99–010 

Calendar No. 70 

112TH CONGRESS REPORT " ! SENATE 1st Session 112–39 

PREVENTING REAL ONLINE THREATS TO ECONOMIC 

CREATIVITY AND THEFT OF INTELLECTUAL PROPERTY 

ACT OF 2011 

JULY 22, 2011.—Ordered to be printed 

Mr. LEAHY, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany S. 968] 

The Committee on the Judiciary, to which was referred the bill 

(S. 968), to prevent online threats to economic creativity and theft 

of intellectual property, and for other purposes, having considered 

the same, reports favorably thereon, with an amendment in the nature of a substitute, and recommends that the bill, as amended, do 

pass. 

CONTENTS 

Page 

I. Background and Purpose of the Preventing Real Online Threats to 

Economic Creativity and Theft of Intellectual Property Act of 2011 1 

II. History of the Bill and Committee Consideration ....................................... 11 

III. Section-by-Section Summary of the Bill ...................................................... 16 

IV. Congressional Budget Office Cost Estimate ................................................ 21 

V. Regulatory Impact Evaluation ...................................................................... 21 

VI. Conclusion ...................................................................................................... 21 

VII. Changes to Existing Law Made by the Bill, as Reported ........................... 22 

I. BACKGROUND AND PURPOSE OF THE PREVENTING REAL ONLINE

THREATS TO ECONOMIC CREATIVITY AND THEFT OF INTELLECTUAL

PROPERTY ACT OF 2011

A. BACKGROUND

Intellectual property is the engine of the American economy and 

critical for job growth. According to independent studies, IP-reliant 

companies account in America for more than $7.7 trillion and emVerDate Mar 15 2010 01:23 Jul 25, 2011 Jkt 099010 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\SR039.XXX SR039

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1 Nam D. Pham, ‘‘Employment and Gross Output of Intellectual Property Companies in the 

United States,’’ NDP Consulting Research Paper, January 2011, at 2, available at http:// 

www.theglobalipcenter.com/sites/default/files/reports/documents/employment__gross_output_of_ip_companies_in_the_us_-_jan_2011_low_res.pdf; see also Oversight of 

the Office of the Intellectual Property Enforcement Coordinator Before the U.S. Senate Committee 

on the Judiciary, S. Hrg. 111th Cong. 2 (2010) (written statement of David Hirschmann, President and CEO, Global Intellectual Property Center, U.S. Chamber of Commerce) at 4; Targeting 

Websites Dedicated To Stealing American Intellectual Property Before the U.S. Senate Committee 

on the Judiciary, S. Hrg. 112th Cong. 1 (2011) (written statement of Tom Adams, CEO, Rosetta 

Stone Inc.) at 1 (‘‘Intellectual property industries are a cornerstone of the U.S. economy, employing more than 19 million people and accounting for 60 percent of our exports’’); Oversight of the 

Office of the Intellectual Property Enforcement Coordinator Before the U.S. Senate Committee on 

the Judiciary, S. Hrg. 111th Cong. 2 (2010) (written statement of Paul E. Almeida, President, 

Department for Professional Employees, AFL–CIO) at 2, 4. 2 ‘‘Strong intellectual property enforcement saves American jobs, it creates American jobs, it 

protects American ideas and it invigorates our economy.’’ Oversight of the Office of the Intellectual Property Enforcement Coordinator Before the U.S. Senate Committee on the Judiciary, S. 

Hrg. 111th Cong. 2 (2010) (written statement of Victoria Espinel, Intellectual Property Enforcement Coordinator, Office of Management and Budget) at 2. 3 ‘‘The revenue lost to American businesses from intellectual property theft carries with it lost 

funding for public services to compound the harm caused to our economy.’’ Id. at 2. 4See Targeting Websites Dedicated To Stealing American Intellectual Property Before the U.S. 

Senate Committee on the Judiciary, S. Hrg. 112th Cong. 1 (2011) (written statement of Tom 

Adams, CEO, Rosetta Stone Inc.) at 2 (‘‘The global sales of counterfeit goods via the Internet 

from illegitimate retailers reached $135 billion in 2010. As a consequence of global and U.S.- 

based piracy of copyright products, the U.S. economy lost $58.0 billion in total output in 2007’’); 

Press Release, FBI, The Federal Bureau of Investigation and the U.S. Customs Service today 

announced the National Intellectual Property Rights Coordination Center’s first conference for 

members of Congress and the industry in Washington (July 16, 2002), available at http:// 

www.fbi.gov/news/pressrel/press-releases/the-federal-bureau-of-investigation-and-the-u.s.-customs-service-today-announced-the-national-intellectual-property-rights-coordination-centers-firstconference-for-members-of-congress-and-industry-in-washington (‘‘Losses to counterfeiting are es- timated at $200-250 billion a year in U.S. business losses’’); Press Release, U.S. Customs and 

Border Protection section of the Department of Homeland Security, U.S. Customs Announces 

International Counterfeit Case Involving Caterpillar Heavy Equipment (May 29, 2002) available 

at http://www.cbp.gov/xp/cgov/newsroom/news_releases/archives/legacy/2002/52002/ 

05292002.xml (‘‘Customs estimates that businesses and industries lose about $200 billion a year 

in revenue . . . due to the counterfeiting of merchandise’’); Stephen E. Siwek, ‘‘The True Cost 

of Copyright Industry Piracy to the U.S. Economy,’’ Institute for Policy Innovation, IPI Policy 

Report No. 189, October 3, 2007, at 1, available at http://www.ipi.org/ipi/IPIPublications.nsf/ PublicationLookupFullTextPDF/02DA0B4B44F2AE9286257369005ACB57/$File/ 

CopyrightPiracy.pdf?OpenElement (‘‘[E]ach year, copyright piracy from motion pictures, sound recordings, business and entertainment software and video games costs the U.S. economy $58 

billion in total output, cost American workers 375,375 jobs and $16.3 billion in earnings, and 

costs Federal, State, and local governments $2.6 billion in tax revenue’’); MEMA Brand Protection Council, ‘‘Stop Counterfeiting Automotive and Truck Parts,’’ available at www.mema.org/ 

cmspages/getAttch.php?id=50. For a view that online infringement is a significant problem, but 

estimates of harm are difficult to quantify, see United States Government Accountability Office 

Report to Congressional Committees on ‘‘Intellectual Property, Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods’’ (2010) (hereinafter referred to as 

‘‘Report on Economic Effects of Counterfeit and Pirated Goods’’), at 18–19. 5See Press Release, U.S. Customs and Border Protection section of the Department of Homeland Security, U.S. Customs Announces International Counterfeit Case Involving Caterpillar 

Heavy Equipment (May 29, 2002) available at http://www.cbp.gov/xp/cgov/newsroom/ news_releases/archives/legacy/2002/52002/05292002.xml (‘‘Customs estimates that businesses 

and industries lose . . . 750,000 jobs due to the counterfeiting of merchandise’’); Oversight of 

the Office of the Intellectual Property Enforcement Coordinator Before the U.S. Senate Committee 

on the Judiciary, S. Hrg. 111th Cong. 2 (2010) (written statement of Paul E. Almeida, President, 

Department for Professional Employees, AFL–CIO) at 4 (‘‘The losses of income arise because entertainment professionals depend on compensation at two points: first when professionals do the 

work, and later when others use and reuse the intellectual property that the professionals created. . . . For AFTRA recording artists in 2008, 90 percent of income derived from sound recordploy more than 19 million workers.1 Protecting American intellectual property from theft is therefore critical to our Nation’s prosperity, welfare, and job creation.2

The theft of American intellectual property threatens that prosperity.3 While estimates of the harm caused to the American economy by counterfeit products and the theft of copyrighted works differ and are difficult to confirm, copyright piracy and the sale of 

counterfeit goods is reported to cost American creators and producers billions of dollars per year.4 Intellectual property theft also 

reportedly results in hundreds of thousands of lost jobs annually, 

and severely reduces the income of those who are employed.5 SimVerDate Mar 15 2010 01:23 Jul 25, 2011 Jkt 099010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR039.XXX SR039

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ings was directly linked to royalties from physical CD sales and paid digital downloads. SAG 

members working under the feature film and TV contract that same year derived 43 percent 

of their total compensation from residuals. Residuals derived from sales to secondary markets 

funded 65 percent of the IATSE [Motion Picture Industry] Health Plan and 36 percent of the 

