Senators Leahy and Cornyn Introduce Intellectual Property Enforcement Act

November 7, 2007. Sen. Patrick Leahy (D-VT) and Sen. John Cornyn (R-TX) introduced S 2317 [PDF | [LOC | WW] ], the "Intellectual Property Enforcement Act".

This is an enforcement bill, regarding civil actions by intellectual property rights (IPR) holders, criminal actions by the government, civil actions by the government, and the activities and operations of the Department of Justice (DOJ) and its Federal Bureau of Investigation (FBI). It does not create or alter any rights in intellectual property. It pertains primarily to copyright, but also reaches trademark and economic espionage.

It contains numerous provisions. It would, among other things:

Sen. Cornyn stated in a release that "gives the law enforcement community the additional tools needed to meet the growing threat to America's innovation economy posed by intellectual property pirates and counterfeiters".

There are other bills pending in the House and Senate that relate to enforcement of intellectual property rights. The DOJ has its own proposals. Sen. Leahy stated in the Senate that this bill "will start the process of considering how to ensure that our enforcement laws are up to the task, and that the necessary resources are in place to enforce them."

See also, Sen. Leahy's and Sen. Cornyn's section by section summary.

Civil Actions by the DOJ. Currently, 17 U.S.C. § 501 provides that "The legal or beneficial owner of an exclusive right under a copyright is entitled ... to institute an action for any infringement of that particular right". This is a private civil right of action that belongs to the right holder. §§ 502, 503, 504, and 505 also pertain to this private right of action.

Also, 17 U.S.C. § 506 currently criminalizes certain types of copyright infringement. For example, it criminalizes willful infringement "for purposes of commercial advantage or private financial gain". Section 506 also criminalizes certain actions related to copyright infringement, such as fraudulent copyright notices and fraudulent removal of copyright notices.

That is, § 506 provides that the government may bring criminal actions. However, currently there is no general civil action that the government can bring for infringement.

S 2317 would add a new § 506a titled "Civil penalties for violations of section 506".

It would provide that "In lieu of a criminal action under section 506, the Attorney General may commence a civil action in the appropriate United States district court against any person who engages in conduct constituting an offense under section 506. Upon proof of such conduct by a preponderance of the evidence, such person shall be subject to a civil penalty under section 504 which shall be in an amount equal to the amount which would be awarded under section 3663(a)(1)(B) of title 18 and restitution to the copyright owner aggrieved by the conduct."

The bill would also amend 17 U.S.C. § 504(b), which addresses actual damages in civil actions.

This section, as amended, would provide that "The copyright owner, or the Attorney General in a civil action, is entitled to recover the actual damages suffered by him or her the copyright owner as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner, or the Attorney General in a civil action, is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work." (Deleted language is strike through. Added language is in bold red.)

The bill would make a similar amendment to § 504(b), which provides for statutory damages.

Sen. Leahy described the proposed DOJ civil action as the "centerpiece of the bill". He said that "Punishment should fit the crime, and a civil action is often more appropriate to the wrong being done in such cases than is criminal prosecution."

Prosecutors sometimes take no action against individual infringers as a result of their determination that criminal prosecution would be too harsh. This bill would provide a lesser recourse for prosecutors. It would likely result in more actions for infringement.

DOJ/FBI Activities. The bill also contains some detailed instructions for the DOJ and its FBI regarding investigating and prosecuting intellectual property rights cases.

The bill would require the creation of an "an operational unit" of the FBI to work with the DOJ's Computer Crime and Intellectual Property Section (CCIPS) "on the investigation and coordination of intellectual property crimes that are complex, committed in more than 1 judicial district, or international". This unit would have at least ten FBI agents, and be located at the FBI headquarters.

The bill would also require the DOJ to "implement a comprehensive program" to train FBI agents "in the investigation and prosecution of such crimes and the enforcement of laws related to intellectual property crimes"

The bill would also require the DOJ to locate at least one prosecutor in Hong Kong and one in Budapest, Hungary, "to assist in the coordination of the enforcement of intellectual property laws between the United States and foreign nations." The bill does not elaborate on the meaning for this phrase.

The bill would also require the DOJ to "create a Task Force to develop and implement a comprehensive, long-range plan to investigate and prosecute international organized crime syndicates engaging in or supporting crimes relating to the theft of intellectual property".

Funding. The bill would also authorize increased appropriations of $10 Million each for the FBI and DOJ "to investigate and prosecute criminal activity involving computers". The bill also instructs the FBI and DOJ on the expenditure of these funds.

Registration. 17 U.S.C. § 411 provides that "no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made".

The bill would amend § 411 to limit its application to a "civil action".

It would also add a new subsection that provides a harmless error exception. It provides that "A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, unless (A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration".

Sen. Leahy stated that "Copyright registration should not be voided by innocently checking the wrong box or misspelling a word on a form."

Pretrial Discovery and Preservation of Records. The bill would amend 17 U.S.C. § 503(a), which provides for pretrial impounding of copies, phonorecords, and other articles of infringement. The bill would add the clause "and of records documenting the manufacture, sale, or receipt of things involved in such violation".

This changes the character § 503(a). It is currently remedial. It allows things to be seized at the outset of an action that could be awarded to the copyright holder upon final judgment. The bill would make § 503(a) both a remedial and a pretrial discovery and preservation of evidence provision.

Importation and Exportation. The bill would amend 17 U.S.C. § 602 to cover both importation and exportation of copies and phonorecords. It currently applies only to importation.

Expansion of DMCA Ban on Trafficking in Circumvention Devices. The bill would amend the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA), at 17 U.S.C. § 1201, by providing a broad and expansive definition of the term "traffic in".

It is currently illegal to traffic in circumvention devices. The bill provides that "traffic in" would not only reach those who sell, but also those who transport or transfer for financial gain. Moreover, the bill provides that "financial gain" would include receipt of copyrighted works.

§ 1201(a)(1) provides that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title".

§ 1201(a)(2) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title; (B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or (C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title". (Emphasis added.)

The bill would provide that the term "traffic in", which is used in § 1201(a)(2), means "to transport, transfer, or otherwise dispose of, to another, for purposes of commercial advantage or private financial gain, or to make, import, export, obtain control of, or possess, with intent to so transport, transfer, or otherwise dispose of".

It would provide that the term "financial gain", which is used in the definition of "traffic in", includes "receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works".

Forfeiture, Destruction and Restitution. The bill would create a new section in the criminal code, to be codified at 18 U.S.C. § 2323, titled "Forfeiture, destruction, and restitution".

It addresses both civil and criminal actions. For example, in civil actions for copyright infringement, forfeiture would extend not only to infringing items, but also to "Any property used, or intended to be used, in any manner or part to commit or facilitate the commission of" infringement.

However, this procedure would apply to other intellectual property rights other than copyright. The bill would amend several statutory sections that provide for forfeiture and restitution to provide that "Forfeiture, destruction, and restitution relating to this section shall be subject to" the new 18 U.S.C. § 2323.

This would apply to 17 U.S.C. § 506(b), regarding criminal copyright infringement, 18 U.S.C. § 2319B(b), regarding unauthorized recording of motion pictures, 18 U.S.C. § 2318, regarding trafficking in counterfeit labels, illicit labels, or counterfeit documentation or packaging for works that can be copyrighted, 18 U.S.C. § 1834, regarding economic espionage, and 18 U.S.C. § 2320(b), regarding trafficking in counterfeit goods or services.