News from the Front: the Latest US Bill on Online Piracy War

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Intellectual Property Rights owners are having their voice heard in the US Senate.  On 28th September 2010, Senator Patrick J. Leahy introduced the Combating Online Infringement and Counterfeits Act bill (COICA), which aims at combating online distribution of pirated content and counterfeit goods.  On 18th November the Senate Committee of Judiciary unanimously recommended that the US Senate consider the bill for adoption.  The approval process is understood to be moving forward.   Although the aim of the COICA “to combat online infringement, and for other purposes” is certainly valid, the bill has already been condemned by many as a “censorship bill” and as one (of many) bills that would bring the Internet-as-we-know-it to a halt.

What would happen if COICA were to be enacted?  The Attorney General office would have the power to request court orders (e.g. restraining orders) against domain names used by Internet sites “dedicated to infringing activities”, i.e. sites:

Primarily designed, [with]no demonstrable, commercially significant purpose or use other than, or marketed by [their]operator, or by a person acting in concert with the operator,

a. To offer goods or services infringing third parties’ copyright, including by offering or providing access to, without authorization of the copyright owner or otherwise by operation of law, copies of, or public performance or display of, works protected by [copyright], in complete or substantially complete form, by any means, including by means of download, transmission, or otherwise, including the provision of a link or aggregated links to other sites or Internet resources for obtaining such copies  for accessing such performance or display; or

b.      To sell or distribute goods, services, or materials bearing a counterfeit mark. (Note: the above is an excerpt of the definition under COICA).

It will be interesting to see how the courts and the US administration will interpret this definition, which is certainly elastic enough to allow a high margin of discretion.

If approved, COICA would also add to the long list of US laws with extra-territorial effects.  In the case that infringing domain names (or their registrars) are located outside the US, US-based service providers, financial transaction providers and online advertisers, may be ordered to take technical measures that would de facto prevent foreign websites from doing business in the US.  For example: 1) US service providers would have to take steps to prevent a domain name from resolving to foreign infringing website’s Internet Protocol address; 2) US financial transaction providers would have to take reasonable measures to prevent transactions made by US customers for purchases associated with banned foreign domain names; 3) Services that serve advertisements to Internet sites would have to take reasonable measures to prevent their network from serving advertisements to foreign Internet sites found to be infringing COICA.

COICA would also introduce a “name and shame” mechanism whereby the US Intellectual Property Enforcement Coordinator would publish a list of domain names against which court orders are issued under the Act.  A second (more controversial) list of “domain names that upon information and reasonable belief the Department of Justice determines are dedicated to infringing activities but for which the Attorney General has not filed an action” would be kept and published by the Attorney General, without any control from the courts.  The publication of a domain name on the Attorney General list would give third parties (e.g. ISPs, DNS providers, registrars, online payment platform providers, etc.) full immunity to adopt restrictive measures against it.  In practice, third party providers and partners would have a ‘licence-to-terminate’ any commercial relationship with blacklisted websites.  The devastating commercial effects of the Attorney General list are therefore clear, while the criteria for inclusion on that list are still to be understood.

COICA would impose a significant burden on the compliance functions of an extensive variety of businesses ranging from peer-to-peer platform providers to e-commerce websites, online advertisers, ISPs, domain name registrars and online payment platforms.  From the point of view of its geographic scope, COICA would have the merit of recognising and addressing the borderless nature of the Internet, but how US international partners (EU, China, Japan) would react if the bill were to be passed is yet to be seen.  We’ll keep a close look on the US Senate to monitor progress of the bill.

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