Rights holders and many government leaders are determined to crack down on Internet piracy through stricter enforcement, but public-interest groups argue that such rules can jeopardize free speech, particularly in countries without the types of safeguard measures found in American law.

The U.S. Trade Representative's Office recently released the latest text -- and possibly the final version -- of the Anti-Counterfeiting Trade Agreement, an accord aimed at increasing international cooperation in curbing the piracy and counterfeiting of intellectual property. The current draft, which includes a section on the Internet, is the product of three years of negotiation and 11 rounds of talks.

"The general trend of ACTA is to shift enforcement standards from civil to criminal, from private parties to government entities, and to lower the evidentiary threshold for enforcement," said Sean Flynn, associate director of the Program on Information Justice and Intellectual Property at American University. "All those shifts create more opportunities to use copyright enforcement as a pretext for censorship."

According to a USTR spokesperson, American officials crafting ACTA understand the concerns about free speech and address them in the agreement. Enforcement procedures in the digital environment must "preserve fundamental principles such as freedom of expression, fair process, and privacy," the text reads.

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The coalition urged Leahy to push for Senate approval of the legislation when Congress returns in mid-November for a lame-duck session after the November midterm elections.

The legislation would give the Justice Department new authority to file a civil action against a domain name linked to a website trafficking in illegal copyrighted content or counterfeit goods. Under the bill, the company that sold the domain name registration to the website could be forced to revoke the domain name of the site if it is being used for copyright infringement or counterfeiting.

The Judiciary Committee was set to mark up the bill in late September but postponed action on the measure when the Senate recessed for the midterm elections.

"Rogue websites - many of which are hosted outside of the U.S. - have become
increasingly sophisticated in both design and operation, and often deceive consumers into believing they are legitimate," the letter said. "We believe that the tools S. 3804
would provide are essential to helping address these illegal websites and ensuring that the Internet is a safe and vibrant marketplace."

The letter was signed by such groups and companies as the Association of American Publishers, NBC Universal, the Recording Industry Association of America, Sony Music Entertainment, and the U.S. Chamber of Commerce.

Critics worry that the measure will hamper free speech, and by allowing domain names to be shut down, it could set a bad precedent that other countries might seek to immitate in order to stifle government critics.

The coalition of businesses and groups dismissed such claims, saying, "some foreign countries have engaged in political censorship long before this bill was introduced and they will continue to do so regardless of whether this legislation is enacted."

The parties released the latest text Wednesday following the final round of talks in Tokyo last week over the Anti-Counterfeiting Trade Agreement. Despite public release of a text, the Office of the U.S. Trade Representative said in a statement that the "draft agreement will undergo final legal review and relevant domestic processes before signature."

"This text reflects tremendous progress in the fight against counterfeiting and piracy - a global crime wave that robs workers in the United States and around the world of good-paying jobs and exposes consumers to dangerous products," U.S. Trade Representative Ron Kirk said in a statement. "...We must now work quickly with our partners to finalize the results achieved in the Tokyo."

In addition to the United States, other countries involved in the ACTA talks included the member countries of the European Union as well as Australia, Canada, Japan, Mexico, Morocco, New Zealand, Singapore, South Korea, and Switzerland.

"Today's release of the ACTA text marks an important step forward in the negotiations between 40 countries working to raise the bar for intellectual property enforcement," Rob Calia, senior director for counterfeiting and piracy at the U.S. Chamber of Commerce's Global Intellectual Property Center, said in a news release. "Better enforcement of IP rights around the world will help strengthen the global economy, create new jobs, and protect consumers from dangerous products."

Some public interest and technology groups as well as U.S. and European lawmakers have criticized the secrecy surrounding the ACTA negotiating process. Critics also voiced concern with some of the proposed provisions in previous drafts, particularly those related to online infringement and counterfeiting. They said the proposed deal would export IP protections in U.S. law without including provisions balancing the rights of users.

Following the most recent round of talks late last month in Tokyo, negotiators involved in drafting the proposed Anti-Counterfeiting Trade Agreement issued a statement Saturday indicating that they had "constructively resolved nearly all substantive issues and produced a consolidated and largely finalized text of the proposed agreement."