SAG Health and Pension Plan’’). 6See ‘‘Report on Economic Effects of Counterfeit and Pirated Goods,’’ at 9–10. 7 John Morton, Director of Immigration and Customs Enforcement, U.S. Department of Homeland Security Prepared Remarks: Operation In Our Sites v. 2.0—Cyber Monday (November 29, 

2010) available at http://www.ice.gov/doclib/news/library/speeches/112910morton.pdf. 8See ‘‘Report on Economic Effects of Counterfeit and Pirated Goods,’’ at 8. 9 Id. at 7. 10 Id. at 8–9. 11The Council of Europe Convention on Cybercrime, to which the United States is a signatory, 

requires signatories to have in place criminal copyright laws that apply to copyright infringement on the Internet. See Convention on Cybercrime, November 23, 2001, TIAS 13174, available 

at http://www.state.gov/documents/organization/131807.pdf. This Act provides an additional 

mechanism in the fight against online infringement occurring overseas. 

ply put, this form of infringement impacts companies of all types 

and sizes and the people who work there.6

The growth and success of the Internet as a medium for commerce has given businesses the opportunity to connect with consumers throughout the world in ways they never could before. Unfortunately, along with the success of legitimate commerce, the distribution and sale of counterfeit products and pirated content online has also increased dramatically. According to the Director of 

Immigration and Customs Enforcement, ‘‘nearly 100 million people 

shopped [online] on Cyber Monday last year,’’ yet ‘‘[c]ounterfeiters 

are prowling the back alleys of the Internet, masquerading, duping, 

and stealing: masquerading as legitimate retailers, duping shoppers, stealing from real businesses and their workers.’’ 7

Copyright infringement in particular, in the form of peer-to-peer 

networks, cyber lockers, streaming sites, and one-click hosting 

services, has grown rampant on the Internet. Since digital products 

are not tangible, they can be reproduced at very low cost, and have 

the potential for immediate delivery through the Internet across 

virtually unlimited geographic markets. The GAO reports that ‘‘sectors facing threats from digital piracy include the music, motion 

picture, television, publishing, and software industries,’’ 8 but piracy impacts virtually any online industry that relies on copyright 

protection. 

Similarly, the sale of counterfeit goods via Internet sites that appear professional and can quickly deliver items in sophisticated 

packaging is thriving on the Internet. In many cases, these Internet sites are able to conceal the inauthentic nature and low quality 

of the product being purchased. The footwear, clothing, consumer 

electronics and pharmaceutical industries, among others, are frequent victims of counterfeiting.9 Preventing counterfeit sales is 

therefore not only important to our economy and job creation, but 

it protects unsuspecting consumers from inferior and often dangerous products. 

The online theft of American intellectual property is a growing 

criminal enterprise both because of the ease by which it can be 

done online and the ability of the sellers and distributors to remain 

anonymous, operate from overseas, and avoid traditional methods 

for protection.10 Operators of rogue Internet sites, which do nothing 

but traffic in infringing goods, can act with impunity from 

abroad.11

The rogue Internet sites that operate as virtual stores for the infringing products are well designed and give the appearance of leVerDate Mar 15 2010 01:23 Jul 25, 2011 Jkt 099010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR039.XXX SR039

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12For an example of the unfortunate ease with which operators of rogue Internet sites can 

clone legitimate Internet sites to trick consumers, see http://www.bbc.co.uk/news/business11372689. The National Electrical Manufacturers Association has exposed similar examples. 

See, e.g., http://blog.nema.org/blogs/currents/archive/2008/04/06/a-letter-from-the-counterfeitwars.aspx (counterfeit hair irons). 13 Eric Holder, Attorney General of the United States, remarks at the Rio De Janeiro Prosecutor General’s Office (February 14, 2010) (‘‘Unfortunately, the success of this worldwide, digital marketplace has also attracted criminals who seek to exploit and misappropriate the intellectual property of others. The same technologies that have created unprecedented opportunities 

for growth in legitimate economies have also created global criminal organizations that are 

eager to steal the creativity and profits from our domestic industries and workers. . . . These 

groups, who do not respect international boundaries or borders, have developed sophisticated, 

efficient and diverse methods for committing almost every type of intellectual property offense 

imaginable, including: widespread online piracy of music, movies, video games, business software and other copyrighted works; well-funded corporate espionage; sales of counterfeit luxury 

goods, clothing and electronics, both on street corners and through Internet auction sites; and 

increased international trade in counterfeit pharmaceuticals and other goods that pose a substantial risk to the health and safety of our consumers’’); see also Protecting Intellectual Property 

Rights In A Global Economy: Current Trends and Future Challenges Before the Subcommittee 

on Gov’t Management, Organization, and Procurement of the H. Committee on Oversight and 

Gov’t Reform, 111th Cong. 1 (2009) (written statement of Jason M. Weinstein, Deputy Assistant 

Attorney General, Criminal Division, U.S. Department of Justice) at 5 (‘‘Because intellectual 

property crime is perceived as a low-risk criminal enterprise with the potential for high profit 

margins, it is not surprising that the sale of counterfeit and pirated goods is also becoming an 

attractive revenue source for traditional organized crime groups’’); General James L. Jones, National Security Advisor to the President of the United States, Remarks at the Sochi Security 

Council Gathering, Sochi Russia (October 5, 2010) available at http://www.whitehouse.gov/thepress-office/2010/10/05/remarks-gen-james-l-jones-national-security-advisor-sochi-security-counc 

(Criminal syndicates ‘‘generate[] trillions of dollars annually from illicit activities such as money 

laundering, trafficking, counterfeiting, environmental crime, and financial fraud. . . . many of 

these criminal syndicates operate globally; they are comprised of loose networks that cooperate 

intermittently but maintain their independence; and they employ sophisticated technology and 

financial savvy’’). 14See, e.g., 17 U.S.C. § 506; 18 U.S.C. § 2319; 18 U.S.C. § 2320. 15 In her recent hearing before the Senate Committee on the Judiciary, Victoria Espinel, U.S. 

Intellectual Property Enforcement Coordinator, stated that ‘‘legislative action may be required 

in order to fulfill our goals’’ of effective intellectual property protection. Oversight of the Office 

of the Intellectual Property Enforcement Coordinator Before the U.S. Senate Committee on the 

Judiciary, 111th Cong. 2 (2010) (written statement of Victoria Espinel, Intellectual Property Enforcement Coordinator, Office of Management and Budget). 

gitimacy.12 They are easily accessible by entering domain names 

that sound legitimate into the users’ Internet browser or typing 

common search terms into Internet search engines; they often accept payment through well respected credit card companies; and 

they often run advertisements from trusted companies. All of this 

presents an appearance of legitimacy to the virtual store, even 

though the products being sold are illegal, and in the case of counterfeits are often inferior or even dangerous. And, in many cases, 

American consumers may unwittingly be giving their credit card 

information to overseas organized crime syndicates when visiting 

rogue Internet sites.13

If these rogue Internet sites operated in the physical world, rather than online, the perpetrator would be the subject of civil lawsuits and criminal penalties.14 But because this theft is veiled by 

the complexities of the online world and many of the perpetrators 

are located overseas, the task of enforcing U.S. intellectual property laws on the Internet is a difficult one. Too often our Government, as well as the businesses and consumers who are harmed by 

online infringement, are forced to sit idly by while this theft continues undeterred.15

The Committee notes that protecting intellectual property in the 

form of copyrighted material is not only important to our economy 

and jobs, but is also important for advancing the goals of the First 

Amendment. The United States Supreme Court has long held that 

copyright protection advances the goals of the First Amendment by 

‘‘supply[ing] the economic incentive to create and disseminate 


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16See Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 558 (1985); Sony 

Corp. of Amer. v. Universal City Studios, Inc., 464 U.S. 417 (‘‘[T]he limited grant is a means 

by which an important public purpose may be achieved. It is intended to motivate the creativity 

of authors and inventors by the provision of a special reward, and to allow the public access 

to the products of their genius after the limited period of exclusive control has expired’’); Herbert 

v. Shanley Co., 242 U.S. 591, 595 (1917) (‘‘If music did not pay, it would be given up. If it pays, 

it pays out of the public’s pocket. Whether it pays or not, the purpose of employing it is profit, 

and that is enough’’). 17See Mazer v. Stein, 347 U.S. 201, 219 (1954). 18See Harper & Row Publishers, Inc., 471 U.S. at 558. 19See id. at 559 (quoting Wooley v. Maynard, 430 U.S. 705 (1977) (Burger, C.J.)). Additionally, 

in a recent letter to members of the U.S. Senate Committee on the Judiciary, First Amendment 

practitioner Floyd Abrams wrote: ‘‘Copyright violations are not protected by the First Amendment. Entities ‘dedicated to infringing activities’ are not engaged in speech that any civilized, 

let alone freedom-oriented nation protects. That these infringing activities occur on the Internet 

makes them not less, but more harmful.’’ Letter from Floyd Abrams, Senior Partner, Cahill, 

