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67–443 PDF 2011

S. HRG. 112–47 

TARGETING WEBSITES DEDICATED TO STEALING 

AMERICAN INTELLECTUAL PROPERTY 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

FEBRUARY 16, 2011 

Serial No. J–112–5 

Printed for the use of the Committee on the Judiciary 

( 

(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

CHARLES E. GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

JON KYL, Arizona 

JEFF SESSIONS, Alabama 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

KOLAN DAVIS, Republican Chief Counsel and Staff Director 

(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Franken, Hon. Al, a U.S. Senator from the State of Minnesota, prepared 

statement .............................................................................................................. 175 

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa ..................... 3 

prepared statement .......................................................................................... 176 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1 

prepared statement .......................................................................................... 189 

WITNESSES 

Adams, Tom, President and Chief Executive Officer, Rosetta Stone Inc., Arlington, Virginia ................................................................................................... 5 

Dailey, Thomas M., Vice President and Deputy General Counsel, Verizon 

Communications Inc., Arlington, Virginia ......................................................... 10 

Jones, Christine N., Executive Vice President, General Counsel and Corporate 

Secretary, The Go Daddy Group, Inc., Scottsdale, Arizona .............................. 8 

Turow, Scott, President, Authors Guild, New York, New York ........................... 6 

Yee, Denise, Senior Trademark Counsel, Visa, Inc., San Francisco, California 12 

QUESTIONS AND ANSWERS 

Responses of Tom Adams to questions submitted by Senators Grassley and 

Coburn ................................................................................................................... 34 

Responses of Thomas M. Dailey to questions submitted by Senators Coburn, 

Grassley and Klobuchar ...................................................................................... 42 

Responses of Christine N. Jones to questions submitted by Senators Grassley, 

Klobuchar and Coburn ......................................................................................... 51 

Responses of Scott Turow to questions submitted by Senators Coburn and 

Grassley ................................................................................................................ 61 

Responses of Denise Yee to questions submitted by Senators Grassley, Klobuchar and Coburn .............................................................................................. 95 

SUBMISSIONS FOR THE RECORD 

Adams, Tom, President and Chief Executive Officer, Rosetta Stone Inc., Arlington, Virginia, statement ................................................................................ 103 

AFL–CIO, William Samuel, Director Government Affairs, Washington, DC, 

February 15, 2011, letter ..................................................................................... 118 

AT&T, James W. Cicconi, Senior Executive Vice President, Washington, DC, 

March 24, 2010, letter ......................................................................................... 120 

COICA, New York, New York: 

Floyd Abrams, February 11, 2011, letter ....................................................... 125 

Sascha Meinrath, and Aparna Sridhar, February 15, 2011, letter .............. 135 

Castro, Daniel, Senior Analyst, Information Technology and Innovation Foundation (ITIF), Washington, DC, statement ........................................................ 138 

Center for Democracy & Technology, Washington, DC, statement ..................... 144 

Computer & Communications Industry Association, Edward J. Black, President and Chief Executive Officer, Washington, DC, statement ....................... 152 

Consumer Electronics Association (CEA), Michael Petricone, Senior Vice 

President, Government Affairs, statement ........................................................ 162 

Dailey, Thomas M., Vice President and Deputy General Counsel, Verizon 

Communications Inc., Arlington, Virginia, statement ...................................... 164 

Jones, Christine N., Executive Vice President, General Counsel and Corporate 

Secretary, The Go Daddy Group, Inc., Scottsdale, Arizona, statement ........... 177 

Page

IV 

Keane, Brian A., Chief Operating Officer, Blue Sky, Greenwich, Connecticut, 

February 15, 2011, letter ..................................................................................... 188 

Motion Picture Association of America, Inc (MPAA), Washington, DC, statement ...................................................................................................................... 191 

Net Coalition, statement and attachments ........................................................... 194 

New York Times, Scott Turow, Paul Aiken and James Shapiro, February 

14, 2011, article .................................................................................................... 211 

Siy, Sherwin, Deputy Legal Director, Public Knowledge, Washington, DC, 

statement .............................................................................................................. 214 

Roberts, Nora, February 13, 2011, letter ............................................................... 222 

Turow, Scott, President, Authors Guild, New York, New York ........................... 223 

U.S. Chamber of Commerce, Washington, DC, statement and joint letter ........ 238 

Yee, Denise, Senior Trademark Counsel, Visa, Inc., San Francisco, California, 

statement .............................................................................................................. 249 

(1) 

TARGETING WEBSITES DEDICATED TO STEALING AMERICAN INTELLECTUAL PROPERTY 

WEDNESDAY, FEBRUARY 16, 2011 

U.S. SENATE, COMMITTEE ON THE JUDICIARY, Washington, DC 

The Committee met, pursuant to notice, at 10:05 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Whitehouse, Klobuchar, Franken, 

Coons, Blumenthal, Grassley, Kyl, and Coburn. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. 

SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. Good morning. I want to thank the witnesses 

who are here today to testify about how we can make some 

progress in the fight against online copyright infringement and also 

the sale of counterfeit goods. Last Congress, I introduced legislation, cosponsored by 12 other Senators on this Committee, to combat ‘‘rogue websites’’ that do nothing but traffic in infringing material. I thank those Senators who joined me, including Senator 

Hatch, who was the lead cosponsor and is a long-time leader on intellectual property issues, and, of course, our Ranking Member, 

Senator Grassley. I note that because sometimes you only read that 

members of opposite parties only work against each other, and this 

Committee has had a long record of working together in a bipartisan way on a whole number of issues, certainly in the high-tech 

area, but in the criminal area, fraud, oversight, and so on. 

The legislation was then approved unanimously by the Senate 

Judiciary Committee, 19–0. Now, there are some concerns on both 

sides of the aisle which we will try to address. Some intellectual 

property owners argue that the legislation did not go far enough; 

others are concerned it may go too far. Senator Coburn asked me 

if we could hold this hearing to give all sides an opportunity to address this issue. At his request I have done that. 

We work to address issues, but let us be clear. When we look at 

those issues, the problem of online infringement is real; it is substantial; and it causes a drain on our economy, it costs American 

jobs. Copyright piracy and the sale of counterfeit goods are reported to cost the American economy billions of dollars a year, 

thousands of lost jobs. A January study found that nearly 24 percent of all Internet traffic worldwide is infringing. It is a staggering 

number; it is growing. Certainly those of us on this Committee who 

have been in law enforcement—and there are several; I see Senator 

2 

Blumenthal has just joined us. If you had somebody who was 

breaking into a warehouse and stealing a few hundred thousand 

dollars’ worth of items, why, you would want to get after that. 

Well, you have these people stealing millions and billions of dollars. 

We ought to be just as incensed on that. So inaction is not an option. I think we have to pass online infringement legislation in this 

Congress before rogue websites harm more businesses and result 

in more lost jobs, because what they do is theft, pure and simple. 

They are no more than digital stores selling stolen and, in the case 

of counterfeits, often dangerous products. If they existed in the 

physical world, everybody would agree that you should shutter 

them and their proprietors arrested. And we cannot excuse the behavior because it happens on the Internet and the owners operate 

overseas. The Internet needs to be free and open, but not lawless. 

Every one of the witnesses here today has an interest in an 

Internet marketplace that remains vibrant and continues to expand. I suspect no one here condones rogue websites. We have an 

interest in keeping Internet activity lawful. If we lose confidence 

that the products we are purchasing online are the real things 

rather than counterfeit, it hurts the entire Internet ecosystem. 

I know some market participants have become more aggressive 

on their own initiative since we began consideration of a legislative 

approach to this problem last June. I commend them. After all, legislative action alone cannot possibly achieve the effects of self-policing in the private sector. MasterCard, for instance, has been working closely and productively with the intellectual property community to make sure they are not processing payments from sites that 

are trafficking in illegal goods. I know Visa has begun discussions 

with the IP community in that same way. 

But voluntary conduct is not enough. Court orders are often necessary for appropriate action. AT&T first suggested in written comments an approach that allows law enforcement to seek a court 

order that could be used by AT&T and other Internet service providers to prevent rogue websites based overseas from reaching us. 

I applaud their leadership. That model not only became the basis 

of our legislation last year, but it is consistent with the work law 

enforcement has done recently. 

So I am convinced we will pass legislation to target rogue 

websites this year. I want to hear from all sides. But I do refuse 

to accept that the problem is too difficult because people who want 

to steal will always find a way. That is like saying we should not 

prosecute drug crimes or child pornography because people will always find a way to do bad things anyway. As a former prosecutor, 

I find that line of argument unacceptable. 

I have talked with Chairman Smith in the House. I intend to 

work closely with him and with other Members of the House who 

have been leaders on this issue. And I look forward to continuing 

to work with Senator Grassley and other members of this Committee. This issue is one of those like patent reform on which we 

can work in a truly bipartisan and bicameral basis. After all, as I 

said in a speech earlier this month, when you have the Chamber 

of Commerce and organized labor come together in support of legislation to address this problem, then so can Democrats and Republicans in both the House and Senate. 

3 

Senator Grassley. 

STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR 

FROM THE STATE OF IOWA 

Senator GRASSLEY. Before I go to my statement, I would follow 

up on three things. One, I may have to temporarily leave to go 

down the hall to help make a majority in the Finance Committee. 

And that reminds me. Since this involves intellectual property and 

trade and piracy, it is also issues that we deal with on trade issues 

down in the Finance Committee as well over the last several years. 

And the third one would be a commentary on your comment about 

this being a bipartisan issue. Very true, and stressing that, because 

people think that everything around here is very partisan. And I 

always remind my constituents that the reason they think everything is partisan around here is because controversy is what makes 

news, you know. And, consequently, when people get along, it is 

not very well noticed by the press. 

I appreciate your holding this hearing on this very important 

subject. I agree that increased online theft of intellectual property 

has really become a rampant problem. There is a lot of interest in 

going after criminals who engage in pervasive piracy and counterfeiting online. That is because the impact of copyright piracy and 

sale of counterfeit goods imposes a huge cost on our American economy, which means lost jobs and lost sales and lost income. In fact, 

these detrimental impacts go far beyond the American economy. 

We recently had a report estimating that counterfeiting and piracy 

resulted in 2.5 million jobs lost in the G–20 economies, and that 

the global value of counterfeited and pirated goods exceeds $650 

billion. Obviously, those are staggering numbers. 

Piracy and counterfeiting also can present serious health and 

safety problems because we have counterfeit products such as ineffective pharmaceuticals, defective electrical products, tainted toothpaste, malfunctioning equipment, and sub-par materials, all posing 

dangers to the American consuming public. Addressing this problem would help protect consumers. A large chunk of this piracy and counterfeiting is done online. 

That is because the internet reaches across the globe and is mostly 

anonymous. Moreover, part of the problem is that many Internet 

websites that engage in offering infringing content and counterfeit 

goods are actually foreign owned and operated. These websites appeal to American consumers because they reside at familiar toplevel domains, such as .com or .net. These websites also appear to 

be legitimate because they have corporate advertising and credit 

card acceptance. Today our testimony on the scope of intellectual property theft 

over the Internet and what efforts have been undertaken to combat 

this scourge, of course, is very needed information. I am interested 

in hearing whether the witnesses support or have concerns with 

the legislation that the Senate has proposed to address the problem. I am certain that everyone supports the underlying goals of 

S. 3804, the Combating Online Infringement and Counterfeiting 

Act, a bill that was introduced in the last Congress. That said, a number of concerns have been raised about that bill, 

and it is appropriate for the Committee to look into those concerns 

to determine whether they are legitimate and should be addressed. 

