States Code; or
(III) the sale, distribution, or
promotion of goods, services, or
materials bearing a counterfeit mark,
as that term is defined in section
34(d) of the Lanham Act or section 2320
of title 18, United States Code; or
(ii) the operator of the U.S.-directed
site--
(I) is taking, or has taken,
deliberate actions to avoid confirming
a high probability of the use of the
U.S.-directed site to carry out acts
that constitute a violation of section
501 or 1201 of title 17, United States
Code; or
(II) operates the U.S.-directed
site with the object of promoting, or
has promoted, its use to carry out acts
that constitute a violation of section
501 or 1201 of title 17, United States
Code, as shown by clear expression or
other affirmative steps taken to foster
infringement.
(2) Qualifying plaintiff.--The term ``qualifying
plaintiff'' means, with respect to a particular Internet site
or portion thereof, a holder of an intellectual property right
harmed by the activities described in paragraph (1) occurring
on that Internet site or portion thereof.
(b) Denying U.S. Financial Support of Sites Dedicated to Theft of
U.S. Property.--
(1) Payment network providers.--Except in the case of an
effective counter notification pursuant to paragraph (5), a
payment network provider shall take technically feasible and
reasonable measures, as expeditiously as possible, but in any
case within 5 days after delivery of a notification under
paragraph (4), that are designed to prevent, prohibit, or
suspend its service from completing payment transactions
involving customers located within the United States and the
Internet site, or portion thereof, that is specified in the
notification under paragraph (4).
(2) Internet advertising services.--Except in the case of
an effective counter notification pursuant to paragraph (5), an
Internet advertising service that contracts with the operator
of an Internet site, or portion thereof, that is specified in a
notification delivered under paragraph (4), to provide
advertising to or for such site or portion thereof, or that
knowingly serves advertising to or for such site or portion
thereof, shall take technically feasible and reasonable
measures, as expeditiously as possible, but in any case within
5 days after delivery the notification under paragraph (4),
that are designed to--
(A) prevent its service from providing
advertisements to or relating to the Internet site, or
portion thereof, that is specified in the notification;
(B) cease making available advertisements for such
Internet site, or portion thereof, that is specified in
the notification, or paid or sponsored search results,
links, or other placements that provide access to such
Internet site, or portion thereof, that is specified in
the notification; and
(C) cease providing or receiving any compensation
for advertising or related services to, from, or in
connection with such Internet site, or portion thereof,
that is specified in the notification.
(3) Designated agent.--
(A) In general.--Each payment network provider and
each Internet advertising service shall designate an
agent to receive notifications described in paragraph
(4), by making available through its service, including
on its Web site in a location accessible to the public,
and by providing to the Copyright Office, substantially
the following:
(i) The name, address, phone number, and
electronic mail address of the agent.
(ii) Other contact information that the
Register of Copyrights considers appropriate.
(B) Directory of agents.--The Register of
Copyrights shall maintain and make available to the
public for inspection, including through the Internet,
in electronic format, a current directory of agents
designated under subparagraph (A).
(4) Notification regarding internet sites dedicated to
theft of u.s. property.--
(A) Requirements.--Subject to subparagraph (B), a
notification under this paragraph is effective only if
it is a written communication that is provided to the
designated agent of a payment network provider or an
Internet advertising service and includes substantially
the following:
(i) A physical or electronic signature of a
person authorized to act on behalf of the
holder of an intellectual property right harmed
by the activities described in subsection
(a)(1).
(ii) Identification of the Internet site,
or portion thereof, dedicated to theft of U.S.
property, including either the domain name or
Internet Protocol address of such site, or
both.
(iii) Identification of the specific facts
to support the claim that the Internet site, or
portion thereof, is dedicated to theft of U.S.
property and to clearly show that immediate and
irreparable injury, loss, or damage will result
to the holder of the intellectual property
right harmed by the activities described in
subsection (a)(1) in the absence of timely
action by the payment network provider or
Internet advertising service.
(iv) Information reasonably sufficient to
establish that the payment network provider or
Internet advertising service is providing
payment processing or Internet advertising
services for such site.
(v) Information reasonably sufficient to
permit the payment network provider or Internet
advertising service to contact the holder of
the intellectual property right harmed by the
activities described in subsection (a)(1).
(vi) A statement that the holder of the
intellectual property right has a good faith
belief that the use of the owner's works or
goods in which the right exists, in the manner
described in the notification, is not
authorized by the holder, its agent, or law.
(vii) A statement that the information in
the notification is accurate, and, under
penalty of perjury, that the signatory is
authorized to act on behalf of the holder of
the intellectual property right harmed by the
activities described in subsection (a)(1).
(viii) Identification of the evidence
indicating that the site (or portion thereof)
is a U.S.-directed site.
(B) Service if no agent designated.--If a payment
network provider or Internet advertising service has
not designated an agent under paragraph (3), the
notification under subparagraph (A) may be provided to
any officer or legal representative of such provider or
service.
(C) Notice to internet site identified in
notification.--Upon receipt of an effective
notification under this paragraph, a payment network
provider or Internet advertising service shall take
appropriate steps to ensure timely delivery of the
notification to the Internet site identified in the
notification.
(5) Counter notification.--
(A) Requirements.--Subject to subparagraph (B), a
counter notification is effective under this paragraph
only if it is a written communication that is provided
to the designated agent of a payment network provider
or an Internet advertising service and includes
substantially the following:
(i) A physical or electronic signature of
the owner or operator of the Internet site, or
portion thereof, specified in a notification
under paragraph (4) subject to which action is
to be taken by the payment network provider or
Internet advertising service under paragraph
(1) or (2), or of the registrant of the domain
name used by such site or portion thereof.
(ii) In the case of an Internet site
specified in the notification under paragraph
(4) that is a foreign Internet site, a
statement that the owner or operator, or
registrant, consents to the jurisdiction of the
courts of the United States, and will accept
service of process from the person who provided
notification under paragraph (4), or an agent
of such person, for purposes of adjudicating
whether the site is an Internet site dedicated
to theft of U.S. property under this section.
(iii) A statement under penalty of perjury
that the owner or operator, or registrant, has
a good faith belief that it does not meet the
criteria of an Internet site dedicated to theft
of U.S. property as set forth under this
section.
(iv) The name, address, email address, and
telephone number of the owner, operator, or
registrant.
(B) Service if no agent designated.--If a payment
network provider or Internet advertising service has
not designated an agent under paragraph (3), the
counter notification under subparagraph (A) may be
provided to any officer or legal representative of such
provider or service.
(6) Misrepresentations.--Any provider of a notification or
counter notification who knowingly materially misrepresents
under this section--
(A) that a site is an Internet site dedicated to
the theft of U.S. property, or
(B) that such site does not meet the criteria of an
Internet site dedicated to the theft of U.S. property,
shall be liable for damages, including costs and attorneys'
fees, incurred by the person injured by such misrepresentation
as a result of the misrepresentation.
(c) Limited Injunctive Relief in Cases of Counter Notification.--
(1) In personam.--If an effective counter notification is
made under subsection (b)(5), or if a payment network provider
fails to comply with subsection (b)(1), or an Internet
advertising service fails to comply with subsection (b)(2),
pursuant to a notification under subsection (b)(4) in the
absence of such a counter notification, a qualifying plaintiff
may commence an in personam action against--
(A) a registrant of a domain name used by the
Internet site, or portion thereof, that is subject to
the notification under subsection (b)(4); or
(B) an owner or operator of the Internet site or
portion thereof.
(2) In rem.--If through due diligence a qualifying
plaintiff who is authorized to bring an in personam action
under paragraph (1) with respect to an Internet site dedicated
to theft of U.S. property is unable to find a person described
in subparagraphs (A) or (B) of paragraph (1), or no such person
found has an address within a judicial district of the United
States, the qualifying plaintiff may commence an in rem action
against that Internet site or the domain name used by such
site.
(3) Notice.--Upon commencing an action under this
subsection, the qualifying plaintiff shall send a notice of the
alleged activity described in subsection (a)(1) and intent to
proceed under this subsection--
(A) to the registrant of the domain name of the
Internet site, or portion thereof, that is the subject
to the notification under subsection (b)(4)--
(i) at the postal and electronic mail
addresses appearing in the applicable publicly
accessible database of registrations, if any,
and to the extent such addresses are reasonably
available; and
(ii) via the postal and electronic mail
addresses of the registrar, registry, or other
domain name registration authority that
registered or assigned the domain name of the
Internet site, or portion thereof, to the
extent such addresses are reasonably available;
(B) to the owner or operator of the Internet site,
or portion thereof--
(i) at the primary postal and electronic
mail addresses for such owner or operator that
are provided on the Internet site, or portion
thereof, if any, and to the extent such
addresses are reasonably available; or
(ii) if there is no domain name of the
Internet site or portion thereof, via the
postal and electronic mail addresses of the
Internet Protocol allocation entity appearing
in the applicable publicly accessible database
of allocations and assignments, if any, and to
the extent such addresses are reasonably
available; or
(C) in any other such form as the court may
prescribe, including as may be required by rule 4(f) of
the Federal Rules of Civil Procedure.
(4) Service of process.--For purposes of this section, the
actions described in this subsection shall constitute service
of process.
(5) Relief.--On application of a qualifying plaintiff
following the commencement of an action under this section with
respect to an Internet site dedicated to theft of U.S.
property, the court may issue a temporary restraining order, a
preliminary injunction, or an injunction, in accordance with
rule 65 of the Federal Rules of Civil Procedure, against a
registrant of a domain name used by the Internet site, or
against an owner or operator of the Internet site, or, in an
action brought in rem under paragraph (2), against the Internet
site, or against the domain name used by the Internet site, to
cease and desist from undertaking any further activity as an
Internet site dedicated to theft of U.S. property.
(d) Actions Based on Court Orders.--
(1) Service and response.--
(A) Service by qualifying plaintiff.--A qualifying
plaintiff, with the prior approval of the court, may
serve a copy of a court order issued under subsection
(c) on similarly situated entities described in
paragraph (2). Proof of service shall be filed with the
court.
(B) Response.--An entity served under subparagraph
(A) shall, not later than 7 days after the date of such
service, file with the court a certification
acknowledging receipt of a copy of the order and
stating that such entity has complied or will comply
with the obligations imposed under paragraph (2), or
explaining why the entity will not so comply.
(C) Venue for service.--A copy of the court order
may be served in any judicial district where an entity
resides or may be found.
(2) Reasonable measures.--After being served with a copy of
an order pursuant to this subsection, the following shall
apply:
(A) Payment network providers.--
(i) Preventing affiliation.--A payment
network provider shall take technically
feasible and reasonable measures, as
expeditiously as possible, but in any case
within 5 days after being served with a copy of
the court order, or within such time as the
court may order, that are designed to prevent,
prohibit, or suspend its service from
completing payment transactions involving
customers located within the United States or
subject to the jurisdiction of the United
States and any account--
(I) which is used by the Internet
site dedicated to theft of U.S.
property that is subject to the order;
and
(II) through which the payment
network provider would complete such
payment transactions.
(ii) No duty to monitor.--A payment network
provider is in compliance with clause (i) if it
takes action described in that clause with
respect to accounts it has as of the date of
service of the order, or as of the date of any
subsequent notice that its service is being
used to complete payment transactions described
in clause (i).
(B) Internet advertising services.--
(i) Required actions.--An Internet
advertising service that contracts with the
Internet site dedicated to theft of U.S.
property that is subject to the order to
provide advertising to or for such Internet
site, or that knowingly serves advertising to
or for such internet site, shall take
technically feasible and reasonable measures,
as expeditiously as possible, but in any case
within 5 days after being served with a copy of
the order, or within such time as the court may
order, that are designed to--
(I) prevent its service from
providing advertisements to or relating
to the Internet site;
(II) cease making available
advertisements for the Internet site,
or paid or sponsored search results,
links, or other placements that provide
access to the Internet site; and
(III) cease providing or receiving
any compensation for advertising or
related services to, from, or in
connection with the Internet site.
(ii) No duty to monitor.--An internet
advertising service is in compliance with
clause (i) if it takes action described in that
clause with respect to accounts it has as of
the date on which a copy of the order is
served, or as of the date of any subsequent
notice that its service is being used for
activities described in clause (i).
(3) Communication with users.--An entity taking an action
described in this subsection shall determine the means to
communicate such action to the entity's users or customers.
(4) Enforcement of orders.--
(A) Rule of construction.--The authority under this
subsection shall be the sole legal remedy to enforce
the obligations of any entity under this subsection.
(B) Procedures and relief.--
(i) Show cause order.--On a showing by the
qualifying plaintiff of probable cause to
believe that an entity served with a copy of a
court order issued under subsection (c) has not
complied with its obligations under this
subsection by reason of such court order, the
court shall require the entity to show cause
why an order should not issue--
(I) to require compliance with the
obligations of this subsection; and
(II) to impose an appropriate
monetary sanction, consistent with the
court's exercise of its equitable
authority, to enforce compliance with
its lawful orders, if the entity--
(aa) has knowingly and willfully failed to file a certification
required by paragraph (1)(B);
(bb) has filed such a certification agreeing to comply but has
knowingly and willfully failed to do so; or
(cc) has knowingly and willfully certified falsely that compliance
with the requirements of paragraph (2) is not required by law.
(ii) Service of process.--The order to show
cause, and any other process, may be served in
any judicial district where the entity resides
or may be found.
(C) Defense.--An entity against whom relief is
sought under subparagraph (B) may establish an
affirmative defense by showing that the entity does not
have the technical means to comply with this subsection
without incurring an unreasonable economic burden, or
that the order is not authorized by this subsection.
Such showing shall not be presumed to be a complete
defense but shall serve as a defense only for those
measures for which a technical limitation on compliance
is demonstrated or for such portions of the order as
are demonstrated to be unauthorized by this subsection.
(5) Immunity.--
(A) Immunity from suit.--Other than in an action
pursuant to paragraph (4), no cause of action shall lie
in any Federal or State court or administrative agency
against any entity served with a copy of a court order
issued under subsection (c), or against any director,
officer, employee, or agent thereof, for any act
reasonably designed to comply with this subsection or
reasonably arising from such order.
(B) Immunity from liability.--Other than in an
action pursuant to paragraph (4)--
(i) any entity served with a copy of an
order under this subsection, and any director,
officer, employee, or agent thereof, shall not
be liable for any acts reasonably designed to
comply with this subsection or reasonably
arising from such order; and
(ii) any--
(I) actions taken by customers of
such entity to circumvent any
restriction on access to the Internet
site, or portion thereof that is
subject to such order, that is
instituted pursuant to this subsection,
or
(II) act, failure, or inability to
restrict access to an Internet site or
portion thereof that is subject to such
order, despite good faith efforts to
comply with such order by such entity,
shall not be used by any person in any claim or
cause of action against such entity.
(e) Modification or Vacation of Orders.--
(1) In general.--At any time after the issuance of an order
under subsection (c), or an amended order issued under
subsection (f), with respect to an Internet site dedicated to
theft of U.S. property, a motion to modify, suspend, or vacate
the order may be filed by--
(A) any person, or owner or operator of property,
that is subject to the order;
(B) any registrant of the domain name, or the owner
or operator, of such Internet site;
(C) any domain name registrar, registry, or other
domain name registration authority that has registered
or assigned the domain name of such Internet site; or
(D) any entity that has been served with a copy of
an order under subsection (d), or an amended order
under subsection (f), that requires such entity to take
action prescribed in that subsection.
(2) Relief.--Relief under this subsection shall be proper
if the court finds that--
(A) the Internet site subject to the order is no
longer, or never was, an Internet site dedicated to
theft of U.S. property; or
(B) the interests of justice otherwise require that
the order be modified, suspended, or vacated.
(3) Consideration.--In making a relief determination under
paragraph (2), a court may consider whether the domain name of
the Internet site has expired or has been re-registered by an
entity other than the entity that is subject to the order with
respect to which the motion under paragraph (1) is brought.
(4) Intervention.--An entity required to take action
pursuant to subsection (d) if an order issues under subsection
(c) may intervene at any time in any action commenced under
subsection (c) that may result in such order, or in any action
to modify, suspend, or vacate such order under this subsection.
(f) Amended Orders.--The qualifying plaintiff, if alleging that an
Internet site previously adjudicated in an action under this section to
be an Internet site dedicated to theft of U.S. property is accessible
or has been reconstituted at a different domain name or Internet
Protocol address, may petition the court to amend the order issued
under this section accordingly.
(g) Reporting of Orders.--
(1) In general.--The qualifying plaintiff shall inform the
Intellectual Property Enforcement Coordinator of any court
order issued under subsection (c) or amended order issued under
subsection (f).
(2) Alterations.--Upon the modification, suspension,
expiration, or vacation of a court order issued under
subsection (c) or an amended order issued under subsection (f),
the qualifying plaintiff shall, and the defendant may, so
inform the Intellectual Property Enforcement Coordinator.
SEC. 104. IMMUNITY FOR TAKING VOLUNTARY ACTION AGAINST SITES DEDICATED
TO THEFT OF U.S. PROPERTY.
No cause of action shall lie in any Federal or State court or
administrative agency against, no person may rely in any claim or cause
of action against, and no liability for damages to any person shall be
granted against, a service provider, payment network provider, Internet
advertising service, advertiser, Internet search engine, domain name
registry, or domain name registrar for taking any action described in
section 102(c)(2), section 103(d)(2), or section 103(b) with respect to
an Internet site, or otherwise voluntarily blocking access to or ending
financial affiliation with an Internet site, in the reasonable belief
that--
(1) the Internet site is a foreign infringing site or is an
Internet site dedicated to theft of U.S. property; and
(2) the action is consistent with the entity's terms of
service or other contractual rights.
SEC. 105. IMMUNITY FOR TAKING VOLUNTARY ACTION AGAINST SITES THAT
ENDANGER PUBLIC HEALTH.
(a) Refusal of Service.--A service provider, payment network
provider, Internet advertising service, advertiser, Internet search
engine, domain name registry, or domain name registrar, acting in good
faith and based on credible evidence, may stop providing or refuse to
provide services to an Internet site that endangers the public health.
(b) Immunity From Liability.--An entity described in subsection
(a), including its directors, officers, employees, or agents, that
ceases or refuses to provide services under subsection (a) shall not be
liable to any person under any Federal or State law for such action.
(c) Definitions.--In this section:
(1) Adulterated.--The term ``adulterated'' has the meaning
given that term in section 501 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 351).
(2) Internet site that endangers the public health.--The
term ``Internet site that endangers the public health'' means
an Internet site that is primarily designed or operated for the
purpose of, has only limited purpose or use other than, or is
marketed by its operator or another acting in concert with that
operator for use in--
(A) offering, selling, dispensing, or distributing
any prescription medication, and does so regularly
without a valid prescription; or
(B) offering, selling, dispensing, or distributing
any prescription medication that is adulterated or
misbranded.
(3) Misbranded.--the term ``misbranded'' has the meaning
given that term in section 502 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 352).
(4) Prescription medication.--
(A) Prescription medication.--The term
``prescription medication'' means a drug that is
subject to section 503(b) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 353(b)).
(B) Drug.--The term ``drug'' has the meaning given
that term in section 201(g)(1) of the Federal Food
Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)).
(5) Valid prescription.--The term ``valid prescription''
has the meaning given that term in section 309(e)(2)(A) of the
Controlled Substances Act (21 U.S.C. 829(e)(2)(A)).
SEC. 106. GUIDELINES AND STUDY.
(a) Guidelines.--The Attorney General shall--
(1) provide appropriate resources and procedures for case
management and development to effect timely disposition of
actions brought under this title;
(2) develop a deconfliction process in consultation with
appropriate law enforcement agencies, including U.S.
Immigration and Customs Enforcement, to coordinate enforcement
activities under this title;
(3) publish procedures developed in consultation with
appropriate law enforcement agencies, including U.S.
Immigration and Customs Enforcement, to receive information
from the public relevant to the enforcement of this title; and
(4) provide guidance to intellectual property rights
holders about what information such rights holders should
provide to assist in initiating an investigation or to
supplement an ongoing investigation pursuant to this title.
(b) Study.--
(1) Nature of study.--The Register of Copyrights, in
consultation with appropriate departments and agencies of the
United States and other stakeholders, shall conduct a study on
the enforcement and effectiveness of this title and on any need
to amend the provisions of this title to adapt to emerging
technologies.
(2) Reports to congress.--Not later than 2 years after the
date of the enactment of this Act, the Register of Copyrights
shall submit to the Committees on the Judiciary of the House of
Representatives and the Senate a report containing the results
of the study conducted under this subsection and any
recommendations that the Register may have as a result of the
study.
SEC. 107. DENYING U.S. CAPITAL TO NOTORIOUS FOREIGN INFRINGERS.
(a) Identification and Recommendations Regarding Notorious Foreign
Infringers.--
(1) In general.--Using existing resources, the Intellectual
Property Enforcement Coordinator, in consultation with the
Secretaries of Treasury and Commerce, the United States Trade
Representative, the Chairman of the Securities and Exchange
Commission, and the heads of other departments and appropriate
agencies, shall identify and conduct an analysis of notorious
foreign infringers whose activities cause significant harm to
holders of intellectual property rights in the United States.
(2) Public input.--In carrying out paragraph (1), the
Intellectual Property Enforcement Coordinator shall solicit and
give consideration to the views and recommendations of members
of the public, including holders of intellectual property
rights in the United States.
(b) Report to Congress.--The Intellectual Property Enforcement
Coordinator shall, not later than 6 months after the date of the
enactment of this Act, submit to the Committees on the Judiciary of the
House of Representatives and the Senate a report that includes 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 to adopt industry norms that
promote the protection of intellectual property globally,
including addressing--
(A) whether notorious foreign infringers that
engage in significant infringing activity should be
prohibited by the laws of the United States from
seeking to raise capital in the United States,
including offering stock for sale to the public; and
(B) whether the United States Government should
initiate a process to identify and designate foreign
entities from a list of notorious foreign infringers
that would be prohibited from raising capital in the
United States.
TITLE II--ADDITIONAL ENHANCEMENTS TO COMBAT INTELLECTUAL PROPERTY THEFT
SEC. 201. STREAMING OF COPYRIGHTED WORKS IN VIOLATION OF CRIMINAL LAW.
(a) Title 17 Amendments.--Section 506(a) of title 17, United States
Code, is amended to read as follows:
``(a) Criminal Infringement.--
``(1) In general.--Any person who willfully infringes a
copyright shall be punished as provided under section 2319 of
title 18, if the infringement was committed--
``(A) for purposes of commercial advantage or
private financial gain;
``(B) by the reproduction or distribution,
including by electronic means, during any 180-day
period, of 1 or more copies or phonorecords of 1 or
more copyrighted works, or by the public performance by
means of digital transmission, during any 180-day
period, of 1 or more copyrighted works, when the total
retail value of the copies or phonorecords, or of the
public performances, is more than $1,000; or
``(C) by the distribution or public performance of
a work being prepared for commercial dissemination, by
making it available on a computer network accessible to
members of the public, if such person knew or should
have known that the work was intended for commercial
dissemination.
``(2) Evidence.--For purposes of this subsection, evidence
of reproduction, distribution, or public performance of a
copyrighted work, by itself, shall not be sufficient to
establish willful infringement of a copyright.
``(3) Definition.--In this subsection, the term `work being
prepared for commercial dissemination' means--
``(A) a computer program, a musical work, a motion
picture or other audiovisual work, or a sound
recording, if, at the time of unauthorized distribution
or public performance--
``(i)(I) the copyright owner has a
reasonable expectation of commercial
distribution; and
``(II) the copies or phonorecords of the
work have not been commercially distributed in
the United States by or with the authorization
of the copyright owner; or
``(ii)(I) the copyright owner does not
intend to offer copies of the work for
commercial distribution but has a reasonable
expectation of other forms of commercial
dissemination of the work; and
``(II) the work has not been commercially
disseminated to the public in the United States
by or with the authorization of the copyright
owner;
``(B) a motion picture, if, at the time of
unauthorized distribution or public performance, the
motion picture--
``(i)(I) has been made available for
viewing in a motion picture exhibition
facility; and
``(II) has not been made available in
copies for sale to the general public in the
United States by or with the authorization of
the copyright owner in a format intended to
permit viewing outside a motion picture
exhibition facility; or
``(ii) had not been commercially
disseminated to the public in the United States
by or with the authorization of the copyright
owner more than 24 hours before the
unauthorized distribution or public
performance.''.
(b) Title 18 Amendments.--Section 2319 of title 18, United States
Code, is amended--
(1) in subsection (b)(1), by striking ``during any 180-day
period'' and all that follows and insert ``of at least 10
copies or phonorecords, or of at least 10 public performances
by means of digital transmission, of 1 or more copyrighted
works, during any 180-day period, which have a total retail
value of more than $2,500;'';
(2) in subsection (c)--
(A) in paragraph (1), by striking ``of 10 or more
copies or phonorecords'' and all that follows and
inserting ``including by electronic means, of at least
10 copies or phonorecords, or of at least 10 public
performances by means of digital transmission, of 1 or
more copyrighted works, during any 180-day period,
which have a total retail value of more than $2,500;'';
and
(B) in paragraph (3), by striking ``if the
offense'' and all that follows and inserting ``in any
other case;'';
(3) in subsection (d)(4), by striking ``under paragraph
(2)'' and inserting ``committed for purposes of commercial
advantage or private financial gain under subsection (a)'';
(4) in subsection (f)--
(A) by amending paragraph (2) to read as follows:
``(2) the terms `reproduction', `distribution', and `public
performance' refer to the exclusive rights of a copyright owner
under paragraphs (1), (3), (4), and (6), respectively, of
section 106 (relating to exclusive rights in copyrighted
works), as limited by sections 107 through 122, of title 17;
and'';
(B) in paragraph (3), by striking ``; and'' and
inserting a period; and
(C) by striking paragraph (4); and
(5) by adding at the end the following new subsection:
``(g) Evidence of Total Retail Value.--For purposes of this section
and section 506(a) of title 17, total retail value may be shown by
evidence of--
``(1) the total retail price that persons receiving the
reproductions, distributions, or public performances
constituting the offense would have paid to receive such
reproductions, distributions, or public performances lawfully;
``(2) the total economic value of the reproductions,
distributions, or public performances to the infringer or to
the copyright owner, as shown by evidence of fee, advertising,
or other revenue that was received by the person who commits
the offense, or that the copyright owner would have been
entitled to receive had such reproductions, distributions, or
public performances been offered lawfully; or
``(3) the total fair market value of licenses to offer the
type of reproductions, distributions, or public performances
constituting the offense.''.
(c) Rule of Construction.--Any person acting with a good faith
reasonable basis in law to believe that the person's conduct is lawful
shall not be considered to have acted willfully for purposes of the
amendments made by this section. Such person includes, but is not
limited to, a person engaged in conduct forming the basis of a bona
fide commercial dispute over the scope of existence of a contract or
license governing such conduct where such person has a reasonable basis
in law to believe that such conduct is noninfringing. Nothing in this
subsection shall affect the application or interpretation of the
willfulness requirement in any other provision of civil or criminal
law.
SEC. 202. TRAFFICKING IN INHERENTLY DANGEROUS GOODS OR SERVICES.
Section 2320 of title 18, United States Code, is amended as
follows:
(1) Subsection (a) is amended to read as follows:
``(1) In general.--
``(A) Offenses.--Whoever--
``(i) intentionally traffics or attempts to
traffic in goods or services and knowingly uses
a counterfeit mark on or in connection with
such goods or services,
``(ii) intentionally traffics or attempts
to traffic in labels, patches, stickers,
wrappers, badges, emblems, medallions, charms,
boxes, containers, cans, cases, hangtags,
documentation, or packaging of any type or
nature, knowing that a counterfeit mark has
been applied thereto, the use of which is
likely to cause confusion, to cause mistake, or
to deceive, or
``(iii) intentionally imports, exports, or
traffics in counterfeit drugs or intentionally
participates in or knowingly aids drug
counterfeiting,
shall, if an individual, be fined not more than
$2,000,000 or imprisoned not more than 10 years, or
both, and, if a person other than an individual, be
fined not more than $5,000,000.
