On paper it appears the government is doing a fabulous job cracking down on copyright and trademark infringement. Between 2005 and 2006 the number of defendants convicted of criminal copyright and trademark infringement rose 57 percent. The number of those sentenced to more than two years in prison skyrocketed 130 percent.
But the Department of Justice believes it is losing the battle against infringement.
"Large-scale trademark and copyright crime is on the increase both here and abroad," says a DOJ spokesperson who asked to remain anonymous. "The criminals are increasingly organized and sophisticated."
So on May 14 the DOJ asked Congress to enact the Intellectual Property Protection Act of 2007 --a bill that would beef up criminal enforcement of copyright and trademark law by altering a variety of criminal law provisions. It would, for instance, create a new crime of attempted copyright infringement, allow civil forfeiture for items involved in copyright infringement and authorize wiretaps for government investigations of criminal infringement.
Backers say the proposed law would provide greatly needed protections for copyrights and trademarks. But opponents--privacy advocates, consumer rights organizations and civil rights groups--fear the Act is an overreaction that puts millions of ordinary citizens at risk of unnecessary criminal investigation or prosecution.
"This would criminalize the everyday activities of millions of Americans," says Jason Schultz, senior staff attorney for the Electronic Frontier Foundation, a non-profit organization that fights for consumers' digital rights.
Defining the Crime
Not all copyright or trademark infringements are crimes under current law. Copyright infringement is criminal only if the accused willfully commits infringement and the infringement either was committed for the purpose of commercial advantage or financial gain; involved at least 10 infringing copies, with a retail value of least $1,000, that were made or distributed within a 180-day period; or involved certain pre-release works that are distributed over a computer network.
In the trademark arena, the law criminalizes intentional trafficking in trademarked goods or services with the knowledge the marks are counterfeit. Moreover, the mere attempt to commit criminal trademark infringement is a crime.
There is, however, no similar crime of attempted criminal copyright infringement. The IP Protection Act would change that by imposing criminal penalties on anyone who takes substantial steps toward committing criminal copyright infringement. That would make it easier for the government to prosecute wrongdoers who do not make infringing copies, but merely resell such copies to others.
"The government wants to be able to go after infringers who have thousands of infringing copies but haven't yet shipped them out of the warehouse," says Ralph Oman, a copyright attorney in Dechert's Washington, D.C., office.
Critics, however, fear that the government wouldn't limit its prosecutions to large-scale infringers.
"A new crime of attempted copyright infringement would allow the government to go after people who have peer-to-peer software on their computers and files in their shared folders," Schultz says. "?? 1/2 The entertainment industry will pressure the DOJ and FBI to get on the P2P networks, get massive amounts of data on those who use the networks and then charge them with crimes."
Critics are also taking issue with the portion of the Act that would extend civil forfeiture to alleged criminal copyright infringement.
The Act would enable the government to seize any property used or intended to be used to commit or facilitate criminal copyright infringement, including computers, routers and blank CDs. Federal authorities could take this property regardless of whether the owner was convicted of criminal copyright infringement. As with other civil forfeiture laws, authorities could seize a person's property simply by showing probable cause that the items were used in a crime.
Critics argue the government could use this provision to seize the property of innocent parties who might be unaware that criminals are using their property to facilitate criminal copyright infringement. ISPs, for instance, could have their servers taken because a few users have engaged in file-sharing.
Moreover, once the government seizes an item, it's often difficult for an owner to get that property back. "[T]he burden of proof is on the [owner] to show it is innocent," says Jonathan Band, a copyright expert in Washington, D.C., who represents NetCoalition, an organization of ISPs. "That's hard. How do you prove a negative?"
Supporters of the Act counter that there is nothing to fear. "Trademark civil seizure ?? 1/2 has worked very well," says Paul Llewellyn, an IP litigator in Kaye Scholer's Manhattan office. "This scheme has existed in the trademark context for years and years without any significant abuse."
Another contentious provision of the Act would authorize federal officials to use wiretaps to investigate criminal copyright or trademark infringements. The DOJ says wiretapping is an important investigative tool that should be available to stop large-scale copyright and trademark infringements.
But some fear this provision would give the government too much power to spy on citizens. "It gives law enforcement officials the ?? 1/2 [ability] to read your e-mail or tap your phone," Schultz says. "This opens up a back door for surveillance of millions of Americans."
So far, Capitol Hill hasn't been particularly receptive to this proposed law. The IP Protection Act hasn't found a sponsor in the Senate and it has fared little better in the House. Rep. Steve Chabot introduced a bill in late July that contains many parts of the Act, but the bill has no co-sponsors.
"Word on the street is that nothing will happen with copyright law until the patent reform issue is resolved one way or the other," Schultz says.
Moreover, the scandal-wracked DOJ has picked a rather inauspicious time to ask for an increase in its powers. "The Justice Department is not held in very high esteem by the Democratic Congress," Band says. "The Judiciary Committees in both houses are spending much of their time investigating the Justice Department, not seeking advice from it."
Over the long term, the Act's chances remain unclear. Some observers say the Act eventually could sail through Congress. "It is an easy one for Congress to pass," Oman says.
Others, however, assert that if the proposal starts moving through Congress, it will generate a lot of opposition from privacy, civil liberty and consumer groups. "If this starts to get traction, there will be more organized opposition," Schultz says.