US Congress Hastens Through Flurry Of IP Legislation Before Departure

By Liza Porteus Viana for Intellectual Property Watch
In the waning days of this congressional session in the United States, US lawmakers are passing a flurry of intellectual property-related bills.

One of the bills awaiting President Bush’s signature would create a position of a top intellectual property official in the White House. Another bill would add protection to works whose rights owners are unknown, and a further bill would extend negotiations on internet radio royalties.

The first bill, S 3325, the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008, passed the Senate Friday and the House of Representatives on Sunday.

Under the bill, sponsored by Senator Patrick Leahy, a Vermont Democrat, copyright registration would not be a prerequisite to a criminal action, and a civil infringement action could be brought regardless of errors in registration unless those errors were made knowingly.

It also:
-Gives copyright owners the same rights as trademark owners to impound records documenting infringement.

-Increases the maximum statutory penalties for counterfeiting that endangers public health and safety and enhances penalties for recidivists (repeat offenders) in criminal cases.

-Increases the resources available to both federal and local law enforcement, and requires a 50 percent match by state and local governments.

-Calls for at least 10 more agents of the Federal Bureau of Investigation (FBI) at the Computer Crime and Intellectual Property Section; ensures that Department of Justice computer hacking and IP crimes units are supported by at least one FBI agent; ensures necessary forensic training for experts; and ensures that the attorney general will develop and implement a comprehensive plan to prosecute international organized crime that’s benefiting from IP theft.

Groups like the National Association of Manufacturers, Motion Picture Association of America, Innovation Alliance and the Copyright Alliance hailed the bill as a win.

“This bill truly is music to the ears of all those who care about strengthening American creativity and jobs,” said Recording Industry Association of America Chairman Mitch Bainwol. “Additional tools for intellectual property enforcement are not just good for the copyright community but for consumers who will enjoy a wider array of legitimate offerings.”

But not everyone agrees with that assessment.

“The bill only adds more imbalance to a copyright law that favours large media companies,” said Public Knowledge President Gigi Sohn. “At a time when the entire digital world is going to less restrictive distribution models, and when the courts are aghast at the outlandish damages being inflicted on consumers in copyright cases, this bill goes entirely in the wrong direction.”

White House IP “Czar”

S 3325 also creates an Intellectual Property Enforcement Coordinator (IPEC) within the Executive Office of the President to replace the National Intellectual Property Law Enforcement Coordination Council, an interagency group responsible for coordinating the US’ domestic and international intellectual property enforcement activities, co-chaired by the USPTO director.

Lawmakers said this provision aims to alleviate concerns that the current governmental structure is preventing coordination among agencies from “reaching its full potential.”

The IPEC would chair an interagency committee that will produce a Joint Strategic Plan to combat piracy and counterfeiting that would include Senate-confirmed officials from the Office of Management and Budget, DOJ, US Patent and Trademark Office, Office of the US Trade Representative, US Copyright Office, as well as the State, Homeland Security and Health and Human Services departments.

It is imperative the IPEC be in the White House, Congress says, so the official has the best “vantage point for viewing the efforts underway in each department and agency, that the coordinator does not have institutional loyalties and obligations to any particular agency or department, and that the coordinator has both the visibility and the access” necessary.

But not everyone thinks such an IP “czar” will be effective.

“We’re not high on the idea,” said Public Knowledge spokesman Art Brodsky.

“The ‘top cop’ appears to be more of a figurehead, a chance for everyone on the Hill to take credit for a legislative accomplishment in an IP-dismal year of little having been accomplished,” added Harold Wegner, a patent lawyer at Foley & Lardner.

The Commerce and Justice departments last week sent letters to Congress opposing the bill, particularly an IPEC, saying its creation constitutes a “legislative intrusion into the internal structure and composition of the president’s administration.”

“This provision is therefore objectionable on constitutional separation of powers grounds,” department lawyers wrote.

Sources say it is so far unclear whether the administration is going to support S 3325 as is.

Orphan Works

The Senate also on Friday unanimously passed bill S 2913 to encourage the use of “orphan works” – content that may protected by copyright but whose owners cannot be identified or found.

The bill, sponsored by Sens. Leahy and Orrin Hatch, a Utah Republican, was supported by the Register of Copyrights, the Software and Information Industry Association, Public Knowledge, and the College Art Association. It allows users to display or employ orphaned works if the owner is not found after a thorough, documented search. Currently, users of orphan works can be held liable for up to $150,000 in statutory damages if they are found to be inappropriately using such works.

Enactment of the bill before the close of this Congress “would be an extremely important accomplishment,” said Association of American Publishers Vice President for Legal and Government Affairs Allan Adler. It has been referred to the House Judiciary Committee. Groups opposing the bill include cartoonist, illustrator and photographer societies, as well as music recording groups.

S 2913 also:

-Provides specific search criteria, and the Copyright Office is expected to post guidelines for the best practices for finding a copyright owner.

-Provides for court review to determine if an adequate search has been conducted in good faith.

-Gives protections for copyright owners who may surface later, and provides a path for compensation if users exhibit bad faith.

“It is important to recognise that this bill does not dramatically alter the structure of current copyright law,” Leahy said. “If users do not follow the procedures set out in the bill, they are in the same place they are now – facing full statutory damages. This bill does not create a licence to infringe.”

“By limiting liability and providing reasonable compensation for copywriter owners, this bill strikes an appropriate balance between protecting against copyright infringement and making publicly available work that adds immeasurably to the preservation of our national and personal history,” Hatch said.

Internet Radio

[Editor’s Note: The Senate passed HR 7084 on 30 September, which clears the bill to go the White House for signature.]

Meanwhile, the House on Saturday unanimously passed HR 7084, the Webcaster Settlement Act, which would allow internet radio stations and the music industry to continue negotiations on lowering Web royalty rates.

“This is a truly historic moment for internet radio and its listeners,” said Representative Jay Inslee, a Washington Democrat who helped introduce the bill earlier and who last week helped get the National Association of Broadcasters on board. “There may now be a light at the end of the tunnel in the fight over internet radio royalties.”

Webcasters and SoundExchange – a nonprofit that collects royalties on behalf of recording copyright owners and artists from internet and other digital radio services – have been negotiating new rates since the federal Copyright Royalty Board hiked them in early 2007. Webcasters said the higher rates would be their death knell.

The bill would enable the two sides to continue negotiations through 15 February, even with Congress on recess, and make any deal struck legally binding.

The Senate may take up the bill this week before it adjourns.

Over the weekend, the Senate also passed HR 2638, a continuing resolution to extend funding through 6 March, 2009, for the US government until regular appropriations bills are passed. Funding for the USPTO would be the same as in fiscal year 2008. The bill has been sent to Bush for signing. Funding authority for 2008 expired at midnight Tuesday.

Liza Porteus Viana may be reached at info@ip-watch.ch