``(B) Subsequent offenses.--In the case of an
offense by a person under this paragraph that occurs
after that person is convicted of another offense under
this paragraph, the person convicted, if an individual,
shall be fined not more than $5,000,000 or imprisoned
not more than 20 years, or both, and if other than an
individual, shall be fined not more than $15,000,000.
``(2) Serious bodily harm or death.--
``(A) Serious bodily harm.--If the offender
knowingly or recklessly causes or attempts to cause
serious bodily injury from conduct in violation of
paragraph (1), the penalty shall be, for an individual,
a fine of not more than $5,000,000 or imprisonment for
any term of years or for life, or both, and for other
than an individual, a fine of not more than
$15,000,000.
``(B) Death.--If the offender knowingly or
recklessly causes or attempts to cause death from
conduct in violation of paragraph (1), the penalty
shall be, for an individual, a fine of not more than
$5,000,000 or imprisonment for any term of years or for
life, or both, and for other than an individual, a fine
of not more than $15,000,000.
``(3) Military goods or services.--
``(A) In general.--A person who commits an offense
under paragraph (1) shall be punished in accordance
with subparagraph (B) if--
``(i) the offense involved a good or
service described in paragraph (1) that if it
malfunctioned, failed, or was compromised,
could reasonably be foreseen to cause--
``(I) serious bodily injury or
death;
``(II) disclosure of classified
information;
``(III) impairment of combat
operations; or
``(IV) other significant harm--
``(aa) to a member--
``(AA) of the Armed
Forces; or
``(BB) of a
Federal, State, or
local law enforcement
agency; or
``(bb) to national security or critical infrastructure; and
``(ii) the person had knowledge that the
good or service is falsely identified as
meeting military standards or is intended for
use in a military or national security
application, or a law enforcement or critical
infrastructure application.
``(B) Penalties.--
``(i) Individual.--An individual who
commits an offense described in subparagraph
(A) shall be fined not more than $5,000,000,
imprisoned for not more than 20 years, or both.
``(ii) Person other than an individual.--A
person other than an individual that commits an
offense described in subparagraph (A) shall be
fined not more than $15,000,000.
``(C) Subsequent offenses.--
``(i) Individual.--An individual who
commits an offense described in subparagraph
(A) after the individual is convicted of an
offense under subparagraph (A) shall be fined
not more than $15,000,000, imprisoned not more
than 30 years, or both.
``(ii) Person other than an individual.--A
person other than an individual that commits an
offense described in subparagraph (A) after the
person is convicted of an offense under
subparagraph (A) shall be fined not more than
$30,000,000.''.
(2) Subsection (e) is amended--
(A) in paragraph (1), by striking the period at the
end and inserting a semicolon;
(B) in paragraph (3), by striking ``and'' at the
end;
(C) in paragraph (4), by striking the period at the
end and inserting a semicolon; and
(D) by adding at the end the following:
``(5) the term `counterfeit drug' has the meaning given
that term in section 201(g)(2) of the Federal Food Drug, and
Cosmetic Act (21 U.S.C. 321(g)(2));
``(6) the term `critical infrastructure' has the meaning
given that term in section 2339D(c);
``(7) the term `drug counterfeiting' means any act
prohibited by section 301(i) of the Federal Food Drug, and
Cosmetic Act (21 U.S.C. 331(i));
``(8) the term `final dosage form' has the meaning given
that term in section 735(4) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 379g(4));
``(9) the term `falsely identified as meeting military
standards' relating to a good or service means there is a
material misrepresentation that the good or service meets a
standard, requirement, or specification issued by the
Department of Defense, an Armed Force, or a reserve component;
``(10) the term `use in a military or national security
application' means the use of a good or service, independently,
in conjunction with, or as a component of another good or
service--
``(A) during the performance of the official duties
of the Armed Forces of the United States or the reserve
components of the Armed Forces; or
``(B) by the United States to perform or directly
support--
``(i) combat operations; or
``(ii) critical national defense or
national security functions; and
``(11) the term `use in a law enforcement or critical
infrastructure application' means the use of a good or service,
independently, in conjunction with, or as a component of,
another good or service by a person who is directly engaged
in--
``(A) Federal, State, or local law enforcement; or
``(B) an official function pertaining to critical
infrastructure.''.
SEC. 203. PROTECTING U.S. BUSINESSES FROM FOREIGN AND ECONOMIC
ESPIONAGE.
(a) For Offenses Committed by Individuals.--Section 1831(a) of
title 18, United States Code, is amended, in the matter after paragraph
(5)--
(1) by striking ``15 years'' and inserting ``20 years'';
and
(2) by striking ``not more than $500,000'' and inserting
``not less than $1,000,000 and not more than $5,000,000''.
(b) For Offenses Committed by Organizations.--Section 1831(b) of
such title is amended by striking ``$10,000,000'' and inserting ``not
more than the greater of $10,000,000 or 3 times the value of the stolen
trade secret to the organization (including expenses for research and
design or other costs of reproducing the trade secret that the
organization has thereby avoided)''.
SEC. 204. AMENDMENTS TO SENTENCING GUIDELINES.
Not later than 180 days after the date of the enactment of this
Act, pursuant to its authority under section 994(p) of title 28, United
States Code, the United States Sentencing Commission shall--
(1) review, and if appropriate, amend Federal Sentencing
Guidelines and policy statements applicable to persons
convicted of--
(A) intellectual property offenses;
(B) an offense under section 2320(a) of title 18,
United States Code; or
(C) an offense under section 1831 of title 18,
United States Code;
(2) in carrying out such review, consider amending such
Guidelines and policy statements to--
(A) apply an appropriate offense level enhancement
for intellectual property offenses committed in
connection with an organized criminal enterprise;
(B) apply an appropriate offense level enhancement
to the simple misappropriation of a trade secret;
(C) apply an additional appropriate offense level
enhancement if the defendant transmits or attempts to
transmit the stolen trade secret outside of the United
States and an additional appropriate enhancement if the
defendant instead commits economic espionage;
(D) provide that when a defendant transmits trade
secrets outside of the United States or commits
economic espionage, that the defendant should face a
minimum offense level;
(E) provide for an offense level enhancement for
Guidelines relating to the theft of trade secrets and
economic espionage, including trade secrets transferred
or attempted to be transferred outside of the United
States;
(F) apply an appropriate offense level enhancement
and minimum offense level for offenses under section
2320(a) of title 18, United States Code, that involve a
product intended for use in a military or national
security application, or a law enforcement or critical
infrastructure application;
(G) ensure that the Guidelines and policy
statements (including section 2B5.3 of the Federal
Sentencing Guidelines (and any successor thereto))
reflect--
(i) the serious nature of the offenses
described in section 2320(a) of title 18,
United States Code;
(ii) the need for an effective deterrent
and appropriate punishment to prevent offenses
under section 2320(a) of title 18, United
States Code; and
(iii) the effectiveness of incarceration in
furthering the objectives described in clauses
(i) and (ii); and
(H) ensure reasonable consistency with other
relevant directives and Guidelines and Federal
statutes;
(3) submit to Congress a report detailing the Commission's
actions with respect to each potential amendment described in
paragraph (2);
(4) make such conforming amendments to the Federal
Sentencing Guidelines as the Commission determines necessary to
achieve consistency with other Guideline provisions and
applicable law; and
(5) promulgate the Guidelines, policy statements, or
amendments provided for in this section as soon as practicable
in accordance with the procedure set forth in section 21(a) of
the Sentencing Act of 1987 (28 U.S.C. 994 note), as though the
authority under that Act had not expired.
SEC. 205. DEFENDING INTELLECTUAL PROPERTY RIGHTS ABROAD.
(a) Resources To Protect Intellectual Property Rights.--
(1) Policy.--The Secretary of State and the Secretary of
Commerce, in consultation with the Register of Copyrights,
shall ensure that the protection in foreign countries of the
intellectual property rights of United States persons is a
significant component of United States foreign and commercial
policy in general, and in relations with individual countries
in particular.
(2) Dedication of resources.--The Secretary of State and
the Secretary of Commerce, in consultation with the Register of
Copyrights, and the heads of other appropriate departments and
agencies, shall ensure that adequate resources are available at
the United States embassy or diplomatic mission (as the case
may be) in any country that is identified under section
182(a)(1) of the Trade Act of 1974 (19 U.S.C. 2242(a)(1)) to
ensure--
(A) aggressive support for enforcement action
against violations of the intellectual property rights
of United States persons in such country;
(B) cooperation with and support for the host
government's efforts to conform its applicable laws,
regulations, practices, and processes to enable the
host government to honor its international and
bilateral obligations with respect to the protection of
intellectual property rights;
(C) consistency with the policy and country-
specific priorities set forth in the most recent report
of USTR under such section 182(a)(1); and
(D) support for holders of United States
intellectual property rights and industries whose
access to foreign markets is improperly restricted by
intellectual property related issues.
(b) New Appointments.--
(1) Appointments and administration.--The Secretary of
State and the Secretary of Commerce, in consultation with the
Register of Copyrights, shall appoint at least one intellectual
property attache to be assigned to the United States embassy or
diplomatic mission (as the case may be) in a country in each
geographic region covered by a regional bureau of the
Department of State. The Director of the Patent and Trademark
Office shall maintain authority over hiring, personnel ratings,
and objectives for the attaches, in consultation with the
Secretary of State. Depending on experience and expertise,
intellectual property attaches shall be designated as the
diplomatic rank in-mission of First Secretary or Counselor.
(2) Regions defined.--The geographic regions referred to in
paragraph (1) are the following:
(A) Africa.
(B) Europe and Eurasia.
(C) East Asia and the Pacific.
(D) The Near East.
(E) South and Central Asia and the Pacific.
(F) The Western Hemisphere.
(3) Duties.--The intellectual property attaches appointed
under this subsection shall focus primarily on intellectual
property matters, including the development, protection, and
enforcement of applicable law. Each intellectual property
attache shall work, in accordance with guidance from the
Director, and in coordination with appropriate staff at the
Departments of Commerce and State and the Copyright Office, to
advance the policy goals and priorities of the United States
Government. Those policy goals and priorities shall be
consistent with USTR's reports under section 182(a)(1) of the
Trade Act of 1974. The intellectual property attaches shall
work with United States holders of intellectual property rights
and industry to address intellectual property rights violations
in the countries where the attaches are assigned.
(c) Priority Assignments.--
(1) In general.--Subject to paragraph (2), in designating
the United States embassies or diplomatic missions where
attaches will be assigned under subsection (b), the Secretary
of State and the Secretary of Commerce shall give priority to
countries where the activities of an attache are likely to
achieve the greatest potential benefit in reducing intellectual
property infringement in the United States market, to advance
the intellectual property rights of United States persons and
their licensees, and to advance the interests of United States
persons who may otherwise be harmed by violations of
intellectual property rights in those countries.
(2) Assignments to priority countries.--In carrying out
paragraph (1), the Secretary of State and the Secretary of
Commerce shall consider assigning intellectual property
attaches--
(A) to the countries that have been identified
under section 182(a)(1) of the Trade Act of 1974 (19
U.S.C. 2242(a)(1)); and
(B) to countries of critical economic importance to
the advancement of United States intellectual property
rights and interests.
(d) Training.--The Secretary of State and the Secretary of Commerce
shall ensure that each intellectual property attache appointed under
subsection (b) is fully trained for the responsibilities of the
position before assuming duties at the United States embassy or
diplomatic mission to which the attache is assigned.
(e) Coordination.--The activities of intellectual property attaches
under this section shall be determined in consultation with the
Intellectual Property Enforcement Coordinator. The Director shall
assist in coordinating the policy priorities and activities of the
intellectual property attaches and oversee administrative and personnel
matters.
(f) Training and Technical Assistance.--
(1) Consistency.--Using existing resources, all training
and technical assistance provided by intellectual property
attaches appointed under subsection (b), or under other
authority, relating to intellectual property enforcement and
protection abroad shall be designed to be consistent with the
policy and country-specific priorities set forth in the most
recent report of USTR under section 182(a) of the Trade Act of
1974.
(2) Role of ipec.--Such training and technical assistance
programs shall be carried out in consultation with the
Intellectual Property Enforcement Coordinator. The Director
shall assist in coordinating the training and technical
assistance programs conducted by intellectual property
attaches.
(g) Activities in Other Countries.--In the case of countries that
are not identified under section 182(a)(1) of the Trade Act of 1974,
the activities of Federal departments and agencies with respect to
intellectual property rights in those countries, intellectual property
programs and outreach of the United States Government in those
countries, and training and technical assistance programs of the United
States Government relating to intellectual property in those countries
may be conducted to the extent they are consistent with compelling
commercial or foreign policy interests of the United States.
(h) Reports to Congress.--The Intellectual Property Enforcement
Coordinator shall include in the annual report submitted under section
314 of the Prioritizing Resources and Organization for Intellectual
Property Act of 2008 (15 U.S.C. 8114) on the activities of the advisory
committee established under section 301 of that Act (15 U.S.C. 8111)
information on the appointment, designation for assignment, and
activities of all intellectual property attaches of any Federal
department or agency who are serving abroad.
(i) Definitions.--In this section:
(1) Director.--The terms ``Director of the Patent and
Trademark Office'' and ``Director'' mean the Under Secretary
for Intellectual Property and Director of the Untied States
Patent and Trademark Office.
(2) Intellectual property enforcement.--The term
``intellectual property enforcement'' has the meaning given
that term in section 302 of the Prioritizing Resources and
Organization for Intellectual Property Act of 2008 (15 U.S.C.
8112).
(3) Intellectual property enforcement coordinator.--The
term ``Intellectual Property Enforcement Coordinator'' means
the Intellectual Property Enforcement Coordinator appointed
under section 301 of the Prioritizing Resources and
Organization for Intellectual Property Act of 2008 (15 U.S.C.
8111).
(4) Intellectual property rights.--The term ``intellectual
property rights'' means the rights of holders of copyrights,
patents, trademarks, other forms of intellectual property, and
trade secrets.
(5) USTR.--The term ``USTR'' means the United States Trade
Representative.
(6) United states person.--The term ``United States
person'' means--
(A) any United States resident or national;
(B) any corporation, partnership, other business
entity, or other organization, that is organized under
the laws of the United States; and
(C) any foreign subsidiary or affiliate (including
any permanent foreign establishment) of any
corporation, partnership, business entity, or
organization described in subparagraph (B), that is
controlled in fact by such corporation, partnership,
business entity, or organization.
(j) Authorization of Appropriations.--The Secretary of State and
the Secretary of Commerce shall provide for the training and support of
the intellectual property attaches appointed under subsection (b) using
existing resources.
Mr. Conyers. Thank you, Chairman Smith, and good morning to
my fellow colleagues on the Committee. This is a very important
hearing, and I want to commend you on your statement, because
you raise some issues that I think we will have to go into
quite carefully.
Now, there have been attempts to deal with the problem that
is before us today. But HR 3261, the ``Stop Online Piracy
Act,'' represents a great deal of work and some experience from
our attempts to deal with this subject before.
I am very pleased that this is a bipartisan bill, and I
think that is very important.
Now, there have been a number of attempts to stop online
intellectual property theft and fraud. Some of the leading
Internet service providers and right holders, and the best
practices standards that are being developed with in the
advertising network and payment processing companies, and
particularly MasterCard, have all come to my intention. I
commend them. But this private cooperation is not sufficient.
Our studies have shown that upwards of one-quarter of all
Internet traffic is copyright infringing. And to those who say
that a bill to stop online theft will break the Internet, I
would like to point out that it is not likely to happen.
Users connect to the Internet through service providers,
like AT&T and Verizon, but by most accounts, and I have to
bring up Google's name again in the beginning of this
discussion, Google's search engine connects users to Internet
content more often than any other, and places the most
advertisements. As users surf the web, their computers, connect
with domain name servers to resolve the site name that they
type into their browser and its location on the web.
Now, we are getting a number of reactions from this
proposal. Some rightsholders have said that the market based
process outlined in Section 103 of the bill does not go far,
and too many players who profit from piracy. But on the other
hand, there are some in the technology sector that have said
this bill will break the Internet and strangle startups and
Silicon Valley giants alike. And so, I reluctantly asked to put
this into the record, ``The attack of the Internet killers.''
Mr. Smith. Without objection, that will be made a part of
the record.
[The information referred to follows:]
__________
Mr. Conyers. It is very serious business. ``Do not walk,
run.'' ``Tell Congress there is a better way.'' ``Threatens
global Internet security.'' ``Kills cloud computers.'' ``An
American job crushing monster.'' That is our bill, H.R. 3261.
Mr. Smith. Is that not a comic?
Mr. Conyers. No, this is serious. [Laughter.]
It is a terrible thing, and that we ought to know better.
Now, on a more serious note, we have from our friends in
the American Civil Liberties Union a caution that I have to
take more seriously because they have some questions that I
think needs to be examined here, and that is, the first one is
that there is an Attorney General section of the bill that only
the Justice Department, in its wisdom, can ask a court to
filter or block web content. What the American Civil Liberties
Union is telling us is that we will, with this legislation,
inadvertently involve non-infringing operators, and that this
would violate their constitutional rights.
Now, against that, I am going to ask to put in the imminent
First Amendment scholar, Floyd Abrams', recommendation that
says that the notion that this bill threatens freedom of
expression is unsupportable. It protects creators of free
speech, as Congress has done and the Judiciary Committee
especially has been particularly sensitive to protecting. And
so, I ask unanimous consent to put in the statement of attorney
Floyd Abrams. And I yield back the balance of my time. Thank
you.
Mr. Smith. Without objection.
[The information referred to follows:]
__________
Mr. Smith. Thank you, Mr. Conyers.
The gentleman from Virginia, Mr. Goodlatte, the Chairman of
the Intellectual Property Subcommittee, is recognized.
Mr. Goodlatte. Mr. Chairman, thank you for holding this
hearing, and thank you for your leadership on this issue.
For more than two centuries, America's economic strength
has been built on a firm foundation. The rule of law, respect
for individuals and private property, and the promotion of
industry through policies that reward creativity and innovation
are essential virtues that helped the fledgling Nation
encourage the initiative of its citizens, and in time emerged
the most advanced and prosperous on earth. These virtues are
not universal. In an increasingly connected world, threats that
emanate from areas where these principles are not shared are
jeopardizing our ability to sustain the incentives needed to
foster growth and development and advance human progress.
These threats create challenges for us in both the physical
world and the virtual world where the systematic and willful
violation of intellectual property rights now poses a clear,
present, and growing danger to American creators and
innovators, U.S. consumers, and our collective confidence in
the Internet ecosystem.
In order to continue to incentivize artists, authors, and
inventors, we need to ensure that these creators have the
ability to earn a return on their investments. Increasingly,
foreign piracy is stripping creators of that ability. Within
the Internet ecosystem today, there are legitimate commercial
sites that offer consumers authorized goods and services.
Indeed, many exciting new technologies and websites help
content owners distribute music, movies, books, games,
software, and other copyrighted works in ways that were not
even imaginable 10 years ago. However, there are also rogue
sites that steal the intellectual property of others, and
traffic in counterfeit and pirated goods.
In recent years, these websites have grown and evolved.
They have become increasingly sophisticated and rival the
legitimate sites in appearance, operation, and indicia of
reliability.
U.S. consumers are frequently led to these sites by search
engines that list them among the top search results. After
clicking on a site, they are immediately reassured by the logos
of U.S. payment processors and the presidents of major
corporate advertising supporting the site. These sites sell
infringing copyrighted works, but they are not limited to
those. Increasingly, these sites also offer counterfeit goods,
such as counterfeit automobile parts, medicines, baby formula,
and other products that can pose serious threats to the health
and safety of American citizens. What is worse, these rogue
sites often list the real customer service contact information
for the legitimate companies, which deteriorates the reputation
of the legitimate maker of these goods.
For all these reasons, I have joined Chairman Smith in
introducing the Stop Online Piracy Act, which creates new tools
for law enforcement to combat these growing threats.
Specifically, this legislation gives law enforcement the
authority to bring an action in a Federal court to declare a
website in violation of the law, and allows the court to issue
a court order to intermediaries to block transactions and
access to those sites found to be infringing. The bill also
provides content owners with a limited liability to request a
court to declare a website as violating the law. However, the
content owners must first attempt to work directly with
financial services and advertising intermediaries to solve the
problem. Only if those parties cannot reach agreement are
content owners allowed to seek a court declaration against and
infringing website.
It is my hope that this provision will allow content owners
and intermediaries to work together to root out infringing
sites quickly.
It should be noted that there has been criticism from many
in the online community about the scope of this bill, its
effect on the functioning of the Internet, and that it could
entangle legitimate websites. It is not my intention to do so,
and I stand ready to work with the tech community to address
any legitimate concerns they have. I have requested detailed
comments from the tech community about their concerns, and look
forward to continuing to work with them and Chairman Smith and
other Members of the Judiciary Committee to ensure that this
legislation punishes lawbreakers while protecting content
owners as well as legitimate online innovators and startups.
Mr. Chairman, this is a good bill, but a number of issues
raised about it need to be carefully addressed. I look forward
to working with you on those issues as we move forward to
protect content owners online, and I look forward to hearing
from our witnesses today.
Mr. Smith. Thank you, Mr. Goodlatte.
The gentleman from North Carolina, Mr. Watt, the Ranking
Member of the Intellectual Property Subcommittee, is
recognized.
Mr. Watt. Thank you, Mr. Chairman.
Mr. Chairman, in my experience, there is usually only one
thing that is at stake when we have long lines outside a
hearing, as we do today, and when giant companies, like those
opposing this bill and their supporters, start throwing around
rhetoric like, ``This bill will kill the Internet,'' or, ``It
is an attempt to build the great firewall of America.'' And
that one thing is usually money.
While I appreciate that the stakeholders of Internet
companies that have market caps in the billions of dollars
care, as we all do, about the First Amendment and other
precious rights, it seems clear to me that the obstinate
opposition we have seen in the days since introduction of the
Stop Online Piracy Act is really about the bottom line--piracy
and counterfeiting, make money, and lots of it.
This is not speculative. Sites that specialize in stolen
goods attract a lot of eyeballs, which, in turn, attracts a lot
of advertising, which in turn means, well, you got it, lots of
money.
To be fair, many of the copyright and trademark owners who
want this bill to help enforce their rights are also businesses
owners and are also motivated by money. But in my mind,
stopping theft of your work or products is an appropriate
incentive to secure profits. But doing nothing or next to
nothing to prevent theft through the use of tools a company
creates or controls is not an appropriate incentive to secure
profits.
So, as policymakers, our goal must be to confront the
criminal enterprises that are flourishing on the Internet,
stealing from the rightsholders, and visiting untold harm on
consumers. Doing nothing is not an option. Not only are online
piracy and counterfeiting drains on our economy, they expose
unworried consumers to fraud, identity theft, confusion, and,
at worst, physical harm. The penetration of hazardous product
and goods into the American marketplace, including our military
supply chain, poses an unacceptable risk of serious bodily
injury or death to our citizens. Tolerance of online theft of
music, movies, and software reinforces a culture of
entitlement, stifles creativity, injures artist, and undermines
job stability and growth.
While I have never been a big advocate of current seizure
laws, why would we not, as this bill does, give the Attorney
General, at a minimum, the same power to block foreign thieves
from access to the U.S. markets as the Attorney General has for
domestic markets? Given the limits of government resources, why
should we not establish a framework to enable rightsholders to
engage specific intermediaries within the Internet ecosystem to
meet the challenges of online piracy and counterfeiting?
I think one of the big problems here is that to date, the
economic incentives for the big Internet companies to work
against online piracy are just not there. To be sure, there are
many intermediaries that are inadvertently involved with pirate
sites who have come to the table with constructive suggestions
for crafting a balanced bill that will work. I commend ISPs,
payment processors, like MasterCard, who is here today, and
Visa, Go Daddy, who is the largest registrar of domain names,
and a number of software companies who have raised reasonable
concerns, and are willing to work together to address them.
But, again, when I hear overblown claims like, this bill is a
``Give away to greedy trial lawyers,'' or ``A killer of
innovation and entrepreneurs,'' that the co-sponsors of this
bill are the ``Internet killers,'' I become suspicious of the
message, as well as the messengers.
As is and as one who cares deeply about the constitutional
guarantees of free speech and due process, it is beyond
troubling to hear hyperbolic charges that this bill will open
the floodgates to government censorship. That is simply not the
world we live in, and to suggest that by establishing a means
to combat theft of intellectual property online, we will
somehow default into a repressive regime, belittles the
circumstances under which true victims of tyrannical government
actually live.
I urge everyone to set aside all the hyperbole and
accusations. I am the first to admit that I do not like or love
everything about this bill, but it is a very strong, solid
effort to begin the process of responsibly providing the
Attorney General and rightsholders with necessary tools to keep
pace with, and ultimately, to outpace the high-tech bandits
roving the Internet. I believe there are still some things we
can do in the legislation to avoid unintended consequences,
maintain the integrity of the Internet, and preserve certain
freedoms, including many of the specific suggestions made by
the Ranking Member.
Our staffs have worked closely together to identify ways to
improve this bill, and we will continue to do so. And I
appreciate the fact that crafting a bill governing the online
environment requires attention to technological details. But I
start from the premise that Internet freedom does not and
cannot mean Internet lawlessness, and that the goals of freedom
and lawfulness are no more incompatible in the Internet space
than they are in the physical world.
Mr. Chairman, there is an African proverb that says, when
elephants fight, it is the grass that suffers. Perhaps if we
refocus this debate on the ills that may befall innocent
consumers who fall prey to the perils of pirated and
counterfeit goods rather than on the balance sheet of all the
big companies, we can reach a worthy compromise.
I look forward to hearing from the witnesses, and engaging
in ongoing dialogue as we move the bill forward. The stakes for
America and American consumers are too high to get engaged in
too much hyperbole.
Mr. Chairman, I yield back the balance of my time.
Mr. Smith. Thank you, Mr. Watt.
Without objection, other Members' opening statements will
be made a part of the record.
[The prepared statement of Mr. Forbes follows:]
__________
[The prepared statement of Ms. Lofgren follows:]
__________
[The prepared statement of Mr. Johnson follows:]
__________
Mr. Smith. We welcome our distinguished panel today, and I
will now introduce them.
Our first witness is Marie Pallante, the Register of
Copyrights. Ms. Pallante was appointed by the Librarian of
Congress, Dr. James Billington, as the 12th Register on June
1st of this year. Immediately prior to that appointment, Ms.
Pallante served as the Acting Register.
As a Register, Ms. Pallante continues the tradition of
serving as the principal advisor to Congress on matters of
copyright policy. Ms. Pallante has spent much of her career in
the office, where she previously served as the associate
Register for Policy and International Affairs, Deputy General
Counsel, and Policy Advisor. In addition, Ms. Pallante spent
nearly a decade as Intellectual Property Counsel and Director
of Licensing for the Guggenheim Museum in New York.
She earned her law degree from George Washington University
and her Bachelor's degree from Misericordia University, where
she was also awarded an honorary degree of humane letters.
Our second witness is John P Clark, the Vice President of
Global Security and Chief Security Officer for Pfizer. Since
joining Pfizer in 2008, Mr. Clark has been recognized as the
leading authority on the threat that counterfeit medicines pose
to patient health and safety.
Prior to joining Pfizer, Mr. Clark served as Deputy
Assistant Secretary of the U.S. Immigration and Customs
Enforcement. In that capacity he was responsible for overall
management and coordination of the agency's operation, and he
served as the Assistant Secretary's principal representative to
the Department of Homeland Security and to the law enforcement
and intelligence communities.
Starting as a U.S. Border Patrol Agent in 1980, Mr. Clark
spent more than 25 years as a law enforcement professional
before retiring from public service. A New York native, Mr.
