OUSTR Releases Notorious Markets Report

December 20, 2011. The Office of the U.S. Trade Representative (OUSTR) released a report [6 pages in PDF] titled "Out-of-Cycle Review of Notorious Markets".

This report lists web sites that might be targeted by the Department of Justice (DOJ) if the Congress were to enact into law HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", which is currently under consideration by the House Judiciary Committee (HJC). This report also lists physical markets in other countries.

Ron Kirk (at right), the USTR, stated in a release that "Piracy and counterfeiting continue to present a serious challenge to the innovation and creativity that is essential to supporting American jobs and creating economic growth around the world. The notorious markets highlighted in this review negatively impact legitimate businesses and industries of all sizes that rely on intellectual property to protect their goods and services".

This report states that notorious markets are "selected markets, including ones on the Internet, that are reportedly engaged in piracy and counterfeiting, according to information submitted to the" OUSTR.

It adds that they "are marketplaces that have been the subject of enforcement action or that may merit further investigation for possible intellectual property rights infringements. The scale and popularity of these markets can cause economic harm to U.S. and other IP right holders."

Steve Metalitz, counsel to the International Intellectual Property Alliance (IIPA), stated in a release that "We are extremely grateful for the U.S. Government’s enhanced focus on notorious piracy markets highlighted in today’s announcement. This focus has clearly gotten the attention of foreign governments and led to some notable developments in some of the markets previously listed." The IIPA represents the major intellectual property groups -- MPAA, RIAA, BSA, ESA, IFTA, AAP, and NMPA.

Notorious Markets List. This report states that since the release of the last notorious markets report in February "several markets took action to address the widespread availability of pirated or counterfeit goods". These include the "Chinese website, Baidu", the "Ladies Market in Hong Kong", and the "Savelovskiy Market in Russia". Hence, the OUSTR removed these markets from its "Notorious Markets List".

The just released report lists a class of Russian web sites identified as "Allofmp3 clones". It states that while allofmp3 "was shut down in 2007, sites that are nearly identical, many of which appear to be owned by the same parties, have taken its place. These websites appear to be designed to confuse consumers by operating much like popular, legitimate sites".

The report also lists "deep linking" web sites, for which the infringing works reside on third party servers. It names Sogou MP3 and Gougou in the People's Republic of China (PRC).

It also names business to business and business to consumer web sites Taobao in the PRC and Modchip.ca and Consolesource in Canada, which "sell circumvention devices and components used to circumvent technological protection measures on game consoles".

The report also names several BitTorrent indexing web sites that are used for locating and downloading of infringing works. It names ThePirateBay (Sweden), IsoHunt (Canada), Btjunkie (Sweden and Netherlands), Kat.ph (Canada, Ukraine and Romania), and torrentz.eu (Canada, Panama and Switzerland).

The report also names BitTorrent trackinging web sites, which can be used to "transfer allegedly infringing material, by directing users to peers who share the infringing content". It names Rutracker (Russia), Demonoid (Ukraine), and zamunda (Bulgaria).

This report also names the social media web site vKontakte (Russia), the cyber lockers Megaupload (Netherlands and Hong Kong and Putlocker (United Kingdom), the forum web site Warez-bb (Luxembourg, Switzerland and Sweden), and the sports programming retransmission peer to peer service TV Ants (PRC).

Basis and History of Notorious Markets Reports. Section 301 is the statutory means by which the U.S. asserts its international trade rights, including its rights under World Trade Organization (WTO) agreements. In particular, under the "Special 301" provisions of the Trade Act of 1974, the OUSTR identifies trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to U.S. artists and industries that rely upon intellectual property protection. See, 19 U.S.C. § 2242.

However, Section 2242 contains no reference to the identification of notorious web sites, or notorious markets. Rather, it requires the OUSTR to identify "foreign countries". The OUSTR must identify, for example, countries that "deny adequate and effective protection of intellectual property rights, or ... deny fair and equitable market access to United States persons that rely upon intellectual property protection".

Beginning in 2006, the OUSTR included sections on notorious markets in its annual Special 301 reports. In 2010, the OUSTR announced that it would also produce stand alone notorious markets reports. See, story titled "OUSTR Announces Separate Notorious Markets Process" in TLJ Daily E-Mail Alert No. 2,138, October 4, 2010.

 The OUSTR released its first notorious markets report in February of 2011.

Notorious Markets and SOPA. HR 3261, the "Stop Online Piracy Act" or "SOPA", would give the Intellectual Property Enforcement Coordinator (IPEC) responsibility for writing a report regarding notorious markets.

It provides, at Section 204, that the IPEC "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".

The SOPA would require the IPEC to include certain sections in its notorious markets report that are not currently included in the OUSTR's notorious markets reports.

For example, the IPEC report would include "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." The IPEC would also be required to offer its recommendation as to whether there should be a "list of notorious foreign infringers that would be prohibited from raising capital in the United States."

Also, the SOPA would require that the IPEC report be written for the HJC and Senate Judiciary Committee (SJC). The SOPA could affect oversight jurisdiction.