Online Copyright Infringement and
Counterfeiting: Legislation in the 112th
Congress
Brian T. Yeh
Legislative Attorney
January 10, 2012
Congressional Research Service
7-5700
www.crs.gov
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CRS Report for Congress
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epared for Members and Committees of Congress
Online Copyright Infringement and Counterfeiting: Legislation in the 112th Congress
Summary
The global nature of the Internet offers expanded commercial opportunities for intellectual
property (IP) rights holders but also increases the potential for copyright and trademark
infringement. Piracy of the content created by movie, music, and software companies and sales of
counterfeit pharmaceutical drugs and consumer products negatively impact the American
economy and can pose risks to the health and safety of U.S. citizens. Although rights holders and
law enforcement agencies currently have some legal tools to pursue domestic infringers, they face
difficult challenges in enforcing IP laws against actors located abroad. Many websites trafficking
in pirated copyrighted content or counterfeit goods are registered and operate in foreign countries.
These foreign “rogue sites” sell subject matter that infringes U.S. copyrights and trademarks to
U.S. consumers, yet the website operators remain beyond the reach of U.S. courts and authorities.
Some believe that legislation is necessary to address the jurisdictional problem of holding foreign
websites accountable for piracy and counterfeiting. On May 12, 2011, Senator Leahy introduced
S. 968, the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual
Property Act (PROTECT IP Act), that would allow the Attorney General to seek an injunction
from a federal court against a domain name used by a foreign website that engages in, enables, or
facilitates infringement; such court order may then be served on U.S.-based domain name servers,
Internet advertisers, search engines, and financial transaction providers, which would be required
to take actions such as preventing access to the website or suspending business services to the
site. IP rights holders may also sue to obtain a cease and desist order against the operator of an
Internet site dedicated to infringement (whether domestic or foreign) or the domain name itself.
On October 26, 2011, Representative Lamar Smith introduced H.R. 3261, the Stop Online Piracy
Act (SOPA). SOPA is similar to the PROTECT IP Act yet is broader in scope by including several
provisions not found in S. 968, such as those that increase the criminal penalties for online
streaming of copyrighted content, create criminal penalties for trafficking in counterfeit drugs,
increase penalties for foreign espionage, and require the appointment of dedicated IP personnel in
U.S. embassies. SOPA also allows IP rights holders to send a written request to financial
transaction providers and Internet advertisers asking them to terminate business relationships with
a website (whether domestic or foreign) that is dedicated to theft of U.S. property; if such request
is ignored, or if the website files a counter notification, the rights holder may then sue the website
owner/operator or the website’s domain name itself.
There has been considerable public debate about the PROTECT IP Act and SOPA. Critics claim
these measures amount to “Internet censorship” and that they would impair free speech. There are
also concerns that the legislation will disrupt the technical integrity of the Internet. Supporters of
the bills argue that in order to reduce digital piracy and online counterfeiting, new enforcement
mechanisms are vital for U.S. economic growth and needed to protect public health and safety.
On December 17, 2011, Senator Wyden introduced S. 2029, the Online Protection and
Enforcement of Digital Trade Act (OPEN Act), that would authorize the International Trade
Commission (ITC) to investigate foreign websites that allegedly engage in willful IP
infringement. The ITC may issue a cease and desist order against the website; such an order may
be used by the rights holder to oblige financial transaction providers or Internet advertising
services to stop doing business with the website. Unlike the PROTECT IP Act and SOPA, the
OPEN Act does not apply to domestic websites and also would not require search engines or
domain name servers to block access or disable links to foreign websites.
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Online Copyright Infringement and Counterfeiting: Legislation in the 112th Congress
Contents
Introduction...................................................................................................................................... 1
Brief Overview of Federal Laws That Apply to Particular Unlawful Online Activity .................... 2
Digital Millennium Copyright Act (DMCA)............................................................................. 2
Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PRO-
IP Act)..................................................................................................................................... 4
Anticybersquatting Consumer Protection Act (ACPA) ............................................................. 5
Unlawful Internet Gambling Enforcement Act (UIGEA) ......................................................... 6
Ryan Haight Online Pharmacy Consumer Protection Act......................................................... 7
Legislative History of Online Copyright Infringement and Counterfeiting Legislation.................. 7
Summary of PROTECT IP Act Provisions ...................................................................................... 8
Action by the Attorney General................................................................................................. 9
Action by a “Qualifying Plaintiff”........................................................................................... 10
Due Process, Safeguards, and Limitations on Liability........................................................... 11
Reports to Congress................................................................................................................. 12
Summary of SOPA Provisions ....................................................................................................... 12
Title I of SOPA, “Combating Online Piracy”.......................................................................... 12
Action by the Attorney General......................................................................................... 12
Actions by a “Qualifying Plaintiff”................................................................................... 14
Due Process, Safeguards, and Limitations on Liability .................................................... 16
Reports to Congress .......................................................................................................... 17
Title II of SOPA, “Additional Enhancements to Combat Intellectual Property Theft” ........... 18
Streaming of Copyrighted Works in Violation of Criminal Law....................................... 18
Trafficking in Inherently Dangerous Goods or Services................................................... 18
Protecting U.S. Businesses From Foreign and Economic Espionage ............................... 19
Amendments to Sentencing Guidelines ............................................................................ 19
Defending Intellectual Property Rights Abroad ................................................................ 19
Debate Over the Legislation .......................................................................................................... 19
Impact on Free Speech ............................................................................................................ 19
Technical Integrity of the Internet ........................................................................................... 21
Private Cause of Action ........................................................................................................... 22
Conflict with the DMCA “Safe Harbors” and Potential Impact on Internet Innovation
(Referring to SOPA Only) .................................................................................................... 23
Manager’s Amendment to H.R. 3261 (SOPA)............................................................................... 25
Summary of the OPEN Act............................................................................................................ 27
International Trade Commission Enforcement........................................................................ 27
Applicable Scope of New Section 337A, as added by the OPEN Act..................................... 27
Violation .................................................................................................................................. 28
Complaint ................................................................................................................................ 28
ITC Determination................................................................................................................... 28
Remedies ................................................................................................................................. 29
Section 337 Judges .................................................................................................................. 30
OPEN Act Compared to PROTECT IP Act and SOPA ........................................................... 30
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Online Copyright Infringement and Counterfeiting: Legislation in the 112th Congress
Contacts
Author Contact Information........................................................................................................... 31
Acknowledgments ......................................................................................................................... 31
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Online Copyright Infringement and Counterfeiting: Legislation in the 112th Congress
Introduction
The Internet has become a central part of the American economy, delivering innovative products
while eliminating the need for inefficient middlemen. However, the free flow of information
facilitated by the Internet has also created problems with copyright and trademark infringement.
The problem is significant; as much as 6% of the U.S. gross national product is generated by
industries supported by intellectual property laws.1 A recent report contends that nearly 24% of all
Internet traffic worldwide is infringing.2 Piracy of the content created by movie, music, and
software companies, and the sale of counterfeit goods that include inauthentic clothing,
pharmaceutical drugs, and consumer electronics, negatively impacts the American economy.3
Although the Government Accountability Office cautions that it is difficult to precisely quantify
the economy-wide impacts of piracy, it is believed to be a serious problem.4
However, many websites trafficking in copyrighted content or counterfeit goods are registered
and operate entirely in foreign countries. These foreign “rogue sites” often provide creative
content and physical goods protected by U.S. intellectual property law to people located within
the United States. S. 968, the Preventing Real Online Threats to Economic Creativity and Theft of
Intellectual Property Act (PROTECT IP Act), and H.R. 3261, the Stop Online Piracy Act (SOPA),
are legislative responses to the jurisdictional problem of holding foreign websites accountable for
piracy and counterfeiting. The bills also authorize new enforcement mechanisms against domestic
sites that facilitate infringing activities. These bills would create new obligations for U.S.-based
domain name servers, Internet advertisers, search engines, and financial transaction providers to
address such harm to intellectual property rights holders. There has been considerable public
debate about the changes to existing law that are proposed by these two bills. An alternative
legislative measure, S. 2029, the Online Protection and Enforcement of Digital Trade Act (OPEN
Act), has been introduced in response to the concerns raised about the PROTECT IP Act and
SOPA.
1 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Frederick Huntsberry, Chief Operating Officer Paramount Pictures Corp.).
2 See Targeting Websites Dedicated To Stealing American Intellectual Property: Hearing Before the S. Comm. on the
Judiciary, 112th Cong. (2011) (written statement of Sen. Patrick Leahy, Chairman S. Comm. on the Judiciary, citing a
report commissioned by NBC Universal, available at http://documents.envisional.com/docs/Envisional-Internet_Usage-
Jan2011.pdf).
3 As used in this report, the term “piracy” refers to the unlawful reproduction and distribution of copyrighted content,
and “counterfeiting” refers to the manufacture and distribution of products that bear (without authorization) a
trademark that is identical to a trademark validly registered for those goods, or that cannot be distinguished in its
essential aspects from such a trademark, and that, thereby, infringes the rights of the owner of the trademark in
question. These definitions are adapted from those used in the World Trade Organization (WTO)’s Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), Section 4, Article 51, footnote 14, available
at http://www.wto.org/english/tratop_e/trips_e/t_agm4_e.htm#Footnote14.
4 U.S. Government Accountability Office, Observations on Efforts to Quantify the Economic Effects of Counterfeit and
Pirated Goods, 10-423, April 2010, p. 2, available at http://www.gao.gov/new.items/d10423.pdf.
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Brief Overview of Federal Laws That Apply to
Particular Unlawful Online Activity
Digital Millennium Copyright Act (DMCA)
Congress passed the Digital Millennium Copyright Act (DMCA) in 1998 in an effort to adapt
copyright law to an evolving digital environment.5 Title II of the DMCA added a new Section 512
to the Copyright Act (Title 17 of the U.S. Code) in order to limit the liability of service providers
against claims of copyright infringement relating to online materials. This “safe harbor”
immunity is available only to parties that qualify as a “service provider” as defined by the
DMCA, and only after the provider complies with certain eligibility requirements. In exchange
for immunity from liability, the DMCA requires service providers to cooperate with copyright
owners to address infringing activities conducted by the providers’ customers. The DMCA’s safe
harbors greatly limit service providers’ liability based on the specific functions they perform.6 The
safe harbors correspond to four functional operations of a service provider that might otherwise
constitute copyright infringement: (1) transitory digital network communications, (2) system
caching, (3) storage of information on systems or networks at direction of users, and (4)
information location tools.7
One safe-harbor-qualifying condition common to three of the four categories is the requirement
that upon proper notification by the copyright owner of online material being displayed or
transmitted without authorization, a service provider must “expeditiously” remove or disable
access to the allegedly infringing material.8 This “notice and takedown” obligation does not apply
when the service provider functions as a passive conduit of information under 17 U.S.C. Section
512(a) (offering transitory digital network communications), but is a condition that must be met
to obtain shelter under the remaining three safe harbor provisions. As indicated by the eligibility
conditions in each subsection of Section 512(b)-(d), the notice and takedown procedure varies
slightly for each. To prevent abuse of the notice and take-down procedure, Section 512(f)
provides damages, costs, and attorneys’ fees to any service provider that is injured by a knowing,
material misrepresentation that an item or activity is infringing.9 For example, any person who
sends a “cease and desist” letter to a service provider, with the knowledge that the claims of
copyright infringement are false, may be liable to the accused infringer for damages.