They added that the negotiating parties have "agreed to work expeditiously to resolve the small number of outstanding issues that require further examination in capitals, with a view to finalizing the text of the agreement as promptly as possible." In addition to the United States and the EU, other countries invovled in the ACTA talks include Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland.

U.S. Intellectual Property Enforcement Coordinator Victoria Espinel told Tech Daily Dose Tuesday that the ACTA text may be released this week.

The ACTA talks have been criticized for lacking transparency. Some public interest groups have been pushing the Office of the U.S. Trade Representative and others invovled in the ACTA talks to release more details about the draft treaty.

European Parliament Vice President Stavros Lambrinidis and three other Parliament members who have been active in pushing for more transparency in the ACTA talks said in a statement Monday that "there is no credible way of knowing whether the negotiations are actually concluded or not" and once again criticized the secrecy surrounding the process.

"In case the agreement has indeed been initialed, we demand from the Commission to present the final ACTA text to the European Parliament as soon as it is procedurally possible," the European Parliament members said. "It is the Parliament that will ultimately have to decide on rejecting or accepting the agreement, and a complete and thorough briefing of its members is now more urgent than ever."

The department's Internet Policy Task Force issued a notice of inquiry that seeks comment from a variety of stakeholders including copyright holders, technology companies, Internet service providers and Internet users. The task force, which was formed in April, is made up of officials from four Commerce Department agencies: the International Trade Administration, the National Institute of Standards and Technology, the National Telecommunications and Information Administration, and the Patent and Trademark Office.

Among the questions the task force is asking of copyright holders include what challenges copyright holders have experienced in trying to develop new online business models and to counter online infringement and what technologies are available to help detect or prevent online infringement and how effective are they.

The NOI asks Internet intermediaries such as Internet service providers about requests under such laws as the Digital Millennium Copyright Act to take down content that is infringing a copyrighted work. The notice asks how frequently ISPs and other intermediaries are asked to take down infringing content, how accurate such requests are, and what processes copyright holders use to ensure their requests are legitimate.

Internet users are asked to comment on such issues as the prevalence and effectiveness of initiatives aimed at educating users about copyright infringement. They also are asked whether current methods for detecting copyright infringement hamper their ability to obtain legal copies of such works or to "share legal user-generated content."

The department said the comments will be used by the task force in a report that will provide suggestions to assist the Obama administration as it crafts new policies related to domestic and international online copyright protection. Stakeholders have until Nov. 19 to submit comments.

"The Department of Commerce has played an instrumental role in the development of policies that have helped digital commerce flourish," Commerce Secretary Gary Locke said in a statement. He added that, "Our ongoing challenge and commitment is to align the flexibility needed for innovation in the Internet economy with effective means of protecting copyrighted works that are accessible online."

The issue of online piracy has gained new attention in recent months with the release in June of the White House's joint strategic plan on copyright enforcement, the introduction last month of legislation from Senate Judiciary Chairman Patrick Leahy, D-Vt., aimed at cracking down on online piracy and counterfeiting, and the ongoing effort by the United States, European Union and other countries to develop an international trade agreement to increase cooperation on efforts to curb online piracy and counterfeiting.

ACTA aims to increase international cooperation in curbing the piracy and counterfeiting of intellectual property, but has provoked tension about whose job it is to police the protections afforded to rights holders.

The secondary liability provision has been favored by the American entertainment industry but has been opposed by Internet firms and activists in addition to some ACTA negotiating partners.

Negotiating this agreement are Australia, Canada, EU member states, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States. USTR hosted the 10th round of talks in Washington last week.

Sean Flynn, associate director of American University's program on Information Justice and Intellectual Property, is skeptical that secondary liability has been removed from the agreement.

According to Flynn, the language that may be removed from the treaty, as reported by Inside Trade, does not preclude other provisions of the text that evoke secondary liability issues. "On closer read of the ACTA text as we know it, the truth may be that secondary liability is not going away at all," Flynn said.

Since the 10th round of talks concluded last week, a revised text has not been released. Japan will host the next, and possibly final, round of negotiations in September.

USTR has declined to comment on the secondary liability issue at this time.

