House Subcommittee Amends PRO-IP Act

March 6, 2008. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property (SCIIP) amended and approved HR 4279 [LOC | WW | PDF], the "Prioritizing Resources and Organization for Intellectual Property Act of 2007", also known as the PRO IP Act.

Rep. John Conyers (D-MI), Rep. Lamar Smith (R-TX), Rep. Howard Berman (D-CA), and others introduced this bill on December 5, 2007. This lengthy bill addresses remedies for infringement and counterfeiting and the organization and funding of government efforts to enforce intellectual property rights. For a summary of the bill as introduced, see story titled "Representatives Introduce PRO IP Act" in TLJ Daily E-Mail Alert No. 1,683, December 5, 2008.

Rep. Conyers, the Chairman of the HJC, stated in opening that counterfeiting and piracy of intellectual property harms the U.S. economy, and therefore, "we need to radically step up our efforts because the problem is expanding faster than our enforcement efforts can keep up".

Rep. Smith, the ranking Republican on the HJC, wrote in his opening statement that intellectual property is "critical to preserving a strong American economy and promoting American workers", and that "the investment needed to create and produce world-leading intellectual property is in stark contrast to the easy, massive, unauthorized reproduction and distribution of fraudulent and unlicensed products and services".

He said that more must be done to ensure that the government has the necessary resources, and the "PRO-IP Act provides a strong foundation".

The Subcommittee approved an managers' amendment [3 pages in PDF], and then the bill as amended.

Summary of Amendment. This amendment contains 16 changes to the original bill, many of which are minor and technical. The most significant change is that it strikes Section 104 of the original bill, titled "Computation of statutory damages in copyright cases".

The stricken Section 104 would have amended 17 U.S.C. § 504(c)(1). Section 504 provides remedies for infringement. Subsection 504(c) provides for statutory damages.

Subsection 504(c)(1) currently provides, in full, that "Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work."

Section 104 would have stricken the second sentence (beginning "For the purposes ..."), and added the following provisions: "A copyright owner is entitled to recover statutory damages for each copyrighted work sued upon that is found to be infringed. The court may make either one or multiple awards of statutory damages with respect to infringement of a compilation, or of works that were lawfully included in a compilation, or a derivative work and any preexisting works upon which it is based. In making a decision on the awarding of such damages, the court may consider any facts it finds relevant relating to the infringed works and the infringing conduct, including whether the infringed works are distinct works having independent economic value."

The bill, as amended, leaves Subsection 504(c)(1) in its current form. Moreover, the bill as amended by the Subcommittee now contains no changes to Section 504.

Rep. Berman (at left), the Chairman of the SCIIP, explained the amendment at the March 6 mark up. He said that "the managers' amendment will delete the changes proposed to Section 504 of the Copyright Act. There was a full day meeting on the provision with representatives of almost every facet of the copyright world and impacted user groups. While the discussion revealed that there is some reason to believe that the existing provision has the potential to yield inadequate compensation for copyright owners in some cases, it was clear that more time would be needed to identify a legislative solution."

Similarly, Rep. Conyers said that "most opposition centered on Section 104 of the bill ..." He said that "we took these concerns to heart and pledged to work the issue out."

Rep. Berman added, "for the sake of expediency, I decided to remove Section 104, so that the PRO IP Act could move forward quickly. There will be on-going discussions about these issues."

Rep. Conyers also stated that "just because we took this provision out does not mean it is not longer an issue". It remains "a topic of ongoing conversations and subject matter for another day".

Title II of the bill contains many changes to current statutes to strengthen both copyright and trademark criminal and civil procedure with respect to forfeiture, destruction, and restitution.

For example, Section 202 of the bill amends 18 U.S.C. § 2318 regarding forfeitures for trafficking in counterfeit labels for software, music, movies, and other intellectual property.

The bill, as introduced, provides in part that "The following property is subject to forfeiture ... Any property used, or intended to be used, to commit or facilitate the commission of a violation of" Subsection 2318(a) "that is owned or predominantly controlled by the violator or by a person conspiring with or aiding and abetting the violator in committing the violation."

The amendment approved on March 6 adds that for the purposes of the above quoted language, "the Government shall establish that there was a substantial connection between the property and the offense".

The amendment also adds this "substantial connection" requirement to parallel language amending 18 U.S.C. § 2319. That is, Section 2319 addresses "Criminal infringement of copyright". This underlying bill amends this section to provide for forfeiture of, among other things, "Any property used, or intended to be used, to commit or facilitate the commission of a violation of" 17 U.S.C. § 506.

Similarly, this amendment also adds this "substantial connection" requirement to the bills' provisions regarding forfeiture under 18 U.S.C. S 2319A ("Unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances") and 18 U.S.C. § 2319B ("Unauthorized recording of Motion pictures in a Motion picture exhibition facility").

Rep. Berman explained that "the managers’ amendment will tighten up the forfeiture provisions. It has been pointed out by Public Knowledge, among others, that there is the possibility that the forfeiture provisions could ensnare ``materials and devices that may have only a fleeting connection to the offense.´´ In response to these concerns, the amendment explicitly requires that there be a ``substantial connection´´ between the property being forfeited and the intellectual property offense."

Titles III, IV and V of the bill pertain to the organization of government activities and operations related to intellectual property rights enforcement. The amendment approved on March 6 makes numerous minor changes to these sections.

Other key provisions of the underlying bill are unaffected by the amendment approved on March 6. For example, the bill amends 17 U.S.C. § 410 to provide a harmless error exception in the registration requirement for civil actions for copyright infringement.

The bill also amends 17 U.S.C. § 602 to cover both importation and exportation of copies and phonorecords; it currently applies only to importation. The bill also contains a parallel section to cover exportation of goods containing infringing marks.

Reaction. Patrick Ross, head of the Copyright Alliance, praised the bill in a release, and added that "I am particularly pleased that the bill was not amended to include any of the anti-copyright provisions".

For example, the bill contains no language from or similar to HR 1201 [LOC | WW], the "Freedom and Innovation Revitalizing U.S. Entrepreneurship Act of 2007", or "FAIR USE Act". This bill would amend 17 U.S.C. § 1201 to create exceptions to the ban on circumvention.

See, story titled "Rep. Boucher Introduces FAIR USE Act" in TLJ Daily E-Mail Alert No. 1,545, February 28, 2007.

Ed Black, head of the Computer and Communications Industry Association (CCIA), praised the Subcommittee for removing Section 104. He stated in a release that " The subcommittee wisely avoided a big mistake" and "I hope that decision is not reversed at a later stage."

Gigi Sohn, head of the Public Knowledge, stated in a release that "We are pleased that the Subcommittee deleted from the bill the section (Section 104) that would have allowed multiplied damages for infringement of a compilation far beyond any reasonable levels. We are also pleased that the Subcommittee amended the bill to require that the Justice Department show a ‘substantial connection’ between the property it seeks to have forfeited and the infringing activity. This change would protect against a defendant having property taken by the government, such as a car or a home, which has only the most tangential relationship to infringing activity." (Parentheses in original.)