Current IP Enforcement Structure Inefficient, Industry Tells Subcommittee
Lawmakers considered IP industry pleas for better copyright enforcement at home and abroad late Monday at a House IP Subcommittee hearing. “Rogue websites pose a two-pronged threat to American IP interests,” said Chairman Bob Goodlatte, R-Va. Websites that traffic in stolen intellectual property affect U.S. job growth and revenue, he said. Furthermore, there’s a particularly pressing threat coming from “cyberlockers” that enable massive theft of intellectual property, he said.
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"Existing laws are inadequate and we need to do more to confront the problem,” said full Judiciary Committee Chairman Lamar Smith, R-Texas. Industry representatives agreed, saying the existing IP enforcement framework is insufficient to deal with the growing threat from rogue websites. The Digital Millennium Copyright Act has been unsuccessful because illegal sites quickly replace the infringing sites that are taken down and many sites will automatically replace infringing files with new files of the same film, said Frederick Huntsberry, Paramount Pictures chief operating officer, in prepared testimony. Rogue website legislation needs to keep search engines, credit providers, ad brokers and ISPs from enabling online theft, said Huntsberry. “Legislation focusing on rogue online services is desperately needed to establish the rule of law on the Internet."
There is an online “shadow economy” where copies of U.S. motion pictures are distributed online, often internationally, said Huntsberry. “No business, no matter how innovative, nimble, or creative, can compete with a shadow economy that offers consumers high-quality distribution of the exact same goods at no cost or nominal cost,” said Huntsberry.
The emerging threat from cyberlockers, smart TVs and rogue international websites is making it easier for consumers to watch stolen films at home, said Huntsberry. Twenty cyberlocker providers account for 96 percent of all infringing copies of Paramount films, Huntsberry’s testimony said. The 20 providers receive a total of 177 million unique monthly visitors and each can make $41 million to $304 million annually in subscription and ad revenue, according to Paramount’s estimates. “We are excited about and embrace the new legitimate distribution models that technology is opening up, but we also recognize that those who profit from the online shadow economy will siphon away those opportunities if left unchecked,” Huntsberry said.
"How we preserve free speech rights as we confront this problem is critically important,” said Rep. Mel Watt, D-N.C. The best way to protect free speech is to make sure that any pending legislation is worded narrowly so as to prevent accidental harm to legal website operators, said David Sohn, senior policy counsel at the Center for Democracy & Technology. There are significant concerns about DNS takedown efforts such as Immigration and Customs Enforcement’s “Operation In Our Sites,” which was both ineffective and had high collateral impacts, Sohn said. “We would strongly urge Congress not to proceed with legislation proposing domain name-focused remedies,” he wrote in prepared testimony.
Congress should implement an enhanced enforcement system to identify piracy websites, work with ISPs to block them, support pricing structures and usage caps that discourage online piracy, partner with search engines and ad networks to discourage the facilitation of rogue websites, fund anti-piracy research, and work with the private sector and the international community to impose penalties for infringing websites, wrote Daniel Castro, senior analyst at the Information Technology and Innovation Foundation. Castro said that his group endorses legislation similar to the Combating Online Infringement and Counterfeits Act proposed by Senate Judiciary Committee Chairman Patrick Leahy, D-Vt.
Subcommittee Ranking Member John Conyers, D-Mich., expressed frustration with the witnesses’ lack of solutions to the problem of IP theft, and at one point asked each witness directly what Congress should do. “I'm disappointed in all the witnesses,” said Conyers. “How many times do you think we will have hearings on this topic in the 112th Congress?” he asked. “This might be it.” In response, both Huntsberry and Maria Pallante, acting register of copyrights at the Copyright Office, suggested that Congress give law enforcement agencies greater authority to track and prosecute infringing websites. Sohn said that Congress should embrace a “follow the money” approach that ensures that rogue websites cannot make a profit from their infringing endeavors. Castro said that Congress should create an Internet blacklist of rogue sites, block them at the DNS level and restrict search engines from listing them in their search results.