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PRIORITIZING RESOURCES AND ORGANIZATION

FOR INTELLECTUAL PROPERTY ACT OF 2007

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

ON

H.R. 4279

DECEMBER 13, 2007

Serial No. 110–76

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

HOWARD L. BERMAN, California, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ROBERT WEXLER, Florida 

MELVIN L. WATT, North Carolina 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BRAD SHERMAN, California 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ZOE LOFGREN, California 

BETTY SUTTON, Ohio 

HOWARD COBLE, North Carolina 

TOM FEENEY, Florida 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

SHANNA WINTERS, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III)

C O N T E N T S 

DECEMBER 13, 2007

Page 

TEXT OF THE BILL 

H.R. 4279, the ‘‘Prioritizing Resources and Organization for Intellectual Property Act of 2007’’ ................................................................................................... 2

OPENING STATEMENTS 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Courts, the Internet, and Intellectual Property .................. 20

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 22

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Member, Subcommittee on Courts, the Internet, and Intellectual Property ........................................................................................................ 25

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Chairman, Subcommittee on Courts, the Internet, 

and Intellectual Property .................................................................................... 27

The Honorable Rick Boucher, a Representative in Congress from the State 

of Virginia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 28

The Honorable Darrell Issa, a Representative in Congress from the State 

of California, and Member, Subcommittee on Courts, the Internet, and 

Intellectual Property ............................................................................................ 30

The Honorable Brad Sherman, a Representative in Congress from the State 

of California, and Member, Subcommittee on Courts, the Internet, and 

Intellectual Property ............................................................................................ 31

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 32

The Honorable Sheila Jackson Lee, a Representative in Congress from the 

State of Texas, and Member, Subcommittee on Courts, the Internet, and 

Intellectual Property ............................................................................................ 32

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California, and Member, Subcommittee on Courts, the Internet, and 

Intellectual Property ............................................................................................ 33

WITNESSES 

Ms. Sigal P. Mandelker, Deputy Assistant Attorney General, Criminal Division, U.S. Department of Justice, Washington, DC 

Oral Testimony ..................................................................................................... 35

Prepared Statement ............................................................................................. 38

Mr. James P. Hoffa, General President, International Brotherhood of Teamsters, Washington, DC 

Oral Testimony ..................................................................................................... 54

Prepared Statement ............................................................................................. 56

Page

IV

Ms. Gigi B. Sohn, President and Co-Founder, Public Knowledge, Washington, 

DC 

Oral Testimony ..................................................................................................... 63

Prepared Statement ............................................................................................. 65

Mr. Rick Cotton, Executive Vice President and General Counsel, NBC Universal, New York, NY 

Oral Testimony ..................................................................................................... 81

Prepared Statement ............................................................................................. 83

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Howard Coble, a Representative in 

Congress from the State of North Carolina, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property ......................... 23

Prepared Statement of the Honorable Lamar Smith, a Representative in 

Congress from the State of Texas, and Member, Subcommittee on Courts, 

the Internet, and Intellectual Property .............................................................. 26

Prepared Statement of the Honorable Betty Sutton, a Representative in Congress from the State of Ohio, and Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 34

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 129

(1)

PRIORITIZING RESOURCES AND ORGANIZATION FOR INTELLECTUAL PROPERTY ACT 

OF 2007

THURSDAY, DECEMBER 13, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY, COMMITTEE ON THE JUDICIARY, Washington, DC.

The Subcommittee met, pursuant to notice, at 10:11 a.m., in 

Room 2141, Rayburn House Office Building, the Honorable Howard 

Berman (Chairman of the Subcommittee) presiding. 

Present: Representatives Conyers, Berman, Boucher, Watt, Jackson Lee, Johnson, Sherman, Schiff, Lofgren, Sutton, Coble, Feeney, 

Smith, Goodlatte, Cannon, Chabot, and Issa. 

Staff present: Perry Apelbaum, Majority Staff Director and Chief 

Counsel; Shanna Winters, Subcommittee Chief Counsel; David 

Whitney, Subcommittee Minority Counsel; Joseph Gibson, Minority 

Chief Counsel; and Rosalind Jackson, Professional Staff Member. 

Mr. BERMAN. I would bang the gavel, but I can’t find the gavel. 

The hearing of the Subcommittee on Courts, the Internet, and Intellectual Property will come to order. I would like to begin by welcoming everyone to this hearing on H.R. 4279, the ‘‘Prioritizing Resources and Organization for Intellectual Property Act of 2007,’’ 

known as PRO-IP. 

[The text of the bill, H.R. 4279, follows:]

2

I 

110TH CONGRESS 

1ST SESSION H. R. 4279

To enhance remedies for violations of intellectual property laws, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 5, 2007

Mr. CONYERS (for himself, Mr. BERMAN, Mr. SMITH of Texas, Mr. SCHIFF, Mr. 

FEENEY, Mr. ISSA, Mr. CHABOT, Mr. COHEN, Mr. KELLER of Florida, Ms. JACKSONLEE of Texas, and Mr. GOODLATTE) introduced the following bill; which was referred to the Committee on the Judiciary 

A BILL 

To enhance remedies for violations of intellectual property laws, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States 

of America in Congress assembled, 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Prioritizing Resources and Organization for Intellectual Property Act of 2007’’. 

(b) TABLE OF CONTENTS.—The table of contents is as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Reference. 

Sec. 3. Definition. 

TITLE I—ENHANCEMENTS TO CIVIL INTELLECTUAL PROPERTY LAWS 

Sec. 101. Registration of claim. 

Sec. 102. Registration and infringement actions. 

Sec. 103. Civil remedies for infringement. 

Sec. 104. Computation of statutory damages in copyright cases. 

Sec. 105. Treble damages in counterfeiting cases. 

Sec. 106. Statutory damages in counterfeiting cases. 

Sec. 107. Exportation of goods bearing infringing marks. 

Sec. 108. Importation and exportation. 

TITLE II—ENHANCEMENTS TO CRIMINAL INTELLECTUAL PROPERTY 

LAWS 

Sec. 201. Criminal infringement of a copyright. 

Sec. 202. Harmonization of forfeiture procedures for intellectual property offenses. 

Sec. 203. Directive to United States Sentencing Commission. 

Sec. 204. Trafficking in counterfeit goods or services. 

TITLE III—COORDINATION AND STRATEGIC PLANNING OF FEDERAL 

EFFORT AGAINST COUNTERFEITING AND PIRACY 

Subtitle A—Office of the United States Intellectual Property Enforcement 

Representative 

Sec. 301. Office of the United States Intellectual Property Enforcement Representative. 

Sec. 302. Definition. 

3

Subtitle B—Joint Strategic Plan 

Sec. 321. Joint Strategic Plan. 

Sec. 322. Reporting. 

Sec. 323. Other intellectual property activities. 

Sec. 324. Savings and repeals. 

Sec. 325. Authorization of appropriations. 

TITLE IV—INTERNATIONAL ENFORCEMENT AND COORDINATION 

Sec. 401. Intellectual property attache ́s. 

Sec. 402. Duties and responsibilities of intellectual property attache ́s. 

Sec. 403. Training and designation of assignment. 

Sec. 404. Coordination. 

Sec. 405. Authorization of appropriations. 

TITLE V—DEPARTMENT OF JUSTICE PROGRAMS 

Subtitle A—Coordination 

Sec. 501. Intellectual Property Enforcement Officer. 

Subtitle B—Law Enforcement Resources 

Sec. 511. Local law enforcement grants. 

Sec. 512. CHIP units, training, and additional resources. 

Sec. 513. Transparency of prosecutorial decisionmaking. 

Sec. 514. Authorization of appropriations. 

Subtitle C—International Activities 

Sec. 521. International intellectual property law enforcement coordinators. 

Sec. 522. International training activities of the computer crime and intellectual 

property section. 

Subtitle D—Coordination, Implementation, and Reporting 

Sec. 531. Coordination. 

Sec. 532. Annual reports. 

SEC. 2. REFERENCE. 

Any reference in this Act to the ‘‘Trademark Act of 1946’’ refers to the Act entitled ‘‘An Act to provide for the registration of trademarks used in commerce, to 

carry out the provisions of certain international conventions, and for other purposes’’, approved July 5, 1946 (15 U.S.C. 1051 et seq.). 

SEC. 3. DEFINITION. 

In this Act, the term ‘‘United States person’’ means—

(1) any United States resident or national, 

(2) any domestic concern (including any permanent domestic establishment 

of any foreign concern), and 

(3) any foreign subsidiary or affiliate (including any permanent foreign establishment) of any domestic concern that is controlled in fact by such domestic 

concern,

except that such term does not include an individual who resides outside the United 

States and is employed by an individual or entity other than an individual or entity 

described in paragraph (1), (2), or (3). 

TITLE I—ENHANCEMENTS TO CIVIL 

INTELLECTUAL PROPERTY LAWS 

SEC. 101. REGISTRATION OF CLAIM. 

Section 410 of title 17, United States Code, is amended—

(1) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and 

4

(2) by inserting after subsection (b) the following: 

‘‘(c)(1) A certificate of registration satisfies the requirements of section 411 and 

section 412 regardless of any inaccurate information contained in the certificate, unless—

‘‘(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and 

‘‘(B) the inaccuracy of the information, if known, would have caused the 

Register of Copyrights to refuse registration. 

‘‘(2) In any case in which inaccuracies described under paragraph (1) are alleged, the court shall request the Register of Copyrights to advise the court whether 

the inaccuracy of the information, if known, would have caused the Register of 

Copyrights to refuse registration. 

‘‘(3) Nothing in this subsection shall affect any rights, obligations, or requirements of a person related to information contained in a registration certificate except for the institution of and remedies in infringement actions under sections 411 

and 412.’’. 

SEC. 102. REGISTRATION AND INFRINGEMENT ACTIONS. 

(a) REGISTRATION IN CIVIL INFRINGEMENT ACTIONS.—Section 411(a) of title 17, 

United States Code, is amended—

(1) in the section heading, by inserting ‘‘civil’’ after ‘‘and’’ ; and 

(2) in subsection (a), by striking ‘‘no action’’ and inserting ‘‘no civil action’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 411(b) of title 17, 

United States Code, is amended by striking ‘‘506 and sections 509 and’’ and inserting ‘‘505 and section’’. 

SEC. 103. CIVIL REMEDIES FOR INFRINGEMENT. 

Section 503(a) of title 17, United States Code, is amended—

(1) by striking ‘‘and of all plates’’ and inserting ‘‘of all plates’’; and 

(2) by striking the period at the end and inserting the following: ‘‘, and 

records documenting the manufacture, sale, or receipt of things involved in such 

violation. The court shall enter an appropriate protective order with respect to 

discovery by the applicant of any records that have been seized. The protective 

order shall provide for appropriate procedures to assure that confidential information contained in such records is not improperly disclosed to the applicant.’’. 

SEC. 104. COMPUTATION OF STATUTORY DAMAGES IN COPYRIGHT CASES. 

Section 504(c)(1) of title 17, United States Code, is amended by striking the second sentence and inserting the following: ‘‘A copyright owner is entitled to recover 

statutory damages for each copyrighted work sued upon that is found to be infringed. The court may make either one or multiple awards of statutory damages 

with respect to infringement of a compilation, or of works that were lawfully included in a compilation, or a derivative work and any preexisting works upon which 

it is based. In making a decision on the awarding of such damages, the court may 

consider any facts it finds relevant relating to the infringed works and the infringing conduct, including whether the infringed works are distinct works having independent economic value.’’. 

SEC. 105. TREBLE DAMAGES IN COUNTERFEITING CASES. 

Section 35(b) of the Trademark Act of 1946 (15 U.S.C. 1117(b)) is amended to 

read as follows: 

‘‘(b) In assessing damages under subsection (a) for any violation of section 

32(1)(a) of this Act or section 220506 of title 36, United States Code, in a case involving use of a counterfeit mark or designation (as defined in section 34(d) of this 

Act), the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages, whichever amount is greater, together 

with a reasonable attorney’s fee, if the violation consists of—

‘‘(1) intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark (as defined in section 34(d) of this Act), in connection with the sale, offering for sale, or distribution of goods or services; 

‘‘(2) intentionally inducing another to engage in a violation specified in 

paragraph (1); or 

‘‘(3) providing goods or services necessary to the commission of a violation 

specified in paragraph (1), with the intent that the recipient of the goods or 

services would put the goods or services to use in committing the violation. 

In such a case, the court may award prejudgment interest on such amount at an 

annual interest rate established under section 6621(a)(2) of the Internal Revenue 

Code of 1986, beginning on the date of the service of the claimant’s pleadings setting 

5

forth the claim for such entry of judgment and ending on the date such entry is 

made, or for such shorter time as the court considers appropriate.’’. 

SEC. 106. STATUTORY DAMAGES IN COUNTERFEITING CASES. 

Section 35(c) of the Trademark Act of 1946 (15 U.S.C. 1117) is amended—

(1) in paragraph (1)—

(A) by striking ‘‘$500’’ and inserting ‘‘$1000’’; and 

(B) by striking ‘‘$100,000’’ and inserting ‘‘$200,000’’; and 

(2) in paragraph (2), by striking ‘‘$1,000,000’’ and inserting ‘‘$2,000,000’’. 

SEC. 107. EXPORTATION OF GOODS BEARING INFRINGING MARKS. 

Title VII of the Trademark Act of 1946 (15 U.S.C. 1124) is amended—

(1) in the title heading, by inserting after ‘‘IMPORTATION’’ the following: 

‘‘OR EXPORTATION’’; and 

(2) in section 42—

(A) in the first sentence—

(i) by striking the word ‘‘imported’’; and 

(ii) by inserting after ‘‘custom house of the United States’’ the following: ‘‘, nor shall any such article be exported from the United 

States’’. 

SEC. 108. IMPORTATION AND EXPORTATION. 

(a) IN GENERAL.—The heading for chapter 6 of title 17, United States Code, is 

amended to read as follows: 

‘‘CHAPTER 6—MANUFACTURING REQUIREMENTS, IMPORTATION, AND 

EXPORTATION’’. 

(b) AMENDMENT ON EXPORTATION.—Section 602(a) of title 17, United States 

Code, is amended—

(1) by redesignating paragraphs (1) through (3) as subparagraphs (A) 

through (C), respectively, and moving such subparagraphs 2 ems to the right; 

(2) by striking ‘‘(a)’’ and inserting ‘‘(a) INFRINGING IMPORTATION AND EXPORTATION.—

‘‘(1) IMPORTATION.—’’; 

(3) by striking ‘‘This subsection does not apply to—’’ and inserting the following: 

‘‘(2) IMPORTATION OR EXPORTATION OF INFRINGING ITEMS.—Importation into 

the United States or exportation from the United States, without the authority 

of the owner of copyright under this title, of copies or phonorecords, the making 

of which either constituted an infringement of copyright or would have constituted an infringement of copyright if the copies or phonorecords had been 

made in the United States, is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under sections 501 

and 506. 

‘‘(3) EXCEPTIONS.—This subsection does not apply to—’’; 

(4) in paragraph (3)(A) (as redesignated by this subsection) by inserting ‘‘or 

exportation’’ after ‘‘importation’’; and 

(5) in paragraph (3)(B) (as redesignated by this subsection)—

(A) by striking ‘‘importation, for the private use of the importer’’ and 

inserting ‘‘importation or exportation, for the private use of the importer or 

exporter’’; and 

(B) by inserting ‘‘or departing from the United States’’ after ‘‘United 

States’’. 

(c) CONFORMING AMENDMENTS.—(1) Section 602 of title 17, United States Code, 

is further amended—

(A) in the section heading, by inserting ‘‘or exportation’’ after ‘‘importation’’; and 

(B) in subsection (b)—

(i) by striking ‘‘(b) In a case’’ and inserting ‘‘(b) IMPORT PROHIBITION.—

In a case’’; and 

(ii) by striking ‘‘if this title had been applicable’’ and inserting ‘‘if the 

copies or phonorecords had been made in the United States’’. 

(2) The item relating to chapter 6 in the table of chapters for title 17, United 

States Code, is amended to read as follows: 

6

‘‘6. MANUFACTURING REQUIREMENTS, IMPORTATION, AND EXPORTATION ........ 601’’. 

TITLE II—ENHANCEMENTS TO CRIMINAL 

INTELLECTUAL PROPERTY LAWS 

SEC. 201. CRIMINAL INFRINGEMENT OF A COPYRIGHT. 

Section 2319 of title 18, United States Code, is amended—

(1) in subsection (b)(2), by inserting ‘‘is a felony and’’ after ‘‘offense’’ and by 

striking ‘‘paragraph (1)’’ and inserting ‘‘subsection (a)’’; 

(2) in subsection (c)(2), by inserting ‘‘is a felony and’’ after ‘‘offense’’, and 

by striking ‘‘paragraph (1)’’ and inserting ‘‘subsection (a)’’; 

(3) in subsection (d)(3), by inserting ‘‘is a felony and’’ after ‘‘offense’’, and 

by inserting ‘‘under subsection (a)’’ before the semicolon; and 

(4) in subsection (d)(4), by inserting ‘‘is a felony and’’ after ‘‘offense’’. 

SEC. 202. HARMONIZATION OF FORFEITURE PROCEDURES FOR INTELLECTUAL PROPERTY 

OFFENSES. 

(a) TRAFFICKING IN COUNTERFEIT LABELS.—Section 2318 of title 18, United 

States Code, is amended—

(1) by amending subsection (d) to read as follows: 

‘‘(d) FORFEITURE AND DESTRUCTION; RESTITUTION.—

‘‘(1) CIVIL FORFEITURE PROCEEDINGS.—(A) The following property is subject 

to forfeiture to the United States: 

‘‘(i) Any counterfeit documentation or packaging, and any counterfeit 

label or illicit label and any article to which a counterfeit label or illicit 

label has been affixed, or which a counterfeit label or illicit label encloses 

or accompanies, or which was intended to have had such label affixed, enclosing, or accompanying. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of a violation of subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or facilitate 

the commission of a violation of subsection (a) that is owned or predominantly controlled by the violator or by a person conspiring with or aiding 

and abetting the violator in committing the violation. 

‘‘(B) The provisions of chapter 46 relating to civil forfeitures shall extend 

to any seizure or civil forfeiture under subparagraph (A). At the conclusion of 

the forfeiture proceedings, the court shall order that any forfeited counterfeit labels or illicit labels and any article to which a counterfeit label or illicit label 

has been affixed, or which a counterfeit label or illicit label encloses or accompanies, or which was intended to have had such label affixed, enclosing, or accompanying, be destroyed or otherwise disposed of according to law. 

‘‘(C) In this paragraph, the term ‘aiding and abetting’ means to knowingly 

provide aid to the violator with the intent to facilitate the violation. 

‘‘(2) CRIMINAL FORFEITURE PROCEEDINGS.—(A) The court, in imposing sentence on a person convicted of an offense under this section, shall order, in addition to any other sentence imposed, that the person forfeit to the United States 

the following property: 

‘‘(i) Any counterfeit documentation or packaging, and any counterfeit 

label or illicit label, that was used, intended for use, or possessed with intent to use in the commission of an offense under subsection (a), and any 

article to which such a counterfeit label or illicit label has been affixed, 

which such a counterfeit label or illicit label encloses or accompanies, or 

which was intended to have had such label affixed, enclosing, or accompanying. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of an offense under subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or substantially facilitate the commission of an offense under subsection (a). 

‘‘(B) The forfeiture of property under subparagraph (A), including any seizure and disposition of the property and any related judicial or administrative 

proceeding, shall be governed by the procedures set forth in section 413 of the 

Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 853), 

other than subsection (d) of that section. At the conclusion of the forfeiture proceedings, the court shall order that any counterfeit label or illicit label and any 

article to which a counterfeit label or illicit label has been affixed, which a counterfeit label or illicit label encloses or accompanies, or which was intended to 

7

have had such label affixed, enclosing, or accompanying, be destroyed or otherwise disposed of according to law. 

‘‘(3) RESTITUTION.—When a person is convicted of an offense under this section, the court, pursuant to sections 3556, 3663A, and 3664, shall order the person to pay restitution to the owner of the marks or copyrighted works involved 

in the offense and any other victim of the offense as an offense against property 

referred to in section 3663A(c)(1)(A)(ii).’’; 

(2) by striking subsection (e); and 

(3) by redesignating subsection (f) as subsection (e). 

(b) CRIMINAL INFRINGEMENT OF A COPYRIGHT.—

(1) IN GENERAL.—Section 2319 of title 18, United States Code, is amended 

by adding at the end the following: 

‘‘(g) FORFEITURE AND DESTRUCTION; RESTITUTION.—

‘‘(1) CIVIL FORFEITURE PROCEEDINGS.—(A) The following property is subject 

to forfeiture to the United States: 

‘‘(i) Any copies or phonorecords manufactured, reproduced, distributed, 

sold, or otherwise used, intended for use, or possessed with intent to use 

in violation of section 506(a) of title 17, and any plates, molds, matrices, 

masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be made and any devices for manufacturing, reproducing, or assembling such copies or phonorecords. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of a violation of section 506(a) of title 17. 

