The U.S. Department of Justice is proposing a legislative package to fight copyright crimes. The following is a summary of the section-by-section analysis provided by the DOJ.


The U.S. Department of Justice is proposing a legislative package to fight copyright crimes. The following is a summary of the section-by-section analysis provided by the DOJ:

Section 1 provides the short title for the legislation as The Intellectual Property Protection Act of 2005.

Section 2 amends the Copyright Act so that the requirement of registering a copyrighted work before instituting an action for infringement will only apply to civil actions -- not to criminal prosecutions.

Section 3 adds a provision that mirrors the Lanham Act which governs trademarks. It permits a court to issue an ex parte order to not only seize the goods and the means for making them (as currently permitted), but also to seize records documenting the manufacture, sale or receipt of things involved in the violation (i.e., additional evidence).

Section 4 creates a new federal offense of "attempting" to infringe copyright. The penalties that apply to criminal copyright infringement would also apply to attempting to commit that crime.

It also amends the forfeiture provisions to make current forfeiture laws in the intellectual property area uniform. It subjects to forfeiture any copies of phonorecords manufactured, reproduced, distributed, sold or otherwise used, intended for use or possessed with intent to use in violation of the criminal copyright infringement statute. It also subjects to forfeiture any property that constitutes -- or is derived from -- any proceeds obtained directly or indirectly as a result of federal copyright infringement offenses.

It also subject to forfeiture any property used -- or intended to be used -- to commit or facilitate the commission of the offense, including plates, molds, masters and other articles. At the conclusion of the forfeiture proceeding, the court is required to issue an order to destroy or otherwise dispose of any forfeited infringing copies or phonorecords as well as any property used to commit or facilitate commission of the offense.

The procedures for this forfeiture would be governed by the procedures in the Comprehensive Drug Abuse Prevention and Control Act.

The section requires restitution as well as forfeiture so the person convicted may be ordered to pay restitution to the copyright owner and any other victim of the offense.

Section 5 clarifies importing and exporting copyrighted goods as they are affected the distribution right and related criminal remedies. Currently the distribution right under copyright law pertains to works distributed "to the public." When importing or exporting is not done to the public -- as when the transaction involves shipment from one party to itself across the border -- the distribution right may not be infringed.

This section clarifies that importing or exporting pirated copyrighted works is subject to both civil and criminal remedies even if not distributed to the public.

This bill does not change the current rule that provides only civil remedies against importing noninfringing copyrighted works that were acquired outside the country. Also, it doe not affect the criminal remedies for smuggling pirated works into the United States or a foreign country.

Section 6 amends the definition of trafficking in unauthorized sound recordings or music videos of live performances to address three issues: consideration, possession and imports/exports.

Under the current definition, trafficking occurs if the defendant transported, transferred or otherwise disposed of unauthorized recordings or videos to another "for consideration." It also occurs if the defendant made or obtained control of unauthorized recordings or videos on his own, so long as he took these actions with the intent to transport, transfer or otherwise dispose of them for consideration.

The first problem is that the consideration element has been interpreted narrowly. As a result, a whole host of business-related activity that should be illegal is not. For example, a Web site could offer an infringing item to attract customers who would order other products or increase the Web site's advertising revenue. One court has held that giving it away is not "for consideration."

Under the new proposed definition, the concept of consideration is replaced with that of commercial advantage or private financial gain. These terms have been used for years within the copyright code, so there is ample guidance for interpretation.

The second problem is that the current definition does not include "possession" with intent to transport, etc. A defendant may possess large quantities of pirated recordings, but have no records indicating when he made them or obtained them. As a result, the defendant would not be trafficking. There may also be a statute of limitations problem if those records were not available.

The proposed definition includes possession with intent to traffic so that a defendant who possesses the copyrighted works can be prosecuted.

The third problem concerns importing and exporting goods. The amendment clarifies the definition to make it clear that importing and exporting infringing goods is illegal.

