    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

     PRIORITIZING RESOURCES AND ORGANIZATION FOR INTELLECTUAL PROPERTY ACT
                                    OF 2007

    =======================================================================

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON COURTS, THE INTERNET,
                           AND INTELLECTUAL PROPERTY

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 4279

                                   __________

                               DECEMBER 13, 2007

                                   __________

                               Serial No. 110-76

                                   __________

             Printed for the use of the Committee on the Judiciary

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

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                           COMMITTEE ON THE JUDICIARY

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
    MAXINE WATERS, California            DANIEL E. LUNGREN, California
    WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
    ROBERT WEXLER, Florida               RIC KELLER, Florida
    LINDA T. SANCHEZ, California         DARRELL ISSA, California
    STEVE COHEN, Tennessee               MIKE PENCE, Indiana
    HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
    BETTY SUTTON, Ohio                   STEVE KING, Iowa
    LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
    BRAD SHERMAN, California             TRENT FRANKS, Arizona
    TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
    ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
    ADAM B. SCHIFF, California
    ARTUR DAVIS, Alabama
    DEBBIE WASSERMAN SCHULTZ, Florida
    KEITH ELLISON, Minnesota

                Perry Apelbaum, Staff Director and Chief Counsel
                     Joseph Gibson, Minority Chief Counsel
                                     ------

        Subcommittee on Courts, the Internet, and Intellectual Property

                     HOWARD L. BERMAN, California, Chairman

    JOHN CONYERS, Jr., Michigan          HOWARD COBLE, North Carolina
    RICK BOUCHER, Virginia               TOM FEENEY, Florida
    ROBERT WEXLER, Florida               LAMAR SMITH, Texas
    MELVIN L. WATT, North Carolina       F. JAMES SENSENBRENNER, Jr.,
    SHEILA JACKSON LEE, Texas            Wisconsin
    STEVE COHEN, Tennessee               ELTON GALLEGLY, California
    HANK JOHNSON, Georgia                BOB GOODLATTE, Virginia
    BRAD SHERMAN, California             STEVE CHABOT, Ohio
    ANTHONY D. WEINER, New York          CHRIS CANNON, Utah
    ADAM B. SCHIFF, California           RIC KELLER, Florida
    ZOE LOFGREN, California              DARRELL ISSA, California
    BETTY SUTTON, Ohio                   MIKE PENCE, Indiana

                         Shanna Winters, Chief Counsel

                        Blaine Merritt, Minority Counsel

                                C O N T E N T S

                                  ----------

                               DECEMBER 13, 2007

                                                                       Page

                                TEXT OF THE BILL

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

                               OPENING STATEMENTS

    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan, Chairman, Committee on the
      Judiciary, and Member, Subcommittee on Courts, the Internet,
      and Intellectual Property......................................    20
    The Honorable Howard Coble, a Representative in Congress from the
      State of North Carolina, and Ranking Member, Subcommittee on
      Courts, the Internet, and Intellectual Property................    22
    The Honorable Lamar Smith, a Representative in Congress from the
      State of Texas, and Member, Subcommittee on Courts, the
      Internet, and Intellectual Property............................    25
    The Honorable Howard L. Berman, a Representative in Congress from
      the State of California, and Chairman, Subcommittee on Courts,
      the Internet, and Intellectual Property........................    27
    The Honorable Rick Boucher, a Representative in Congress from the
      State of Virginia, and Member, Subcommittee on Courts, the
      Internet, and Intellectual Property............................    28
    The Honorable Darrell Issa, a Representative in Congress from the
      State of California, and Member, Subcommittee on Courts, the
      Internet, and Intellectual Property............................    30
    The Honorable Brad Sherman, a Representative in Congress from the
      State of California, and Member, Subcommittee on Courts, the
      Internet, and Intellectual Property............................    31
    The Honorable Bob Goodlatte, a Representative in Congress from
      the State of Virginia, and Member, Subcommittee on Courts, the
      Internet, and Intellectual Property............................    32
    The Honorable Sheila Jackson Lee, a Representative in Congress
      from the State of Texas, and Member, Subcommittee on Courts,
      the Internet, and Intellectual Property........................    32
    The Honorable Zoe Lofgren, a Representative in Congress from the
      State of California, and Member, Subcommittee on Courts, the
      Internet, and Intellectual Property............................    33

