On Wednesday, February 16th the Senate Judiciary Committee held a hearing titled "Targeting Websites Dedicated To Stealing American Intellectual Property" (hearing webcast and all witness statements are available at http://judiciary.senate.gov/hearings/hearing.cfm?id=4982). Not surprisingly, all those present – Senators and witnesses alike – agreed that with websites specializing in the unauthorized distribution of copyrighted works and counterfeit goods were a serious problem and that more needed to be done. But their disagreement on what should be included in responsive legislation – as well as the different perspective of a key House Chairman — raises considerable doubt about whether a bill can advance through the Senate and on to enactment.
That divergence in views was fairly predictable. What was surprising was that search engines were dragged into the debate and that Google and Yahoo faced stern bipartisan criticism for refusing invitations to testify. Senator Tom Coburn, who had sought the hearing due to his own concerns about COICA, even threatened to subpoena Google if it stonewalled the Committee. In effect, Google and its search engine brethren were the ‘elephants’ not in the hearing room.
Committee Chairman Patrick Leahy kicked off the session by noting that his COICA domain seizure legislation, S. 3804 in the last Congress, had been reported from the Committee last fall by a unanimous 19-0 vote. He continued:
Some intellectual property owners argue that the legislation did not go far enough; others are concerned it may go too far… Copyright piracy and the sale of counterfeit goods are reported to cost the American economy billions of dollars annually and hundreds of thousands of lost jobs… That is why inaction is not an option, and we must pass online infringement legislation in this Congress before rogue websites harm more businesses, and result in more lost jobs… What these rogue websites do is theft, pure and simple… The Internet needs to be free and open – not lawless… I am confident that we will pass legislation to target rogue websites this year. I want to hear from all sides as we move forward, but I refuse to accept that addressing the problem is too difficult because people who want to steal will always find a way.
Senator Charles Grassley, the Committee’s top Republican, noted the role of offshore websites but also raised some cautionary flags:
A large chunk of this piracy and counterfeiting is done online. That’s because the internet reaches across the globe and is mostly anonymous. Moreover, part of the problem is that many internet websites that engage in offering infringing content and counterfeit goods are actually foreign owned and operated. These websites appeal to American consumers because they reside at familiar top level domains, such as .com or .net. These websites also appear to be legitimate because they have corporate advertising and credit card acceptance…I’m certain that everyone supports the underlying goals of S. 3804, the Combating Online Infringement and Counterfeiting Act, a bill that was introduced in the last Congress. That said, a number of concerns have been raised about that bill, and it is appropriate for the Committee to look into those concerns to determine whether they are legitimate and should be addressed. Certainly, we should act responsibly so that we do not harm consumers, innovation, or economic growth.
Rosetta Stone CEO Tom Adams kicked off the witness testimony with strong support for domain seizure legislation as well as an immodest proposal to expand its scope beyond websites to the search engines that help locate them. Adams stated:
We also urge the Committee to consider the fact that the most common way for “rogue” websites, especially those based overseas, to reach out to American consumers is by means of paid advertisements on search engines such as Google. By purchasing the brand name of the product being counterfeited as a search engine keyword, the infringing website can have a paid advertisement appear on the search engine results page whenever a consumer conducts a search using that brand name. Search engines such as Google misappropriate value created by Rosetta Stone and protected by its federal intellectual property rights by selling Rosetta Stone’s trademarks as advertising “keywords” to counterfeiters who operate the “rogue” websites. When a consumer looking to purchase a Rosetta Stone product searches on Google for “Rosetta Stone”, the resulting search results page will include not only links to Rosetta Stone’s official website, but also paid ads linking to “rogue” websites…The problem is exacerbated by Google’s search advertising market share of approximately 70%, which provides foreign counterfeiters a convenient, low cost advertising platform to reach the majority of American consumers without the threat of criminal prosecution. The key point is that without the ability to buy paid advertisements on search engines using the brand names of the pirated products, these infringing websites would not be able to easily reach American consumers, and likewise, it would be much less likely that American consumers would become aware of the existence of these websites. Therefore, it is critical that this legislation empowers the DoJ to prevent “rogue” websites from using search engines as their gateway to American consumers…The search engines may argue that this action would be an undue burden and difficult for them administer. However, in our experience, search engines such as Google have the ability, if they so desire to do so, to filter out paid advertisements from pirate websites, thereby preventing them from bidding on the Rosetta Stone brand name as a keyword. The barrier is not a lack of technology, but a lack of commitment to fighting piracy instead of profiting from it. We regret that Google declined an invitation to participate in today’s hearing so that we could better understand why some companies receive stronger protection against “rogue” websites than others.