4 

Certainly, we should act responsibly so that we do not harm consumers, innovation, or economic growth. Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you. Our first witness—and I should ask Senator Kyl, how long are 

you going to be able to stay with us? Senator KYL. Mr. Chairman, I have got the same problem Senator Grassley does. We both are going to have to get over to the 

Finance Committee, and, therefore, I have the opportunity to introduce the witness, if I could be excused. Chairman LEAHY. I am going to take the witnesses in the order 

they are here, but if you would like to introduce Ms. Jones out of 

order, why don’t you just go now. Then you will be able to leave. Senator KYL. I appreciate it. And I want to join Senator Grassley 

in thanking you for holding this hearing on an extremely important 

topic and to re-emphasize what he did about the bipartisan nature 

of this and, of course, my work in support of the Leahy bill on patent reform, which is just another example. But I would like your permission to introduce a good friend of 

mine and a very important witness for us, and that is Christine 

Jones. She is the general counsel and corporate secretary for the 

Go Daddy Group of companies and is responsible for all of the legal 

affairs of that Go Daddy Group, including the two departments 

which deal with websites devoted to stealing intellectual property, 

which is the subject of the hearing today. She was the company’s 

first lawyer and made it a priority to put Go Daddy on the leading 

edge of addressing bad actors on the Internet. She has helped to 

push through legislation aimed at protecting kids online, fighting 

the problem of illegal online drug sellers, and she has been a repeat visitor to the witness table here in Washington, having testified on numerous Internet-related issues in Congressional committees in recent years. On a personal note, prior to joining Go Daddy, Christine worked 

as a commercial litigator and prosecutor and CPA. I first met her 

in 1997 when she first moved to Arizona. She has been very active 

in our community affairs, and I just also would add that one of the 

soft spots in my heart for Go Daddy is the fact that they are a big 

sponsor of car racing, which I am kind of a nut for, both Indy car 

racing and NASCAR racing. But obviously they do some incredibly 

important work in this problem of intellectual property, and I am 

delighted that Christine Jones will be here to testify today. Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you. I will resist talking about the ad 

Go Daddy once had about appearing before a Senate Committee. [Laughter.] 

Chairman LEAHY. This is not the one. 

Senator COBURN. Mr. Chairman. 

Chairman LEAHY. Yes? 

Senator COBURN. Just to note I will have to go to the Finance 

Committee as well, so I am going to be here, and if I do not get 

a chance to question, I will submit questions. Chairman LEAHY. Well, thank you very much. As I said before 

you came in, the reason we are having this hearing is at your request. I wanted to give Senator Kyl, because I know he has to leave, 

that opportunity of introducing Ms. Jones because even privately 

5 

he said some very nice things about you, too. So I wanted him to 

have the chance—— 

[Laughter.] 

Chairman LEAHY. You know, it is not just what we say on the 

record, but if we say it in private, it is even better. Tom Adams is chief executive officer of Rosetta Stone, a position 

he has held since joining the company in 2003. In his role as CEO, 

Mr. Adams was recognized in 2009 as the Ernst & Young Entrepreneur of the Year National Category Winner, and well deserved, 

I might say. As a native of Sweden, Mr. Adams is fluent in a number of languages, including Swedish, French, and English, and a 

working knowledge of Spanish. C’est bien. Mr. Adams received his bachelor’s degree from Bristol University 

in England, his master’s from the international business school 

INSEAD. 

Please go ahead, Mr. Adams. What I am going to do is I am 

going to have each witness testify, and then we will open it up for 

questions for all of you. Go ahead, Mr. Adams. There should be a button that says ‘‘Talk.’’ 

STATEMENT OF TOM ADAMS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ROSETTA STONE INC., ARLINGTON, VIRGINIA 

Mr. ADAMS. Senator Leahy, Senator Grassley, and the rest of the 

Committee, thank you very much for holding this meeting today. 

My name is Tom Adams. I am CEO of Rosetta Stone, and our company, Rosetta Stone, has sort of grown up here in America. We 

have over 2,000 employees right now. We teach 30 languages. And 

over the past several years, we have frankly been under attack by 

pirates and counterfeiters that over time have appropriated our 

name and have used the ecosystem here in the United States to 

reach the U.S. consumer. 

So I want to thank you for recognizing the harm that rogue 

websites cause the American consumer and businesses, too. American companies today are losing the battle against the counterfeiters. The amount of criminal activity is astounding. Our company has had over 1,000 websites created like these websites right 

here. None of these are legitimate website home pages of 

RosettaStone.com, although they look very similar. They have very 

similar URLs where they will, for example, call themselves 

RosettaStone-site.com, and so the entire purpose of these websites 

is to deceive the U.S. consumer. 

While we welcome all aspects of the legislation contemplated, we 

are concerned that a key element of the ecosystem is not being addressed directly. Almost all these websites are first discovered—or 

the preponderance of discovery of these websites happens through 

search engines. So American consumers are looking for Rosetta 

Stone, let us say. They will type into the search box, and they will 

see on websites like Google and Yahoo! search results. Some of 

these search results are organic, and some are paid. And you can 

see here all the marked areas where these are fraudulent sites 

claiming to be selling Rosetta Stone. The URLs use the word ‘‘Rosetta’’ very often, and ‘‘Rosetta’’ is used in the header. And all of 

this is to confuse the consumer. 

The consequences of this are that consumers end up with product 

that is faulty. It often does not work. They believe they have transVerDate Nov 24 2008 10:09 Aug 12, 2011 Jkt 067443 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\67443.TXT SJUD1 PsN: CMORC
6 

acted with our company so they call our customer service. And so 

on a daily basis we get calls from customers who believe that Rosetta Stone is not a quality provider of software products, although 

we take great pride in the legitimate products that we sell through 

our own site. And so as a result, there is brand damage; there are 

consumers passing over their financial information to sites that 

they trust because they show ‘‘Rosetta Stone.’’ And all of this is 

happening, frankly, because of an ecosystem that is supporting this 

activity and which makes this activity profitable. Many of the search engines say that it is very difficult for them 

to work against this problem, but we have seen a repeated number 

of times that they put on filters which do not have any pirates for 

a while. I would contend that that is the case today, but those pirates come back time after time. 

The key issue is, of course, that there is a profit that is being 

made on these activities by payment processors or by search engines and so on. So there are many companies here in the ecosystem that make money from this illicit activity, and we simply 

must stop that, and we hope that this Committee is successful in 

moving the legislation forward. I want to thank you all again for giving us the opportunity to appear at this hearing today. We are passionate about your issue, 

and we will do whatever we can to help support the very positive 

actions that you have taken so far. [The prepared statement of Mr. Adams appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much. I share your frustration. I am one who goes online often, and you want to make sure 

you are in the right place. But we will get further into that. Our next witness is Scott Turow, a writer and an attorney. He 

is here today as President of the Authors Guild, the largest society 

of published authors in the United States. He has written eight 

best-selling books including ‘‘Presumed Innocent.’’ He has been a 

partner in the Chicago office of—I am going to mispronounce this. 

Sonnenschein? 

Mr. TUROW. Yes. 

Chairman LEAHY.—Nath and Rosenthal since 1986. He has concentrated on white-collar criminal defense and pro bono matters. 

He was an Assistant U.S. Attorney in Chicago. He graduated from 

Amherst College and received his law degree from Harvard. We 

have known each other for years, and I believe it was Senator Durbin of this Committee who first introduced us. 

Please go ahead, sir. 

STATEMENT OF SCOTT TUROW, PRESIDENT, AUTHORS GUILD, 

NEW YORK, NEW YORK 

Mr. TUROW. Thank you, Mr. Chairman. 

First I want to express my gratitude that these hearings are 

being held. I do not believe it is hyperbolic to say that if piracy of 

intellectual property is allowed to go unchecked, it will either 

gravely damage or even destroy the creative community in the 

United States. And if I may, I would like to augment my written 

remarks with some personal observations. 

I published a new novel—— 

7 

Chairman LEAHY. And I should note that all the statements will 

be placed in the record in full, but please go ahead, sir. 

Mr. TUROW. With gratitude, thank you, Mr. Chairman. 

I published a new novel last May. I was lucky enough that it 

landed almost immediately on the various best-seller lists. And 

within the first week or two that it was available for sale, I had 

friends, four of them from different venues, some in publishing, 

some who had just been cruising the net, who informed me that 

there were pirated versions of my book available and, of course, at 

a fraction of the price at which legitimate venues were selling it. 

And what began then was, frankly, a game of whack-a-mole with 

my publisher sending take-down letters and new sites popping up 

where pirated copies of ‘‘Innocent’’ were on sale again. 

You know, I came today with my iPad. I enjoy the benefits of the 

digital revolution, but it brings enormous peril particularly for authors. The sale of these devices, of course, is growing rapidly. The 

bigger that market gets, the larger the market is for the pirates. 

And my concern is not to protect the incomes of best-selling authors. My concern instead is for the sake of our literary culture. 

At this point in time, because of the Internet and a number of 

other sources, American publishing is, frankly, wobbly. In 2008, 

which is the last year for which I have statistics, there were only 

two American publishing groups that reported a profit. And if the 

pirates destroy the remaining margin in the publishing industry, it 

will, frankly, collapse and with that will go the guidance of editors 

and, more significantly, the function that publishers actually play 

as the investment bankers or the venture capitalists, really, in our 

literary culture. They advance money to authors so authors can 

write books in the hope that those books will be profitable. 

As you might expect, as the President of the Authors Guild, my 

concerns are even more so for our members. It is a hard world in 

which to get a book published. If piracy destroys the small margins 

that remain for publishers in books that are not going to be best 

sellers, those books will not be published at all. We will not hear 

new voices. Authors who are at the middle of their career will be 

stilled, and our cultural conversation will become stilted and impoverished. 

The consequences are dire, with authors, frankly, headed in the 

same direction as our colleagues who are musicians, without the 

same options of performing to augment our incomes. As a result, 

I find myself with little patience for the third parties who enable 

the piracy of books and music and movies. And I would call to the 

Committee’s attention. That I, too, was a Federal prosecutor. My 

career started in the late 1970s and ran into the 1980s. At that 

time we began to recognize that the selling of dangerous illegal 

drugs was becoming an international industry, that it could not be 

combated simply with on-street arrests, and that we had to follow 

the trail of money into the financial institutions where it was being 

deposited. And those financial institutions, of course, raised Cain. 

They said this was Government intrusion. They said that they 

could not afford the price of vigilance, that it would destroy their 

business. It did not. It was necessary, and the same kinds of steps 

are necessary now for those who profit by advertising, by collecting 

fees from payments for this form of intellectual piracy. There needs 

8 

to be legislation, and as you said, Mr. Chairman, inaction really 

should not be an option for the Congress. 

So I thank you for your attention to this very, very important 

issue. 

[The prepared statement of Mr. Turow appears as a submission 

for the record.] 