Clark received his Bachelor of Science degree in History from
the State University of New York at Binghamton, and a Master of
science degree from National-Louis University.
Our third witness is Michael O'Leary, the Senior Executive
Vice President for Global Policy and External Affairs at the
Motion Picture Association of America. In that position, Mr.
O'Leary supervises all international, Federal, and State
affairs operations around the world for the association.
Before moving to MPAA, Mr. O'Leary served more than a dozen
years at the Department of Justice, where he worked on
legislative, intellectual property, and enforcement issues.
During his tenure at the DoJ, he served as the Deputy Chief of
the Computer Crime and Intellectual Property section, where he
prosecuted and supervised some of the most significant domestic
and international criminal and IP cases undertaken by the
Department. Before joining DoJ, Mr. O'Leary spent 5 years
serving as Counsel to the Senate Judiciary Committee.
He grew up in Montana as a graduate of Arizona State
University and the University of Arizona School of Law.
Our fourth witness is Ms. Linda Kirkpatrick, who serves as
the Group Head of Customer Performance Integrity at MasterCard
Worldwide. In this role, Ms. Kirkpatrick is responsible for
driving the strategy, development, and execution of global
customer compliance programs, data integrity, and dispute
resolution management.
Ms. Kirkpatrick has been with MasterCard since 1997. She
earned her Bachelor of Arts degree in Economics with a
concentration in Finance from Manhattanville College in
Purchase, New York.
Our fifth witness is Katherine Oyama, a Policy Counsel for
Google, where she focuses on copyright and trademark law and
policy.
From 2009 to early 2011, she worked in the Office of the
Vice President as Associate Counsel and Deputy Counsel to Vice
President Joseph R Biden. Prior to her government service, Ms.
Oyama was a litigation associate with Wilmer Cutler Pickering
Hale & Dorr, where she worked on intellectual property cases,
government regulatory, litigation, and pro bono matters. She
previously worked in the Media and Entertainment practice of a
New York-based strategy consulting firm, for the Silicon
Valley-based Internet startup, LoudCloud, Inc., and for a
Texas-based company, Electronic Data Systems.
Ms. Oyama is a graduate of Smith College, where she
graduated with honors in Government, and the University of
California Berkeley School of Law, where she served as senior
articles editor of the Berkeley Technology Law Journal.
Our final witness is Paul Almeida, the President of the
Department for Professional Employees of the AFL-CIO.
Mr. Almeida has served as President of the DPE since
February 2001. Prior to his tenure with DPE, Mr. Almeida served
as President of the International Federation of Professional
and Technical Engineers for 7 years.
Mr. Almeida earned his degree in Engineering from Franklin
Institute in Boston, and he resides in Arlington,
Massachusetts.
We welcome, you all. Every member of the panel will have 5
minutes to give their testimony, and we have a light on the
table to indicate when that time is about to expire and has
expired. Again, we welcome you.
And, Ms. Pallante, we will begin with you?
TESTIMONY OF THE HONORABLE MARIA PALLANTE, REGISTER OF
COPYRIGHTS, U.S. LIBRARY OF CONGRESS
Ms. Pallante. Mr. Chairman, thank you for the opportunity
to appear today, and I would also like to thank you, Ranking
Member Conyers, Chairman Goodlatte, and Ranking Member Watt of
the Subcommittee, and all of the Members of the Committee for
your continued leadership on copyright policy.
Congress has updated the Copyright Act many times in the
past 200 years, including the enforcement provisions, but as we
all know, this work is never finished. Infringers today are
sophisticated, and they are bold. They blatantly stream and
disseminate books, music, films, and software through websites
using the services of trusted search engines, advertising
networks, and credit card companies. This is not a problem that
we can accept. In my view, it is about the rule of law on the
Internet.
Much of the bill employs a strategy of follow the money. I
testified in support of this approach in March, and I still
agree that it is an important part of the equation. Many sites
make money by selling illegal access to copyrighted works or by
offering related advertising. But the approach does have some
limitations. Many of the worst sites do not sell infringing
content; they offer it for free, and they do not run ads.
I would like to offer an example involving Google, but I
would first like to say that I have a great deal of respect for
Google, and I cannot imagine the Internet without it. However,
if you conduct a search for the phrase ``download movies,''
Google search engine will supply the words ``for free,'' and it
will return a list of sites that offer illegal copies or
streams at no charge and with no advertising. These cases
require a different kind of strategy. Then, follow the money.
The same is true when damages imminent, for example, when a
site is streaming live sporting events or selling movies
before. They have been released to the public.
In the context of foreign infringing sites, the bill
addresses this problem by giving the Department of Justice, the
power to require search engines to dismantle direct hyperlinks,
and to require service providers to block the access of
subscribers within the United States. These actions require
court approval and incorporate the existing legal standards of
seizure and civil forfeiture law. These are the same standards
that ICE has used effectively for operation in our sites.
Mr. Chairman, I do not want to suggest that blocking
websites is a small step; it is not. And the public interest
groups that oppose this part of the bill are right to be
concerned about unintended consequences. However, it may
ultimately come down to a question of philosophy for Congress.
If the Attorney General is chasing 21st century infringers,
what kinds of tools does Congress want to provide? How broad
and how flexible?
The bill also gives copyright owners some tools, but these
do not involve search engines or ISPs, and I think that this is
the right calibration. Put another way, the bill reflects the
fact that many industries contribute to the success of the
Internet, and it properly distinguishes between the actions
that law enforcement and private citizens can bring.
One of the more interesting aspects of the bill is that
before authors or other copyright owners can seek court orders,
it requires them to alert payment processors and ad networks
about infringing content, and request that they sever financial
ties. This approach is creative and provide incentives for the
parties to cooperate. It also allows for counter notification.
However, whether the notification system is ultimately
effective will largely depend upon whether it can be
implemented in a manner that is clear and fair for all
involved. The intermediaries at issue are running businesses in
good faith, and the websites at issue are entitled to due
process.
The bill does incorporate due process where court orders
are involved. The notification system would operate outside the
purview of the court, and, therefore, it may benefit from
further due process review.
Finally, I do not believe it is the intent of the bill to
negate the safe harbors of the DMCA, and I do not read it that
way. Nothing subjects ISPs to liability for their acts or their
failure to act. No monetary relief can be obtained, and the
injunctive relief permitted by the bill appears to be
consistent with what the DMCA already permits. This said, the
bill has many moving parts, and I note that a number of
stakeholders with differing perspectives have offered
productive suggestions. As the Committee works to refine the
bill, I would encourage you to fully consider the suggestions.
However, in closing, I would also like to state that I believe
that Congress has the responsibility to protect the exclusive
rights of copyright owners. And I hope that you will advance
the bill with this in mind.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Pallante follows:]
__________
Mr. Smith. Thank you, Ms. Pallante.
Mr. Clark?
TESTIMONY OF JOHN P. CLARK, CHIEF SECURITY OFFICER AND VICE
PRESIDENT OF GLOBAL SECURITY, PFIZER, INC.
Mr. Clark. Chairman Smith, Ranking Member Conyers,
distinguished Members of the Committee----
Mr. Watt. Could you pull your mic a little bit closer,
please, or cut it on?
Mr. Clark. It is a pleasure to appear before you today to
discuss the threat that counterfeit medicines posed to the
health and safety of patients in the United States and around
the world. It is a closer global issue.
As Vice President of Global Security for Pfizer, I work to
mitigate the threat that counterfeit medicines posed to the
health and safety of patients who rely on Pfizer medicines to
live healthier and longer lives. I commend the Chairman and the
Ranking Member of on the Committee for co-sponsoring the Stop
Online Piracy Act for their legislative effort. It is a
positive step forward in our fight against counterfeit
medicines.
Counterfeit medicines pose a threat because of the
conditions under which they are manufactured, on unlicensed,
unregulated sites, frequently under unsanitary conditions. In
many instances, they contain none of the active pharmaceutical
ingredients found in authentic medicines or in incorrect
dosages, depriving patients, depriving patients of the
therapeutic benefit of the medicine prescribed by their put
physicians. And others, they may contain toxic ingredients,
such as heavy metals, arsenic, pesticides, rat poison, brick
dust, floor wax, leaded highway paint, and even sheet rock or
wallboard.
Counterfeit medicines are a global problem, and I am
pleased to share our experience in combating them, and how the
Stop Online Piracy Act aims to strengthen the U.S. arsenal.
Pfizer has implemented an aggressive anti-counterfeiting
campaign that attacks counterfeits at their source. Since 2004,
we have prevented more than 138 million dosages of counterfeit
Pfizer medicines alone, more than 68 million finished dosages,
and enough active pharmaceutical ingredients to manufacture
another 70 million from reaching global patients. Additional
raid by law enforcement, based on evidence we have provided
have also resulted in seizures of millions of dosages of
counterfeits marketed by other major pharmaceutical companies.
In the United States, we work closely with ICE, the FBI,
and FDA on their investigations, and with Customs and Border
Protection to improve their ability to prevent counterfeit
Pfizer medicines from reaching U.S. patients. While the true
scope of the counterfeit problems is hard to estimate, we have
confirmed that counterfeit Pfizer medicines have been found and
seized and at least 101 countries, and have reached the supply
chains and 53 countries.
Technology has created a new front in this battle. Today
the major threat to patients in the U.S. are the many
professional looking websites that promise safe, FDA approved,
branded medicines from Canada or the UK, and for that reason,
we appreciate the Chairman and Ranking Member's focus on the
threat in Title I of the bill, giving the Attorney General new
tools and incentivizing private stakeholders to act against
rogue websites, with immunity in place for every stakeholders'
action would be an important step forward.
Patients do not realize that many of the websites do not
disclose the true source of the products they dispense, or even
where their alleged dispensing online pharmacy is located. In
such instances, the World Health Organization has estimated
that patients have more than a 50 percent chance of receiving a
counterfeit medicine. I happen to believe that is a very low
estimate.
I would like to share two short case studies. The first is
Rx North. Patients who visited Rx North's website thought they
were ordering from a Canadian pharmacy and would receive
authentic FDA approved medicines. In reality, the medicines
dispensed from our Rx North were traced from China, where they
were manufactured, through Hong Kong, on to Dubai, into the UK
where they were intercepted. Among the medicines seized by UK
customs were Lipitor, found to contain only 82 to 86 percent of
the active pharmaceutical ingredient, which is an incredibly
high number for most counterfeit, as well as counterfeit
versions of medicines from four other companies, including one
found to contain traces of metal.
The second is the case of Kevin Xu, convicted of
misbranding drugs and trafficking in counterfeit goods. It
demonstrates how attractive a target the U.S. supply chain is
who account for those who counterfeit our medicines, and how
weak our current penalties for counterfeiting medicine are.
During meetings with our undercover consultant, Xu boasted
of the global scope of his criminal enterprise. He offered a
list of branded counterfeit medicines that he could provide,
including five Pfizer medicines. The evidence we gathered was
shared with an ongoing ICE investigation of Xu. An order placed
by an ICE undercover agent was filled with the counterfeit.
When the tablets were tested, they were found to contain only
insignificant levels of the active pharmaceutical ingredient
found in the authentic medicine.
Xu was sentenced to just 78 months in Federal prison
without parole, the maximum sentence under the applicable U.S.
sentencing commission guideline range. This punishment does not
reflect the seriousness of the crime. The Stop Online Piracy
Act takes a positive step toward making these penalties even
tougher.
Pharmaceutical counterfeiting is a low risk, high profit
criminal activity that has attracted drug traffickers, fire
arms smugglers, and terrorists. One of the principal players in
the 2003 Lipitor breach here in the U.S. was a convicted
cocaine trafficker. In 2006, the U.S. attorney for the Eastern
District of Michigan announced the indictment of 19 people who
gave a portion of their profits from the sale of counterfeit
Viagra to Hezbollah.
Those who counterfeit medicines are confident that even if
caught, they will get just a slap on the wrist. Even here in
the U.S., the maximum sentence imposed under the Food and Drug
and Cosmetics Act is just 3 years. Recognizing the inherent
risk that any counterfeit medicine poses to patients, we must
enhance the penalties for pharmaceutical counterfeiting to
provide a greater deterrent. Expedited procedures must be in
place to shut down rogue websites dispensing counterfeit
medicines to the U.S.
The Stop Online Piracy Act is a significant step forward in
those efforts, and I thank the Chairman and Ranking Member for
introducing this important piece of legislation. I would like
to work with you so that our laws recognize the grave health
and safety risk posed by counterfeit medicines and serve as a
deterrent.
I work with foreign government representatives in the
global fight against counterfeiting. It is hypocritical for us
to speak with foreign government representatives, as I often
do, about their lack of effective legislation, when U.S. laws
are still lacking. This bill, if enacted, with strong penalties
and mechanism to shut down rogue websites will be highly
effective in our global argument for all governments to fully
appreciate the serious health and safety aspects of this
problem, and encourage similar efforts around the world.
Thank you again for this opportunity to express my views.
For Pfizer, pharmaceutical counterfeiting is first and foremost
an issue of patient health and safety. We look forward to
working with you on the global fight against counterfeit
medicines.
[The prepared statement of Mr. Clark follows:]
Prepared Statement of John P. Clark, Chief Security Officer,
Pfizer, Inc.
and Vice President, Global Security
Chairman Smith, Ranking Member Conyers, distinguished Members of
the Committee. It is indeed a pleasure to appear before you today to
discuss an issue of great importance--the threat that counterfeit
medicines pose to the health and safety of patients in the United
States and around the world.
My name is John Clark, and I am the Chief Security Officer for
Pfizer Inc, and Vice President of its Global Security Team. In those
positions I am responsible for ensuring that programs are in place to
protect Pfizer's personnel, real and intellectual property, reputation,
and the integrity of its medicines.
Prior to joining Pfizer in 2008, I served as Immigration and
Customs Enforcement (ICE) Deputy Assistant Secretary, responsible for
the overall management and coordination of the agency's operation, as
well as the Assistant Secretary's principal representative to the
Department of Homeland Security and to the law enforcement and
intelligence communities. During my more than 25 years in ICE and its
predecessor agency, U.S. Customs, I held a variety of investigative,
management and executive positions.
Pfizer is a diversified, global health care company and the world's
largest biopharmaceutical company. Our core business is the discovery,
development, and marketing of innovative pharmaceuticals for human and
animal health, and we are committed to ensuring the integrity of those
products when they reach the market.
THREAT TO PATIENT HEALTH AND SAFETY
A significant aspect of my job is to mitigate the threat that
counterfeit medicines pose to the health and safety of patients who
rely on Pfizer medicines to live healthier, longer lives. For that
reason, I commend the Chairman and Ranking Member and the many members
who are co-sponsors of the Stop Online Piracy Act for their legislative
effort. It is a positive step forward in our fight against counterfeit
medicines.
Counterfeit medicines pose a threat because of the conditions under
which they are manufactured--in unlicensed and unregulated sites,
frequently under unsanitary conditions--and the lack of regulation of
their contents. In many instances, they contain none of the active
pharmaceutical ingredient (API) found in the authentic medicine, or an
incorrect dosage, depriving patients of the therapeutic benefit of the
medicines prescribed by their physicians. In others, they may contain
toxic ingredients such as heavy metals, arsenic, pesticides, rat
poison, brick dust, floor wax, leaded highway paint and even sheetrock
or wallboard.
Counterfeit medicines are a global problem, one from which no
region, country, therapeutic area is immune. And, while my comments
today focus on Pfizer's experience in combating counterfeit medicines
and the positive impact the Stop Online Piracy Act can make in that
effort, it is a threat to the entire pharmaceutical industry.
PFIZER'S PROGRAM TO MITIGATE THAT THREAT
We have implemented an aggressive anti-counterfeiting campaign to
detect and disrupt major manufacturers and distributors of counterfeit
Pfizer medicines. By attacking counterfeits at or near their source, we
protect the global market. Through our efforts we have, since 2004,
prevented more than 138 million doses of counterfeit Pfizer medicines--
more than 68 million finished doses and enough active pharmaceutical
ingredient to manufacture another 70 million--from reaching patients
around the world. And, because those who counterfeit our medicines have
no ``brand loyalty'', raids by law enforcement authorities based on
evidence we have provided have also resulted in seizures of millions of
doses of counterfeits marketed by other major pharmaceutical companies.
I attribute the success of our program to our talent--colleagues
placed strategically around the world with extensive law enforcement
experience who know how to initiate and develop cases--and the
effective partnerships we have forged with enforcement authorities
around the world. As part of those partnerships, we not only refer the
results of our investigations, but also provide support as required in
investigations and test--free of charge--suspected counterfeit Pfizer
medicines to determine their authenticity.
We also provide training to enforcement authorities to raise
awareness to the counterfeiting problem and enhance their ability to
distinguish counterfeit from authentic Pfizer medicines. As of
September 30, 2011, we have provided training to authorities in 117
countries, often in conjunction with programs sponsored by the US
Patent and Trade Office (USPTO) and the World Customs Organization
(WCO). In some instances, we have sponsored regional conferences to
facilitate collaboration between authorities in the regions, and work
with them to develop actionable plans of action to address the problem.
These training efforts have produced tangible results in increased
enforcement activity in Egypt, Jordan, Lebanon, the UAE and Poland, and
the passage of strong anti-counterfeiting legislation in Jordan and
Kenya.
In the U.S., we work closely with ICE, the FBI and FDA on their
investigations, and with CBP to improve their ability to prevent
counterfeit Pfizer medicines from reaching U.S. patients.
One example of our collaboration with CBP is the use of our
``mobile labs'', which we have used in pilot programs with CBP at
International Mail Facilities in San Francisco, Los Angeles, New York,
Miami and Chicago.
While the true scope of the counterfeit problem is hard to
estimate, we can provide some metrics based on the seizures reported to
us by enforcement authorities and confirmed by our labs. Based on that
data, we have confirmed counterfeit Pfizer medicines in at least 101
countries, and having breached the legitimate supply chains of 53.
While Viagra is our most counterfeited medicine, counterfeiters
have targeted more than 50 of our products, including Aricept
(Alzheimers), Celebrex (anti-inflammatory), Genotropin (human growth
hormone), Lipitor (high cholesterol), Metakelfin (anti-malarial),
Norvasc (high blood pressure), Prevnar (vaccine to prevent infection
caused by pneumococcal bacteria), Sutent (for treatment of treatment of
rare cancer of the stomach, bowel or esophagus (GIST), advanced kidney
cancer (RCC, and a type of pancreatic cancer (pNET), Viagra (erectile
dysfunction), Xanax (anxiety disorders), Zithromax (anti-infective) and
Zoloft (depression).
And counterfeit versions of 23 of those medicines, including
Celebrex, Genotropin, Lipitor, Metakelfin, Norvasc, Prevnar, Sutent,
Viagra, Xanax and Zithromax, have breached supply chains around the
world.
THE ONLINE THREAT
The major threat to patients in the U.S., however, is the Internet
and the many professional looking websites that promise safe, FDA-
approved, branded medicines from countries such as Canada or the UK.
And, for that reason, we appreciate the Chairman and Ranking Member's
focus on that threat in Title I of the bill. Giving the Attorney
General new tools and incentivizing private stakeholders to act against
rogue websites if immunity is in place for every stakeholder's actions
would be an important step forward.
Patients are lured by the ease with which they can order their
medicines online, often without the need to consult a doctor or provide
a valid prescription. They do not realize that many of those sites have
failed to disclose the true source of the products they dispense or
even where they--the ``dispensing'' online pharmacy are located. In
such instances, the WHO has estimated that patients have more than a
50% chance of receiving a counterfeit medicine.
It is possible for U.S. patients to buy their medicines safely
online through pharmacies that have been accredited by the National
Association of Boards of Pharmacies (NABP). To be accredited, a
pharmacy must comply with the licensing and inspection requirements of
their state and each state to which they dispense pharmaceuticals. If
they meet these criteria they are designated VIPPS sites--Verified
Internet Pharmacy Practice Sites. Pharmacies displaying the VIPPS seal
have demonstrated to NABP compliance with VIPPS criteria including
patient rights to privacy, authentication and security of prescription
orders, adherence to a recognized quality assurance policy, and
provision of meaningful consultation between patients and pharmacists.
VIPPS pharmacies represent only a small percentage of online
pharmacies. In a recent survey of more than 8000 websites selling
medicines, the NABP found that 96% were not operating in accordance
with pharmacy laws and standards.
CASE STUDY: RXNORTH
The case of RxNorth is an excellent example of how easily patients
can be deceived, and the risks to which they expose themselves when
ordering online from a rogue website, which the Stop Online Piracy Act
aims to shutdown.
Patients, who visited the RxNorth website, thought they were
ordering from a Canadian Pharmacy and would receive authentic FDA-
approved medicines.
In reality, however, the medicines dispensed from RxNorth were
traced from China, where they were manufactured, through Hong Kong,
Dubai, to the UK where they were intercepted. Among the medicines
seized by UK Customs were Lipitor--found to contain only 82 to 86% of
the claimed dosage of active pharmaceutical ingredient--as well as
counterfeit versions of medicines from four other companies, including
one found to contain traces of metal.
Subsequent investigation revealed that had they not been
intercepted, those medicines would have been sent to a fulfillment
center in the Bahamas, where they would have been split from their
pallets and placed in individual packages corresponding to customer
order. To gain ``credibility'', the packages would then have been
shipped to the UK, from where they would have been sent to the U.S.
patients who had placed their orders with RxNorth, believing it to be a
``safe'' pharmacy in Canada.
As a result of this investigation, the FDA warned consumers not to
place orders with RxNorth and not to take the medicines they had
received. But, more needs to be done to combat these rogue websites.
case study: operation cross ocean
Operation Cross Ocean also demonstrates the threat to unsuspecting
U.S. patients who order their medicines online. Chinese and U.S.
authorities worked together to dismantle an operation that manufactured
counterfeit versions of Viagra and other medicines in China, then
dispensed them via the Internet through a network of brokers, largely
in the U.S. and Europe.
When they raided the manufacturing site (pictured below),
authorities seized 10 lines of manufacturing equipment and counterfeit
medicines, including 570,000 finished pills and enough active
pharmaceutical ingredient to manufacture 1.82 million more.
CASE STUDY: KEVIN XU
The case of Kevin Xu, convicted of misbranding drugs and
trafficking in counterfeit goods, demonstrates how attractive a target
the U.S. supply is for those who counterfeit our medicines and how weak
our current penalties for counterfeiting medicines are.
An investigation initiated in our Asia-Pacific region identified Xu
and his company, Orient Pacific International, as a major manufacturer
and distributor of counterfeit medicines, including several Pfizer
products. During meetings with our ``undercover'' consultant, Xu
boasted of the global scope of his criminal enterprise, including his
responsibility to oversee the quality of counterfeits produced in
China, and provided a list of branded medicines that he could provide,
which included Pfizer's Alzheimer's drug, Aricept, ulcer drug, Cytotec,
cholesterol lowering drug, Lipitor, kidney cancer drug, Sutent and
erectile dysfunction drug, Viagra.
The evidence we gathered was shared with ICE, which had already
begun an investigation of Xu. An order placed by an ICE undercover was
filled with counterfeit Aricept, Pfizer's Alzheimer's drug, packaged
for the French market. When the tablets were tested, they were found to
contain only insignificant levels of the active pharmaceutical
ingredient found in authentic Aricept.
Xu was arrested in July 2007 and charged with manufacturing
counterfeit versions of medicines intended to treat prostate cancer
(Casodex, Astra Zeneca), blood clots (Plavix, Bristol Myers Squibb),
schizophrenia (Zyprexa, Lilly), and Alzheimers (Aricept, Pfizer),
mislabeling them as chemicals, and smuggling them into the U.S. where
they were to be introduced into our supply chain.
The likelihood of Xu's success was high. European authorities have
identified Xu as the source of counterfeit versions of non-Pfizer
products--Zyprexa (Lilly, anti-psychotic), Plavix (Bristol Myers
Squibb, blood thinner), and Casodex (Astra Zeneca, prostate cancer) -
recalled from the legitimate supply chain in the UK, a supply chain as
tightly regulated as ours, in May 2007.
As reported in a press release by the U.S. Attorney's Office for
the Southern District of Texas, Xu was ``sentenced to 78 months in
federal prison without parole, the maximum sentence under the
applicable U.S. Sentencing Commission guideline range for conspiring
with others in the Peoples Republic of China to traffic in counterfeit
pharmaceutical drugs and causing the introduction of counterfeit and
misbranded drugs into interstate commerce.'' http://www.cybercrime.gov/
XuSent.pdf, accessed on November 10, 2011
This is a good example of the punishment not rising to the level of
the seriousness of the crime and why we need stronger penalties. The
Stop Online Piracy Act takes a positive step forward and we would
welcome the opportunity to work with you to perfect the penalty
section.
CASE STUDY: ARAB CHINA NETWORK
Based upon information provided by Global Security, more than 300
Chinese law enforcement officers, from both the Public Service Bureau
(PSB) and State Food and Drug Administration (SFDA), initiated
enforcement actions that dismantled one of the most prolific
counterfeiting organizations ever uncovered in China. The network,
comprised of males of Middle East descent living in the southern
provinces of China, was responsible for distributing large quantities
of counterfeit medicines, manufactured in China, throughout the Gulf
States and U.S..
In two separate but related enforcement operations, authorities
raided two manufacturing sites and 26 storage facilities, making 26
arrests. They seized vast amounts of finished products--a mix of
counterfeits and generics--including counterfeit Pfizer's ulcer drug,
Cytotec, Viagra and Pfizer's anti-anxiety drug, Xanax. Initial
estimates by authorities placed the pill count as high as 200 million,
including counterfeits of Pfizer medicines as well as those of four
other pharma companies. Also seized were large quantities of active
pharmaceutical ingredient, including barrels of sildenafil, the active
pharmaceutical ingredient in Viagra, which may be beyond the capability
of the authorities to accurately weigh. The seizures included
equipment--54 machines and 1230 moulds, tools and dies, at least 200 of
which are for Pfizer medicines--with which to manufacture the
counterfeits.
In a subsequent release to Chinese Media, authorities stated that
they had seized approximately 7 million counterfeit Viagra in those
raids.
CASE STUDY: OPERATION EAGLE EYE
Based on information provided by Pfizer, China's Ministry of Public
Security (MPS) raided sites in Eagle Eye Action in Henan, Zhezjang,
Guangdong provinces, making 36 arrests. They seized more than 5.6
million counterfeit tablets including medicines from Pfizer (Aricept,
Lincocin, Lipitor, Viagra, Xanax) and two other major pharmaceutical
companies, as well as 45 machines.
The head of the operation was sentenced to life imprisonment. Other
members of the criminal network received sentences ranging from 2 to 15
years in jail.
WHAT MORE CAN WE DO?
We have seen progress in the fight against counterfeit medicines,
but much more needs to be done. In some countries, pharmaceutical
counterfeiting is not a crime; in others it has only minimal sanctions.
Lax enforcement of laws that do exist is yet another problem.
Pharmaceutical counterfeiting is a low risk, high profit criminal
activity that has attracted drug traffickers, firearm smugglers, and,
even terrorists. One of the principal players in the 2003 Lipitor
breach here in the U.S. was a convicted cocaine trafficker. In 2006,
the U.S. Attorney for the Eastern District of Michigan announced the
indictment of 19 people who gave a portion of their profits from the
sale of counterfeit Viagra to Hezbollah.
Those who counterfeit medicines are confident that even if they get
caught, they will get a mere slap on the wrist. Even here in the U.S.,
the maximum sentence imposed under the Food Drug and Cosmetics Act is 3
years. Recognizing the inherent risk that any counterfeit medicine
poses to patients, we must enhance the penalties for pharmaceutical
counterfeiting to provide a greater deterrent. Expedited procedures
must be put in place to shutdown ``rogue'' websites dispensing
counterfeit medicines to U.S. patients.