                                   WITNESSES

    Ms. Sigal P. Mandelker, Deputy Assistant Attorney General,
      Criminal Division, U.S. Department of Justice, Washington, DC
      Oral Testimony.................................................    35
      Prepared Statement.............................................    38
    Mr. James P. Hoffa, General President, International Brotherhood
      of Teamsters, Washington, DC
      Oral Testimony.................................................    54
      Prepared Statement.............................................    56
    Ms. Gigi B. Sohn, President and Co-Founder, Public Knowledge,
      Washington, DC
      Oral Testimony.................................................    63
      Prepared Statement.............................................    65
    Mr. Rick Cotton, Executive Vice President and General Counsel,
      NBC Universal, New York, NY
      Oral Testimony.................................................    81
      Prepared Statement.............................................    83

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable Howard Coble, a
      Representative in Congress from the State of North Carolina,
      and Ranking Member, Subcommittee on Courts, the Internet, and
      Intellectual Property..........................................    23
    Prepared Statement of the Honorable Lamar Smith, a Representative
      in Congress from the State of Texas, and Member, Subcommittee
      on Courts, the Internet, and Intellectual Property.............    26
    Prepared Statement of the Honorable Betty Sutton, a
      Representative in Congress from the State of Ohio, and Member,
      Subcommittee on Courts, the Internet, and Intellectual Property    34

                                    APPENDIX

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

     PRIORITIZING RESOURCES AND ORGANIZATION FOR INTELLECTUAL PROPERTY ACT
                                    OF 2007

                                  ----------

                          THURSDAY, DECEMBER 13, 2007

                  House of Representatives,
          Subcommittee on Courts, the Internet,
                             and Intellectual Property,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 10:11 a.m., in
    Room 2141, Rayburn House Office Building, the Honorable Howard
    Berman (Chairman of the Subcommittee) presiding.
        Present: Representatives Conyers, Berman, Boucher, Watt,
    Jackson Lee, Johnson, Sherman, Schiff, Lofgren, Sutton, Coble,
    Feeney, Smith, Goodlatte, Cannon, Chabot, and Issa.
        Staff present: Perry Apelbaum, Majority Staff Director and
    Chief Counsel; Shanna Winters, Subcommittee Chief Counsel;
    David Whitney, Subcommittee Minority Counsel; Joseph Gibson,
    Minority Chief Counsel; and Rosalind Jackson, Professional
    Staff Member.
        Mr. Berman. I would bang the gavel, but I can't find the
    gavel. The hearing of the Subcommittee on Courts, the Internet,
    and Intellectual Property will come to order. I would like to
    begin by welcoming everyone to this hearing on H.R. 4279, the
    ``Prioritizing Resources and Organization for Intellectual
    Property Act of 2007,'' known as PRO-IP.
        [The text of the bill, H.R. 4279, follows:]

                                                                          I
    110th CONGRESS
        1st Session

                                    H. R. 4279

    To enhance remedies for violations of intellectual property laws, and
        for other purposes.
                                   __________
                        IN THE HOUSE OF REPRESENTATIVES
                                December 5, 2007
    Mr. Conyers (for himself, Mr. Berman, Mr. Smith of Texas, Mr. Schiff,
        Mr. Feeney, Mr. Issa, Mr. Chabot, Mr. Cohen, Mr. Keller of Florida,
        Ms. Jackson-Lee of Texas, and Mr. Goodlatte) introduced the
        following bill; which was referred to the Committee on the
        Judiciary
                                   __________

                                     A BILL

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

        Be it enacted by the Senate and House of Representatives of the
    United States of America in Congress assembled,

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This Act may be cited as the ``Prioritizing
    Resources and Organization for Intellectual Property Act of 2007''.
        (b) Table of Contents.--The table of contents is as follows:

        Sec. 1. Short title; table of contents.
        Sec. 2. Reference.
        Sec. 3. Definition.

           TITLE I--ENHANCEMENTS TO CIVIL INTELLECTUAL PROPERTY LAWS

        Sec. 101. Registration of claim.
        Sec. 102. Registration and infringement actions.
        Sec. 103. Civil remedies for infringement.
        Sec. 104. Computation of statutory damages in copyright cases.
        Sec. 105. Treble damages in counterfeiting cases.
        Sec. 106. Statutory damages in counterfeiting cases.
        Sec. 107. Exportation of goods bearing infringing marks.
        Sec. 108. Importation and exportation.