Chairman LEAHY. Thank you, and I appreciate the fact you 

brought up all the different things that might be on there, not only 

books but products. Somebody thinks they are getting a medication 

that controls a heart condition, for example, and they are getting 

a fake medication and they die. 

Ms. Jones, you have already been introduced. I cannot do better 

than Senator Kyl has introducing you. Please go ahead. 

STATEMENT OF CHRISTINE N. JONES, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, 

THE GO DADDY GROUP, INC., SCOTTSDALE, ARIZONA 

Ms. JONES. Thank you, sir, and I really appreciate you letting 

Senator Kyl introduce me. That was very gracious. As with most 

Arizona citizens, I was very sad to learn of his impending retirement. He has done a lot of good for the community, and we really 

wish him the best in the future. 

But I want to thank you, Chairman Leahy, and the members of 

the Committee, for the privilege of testifying today. We appreciate 

the efforts of the Committee and your staff, whom we have worked 

with closely—— 

Chairman LEAHY. If I might interrupt, Ms. Jones, it may not surprise you to know that I was at my home in Vermont when I heard 

the news, and I called Senator Kyl to tell him how much I was 

going to miss him on this Committee. 

Ms. JONES. Yes, that is a mutual feeling. 

But we appreciate what the Committee is doing. We have long 

taken it as a priority at Go Daddy to make the Internet a better 

and safer place, and so we are honored just to be a part of this conversation to try to move the ball forward on that. 

For many years, we have taken an aggressive approach to assisting IP holders in their efforts to police and protect their marks, 

copyrights, designs, and other works on the Internet. We have established a series of standard operating procedures designed specifically to assist the IP community in the difficult task, sometimes 

very difficult task, of enforcing their intellectual property rights 

against the often elusive or, as Mr. Turow put it, whack-a-mole online infringers. In fact, we are arguably more willing to help IP 

holders than any of our fellow members of the Internet ecosystem, 

a position we take very seriously. 

We do this because we are a large holder of intellectual property 

ourselves, and we understand the frustration of trying to keep up 

with the bad guys. And we do it because we appreciate the significant efforts of the MPAA and organizations like them to protect 

their members. But mostly we do it because we believe it is the 

right thing to do. And at Go Daddy, we always try to do the right 

thing. 

I would like to address some of what my colleagues have already 

discussed, but from the standpoint of the registrar and hosting proVerDate Nov 24 2008 10:09 Aug 12, 2011 Jkt 067443 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\67443.TXT SJUD1 PsN: CMORC
9 

vider, and to put the comments in perspective, let me point out we 

sit at the on ramp to the Internet. Every single website operator 

must have a domain name to function. So we end up in a unique 

position. We enable access to the Internet to a whole lot of people, 

more than 46 million as of today, to be exact. And while we understand the Internet is used for many, many really good things, we 

also know—we are not naive. We understand there is a whole host 

of bad stuff happening out there as well. We understand how easy 

it is for the bad guys to put up a website, copy a few books or some 

foreign language CDs, launch their online business, and start collecting money. 

Because we do not wish for our service to be used to enable people to break the law, we have been very aggressive in taking action 

against some of these websites. And at the outset, to allay the fears 

of the EFF and the ACLU and some of the people who have opposed the legislation we are talking about today, let me make it 

clear, our position as a default is leave the website up. OK? We are 

in favor of the open exchange of ideas on the Internet. We like that. 

But we do not provide a platform for illegal activity, and that is 

what I want to talk about now. 

We believe a hybrid approach to this problem is the best way to 

address it, and by that I mean we need a multi-stakeholder group, 

companies from the entire Internet ecosystem, to voluntarily cooperate in disabling their services, whatever the relevant service is, 

for infringing websites. It means we need targeted, narrowly tailored legislation to pick up the slack for the people or companies 

who cannot or will not cooperate, and it means preventing frivolous 

lawsuits, which we get from time to time, against the companies 

who voluntarily help IP holders by terminating those services. And 

there are a variety of ways to go about this once we get the framework in place. 

At the end of 2010, for example, this Committee—no, that was 

the end of 2008. I am sorry. At the end of 2008, this Committee 

was instrumental in passing the Ryan Haight Online Pharmacy 

Consumer Protection Act, and we have used that very effectively 

in addition to our voluntary efforts to help end the rogue pharmacy 

contacts. And I would say that has been one of the most effective 

hybrid approaches we have had. We did a similar thing in the child 

pornography context where we got cooperation from all of the Internet ecosystem players, have legislation that is on point, work with 

the National Center for Missing and Exploited Children, and today 

it is much more difficult to find, buy, host, or register child pornography online. And so this kind of hybrid approach is what I would 

support and what I think is the best and most effective way to do 

it. 

I am just going to jump to the end because I know I am short 

on time here, but I will just say we are happy to be part of this 

conversation, and we are happy that the Committee is really working hard to figure out how best to do it. And I do not think we can 

really make progress on this until we have the cooperation from all 

of what we call the Big Five players. That would be domain name 

registrars, hosting providers, payment card processors, Internet 

service providers, and online advertising providers, which, by the 

way, some people call ‘‘search engines.’’ Without the cooperative efVerDate Nov 24 2008 10:09 Aug 12, 2011 Jkt 067443 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\67443.TXT SJUD1 PsN: CMORC
10 

forts from all of these players, the criminals that Go Daddy works 

hard to take offline every day will come back almost certainly as 

customers of one of our more lax competitors. We do not like the 

whack-a-mole game any more than anybody else, and we want it 

to stop. 

Thank you very much. I will be happy to take questions later. 

[The prepared statement of Ms. Jones appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very, very much. 

Our next witness is Thomas Dailey. He is vice president and deputy general counsel for global internet strategy broadband programming for Verizon. He has the responsibility for the development and implementation of policies in areas such as anti-piracy, 

content regulation, and privacy. He has served as Verizon’s chief 

Internet counsel since 1998. Prior to that, he was general counsel 

to Verizon’s telephone business in Vermont. He received his bachelor’s degree from Colby College and his law degree from Suffolk 

University Law School. 

Mr. Dailey, it is good to see you again. 

STATEMENT OF THOMAS M. DAILEY, VICE PRESIDENT AND 

DEPUTY GENERAL COUNSEL, VERIZON COMMUNICATIONS 

INC., ARLINGTON, VIRGINIA 

Mr. DAILEY. Thank you very much, Chairman Leahy, Ranking 

Member Grassley, and members of the Senate Judiciary Committee. Thank you for the opportunity to testify today and to 

present Verizon’s perspectives on the Combating Online Infringement and Counterfeits Act. 

As we have heard from the other witnesses, online trafficking in 

counterfeit goods and infringing content is an important and legitimate concern for rights holders, and it is a concern that Verizon 

very much shares. This legislation, while offering a new approach 

to combating piracy, raises issues for a variety of different stakeholders who are concerned about the consequences of the bill beyond its impact on piracy, including its impact on global Internet 

policy interests. I am not here today to address these important 

issues, but I do urge the Committee to take in the views of other 

concerned stakeholders directly as you continue your review of the 

legislation. 

The reason I am here today is that the Committee asked Verizon 

to comment on the legislation from the perspective of a service provider who would need to respond to a judicial order to restrict access to designated websites if the bill becomes law. 

Before I get to our concerns with the legislation, let me first 

mention a few things that we think that the bill got right. 

First, we appreciate the fact that the Committee has included in 

the legislation provisions that appropriately limit the bill’s impact 

on Internet service providers, such as not requiring a service provider to modify its network or facilities to comply with a judicial 

order. 

Second, we think the limitation that ISPs will be required to 

take action only pursuant to a judicial order issued in a lawsuit 

filed by the Department of Justice will help ensure COICA is narrowly invoked. 

11 

Third, the bill includes appropriate immunities for taking action 

in compliance with the law or arising from a judicial order issued 

under it. 

And, finally, the bill recognizes that DNS-based restrictions are 

not 100 percent effective, and it protects service providers from liability based on actions taken by their subscribers to circumvent 

the restrictions that are put in place. 

These provisions strike the proper balance between protecting a 

rights holder’s property and allocating the burdens of that effort, 

and we thank the Committee for including them. 

However, there are several changes to the legislation that we believe are necessary to ensure that the mechanisms described in the 

bill remain narrowly focused in their use and application and target only the worst of the worst Internet sites. 

So the changes we propose—and I will just cut through them 

quickly because they are in my written testimony—are the following: 

First, the bill should be clarified to ensure that service providers 

are required to take action only with respect to their U.S.-based 

DNS servers. Limiting the scope of a judicial order to DNS servers 

located here in the U.S. keeps the enforcement effort narrower, and 

it helps limit extraterritorial impact. 

Second, the legislation should expressly forbid private rights of 

action and require that DNS restrictions be imposed only where 

they are the least burdensome form of remedy. This, too, will help 

keep the focus of the bill more targeted and narrow by ensuring 

only that the Justice Department can seek an order to restrict access to a website and that the DOJ must conclude that the website 

restriction is truly necessary in the circumstances. 

Third, there are a number of operational perspectives that we believe should be put into the bill, particularly those around ensuring 

that ISPs are properly notified of what they need to do and, most 

importantly, that they are notified when a website that has been 

subject to a restriction is no longer subject to that restriction. 

And, finally, we believe that service providers will incur costs in 

implementing these DNS restrictions, and to encourage the Government to keep the list of restricted websites short and to reimburse providers, we believe that the bill should place appropriate 

limits on the number of domain names that can be subject to restriction without cost reimbursement. 

So, in closing, Verizon supports the efforts of Congress, the Department of Justice, and rights holders to combat the online theft 

of intellectual property. We believe that responsible members of the 

Internet ecosystem should work with Congress, law enforcement, 

and the courts to take efficient, effective, and judicially sanctioned 

steps to address this important problem. However, we also note 

that the new approaches to combating online privacy in the legislation raise complex issues and that Government—sanctioned 

website blocking represents a major shift in U.S. policy that requires careful consideration and input from a wide variety and 

group of stakeholders. 

I hope this testimony is useful to the Committee, and I look forward to your questions. 

12 

[The prepared statement of Mr. Dailey appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much. 

Our next witness is Denise Yee. She is senior trademark counsel 

for Visa. In her role at Visa, she heads the overall responsibility 

for managing Visa’s trademark and domain name portfolios worldwide. She is also responsible for global enforcement of the Visa 

trademark worldwide and has played a significant role in developing Visa’s anti-counterfeit and anti-piracy policies. She has been 

with Visa since 1999. She received her bachelor’s degree from the 

University of California at San Diego and her law degree from 

Santa Clara University School of Law. 

Ms. Yee, we are delighted to have you here. 

STATEMENT OF DENISE YEE, SENIOR TRADEMARK COUNSEL, 

VISA, INC., SAN FRANCISCO, CALIFORNIA 

Ms. YEE. Chairman Leahy, Ranking Member Grassley, members 

of the Committee, my name is Denise Yee, and I am senior trademark counsel for Visa Inc. With me today is Martin Elliott, who 

is the senior business leader from P Payment System Risk. Visa 

welcomes the opportunity to provide its views on the targeting 

websites dedicated to stealing American intellectual property. 

Visa fully appreciates the value of IP. The ‘‘VISA’’ trademark 

itself is one of our company’s most valuable assets. We fight 

phishing scams and other infringements to the ‘‘VISA’’ trademark 

every day and expend millions of dollars doing so. 