Gordon, and Reindel LLP, to Senator Patrick Leahy, Chairman of the Senate Judiciary Committee, Senator Chuck Grassley, Ranking Member of the Senate Judiciary Committee, Senator 

Orrin Hatch, United States Senate (May 24, 2011) (on file with the U.S. Senate Committee on 

the Judiciary’s Majority staff.) 20This right to be compensated for their work is not simply a creation of U.S. law. Our Constitution provides for this in the Copyright Clause, U.S. CONST. ART. I § 8, and the United 

Nations’ Universal Declaration of Human Rights, which has become a model for treaties and 

constitutions around the world, proclaimed this ‘‘right of authors’’ as inalienable. Universal Declaration of Human Rights, G.A. Res. 217 (III) A, U.N. Doc A/810 at Art. 27 ¶ 2 (December 10, 

1948). 21 Id. at 9–10. 22Oversight of the Office of the Intellectual Property Enforcement Coordinator Before the U.S. 

Senate Committee on the Judiciary, S. Hrg. 111th Cong. 2 (2010) (written statement of Victoria 

Continued 

ideas.’’ 16 The ‘‘clause [of the Constitution] empowering Congress to 

grant patents and copyrights is [based] in the conviction that encouragement of individual effort by personal gain is the best way 

to advance public welfare through the talents of authors and inventors in ‘Science and useful Arts.’ ’’ 17

Further, Justice O’Connor wrote that copyright law is the very 

‘‘engine of free expression.’’ 18 It exists not to prevent free speech, 

but to promote it. Justice O’Connor went on to recall that ‘‘freedom 

of thought and expression ‘includes both the right to speak freely 

and the right to refrain from speaking at all.’ ’’ 19 As rogue Internet 

sites evade U.S. intellectual property laws, they not only cause economic harm, but they trample on these First Amendment values.20

In sum, the theft of intellectual property by rogue Internet sites 

is harmful in several ways. First, online infringement harms the 

content and trademark owners themselves in the form of lost sales, 

lost brand value, increased costs to protect their intellectual property, and decreased incentives to invest in research and development. Second, online infringement harms consumers who receive 

lower quality products, inauthentic products, or, in a worst case 

scenario, products that cause physical harm or health risks. Third, 

online infringement harms Federal and State Governments in the 

form of lost tax revenues, higher law enforcement costs, and the 

harm caused by the effects of the Government’s own purchase of 

counterfeit products. Fourth, online infringement harms U.S. trade 

by lessening its ability to partner with countries that have weaker 

intellectual property enforcement regimes.21 Fifth, online infringement reduces the incentives to create and disseminate ideas which, 

as the United States Supreme Court has recognized, harms the 

free expression principles of the First Amendment. Finally, as Victoria Espinel, U.S. Intellectual Property Enforcement Coordinator 

(IPEC), noted in a hearing before the Senate Committee on the Judiciary, online infringement supports international organized crime 

syndicates, which pose risks to our national security.22


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Espinel, Intellectual Property Enforcement Coordinator, Office of Management and Budget) at 

2. See also supra, n. 13. 23The Department of Justice, in conjunction with Immigration and Customs Enforcement, has 

recently used its forfeiture authority to seize domestic domain names that were being used for 

criminal activity. See http://www.ice.gov/news/releases/1105/110525washingtondc.htm; see 

also Promoting Investment and Protecting Commerce Online: Legitimate Sites v. Parasites, Part 

II Before the H. Committee on the Judiciary, H. Hrg. 112th Cong. 1 (2011) (written statement 

of John Morton, Director, U.S. Immigration and Customs Enforcement, Department of Homeland Security) at 9–11. This authority cannot be used to combat foreign-based websites accessed 

by foreign-registered domain names. 24The Anticybersquatting Consumer Protection Act (‘‘ACPA’’), 15 USC § 1125(d), authorizes a 

trademark owner to file an in rem action against a domain name. See Caesars World, Inc. v. 

Caesars-Palace.com, 112 F.Supp.2d 502, 504 (E.D. Va. 2000) (‘‘There is no prohibition on a legislative body making something property. Even if a domain name is no more than data, Congress 

can make data property and assign its place of registration as its situs’’) (emphasis added). See 

also Heathmount A.E. Corp. v. Technodome.com, 2000 WL 33666935, at *3–4 (E.D. Va. 2000) 

(unpublished). Further, the Federal Government’s recent domain name seizures, discussed supra 

at n.23, recognizes domain names as property. 

B. PURPOSE OF THE LEGISLATION

Today, law enforcement officials and rights holders have limited 

effective remedies available to fight the purveyors of infringing 

goods on the Internet when they operate overseas and in hiding.23

Federal legislation is needed to provide a tailored mechanism for 

combating rogue Internet sites. 

The Committee bill, as reported, gives the Department of Justice 

and rights holders an expedited process for cracking down on rogue 

Internet sites by targeting the domain names associated with those 

sites through injunctive relief. By making it more difficult for a domain name to be used for illicit purposes, and limiting the profitability of the underlying Internet site, the legislation will allow law 

enforcement to disrupt the criminal enterprises using domain 

names—and American infrastructure—to steal American intellectual property and profit off American consumers. The legislation 

will deter criminals from building up the success and visibility of 

rogue websites, because by doing so they will more likely become 

the target of law enforcement. The Committee bill, as reported, also 

addressed concerns raised by various parties since similar legislation was introduced in the 111th Congress, but the Committee understands that there remain outstanding concerns. 

1. Department of Justice actions 

The Committee bill, as reported, authorizes the Justice Department to file a civil action against the registrant or owner of a foreign registered domain name that accesses an Internet site that is 

‘‘dedicated to infringing activities,’’ or the foreign-registered domain 

name itself, and to seek a cease and desist order from the court. 

The Justice Department should bring the action against the owner 

or registrant of any foreign-registered domain name where practicable. However, in cases in which the Department is unable to 

find the owner or registrant, or that person has no address within 

the United States, the bill authorizes the Department to bring an 

in rem action against the non-domestic domain name itself. This 

process is modeled on the Anticybersquatting Consumer Protection 

Act.24

A domain name is the alphanumeric designation conventionally 

used to access a specific Internet address. The domain name typically comprises at least a top level domain and a second level domain. For instance, in the domain name senate.gov, ‘‘.gov’’ is the 

top level domain; ‘‘senate’’ is the second level domain. By typing 


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25The legislation defines a domain name by cross-referencing section 45 of the Lanham Act. 

Pursuant to that definition, a domain name is the combination of the top level domain and the 

second level domain, which is what domain name registries and registrars assign, and does not 

include third level domains of files or subfiles. 26These factors are derived from the World Intellectual Property Organization recommendations for determining whether the ‘‘use of a sign on the Internet has a commercial effect in a 

Member State.’’ See Joint Recommendation Concerning Provisions on the Protection of Marks, 

and Other Industrial Property Rights In Signs On The Internet, adopted by the Assembly of the 

Paris Union for the Protection of Industrial Property and the General Assembly of the World 

Intellectual Property Organization, October 3, 2001, available at http://www.wipo.int/about-ip/ 

en/development_iplaw/pub845-04.htm#P134_6837. 27Most Internet service providers operate a DNS server that they offer to their subscribers, 

but subscribers can use DNS services that are not affiliated with their Internet service provider. 

The Committee bill applies to all DNS operators. 28The Act includes a requirement that a plaintiff serve this order on ‘‘similarly situated’’ third 

parties. This provision is intended to avoid any competitive disparity that could result from selectively imposing burdens on some entities within a given class, but not others. 29The actions required of an operator of a domain name system server is limited by the Act 

to those designed to prevent the domain name from resolving. The Act defines a domain name 

by reference to the Lanham Act, see supra note 25, and therefore orders issued pursuant to this 

Act would not require such operators to block particular subdomains or subdirectories. 

