Bloomberg News

Anti-Piracy Role Added to U.S. Trade Agency in Draft Bill

December 13, 2011

(Adds studio executive comments in eighth paragraph.)

Dec. 8 (Bloomberg) -- U.S. lawmakers unveiled draft legislation that would give the International Trade Commission the lead role in fighting foreign websites trafficking in illegal content and counterfeit goods.

The draft bill, released today by Senator Ron Wyden, an Oregon Democrat, and Representative Darrell Issa, a California Republican, is meant as an alternative to Hollywood-backed anti- piracy legislation under consideration by the House and Senate.

Those measures pit the movie and music industries, which want a stronger crackdown on online piracy, against Google Inc., Facebook Inc. and other Web companies that say the bills may ensnare legitimate websites and threaten the growth of the U.S. technology industry.

The draft bill released by Wyden and Issa, called the Online Protection and Enforcement of Digital Trade Act, lets U.S. intellectual-property owners petition the trade agency to investigate foreign websites linked to piracy.

Under the bill, the commission may issue cease-and-desist orders against foreign websites that “primarily” and “willfully” engage in copyright infringement. Those orders could be used to force U.S.-based payment and advertising companies to stop providing services to such sites, according to the draft.

Hollywood-Backed Bills

The Wyden-Issa proposal contrasts with Hollywood-backed anti-piracy bills that were introduced this year and have multiple co-sponsors from both parties. Those measures would let the U.S. Justice Department seek court orders forcing Internet- service providers, search engines, payment services and advertising networks to block or cease business with foreign websites linked to piracy.

The Hollywood-backed measure in the House, the Stop Online Piracy Act, also would give intellectual-property owners, through private action and in court, the ability to push U.S. payment processors and online-advertising services to stop doing business with foreign websites.

Studio executives expressed concern today in an interview at Bloomberg’s Washington office that the trade commission isn’t equipped to take on enforcement.

“It’s a body that is not prepared for the task and is too unwieldy and would take too long to solve the problem,” said Jim Gianopulos, chief executive officer of Fox Filmed Entertainment Inc.

Barry Meyer, chairman and CEO of Warner Bros. Entertainment Inc., said that “we frankly view it as delaying and obfuscating the issue. There is a process that works right now. Judges have been doing this for years.”

Vote Planned

Representative Lamar Smith, a Texas Republican and chairman of the House Judiciary Committee, has said he plans to hold a committee vote before year-end on the Stop Online Piracy Act, which he introduced.

Google, Facebook and other Web companies said in a Nov. 15 letter that the House and Senate measures would create “new uncertain liabilities” for Internet companies and asked lawmakers to seek “more targeted ways” to combat “rogue” websites in other countries.

NetCoalition, a technology-industry group representing Google, Yahoo Inc. and EBay Inc., supports having the trade commission handle copyright and trademark infringement cases against foreign websites, Markham Erickson, the group’s executive director, said in an interview this week. The Washington-based group’s members include Bloomberg LP, the parent company of Bloomberg News.

Soliciting Comments

The alternative bill from Wyden and Issa is still in draft form and may be introduced as legislation within a week, Jennifer Hoelzer, a spokeswoman for Wyden, said in an interview. The draft bill will be posted on a website to solicit comments and feedback, Hoelzer said.

The measure would authorize the trade agency to collect fees from complainants to pay for piracy investigations and expand the agency’s ability to hire the personnel needed to carry out the bill’s provisions, Hoelzer said. The commission has been asked for “technical feedback” on the draft bill, she said.

The agency has the power to block imports of products found to infringe intellectual-property rights. It’s at the center of patent battles over smartphone technology and is investigating allegations of unfair trade practices by China in the solar- panel industry.

--Editors: Michael Shepard, Steve Walsh

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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