‘‘(iii) Any property used, or intended to be used, to commit or facilitate 

the commission of a violation of section 506(a) of title 17 that is owned or 

predominantly controlled by the violator or by a person conspiring with or 

aiding and abetting the violator in committing the violation. 

‘‘(B) The provisions of chapter 46 of title 18 relating to civil forfeitures shall 

extend to any seizure or civil forfeiture under this section. At the conclusion of 

the forfeiture proceedings, the court shall order that any forfeited infringing 

copies or phonorecords, and any plates, molds, matrices, masters, tapes, and 

film negatives by means of which such unauthorized copies or phonorecords 

may be made, be destroyed or otherwise disposed of according to law. 

‘‘(C) In this paragraph, the term ‘aiding and abetting’ means to knowingly 

provide aid to the violator with the intent to facilitate the violation. 

‘‘(2) CRIMINAL FORFEITURE PROCEEDINGS.—(A) The court, in imposing sentence on a person convicted of an offense under subsection (a), shall order, in 

addition to any other sentence imposed, that the person forfeit to the United 

States the following property: 

‘‘(i) Any copies or phonorecords manufactured, reproduced, distributed, 

sold, or otherwise used, intended for use, or possessed with intent to use 

in the commission of an offense under subsection (a), and any plates, molds, 

matrices, masters, tapes, film negatives, or other articles by means of which 

the copies or phonorecords may be reproduced, and any electronic, mechanical, or other devices for manufacturing, reproducing, or assembling such 

copies or phonorecords. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of an offense under subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or substantially facilitate the commission of an offense under subsection (a). 

‘‘(B) The forfeiture of property under subparagraph (A), including any seizure and disposition of the property and any related judicial or administrative 

proceeding, shall be governed by the procedures set forth in section 413 of the 

Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 853), 

other than subsection (d) of that section. At the conclusion of the forfeiture proceedings, the court shall order that any forfeited infringing copies or 

phonorecords, and any plates, molds, matrices, masters, tapes, and film negatives by means of which such infringing copies or phonorecords may be made, 

be destroyed or otherwise disposed of according to law. 

‘‘(3) RESTITUTION.—When a person is convicted of an offense under this section, the court, pursuant to sections 3556, 3663A, and 3664, shall order the person to pay restitution to the copyright owner and any other victim of the offense 

as an offense against property referred to in section 3663A(c)(l)(A)(ii).’’. 

(2) CONFORMING AMENDMENTS.—(A) Section 506(b) of title 17, United States 

Code, is amended by striking all that follows ‘‘destruction’’ and inserting the following: ‘‘of property as prescribed by section 2319(g) of title 18.’’. 

8

(B) Section 509 of title 17, United States Code, relating seizure and forfeiture, and the item relating to section 509 in the table of sections at the beginning of chapter 5 of title 17, United States Code, are repealed. 

(c) UNAUTHORIZED FIXATION AND TRAFFICKING.— (1) IN GENERAL.—Section 2319A of title 18, United States Code, is amended—

(A) by striking subsection (c) and redesignating subsections (d), (e), and 

(f) as subsections (c), (d), and (e), respectively; and 

(B) by amending subsection (b) to read as follows: 

‘‘(b) FORFEITURE AND DESTRUCTION; RESTITUTION.— ‘‘(1) CIVIL FORFEITURE PROCEEDINGS.—(A) The following property is subject 

to forfeiture to the United States: 

‘‘(i) Any copies or phonorecords of a live musical performance described 

in subsection (a)(1) that are made without the consent of the performer or 

performers involved, and any plates, molds, matrices, masters, tapes, and 

film negatives by means of which such copies or phonorecords may be 

made. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of a violation of subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or facilitate 

the commission of a violation of subsection (a) that is owned or predominantly controlled by the violator or by a person conspiring with or aiding 

and abetting the violator in committing the violation. 

‘‘(B) The provisions of chapter 46 relating to civil forfeitures shall extend 

to any seizure or civil forfeiture under paragraph (1). At the conclusion of the 

forfeiture proceedings, the court shall order that any forfeited unauthorized copies or phonorecords of live musical performances, and any plates, molds, matrices, maters, tapes, and film negatives by means of which such unauthorized 

copies or phonorecords may be made, be destroyed or otherwise disposed of according to law. 

‘‘(C) In this paragraph, the term ‘aiding and abetting’ means to knowingly 

provide aid to the violator with the intent to facilitate the violation. 

‘‘(2) CRIMINAL FORFEITURE PROCEEDINGS.—(A) The court, in imposing sentence on a person convicted of an offense under this section, shall order, in addition to any other sentence imposed, that the person forfeit to the United States 

the following property: 

‘‘(i) Any unauthorized copies or phonorecords of a live musical performance that were used, intended for use, or possessed with intent to use in 

the commission of an offense under subsection (a), and any plates, molds, 

matrices, masters, tapes, and film negatives by means of which such copies 

or phonorecords may be made. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of an offense under subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or substantially facilitate the commission of an offense under subsection (a). 

‘‘(B) The forfeiture of property under subparagraph (A), including any seizure and disposition of the property and any related judicial or administrative 

proceeding, shall be governed by the procedures set forth in section 413 of the 

Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 853), 

other than subsection (d) of that section. At the conclusion of the forfeiture proceedings, the court shall order that any forfeited unauthorized copies or 

phonorecords of live musical performances, and any plates, molds, matrices, 

masters, tapes, and film negatives by means of which such unauthorized copies 

of phonorecords may be made, be destroyed or otherwise disposed of according 

to law. 

‘‘(3) NOTIFICATION OF IMPORTATION.—The Secretary of Homeland Security 

shall issue regulations by which any performer may, upon payment of a specified fee, be entitled to notification by U.S. Customs and Border Protection of the 

importation of copies or phonorecords that appear to consist of unauthorized fixations of the sounds or sounds and images of a live musical performance prohibited by this section. 

‘‘(4) RESTITUTION.—When a person is convicted of an offense under this section, the court, pursuant to sections 3556, 3663A, and 3664, shall order the person to pay restitution to the performer or performers involved, and any other 

victim of the offense as an offense against property referred to in section 

3663A(c)(1)(A)(ii).’’. 

(2) APPLICABILITY.—Section 2319A(e), as redesignated by paragraph (1) of 

this subsection, is amended by inserting before the period the following: ‘‘, exVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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cept that the forfeiture provisions under subsection (b)(2), as added by the 

Prioritizing Resources and Organization for Intellectual Property Act, shall 

apply only in a case in which the underlying act or acts occur on or after the 

date of the enactment of that Act’’. 

(d) UNAUTHORIZED RECORDING OF MOTION PICTURES.—Section 2319B(b) of title 

18, United States Code, is amended to read as follows: 

‘‘(b) FORFEITURE AND DESTRUCTION; RESTITUTION.—

‘‘(1) CIVIL FORFEITURE PROCEEDINGS.—(A) The following property is subject 

to forfeiture to the United States: 

‘‘(i) Any copies of a motion picture or other audiovisual work protected 

under title 17 that are made without the authorization of the copyright 

owner. 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of a violation of subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or facilitate 

the commission of a violation of subsection (a) that is owned or predominantly controlled by the violator or by a person conspiring with or aiding 

and abetting the violator in committing the violation. 

‘‘(B) The provisions of chapter 46 relating to civil forfeitures shall extend 

to any seizure or civil forfeiture under this section. At the conclusion of the forfeiture proceedings, the court shall order that any forfeited unauthorized copies 

or phonorecords of a motion picture or other audiovisual work, or part thereof, 

and any plates, molds, matrices, masters, tapes, and film negatives by means 

of which such unauthorized copies or phonorecords may be made, be destroyed 

or otherwise disposed of according to law. 

‘‘(C) In this paragraph, the term ‘aiding and abetting’ means to knowingly 

provide aid to the violator with the intent to facilitate the violation. 

‘‘(2) CRIMINAL FORFEITURE PROCEEDINGS.—(A) The court, in imposing sentence on a person convicted of an offense under this section, shall order, in addition to any other sentence imposed, that the person forfeit to the United States 

the following property: 

‘‘(i) Any unauthorized copies of a motion picture or other audiovisual 

work protected under title 17, or part thereof, that were used, intended for 

use, or possessed with intent to use in the commission of an offense under 

subsection (a). 

‘‘(ii) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of an offense under subsection (a). 

‘‘(iii) Any property used, or intended to be used, to commit or substantially facilitate the commission of an offense under subsection (a). 

‘‘(B) The forfeiture of property under subparagraph (A), including any seizure and disposition of the property and any related judicial or administrative 

proceeding, shall be governed by the procedures set forth in section 413 of the 

Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 853), 

other than subsection (d) of that section. At the conclusion of the forfeiture proceedings, the court shall order that any forfeited unauthorized copies or 

phonorecords of a motion picture or other audiovisual work, or part thereof, and 

any plates, molds, matrices, masters, tapes, and film negatives by means of 

which such unauthorized copies or phonorecords may be made, be destroyed or 

otherwise disposed of according to law. 

‘‘(3) RESTITUTION.—When a person is convicted of an offense under this 

chapter, the court, pursuant to sections 3556, 3663A, and 3664, shall order the 

person to pay restitution to the owner of the copyright in the motion picture 

or other audiovisual work and any other victim of the offense as an offense 

against property referred to in section 3663A(c)(1)(A)(ii).’’. 

(e) APPLICABILITY.—The amendments made by this section shall apply only in 

a case in which the underlying act or acts occur on or after the date of the enactment of this Act. 

SEC. 203. DIRECTIVE TO UNITED STATES SENTENCING COMMISSION. 

(a) REVIEW AND AMENDMENT.—The United States Sentencing Commission, pursuant to its authority under section 994 of title 28, United States Code, shall review 

and, if appropriate, amend the Federal sentencing guidelines and policy statements 

applicable in any case sentenced under section 2B5.3 of the Federal sentencing 

guidelines for exporting infringing items in violation of section 602(a)(2) of title 17, 

United States Code, to determine whether a defendant in such case should receive 

an upward adjustment in the offense level, on the grounds that exportation introduces infringing items into the stream of foreign commerce in a manner analogous 

10

to the manner in which manufacturing, importing, and uploading such items introduces them into the stream of commerce. 

(b) AUTHORIZATION.—The United States Sentencing Commission may amend 

the Federal sentencing guidelines under subsection (a) in accordance with the procedures set forth in section 21(a) of the Sentencing Act of 1987 (28 U.S.C. 994 note) 

as though the authority under that section had not expired. 

SEC. 204. TRAFFICKING IN COUNTERFEIT GOODS OR SERVICES. 

(a) IN GENERAL.—Section 2320 of title 18, United States Code, is amended—

(1) in subsection (a)—

(A) by striking ‘‘Whoever’’ and inserting ‘‘

‘‘(1) IN GENERAL.—Whoever’’; 

(B) by moving the remaining text 2 ems to the right; and 

(C) by adding at the end the following: 

‘‘(2) SERIOUS BODILY HARM OR DEATH.—

‘‘(A) SERIOUS BODILY HARM.—If the offender knowingly or recklessly 

causes or attempts to cause serious bodily injury from conduct in violation 

of paragraph (1), the penalty shall be a fine under this title or imprisonment for not more than 20 years, or both. 

‘‘(B) DEATH.—If the offender knowingly or recklessly causes or attempts 

to cause death from conduct in violation of paragraph (1), the penalty shall 

be a fine under this title or imprisonment for any term of years or for life, 

or both.’’; and 

(2) in subsection (b)(l)—

(A) by redesignating subparagraph (B) as subparagraph (C); and 

(B) by inserting after subparagraph (A) the following: 

‘‘(B) Any property constituting or derived from any proceeds obtained 

directly or indirectly as a result of a violation of subsection (a).’’. 

TITLE III—COORDINATION AND STRATEGIC 

PLANNING OF FEDERAL EFFORT AGAINST 

COUNTERFEITING AND PIRACY 

Subtitle A—Office of the United States Intellectual 

Property Enforcement Representative 

SEC. 301. OFFICE OF THE UNITED STATES INTELLECTUAL PROPERTY ENFORCEMENT REPRESENTATIVE. 

(a) ESTABLISHMENT WITHIN EXECUTIVE OFFICE OF THE PRESIDENT.—There is established within the Executive Office of the President the Office of the United 

States Intellectual Property Enforcement Representative (in this title referred to as 

‘‘the Office’’). 

(b) UNITED STATES INTELLECTUAL PROPERTY ENFORCEMENT REPRESENTATIVE.—

The head of the Office shall be the United States Intellectual Property Enforcement 

Representative (in this title referred to as the ‘‘IP Enforcement Representative’’) 

who shall be appointed by the President, by and with the advice and consent of the 

Senate. As an exercise of the rulemaking power of the Senate, any nomination of 

the IP Enforcement Representative submitted to the Senate for confirmation, and 

referred to a committee, shall be referred to the Committee on the Judiciary. The 

IP Enforcement Representative shall hold office at the pleasure of the President, 

shall be entitled to receive the same allowances as a chief of mission, and shall have 

the rank of Ambassador Extraordinary and Plenipotentiary. 

(c) DUTIES OF IP ENFORCEMENT REPRESENTATIVE.—

(1) IN GENERAL.—The IP Enforcement Representative shall—

(A) have primary responsibility for developing, coordinating, and facilitating the implementation, by the departments and agencies listed in subsection (d)(2), the policies, objectives, and priorities of the Joint Strategic 

Plan against counterfeiting and piracy under section 321; 

(B) serve as the principal advisor to the President on domestic and 

international intellectual property enforcement policy; 

(C) assist the United States Trade Representative in conducting negotiations on behalf of the United States relating to international intellectual 

property enforcement, including negotiations on any intellectual property 

enforcement matter considered under the auspices of the World Trade OrVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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ganization or in the course of commodity and direct investment negotiations 

in which the United States participates; 

(D) issue and coordinate policy guidance to departments and agencies 

on basic issues of policy and interpretation that arise in the exercise of domestic and international intellectual property enforcement functions to the 

extent necessary to assure the coordination of international intellectual 

property enforcement policy and consistent with any other law; 

(E) act as the principal spokesperson of the President on domestic and 

international intellectual property enforcement matters; 

(F) report directly to the President and the Congress regarding, and be 

responsible to the President and the Congress for the administration of, intellectual property enforcement programs; 

(G) advise the President and the Congress with respect to domestic and 

international intellectual property enforcement challenges and priorities; 

(H) report to the Congress, as provided in section 322, on the implementation of the Joint Strategic Plan, and make recommendations to the 

Congress for improvements in Federal intellectual property enforcement efforts; 

(I) chair the interagency intellectual property enforcement advisory 

committee established under subsection (d)(2), and consult with such advisory committee in the performance of the functions of the IP Enforcement 

Representative; and 

(J) carry out such other functions as the President may direct. 

(2) SENSE OF CONGRESS.—It is the sense of the Congress that the IP Enforcement Representative should—

(A) be the senior representative on any body that the President may 

establish for the purpose of providing to the President advice on overall 

policies in which intellectual property enforcement matters predominate; 

and 

(B) be included as a participant in all economic summit and other international meetings at which international intellectual property enforcement 

is a major topic. 

(3) DELEGATION.—The IP Enforcement Representative may—

(A) delegate any of the IP Enforcement Representative’s functions, powers, and duties to such officers and employees of the Office as the IP Enforcement Representative may designate; and 

(B) authorize such successive redelegations of such functions, powers, 

and duties to such officers and employees of the Office as IP Enforcement 

Representative considers appropriate. 

(d) COORDINATION OF INTELLECTUAL PROPERTY ENFORCEMENT ACTIONS.—

(1) IN GENERAL.—In carrying out the functions of the IP Enforcement Representative, the IP Enforcement Representative shall coordinate the allocation 

of interagency resources for intellectual property enforcement, including identifying, and referring to the appropriate Federal department or agency, for consideration with respect to action, violations of intellectual property laws. 

(2) ADVISORY COMMITTEE.—For purposes of assisting the IP Enforcement 

Representative in carrying out the functions of the IP Enforcement Representative, there is established an interagency intellectual property enforcement advisory committee composed of the IP Enforcement Representative, who shall chair 

the committee, and senior representatives of the following departments and 

agencies who are involved in intellectual property enforcement, and are appointed by the respective heads of those departments and agencies: 

(A) The Department of Justice (including the Intellectual Property Enforcement Officer appointed under section 501). 

(B) The United States Patent and Trademark Office and other relevant 

units of the Department of Commerce. 

(C) The Office of the United States Trade Representative. 

(D) The Department of State (including the United States Agency for 

International Development and the Bureau of International Narcotics Law 

Enforcement). 

(E) The Department of Homeland Security (including U.S. Customs and 

Border Protection and U.S. Immigration and Customs Enforcement). 

(F) The United States International Trade Commission. 

(G) The Food and Drug Administration of the Department of Health 

and Human Services. 

(H) The United States Copyright Office. 

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(I) Such other agencies as the IP Enforcement Representative determines to be substantially involved in the efforts of the Federal Government 

to combat counterfeiting and piracy. 

(e) IDENTIFICATION OF COUNTRIES THAT DENY ADEQUATE PROTECTION OF INTELLECTUAL PROPERTY RIGHTS.—Section 182(b)(2)(A) of the Trade Act of 1974 (19 

U.S.C. 2242(b)(2)(A)) is amended by inserting ‘‘the United States Intellectual Property Enforcement Representative,’’ after ‘‘shall consult with’’. 

(f) POWERS OF IP ENFORCEMENT REPRESENTATIVE.—In carrying out the responsibilities under this title, the IP Enforcement Representative may—

(1) select, appoint, employ, and fix the compensation of such officers and 

employees as may be necessary to carry out those responsibilities; 

(2) request the head of a department, agency, or program of the Federal 

Government to place personnel of such department, agency, or program who are 

engaged in intellectual property enforcement activities on temporary detail to 

the Office of the IP Enforcement Representative to assist in carrying out those 

responsibilities; 

(3) use for administrative purposes, on a reimbursable basis, the available 

services, equipment, personnel, and facilities of Federal, State, and local government agencies; 

(4) procure the services of experts and consultants in accordance with section 3109 of title 5, United States Code, relating to the procurement of temporary and intermittent services, at rates of compensation for individuals not 

to exceed the daily equivalent of the rate of pay payable under level IV of the 

Executive Schedule under section 5315 of title 5, United States Code, and while 

such experts and consultants are so serving away from their homes or regular 

place of business, to pay such employees travel expenses and per diem in lieu 

of subsistence at rates authorized by section 5703 of title 5, United States Code, 

for persons in Government service employed intermittently; 

(5) issue such regulations as may be necessary to carry out the functions 

vested in the IP Enforcement Representative; 

(6) enter into and perform such contracts, leases, cooperative agreements, 

or other transactions as may be necessary in the conduct of the work of the Office and on such terms as the IP Enforcement Representative considers appropriate, with any department, agency, or instrumentality of the United States, 

or with any public or private person, firm, association, corporation, or institution; 

(7) accept voluntary and uncompensated services, notwithstanding the provisions of section 1342 of title 31, United States Code; 

(8) adopt an official seal, which shall be judicially noticed; and 

(9) accept, hold, administer, and use gifts, devises, and bequests of property, both real and personal, for the purpose of aiding or facilitating the work 

of the Office. 

(g) COMPENSATION.—Section 5312 of title 5, United States Code, is amended by 

adding at the end the following: 

‘‘United States Intellectual Property Enforcement Representative.’’. 

SEC. 302. DEFINITION. 

For purposes of this title, the term ‘‘intellectual property enforcement’’ means 

matters relating to the enforcement of laws protecting copyrights, patents, trademarks, other forms of intellectual property, and trade secrets, both in the United 

States and abroad, including matters relating to combating counterfeit and pirated 

goods. 

Subtitle B—Joint Strategic Plan 

SEC. 321. JOINT STRATEGIC PLAN. 

(a) PURPOSE.—The objectives of the Joint Strategic Plan against counterfeiting 

and piracy that is referred to in section 301(c)(1)(A) (in this section referred to as 

the ‘‘joint strategic plan’’) are the following: 

(1) Eliminating counterfeit and pirated goods from the international supply 

chain. 

(2) Identifying individuals, financial institutions, business concerns, and 

other entities involved in the financing, production, trafficking, or sale of counterfeit or pirated goods. 

(3) Identifying and sharing information among the relevant departments 

and agencies for the purpose of arresting and prosecuting individuals and entiVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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ties that are knowingly involved the financing, production, trafficking, or sale 

of counterfeit or pirated goods. 

(4) Disrupting and eliminating counterfeit and piracy networks. 

(5) Strengthening the capacity of other countries to protect and enforce intellectual property rights, and reducing the number of countries that fail to enforce laws preventing the financing, production, trafficking, and sale of counterfeit and pirated goods. 

(6) Working with other countries to establish international standards and 

policies for the effective protection and enforcement of intellectual property 

rights. 