‘‘senate.gov’’ in a web browser, the Internet user’s domain name 

server will find the Internet address associated with the domain 

name senate.gov. Each top level domain is operated by a domain 

name registry which, through registrars, allows registrants to register domain names.25

The Committee bill, as reported, authorizes the Justice Department to seek relief from a Federal district court in the form of a 

temporary restraining order, a preliminary injunction, or an injunction, in accordance with rule 65 of the Federal Rules of Civil Procedure. For an order to issue against the owner, registrant, or domain name itself, the Justice Department must demonstrate to the 

court that the Internet site accessed by the domain name is ‘‘dedicated to infringing activities.’’ In addition, the Internet site must 

be used within the United States, conduct business directed to residents of the United States, and harm holders of United States intellectual property rights.26

If the court issues an order against the domain name or its registrant, owner, or operator, the legislation authorizes law enforcement officers to serve the court order on specified third parties, including operators of nonauthoritative domain name system servers 

(‘‘DNS operators’’),27 search engines, payment processors, and online advertising network providers.28 These parties monetize the 

Internet site by enabling U.S. consumers to access the infringing 

website, to purchase content and products off the website, and to 

view advertisements on the website. Without partnering with these 

entities, the financial incentive to run an infringing Internet site 

is greatly diminished. The bill requires these third parties to take 

appropriate action to, respectively, prevent a domain name from resolving to its Internet protocol address,29 prevent a search result 

from linking to an Internet site, prevent payment processing for 

purchases on the underlying Internet site, or prevent its network 

from providing advertisements to the underlying Internet site. 

The Committee bill, as reported, affords due process to both defendants and third parties compelled to action by the legislation. 

The Justice Department must send notice of the alleged violation 

and intent to proceed under the legislation to the registrant of the 

domain name that is the subject of the action. Additionally, the 

Justice Department must provide notice to any third party that 


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30The Combating Online Infringement and Counterfeits Act (‘‘COICA’’), S.3804, introduced 

and reported by the Committee on the Judiciary in the 111th Congress, used a far broader definition of an Internet site dedicated to infringing activities. COICA’s definition included sites 

might be required to take action as the result of a resulting court 

order. 

The Committee bill, as reported, includes safeguards to allow the 

domain name or Internet site owner, operator, registrant, registry 

or registrar to petition the court to modify, suspend or vacate the 

order where the Internet site operator takes effective steps to exclude infringing or counterfeiting activity from the site, or where 

the interests of justice require. The bill also authorizes any third 

party receiving an order to petition the court. Similarly, as Internet 

site operators subject to the order transition their Internet sites to 

new domain names, the bill authorizes a plaintiff to bring a related 

action against the additional domain name in the same judicial district. 

2. Qualifying plaintiff actions 

The Committee bill, as reported, similarly authorizes a ‘‘qualifying plaintiff,’’ defined as either the Attorney General or a rights 

holder, to file an action for civil injunctive relief against the registrant or owner of any domain name that accesses an Internet site 

that is ‘‘dedicated to infringing activities’’—or the domain name 

itself—and to seek a cease and desist order from the court. That 

action can be brought regardless of whether the domain name at 

issue is registered in the United States or abroad. Such an action 

is subject to the same due process and notice requirements described in Part I.B.1. 

The mechanism is identical to that reserved for the Justice Department in non-domestic actions; however the resulting remedies 

are more limited. A qualifying plaintiff may only seek the court’s 

permission to serve a court order resulting from an action brought 

under this provision on a payment processor or online advertising 

network. Neither a DNS operator nor a search engine can be required to take action as the result of an order issued under this 

provision. 

3. Internet site ‘‘Dedicated to Infringing Activities’’ 

The definition of an Internet site ‘‘dedicated to infringing activities’’ in the legislation is narrowly tailored to implicate only the 

most egregious rogue websites that are trafficking in infringing 

goods. For an Internet site to fall within the definition, the legislation requires a party bringing an action, whether against a domestic or non-domestic domain name, to make one of two showings. 

The plaintiff can show that the Internet site has no significant use 

other than engaging in, enabling, or facilitating the (1) reproduction, distribution, or public performance of copyrighted works in 

violation of title 17, (2) violation of section 1201 of title 17, or (3) 

sale, distribution, or promotion of counterfeits under the Lanham 

Act. Alternatively, the plaintiff can show that the Internet site is 

designed, operated, or marketed primarily as a means for engaging 

in, enabling, or facilitating the (1) reproduction, distribution, or 

public performance of copyrighted works in violation of title 17, (2) 

violation of section 1201 of title 17, or (3) sale, distribution, or promotion of counterfeits under the Lanham Act.30


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that satisfy the criteria for forfeiture under section 2323 of title 18. The Committee heard concerns that this definition had the potential to include Internet sites with a significant amount 

of protected speech. The Committee responded to those concerns in the Committee bill by 

crafting a narrower definition, although the Committee recognizes that it means there will be 

rogue Internet sites whose operators may be violating criminal law that are nonetheless beyond 

the scope of this legislation. The Committee also recognizes that even with the new, narrower 

definition, there may still be some minimal amount of lawful content accessed through the domain name. The Supreme Court has upheld similar ancillary restraints for content neutral regulations. See Arcara v. Cloud Books, Inc., 478 U.S. 697 (1986). 31This safe harbor should not be construed to imply that there is liability for other entities 

that undertake voluntary action to combat online infringement and counterfeiting, or for payment processors or online advertising networks undertaking other actions against rogue 

websites, outside of those prescribed in this section. 

Importantly, in targeting only the ‘‘worst of the worst’’ Internet 

sites, the definition maintains the protection of fair use. The Committee intends for the legislation to target only those Internet sites 

clearly profiting from stolen American intellectual property, and 

not to be used where there is fair use or where there is an objectively reasonable interpretation of an express license to use intellectual property. 

4. Protections for third parties 

The Committee bill, as reported, contains protections for those 

third parties required to take action under the Act, to ensure that 

any party acting pursuant to an order is held harmless for having 

taken the appropriate action. This immunity extends to any acts 

reasonably designed to comply with an order or reasonably arising 

from an order. Additionally, no third party is required to take action to comply with an order beyond what is technically feasible 

and reasonable. It is also not the Committee’s intent that compliance with an order issued under this legislation create an ongoing 

duty on the part of a third party to affirmatively monitor its systems to ensure that it does not allow access to an Internet site or 

transact with an underlying merchant that is the subject of an 

order, where the site or merchant has reconstituted under an alias. 

The Committee bill, as reported, also encourages voluntary action by payment processors and online advertising network providers, by providing a safe harbor if these third parties voluntarily 

take action authorized by the legislation relating to an Internet site 

that it reasonably believes is dedicated to infringing activities.31

Further, the bill encourages voluntary action by domain name registries, registrars, search engines, financial transaction providers, 

and online advertising network providers against Internet sites 

that endanger the public health, either where the site is ‘‘dedicated 

to infringing activities’’ relating to controlled or non-controlled prescription medicines, or has no significant use other than, or is used 

primarily as a means for, the distribution of prescription medicines 

without a valid prescription, or the distribution of misbranded or 

adulterated medicines. 

The Committee bill, as reported, authorizes the plaintiff to bring 

an action to compel compliance from any third party required to 

take action under this section that knowingly and willfully fails to 

comply with a court order. The Committee anticipates that these 

actions will be used only in those situations where a third party 

does not fulfill its legal obligation under the Act. These provisions 

do not open the door to fishing expeditions in the form of frivolous 

litigation brought simply to initiate broad discovery. A third party 


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would not be monetarily liable for any action or inaction under this 

Act. 

5. Impact of the legislation 

The Committee understands that when access to an Internet site 

is blocked by a DNS operator or a search engine, the Internet site 

is still accessible to a user who takes certain affirmative steps. For 

example, where the Internet site is blocked by the DNS operator, 

a user can access the Internet site by changing the Domain Name 

Server to which the Internet service provider communicates to an 

alternative Domain Name Server. In the Committee’s view, however, a substantial portion of users are not intending to commit or 

facilitate an intellectual property-related crime. Rather, many consumers are being lured to the illegal Internet sites as discussed 

above. These consumers will be protected as a result of the remedies outlined in the Act and will, instead, visit Internet sites offering legitimate content or products. 

Similarly, the Committee understands that when a payment 

processor or advertising network suspends a particular merchant 

account in compliance with the Act, that website may in fact find 

a way to process payments through another alias. The Act requires 

payment processors and advertising networks to make reasonable 

efforts to stop payment transactions from merchants associated 

with the Internet site at issue, and the Committee believes that 

this will substantially diminish the financial viability of that site. 