The Stop Online Piracy Act is a significant step forward in those
efforts and I thank the Chairman and Ranking Member for introducing
this important piece of legislation. I would like to work with you so
that our laws recognize the grave health and safety risks posed by
counterfeit medicines and serve as a deterrent.
I work with foreign government representatives in the global fight
against counterfeiting. It is hypocritical for us to speak with foreign
government representatives, as I do, about their lack of effective
legislation when U.S. law is still lacking. This bill, if enacted with
strong penalties and mechanisms to shut down rogue websites, will be
highly effective in our global argument for all governments to fully
appreciate the serious health and safety aspects of this problem and
encourage similar efforts.
CONCLUSION
Thank you again for this opportunity to express my views. For
Pfizer, pharmaceutical counterfeiting is first and foremost an issue of
patient health and safety. We look forward to working with you on the
global fight against counterfeit medicines.
__________
Mr. Smith. Thank you, Mr. Clark.
Mr. O'Leary?
TESTIMONY OF MICHAEL P. O'LEARY, SENIOR EXECUTIVE VICE
PRESIDENT, GLOBAL POLICY AND EXTERNAL AFFAIRS, MOTION PICTURE
ASSOCIATION OF AMERICA (MPAA)
Mr. O'Leary. Thank you. Mr. Chairman, Ranking Member
Conyers, Chairman Goodlatte, and Ranking Member Watt,
distinguished Members of the Committee, I am honored to be here
today and, and thank you for holding this important hearing. I
also want to thank you for introducing this legislation, which
will help protect American creativity and American jobs from
thieves who hide overseas and seek to profit off the hard work
of people in this country.
I also want to acknowledge my fellow panelists. I am
pleased to be here with all of them today, and look forward to
working with them throughout this process. I want to
particularly acknowledge the contributions of Ms. Kirkpatrick
and MasterCard. As the Chairman alluded to earlier, they are
truly a fine example of a corporation trying to make the
Internet a safe marketplace for people all over the world. And
frankly, their example is one to be followed.
Critics would have you, as Mr. Watt alluded to, believe
that this is a battle between two giant corporations, and there
is certainly a lot of truth to that. But I am also very proud
to be part of a wide ranging coalition that includes the AFL-
CIO, who we will hear from shortly, members of the Chamber of
Commerce, big business, small business, individual creators,
and entrepreneurs. So, I think critics would have you believe
that this bill is really about supporting Hollywood and things
like that, but the truth of the matter, when you look behind
the rhetoric and the hyperbole, is that intellectual property
is something which affects every facet of the American economy,
and it affects people all over the country.
In the case of the industry that I represent, the American
motion picture and television industry, we believe that these
jobs are worth protecting. They are more fully detailed in my
written testimony, but I would just mention a few. There are
people like Dan Lemieux, who is a stunt coordinator from
Michigan. He has worked on numerous films and television shows
like Nip Tuck and The Shield. The industry includes over 95,000
small businesses. They employ 10 people or less. Businesses
like Fletcher Camera, which is in Chicago. They have 25
employees in that small business, and they provide movie
equipment for productions that occur all over the Midwest.
There are hundreds of thousands of businesses that provide
services to production. There is a small paint and decorating
firm in Baltimore, Maryland. It is a fifth generation family
run operation, and it has applied paint for virtually every
major production, which has occurred in the mid-Atlantic region
over the past few years.
I want to be very clear with this Committee that hard work,
innovation, and creativity are not solely the province of
people who live in northern California. There are people all
over this country who contribute to the economy every day, who
contribute to our culture, who contribute to what we make
creatively. And their jobs are just as important and just as
worth protecting as anyone else's. And that is why we think
this bill is so important, because it is a positive step in
that direction.
In this economic climate, we simply cannot afford to turn
our back on any industry, which is coming forward and producing
things that we can take all over the world and be successful
with. Our industry competes. When we are given an opportunity
to compete globally, we succeed. Where we have trouble,
frankly, Mr. Chairman, is where we do not have an opportunity
to compete fairly. And one of the problems we have is competing
with people who are trying to steal our stuff. We are not
before the Congress looking for a handout or a bail out. We are
simply asking for an opportunity to stop from stealing the
products that we make.
In recent weeks, you have heard a lot of spurious arguments
about this legislation. They have been chronicled in a number
of the opening remarks, that it violates the First Amendment,
that it undermines existing protection laws, that it somehow
stifles innovation, and that it will, yes, break the Internet.
The irony, of course, of that argument is that I believe it was
first raised by those opposing the DMCA many years ago, as the
Chairman will recall. And I believe some of those same people
are here today opposing this bill because they think it will
undermine the DMCA. So, there is a bit of irony there, which
seems to be lost inside the Beltway, but I suspect that,
outside the Beltway people see it for what it is.
These allegations that you are hearing are simply taken
from the playbook of those people who have consistently opposed
every effort that the Congress has come forward with in the
past few years to protect intellectual property. The good news
is that every time Congress protects intellectual property, the
Internet flourishes. Every time the United States stands for
legitimacy over illegitimacy, the Internet gets bigger and
stronger. More things are available to consumers. More products
are available to consumers. We make more movies. They see more
television. Protecting legitimacy is a positive thing for the
economy and for innovation, and people that tell you otherwise
are wrong. They have been wrong when they have been raising
these arguments for the past two decades, and they are wrong in
the context of this bill.
What you understand so clearly, Mr. Chairman, and the Stop
Online Piracy Act reflects this, is that there is a very great
difference between legitimate marketplace and the illicit sites
and services that we are talking about. When the legitimate
market is protected against the threat of online theft, the
only people who lose are those who do not work, take no risk,
make no investment. Instead, those are the people that simply
try to profit off the hard work of others.
We have also heard arguments that Congress should limit its
approach to the threat of rogue sites to ``following the
money.'' It is worth noting that whoever usually makes that
argument is really saying you should follow someone else's
money. If we are, in fact, going to follow the money, which is
something we should do, we should follow all of the money, not
just some of it.
Piracy is a complex problem that cannot be fixed in
piecemeal solutions, but this bill is an important first step
in trying to deal with what is a very real and growing threat.
This is fundamentally about jobs and about protecting the jobs
that Americans have, creating products that are enjoyed all
over the world.
Ultimately, someone once said that to lead is to choose,
and the bill, Mr. Chairman, that you put before the Congress in
this debate is one which provides a number of choices. It is a
choice between illegal and legitimate. It is a choice between a
safe, vibrant Internet for everyone and all black-market
Internet. It is a choice between protecting American creativity
and jobs or protecting thieves. These are simple choices from
our perspective, and with the leadership that has been provided
by this Committee, we look forward to this process, debating
this bill, putting something on the President's desk that both
Republicans and Democrats can support, and at the end of the
day, will allow these hard-working Americans to keep their jobs
and keep creating the products that the world enjoys. Thank
you.
[The prepared statement of Mr. O'Leary follows:]
__________
Mr. Smith. Thank you, Mr. O'Leary.
Ms. Kirkpatrick?
TESTIMONY OF LINDA KIRKPATRICK, GROUP HEAD, CUSTOMER
PERFORMANCE INTEGRITY, MASTERCARD WORLDWIDE
Ms. Kirkpatrick. Thank you. Good morning, Chairman Smith,
Ranking Member Conyers, and Members of the Committee. My name
is Linda Kirkpatrick, and I am group head, franchise
development and customer performance and integrity at
MasterCard Worldwide in Purchase, New York.
MasterCard commends the Committee on its attention to the
issue of Internet-based infringement, including the work that
went into H.R. 3261, the ``Stop Online Piracy Act.'' We greatly
appreciate the opportunity to be here today, and look forward
to working with you to combat this critical issue.
MasterCard's rules and requirements prohibit the use of its
system for any illegal purposes, including for the sale of
products or services that infringe on intellectual property
rights. MasterCard recognizes the important role it plays in
combatting this issue, and has taken a number of steps that
demonstrate its commitment to this important cause.
These efforts, which are discussed in my written testimony,
include: publishing the MasterCard anti-piracy policy, which
sets out the specific process by which MasterCard and
rightsholders can work together to identify and prevent the
sale of infringing products or services; working with the White
House's Office of U.S. Intellectual Property Enforcement
coordinator in the development of industry best practices to
address online infringement; and the implementation and
maintenance of MasterCard's business risk assessment and
mitigation program, otherwise known as our BRAMA program.
By way of background, MasterCard operates a global payment
system that connects over 1 billion cardholders and millions of
merchants worldwide to complete MasterCard branded payment
transactions. MasterCard neither issues payment cards to
cardholders, nor does it contract with merchants to accept
payment cards. Rather, MasterCard's financial institution
customers issue payment cards to cardholders, and contract with
birches to accept the cards.
The card issuing customers are known as issuers; those
customers that contract with merchants for card accepted are
commonly called acquirers. Each cardholder's account
relationship is with the issuer that issued the card to the
cardholder, and each merchant's acceptance relationship is with
its acquirer.
MasterCard has a long history of working with law
enforcement, private stakeholders, its customers, and others,
to address illegal or otherwise BRAM damaging activities that
may involve the MasterCard payment system or the unauthorized
use of our widely recognized family of payment brands. Our
commitment to working with rightsholders to prevent the
MasterCard system from being used to facilitate online
infringement is evidenced by our industry leading anti-piracy
policy, which is publicly available on our Internet site.
In accordance with that policy, MasterCard has established
procedures that apply when a law enforcement entity or
rightsholder brings to MasterCard's attention evidence of
alleged infringement. We have established an e-mail address for
the submission of such requests and a set of information
requirements for such requests, which are largely similar to
the information required of rightsholders in H.R. 3261.
The process we implemented was developed collaboratively
through strong working relationships with rightsholders and
their trade associations, and has led to the investigation of
thousands of Internet sites, and the termination of hundreds of
rogue merchants.
MasterCard has also worked closely with the White House's
Office of U.S. Intellectual Property Enforcement coordinator in
the development of a best practices document to address online
infringement. Development of the best practices document
involved input from a wide variety of stakeholders, including
numerous representatives from the rightsholder community,
payment networks, and other parties involved in online
commerce. The best practices are designed to assist
rightsholders in protecting their intellectual property through
a voluntary system, and in no way diminish the ability of
rightsholders to take independent action to enforce their
intellectual property rights.
Our business risk assessment and mitigation program, or
BRAM program, is another key component of MasterCard's
corporate effort to preserve the integrity of the MasterCard
payment systems and protect against illegal and BRAM damaging
transactions. More specifically, the Bram program serves to
restrict access to the MasterCard system by merchants whose
products and services may pose significant fraud, regulatory,
or legal risks.
The BRAM program was created to enforce MasterCard rules,
prohibiting acquirers from engaging in or supporting any
merchant activity that is illegal, or that may damage the good
will of MasterCard, or reflect negatively on the MasterCard
brand. Merchant activities that infringe upon the intellectual
property rights of another are expressly covered under the
protocols of the BRAM program.
MasterCard is fully committed to continuing to address this
important issue. As the Committee moves forward with
legislation, MasterCard believes it is essential to ensure that
any obligations imposed on payment systems are capable of being
readily implemented through reasonable policies and procedures,
and that payment systems be shielded from litigation and
liability when acting in accordance with the bill's
requirements. Thank you. In my written testimony, we have
offered a few general comments on the bill along those lines
that we believe are consistent with the Committee's objectives.
I look forward to answering any questions that you may
have.
[The prepared statement of Ms. Kirkpatrick follows:]
__________
Mr. Smith. Thank you, Ms. Kirkpatrick.
And, Ms. Oyama?
TESTIMONY OF KATHERINE OYAMA,
COPYRIGHT COUNSEL, GOOGLE, INC.
Ms. Oyama. Thank you. Chairman Smith, Ranking Member
Conyers, Members of the Committee, thank you so much for the
opportunity to testify today, not just on behalf of Google, but
also on behalf of the Consumer Electronics System Association,
CCIA, Net Coalition, TechNet, and Tech America, which together
represents thousands of companies.
Google takes the problem of online piracy and
counterfeiting very seriously. We devote our best engineering
talent and tens of millions of dollars every year to fight it.
In the last year alone, we have spent more than $60 million to
weed out bad actors from our ad services. We have shut down
nearly 150,000 adware accounts, mostly based on our own
detection efforts. And so far, this year, we have processed 5
million DMCA takedown requests, targeting nearly 5,000,000
items.
We are as motivated as anyone to get this right, but the
Stop Online Piracy Act is not the right approach. SOPA
undermines the legal, commercial, and cultural architecture
that has propelled the extraordinary growth of Internet over
the past decade, a sector that has grown to $2 trillion in
annual U.S. GDP, including $300 billion from online
advertising.
Virtually every major Internet company from Twitter to
Facebook, Yahoo and eBay, as well as a diverse array of other
groups from venture capitalists, to librarians, to musicians,
have expressed serious concerns about this bill. Unfortunately,
this legislation is overbroad. It undermines the Digital
Millennium Copyright Act, which has, for more than a decade,
struck a balance. The DMCA provides copyright owners with
immediate recourse when they discover infringement online,
while also giving service providers the certainty that they
need to investigate in the products on which America, millions
of Americans rely.
The bill sweeps in and it will send websites that have
violated no law. It imposes harsh and arbitrary sanctions
without due process.
The following example shows how the bill, as currently
written, would work. Imagine a website--let us call it Dave's
Online Emporium, which enables small businesses to sell
clothing and accessories. More than 99 percent of the sellers
on Dave's Emporium are entirely legitimate, but unbeknownst to
Dave, one seller has started selling counterfeit bags and T-
shirts that parity a copyrighted design. Dave's Emporium takes
great care to comply with copyright laws, including takedown
procedures, including repeat infringement provisions of the
DMCA. But, under the Stop Online Piracy Act, the entire site
could be deemed ``dedicated to theft.'' Based on the violations
of this single seller, the whole business effectively shut
down. Just about any private party--a corporation, the
copyright troll, someone with an ax to grind--could send a
notice to payment and advertising companies to terminate
services to the site without first involving law enforcement
were triggering any judicial process. The complaining party has
no duty to contact Dave's Emporium directly to resolve the
issue before going straight to ads and payment services to
terminate his service. If the emporium fails to respond with a
counter notice, within 5 days, Dave's site could effectively be
put out of business.
Facing these potential risks, Dave might think twice about
establishing his online Emporium in the first place. Countless
websites of all kinds, commercial, social, personal, could be
shuttered or put out of business, based on allegations that may
or may not be valid, and the resulting cloud of legal
uncertainty would threaten new investment, entrepreneurship,
and innovation. In a new study of venture capitalists, released
today, more than 80 percent said that the safe harbor
provisions of digital copyright laws are essential. Weakening
those safe harbor provisions would have a recession like impact
on new investment. And at the same time, this proposal imposes
new and unclear obligations on Internet service providers to
take ``technically feasible and reasonable measures to block
access to sites, to remove them from search results, turning
these providers into de facto web censors.''
This will not work. As long as there is money to be made
pushing pirated and counterfeit products, tech savvy criminals
around the world will find ways to sell these products online,
and ordering ISPs and search engines to disappear websites from
the Internet will not change this fundamental reality. We urge
you, instead, to target the problem at the source. Shut down
illegal foreign sites by cutting off their revenue. We support
legislation that builds on the DMCA. Our proposal would empower
the Justice Department to target foreign sites that violate
current law, and the court could send out order, advertisers
and payment services in which our services would be included,
to cut off ads and payments to those sites. Google has been
working with the Committee on such a solution for over 6
months, and we will continue to do so.
When all is said and done, we must address online piracy
effectively in ways that continue to allow the Internet to
drive this economy and this country forward. Thank you.
[The prepared statement of Ms. Oyama follows:]
__________
Mr. Smith. Thank you, Ms. Oyama.
Mr. Almeida?
TESTIMONY OF PAUL ALMEIDA, PRESIDENT, DEPARTMENT FOR
PROFESSIONAL EMPLOYEES (DPE), AMERICAN FEDERATION OF LABOR,
CONGRESS OF INDUSTRIAL ORGANIZATIONS (AFL-CIO)
Mr. Almeida. Good morning Chairman Smith, Ranking Member
Conyers, and distinguished Members of the Committee. My name is
Paul Almeida. I'm the President of the Department for
Professional Employees (DPE), a coalition of 22 national unions
affiliated with the AFL-CIO. I am honored to speak today on
behalf of the 4 million professional and technical people whom
our affiliated unions represent. Those people include creators,
performers, and crafts people in arts and entertainment and
media, professional and technical people in education, health
care, and public administration, in aerospace, and other
manufacturing, and pharmaceuticals, science, engineering,
information, and in professional sports.
The people I represent work in a wide range of occupations
and industries. They share a wide range of interests as workers
and consumers, as well as ardent defenders of the First
Amendment. On their behalf, permit me to commit you and thank
you. Their unions unanimously support the Stop Online Piracy
Act, as does the entire AFL-CIO.
My message is simple. It has three parts. First,
strengthening protections for U.S. intellectual property helps
American workers, jobs, incomes, and benefits. Second,
counterfeit goods endanger danger, workers, both as workers and
consumers. Third, there is no inconsistency between protecting
free speech and an open Internet and safeguarding intellectual
property. If the United States allows attacks on intellectual
property to get an answer, it puts good livelihoods at risk.
Online access continues to accelerate and expand. It
increasingly displaces traditional models for distributing
content and, thus, heightens the potential for digital theft.
Estimates of the number of jobs lost to digital theft in arts,
entertainment, and media sector alone run in the hundreds of
thousands. Losses of income arise because entertainment
professionals depend on compensation at two points--first, when
the professionals do the work, and later with the reuse of the
intellectual property. Royalties and residuals from downstream
revenues enable entertainment professionals to survive between
projects.
In manufacturing, the estimates of losses from counterfeits
also run in the billions. Again, the victims include workers
who face lost jobs and income. We should not allow rogue
websites to facilitate the distribution of counterfeit goods.
My second point, counterfeits endanger workers as workers
and as consumers. Only last week, the Senate Committee on Armed
Services heard about an astonishing extent of counterfeit
electronic parts in the military supply chain. Counterfeits
kill. When protective vests are fake, soldiers and police
officers can die. When prescription drugs are fake, patients
can die. And when smoke detectors are fake, home owners and
firefighters can die.
In May, the Atlanta, Georgia, Fire and Rescue Department
recalled roughly 18,500 smoke detectors that it distributed for
a free Atlanta smoke alarm program. The smoke detectors were
counterfeit, and so were the underwriter laboratory seals. An
alert from the U.S. Consumer Product Safety Commission noted,
``The unreliable, counterfeit alarms pose a life safety hazard
to the occupants in the event of a fire.''
Counterfeit smoke detectors pose a life safety hazard, not
just home owners, but to firefighters. Harold Schaitberger,
General President of the International Association of
Firefighters, another union affiliated with DPE, wrote to
Chairman Smith and Ranking Member Conyers to support the Stop
Online Piracy Act. President Schaitberger noted that, ``The
preparedness and safety of our members depends on reliable
equipment.'' A blog called TechKnit.com posted a defamatory
response. ``Who does the MPAA actually think it is fooling? Is
Congress so stupid that it cannot figure out for itself that
firefighters have no clue what the debate is about?'' The blog
accused firefighters of supporting censorship. It implied the
only reason the firefighters spoke up was because the MPAA was
paying off the union. Firefighters know the consequences of
counterfeit equipment.
My third point, freedom of speech is not the same as
lawlessness on the Internet. Protecting intellectual property
is not the same as censorship. The First Amendment does not
protect stealing goods off trucks. I mentioned earlier that the
people whom I represent today include ardent defenders of the
First Amendment, newspaper and broadcast journalists, radio
broadcasters, news writers, script writers, and many others in
the arts and entertainment and media. When they oppose wage
theft, there is no inconsistency with the First Amendment.
Digital theft and rogue websites diminishes incentives to
invest, and leads to a downward spiral for U.S. workers in our
economy. That is the bad news. The good news is that you are
taking action. The professional and technical workers and their
unions whom I represent look forward to your passing the Stop
Online Piracy Act.
Thank you.
[The prepared statement of Mr. Almeida follows:]
__________
Mr. Smith. Thank you, Mr. Almeida.
I will recognize myself for questions. And, Ms. Pallante,
let me direct a couple of questions to you.
In your prepared a written statement, you said, ``If
Congress does nothing to provide serious responses to online
piracy, the U.S. copyright system will ultimately fail.'' What
did you mean by that?
Ms. Pallante. Thank you, Mr. Chairman. Yes, I do not think
that is an overstatement. The system that we have for copyright
and have had since 1790, is based on a system of exclusive
rights with which authors can license and which publishers and
producers can invest in, and then distribute and otherwise
bring to life for consumers, not only here, but through
reciprocal agreements with foreign countries.
If those exclusive rights cannot be meaningfully enforced
and can be usurped in a lawless environment, they will become
meaningless. And if Congress does not update the piracy laws,
as it has done consistently for many, many years, many decades,
hundreds of years----
Mr. Smith. I think you just anticipated my next question,
which was going to be, do you think the legal system has all
the tools it needs now to combat the infringing websites?
Ms. Pallante. I do not. I think that this is a timely
hearing. I think Congress has done an excellent job of
intervening when technology outpaces the law. It did that in
the Net Act. It did that in the Art Act. And I think that this
is similar legislation. We are looking at a situation where
very sophisticated and very smart and very blatant infringers
will leap to offshore locations so that they can direct
infringing goods, which often belong to our companies, back to
American consumers. They are outside the jurisdiction of our
courts. We are not suggesting that we would intervene in
domestic courts in foreign countries. What we are saying is
that we should have some response to allowing them to do that
with impunity.
Mr. Smith. Okay. Thank you, Ms. Pallante.
Ms. Oyama, let me direct a couple of questions to you. And,
first, let me say that you spoke a lot of the right words
today. We have heard those words before, and I only hope that
your company and other similar companies will practice what you
preached. And that we will wait to see.
Let me ask you a couple of questions. You do acknowledge
that there is a severe problem, I gather, with the theft of
intellectual property by foreign criminals?
Ms. Oyama. That is a problem that we take extremely
seriously. We have hundreds of employees that work on it.
Mr. Smith. And I believe you agreed that if we cut off
access to American consumers and U.S. dollars, that that will
decrease the amount of intellectual property theft as well.
Ms. Oyama. We think cutting off the money is a very
effective solution.
Mr. Smith. Okay.
Ms. Oyama. The sites are in business because they profit.
Mr. Smith. Now, particularly with regard to Google, do you
think Google should stop returning search results for foreign
sites that are breaking U.S. law?
Ms. Oyama. Under the Digital Millennium Copyright Act, a
rightsholder could come directly to Google. It would not need
to go to court, and they could alert us of the foreign
infringement. And we remove that.
Mr. Smith. Well, a lot of people do not think the DMCA is
sufficient, including the Register of Copyrights. Do you think
we should go beyond that to try to stop returning search
results for foreign sites?
Ms. Oyama. Thank you for the question. I think there is a
lot of misperception about what is and what is not----
Mr. Smith. No, no. I was asking you a specific question
here. Should Google stop returning search results for foreign
sites that are breaking U.S. law?
Ms. Oyama. We do when notified by rightsholders. We have
done that more than 5 million times.
Mr. Smith. The answer is yes, then?
Ms. Oyama. Yes.
Mr. Smith. Okay, thank you. Another question is this.
Should Google stop placing ads on illegal sites that are
stealing American intellectual property?
Ms. Oyama. Our policies prohibit that. We have proactively
ejected more than 12,000 sites this year.
Mr. Smith. Okay. And so, you would agree not to either
facilitate or place ads on illegal sites that are stealing U.S.
property?
Ms. Oyama. If a site is violating the law, we would eject
them from our system, and we do that.
Mr. Smith. Again, I hope you can practice what you preach
today. That would be a major breakthrough.
It seems to me, and let me just conclude in this way, that
Google and other companies really have a decision to make. And
I hope they will make the right decision. I hope they will
decide to help other American companies. It is not necessarily
going to benefit Google or some of your allies, but I hope you
will decide to help American companies protect their
intellectual property from being infringed by foreign
criminals. And that is, I know a decision that you all are
having to make and weigh.
I acknowledge and regret to a large extent that if you make
the right decision, that is going to mean you are going to have
to give up some of the revenue you might get from some of those
ads that are actually on the infringing websites themselves.
That is a decision for you all to make, but I think you can
make the right one there.
I simply hope that you and others will decide to do what is
good for other American companies, do what is good for American
jobs, and do what is good for the American economy as well. But
thank you for your testimony.
The gentleman from California, Mr. Berman, is recognized
for 5 minutes.
Mr. Berman. Well, thank you very much, Mr. Chairman and
Ranking Member Conyers. And I would like to thank the Chairman
for responding to my letter inviting Google to testify. I think
it is extremely important to understand what legitimate issues
the opposition may have, so they can be addressed. I have not
heard contrary changes they would recommend. I have not
received a Google proposal or suggested proposal on focusing on
foreign rogue websites, and would love to see it since it has
apparently been discussed with the Committee.
Opponents of the legislation say we support the bill's
stated goals, and asked that sponsors consider more targeted
ways to combat foreign rogue websites. That is the response to
every idea put forward to stop that. Why is this not the time
for the tech community to put forward concrete and specific
proposals that will effectively combat the theft that take
place on the Internet?
The rhetoric around this bill is over the top. None of the
sponsors of this bill are against the First Amendment. None of
the sponsors of this bill want to shut down the Internet. And
none of the sponsors want to stymie technology. Perhaps the
first example that I will focus on is opponents claiming that
the legislation will undermine U.S. foreign policy, and
encourage repression by foreign governments. I wrote to
Secretary Clinton and asked her opinion. She clearly and
forcefully said there is no contradiction between intellectual
property rights protection and enforcement ensuring freedom of
expression on the Internet. In other words, we can adopt
legislation like H.R. 3261. To better protect U.S. intellectual
property online, at the same time demand that foreign
governments respect Internet freedom. And I would like to
submit those letters for the record.
Mr. Smith. Without objection.
[The information referred to follows:]
__________
__________
Mr. Berman. Based on your answers to Mr. Smith's question,
I would like to follow up. I thought I heard you say in
response to the Chairman's question that Google does not legal
to pirate websites?
Ms. Oyama. Under the DMCA procedures that Congress set out,
a rightsholder can notify Google about foreign infringement,
and we would remove that site.
Mr. Berman. All right. Well, explain to me this one. The
Pirate Bay is a notorious pirate site, a fact that its founders
proudly proclaim in the name of the site itself. In fact, the
site's operators have been criminally convicted in Europe. One
has apparently fled to Cambodia. It is being blocked by court
order in at least Italy, Denmark, Belgium, Ireland, and
Finland. And yet, Google continues to send U.S. customers, or
at least I do not know what you are doing this morning, but
before this morning, because maybe you could read my mind.
U.S.-Google continues to send U.S. consumers to the site by
linking to the site in your search results. Why do you do this,
requiring copyright owners to send thousands upon thousands of
notices for individual Torrent Links Pirate Bay, only to have
those same files reappear on the system, when Google calls The
Pirate Bay again? And we all know that this is a notoriously
egregious pirate site. Why does Google refuse to de-index the
site in your search results?
Ms. Oyama. Copyright infringement, counterfeiting, these
are issues that we take incredibly seriously. We invest tens of
millions of dollars into the problem. We have hundreds of
people around the world that work on it.
When it comes to copyright----
Mr. Berman. Why does Google refuse to de-index the site in
your search results?
Ms. Oyama. We will immediately, if we are notified by a
rightsholder, we would remove the link from our search results
to The Pirate Bay. We have done that over 5 million times this
year. When it comes to copyright----
Mr. Berman. You remove the link to a particular item.
Ms. Oyama. Right.
Mr. Berman. Why do you not refuse to de-index the site in
your search results?.
Ms. Oyama. The procedures that Congress set out under the
DMCA ensure that today with websites----
Mr. Berman. Would it make sense to have a law that allowed
you, if the DMCA does not go far enough, a law that essentially
told you that is what you should do in response to dealing with
a clearly established rogue website that flaunts it in every
possible way?