5 For more information regarding the DMCA, see CRS Report RL32037, Safe Harbor for Service Providers Under the
Digital Millennium Copyright Act, by Brian T. Yeh and Robin Jeweler, and CRS Report RL33887, The Digital
Millennium Copyright Act: Exemptions to the Prohibition on Circumvention, by Brian T. Yeh.
6 Ellison v. Robertson, 189 F. Supp. 2d 1051, 1064 (C.D. Cal. 2002), aff’d in part and rev’d in part, 357 F.3d 1072 (9th
Cir. 2004). Service providers who qualify for safe harbor are protected from all monetary and most equitable relief that
may arise from copyright liability. In such a situation, “even if a plaintiff can show that a safe harbor-eligible service
provider has violated her copyright, the plaintiff will only be entitled to the limited injunctive relief set forth in 17
U.S.C. §512(j).” Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1098-99 (W.D. Wash. 2004) (citations
omitted).
7 17 U.S.C. §512(a)-(d).
8 See 17 U.S.C. §512(b)(E), (c)(C), and (d)(3).
9 “‘Knowingly’ means that a party actually knew, should have known if it acted with reasonable care or diligence, or
would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations. “‘Material’
means that the misrepresentation affected the ISP’s response to a DMCA letter.” Online Policy Group v. Diebold, Inc.,
337 F. Supp. 2d 1195, 1204 (N.D. Cal. 2004) (citations omitted).
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As noted earlier, the DMCA’s safe harbor provisions do not confer absolute immunity from legal
liability for copyright infringement. Although they ensure that qualifying service providers are
not liable for monetary relief, they may be liable for limited injunctive relief. For example, a
service provider that provides “transitory digital network communications” may be subject to the
following injunctive relief:
• an order restraining the service provider from providing access to a subscriber or
account holder of the service provider’s system or network who is using the
provider’s service to engage in infringing activity and is identified in the order,
by terminating the accounts of the subscriber or account holder that are specified
in the order;
• an order restraining the service provider from providing access, by taking
reasonable steps specified in the order to block access, to a specific, identified,
online location outside the United States.10
In the case of service providers that provide either (1) system caching, (2) storage of information
on systems or networks at direction of users, or (3) information location tools, the court may grant
injunctive relief with respect to a service provider in one or more of the following forms:
• an order restraining the service provider from providing access to infringing
material or activity residing at a particular online site on the provider’s system or
network;
• an order restraining the service provider from providing access to a subscriber or
account holder of the service provider’s system or network who is engaging in
infringing activity and is identified in the order, by terminating the accounts of
the subscriber or account holder that are specified in the order;
• such other injunctive relief as the court may consider necessary to prevent or
restrain infringement of copyrighted material specified in the order of the court at
a particular online location, if such relief is the least burdensome to the service
provider among the forms of relief comparably effective for that purpose.11
One public interest group has praised the importance of the DMCA’s safe harbor provisions to the
development of the Internet:
Without these protections, the risk of potential copyright liability would prevent many online
intermediaries from providing services such as hosting and transmitting user-generated
content. Thus the safe harbors have been essential to the growth of the Internet as an engine
for innovation and free expression.12
Some have called for Congress to pass legislation that would expand the DMCA to include notice
and takedown provisions regarding trademark infringement and other illegal conduct such as
spam, phishing, and fraud.13
10 17 U.S.C. §512(j)(1)(B).
11 17 U.S.C. §512(j)(1)(A).
12 Electronic Frontier Foundation, Digital Millennium Copyright Act, at http://www.eff.org/issues/dmca.
13 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearings Before the
House Subcomm. on Intellectual Property, Competition, and the Internet, 112h Cong., 1st sess. (2011) (statement of
Christine N. Jones, General Counsel, The Go Daddy Group, Inc.), at 8.
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Prioritizing Resources and Organization for Intellectual Property
Act of 2008 (PRO-IP Act)
The Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PRO-IP Act)
strengthened existing forfeiture provisions for use in cases involving criminal copyright
infringement and trademark counterfeiting.14 The PRO-IP Act allows civil forfeiture of “[a]ny
property used, or intended to be used, in any manner or part to commit or facilitate the
commission of [criminal copyright infringement or trafficking in counterfeit goods].”15 The
Department of Justice and U.S. Immigration and Customs Enforcement (ICE) have recently
begun to use this civil forfeiture authority in an innovative way—to seize and forfeit domain
names of websites that are being used for criminal activity, in this case websites that are involved
in selling counterfeit goods and distributing pirated merchandise and copyrighted digital
materials.16 Domain name registrars redirect traffic from the seized domains to a government
website explaining that the domain name has been seized by ICE. However, the sites remain
online and accessible through their Internet protocol addresses.17
Between June 30, 2010, and November 28, 2011, ICE seized 350 domain names18 associated with
Internet piracy in its initiative called “Operation In Our Sites.”19 Of these 350 seized domain
names, 116 have been forfeited to the U.S. government.20 In order to obtain domain name seizure
warrants, ICE agents present evidence of criminal trademark violations or criminal copyright
infringement that is occurring on the website to a federal magistrate judge. In order to issue the
warrant, the judge must determine, by a standard of probable cause, that the domain name is
being used in violation of federal criminal laws.21 Due process protections are part of this process,
as described by the ICE Director:
As with all judicially authorized seizure warrants, the owners of the seized property have the
opportunity to challenge the judge’s determination through a petition. If a petition is filed, a
hearing is held in a federal court to determine the validity of the affidavit supporting the
seizure, at which point the government would have the burden of proof.… Under existing
14 P.L. 110-403, 122 Stat. 4256.
15 18 U.S.C. §2323.
16 For more information about this initiative, see Ben Sisario, U.S. Shuts Down Web Sites in Piracy Crackdown, N.Y.
TIMES, Nov. 27, 2010, at B2; see also U.S. Dep’t of Justice, Press Release: Federal Courts Order Seizure of 82
Website Domains Involved in Selling Counterfeit Goods as Part of DOJ and ICE Cyber Monday Crackdown, Nov. 29,
2010, available at http://www.justice.gov/opa/pr/2010/November/10-ag-1355.html.
17 An Internet protocol address is a series of numbers assigned to a device attached to a network. These numbers are
used to indicate where the device is located on the network. For example, when a user visits http://www.google.com the
user’s computer is communicating with 74.125.93.147, the Internet protocol address of google.com’s webserver.
18 A domain name can be typed into a web browser to access an Internet address; it usually consists of a “top level
domain” and a “second level domain”—for example, in the domain name “amazon.com,” “.com” is a top level domain,
and “amazon” is the second level domain. A domain name registry operates top level domains, and a domain name
registrar manages the registration of domain names. See S.Rept. 111-373 at 6.
19 U.S. Dep’t of Justice, U.S. Immigration and Customs Enforcement (ICE), Federal Courts Order Seizure of 150
Website Domains Involved in Selling Counterfeit Goods as Part of DOJ, ICE HIS and FBI Cyber Monday Crackdown,
Nov. 28, 2011, at http://www.justice.gov/opa/pr/2011/November/11-ag-1540.html.
20 Id.
21 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearings Before the
House Subcomm. on Intellectual Property, Competition, and the Internet, 112h Cong., 1st sess. (2011) (statement of
John Morton, Director, ICE), at 11.
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federal law, the website owner may also choose to demand return of the property through the
law enforcement agency itself, by writing a letter to ICE.… Further, if the website owner
determines he or she does not wish to pursue either of these avenues of due process, a
challenge may be filed directly with the law enforcement agency conducting a forfeiture
action under administrative processes.22
The assistant deputy director of ICE has explained that several factors are taken into account
before the agency decides which domain name should be seized, including
• the popularity of the website, which often correlates with its profitability;
• whether the website is commercial in nature and earns a substantial amount of
money—those that run advertisements, sell subscriptions, or sell merchandise;
and
• whether seizing a site will have a substantial impact on piracy.23
However, the global nature of the Internet presents problems to the civil forfeiture approach used
by ICE. Only domain names registered within the United States and subject to ICE’s jurisdiction
may be seized.
Anticybersquatting Consumer Protection Act (ACPA)
The Anticybersquatting Consumer Protection Act (ACPA)24 includes two provisions that provide
individuals with remedies against abuses of the domain name system. First, it provides a means to
protect against trademark dilution through the domain name system. Second, it provides
anticybersquatting protections for individuals.25
ACPA allows trademark owners to file a lawsuit against domain name registrants and their
licensees for trademark dilution.26 Such suits are permissible if the domain name is identical or
confusingly similar to a mark that was distinctive or famous at the time the domain name was
registered, or infringes upon names or insignias of the American Red Cross or United States
Olympic Committee.27 If the registrant is found to have registered the domain name in bad faith,
ACPA authorizes a court to order that the domain name be forfeited, canceled, or transferred to
the trademark owner.28
22 Id. at 12.
23 BNA’s Electronic Commerce & Law Report, U.S. Nexus, Website’s Profit Factor Into ICE Calculus of Which
Domains to Seize, June 8, 2011 (interview between BNA’s Tamlin Bason and Erik Barnett, assistant deputy director of
ICE).
24 P.L. 106-113, app. I, tit. III.
25 Cybersquatting is defined under ACPA as registering a domain name that “consists of the name of another living
person [such as a celebrity], or a name substantially and confusingly similar thereto, without that person’s consent, with
the specific intent to profit from such name by selling the domain name.” 15 U.S.C. §8131.
26 15 U.S.C. §1125(d)(1)(A). For more information about trademark dilution generally, see CRS Report RL33393,
Protecting Famous, Distinctive Marks: The Trademark Dilution Revision Act of 2006, by Brian T. Yeh.
27 15 U.S.C. §1125(d)(1)(A)(ii).
28 15 U.S.C. §1125(d)(1)(C).
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ACPA also authorizes in rem actions directly against a domain name that infringes upon a
trademark, where personal jurisdiction cannot be obtained over the owner of the infringing
domain name or if the owner cannot be identified by the trademark owner.29
ACPA also allows individuals to sue cybersquatters, defined as one who intends to profit by
registering and subsequently selling a domain name that is comprised of or confusingly similar to
the first individual’s name without consent.30 The court may award injunctive relief to the
plaintiff, “including the forfeiture or cancellation of the domain name or the transfer of the
domain name to the plaintiff.”31
Unlawful Internet Gambling Enforcement Act (UIGEA)
The Unlawful Internet Gambling Enforcement Act (UIGEA), which Congress passed in 2006 as
Title VIII of the SAFE Port Act,32 seeks to cut off the flow of revenue to unlawful Internet
gambling businesses.33 UIGEA prohibits gambling-related businesses from accepting checks,
credit card charges, electronic transfers, and similar payments in connection with unlawful
Internet gambling.34 Anyone who violates this prohibition of UIGEA is subject to a criminal fine
of up to $250,000 (or $500,000 if the defendant is an organization), imprisonment of up to five
years, or both.35 In addition, upon conviction of the defendant, the court may enter a permanent
injunction enjoining the defendant from making bets or wagers “or sending, receiving, or inviting
information assisting in the placing of bets or wagers.”36 The Attorney General of the United
States or a state attorney general may bring civil proceedings to enjoin a transaction that is
prohibited under UIGEA.37
UIGEA directed the Board of Governors of the Federal Reserve System and the Treasury
Department to promulgate regulations that require “each designated payment system, and all
participants therein, to identify and block or otherwise prevent or prohibit restricted transactions
through the establishment of policies and procedures” reasonably calculated to have that result.38
The final rule adopted by the Federal Reserve and the Treasury Department identifies five
relevant payment systems that could be used in connection with, or to facilitate, the “restricted
transactions” used for Internet gambling: Automated Clearing House System (ACH), card
systems, check collection systems, money transmitting business, and wire transfer systems.39 The
rule defines a “restricted transaction” to mean any transactions or transmittals involving any
credit, funds, instrument, or proceeds that the UIGEA prohibits any person engaged in the
business of betting or wagering from knowingly accepting, in connection with the participation of
29 15 U.S.C. §1125(d)(2)(A).
