Intellectual Property Report

Articles

PRO-IP Act Looks To Strengthen Trademark And Copyright Law

Suzanne M. Hengl

As the value and importance of intellectual property increases in the global economy, so too must the vigilance of intellectual property owners in protecting such assets, particularly against counterfeiters who cause billions of dollars worth of damage to American businesses. Over the past several years the United States has assisted intellectual property owners by stepping up efforts to combat counterfeiting both in the United States and abroad with initiatives such as the Strategy Targeting Organized Piracy and the Stop Counterfeiting in Manufactured Goods Act, which expanded criminal sanctions against counterfeiters.

Most recently, on October 13, 2008, President Bush signed into law the Prioritizing Resources and Organization for Intellectual Property Act of 2008 (the “PRO-IP Act” or the “Act”). This legislation promises to further strengthen U.S. intellectual property laws by coordinating enforcement among different agencies under the supervision of an executive-level intellectual property enforcement coordinator.

The Act will also increase statutory damages and forfeiture penalties for infringement, amend certain copyright registration rules, and expand resources available to law enforcement agencies to battle trademark and copyright infringement. While the Act omits a heavily contested provision which would have authorized the Department of Justice to use civil litigation to pursue alleged copyright infringers, the legislation does include several other provisions to strengthen government enforcement of intellectual property rights.

This article offers a snapshot of the principal provisions of the PRO-IP Act, which are as follows:

1. “INTELLECTUAL PROPERTY CZAR” POST CREATED
   
   The Act provides that the President shall appoint an Intellectual Property Enforcement Coordinator (“IPEC”) to serve within the Executive Office of the President. The IPEC will replace the National Intellectual Property Law Enforcement Coordination Council, currently housed in the Department of Commerce. His duties will include chairing an intellectual property enforcement advisory committee comprised of members from various government agencies and departments including the Office of Management and Budget, the Department of Justice, the Patent and Trademark Office, the Office of the U.S. Trade Representative, and the U.S. Copyright Office.
   
   The IPEC will also be responsible for coordinating and developing a Joint Strategic Plan (the “Plan”) in concert with the aforementioned committee. The Plan’s goals, which are wide ranging, include:
   
   (i) reducing counterfeit and infringing goods in the domestic and international supply chains;
   
   (ii) increasing efficiencies and identifying structural weaknesses in the current system;
   
   (iii) ensuring information sharing across departments;
   
   (iv) strengthening the ability of other countries to protect and enforce intellectual property rights;
   
   (v) working with other countries to develop international standards and enforcement policies; and
   
   (vi) protecting intellectual property rights overseas by working with other countries to crack down on the sale and trafficking of counterfeit goods.
   
   Further, the IPEC will assist various governmental agencies and departments with the Plan’s implementation. He will also facilitate the issuance of policy guidelines to ensure coordination and consistency of intellectual property laws, and will report to the President and Congress regarding both domestic and international intellectual property enforcement programs.
   
   Notwithstanding the creation of the IPEC position, the currently-existing authority of respective U.S. departments and agencies with respect to the investigation and prosecution of intellectual property laws and U.S. trade agreements and international trade will remain unchanged.
   
   
2. ENHANCED PENALTIES FOR INTELLECTUAL PROPERTY VIOLATIONS
   
   The PRO-IP Act also enhances penalties for intellectual property violations.
   
   a. Forfeiture: The Act fortifies forfeiture provisions, harmonizing forfeiture laws and broadening the scope of property that can be confiscated in connection with counterfeiting of goods and services generally, including in connection with counterfeiting of copyrighted works. These amendments further build on the efforts undertaken by the Stop Counterfeiting in Manufactured Goods Act, which amended 18 U.S.C. §2320. Specifically, the Act provides that, in the context of civil proceedings, property subject to forfeiture will include not just the offending goods themselves, but also property used to facilitate the commission of an offense and property derived from any proceeds obtained directly or indirectly as a result of the commission of an offense. With respect to criminal proceedings, the Act provides that forfeiture proceedings shall be governed by Section 413 of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. § 853), which states in pertinent part that a defendant shall forfeit any property constituting, or derived from, any proceeds obtained either directly or indirectly as a result of a violation and any property used, or intended to be used, to commit, or to facilitate the commission of, a violation.
   