To promote growth in e-commerce, to protect the Visa brand, and 

because it is the right thing to do, we go beyond any legal requirements to prevent the use of our payment system for illegal e-commerce transactions. Our policy is unequivocal: Our system must 

not be used for illegal transactions. The integrity of the Visa brand 

is critical to the success of the system. The system works because 

of consumer confidence in its security and reliability. We are committed to ridding our system of merchants that engage in illegal 

transactions, including IP infringement. 

Our payment network includes four parties: acquiring banks that 

sign up merchants, and issuing banks that sign up card holders. 

Visa has no direct relationship with either merchants or card holders; rather, we provide the network that enables these four parties 

to conduct transactions. Our rules state that the transaction entered into the Visa system must be both legal in the card holder’s 

jurisdiction and the merchant’s jurisdiction. In the context of IP, 

Visa enforces this rule through a simple approach. At no cost, the 

IP owner may report instances of online infringement to Visa. We 

then conduct a test transaction to identify the acquirer that signed 

up the merchant in the system. Visa instructs the acquirer to conduct an investigation into the alleged infringement and to report 

the conclusion of its investigation within 5 business days. Absent 

proof of legality, the acquirer must demand that its merchant comply with Visa rules or terminate the merchant. Also, we educate 

acquirers that they should not sign up merchants engaged in the 

sale of infringing content. 

However, taking voluntary action against infringing merchants is 

not without risk. In 2006, Visa received a complaint that a Russian 

13 

website called AllofMP3.com was allowing the unauthorized 

downloads of music, and Visa and its acquirer terminated the merchant from the system. That decision backfired, resulting in the 

merchant suing the acquirer. And even more surprising, the Russian courts found that AllofMP3 did not infringe under Russian 

copyright law and the acquirer breached its contract by terminating service. The court ordered us to resume processing transactions, which we allowed only between the west side and Russian 

customers. 

There are other challenges to protecting third-party IP online. 

First, we are not well positioned to identify counterfeit or copyright-infringing content. IP owners are best situated to bring instances of infringement to our attention, but they rarely do. Second, where legality is not clear, we have no authority to decide 

what is lawful. We are then force into the precarious position of either agreeing with the IP owner or the merchant. Either decision 

could expose Visa to multiple lawsuits around the world. Third, 

when Visa is notified of an infringing merchant, Visa must work 

through the merchant’s acquirer. These infringing merchants often 

cover their tracks by creating multiple shell companies under different names and entering into agreements with numerous 

acquirers under false pretenses. 

Despite these challenges, Visa is committed to expelling bad merchants from our system, but we cannot permanently eliminate infringement from the Internet. The payment systems are only capable of limited enforcement to disrupt this activity. An effective longterm solution involves sustained international cooperation among 

law enforcement agencies and all e-commerce stakeholders, as my 

colleague from Go Daddy mentioned. 

We appreciate the Committee’s interest in exploring legal mechanisms to protect American IP, and Visa supports COICA’s objectives. But imposing a regulatory framework on top of our existing 

voluntary procedures could have some unintended consequences. 

For example, extraterritorial application of U.S. law may invite retaliation by other countries’ governments, or it may set an unrealistic expectation that payment systems can singlehandedly eliminate online infringement. It could also increase the likelihood that 

payment systems would be subject to conflicting legal obligations, 

such as AllofMP3. 

Notwithstanding these concerns, Visa supports the objective of 

COICA: targeting and expelling websites dedicated to stealing 

American IP. Visa believes that its own voluntary procedures have 

the same objective and, thus, COICA and Visa’s procedures should 

be viewed as complementary. 

In conclusion, Visa supports legislation such as COICA and is 

committed to working with the Committee to help to American intellectual property and fight this global menace. 

Thank you. 

[The prepared statement of Ms. Yee appears as a submission for 

the record.] 

Chairman LEAHY. Thank you. Let me ask one question of each 

of you and just answer this quickly because we will go into more 

detail. 

14 

Do you all agree that rogue websites that do nothing but traffic 

in infringing goods constitutes a problem for our Nation’s economy 

and job growth that needs to be addressed? In other words, is it 

safe to say that none of you are here to defend rogue websites? Mr. 

Adams. 

Mr. ADAMS. Absolutely not. 

Chairman LEAHY. Mr. Turow. 

Mr. TUROW. The faster we get rid of them, the better the United 

States will be. 

Chairman LEAHY. Ms. Jones. 

Ms. JONES. Yes, I would agree with that. We see a whole lot of 

them every day, and they definitely take away jobs from Americans. 

Chairman LEAHY. Mr. Dailey. 

Mr. DAILEY. I agree as well. 

Chairman LEAHY. Ms. Yee. 

Ms. YEE. I agree as well. We do not defend rogue websites. 

Chairman LEAHY. Let me ask you this: We are trying to find solutions to this. Do any of you think that to date private sector solutions have been sufficient to stop these rogue sites? Mr. Adams. 

Mr. ADAMS. Absolutely not, especially given the concentration of 

search around key engines like Yahoo! and Google. 

Chairman LEAHY. Mr. Turow. 

Mr. TUROW. Private actions have not provided any solution whatsoever, Mr. Chairman. 

Chairman LEAHY. Ms. Jones. 

Ms. JONES. I do not think so. I wish that everybody would do 

what Go Daddy does. Not to hurt myself by patting ourselves on 

the back too much, but I think we have got to keep in mind not 

everybody has the scale to do what we do, which is why the hybrid 

approach where you have to pick up the slack with the legislation 

I think is really important. 

Chairman LEAHY. Mr. Dailey. 

Mr. DAILEY. I think I am inclined to agree. I think that there are 

certainly existing mechanisms in the U.S. for dealing with U.S.- 

sited websites, and that is certainly—you know, there are a number of ways that we can go after those. We have seen some in the 

past, in the recent past, through some of the ICE efforts and others. 

The issue I think comes to a head as a legal and policy matter 

when we are dealing with the non-domestic domains that are part 

of the subject of the statute. 

Chairman LEAHY. Ms. Yee. 

Ms. YEE. We have voluntary procedures to address issues relating to copyright infringement and counterfeit, but few rights holders have come forward. 

That said, we do believe that with the objectives of COICA and 

we do believe that with collaboration among the private sector, we 

can combat counterfeit and copyright infringement on the Internet. 

Chairman LEAHY. Well, let me ask each of you this: There will 

be legislation. If you were sitting in the room drafting that, what 

would you say is the most essential element in legislation to combat online infringement? Mr. Adams. 

15 

Mr. ADAMS. The No. 1 most important thing is to make it more 

difficult for these criminals to find a market here in the United 

States. That means that they cannot be allowed to buy advertising, 

and that means that they cannot be allowed to operate the way 

they do today on search engines. 

Chairman LEAHY. Mr. Turow. 

Mr. TUROW. I agree with what Mr. Adams said. Advertisers, payment processors, ISPs, anybody who is profiting from this, whether 

intentionally or not, once put on notice, needs to desist from aiding 

these illegal enterprises. 

Chairman LEAHY. Ms. Jones. 

Ms. JONES. I am not sure I can narrow it down to one, but I 

might be able to narrow it down to three. 

Chairman LEAHY. Go ahead. 

Ms. JONES. The most important thing is to have a hierarchical 

approach which targets the bad guys first and then works up the 

chain of custody, if you will, to use the former prosecutor analogy. 

Second, provide a safe harbor for those of us who do the right 

thing against these lawsuits that Ms. Yee mentioned and the ones 

that we get from time to time, which cost a fortune to defend but 

have no merit whatsoever. 

And then this might really raise the ire of some of my Internet 

colleagues, but I am just going to say it anyway. Have a consequence if they do not do the right thing. 

Chairman LEAHY. That appeals to those of us, like Senator Klobuchar, who have been prosecutors. 

Mr. Dailey. 

Mr. DAILEY. To pick up on a couple of the statements that have 

been made so far, I think that the notion of all players in the ecosystem participating equally is something that Verizon has believed for a long time. And so I think that following the money is 

always a good place to go. 

The safe harbor aspect, to the extent that a law is passed, I 

think is very important. Immunity from liability is very important 

because we do not want to be dealing with lawsuits that might follow from some of the activity that could be required under the law. 

And then the final thing that I think is very important in the 

current draft of the bill, if it goes forward, is the requirement that 

there be a judicial order. I think that is a very important safeguard 

over the overbroad application. 

So I think those would be the three things that I would suggest. 

Chairman LEAHY. Ms. Yee. 

Ms. YEE. We think that in order to curb counterfeit and copyright infringement, it is necessary for all of the stakeholders in the 

e-commerce environment to cooperate. It is a shared responsibility, 

so that we hope that all of the stakeholders in e-commerce are a 

part of the bill. 

We are not opposed to legislation. We think it is important. And 

the essential part of the legislation—and I agree with my colleagues here, with Verizon and Go Daddy—is the safe harbor and 

to make sure that we are not penalized for trying to do the right 

thing. 

Thank you. 

16 

Chairman LEAHY. I am going to yield to Senator Grassley, but 

I want to put in the record an op-ed that Mr. Turow had in the 

New York Times. It says that the ability of creators to make a living off their work is essential to culture in this country. Was it Oliver Wendell Holmes who said, ‘‘If music did not pay, it would be 

given up’’ ? I think it is the same in this. 

Chairman LEAHY. Senator Grassley, and then Senator Klobuchar. 

Senator GRASSLEY. I was a cosponsor of last year’s bill, and I 

think we will probably get to a point where we will have broad bipartisan support for a bill this year. But let me ask a question that 

we always ought to ask before we think a new law is the answer 

to every question. 

Before we enact new legislation, it is important to determine 

whether there is an actual need for more laws. Some argue that 

statutes already on the books like the Digital Millennium Copyright Act or the PRO–IP Act are sufficient to fight criminal activity 

on rogue websites. 

Number one, I want to know if you agree. Number two, do you 

believe that additional legislation like last year’s bill is necessary? 

And, three, do you believe the Justice Department should have authority to bring legal action against rogue websites? And I am asking the questions of all of you, but try not to be repetitive, so 

maybe all of you do not need to answer. But I sure want your opinions, on either side. Go ahead. 

Mr. ADAMS. So I will just start by saying that since most of these 

sites operate from overseas, current legislation does not help us in 

enforcing our intellectual property. And since current legislation 

does not really hold the ecosystem to account, we are unable to cutoff the actual merchants of this illicit product. And so either we 

have got to tackle the ecosystem here, or we have got to change the 

laws of China, Russia, and numerous other countries. 

Mr. TUROW. I agree with Mr. Adams. The safe harbor provisions 

of the DMCA, while well intended, have not functioned well. Although I understand that my colleagues on this panel have tried 

to be good corporate citizens, that is not a universal truth, and not 

everybody is as vigilant. We need the help of legislation to make 

sure of that. 

One of the suggestions that I make in my written testimony is 

that we require anybody who is going to get credit card payments 

to have a registered agent for service of process so that we do not 

have to deal with the intractable jurisdictional problems of trying 

to bring our legal system to bear against people whose sites are 

completely foreign. If they want to do business in the United 

States, then they should be amenable to process here. 

Senator GRASSLEY. Anybody else have anything to add? 

