Intellectual Property

Too many tax-payer funded technologies are being taken by China or other countries, Sen. Jim Webb, D-Va., says, and on Friday he reintroduced a bill to stop the flow.

In order to operate in China, for example, American companies are often forced to hand over their intellectual property and proprietary. Many of those technologies are developed using taxpayer money through grant, loans, or other incentives, Webb said in a statement.

"If taxpayers supported the development of the technology, they own a piece of it and it can't just be given away," Webb said. "Federal dollars that go toward R&D funding, loan guarantees, and public-private partnerships in order to help develop the next generation of technologies here are supposed to be making American businesses competitive and generate American jobs -- not to help develop other industries, such as those in China."

Webb's bill would prohibit companies from transferring technology to countries that require such transfers as a cost of doing business.

"The transfer of publicly supported proprietary technologies by American firms to China -- and potentially other countries -- clearly and unequivocally places the competitive advantage of the American economy at risk," Webb said.

With the House Judiciary debate over online piracy legislation now expected to extend into the new year, the Office of the U.S. Trade Representative provided copyright and trademark holders with fresh evidence Tuesday to demonstrate the scope of online infringement they face from pirates and counterfeiters based offshore.

USTR released a new report outlining the most notorious infringers based outside the United States.
"Globally copyright piracy on a commercial scale and trademark counterfeiting continue to thrive, in part because of the presence of marketplaces that deal in goods and services that infringe intellectual property rights," according to the USTR report.

The report includes a list of sites offering pirated music, links to pirated content, sites that provide illegal streaming of live events such as professional sports, cyber lockers where pirated content can be stored and accessed, and social networking sites such as Russia's vKontakte, where users can provide access to infringing materials.

"The notorious overseas markets highlighted in today's report are a direct threat to the millions of hard-working Americans and the tens of thousands of businesses that rely on [intellectual property] for their livelihoods," Michael O'Leary, senior executive vice president of the Motion Picture Association of America, said in a statement. "The list also demonstrates the need for Congress to take action against rogue websites that are causing so much damage to American workers and businesses."

Two key lawmakers are expected to release draft legislation on Thursday that offers an alternative to two controversial bills cracking down on piracy and counterfeiting on foreign websites.

The draft legislation from House Oversight and Government Reform Chairman Darrell Issa, R-Calif., and a similar Senate draft measure from Sen. Ron Wyden, D-Ore., are aimed at countering a House bill known as the Stop Online Piracy Act, introduced last month by House Judiciary Chairman Lamar Smith, R-Texas., and a similar bill approved by the Senate Judiciary Committee in May known as the Protect IP Act.

House Judiciary is expected to mark up SOPA next week. Both SOPA and the Protect IP Act would cut off access to foreign websites deemed to be dedicated to piracy or counterfeiting. Those bills would allow the attorney general to ask a court to require a service provider to redirect U.S. users away from such sites and require advertisers and payment processors such as PayPal and credit card companies to stop doing business with them.

Both SOPA and Protect IP are strongly supported by a broad coalition of copyright and trademark owners, unions and others that say the rapid growth in infringement on foreign websites is hurting the U.S. economy.

But Issa, Wyden and other critics, including tech companies, venture capitalists and privacy advocates, argue that SOPA and Protect IP are too broad and could do more harm than good.

"Efforts to address online piracy aimed at specific behaviors or parts of the network could have unintended consequences elsewhere - consequences that may undermine the value that digital products and services creates for so many," seven tech groups, including the Information Technology Industry Council and TechAmerica, said in a letter to Smith on Wednesday. They urged the committee to hold off on marking up SOPA and continue to work with stakeholders on finding other ways to crack down infringement on foreign websites.

Issa's draft bill, known as the Online Protection and Enforcement of Digital Trade Act, employs a follow-the-money strategy and gives responsibility for implementing the bill to the International Trade Commission instead of the Justice Department.