         TITLE II--ENHANCEMENTS TO CRIMINAL INTELLECTUAL PROPERTY LAWS

        Sec. 201. Criminal infringement of a copyright.
        Sec. 202. Harmonization of forfeiture procedures for intellectual
    property offenses.
        Sec. 203. Directive to United States Sentencing Commission.
        Sec. 204. Trafficking in counterfeit goods or services.

       TITLE III--COORDINATION AND STRATEGIC PLANNING OF FEDERAL EFFORT
                       AGAINST COUNTERFEITING AND PIRACY

         Subtitle A--Office of the United States Intellectual Property
                           Enforcement Representative

        Sec. 301. Office of the United States Intellectual Property
    Enforcement Representative.
        Sec. 302. Definition.

                        Subtitle B--Joint Strategic Plan

        Sec. 321. Joint Strategic Plan.
        Sec. 322. Reporting.
        Sec. 323. Other intellectual property activities.
        Sec. 324. Savings and repeals.
        Sec. 325. Authorization of appropriations.

              TITLE IV--INTERNATIONAL ENFORCEMENT AND COORDINATION

        Sec. 401. Intellectual property attaches.
        Sec. 402. Duties and responsibilities of intellectual property
    attaches.
        Sec. 403. Training and designation of assignment.
        Sec. 404. Coordination.
        Sec. 405. Authorization of appropriations.

                    TITLE V--DEPARTMENT OF JUSTICE PROGRAMS

                            Subtitle A--Coordination

        Sec. 501. Intellectual Property Enforcement Officer.

                     Subtitle B--Law Enforcement Resources

        Sec. 511. Local law enforcement grants.
        Sec. 512. CHIP units, training, and additional resources.
        Sec. 513. Transparency of prosecutorial decisionmaking.
        Sec. 514. Authorization of appropriations.

                      Subtitle C--International Activities

        Sec. 521. International intellectual property law enforcement
    coordinators.
        Sec. 522. International training activities of the computer crime
    and intellectual property section.

            Subtitle D--Coordination, Implementation, and Reporting

        Sec. 531. Coordination.
        Sec. 532. Annual reports.

    SEC. 2. REFERENCE.

        Any reference in this Act to the ``Trademark Act of 1946'' refers
    to the Act entitled ``An Act to provide for the registration of
    trademarks used in commerce, to carry out the provisions of certain
    international conventions, and for other purposes'', approved July 5,
    1946 (15 U.S.C. 1051 et seq.).

    SEC. 3. DEFINITION.

        In this Act, the term ``United States person'' means--
                (1) any United States resident or national,
                (2) any domestic concern (including any permanent domestic
            establishment of any foreign concern), and
                (3) any foreign subsidiary or affiliate (including any
            permanent foreign establishment) of any domestic concern that
            is controlled in fact by such domestic concern,

    except that such term does not include an individual who resides
    outside the United States and is employed by an individual or entity
    other than an individual or entity described in paragraph (1), (2), or
    (3).

           TITLE I--ENHANCEMENTS TO CIVIL INTELLECTUAL PROPERTY LAWS

    SEC. 101. REGISTRATION OF CLAIM.

        Section 410 of title 17, United States Code, is amended--
                (1) by redesignating subsections (c) and (d) as subsections
            (d) and (e), respectively; and
                (2) by inserting after subsection (b) the following:
        ``(c)(1) A certificate of registration satisfies the requirements
    of section 411 and section 412 regardless of any inaccurate information
    contained in the certificate, unless--
                ``(A) the inaccurate information was included on the
            application for copyright registration with knowledge that it
            was inaccurate; and
                ``(B) the inaccuracy of the information, if known, would
            have caused the Register of Copyrights to refuse registration.
        ``(2) In any case in which inaccuracies described under paragraph
    (1) are alleged, the court shall request the Register of Copyrights to
    advise the court whether the inaccuracy of the information, if known,
    would have caused the Register of Copyrights to refuse registration.
        ``(3) Nothing in this subsection shall affect any rights,
    obligations, or requirements of a person related to information
    contained in a registration certificate except for the institution of
    and remedies in infringement actions under sections 411 and 412.''.

    SEC. 102. REGISTRATION AND INFRINGEMENT ACTIONS.

