The IPEC’s Annual Report: Deterring Online Piracy and Counterfeiting via Cooperation, COICA, Special 301 and Legislation

[T]he IPEC has facilitated and encouraged dialogue among the different private sector Internet intermediaries that contribute to the dynamic nature and functioning of the Internet, including payment processors, search engines and domain name registrars and registries.” Reportedly, creators, consumers, and internet-access-providers are now all “fed up” with the sue-consumers-in-John-Doe-lawsuit approach to internet copyright enforcement long favored by EFF, Public Knowledge and Google.  Voluntary cooperation between intermediaries and rightsholders ought to be a public-policy no-brainer. Nor is that surprising: Back in 1998, Congress and President Clinton presumed that broad cooperation among creators and internet intermediaries could create enforcement mechanisms superior to any enacted legislatively in the DMCA.   See 17 U.S.C. 512(i)(1)(B); see also id. at 512(i)(2).

Granted, the IPEC’s Annual Report focused on the necessity of such cooperation most extensively when discussing “rogue” internet pharmacies. I doubt that anyone familiar with the sociopathy of many foreign counterfeiters would deny that swift cooperation is particularly critical in this context.  Nevertheless, the Annual Report also stressed that intermediary cooperation should play a critical role in deterring all forms of internet infringement, (p. 28): “For example, earlier this year, MasterCard withdrew services from LimeWire, a well-known file-sharing site.” Both MasterCard and the IPEC should be commended for calling out LimeWire for intentionally inducing mass piracy by means so absurd that Wikileaks has now reportedly obtained many or most of its sensitive files by data-mining the file-sharing networks created by programs like LimeWire.

In addition, the IPEC and the Administration also support ongoing efforts to address the critical issues underlying the Combating Online Infringement and Counterfeits Act (“COICA”) (p. 21): “The IPEC is working with Congress to determine if there are ways to provide law enforcement with additional authorities to act against foreign websites used to infringe U.S. intellectual property rights.”

This is a mission-critical effort.  Back when international commerce flowed mostly through our seaports, the U.S. used administrative customs seizures to deter foreign counterfeiters and pirates from targeting our domestic markets and to fulfill our duty to the WTO “to prevent the entry into the channels of commerce… of [infringing] goods, including imported goods.”  Today, Google boasts that the virtual “ports” in our computers are becoming an equally important entry point for international commerce. This boast thus begs the critical question: In this new online environment, how can the federal government best fulfill its WTO obligations and perform its traditional border-protection functions by keeping foreign infringers from using virtual “ports” to infiltrate and disrupt our domestic markets?

In the long run, I suspect that this one of the most important and challenging question that will confront IPR law and policy.  It is good to see the IPEC and the Administration signal that they are willing to step up and help leaders in Congress confront this critical challenge effectively and efficiently.

The IPEC Endorsed USTR’s Plan to Use Special 301 to Target Particular Foreign Websites: “This year, USTR initiated an interagency process to explore using the Special 301 process to highlight foreign based and controlled websites of particular concern.” This is another promising initiative.  Ultimately, legally enforceable IPRs are indispensible if we want to use proven market mechanisms to encourage the production of expressive works and useful innovations.  Nevertheless, the persuasion-based “Special 301” process run by USTR has proven to be a remarkably effective tool for encouraging other countries to remediate flaws in their IPR-enforcement systems.   It thus makes sense to use the Special 301 process to name-and-shame those sites and services that most threaten the growth of lawful Internet commerce by facilitating and exporting mass piracy.  Indeed, doing so would make it much easier for responsible intermediaries to identify and avoid businesses built upon piracy.  It might even deter the thugs at Rapidshare from threatening to sue researchers, Google, or others who might dare to conclude that Rapidshare is “closely associated with piracy.”

The IPEC’s Forthcoming “Whitepaper” Will Propose Legislative Changes to U.S. IP Laws: “The IPEC will include legislative proposals identified in that review in a White Paper on legislative recommendations that the IPEC expects to submit to Congress in the near future.” There has been a great deal of interest in possible changes to U.S. IP laws that might be proposed by the IPEC.  I have long suggested that the IPEC’s legislative proposals would probably focus on counterfeiting, not copyright piracy.  The potential legislative proposals specified in the Report, (see pp. 26-27), ido focus on counterfeiting.  Personally, I commend the IPEC’s focus on reviewing and updating anti-counterfeiting laws in light of the growing significance of Internet commerce: Such a review was at least timely, if not overdue.  That said, I would not be surprised to see some additional legislative proposals on copyrights: One obvious example would involve amending the enhanced criminal-penalty provisions of Section 506(a)(1)(B)-(C) to ensure that they are applicable to online streaming.

In the context of the recent creation of two executive branch IP committees, the IPEC’s first Annual Report provides a thorough review and an important guide to the Administration’s IPR-enforcement priorities for the coming year.

Thomas Sydnor II is a Senior Fellow in Intellectual Property at ACT. He researches and writes on intellectual-property law, particularly on copyrights.