30 15 U.S.C. §8131(1)(A).
31 15 U.S.C. §8131(2).
32 P.L. 109-347, 120 Stat. 1952 (31 U.S.C. §§5361-5367) (2006).
33 For a more detailed analysis and description of UIGEA, see CRS Report RS22749, Unlawful Internet Gambling
Enforcement Act (UIGEA) and Its Implementing Regulations, by Brian T. Yeh and Charles Doyle.
34 31 U.S.C. §5363.
35 31 U.S.C. §5366(a).
36 31 U.S.C. §5366(b).
37 31 U.S.C. §5365.
38 31 U.S.C. §5364(a).
39 31 C.F.R. §132.3.
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another person in unlawful Internet gambling.40 The rule directs participants in the designated
systems, unless exempted, to “establish and implement written policies and procedures
reasonably designed to identify and block or otherwise prevent or prohibit restricted
transactions,”41 and then provides non-exclusive examples of reasonably compliant policies and
procedures for each system.42
Some Members of Congress have criticized UIGEA for being, in their view, ineffective at
stopping Internet gambling by millions of Americans.43
Ryan Haight Online Pharmacy Consumer Protection Act
“Rogue” Internet pharmacies engage in practices that are illegal, such as selling unapproved or
counterfeit drugs or dispensing drugs without a prescription. In response to the problem of rogue
Internet pharmacies and the illegal sale of prescription controlled substances over the Internet, the
110th Congress passed the Ryan Haight Online Pharmacy Consumer Protection Act of 200844
(hereinafter called “Ryan Haight Act”), which amends the federal Controlled Substances Act to
expressly regulate online pharmacies that dispense controlled substances by mandating that the
pharmacy post specific information on its website, and that the pharmacy register with and submit
certain reports to the Drug Enforcement Administration. The Ryan Haight Act requires that
delivery, distribution, or dispensing of controlled substances over the Internet must be pursuant to
a “valid prescription” (defined by the statute as a prescription that is issued for a legitimate
medical purpose in the usual course of professional practice, by a practitioner who has conducted
at least one medical evaluation of the patient in the physical presence of the practitioner). The
Ryan Haight Act also clarifies and enhances the penalties for illegal distributions of controlled
substances over the Internet. According to the White House 2010 National Drug Control Policy,
the Ryan Haight Act has “already had a significant impact on reducing the number of illegal
Internet pharmacies.”45
Legislative History of Online Copyright
Infringement and Counterfeiting Legislation
On September 20, 2010, Senator Leahy with Senator Hatch introduced the Combating Online
Infringement and Counterfeits Act (COICA). The Senate Judiciary Committee voted to report
COICA favorably to the Senate, with an amendment in the nature of a substitute. However, no
40 31 C.F.R. §132.2(y).
41 31 C.F.R. §132.5(a).
42 31 C.F.R. §132.6.
43 Tax Proposals Related to Legislation to Legalize Internet Gambling: Hearing Before the House Comm. on Ways and
Means, 111th Cong., 2nd sess. (2010) (statement of Rep. McDermott) (“[E]very day millions of Americans gamble on
the Internet. Prohibition hasn’t prevented the millions of Americans who want to gamble online from doing it. It has
forced internet gambling operators to work offshore, it has put consumers at risk, and it sends billions in dollars of
revenue to other nations.”).
44 P.L. 110-425.
45 White House Office of National Drug Control Policy, 2010 National Drug Control Strategy, at 33.
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public hearing was held to consider COICA before the end of the 111th Congress, and the full
Senate did not act on the legislation before the end of the congressional term.
At the request of Senator Coburn, the Senate Judiciary Committee in the 112th Congress held a
hearing February 16, 2011, on the topic of “Targeting Websites Dedicated To Stealing American
Intellectual Property.” This hearing considered the scope of intellectual property theft over the
Internet and the problem of “rogue websites” that exclusively traffic in infringing material, issues
that COICA was designed to address.46
On May 12, 2011, Senator Leahy introduced S. 968, the PROTECT IP Act. On May 26, 2011, the
Senate Committee on the Judiciary voted to report the legislation to the full Senate, with an
amendment in the nature of a substitute.47 Senator Wyden then placed a hold on the bill,
indicating his intent to object to any unanimous consent request to proceed,48 a sentiment that has
been since joined by Senators Moran, Cantwell, and Paul.49 The Senate Judiciary Committee held
a hearing on June 22, 2011, entitled “Oversight of Intellectual Property Law Enforcement
Efforts” that included testimony from ICE and other agencies charged with enforcement of
intellectual property laws online. On July 22, 2011, Senator Leahy filed a written report.50 On
December 17, 2011, Senator Reid presented a cloture motion on a motion to proceed to S. 968,
the PROTECT IP Act, with a roll call vote scheduled to be held on January 24, 2012. Senator
Wyden has expressed his intent to filibuster the bill.51
On October 26, 2011, Representative Lamar Smith, chairman of the House Judiciary Committee,
introduced H.R. 3261, the Stop Online Piracy Act (SOPA). The House Judiciary Committee held
a hearing on SOPA on November 2, 2011. On December 12, 2011, Representative Smith released
a manager’s amendment in the nature of a substitute to H.R. 3261. On December 15 and 16, the
House Judiciary Committee held markup sessions in which the committee considered 60
amendments that were filed to the manager’s amendment. However, the committee did not
complete the markup and postponed continuation of the SOPA markup “due to House
schedule.”52 Chairman Smith reportedly intends to conclude the committee markup “as quickly as
possible in January” 2012.53
Summary of PROTECT IP Act Provisions
The following is a brief summary of the key provisions of S. 968, as reported in the Senate.
46 Nathan Pollard and Amy E. Bivins, Leahy Vows to Offer Tough Anti-Piracy Bill; Senator Demands ‘Accountability’
From ISPs, 16 Electronic Commerce & Law Report 257 (Feb. 23, 2011).
47 Sen. Leahy, Report of the Sen. Judiciary Committee, Congressional Record, May 26, 2011, p. S3426.
48 Sen. Wyden, Intent to Object, Congressional Record, May 26, 2011, p. S3419.
49 Letter from Senators Wyden, Cantwell, Moran, and Paul, to Senators Reid and McConnell, Nov. 17, 2011.
50 S.Rept. 112-39.
51 Sen. Wyden, Congressional Record, Dec. 17, 2011, p. S8783.
52 U.S. House of Representatives, Committee on the Judiciary, Full Committee Markup of: H.R. 3261, the “Stop Online
Piracy Act,” at http://judiciary.house.gov/hearings/mark_12152011.html.
53 Keith Perine, Opponents of Piracy Bills Hope to Slow Measures in House and Senate, CQ Today Online News –
Technology & Communications, Jan. 2, 2012.
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Action by the Attorney General
S. 968 focuses on Internet sites that are “dedicated to infringing activities.” An “Internet site
dedicated to infringing activities,” as defined by the bill, is an Internet site that has no significant
use other than engaging in, enabling, or facilitating (1) copyright infringement; (2) circumvention
of copyright protection systems; or (3) the sale, distribution, or promotion of goods, services, or
materials bearing a counterfeit mark. The term also encompasses websites that facts or
circumstances suggest are used primarily as a means for engaging in or enabling those activities.54
The PROTECT IP Act also defines “nondomestic domain name” as a domain name for which the
domain name registry is not located in the United States.55
The PROTECT IP Act would authorize the Attorney General to file a civil action against a person
who registers a nondomestic domain name used by an Internet site dedicated to infringing
activities, or against a person who owns or operates such an Internet site.56 This provision is
unlikely to be invoked often because these individuals are rarely located in the United States and
are therefore difficult to prosecute domestically.
If through due diligence the Attorney General cannot find such a person, the Attorney General
may commence an in rem action against a nondomestic domain name used by an Internet site
dedicated to infringing activities. In such an action, a federal court may issue a temporary
restraining order, a preliminary injunction, or an injunction against the domain name if the
domain name is used within the United States to access the Internet site and the Internet site
harms U.S. intellectual property rights holders. A federal law enforcement officer (with prior
court approval) may serve a copy of such court order (to cease and desist from undertaking any
further activity as an Internet site dedicated to infringing activities) to the following entities that
would be required to take the specified actions:
• Operators of non-authoritative domain name servers: Non-authoritative
domain name servers are intermediary servers used to resolve a domain name to
its Internet protocol address. They do this by retaining a copy of information
stored on an authoritative domain name server. Operators of these servers,
generally Internet service providers, are directed to prevent access to seized
domain names through the least burdensome technically feasible means.57
• Financial transaction providers: Companies that facilitate online transactions,
such as credit card companies, are required to prevent their service from
completing transactions between customers located within the United States and
the Internet site.58
• Internet advertising services: Internet advertising services are required to stop
selling advertising to and providing advertising for the Internet site.59
54 S. 968 as reported, §2(7).
55 S. 968 as reported, §2(9).
56 S. 968 as reported, §3(a)(1).
57 S. 968 as reported, §3(d)(2).
58 Id.
59 Id.
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• Information location tools: Search engines such as Google and Yahoo must take
technically feasible measures to remove or disable access to the Internet site.60
The PROTECT IP Act authorizes the Attorney General to bring an action for injunctive relief
against any of the third parties that receive this court order and knowingly and willfully fail to
comply with the obligations described above. A defendant in such an action may establish an
affirmative defense by showing that it does not have the technical means to comply without
incurring an unreasonable economic burden.61
Action by a “Qualifying Plaintiff”
A qualifying plaintiff62 may bring suit for civil injunctive relief against a person who registered a
domain name used by an Internet site dedicated to infringing activities, or the owner/operator of
such an Internet site. Because this provision does not use the term “nondomestic” to limit the
term “domain name,” this action by a qualifying plaintiff is available against the owner/operator
of any Internet site dedicated to infringement (whether domestic or foreign) or the registrant of
such domain name.63 This provision gives a new “private right of action” to intellectual property
rights holders who are harmed by the activities occurring on the domestic or foreign Internet site
dedicated to infringing activities.