Issa's draft, obtained by Tech Daily Dose, would allow copyright or trademark owners to file a complaint with the ITC against a foreign website that is infringing their intellectual property.

The draft calls for an expedited process for dealing with such complaints, quicker than the normal process the ITC uses for infringement cases. Under the draft bill, a commission finding could lead to a cease-and-desist order to the infringing website and an order to online advertisers and payment processors to stop doing business with those sites. The draft would authorize the ITC to require those who file complaints against foreign websites to pay a fee to pay for the costs of the process.

Issa is expected to launch a new website, www.keepthewebopen.com, Thursday that will allow users to offer changes to the bill, which will likely be introduced some time before the end of the year. Among those expected to sign on to Issa's bill include Rep. Zoe Lofgren, D-Calif., who also has been an outspoken critic of SOPA and Protect IP.

A bipartisan group of House and Senate lawmakers released a draft proposal to address their concerns with controversial House and Senate bills that would crack down on piracy and counterfeit products on foreign websites.

The draft proposal was crafted by Sens. Maria Cantwell, D-Wash., Jerry Moran, R-Kan., Mark Warner, D-Va., Ron Wyden, D-Ore., and Reps. Jason Chaffetz, R-Utah, John Campbell, R-Calif., Lloyd Doggett, D-Texas, Anna Eshoo, D-Calif., Darrell Issa, R-Calif., and Zoe Lofgren, D-Calif.

Their draft proposes an alternative to a Senate bill known as the Protect IP Act, authored by Senate Judiciary Chairman Patrick Leahy, D-Vt., and the Stop Online Piracy Act, or SOPA, introduced in the House last month by Judiciary Chairman Lamar Smith, R-Texas. Wyden has been a vocal opponent of the Senate measure and has blocked the bill from moving to the Senate floor since it was approved by the Judiciary Committee in May.

Even though they agree on the need to curb online piracy and counterfeiting abroad, Wyden and several of the other lawmakers say Protect IP and SOPA would stifle free speech and innovation and undermine the integrity of the Internet.

In an interview late Thursday, Wyden said the proposal he and the other lawmakers have crafted "is focusing to the extent possible on the payment processors, the advertisers, the follow-the-money approach." Its an approach that tech firms and other critics have been urging lawmakers to take instead of trying to block access to websites that offer infringing content or goods. "If you can take away the financial incentive, that goes a long way in dealing" with the problem, Wyden added.

Protect IP and SOPA focus on trying to cut off funding to those sites as well but they also would allow the attorney general to seek a court order requiring U.S. service providers to direct users away from websites deemed to be primarily focused on providing pirated content or counterfeit goods. Those bills also would put the Justice Department in charge of enforcing the bill's provisions.

The proposal from Wyden and the other lawmakers would give that job to the International Trade Commission, which deals with imports alleged to infringe intellectual property. The proposal would allow intellectual property owners to appeal to the commission to investigate infringing sites. If the commission finds such sites are "primarily" and "willfully" infringing U.S. copyrights or willfully enabling imports of counterfeit merchandise, the agency would issue a cease-and-desist order requiring U.S. payment processors and advertisers to stop doing business with the sites.

"When infringement is addressed only from a narrow judicial perspective, important issues pertaining to cyber security and the promotion of online innovation, commerce and speech get neglected," according to the proposal.

Wyden said the lawmakers will collect comments on the proposal over the next few weeks and will likely introduce it early next year.

If you can't beat 'em, form a coalition!

Nearly 90 industry groups and companies announced Thursday they have formed a new coalition to try to block a plan, to allow for the introduction of an unlimited number of new Internet addresses. The Internet Corporation for Assigned Names and Numbers, the nonprofit group that manages the Internet's "top level" domain name system, plans to vastly expand the domain name space from the 22 groups of names such as .com now available to Internet users to almost any name such as .bank or .angrybirds.