While recognizing that Mr. Adams has the right to advocate any policy position he chooses, we found his testimony deliberately disingenuous in its failure to provide the Committee with clear and conspicuous notice that Rosetta Stone and Google are engaged in landmark litigation, currently under appeal, challenging Google’s practice of selling trademarks as keywords to their owner’s competitors. ICA has previously noted that court cases in the US and EU upholding this practice illustrate a widening gap between online trademark law and UDRP practice (see https://www.internetcommerce.org/Google-and-eBay-Keywords-and-Domains-and-ICANN) and we have urged ICANN to contract for an independent third party expert study of these disparities with the aim of harmonizing them, inasmuch as the UDRP should be protecting existing trademark rights rather than creating new ones (see https://www.internetcommerce.org/Independent_Third_Party_Review_of_the_Internet_Trademark_Law_and_the_UDRP ). While his testimony lacked specifics regarding the statutory language that Rosetta Stone is seeking, Congress is generally loathe to intervene in a manner that affects ongoing litigation, preferring that contentious issues be decided by the Supreme Court before it considers any remedial statutory amendments. So, while he responded to one question with a declaration that “Search engines should not yield infringing websites!”, achieving that is likely beyond the reach of any technology and could require changes to trademark law that expand its reach in an unprecedented and unjustified manner.
Depending on one’s viewpoint, the sale of trademarks as keywords is blatant trademark infringement – or is as innocuous as Pepsi buying supermarket shelf space next to Coke. Any new legal requirements placed on search engines to filter against advertisers seeking to purchase trademark keywords not only has enormous implications for them and for Internet advertising networks (another industry conspicuously absent from the hearing) but could affect the ultimate outcome of Rosetta Stone’s ongoing litigation against Google. ICA will carefully review any proposed legislative language for its overall impact on online trademark law and on domain investors who have ads generated by Google or other search companies on their own websites. For now we’ll simply note that the addition of search engine restrictions to domain seizure legislation would likely be a very large complicating factor weighing against enactment – especially if Google, Yahoo, and Microsoft weigh in against it.
Mr. Adams also suggested creation of a notice-and-takedown system for website trademark violations similar to that which exists for copyright under the Digital Millennium Copyright Act (DMCA):
[W]e believe that the effectiveness of this legislation would be strengthened by the addition of provisions to protect the rights of trademark owners in a manner analogous to the protections afforded to copyright owners under the DMCA. Under this arrangement, a trademark owner would be able to notify an ISP or other service provider that its trademark rights are being infringed by the contents of a website, and the service provider would be afforded immunity from liability if it acts expeditiously to remove the infringing website or web content. In this way, trademark owners would be able to assert their legal rights under the Lanham Act through a notice process comparable to provisions of the DMCA without the need for government intervention or expenditure of government resources.
ICA has previously suggested consideration of notice-and-takedown as a less onerous alternative to domain seizures and shutdowns, particularly where the infringing content is nothing more than third-party provided advertising links that the domain owner did not control. But the devil is in the details, and we shall give any such proposal serious scrutiny as well.
The other hearing witnesses provided various degrees of support for the bill while taking seemingly irreconcilable positions on some key issues:
• GoDaddy General Counsel Christine Jones noted that the number one registrar’s extensive anti-infringement staff processed more than 13,000 trademark infringement complaints, and had also taken down about 36,000 rogue pharmaceutical websites, in 2010. While supporting a “hybrid” approach that combines such voluntary private sector activities with new legislation, she urged that any reintroduced bill include and clarify the responsibilities of web hosting services, include a notice procedure for websites hosting user-generated content, and tighten up the definition of when a website will be found “dedicated” to infringing activities.