        (a) Registration in Civil Infringement Actions.--Section 411(a) of
    title 17, United States Code, is amended--
                (1) in the section heading, by inserting ``civil'' after
            ``and'' ; and
                (2) in subsection (a), by striking ``no action'' and
            inserting ``no civil action''.
        (b) Technical and Conforming Amendment.--Section 411(b) of title
    17, United States Code, is amended by striking ``506 and sections 509
    and'' and inserting ``505 and section''.

    SEC. 103. CIVIL REMEDIES FOR INFRINGEMENT.

        Section 503(a) of title 17, United States Code, is amended--
                (1) by striking ``and of all plates'' and inserting ``of
            all plates''; and
                (2) by striking the period at the end and inserting the
            following: ``, and records documenting the manufacture, sale,
            or receipt of things involved in such violation. The court
            shall enter an appropriate protective order with respect to
            discovery by the applicant of any records that have been
            seized. The protective order shall provide for appropriate
            procedures to assure that confidential information contained in
            such records is not improperly disclosed to the applicant.''.

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

        Section 504(c)(1) of title 17, United States Code, is amended by
    striking the second sentence and inserting the following: ``A copyright
    owner is entitled to recover statutory damages for each copyrighted
    work sued upon that is found to be infringed. The court may make either
    one or multiple awards of statutory damages with respect to
    infringement of a compilation, or of works that were lawfully included
    in a compilation, or a derivative work and any preexisting works upon
    which it is based.   In making a decision on the awarding of such
    damages, the court may consider any facts it finds relevant relating to
    the infringed works and the infringing conduct, including whether the
    infringed works are distinct works having independent economic
    value.''.

    SEC. 105. TREBLE DAMAGES IN COUNTERFEITING CASES.

        Section 35(b) of the Trademark Act of 1946 (15 U.S.C. 1117(b)) is
    amended to read as follows:
        ``(b) In assessing damages under subsection (a) for any violation
    of section 32(1)(a) of this Act or section 220506 of title 36, United
    States Code, in a case involving use of a counterfeit mark or
    designation (as defined in section 34(d) of this Act), the court shall,
    unless the court finds extenuating circumstances, enter judgment for
    three times such profits or damages, whichever amount is greater,
    together with a reasonable attorney's fee, if the violation consists
    of--
                ``(1) intentionally using a mark or designation, knowing
            such mark or designation is a counterfeit mark (as defined in
            section 34(d) of this Act), in connection with the sale,
            offering for sale, or distribution of goods or services;
                ``(2) intentionally inducing another to engage in a
            violation specified in paragraph (1); or
                ``(3) providing goods or services necessary to the
            commission of a violation specified in paragraph (1), with the
            intent that the recipient of the goods or services would put
            the goods or services to use in committing the violation.
    In such a case, the court may award prejudgment interest on such amount
    at an annual interest rate established under section 6621(a)(2) of the
    Internal Revenue Code of 1986, beginning on the date of the service of
    the claimant's pleadings setting forth the claim for such entry of
    judgment and ending on the date such entry is made, or for such shorter
    time as the court considers appropriate.''.

    SEC. 106. STATUTORY DAMAGES IN COUNTERFEITING CASES.

        Section 35(c) of the Trademark Act of 1946 (15 U.S.C. 1117) is
    amended--
                (1) in paragraph (1)--
                        (A) by striking ``$500'' and inserting ``$1000'';
                    and
                        (B) by striking ``$100,000'' and inserting
                    ``$200,000''; and
                (2) in paragraph (2), by striking ``$1,000,000'' and
            inserting ``$2,000,000''.

    SEC. 107. EXPORTATION OF GOODS BEARING INFRINGING MARKS.

        Title VII of the Trademark Act of 1946 (15 U.S.C. 1124) is
    amended--
                (1) in the title heading, by inserting after
            ``IMPORTATION'' the following: ``OR EXPORTATION''; and
                (2) in section 42--
                        (A) in the first sentence--
                                (i) by striking the word ``imported''; and
                                (ii) by inserting after ``custom house of
                            the United States'' the following: ``, nor
                            shall any such article be exported from the
                            United States''.

    SEC. 108. IMPORTATION AND EXPORTATION.

        (a) In General.--The heading for chapter 6 of title 17, United
    States Code, is amended to read as follows:

           ``CHAPTER 6--MANUFACTURING REQUIREMENTS, IMPORTATION, AND
                                 EXPORTATION''.