(7) Protecting intellectual property rights overseas by—

(A) working with other countries to ensure that such countries—

(i) have adequate and effective laws protecting copyrights, trademarks, patents, and other forms of intellectual property; 

(ii) have legal regimes that enforce their own domestic intellectual 

property laws, eliminate counterfeit and piracy operations, and arrest 

and prosecute those who commit intellectual property crimes; 

(iii) provide their law enforcement officials with the authority to 

seize, inspect, and destroy pirated and counterfeit goods, including at 

ports of entry; 

(iv) provide for the seizure of property used to produce pirated and 

counterfeit goods; and 

(v) are not on the Priority Watch List issued by the United States 

Trade Representative under section 182 of the Trade Act of 1974 (19 

U.S.C. 2242); 

(B) exchanging information with appropriate law enforcement agencies 

in other countries relating to individuals and entities involved in the financing, production, trafficking, or sale of pirated or counterfeit goods; 

(C) using the information described in subparagraph (B) to conduct enforcement activities in cooperation with appropriate law enforcement agencies in other countries; and 

(D) building a formal process for consulting with companies, industry 

associations, labor unions, and other interested groups in other countries 

with respect to intellectual property enforcement. 

(b) TIMING.—Not later than 6 months after the date of the enactment of this 

Act, and not later than December 31 of every third year thereafter, the IP Enforcement Representative shall submit the joint strategic plan to the President, to the 

Committee on the Judiciary and the Committee on Appropriations of the House of 

Representatives, and to the Committee on the Judiciary and the Committee on Appropriations of the Senate. 

(c) RESPONSIBILITY OF THE IP ENFORCEMENT REPRESENTATIVE.—In developing 

the joint strategic plan, the IP Enforcement Representative—

(1) shall consult and coordinate with the appropriate officers and employees 

of departments and agencies represented on the advisory committee appointed 

under section 301(d)(2) who are involved in intellectual property enforcement; 

and 

(2) may consult with private sector experts in intellectual property enforcement. 

(d) RESPONSIBILITIES OF OTHER DEPARTMENTS AND AGENCIES.—To assist in the 

development and implementation of the joint strategic plan, the heads of the departments and agencies identified under section 301(d)(2) (including the heads of any 

other agencies identified by the IP Enforcement Representative under section 

(d)(2)(I)) shall—

(1) designate personnel with expertise and experience in intellectual property enforcement matters to work with the IP Enforcement Representative; and 

(2) share relevant department or agency information with the IP Enforcement Representative, including statistical information on the enforcement activities of the department or agency against counterfeiting or piracy. 

(e) CONTENTS OF THE JOINT STRATEGIC PLAN.—Each joint strategic plan shall 

include the following: 

(1) A detailed description of the priorities identified for activities of the Federal Government relating to intellectual property enforcement. 

(2) A detailed description of the means and methods to be employed to 

achieve the priorities, including the means and methods for improving the efficiency and effectiveness of the Federal Government’s enforcement efforts 

against counterfeiting and piracy. 

(3) Estimates of the resources necessary to fulfill the priorities identified 

under paragraph (1). 

14

(4) The performance measures to be used to monitor results under the joint 

strategic plan during the following year. 

(5) An analysis of the threat posed by violations of intellectual property 

rights, including targets, risks, and threats of intellectual property theft, and 

the costs to the economy of the United States resulting from violations of intellectual property laws and the threats to public health and safety created by 

counterfeiting and piracy. 

(6) An identification of the departments and agencies that will be involved 

in implementing each priority under paragraph (1). 

(7) A strategy for ensuring coordination between the IP Enforcement Representative and the departments and agencies identified under paragraph (6), 

including a process for oversight of, and accountability among, the departments 

and agencies carrying out the strategy. 

(8) Such other information as the IP Enforcement Representative considers 

important in conveying to the recipients of the report, and to the people of the 

United States, the costs imposed on the United States economy and the threats 

to public health and safety created by counterfeiting and piracy, and the steps 

that the Federal Government will take over the period covered by the succeeding joint strategic plan to reduce those costs and counter those threats. 

(f) ENHANCING ENFORCEMENT EFFORTS OF FOREIGN GOVERNMENTS.—The joint 

strategic plan shall include programs to provide training and technical assistance 

to foreign governments for the purpose of enhancing the efforts of such governments 

to enforce laws against counterfeiting and piracy. With respect to such programs, 

the IP Enforcement Representative, in developing the joint strategic plan, shall—

(1) seek to enhance the efficiency and consistency with which Federal resources are expended, and seek to minimize duplication, overlap, or inconsistency of efforts; 

(2) identify and give priority to those countries where programs of training 

and technical assistance can be carried out most effectively and with the greatest benefit to reducing counterfeit and pirated products in the United States 

market, to protecting the intellectual property rights of United States persons 

and their licensees, and to protecting the interests of United States persons otherwise harmed by violations of intellectual property rights in those countries; 

(3) in identifying the priorities under paragraph (2), be guided by the countries identified by the United States Trade Representative under section 182(a) 

of the Trade Act of 1974 (19 U.S.C. 2242(a)); and 

(4) develop metrics to measure the effectiveness of the Federal Government’s efforts to improve the laws and enforcement practices of foreign governments against counterfeiting and piracy. 

(g) DISSEMINATION OF THE JOINT STRATEGIC PLAN.—The joint strategic plan 

shall be posted for public access on the website of the White House, and shall be 

disseminated to the public through such other means as the IP Enforcement Representative may identify. 

SEC. 322. REPORTING. 

(a) ANNUAL REPORT.—Not later than December 31 of each year, the IP Enforcement Representative shall submit an report on the activities of the Office during 

the preceding fiscal year. The annual report shall be submitted to the President and 

the Congress, and disseminated to the people of the United States, in the manner 

specified in subsections (b) and (g) of section 321. 

(b) CONTENTS.—The report required by this section shall include the following: 

(1) The progress made on implementing the strategic plan and on the 

progress toward fulfillment of the priorities identified under section 321(e). 

(2) The progress made toward efforts to encourage Federal, State, and local 

government departments and agencies to accord higher priority to intellectual 

property enforcement. 

(3) The progress made in working with foreign countries to investigate, arrest, and prosecute entities and individuals involved in the financing, production, trafficking, and sale of counterfeit and pirated goods. 

(4) The manner in which the relevant departments and agencies are working together and sharing information to strengthen intellectual property enforcement. 

(5) An assessment of the successes and shortcomings of the efforts of the 

Federal Government, including departments and agencies represented on the 

committee appointed under section 301(d)(2), in fulfilling the priorities identified in the applicable joint strategic plan during the preceding fiscal year. 

(6) Recommendations for any changes in statutes, regulations, or funding 

levels that the IP Representative considers would significantly improve the efVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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fectiveness or efficiency of the effort of the Federal Government to combat counterfeiting and piracy and otherwise strengthen intellectual property enforcement. 

(7) The progress made in strengthening the capacity of countries to protect 

and enforce intellectual property rights. 

(8) The successes and challenges in sharing with other countries information relating to intellectual property enforcement. 

(9) The progress of the United States Trade Representative in taking the 

appropriate action under any trade agreement or treaty to protect intellectual 

property rights of United States persons and their licensees. 

SEC. 323. OTHER INTELLECTUAL PROPERTY ACTIVITIES. 

If in any other case in which the IP Representative identifies other intellectual 

property initiatives of the Federal Government that include enforcement activities 

similar or identical to the activities described in this title, the IP Representative 

shall consolidate those activities into the work of the Office of the IP Representative 

in order to prevent duplication. Other activities that may improve intellectual property enforcement may continue outside of the Office of the Intellectual Property Enforcement Representative, including—

(1) capacity building in other countries (other than activities to carry out 

the objectives described in section 321(a)(7); and 

(2) bilateral and multilateral cooperative efforts. 

SEC. 324. SAVINGS AND REPEALS. 

(a) REPEAL OF COORDINATION COUNCIL.—Section 653 of the Treasury and General Government Appropriations Act, 2000 (15 U.S.C. 1128) is repealed. 

(b) CURRENT AUTHORITIES NOT AFFECTED.—Except as provided in subsection 

(a), nothing in this title shall alter the authority of any department or agency of 

the United States to investigate and prosecute violations of laws protecting intellectual rights. 

(c) REGISTER OF COPYRIGHTS.—Nothing in this title shall derogate from the duties and functions of the Register of Copyrights. 

SEC. 325. AUTHORIZATION OF APPROPRIATIONS. 

There are authorized to be appropriated for each fiscal year such sums as may 

be necessary to carry out this title. By not later than the date on which the President submits to Congress the budget of the United States Government for a fiscal 

year, the IP Representative shall submit to the Committees on the Judiciary of the 

House of Representatives and the Senate the projected amount of funds for the succeeding fiscal year that will be necessary for the Office to carry out its functions. 

TITLE IV—INTERNATIONAL ENFORCEMENT 

AND COORDINATION 

SEC. 401. INTELLECTUAL PROPERTY ATTACHE ́ S. 

The Under Secretary of Commerce for Intellectual Property and Director of the 

United States Patent and Trademark Office (in this title referred to as the ‘‘Director’’), in consultation with the Director General of the United States and Foreign 

Commercial Service, shall appoint 10 intellectual property attache ́s to serve in 

United States embassies or other diplomatic missions. The 10 appointments shall 

be in addition to personnel serving in the capacity of intellectual property attache ́

at United States embassies or other diplomatic missions on the date of the enactment of this Act. 

SEC. 402. DUTIES AND RESPONSIBILITIES OF INTELLECTUAL PROPERTY ATTACHE ́ S. 

The intellectual property attache ́s appointed under section 401, as well as others serving as intellectual property attache ́s of the Department of Commerce, shall 

have the following responsibilities: 

(1) To promote cooperation with foreign governments in the enforcement of 

intellectual property laws generally, and in the enforcement of laws against 

counterfeiting and piracy in particular. 

(2) To assist United States persons holding intellectual property rights, and 

the licensees of such United States persons, in their efforts to combat counterfeiting and piracy of their products or works within the host country, including 

counterfeit or pirated goods exported from or transshipped through that country. 

16

(3) To chair an intellectual property protection task force consisting of representatives from all other relevant sections or bureaus of the embassy or other 

mission. 

(4) To coordinate with representatives of the embassies or missions of other 

countries in information sharing, private or public communications with the 

government of the host country, and other forms of cooperation for the purpose 

of improving enforcement against counterfeiting and piracy. 

(5) As appropriate and in accordance with applicable laws and the diplomatic status of the attache ́s, to engage in public education efforts against counterfeiting and piracy in the host country. 

(6) To coordinate training and technical assistance programs of the United 

States Government within the host country that are aimed at improving the enforcement of laws against counterfeiting and piracy. 

(7) To identify and promote other means to more effectively combat counterfeiting and piracy activities under the jurisdiction of the host country. 

SEC. 403. TRAINING AND DESIGNATION OF ASSIGNMENT. 

(a) TRAINING OF ATTACHE ́S.—The Director shall ensure that each attache ́ appointed under section 401 is fully trained for the responsibilities of the position before assuming duties at the United States embassy or other mission in question. 

(b) PRIORITY ASSIGNMENTS.—In designating the embassies or other missions to 

which attache ́s are assigned, the Director shall give priority to those countries 

where the activities of an attache ́ can be carried out most effectively and with the 

greatest benefit to reducing counterfeit and pirated products in the United States 

market, to protecting the intellectual property rights of United States persons and 

their licensees, and to protecting the interests of United States persons otherwise 

harmed by violations of intellectual property rights in those countries. 

SEC. 404. COORDINATION. 

(a) IN GENERAL.—The activities authorized by this title shall be carried out in 

coordination with the United States Intellectual Property Enforcement Representative appointed under section 301. 

(b) REPORT ON ATTACHE ́S.—The Director shall submit to the Congress each year 

a report on the appointment, designation for assignment, and activities of all intellectual property attache ́s of the Department of Commerce who are serving at United 

States embassies or other diplomatic missions. 

SEC. 405. AUTHORIZATION OF APPROPRIATIONS. 

There are authorized to be appropriated for each fiscal year such sums as may 

be necessary for the training and support of the intellectual property attache ́s appointed under section 401 and of other personnel serving as intellectual property 

attache ́s of the Department of Commerce. 

TITLE V—DEPARTMENT OF JUSTICE 

PROGRAMS 

Subtitle A—Coordination 

SEC. 501. INTELLECTUAL PROPERTY ENFORCEMENT OFFICER. 

(a) ESTABLISHMENT.—There is established within the Office of the Deputy Attorney General in the Department of Justice the ‘‘Intellectual Property Enforcement 

Division’’. The head of the Intellectual Property Enforcement Division shall be the 

Intellectual Property Enforcement Officer (in this title referred to as the ‘‘IP Officer’’). The IP Officer shall be appointed by the Attorney General and shall report 

directly to the Deputy Attorney General. 

(b) DUTIES.—The IP Officer shall—

(1) coordinate all efforts of the Department of Justice relating to the enforcement of intellectual property rights and to combating counterfeiting and piracy; 

(2) serve as the lead representative of the Department of Justice on the advisory committee provided for in section 301(d)(2) and as the liaison of the Department of Justice with foreign governments with respect to training conducted under section 522; and 

(3) carry out such other related duties that may be assigned by the Deputy 

Attorney General. 

(c) TRANSFER OF FUNCTIONS.—

17

(1) CRIMINAL INTELLECTUAL PROPERTY ENFORCEMENT.—There are transferred to the Intellectual Property Enforcement Division those functions of the 

Computer Crime and Intellectual Property Section of the Criminal Division of 

the Department of Justice that relate to the enforcement of criminal laws relating to the protection of intellectual property rights and trade secrets, including 

the following: 

(A) Section 506 and 1204 of title 17, United States Code. 

(B) Section 2318 through 2320 of title 18, United States Code. 

(C) Sections 1831 and 1832 of title 18, United States Code. 

(D) Any other provision of law, including the following, to the extent 

such provision involves the enforcement of any provision of law referred to 

in subparagraphs (A) through (C) or comparable provision of law: 

(i) Section 1341 of title 18, United States Code, relating to frauds 

and swindles. 

(ii) Section 1343 of title 18, United States Code, relating to fraud 

by wire, radio, or television. 

(iii) Section 2512 of title 18, United States Code, relating to trafficking in interception devices. 

(iv) Section 633 of the Communications Act of 1934 (47 U.S.C. 553), 

relating to the unauthorized reception of cable service. 

(v) Section 705 of the Communications Act of 1934 (47 U.S.C. 605), 

relating to the unauthorized publication or use of communications. 

(2) INTELLECTUAL PROPERTY ENFORCEMENT COORDINATORS.—The Intellectual Property Law Enforcement Coordinators of the Department of Justice to 

whom section 521 applies shall also be in the Intellectual Property Enforcement 

Division. 

Subtitle B—Law Enforcement Resources 

SEC. 511. LOCAL LAW ENFORCEMENT GRANTS. 

(a) AUTHORIZATION.—Section 2 of the Computer Crime Enforcement Act (42 

U.S.C. 3713) is amended—

(1) in subsection (b), by inserting after ‘‘computer crime’’ each place it appears the following: ‘‘, including infringement of copyrighted works over the 

Internet’’; and 

(2) in subsection (e)(1), relating to authorization of appropriations, by striking ‘‘fiscal years 2001 through 2004’’ and inserting ‘‘fiscal years 2008 through 

2012’’. 

(b) GRANTS.—The Office of Justice Programs of the Department of Justice shall 

make grants to eligible State or local law enforcement entities, including law enforcement agencies of municipal governments and public educational institutions, 

for training, prevention, enforcement, and prosecution of intellectual property theft 

and infringement crimes (in this subsection referred to as ‘‘IP–TIC grants’’), in accordance with the following: 

(1) USE OF IP–TIC GRANT AMOUNTS.—IP–TIC grants may be used to establish and develop programs to do the following with respect to the enforcement 

of State and local true name and address laws and State and local criminal 

laws on anti-piracy, anti-counterfeiting, and theft of goods protected by any 

copyright, patent, trademark, service mark, trade secret, or other intellectual 

property right under State or Federal law: 

(A) Assist State and local law enforcement agencies in enforcing those 

laws, including by reimbursing State and local entities for expenses incurred in performing enforcement operations, such as overtime payments 

and storage fees for seized evidence. 

(B) Assist State and local law enforcement agencies in educating the 

public to prevent, deter, and identify violations of those laws. 

(C) Educate and train State and local law enforcement officers and 

prosecutors to conduct investigations and forensic analyses of evidence and 

prosecutions in matters involving those laws. 

(D) Establish task forces that include personnel from State or local law 

enforcement entities, or both, exclusively to conduct investigations and forensic analyses of evidence and prosecutions in matters involving those 

laws. 

(E) Assist State and local law enforcement officers and prosecutors in 

acquiring computer and other equipment to conduct investigations and forensic analyses of evidence in matters involving those laws. 

18

(F) Facilitate and promote the sharing, with State and local law enforcement officers and prosecutors, of the expertise and information of Federal law enforcement agencies about the investigation, analysis, and prosecution of matters involving those laws and criminal infringement of copyrighted works, including the use of multi-jurisdictional task forces. 

(2) ELIGIBILITY.—To be eligible to receive an IP–TIC grant, a State or local 

government entity must provide to the Attorney General—

(A) assurances that the State in which the government entity is located 

has in effect laws described in paragraph (1); 

(B) an assessment of the resource needs of the State or local government entity applying for the grant, including information on the need for 

reimbursements of base salaries and overtime costs, storage fees, and other 

expenditures to improve the investigation, prevention, or enforcement of 

laws described in paragraph (1); and 

(C) a plan for coordinating the programs funded under this section with 

other federally funded technical assistance and training programs, including directly funded local programs such as the Local Law Enforcement 

Block Grant program (described under the heading ‘‘Violent Crime Reduction Programs, State and Local Law Enforcement Assistance’’ in title I of 

the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1998 (Public Law 105–119)). 

(3) MATCHING FUNDS.—The Federal share of an IP–TIC grant may not exceed 90 percent of the costs of the program or proposal funded by the IP–TIC 

grant, unless the Attorney General waives, in whole or in part, the 90 percent 

requirement. 

(4) AUTHORIZATION OF APPROPRIATIONS.—

(A) AUTHORIZATION.—There is authorized to be appropriated to carry 

out this subsection the sum of $25,000,000 for each of fiscal years 2008 

through 2012. 

(B) LIMITATION.—Of the amount made available to carry out this subsection in any fiscal year, not more than 3 percent may be used by the Attorney General for salaries and administrative expenses. 

SEC. 512. CHIP UNITS, TRAINING, AND ADDITIONAL RESOURCES. 

(a) EVALUATION OF CHIP UNITS.—The Attorney General shall review the allocation and activities of the Computer Hacking and Intellectual Property (in this section referred to as ‘‘CHIP’’) units that have been established in various Federal judicial districts, with the goals of—

(1) improving the effectiveness of CHIP units in investigating and prosecuting criminal offenses arising from counterfeiting or piracy activities; 

(2) ensuring that CHIP units are established and funded in every judicial 

district in which they can be effectively deployed; 

(3) upgrading the training and expertise of Department of Justice personnel 

participating in CHIP units; and 

(4) improving the coordination of the activities of CHIP units with corresponding efforts of State and local law enforcement agencies operating within 

the Federal judicial district in question. 

(b) REQUIREMENTS.—In addition to any initiatives undertaken as a result of the 

review conducted under subsection (a), the Attorney General, in consultation with 

the Director of the Federal Bureau of Investigation, shall ensure that—

(1) each CHIP unit is assigned at least 2 additional agents of the Federal 

Bureau of Investigation to support such unit for the purpose of investigating intellectual property crimes; 

(2) each CHIP unit is assigned at least 1 additional assistant United States 

attorney to support such unit for the purpose of prosecuting intellectual property crimes or other crimes involved in counterfeiting or piracy activities; 

(3) CHIP units are established and staffed in at least 10 Federal judicial 

districts in addition to those districts in which CHIP units exist on the date of 

the enactment of this Act; and 

(4) an operational unit is created consisting of not less than 5 agents of the 

Federal Bureau of Investigation, attached to the headquarters of the Federal 

Bureau of Investigation in Washington, DC, and dedicated to working with the 

Intellectual Property Enforcement Division established by section 501 on the development, investigation, and coordination of complex, multi-district, and international criminal intellectual property cases. 

(c) COORDINATION WITH STATE AND LOCAL AUTHORITIES.—The United States attorney for each Federal judicial district in which a CHIP unit is in operation shall 

ensure that the activities of that unit are coordinated with the corresponding activiVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
19

ties of State and local law enforcement agencies operating within that Federal judicial district in the investigation of intellectual property crimes and other crimes involved in counterfeiting or piracy, including by coordinating Federal, State, and 

local operations and intelligence sharing to the extent appropriate. 

(d) ADDITIONAL RESPONSIBILITIES OF THE ATTORNEY GENERAL.—The Attorney 

General, in consultation with the Director of the Federal Bureau of Investigation 

as appropriate, shall ensure the following: 

(1) All agents of the Federal Bureau of Investigation, and all assistant 

United States attorneys, who are assigned to CHIP units have received advanced training, on an annual basis, in the investigation and prosecution of intellectual property crimes and other crimes involved in counterfeiting and piracy. 