During a discussion on how to implement the recommendations included in the Obama administration's Joint Strategic Plan on Intellectual Property Enforcement, LegitScript President John Horton and others talked about the importance of getting those involved in the infrastructure of the Internet to help crack down on those who provide pirated or counterfeit products. Horton pointed in particular to the role that registrars, the firms that sell Internet domain name registrations, can play in protecting intellectual property.

Horton in particular called on the Internet Corporation for Assigned Names and Numbers, which manages the Internet's domain name system, to crack down on registrars that violate their accreditation agreements with ICANN, which bars domain names from being used for illegal activities. Citing a recent report from an Internet security research company called KnujOn.com, Horton claimed some registrars have become safe havens for rogue online pharmacies. "Without their [registrars] sponsorship of the illicit transaction structure, the problem would not exist," the report said.

An ICANN spokesman did not have an immediate response to a request for comment.

Horton noted that Google, Microsoft and Yahoo now require that online pharmacies that want to advertise with them to be accredited by a program run by the National Association of Boards of Pharmacy.

Horton said such cooperation "highlights the importance of continuing down that road in encouraging domain name registrars ..., ISPs [Internet service providers] and other companies and say look in all these areas related to intellectual property, in my area rogue Internet pharmacies, there is no reason to knowingly facilitate criminal activity including activity that violates intellectual property. Those are the choke points of the Internet."

Mark Esper, executive vice president of the U.S. Chamber of Commerce Global Intellectual Property Center, said he thinks search engines, ISPs and others "want to do the right thing." He added that it is up to the IP community and others to work with Internet intermediaries to find a "commercially reasonable way" to help curb Internet piracy and counterfeiting.

YouTube, which Google bought in 2006, argued it was protected from liability by a provision in the Digital Millennium Copyright Act that provides a safe harbor from liability for copyright infringement if an Internet firm moves to take down illegal content once it is informed of it.

In the decision granting YouTube's motion for summary judgement, U.S. District Judge Louis Stanton noted that when YouTube "received
specific notice that a particular item infringed a copyright, they swiftly removed it. It is uncontroverted that all the clips in [the] suit are off the YouTube Web site, most having been removed in response to DMCA takedown notices."

In a YouTube blog post, Google Vice President and General Counsel Kent Walker said the decision "follows established judicial consensus that online services like YouTube are protected when they work cooperatively with copyright holders to help them manage their rights online. This is an important victory not just for us, but also for the billions of people around the world who use the Web to communicate and share experiences with each other."

Viacom alleged in its $1 billion lawsuit that YouTube's growth was fueled by the use of copyrighted material stolen from Viacom networks such as MTV and Comedy Central. In a statement last month on the case, Viacom Executive Vice President and General Counsel Michael Fricklas argued, "It is abundantly clear that YouTube and Google knew about copyright infringement on the YouTube site, encouraged it and profited from it."

In response to the decision, Public Knowledge Deputy Legal Director Sherwin Siy in a statement urged "those policymakers who look continually to make our copyright law more draconian and unbalanced will take this ruling to heart, and note that the current law is working quite well to protect content creators while taking into account the responsibilities of online service providers."

The groups met last week in Washington to "analyze" the public text of the Anti-Counterfeiting Trade Agreement released in April.

"ACTA is the predictably deficient product of a deeply flawed process," according to the statement signed by several members of the European Parliament as well as public interest groups from around the world such as the African Commons Project, the Electronic Frontier Foundation, Electronic Frontiers Australia and Public Knowledge. "What started as a relatively simple proposal to coordinate customs enforcement has transformed into a sweeping and complex new international intellectual property and internet regulation with grave consequences for the global economy and governments' ability to promote and protect the public interest."

They outlined several problematic provisions pointing in particular to the language related to the Internet. The statement claims the agreement would encourage Internet service provides to "police the activities of Internet users by holding internet providers responsible for the actions of subscribers, conditioning safe harbors on adopting policing policies, and by requiring parties to encourage cooperation between service providers and rights holders." It also claims that it would encourage other countries to adopt "anti-circumvention" provisions similar to those included in the United States' Digital Millennium Copyright Act targeting technology that can override intellectual property protections.