The Committee does not intend the Act to deter voluntary action 

otherwise taken by third parties against rogue websites, nor does 

the Committee intend the Act to serve as a substitute for such voluntary action. Voluntary, cooperative action taken by private parties to prevent infringement and the sale of counterfeits over the 

Internet can be an effective approach to combat online infringement. 

6. Savings clauses 

The Committee bill, as reported, may not be construed to limit 

or expand the civil or criminal remedies available under any other 

Federal or State laws for infringing activities on the Internet. The 

legislation does not enlarge or diminish vicarious or contributory liability for any cause of action under the Lanham Act or title 17, 

including any limitation on liability under section 512 of title 17. 

Finally, nothing in this legislation shall serve as a basis for determining the application of section 512 of title 17 to any party. 

7. Guidelines and reports 

The Committee bill, as reported, requires the Attorney General 

to publish certain procedures for implementation of this Act. The 

bill also requires the Attorney General to develop a deconfliction 

process with other law enforcement agencies, including U.S. Immigration and Customs Enforcement, for implementation of this Act. 

The Committee bill, as reported, also requires the Secretary of 

Commerce, the Register of Copyrights, the Attorney General, and 

the Comptroller General to issue reports. The Secretary of Commerce is required to report to the Committees on the Judiciary in 

both the Senate and House on the ability to deploy Domain Name 

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port to the Committees on the Judiciary in both the Senate and 

House on the effectiveness and burden of carrying out this legislation. The Attorney General is required to report to the Committees 

on the Judiciary in both the Senate and House on actions brought 

under this legislation. The Comptroller General is required to report to the Committees on the Judiciary in both the Senate and 

House on actions brought by a rights holder under this legislation. 

8. Importation of counterfeit products and infringing devices 

The Committee bill, as reported, provides that Customs and Border Protection (‘‘CBP’’) may identify and prevent counterfeit products from being imported into the United States by clarifying that, 

notwithstanding the Trade Secrets Act, the Secretary of Homeland 

Security is authorized to share samples or photos of suspected 

counterfeit products and their packaging or labels with the relevant rights holders to determine whether the shipment should be 

seized at the border. Similarly, it ensures that the Secretary of 

Homeland Security can share information and samples relating to 

anti-circumvention devices that have been seized with affected parties. These provisions are intended as clarifying in nature and do 

not imply that anything in the Trade Secrets Act currently prohibits the sharing of such information and should not limit or affect 

what specific information CBP may be required to or prevented 

from disclosing through subsequent legislation or rulemaking. 

II. HISTORY OF THE BILL AND COMMITTEE CONSIDERATION

A. INTRODUCTION OF THE BILL

On September 20, 2010, in the 111th Congress, Chairman Leahy 

introduced the Combating Online Infringement and Counterfeits 

Act, S. 3804, along with Senator Hatch. Senator Bayh, Senator 

Durbin, Senator Feinstein, Senator Klobuchar, Senator Kohl, Senator Schumer, Senator Voinovich, and Senator Whitehouse, were 

original cosponsors of the bill. Senator Alexander, Senator Cardin, 

Senator Coburn, Senator Gillibrand, Senator Graham, Senator 

Grassley, Senator Inhofe, Senator McCaskill, and Senator Menendez later joined as cosponsors. This bill was referred to the Senate 

Committee on the Judiciary. 

The bill was on the agenda for the September 23, 2010 business 

meeting, but was held over. On November 18, 2010, the Committee 

on the Judiciary considered S. 3804. Chairman Leahy offered a 

substitute amendment, which was adopted by unanimous consent. 

That was the only amendment considered during this debate. Senator Coburn submitted a statement for the record that indicated 

certain Internet service providers, search engines, Federal agencies 

in charge of intellectual property enforcement, and other interested 

parties had outstanding concerns over some provisions in the legislation, and noted the need for further discussion of those issues in 

the form of a hearing prior to the final passage of the legislation. 

The Committee then voted to report the Combating Online Infringement and Counterfeits Act, with an amendment in the nature 

of a substitute, favorably to the Senate by a roll call vote of 19– 

0. 

On May 12, 2011, Chairman Leahy introduced the Preventing 

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32Google Inc. was asked by the Committee to testify as a hearing witness, but declined. 

tual Property Act, S. 968, along with Senator Hatch and Senator 

Grassley. Senator Blumenthal, Senator Coons, Senator Feinstein, 

Senator Franken, Senator Graham, Senator Klobuchar, Senator 

Kohl, Senator Schumer, and Senator Whitehouse were original cosponsors. Senator Alexander, Senator Ayotte, Senator Blunt, Senator Boozman, Senator Cochran, Senator Corker, Senator Durbin, 

Senator Gillibrand, Senator Hagan, Senator Lieberman, Senator 

Rubio, Senator Shaheen, and Senator Tom Udall joined as cosponsors. The bill was referred to the Senate Committee on the Judiciary. 

B. HEARINGS

On June 23, 2010, in the 111th Congress, the Senate Committee 

on the Judiciary held a hearing on ‘‘Oversight of the Office of the 

Intellectual Property Enforcement Coordinator.’’ This hearing was 

attended by Chairman Leahy, Senator Coburn, Senator Franken, 

Senator Grassley, Senator Hatch, Senator Klobuchar, and Senator 

Whitehouse. Testifying on Panel I was the Honorable Victoria A. 

Espinel, Intellectual Property Enforcement Coordinator, Office of 

Management and Budget. Testifying on Panel II were Barry M. 

Meyer, Chairman and CEO, Warner Bros. Entertainment Inc.; 

Paul E. Almeida, President, Department for Professional Employees, AFL–CIO; David Hirschmann, President and CEO, Global Intellectual Property Center, U.S. Chamber of Commerce; and Caroline Bienstock, President and CEO, Carlin America. The following 

materials were submitted for the record: Letter from the Copyright 

Alliance to Chairman Leahy dated June 23, 2010, with attachments; statement of James M. Yates; prepared statement of Victoria A. Espinel; prepared statement of Barry M. Meyer; prepared 

statement of Paul E. Almeida; prepared statement of David 

Hirschmann; and prepared statement of Caroline Bienstock. 

On February 16, 2011, in the 112th Congress, the Senate Committee on the Judiciary held a hearing on ‘‘Targeting Websites 

Dedicated to Stealing American Intellectual Property.’’ This hearing was attended by Chairman Leahy, Senator Grassley, Senator 

Blumenthal, Senator Coburn, Senator Coons, Senator Franken, 

Senator Klobuchar, Senator Kyl, and Senator Whitehouse. Testifying at this hearing were Tom Adams, President and CEO of Rosetta Stone, Inc.; Scott Turow, President of the Authors Guild; 

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

Corporate Secretary of the Go Daddy Group, Inc.; Thomas M. 

Dailey, Vice President and Deputy General Counsel for Verizon; 

and Denise Yee, Senior Trademark Counsel for Visa, Inc.32 The following materials were submitted for the record: Letter from William Samuel, Director of Government Affairs for the AFL–CIO, 

dated February 15, 2011; letter from AT&T to Victoria Espinel, 

U.S. Intellectual Property Enforcement Coordinator, dated March 

24, 2010; letter from Brian Keane, CEO of Blue Sky, to Senator 

Blumenthal, dated February 15, 2011; statement of the Computer 

and Communications Industry Association; statement of the Consumer Electronics Association; statement of the Center for Democracy and Technology; letter from Floyd Abrams to Chairman 

Leahy, Senator Grassley, and Senator Hatch, dated February 11, 


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2011; letter from Sascha Meinrath, Aparna Sridhar, M. Chris 

Riley, Open Technology Initiative, New America Foundation, and 

Free Press Action Fund to Chairman Leahy, dated February 15, 

2011; statement of Daniel Castro, Senior Analyst, Information 

Technology and Innovation Foundation; statement of the Motion 

Picture Association of America, Inc.; statement of the NetCoaltion, 

with attachments; Op-Ed by Scott Turow, Paul Aiken, and James 

Shapiro from the February 14, 2011 edition of the New York 

Times; statement of Public Knowledge; letter from Nora Roberts to 

Chairman Leahy and Members of the Senate Judiciary Committee, 

dated February 13, 2011; letter from multiple companies and associations to Members of the United States Congress, dated February 

15, 2011; statement of the United States Chamber of Commerce; 

prepared statement of Tom Adams; prepared statement of Scott 

Turow; prepared statement of Christine N. Jones; prepared statement of Thomas M. Dailey; and prepared statement of Denise Yee. 

