AG Gonzales Proposes Intellectual Property Protection Act

November 10, 2005. Attorney General Alberto Gonzales gave a speech at a U.S. Chamber of Commerce event in which he discussed intellectual property, and proposed new legislation to offer greater civil and criminal protections for some intellectual property rights holders.

See, draft [17 pages in PDF] of HR __, the "Intellectual Property Protection Act of 2005", and the Department of Justice's (DOJ) summary and comments [13 pages in PDF].

Gonzales (at right) stated that "we've just sent to Congress important legislation to address the problem of intellectual property crime: the Intellectual Property Protection Act of 2005. This is a comprehensive legislative package designed by the Department of Justice to help overhaul and update America’s intellectual property statutes. It is a reflection of the sustained commitment on the part of the Department and the Administration to ensure that we are doing everything we can to combat this problem."

He said that "This legislative package, if enacted, would strengthen penalties for repeat copyright criminals, expand criminal intellectual property protection, and add critical investigative tools for both criminal and civil enforcement."

He also said that "Rapid technological advancements have made the reproduction and distribution of counterfeit goods and pirated materials easier than ever in our history. Our policy-making efforts must advance along with modern technologies if we’re going to keep pace with this evolving area of criminal activity. This proposed legislative package is a good way to ensure that our laws are in step with the changing nature of intellectual property crimes."

While the draft bill is long (17 pages single spaced) and contains numerous provisions, it largely consists of a technical and incremental changes to existing sections of Title 17 (copyright) and related sections of Title 18 (crimes). It would not make any fundamental alterations to copyright law. Most of the provisions pertain to copyright law, prosecution of violations of copyright law, and civil remedies. The bill also touches on counterfeit labels, which can constitute trademark law violations, and theft of trade secrets. And notably, the draft bill contains a few provisions that are not accurately characterized as intellectual property provisions. This bill would affect some criminal prosecutions that do not involve intellectual property rights.

Civil Orders for Seizure of Records. Currently, a copyright holder can obtain from the court an order for "the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in violation of the copyright owner's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced." See, 17 U.S.C. § 503.

The bill (at Section 3) would also allow the court to order the impounding of "records documenting the manufacture, sale, or receipt of things involved in such violation."

The DOJ summary states that this would include an ex parte order (that is, without notice to the alleged infringer) for the seizure of business records.

Forfeiture and Destruction of Property in Criminal Cases. The bill (at Section 4) would amend 17 U.S.C. § 506 with respect to forfeiture and destruction, and restitution, in criminal copyright infringement cases.

Gonzales stated that "our legislative proposals implement broad reforms that ensure the ability to forfeit property -- including illicit proceeds -- derived from or used in the commission of criminal intellectual property offenses. We also propose to strengthen restitution provisions for victim companies and rights holders, in order to provide maximum protection for those who suffer most from these crimes."

The DOJ summary states that this section "subjects to forfeiture any copies of phonorecords manufactured, reproduced, distributed, sold or otherwise used, intended for use, or possessed with intent to use in violation of section 506(a). It also subjects to forfeiture any property that constitutes or is derived from any proceeds obtained directly or indirectly as a result of federal copyright infringement offenses. Finally, it subjects to forfeiture any property used or intended to be used in any manner or part to commit or facilitate the commission of a federal copyright infringement offense, including any plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which the infringed copies or phonorecords may be reproduced, and any electronic, mechanical, or other devices for manufacturing, reproducing, or assembling such copies or phonorecords."

The bill (at Section 8) also would amend 17 U.S.C. § 1204 with respect to forfeiture and destruction, and restitution, in criminal DMCA cases.

Attempted Criminal Infringement. The bill (at Section 4) would amend 17 U.S.C. § 506 to encompass certain "attempts to infringe" copyright.

The DOJ summary states that "It is a general tenet of the criminal law that those who attempt to commit a crime but do not complete it are as morally culpable as those who succeed in doing so."

Importation and Exportation. The bill (at Section 5) would amend 17 U.S.C. § 602 regarding "Infringing importation of copies or phonorecords".

Gonzales stated that "we propose to make clear that exporting infringing goods is the same as importing them … and should be punished accordingly. Every member of the global economy has a responsibility to keep counterfeit goods out of the global market."

Prosecution Without Registration. The bill (at Section 2) would amend 17 U.S.C. § 411 regarding "Registration and infringement actions" to allow prosecution of criminal copyright infringement before the author has completed, or even started, the copyright registration process.

The Congress recently relaxed the registration as a prerequisite for civil litigation requirement in the case of certain classes of works. That is, pirates often obtain, copy, and disseminate works before they are reduced to final form and released to the public. These acts can cause significant commercial harm. These acts occur before the copyright holder has obtained a certificate of registration from the Copyright Office. The Congress enacted earlier this year the Artists' Rights and Theft Prevention Act of 2005 (ART Act), as part of the Family Entertainment and Copyright Act (FECA). The FECA was S 167. It is now Public Law No. 109-9. Also, the Copyright Office has completed its process of promulgating implementing regulations.