Ms. JONES. Just briefly, if I could, the DMCA has worked great 

for us, and so have other already enacted bits of legislation. I think 

in 2010 we took down around 36,000 domain names and websites 

under the Ryan Haight Act, for example, in the pharmacy context. 

We took down around 13,000 copyright and trademark infringements under DMCA or DMCA-like statutes. So that works great. 

And with all due respect to Mr. Turow, those of us who do the 

right thing need the safe harbor, so let us not toy with that. 

17 

But should the DOJ have the right to bring an action? The answer is yes, and that gets back to my earlier answer, which is you 

have to have a consequence for the people who do not do the right 

thing. 

Senator GRASSLEY. Did somebody else want to answer? 

Mr. DAILEY. I was just going to echo Ms. Jones’ remarks. 

Senator GRASSLEY. OK. 

Ms. YEE. I also agree with Ms. Jones’ remarks. 

Senator GRASSLEY. OK. The Department of Homeland Security, 

its immigration and customs people, has been successful at combating online infringement through the authorities provided under 

the PRO-IP Act and the Operation In Our Sites efforts. Do you believe that ICE has done a good job with its existing authority? Or 

could it do better? And if better, how? To any of you. 

Mr. ADAMS. So we have worked quite a bit with ICE, and we 

think that they are doing a great job, but they need more resources. They need more help. And given that a lot of this activity 

is outside the United States, I think that they are not able to help 

quite as much as they would like. 

Senator GRASSLEY. Does anybody else have anything to add to 

that? 

Ms. JONES. We had experience with the take-down at the beginning of the year or the end of the previous year—I think there were 

85 domain names that were seized, and then there were another 

nine that have first-run movies. And we cooperated and participated in that investigation and that worked well. 

The focus on the top of the Christmas tree, if you will, is not our 

favorite way to approach. Again, we like going to the bad guy first, 

and I think this gets to Mr. Adams’ point, which is a lot of the bad 

activity is offshore. You can disable the domain name, but you do 

not get to the root of the problem. 

So what ICE is doing is great. It is a solution, but not the only 

solution. 

Senator GRASSLEY. Would it be all right with you, Senator Klobuchar, if I ask one more question? 

Senator KLOBUCHAR. Of course it would, Senator. 

Senator GRASSLEY. Thank you. 

What do you believe is the appropriate role for search engines to 

play in combating rogue sites? 

Mr. ADAMS. Well, personally I think that if a domain or a 

counterparty is identified as one that on a serial basis is involved 

in criminal activity, search engines cannot be allowed to continue 

doing business with them. And as it stands, they repeatedly just 

take down the infringing ad but continue doing business with the 

counterparty. This must cease. There must be very serious consequences for a company like Google for that kind of behavior. We 

have sustained it over a number of years. It is really whack-a-mole, 

and it is impossible to discipline a company with that kind of market power, with a 70-percent share of search, and to get them to 

change their behavior. We need you to act now and legislate to protect IP owners like Rosetta Stone. 

Mr. TUROW. I agree with that. With regard to the matter of a 

safe harbor, my own view would be that those who respond to this 

legislation and act consistently with it, of course, should be granted 

18 

immunity. But I do not think, again, that the safe harbors that currently exist are sufficient to compel other people in the Internet 

ecology to be as vigilant as some of the people who are sitting at 

this table. 

Ms. JONES. So it sounds like we are probably saying the same 

thing on that. But getting back to search, if I could just briefly— 

and we have gone around and around with the search providers on 

this, and not casting aspersions on anybody who operates in the 

Internet community, but you got to stop selling your product to the 

bad guys. Whether you are a search provider, whether you are a 

credit card processor, whether you are a domain name registrar, 

whatever you are, you have to stop the sale. But there is simply 

no reason why you should be able to search for any fake good or 

any replica good and have that search result return access to thousands upon thousands of websites that do this. There is no reason 

for that. 

I do not run a search engine. I do not write that algorithm. I do 

not know what the issue is there, but we seem to get a lot of resistance from the search companies. And I am sorry they are not here 

today to answer that question, but we do not think you should be 

able to search for that and get a result so that you can go get fake 

Rosetta Stone from all of those websites that Mr. Adams displayed. 

Senator GRASSLEY. I will yield, and, Mr. Chairman, I am going 

to have to submit questions for answer in writing. 

[The questions of Senator Grassley appears under questions and 

answers.] 

Chairman LEAHY. You mean you are going to leave me here on 

my own? 

Senator GRASSLEY. Yes. 

Chairman LEAHY. Kind of scary. 

Senator KLOBUCHAR. No. I am here. I am here. 

Chairman LEAHY. No, no. I was just talking about from their 

side of the aisle. 

[Laughter.] 

Chairman LEAHY. I would never forget you, Senator Klobuchar, 

a former prosecutor, a valued member of this Committee, and I 

yield to you. 

Senator KLOBUCHAR. Well, thank you very much, Senator Leahy, 

and thank you, both of you, for your work in this very important 

area. As a daughter of an author and an author myself—OK, my 

book is for $7.99 on Amazon, ‘‘Uncovering the Dome.’’ 

[Laughter.] 

Senator KLOBUCHAR. Sadly, I wrote a book in college. Unlike you, 

Mr. Turow, I wrote a book on the politics behind the building of 

the Metrodome, as in the one that just sunk. OK? 

[Laughter.] 

Senator KLOBUCHAR. But it did bring the value up a little. So I 

am very aware, mostly from my father’s work, about the importance of protecting intellectual property, and I am very concerned 

as a former prosecutor, as Senator Leahy pointed out, about what 

is going on here, that we are basically losing a huge amount of 

money in our economy in an area where I think we can actually 

make a lot of money in our economy. 

19 

And I guess I would start with you, Mr. Adams. You mentioned 

the global sales of counterfeit goods via the Internet from illegitimate retailers reached $135 billion in 2010, and as a consequence 

of a global U.S.-based piracy of copyrighted materials, the U.S. 

economy lost $58 billion in total output in 2007. Do you know 

where those numbers came from? And could they be an underestimation given that we do not really know? 

Mr. ADAMS. Those numbers are all from the Chamber of Commerce. 

Senator KLOBUCHAR. Very good. I just think people have to start 

looking at it in this way as we look at every way that we can grow 

jobs and the economy, that this is a major problem, and that is the 

way I look at it. 

I guess my first question would be, as a fan and a sponsor of 

doing something here, would be one of the questions we get back 

with this legislation. Would these crooks just go to another 

website? You know, you shut one down and then they just go to 

another website. What is your answer to that? 

Mr. ADAMS. I think that is exactly the problem. If you shut down 

one website now, within minutes there is a new one that appears. 

And so you have to tackle the problem in the ecosystem given that 

we cannot change the laws and the behaviors and the enforcements 

in countries like China, Russia, et cetera. 

So what you have to do is deal with search engines, which, by 

the way, in other areas of intellectual property, like, for example, 

the YouTube site, they do a review before a video is posted, very 

often, because there were so many infringing videos. Why wouldn’t 

we have a company like Google review a URL and just see is this 

legitimate? It is a very easy action. They do it for video. And here 

we are talking about not a video clip that someone would watch 

where, of course, it is an infringement on the intellectual property 

itself, but it is relatively harmless from a commerce perspective. 

Why wouldn’t we stop the commerce by having the search engine 

review who they are doing business with? Instead, if you simply 

have a credit card and if you are based abroad, you can open an 

account immediately and start posting your ads and having them 

link these ads to illicit websites hosted on servers that are overseas, and you can do an enormous amount of transactions. Google 

does a manual review of the sites when you ask them to take them 

down. So it takes 3 days or so for them to take down an infringing 

site, but it takes the infringer minutes to set up a new site. We 

need to flip that. We need to have Google review a new 

counterparty and the domains that they are wanting to put in front 

of the customer to see if it is legit. And if it is legit, they can start 

advertising, and that would change the entire burden of policing 

this to them. 

Senator KLOBUCHAR. Flipping the burden. 

Mr. ADAMS. Which is where it should be, because we are not 

profiting at all from any of this activity, and yet we have to police 

it enormously because we do not want to have a harmed brand. 

Senator KLOBUCHAR. Very good. 

Mr. Dailey, just one of the concerns I know that Verizon has 

raised as we look at how we are going to combat this, what I consider crimes going on out there, and I will mention that Senator 

20 

Cornyn and I have a bill to actually up the penalties for this. But 

my question of you, Mr. Dailey, is: I know one of the concerns is 

that Verizon customers would somehow be confused if a website 

was shut off, and I understand that the customer would see an 

error message instead of actually seeing the website. Well, from my 

understanding just from our staff, the error message would say 

something like ‘‘404 error’’ without any explanation to the customer 

regarding the court order. And my question is: Does Verizon have 

the technology and the capability to shape the wording of the error 

message to explain why the customer cannot get to the website and 

just update the technology to get at that concern? 

Mr. DAILEY. Yes, and thank you, Senator. The technology does 

exist. It is not within our licenses, shall I put it that way. So it 

is a several million dollar effort to change the error message for the 

purpose that you have just described, but it is available, at least 

to us. I do not know about other ISPs who might be affected by the 

requirement. 

Senator KLOBUCHAR. It just seems to me that there is a way to 

get around that. 

Then the last thing I just have, and I will submit some questions 

for the record, of you, Ms. Jones, is: I am working on this legislation, as I mentioned, with Senator Cornyn that will keep our laws 

up to date with these new technologies. I have always believed that 

we need to be as sophisticated as the crooks that are breaking the 

laws, which is not happening right now. And currently, as you 

know, a person that streams pirated works for commercial gain can 

only be convicted of a misdemeanor regardless of the amount of 

content that is streamed. And then at the same time, if they sold 

$2,500 worth of DVDs, they could be convicted of a felony. And so 

we plan to introduce legislation that will make the penalties for 

streaming the same as it is for selling the DVDs on the street. And 

I just wondered if you thought that would be helpful. 

Ms. JONES. Well, I can tell you, we have worked with the recording industry a lot on that exact issue, and the MPAA, for example, 

go after these websites that stream movies all the time, and I can 

tell you, there is more than $2,500 worth of product going out. We 

had one recently—I think it is OK to disclose this—where—— 

Senator KLOBUCHAR. Oh, everything is just between us. 

[Laughter.] 

Ms. JONES. I will not use any names. How about that? The customer—— 

Chairman LEAHY. Everybody else in the room, do not listen. 

Ms. JONES. The customer had 32 dedicated servers. Now, to put 

that in perspective, that is a lot of data. OK? A lot of data. And 

the MPAA worked with Federal authorities. They came and seized 

the boxes, and I think the guy is now in jail. But they did not prosecute him for a felony for the streaming website. And I mean, come 

on, there were thousands upon thousands upon thousands of movies on that website. Clearly there was more than $2,500 worth of 

damage. So I think you are on to something there. 

Senator KLOBUCHAR. OK, very good. I am out of time. I also 

wanted to thank you, Mr. Turow, for coming to Minneapolis for the 

legal aid dinner at one point. I was there and you came and gave 

of your time, so thank you for that. Thank you to all the witnesses. 

21 

Chairman LEAHY. Thank you very much. 

Senator Whitehouse. 