Ms. Oyama. So, we have no idea of knowing if a given search
result is infringing or is authorized. We do need the
cooperation of the rightsholder to let us know. And today we
are removing links. We think in terms of a legislative approach
something that goes after the real incentive for those sites to
be in business makes sense. So enhancing the DMCA and going
after advertising, which is our services, and payment
providers, we think makes sense. We think it is that----
Mr. Berman. Could you draft some proposals that reflect
that position, so we could look at them? I mean, I would love
it if you and the Consumer Electronics Association, and Public
Knowledge, and these groups would give us something specific.
You think it goes too far, it is too excessive. Give us
something specific. Infuse herself with the notion that you
want to stop digital theft. What works? And use your brilliant
mind that you have into organizations to give us some
specifics, because the DMCA is not doing the job. That is so
obvious.
Ms. Oyama. We are very interested in working with your
staff, with the Chairman, and other Members of the Committee. I
do believe through NetCoalition, we have provided that
language, and would be happy to follow up.
We do think, in terms of search results, that Congress got
it right under the DMCA. It leaves up legitimate content. It
takes down infringing content. We want to make sure that when
we are dealing with speech, that we use a scalpel.
Mr. Berman. Well, my time has expired, but you cannot look
at what is going on since the passage of the DMCA and say
Congress got it just right. Maintain the status quo.
Ms. Oyama. We certainly believe more tools would be useful.
Mr. Smith. The gentleman's time has expired. Thank you, Mr.
Berman.
The gentleman from North Carolina, Mr. Coble, is
recognized?
Mr. Coble. Thank you, Mr. Chairman. Good to have you. I
have had to miss some of the hearing, Mr. Chairman, because of
other meetings, but it is good to be here. I was going to
examine Ms. Pallante, but the Chairman beat me to it. I was
going to examine Ms. Oyama, but Mr. Berman beat me to it. But I
will still try to recover.
Ms. Oyama, let me ask you this. What relief does the DMCA
offer to a trademark owner who is trying to prevent
counterfeiters from selling fakes?
Ms. Oyama. So, for counterfeit, it is dealt with a little
bit differently. For counterfeit at Google, we will act through
our advertising. We had eject it, so, for example, for ad
words, we have ejected over 100,000 accounts in the last year.
There is a very kind of stark difference between copyright and
trademark. Congress so far has not enacted by DMCA for
trademark. Copyright laws are exclusive rights. Trademarks--it
depends on what geography you are in, right, what product you
can use. There is a given name specifically that can be used on
lots of different products. And so, I know there has been kind
of a long-standing conversation about that issue.
Certainly, if we ever were to receive a court order about
counterfeit and related to search, well, well of course, we
would comply with that court order.
Mr. Coble. I thank you.
Mr. Clark, how involved are our organized criminal networks
in the manufacture and distribution of counterfeit medicines?
Mr. Clark. From my estimation and experience, it is a
problem that is growing. I do not think we have reached the
level yet where we are seeing global cartels, per se, as we do
in narcotics, but as the notoriety of the crime gets around,
the profit margins are so phenomenal and the abilities on a
global scale are so low, that it is a no-brainer for organized
crime to look at this as a way to go. So, it is growing.
We have seen instances of it, not systemic instances, but
we have seen, as I just cited, the Detroit instance, where
money was going to Hezbollah. We have seen drug traffickers.
But I think it is growing in that capacity.
Mr. Coble. Mr. Clark, what aspects of SOPA do you believe
are particularly important to combating the problem of
counterfeiting medicines?
Mr. Clark. I apologize, Congressman. I missed the first
part of that?
Mr. Coble. What aspects of SOPA, the bill before us, do you
believe are particularly important to combating the problem of
counterfeiting medicines?
Mr. Clark. I think all aspects. My biggest worry,
Congressman, is that counterfeit medicines are still not
perceived by the public, by law enforcement, by judiciary, our
judges, and prosecutors as a serious crime yet. When you see
somebody like Kevin Xu, who has a global reputation for
supplying counterfeits--it was my understanding during his
undercover discussions, he offered a list of counterfeit
medicines, and he said if anything is on that list, anything
else off that list that you want, I can have it for you. Give
me 2 weeks. We are talking cancer medicines. We are talking
blood pressure medicines. We are talking Alzheimer's medicines.
And I think when we see a few tablets here or there, we
have a tendency not to think of the consequences those tablets
bring. A lot of people in the United States, I think, look at
it and say, there are no bodies in the street. Nobody seems to
be dying from counterfeits, so it cannot be that serious of a
crime.
Mr. Coble. I got you.
Mr. Clark. But when you look at people, at best. If they
are getting 20 percent of the active pharmaceutical ingredient
in the medicine that they are taking, such as this Alzheimer's
medicine that was manufactured in Turkey, manufactured in
facilities such as this where there are no conditions that in
terms of licensing. Regulatory, environmental, are applied.
Even with just 20 percent of the active ingredient in it, what
is the other 80 percent? And if there is nothing but benign
chemicals in that 80 percent, they are still not going to get
relieved of their disease, and they eventually die.
So, my biggest worry, Congressman, people are dying from
these counterfeits. We just have not figured out a way to
correlate the deaths from counterfeits with the problem yet.
Mr. Coble. I thank you. I want to beat that red light that
will illuminate imminently, and say to Ms. Kirkpatrick, I am
advised that MasterCard has been instrumental in combating
piracy. And, Mr. Chairman, I think it should be noted, for
those of you who have combated, particularly flagrant, that
that should be noted. And I thank you all for being with us.
And I yield back, Mr. Chairman.
Mr. Smith. Thank you, Mr. Coble.
The gentleman from North Carolina, Mr. Watt, is recognized?
Mr. Watt. Thank you, Mr. Chairman. And let me start by
thanking all of the witnesses for being here today. This is a
difficult issue. This legislation rages some interesting new
challenges, but circumstances are raising difficult new
challenges.
Ms. Oyama, let me start with you because I want to be sure
I understood your testimony. I got the impression that you do
not object strenuously to the provisions of Section 102,
because they require a court order; that your primary
objections are with respect to the provision in 103, where
market based system to protect customers are involved because
it does not require giving notice to the site owner or whoever
has put up the site. Am I misstating where you are on that?
Ms. Oyama. We would certainly agree that concerns about 103
are the greatest, one, because of the scope of what is the
definition----
Mr. Watt. Well, let me separate the question. Do you have
concerns with Section 102?
Ms. Oyama. The legislation. We support----
Mr. Watt. The question is, do you have concerns with
section 102?
Ms. Oyama. With some of the remedies, yes.
Mr. Watt. Some of the remedies? Okay. And you will give us
that in writing so that we can evaluate those concerns.
Ms. Oyama. The ads----
Mr. Watt. But your primary concerns are with section 103.
Am I misstating that?
Ms. Oyama. I think the remedies in 102 focused on ads and
payments, the way that these sites are making money----
Mr. Watt. I am not trying to get you to resolve that issue
about 102 today. I would rather have that in writing.
Ms. Oyama. It is much more workable, yes.
Mr. Watt. Right. But your concerns about 103 have to do
with the lack of notice to the site owner, right?
Ms. Oyama. It has, in part. I think----
Mr. Watt. Okay. So, is there some effective way that we
could give notice to the site owner, that you are aware of? And
if you could give me those suggestions in writing, because I
have those concerns, too. The problem is we do not currently
have an effective way, access to those information to give them
notice. And you do, I think, in your system because you put up
the site. Okay.
Now, if you could help me with those two things, we will be
far down the road. I am not adverse to addressing your
concerns. I have indicated that to you both in private and I am
saying it publicly today.
Let me talk about this constitutional standard, and make
sure that I understand where you are on that because you appear
to be advocating a constitutional standard that would prohibit
the enforcement of any laws online. In your written testimony,
you disagree with Professor Abrams' conclusion that it is
constitutional to block access to a website that is primarily
infringing, even though such blocking may incidentally impact
protected speech.
Your written testimony will not concede that blocking a
website that is almost entirely infringing would be
constitutional. And you have confirmed that in what you just
said verbally here. Does that mean that you consider it
unconstitutional for law enforcement to seize a child
pornography site if the site also contains one copy of the King
James Bible?
Ms. Oyama. So, the speech concerns that have been raised--
--
Mr. Watt. Just answer that question for me, and then I will
go forward from there.
Ms. Oyama. There are certainly legitimate problems----
Mr. Watt. What about if it contains 20 copies of the King
James Bible, but it is still 90 percent child pornography? Are
you saying First Amendment rights will not allow us to do that?
Ms. Oyama. I think we agree with Floyd Abrams that you need
to look at the whole site. You need to make sure that it is
really dedicated to infringement--and we need legitimacy.
Mr. Watt. Okay. Well, and probable cause would require the
Attorney General's office to do that. I mean, he is not going
to go and cite you unless or stop this process unless he has
gone through that analysis.
The question is, do you think that there is something
unconstitutional about taking down a site that is
overwhelmingly, primarily devoted to two stolen products? And
I've, you know, if that is your position, I think we are going
to have a real problem with that.
Ms. Oyama. No. I think if there was a site out there that
was 100 percent terrible, that is a separate issue. The
definition----
Mr. Watt. No, I am saying 90 percent terrible. It's him,
saying 98 percent terrible. Is 2 percent going to save the site
from being taken down?
Ms. Oyama. I do not think there is an exact number. I think
when you are sweeping in mast majorities of legitimate speech
without notice, that raises significant questions----
Mr. Watt. Is that 51 percent, or is it 60 percent? I mean,
how are we going to do this? You are telling me I cannot
violate somebody's constitutional rights if it incidentally
adversely impacts their protected rights. That is what you are
saying.
Ms. Oyama. No. I think if a site was primarily dedicated to
infringement, there is a lot of tools that----
Mr. Watt. Okay. Well, that is what the bill says, does it
not?
Ms. Oyama. Well, we would not agree that the scope of the
definition captures totally infringing sites. We have a lot of
concerns that it sweeps in legitimate----
Mr. Watt. No, I did not say totally infringing. That is not
what you said either. That is not what you said. You said
primarily infringing. And then, all of a sudden you shifted
over to totally infringing. Is this a question about whether
something is totally infringing or primarily infringing, or do
you think that both of them, that one should be protected and
one should not be protected?
Ms. Oyama. I think a definition that was, you know,
narrowly drawn that had something like primarily would be
helpful.
Mr. Watt. Okay. So you are going to give us some language
on that. My time is up.
Ms. Oyama. We have a definition.
Mr. Smith. The gentleman's time has expired. Thank you, Mr.
Watt.
The gentleman from Virginia, Mr. Goodlatte, is recognized?
Mr. Goodlatte. Thank you, Mr. Chairman.
Ms. Oyama, I want to pursue that line of questioning. Years
ago, a former Chairman, Henry Hyde, put me in a room with about
30 government representatives from the content industry, from
the online industry, Internet service providers, and a few that
had a foot in both camps. And we worked for months in a hot
room, and came to agreement on the Digital Millennium Copyright
Act, and, in particular, the notice and takedown provisions,
which you have spoken highly of. And I agree with you that
those provisions still have a role in protecting online
copyright.
But the Internet has changed dramatically since then. The
speeds have accelerated. The technology is more sophisticated.
Search engines are more sophisticated. And the criminals who
use all of that to rip off legitimate businesses of all kinds
are more sophisticated.
So, as you know, and, as I have said, I am interested in
making sure this legislation gives effective tools to combat
lawbreakers, but to also ensure it does not entangle legitimate
online businesses or the ability of entrepreneurs to continue
to bring exciting new products and services to the Internet.
Can you tell the Committee the top concerns the tech
community has about the bill and your specific recommendations
on how to fix those concerns within the bill?
Ms. Oyama. Sure, thank you. I think when the conversation
started, the idea was to target foreign rogue sites, sites that
were clearly breaking the law, build on the DMCA, and introduce
new harsh remedies. That is definitely an approach that we
would get behind, that we would support. I think when the tech
community now is looking at is this language. There are serious
concerns that the definition of a site that is dedicated to the
theft of U.S. property, you know, probably purely
unintentionally, it sweeps in a great amount of lawful
websites, so, for example, the unit of analysis for what the
site is. There is some language in there that says an Internet
site or a portion thereof. So there is some concern about
whether we are looking at the whole site or are we just looking
at one blog, one tweet, one comment, one page on a site. So,
getting the definition right would be really important.
There are other words within the definition that seem to
introduce notions like ``facilitate.'' That is one of the
reasons why the Consumer Electronics Association, who I
mentioned, they have serious concerns because they manufacture
so many different devices. Somebody could say that the Internet
itself facilitates infringement. So, we need to make sure that
we are really staying within the existing confines of copyright
law.
I would also mention in the definition there is some
language, you can be dedicated to fast if you have. No one
understands, sir, what this means. If you have taken deliberate
actions to avoid confirming a high probability of the use of
your site for infringement.
Right now, small business owners, when they are starting a
website, they know if they comply with the DMCA, that they are
lawful companies. They can seek investment, they can go
forward. If they have to somehow subscribe to that kind of
definition, the folks that we are hearing from, they just have
no idea how they would even possibly build their sites to build
to fit that definition. So I think getting the scope of what is
a site dedicated to infringement would be critical.
And from there, we are certainly more than happy to work on
remedies. The two that we think are really smart, if you look
at Wikileaks, I think this is a good example of the fact that
this is a strong remedy, is choking these sites off at their
revenue source. They are in business because they can either
sell advertising or because they can profit from subscribers.
If you could get the entire industry together and you could
choke off advertising, and you could choke off payments to
those sites, you would be incredibly effective without
introducing the collateral damage that we had discussed to free
speech or to Internet architecture, things like that.
So, ensuring that we had the right remedies and the right
scope, I think there is plenty of opportunity for all players
out for a cross-section of industry to come together.
Mr. Goodlatte. Let me just follow up on that. The more
detailed information you give us, the better our ability to
address legitimate concerns. So, will you commit to working
with me to identify the specific problems that the tech
community has with the bill, and working to address those
specific problems to improve the bill as we move forward?
Ms. Oyama. Absolutely.
Mr. Goodlatte. And some of have argued that this
legislation would break the Internet. As the co-chair of the
Congressional Internet Caucus, that is the last thing I want to
do. Can you explain exactly how this legislation would impact
the functioning of the Internet?
Ms. Oyama. So, I think the major concerns that have been
raised really kind of in a cybersecurity field. So, so there is
a white paper by a group of engineers who designed DNS-SEC.
There are some other leading cyber security folks who have
spoken out about it. I think Stewart Baker has been on record.
He is a former Senior Official at DHS, and the formal General
Counsel of the NSA.
One of the provisions in the bill would require ISPs to
perform DNS blocking. There is kind of a twofold concern there.
One is that the methods proposed here are not compatible with a
more than 10-year long effort into cybersecurity field to
implement DNS-SEC in a way that would prevent cyber security
attacks. So, I am not the cyber security expert, but the folks
that wrote that code are saying that this will really harm the
U.S. in the global effort to make deacons as more secure.
I think the second piece is, we know that users
unfortunately, are seeking this material. We can predict that
there are going to be circumvention efforts. And so, there is a
big concern that if we play certain obligations on you as DNS
providers, that users are going to reroute their traffic to
offshore rogue providers. And the vulnerabilities that an
offshore rogue provider could introduce into the network, not
just for the kids that are looking for the movie, or for some
bad actor, but for anyone who is on the network that they are
on is really significant. It could introduce spyware, malware,
privacy concerns.
Mr. Smith. The gentleman's----
Ms. Oyama. I know this is, you know, something that really
the folks who are the experts in this field have raised, but,
you know, that has been kind of a critical concern about----
Mr. Goodlatte. Ms. Oyama, I hate to interrupt. I do believe
that Mr. Clark, if the Chairman will permit Mr. Clark from his
past experience with the Department of Justice might also be
able to comment on this issue, if the Chairman allows.
Mr. Smith. Mr. Clark, could you give a very brief response?
Mr. Clark. Very briefly, unfortunately I do not have the
cyber experience. It was not one of the areas I actually worked
myself. I have managed it. I do not know the intricacies about
it. So in all honesty, so I apologize for not having an answer
for that.
Mr. Goodlatte. I apologize, Mr. Chairman. I thought there
was an opportunity there, but perhaps not. Ms. Oyama, thank
you. We look forward to working with you.
Mr. Smith. Thank you, Mr. Goodlatte.
The gentlewoman from California, Ms. Lofgren, is
recognized?
Ms. Lofgren. Before my questions, I would like to ask
unanimous consent to introduce a number of items into the
record, opposition to the provisions of the bill. The letters
are from the Consumer Union and other consumer groups; TechNet;
Tech America; the American Library Association; the Competitive
Enterprise Institute; Human Rights Watch and other public
interest groups; dozens of human rights groups around the
world; a written statement from the ACLU; a paper from the
Brookings Institute explaining how the bill would undermine
security and stability of the Internet; a white paper by five
leading DNS engineers and Internet security experts, a letter
from the Anti-Phishing Working Group; an article from Stewart
Baker, the former General Counsel of the NSA and Policy Chief
for DHS under the Bush Administration entitled ``Copyright
Bills Could Kill Hopes for Securenet;'' a letter signed by AOL,
eBay, Facebook, Twitter, Yahoo, LinkedIn, Google, Mozilla, and
Zynga; and a Harvard Business Review article entitled ``Great
Firewall of America.''
Mr. Smith. Without objection.
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Ms. Lofgren. You know, I think some today have sort of
written off, I think, serious criticisms of this bill as
hyperbole, and that the only objection is about money and
hyperbole, and I just do not think that is the case. The big
tech companies were not the ones who said this bill would cause
the U.S. to lose its position as a global leader in supporting
a free and open Internet. That is from dozens of human rights
groups around the world. The big tech companies were not the
ones that wrote that the bill has the potential to do consumers
more harm than good. That is from the Consumer Union and other
nonprofit consumer groups.
The big tech companies did not write that the bill is in
conflict with the First Amendment. That is from the ACLU and
over 100 law professors. It was not the big tech companies who
said the bill would kill our best hope for securing Internet.
No, that is from Stewart Baker, the former Assistant Secretary
for DHS and the former General Counsel of the National Security
Agency. Dozens of venture capitalists, not big tech companies,
wrote that the bill will stifle investment and Internet
services, throttle innovation, and hurt American
competitiveness. And it has not generally been the policy of
this Committee to dismiss the views of those in industries that
we are going to regulate, and these are just a few of the
examples.
Now, I understand why co-sponsors of the legislation are
not happy about widespread criticism of the bill, but I think
impugning the motives of the critics rather than engaging in
the substance is a mistake.
I have a number of questions, and I note that, yeah, we
have got six witnesses here. Five are in favor and only one is
against, and that troubles me. I will just say that. You know,
I do not think it is a balanced effort, and I am sorry that we
do not have any technical expertise on this panel in terms of
engineering talent, because I think that is an important issue
as to the DNS blocking portions of the bill.
So, let me ask a question of Mr. O'Leary. Do you believe
that software programs should be illegal if they allow a user
to circumvent Internet filtering ordered by the government?
Mr. O'Leary. I do not believe that software programs should
be per se illegal. I think if people misuse them, then they
should be. If they misuse any product in violation of a law,
they should suffer the consequences.
Ms. Lofgren. So, the ability to just simply circumvent the
takedown order as a software add-on to a browser should
continue to be illegal?
Mr. O'Leary. Well, no. If you are saying you are building
something and specifically to avoid an order of the court not
to do something, I do have a problem with that.
Ms. Lofgren. So, you think that software ought to be
illegal.
Mr. O'Leary. Well, that is not what I said, no.
Ms. Lofgren. Well, it is one or the other. Either you
should be able to do that, or you should not be able to do it.
Which is it?
Mr. O'Leary. Does the software have a legitimate purpose,
or is it simply to circumvent a court order?
Ms. Lofgren. Well, circumventing software can be a
multiplicity of views. For example----
Mr. O'Leary. Right, but in your question, you said the
software would be created to allow circumvention.
Ms. Lofgren. There is an add-on to Firefox that will
allow----
Mr. O'Leary. I think that most legitimate companies in the
United States, including Firefox, should abide by court orders
and follow the law.
Ms. Lofgren. So, well, you are not really answering the
question. I will take from here you think that that ought to be
regulated at least.
Mr. O'Leary. Regulated in much the same way as we regulate
people driving drunk and stealing things, yeah, I think that--I
know that the word ``regulation'' has----
Ms. Lofgren. Let me ask you this, because I do not have a
long time, and I assume that you were directing your comments
that people did not--that Northern California people did not
care about jobs in the rest of America, either to myself or Mr.
Lungren since we are the only Members of the Committee from
Northern California. I will say I do care about jobs all over
America. And, in fact, eBay, which is headquartered in San
Jose, has enabled thousands of Americans all over the country
to form small businesses, and to use the Internet to sell
products.
I would like to know, your concept--do you think that this
is a big problem? I think it is a problem. I think that
Internet piracy is something that is troubling. It is illegal.
And I think we need to do something about it. So, let me just
put that out there.
How many sites do you think need to be shut down in order
to say we have succeeded in the fight against Internet high
receipt? Is it a dozen? Is it hundreds? Is it thousands? Do you
have any idea the scope of the number of sites that need to be
removed?
Mr. O'Leary. Well, I think, first of all, you've
mischaracterized my comment about Northern California, and I
would like to correct the record on that. I was simply----
Ms. Lofgren. Well, do it later, because I do not have that
much time. Answer my question, please.
Mr. Smith. Actually, the gentlewoman's time has expired,
but you are free to answer the question.
Mr. O'Leary. Thank you. The comment about Northern
California was in the context of this debate. The perception
has been created by opponents of this bill that all of the
innovation and all of the creative thinking comes out of
Silicon Valley. I was not taking umbrage with anyone in Silicon
Valley. We have great relationships with a lot of people in
Silicon Valley. Pixar, which makes wonderful movies, is in
Silicon Valley. Apple, which is a legitimate online retailer,
is in Silicon Valley. I was also making the simple point,
Congresswoman, that there are people all over this country in
places like Detroit, Baltimore, Texas, North Carolina----
Ms. Lofgren. Mr. Chairman, I wonder since----
Mr. Smith. The gentlewoman----
Mr. O'Leary. I would be happy to answer your question.
Ms. Lofgren. May I have an additional 30 seconds?
Mr. Smith. Well, the gentleman--answer the question very
briefly.
Ms. Lofgren. How many sites?
Mr. O'Leary. Well, I know for a fact that we could start
with Pirate Bay, which was mentioned earlier. I do not know how
many----
Ms. Lofgren. So, is it just Pirate Bay, do you think, or do
you think it is a dozen? Is it 100? Is it 1,000? What do you
think?
Mr. O'Leary. It would be easier to answer the question if I
was allowed to. There are multiple sites out there. This is a
legitimate problem. We have been very clear, and we will
continue to be clear, that there is no silver bullet. The
problem is evolving and changing. I cannot sit here right now
and tell you in good faith that I know what that number is, but
what I do know is that there are literally hundreds of sites
out there that are engaging in this activity. And all you need
to know that----
Ms. Lofgren. Do you think it is in the neighborhood of----
Mr. Smith. The gentlewoman's time----
Mr. O'Leary [continuing]. Know that is to go to Google and
type in J. Edgar, and you will get a list of page after page
after page----
Ms. Lofgren. Or Baidu, or Bing, or any of them.
Mr. O'Leary [continuing]. Of sites that are engaging in
this illegal activity.
Ms. Lofgren. So, it is hundreds of thousands.
Mr. Smith. The gentlewoman's time has expired, but let me
remind Members that they are welcome to submit written
questions to any of the panelists, and we will try to get those
answers to the Members quickly as we can.
The gentleman from California, Mr. Issa, is recognized?
Mr. Issa. Thank you, Mr. Chairman. And the gentlelady from
the North, while I am deep in the Confederacy of California,
went through quite a litany of good opponents to the bill. I
would like to add to that, by unanimous consent, the following:
a joint letter by 160 entrepreneurs, founders, and CEOs, and
executives; a letter expressing concern about SOPA from the
Digital Media Association; a statement by the Consumer
Electronics Association, which was denied an opportunity to be
here as a witness; a letter signed by 53 venture capitalists
expressing concern regarding the Protect Act; and a transcript
of recent remarks made by Vice President Joe Biden that he gave
at the London Cybersecurity Conference germane to his concerns
about this bill.
Mr. Smith. Without objection.
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Mr. Issa. Thank you, Mr. Chairman. I have been the victim
of piracy, so you are not going to have a problem with me
agreeing with the problem. Hardware/software, got it all. But,
Mr. Clark, I am going to hope that you can stretch for this
part of it, even though it is not in your title. You are
familiar with the ITC, are you not?
Mr. Clark. Yes, I am.
Mr. Issa. Pfizer regularly for patent infringement on
imported products would go to the ITC and get relatively quick
justice using administrative law judges available to them,
injunctive relief against a patent violator, correct?
Mr. Clark. Outside of my field, but I would believe that
would be the case.
Mr. Issa. So, when we deal with rogue elements outside the
jurisdiction of the United States that are importing in the
United States, we have a history of an organization that is
quick, administrative, and can have continued jurisdiction
against non-U.S. entities who are, in fact, trying to take what
they have stolen and sell it into America. Is that correct to
your understanding?
Mr. Clark. Generally speaking, yes.
Mr. Issa. Okay. Have any of you--just raise your hand--
worked with the ITC in your background or are familiar with
them? One or the other.
Well, let me just run through quickly, because time will be
very limited and the answers seem to be long. We have a court
of jurisdiction. Now, they do not specifically have the mandate
to follow the money and provide injunctive relief against
Google, eBay, or anybody else after they find an offshore
infringer and seek remedies, but they have their own counsels.
They have administrative law judges. They have a procedure.
Mr. Chairman, I object to this bill in its current form,
mostly because I believe it fails to use tools that are
generally better than the tools that we have at our disposal in
this bill. And I believe that if the real remedies sought is,
in fact, a court of continued jurisdiction specializing in
intellectual property and designed to it, in fact, reach a
quick solution to a question of whether there is wrongdoing,
and then follow the money through injunction, not through
fines, and obviously a criminal referral.
My intention is to offer legislation on a bipartisan basis
that will, in fact, look at the legitimate concerns, take a
great deal of these 80 pages; however, and this is where it is
tough, Mr. Chairman and Ranking Member, suggest that a
jurisdiction not within this Committee get a substantial
portion of this bill, because I believe that that is as
appropriate as it is for the Federal courts to consider
domestic entities who are violating it.
And so, with that, Ms. Oyama, if I am pronouncing it right.
Ms. Oyama. Yes.
Mr. Issa. In your experience, has Google worked with the
ITC or any other administrative law judges and executing on
other people's judgments?
Ms. Oyama. I would imagine in the patent context, yes. It
is not my field, so I cannot speak to it.
Mr. Issa. Okay. But do you agree that having a court of
continued jurisdiction that, in fact, can work for injunctive
relief as technology is available is generally something that
Google and the other search engines would see as reasonable
once there is a judgment entered against an offender somewhere?
Ms. Oyama. Yeah, I think we would be happy to work on that
type of solution.
Mr. Issa. And I am going to get to the others, but, Mr.
Clark, if you had that, and you had a judgment against party A
who had an Internet site, and then 25 other similar parties
show up from the same country and have all the identities that
tell you it is basically the same group of you already have a
judgment against, would you not benefit from a court that we
specifically gave jurisdiction to to determine quickly that
those are alter egos and execute upon them so that you would
not go through this wackomo again and again, trying to prove to
somebody that it is basically the same people doing it again?
Mr. Clark. My working relationship with the ITC has been
very, very limited. I am not quite certain what their
capabilities are. If you are saying you are going to empower
them to do certain work like that, it would make some sense.