(2) A comprehensive training program on the development and investigation of criminal offenses involved in counterfeiting and piracy is provided for all 

agents of the Federal Bureau of Investigation. 

(3) All relevant units of the Department of Justice are allocated sufficient 

funding and other resources as may be necessary to provide expert computer 

forensic assistance, including from nongovernmental entities, in investigating 

and prosecuting intellectual property crimes in a timely manner. For purposes 

of this paragraph, the term ‘‘all relevant units’’ includes those officers and employees assigned to carry out the functions transferred by section 502(a)(1), 

CHIP units, offices of the United States attorneys, and units of the Federal Bureau of Investigation that are engaged in the investigation of intellectual property crimes. 

SEC. 513. TRANSPARENCY OF PROSECUTORIAL DECISIONMAKING. 

(a) IN GENERAL.—The Attorney General shall direct each United States attorney—

(1) to review the formal or informal standards currently in effect in that 

Federal judicial district for accepting or declining prosecution of cases involving 

criminal violations of intellectual property laws; 

(2) to consider whether the standards should be modified or applied more 

flexibly—

(A) to ensure that significant violations are not being declined for prosecution inappropriately; or 

(B) in light of the broader impact of individual cases on the overall 

strategy to combat counterfeiting and piracy; and 

(3) to review the practices and procedures currently in place for providing 

information to complainants and victims in cases and investigations involving 

criminal violations of intellectual property laws regarding the status of such 

cases and investigations, including the practices and procedures for apprising 

interested parties of the decision to decline prosecution of such cases. 

(b) CONSTRUCTION.—(1) Nothing in this section shall be construed to impinge 

on the appropriate exercise of prosecutorial discretion with regard to cases involving 

criminal violations of intellectual property laws or to require the promulgation of 

formal standards or thresholds regarding prosecution of any cases. 

(2) Nothing in the section shall give rise to any claim, cause of action, defense, 

privilege, or immunity that may be asserted by any party to Federal litigation. 

SEC. 514. AUTHORIZATION OF APPROPRIATIONS. 

There are authorized to be appropriated for each fiscal year such sums as may 

be necessary to carry out this subtitle. 

Subtitle C—International Activities 

SEC. 521. INTERNATIONAL INTELLECTUAL PROPERTY LAW ENFORCEMENT COORDINATORS. 

(a) DEPLOYMENT OF ADDITIONAL COORDINATION.—The Attorney General shall, 

within 180 days after the date of the enactment of this Act, deploy 5 Intellectual 

Property Law Enforcement Coordinators, in addition to those serving in such capacity on such date of enactment. Such deployments shall be made to those countries 

and regions where the activities of such a coordinator can be carried out most effectively and with the greatest benefit to reducing counterfeit and pirated products in 

the United States market, to protecting the intellectual property rights of United 

States persons and their licensees, and to protecting the interests of United States 

persons otherwise harmed by violations of intellectual property rights in those countries. The mission of all International Intellectual Property Law Enforcement Coordinators shall include the following: 

20

(1) Acting as liaison with foreign law enforcement agencies and other foreign officials in criminal matters involving intellectual property rights. 

(2) Performing outreach and training to build the enforcement capacity of 

foreign governments against intellectual property-related crime in the regions 

in which the coordinators serve. 

(3) Coordinating United States law enforcement activities against intellectual property-related crimes in the regions in which the coordinators serve. 

(4) Coordinating with the activities of the intellectual property attache ́s appointed under title IV in the countries or regions to which the coordinators are 

deployed. 

(5) Coordinating the activities of the coordinators with the IP Officer. 

(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for each fiscal year such sums as may be necessary for the deployment and 

support of all International Intellectual Property Enforcement Coordinators of the 

Department of Justice, including those deployed under subsection (a). 

SEC. 522. INTERNATIONAL TRAINING ACTIVITIES OF THE COMPUTER CRIME AND INTELLECTUAL PROPERTY SECTION. 

(a) INCREASED TRAINING AND TECHNICAL ASSISTANCE TO FOREIGN GOVERN- MENTS.—The Attorney General shall increase the efforts of the Department of Justice to provide training and technical assistance to foreign governments, including 

foreign law enforcement agencies and foreign courts, to more effectively combat 

counterfeiting and piracy activities falling within the jurisdiction of such governments. 

(b) CONDUCT OF PROGRAMS.—The increased training and technical assistance 

programs under subsection (a) shall be carried out by the Intellectual Property Enforcement Division established by section 501, as well as through such other divisions, sections, or agencies of the Department of Justice as the Attorney General 

may direct. 

(c) PRIORITY COUNTRIES.—The Attorney General, in providing increased training 

and technical assistance programs under this section, shall give priority to those 

countries where such programs can be carried out most effectively and with the 

greatest likelihood of reducing counterfeit and pirated products in the United States 

market, of protecting the intellectual property rights of United States persons, and 

of protecting the interests of United States persons otherwise harmed by violations 

of intellectual property rights in those countries. 

(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for each fiscal year such sums as may be necessary to carry out this section. 

Subtitle D—Coordination, Implementation, and 

Reporting 

SEC. 531. COORDINATION. 

The IP officer shall ensure that activities undertaken under this title are carried out in a manner consistent with the joint strategic plan developed under section 

321. 

SEC. 532. ANNUAL REPORTS. 

Not later than 1 year after the date of the enactment of this Act, and annually 

thereafter, the Attorney General shall submit to the Committees on the Judiciary 

of the Senate and the House of Representatives a report on actions taken to carry 

out the requirements of this title, including a report on the activities of the IP Officer.

Æ

Mr. BERMAN. At this point, I would like to recognize the chief 

sponsor of this legislation, the Chairman of the full Judiciary Committee, and our great friend and champion on these issues, Chairman Conyers. 

Mr. CONYERS. Thank you very much, Howard Berman, Committee Chair on Intellectual Property. I may be the one that put 

this bill out, but I didn’t name it PRO-IP, the Prioritizing ReVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
21

sources and Organization for Intellectual Property Act of 2007. We 

have strong support on both sides of the aisle and we think this 

is very important in the fight to maintain our competitive edge in 

a global marketplace. 

By providing additional resources for enforcement of intellectual 

property, we ensure that innovation and creativity will continue to 

prosper in our society. I don’t even know why I am talking about 

why we need this legislation. It is pretty clear, or it ought to be. 

Contrary to popular views expressed online, this bill is for the 

American people, not a specific industry. Counterfeiting and piracy 

cost the United States 750,000 jobs. Secondly, it hits the economy 

of our country somewhere between $200 billion and $250 billion 

every year in lost sales. 

Moreover, counterfeiting of items such as pharmaceuticals, aircraft, and auto parts is placing human lives at risk. Right now, 

fake and unsafe drugs, inadequate brake pads, aircraft parts, 

undetectable to the average unsuspecting citizen—are being passed 

off as the real thing. Consumer Reports investigators have seized 

brake pads made of kitty litter, sawdust, dried grass; smoke alarms 

with phony product safety certifications; toothpaste made with a 

chemical found in antifreeze; cell phone batteries that have a potential to explode. 

We have two options. The first is we can sit on our hands and 

do nothing, or we can try to make a difference. This bill is our attempt at the latter. There are concerns over some of these provisions that I just want mentioned. First, there are some people 

claiming that section 104 of this legislation, the provision allowing 

a court to consider whether to award statutory damages for each 

work in a compilation will result in opportunistic lawsuits that 

would drive some smaller companies out of business. 

Well, we are always watching lawyers that are hustling the system, so that goes with the turf. That is part of the problem. But, 

I believe the current law is outdated. Damages need to reflect the 

fact that we live in a world where music and published works are 

being consumed in bite-size pieces, not just in albums or whole 

books. I understand the concerns, and I want everyone to know 

that I am committed to working further on the issue. 

On the issue of civil forfeiture, some think the bill will allow the 

seizure of a family’s general purpose computer in a download case. 

Well, it is already in the law. We want to make sure that it is not 

abused. H.R. 4279 builds this current civil forfeiture law by enabling the seizure of property used to commit or facilitate violations 

of law. A warehouse used to store counterfeit goods could be seized. 

Property used to transport goods would be subject to forfeiture. 

We have carefully crafted the language in these sections to allow 

seizure only if the property was owned or predominantly controlled 

by the infringer. We have worked with a lot of different parties—

civil rights organizations, Internet service providers—to arrive at 

the language that we are going to examine here this morning. In 

fact, the provisions were the subject of extensive negotiations, and 

I feel comfortable about it, but we are going to continue discussions. As everybody knows, you don’t start off a bill written in concrete to begin with. 

22

I am aware of the concerns within the administration over restructuring the IP enforcement efforts. Yes, we create a new office 

of the U.S. intellectual property enforcement representative in the 

executive office of the President, as well as a key leadership position at the Department of Justice. The new Intellectual Property 

Enforcement Division that we envision is to provide better national 

planning and more effective coordination and accountability. 

So I want to work with DOJ and the administration on how we 

can accomplish these goals. Your constructive comments are going 

to be carefully considered. We have worked hard. We have a bipartisan bill. We have the Teamsters, the Directors Guild, AFTRA, 

SEIU, United Here, laborers, AFM, OPEIU, the Coalition Against 

Counterfeiting and Piracy, the Motor Equipment Manufacturing 

Association, even PhRMA, NBC Universal, and others. 

These are the ideas that I have that I am happy to start this discussion off with this morning, Mr. Chairman. I appreciate your 

courtesy. 

Mr. BERMAN. Thank you very much, Chairman Conyers. 

I am now pleased to recognize the Ranking Member of our Subcommittee, Howard Coble. 

Mr. COBLE. Thank you, Mr. Chairman. I want to initiate my 

comments by thanking you for the leadership that you have demonstrated in chairing what I regard as the Judiciary’s best Subcommittee generally. I want to thank you specifically for having 

convened this hearing today. On the rare occasions, Mr. Chairman, 

that you and I have not seen eye to eye on certain issues, we have 

without exception disagreed agreeably. 

Along with my colleagues who are cosponsors of this bipartisan 

bill, I share the view that this Congress must act to provide more 

effective tools and resources for those charged with combating piracy and counterfeiting. Indeed, I support the overwhelming majority of the provisions contained in this bill, and I hope to be able 

to add my name to that growing list at some point in the near future. 

Prior to doing so, however, I believe it is in the interests of copyright holders and users to have further conversation and to develop 

a better understanding about the potential impact of section 104, 

which relates to the computation of statutory damages in certain 

categories of copyright infringement actions. This, Mr. Chairman, 

as you and I have discussed earlier, is a complex issue. 

I appreciate your understanding of my concerns and your suggestions that the Copyright Office should, as soon as practicable, commence a roundtable dialogue among the broad cross-section of interested stakeholders, with the goal of providing further recommendations to our Subcommittee. I support this process, and 

want to take this opportunity to publicly encourage anyone with 

concerns about section 104 to fully participate in this proposed dialogue. 

Mr. Chairman, earlier this year, you will recall that Attorney 

General Gonzales appeared before the full Judiciary Committee to 

discuss a range of issues involving the Department of Justice. During the question and answer period, I asked the Attorney General 

to specifically address concerns that his department may lack the 

necessary tools to investigate and prosecute high-level intellectual 

23

property cases. I also asked him for guidance as to what steps we 

could take to more successfully prevent or prosecute counterfeiting 

and intellectual property piracy crimes within the United States 

and abroad. 

I was impressed with the breadth and candor of General 

Gonzales’ unscripted response. He talked about the importance of 

increasing our level of cooperation with friends and allies around 

the world, as well as the need to improve communications and education efforts targeted at American consumers. He stressed the determination and sophistication of criminals and terrorists who will 

pay to advance technology by offering top dollar for the top 

innovators. 

The Attorney General described the department’s engagement as 

an escalating real war that is being waged over the Internet 

through technology, and he candidly offered, ‘‘I do sometimes worry 

that we don’t have the best minds on this. We don’t have adequate 

resources, and I think this is something that I would love to talk 

to the Congress about because I worry about this very much.’’ General Gonzales also noted that you always need more FBI agents because these are very, very complicated cases. 

Mr. Chairman, the bill before us today is one that has been 

drafted with a high degree of deliberation, thought and sensitivity 

to the concerns expressed by former Attorney General Gonzales. I 

might add that they have been shared by many of us on this Subcommittee for some time. The views of the department, as well as 

other executive branch agencies and entities involved in enforcing 

and protecting IP rights have been weighed and given a great deal 

of consideration. 

That said, the bill includes two bold new proposals. The first will 

establish an Office of the United States Intellectual Property Enforcement Representative in the executive office of the President 

that is modeled, but on a much smaller scale, after the organic legislation that established the Office of the United States Trade Representative. 

The second will establish a new IP Enforcement Division at the 

Department of Justice that will ensure that IP enforcement issues, 

which are often forced to compete with other valid departmental 

priorities for scarce investigative and prosecutorial resources, will 

be able to receive a high level of dedicated attention, resources and 

priority that is commensurate to their importance to United States 

rights holders and to United States law enforcement interests. 

Mr. Chairman, I am sure much will be said as we continue to 

plow this field, but for the moment I look forward to hearing from 

our distinguished panel. I again thank you, Mr. Chairman, for having convened this hearing, and I yield back. 

[The prepared statement of Mr. Coble follows:]

PREPARED STATEMENT OF THE HONORABLE HOWARD COBLE, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NORTH CAROLINA, AND RANKING MEMBER, SUB- COMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

Thank you, Mr. Chairman, for convening this hearing on the newly-introduced 

anti-counterfeiting and piracy bill, your friendship and your leadership of this Subcommittee. 

On the few occasions you and I have not seen eye to eye on an issue, I have respected the fact that we have, as they say back home, been able to disagree without 

being disagreeable. 

24

Along with my colleagues who are cosponsors of this bipartisan bill, I share the 

view that this Congress must act to provide more effective tools and resources to 

those charged with combating piracy and counterfeiting. 

Indeed, I support the overwhelming majority of provisions contained in this bill 

and I hope to be able to add my name to that growing list at some point in the 

near future. 

But before doing so, I believe it is in the interests of copyright holders and users 

to have a further conversation and to develop a better understanding about the potential impact of section 104, which relates to the computation of statutory damages 

in certain categories of copyright infringement actions. 

This is a complex issue. I appreciate your understanding of my concerns and your 

suggestion the Copyright Office should, as soon as practicable, commence a dialogue 

among a broad cross-section of interested stakeholders with the goal of providing 

further recommendations to our Subcommittee. 

I support this process and want to take this opportunity to publicly encourage 

anyone with concerns about section 104 to fully participate in this planned dialogue. 

Mr. Chairman, earlier this year, General Gonzales appeared before the full Judiciary Committee to discuss a range of issues involving the Department of Justice. 

During the Q and A period, I asked the Attorney General to specifically address 

concerns that the Department may lack the necessary tools to investigate and prosecute high-level intellectual property cases. 

I also asked for guidance as to what steps we can take to more successfully prevent or prosecute counterfeiting and intellectual property piracy crimes within the 

U.S. and abroad. 

I was impressed with the breadth and candor of General Gonzales’ unscripted response. 

He talked about the importance of increasing our level of cooperation with friends 

and allies around the world as well as the need to improve communications and 

education efforts targeted at American consumers. 

He stressed the determination and sophistication of ‘‘[c]riminals and terrorists 

[who] will pay to advance technology’’ by offering ‘‘top dollar for the top innovators.’’

The Attorney General described the Department’s engagement as an escalating 

‘‘real war that is being waged over the Internet’’ through technology and he candidly 

offered:

I do sometimes worry that we don’t have the best minds on this, we 

don’t have adequate resources. And I think this is something that I 

would love to talk to Congress about because I worry about this very 

much.

General Gonzales also noted, ‘‘[y]ou always need more [FBI] agents, because these 

are very, very complicated cases.’’

Mr. Chairman, the bill before us today is one that has been drafted with a high 

degree of deliberation, thought and sensitivity to the concerns expressed by General 

Gonzales. Concerns, I might add, that have been shared by many of us on this Subcommittee for a long time. 

The views of the Department as well as other executive branch agencies and entities involved in enforcing and protecting IP rights have been weighed and given a 

great deal of consideration. 

That said, this bill includes two bold new proposals. 

The first will establish an Office of the U.S. Intellectual Property Enforcement 

Representative (USIPER) in the Executive Office of the President that is modeled, 

but on a much smaller scale, after the organic legislation that established the Office 

of the U.S. Trade Representative. 

The second will establish a new IP Enforcement Division at the Department of 

Justice that will ensure that IP enforcement issues, which are often forced to compete with other valid departmental priorities for scarce investigative and prosecutorial resources, will be able to receive a level of dedicated attention, resources and 

priority that is commensurate to their importance to U.S. rights-holders and to U.S. 

law enforcement interests. 

Mr. Chairman, I plan to have much more to say later about the specific solutions 

contained in H.R. 4279 but for now, I’m interested in giving our witnesses an opportunity to speak. With that, I yield the balance of my time.

Mr. BERMAN. Thank you very much, Mr. Coble. 

Now, I am pleased to recognize the Ranking Member of the 

House Judiciary Committee, and a cosponsor of this legislation, 

Congressman Lamar Smith. 

25

Mr. SMITH. Thank you, Mr. Chairman. I want to thank you, as 

well as Ranking Member Coble, for having a hearing on this important bill. I notice that it is, of course, bipartisan. There are five Republican and five Democrat original cosponsors, which augurs well 

for its success in this Congress, or more likely next year. 

I also want to point out, and I don’t know who came up with it, 

that the acronym for H.R. 4279 is PRO-IP, which is very appropriate, and not a surprise. One of my favorite quotes is from the 

last days of the 19th century, in 1899, when the patent commissioner himself, Charles Duell, said ‘‘Everything that can be invented has been invented.’’ With all due respect to Mr. Duell, over 

100 years later, it is abundantly clear that he was wrong. 

As we stand at the dawn of the 21st century, lawmakers must 

be willing to reexamine assumptions and consider new initiatives 

that help promote America’s vital national and economic interests. 

Doing more of what has been done before is simply not good 

enough. We must work to improve the policies and institutions of 

the past to promote the ideas of the future. 

One specific area that should be provided more permanence and 

priority in our government is the promotion, protection and enforcement of intellectual property rights. The value of U.S. intellectual property is estimated at between $5 trillion and $5.5 trillion—

an amount that is about 45 percent of our country’s gross domestic 

product. America’s IP industries provide valuable employment opportunities to tens of millions of our citizens. 

One recent study attributed 40 percent of the growth in GDP 

achieved by all private industry to U.S. IP industries alone. That 

same study concluded that nearly 60 percent of U.S. export growth 

is driven by international demand for the products and services 

created by our IP entrepreneurs. Significant investments are required to create and produce world-leading intellectual property. 

Unfortunately, those investments are in stark contrast to the easy, 

massive, unauthorized reproduction and distribution of fraudulent 

and unlicensed products and services. It is undisputed that the 

theft of U.S. IP costs American businesses their markets and 

American citizens their livelihoods. 

In cases that involve products such as fake pharmaceuticals, auto 

parts or aircraft parts, American consumers may even face debilitating injuries or even death. The ill-effects of counterfeiting and 

piracy cannot be catalogued by merely reciting statistics and cold 

mathematical calculations of economic costs alone. Neither, as I 

stated earlier, can we meet the new challenges and techniques employed by sophisticated counterfeiters and pirates by merely doing 

more of what has been done before. 

Our response to these threats must be proportionate to the harm 

inflicted. Among other efforts, our private and public activities 

must be directed towards, one, improving consumer education; two, 

enhancing communication and coordination among government departments and agencies involved in IP enforcement; and three, providing the resources to meet the challenges of protecting IP in an 

age of advanced technologies and globalization. 

Chairman Conyers, if he is still here—he is gone—but in any 

case, I want to commend him for the deliberate and transparent 

manner in which this bill was drafted. I also commend the work 

26

of the Bush administration, which has done more to elevate IP enforcement than any previous administration, in my judgment. 

Finally, I want to recognize the work of the Coalition Against 

Counterfeiting and Piracy, which succeeded this year in enlisting 

and uniting hundreds of businesses, associations and labor organizations in the fight against global IP theft. Protecting intellectual 

property is critical to preserving a strong economy. This bill protects American jobs, encourages innovation, and creates strong policies to protect the ideas of the future. 

Unlike Mr. Duell, I believe that we have merely scratched the 

surface of creativity and invention. I look forward to a productive 

discussion about ways to promote the efforts of American businesses and help preserve a strong American economy. 

Mr. Chairman, thank you for yielding to me, and I will yield 

back. 

[The prepared statement of Mr. Smith follows:]

PREPARED STATEMENT OF THE HONORABLE LAMAR SMITH, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS, AND MEMBER, SUBCOMMITTEE ON COURTS, 

THE INTERNET, AND INTELLECTUAL PROPERTY

Thank you, Mr. Chairman and Ranking Member Coble, for scheduling this important legislative hearing on H.R. 4279, a bill known as the PRO-IP Act. 

During the waning days of the 19th century (1899), the Patent Commissioner, 

Charles H. Duell, remarked ‘‘everything that can be invented has been invented.’’