Under the bill, the new definition of trafficking makes it illegal, for purposes of commercial advantage or private financial gain, to transport, transfer or otherwise dispose of the subject goods to another. It also makes it illegal to make, import, export, obtain control of, or possess the subject goods by one's self, if one did so with the intent to transport, transfer or otherwise dispose of the subject goods to another for purposes of commercial advantage or private financial gain.

Section 7 amends the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA) to conform to the changes with imports and exports in section 5 and the definition of trafficking in section 6. However, the definition of trafficking for this change does not include the element of acting "for purposes of commercial advantage or private financial gain" because the DMCA does not premise liability on the intent to realize commercial advantage or private financial gain -- except in criminal cases which already include that element.

Section 8 creates new forfeiture, destruction and restitution provisions for offenses in the DMCA to harmonize the laws.

Section 9 amends the law relating to fraud and false statements made when identifying documents and other information (18 U.S.C. section 1028). It makes that law consistent with the provisions of this legislation related to importing and exporting in section 5 above and the definition of trafficking in section 6 above.

Section 10 amends the law relating to fraud and false statements in connection with access devices (18 U.S.C. section 1029). It makes that law consistent with the provisions of this legislation related to importing and exporting in section 5 above and the definition of trafficking in section 6 above. However, the change does not include the element of commercial advantage or financial gain in the definition of trafficking.

Section 11 creates a new section covering forfeitures for violations of the Economic Espionage Act, which involves trade secrets. It sets forth three categories of property subject to forfeiture so the law is harmonized with intellectual property offenses. It also creates a new restitution provision for the Economic Espionage Act, providing for restitution to the owner of the trade secret underlying the offense.

Section 12 amends the law relating to trafficking in counterfeit labels (18 U.S. C. section 2318). It makes that law consistent with the provisions of this legislation related to importing and exporting in section 5 above and the definition of trafficking in section 6 above. It also harmonizes the forfeiture and restitution provisions.

Section 13 amends the repeat offender provisions of the criminal copyright infringement statute (18 U.S.C. section 2319) in two respects.

Currently there are three major criminal acts in the Copyright Act (17 U.S.C. section 506): infringement for commercial advantage or private financial gain; infringement for non-commercial purposes above a certain threshold; and infringement of pre-release works over a publicly-accessible computer network. The repeat-offender penalties only apply if the subsequent infringement charges are identical to the earlier offense, i.e., one of the three acts.

The bill imposes repeat-offender penalties when the infringer commits any two copyright felonies under section 506 regardless of the particular type of offense. It also criminalizes "attempts" to commit the underlying offenses.

Section 14 merely changes section numbers.

Section 15 harmonizes forfeiture provisions in the criminal copyright infringement statute.

Section 16 harmonizes forfeiture provisions in the counterfeit trademark statute. It also includes importing and exporting, as described in section 5, and amends the definitions of trafficking, as discussed in section 6 above. This definition change is expected to be used to prosecute "phishing" offenses in which criminals impersonate legitimate, well-known corporations by reproducing their trademarks on fraudulent e-mail messages and Web sites.

Section 17 adds three intellectual property crimes to the offenses for which law enforcement officers may obtain wire or oral communication for investigation: economic espionage to benefit any foreign government, instrumentality or agent; criminal infringement of copyright; and trafficking in counterfeit goods or services.

Currently a federal court may not issue an order authorizing use of a wiretap for intellectual property crimes. The bill provides for this authority for offenses that are equivalent in impact to other offenses that already give rise to such authority.

Section 18 directs the U.S. Sentencing Commission, within 180 days after the legislation is enacted, to review and, if appropriate, amend the federal sentencing guidelines and policy statements applicable to persons convicted of offenses for: circumvention of copyright protections under the DMCA; trafficking in counterfeit or illicit labels; trafficking in counterfeit goods or services; or crimes involving exportation.

Currently the guidelines tie the offense in part to the infringement amount, which is usually calculated as the number of counterfeit items multiplied by the retail price per item. This becomes more complicated when the offense does not involve an infringement, such as circumvention of protections, or when the infringement is trafficking in labels separate from the goods to which they are attached.

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