On June 22, 2011, in the 112th Congress, the Senate Committee 

on the Judiciary held a hearing on ‘‘Oversight of Intellectual Property Law Enforcement Efforts.’’ This hearing was attended by 

Chairman Leahy, Senator Grassley, Senator Blumenthal, Senator 

Coburn, Senator Coons, Senator Franken, Senator Klobuchar, Senator Kohl, and Senator Whitehouse. Testifying at this hearing were 

Victoria Espinel, United States Intellectual Property Enforcement 

Coordinator; Jason Weinstein, Deputy Assistant Attorney General 

for the Criminal Division, United States Department of Justice; 

Gordon M. Snow, Assistant Director for the Cyber Division, Federal 

Bureau of Investigation; Allen Gina, Assistant Commissioner, Office of International Trade, United States Customs and Border Protection; and Erik Barnett, Assistant Deputy Director, United States 

Immigration and Customs Enforcement. The following materials 

were submitted for the record: Letter from the American Federation of Musicians, the American Federation of Television and Radio 

Artists, the Directors Guild of America, the International Alliance 

of Theatrical Stage Employees, Moving Picture Technicians, Artists, and Allied Crafts of the United States, Its Territories, and 

Canada, the International Brotherhood of Teamsters, and the 

Screen Actors Guild, dated June 20, 2011, to Chairman Leahy and 

Senator Grassley; letter from Paul Williams, President and Chairman of the Board of the American Society of Composers, Authors, 

and Publishers, dated June 20, 2011, to Chairman Leahy and Senator Grassley; letter from Tom Giovanetti, President of the Institute for Policy Innovation, dated June 20, 2011, to Chairman Leahy 

and Senator Grassley; letter from Mitch Bainwol, Chairman and 

CEO of the Recording Industry Association of America, Inc., dated 

June 21, 2011, to Chairman Leahy; letter from the Motion Picture 

Association of America, Inc., and member studios, dated June 22, 

2011, to Chairman Leahy and Senator Grassley; statement of Colleen M. Kelley, National President of the National Treasury Employees Union; statement of the United States Chamber of Commerce; prepared statement of Victoria Espinel; prepared statement 

of Jason Weinstein; prepared statement of Gordon M. Snow; prepared statement of Allen Gina; and prepared statement of Erik 

Barnett. 


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C. LEGISLATIVE HISTORY

The bill was on the agenda for the May 19, 2011 business meeting, but it was held over. On May 26, 2011, the Committee on the 

Judiciary considered S. 968. Chairman Leahy offered a substitute 

amendment, which was adopted by unanimous consent. Chairman 

Leahy and Senator Grassley offered an additional amendment to 

clarify that when Customs and Border Protection suspects a product that is being imported or exported of being counterfeit, it is not 

prohibited by the Trade Secrets Act to share samples of packaging 

or labels of suspected counterfeits with the purported rights owner. 

This amendment was adopted by voice vote. No other amendments 

were considered during this debate. 

The Committee then voted to report S. 968, with amendments, 

favorably to the Senate. The Committee reported this bill by voice 

vote. 

The following companies or groups submitted letters in support 

of S. 968: United States Chamber of Commerce; AFL–CIO; Business Software Alliance; National Cable and Telecommunications 

Association; National Association of Broadcasters; National Association of Manufacturers; Comcast/NBC Universal; Copyright Alliance; American Federation of Musicians; American Federation of 

Television and Radio Artists; Directors Guild of America; International Alliance of Theatrical Stage Employees, Moving Picture 

Technicians, Artists and Allied Crafts of the United States, Its Territories, and Canada; Screen Actors Guild; International Brotherhood of Teamsters; National Music Publishers’ Association; Institute for Policy Innovation; Software and Information Industry Association; Writers Guild of America, West; Viacom; Independent 

Film & Television Alliance; Motion Picture Association of America; 

National Association of Theatre Owners; Paramount Pictures Corporation; Association for Safe Online Pharmacies; Small Business 

& Entrepreneurship Council; Songwriters Guild of America; Sony 

Pictures Entertainment Inc.; Twentieth Century Fox Film Corporation; Universal City Studios LLC; Walt Disney Studios Motion Pictures; Warner Bros. Entertainment Inc.; Deluxe Entertainment 

Services Group; 1–800 Contacts, Inc.; 1–800–PetMeds; ABRO Industries, Inc.; Acushnet Company; Adidas America; Advanced Medical Technology Association (AdvaMed); Alliance of Automobile 

Manufacturers; Alliance of Visual Artists (AVA); American Association of Independent Music (A2IM); American Board of Internal 

Medicine; American Made Alliance; American Society of Composers, Authors and Publishers (ASCAP); American Society of 

Media Photographers; Anti-Counterfeiting and Piracy Initiative 

(ACAPI); Arts+Labs; Association of American Publishers (AAP); Association of Equipment Manufacturers; Association of Independent 

Music Publishers (AIMP); Association of Test Publishers; Autodesk, 

Inc.; Automotive Aftermarket Industry Association; Beachbody, 

LLC; Beam Global Spirits & Wine; Blue Sky Studios, Inc.; Bose 

Corporation; Brigid Collins Family Support Center; Broadcast 

Music, Inc. (BMI); Burberry; Cascade Designs Incorporated; CBS 

Corporation; Cengage Learning; CFA Institute; Chanel USA; 

Church Music Publishers Association; Coalition Against Counterfeiting and Piracy (CACP); The Collegiate Licensing Company/IMG 

College; Commercial Photographers International; Copyright ClearVerDate Mar 15 2010 01:23 Jul 25, 2011 Jkt 099010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR039.XXX SR039

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ance Center (CCC); Coty Inc.; Country Music Association; Dayco 

Products, LLC; Deckers Outdoor Corporation; Dolce & Gabbana; 

Dollar General Corporation; Electronic Components Industry Association (ECIA); Eli Lilly and Company; Entertainment Software Association (ESA); ERAI, Inc.; The Estee Lauder Companies; Evidence Photographers International Council; Ex Officio; Exxel Outdoors; Far Bank Enterprises; Fashion Business Incorporated; Federation of State Boards of Physical Therapy; Ford Motor Company; 

Fortune Brands, Inc.; Gemvision Corporation; Gospel Music Association; Governors America Corp.; Graduate Management Admission Council; Greeting Card Association (GCA); Guru Denim; 

HarperCollins Publishers; Harry Fox Agency; Hastings Entertainment, Inc.; ICM Distributing Company, Inc.; IDS Publishing; IEC 

Electronics Corp.; Imaging Supplies Coalition (ISC); Independent 

Distributors of Electronics Association (IDEA); Innate-gear; Intellectual Property Owners Association; International 

AntiCounterfeiting Coalition (IACC); International Trademark Association (INTA); John Wiley & Sons, Inc.; Johnson & Johnson; 

Kekepana International Services; Leatherman Tool Group, Inc.; 

Lexmark International, Inc.; L’Ore ́al USA; LVMH Moe ̈t Hennessy 

Louis Vuitton; Macmillan; Major League Baseball; Marmot; The 

McGraw-Hill Companies; Merck & Co., Inc.; Messy Face Designs, 

Inc.; MicroRam Electronics, Inc.; Microsoft; Monster Cable Products, Inc.; Music Managers Forum-U.S.; Nashville Songwriters Association International; National Association of Recording Merchandisers (NARM); National Basketball Association (NBA); The 

National Collegiate Athletic Association (NCAA); National Electrical Manufacturers Association (NEMA); National Football 

League (NFL); Nervous Tattoo Inc., dba Ed Hardy; Netflix; New 

Era Cap Co Inc.; News Corporation; Nike, Inc.; Nintendo of America Inc.; Oakley, Inc.; OpSec Security, Inc.; Outdoor Industry Association; Outdoor Power Equipment Institute (OPEI); Outdoor Research, Inc; Pacific Component Xchange, Inc.; Perry Ellis International; Personal Care Products Council; Petzl America; Pfizer 

Inc.; Picture Archive Council of America (PACA); PING; Premier 

League; Production Music Association (PMA); Professional Photographers of America; Quality Float Works, Inc.; The Recording Academy (National Academy of Recording Arts and Sciences); Recording 

Industry Association of America (RIAA); Reebok International Ltd.; 

Reed Elsevier Inc.; Revlon; Romance Writers of America (RWA); 

Rosetta Stone Inc.; Schneider Electric; SESAC, Inc.; SG Industries, 

Inc.; SMT Corp.; Society of Sport & Event Photographers; Sony 

Music Entertainment; SoundExchange; Specialty Equipment Market Association (SEMA); Sports Rights Owners Coalition; Spyder 

Active Sports, Inc; Stock Artist Alliance; Stuart Weitzman Holdings, LLC; Student Photographic Society; SunRise Solar Inc.; Taylor Made Golf Company, Inc.; Tednologies, Inc.; Tiffany & Co.; The 

Timberland Company; Time Warner Inc.; Toshiba America Business Solutions, Inc.; Ultimate Fighting Championship; Underwriters Laboratories Inc.; Universal Music Group; Uniweld Products Inc.; Vibram USA, Inc; W.R. Case & Sons Cutlery Co.; WalMart; The Walt Disney Company; Warner Music Group; Winestem 

Company; Xerox Corporation; Zippo Manufacturing Company. 