With all due respect to Mr. Duell, over 100 years later it is abundantly clear that 

he was wrong. 

But as we stand at the dawn of the 21st century, lawmakers must be willing to 

reexamine assumptions and consider new initiatives that help promote America’s 

vital national and economic interests. 

Doing more of what’s been done before is simply not good enough. We must work 

to improve the policies and institutions of the past to promote the ideas of the future. 

One specific area that should be provided more permanence and priority in our 

government is the promotion, protection and enforcement of intellectual property 

rights. 

The value of U.S. intellectual property (IP) is estimated at between $5 and $5.5 

trillion—an amount that is about 45 percent of our country’s Gross Domestic Product (GDP). 

America’s IP industries provide valuable employment opportunities to tens of millions of our citizens. 

One recent study attributed 40 percent of the growth in GDP achieved by all U.S. 

private industry to U.S. IP industries. That same study concluded that nearly 60 

percent of U.S. export growth is driven by international demand for the products 

and services created by our IP entrepreneurs. 

Significant investments are required to create and produce world-leading intellectual property. Unfortunately, those investments are in stark contrast to the easy, 

massive unauthorized reproduction and distribution of fraudulent and unlicensed 

products and services. 

It is undisputed that the theft of U.S. IP costs American businesses their markets 

and American citizens their livelihoods. 

In cases that involve products such as fake pharmaceuticals, auto parts or aircraft 

parts, American consumers may even face debilitating injuries or even death. 

The ill effects of counterfeiting and piracy cannot be catalogued by merely reciting 

statistics and cold mathematical calculations of economic cost alone. Neither, as I 

stated earlier, can we effectively combat the new challenges and techniques employed by sophisticated counterfeiters and pirates by merely doing more of what’s 

been done before. 

Our response to these threats must be proportionate to the harm inflicted. Among 

other efforts, our private and public activities must be directed towards:

1) improving consumer education;

2) enhancing communication and coordination among government departments 

and agencies involved in IP enforcement; and

27

3) establishing vigorous new organizations and leadership that are engineered 

to capitalize on the solid foundation laid by this Administration and providing the resources to meet the challenges of protecting IP in an age of advanced technologies and globalization.

Chairman Conyers, I commend the deliberate and transparent manner in which 

this bill was drafted. I also commend the work of the Bush administration, which 

has done more to elevate IP enforcement than any previous administration. 

Finally, I want to recognize the work of the Coalition Against Counterfeiting and 

Piracy (CACP), which succeeded this year in enlisting and uniting hundreds of businesses, associations and labor organizations in the fight against global IP theft. 

Protecting intellectual property is critical to preserving a strong economy. This 

bill protects American jobs, encourages innovation and creates strong policies to protect the ideas of the future. 

Unlike Mr. Duell, I believe that we have merely scratched the surface of creativity 

and invention. I look forward to a productive discussion about ways to promote the 

efforts of American businesses and help preserve a strong American economy. 

With that, I yield the balance of my time.

Mr. BERMAN. Thank you, Mr. Smith. 

I will recognize myself for an opening statement at this point. 

From Chairman Conyers, Howard Coble and Lamar Smith, we 

have had a good picture of the devastating impact of counterfeiting 

and piracy on our economy, on our health and on our safety. I 

share their desire to prioritize and better coordinate U.S. efforts at 

enforcing our intellectual property rights here and abroad. 

We will be hearing from the witnesses shortly to get their 

thoughts about this legislation and speak to any problems they see 

with it. I would like to note a couple of issues at the outset, rather 

than focus on that which has already been said. There were many 

suggestions proposed, such as allowing wiretapping for intellectual 

property crimes, or criminalizing attempted copyright infringement—both of which were purposely not included in this bill. I 

fought very hard to make sure that the death penalty would not 

appear either. [Laughter.] 

The Chairman and the Ranking Member of the Committee and 

their staffs worked very hard at trying to vet through many proposals to find an appropriate balance. Therefore, in addition to 

what was excluded from the bill, there were a number of provisions 

which underwent significant revisions to accommodate additional 

concerns. Furthermore, we met with the Department of Justice 

about some of their apprehensions, and our door remains open to 

try and constructively resolve our mutual concerns. 

My Ranking Member, Mr. Coble, has raised a good point about 

examining the possible effect of the change in statutory damages 

language in section 104 of the bill. In the course of the discussion 

of the provision, it became clear that there are a number of questions about the state of current law and the scope of this change 

as it relates to compilations and derivative works. 

But in this age where technology makes it possible and appealing 

to offer and purchase copyrighted materials either in compilations 

or in disaggregated formats or both, it would be irresponsible to ignore the policy implications of a provision that limits damages for 

compilations which in reality contain any number of valuable 

works. As such, I have asked, as Mr. Coble has mentioned, the 

Copyright Office to convene a series of meetings about this issue 

with the various parties. 

28

An additional point: While the bill represents a good compromise 

on a number of issues, I believe we shouldn’t overlook many of the 

main issues facing owners and users today. As we approach the 

10th anniversary of the Digital Millennium Copyright Act, we 

should be analyzing some of the protections we gave to intermediary services such as ISPs, and some exemptions provided to 

educational institutions, and the effectiveness of the takedown notice and procedure. 

We should also examine whether filtering technologies have advanced enough today that there should be some obligation to adopt 

them where appropriate. Mr. Boucher and I have even talked about 

this, and if he and others on the Committee feel that the review 

by the Librarian of Congress every 3 years on the ability to make 

fair use of copyrighted works, protected by digital rights management, is inadequate, we should look at the review process and discuss H.R. 1201 at that time as well. 

In other words, there are a number of issues this bill isn’t addressing that come down on both sides of the debate that goes on 

about copyright in this new digital age. We don’t want this bill to 

keep from having a discussion about those issues, but I think there 

is a logic to dealing with those issues in a separate framework. 

We saw recently a number of user-generated content sites and 

copyright owners sit down and negotiate an agreement which acknowledged the need for filtering and the importance of fair use. 

It would be nice if more companies could strive for the gold standard in terms of corporate copyright policy. With IP being one of 

America’s top exports and the source of numerous jobs employing 

a huge sector of the economy, I don’t see how we can afford not to 

prioritize intellectual property enforcement. 

Now, I think, contrary to the usual practice in the Committee, 

we may have other Members who want to make opening statements. Mr. Boucher, might you be one of them? I recognize Congressman Boucher. 

Mr. BOUCHER. Mr. Chairman, in the interest of bipartisan harmony, if there are Republican Members who would like to make a 

statement, it probably is time for the transition to go to that side 

of the aisle. 

Mr. BERMAN. Well, I hesitated, as we had done two on that side 

of the aisle, and now we are——

Mr. BOUCHER. You are looking for balance here, is what you are 

saying. 

Mr. BERMAN. Go ahead. 

Mr. BOUCHER. I thank both gentlemen very, very much. 

Thank you, Mr. Chairman. There is much in this legislation that 

I support, and I also want to commend you and Chairman Conyers 

and Mr. Smith and Mr. Coble for bringing it forward. 

Let me also say that I appreciate the suggestion that you just 

made, Chairman Berman, that we should look perhaps at a broader 

range of issues. I welcome the suggestion that perhaps elements of 

H.R. 1201 and the fair use protections that it involves could be examined as a part of this overall comprehensive discussion. 

I want to make just a couple of comments today about some concerns that I have about the increase in statutory damages for compilations that would be contemplated by section 104 of the bill. 

29

That increase in statutory damages, in my opinion, would do little 

or nothing to deter willful infringers. There are already ample statutory damages directed at them. Those statutory damages are not 

deterring their conduct. They frankly don’t think about that. They 

don’t fear enforcement. The increase in statutory damages is not 

going to cause them to change. 

But there are legitimate companies that make devices that have 

the ability to record from TiVos to iPods to software products that 

facilitate the devices that have recording functions and that involve 

transmissions over the Internet, that always weigh the risk of a 

finding of secondary copyright infringement that would arise because of the infringing conduct of the users of those devices or software products or services, and then weigh that particular risk 

against the fair use privilege that they also have in the law to introduce those products or services. 

A balance based on that analysis is achieved, and then the decision is made as to whether or not to introduce that product and to 

involve themselves in that level of innovation. If we increase the 

statutory damages, we inevitably will increase the risk component 

of that analysis. And the effect on innovation will be real and it 

will be adverse. I would direct Members’ attention to the letter that 

this Committee received from America’s leading technology companies that produce software and services that involve copying and 

transmission as evidence of the effect that this measure would 

have on innovation. 

I think that perhaps as a part of the general larger conversation 

that the introduction of this bill might engender, that the time may 

have arrived when we consider a change in the way that we apply 

statutory damages. Bear in mind that anyone who can show actual 

damages because of either direct copyright infringement by an infringer, or because of secondary copyright infringement by a manufacturer of a product or service, can already get the actual damages 

that that individual can show he or she has sustain. We would not 

interfere with that. 

But the time may have arrived when we consider de-coupling the 

award of statutory damages for direct infringers on the one hand—

the people who are willfully infringing copyright directly, and the 

award of statutory damages for indirect infringement, which would 

be secondary liability of device manufacturers. I have actually introduced a bill—Mr. Berman referenced that—that would remove 

the statutory damage liability with regard to secondary infringement. Perhaps the time for that de-coupling has now arrived. If we 

do that, that would address the concerns of the technology companies that have raised objections to section 104. 

There are other problems with section 104, which I won’t burden 

the Committee with at this point, and we can discuss those at the 

proper time. I am sure some of the witnesses today will have some 

comments about those as well. But I would simply like to suggest 

that we not run the risk through this measure of retarding American innovation. That innovation is incredibly important. 

There was a study released last year that shows that companies 

that depend upon fair use as the legal foundation for their products 

or services, contribute fully 16 percent of American gross domestic 

product. They have annual combined revenues of $2.2 trillion per 

30

year. They employ one of eight Americans. It is critically important 

that we not dampen the innovation that has led to that economic 

success and that engenders that amount of economic contribution. 

Thank you, Mr. Chairman. I yield back. 

Mr. BERMAN. Thank you. 

I would remind the Committee that there is no mandate for any 

particular technology in this bill, and there is no mandate in the 

Committee rules that every Member needs to have an opening 

statement. 

With that, I recognize for an opening statement Mr. Issa. 

Mr. ISSA. Thank you, Mr. Chairman. Thank you for recognizing 

my wanting to be recognized. 

I want to associate myself, oddly enough, with both Mr. Boucher 

and with the Chairman, because I believe that both are essential 

when the final passage of this bill occurs. I am a cosponsor of this 

bill and very proudly so. I believe that we have to put real teeth 

into enforcement. 

I do share the concern of Mr. Boucher that statutory damages for 

real disputes about what is or isn’t fair use. Statutory damages, 

when you are dealing with, let’s just say $100 million-plus companies on both sides, who might also be dealing in patent at the same 

time as they are dealing in copyright. We have no statutory rules, 

no per-piece minimum damages on a patent infringement. As a patent holder, some might say we should. But it is very clear that we 

do have to look carefully at the difference between a dispute about 

what is legitimate use and what isn’t, versus those who wantonly 

use somebody else’s intellectual property. 

Now, many people know that I came out of hardware production. 

I came out of the consumer electronics industry, which I note is one 

of the signatories to this grand alliance of companies with concerns. 

I would say that one of the things that people don’t understand is 

that although the industry has concerns, the industry is also constantly being adversely affected. 

Taking only my former company that I have no economic interest 

in at all today, but I have a history. That history includes having 

my own voice that said ‘‘protected by vipers, stand back’’ stolen and 

used by others for profit, with no payment. I also had my major 

brand names, and in fact clones of my car security products, highend home audio and car audio products duplicated, mostly in 

China, but not exclusively, and brought to this country to not only 

be sold, but for the defectives to come back to me, never having 

made the original sale. 

Those occur every day and they are not covered by patents, that 

in fact teeth in protection of copyright, trade dress and other protections are equally essential to patent protection on products, and 

particularly as consumer electronic products tend to become 

commoditized, except for their origin or source. The name Sony or 

Panasonic, et cetera, mean something and give you a premium over 

something produced somewhere in mainland China and delivered 

with a name that usually is not known. 

I believe therefore that we do have to make a differentiation between a dispute of a product like Slingbox, the dispute of a product 

like TiVo, where in fact the court needs to be available to both 

sides to enter into whether or not they are fairly using and fairly 

31

paying for intellectual property. But it is very, very clear that we 

should not be putting additional statutory demands that would 

simply cause these products not to be innovated. 

Therefore, I look forward to working not just on the bipartisan 

basis of the 10 of us who cosponsored this bill, but with those who 

are presently concerned, to make this bill not just good, but as 

close to revolutionary in protecting intellectual property, both here 

and on that 60 percent of products that we export. 

With that, I would yield back, in the nick of time. 

Mr. BERMAN. I don’t know how many revolutionary efforts my 

heart can stand working with you, Mr. Issa. [Laughter.] 

Mr. ISSA. Well, three or four ought to do it. And we can look at 

the death penalty again if we can’t get statutory. 

Mr. BERMAN. I know Mr. Sherman had an opening statement, so 

I will recognize Mr. Sherman. 

Mr. SHERMAN. Thank you, Mr. Chairman. 

The theft of intellectual property and counterfeiting costs U.S. 

businesses $250 million annually. It is 6 percent to 9 percent——

Mr. ISSA. Billion. 

Mr. SHERMAN. Did I say ‘‘billion’’? 

Mr. ISSA. You should. 

Mr. SHERMAN. I should say ‘‘billion.’’ Thank you, Mr. Issa. 

It accounts for 6 percent to 9 percent of world trade annually. It 

steals 750,000 American jobs, including 200,000 in the auto industry and the auto parts industry, and 106,000 jobs just in the Los 

Angeles area, robbing our area of $5.2 billion in productivity, according to a Gallup study. 

As Chairman Conyers pointed out, it is also a consumer safety 

issue. Worldwide some 10 percent of all pharmaceuticals are counterfeit, 2 percent of all airplane parts are counterfeit as well. And 

finally, it is a threat to national security. The 1993 World Trade 

Center bombings were partially financed through the sale of counterfeit goods, and just a couple of years ago over $1 million of counterfeit brakes were found in Lebanon with the profits earmarked 

for Hezbollah. 

So clearly, we ought to do all we can. I commend the Chairman 

for introducing this legislation. Several months ago, I introduced, 

along with Mr. Chabot, Mr. Cohen, and Mr. Donnelly, the Intellectual Property Rights Enforcement Act. We have the support of the 

National Manufacturers Association, and the AFL-CIO. 

I take, however, no particular pride of authorship in this bill, because it is a 100 percent rip-off of the Bayh-Voinovich bill introduced in the Senate. This does not mean that I don’t respect intellectual property rights. I am a fully licensed user of the BayhVoinovich bill. We could spend a lot of time worrying about the differences between the two approaches. Frankly, I think those can 

get ironed out rather quickly, and I think the greatest sage in 

America today is Larry the Cable Guy, when he said, ‘‘git’er done.’’ 

Let us move forward and get a bill passed that organizes the American government to deal with this major problem. 

I yield back. 

Mr. BERMAN. I thank the gentleman. 

Mr. Goodlatte? 

32

It would be great if we could finish opening statements before we 

have to go for our 15-minute and three 5-minute votes. I think we 

ought to come back and hear the witnesses. [Laughter.] 

Mr. Goodlatte? 

Mr. GOODLATTE. Thank you, Mr. Chairman. I will abbreviate my 

statement. 

Because the United States has been the pioneer for intellectual 

property protections, it is no surprise that copyright industries are 

so successful and are so crucial to our national economy. The U.S. 

copyright industry has created millions of high-skilled, high-paying 

U.S. jobs and has contributed billions to our economy. 

However, the proliferation of copyright piracy in America is 

growing and is threatening to undermine the very copyright protections our founding fathers envisioned. The same fast Internet connections and innovative technologies that continue to bring us wonderful new products can also be used to download, upload and otherwise share illegal copies of songs, movies, games and software at 

an unprecedented level. 

To combat this rising theft, I am pleased to cosponsor this legislation which strengthens many provisions in the law, including increasing penalties for civil violations and repeat offenders, allowing 

treble damages in counterfeiting cases, increasing statutory penalties in counterfeiting cases, and increasing the maximum penalties for trafficking in counterfeit goods when those offenses endanger public health and safety. 

The bill creates an Office of U.S. IP Enforcement Representative 

within the executive office of the President to coordinate all the 

various agencies and departments that work on IP enforcement 

issues and to serve as the President’s principal advisor for IP matters. In addition, it increase the number of IP liaisons from the 

Patent and Trademark Office in U.S. embassies around the world, 

and enhances the Department of Justice’s computer crime units to 

make sure they are equipped and being used to prosecute IP violations. 

While I am a cosponsor of this legislation and believe it is a very 

good start, I also acknowledge that the bill is not perfect, and note 

that some of the technology and online sectors and the Internet 

users community have raised concerns about the effect that some 

of the damages provisions in the bill could have on innovation and 

their legitimate operations. I look forward to working with the 

Chairman and others on these issues as we consider this comprehensive update of our Nation’s intellectual property laws. 

I yield back. 

Mr. BERMAN. I thank the gentleman. 

The gentlelady from Texas, Sheila Jackson Lee. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. 

I am very pleased to join as an original cosponsor of this legislation. As I look at the witnesses and can imagine the diversity of 

their statements, I might offer the thought that Americans are not 

absolutely against trade. They just want it to be a two-way street 

and they want it to work for them. 

The same thing with this question of piracy and the stealing of 

our creativity. What it does is it dumbs down the American genius 

and simply we have to protect that. That is what this legislation 

33

stands for—the opportunity for us to be creative and the opportunity for trade to be a two-way street. Enforcement has to be the 

key of moving us into the 21st century to ensure that more of us 

create and more of us have our creations protected. 

I thought one of the glaring insults of this piracy and trademark 

violation had to do with the incident in June, where counterfeit 

toothpaste containing a dangerous chemical was distributed and 

sold to U.S. consumers under a trademark owned by the company 

Colgate-Palmolive. The trademark holders were forced to apologize 

for the ill-effects of a product they had no part in creating or distributing, and the company suffered a loss of both reputation and 

sales. 

As we make our way through this legislation, I am considering 

and would hope that we would consider an enhancement of penalties on the trademark violation if, for example, there is an injury, 

a physical injury or an injury in some other form, so that there is 

an increased penalty, not a tort action, but an absolute increased 

penalty as it results in the harm to the individual who may have 

consumed the particular product. 

Mr. Chairman, I think this is an important step forward. Enforcement has to be the key to protect what is ours, and certainly 

to build our trade and effectively protect our creativity. I believe 

this is an important step and important legislative initiative. 

With that, I will yield back. 

Mr. BERMAN. Thank you. 

We have about 7 minutes. I don’t want to put my friend from 

California under the notion of what she says——

Would you like to make your statement when we come back? 

Ms. LOFGREN. I will make a statement of about 2 minutes. 

Mr. BERMAN. You got it. 

Ms. LOFGREN. I just would like to say that the hearing we had 

in October I thought was a good one, focusing on international piracy and what can bring us together. One of the things I note is 

that when we inspect less than 1 percent of the containers coming 

into the United States, this bill is not going to stop the piracy that 

we see that infuriates us, especially in China and in Russia. There 

are parts of this bill that I think are important. I would like to say 

I am deeply troubled by section 104 and I would ask unanimous 

consent to put in the record a letter signed by myself, Congressman 

Sensenbrenner, and Congressman Boucher, including a letter 

signed by 25 law intellectual professor law professors, expressing 

concern on section 104. 

Mr. BERMAN. That will be included in the record. 

[The information referred to is available in the Appendix.] 

Ms. LOFGREN. Thank you. 

I do believe, as Mr. Boucher has indicated, that the statutory 

damages would have the effect of chilling innovation and preventing economic growth. It is of grave concern to me. 

There are other elements of the bill that I am sure we can work 

together on, but absent some modification, these statutory damages 

would provide for $1.5 million in statutory damages for a single 

CD. I think that is unreasonable, and I look forward to continuing 

to work with my friend from California on this. 

I would yield back. 

34

Mr. BERMAN. I can’t resist pointing out that the 104 authority is 

a discretionary authority. It is not a mandate. 

Ms. LOFGREN. If I could just note, the courts have plenty of discretion right now and this section is unnecessary, but we will have 

a long dialogue on this, I am sure. 

Mr. BERMAN. I am sure we will. I didn’t want my silence to be 

acquiescence. [Laughter.] 

I would recognize the gentlelady from Ohio, Ms. Sutton. 

Ms. SUTTON. Mr. Chairman, I will put my statement into the 

record. Thank you. 

Mr. BERMAN. Okay. Thank you very much. 

[The prepared statement of Ms. Sutton follows:]

PREPARED STATEMENT OF THE HONORABLE BETTY SUTTON, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF OHIO

Mr. Chairman, 

Thank you for calling this important hearing today. I would like to thank the panelists for their participation and for their thoughtful remarks. 