Senator WHITEHOUSE. Let me thank the Chairman for his focus 

on this issue. I contend that America is on the losing end of the 

largest transfer of wealth through theft and piracy in the history 

of mankind. Perhaps the Spanish kings who were having the treasures of the New World sunk and stolen in the galleons in the great 

treasure ships across the Atlantic were contenders for that role. 

But I think we take the prize, and we are doing virtually nothing 

about it. And it has many dimensions. It has the dimension of outright theft and fraudulent charges on credit. It has the dimension 

of industrial espionage, everything from entire fighter jet plans 

being exfiltrated to scientific processes. Often because there you 

are not stealing, you are copying, it can be a crime that is often 

unknown to the victim and, therefore, requires very energetic efforts to pursue it. 

What we are talking about today is yet another element of it, 

and that is, public sales in violation of copyright and licensing 

agreements that are facilitated by legitimate members of our business community. And probably the most dangerous is the intrusion 

and insertion of potential attack mechanisms into critical private 

infrastructure, and they all have a common theme, which is our 

failure to adequately defend our interests in what is called ‘‘the 

wild, wild Web.’’ 

I was delighted to hear Ms. Yee describe this as a global menace, 

and I think everybody on the panel agrees with that description. 

Ms. Jones indicated that efforts to voluntarily cooperate are important. 

I think it is very important that the ISPs who provide the connections, that the search engines who provide the location, and 

that the payment providers who make it a profitable transaction 

for the criminals all work together to guide us in the best possible 

way. But I also worry that unless we act legislatively, there is an 

incentive to let everybody else go first—on the ISPs to let the payment people go first; on the payment folks to let the search engines 

go first; within the search engine, ISP, or payment communities to 

let the other card or the other engine or the other telecommunications company go first; and that as a result of those natural tendencies, we are simply not addressing what is particularly in our 

economy a really catastrophic loss of wealth to the American people. 

And so I could not agree with you more about the importance of 

voluntarily cooperating, but please do not think that we are not 

going to be legislating in this area. You will do us great assistance 

and advantage by voluntarily cooperating in ways that guide that. 

But I really think we are well past the point where we can count 

on mere voluntary cooperation among all these different interests 

as being adequate to the task. There is simply too much being stolen right here as we speak. 

I would be interested, Ms. Yee, to know if I went back to my 

computer and dialed in a—how long it would take me to find a 

website that Visa was attached to that was selling pirated product. 

I bet I could do it in less than 5 minutes. 

22 

And so I think it is really important that the scale of the effort 

that we engage in match the scale of the theft and piracy that 

America is suffering, and I guess I just would say that by way of 

encouragement to all of you to really take this seriously, because 

the legislation will be much more successful if it is worked out in 

really cooperative fashion. But we do have to see this as urgent. 

It is too important to our economy and to our National security not 

to see it as urgent, and I think the Chairman’s leadership on this 

is particularly appropriate and important and particularly significant given his long and very distinguished career in the protection 

of civil liberties area. And so he has bona fides there that are unmatched, and his willingness to address this I think is very significant. 

Chairman LEAHY. Thank you very much. I think as you listen to 

some of these comments, you realize there will be legislation, and 

we want your cooperation in doing the best possible. But this is a 

major, major issue. The transfer of wealth that Senator Whitehouse 

talked about is not overstated. 

Senator Blumenthal. 

Senator BLUMENTHAL. I want to join in thanking you, Mr. Chairman, for your leadership and the bipartisan commitment from Senator Grassley and others on the other side, and I want to associate 

myself with the remarks just made so compellingly by Senator 

Whitehouse in terms that I am sure would qualify for one of Mr. 

Turow’s novels if—— 

[Laughter.] 

Mr. TUROW. Eloquence far greater than I can muster. 

Senator WHITEHOUSE. All right. Enough on that. 

Senator FRANKEN. Yes, enough, enough. 

[Laughter.] 

Senator BLUMENTHAL. You can tell I am the junior Senator. 

First of all, on that topic, I want to say that I found your op-ed 

piece in yesterday’s New York Times a very succinct and cogent 

statement of why this is so important in historical terms, and I 

would like, with permission, Mr. Chairman, for it to be entered in 

the record. 

Chairman LEAHY. Without objection. 

Senator BLUMENTHAL. Thank you. 

[The op-ed appears as a submission for the record.] 

Senator BLUMENTHAL. You know, I approach this subject from 

the standpoint of an enforcer, having tried to hold accountable 

many of these enablers and facilitators in other contexts, not necessarily the intellectual property area but abuses concerning child 

predators and pornography. And I view it as imposing basic fairness and accountability, basic responsibility for the enabling or facilitating of the outright lawbreaking and theft of property that 

should be countenanced by no one. And so I welcome and support 

this measure, but with the perspective of enforcement. 

I would like to ask perhaps Mr. Turow, as a former prosecutor 

and a litigator, will these measures really be effective in terms of 

stopping practically, immediately, these kinds of abuses? Are they 

enforceable? And will they be enforced to effectively stop them? 

Mr. TUROW. Well, I certainly regard the legislation that was proposed in the last session called COICA as a great first step. SpeakVerDate Nov 24 2008 10:09 Aug 12, 2011 Jkt 067443 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\67443.TXT SJUD1 PsN: CMORC
23 

ing from our perspective and from the perspective of a lawyer, I do 

believe there should be a private right of action so that there is 

some forum in which private parties can put the various members 

of the Internet community on notice that there is offending conduct 

taking place. Certainly in an era of budget deficits, it is unrealistic 

to expect the Government to dramatically increase enforcement efforts despite the fact that I have no doubt that the Justice Department is greatly interested in this problem. 

And so if there is some form of private Attorney Generalship that 

is permitted, one that does not penalize the people who respond in 

good faith to the legislation so that they are immune from civil 

suits if they respond to the efforts of the orders that come down 

as a result of that private litigation, then I think we would be far 

better off that way. 

Senator BLUMENTHAL. And, in fact, in many of our areas of enforcement, private rights of action incentivize the public enforcers 

to do their job better, don’t they? 

Mr. TUROW. That is, in fact, the structure that we have throughout our intellectual property laws. That is the way copyright is routinely enforced, the way patents are routinely enforced. 

Senator BLUMENTHAL. Without putting any of you on the spot, as 

you know, the Department of Justice and the Department of Homeland Security have begun a more vigorous enforcement effort. I 

think it is called Operation In Our Sites. And I gather your feeling 

is that it has been insufficient to stem or stop this problem. 

Ms. JONES. Can I talk to that for one second? It is not that it 

has been inefficient or insufficient, even. It is just these ICE agents 

are people, and they have to investigate these things just like any 

other crime. So what they have done has worked. We just need 

more of them and more voluntary cooperation so that we never 

have to get to the criminal prosecution in most of these cases. 

And going back to what Senator Whitehouse said, if you get all 

of the players to cooperate, it really helps solve the problem of sort 

of the frogs jumping off the barrel overseas, because if you cannot 

buy this stuff with a credit card and you cannot search for it on 

a search engine and you cannot browse to it because the hosting 

provider or the ISP took the content away, it does not matter really 

where the source is coming from. It really helps to solve that problem. 

But getting back to ICE, it is not that they are doing an insufficient job. They are really, really trying hard. They just need more 

people and more money and less infringers. 

Mr. TUROW. And I would also add that, as you, Senator, are familiar with from firsthand experience, mounting a criminal prosecution where you need to gather evidence of intent as opposed to 

mere infringement is also a substantial burden on those who are 

doing a great and diligent job, but they are still trying to fulfill an 

evidentary standard that enhances the burdens on them. 

Senator BLUMENTHAL. And the standard of proof, combined with 

the necessity for evidence of mens rea, or intent, is a very substantial burden. I agree. 

Mr. DAILEY. Senator, if I could comment on the private right of 

action point in particular, I think it is precisely the discipline that 

an investigation brought by the Justice Department would bring to 

24 

the process that is important, particularly when we are talking 

about blocking websites. And it is not just because it is a difficult 

process, it raises a number of policy issues. But I would also be 

concerned about the risks associated with private rights of action 

where there is less discipline, less rigor about what is being requested to be blocked, because if a court order comes in to us, we 

are going to have to follow it. And if you are overblocking consistently, that is going to be a recipe for disaster for the bill. 

And so one of the themes in our testimony is that we should be 

looking—particularly when we are talking about orders to block access to website, that we should be looking for ways to narrowly tailor those orders so that they are properly effective, because this is 

an enormously complicated issue. I will not bore the Committee 

with a discussion about second-level domains, third-level domains, 

and what we are actually targeting with these. But it is the type 

of thing that experts really need to consult with each other about. 

We fully understand the scope of the problem. It is enormous, 

and we want to help. But we have to be careful here that we are 

not blocking more than what we really intend to do, which is bad 

as a general matter, but could also be bad for the law, and we do 

not want to see that happen either. 

Chairman LEAHY. Thank you. 

Senator BLUMENTHAL. My time is up, but if I may just say, Mr. 

Chairman, maybe we will have time for a second round. 

Chairman LEAHY. We are. Senator Whitehouse has also requested time, and we will. 

Senator Coburn, thank you for rejoining us. Like everybody else 

here, he has got about three different things going on at the same 

time. 

Senator COBURN. Mr. Chairman, first of all, let me give you my 

personal thanks for having this hearing. I think it is an important 

area. I do not think the Bush administration did a good job on IP. 

I do not think this administration has done a good job in protecting 

intellectual property. And I think we need to be much more aggressive in it. 

I am very sorry that there is not a search engine here represented because I think we need to hear from them. I think the 

fact Google refused and Yahoo! said they did not have anybody 

competent—— 

[Laughter.] 

Senator COBURN.—bothers—and that is my word, not theirs. 

Chairman LEAHY. If the Senator would yield for a moment, you 

know they were invited. 

Senator COBURN. I do. I know they were invited. But I think the 

fact that they are not here—and I think, Mr. Adams, it kind of goes 

to one of the things that you put forward. You showed American 

Airlines and AOL. Why do you think they do not have all the junk 

on the right side of the website when you go to Google? Do you 

think it is because their legal counsel has been rather aggressive 

on it? Or is it because they have so much more traffic than maybe 

Rosetta Stone? Or why is it that you do not see all that on their 

line but they see it on yours? 

Mr. ADAMS. So our sense is that there are—you know, there is 

an arbitrary behavior, and it is very apparent. Rosetta Stone is not 

25 

the most valuable brand in the world. There are many brands that 

are much more valuable and that do not see any competition. We 

have asked Google why they treat different companies different 

ways. They always tell us, ‘‘I cannot talk about that.’’ So I cannot 

explain to you—-the account manager talking to our account manager cannot explain why. 

I think that the fact that they are not here to sort of answer to 

their actions in this field of intellectual property is very disappointing. We very much want to partner with companies. We 

think this is a shared issue. We think that the ISPs, the payment 

processors, the search engines would all do much better in a world 

where this was not going on, and yet there is clearly a profit relationship right now between an illicit website and Google. 

Senator COBURN. Because of the paid advertising. 

Mr. ADAMS. Because they pay them for every single click. If you 

can imagine that there are a thousand websites that have been created, independent websites multi—levels deep that are replicas of 

the Rosetta Stone website, where they are selling ripped off software and they have payment processing on every single website, 

and each of those websites is doing business with an organization 

like Google, it is clear this is a massive issue, and they are very 

well aware of the size of—— 

Senator COBURN. So it is a revenue issue to them. Their balance—and we are putting words in their mouth, but that is fair to 

do if they are not here. The fact is that it is a revenue issue versus 

protecting intellectual property in this country. 