The Coalition for Responsible Internet Domain Oversight says that ICANN's domain name plan will have costly implications for trademark owners, who could be forced to register their names in every new domain name launched or offer their own Internet address. The coalition also argues that ICANN has not taken their concerns seriously enough and failed to follow the consensus-driven process ICANN is supposed to use when enacting such new proposals.

ICANN is currently slated to begin accepting applications under the new domain name program in January.

"The major global industries represented by [the coalition] foresee immense damage to their constituents, consumers and the economy," Association of National Advertisers President and CEO Bob Liodice, said in a statement. "We implore ICANN to discontinue its efforts to roll out this ill-conceived, unwanted and destructive program."

Other groups in the coalition include the Grocery Manufacturers Association, the National Association of Manufacturers, the National Association of Broadcasters and the U.S. Chamber of Commerce as well as such companies as Adobe, Coca-Cola, Hewlett-Packard, Procter & Gamble, and Samsung.

"The new gTLD program is the result of six years of careful study, discussion and debate," ICANN spokesman Brad White said. "It evolved from 45 comment periods encompassing 2,400 comments and analyses. There were 55 explanatory memoranda or independent reports and seven drafts of the Applicant Guidebook."
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Talk about good timing. One day after legislation was proposed to crack down on infringement on foreign websites was introduced, more than a dozen venture capitalists came to Washington Thursday to complain that the measure could have drastic consequences for technology startups and innovation.

The venture capitalists were set to meet with key lawmakers and staff Thursday on Capitol Hill including GOP and Democratic House leadership and members of the House Judiciary Committee. The trip was organized by the Consumer Electronics Association, a fierce critic of the House bill and a similar Senate measure.

The House measure was introduced by House Judiciary Chairman Lamar Smith, R-Texas, with bipartisan support. Among the many provisions in the House bill and a measure passed by the Senate Judiciary Committee in May that worries the venture capitalists as well as civil libertarians, Internet engineers and others is a provision that would require service providers to redirect users away from sites engaged in piracy and counterfeiting.

Brad Burnham with Union Square Ventures, which has invested in social media sites such as Foursquare and Twitter and game maker Zynga, told Tech Daily Dose that the language in the House bill is too broad and could force action by a wide range of Internet-related firms, including social media sites. He and others said they worry that the potential costs of having to comply with the law could prevent many tech startups from getting off the ground.

"It makes it infinitely harder to get startups going" in the United States, Josh Mendelsohn, a partner with a VC firm called Hattery, said. He added that if the bill passes, it may force some startups to move abroad.

The venture capitalists acknowledged that they have been slow to react to the legislation and to rally opposition. And despite their visit, they said they do not have the time or resources to match the lobbying campaign being waged by supporters of the legislation. Intellectual property owners, labor groups and other supporters of the bill have been lobbying for at least two years for measures they say are vital to protecting their products from being stolen by foreign infringers.

They argue that the current tools available to them such as the Digital Millennium Copyright Act, which requires websites and others to take down infringing content after being notified of its existence on their sites, are of little use in targeting infringers who haves set up websites offshore.

Judiciary Intellectual Property Subcommittee Chairman Bob Goodlatte, R-Va., one of the House bill's chief co-sponsors, told Tech Daily Dose Thursday that he and the bill's other authors are open to making additional changes but voiced frustration that many of the bill's critics have failed to offer alternative solutions to addressing a growing problem.

A key senator is questioning the Obama administration's claim that an international agreement aimed at curbing piracy and counterfeiting does not require congressional approval.

Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee's International Trade Subcommittee, wrote President Obama Wednesday about the Anti-Counterfeiting Trade Agreement. The agreement, which the United States recently signed, was negotiated with more than 30 countries and is aimed at improving cooperation in efforts to fight piracy and counterfeiting.

The administration has maintained that ACTA is a "sole executive agreement" that doesn't change U.S. law and therefore doesn't require congressional approval.