If through due diligence a qualifying plaintiff is unable to find such a person (or no such person
has an address within the United States), the qualifying plaintiff may bring suit against a domain
name used by an Internet site dedicated to infringing activities. In response, a federal court may
issue a temporary restraining order, a preliminary injunction, or an injunction, against the domain
name if the domain name is used within the United States to access the Internet site and the site
harms U.S. intellectual property rights holders. Should the court grant the injunctive relief, the
qualifying plaintiff (with prior court approval) may serve a copy of the court’s cease and desist
order to the following entities, which would then be responsible for taking the specified actions:
• Financial transaction providers: Companies that facilitate online transactions,
such as credit card companies, are required to prevent their service from
completing transactions between customers located within the United States and
the Internet site.64
• Internet advertising services: Internet advertising services are required to stop
selling advertising to and providing advertising for the Internet site.65
The PROTECT IP Act authorizes a qualifying plaintiff to bring an action for injunctive relief
against any party receiving this court order that knowingly and willfully fails to comply with such
60 Id.
61 S. 968 as reported, §3(e).
62 A qualifying plaintiff is defined by the bill as (1) the U.S. Attorney General or (2) “an owner of an intellectual
property right ... harmed by the activities of an Internet site dedicated to infringing activities occurring on that Internet
site.” See S. 968 as reported, §2(11)(B).
63 S. 968 as reported, §4(a).
64 S. 968 as reported, §4(d)(2).
65 Id.
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order. A defendant in such an action may establish an affirmative defense by showing that it does
not have the technical means to comply without incurring an unreasonable economic burden.66
Due Process, Safeguards, and Limitations on Liability
The PROTECT IP Act specifies that Rule 65 of the Federal Rules of Civil Procedure (FRCP) will
govern how a federal court may issue injunctive relief in either an action brought by the Attorney
General against a nondomestic entity, or an action brought by a qualifying plaintiff against
domestic or nondomestic parties.67 Rule 65 of the FRCP provides that a “court may issue a
preliminary injunction only on notice to the adverse party,” and that a “court may issue a
temporary restraining order without written or oral notice to the adverse party or its attorney only
if (1) specific facts in an affidavit or a verified complaint clearly show that immediate and
irreparable injury, loss, or damage will result to the movant before the adverse party can be heard
in opposition; and (2) the movant’s attorney certifies in writing any efforts made to give notice
and the reasons why it should not be required.” Thus, Rule 65 requires that, prior to the issuance
of a preliminary injunction, the party that is the target of the injunction is entitled to notice and an
opportunity to be heard. However, an ex parte temporary restraining order (with no notice to the
adverse party) may be granted if the party seeking the order satisfies the stringent requirements
described above.
The Attorney General is also required by S. 968 to provide notice of the alleged violation and
intent to proceed under the act to the registrant of the domain name or to the owner/operator of
the Internet site, by using the postal or email address of the registrant/owner or by some other
means that the court finds necessary.68 The PROTECT IP Act places a similar notice requirement
upon the quantifying plaintiff.69
Any person bound by a court order (registrant of the domain name, owner/operator of the Internet
site, financial transaction provider, Internet advertising service) may file a motion with the court
to modify, suspend, or vacate the order; the court may grant such relief if the court finds that
either (1) the Internet site associated with the domain name is no longer, or never was, dedicated
to infringing activities, or (2) the interests of justice require it.70
To encourage financial transaction providers and Internet advertising services to “self-police,” the
PROTECT IP Act makes them immune from liability for voluntarily taking action against an
Internet site, so long as they act in good faith on credible evidence that the Internet site is
dedicated to infringing activities.71
S. 968 provides immunity from liability to more actors when they refuse to provide services to
“infringing Internet sites that endanger the public health.” An “infringing Internet site that
endangers the public health” is an Internet site that sells, dispenses, or distributes counterfeit
prescription medicine. Domain name registries, domain name registrars, financial transaction
66 S. 968 as reported, §4(e).
67 S. 968 as reported, §§3(b)(1), 4(b)(1).
68 S. 968 as reported, §3(c)(1).
69 S. 968 as reported, §4(c)(1).
70 S. 968 as reported, §4(f).
71 S. 968 as reported, §5(a).
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providers, search engines, and Internet advertising services may refuse to provide services to such
Internet sites when they have a good faith belief that the site is infringing.72
Reports to Congress
The PROTECT IP Act requires reports to Congress regarding the effectiveness of the act and its
effect on Internet technologies, from the following government entities: the Attorney General, the
Register of Copyrights, the Secretary of Commerce, and the Government Accountability Office.73
Summary of SOPA Provisions
As introduced, SOPA contains two titles: (1) Combating Online Piracy and (2) Additional
Enhancements to Combat Intellectual Property Theft. Prior to the titles are savings and
severability clauses. The first savings clause pronounces that “Nothing in this Act shall be
construed to impose a prior restraint on free speech or the press protected under the 1st
amendment to the Constitution.” The second savings clause explains that nothing in Title I of this
act shall be construed to enlarge or diminish copyright infringement liability for any cause of
action under the Copyright Act, including any limitations on liability that the Copyright Act
provides. The severability clause explains that if any provision of this act is held to be
unconstitutional, the other provisions of the act are not to be affected by that determination.
Title I of SOPA, “Combating Online Piracy”
Action by the Attorney General
Whether an Internet site may be subject to an action by the Attorney General under SOPA
depends on if it qualifies as a “foreign infringing site.” Section 102(a) of SOPA provides a
definition of a “foreign infringing site” to mean
1. the Internet site (or portion thereof) is a U.S.-directed site and is used by users in
the United States,
2. the owner/operator of such Internet site “is committing or facilitating the
commission of” criminal trademark and copyright infringement, and
3. the Internet site would be subject to seizure in the United States by the Attorney
General if such site were a domestic Internet site.74
Section 102(b) of SOPA authorizes the Attorney General to commence either an in personam
action against a registrant of a domain name used by a foreign infringing site (or the
owner/operator of such site), or an in rem action against a foreign infringing site or the foreign
domain name used by such site. An in rem action is only permitted where, after diligence by the
Attorney General, the domain name’s registrant or the site’s owner cannot be found.
72 S. 968 as reported, §5(b).
73 S. 968 as reported, §7.
74 Examples of such domestic sites are those that have been seized by the U.S. Immigration and Customs Enforcement
(ICE) in its “Operation In Our Sites” initiative, described at the outset of this report.
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Federal district courts are authorized by SOPA, following the commencement of these actions, to
issue a temporary restraining order, a preliminary injunction, or an injunction against the
registrant of the domain name used by the foreign infringing site, or the owner/operator of the
foreign infringing site, to cease and desist from undertaking any further activity as a foreign
infringing site.
A process server on behalf of the Attorney General, who obtains prior approval of the court, may
serve a copy of the court’s cease and desist order on third parties that fall within the following
four categories; these parties that receive the court order are then required to take the actions
specified below.
• A service provider is required to take “technically feasible and reasonable
measures designed to prevent access by its subscribers located within the United
States to the foreign infringing site (or portion thereof) that is subject to the order,
including measures designed to prevent the domain name of the foreign
infringing site (or portion thereof) from resolving to that domain name’s Internet
Protocol address. Such actions shall be taken as expeditiously as possible, but in
any case within 5 days after being served with a copy of the order, or within such
time as the court may order.”75
• An Internet search engine is required to “take technically feasible and
reasonable measures, as expeditiously as possible, but in any case within 5 days
after being served with a copy of the order, or within such time as the court may
order, designed to prevent the foreign infringing site that is subject to the order,
or a portion of such site specified in the order, from being served as a direct
hypertext link.”76
• A payment network provider is required to “take technically feasible and
reasonable measures, as expeditiously as possible, but in any case within 5 days
after being served with a copy of the order, or within such time as the court may
order, designed to prevent, prohibit, or suspend its service from completing
payment transactions involving customers located within the United States or
subject to the jurisdiction of the United States and the payment account” that is
used by the foreign infringing site and through which the payment network
provider would complete such payment transactions.77
• An Internet advertising service is required to “take technically feasible and
reasonable measures, as expeditiously as possible, but in any case within 5 days
after being served with a copy of the order, or within such time as the court may
order, designed to prevent its service from providing advertisements to or relating
to the foreign infringing site that is subject to the order or a portion of such site
specified in the order; cease making available advertisements for the foreign
infringing site or such portion thereof, or paid or sponsored search results, links,
or other placements that provide access to such foreign infringing site or such
portion thereof; and cease providing or receiving any compensation for
75 H.R. 3261, §102(c)(2)(A)(i).
76 H.R. 3261, §102(c)(2)(B).
77 H.R. 3261, §102(c)(2)(C).
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advertising or related services to, from, or in connection with such foreign
infringing site or such portion thereof.”78
SOPA authorizes the Attorney General to bring an action for injunctive relief against any party
that receives this court order and knowingly and willfully fails to comply with the obligations
described above. A defendant in such an action may establish an affirmative defense by showing
that it does not have the technical means to comply without incurring an unreasonable economic
burden.79
SOPA also authorizes the Attorney General to bring an action for injunctive relief against “any
entity that knowingly and willfully provides or offers to provide a product or service designed or
marketed for the circumvention or bypassing of measures” that were taken by any of the parties
that received the court order.80
Actions by a “Qualifying Plaintiff”
Whether an Internet site (that may be either domestic or foreign) may be subject to a private right
of action by a “qualifying plaintiff” under SOPA depends on if the Internet site is one that is
“dedicated to theft of U.S. property.” An intellectual property right holder who is “harmed by” the
activities of such an Internet site is classified by SOPA as a “qualifying plaintiff.”81 SOPA
provides a definition of the term “Internet site is dedicated to theft of U.S. property” to mean
1. an Internet site, or a portion thereof, that is a U.S.-directed site and is used by
users within the United States; and
2. either:
a. “the U.S.-directed site is primarily designed or operated for the purpose of,
has only limited purpose or use other than, or is marketed by its operator or
another acting in concert with that operator for use in, offering goods or
services in a manner that engages in, enables, or facilitates:” (1) copyright
infringement, (2) circumvention of copyright protection systems, or (3) the
sale, distribution, or promotion of goods, services, or materials bearing a
counterfeit mark, or
b. the operator of the U.S.-directed site:
i. “is taking, or has taken, deliberate actions to avoid confirming a high
probability of the use of the U.S.-directed site to carry out acts that
constitute” copyright infringement or circumvention of copyright
protection systems, or
78 H.R. 3261, §102(c)(2)(D).
79 H.R. 3261, §102(c)(4).
80 H.R. 3261, §102(c)(4)(A)(ii). The bill defines “a product or service designed or marketed for the circumvention or
bypassing of measures” to mean a product or service that is designed or marketed to enable a domain name described in
the court order to (1) resolve to that domain name’s Internet protocol address notwithstanding the measures taken by
the service provide to prevent such resolution, or (2) resolve to a different domain name or Internet protocol address
that the provider of the product or service knows, reasonably should know, or reasonably believes is used by an Internet
site offering substantially similar infringing activities as those with the infringing foreign site that is subject to the court
order. H.R. 3261, §102(c)(4)(D).