See, stories titled "House Approves Copyright Bill" in TLJ Daily E-Mail Alert No. 1,119, April 20, 2005; "Copyright Office Commences Rulemaking on Preregistration of Unpublished Works" in TLJ Daily E-Mail Alert No. 1,181, July 25, 2005; and "Copyright Office Publishes Interim Regulations for Preregistration of Unpublished Works" in TLJ Daily E-Mail Alert No. 1,242, October 28, 2005.

The DOJ's bill summary states that "Prosecutors do not control whether or when a copyrighted work is registered. Because prosecutors work for the public good, they should be able to institute an infringement prosecution even if the copyright has not yet been registered. This is especially true now that a typical criminal prosecution for copyright piracy over the Internet commonly involves hundreds, if not thousands, of copyrighted works. The burden of checking whether each work was registered would substantially slow down investigations and hinder the government’s ability to prosecute these violations, especially infringement of works owned by small businesses that have not had the time or resources to register."

Currently, federal prosecutors bring mot criminal intellectual property cases at the request of, and with the assistance of, large organized intellectual property interests. The proposed language would enable the government to more quickly and efficiently assist these copyright holders.

Hypothetically, the proposed language would also enable to the government to bring criminal copyright infringement cases without any request or assistance from a copyright holder. This change could hypothetically increase the capacity of the government to abuse copyright prosecution authority for non-copyright purposes. By removing the requirement that the author have registered a work, the bill substantially decreases the role of the author in the process. The government could institute a criminal prosecution where the author has not intended to obtain a registration, or seek copyright protection.

The government normally faces a very high burden when it seeks to obtain a prior restraint of many forms of expression, or when it seeks to penalize expression, because of the free speech clause of the First Amendment. However, if the government can find some infringed copyright interest in expression that is seeks to suppress or penalize, it could proceed, under the proposed bill, without the purported interest holder having taken any action to enforce or claim the purported interest. Moreover, it may be noteworthy that the bill also adds to the list of predicate offenses for the issuance of a wiretap order criminal infringement of copyright.

Of course, the United States government has no history of abusing copyright laws to suppress speech.

IP Crimes as Predicate Offenses for Wiretaps. The bill would expand the list of offenses which may serve as a predicate for the issuance of a wiretap order. It would add to the list, which is found at 18 U.S.C. § 2516, three IP related crimes, economic espionage to benefit any foreign government, criminal infringement of copyright, and trafficking in counterfeit goods or services.

The DOJ summary states that "Law enforcement officers should have access to the full range of accepted law enforcement tools when they investigate intellectual property crimes. A federal court may issue an order authorizing the use of a voice intercept, otherwise known as a “wiretap,” in the investigation of many federal crimes, but not for intellectual property crimes. In certain intellectual property crimes, this is unacceptable."

Non IPR Prosecutions. The bill would insert definitions of trafficking into many statutory sections, both in Title 17 (copyrights) and Title 18 (criminal code).

It would provide definitions for 17 U.S.C. § 1201 (anti-circumvention provisions of the Digital Millennium Copyright Act), and 17 U.S.C. § 1101, regarding trafficking in unauthorized sound recordings or music videos of live performances.

However, the bill would also amend 18 U.S.C. § 1028, pertaining to "Fraud and related activity in connection with identification documents, authentication features, and information", and 18 U.S.C. § 1029, pertaining to "Fraud and related activity in connection with access­devices". Most prosecutions under these sections do not implicate intellectual property.

Reaction. Mitch Bainwol, Ch/CEO of the Recording Industry Association of America (RIAA), stated in a release that "Once again, the Administration has truly stepped up to the plate to demonstrate its commitment to protect musicians, songwriters, record labels and the music they work so hard to create. Given the growing sophistication of today's music piracy trade, taking the profit out of crime is now more important than ever."

Bainwol added that "Over the past year, we have seen major advancements in both policy and personnel focused specifically on safeguarding our nation’s intellectual property. We look forward to seeing those ideas continue to take shape and are grateful for the U.S. government’s support in protecting our ability to invest in new music."

In contrast, the Public Knowledge (PK), a Washington DC based interest group that supports weaker intellectual property rights and remedies, stated in a release that Gonzales' draft bill "proposes to enforce copyright law in ways it has never before been enforced. Making the ``attempt´´ at copyright infringement the same as actual infringement puts it in the same category as far more serious criminal offenses."

PK also stated that "The bill would eliminate the requirement that a copyrighted work be registered before the government could pursue a criminal copyright infringement claim. Current copyright law requires a copyrighted work to be registered with the U.S. Copyright Office before an infringement suit can be filed -- regardless of whether it is a civil or criminal suit. While this change might increase the Department’s ability to apprehend copyright infringers, it would have an overall negative effect by discouraging copyright registration."

"Since the DoJ has opened the discussion to making changes to the Digital Millennium Copyright Act, Public Knowledge would support a number of changes to the DMCA. We welcome the discussion of copyright law, we wish the Justice Department had devoted some analysis as well to protecting the fair use rights of consumers, such as reinstating consumer fair use of digital copyrighted works, as proposed by Rep. Rick Boucher in HR 1201."

See, HR 1201, the "Digital Media Consumers' Rights Act of 2005", and story titled "Reps. Boucher, Doolittle and Barton Reintroduce Digital Media Consumers' Rights Act" in TLJ Daily E-Mail Alert No. 1,111, April 8, 2005.

See also, U.S. Chamber of Commerce release.