Wyden begs to differ. "It may be possible for the U.S. to implement ACTA or any other trade agreement, once validly entered, without legislation if the agreement requires no change in U.S. law," he wrote. "But regardless of whether the agreement requires changes in U.S. law ... the executive branch lacks constitutional authority to enter a binding international agreement covering issues delegated by the Constitution to Congress' authority, absent congressional approval."

Wyden urged Obama to either declare that ACTA is not binding on the United States or provide Congress with a more precise legal rationale of why the deal does not require congressional approval.

ACTA critics have raised similar concerns. They also attacked the process used to negotiate the agreement as too secretive and voiced concern with provisions aimed at curbing online infringement of intellectual property.

"Hopefully, Senator Wyden's letter will alert the administration to the serious constitutional issue facing it and compel it to engage its constitutional and international law experts ... to ensure that the [U.S. Trade Representative] does not disregard this country's constitutional mandates in its fervor to hastily enter a broad ranging and controversial agreement restraining US policy options," said Sean Flynn, associate director of American University's Program on Information Justice and Intellectual Property.

Entrepreneurs associated with some of the nation's top tech start-ups urged lawmakers Thursday to reject a Senate bill cracking down on foreign websites engaged in piracy of movies, music and other intellectual property.

Foursquare co-founder Dennis Crowley, LinkedIn founder Reid Hoffman and Twitter co-founder and ex-CEO Evan Williams joined 136 other tech entrepreneurs to
voice concerns with the Protect IP Act, which was approved by the Senate Judiciary Committee in May.

"We appreciate the stated purpose of the bill, but we fear that if PIPA is allowed to become law in its present form, it will hurt economic growth and chill innovation in legitimate services that help people create, communicate, and make money online," they wrote in a letter.

They argue that the bill's focus on websites "'dedicated to infringing activities is vague and ripe for abuse" and could target legitimate sites. They also noted that content owners have a dubious history of trying to block popular technologies that they believe will promote piracy pointing to the VCR and MP3 digital music player as examples.

In addition, they echoed concerns raised by Internet engineers that the bill's provisions aimed at blocking access to infringing web sites could harm the Internet's domain name system.

"As Web entrepreneurs and Web users, we want to ensure that artists and great creative content can thrive online. But this isn't the right way to address the underlying issue. Introducing this new regulatory weapon into the piracy arms race won't stop the arms race, but it will ensure there will be more collateral damage along the way," the letter added.

Supporters of the anti-piracy legislation, however, say U.S. law enforcement need more tools to target foreign websites that provide pirated content or sell counterfeit goods, saying the growing theft of U.S. intellectual property is hurting the U.S. economy.

The Senate Judiciary bill has been blocked so far from moving to the Senate floor by Sen. Ron Wyden, D-Ore., who has voiced many of the same concerns about the measure raised by the entrepreneurs in their letter Thursday.

The House Judiciary Committee, led by Intellectual Property, Competition, and the Internet Subcommittee Chairman Bob Goodlatte, R-Va., is working on its own legislation.

"The success of our economy relies in part on the success of America's IP industries. Unfortunately, our intellectual property continues to be stolen, marketed and distributed by rogue websites operated outside of the U.S.," the committee said in a statement Thursday announcing that the online piracy legislation is among the panel's top priorities for the fall.

Sen. Ron Wyden, D-Ore., renewed his fight over online piracy legislation Thursday by announcing he will again block it from moving to the Senate floor.

Wyden said he has placed a "hold" on the legislation, which was approved by the Senate Judiciary Committee Thursday. The bill, sponsored by Judiciary Chairman Patrick Leahy, D-Vt., is aimed at cracking down on foreign websites that offer pirated content and counterfeit goods. A hold prevents Senate leadership from obtaining agreement to bring a bill to the floor. Senate Majority Leader Harry Reid, D-Nev., could get around a hold by seeking a cloture vote, which would require 60 votes, on allowing the bill to proceed to the floor for debate.