81 H.R. 3261, §103(a)(2) (definition of “qualifying plaintiff”).
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ii. “operates the U.S.-directed site with the object of promoting, or has
promoted, its use to carry out acts that constitute” copyright infringement
or circumvention of copyright protection systems, “as shown by clear
expression or other affirmative steps taken to foster infringement.”82
Notification Process (No Court Involvement)
Subsection 103(b) of SOPA authorizes a qualifying plaintiff to send written notifications to
payment network providers and Internet advertising services regarding an Internet site that is
dedicated to the theft of U.S. property. Such notification must, among other things, include the
following items:
• Identify the Internet site that is allegedly dedicated to the theft of U.S. property,
including the domain name or Internet Protocol address of such site.
• Identify specific facts to support a claim that the Internet site is dedicated to theft
of U.S. property, and that “clearly show that immediate and irreparable injury,
loss, or damage will result to the holder of the intellectual property right harmed
by the activities” of such Internet site “in the absence of timely action by the
payment network provider or Internet advertising service.”
• “Information reasonably sufficient to establish that the payment network provider
or Internet advertising service is providing payment processing or Internet
advertising services for such site.”
• “A statement that the holder of the intellectual property right has a good faith
belief that the use of the owner’s works or goods in which the right exists, in the
manner described in the notification, is not authorized by the holder, its agent, or
law.”83
A payment network provider or Internet advertising service is required to “take technically
feasible and reasonable measures, as expeditiously as possible, but in any case within 5 days
after” delivery of the notification, that are, respectively, “designed to prevent, prohibit, or suspend
its service from completing payment transactions involving customers located within the United
States and the Internet site” or “prevent its service from providing advertisements to or relating to
the Internet site.”84
The owner/operator of the Internet site may file a “counter notification” to the payment network
provider or Internet advertising service that states (under penalty of perjury) that the
owner/operator/registrant of the Internet site “has a good faith belief that it does not meet the
criteria of an Internet site dedicated to theft of U.S. property.”85
SOPA provides liability (in the form of damages, costs, and attorneys’ fees) for any provider of a
notification or counter notification who, respectively, knowingly materially misrepresents that a
82 H.R. 3261, §103(a)(1) (definition of “Internet site is dedicated to theft of U.S. property”).
83 H.R. 3261, §103(b)(4)(A).
84 H.R. 3261, §103(b)(1), (2).
85 H.R. 3261, §103(b)(5).
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site is an Internet site dedicated to the theft of U.S. property, or that such site does not meet the
criteria of an Internet site dedicated to the theft of U.S. property.86
Civil Actions for Injunctive Relief
If a counter notification is filed, or if a payment network provider or Internet advertising service
fails to comply with its obligations upon receiving the notification, Section 103(c) of SOPA
allows the qualifying plaintiff to commence an in personam action against the registrant of the
domain name used by the Internet site, or the owner/operator of the Internet site. If the qualifying
plaintiff cannot find these individuals through due diligence, he or she may bring an in rem action
against the Internet site or the domain name used by such site.87
SOPA authorizes federal district courts, following the commencement of this action by the
qualifying plaintiff, to issue a temporary restraining order, a preliminary injunction, or an
injunction against the registrant/owner/operator of the Internet site, to cease and desist from
undertaking any further activity as an Internet site dedicated to theft of U.S. property.88
A qualifying plaintiff who obtains prior approval of the court may serve a copy of the court’s
cease and desist order on payment network providers and Internet advertising services, which are
then required to take the same measures as required of these parties under the action brought by
the Attorney General described above. If the qualifying plaintiff demonstrates to the federal court
probable cause to believe that any of these third parties that received the court order has not
complied with its obligations, the court shall require the entity to explain why an order should not
be issued directing it to comply with the obligations and to impose a monetary sanction.89 An
entity against whom this relief is sought may establish an affirmative defense by showing that it
does not have the technical means to comply without incurring an unreasonable economic burden.
Due Process, Safeguards, and Limitations on Liability
SOPA would require courts to follow Rule 65 of the Federal Rules of Civil Procedure (FRCP) in
deciding whether to issue injunctive relief in either an action brought by the Attorney General
against a nondomestic entity, or an action brought by a qualifying plaintiff against domestic or
nondomestic parties.90 Rule 65 of the FRCP provides that a “court may issue a preliminary
injunction only on notice to the adverse party,” and that a “court may issue a temporary
restraining order without written or oral notice to the adverse party or its attorney only if: (A)
specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable
injury, loss, or damage will result to the movant before the adverse party can be heard in
opposition; and (B) the movant’s attorney certifies in writing any efforts made to give notice and
the reasons why it should not be required.” Thus, Rule 65 requires that, prior to the issuance of a
preliminary injunction, the party that is the target of the injunction is entitled to notice and an
opportunity to be heard. However, an ex parte temporary restraining order (with no notice to the
86 H.R. 3261, §103(b)(6).
87 H.R. 3261, §103(c)(2).
88 H.R. 3261, §103(c)(5).
89 H.R. 3261, §103(d)(4).
90 H.R. 3261, §§102(b)(5), 103(c)(5).
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adverse party) may be granted if the party seeking the order satisfies the stringent requirements
described above.
SOPA requires the Attorney General to provide notice of the alleged violation and intent to
proceed under the act to the registrant of the domain name or to the owner/operator of the Internet
site, by using the postal or email address of the registrant/owner or by some other means that the
court finds necessary.91 The bill requires qualifying plaintiffs to provide similar notice.92
SOPA provides immunity from liability to third parties for their actions taken to reasonably
comply with the court order.93
Any person bound by the court order (registrant of the domain name, owner/operator of the
Internet site, service provider, Internet search engine, payment network provider, Internet
advertising service) may file a motion with the court to modify, suspend, or vacate the order; the
court may grant such relief if the court finds that either (1) the Internet site associated with the
domain name is no longer, or never was, a foreign infringing site, or (2) the interests of justice
require it.94
To encourage certain third parties to “self-police,” SOPA provides immunity from any cause of
action for service providers, payment network providers, Internet advertising services, Internet
search engines, domain name registries, or domain name registrars, that voluntarily take action
against an Internet site, so long as they act in the reasonable belief that (1) the Internet site is a
foreign infringing site or is dedicated to theft of U.S. property, and (2) the action is consistent
with the entity’s terms of service or other contractual rights.95
SOPA also provides immunity from liability to service providers, payment network providers,
Internet advertising services, advertisers, Internet search engines, domain name registries, or
domain name registrars, when they, in good faith and based on credible evidence, stop providing
or refuse to provide services to “an Internet site that endangers the public health.”96 “An Internet
site that endangers the public health” is defined by subsection (c) to mean an Internet site that is
primarily designed or operated for the purpose of, has only limited purpose or use other than, or is
marketed by its operator for use in (1) offering/selling/dispensing/distributing prescription
medicine without a valid prescription, or (2) offering/selling/dispensing/distributing prescription
medicine that is adulterated or misbranded.
Reports to Congress
SOPA requires the Register of Copyrights to “conduct a study on the enforcement and
effectiveness of this title and on any need to amend the provisions of this title to adapt to
emerging technologies.”97
91 H.R. 3261, §102(b)(3).
92 H.R. 3261, §103(c)(3).
93 H.R. 3261, §§102(c)(5), 103(d)(5).
94 H.R. 3261, §§102(d), 103(e).
95 H.R. 3261, §104.
96 H.R. 3261, §105.
97 H.R. 3261, §106(b).
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SOPA also requires the Intellectual Property Enforcement Coordinator (IPEC), in consultation
with the Secretaries of the Treasury and Commerce, the United States Trade Representative, the
Chairman of the Securities and Exchange Commission, and the heads of other departments and
appropriate agencies, to identify and conduct an analysis of notorious foreign infringers whose
activities cause significant harm to holders of intellectual property rights in the United States.98
The IPEC is required to submit a report to Congress that includes, among other things, “an
examination of whether notorious foreign infringers have attempted to or succeeded in accessing
capital markets in the United States for funding or public offerings,” and “whether notorious
foreign infringers that engage in significant infringing activity should be prohibited by the laws of
the United States from seeking to raise capital in the United States, including offering stock for
sale to the public.”99
Title II of SOPA, “Additional Enhancements to Combat Intellectual
Property Theft”
Streaming of Copyrighted Works in Violation of Criminal Law
Section 201 of SOPA would amend the criminal copyright statutes (17 U.S.C. §506, 18 U.S.C.
§2319) to provide additional criminal penalties for unlawful public performances of copyrighted
works over the Internet using technology such as “streaming.” This section authorizes a
maximum five-year prison sentence for those who, without authorization, willfully stream
commercially valuable copyrighted material for purposes of commercial advantage or private
financial gain. In addition, this section would authorize misdemeanor and felony penalties for
non-commercial willful public performance by means of digital transmission, during any 180-
period, of 1 or more copyrighted works, where the total retail value of the public performance
exceeds $1,000. For a detailed analysis and discussion of the changes that Section 201 would
make to existing law, see CRS Report R41975, Illegal Internet Streaming of Copyrighted
Content: Legislation in the 112th Congress, by Brian T. Yeh.
Trafficking in Inherently Dangerous Goods or Services
Section 202 of SOPA would amend 18 U.S.C. Section 2320 (the criminal offense of trafficking in
counterfeit goods or services) to include the intentional importation, exportation, or trafficking of
counterfeit drugs.100 This section also provides penalties if this criminal offense involves a good
or service that, “if it malfunctioned, failed, or was compromised, could reasonably be foreseen to
cause” (1) serious bodily injury or death, (2) disclosure of classified information, (3) impairment
of combat operations, or (4) other significant harm, to a member of the Armed Forces, law
enforcement agency, or national security or critical infrastructure. In order for a person to be
liable under this new provision, the person must possess “knowledge that the good or service is
falsely identified as meeting military standards or is intended for use in a military or national
security application, or a law enforcement or critical infrastructure application.”
98 H.R. 3261, §107(a).
99 H.R. 3261, §107(b).
100 Other legislation in the 112th Congress provide similar amendments to 18 U.S.C. §2320 (although with more
stringent penalties), see Counterfeit Drug Penalty Enhancement Act of 2011 (H.R. 3468 and S. 1886).
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Protecting U.S. Businesses From Foreign and Economic Espionage
Section 203 of SOPA would increase the penalties for the criminal offense of theft of trade secrets
by someone who intends or knows that the offense will benefit any foreign government (18
U.S.C. §1831(a)), from the existing 15 years in prison to 20 years, and from a $500,000 fine to
“not less than $1,000,000 and not more than $5,000,000.” If this offense is committed by
organizations, the penalty is changed from the existing fine of “not more than $10,000,000” to
“not more than the greater of $10,000,000 or 3 times the value of the stolen trade secret to the
organization (including expenses for research and design or other costs of reproducing the trade
secret that the organization has thereby avoided).”
Amendments to Sentencing Guidelines
Section 204 of SOPA directs the U.S. Sentencing Commission to review and, if appropriate,
amend the Federal Sentencing Guidelines and policy statements applicable to persons convicted
of intellectual property offenses, trafficking in counterfeit goods or services, and economic
espionage.
Defending Intellectual Property Rights Abroad
Section 205 of SOPA directs the Secretary of State and the Secretary of Commerce, in
consultation with the Register of Copyrights, to “ensure that the protection in foreign countries of
the intellectual property rights of United States persons is a significant component of United
States foreign and commercial policy in general, and in relations with individual countries in
particular.” This section also requires the Secretary of State and the Secretary of Commerce, in
consultation with the Register of Copyrights, to “appoint at least one intellectual property attaché
to be assigned to the United States embassy or diplomatic mission (as the case may be) in a
country in each geographic region covered by a regional bureau of the Department of State.”