Mr. Issa. Currently they are, and the others would probably
know this, it is a place that plaintiffs go to if there is any
importation and they have a patent because they can administer
a decision faster than the fastest rocket docket. And unlike
the eBay decision, they have injunctive relief, not only as a
tool, but as their one and only tool, and they use it without
discretion because, in fact, that is the mandate of Congress.
Mr. Clark. But you are still talking of a referral process.
I think the DoJ then for a criminal follow-up and for asset----
Mr. Issa. And I recognize at some point the administrative
law judges look and say we have a domestic entity that is not
compliant with our injunctions, or a site that is just as broke
in the U.S. So, I am very aware that there are elements here
that if you are cooperating or facilitating with a foreign
entity, that there would have to be a referral. That is not
going to be Yahoo, or Google, or eBay. It is going to be, as
you know, the rogue sites you fight every day.
Mr. Clark. Right. And I would just be worried about the
bifurcation of activity in the referral process and the
elongation of the end result is something like that were
arranged.
Mr. Issa. Well, I look forward to showing both our
witnesses and the Committee that, in fact, the ITC's time to
judgment and their execution is actually much shorter than our
Federal courts, and less discretionary than the Justice
Department's generally. And I thank the Chairman for his
indulgence, and yield back.
Mr. Smith. Thank you, Mr. Issa.
The gentlewoman from Texas, Ms. Jackson Lee, is recognized?
Ms. Jackson Lee. Let me thank the Chairman very much, and
the Ranking Member, and let me call the roll, for the record,
and say that I want the U.S. Library of Congress, I want
Pfizer, the Motion Picture Association of America, MasterCard,
Google, and our good friends in the technical aspect of our
moviemaking business, and all supporters to be made whole. I
think we have a consensus that online piracy is a both
devastating and destructive element of the Nation's economy. In
fact, I have said, I think, I believe often that it steals the
genius of this country.
We are very proud of the motion picture industry, and I am,
if you will, a cup runneth over. I may be your physical armor
when I see the massive thievery that goes on, and certainly in
some of our international friends.
So, I start off with that, and I want to find a common
ground. And as I have looked at the legislation, I hope the
Chairman and Ranking Member will give us the time to really
study the legislation. Several things come to mind. One, this
legislation has no referral. I am a Member of the Homeland
Security Committee, and our Committee spent years helping to
build the switch to the DNS-SEC. And if this bill would pass,
we would have a challenge with that format.
And the question is, would everyone who needs to make
changes to the DNS-SEC would instead be on the phone to their
lawyers, asking whether they would be sued for adopting
security technology that will make the mandated block and
redirect system even more difficult. We have to look at all of
these issues.
So, I want to ask the Library of Congress first if she has
any comments regarding that conflict. We are supposed to be
collaborative. You are the only government witness. I am not
sure if you have thought of that, but let me give you a second
question quickly since our time is going quickly. I am
concerned about what effect it will have on small businesses,
particularly those that could not afford to go to court should
a rightsholder come forward and demand that their access to
revenue be shut off. If a rightsholder accuses a small business
website of facilitating infringement and a payment processor
shuts off payments to that business, is the payment processor
immune from suit under section 104, and what rights do they
have?
So, first, is there any collaboration or recognition about
the system that the DHS has formulated?
Ms. Pallante. I am sorry, I do not know the answer.
Ms. Jackson Lee. You do not have that question. Mr.
Chairman, I think we have to have that answer from whatever
resources we can get.
Next, if you can have any insight on how it impacts small
businesses----
Ms. Pallante. Yes.
Ms. Jackson Lee [continuing]. This particular legislation.
Ms. Pallante. That section of the bill, I believe, was
actually intended to make it easier and quicker, and to avoid
the court process and the cost. That is the goal. There is no
liability for the intermediaries under that section. There is
an obligation if it goes to the next stage and there is a court
order. There is an obligation.
Ms. Jackson Lee. Right. So, there is still a process that
is small business might have to be engaged in. There is still a
process which makes it easier----
Ms. Pallante. There is, and they are good faith
intermediaries, and they have not themselves broken the law,
and the bill tries to take that into account. If we can refine
that, we should.
Ms. Jackson Lee. Yes, because they still have an obstacle
to climb, if you might.
Let me go to Ms. Oyama. Forgive us all for not reading the
name correctly. I do not have it in front of me. But let me
quickly give you a series of questions.
Ms. Oyama, is that correct?
Ms. Oyama. Yes.
Ms. Jackson Lee. All right, thank you. One of the kinds of
groups that I have been engaged in over the last couple of
months is the generation of youth that are excited about
startups. They are everywhere. They are job creators, and I see
them as the next nucleus of job creation in America. They are
obviously functioning now. They are all trying to emulate all
of the stars of social networks. We know that will not be the
case, but they are trying to create jobs.
So, let me raise these concerns with you. I think
immediately what comes to mind is that this legislation may be
overly broad, that it too easily circumvents Internet users,
and it is inherently incompatible with the way the Internet
actually works. Would you comment on the overbroad, these
circumventing Internet users, and incompatible with the way the
Internet works? Could you do that quickly for me? And then, I
would like to go back to--if you could be listening to this
question about the--Ms. Pallante, if you have any idea about
the problematic aspect of this, again, for smaller minority
businesses. But, Ms. Oyama?
Ms. Oyama. Sure. On the over breadth concern----
Ms. Jackson Lee. Over broad.
Ms. Oyama. Over broad, a huge concern is the scope of the
definition of what is a site dedicated to the theft. So, that
is a concern that has been raised amongst small businesses,
larger tech companies. If we are going to go after rogue sites,
we have to make sure that they are rogue sights and they are
breaking the law. There is a lot of concern that right now. The
definition would cover new ground. It would cover sites that
today are complying with the DMCA, so they are taking down
infringement when they are notified by rightsholders. It would
be sites that today under existing laws if they were hauled
into court, they would be found not guilty under existing
copyright laws. So, I think there is the scope concerns there.
Ms. Jackson Lee. Circumvented by Internet users? It could
be too easily circumvented by Internet users?
Ms. Oyama. Yeah. So, one of the concerns is that on the
notice and terminate provision, that peace does not go through
the courts, and so somebody could just notify a service
provider. You could go away for Thanksgiving if you are a
website owner, and your ads and payment providing services
under the bill should be could be shut off in 5 days. So, there
is a lot of concern that, you know, that does not really
provide adequate due process in terms of the way current
businesses work.
I will say in terms of the incompatibility with the
Internet, in the Internet sphere, Internet traffic is going to
route around blockages, and so kind of working with a grain of
the Internet we think is really smart, is really effective. It
is why we support the legislation. We have discussed before
about cutting of the funding sources. It is an incredibly
sophisticated site. Much of international law enforcement was
going after Wikileaks, and if you go to Wikileaks home page, it
says that they are going down because payment providers shut
them off.
Mr. Smith. The gentlewoman's time has expired.
The gentleman from Florida, Mr. Ross, is recognized?
Mr. Ross. Thank you, Mr. Chairman.
Ms. Oyama, do you feel that this bill is an infringement of
the First Amendment right of free speech?
Ms. Oyama. You know, I think short of the
constitutionality; it certainly raises free speech concerns.
Mr. Ross. Is it censorship that you are concerned about?
Ms. Oyama. Yeah. So, the U.S. has had a good platform
globally to speak out for free expression, and I think a lot
like this, which would for the first time empower the
government----
Mr. Ross. It would empower the government to require you to
do something that you do not want to do, which would be to shut
down a site. Is that correct?
Ms. Oyama. We are happy to disable links, when we are
notified by rightsholders. We think that----
Mr. Ross. And as long as you do it without a third party,
such as the government, it is not an infringement of First
Amendment rights of free speech, nor is it a censorship, is it?
Ms. Oyama. We do not do full site blockages; we do page by
page for a----
Mr. Ross. But you do takedowns.
Ms. Oyama. Under DMCA, yes.
Mr. Ross. Yes, which is the same thing. I am just having a
hard time distinguishing when you do it. It is okay, but when
you have the third party, such as the Federal Government,
requiring you to do it, then it becomes censorship and an
infringement of First Amendment rights.
Ms. Oyama. I see. I think the government approach is much
broader in this bill.
Mr. Ross. Let me go a little further here because I want to
go your example of Dave's Emporium, which I think is a great
example for people, such as me, that think simply to understand
a small business. But I want to look at it from a consumer
rights perspective.
Let us say that Dave's Emporium, because of that 1 percent
vendor that he uses on the Internet that is found through your
Google search, results in the purchase of a product that causes
death or personal injury. Now, in that chain of commerce,
Google would be brought into action, especially where there is
joint and several liability as a deep pocket, to defend that
suit and probably pay damages. All of that could have been
prevented had there been an investigation, had there been the
appropriate execution under this Act.
In fact, not only would it have been prevented, but also
under this bill, is there not an affirmative defense that
Dave's Emporium could have asserted in the sense that I do not
have the resources to hire a lawyer that would mitigate my
responsibility to now have to defend the order to take down.
So, what I am getting is that, even further you have
immunities under this Act that would prevent a third party suit
against you if you shut it down. But you do not have immunities
if, in fact, you allow for the sale and purchase of products
that are not only counterfeit, but they also result in death or
personal injury.
Ms. Oyama. So, on counterfeit, it is definitely something
that we agree with you. Counterfeit is a big problem. It is
something that we invest tons of engineering hours, millions of
dollars, into going after. For example, for ad words, we
ejected 95 percent----
Mr. Ross. But it would seem to me that you would want to
have the immunities. You would want to have some protection,
some safe harbors to prevent lawsuits against you in the
execution of your business.
Ms. Oyama. I think if a court is instructing intermediaries
to take action, there is probably some plays for its
immunities. But the concern here is that Dave could be shut off
for 5 days, not pursuant to his terms of service. Certainly no
one has an absolute----
Mr. Ross. But he could be put out of business being sued
because of the harmful product that could have been prevented
had Google investigated the site.
Ms. Oyama. So, certainly, no one has an absolute right to
ad payment services. We think that there should be----
Mr. Ross. Well, Dave is in a bad situation either way, and
I think that he needs to have some protections, and I think
that this bill will offer some of that.
But let me shift to another thing, and let me tell you, I
appreciate what Google has done with regard to child
pornography. I mean, you guys have stepped up to the plate
tremendously. And I think that is a wonderful example; you need
to be congratulated for that. You do it because it is the right
thing to do. And it would seem to me that following the letter
of the law, you could do the same thing in this regard in an
effort to hold down or at least eliminate the use of pirated
sites by way of the search engine, Google.
Ms. Oyama. So, child pornography certainly is a huge
problem. It is something we take very seriously. Technically,
going after child pornography in a search engine is completely
different from copyright because a machine can detect tapped
child pornography, and a machine can look for flesh tones.
Human, if you look at it, would know what it is and could
ejected, and with a copyright----
Mr. Ross. But it is still the right thing to do.
Ms. Oyama [continuing]. You cannot just look at the video
and know whether it is infringing or licensed, right? It needs
to be in collaboration with the rights owner.
Mr. Ross. Real quickly, Ms. Kirkpatrick, not a question,
just a thank you on behalf of MasterCard for what you are doing
because you are cutting off the source of the problem. And that
is very important.
Ms. Kirkpatrick. Thank you.
Mr. Ross. Mr. Almeida, I had a chance to meet a couple of
days ago with one of your members, a gentleman, a lifelong
songwriter. He is in this room. And he met with me, and he
said, you know, the problem is not that it is a fight between
the movie houses and the producers; it is the small people, the
people who have followed their passion, the people who have the
artistic ability to do something they have always wanted to do
that now, after 30 years of being a songwriter has to look at
whether he can keep his house, what his future is going to
hold. And I wish you would do for me, and explain to the
Members up here, is how this adversely impacts not the giants
in Hollywood, and not the giants in Nashville, but those that
participate, those whose creativity and innovation will be
stifled unless there are some protections.
Mr. Almeida. Well, I think there does need to be
protections, and I think that is what this bill hopes to do.
And this is not to protect the big dogs in Hollywood.
Mr. Ross. Right.
Mr. Almeida. Our members who are behind the scenes, who are
stage hands----
Mr. Ross. The foundation.
Mr. Almeida [continuing]. The people who build the sets,
the back end payments for those workers support their health
and pension fund, and that is being cut off. They are adversely
being impacted by these rogue site sand by the piracy of their
videos. A video being released today will be available by the
weekend on the web. And so, we are hoping that this legislation
will help to take a step forward in that area.
Mr. Ross. Thank you. I see my time has expired. I yield
back.
Mr. Smith. Thank you, Mr. Ross.
The gentlewoman from California, Ms. Waters, is recognized?
Ms. Waters. Thank you very much, Mr. Chairman.
Let me just say that I find the discussion on H.R. 3261
extremely interesting and engaging. I think Mr. Watt framed
this issue somewhat in his opening statement when he talked
about the giants, and competition, and the profits and the
money that is involved being at the basis of all of it. And let
me just say that I view any proposed changes in IP and
copyright law as an opportunity to examine whether changes will
expand opportunities for women and minority entrepreneurs, both
in Hollywood and Silicon Valley.
And I come to this discussion just having witnessed a CNN
presentation called ``Black in America'' by Soledad O'Brien
this past weekend, which I found very, very interesting.
Having said that, I would like to direct my first question
to Maria Pallante, U.S. Copyright Registrar. User generated
content, websites like Facebook and YouTube, are extremely
popular. Individuals and groups use these platforms to share
videos that range from fraternity and sorority step shows and
high school talent shows, to videos of kids performing a new
dance or imitating a new music video. Many of the common
artists who do not have record deals also use UGC sites to
showcase their talents, covering popular songs.
Now, to the extent many uploaded video clips feature the
use of copyrighted music and other type of content that is not
for profit or commercial gain, do you think that this bill
would include a safe harbor, their use exception or other
explicit provision that would ensure we are not trying to
subject parity and leisurely activities to felony penalties?
Are you at all concerned that some of the section's broader
language could have unintended consequences that may chill the
use of UGC sites and digital platforms that have served an
important source of social utility?
Ms. Pallante. Thank you for the question. I am not
concerned as it is written. We are talking about two different
levels of activity. This bill would go after sites dedicated to
infringement. I think what is on the table in this room is a
position that one can be compliant with the DMCA through notice
and takedown of very specific sites when notified, and,
therefore, not have an obligation to participate in a solution
that is about fraud, willful, criminal, egregious, dedicated
activity. These two things will operate at the same time, and
the notice and takedown system will remain intact.
Ms. Waters. Also I would like to ask about another issue
that I am very concerned with, and I would like to direct this
to Ms. Katherine Oyama, to Google. I am very concerned about
the voluntary authority and legal immunity the bill gives
Internet service providers to block access to sites they
reasonably believe are infringing sites. This provision would
seem to run counter to the FCC's recently issued open Internet
net neutrality rules.
I can foresee cases in which an Internet service provider
that owns online content may use this section as pretext to
unfairly block access to a competing website that is not really
dedicated to infringement. This section does not require
credible claims, merely a reasonable belief that does not
exclude commercial disputes or anti-competitive conduct. It is
my understanding that the Senate does not have ISP involuntary
blocking authority in its bill.
Can you foresee any unintended consequences with the
voluntary blocking provisions? Is there a way that this bill
could be refined to ensure that voluntary actions are based on
credible evidence and certain thresholds?
Ms. Oyama. Sure, thank you. So we do see today, the
Internet used by countless small businesses to facilitate
communication to facilitate e-commerce. It is truly people's
daily livelihood, and so we do think there should be due
process built-in if something essential to your site, like your
services, is going to be taken away.
I think the provision you are mentioning is Section 104 in
the bill. I think the broader technology community shares those
concerns. You know, want, if you look at the scope of sites
that could be captured by a service provider's reasonable
belief that they were dedicated to theft within the bill, that
is a very broad group. And then, two, the number of service
providers that receive complete immunity for terminating
service without going through a court, without going through
due process. It is not just the providers that are required to
take action under this bill; it is much broader. So, it would
include advertisers, search engines, payment providers, but
also domain name registers, ISPs, you know, a much broader
group of folks.
If you were to lose your domain name and you are a small
and independent business, that is everything. And so, making
sure that you are at least protected by the terms of service
when you sign up for the contract would, you know, probably
makes sense to us.
Ms. Waters. Thank you very much, Mr. Chairman. I yield back
the balance.
Mr. Smith. Thank you, Ms. Waters.
The gentleman from Iowa, Mr. King, is recognized?
Mr. King. Thank you, Mr. Chairman. I appreciate being
recognized, and I appreciate the testimony of the witnesses.
I wanted just to take a bit of a different tack here, if I
could, and looking at the fraudulent Internet sites and the
peace of this that is a direct focus of this hearing. And I am
just looking through some of the background material, the
problem of illegal pirating of copyrighted intellectual
property. And I would think that it is all trademarks, and
copyrights, and patents all together that I think about, not
just websites and things that we can look at.
And so, there is a pattern across this country or across
the world of certain countries that are pretty effective with
this. And I just ask if there is anybody on the panel, just
raise your hand, or answer. Do you have a list of countries
that are the most egregious violators of intellectual property
rights from an American perspective? Yes, sir. I cannot read
your names, I am sorry.
Mr. O'Leary. Thank you, Congressman. It is Michael O'Leary.
The content industries contribute to something through the
State Department. There are a number of different ways. There
is a notorious markets filing, which chronicles the areas of
the world where this is the most problematic, and then there is
a special 301 process whereby the United States puts forward a
list and kind of categorizes where countries fall in terms of
their protection of intellectual property.
And the reason for that, frankly, very simply, is that
intellectual property is not just an American problem; it is a
global problem. And what you are seeing around the world is
that other countries are starting to recognize the benefit of
not just protecting American intellectual property, but
protecting their own.
I would note, for example, that there are at least 16
countries in the world that engage in sight blocking now, which
has been the focus of some of the debate here. The Internet
seems to be working fine in those countries. It seems to be
having an impact in terms of taking sites, like the Pirate Bay,
which is blocked in many other countries, but not in the United
States, offline.
So, in many ways, the United States has historically been a
world leader, but the truth of the matter, Congressman, from
our perspective is, if we do not step up and deal with the
problems we have today, we are going to cede that ground, and
we are not going to be the world leader. And that is
unfortunate for our country, because we do lead the world in
the production of intellectual property, and we ought to be
leading the world in protecting it.
Mr. King. Mr. O'Leary, do you have an opinion then? You
have given me a couple of sources I might look at. Do you have
a recollection on from which countries originate the greatest
theft of intellectual property?
Mr. O'Leary. Off the top of my head, I would hesitate to
list them and any type of specific order. I mean, there are
different problems in different parts of the world. There are
hard goods problems, which is kind of more the traditional disk
type piracy that that occurs in places like Russia. There are
problems with online; a country like Spain has a significant
online piracy problem. There are other places in Europe.
We would be happy to provide you and the Committee with a
complete list. I am hesitant to speculate because I do not
trust my memory well enough to get them in the right order.
Mr. King. Is China on your list?
Mr. O'Leary. China is on the list, yes. There is definitely
a piracy problem in China, yes.
Mr. King. And do you have any recollection of what the loss
might be to American property rightsholder from China?
Mr. O'Leary. I do not off the top of my head. I am not
sure, frankly, that there is a way to measure it given the
realities of China.
Mr. King. Would anyone on the panel be aware of any
studies, U.S. Trade Representative? It seems to me that three
or 4 years ago at least, a U.S. Trade Representative has a
study done that calculates that loss to U.S. intellectual
property rightsholders to different nations, China and Russia
come to mind. Anyone care to answer that? I saw a nod on the
end of the line.
Ms. Pallante. Maria Pallante from the Copyright Office. I
do not have the dollar amount for you, but I would just echo
what Michael said, which is that the special 301 process
identifies problematic standards in our trading partners when
it comes to IP, as well as notorious markets and websites.
Mr. King. Does anyone have more of a comprehensive
solution? We are talking about shutting down some websites. But
it is billions in theft of intellectual property rights
globally. And here we are in the United States of America with
some of the strongest laws and the strongest traditions and
respect for intellectual property. And I do not see a broader
comprehensive solution to this.
It seems to me that they can move faster than we can adjust
to them, and that we are dealing with a component rather than
the big picture. Yes, sir, Mr. O'Leary, and then----
Mr. O'Leary. Congressman, I would argue that you are
correct in the sense that this is a global problem. It is
multi-faceted. There is not a single approach that fits. But it
is critically important that the United States maintain the
high ground and the leadership in this because if we do not do
it, other countries will not.
I would also note that the problem you are highlighting
about the criminals moving faster, that is true regardless of
what the crime is. You ask anyone in law enforcement that and
they will tell you, you catch the ones who keep doing the same
thing, and the people who adapt and change, you have to keep
changing that.
Mr. King. Are you aware of any State-sponsored intellectual
property right theft?
Mr. O'Leary. Are we worried about it?
Mr. King. Are you aware of State-sponsored?
Mr. O'Leary. We believe that that occurs, yes.
Mr. King. And I want to say, I believe that happens from
China as probably the lead globally to do that. Does anyone
disagree with that on the panel? I did not hear any
disagreement.
I think I have gone far enough with this since my red light
came on. But I do appreciate all your testimony, and I hope we
can bring some peaceful solution to this. And I hope at some
point we can bring a whole solution to it.
Thank you very much, and I yield back the balance of my
time.
Mr. Smith. Thank you, Mr. King.
The gentleman from Tennessee, Mr. Cohen, is recognized?
Mr. Cohen. Thank you, Mr. Chairman. This is indeed an
important issue for us to work out, and the theft of
intellectual property is of great concern. But nevertheless,
First Amendment issues are important, too.
And my first thought is, it does not seem like that there
should be that much difference from what the Google folks and
the techie folks are wanting and what the MPAA and the RIA and
the other AAs want.
Let me ask maybe the gentleman from motion pictures, who
apparently has a Rick Perry problem with not being able to
count to something, Mr. O'Leary. Have you all not gotten
together and tried to work this out in some way and fine tune
this to where there are not these issues of people being
penalized that are not guilty and sites being shut down where
there is just a small infringement, but not a total
infringement?
Mr. O'Leary. Well, we do not believe that this legislation
will result in either of those things happening. But our
studios work with Google on a regular basis in terms of trying
to get stuff taken down off the Internet. There are ongoing
relationships.
On this piece of legislation there have not, to my
knowledge, been specific discussions about this. But I want to
be very clear. We have said from the beginning that if people
are willing to come forward with constructive suggestions on
how to do things that are not a pretext for maintaining the
status quo, that we would listen to those things.
Mr. Cohen. Wonderful.
Ms. Oyama, do you have some positive, you know, not under a
pretense type, pretext type of discussions that you would like
to come forth with?
Ms. Oyama. Yes. So, I think just in the broader context of
figuring out how to go after piracy, it is really important to
keep in mind the number one most effective tool for going after
piracy would be to increase the amount of legitimate, lawful
services that are available on the Internet, right? So, if we
can cut off the funding, we would decrease the supply of these
pirate sites. If we could have more legitimate services for
music and movies and everything else, which I know the studios
are working very hard to do, that would also decrease the
consumer demand for this type of----
Mr. Cohen. Without itemizing each of them now, have you had
the opportunity----
Ms. Oyama. Sure.
Mr. Cohen [continuing]. Have you had the opportunity to
pose these to other team?
Ms. Oyama. Yeah. So, although we are here in D.C. today, I
would assure you that all of our businesses partners, you know,
on the West Coast are working very collaboratively, very, you
know, much together to get to those solutions. And we are
always more than happy to continue to work with Mr. O'Leary and
others.
Mr. Cohen. So, are you all working now trying to come up
with some language that the Chairman might put in a manager's
amendment that would make all people happy?
Ms. Oyama. You know, there has been some conversations, but
I think there would need to be a lot more.
Mr. Cohen. I would hope there would be a lot more, and I
think that is something that should take place.
Let me ask you a question since you are on the microphone.
There are a couple of search engines in China and Russia, and
Yandex I think is one of them, and Baidu. And some consider
these rogue sites, and whether they are or not, I do not know.
They could be.
If they were considered such and they were blocked because
they had some pirate type folks among their constituency, how
do you think the Chinese and Russians would respond toward your
company and toward the United States' companies?
Ms. Oyama. That is an excellent question. So, I think we
should realize that even though we would do something for a
really good reason here, it could potentially have
international ramifications. If the U.S. government is ordering
U.S. companies to disappear foreign search engines from our
results, it should be expected that there is going to be some
form of retaliation internationally.
Mr. Cohen. And those sites are the leading Chinese and
Russian search engines, is that correct?
Ms. Oyama. The sites that you mentioned?
Mr. Cohen. Yes, ma'am.
Ms. Oyama. Yeah.
Mr. Cohen. Yeah. So, is it possible under this legislation,
they would be totally cut off entirely?
Ms. Oyama. If they were deemed rogue sites----
Mr. Cohen. Right.
Ms. Oyama [continuing]. Under Section 102, search engines
could receive an order to disappear the whole site.
Mr. Cohen. Right.
Ms. Oyama. It is really tough in a search engine because
although you can remove the direct link from a search, you
know, as long as a rogue site exists, people are still going to
talk about it. They are still going to blog about it. They are
still going to post about it. And so, it is really not possible
to remove all worldwide discussion of a link. And that is why
we support the follow the money type legislation because that
is really going after the source of the problem by choking off
their financial reason to exist.
Mr. Cohen. Let me ask you another question, or maybe to the
panel. I cannot lose my constituent services. We do great
constituent services in Tennessee 9. And this week on 11/14,
Ryan Turner wrote me an e-mail, and he says, ``I am writing as
your constituent. As a constituent, I oppose this Stop Online
Piracy. I am a student studying management of information
systems. Should this pass, I believe my future IT would be
crippled. Having a government hand in DNS service scares me,
especially with the government suing website owners with
1(i)''--I think that was a misprint, but links, ``as a content.
As a college student who owns over 30 domain names, most of
these places for third parties to post text responses, should
one of those include a link to material that infringe
copyrights, now I would be held responsible. I have no funding
available. I handle these claims, and I am lucky enough to be
trained on how to handle lawsuits, but many other entrepreneurs
without formal training have no idea how to handle it.''
If he had this and there was one text that came back that
was maybe linked to an illegal site, would he be cut off, and
what he then have to go to hire a lawyer and possibly go to
court?
Ms. Oyama. I think so. I think there are two ways that
could happen. So, one of the concerns, you know, not just
Google, but the other technology companies who endorse the
testimony, the other trade associations, are concerned about is
that the definition 103 of what is a site dedicated to fast is
very broad. There is some language in there that also refers to
a site or a portion of the site. So, people have a lot of
serious questions about what does that really mean. Are we
looking at a full site?
And today's Internet, the way most websites work, there is
real time communication, and so you have read lots of real time
comments. You have lots of real time posts. If one comment or
post is infringing, does that, you know, impugn the entire
site, or are we looking at it holistically? There are some
other words in the definition that give people concerned that
it is overbroad.
So, either being swept in that way, or under the very broad
immunities that are being given to service providers, pretty
much anyone who qualifies under the definition of a qualifying
plaintiff, which is very broad. They could go to a payment or
advertising service provider. They could allege that the person
that you mentioned is dedicated to theft, and then those
providers have complete immunity to shut him off. So, there is
a concern that there is a strong incentive in the bill that if
you wanted to immunize yourself the easy thing to do would be
to comply with that notice and shut them off.
Mr. Smith. The gentleman's time has expired. And I do not
mean to cut you off, but if you could bring your answer to a
quick conclusion. Have you finished?
Ms. Oyama. I think that is good.
Mr. Smith. Okay.
Mr. King. I think she could go longer.
Mr. Smith. The gentleman from Arizona, Mr. Quayle, is
recognized?
Mr. Quayle. Thank you, Mr. Chairman. And I want to thank
all the witnesses for being here.