H.R. 4279, the ‘‘Prioritizing Resources and Organization for Intellectual Property 

Act of 2007,’’ will help to reduce counterfeiting and piracy and increase our Nation’s 

economic strength. I want to thank the Chairman for his efforts to preserve the jobs 

of my constituents through enforcement of our intellectual property laws. I hope 

that we can continue to work together toward the goal of eliminating counterfeiting 

and piracy for the safety and security of all Americans. 

Thank you.

Mr. BERMAN. We will recess for votes. We will be back to hear 

the reason we came. 

[Recess.] 

Mr. BERMAN. We will resume the hearing. I would like to introduce our excellent panel of witnesses. For one of the introductions, 

I would like to recognize the Chairman of the Committee, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. 

It is my pleasure to introduce James Hoffa, a Michigander. He 

joined the union when he was 18 years old. My father knew his father. My dad was an international representative for the United 

Automobile Workers. Of course, I knew James Hoffa’s father as 

well. And so I am very proud of him. He is more than just a powerful labor leader. His interest in human rights, civil rights, and 

other issues makes him someone that I am proud to say comes 

from Detroit. We have had a good working relationship for a number of decades now. 

Thank you. 

Mr. BERMAN. Thank you, Mr. Conyers. 

Going back to the other panelists, Sigal Mandelker is Deputy Assistant Attorney General in the Criminal Division of the Department of Justice, and has been since July of 2006. She supervises 

the child exploitation and obscenity section, the computer crime 

and intellectual property section, the domestic security section, and 

the Office of Special Investigations. 

Prior to joining the Department of Justice, Ms. Mandelker served 

as counselor to the Secretary of Homeland Security, was an Assistant United States attorney in the Southern District of New York, 

and clerked for Justice Clarence Thomas on the United States Supreme Court, and the Honorable Edith Jones on the United States 

Court of Appeals for the Fifth Circuit. 

35

Ms. Mandelker received her bachelor’s degree from the University of Michigan and her law degree from the University of Pennsylvania. 

Chairman Conyers has introduced Mr. Hoffa, who we are very 

pleased to have as part of our panel. 

Next to him is Gigi Sohn, who is President and Co-founder of 

Public Knowledge, a nonprofit organization that addresses the public stake in the convergence of communications policy and intellectual property law. Ms. Sohn’s comments and articles on intellectual 

property and telecommunications matters have appeared in a variety of publications, including the New York Times and The Washington Post. 

Ms Sohn is a nonresident fellow at the University of Southern 

California Annenberg Center, and a senior fellow at the University 

of Melbourne faculty of law in Melbourne, Australia. Ms. Sohn 

holds a BS in broadcasting and film from Boston University and a 

law degree from the University of Pennsylvania Law School. You 

can all get together. 

Richard ‘‘Rick’’ Cotton is Executive Vice President and General 

Counsel of NBC Universal. He supervises the NBC Universal law 

department, among other duties. Prior to his appointment, Mr. Cotton held other positions within NBC, including President of London-based CNBC Europe. 

Prior to his work for NBC, Mr. Cotton was in private practice 

and served as Deputy Executive Secretary of the United States Department of Health, Education and Welfare, and was law clerk to 

another of my favorite judges, Judge J. Skelly Wright of the U.S. 

Court of Appeals for the District of Columbia, and law clerk to one 

of my favorite judges, Justice William Brennan of the United 

States Supreme Court. 

Mr. Cotton holds a law degree from Yale Law School. 

None of that should be taken as any comment about either Edith 

Jones or Clarence Thomas. [Laughter.] 

Without objection, I authorize myself to declare a recess of the 

hearing at any point. 

I would ask the witnesses now to let you know that your prepared statements will all be made part of the record in their entirety. I would ask you now, if you would, to summarize your testimony in 5 minutes or less. To help you stay within that time, there 

is a timing light at your table. When 1 minute remains, the light 

will switch from green to yellow, and then red when 5 minutes are 

up. 

We welcome all of you, and Ms. Mandelker, why don’t you start? 

TESTIMONY OF SIGAL P. MANDELKER, DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT 

OF JUSTICE, WASHINGTON, DC 

Ms. MANDELKER. Thank you, Chairman Berman, Chairman Conyers, Ranking Member Coble, and Members of this Committee. 

Thank you for the opportunity to discuss the efforts of the Department of Justice to protect intellectual property rights through 

criminal enforcement. This Committee has been an important partner in this effort, and I look forward to discussing ways in which 

we can further enhance our efforts to combat IP theft. 

36

The proliferation of harmful counterfeit products entering our 

marketplace, the emergence of organized criminal syndicates increasingly financed by IP theft, and the exponential growth of IP 

crime worldwide emphasize the importance of criminal enforcement 

to protecting IP rights. 

In addition to establishing the intellectual property task force 

within the department to focus greater attention to IP enforcement 

efforts, the department plays a key role in targeted and coordinated administration efforts. First, we are an integral part of President Bush’s strategy targeting organized piracy, or STOP initiative. 

We work closely with our partners in other departments, local and 

national law enforcement’s rights-holders, and our international 

partners in a coordinated and aggressive strategy to fight global intellectual property crime. 

Second, we have significantly increased our domestic enforcement efforts. We now have over 230 computer hacking and intellectual property, or CHIP, prosecutors dedicated to these crimes, and 

25 specialized CHIP units spread across the country. In the Criminal Division, where I work, we have 40 prosecutors in the computer 

crimes and intellectual property section, including 14 who are specifically dedicated to combating IP theft. These efforts are yielding 

results. In fiscal year 2007, 287 defendants were sentenced on IP 

charges, representing a 35 percent increase over fiscal year 2006 

and a 92 percent increase over fiscal year 2005. 

Third, with the advent of the Internet and the steady increase 

in counterfeit products smuggled across our borders, we are placing 

great emphasis on our international efforts. We now have two intellectual property law enforcement coordinators stationed overseas—one in Bangkok and one in Sofia, Bulgaria. Indeed, I just got 

back from Bangkok, where we launched a new intellectual property 

crime enforcement network in Southeast Asia, with high-level law 

enforcement and customs officials from 13 countries. 

Of course, IP theft in the People’s Republic of China remains a 

key concern to the department and the administration. So we have 

enhanced our law enforcement relationships with China’s ministry 

of public security. This past summer, these efforts resulted in the 

largest-ever joint FBI-MPS international piracy operation, resulting in the seizure of over $500 million worth of counterfeit software 

and the dismantlement of what is believed to be one of the largest 

piracy syndicates in the world. 

Fourth, we are working closely with victim rights-holders, both 

by putting on joint training conferences, and most importantly 

through our aggressive enforcement actions. 

We are also working, of course, with this Committee and Congress on new policy initiatives and legislative tools to improve our 

enforcement efforts. While we are still in the process of reviewing 

the PRO-IP Act introduced last week, and hope to be able to provide more comprehensive comments at a later time, I wanted to 

share the administration’s preliminary views toward this legislation. 

First, we greatly appreciate that the PRO-IP Act incorporates a 

large number of legislative recommendations contained in the administration’s Intellectual Property Protection Act of 2007. These 

include provisions to increase penalties, harmonize and strengthen 

37

forfeiture and restitution provisions, and ensure that exportation 

and transshipment of pirated goods to the U.S. are subject to criminal penalties. 

I thank you, Chairman Berman and Chairman Conyers, on your 

remarks regarding working with the administration on other key 

provisions in this bill. As my written testimony reflects, we do have 

significant concerns with title V of the act, which we believe could 

have a detrimental effect on how the department conducts intellectual property enforcement. 

I see that my time has expired, so in conclusion I would like to 

thank you and other Members of the Committee for your leadership on protecting IP rights. We look forward to continuing to work 

with this Committee on the PRO-IP Act and to identify ways in 

which to advance our common goal of providing owners of intellectual property with the robust legal protections that they deserve. 

[The prepared statement of Ms. Mandelker follows:]

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PREPARED STATEMENT OF SIGAL P. MANDELKER


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Mr. BERMAN. Thank you very much, Ms. Mandelker. 

Mr. Hoffa? 

TESTIMONY OF JAMES P. HOFFA, GENERAL PRESIDENT, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, WASHINGTON, DC 

Mr. HOFFA. Thank you very much, Chairman Berman, Ranking 

Member Coble, and Members of the Subcommittee. It is a great 

honor to be here today. I want to thank you for the opportunity to 

testify about this very important bill, H.R. 4279. It is very important because it protects intellectual property rights and raises the 

fines for stealing copyrights. 

I am here on behalf of the Teamsters Union and our 1.4 million 

members. I am also speaking for all workers who are lucky enough 

to belong to a union, and those who belong to a guild or an association. I am also speaking for those that are not as lucky to belong 

to a union, but we are here to protect them, too. 

Intellectual property theft is a terrible problem for American 

workers. As Chairman Conyers said, over 750,000 jobs have been 

lost. By the way, I say hello to my great friend, the great congressman from Michigan, John Conyers. We go back many, many years. 

You know, we are talking about where do we go from here? How 

do we protect these jobs at a time that we see America losing jobs? 

We see trade deficits out of control. Where do we start? One of the 

ways to start is to stop the counterfeiting and stop the invasion of 

these products and all the different things we see coming into our 

markets. 

I also appreciate the fact that there has been tremendous work 

done by the Coalition Against Counterfeiting and Piracy. The job 

they have done in documenting many of the things that we are 

talking about here today is very important. They have spoken out 

about these crimes that hurt corporate profits and take American 

jobs. 

Some people might think that it is no big deal to buy a knockoff 

handbag or a fake DVD, but it is. These crimes kill jobs. They take 

good jobs and it is in the hundreds of thousands. As part of our 

fight for good jobs, my union and many other unions have battled 

against so-called ‘‘free trade agreements’’ that open the door for piracy. We fought NAFTA and we fought PNTR. We have said all 

along that they kill American jobs and hurt the American economy, 

but even in my wildest dreams did I ever think the damage would 

be as severe as it is, or that counterfeiting would be as widespread 

as it is today. 

China is now the biggest source of knockoff products and pirated 

goods in the world. There are 88 different companies in China that 

make knockoff Yamaha motorcycles. Can you imagine that? Almost 

all the personal computers in China use pirated operating systems. 

When the Chinese government tried to crack down on counterfeiting last year, they confiscated 85 million books, movies and 

computer discs. 

In the United States, if we hadn’t agreed to PNTR with China, 

we might not now be dealing with tainted food, exploding cell 

phone batteries, toxic toothpaste, and defective tires. Today, China’s aggressive export agenda is more than our country can handle. 

55

The part of the bill that creates new intellectual property enforcement positions within the executive branch will do much to control 

and address the problems we are talking about. 

Changes in civil and criminal law to keep pace with new technologies is also important. This bill is particularly relevant to my 

union. We represent workers in many industries that are hurt by 

counterfeiting and piracy. Teamsters work very hard to keep goodpaying jobs in this country. We are very active in the motion picture industry. We also have many members that are animal handlers, location managers, and drivers who transport actors around 

the sets. We are very active in that industry and we have seen layoffs because of counterfeiting and knockoffs. 

People who steal movies may think that they are not hurting 

anyone, but they are. They are stealing 140,000 jobs a year. They 

are also stealing millions of dollars from pension and health and 

welfare funds that have revenues that are linked to the sales of 

DVDs. 

The recording industry has been hit even harder than the motion 

picture industry. In the past few years, EMI Group, Warner Music, 

Sony Music, and Universal Music Group have laid off thousands of 

American workers because of theft and counterfeiting. All told, the 

American entertainment industry loses 370,000 jobs to pirates and 

counterfeiters every year. 

Some people think that they have a right to information on the 

DVDs and CDs, stuff they can take right off their computer. They 

don’t think that they are hurting anybody, but in the end they really are. I think that is wrong. People have a right to earn money 

from the intellectual property that they create. By the way, the 

Teamsters Union supports our brothers who are very active in this 

strike with the Writers Guild. The television and motion picture industry wouldn’t exist without the content that these proud union 

members provide. 

The Teamsters represent several hundred thousand truck drivers. According to the Consumer Reports, there is a growing problem with counterfeiting of brake pads. There are brake pads that 

are even made with kitty litter, and we find out that many, many 

people have had this problem and we see that there are problems 

there. 

I see that my time has run out. Let me summarize by saying this 

is a continuing problem, and what we have to do is to have strong 

legislation to address it. But we have to do more than that. We 

have to do something with trade. We have to inspect what comes 

into this country, whether it comes across the border from Mexico 

or whether it comes in from the Far East. It is a global problem 

that all of us can address, and I think that this bill is a very important beginning to enforcement and to stop counterfeiting. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Hoffa follows:]

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PREPARED STATEMENT OF JAMES P. HOFFA


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Mr. BERMAN. Thank you, Mr. Hoffa. It is great to have your support. 

And speaking of support, I recognize Gigi Sohn. 

TESTIMONY OF GIGI B. SOHN, PRESIDENT AND CO-FOUNDER, 

PUBLIC KNOWLEDGE, WASHINGTON, DC 

Ms. SOHN. Chairman Berman, Chairman Conyers, Ranking 

Member Coble and other Members of the Subcommittee, thank you 

for inviting me to speak today on H.R. 4279. I want to thank you 

first for keeping the process of looking at this bill open and inclusive, and I do want to praise you, both Chairmen, for you and your 

staff’s work in deleting some of the most onerous provisions, as you 

mentioned before, Mr. Berman. Thanks are definitely due to both 

of you. 

While I agree that enforcing IP laws is essential to encouraging 

creativity and promoting economic growth, certain parts of the bill 

could undermine these goals by threatening ordinary consumers 

and legitimate innovators with broad and inappropriate penalties. 

I would like to focus specifically on three provisions. 

First, section 104 of the bill would disaggregate the parts of a 

compilation or derivative work for the purposes of calculating damages, multiplying the already massive statutory damages associated with copyright infringement. Increasing damages this way will 

have a severe chilling effect on legitimate users of copyrighted 

work and on innovation. This stands in stark contrast not only to 

the legislative history of the 1976 Copyright Act, but also to the 

goals of the Patent Reform Act of 2007. The apportionment of damages in that bill recognizes the harm to innovators inherent in disproportionate damages awards. 

Second, section 202 significantly expands the forfeiture provisions attached to four different kinds of IP violations, applying the 

exact same standards to each. This expansion risks even further 

upending rational copyright remedies and ignores the significant 

differences between copyright, trademark and anti-bootlegging 

laws. Section 202 allows forfeiture of materials only remotely connected to an infringement, including materials and devices merely 

intended to be used in infringement. It also creates a new civil forfeiture remedy with a far lower burden of proof. 

Third, section 102 eliminates the requirement that copyrights be 

registered before criminal enforcement proceeds. Copyright registration is critical to informing the public of a work’s copyright 

status and its proper owner. Without a vibrant copyright registry, 

users of a work are often unable to find the copyright owner and 

obtain permission to use that work. This leads to orphan works 

that can no longer be exhibited, reproduced, or seen. Reducing the 

incentives for creators and authors to register their works can only 

worsen this problem. 

These three provisions represent a step away from a rational, realistic copyright regime, one that can allow a copyright law enacted 

before the invention of the VCR to adapt to a post-YouTube world. 

Numerous problems confront current copyright law, but increased enforcement is not a cure-all. When the mere act of forwarding your e-mail or posting pictures on your blog can infringe 

64

copyright, it makes more sense to have the law comport with reality before increasing the sanctions for infringement. 

While a complete review and overhaul of copyright law might be 

an ideal, I propose a set of six more modest reforms for the immediate future. They include, one, reforming fair use. With the introduction of new technologies, courts have recognized newer forms of 

fair use like time-shifting and other personal transformative and 

incidental uses of copyrighted works yet these uses continue to be 

challenged by litigious plaintiffs. These fair uses should be expressly added to section 107. Fair use should also be restored to 

section 1201 of the DMCA and passing H.R. 1201 would be good 

place to start. I was pleased that that is something you might consider, Mr. Chairman. 

Two, placing reasonable limits on secondary liability. Innovators 

should not be afraid to innovate. Congress should codify the standards set out in Sony, that technologies with substantial noninfringing uses are not liable for infringement committed by others. 

Three, preventing copyright abuse. Copyright owners should be 

discouraged from filing spurious DMCA takedown notices or from 

threatening copyright lawsuits in order to suppress speech. 

Four, providing for fair and accessible licensing. Licensing provisions need to be clear, simple and rational for creators and users. 

The fee that webcasters pay to composers and performers should 

be reduced to a reasonable level, and performing artists should be 

compensated for public performances of their works regardless of 

the medium on which they are played. 

Five, addressing the problem of orphan works. I discussed that 

already. 

Six, informing consumers of digital restrictions on their media. 

Consumers should know before they buy digital media whether it 

is restricted by DRM and they should know the legal penalties for 

removing it. 

Each of these proposals directly addresses a situation where a 

consumer innovator might face the already draconian sanctions of 

copyright law. If the disconnect between the law and the reality of 

copyright isn’t tackled first, increasing the severity of those sanctions further does very little good. 

Thank you again for the opportunity to testify and I look forward 

to your questions. 

[The prepared statement of Ms. Sohn follows:]

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PREPARED STATEMENT OF GIGI B. SOHN


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Mr. BERMAN. Thank you. 

Mr. Cotton? 

TESTIMONY OF RICK COTTON, EXECUTIVE VICE PRESIDENT 

AND GENERAL COUNSEL, NBC UNIVERSAL, NEW YORK, NY 

Mr. COTTON. Chairman Berman, Ranking Member Coble and distinguished Members of the Subcommittee, I thank you for inviting 

me here today to testify on H.R.4279. My day job is executive vice 

president and general counsel at NBC Universal, but I appear here 

today in my role as the chair of the Coalition Against Counterfeiting and Piracy, or CACP. 

The CACP is a broad cross-sector business coalition led by the 

U.S. Chamber of Commerce and the National Association of Manufacturers. The CACP now numbers more than 500 companies and 

associations from two dozen different sectors across the economy 

who have come together to fight the vital economic battle against 

counterfeiting and piracy. I might note that our coalition includes 

technology companies, both software and hardware, all of whom 

have IP that deserve and need protection. 

At the outset, let me quickly emphasize four points, many of 

which were addressed by Committee Members in their opening 

statements. First, the economic future of the U.S. rests on our technological invention, our creativity, and our innovation. Counterfeiting and piracy corrosively and perniciously undermine that future. IP theft is a jobs issue and that is what brings the business 

community and the labor community before you today united in 

support of stronger IP enforcement. IP-dependent sectors drive 40 

percent of the growth of the U.S. economy and 60 percent of the 

growth of our exportable goods and services. 

Second, counterfeiting and piracy constitute a health and safety 

issue that presents a clear and increasing danger to the public, 

from counterfeit toothpaste laced with antifreeze to exploding batteries. 

Third, counterfeiting and piracy is the new face of organized 

crime. Organized crime goes where the money is, and today that 

means piracy and counterfeiting. 

And fourth, and this I submit should drive a lot of the attention 

of the Committee, counterfeiting and piracy today simply represent 

a global pandemic that is getting worse, not better, in every sector 

which it afflicts. Over the past 20 years, advances in technology, 

manufacturing capabilities, and transportation have allowed organized criminal gangs, counterfeiters and pirates to escalate the 

scale and the scope of their operations to tidal wave proportions. 

It is not a criticism to say that our current enforcement is not 

stemming the tide. Our efforts to counter this pandemic have simply not kept pace. 

Despite the daunting scope of the challenge there is hope and a 

clear path forward. If we are to turn the tide in this country, we 

must radically escalate our efforts on many fronts to protect the 

economic fruits of our innovation and our creativity—efforts in the 

private sector in developing technology and at the forefront of our 

discussion today, government action. 

The PRO-IP Act is a needed declaration of war, escalating the 

priority of this vital public policy and deploying dedicated enforceVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
82

ment resources to the battle. We commend the Committee leadership and their staff who have worked so hard to pull this important 

and comprehensive bill together. While the act does not contain everything the CACP had proposed, it does recognize three fundamental steps that our government must undertake in order to 

make a difference. 

Number one, the act creates key leadership positions to address 

the challenge of counterfeiting and piracy at the White House level 

and within the Department of Justice. 

Number two, it mandates a dramatic reorientation of government 

strategy to focus on dedicated specialized resources, including FBI 

agents and Federal prosecutors dedicated to IP investigations, 

money for state and city IP enforcement programs and international specialists based in U.S. embassies in key countries 

around the world. 

Number three, it updates several laws that have failed to keep 

pace with the burgeoning threat of counterfeiting and piracy. 

In conclusion, two final points. First, these steps are strongly 

supported by a powerful new study released today by Dr. Laura 

Tyson, former chair of the Council of Economic Advisors. That 

study concludes that for every dollar invested in IP enforcement, 

Federal tax revenues would increase by four dollars to five dollars. 

U.S. economic output would increase anywhere from $40 to more 

than $120 for every dollar invested, and state and local revenues 

would increase by nearly $1.5 billion. 

In conclusion, a plea to the Subcommittee. Every generation 

faces new threats and is judged by how quickly it recognizes and 

responds to them. Make no mistake about it. The U.S. business 

community and the U.S. labor movement have come here today 

with a single and simple message: Global counterfeiting and piracy 

have reached epidemic proportions and will choke off future economic growth and future job growth if current trends continue. 