   b. Enhanced Statutory Damages: The Act enhances statutory damages for counterfeiting violations under the Trademark (“Lanham”) Act of 1946 (15 U.S.C. § 1051 et seq.). In particular, it expands the availability of treble damages under Section 35(b) of the Lanham Act to include not just violators who intentionally use a counterfeit trademark but also those who supply goods or services necessary to the commission of a counterfeiting violation, provided that such persons intend that the recipient of the goods or services puts the goods or services to use in committing a violation. Further, the Act raises statutory damages available pursuant to Section 35(c) of the Lanham Act from $500-$100,000 to $1000-$200,000 and increases the cap on statutory damages for willful use of a counterfeit mark from $1,000,000 to $2,000,000.
   
   c. Expanded Liability For Importing/Exporting Counterfeits: In addition to the foregoing, the PRO-IP Act extends copyright law to apply to both imports and exports, and specifies that the Lanham Act will now be applied to prohibit exporting or transshipping counterfeit goods through U.S. ports. Further, copyright owners will now be afforded the same rights as trademark owners to impound records documenting infringement.
   
   
3. COPYRIGHT REGISTRATION REQUIREMENTS
   
   The PRO-IP Act also changes certain rules concerning copyright registration. Specifically, the Act provides that a copyright registration may survive a litigation challenge even if the registration contains an inaccurate statement, unless the inaccurate information was included on the application: (i) with the knowledge that it was inaccurate; and (ii) the inaccuracy, if revealed, would have caused the Copyright Office to refuse registration. While the question of whether the Copyright Office would have refused registration currently must be litigated, the new legislation provides that courts refer such questions directly to the Register of Copyrights. In addition, prosecutors will no longer need to wait until a copyright has been registered to bring criminal charges alleging infringement, thus eliminating unnecessary delays in prompt and aggressive enforcement.
   
   
4. ADDITIONAL CHANGES
   
   The PRO-IP Act adds teeth to U.S. intellectual property law in other ways as well. It authorizes the Department of Justice to make grants available to state or local law enforcement entities for training, prevention, enforcement, and prosecution of intellectual property theft and infringement crimes, provided that the agency seeking the grant match 50% of the funds. The Act also ensures that (subject to appropriations) ten additional FBI operational agents will be designated to support the Computer Crime and Intellectual Property Section of the Criminal Division of the Department of Justice, and that at least one FBI agent will be designated to support the Computer Hacking and Intellectual Property Crime Unit in the Department of Justice.
   
   Finally, the PRO-IP Act requires agencies to evaluate the Act’s effectiveness. In particular, it requires the Attorney General and FBI to submit detailed annual reports outlining the actions these agencies have taken pursuant to the Act. It also commands the General Accounting Office to quantify the impact of imported and domestic counterfeit goods on the U.S. manufacturing industry and the overall U.S. economy, and to submit a report on the effectiveness of the IPEC and the Attorney General’s efforts to improve intellectual property enforcement.
   
   

CONCLUSION

While the PRO-IP Act was passed unanimously in the Senate and faced little opposition in the House of Representatives, it has its share of detractors. Some fear that the measure is overly broad, particularly in its expansive forfeiture provisions, while others are concerned that the statutory creation of the IPEC position is a troublesome intrusion into the composition of a president’s administration, raising separation of powers concerns. Still, the Act enjoys support among many intellectual property owners, who hope that the creation of a high-ranking official position, coupled with enhanced penalties and additional law enforcement resources, will effectively communicate that America means business when it comes to protecting a critical asset: the creativity, ingenuity and innovation of its citizens.

With the United States continuing to step up enforcement efforts to protect intellectual property, other jurisdictions may be persuaded to follow in its footsteps by building up their own intellectual property laws and bolstering their policing of counterfeits.