Debate Over the Legislation
Numerous concerns have been raised about the provisions of the PROTECT IP Act and SOPA by
a variety of organizations, including human rights and civil liberties groups, technology
companies, law professors, public interest groups, and consumer organizations. These concerns,
and the responses by the legislation’s supporters (the bills’ sponsors as well as organizations
representing intellectual property rights holders, labor unions, and small and large businesses that
manufacture and sell goods), can be organized broadly into the following categories.
Impact on Free Speech
Some commentators are concerned that the expansive definitions used by the bills to describe an
Internet site that is “dedicated to infringing activity” (PROTECT IP Act) or an Internet site that is
“dedicated to theft of U.S. property” (SOPA) could impact non-infringing content that is
legitimate speech protected by the First Amendment.101 Editorials from several major newspapers
101 See, e.g., Letter from Mark Lemley, Professor, Stanford Law School, et al. to Sen. Judiciary Comm. (June 27,
(continued...)
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have also expressed serious reservations about the overly broad definitions.102 Others claim that
the legislation will give owners of copyrighted content “broad censorship powers.”103 These
concerns are heightened by fears that the act provides insufficient legal process.104
Opponents of the legislation argue that repressive foreign regimes could cite U.S. domain name
seizures to justify online suppression of speech. Eric Schmidt, executive chairman of Google,
compared the domain name blocking approach to China’s attempts to stifle free speech. He
warned that any legislative measure that authorizes domain name blocking could set a disastrous
precedent if done the wrong way.105 There is concern that backing away from an open and global
Internet could set “a precedent for other countries ... to use DNS [domain name system]
mechanisms to enforce a range of domestic policies, erecting barriers on the global medium of the
Internet. Non-democratic regimes could seize on the precedent to justify measures that would
hinder online freedom of expression and association.”106
However, supporters of the legislation note that “[a]ll existing copyright protections are
applicable to the Internet” and that “injunctions are a longstanding, constitutionally sanctioned
way to remedy and prevent copyright violations.”107 The Register of Copyrights also has stated
that she does not believe that shutting down a website that is devoted to infringing activity would
violate the First Amendment or that it constitutes censorship, yet she also stressed that “[c]are
must be taken to ensure that noninfringing expression is not unnecessarily suppressed and that the
relief is effective but narrowly tailored.”108 Supporters also point to Supreme Court precedents in
favor of injunctions for copyright infringement, even when the copyrighted material is a matter of
public debate.109 Nevertheless, these supporters concede that “the most troublesome First
Amendment concerns” would be raised “where an entire website could be blocked or seized for a
(...continued)
2011), Open Letter from Mark Lemley to the House of Representatives (Nov. 15, 2011), and Laurence H. Tribe, The
“Stop Online Piracy Act” (SOPA) Violates the First Amendment, available at http://www.net-coalition.com/wp-
content/uploads/2011/08/tribe-legis-memo-on-SOPA-12-6-11-1.pdf.
102 See, e.g., Editorial, “Internet Piracy and How to Stop It,” NEW YORK TIMES, June 9, 2011; Editorial, “Piracy vs. an
Open Internet,” LOS ANGELES TIMES, Nov. 25, 2011.
103 Mike Masnick, Son of COICA, Techdirt, May 10, 2011, http://www.techdirt.com/articles/20110510/13285714230/.
104 See, e.g., H.R. 3261, the “Stop Online Piracy Act”: Hearing Before the H. Comm. on the Judiciary, 112th Cong.
(2011) (written statement of Katherine Oyama, Copyright Counsel, Google, Inc.).
105 Nathan Olivarez-Giles, “Google’s Eric Schmidt: Blocking File-sharing Sites Would Make U.S., Britain like China,”
Los Angeles Times, May 18, 2011, available at http://latimesblogs.latimes.com/technology/2011/05/google-eric-
schmidt-says-blocking-filesharing-sites-would-make-u-s-u-k-ike-china.html.
106 Letter from Center for Democracy and Technology et al. to Sen. Patrick Leahy, Chairman Sen. Judiciary Comm.
(May 25, 2011) available at http://www.cdt.org/files/pdfs/20110525_public_interet_968_ltr.pdf.
107 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Floyd Abrams, Partner, Cahill Gordon & Reindel LLP).
108 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part I: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Maria Pallante, Acting Register of Copyrights).
109 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Floyd Abrams, Partner, Cahill Gordon & Reindel LLP citing Harper & Row v. Nation Enters.,
471 U.S. 539 (1985) (finding an injunction against a magazine’s infringing publication of portions of Gerald Ford’s
memoir valid)).
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single, or just a few, [infringing] offenses.”110 Yet they assert that neither the PROTECT IP Act
nor SOPA would permit such an result.111
In addition, supporters of the legislation argue that the legislation provides sufficient procedural
protections by incorporating Rule 65 of the Federal Rules of Civil Procedure as the basis for
governing the process by which federal judges may issue a temporary restraining order,
preliminary injunction, or injunction.112 As explained earlier in this report, Rule 65 provides
certain procedural safeguards, including requiring notice to the allegedly infringing website and
providing an opportunity for that party to be heard and defend themselves before an order is
issued. Foreign entities would be entitled to these same procedural safeguards as U.S.-based
website operators.113
Technical Integrity of the Internet
Opponents of the legislation have raised concerns that the bills, if either is enacted into law, may
affect the integrity of the Internet.114 They claim that “DNS blocking itself could affect the
Internet’s reliability, security, and performance.”115 Other commentators have called the domain
name blocking approach ineffective,116 noting that the Internet sites will still remain available
through their Internet protocol addresses:
[D]omain name address resolution takes place throughout the Internet, not just by larger ISPs
and registries. Indeed, there are as many as a million worldwide domain names “resolvers,”
and it is unlikely U.S. courts could or would order all of them to comply with a blocking
order. But incomplete blocking could seriously undermine the integrity of this key feature of
the Web’s architecture, incentivizing truly rogue Web site operators to use shadow
registration systems or simply forgo domain names and rely solely on IP addresses.117
A group of Internet network engineers have argued that DNS filtering requirements under both
bills “is incompatible with” implementation of the new security protocols known as DNS
110 Id.
111 H.R. 3261, the “Stop Online Piracy Act”: Hearing Before the H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Maria Pallante, Register of Copyrights); see also Letter of Counsel on PROTECT IP Act and
SOPA, Dec. 12, 2011, available at http://judiciary.house.gov/issues/Rogue%20Websites/Letter%20of%20Counsel.pdf
(observing that because the bills “target only those websites that are wholly or almost entirely devoted to piracy …
such illicit activities are not protected by the First Amendment.”).
112 Id.
113 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Floyd Abrams, Partner, Cahill Gordon & Reindel LLP).
114 Letter from Internet Engineers Opposed to COICA, to Sen. Judiciary Comm. (Sept. 28, 2010) available at
http://www.publicknowledge.org/files/docs/COICA_internet_engineers_letter.pdf (discussing similar provisions in a
preceding bill).
115 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part II: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Kent Walker, Senior Vice President, Google).
116 See e.g. Editorial, “Internet Piracy and How to Stop It,” New York Times, June 9, 2011, p. A26; Editorial, “Policing
the Internet”, Los Angeles Times, June 7, 2011, available at http://articles.latimes.com/2011/jun/07/opinion/la-ed-
protectip-20110607.
117 Larry Downes, Leahy’s Protect IP Bill Even Worse than COICA, CNET News (June 20, 2011 2:46 p.m.),
http://news.cnet.com/8301-13578_3-20062419-38.html.
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Security Extensions (DNSSEC), which have been promoted and supported by the federal
government to further national cybersecurity goals.118 They warn that “[a] legal mandate to
operate DNS servers in a manner inconsistent with end-to-end DNSSEC would therefore interfere
with the rollout of this critical security technology and stifle this emerging platform for
innovation.”119
Supporters respond that taking down infringing Internet sites is akin to “whac-a-mole” and that
the law must provide sufficient authority to combat this problem.120 Furthermore, supporters
believe the DNS blocking provisions of the legislation are key to preventing foreign sites from
infringing American intellectual property rights:
Reaching sites originating outside the U.S. is critical to fighting a worldwide epidemic that is
destroying the ability of the [content owners] to obtain the financing needed to produce
future [content].... Internet sites that steal and distribute American intellectual property are
often foreign-owned and operated, or reside at domain names that are not registered through
a U.S.-based registry or registrar, setting them outside the scope of U.S. law enforcement.
The Justice Department and rights holders are currently limited in their options for legal
recourse, even when the website is directed at American consumers and steals American-
owned intellectual property.121
Supporters also observe that site blocking and filtering technology that is often used to combat
spam, malware, and viruses, have had “no adverse impact on the Internet.”122 Furthermore, they
argue that there is no technical reason why DNS filtering and DNSSEC need to be incompatible;
rather, network engineers can and will find a way to make the required changes to the DNSSEC
code to ensure no such conflict occurs.123
Private Cause of Action
There is considerable consternation from opponents of the legislation that the problems they have
identified will be exacerbated by including the new enforcement mechanisms available to
intellectual property rights holders. They worry that content owners will use the private right of
action to stifle Internet innovation and protect outdated business models.124 “[T]he Internet and
118 Steve Crocker et al., Security and Other Technical Concerns Raised by the DNS Filtering Requirements in the
PROTECT IP Bill, available at http://www.circleid.com/pdf/PROTECT-IP-Technical-Whitepaper-Final.pdf.
119 Id. at 6; see also Letter from Leonard M. Napolitano, Jr., Sandia National Laboratories, to Representative Zoe
Lofren, Nov. 16, 2011 (concluding that “the Domain Name Service (DNS) filtering/redirection mandates in the bills 1)
are likely to be effective, 2) would negatively impact U.S. and global cybersecurity and Internet functionality, and 3)
would delay the full adoption of DNSSEC and its security improvements over DNS.”).
120 The references to “whac-a-mole” are ubiquitous. See e.g. Targeting Websites Dedicated To Stealing American
Intellectual Property: Hearing Before the S. Comm. on the Judiciary, 112th Cong. (2011) (written statement of Tom
Adams, Chief Executive Officer, Rosetta Stone).
121 Press Release, The Motion Picture Association of America, Broad Creative Industry Coalition Praises Senate
Introduction of Bipartisan Legislation to fight Online Theft (May 12, 2011) available at http://mpaa.org/resources/
e62fa607-8234-4120-97f2-aa4082cd691a.pdf.
122 H.R. 3261, the “Stop Online Piracy Act”: Hearing Before the H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Michael P. O’Leary, Senior Executive Vice President, the Motion Pictures Association of
America, Inc.).
123 Id.; see also Daniel Castro, PIPA/SOPA: Responding to Critics and Finding a Path Forward, Dec. 2011, The
Information Technology & Innovation Foundation, at http://www.itif.org/files/2011-pipa-sopa-respond-critics.pdf.