It is not too strong to say that the unprecedented and explosive 

scale of counterfeiting and piracy represent a dagger aimed at the 

heart of America’s future economic security and the health and 

safety of our people. My plea to the Subcommittee is to confront 

this threat and to take strong, swift action to enact the PRO-IP Act 

in this Congress. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Cotton follows:]

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PREPARED STATEMENT OF RICHARD COTTON


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Mr. BERMAN. Thank you, Mr. Cotton. In your comments about 

the revenue impacts of dollars spent on enforcement, I am wondering if we couldn’t calculate the benefits of this bill in dealing 

with our appropriations process in these last days—the creative 

scoring that frequently has been——

Mr. COTTON. Well, we would ask that Dr. Tyson’s study be included in the record and it might help in that respect, Mr. Chairman. 

Mr. BERMAN. Good. We will do that. 

[The information referred to is available in the Appendix.] 

Mr. BERMAN. I will recognize myself for 5 minutes. 

Ms. Sohn? 

Ms. SOHN. I am ready. [Laughter.] 

Mr. BERMAN. You made a number of interesting suggestions and 

helped set the framework for some of the discussions. I want to 

focus on the registration issue first. 

I agree we have to turn to orphan works and this Committee 

plans to do this early next year. But I am curious about two aspects of your testimony dealing with your opposition to the provision in this bill on registration. You talk about the orphan works 

problem, and that it is crucial to require registration before criminal enforcement because you can minimize the orphan works problem that way. If that is the case, and I see your point, would you 

support a carve-out for registered works from being considered orphaned? 

Ms. SOHN. Would I consider a carve-out for registered works? 

Mr. BERMAN. In other words, you are concerned about us removing the registration requirement to allow enforcement that creates 

potential for many more orphan works, and so then I say, is the 

flip-side true? Once it is registered, then it really isn’t orphaned. 

Ms. SOHN. That is an interesting idea, but here is the problem. 

As you well know, photographers who I know have spoken to you 

and who have the most objection to orphan works, fixing the orphan works problem, it is because the Copyright Office only has a 

text-based registry. It is almost impossible, even if you do a goodfaith search, to find that work. So if I am a photographer and I 

have a picture of the Statue of Liberty, the way I register it is a 

picture of the Statue of Liberty in text. 

So part of the problem is that the current copyright registry 

doesn’t make it easy to find certain works that are already registered. So in my mind, it would be unfair to punish somebody who 

wanted to use, let’s say for a history book, a picture of the Statue 

of Liberty, did a good-faith search, but could not find the owner because there is no way to actually right now find a picture. I think 

there is technology that will allow you to actually scan that picture, 

but we don’t have it right now. 

Mr. BERMAN. What if you narrowed the carve-out. I take your 

point, but there are a lot of works that the act of registration 

means you know where the owner is, and you don’t have the problem that you have just raised in those areas. 

Ms. SOHN. That is correct. And at that point, a reasonable search 

under the last bill we had on orphan works—I am using the language from that—a reasonable search would come up with that. 

That shouldn’t be a problem. The problem is that there are certain 

112

instances, particularly visual arts as you well know, where it is not 

that easy to find it on the copyright registry. 

Mr. BERMAN. One more issue on registration. You talk about the 

disincentive to register because of the ability to proceed in criminal 

enforcement cases without a registration. Yet on statutory damages, where a registration is required in order to receive statutory 

damages or attorney’s fees, you talk of the possibility of damages 

being so draconian that it forces excessive damages or settlement 

and is enough to stifle innovation. 

Wouldn’t the possibility of statutory damages and attorney fees 

be motivation enough for a copyright owner to register their work? 

Isn’t the ability to get those statutory damages and attorney fees 

far going to exceed the incentive to not register? And wouldn’t this 

change about the requirement of registration to bring a criminal 

case not have repercussions? I am wondering, given the balance of 

incentives. 

Ms. SOHN. I would agree with you, and that is why I don’t understand why this provision is in this bill. 

Mr. BERMAN. There are some good reasons and I am going to 

let—I think rather than go to my next question, I will let Mr. Cotton develop the reason. It is a narrow, but very important situation 

why the provision is in the bill. My only point was, I can’t buy the 

notion that it is such a huge disincentive for people who would otherwise register their works not to register them, given that they 

lose the chance for statutory damages and attorney’s fees if a registered work is infringed, and they don’t have that opportunity if 

it is not registered. 

But Mr. Cotton, why don’t you just——

Ms. SOHN. As you know, you can always register after infringement happens. Okay? This eliminates the need to, or might. So if 

you are not registered and somebody infringes on your work, you 

have time to basically fix that and then register. 

Mr. BERMAN. I think if the infringement—and I am not sure I 

know what you think I know, because I am not sure that if the infringement comes before the registration, I am not sure if for that 

infringement you can collected attorney’s fees and statutory damages, but we will find that out. 

Mr. Cotton? 

Mr. COTTON. Mr. Chairman, I would make two points. From a 

public policy point of view, there is simply no reason to tie the 

hands of a prosecutor from taking action when there has been a 

clear action of copyright infringement, whether or not there has 

been a registration. The question is whether there has been an infringement. In many cases, certainly in the industry that I come 

from, where there can be a pre-release theft of a very valuable 

piece of work when in fact the registration cannot have taken 

place, and there may be very urgent need for the prosecutor and 

investigators to move quickly. There is no reason to tie their hands. 

Secondly, from the point of view of incentive, I would just have 

to say that I can’t conceive that anyone who was interested in preserving and protecting their IP and which would allow them access 

to statutory damages would make the decision not to register based 

on the highly uncertain question as to whether a prosecutor might 

113

or might not take up a criminal case to protect their particular 

work. 

So I would say, (A), from a public policy point of view there is 

no reason not to allow prosecution in serious cases. And secondly, 

the notion that there is an incentive which would cause a copyright 

owner not to register because they would be relying on the highly 

unpredictable notion of whether or not there would be a criminal 

prosecution is just not in the real world. 

Mr. BERMAN. My time has more than expired. 

Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman, and I thank the witnesses 

for appearing this morning. 

Ms. Mandelker, it is my belief that IP-related criminal offenses 

traditionally have not enjoyed a high prosecutorial priority. I do believe, however, that has improved in recent times. With that in 

mind, what percentage of the department’s resources are dedicated 

exclusively to the investigation and prosecution of IP-related criminal offenses? 

Ms. MANDELKER. Mr. Coble, I can’t give you a specific percentage, but I can tell you what resources we do have dedicated to this 

important problem. We have 230 computer hacking and intellectual 

property prosecutors spread throughout the country in the various 

U.S. attorneys’ offices. Each U.S. attorney’s office has at least one 

prosecutor who is specially trained to work on these types of cases. 

In addition, within the U.S. attorneys’ offices, we have 25 units of 

CHIP units, prosecutors of two or more who are again specially focused on IP theft. 

Within the Criminal Division where I work, we have 40 prosecutors in the computer crimes and intellectual property section, 14 of 

which are exclusively dedicated to IP theft. Of course, this is an 

issue that is a priority within the department, and so we have a 

task force of individuals across the department who are focused on 

this problem, including myself, including somebody in the Attorney 

General’s office and also in the Deputy Attorney General’s office. 

Mr. COBLE. Thank you. 

Ms. Sohn, let me get your opinion. Do you know whether 

websites may be considered to be a compilation under the Copyright Act, (A), and if so, do you know whether website owners actually register their sites with the Copyright Office and whether they 

would be conceivably entitled to statutory damages in the event of 

infringement? 

Ms. SOHN. Certainly, I don’t see why a website couldn’t be considered a compilation. I don’t really know if website owners—I assume some website owners would register their websites with the 

Copyright Office, sure. 

Mr. COBLE. Some critics of section 104 have alleged that it might 

have the effect of intervening in ongoing copyright litigation. What 

do you say to that? 

Ms. SOHN. Could you repeat the question? I am not quite sure 

I understand. 

Mr. COBLE. I said some critics of section 104 have alleged that 

this section, if enacted, might have the effect of intervening in ongoing copyright litigation that has been initiated. What is your response to that? 

114

Ms. SOHN. That is entirely possible. I mean, it depends on 

whether you want to make it retroactive or not. Obviously, Google 

is being sued in the Google book search case, they are being sued. 

YouTube is being sued by Viacom. So it is possible it might have 

an effect. 

Mr. COBLE. I was going to ask Mr. Cotton a question. I am having a senior moment. I was going to ask you a question, Mr. Cotton, but I cannot grasp it for the moment. So with that in mind, 

Mr. Chairman, I will yield back before the red light appears. 

Mr. BERMAN. Thank you, Mr. Chairman, Mr. Coble. 

Mr. COBLE. Thank you, sir. 

Mr. BERMAN. You were Chairman for a long time. [Laughter.] 

The great days when you were Chairman, I remember them well. 

Mr. COBLE. Thank you, sir. 

Mr. BERMAN. Mr. Watt, the gentleman from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman. 

Mr. Chairman, I find myself in much the same position with respect to this bill as I did at the outset of our discussion about the 

patent reform bill. My sense is that there is a substantial amount 

of need to reform and do something to address the problems that 

exist. Yet, the technicalities of what need to be done there is substantial disagreement about. 

So I am here really to try to learn more about what those technicalities should be, what the concerns are, and try to get enough 

basic knowledge before I really start going through the details of 

the bill to try to figure out where some of those inquiries and concerns might be addressed. 

So with that, I think I will yield my time to the chair, who can 

ask some of those technical questions. He had a long list. I knew 

he had a long list and needed more time to explore it. So I think 

I will yield him the balance of my time and I will sit and listen 

like I intended to when I came in. 

Mr. BERMAN. That is very nice of you, and I accept. But I would 

say the one difference between this and the patent bill is that here 

I would say 90 percent of the bill is not particularly controversial. 

I wish I could have said that about the patent bill. [Laughter.] 

Mr. WATT. Well, that is what you told me at the outset of the 

patent bill. [Laughter.] 

Mr. BERMAN. It is my line. This one isn’t as controversial. 

Mr. WATT. The more I looked at it, and the more I talked to people, the less I believed you. [Laughter.] 

Mr. BERMAN. And the less I believed myself. 

I want to take a little time here on 504. You were kind enough 

not in your public testimony to argue that which you argued in 

your written testimony that my approach on damages in copyright 

is somehow inconsistent with my approach to damages in the patent bill. Other than the hobgoblin argument, I actually don’t think 

they are that inconsistent. 

It seems to me section 504 now—that phrase—‘‘for the purposes 

of this subsection, all parts of compilation or derivative work constitutes one work.’’ I think that language has a bias in favor of the 

infringer, rather than the owner. I understand a very different 

time when technology was very different why it was done. Somebody was infringing the sixth edition of a book, because there were 

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five other earlier editions in circulation, you shouldn’t be charged 

with infringing all six versions of the book. 

But what is the policy reason to distinguish between infringer 

‘‘A’’ who takes 20 photos from one site, and infringer ‘‘B’’ who takes 

20 photos, one each from 20 Web sites? Under current law, ‘‘A’’ infringer would be liable for a single statutory damage award, as determined by the court, not mandated by this bill, and infringer ‘‘B’’ 

would be subject to 20 separate statutory damage awards as determined by the court. 

There may be objections to the overall level of the statutory damages, but accepting for the moment that we are going to have some 

statutory damages, how is that disparity justified? 

Ms. SOHN. Well, I think the disparity comes from what kind of 

threats one copyright holder can make to a legitimate user or 

somebody at least who thought they were using copyright work legitimately, or an innovator. I mean, you talk a lot about the judicial discretion, but the fact of the matter is that most of these cases 

don’t ever go to court. The threat is held over the innovator’s head 

or the user’s head, and it never goes anywhere. There is a settlement. The person no longer uses the copyrighted work. 

So to me, the judicial discretion doesn’t really solve the problem, 

and it is the same problem in the patent context, is that the threat 

is enough to stop people from innovating and the threat is enough 

to get people to settle even though they might have a good case in 

court. They won’t test the bounds of the law. 

Mr. BERMAN. All right. Well, we will continue this discussion. 

But in the patent context you never argued that and you were a 

great supporter of that legislation——

Ms. SOHN. And I continue to be. 

Mr. BERMAN. You never argued that we should, on a counterfeit 

product that infringed 50 different patents because it was all in one 

product, consider it as one patent violation. Our goal in the patent 

bill was simply to give the court the discretion that courts here 

have to decide on how to calculate the damages. But I think I have 

used Mr. Watt’s time. 

And now, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

I wonder if Ms. Mandelker—is that how you pronounce it? 

Ms. MANDELKER. Yes. 

Mr. GOODLATTE. Would you explain in some more detail some of 

the concerns you have about the provisions in the bill that require 

reorganization within several Federal agencies? What are your specific concerns? 

Ms. MANDELKER. Yes, thank you for that question. 

In particular, I would note that we have a current structure of 

coordination within the administration that works quite effectively. 

As it currently stands, we have an IP coordinator who sits in the 

Department of Commerce, and who regularly ensures that we as 

an administration convene and coordinate as appropriate. 

So for example, I meet personally monthly with my colleagues in 

the other departments. We coordinate regularly on international 

programs. We work very closely, for example, with the State Department in the deployment of our intellectual property law enforcement coordinators. We recently put on a conference both with 

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the Patent and Trademark Office and the State Department in 

Bangkok, Thailand in which we launched a new regional network. 

That type of coordination is very important and it is happening at 

very high levels within the administration. 

Our concern with putting an office within the executive office of 

the President is in particular for the Department of Justice, we are 

always going to be concerned when you have somebody at the 

White House who may be in the position of directing our enforcement priorities or directing what cases we should do and what 

cases we shouldn’t do. That would be contrary to the longstanding 

tradition of the department, making independent decisions when it 

comes to law enforcement decisions. 

In addition, as I noted, what we have right now is actually quite 

effective. While we don’t coordinate with the USTR, for example, 

on all matters, we do contribute to the section 301 process. We do 

provide them guidance as necessary when it comes to criminal enforcement policy that they seek to promote overseas, and likewise 

with the State Department. 

But what we have really right now is a flexible coordination process that can adjust to the changing needs of the different departments, and it doesn’t impose unnecessary bureaucratic reporting 

structures. 

Mr. GOODLATTE. Thank you. 

Mr. Cotton, we have been talking about the compilations, and I 

wanted to give you an opportunity to explain the rationale for allowing damages for each individual piece of those compilations. I 

wonder if you might explain the nature of what compilations are 

and the rationale. 

Mr. COTTON. Well, let me just speak carefully here, Mr. Goodlatte. The change in the law was not part of the original CACP proposals, which is the organization I am representing today. We have 

strongly endorsed the Committee leadership’s bill, including 104. In 

doing so, we really are focused not necessarily on the specifics of 

that provision, but on the anomaly really that the Chairman reflected, which is it does seem a problem to us in terms of the fact 

that the current penalties for a compilation, which may include 12 

or 16 or many multiples of that in terms of individual works, is the 

same penalty as for the infringement of a single work. And those 

works in a compilation may have different owners and different 

creators. 

And so in terms of resolving that anomaly, we do think it is 

worth the effort to try to find a resolution which does recognize the 

fact that it is in many circumstances a more extensive violation of 

copyright in the context of compilation than in the infringement of 

an individual work. 

Mr. GOODLATTE. Ms. Sohn? 

Ms. SOHN. Yes, I think I finally have the answer to Mr. Berman’s 

question. I think it will also answer yours. 

The reason that a compilation is looked at as one work is because 

you are looking and differentiating that from engaging 20 different 

or 10 different acts of infringement, is that you look at the act. You 

don’t want to punish somebody 10 times for one act of infringement. So if I am infringing on 20 separate photographs, I have enVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00120 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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gaged in 20 different acts of infringement. If I have infringed on 

one album, I have engaged in only one act of infringement. 

It seems to me to be a pretty dangerous tool, again getting back 

to the answer that I originally gave you, to a copyright holder to 

all of a sudden turn one act of infringement into 10 or 20 or, you 

know, depending on how big compilation is even more. 

Mr. GOODLATTE. Do you want to respond to that, Mr. Cotton? 

Mr. COTTON. Yes. I think the law’s tradition has been precisely 

to make those kinds of tradition. Petty larceny is not viewed the 

same as grand larceny. So the precise question that gets addressed 

in a criminal assessment is exactly the extent of the damage and 

the extent of the criminal act. And certainly one likely, I would say, 

grounds on which to make that assessment is the number of infringements involved, and therefore the extent of the damage to 

what, as I say, may be multiple different owners and creators. 

Mr. GOODLATTE. Thank you. 

Thank you, Mr. Chairman. 

Mr. BERMAN. Thank you. 

The gentlelady from Texas, Sheila Jackson Lee. 

Ms. JACKSON LEE. Thank you, Mr. Chairman. 

I thank the witnesses for their testimony. I was detained in another meeting, but in reviewing briefly your statements, I appreciate very much your presence here today. 

Mr. Hoffa, you have had a long history of speaking what we call 

truth to power. As I reviewed your statement, it was provocative 

because I begin my remarks about the devastating impact that piracy and trademark violation has had in the American economy. I 

think the mood is very sour in the United States right now in 

terms of our economy and generating jobs. 

I would just like you to pointedly repeat again or to focus on how 

you think this legislation can be a viable component in saving jobs, 

in producing jobs, and the impact that you have seen in, for example, certainly we know that your home, Michigan, or your beginnings, was at the top of the heap as many of us grew up. We will 

never forget that first shiny car coming from, obviously from Detroit, but whatever showroom it was, maybe some of us got a shiny 

used car, but how proud we were of that vehicle. 

And where we are now as it relates to that whole effort, even 

though we might not attribute that to trademark violation. But 

what kind of piercing impact has trademark violation and piracy 

done from your perspective? 

Mr. HOFFA. Well, thank you, congresswoman. I think it is all tied 

together. The idea of unfair trade and the fact that we do not build 

in strong enough protections in our trade bills are all related. That 

is why we have fought a number of the trade bills that are before 

Congress, whether it goes from NAFTA to PNTR to the recent Peru 

agreement. And we have talked about the fact that we must have 

ways to, number one, protect our economy. 

And when we talk about that, we are talking about copyrights. 

We are talking about counterfeiting. And we are also talking about 

the idea that trade should open up markets of countries that we 

make agreements with. And too many of our agreements are onesided. They basically open up our economy to a flood of goods from 

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all over the world, as we see with China and Mexico, and especially 

India. 

So much of that material is counterfeit. We all know that we can 

go on the streets of New York in Manhattan. We can go over here 

to Georgetown and we see whole stalls of counterfeit material that 

looks like something that has been made by a major manufacturer. 

The answer is, we are not policing and protecting ourselves. Trade 

has been a major issue of labor talking about how do we protect 

American jobs. We have seen a hemorrhaging of millions of jobs 

going to cheaper economies, going to Mexico, going to India. 

That is part and parcel of the same problem of copyrights and 

counterfeiting. That counterfeiting—and what we are talking about 

is part of the same problem because when you open these economies, whether they come in legally or illegally, they are coming in 

and just flooding into this economy. 

I have testified before Congress about how we don’t police what 

comes into this country. The container—90 percent of what comes 

in comes in containers. And if you have been to the ports of Port 

Elizabeth in New Jersey or you have been to Long Beach, you see 

all these containers coming in. 

Ms. JACKSON LEE. Yes. 

Mr. HOFFA. Much of this stuff is in that stuff, and they are only 

protecting and inspecting 1 percent. And if we had better inspection, then we could find out where these counterfeit goods are and 

confiscate them at the border. The answer is we are not doing that, 

and that is why there is such a flood of counterfeit goods in this 

country. 

Ms. JACKSON LEE. This legislation moves us in that direction. 

Mr. HOFFA. That is right. 

Ms. JACKSON LEE. Thank you. 

Let me quickly ask questions of the final three witnesses. I want 

Ms. Sohn to give us the most troubling feature in this legislation 

from your perspective. Ms. Mandelker, if you would, I mentioned 

earlier the incident with the Colgate-Palmolive toothpaste, and the 

impact as it relates to the consumer. Someone injured. We don’t 

know if there was any loss of life, any long-term damage. 

My thought was, not from the tort perspective or liability perspective, but the injured party may have, but the enhanced penalties if, for example, it does result in the injury and-or death of 

an ultimate consumer of that pirated product or that trademark 

violation product. Why don’t you comment on that? And Ms. Sohn, 

if you could. Let me go to Ms. Mandelker first, please. 

Ms. MANDELKER. We agree with you, Congresswoman. In fact, 

that is why we were so pleased to see enhanced penalties in this 

bill for instances where there is a knowing or reckless injury, serious bodily injury. So we think it is quite appropriate to have enhanced penalties when our citizens are being harmed by these 

products. 

Ms. JACKSON LEE. And it separates it from a tort action. It triggers under the actual trademark violation, which I think is very 

important. 