It also outlined other problems with the draft claiming, for example, that it would "distort fundamental balances between the [IP] rights and interests of proprietors and users."

ACTA's supporters argue that several groups are overstating the bill's impact. During a Senate Judiciary Committee hearing, White House Intellectual Property Enforcement Coordinator Victoria Espinel reiterated the Obama administration's support for the agreement. Noting that there has been "a lot of misinformation about" ACTA, Sen. Orrin Hatch, R-Utah, asked whether it would force changes to current U.S. law, a claim being made by ACTA critics.

"Let me say clearly that [the U.S. Trade Representative] and the administration do not see ACTA as a vehicle for changing existing U.S. law," Espinel said, adding that the agreement is seen as critical to increasing cooperating among international law enforcement officials and U.S. trading partners in combating counterfeiting and piracy.

Describing piracy as possibly "the biggest transfer of wealth in history," Sen. Sheldon Whitehouse, D-R.I., discussed how legitimate businesses can play a role in enabling online piracy. He went on to describe how with a few clicks of a mouse one can use a search engine such as Google to help find the Web sites where illegal content can be downloaded over the networks operated by an Internet service provider like AT&T and how illegal content can be bought using payment systems provided by credit card companies such as Visa.

"A lot of legitimate businesses are supporting online piracy," Whitehouse said in asking a panel of private sector representatives whether they are working with these businesses to help combat IP theft.

Warner Brothers Entertainment Chairman and CEO Barry Meyer said while the entertainment industry uses such tools as the notice-and-take-down provision in the Digital Millennium Copyright Act to call on ISPs to remove illegal copyrighted material when they are informed about it, it is usually done after the fact when illegal material is already in the distribution stream. He added that "we need to look at" the role other legitimate businesses play in enabling piracy.

Senate Judiciary Chairman Patrick Leahy, D-Vt., said he plans to work with White House, Sen. Orrin Hatch, R-Utah, and others on IP legislation that would crack down on those who distribute illegal content such as foreign-based Web sites.

During the same hearing, Sen. Al Franken, D-Minn., asked Intellectual Property Enforcement Coordinator Victoria Espinel how to put measures in place that protect against piracy that will not impede the free flow of information on the Internet. Espinel said it is a priority for the Obama administration to preserve network neutrality while still cracking down on piracy.

Franken, a former comedian and writer on NBC's Saturday Night Live show, elicited several laughs in noting how protecting intellectual property affects him personally. "As I've said before, I was in show business ... Yes, I was. I know it's hard to believe considering what a productive member of this committee I am. .... I still get a $12 check every time they run 'Trading Places,'" Franken said in asking whether piracy effects decisions to make new movies.

The AFL-CIO's Paul Almeida agreed that it does and added that most people don't realize that actors get paid in two ways, up front when they perform in a movie or television show and later when a program or movie is shown in reruns. "An A-lister such as yourself probably does rather well," he added to a round of laughter when Franken thanked him with a big smile.

The release of the 61-page document was applauded by a wide array of stakeholders, including the U.S. Chamber of Commerce, Entertainment Software Association, Information Technology Industry Council, Motion Picture Association of America and Public Knowledge. To see the entire report, click here.

Watch for complete coverage in Wednesday's edition of CongressDaily

In her decision granting summary judgment, U.S. District Court Judge Kimba Wood of New York found LimeWire was liable for copyright infringement that occurred through the use of its services. "The evidence establishes that LimeWire users have infringed plaintiffs' copyrights," Wood wrote. "Second, the evidence demonstrates that LimeWire users employed LimeWire to share and download the recordings without authorization."

Recording Industry Association of America Chairman and CEO Mitch Bainwol hailed the decision Wednesday as "an important milestone in the creative community's fight to reclaim the Internet as a platform for legitimate commerce. By finding LimeWire's CEO personally liable, in addition to his company, the court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability."

Public Knowledge Deputy Legal Director Sherwin Siy said while the court's decision is "on the whole not unreasonable," the group is "troubled when this court, or any court, tries to determine whether infringement has taken place based on the technical capabilities of a product or service. Our goal, as we and others expressed in an amicus brief, is that technological innovation should be protected."