124 See Abigail Phillips, The “PROTECT IP” Act: COICA Redux, The Electronic Frontier Foundation (June 20, 4:31
(continued...)
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digital technologies can be highly disruptive of traditional business models for reasons having
nothing to do with infringement.”125 Additionally, technology companies are concerned that they
will be unable to cope with thousands of suits from content owners. They argue that these suits
will overwhelm their ability to handle requests and ultimately increase costs for consumers.126
“We believe that the currently proposed private litigation-based process will, however
unintentionally, become a one-sided litigation machine with rights owners mass-producing
virtually identical cases against foreign domain names for the purpose of obtaining orders to serve
on U.S. payment and advertising companies.”127
Proponents of the legislation argue that online infringement is rampant and that law enforcement
lacks the resources to deter infringing activities. Additionally, they point out that in an action
brought by a qualifying plaintiff, the court order may only be served on payment processors and
online advertisers to require them to cut off financial ties to the Internet site; therefore, content
owners lack the power under either bill to block domain names or websites. In contrast, the
Attorney General can serve the court order on DNS operators (PROTECT IP Act), service
providers (SOPA), and search engines to require them to prevent access to infringing websites (in
addition to having the authority to serve the court order on the financial intermediaries). As the
Register of Copyrights has explained, the enforcement structure provided by the bills:
appropriately provides much broader tools and flexibility to the Attorney General than it
provides to copyright owners. This is a sound policy choice at this time. The Department of
Justice has experience fighting online infringers, will use resources carefully, must exercise
prosecutorial discretion in bringing actions, and must plead its case to the court and obtain a
court-issued order before proceeding. Put another way, while the copyright industries are
extremely important (and certainly a point of pride with respect to the U.S. economy), [the
legislation] recognizes that many sectors rely on, invest in, and contribute to the success of
the Internet.
It is for this reason that [the legislation] puts only limited tools in the hands of copyright
owners, and provides the Attorney General with the sole authority to seek orders against
search engines and Internet service providers.128
Conflict with the DMCA “Safe Harbors” and Potential Impact on
Internet Innovation (Referring to SOPA Only)
Section 512(m) of the Digital Millennium Copyright Act (DMCA) (17 U.S.C. §512(m)) explains
that a service provider that seeks a safe harbor from liability (as described earlier in this report) is
(...continued)
p.m.), https://www.eff.org/deeplinks/2011/05/protect-ip-act-coica-redux (wondering whether Viacom would have
quashed YouTube had the bill been law at the time).
125 Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part I: Hearing Before the
Subcomm. on Intellectual Property, Competition and the Internet of H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of David Sohn, Senior Policy Counsel, Center for Democracy and Technology).
126 See Targeting Websites Dedicated To Stealing American Intellectual Property: Hearing Before the S. Comm. on the
Judiciary, 112th Cong. (2011) (written statement of Thomas Dailey, General Counsel, Verizon).
127 Letter from American Express et al. to Sen. Patrick Leahy, Chairman, Sen. Judiciary Comm. (May 25, 2011)
available at http://www.publicknowledge.org/letter-opposing-PIPA-privaterightofaction.
128 H.R. 3261, the “Stop Online Piracy Act”: Hearing Before the H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Maria Pallante, Register of Copyrights).
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not required to “monitor[] its service or affirmatively seek[] facts indicating infringing activity”
as a condition of enjoying such safe harbor.
Critics of SOPA note that, unlike the PROTECT IP Act, SOPA appears to effectively repeal 17
U.S.C. Section 512(m) and erode the safe harbor protections available to many Internet
companies under the DMCA with its definition of an “Internet site [] dedicated to theft of U.S.
property” (applicable to actions by qualifying plaintiffs). Such definition includes an operator of a
U.S.-directed site that “is taking, or has taken, deliberate actions to avoid confirming a high
probability of the use of the U.S.-directed site to carry out acts that constitute” copyright
infringement or circumvention of copyright protection systems.129 In the view of SOPA’s critics,
this definition would mean that companies that host user-generated content websites (such as
YouTube) and operators of cloud computing storage services (such as Dropbox) would need to
monitor, filter, and otherwise police user behavior for infringing activities, in order to avoid being
covered by the definition.130 In addition, while SOPA does not directly modify the DMCA safe
harbor provisions, SOPA “creates uncertainty about whether court orders issued against ‘foreign
infringing sites’ and ‘sites dedicated to theft’ might disqualify an online service provider from the
DMCA safe harbors.”131 This “legal uncertainty for Internet companies” means that “SOPA will
significantly deter current and future Internet businesses from investing in new ventures.”132
Others point out that although the “notice and takedown” provisions of the DMCA may be abused
by content owners making erroneous claims, the consequence is the blocking or removal of such
content, whereas under SOPA’s notification process available to qualifying plaintiffs, the
consequence for false claims is that the money to the website is stopped.133 They note that such
funds (that the website may depend on to exist) may be cut off merely “based on an allegation of
harm that falls short of an allegation of infringement.”134
Supporters of SOPA observe that while the DMCA has worked well for copyright holders and
service providers to address online infringement, the DMCA’s “notice and takedown” procedures
are ineffective against foreign rogue sites; furthermore, the DMCA does not apply to trademark
infringement and does not address the use of financial intermediaries such as payment processors
and Internet advertising services.135 Other supporters contend that SOPA’s notification process is
less likely to be misused than the DMCA’s “notice and takedown” procedure, because under the
129 H.R. 3261, §103(a)(1)(B)(ii)(I).
130 Corynne McSherry, SOPA: Hollywood Finally Gets a Chance to Break the Internet, Electronic Frontier Foundation,
Oct. 28, 2011, at https://www.eff.org/deeplinks/2011/10/sopa-hollywood-finally-gets-chance-break-internet.
131 H.R. 3261, the “Stop Online Piracy Act”: Hearing Before the H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Katherine Oyama, Copyright Counsel, Google, Inc.).
132 Id.
133 Mike Masnick, The Definitive Post on Why SOPA and PROTECT IP are Bad, Bad Ideas, Techdirt, Nov. 22, 2011,
at http://www.techdirt.com/articles/20111122/04254316872/definitive-post-why-sopa-protect-ip-are-bad-bad-
ideas.shtml.
134 Rashmi Rangnath, SOPA and the DMCA Safe Harbors, Public Knowledge, Nov. 3, 2011, at
http://www.publicknowledge.org/blog/sopa-and-dmca-safe-harbors (“Thus far, a copyright holder has had to allege that
her copyright was infringed before she can take action under the law. Under SOPA, however, a copyright owner could
argue that because a site allows users to upload material, and indeed many have uploaded infringing material, she is
harmed by the site’s activities. After all, her work could be in imminent danger of being uploaded without her
permission.”).
135 Statement of Judiciary Committee Chairman Lamar Smith, Hearing on H.R. 3261, the “Stop Online Piracy Act,”
Nov. 16, 2011.
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latter, a service provider has an incentive to remove infringing content in order to preserve its safe
harbor from liability. In contrast, Internet advertisers and payment processors “don’t have
business incentives to comply with bad faith notices under SOPA. Each site they are ordered to
block is, presumably, a paying customer or revenue source.”136 Thus, not many such companies
would be willing to “rubber-stamp any and every order that cuts into their bottom line without
some way of making sure the site at issue is one that genuinely falls within the scope of”
SOPA.137
Other supporters disagree that SOPA will diminish investment in new technology ventures or
stifle innovation. They believe that “strong copyright law promotes innovation,” and observe that
“[m]any of the loudest voices opposing rogue sites legislation are the same critics who predicted
disaster in the wake of the DMCA, the NET Act (No Electronic Theft Act),138 and the unanimous
Supreme Court decision in Grokster.139 Yet since those events occurred, the Internet has grown by
leaps and bounds, innovation is off the charts and access to technology is at an all time high.”140
Manager’s Amendment to H.R. 3261 (SOPA)
As noted earlier in this report, House Judiciary Chairman Lamar Smith released a manager’s
amendment in the nature of a substitute to H.R. 3261 on December 12, 2011. The manager’s
amendment offers several substantial changes to SOPA, several of which would more closely
align the provisions of SOPA with those in the PROTECT IP ACT, including the following:
• Adds additional savings clauses, including one that clarifies that nothing in title I
of SOPA shall be construed to impose a duty on service providers to monitor
activity on their network or service. Another savings clause specifies that service
providers are not required take actions that would impair the security or integrity
of the domain name system.
• Removes the non-judicial “written notification procedure” that was originally
available to rights holders, leaving only one private enforcement mechanism for
rights holders under SOPA (the same one provided by the PROTECT IP Act)—
they must seek the authorization of a court in order to create a legal obligation on
the part of payment processors and Internet advertisers to cease doing business
with the offending website.
136 Terry Hart, How the Stop Online Piracy Act Will Hit What It Aims At, Copyhype, Oct. 31, 2011, at
http://www.copyhype.com/2011/10/how-the-stop-online-piracy-act-will-hit-what-it-aims-at/.
137 Id.
138 The No Electronic Theft Act, P.L. 105-147, 111 Stat. 2678 (1997), was enacted to enable criminal prosecution of
certain peer-to-peer file-sharing of copyrighted works. For a detailed discussion of this law, see CRS Report R41975,
Illegal Internet Streaming of Copyrighted Content: Legislation in the 112th Congress, by Brian T. Yeh.
139 The Supreme Court in its 2005 opinion Metro-Goldwyn-Mayer Studios v. Grokster held that one who distributes a
device “with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative
steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” For more
information, see CRS Report RL31998, File-Sharing Software and Copyright Infringement: Metro-Goldwyn-Mayer
Studios, Inc. v. Grokster, Ltd., by Brian T. Yeh and Robin Jeweler.
140 H.R. 3261, the “Stop Online Piracy Act”: Hearing Before the H. Comm. on the Judiciary, 112th Cong. (2011)
(written statement of Michael P. O’Leary, Senior Executive Vice President, the Motion Pictures Association of
America, Inc.).
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• Revises SOPA’s definition of a “U.S.-directed site” to expressly require that the
website be a foreign Internet site, thus removing domestic websites from the
scope of the act’s provisions. (Note that the PROTECT IP Act permits private
plaintiff actions against domestic websites.)
• Changes the definition of “foreign infringing site” (which applies to the Section
102 action by the Attorney General) to remove the requirement that the
owner/operator of the site is committing or facilitating the commission of
criminal trademark and copyright infringement. Instead, the definition of a
“foreign infringing site” is a website that “is being operated in a manner that
would, if it were a domestic Internet site, subject it (or its associated domain
name) to seizure or forfeiture in the United States” under exiting law.
• Changes the definition of an “Internet site dedicated to theft of U.S. property”
(which applies to the Section 103 action by private plaintiffs) to require that in
order for a website to meet such definition, the website’s violation of copyright
must be for purposes of commercial advantage or private financial gain. (The
PROTECT IP Act does not contain such a requirement.) In addition, the revised
definition eliminates SOPA’s original language that would have encompassed a
website offering goods or services in a manner that “engages in, enables, or
facilitates” infringement. (The PROTECT IP Act uses these three verbs in its
definition of an Internet site dedicated to infringing activities.) Finally, the
revised definition drops language that would have included a website that “is
taking, or has taken, deliberate actions to avoid confirming a high probability of
the use of the U.S.-directed site to carry out acts that constitute” copyright
infringement or circumvention of copyright protection systems.