• Best-selling novelist Scott Turow, testifying for the Authors Guild, vigorously attacked online file-sharing services and then advocated removal of DMCA safe harbors for ISPs under certain circumstances – and in responses to Senators’ questions also advocated that a private right of action be included in domain seizure legislation.
• Verizon Deputy General Counsel Thomas Dailey argued for an express prohibition on private rights of action, that ISPs should only be required to act in regard to their U.S.-based DNS servers – and that the list of infringing domains an ISP should be asked to act against should be limited to no more than 100 at any one time, with the ISP receiving government compensation for its costs of carrying out the domain blocking. (That last proposal is almost certainly DOA in an era of public sector budget austerity)
• Denise Yee, Visa’s Senior Trademark Counsel, noted that payment processors were not secondarily liable for online merchants’ infringing activities under current case law and stated that any new legislation should maintain that immunity. She also noted that, while Visa nonetheless attempts to assist rights owners, it had received only 30 notices of alleged infringement in the past six months. Observing that any new regulation of payment systems might have unintended negative consequences, and strongly opposing any new private right of action, she nonetheless stated Visa’s support for the objectives of domain seizure legislation but then went on to advocate a number of exemptions for foreign transaction providers that will likely meet opposition from IP interests.
It remains to be seen how any revised version of COICA will attempt to reconcile these widely varying viewpoints. While Chairman Leahy repeatedly stated “There will be legislation!”, and while it remains likely that some bill will be reported from Judiciary Committee this year, Senate floor consideration could well stall as Senators acting upon their own concerns, as well as those of different business constituencies and public interest organizations, delay the legislation. Senator Ron Wyden, for example, who placed a “hold” on COICO in the last Congress, filed a statement with the Committee that reiterated his concerns:
Yes, the Internet needs reasonable laws and bad actors need to be pursued, but the freedoms of billions of individual Internet users cannot be sacrificed in the interest of easing that pursuit. The decisions we make to police the Internet today will also govern how this relatively new medium will continue to develop and shape our world. I objected to last year’s Combating Online Infringement of Copyrights Act not because it might reduce the Internet’s ability to facilitate infringement, but because I believe it went about it in a way that would also reduce the Internet’s ability to promote democracy, commerce and free speech. We can strike a better balance. (full statement at http://wyden.senate.gov/issues/issue/?id=3ad1419c-9af9-4779-b575-f1b3f48b83dc)
And, since the hearing, Rep. Bob Goodlatte, the Chairman of the House Judiciary Committee’s Subcommittee on Intellectual Property, Competition, and the Internet, stated in a C-Span interview:
“We don’t want to be Egypt. Nor do we, when you talk about cybersecurity, a broader issue that goes beyond theft, that goes to the functioning of the internet itself, we don’t want to give government so much power that they have a kill switch, or something like that…Narrowing it down to individual domains, we need to be very careful that we’re doing it in a way where due process is properly followed… We’re not going to start with what the Senate has done — we’re going to start with a careful, fresh look at this.”(report at http://broadbandbreakfast.com/2011/02/house-ip-chairman-on-coica-we-dont-want-to-be-egypt/)
ICA commends Chairman Goodlatte for his thoughtful perspective, and looks forward to working with him and his staff as the House considers the best form of any further legislative response to online infringement. Meanwhile, we hear that the Senate is weeks away from introduction of a new version of COICA, and that the Judiciary Committee will likely schedule another hearing on its specifics before taking any votes.
However, notwithstanding the ultimate fate of a new domain seizure bill, the Obama Administration recently indicated that the enforcement efforts of the Department of Homeland Security’s ICE division are likely to be stepped-up – leaving the possibility that any new grant of extraterritorial authority to the Department of Justice would be an addition to, and not a substitute for, ICE’s escalating domain seizures.