Ms. Oyama, I want to go back to what you were just talking
about earlier about how long-term we can address the piracy
issues via more legitimate websites that provide legitimate
content on the Internet. And I want to go to your testimony
that you indicated. The only long-term way to beat piracy
online is to offer consumers more compelling legitimate
alternatives. And you cited YouTube's free ad-based model for
Monarch ties in content.
I mean, there could be some disagreement. I do not know
what is the best way to monetize content, whether it is fee-
based or free ad-based. And if you look over the course of
history, except for broadcast, it seems like most quality
content has not been given away for free.
So one thing that I want to ask you is, would you agree
that the piracy issues that we are dealing with and the pirate
websites that we are dealing with actually makes it more
difficult for a company to start a fee-based site that offers
legitimate content, and, thus, it forces content providers to
look for ways that are going toward web and ad-based content to
give it away for free?
Ms. Oyama. I think there are so many different models in
the ecosystem model right now. Certainly the problem of piracy
is of tremendous importance and great concern to any content
provider, right? You want to have control over the distribution
of your content. Some people choose to release it for free
because they want to participate with their friends and that
way. Others want to license it, and others want to have an
advertising model.
I think the kind of beauty, of all the new services that we
are seeing is that there is no one-size-fits-all. I do think we
would approach YouTube as a really great example of how kind of
technology and copyright can work together. There is a tool on
YouTube called Content ID. Because YouTube is a hosted
platform, we host all the content, so it is on our servers.
So through Content ID, we are able immediately; a
rightsholder would give us their file. If a user uploads a
piece of content, we would immediately scanned 6 million
reference files, and we could capture, if their song or their
movie was being uploaded, and then the rightsholder would have
control whether to monetize it.
Mr. Quayle. But I think might more direct question is that
if we are not able to crack down and have the tools and the
ability to crack down on the pirate websites, then you are
actually forcing content providers into a narrow avenue of ad-
based, providing only content via ad-based and free markets.
Not free market, but free content.
Ms. Oyama. So, both would be tremendously important, right,
increasing license and piracy.
Mr. Quayle. Exactly. But, I mean, when you are looking at
that and how we need to crack down on the piracy and ad-based,
which is the model that Google uses, and that seems to be one
of the reasons you would be pushing for that, because that is
the way that Google makes their money, right?
Ms. Oyama. There are different ways, but that is the
primary way for sure.
Mr. Quayle. And I think that is just my biggest concern, is
that if you are looking at just ad-based, you are cutting down
one significant avenue for people to provide content. And if we
do not shut down these pirate websites, then we are going to
actually lose out on different types of business models,
different types of content providers. And that was the point I
wanted to make.
Ms. Pallante, I want to go to you. Earlier you stated in
your opening testimony that you do not believe that the safe
harbors under the DMCA are actually weakened by SOPA. Could you
explant on that a little bit?
Ms. Pallante. Yes. First of all, the bill says that as a
savings clause. And, secondly, there is no monetary relief. The
injunctions that are allowed are already permitted under the
DMCA. There are, contrary to popular belief, ways to enjoin
certain action for certain action for search engines and ISPs.
And really, this bill is really designed to sit next to the
DMCA. The DMCA is related to particular files on a website, and
does not require the participation of those who are really in a
good position to help stem the tide of piracy.
So, I would object to a couple of things. I just heard from
my fellow witness. One is that I am pretty sure that Google
just said that it is the fault of content owners that we have a
rogue websites. That just cannot be the truth. Secondly,
although follow the money could be effective, it does not bring
in everybody in the ecosystem. It does not bring in ISPs. It
does not bring in search engines. It does not account for the
vast number of websites that offer content purposely for free.
And it does not really address the broader role of law issue
that we have on the Internet right now.
Mr. Quayle. And under the DMCA, are there actually
instances where a service provider can take down all content on
a webpage or a website if there is infringing content on that
website?
Ms. Pallante. The only way I see that happening is if every
single rightsholder comes together at the same time, and
approaches the website, and every file is infringing.
Mr. Quayle. So, it could be possible under the DMCA.
Ms. Pallante. It is highly unlikely.
Mr. Quayle. Okay. But the one thing I wanted to just get
your final thoughts on, because opponents of the bill actually
say that it is going to endanger the security and integrity of
the Internet. One of the things that the Internet has been very
good at is in commerce. And would it not also be fair to say
that without shutting down these pirate websites, then we are
also endangering the security and integrity of the Internet
because they are putting out often counterfeit goods, and also
infringed copyright materials?
Ms. Pallante. Right. So, there are three underlying
purposes. One is to protect content owners about their own
property. The second is to allow those who want to invest a
place where there is sunshine and oxygen and a good environment
for that. And the third is to protect consumers, absolutely.
Mr. Quayle. Thank you. I yield back.
Ms. Oyama. Can I just clarify one point? I just wanted to
make sure that nothing was mischaracterized, because I do not
think that it is the fault of the rightsholders. Certainly,
rightsholders have the right to protect their content however
they want, and we are completely committed to going after
piracy. My only point was that the success and the consumer
appetite for services like Netflix and iTunes shows that
there's are a lot of different licensing models out there.
Mr. O'Leary. May I follow up on that, on one point, which I
think is a practical point, which is being missed, to Mr.
Quayle's question. There are legitimate services out there now,
there are more of them than there have been before. There will
be more of them tomorrow. The problem is that when you go to
Google and you punch in the name of the movie, those legitimate
sites are buried on page 8 of the search results. There is a
better than average chance that Pirate Bay is going to end up
ahead of Netflix. That is a fundamental problem, no matter how
many legitimate sites are out there, that we cannot overcome,
and we cannot do anything about.
If we could get Google to reach index of those sites in a
way that favored legitimacy, to your question, Congressman
Quayle, then consumers would be getting to those first. But
when Netflix is buried way down in the search results, it does
not matter how good Netflix is going to be, and that is just a
practical problem that could be addressed today.
Mr. Smith. Okay. Thank you, Mr. Quayle.
The gentlewoman from California, Ms. Chu, is recognized?
Ms. Chu. Thank you, Mr. Chair. I would like to ask about
the savings clause, and I would like to ask both Ms. Oyama and
Mr. O'Leary about your opinion on this. I am aware that
concerns have been raised by Internet companies and many others
that the language of the bill may have unintended consequences.
And even though everybody agrees that the problem of foreign
rogue sites is critical and that we need to cut revenue to
these sites, there may be disagreement on the language as
drafted. And I think it is really important that we try to
reach some common ground, that we work through language that is
balanced and effective, and make sure that we do not have
unintended consequences.
One of the areas of disagreement on the Stop Online Piracy
Act is on this question of the savings clause, and whether
there is the immunity that is provided under the Digital
Millennium Copyright Act for search engines and Internet
service providers. And so, I would like to have your different
opinions, because some have represented to me that the Senate
bill has a savings clause. That seems to address this, but SOPA
does not. And is that true? I would like to have your different
opinions on this, Ms. Oyama and Mr. O'Leary.
Ms. Oyama. Sure. So this is actually, it sounds technical,
the savings clause, but it is of critical importance to the
technology industry. Businesses today really build their
business models under the safe harbors that they know they have
under the DMCA. So, if a technology company receives notice of
infringement, they are required to expeditiously remove that
infringement, but they do not have kind of a general monitoring
obligation.
So, the balance that we are trying to strike in any
legislation would be if there are intermediaries who are
required to do new things. Under this bill, that would be
really clear--advertisers shut off your services, payments shut
off your services. And that would be clear, and we would take
those obligations. We want to make sure that this bill that is
going after rogue sites does not strip us of those important
safe harbors and kind of a related litigation and, you know,
open the possibility that those types of orders could be used
to establish red flag knowledge.
And so, there is some language that we propose that would
kind of allienate that concern and keep this bill as effective
as it needs to be to go after rogue sites. But a savings clause
to make sure that we are not opening ourselves up to liability
in a way that we would somehow be to proactively monitor all
user generated content in real time is really important to us.
Ms. Chu. Mr. O'Leary?
Mr. O'Leary. Congresswoman, I would just associate myself
with the comments and the testimony provided by the Register of
Copyrights. This legislation is a complement to the DMCA. It
does not impute those rights or the safe harbor in any way,
shape or form. DMCA deals with good actors, legitimate services
that are trying to take steps to get infringing stuff off of
their sites. Rogue sites deal with a group of people that under
no definition would fit underneath the DMCA. They are bad
actors. They are dedicated to infringement. These actually fit
together. They complement each other. In no sense does this
undermine the DMCA.
Ms. Oyama. I think if that is the case, a one sentence
clarifying that in any legislation would be tremendously
helpful.
Ms. Chu. Ms. Pallante, what is your opinion on this, on the
savings clause, and whether there are enough protections, and
DMCA is not----
Ms. Pallante. Right. Thank you for the question. The
question, again, is just--well, the problem is, just because
somebody may be compliant under the DMCA does not mean that
they should not take action if the Attorney General finds that
there is a foreign infringing site run by criminals who are
engaged in piracy. That is just an unfair comparison. And if
that is the argument, this bill does allow for that, and it is
my view that it should.
Ms. Chu. Okay. Well, I would like to ask a different
question, and that is about job creation. There are some that
are saying SOPA would stifle innovation and job growth, and
that with an opinion, which was a finding by the U.S. Supreme
Court that it contributed to infringement, that venture capital
would try up.
But, Mr. Almeida, in your testimony, you noted that you
represent over 4 million U.S. workers, and on their behalf that
you actually support the Stop Online Piracy Act as an important
jobs bill. How do you respond to these claims that this
legislation would stifle innovation and job growth?
Mr. Almeida. I think innovation is alive and well in the
U.S., and I do not see this as stifling this in the least. Our
members work in the United States. They are taxpayers. They go
to work. They make products that we view as entertainment. That
is what we see this online piracy infringing on. And you cannot
hit a price point when someone is giving it away for free to
make a business model to compete with free.
It also has to do with constructive innovation, and we
believe in constructive innovation, like Netflix, as opposed to
TV shack.bz, which is an infringing site that should be taken
down.
Ms. Chu. Thank you. I yield back.
Mr. Smith. Did you yield back?
Ms. Chu. Yes, I yield back.
Mr. Smith. Thank you, Ms. Chu.
The gentleman from Texas, Mr. Poe, is recognized?
Mr. Poe. Thank you, Mr. Chairman. Thank all of you for
being here. This panel or this Committee is made up of former
prosecutors, defense lawyers, and there are even two former
judges here. And back in my experience on the bench down at the
courthouse or the palace of perjury, as I referred to it in
those days, I saw a lot of thieves. Stealing is stealing, and
thieves are people we are to deal with. I disagree with you,
Mr. O'Leary. They are not bad actors, they are thieves. And
this legislation is trying to get a grip on this.
We have got really three groups that are here. We have the
credit card companies, we have the search engine folks, and the
content providers. If I had my way, I would lock all three of
you in a room and do not come out until you all agree, then we
could solve it, I would think.
If you pull up, as I did, if you pull up on the Google
search engine ``The Grinch Who Stole Christmas,'' or ``Harry
Potter,'' ``free Harry Potter movies'' or ``free the Grinch Who
Stole Christmas,'' you get a lot of free sites on there. And as
a consumer, I cannot tell who is a thief and who is not a
thief. And I know Google is doing a lot, millions of sites and
all of that. I have heard the testimony. But at the point we
are now, what can Google offer to this bill that Google would
sign on to the bill, specifically?
Ms. Oyama. Sure. So, to your point about the search
results, one of the major commitments that we made this year
was to improve the tools to make sure that when rightsholders
notify us those search results will be disabled in the search.
And so, the commitment that we had made at the beginning of the
year was to reduce the turnaround times to under 24 hours. And
so, we are happy to say right now it is 6 hours or less is the
average turnaround.
In terms of what we could do affirmatively----
Mr. Poe. Yes, from this day forward. You pull up ``The
Grinch Who Stole Christmas,'' and you keep going page after
page for free Grinches.
Ms. Oyama. So long as those sites are there, they are going
to show up on the Internet. And so, we think that legislation
that would target the source of those sides is necessary. What
we would do is we would support legislation that would go
through the Department of Justice, so you would have law
enforcement on that. You would have a court determined that a
site is dedicated to infringement, and you could serve those
orders on U.S.-based payment providers and advertising.
We have Google Checkout for payment. We have AdSense,
AdWords, a lot of different advertising products that would
directly regulate and impact our business. But we think that if
we can break the financial ties for those sites, then, that
really is smart, targeted, and effective, and would avoid some
of the collateral damage that we have discussed earlier this
morning.
Mr. Poe. So, your answer is just go after the finances.
Ms. Oyama. Cut off the funding.
Mr. Poe. Yeah, cut off the money. So, if that were
something that we added to the bill that would cut off the
money, then Google may support it. Is that what you are telling
me?
Ms. Oyama. Yes. There are certainly concepts in the bill
that reflect that. But we think if you look at Wikileaks, that
is how they have been taken out is by cutting off the money. It
is an approach that U.S. law enforcement uses for many in
different international problems, you know, narcotics,
terrorism. I mean, it has been a proven way. If you cut off
someone's financial incentive, they are not going to want to
pay for the servers, and the bandwidth, and the infrastructure
to run these websites.
Mr. Poe. Okay. Let me be a little more specific. What can
Google do, not what the financial providers can do, what can
Google do to move this legislation forward?
Ms. Oyama. So, there is a lot we are doing in the private
sector, but in terms of the legislation, we would publicly
support legislation like what I described, follow the money
approach. We would be happy to do that. We would be happy to
work with your staffs on legislation in that way, if it can
avoid the collateral damage that we have discussed, and if we
got a good definition of what is a rogue site, that did not
sweep in legitimate U.S. businesses.
Mr. Poe. But you cannot tell when you pull it up, ``The
Grinch Who Stole Christmas,'' who is the real grinch is and who
is not. You get page after page of free Grinches.
Ms. Oyama. That is why is court adjudication or a
collaboration with rightsholders is really important. There are
lots of legitimate free movies. There are lots of heat, you
know, content that just the middleman would not really know if
that was licensed or infringing.
Mr. Poe. You want in on that, Mr. O'Leary, and then Ms.
Pallante.
Mr. O'Leary. I think, to use the example of the Grinch,
there is a movie right now, as I mentioned earlier, called J.
Edgar. The only lawful place you can see that movie is in a
theater. If you go back to your office and put ``J. Edgar''
into Google, you are going to get the same list of eight pages
of sites where it is free. That movie is not available for free
anywhere. If you want to see it, you have to go to a theater
right now.
So, I understand the complexity when you are talking about
something that is perhaps not in the theater, but this is
actually in the theater right now, and there is no reason for
it to be online in any fashion frankly. I also think that what
is being proposed, what was being suggested is, as I said
earlier, we should follow everybody's money.
And isolating one or two things, that does not solve the
search engine problem that we have been talking about, and we
think that should be a part of the discussion to. We think it
requires all of the people who are involved in this to work
together to get it done, kind of to your theory of throw
everybody in a room and sort it out. If everybody does not go
into the room at the beginning, you are not going to get it
sorted out.
Mr. Poe. Maybe we need a court order to get you all three
in a room.
Thank you, Mr. Chairman. I will yield back.
Mr. Lungren [presiding]. Thank you. Maybe get the FBI to
help you on that J. Edgar Hoover stuff.
Mr. Deutch, you are recognized for the next 5 minutes?
Mr. Deutch. Thank you, Mr. Chair. First of all, it is not
just J. Edgar. I have teenaged daughters who are awfully
excited about the new Breaking Dawn movie, which is coming out.
You can watch that right now online for free.
What troubles me about this a whole exchange, quite
frankly, is on the one hand, there is this great technology,
Ms. Oyama, that you have so proudly trumpeted, understandably,
about YouTube and what YouTube does in order to prevent illegal
content from being posted. Yet when you enter ``watch Breaking
Dawn for free,'' and you can do it online now, there you throw
your arms up in the air. Well, there is nothing we can do.
Ms. Oyama. Sorry, I can understand how that would feel
frustrating. Technologically there is a distinction. So, on
YouTube, the content that is posted on YouTube is hosted on our
servers, so we are able to match files. If someone tries to
upload something on YouTube, we have a reference file we can
match against. We do not control the World Wide Web.
Mr. Deutch. I understand that is a technology issue. We
could talk more about that. I have another question for you.
This has been a fruitful exchange, different than I might have
expected from the way, as a number of us have read referenced
already. The way this debate has played out in the local press
in particular, I do not know whether Google shares the position
publicly that this bill will kill the Internet and all of the
advertisements that have resulted, and all the phone calls that
we have received in our office. But I do wonder if there is any
base level here that you would agree needs to be tackled.
And so, if the issue is the language that says a ``portion
thereof,'' let us assume the bill did not have that language in
there. So you cannot argue that Twitter would have to be taken
down, which, by the way, is an argument, there is no basis for
that argument. Under this bill. You cannot argue under this
bill, that Facebook would have to be taken down. There is no
basis for that under this proposed bill. And I think that you
understand that, notwithstanding the reference to individual
tweets that might lead a whole site to be taken down.
My question is, if that language were not in there, are
there any of these websites that you believe should be taken
down and that Google ought to play a role in helping us
accomplish that?
Ms. Oyama. Yes. We would be happy to work with the
Chairman, with your office, on a follow the money legislation.
Mr. Deutch. Okay. Well, I understand. So, you do not like
the way the bill is written. Let me ask about that because you
have many references to day to following the money. Yesterday,
your Chairman recommended regulations based on tracing payments
at websites offering illegal materials as a replacement for
this bill, consistent with what you said today. Many of the
offshore sites clearly engaging in that are driven by, as you
point out, are driven by ad revenue, not just credit card
transactions. And if we follow the money, we cannot just focus
on the credit cards obviously. We have to focus on the ads.
Google, at least from the statistics I have been told,
retains over 75 percent of all search advertising revenue in
the U.S., therefore, following the money leads us to you. So,
tell me the steps that Google has taken already, understanding
that you are concerned about this intellectual property theft,
understanding the impact that it is going to have every day on
our economy, tell me the steps that Google has taken to combat
it using the following the money approach that you favor.
Ms. Oyama. Okay. So, just to confirm, legislation that
would go after ads is a big part of our business.
Mr. Deutch. I understand, but given----
Ms. Oyama. And we are happy to support that.
Mr. Deutch. I understand that, but tell me what you have
done----
Ms. Oyama. Okay.
Mr. Deutch [continuing]. Now, because we all acknowledge
this is an important issue. And if a 75----
Ms. Oyama. And one should not prevent the other, right.
Mr. Deutch. Right. You can play a significant role today.
So, if you could just speak to what I have already done.
Ms. Oyama. Okay. So, there was some major commitments that
our General Counsel, Kent Walker, made at the beginning of the
year. I will just try to tick off the major ones, but we should
probably follow up with your office on more specifics.
For DMCA, we have removed more than 5 million infringing
files. This year, when rightsholders notified us. One of the
concerns we have heard is that there were some grit in the
system, and that there was frustration that it was taking too
long. So, we invested significant engineering hours and money
to improve the tool.
Mr. Deutch. Ms. Oyama, I hate to cut you off. I do not have
a lot of time here, but I would ask that you would follow up. I
remember Mr. Walker's testimony. I followed up with a letter
after that hearing requesting all sorts of information. I have
not received a response. So, I hope that a response will be
forthcoming to that letter and to the request that I have made
here today.
I would like to finish with this. This notion that we are
going to break the Internet, that somehow we are going to
stifle innovation, the fact that the kid serving me coffee at
Starbucks told me, ``hey, I hear you are taking up legislation
that is going to make it impossible for me to download music.''
The fact is what we are worried about is, and the reason we are
having this discussion, what we are worried about is not
stifling that innovation in the future. That is a concern that
we all have. And I do not believe that the legislation does
that. But we know right now if we do nothing, that the film
industry and those young directors who are starting out, are
not going to be able to do their craft, and we are not going to
have the next Dell, or we are not going to have the next Drake,
because they are not going to be compensated for their work.
And I hope that as we go forward in this that you provide
those answers, that we can have an honest discussion about what
is really at stake here, and let us move past this. These
attacks on those of us who believe this, and suggest that
somehow we are going to mean an end to the Internet, it is not
accurate. I think you understand that it is not accurate, and
it does not do the American economy any great service at all.
And with that, I yield back.
Mr. Lungren. The gentleman yields back, and the other
gentleman from Texas, Mr. Gohmert, is recognized for 5 minutes?
Mr. Gohmert. Mr. Chairman, again, also appreciate your
being here. It is a tough subject, and we are dealing with
intellectual property here. And, I, like my friend, Judge Poe,
was a District Judge and also a Chief Justice. And we dealt
with, it was not called bad actors, you know. You dealt with
that, and that is really what we are talking about here. It is
a crime. It is theft. We do not want thieves working their way
through an honest, legitimate, wonderful means of, in this
case, the Internet.
In the past, some have used the example of the pawn shop
cannot intentionally and knowingly assist in that effort. And
so, there were laws made. Most States have them where law
enforcement can go in and get information. And I know, and I
have been resistant to some of the pushes to force Internet
providers, search engines, into doing things that we do not
even require pawn shops to do. And I thought some were going
overboard in trying to make demands on search engines that we
do not even demand of pawn shops.
But, on the other hand, there is this aspect of our
criminal law, and every State has it, the Federal Government
has it. Anyone who aids, abets, encourages, in any way assists
someone in committing a crime, the law is very clear in every
State and the Federal Code, you are just as guilty as if you
committed the crime yourself.
The question is, do you intentionally or knowingly aid.
Well, it has been brought up often enough. There are thieves
using the Internet. And I keep hearing from people who say,
look, if it were illegal for me to use that free website, then
how come I get access so easily? They are expecting us to do
something. And I think most of us were hoping that there would
be something worked out between the interests here.
But I can give you an example. I know what the law is, and
I had an eight track ``Warm Shade of Ivory, Henry Mancinci''
back in college, and it got me through some all-nighters, that
and ``Jonathan Livingston Seagull'' soundtrack. So, anyway,
Sleepless in Seattle has this song in the wee, small hours of
the morning. And I wanted to get that. I wanted to download it.
I would pay for two bucks for it, not just 99 cents. Nobody has
it except some free websites I knew not to go use those and
download it free because it is illegal. Most people do not.
So, when we talk about follow the money, we are talking
about something terribly difficult in going to China, going to
Russia and trying to follow the money over there. We are not
getting help from those folks. Marsha Blackburn and I met with
their folks in China that handle this stuff, and it seemed
pretty clear to me we were not going to get a whole lot of help
out of them.
So, what should we do to keep from hurting the innovation
of the Internet, and Google, and Bing, and these folks that
come up with great ideas, but at the same time balance the
interests in this being a law abiding society. And I am
gratified to hear people on both sides of the aisle have
similar concerns.
So, it just does not seem to me to be that onerous to say
if someone goes to court, for heaven's sakes, and proves with
probable cause standard that somebody is committing a crime of
theft, and then that is presented to an Internet provider or
search engine, these people are committing a crime. There is
probable cause to believe that is justification for a warrant,
why that is too onerous to say do not make them accessible. And
I am still having trouble understanding that, and I would
welcome comments in that regard from whoever wishes to. Thank
you.
Ms. Oyama. Thanks. I think we completely agree about the
importance of having a Federal judge play the role of an
arbiter so that folks' services are not being terminated just
by a 5-day notice to their provider without the ability to
appear and defend themselves.
I think to your point about what we can do, it is probably
three things. So, one would be building on the DMCA. Under the
DMCA today, search results can be line edited out if a
rightsholder tells us, a search engine, to remove a piece of
content. We have worked incredibly hard over the last year to
improve our tools. The average turnaround time today is 6 hours
if we receive notice.
So, we are working really hard on improving that. It is not
perfect. It is not done. It is something we will continue to
work on.
The second piece, though, would be to build on that and to
come together and support legislation that would impose new
obligations on other providers. So, we are also an advertising
provider, largely an advertising provider, a payment provider.
A judicial process where a court determined that a site was
dedicated to infringement, and then instructed U.S. based
intermediaries to shut off financial ties to that website, that
is the most important and effective thing we could. If we can
knock them off at their knees and we can cut off their
financial ties, they will not have a reason to be in business
anymore. They will not be making money. That is the effective
way to go.
And then the third piece would be to get rid of ineffective
and harmful pieces. So, I realize reasonable people can
disagree about this, but there a tremendous concern in the
technology industry about some of the remedies that are being
proposed and some of the unintended consequences that would
have, you know, potentially very severe repercussions for the
Internet network, for people's security, and for free speech
concerns.
So, getting the balance right is something we think is
important. We certainly think that there is a way forward and a
way that we could agree on going after these sites.
Ms. Lofgren. Would the gentleman yield?
Mr. Gohmert. Well, I would ask unanimous consent to allow
others to finish answering because there are a couple of hands.
And I certainly----
Mr. Lungren. The gentleman is extended another minute.
Mr. Gohmert. You had requested to comment.
Mr. Clark. I would just add that in regard to your comments
about thievery and Congressman Poe's, from our industry's
perspective, it is more than thievery. It is murder. We do
feel, I particularly feel, and I have 28 years of Federal law
enforcement, I know crime when I see it, and I see counterfeit
medicines as actually attempted murder. I mean, it is not
quick, it is not immediate. But when you are only giving a
patient 20 percent of the medicine they need to cure their
cancer or their heart problems or their high blood pressure,
you are, in fact, killing them slowly. But that is the issue
here.
Mr. Gohmert. As a prosecutor, you know that may be not be
murder, it may be negligent homicide or some other type of
homicide.
Mr. Clark. Along those lines. And it is frustrating. If we
are not immediately making progress in cutting that down. I
have worked with CDP and pilot programs, and I am seeing
counterfeits flooding in because of the purchases over the
Internet from the rogue websites that are selling counterfeit
medicines. And it is incredulous to me how much is coming into
the United States.
So, I would say, you know, this bill is going forward with
demonstrating that we need to change the status quo. We cannot
accept what is existing right now. And I agree very much that
we have to demonstrate to people that there are consequences,
and this is a serious crime. When you look at 6 months, 4
months, 3 years. You say your cost of doing business, it cannot
be that bad if that is all they are going to give.
So, I also see the Title II in this as very, very
significant as well.
Mr. Gohmert. Was there anybody else that wanted to comment?
All right. Thank you.
Ms. Lofgren. Would the gentleman yield?
Mr. Gohmert. Yes.
Ms. Lofgren. I just wanted to briefly, I think it was Mr.
O'Leary suggested that if you type in ``J. Edgar movie'' you
get all these infringing sites. And I just did that, and what
you get is the show times in Washington, a review, the
Wikipedia article, the trailer from Warner Brothers, several
reviews of the movie, the iTunes trailer. There is not a single
infringing site that comes up. So, I just thought we----
Mr. Gohmert. Reclaiming my time----
Mr. Marino. Would the gentlewoman or the gentleman yield?
Mr. Gohmert.--I think if you use the word ``free'' in
there, that is where those things come up. But, yes, I will
yield.
Mr. Marino. Would you yield? Well, I just did the same
thing, and on----
Ms. Lofgren. Did you use Google?
Mr. Marino. I just Googled it, ``watch J. Edgar Hoover free
online,'' on YouTube, full versions. It shows you how to
download it, no cost. Right here. There is a list of----
Ms. Lofgren. Well, I did a different search engine. But the
point I am trying to make going back----
Mr. Gohmert. Well, reclaiming my time, I do not know what--
--
Mr. Lungren. The gentleman's time has expired.
Ms. Lofgren. I would ask that the gentleman be granted 15
seconds and so I might say just in answer to--the point is the
search engines are not capable of actually censoring the entire
World Wide Web. That is the problem. You cannot do that. And
so, we need to go after the people who are committing crimes in
a way that is going to work. I think we can do that, but this
bill is not it. And I thank the gentleman.
Mr. Gohmert. Reclaiming my time----
Mr. Lungren. The gentleman's time has expired.