"Installations of unlicensed software on PCs dropped in 54 of the 111 individual economies studied, and rose in only 19," according to the study, which was conducted for BSA by the IT research firm International Data Corporation. "It is clear that anti-piracy education and enforcement campaigns spearheaded in recent years by the software industry, national and local governments, and law enforcement agencies continue to have a positive impact in driving legal purchases and use of PC software."

The study found that much of the increase in piracy is due to the rise of personal computer users in developing countries such as Brazil, China and India. So while the overall rate of piracy dropped in China from 80 percent to 79 percent in 2009, the total value of pirated software increased because of the boost in computer users, according to BSA President and CEO Robert Holleyman. The commercial value of pirated software increased in China by $900 million to $7.6 billion, the biggest increase of any other country measured, according to the study.

Holleyman said that piracy not only results in lost profits for software makers but also is a free trade issue. If firms in China are using pirated software, they are enjoying a trade advantage over U.S. businesses that pay for the software they need, he argued. "Any U.S. business competing with a competitor in China with a high-piracy rate is at an unfair competitive advantage," Holleyman said.

The United States has the lowest software piracy rate in the world at 20 percent. Despite this, given that the United States still has the highest number of computer users, the commercial value of pirated software was $8.6 billion in 2009, the study found. But Holleyman noted that China is expected to surpass the United States next year in the number of computer users, which may further drive up piracy rates there.

The study found that the industry made the greatest progress in combating piracy in Canada, Chile and India, where each country saw a 3 percentage point decline in their piracy rates in 2009. "Most of the piracy of business software occurs in otherwise legitimate businesses," Holleyman said, adding that the theft occurs when businesses copy a few legitimate copies for all the computers in their firm.

The 2009 study is the seventh piracy report that BSA has conducted. Studies such as this have come under fire by some fair-use advocates who say the levels and economic losses of piracy are overstated. A GAO study released in April found that "the illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult, so assumptions must be used to offset the lack of data."

Holleyman said BSA and IDC added an additional factor to this year's study - the software load by country and how many software applications they believe are being used on each computer - in addition to the other data they use. The study examines how much PC software was deployed in 2009 and how much of that was legally bought. BSA also released a video outlining how it conducted the study.

The report "identifies a wide range of serious concerns, ranging from troubling 'indigenous innovation' policies that may unfairly disadvantage U.S. rights holders in China, to the continuing challenges of Internet piracy in countries such as Canada and Spain, to the ongoing systemic IPR enforcement challenges in many countries around the world," according to the report.

USTR said it removed Czech Republic, Hungary and Poland from its watch list. On Hungary, the report notes that "it has taken proactive steps to address the growing threat of Internet piracy, and its customs and police officials have developed their ability to effectively identify infringing products." Hungary was praised for taking "some initial steps to address Internet piracy concerns," while USTR noted the Czech Republic's passage of a law enhancing penalties for IP infringement.

Still despite this, the report highlighted several other trouble spots including China, which along with 10 other countries has been placed on its "priority watch list." USTR singled out China's indigenous innovation policies that favor home-grown technologies and intellectual property over foreign firms or which require foreign firms to share their IP with Chinese partners. "Procurement preferences and other measures favoring 'indigenous innovation' could severely restrict market access for American technology and products," U.S. Trade Representative Ron Kirk said in a statement.

The report also noted that the U.S. music industry claims that "the vast majority of all illegal downloads of music" are associated with China's largest search engine, Baidu.

"We have not determined whether your company is violating laws enforced by the
commission," according to one of the letters sent to the companies. "However, the FTC is urging you to review your security practices for personal information about your customers and employees, and, if appropriate, the practices of contractors and vendors with access to such information, to ensure that the practices are reasonable, appropriate, and in compliance with the law."

The letters were sent to both private and public organizations including schools and local governments, and the entities ranged in size from businesses with just eight employees to publicly held corporations employing tens of thousands. The FTC said it found health-related information, financial records and Social Security and driver's license numbers on the P2P sites.

While P2P technology can be used in many ways including to share software, music, video or documents, if it is not configured properly files can be made available for anyone to see, the FTC warned.