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III. SECTION-BY-SECTION SUMMARY OF THE BILL

Section 1. Short title 

This section provides that the legislation may be cited as the 

‘‘Preventing Real Online Threats to Economic Creativity and Theft 

of Intellectual Property Act’’. 

Section 2. Definitions 

This section provides definitions referenced in the Act, including 

the definition of an ‘‘Internet site dedicated to infringing activities.’’ 

Under this definition, provided in paragraph (7), an ‘‘Internet site 

dedicated to infringing activities’’ means an Internet site that falls 

into one of two categories. The first category is an Internet site 

that has no other significant use other than engaging in, enabling, 

or facilitating the infringement of substantially complete copyrighted material (paragraph (7)(A)(i)); the circumvention of copyright protection systems (paragraph (7)(A)(ii)); or the sale of goods, 

services or materials bearing a counterfeit mark (paragraph 

(7)(A)(iii)). The second category is an Internet site that is designed, 

operated, or marketed by its operator, primarily as a means for engaging in, enabling or facilitating the infringement of substantially 

complete copyrighted material; the circumvention of copyright protection systems; or the sale of goods, services or materials bearing 

a counterfeit mark. 

Section 3. Enhancing enforcement against rogue websites operated 

and registered overseas 

Subsection (a). This subsection authorizes the Attorney General 

to commence either an in personam action against a registrant or 

owner of a nondomestic domain name dedicated to infringing activities (subsection (a)(1)), or an in rem action against a nondomestic domain name dedicated to infringement (subsection 

(a)(2)). An in rem action is only authorized where, after due diligence, the defendant owner or registrant cannot be found. The Attorney General is required to identify any third parties that may 

be required to take action under subsection (d) (subsection (a)(3)). 

Subsection (b)(1). This subsection provides the court with the authority to issue a temporary restraining order, a preliminary injunction or an injunction, in accordance with rule 65 of the Federal 

Rules of Civil Procedure, against an infringing nondomestic domain 

name, registrant, or owner or operator of such a site. The injunction directs the site to cease and desist from further infringing activity, provided that the domain name is being used within the 

United States to access an infringing site, conducts business directed at residents of the United States, and harms intellectual 

property rights holders in the United States. 

Subsection (b)(2). This subsection provides factors the court may 

consider, among other indicia, to determine if a site is conducting 

business directed at residents of the United States. These factors 

include whether a site is providing infringing goods or services to 

users in the United States (subsection (b)(2)(A)); whether there is 

evidence that the site is not intended to provide such goods to 

users in the United States, or access or delivery of such goods to 

users in the United States (subsection (b)(2)(B)); whether the site 

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ices from being accessed from or delivered to the United States 

(subsection (b)(2)(C)); whether the site offers services obtained in 

the United States (subsection (b)(2)(D)); and whether the site offers 

goods and services for sale in U.S. Dollars (subsection (b)(2)(E)). 

Subsection (c). This subsection directs the Attorney General to 

send notice of an alleged violation and intent to proceed under the 

Act to the registrant of the domain name of the Internet site. This 

notice can be sent to the best available postal or email address, or 

in any other form the court finds necessary, including in the manner provided to serve individuals in foreign countries under Rule 

4(f) of the Federal Rules of Civil Procedure. The Attorney General 

is also required to notify any third parties that may be required to 

take action under subsection (d). 

Subsection (d)(1). This subsection requires Federal law enforcement to serve a copy of a court order issued pursuant to this section on any third party which has been identified either in the complaint or any amendments thereto. 

Subsection (d)(2). This subsection details the reasonable measures that identified third parties must take after being served with 

an order. There are four classes of third parties described in this 

subsection: Operators of nonauthoritative domain name system 

servers (subsection (d)(2)(A)), financial transaction providers (subsection (d)(2)(B)), Internet advertising services (subsection 

(d)(2)(C)), and information location tools (subsection (d)(2)(D)). Operators of nonauthoritative domain name system servers shall take 

the least burdensome technically feasible and reasonable measures 

to prevent the domain name described in the order from resolving. 

Safeguards prevent the operator from having to modify its network, 

software, systems, or facilities in order to comply with this subsection. Financial transaction providers must take reasonable 

measures to prevent, prohibit or suspend their service from completing payment transactions associated with the site involving 

U.S. customers. Internet advertising services must take technically 

feasible and reasonable measures to prevent their service from providing advertisements to the infringing site, and cease making 

available any advertisements for that site, or any paid or sponsored 

links that provide access to the site. Information location tools 

must take technically feasible and reasonable measures to remove 

or disable access to the infringing site and not serve a hypertext 

link to such a site. 

Subsection (d)(3). This subsection gives third parties discretion to 

determine if and how they will communicate actions taken under 

this subsection to their users. 

Subsection (d)(4). This subsection is a rule of construction that 

ensures that the obligations of a third party relating to an action 

commenced under this section are limited to those described in the 

section. 

Subsection (d)(5). This subsection provides immunity to third 

parties for actions taken to reasonably comply with an order issued 

under this subsection (subsection (d)(5)(A)). In addition, actions 

taken by customers or users of a third party to circumvent any 

good faith effort to restrict access to an infringing site pursuant to 

this subsection shall not incur liability for that third party (subsection (d)(5)(B)). 


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Subsection (e). This subsection authorizes the Attorney General 

to bring an action for injunctive relief against any party that receives an order under this section and willfully fails to comply with 

the order. This is the sole legal remedy to enforce the obligations 

under this section for any third party described in it. A defendant 

in this action may establish an affirmative defense by showing that 

it does not have the technical means to comply with the subsection 

without incurring unreasonable economic burden, or that the order 

is inconsistent with the Act. 

Subsection (f). This subsection provides the manner in which an 

order under subsection (b) can be modified, suspended, or vacated. 

After the issuance of such an order, a motion to modify, suspend, 

or vacate the order may be filed at any time by: Any person, owner 

or operator of property bound by the order (subsection (f)(1)(A)); 

any registrant of the domain name or the owner or operator of the 

site subject to the order (subsection (f)(1)(B)); any domain name 

registrar or registry that has registered or assigned the domain 

name of the site (subsection (f)(1)(C)); or any third party required 

to take action under subsection (d) (subsection (f)(1)(D)). Relief can 

be granted if the court finds that the site associated with the domain name is no longer or never was dedicated to infringing activities, or the interests of justice require that the order be modified, 

suspended or vacated (subsection (f)(2)). The court can also consider whether the domain name has expired or been registered to 

a different party (subsection (f)(3)). Additionally, third parties can 

intervene at any time in an action commenced under subsection (a), 

or in any action to suspend, modify, or vacate an order (subsection 

(f)(4). 

Subsection (g). This subsection authorizes the Attorney General, 

if alleging that the underlying Internet site at issue was previously 

determined to be an ‘‘Internet site dedicated to infringing activities’’ in a prior action, to commence a related action against the domain name owner, registrant or site itself, in the same judicial district as the previous action. 

Section 4. Eliminating the financial incentive to steal intellectual 

property online 

Subsection (a). This subsection authorizes a qualifying plaintiff, 

which is defined as the Attorney General or a U.S. intellectual 

property rights holder, to commence either an in personam action 

against a registrant, owner, or operator of a domain name used by 

a site dedicated to infringing activities (subsection (a)(1)), or an in 

rem action against a domain name used by a site dedicated to infringing activities, if after due diligence such persons cannot be 

found (subsection (a)(2)). The qualifying plaintiff is required to 

name any third parties that may be required to take action under 

subsection (d) (subsection (a)(3)). 