Mr. Gohmert. I agree, but also need to cut off the getaway.
And with that, and I am not sure what the gentlelady has
against Google, but I respect her using Bing, and yield back my
time.
Mr. Lungren. The gentleman yields back time he does not
have. [Laughter.]
I am going to accuse you of being a liberal here in a
minute.
Mr. Johnson is recognized for 5 minutes?
Mr. Johnson. Thank you, Mr. Chairman. Mr. O'Leary, SOPA
requires payment networks, like MasterCard, to suspend payment
transactions between a U.S. customer and an online merchant
within 5 days. According to Ms. Kirkpatrick's testimony, there
are very legitimate challenges that payment networks have in
meeting such a short deadline, especially considering the
multiple players involved in an online transaction.
The Senate version requires payment networks to take action
as expeditiously as reasonable. Earlier this year, the White
House negotiated a best practices document with the payment
industry that has a reasonable period of time standard.
Which of these standards is acceptable to you that within 5
days under SOPA the ``expeditiously as reasonable'' under the
Senate version, and a reasonable period of time as negotiated
between the White House and the payment industry?
Mr. O'Leary. Yes, sir. I think it is a legitimate question,
and one that we believe can be resolved favorably to everyone.
Mr. Johnson. Which one do you think is most acceptable to
you?
Mr. O'Leary. As I sit here right now, I am not prepared to
pick between the three, quite honestly. I certainly understand
the point that was made by our colleagues at MasterCard if it
is not possibly done within 5 days. We certainly do not want to
create a time limit which forces them into an impossible
standard.
Mr. Johnson. All right.
Mr. O'Leary. At the same time, we would like the
legislation to recognize that if someone is trying to run the
clock out, they do not do it.
Mr. Johnson. If I open up the tent for you to stick your
nose in, boy, you are going to get all the way up in there. I
am just appreciating your gift of gab.
If I might ask Mr. Clark the same question.
Mr. Clark. I feel the same way.
Mr. Johnson. Okay. All right.
Mr. Clark. Sorry. I feel the same way.
Mr. Johnson. All right. Ms. Pallante, Section 506 of the
Copyright Act establishes criminal liability for the willful
infringement of a copyright. Recently, there has been confusion
as to the definition of that term, ``willful.'' Do you think
that willfulness is the same as intentional? Tell me about the
difference between those two standards.
Ms. Pallante. Right. So, that is a great question, and the
point of SOPA is to capture those that knowingly engage in a
known legal duty. And that is the standard that most courts
have accepted. There are some exceptions to that. I think that
is something that could be clarified in the bill, in
legislative history perhaps.
Mr. Johnson. All right. Ms. Oyama, the DMCA in Section 230
of the Communications Decency Act represent the legal
underpinnings of the view that intermediaries need not monitor
or supervise the communications of users. It is a view that we
have long touted and pushed across the world through various
diplomatic channels. We have harshly criticized governments who
use such virtual walls to prevent citizen access to the
Internet. China is a great example. With that in mind, would
this legislation allow companies to demand that search engines
located inside the U.S. censor where American consumers are
able to go on the Internet? And how would this legislation
likely be viewed by China, and Iran, and other countries that
put these roadblocks in terms of content to their citizens on
the Internet? And how would that affect our diplomacy?
Ms. Oyama. Thanks. So, for the DMCA piece that you
mentioned, I think we would certainly agree that DMCA has
proved to be a foundation for American innovation, and has
struck a balance. So, if you are a new company or starting up,
you know what the laws are. You have certainty. And it also
helps rightsholders. If a rightsholder is aware that there is
infringing content on the service provider, they just need to
let us know. Web hosting companies search and engines. We will
remove access to that content. It strikes the right balance. It
takes care of infringing speech. It leaves up legitimate
speech. And it reflects a careful balance. And also, because of
the way web services are used today, we see all over the place
when there are real time events, it is important that a web
platform enables that type of real time communication, of real
time e-commerce.
If you did not have the DMCA and an intermediary platform
was required or potentially liable for what its users were
posting in real time, you would have to implement some type of
proactive monitoring system. It could really change the
dynamics of the Web today.
I think the second piece----
Mr. Johnson. That would stifle the small entrepreneur that
is just getting started, more than it would hamper the larger
providers of content.
Ms. Oyama. I think it is both, but it certainly----
Mr. Johnson. It would be a burden on both.
Ms. Oyama. Yeah. If you are a new company starting up, you
will have less money to invest in that type of monitoring. So,
certainly, it would have an impact on small businesses.
To your question about, you know, kind of the speech
aspect, you know, if we impose a law here, which would have
court orders requiring of domestic search engines to make
entire full websites disappear, and especially if there is some
type of overbroad definition which would capture also
legitimate speech, you know, unfortunately, what we do here
would have other ramifications. And we may think that this is a
good reason, we do think this is a good reason here. But we see
all the time for Google DMCA requests. Competitors tried to
take each other down. Pro-democracy speech tries to be quelled.
We have seen in Libya and the recent activities there,
different politicians tried to take each other's YouTube
channels out because they disagree with their views. We see
copyright use all the time as an excuse to quell speech.
If we mandate this type of approach here, we really need to
think carefully about what types of international ramifications
that will have on free expression globally.
Mr. Lungren. The gentleman's time has expired.
Mr. Johnson. If I might get just one more question.
Mr. Lungren. All right. The gentleman has already had extra
time, but so has everybody else, so go ahead.
Mr. Johnson. Thank you. Thus, Justice Department has
responsibilities under the SOPA act. While at the same time, we
have been talking about downsizing government, and, in fact,
the Justice Department has lost about 30 percent of their
attorneys. How does this affect the effort to criminally go
after these pirates, and also from a civil standpoint? I will
ask that to Mr. O'Leary.
Mr. O'Leary. Well, I think that, you know, this bill
actually speaks directly to that point. That is part of the
reason there is the ability for individual plaintiffs to move
so that the burden does not fall solely on the Justice
Department.
The content industry, Pfizer----
Mr. Johnson. What about the criminal part, though, because
we get people being prosecuted for shoplifting and stealing
little small petty items. But this is multi-billion white
collar fraud, which only the Justice Department has or should
have the, really had the resources and the breadth of law
enforcement ability to address. How does the downsizing of the
Justice Department impact criminal prosecution?
Mr. O'Leary. Well, I think as a general premise, would you
downsize the Justice Department, obviously it has an impact.
But let us be very clear. The Justice Department does pursue
criminal cases internationally.
Mr. Johnson. Well, how can it do so----
Mr. Lungren. The gentleman's time has expired.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Lungren. Some time ago. Recognize myself for 5 minutes.
Mr. Johnson. Well, I am a liberal. [Laughter.]
Mr. Lungren. Well, I would not accuse you of being anything
else. [Laughter.]
Mr. Johnson. Well, I bear that shame with great honor.
[Laughter.]
Mr. Lungren. This is sort of a reverse to the old story
that I went to a fight and a hockey game broke out. I came here
as one who has not made up his mind on this bill, hoping to
receive information on this. And I think everybody on this
panel is committed to fighting piracy. I mean, maybe I am the
only Member of this Committee who has got a gold record. I got
it from the recording industry for my work on anti-
counterfeiting. When I was attorney general of California. So I
very much believe there is an important role for us to play,
law enforcement, in civil law in this regard.
But my concern is something that was brought to my
attention as the Chairman of the Cybersecurity Subcommittee on
Homeland Security, and that is the existence of a system that
has been going on for some years, called DNS security or DNS-
SEC. And I have heard from some of the engineers who have been
working on this in the Internet area that we of applied this
law in this way, it would undo what we have been doing it to
try and secure the Internet by way of DNS-SEC or DNS security.
So, I would like to ask the panelists if any of you feel you
can speak to this point, because it is one that was raised with
me. I am not a technical expert on this, but there was some
real alarm by Internet engineers, I would call them, who really
do not have a dog in this fight and in terms of the disputes
between the various special interests here. And I mean that in
the proper way, special interests.
And so, what I ask Mr. Clark, for instance, are you aware
of this criticism, and does this legislation, would it
incentivize Internet service providers from using the DNS
security extensions because it mandates the redirection of
customers to another website?
Mr. Clark. No, I am afraid I do not. I am not familiar with
that.
Mr. Lungren. Okay. Mr. O'Leary?
Mr. O'Leary. Well, I am certainly aware of the argument,
and the people that we have talked to, it is a concern, which
is, frankly, overstated. As I mentioned earlier in response to
another question, there are numerous countries around the world
that engage in this type of activity. The Internet has worked
without a problem in regard to that. And I think also, you
know, they are overlooking and looking at this debate. There is
an existing security problem with the current state of play,
and that is these rogue sites taking private information from
consumers and spreading malware and spyware and things like
that.
The final thing I would say is that in regard to other
things, like dealing with malware, dealing with spyware,
dealing with child pornography, this type of activity occurs
all the time, and the Internet seems to function just fine.
I tend to agree with the comments of Mr. Deutch that if the
Internet is going to be all things to all people, it should
also be in terms of trying to help us stop people from stealing
our stuff. The problem, frankly, is that the Internet seems to
be for trade----
Mr. Lungren. Well, that is not my point. My point is
whether or not you can respond to the specific question raised
by Stewart Baker, former DHS Assistant Secretary of Policy and
former NSA General Counsel, to the effect that if this approach
to respond to a legitimate problem were put into effect, it
would undercut an effort that has been going on for nearly a
decade to secure the Internet by way of this program that I
referred to.
Mr. O'Leary. We disagree with that position.
Mr. Lungren. Okay. Can you submit in writing for us
specifically how you disagree with that approach?
Mr. O'Leary. Certainly, I would be happy to.
Mr. Lungren. Ms. Kirkpatrick?
Ms. Kirkpatrick. I am unfamiliar with that element. I am
unaware of it. I do not have the technical expertise to comment
on it.
Mr. Lungren. Does anybody with your organization have the
expertise?
Ms. Kirkpatrick. I certainly can follow up and get back to
you.
Mr. Lungren. Would you please respond to that specific
question, because to me it is an underlying question that is
extremely important, having worked on the problem of
cybersecurity. If what we are doing here has the unintended
consequence of upsetting what is, at least in the opinion of a
number of experts, and they may be wrong. I am trying to ferret
this out, undercut a real effort that would practically help us
secure the Internet, that is bothersome to me.
Ms. Oyama?
Ms. Oyama. Sure. So, I think the concerns that you
mentioned are the ones that we have heard as well, from many
cyber security experts. I knows Stewart Baker has written about
this. The designers of DNS-SEC themselves have published a
white paper. I am not--yeah.
Mr. Lungren. Do you have anybody that has expertise with
your association and can respond to that specifically, because
this is not part of this hearing, and I am very concerned that
evidently this bill is not being referred to my Subcommittee.
And I am not parochial about this, but if we are going to do
it, we ought to at least talk about it and to have people come
in here and say, well, our organization--either we do not take
a position or we are not experts on this is upsetting.
Ms. Oyama. I think that there is great concern within our
company.
Mr. Lungren. Well, could you please respond in writing on
that?
Ms. Oyama. Sure, happy to.
Mr. Lungren. Could you, please?
Ms. Oyama. Yes.
Mr. Lungren. And, Mr. Almeida?
Mr. Almeida. No, no expertise.
Mr. Lungren. Okay. Ms. Pallante, do you have any?
Ms. Pallante. I think that Congress should absolutely
consult objective technical experts. But I will add is that
ICE, through operation on our sites, has been using the
existing seizure and civil forfeiture laws to essentially
disappear website in the United States. So, this bill would
take that criminal standard and apply it to foreign sites.
Mr. Lungren. Thank you very much. Let us see, who is next?
Mr. Marino is next for 5 minutes?
Mr. Marino. Thank you, Chairman. Thank you, ladies and
gentlemen, for being here. I think my colleague and friend, Ms.
Lofgren, and I pointed out a very good example of how easy it
is. This is on some sides and not others. I think so. Zoe went
to Bing and got the trailers, and I went to Google, typing in
``free,'' who sent me to YouTube for the free movie. So, you
know, there is a lot of work to be done here.
Ms. Oyama, I want to compliment you on your decorum and
your professionalism and your loyalty to your company, for
being here and answering the tough questions that you have been
answering. You are certainly an asset to your corporation.
Ms. Oyama. Thank you.
Mr. Marino. Nevertheless, I think it is reprehensible that
the chairman, that the CEO, that the president, that the
counsel, none of them thought it was responsible enough for
them to be here, and they sent you into the lion's den. And you
certainly deserve a large portion of their bonus at the end of
the year.
Ms. Oyama. Can I just add one thing to your question on our
general counsel, he was here in the spring. He cares very much
about this problem and doing it the right way.
Mr. Lungren. Good.
Ms. Oyama. He, I think, sent a letter saying he had a long
standing personal commitment for today, any other day, he would
be here, and he looks forward to continuing----
Mr. Marino. All right, I give that to him, and I remove his
name from that list, and he can keep his bonus, all right?
Let me ask you a question here. I want to thank Google for
what it did for child pornography, getting it off the website.
I was a prosecutor for 18 years, and I find it commendable. And
I put those people away. So if you can do that with child
pornography, why can you not do it with these rogue websites?
And let me follow that up with, why not hire some whiz kids out
of college to come in and monitor this and work for the company
to take these off?
My daughter, who is 16, and my son, who is 12, we would
love to get on the Internet, and we download music, and we pay
for it. And I get to a site, and I say, this is a new one, this
is good, we can get some music here. My daughter says, ``Dad,
do not go near that one, it is illegal, it is free, and given
the fact that you are on the Judiciary, I do not think you
should be doing that.'' So, maybe we need to hire her. But why
not?
Ms. Oyama. So, the two problems are similar in that they
are both very serious problems. They are both things that we
all should be working to fight against. But they are very
different in how you go about combating it. So, for child porn,
we are able to design a machine that can detect child porn. You
can detect certain colors that would show up in pornography.
You can detect flesh tones. You can have a manual reviewer.
Someone would look at the content and they would say this is
child porn, and it should not appear.
We cannot do that for copyright just on our own because any
video, any clip of contact, it is going to appear to the user,
to be the same thing. And so, you need to know from the
rightsholder, the owner of the right, how have you licensed it,
have you authorized it, or is this infringement.
Mr. Marino. I only have a limited amount of time here, and
I appreciate your answer. But we have the technology. Google
has the technology. We have the brainpower in this country. We
certainly can figure it out.
Let me move on here. First of all, Mr. Clark and Mr.
O'Leary, I want to thank you for your dedication to law
enforcement. I have been down there for 18 years, and thank you
so much. And, Mr. Almeida, my father was a fireman for 30
years, so I know exactly what you are talking about. So, I want
to pose this question to anyone.
It is my understanding that taking down a portion of the
site is much more difficult than taking down the entire site,
so I am hearing from the testimony here. So, is there a more
balanced approach that we can assist you in letting you take
the lead on it in defusing of this problem and stopping this
infringement on these materials, this illegal stealing of our
materials that is costing us jobs and is costing this country a
lot of money? If you understand my question, please jump in,
anyone. I do not think anyone understands my question.
[Laughter.]
Ms. Pallante?
Ms. Pallante. Well, no, I appreciate the question. I do not
know the answer. Certainly, when law enforcement goes before a
judge and tries to get a court order that would allow it to
seek relief from the website, and then engage the search
engines, the ISPs, the payment processors et cetera, to help,
they would like to stop the infringing material and not be non-
infringing material. I do not know if it is a technical
solution, or if it is just a question of each website, having
different pages where they can easily find the infringing
content.
Mr. Marino. Do any of you agree with me that we do have the
brainpower and the technology available to figure this out, if
we want to spend the money?
All right, thank you, and I yield back my time.
Mr. Lungren. Great. The gentleman's time is up.
Mr. Amodei, you are recognized for the last 5 minutes of
this hearing.
Mr. Amodei. Thank you for that strategic timing of my
recognition, Mr. Chairman. I appreciate that. And so, in honor
of your discretion, I will not use the whole time.
I would like to, first of all, associate myself with the
comments of my colleague from California at the of the dais,
Mr. Deutch. I think he has hit the nail on the head. When you
are the last guy, you do not want to try to see if you can
prolong things any more than usual.
I would like to ask the Chair, however, since there is
written responses to this security thing, and I tried to write
the guy's name down. I am new; I do not know. Maybe it was
Stewart Baker? Maybe we could have Stewart Baker's concerns
written so we can have something to compare those with. And if
that is out of order, then I will shut up on that and move
right along.
Mr. Lungren. Mr. Baker's article was made part of the
record. [Laughter.
And the gentlelady from California is giving it to you
right now.
Mr. Amodei. Okay, good. Thank you.
Mr. Lungren. And if I were Chair, I would have him here,
but I am only temporary Chair. [Laughter.]
Mr. Amodei. Thank you for your compassion for someone who
has been here for 61 days.
Finally, so that I have something to yield back, I
appreciate the concerns. This strikes as one of those deals
where the pursuit of the perfect is going to get in the way of
the good. One thing, and I apologize for missing the part that
I missed, but there was an opportunity to talk with some folks
in another Committee that was kind of important. But I did not
hear anything that said, ``no, this is not an issue; no, this
is not taking place; no, those jobs, or this gentleman on the
end, are not being threatened; no, it is not real time impacts
when Mr. Marino can dial in and be watching it right now.''
Quite frankly, I think there is an issue--I do not how you
address it because nobody should leave the room thinking I am
technically savvy. But I do not have anything to type on, as a
matter of fact. They even took my iPhone away today.
But I will tell you this. The impacts are instantaneous.
Once it is downloaded, it is gone. That horse is out of the
barn, and it is never coming back. And when you have a broken
leg, you need to go to the hospital.
And I agree with Mr. Marino's comments. Way to go. Whatever
they are paying you, it is not enough. And so, if those pansies
want to come by someday and say hi, tell them they are welcome.
[Laughter.]
So, anyhow, when your leg is broken, you got to go to the
hospital, and unfortunately you are in the medical business on
this stuff, and so I can just say that my concern is this. You
are a major operational piece of this. The criminal activities
are uncontroverted that are happening, and to do nothing is
wrong. Nothing happens quick in this process. I believe from my
vast amount of experience, and so it is time to try something.
And so, while I appreciate the concerns, when I hear the
recurring think of follow the money, there is plenty of money
around to follow. And that is a good thing. I am a Republican;
it is a good thing to make money.
So, I will just tell you from my perspective, it is time to
move. If there was a perfect bill that ever came out of here,
it will sure be neat for me to be here while it happens, but I
am guessing it is not going to happen when I do. So, I would
appreciate best recommendations so that we can get moving on in
terms of stopping something that is taken 7 years just to get
to this point. I am not picking on you.
And so, with that, Mr. Chairman, I see the light is where
it is. I yield back the most time that anybody has yielded back
today.
Mr. Lungren. Very good. The gentleman will be commended.
I would like to thank our witnesses for the testimonies
today. Without objection, all Members will have 5 legislative
days to submit additional written questions for the witnesses
or additional materials for the record.
We thank you all. We appreciate your testimony on a very
difficult subject.
This hearing is adjourned.
[Whereupon, at 1:29 p.m., the Committee adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Ron Wyden,
a U.S. Senator from the State of Oregon
I would like to take this opportunity to commend Chairman Smith and
Ranking Member Conyers for holding this hearing. While I would have
liked to see a more diverse range of voices included at today's table,
I appreciate the opportunity to share my views on this important
subject.
While some would like to paint this issue as a simple matter of
being for or against intellectual property, that would be a mistake.
Believing that a free and open Internet is worth fighting to
protect does not mean that we aren't concerned about copyright
infringement or that we are somehow oblivious to the fact that
unscrupulous foreign suppliers are using the net to traffic counterfeit
and illegal goods. They are and Congress and this committee are right
to be considering remedies to stop them and to protect the hard work of
our creative industries.
Rather, those of us who value the Internet's growing role in our
society recognize that any government intervention in the online
ecosystem that is the Internet can and will have a ripple effect on
more than just its bad actors. Interfering in the Domain Name System
(DNS) for example would undermine the net's structure and harm
cybersecurity efforts. Authorizing a private right of action, for
example, wouldn't just allow rights holders to use the courts to
protect their intellectual property. Companies could also abuse such
authority to protect out-dated business models by quashing new
innovations in their infancy and discouraging less than complimentary
speech.
In other words, the wrong approach to combating infringement could
fundamentally change the Internet as we know it, moving us towards a
world where transactions are less secure, ideas are less accessible and
starting a website wouldn't be an option for anyone who couldn't afford
a lawyer.
The Internet has become an integral part of our everyday lives
precisely because it has been an open-to-all land of opportunity where
entrepreneurs, thinkers and innovators are free to try and fail. The
Internet has changed the way we communicate with each other, learn
about the world and conduct business, because instead of picking
winners and losers, we created a world where every idea has an
opportunity to be heard regardless of where it originates.
As Members of Congress we can now engage with our constituents via
online innovations in social media, while a small business in rural
Oregon can use the Internet to find customers around the world. And the
Internet isn't just becoming the global marketplace for goods and
services, it is the marketplace of ideas challenging tyranny and
championing democracy. It has made lies harder to sustain, information
harder to repress and injustice harder to ignore.
But while the Internet has become a dependable part of our lives,
it is essential that we not take it for granted or make assumptions
about a medium that is still taking shape and that few in Congress
fully understand.
Moreover, it is important to remember that the Internet we know did
not happen by accident. Rather, it grew from a set of principles that
we deliberately put into law during a situation not unlike the one
before the committee today.
Over 15 years ago, when Congress first started thinking about
Internet regulation the concern was protecting children from
pornography. There were competing ideas and some argued that Congress
should simply censor the Internet and use the government to cut off
access to objectionable material.
But a few of us saw value in letting the Internet develop free from
corporate or government control. Instead of having government censor
the web, we developed an approach that would empower users and
technology to address content concerns on their own. And we took the
opportunity to pass a law that said that neutral parties on the net are
not liable for the actions of bad actors.
That fundamental principle enshrined in Section 230 of the
Communications Decency Act both addressed the problem and freed
innovators to develop new ideas like YouTube, Facebook, Wikipedia and
Twitter. So now, as we again debate web censorship, let's ask
ourselves: What next generation of innovations won't be realized if we
backtrack on that principal now?
Yes, the Internet needs reasonable laws and bad actors need to be
pursued, but the freedoms of billions of individual Internet users
should not be sacrificed in the interest of easing that pursuit. The
decisions we make to police the Internet today will also govern how
this relatively new medium will continue to develop and shape our
world. And yes, giving moneyed interests a louder voice and a greater
ability to determine what that online world will look like would
fundamentally alter the Internet which currently treats all voices as
equal.
As I have said before, this is not an issue where we should use a
bunker-buster bomb when a laser beam would do. And that is not just my
opinion, venture capitalists who fund Internet start-ups, the biggest
and smallest actors in the tech community, law professors concerned
with speech, Internet technologists, security experts and mainstream
and new media have all expressed concerns about the legislation
advancing in Congress.
In writing laws to police the Internet, we need to consider more
than how effective a proposed remedy would be at combating
infringement, we must also consider the impact proposed remedies will
have on everything else online. This means keeping the following in
mind:
1. Be deliberate. While rights holders and law enforcement are
understandably eager to go after bad actors, we must be mindful
of the precedents we set here at home, and around the world.
2. Get the scope right. Narrowly focus law enforcement's
authority on those who are willfully and deliberately breaking
the law or infringing on others' property rights for commercial
gain.
3. Avoid collateral damage. Rather than frustrating the
architecture of the Internet or establishing a censoring
regime, consider instead promoting approaches that empower
users and do no harm to the 'Net. More simply, fish for tuna
without catching dolphins.
4. Promote innovation over litigation. Our efforts should be
to protect copyrights and trademarks, not outdated business
models.
Again, I thank the committee for its consideration of my views.
Prepared Statement of Terry Hart, Creator of Copyhype
List of submitters contributing material in association with the
consideration of H.R. 3261*
---------------------------------------------------------------------------
*The material received by the Subcommittee from the submitters
whose names appear in this list, is not printed in this hearing record
but is on file with the Subcommittee.
60 plus
ABC
AFL-CIO
Alliance for Safe Online Pharmacies
American Bankers Association
American Civil Liberties Union
American Consumer Institute Center for Citizen Research
American Society of Composers, Authors and Publishers
Americans for Tax Reform
Association of American Publishers
Association of State Criminal Investigative Agencies
Association of Talent Agents
Beachbody, LLC
BMG Chrysalis
Broadcast Music Incorporated
Building and Construction Trades Department (AFL-CIO)
Capitol Records Nashville
CBS (including subsidiary Simon & Schuster)
Cengage Learning
Center for Indicvidual Freedom
Christian Music Trade Association
Church Music Publishers' Association
Coalition Against Online Video Piracy
Comcast/NBCUniversal
Computer & Communications Industry Association
Concerned Women for America
Congressional Fire Services Institute
Copyright Alliance
Coty, Inc.
Council of Better Business Bureaus
Council of State Governments
Country Music Association
Country Music Television
Creative Community
Deluxe Entertainment Services Group, Inc.
Disney Publishing Worldwide, Inc.
Educause
Electronic Transactions Association
Elsevier
EMI Christian Music Group
EMI Music Publishing
Entertainment Software Association
ESPN
GoDaddy
Gospel Music Association
Graphic Artists Guild
Hachette Book Group
HarperCollins Publishers Worldwide, Inc.
Hyperion
Independent Film & Television Alliance
International Anti-Counterfeiting Coalition
International Brotherhood of Electrical Workers
International Brotherhood of Teamsters
International Trademark Association
International Union of Police Associations
Internet Society
Joint letter of support from AFM, AFTRA, DGA, IATSE, IBT, and SAG
Joint letter of opposition from ALA, ARL, CDT, CEI, DP,EFF, FH,HRF,
HRW,
Internews, NAFOTI, PK and TF
Joint letter of opposition from educational interests
Joint letter of support from First Amendment & Intellectual Property
Counsels
Let Freedom Ring
Library Copyright Alliance
Lilly
L'Oreal
Lost Highway Records
Macmilian
Major City Chiefs
Major County Sheriffs
Major League Baseball
Marvel Entertainment, LLC
Mastercard Worldwide
MCA Records
McGraw-Hill Education
Mercury Nashville
Minor League Baseball
Minority Media & Telecom Council
Motion Picture Association of America
Moving Picture Technicians
MPA--The Association of Magazine Media
National Association of Fusion Center Directors
National Association of Manufacturers
National Association of Prosecutor Coordinators
National Association of Theater Owners
National Association of State Chief Information Officers
National Cable & Telecommunications Association
National Center for Victims of Crime
National Criminal Justice Association
National District Attorneys Association
National Domestic Preparedness Coalition
National Football League
National Governors Association
National League of Cities
National Narcotics Officers' Association Coalition
National Sheriffs Association
National Songwriters Association
National Troopers Coalition
Net Coalition
News Corporation
Pearson Education
Penguin Group (USA), Inc.
Pfizer, Inc.
Pharmaceutical Research and Manufacturers of America
Professors' Letter In Opposition to PROTECT-IP
Provident Music Group
Random House
Raulet Property Partners
Republic Nashville
Revlon
Sandia National Laboratories
Scholastic, Inc.
Showdog Universal Music
Sony Music Entertainment
Sony Music Nashville
Sony/ATV Music Publishing
State International Development Organizations
The Estee Lauder Companies
The Honorable Ron Wyden
The Perseus Books Group
Tiffany and Co.
Time Warner
True Religion
U.S. Chamber of Commerce
U.S. Conference of Mayors
U.S. Olympic Committee
Ultimate Fighting Championship
UMG Publishing Group Nashville
United States Tennis Association
Universal Music
Universal Music Publishing Group
Viacom
Visa Inc.
W.W. Norton & Company
Wallace Bajjali Development Partners LP
Warner Music Group
Warner Music Nashville
Wolters Kluewer Health
Word Entertainment
Zumba Fitness