Ms. Sohn, what is it that——

Ms. SOHN. Really section 104 is the most troubling. I would note 

that the other supporters of this bill actually haven’t mentioned it 

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in their written testimony, something that is really important to 

them. I am also pleased to hear Mr. Coble talk about possible——

Ms. JACKSON LEE. Why don’t you just go ahead and say 104, and 

then how would you fix it or what is your issue with it. 

Ms. SOHN. I think it needs to be deleted from the bill. Right now, 

I mean, hopefully we will have this roundtable. I am not sure how 

you fix it because it is so core, it is so opposite to what the Copyright Act has been about. 

Ms. JACKSON LEE. And you feel that it does what? When I say 

‘‘does what,’’ does what negatively? 

Ms. SOHN. It increases the statutory damages for copyright infringement so much as to place very bad limits, chill innovation 

and chill legitimate speech. 

Ms. JACKSON LEE. So you are thinking that people will be fearful 

because they might step on someone’s toes and therefore deny their 

own creativity because the penalties are so high. 

Ms. SOHN. They already are fearful, but this would make it far 

worse. 

Ms. JACKSON LEE. Well, don’t you think the counter-impact that 

then we would have at least a sanctity around this whole concept 

of copyright, patent and the lack of trademark infringement? 

Ms. SOHN. Well, I think we already do. I don’t think anybody is 

arguing that statutory damages these days are inadequate. You 

may have heard about the woman in Minnesota who was just fined 

$222,000 for 24 songs she had on a peer-to-peer network. That was 

$9,250 a song. I don’t think anybody is arguing that that is inadequate and that is the law today. So I am not sure that increasing 

penalties 10-fold or 20-fold does anything other than stop legitimate innovators and legitimate speakers or users of copyrighted 

works, legitimate creators from creating. 

Ms. JACKSON LEE. I thank the gentleman. I just would say, Ms. 

Sohn, I think it is worthy of consideration of the provision that you 

have highlighted. I think what we have seen in some of the egregiousness of trademark infringement has moved this Congress to 

believe that there are larger bodies other than the unfortunate 

woman in Minnesota and maybe others, that we have to make a 

very strong statement. 

I know Mr. Cotton is shaking his head, and I would ask the 

Chairman to yield him just a second to comment, because he is the 

poster child in terms of this issue. If the Chairman would yield him 

a minute. 

Mr. BERMAN. Mr. Cotton for a quick response. 

Ms. JACKSON LEE. And I thank the Chairman for his indulgence. 

Mr. COTTON. I would just say that I think the emphasis that the 

congresswoman placed is the fundamental thrust of what the big 

picture of what this bill is all about, which is what we know right 

now is that our enforcement regime, both in terms of penalties and 

in terms of enforcement resources, is not stemming the tide that 

we face collectively. 

What is critical is that we step up. We make the penalties that 

we create not just a cost of doing business for the counterfeiters 

and the organized criminal conspiracies that are behind the flood 

that we face, but that we actually make it a serious deterrent. We 

apply enforcement across the board. That is the big picture. 

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Ms. JACKSON LEE. Thank you, Mr. Chairman. 

Mr. BERMAN. The gentleman from Georgia, Mr. Johnson. 

Mr. JOHNSON. Yes, just some thoughts. And certainly I appreciate the efforts of the Chairman, who has introduced this legislation to help mitigate some of the loss that Americans are undergoing as a result of copyright and trademark infringement. I am 

fully supportive of efforts to cut that, so that American businesses 

can prosper. 

I am concerned about the fact that the enforcement provisions of 

this law, of this proposal, both civil and criminal, would go more 

toward Americans, as opposed to those in other countries who are 

responsible for the tsunami, if you will, of counterfeit products entering this country and circulating around the world. 

So that brings me to my issue of free trade, if you will, and the 

agreements that this country signs with other countries. There 

seems to be a lack of strong protections in these trade agreements 

that would be helpful in stemming the tide of these counterfeit 

goods coming here and circulating around the world. 

Would you comment on that, Mr. Cotton? 

Mr. COTTON. I would make three very quick points in response. 

First, I think the issue that you raise is critically important, but 

what I would say to you is that in arguing the case internationally 

for stronger IP protection action by countries internationally, they 

look to the example of the United States in terms of what they 

should do and how they respond. 

Mr. JOHNSON. Even the Chinese? 

Mr. COTTON. Well, ultimately I would say to you yes, that is to 

the extent that we wind up with counterfeit goods on our streets, 

and to the extent that we ask countries everyplace from China to 

many other countries in the world to devote very significant resources to enforcement and to escalate the message, for example 

in——

Mr. JOHNSON. How do we do that in a free trade agreement? 

How do you counter the notion that our free trade agreements don’t 

go far enough with respect to strong protections? 

Mr. COTTON. I am sorry. I would agree with you that it would 

be desirable to use every lever that we have available to us. I guess 

my only point I was making was that, I would agree with you that 

it would be desirable to have our free trade agreements. It is desirable——

Mr. JOHNSON. It seems that those are the best route to be able 

to stem this tsunami of counterfeit goods coming over here and circulating around the world, even though I appreciate the stronger 

enforcement mechanisms that are a part of this legislation and the 

aspirational aspects of this in so far as international enforcement 

coordination that is called for under this bill. 

But let me shift now to this issue of the registration of copyrights 

as a prerequisite to criminal prosecution, and then this legislation 

would remove the registration requirement. I would ask Ms. 

Mandelker, normally in a criminal case you have a need to prove 

intent. I would assume that that need to prove intent is a part of 

the criminal laws, in so far as copyright infringement that exists 

now. Would that change under this new legislation? And if it does 

not change, how could you prove intent in a situation where you 

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could not find where, say, a photograph has copyright protection, 

but you can’t find it due to the technological limitations of the copyright department today. How could you prove intent? 

Ms. MANDELKER. Well, let me just say at the outset that we actually see this provision as a clarification of existing law. We think 

it is important to make it clear in existing law that proof of registration is not a requirement when we bring our criminal cases, 

but we don’t think this is actually something new. It is just, again, 

a clarification. 

Certainly, we need to prove intent, willful intent. 

Mr. JOHNSON. How can you do that without registration, without 

a registration requirement? 

Ms. MANDELKER. I might turn to the—if you have an individual, 

for example, who clearly tried or made a good-faith effort to find 

out whether or not a particular work was registered, who wanted 

to——

Mr. JOHNSON. They would have a defense, but it would not protect them from being prosecuted, being hauled off to the jail, 

fingerprinted, have to make bond, hire an attorney, and then 

present your defense at some point later. 

Ms. MANDELKER. Let me just say that at the department, we are 

really interested in going after willful infringers. 

Mr. JOHNSON. How can you prove willfulness without a prerequisite of registration? How could a prosecutor make that assessment without a requirement that the work be registered? 

Ms. MANDELKER. Again, I would note that we don’t think that it 

is currently a requirement for prosecutors. 

Mr. JOHNSON. Well, it should be, it would seem to me. It should 

be. 

Ms. MANDELKER. I would also note that in many of our cases, we 

are dealing with not just one good, but many counterfeited goods. 

As was noted earlier, it would really slow down the criminal prosecution process to force our prosecutors to go make that determination. Again, at the department we are not going to be focused on 

the example that Ms. Sohn noted of an individual who took a photograph. We are going to be focused on those large-scale infringers. 

Mr. JOHNSON. Yes, well, if the state of the law allows you to go 

against that small photographer, sometimes it will happen—a renegade prosecutor, if you will. So I am concerned about doing away 

with the registration requirement. I am concerned about that. 

Mr. BERMAN. The time of the gentleman has expired. We will be 

having a vote soon. 

I recognize the gentleman from California, Mr. Sherman. 

Mr. SHERMAN. Mr. Chairman, I am one person in this room who 

supports section 104, and I think we ought to try to emerge with 

as strong a bill as possible. But I am going to focus my attention 

on title IV, which deals with the international provisions. 

Mr. Hoffa, we have kind of a procedure here under our wonderful 

free trade agreements. Under this bill, we are going to have 10 new 

intellectual property attaches for the whole world. It will go something like this. One of these attaches will go talk to the Chinese 

and yell and beg and point to them where it is their legal obligation, because we are good lawyers and we believe that paper matters. And point to them how they are supposed to enforce intellecVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00125 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
122

tual property. Then he or she will leave the room. The Chinese will 

explode into laughter because they are good enough diplomats to 

be able to suppress that laughter while we are actually in the 

room. 

Then they will put back on their earnest faces. They will have 

a press conference. They will announce that they are going to do 

something. They may actually go out and grab a few counterfeit 

products and put them in a warehouse until they re-sell them later. 

And then we repeat the whole process at the beginning of the next 

year. 

I wonder whether you think that we need to instead think of 

some things that go beyond the text of these free trade agreements 

and actually, for example, take a boatload or two of goods coming 

in from China and turn them around in order to demonstrate our 

concern on this issue. 

Mr. HOFFA. Well, I think the problem is that in this country if 

you find a clear copyright and you buy the counterfeit goods, you 

can sue. There is a legal system here where you can enforce rights. 

That isn’t really true in China. You are subject to a completely different system. If you do find a copyright infringement in China, 

you really are in tough shape. Our agreements have not done anything to give you any type of rights to enforce your rights over 

there. 

You might go to the communist government, and they might say, 

‘‘Okay, we have found 1,000 DVDs,’’ and then they will run a 

steamroller over them for the TV cameras. Or they will set some 

DVDs on fire for the video cameras. And that has nothing to do 

with enforcement. 

There isn’t really a way to bring lawsuits over there that can be 

effective to stop this. When there are violations found in China, it 

isn’t the Chinese government that finds them. And I don’t want to 

single out the Chinese because it is true in India and it is true in 

Mexico. The problem is, it is the industry that finds them. Every 

major manufacturer has a part of their company that is devoted to 

finding knockoffs or copyrights. So they go and find these and they 

show the Chinese or the Indians, ‘‘Look what you are doing. What 

are you going to do about that?’’

And then you can bring a lawsuit and then they will shut down 

two or three factories. But the two or three they shut down, there 

are 10 more. So somehow we have to have in our trade agreements 

some way either to reciprocate or some way to protect our products 

from being copied. 

Of course, the best example is the dog food example, where we 

had that this summer. We went through and the dog food came in 

and the dogs were dying because it had different products in it. 

And then we had the issue about the Colgate copyright, with the 

antifreeze in it. These were dreadful examples of what can happen 

because there isn’t anybody in these countries looking for these violations. Anything goes in these new economies. Unfortunately, they 

are early economies. Anything to make money goes. 

Over here, we don’t have that problem. We have consumer safety. We have the Justice Department. We have a lot of enforcement. 

We have individual lawsuits, and we have damages. You know, if 

somebody does do this and we identify them, they can be sued for 

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millions of dollars. You really can’t do that in China and you can’t 

do that in India. 

So the problem is, how do we put that into a trade agreement? 

I think until we figure that out, we ought to stop doing trade agreements for awhile and realize the problems that we are losing jobs, 

and we ought to figure it out. 

Mr. SHERMAN. Should we be forcing a renegotiation of the trade 

agreements we have now, or just leave those on the books the way 

they are? 

Mr. HOFFA. I think that all of them should be. You know, we 

have talked about renegotiating NAFTA or terminating it and 

starting over again. People cringe at that. Think about it. All the 

trade agreements that we have done, have you ever known one 

that has ever expired or that we have stopped? I mean, once they 

are on the books, they are like no one can ever stop them. 

You talk about, well, why don’t we just void that agreement. 

Every one of these agreements has a provision to end that agreement. You know, it is a 60-day notice. 

Mr. SHERMAN. I would also point out that every single one of 

them has increased our trade deficit with the country involved. 

We have talked a little bit about the need to inspect these containers. Should the cost of inspecting these containers fall upon all 

taxpayers, even the businesses that are in competition with imports? Or should we have at least the fair cost of examining the 

containers fall upon those who are bringing the containers into the 

country? 

Mr. HOFFA. Well, there are billions of dollars in profits being 

made by these large shipping companies. I don’t think it would be 

wrong that they pay part of this cost. They are the ones that are 

bringing in these shiploads of goods in these containers that are 

coming from the Far East and all over the world. If you have been 

to the ports, and most of us have, you see how they are piled so 

high. 

The odd thing is, there are shiploads of containers coming in, but 

when they go out, they go out empty. That is really a story about 

what is wrong with our trade agreements. It is a one-way deal. 

They are not buying our products, but we are bringing their products in. So we have talked about the fact that large shippers should 

pay a small portion, or at least a per-container cost of inspection, 

rather than have it put on the American taxpayer. 

Mr. BERMAN. The time of the gentleman has expired. 

Mr. SHERMAN. Thank you. 

Mr. BERMAN. I have an idea. We have been doing it with terrorism laws and nonproliferation laws. You and I have been doing 

it with laws dealing with Iran. We should have extraterritorial application of our copyright and trademark laws. [Laughter.] 

Mr. SHERMAN. Mr. Chairman, you surprise me. You are going 

one step beyond what I thought was already a pretty extreme position. 

Mr. BERMAN. The gentleman from North Carolina gave up part 

of his time earlier. We have had a string of Democrats. So I am 

now going to recognize him because he did have a question he 

wanted to ask Mr. Cotton. 

124

Mr. COBLE. Mr. Chairman, I apologize for my ineptness. I 

misfiled my question. I just wanted to hear from Mr. Cotton. I don’t 

think it has been addressed. 

Mr. Cotton, the decision to require dedicated resources at DOJ, 

the White House and elsewhere is somewhat unusual, and some in 

the executive branch I think will argue, wrongheaded. They imply 

that it will create an inflexible and meddlesome bureaucracy. I am 

not convinced that that would be the case. What do you say in response to that? 

Mr. COTTON. I think our experience teaches one lesson very 

clearly. It is one that has been reported to me from every sector 

of the coalition that I am involved with, which is that officials that 

have a general jurisdiction responsibility wind up having other 

pressures on them to the extent that IP enforcement tends to fall 

down the to-do list. Until there are both senior policy executives 

and until there are significant, dedicated, specialized IP enforcement resources, we will not make progress in addressing the issues 

that are on the table. 

Mr. COBLE. Thank you. That is what I wanted to get in. 

Mr. Chairman, I thank you for recognizing me. 

Mr. BERMAN. I appreciate it. The gentleman yields back. 

I recognize another gentleman from California, Mr. Schiff. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

I join my colleagues in strongly supporting the legislation, and 

I congratulate the Chairman on all his superb work. I appreciate 

in particular also inclusions of sections 511 and 512 that we proposed parts of to create the state and local law enforcement grants, 

as well as strengthen the CHIP units. 

I had a couple of questions, some ideas that we have been kicking around. It goes a little shy of what Mr. Sherman and Mr. Berman were just proposing on the international front. 

Mr. BERMAN. I was kidding around. 

Mr. SCHIFF. I know you were. I have a more modest idea I would 

like to run by the Committee. Before I do, I just want to make a 

comment on section 104, which has some surface appeal to me, but 

I am still wrestling with it. When I think about the analogy, Mr. 

Cotton, that you mentioned of prosecutors or judges separating out 

petty larceny from grand larceny, I also think about the fact, 

though, that when we charge someone for theft of an automobile, 

we charge them for theft of the automobile, theft of the radio in the 

automobile, theft of the seats in the automobile, or the theft of a 

briefcase in the automobile, even though the briefcase might belong 

to someone different than the automobile belonged to. It would be 

theft of an automobile. 

Just looking at the discretion we are giving to the judge to determine whether distinct works have independent economic value, you 

could say that also about objects in a car. So I think when you 

think about it a little more, I haven’t reached a conclusion on it. 

I can see certainly the value to be added by it. 

But I wanted to run some other thoughts by you on the international front. For example, one of the thoughts that we were kicking around was the idea of tasking the Commerce Department with 

posting a list of Web sites that clearly infringe. We know many of 

the most well known. A lot of them use major credit cards, take 

125

major credit cards. A lot of them have advertisements from major 

companies. Presumably some of those companies or credit card 

agencies aren’t aware that these are Web sites that are dealing in 

hundreds of thousands of pirated works every day. 

Do you have any feedback on whether you think that kind of 

idea, whether it be housed in Commerce or the Copyright Office or 

somewhere else, might have some value to it? 

And then a second thing I would like to throw out there, which 

is I guess more incendiary. We do a favor for some institutions of 

higher learning, which are also often very problematic from an IP 

point of view, by giving them a broad safe harbor. Should we require the use of filtering devices if we are going to allow that safe 

harbor? 

So if I could throw those two ideas out there and get your feedback. 

Mr. COTTON. I am delighted to make a comment because this entire area is really the second focal point, in addition to governmental action, of the Coalition Against Counterfeiting and Piracy. 

It is a recognition that there are sectors of the economy that are 

intermediaries. Frequently, they are actually business partners of 

many of the brand owners in the sense of working with us. 

But the question that you pose is whether perfectly legitimate 

businesses, but who by virtue of their infrastructure become the 

means by which counterfeit and pirated goods get into the stream 

of commerce, have some responsibility to address that issue and to 

take action to reduce the degree to which their infrastructure is 

used. 

My primary example of this would be the collective judgment 

that we as a society came to concerning financial institutions and 

money laundering. Banks are perfectly legitimate and important 

institutions. We have imposed on them an obligation not simply to 

take cash and close their eyes as to who brings it to them and what 

the source of that money was, but to ask questions about their customers and to ask questions about the source of cash that may be 

deposited with them. 

The question is a delicate question and I would cite you the most 

recent example where I think there was a successful negotiation 

between brand owners and intermediaries in the case of YouTubelike sites, where a number of user-generated content sites signed 

a voluntary agreement of principles with content owners committing to adopt by the end of this year filtering technology, which 

they recognize was commercially available and technologically feasible. 

I think the question becomes for other institutions, other sectors 

such as the ones you referenced—financial intermediaries—I think 

you could ask the same question about shippers, warehousers, retailers. The question becomes: When is it reasonable for those sectors? What actions are reasonable for those sectors to take and how 

can they work collectively with brand owners that from the point 

of view of protecting the health and safety, in many cases, of consumers and preventing pirates and counterfeiters from using their 

infrastructure, what actions can they take? 

Mr. SCHIFF. Would it be feasible to have a government agency 

tasked with developing the IP terrorist watch list that at least comVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00129 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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panies would be on notice? Even if there wasn’t a legal prohibition 

against their doing business, they couldn’t very well claim ignorance if they are processing credit card transactions or advertising 

on clearly piracy-oriented sites. 

Ms. SOHN. Yes, I think Mr. Cotton just pointed out what the 

problem is in doing something like that is that you are just opening 

up the floodgates to massive litigation against every single company that might have any kind of tangential relationship to copyright infringement. A court in California in a case involving a pornography site had sued MasterCard and Visa claiming that because it had given financial services to other Web sites that had 

stolen their pornographic pictures, that they were not liable. 

I just think that if you open the floodgates in that way, then you 

are just going to be flooding the courts with people going—copyright trolls, basically patent trolls—copyright trolls going after 

every single company which might have the most tangential relationship to an infringing Web site. 

Mr. SCHIFF. You might be if you enacted some liability for doing 

business with someone on the list, but if you post the list of piracy 

sites, how does that expand the liability other than putting people 

on notice? In other words, if the top 10 Web sites are responsible 

for 60 percent of all the piracy, and I am just guessing at a big 

number, and you can identify those and you can stigmatize doing 

business with those, why does that open floodgates of litigation? If 

it would deter legitimate companies from doing business with those 

Web sites, wouldn’t that be desirable? 

Ms. SOHN. I think that might be a good marketplace solution to 

the problem. I am not sure government should be involved. But it 

might be nice, yes, to do a watch list of a hall of shame. I have 

no problem with that. 

Mr. COTTON. If I might must make one point. Just to be clear 

what I said, which was I was referring to negotiated agreements 

between sectors. That is what the CACP is endeavoring to accomplish before we turn to the question of legal standards or legal 

questions. 

Mr. BERMAN. The time of the gentleman has expired. 

I have one short question for Sigal Mandelker. You testified that 

the department implemented all 31 recommendations from the IP 

task force report. One of the recommendations was that the FBI 

should increase the number of agents dedicated to IP investigations. Can you tell me how many FBI agents are dedicated to IP 

investigations, meaning that is their full-time job? 

Ms. MANDELKER. I can’t give you a specific number since I am 

from the Criminal Division, but I am happy to make that inquiry 

and report back to the Committee. I can tell you that they have increased the number of arrests and indictments, and I am also 

happy to provide those statistics. 

Mr. BERMAN. That is important, good and useful, but I would 

like just the name and phone number of one FBI agent who has 

been told ‘‘full-time, this is your job.’’ If you could find that out, 

that would be great for me. 

There are a lot of comments I could make, but I think we have 

a vote coming up. This has been a very useful panel, very interVerDate 0ct 09 2002 12:44 Jun 11, 2008 Jkt 000000 PO 00000 Frm 00130 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\121307\39705.000 HJUD1 PsN: 39705
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esting, a lot of issues raised, not all of them resolved. I appreciate 

all of you coming. 

With that, unless anybody says something different, I am going 

to adjourn the hearing. 

[Whereupon, at 1:01 p.m., the Subcommittee was adjourned.] 

(129)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TENNESSEE, AND MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

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