Subsection (b)(1). This subsection provides the court with the authority to issue a temporary restraining order, a preliminary injunction or an injunction, in accordance with rule 65 of the Federal 

Rules of Civil Procedure, against an infringing domain name, registrant, or owner or operator of such a site. The injunction directs 

the site to cease and desist from further infringing activity, provided that the domain name is registered or assigned by a domain 

name registry located or doing business in the U.S., the domain 


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name is used within the U.S. to access such an infringing site, and 

the site conducts business related to the residents of the U.S. and 

harms U.S. intellectual property rights holders. 

Subsection (b)(2). This subsection provides factors the court may 

consider, among other indicia, to determine if a site is conducting 

business directed at residents of the U.S. These factors include 

whether a site is providing infringing goods or services to users in 

the U.S. (subsection (b)(2)(A)); whether there is evidence that the 

site is not intended to provide such goods to users in the U.S., or 

access or delivery of such goods to users in the U.S. (subsection 

(b)(2)(B)); whether the site has reasonable measures in place to 

prevent such goods and services from being accessed from or delivered to the U.S. (subsection (b)(2)(C)); whether the site offers services obtained in the U.S. (subsection (b)(2)(D)); and whether the 

site offers goods and services for sale in U.S. Dollars (subsection 

(b)(2)(E)). 

Subsection (c). This subsection directs the qualifying plaintiff to 

send notice of an alleged violation and intent to proceed under the 

Act to the registrant of the domain name of the Internet site. This 

notice can be sent to the best available postal or email address, or 

in any other form the court finds necessary, including in the manner provided to serve individuals in foreign countries under Rule 

4(f) of the Federal Rules of Civil Procedure. The qualifying plaintiff 

is also required to notify any third parties that may be required to 

take action under subsection (d). 

Subsection (d)(1). This subsection requires a qualifying plaintiff 

to serve a copy of a court order issued pursuant to this section on 

any third party which has been identified either in the complaint 

or any amendments thereto. 

Subsection (d)(2). This subsection details the reasonable measures that identified third parties must take after being served with 

an order. There are two classes of third parties described in this 

subsection: Financial transaction providers (subsection (d)(2)(A)) 

and Internet advertising services (subsection (d)(2)(B)). Financial 

transaction providers must take reasonable measures to prevent, 

prohibit or suspend their service from completing payment transactions associated with the site involving U.S. customers. Internet 

advertising services must take technically feasible and reasonable 

measures to prevent their service from providing advertisements to 

the infringing site, and cease making available any advertisements 

for that site, or any paid or sponsored links that provide access to 

the site. 

Subsection (d)(3). This subsection gives third parties discretion to 

determine if and how they will communicate actions taken under 

this subsection to their users. 

Subsection (d)(4). This subsection is a rule of construction that 

ensures that the obligations of a third party relating to an action 

commenced under this section are limited to those described in the 

section. 

Subsection (d)(5). This subsection provides immunity to third 

parties for actions taken to reasonably comply with an order issued 

under this subsection (subsection (d)(5)(A)). In addition, actions 

taken by customers or users of a third party to circumvent any 

good faith effort to restrict access to an infringing site pursuant to 


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this subsection shall not incur liability for that third party (subsection (d)(5)(B)). 

Subsection (e). This subsection authorizes the Attorney General 

to bring an action for injunctive relief against any party that receives an order under this section and willfully fails to comply with 

the order. This is the sole legal remedy to enforce the obligations 

under this section for any third party described in it. A defendant 

in this action may establish an affirmative defense by showing that 

it does not have the technical means to comply with the subsection 

without incurring unreasonable economic burden, or that the order 

is inconsistent with the Act. 

Subsection (f). This subsection provides the manner in which an 

order under subsection (b) can be modified, suspended, or vacated. 

After the issuance of such an order, a motion to modify, suspend, 

or vacate the order may be filed at any time by: Any person, owner 

or operator of property bound by the order (subsection (f)(1)(A)); 

any registrant of the domain name or the owner or operator of the 

site subject to the order (subsection (f)(1)(B)); any domain name 

registrar or registry that has registered or assigned the domain 

name of the site (subsection (f)(1)(C)); or any third party required 

to take action under subsection (d) (subsection (f)(1)(D)). Relief can 

be granted if the court finds that the site associated with the domain name is no longer or never was dedicated to infringing activities, or the interests of justice require that the order be modified, 

suspended or vacated (subsection (f)(2)). The court can also consider whether the domain name has expired or been registered to 

a different party (subsection (f)(3)). Additionally, third parties can 

intervene at any time in any action commenced under subsection 

(a), or in any action to suspend, modify, or vacate an order (subsection (f)(4)). 

Subsection (g). This subsection authorizes the qualifying plaintiff, 

if alleging that the underlying Internet site at issue was previously 

determined to be an ‘‘Internet site dedicated to infringing activities’’ in a prior action, to commence a related action against the domain name owner, registrant or site itself, in the same judicial district as the previous action. 

Section 5. Voluntary actions against websites stealing American intellectual property 

This section provides a safe harbor from liability to financial 

transaction providers and Internet advertising services that voluntarily take actions described under sections 3(d) or 4(d) with regard 

to an Internet site if those entities act in good faith and based on 

credible evidence that the site is dedicated to infringing activities 

(subsection (a)). This section also protects domain name registries, 

registrars, financial transaction providers, information location 

tools, or Internet advertisers from liability if they voluntarily stop 

providing or refuse to provide service to sites that endanger the 

public health by selling counterfeit, misbranded, or adulterated 

pharmaceuticals, or regularly sell pharmaceuticals without a valid 

prescription, so long as the third party’s action is taken in good 

faith and based on credible evidence (subsection (b)). 


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Section 6. Savings clauses 

These savings clauses ensure that nothing in the Act will be construed to limit or expand civil or criminal remedies available to any 

person for infringing activities on the Internet pursuant to other 

Federal or State laws (subsection (a)); enlarge or diminish liability 

for any cause of action under either the Lanham Act or the Copyright Act, nor create an obligation to take action pursuant to section 5 of the Act (subsection (b)); or serve as a basis to determine 

the application of section 512 of the Copyright Act, providing limitations on liability relating to material online (subsection (c)). 

Section 7. Guidelines and studies 

Subsection (a). This subsection requires the Attorney General, in 

consultation with other relevant law enforcement agencies, to publish procedures to receive information from the public about Internet sites dedicated to infringing activities, and to develop a 

deconfliction process with relevant law enforcement agencies to coordinate the enforcement activities brought under the Act. 

Subsection (b). This subsection requires a series of reports designed to review the effectiveness of the Act and related oversight. 

The Secretary of Commerce, the Register of Copyrights, the Attorney General, and the Government Accountability Office are required to produce reports under this subsection. 

Section 8. Preventing the importation of counterfeit products and infringing devices 

This section clarifies that when Customs and Border Protection 

suspects a product that is being imported or exported of being 

counterfeit, the Secretary of Homeland Security is not prohibited 

by the Trade Secrets Act from sharing samples of packaging or labels of suspected counterfeits with the purported rights owner. 

Similarly, it ensures that the Secretary of Homeland Security can 

share information and samples relating to anti-circumvention devices that have been seized with affected parties. 

IV. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The cost estimate provided by the Congressional Budget Office 

pursuant to section 402 of the Congressional Budget Act of 1974 

was not available for inclusion in this report. The estimate will be 

printed in either a supplemental report or the Congressional 

Record when it is available. 

V. REGULATORY IMPACT EVALUATION

In compliance with rule XXVI of the Standing Rules of the Senate, the Committee finds that no significant regulatory impact will 

result from the enactment of S. 968. 

VI. CONCLUSION

The Preventing Real Online Threats to Economic Creativity and 

Theft of Intellectual Property Act will provide the Justice Department and rights holders with an important new mechanism for 

combating online copyright infringement and the sale of counterfeit 

goods. 


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VII. CHANGES TO EXISTING LAW MADE BY THE BILL, AS REPORTED

Pursuant to paragraph 12 of Rule XXVI of the Standing Rules 

of the Senate, the Committee finds no changes in existing law 

made by S. 968, as ordered reported. 

Æ 


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