• Provides a new section (Section 104) that states: “In any case in which only a
specifically identified portion of an Internet site is identified by the court as a
foreign infringing site or as an Internet site dedicated to theft of U.S. property,
and made subject to an order [under section 102 and 103], the relief granted
under such subjection, and the obligations of any entity served with a copy of an
order … shall be confined to that specified portion so identified and made subject
to the order. Nothing in the order shall be interpreted to impose obligations on
any entity served with a copy of the order with respect to any other portion of an
Internet site not specified in the order.”
• Deletes SOPA’s original requirement that service providers take “measures
designed to prevent the domain name of the foreign infringing site (or portion
thereof) from resolving to that domain name’s Internet Protocol address.”
Instead, the manager’s amendment allows a service provider to take “such
measures as it determines to be the least burdensome, technically feasible, and
reasonable means designed to prevent access by its subscribers located within the
United States to the foreign infringing site that is subject to the order.”
• Deletes SOPA’s “5 day” time limit within which third parties would have had to
satisfy their obligations to take actions against the foreign infringing site; rather,
the manager’s amendment provides that “[s]uch actions shall be taken as
expeditiously as possible.”
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Summary of the OPEN Act
On December 17, 2011, Senator Wyden, along with Senators Cantwell and Moran, introduced S.
2029, the Online Protection and Enforcement of Digital Trade Act (OPEN Act), to serve as an
alternative to the PROTECT IP Act and SOPA. The OPEN Act has been referred to the Senate
Committee on Finance. The following is a brief summary of the key provisions of the OPEN Act.
International Trade Commission Enforcement
Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), as amended, prohibits unfair methods of
competition or other unfair acts in the importation of products into the United States. It also
prohibits the importation of articles that infringe valid U.S. patents, copyrights, processes,
trademarks, or protected design rights. The International Trade Commission (ITC) is an
independent, quasi-judicial federal government agency responsible for investigating and
arbitrating complaints of unfair trade practices under section 337. The primary remedy employed
by the ITC is to order the U.S. Customs and Border Protection (CBP) to stop imports from
entering the border. Additionally, the ITC may issue cease and desist orders against individuals
determined to be violators of intellectual property rights. The majority of unfair competition acts
asserted under section 337 involve allegations of patent infringement.141
The OPEN Act would amend the Tariff Act of 1930 to insert after section 337 a new section
337A, entitled “Unfair Trade Practices Relating to Infringement of Copyrights and Trademarks
By Certain Internet Sites.”
Applicable Scope of New Section 337A, as added by the OPEN Act
The OPEN Act defines “infringing activity” to mean (1) an activity that constitutes copyright
infringement; (2) circumvention of copyright protection systems; or (3) the sale, distribution, or
promotion of goods, services, or materials bearing a counterfeit mark.142 It defines an “Internet
site dedicated to infringing activity” to mean an Internet site that is (1) foreign; (2) conducts
business directed at U.S. residents; and (3) “has only limited purpose or use other than engaging
in infringing activity and whose owner or operator primarily uses the site” to willfully commit
copyright infringement, circumvent copyright protection systems, or use counterfeit marks on
products and services (emphasis added).143 The OPEN Act provides several exclusions from this
definition of an “Internet site dedicated to infringing activity,” including (1) if the Internet site has
a practice of complying with DMCA notice and takedown requests, (2) if the Internet site
qualifies for a section 512 DMCA safe harbor from liability, or (3) if the Internet site distributes
content and goods that do not infringe a copyright or trademark.144
141 For more information about Section 337 proceedings, see CRS Report RS22880, Intellectual Property Rights
Protection and Enforcement: Section 337 of the Tariff Act of 1930, by Shayerah Ilias.
142 S. 2029, § 2, adding new § 337A(a)(4).
143 Id., adding new § 337A(a)(8)(A).
144 Id., adding new § 337A(a)(8)(C).
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Violation
The OPEN Act declares that it is an unfair practice in import trade, and thus a violation of the
new section 337A that it would add to the Tariff Act of 1930, for an Internet site dedicated to
infringing activity to facilitate imports into the United States.145 The ITC would be empowered to
make the determination as to whether there has been such a violation. The only websites that may
be investigated by the ITC are ones that have a nondomestic domain name; if the ITC discovers
that the accused domain name is a domestic one, the ITC is required to terminate or not initiate
the investigation and then refer the matter to the Attorney General for further proceedings as the
Attorney General determines is appropriate.146 In addition, the OPEN Act requires the ITC to
terminate, or not initiate, an investigation of a domain name if the operator of the associated
Internet site provides a legal notice on the site that states that the operator consents to the
jurisdiction and venue of the U.S. district courts.147
Complaint
The OPEN Act charges the ITC with the power and duty to investigate an alleged violation on its
own initiative or upon receiving a complaint filed by a rights holder. An owner of a copyright or
trademark that is the subject of the infringing activity on a nondomestic website may file a
complaint with the ITC alleging, under oath, that the Internet site dedicated to infringing activity
is being operated or maintained in violation of section 337A.148 The OPEN Act requires the
complainant to send a notice of the complaint to the registrant of the domain name at its postal
and e-mail addresses, if they are reasonably available. In addition, the OPEN Act specifies that
the complaint must identify (and notify) any financial transaction provider or Internet advertising
company that may be required to take measures against the offending website, if the ITC
determines that there has been a section 337A violation.
ITC Determination
The OPEN Act requires the ITC to determine, with respect to each section 337A investigation,
whether or not the Internet site is operated or maintained in violation of section 337A. Final ITC
determinations may be appealed to the U.S. Court of Appeals for the Federal Circuit.
The OPEN Act also provides the President with an opportunity to disapprove of any ITC
determination “for policy reasons” no later than 60 days after the determination is made; such
presidential disapproval nullifies the determination.149
The OPEN Act permits the ITC, in administering a section 337A proceeding, to allow the
submission of information electronically, hold hearings electronically or obtain testimony
145 Id., adding new § 337A(b).
146 Id., adding new § 337A(c)(4).
147 Id., adding new § 337A(c)(5).
148 Id., adding new § 337A(d).
149 Id., adding new § 337A(e)(4).
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electronically, or “by such means as the Commission determines allows participation in
proceedings … at as low a cost as possible to participants in the proceedings.”150
Remedies
The OPEN Act provides the ITC with the power to issue an order against the Internet site
dedicated to infringing activity to cease and desist such activity, after the ITC makes the
determination that such Internet site is in violation of the new section 337A.151 The ITC may
grant a temporary or preliminary cease and desist order against the Internet site if the complainant
files with the ITC chairperson (or his designee) a petition requesting such order. The OPEN Act
mandates that the ITC chairperson, prior to issuing a temporary or preliminary cease and desist
order, must give the owner/operator of the Internet site an opportunity to be heard (which may
include submitting information electronically). The ITC chairperson may issue such an order if he
determines that “there is reason to believe” that an Internet site dedicated to infringing activity is
operated or maintained in violation of section 337A.152 The OPEN Act specifies that the ITC
chairperson follow the provisions of rule 65 of the Federal Rules of Civil Procedure in deciding
whether to issue the temporary or preliminary cease and desist order. If the complainant makes a
showing of “extraordinary circumstances,” the ITC chairperson may make a determination
regarding the petition for a temporary cease and desist order on an expedited basis;153 otherwise,
the ITC chairperson is required to make a determination within 30 days.154 The cease and desist
order may last no longer than 14 days after its issuance, although the ITC chairperson may extend
the order for additional periods of 14 days for good cause or with consent of the entity against
which the order is issued. In order to discourage the filing of frivolous petitions for temporary or
preliminary cease and desist orders, the ITC chairperson may require the complainant to post a
bond; such bond may be forfeited to the owner of the Internet site if the ITC later determines that
the Internet site was not in violation of section 337A.155
If the ITC “reasonably believes that a financial transaction provider or an Internet advertising
service” is supplying services to an Internet site that is subject to a cease and desist order, the ITC
may allow the complainant to serve a copy of the order upon the financial transaction provider or
Internet advertising service.156 Upon receipt of the order, financial transaction providers must take
measures, as expeditiously as reasonable, to prevent or prohibit completion of payment
transactions by the provider to the Internet site, and Internet advertising services must take
technically feasible measures, as expeditiously as reasonable, to cease serving advertisements to
the Internet site. The OPEN Act confers immunity from civil actions for these third parties that
take any act reasonably designed to comply with these obligations (or that make a good faith
effort to comply).
150 Id., adding new § 337A(e)(5)(B).
151 Id., adding new § 337A(f)(1).
152 Id., adding new § 337A(f)(2).
153 Id., adding new § 337A(f)(2)(E)(i).
154 Id., adding new § 337A(f)(2)(F)(i).
155 Id., adding new § 337A(f)(2)(G).
156 Id., adding new § 337A(g).
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The Attorney General may bring an action for injunctive relief against any person subject to a
cease and desist order who knowingly and willfully fails to comply with the order.157 A defendant
in such an action may assert an affirmative defense that the defendant lacks the technical means
to comply with the order without incurring an unreasonable economic burden.
The OPEN Act also confers immunity from liability (under any federal or state law) to a financial
transaction provider or Internet advertising service for ceasing or refusing to provide services to
an Internet site that the providers believe (in good faith and based on credible evidence) to be an
Internet site that is primarily designed for the purpose of offering, selling, dispensing, or
distributing any prescription medication without a valid prescription. (The PROTECT IP Act and
SOPA contain a similar provision, although the two bills would extend such immunity to service
providers, search engines, domain name registries and registrars in addition to financial
transaction providers and Internet advertising companies.)
Section 337 Judges
The OPEN Act allows the ITC to appoint hearing officers, to be called “section 337 judges,” to
preside at the taking of evidence at section 337 and 337A hearings and to make initial and
recommended decisions in investigations brought under section 337 and 337A of the Tariff Act of
1930. 158 A section 337 judge is required to possess a minimum of seven years of legal experience
and be licensed to practice law; the OPEN Act allows the ITC to promulgate regulations
regarding other qualifications of the section 337 judges, including technical expertise and
experience in IP matters.
OPEN Act Compared to PROTECT IP Act and SOPA
While the PROTECT IP Act and SOPA rely primarily on the authority of federal judiciary for
their enforcement measures, the OPEN Act places the responsibility of addressing online piracy
and counterfeiting upon the International Trade Commission. In addition, the OPEN Act does not
apply to Internet service providers and search engines and thus does not require or encourage
domain name system filtering as a potential action against offending websites. The OPEN Act
also only applies to foreign websites, whereas the PROTECT IP Act (as reported) and SOPA (as
introduced) could apply to domestic websites in certain circumstances. Finally, the OPEN Act
does not provide rights holders with a private right of action against rogue websites in federal
courts; rights holders instead must seek relief through the ITC.
157 Id., adding new § 337A(h).
158 Id., § 3, adding new 337B(a).
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Author Contact Information
Brian T. Yeh
Legislative Attorney
byeh@crs.loc.gov, 7-5182
Acknowledgments
Portions of this report were prepared by Jonathan H. Miller, Law Clerk, American Law Division.
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