Mr. ADAMS. That is correct. In our opinion, that is the tradeoff 

that they are making. 

Senator COBURN. Well, I would just tell you, as Ranking Member 

on the Permanent Subcommittee on Investigations, I plan on sending a letter to Google. And with the authority that we have to subpoena, if they do not answer us, then I will seek my colleague and 

we will subpoena an answer to these questions since they refuse 

to come and testify. 

Mr. Chairman, I want to thank you for having the hearing. I am 

going to submit some questions for the record to each of our guests, 

and I want to thank each of you all for your attentiveness to this 

issue. 

[The questions of Senator Coburn appears under questions and 

answers.] 

Senator COBURN. There is one other that maybe we can talk 

about before I go. What would happen to Go Daddy if last year’s 

legislation would have been passed in terms of your costs? 

Ms. JONES. Candidly, for us, not a whole lot would change because we have been voluntarily taking the actions mostly described 

in that legislation for a lot of years, almost 10 years now. What 

would happen to people who have smaller registrars and smaller 

hosting operations? I guess it would mean a couple more head 

count. It probably would cost them some money. Certainly every 

time we shut down a domain name or terminate a hosting account, 

it costs us revenue. So, yes, I mean, there is—— 

Senator COBURN. There is a cost. 

Ms. JONES. There is a cost. 

Senator COBURN. How about for Verizon? 

26 

Mr. DAILEY. Well, I think from Verizon’s perspective, the answer 

is it sort of depends. We raised—— 

Senator COBURN. How aggressive we are with it. 

Mr. DAILEY. Well, yes, there were a number of aspects of the bill 

that we commented on that, if narrowed, would make it administratively easier and, of course, affect costs. One of the big issues, 

as I mentioned a minute ago, in terms of structuring the type of 

domain name that is actually the target, if it is a second-level domain—Verizon.com, Verizon is the second-level domain there, .com 

is the top-level domain. If the order is to block Verizon.com that 

affects third-level domains, so e-mail.verizon.com. So it goes further 

down the stream. So it makes it a much bigger effort. 

Senator COBURN. So it can be expensive. 

Mr. DAILEY. It could. 

Senator COBURN. How about with Visa? 

Ms. YEE. Well, Visa today, you know, I just wanted to first mention that in six months Visa has received a total of 30 inquiries 

from IP rights holders, and so our voluntary procedures we provide 

at no cost. And so part of the problem really is to have the rights 

holders come forward, and we would like for them to try procedures 

first before they consider things like private right of action, as Mr. 

Turow suggested. But assuming that the legislation was passed as 

is, you know, we already have the voluntary procedures that are 

very consistent with what the legislation contemplates. 

Senator COBURN. I wonder if you all might suggest to the Committee how we make that more effective in terms of them coming 

voluntarily to you to request those things, if you would submit that 

to the Committee. Knowing what is going on, how do we make it 

where they are more aware that you are in voluntary compliance 

if you are asked and except you are saying you are not getting 

asked very much. And so, you know, that is a void in what we were 

doing in terms of legislation. We do not need to legislate something 

that cannot be fixed if we increase information. So I am supportive 

of the concept. I know there were a lot of false rumors about our 

bill last year, and I fought back on those. But I think cost is an 

important aspect for us, and so I look forward to hearing the answers to the questions that I will submit for the record. 

Thank you, Mr. Chairman. 

Chairman LEAHY. Well, thank you very much, and thank you for 

your involvement, Senator Coburn. 

Following Dr. Coburn, we have Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. Thank you for 

your hard work on this very important issue, and also thanks to 

Ranking Member Grassley. 

As many of you know, I am a copyright holder of intellectual 

property or, as Senator Whitehouse said to me coming in, in my 

case quasi-intellectual property. 

[Laughter.] 

Senator FRANKEN. And I resented that, but still would like to associate myself with his remarks, nevertheless. 

Like Mr. Turow, I am well aware of how important it is that we 

protect the intellectual property of today’s writers and artists and 

innovators. You know, this affects not just the writers and the producers and the movie stars and movies, but the people who work 

27 

on the movies, the craftsmen and the technicians and the craft 

services people, because it changes the business model when this 

stuff is stolen. 

Now, I have a longer statement on this that I would like to add 

to the record, if there is no objection, Mr. Chairman. 

Senator BLUMENTHAL. I will not object. 

Senator FRANKEN. Thank you. 

[The prepared statement of Senator Franken appears as a submission for the record.] 

Senator FRANKEN. You know, I also think it is essential that we 

move cautiously before we create a structure that will direct Internet service providers to block content at the domain level. 

Let me start my questions with Ms. Yee. There are many people 

who believe that the best way to attack this problem is to follow 

the money and focus on rogue sites’ means of financial support 

rather than targeting and blocking domain names. What do you 

think of this approach? I realize it would place more of a burden 

on companies like Visa and on advertising networks. But we have 

seen great success at shutting down child pornography sites with 

this approach, and I would think it would be even more effective 

for pirate sites, especially since these sites exist purely for financial 

reasons. 

Have you looked at what percentage of pirated content you could 

stop with this approach? 

Ms. YEE. Well, I want to answer your first question about our 

ability to interrupt this activity, and as I mentioned in my oral testimony, similar to domain name registration, nefarious merchants 

will find a way to get into the system. They will change their merchant account name. They will sign up with different acquirers. So 

once Visa takes swift action to terminate a merchant with the 

acquirer’s assistance, the nefarious merchant will move on to another account name with a different acquirer under false pretenses. 

So it is a whack-a-mole game for us, too. We honestly do not 

want it in our system; neither do the acquirers. Our policy is very 

specific. 

Senator FRANKEN. Well, how is this different than on child pornography? 

Ms. YEE. Well, I think our approach is very similar. You know, 

to the extent that we are made aware of the infringing activity by 

rights holders, we are, you know, happy to provide assistance to 

help terminate the merchant out of the system. At the end of the 

day, Visa does not want this type of activity in the system. 

Senator FRANKEN. Mr. Adams, have you looked into this at Rosetta Stone? If we just shut down the advertising and payment 

processing functions of counterfeit goods sites, could we stop the 

vast majority of sales of counterfeit goods? 

Mr. ADAMS. We believe that is true. 

Senator FRANKEN. Thank you. 

Mr. Dailey, I have heard that the process of blocking domain 

names will not work, that it will be incredibly easy to circumvent, 

and it will ultimately drive users to rely on unreliable foreign domain name services. I have heard that this could lead large numbers of users to abandon the current domestic DNS system and, 

therefore, threaten network stability and lead to more identity 

28 

theft. Are you concerned about this? How easy do you think it will 

be to get around this process? And do you think there is a more 

effective tool to stop these pirates? 

Mr. DAILEY. I think those are legitimate concerns. I think how 

widespread the problem becomes is something we just have to wait 

and see to see how many users actually go through the effort of reprogramming their computer to bypass their domestic ISP, such as 

Verizon’s own DNS servers. 

It is not terribly complicated to do, although I actually asked one 

of our folks to walk me through it yesterday, and I got bogged 

down in the process a couple of times. So I am not so sure that it 

is quite as easy—— 

Senator FRANKEN. That is reassuring. 

Mr. DAILEY. Yes, but—— 

[Laughter.] 

Senator FRANKEN. I think. 

Mr. DAILEY. It certainly can happen, and that is one of the problems with DNS blocking, that it is certainly not 100 percent effective. I do not think that is really the bill’s goal. The bill, as indicated, is really not designed to clamp down 100 percent, and I do 

not think that there are really very many 100-percent solutions in 

anything we try and do to regulate commerce on the Internet. 

So I think that, yes, there are ways around it. If you start using 

a foreign DNS server that is also not secure, that has also been 

compromised so that you do not necessarily know where you are 

going on the Internet in terms of the results that are returned to 

your computer, yes, you certainly could increase phishing risk and 

privacy theft. How big a problem that really is is really hard to determine at this point. 

Senator FRANKEN. Thank you. My time has expired. I guess we 

are going to do a second round. 

I see, Mr. Turow, that the Screen Actors Guild, Directors Guild, 

the American Federation of TV and Radio Artists have all endorsed 

this legislation. I am a member of all three. I voted for this bill last 

year. I am glad that the Chairman has made some modifications. 

I am also interested in the architecture of the Internet to make 

sure that there is as much freedom on it—and, you know, I will be 

back for a second round, I guess. 

Mr. Chairman? 

Senator WHITEHOUSE. Everybody on the panel except perhaps 

Mr. Adams is a lawyer, correct? 

Mr. ADAMS. That is certainly true in my case. 

Senator WHITEHOUSE. OK, so we are four out of five. I am interested in Mr. Turow’s notion of the private Attorney General aspect 

here, and it has certain historic resonance because, as long as you 

have got pirates out there, why not send privateers after them, 

which is what we in Rhode Island did years ago when we had pirates coming after our shipping. And so the notion of the private 

Attorney General is an interesting idea, but it raises the question 

of how effective our judicial branch has been in being an arbiter 

and forum for resolving these problems. And it strikes me that the 

judicial branch is sort of ready, willing, and able to do it, but it has 

not been used very much. The only case that I can think of that 

was exciting and interesting in this respect was Microsoft’s lawsuit 

29 

that went after—I want to say the domain providers that were connecting the botnets that were attacking Microsoft with their control 

nodes so that when the bad guys sent the signal to the control node 

to fire off the bots that they had out there, the signal went no 

place. They had been basically disabled from the net. And that was 

a wonderful countermeasure taken by Microsoft to counterattack, 

really, and it was done by going to court and getting an order from 

a United States district judge in California someplace, and the defendant, I think perfectly willingly once they had the case in front 

of them, complied and the attack on Microsoft was intercepted and 

shut down. 

And it would seem to me that that ought to be happening more, 

and I would love to hear your opinions on why it is that we are— 

I mean, there are huge amounts of money at stake here, and why 

is it that you are not in the courts more often sorting through this 

with customers, with—I mean, it is not—there are theories that 

would tie you pretty closely to the criminal activity if they were 

stretched a bit. And certainly there are civil theories that could 

connect you to this. Why is it that this is not a more active Article 

III issue? Is it a lack of subject matter expertise? Is it a reluctance 

to go to the courts on the part of potential plaintiffs? Are there particular defenses and privileges that you have that keeps these 

things out of the court? 

It just seems like that would be a very logical place to begin to 

develop a sort of common law in this area that could be much more 

flexible than what we do by statute here, and yet I see so little of 

it actually happening in practice. 

Mr. TUROW. If I may answer, Senator, just from our perspective, 

there are two major issues, of course: one is the safe harbor in 

DMCA that allows people to say, ‘‘Not my fault,’’ you know, the 

three monkeys routine, frankly. And the other, of course, is gaining 

personam jurisdiction over sites that are very often extraterritorial, 

which is why we think it would be wise to require a registered 

agent for anybody who is going to get a credit card payment to an 

overseas site. 

Ms. JONES. Can I be heard on that just briefly? 

Senator WHITEHOUSE. Yes, of course. 