"In December of last year I placed a hold on similar legislation, commonly called COICA, because I felt the costs of the legislation far outweighed the benefits. After careful analysis of the PROTECT IP Act, or PIPA, I am compelled to draw the same conclusion," Wyden said in a statement Thursday. "I understand and agree with the goal of the legislation, to protect intellectual property and combat commerce in counterfeit goods, but I am not willing to muzzle speech and stifle innovation and economic growth to achieve this objective."

A group of Internet engineers released a paper Thursday that raised concerns with a provision in the bill that would require Internet service providers to redirect requests for domain names linked to websites that offer pirated content or counterfeit goods. The paper notes that the engineers do not oppose strong enforcement of intellectual property rights. "The DNS [domain name system] filtering requirements in the PROTECT IP Act, however, raise serious technical concerns," it said.

A spokeswoman for Leahy said he did not have any comment on Wyden's move, saying the Judiciary Committee's unanimous vote for the bill speaks for itself.

The bill is strongly backed by IP groups who argue that law enforcement needs more tools to address the growing threat to U.S. innovation posed by rogue foreign websites. Such sites offer illegal access to U.S. television shows and movies and counterfeit or stolen copies of U.S. drugs, luxury items and other goods.

"Today's decisive action by the Senate Judiciary Committee to approve the PROTECT IP Act sends a clear message that rogue sites--those devoted to the sale of counterfeit goods or distribution of pirated content--have no place in the legitimate marketplace," David Hirschmann, president and CEO of the Chamber of Commerce's Global Intellectual Property Center, said in a statement.

The Obama Administration is calling for greater law enforcement authority and tougher penalties, including prison in some cases, for people convicted of copyright infringement.

The White House's Intellectual Property Enforcement Coordinator, Victoria Espinel, submitted 20 recommendations to Congress on Tuesday aimed at cracking down on copyright infringement on items ranging from drugs to music and military equipment.

Espinel urged Congress to make illegally streaming copyrighted content online a felony offense in some instances.

Online piracy and counterfeiting, her report notes, are "significant concerns" for the White House. Such infringement causes "economic harm and threaten the health and safety of American consumers," Espine report reads.

"Foreign-based and foreign-controlled websites and web services raise particular concerns for U.S. enforcement efforts. We are aware that members of Congress share our goal of reducing online infringement and are considering measures to increase law enforcement authority to combat websites that are used to distribute or provide access to infringing products."

The list suggests that Congress enact longer sentences for many counterfeiting offenses, including selling fake military or law enforcement items, trade secrets, or bogus drugs. The White House also calls for wiretap authority in counterfeiting and trademark investigations.

The recommendations gathered praise from a range of groups, including the U.S. Chamber of Commerce, which urged the administration to make the U.S. a "miserable place for counterfeiters and pirates."

"We are particularly encouraged to see several of our top legislative priorities covered by the white paper, especially the issue of rogue websites," said Rob Calia, senior director for Counterfeiting and Piracy at the Chamber's Global IP Center. "The paper makes clear that the Administration shares Congress' commitment towards combating websites dedicated to the sale or distribution of infringing products."

The Motion Picture Association of America also lauded Espinel, the first White House IP enforcement coordinator ever, for "recognizing the danger posed to our workforce by theft, both in the online and physical marketplace, and by making the protection of the creative workers and their craft a top priority."

Espinel included a proposal to charge radio stations royalty fees for playing live music performances, a move that drew support from the Recording Industry Association of America Tuesday.

"We appreciate the administration's recommendation that Congress enact a performance right which would finally close a longstanding and unfair loophole in copyright law that denies compensation to artists and record labels when their music is played over terrestrial radio," said RIAA Chairman and CEO Mitch Bainwol in a statement.

The National Association of Broadcasters was predictably irritated.

"This is hardly a new policy position from the White House," NAB Executive Vice President Dennis Wharton said in a statement.

"NAB remains unalterably opposed to legislation creating an onerous, jobs-killing fee on America's hometown radio stations without offsetting provisions and benefits that recognize the the unparalleled promotional value of radio airplay."