Ms. JONES. Since we do operate a massive percentage of the 

Internet’s DNS around the world, the reason you do not see that 

issue in court more often is because all Microsoft has to do is pick 

up the phone and say, ‘‘Hey, Go Daddy, the Conficker virus is driving us crazy,’’ and we say, ‘‘OK, we will fix it.’’ And so do most of 

the other legitimate good corporate citizens. You do not have to go 

to court to get an order. We will just fix it for you, right? And this 

is the same thing that happens when there are other major massive attacks on people’s systems, whether they come from in this 

country or outside the country. We just work on it, and we fix it 

for people, right? Do not go waste your money on a lawyer and file 

a lawsuit, for the love of God. Just pick up the phone and call us. 

Senator WHITEHOUSE. Don’t the studios whose content is all over 

the pirated sites pick up the phone and call you? 

Ms. JONES. They do every single day. Thousands upon thousands 

upon thousands a year. 

Senator WHITEHOUSE. So that does not work so well. 

30 

Ms. JONES. And it works, right? The DMCA works in that context. We actually have a trademark policy that works in that context. You do not have to go to court and get a lawsuit in most of 

the cases. You only have to do that when there is a bad guy on the 

other end. And that is why—I think Mr. Turow and I are saying 

the same thing. Give the safe harbor to the good guys and give the 

consequence to the bad guys. 

Senator WHITEHOUSE. My time has expired. 

Chairman LEAHY. Thank you very much, and also thank you for 

all the behind-the-scenes work you have done on this, Senator 

Whitehouse. 

Senator Coons, we are delighted to have you here, sir. Please go 

ahead. 

Senator COONS. Thank you, Chairman Leahy, and thank you to 

the members of the panel. I serve, as most of us do, on two committees that are having simultaneous hearings, so I enjoyed reading 

your submitted testimony in advance and appreciate a chance to be 

with you today. 

Counterfeiting and, in particular, online copyright infringement 

and the piracy of intellectual property is a very real and dramatically growing problem for us here and overseas, and it saps the creative energy and the resources that help sustain the sorts of innovations and service that you and your companies provide. But I 

also think, as we move forward in considering COICA, we have to 

balance America’s historic role as a Nation that promotes free expression, and particularly given recent developments in Egypt and 

elsewhere, we have to make sure that we strike the right balance, 

that we continue to advance and promote democracy and free 

speech and strike the appropriate balance against infringing speech 

and outright theft, which are not things that we want to sustain. 

Given that last exchange, if I could, Ms. Jones, I am just interested in how we might work in partnership with our counterparts 

abroad to help facilitate the efforts that are imagined under this 

bill and get your view on whether you think COICA, which allows 

the DOJ to compel third parties to take measures regarding sites 

registered abroad, either could help or hurt relations with counterparties around the world that we need to engage. How might we 

effectively engage them and how might this challenge that relationship? 

Ms. JONES. Counterparties means foreign governments? 

Senator COONS. Foreign governments and, frankly, their comparable law enforcement entities. 

Ms. JONES. We have been told repeatedly—and I think this is 

right—that the foreign governments with whom we are friendly, at 

least, are compelled and follow the example of the actions that are 

taken by the U.S. Government and U.S. law enforcement. And 

most of the countries that we have good relationships with will say, 

OK, the U.S. Government took this seriously, they made this a 

criminal action, their law enforcement are asking us for our cooperation, and to the extent that that action is illegal in this country, we are going to give it to them. 

We routinely work with FBI—they have some clever name for it, 

but anyway, their local liaisons in foreign countries to help them 

investigate cases. It happens all the time. But to Ms. Yee’s earlier 

31 

point, you have to have the hook, OK? Because it is not enough 

for—let us use Great Britain, for example, to come and say, hey, 

Visa, hey, Go Daddy, can you help us out with this if what the person is doing is not illegal in their country. 

Senator COONS. Right. Then my next question, in trying to strike 

that right balance between free speech protection and promotion of 

free speech and blocking outright piracy, how easy will it be for offending sites to effectively insulate themselves from domain name 

seizure if they, for example, Mr. Turow, take the pirated copies of 

your latest work and intermingle them with forwarded copies of the 

latest speech against the Government of Iran, you know, or other 

governments? How do we strike a balance that allows you to single 

out those sites that really are overwhelmingly dedicated to piracy 

from those that begin to insulate themselves from domain name 

seizure by mixing the two in a way that then makes it quite difficult to make the argument effectively overseas and at home? Any 

opinions on that, Mr. Turow? 

Mr. TUROW. Well, first of all, I should say—and it will not come 

as any surprise—as president of the Authors Guild, the guild is obviously concerned about anything that borders on censorship, and 

we are clearly not advocating that and never would. We believe in 

due process before these sites are brought down. 

You are completely right, Senator Coons, that this is a difficult 

enterprise, and there are all kinds of strategies to avoid whatever 

laws you craft. But I think that the point that has been raised here 

many times that a law that insists on coordinated activity by everybody in the Internet ecology is the best approach, so that, you 

know, the subtle alterations of websites can be addressed either 

through payment issues or by having the search engines be more 

vigilant about what they are allowing to be searched for in the first 

place. 

Ms. JONES. Can I—— 

Senator COONS. My time has expired. I think with the Chairman’s forbearance—— 

Ms. JONES. Can I just add to that real quick? As the company 

that probably responds to more of these than anybody else, our position is if there is any offending content, the whole website comes 

down. If you fix it, you take off the fake Rosetta Stone, you take 

off Mr. Turow’s book, we will put it back up. OK? But it is either 

all of nothing, because we do not want that crap about, Are you 50/ 

50? Are you 80/20? Are you really engaged in illegal activity? Are 

you really not? No. We want it to be black and white. Either you 

are or you are not. If you fix it, press on. But until you fix it, you 

are all gone. 

Mr. DAILEY. May I comment on that as well? 

Ms. JONES. I know he is going to hate that. 

[Laughter.] 

Mr. DAILEY. No, not necessarily. But it is good insofar as it goes 

in a notice and take-down environment. You pull down the site, 

and then it gets fixed, and then it gets put back up. The issue, I 

think, that the Committee is struggling with is what to do about 

non-domestic websites where we do not have a notice and takedown procedure necessarily. So that is a more complicated problem, 

and I think that the issue that you raised about websites restrucVerDate Nov 24 2008 10:09 Aug 12, 2011 Jkt 067443 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\67443.TXT SJUD1 PsN: CMORC
32 

turing their architecture, for example, to avoid a judicial order is 

a very real one, and that is part of the complexity that I was alluding to in my testimony earlier, that these are things that need to 

be, I think, discussed and figure out how do we work it, because 

we would like to see an effective mechanism to help the various 

copyright interests that are out there. We have no interest in seeing piracy continue, and we have done a lot of work at Verizon over 

the years with the content community to try and address the problem domestically. 

But I just wanted to make that distinction between notice and 

take-down, which works, I think, reasonably well in the United 

States, different from, though, the issue that we are dealing with 

where we do not have that procedure abroad. 

Senator COONS. Thank you. I just wanted to thank the Chairman 

in particular for this hearing and for his work on this. Global piracy is an enormously difficult thing that is draining billions of dollars of resources, and I want to thank the panel for the work that 

you represent today on behalf of your companies and you individually. 

Thank you. 

Chairman LEAHY. Thank you, and before I yield to Senator 

Blumenthal, I would note, as I did earlier, both Yahoo! and Google 

were invited to be here today. I wish they had come because a 

number of the answers you have given, each of you, it would have 

helped if they could have responded. But I would note to both those 

companies, there will be legislation, and it would have been helpful 

to have had their testimony here as we prepare for it, but we will 

have the legislation one way or the other. 

Senator Blumenthal. 

Senator BLUMENTHAL. Thank you, Mr. Chairman. And I join in 

your feeling that it would have been very helpful for them to be 

here and there will be legislation. And may I just say with all due 

respect to Mr. Dailey and Ms. Jones, taking down the website and 

then putting it back strikes me at least as an insufficient deterrent 

to this kind of conduct, almost part of the cost of doing business, 

which is why I think a private right of action, with damages, 

maybe treble damages, punitive damages, and an effective enforcement mechanism is absolutely necessary. 

And to Mr. Dailey’s point—I think it was your point—that there 

may be overuse or even abuse, that potential danger strikes me as 

no different in material respects than exists in many of our consumer protection laws where there are private rights of action and 

where it imposes costs that are in effect commensurate with the 

damage that is done. 

I just want to say my view is—I know it may sound oversimplistic—that we are dealing here with a situation that is comparable to the drug dealing kind of situation where the planes or 

the transport mechanisms that provide the vehicle that enable and 

facilitate the drugs to be imported or dealt in effect are knowingly 

going on with that activity without any real accountability. And if 

that were happening in the world of drug dealing, if planes or ships 

were knowingly transporting mules or the drugs directly, we would 

have a very different attitude toward them and should have a very 

33 

different attitude toward the facilitators and enablers in this situation. 

So I welcome your support for a private right of action, and my 

hope is that it will be in too big to fail. 

Thank you, Mr. Chairman. 

Chairman LEAHY. I thank the panel very much. I also thank all 

the Senators who have asked questions. We will keep the record 

open for one day for further questions. I will have a couple others 

that I will submit for the record. 

[The questions of Chairman Leahy appears under questions and 

answers.] 

Chairman LEAHY. Thank you for taking the time. It has been extremely helpful. This is a matter that we will have legislation. I appreciate the broad support from users, industry, authors, others. 

We have at least two areas that everybody should have in their 

mind. You have websites that supply consumer goods. It can be everything from parts for your car to medication. If they are counterfeit, if they are such that can damage, people can die. I mean, that 

is not oversimplification. People can die from that. And that we 

should be concerned about. 

But, also, if you are an author, you are a composer, you are a 

writer, you make a movie, if you have got something that is really 

not any good, well, you are not going to make money on it. But if 

you have got something you worked hard on and it is good, you 

ought to have the value of that and not have somebody who has 

simply stolen it, has a website, they get the value of it. 

We had testimony once talking about the movie ‘‘Ray.’’ Taylor 

Hackford, the producer of that movie on the life of Ray Charles, a 

great movie, one of my favorites, but he had spent years borrowing 

the money, trying to put this movie together. He put a lot of his 

own time and money and effort into it. He was so proud of the 

movie that he had a premier in New York City. The next day he 

decided to walk up just to see the marquis with his name and the 

name of the movie on it. As he came around the corner, somebody 

offered to sell him a counterfeit copy. Now, at least he could go and 

say to the police, ‘‘The guy standing over there is doing it.’’ But the 

same counterfeit copies are coming across the web. 

Again, if people are going to make this effort, they ought to be 

rewarded. Mr. Turow, your comment about at least if you are a 

best-selling musician you can also do a concert. Authors cannot go 

out and do readings. 

[Laughter.] 

Chairman LEAHY. But even the people that have the music, it is 

great they can make money on their concerts, but they should not 

have to do that. And you have a lot of people who are writers of 

the music but are not the ones that are going to be seen in the concert. 

So I think it is a very important issue. I do regret that the two 

companies invited here are not here, but we are going to push forward. Remember, this bill passed 19–0 in the Committee last year. 

We have bipartisan support. It will pass. 

I thank everybody for being here, and we stand in recess. 

[Whereupon, at 11:56 a.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.] 

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