        (b) Amendment on Exportation.--Section 602(a) of title 17, United
    States Code, is amended--
                (1) by redesignating paragraphs (1) through (3) as
            subparagraphs (A) through (C), respectively, and moving such
            subparagraphs 2 ems to the right;
                (2) by striking ``(a)'' and inserting ``(a) Infringing
            Importation and Exportation.--
                ``(1) Importation.--'';
                (3) by striking ``This subsection does not apply to--'' and
            inserting the following:
                ``(2) Importation or exportation of infringing items.--
            Importation into the United States or exportation from the
            United States, without the authority of the owner of copyright
            under this title, of copies or phonorecords, the making of
            which either constituted an infringement of copyright or would
            have constituted an infringement of copyright if the copies or
            phonorecords had been made in the United States, is an
            infringement of the exclusive right to distribute copies or
            phonorecords under section 106, actionable under sections 501
            and 506.
                ``(3) Exceptions.--This subsection does not apply to--'';
                (4) in paragraph (3)(A) (as redesignated by this
            subsection) by inserting ``or exportation'' after
            ``importation''; and
                (5) in paragraph (3)(B) (as redesignated by this
            subsection)--
                        (A) by striking ``importation, for the private use
                    of the importer'' and inserting ``importation or
                    exportation, for the private use of the importer or
                    exporter''; and
                        (B) by inserting ``or departing from the United
                    States'' after ``United States''.
        (c) Conforming Amendments.--(1) Section 602 of title 17, United
    States Code, is further amended--
                (A) in the section heading, by inserting ``or exportation''
            after ``importation''; and
                (B) in subsection (b)--
                        (i) by striking ``(b) In a case'' and inserting
                    ``(b) Import Prohibition.--In a case''; and
                        (ii) by striking ``if this title had been
                    applicable'' and inserting ``if the copies or
                    phonorecords had been made in the United States''.
        (2) The item relating to chapter 6 in the table of chapters for
    title 17, United States Code, is amended to read as follows:

    ``6. Manufacturing Requirements, Importation, and Exportation ........
                                     601''.

         TITLE II--ENHANCEMENTS TO CRIMINAL INTELLECTUAL PROPERTY LAWS

    SEC. 201. CRIMINAL INFRINGEMENT OF A COPYRIGHT.

        Section 2319 of title 18, United States Code, is amended--
                (1) in subsection (b)(2), by inserting ``is a felony and''
            after ``offense'' and by striking ``paragraph (1)'' and
            inserting ``subsection (a)'';
                (2) in subsection (c)(2), by inserting ``is a felony and''
            after ``offense'', and by striking ``paragraph (1)'' and
            inserting ``subsection (a)'';
                (3) in subsection (d)(3), by inserting ``is a felony and''
            after ``offense'', and by inserting ``under subsection (a)''
            before the semicolon; and
                (4) in subsection (d)(4), by inserting ``is a felony and''
            after ``offense''.

    SEC. 202. HARMONIZATION OF FORFEITURE PROCEDURES FOR INTELLECTUAL
                        PROPERTY OFFENSES.

        (a) Trafficking in Counterfeit Labels.--Section 2318 of title 18,
    United States Code, is amended--
                (1) by amending subsection (d) to read as follows:
        ``(d) Forfeiture and Destruction; Restitution.--
                ``(1) Civil forfeiture proceedings.--(A) The following
            property is subject to forfeiture to the United States:
                        ``(i) Any counterfeit documentation or packaging,
                    and any counterfeit label or illicit label and any
                    article to which a counterfeit label or illicit label
                    has been affixed, or which a counterfeit label or
                    illicit label encloses or accompanies, or which was
                    intended to have had such label affixed, enclosing, or
                    accompanying.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of a violation of subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or facilitate the commission of a violation
                    of subsection (a) that is owned or predominantly
                    controlled by the violator or by a person conspiring
                    with or aiding and abetting the violator in committing
                    the violation.
                ``(B) The provisions of chapter 46 relating to civil
            forfeitures shall extend to any seizure or civil forfeiture
            under subparagraph (A). At the conclusion of the forfeiture
            proceedings, the court shall order that any forfeited
            counterfeit labels or illicit labels and any article to which a
            counterfeit label or illicit label has been affixed, or which a
            counterfeit label or illicit label encloses or accompanies, or
            which was intended to have had such label affixed, enclosing,
            or accompanying, be destroyed or otherwise disposed of
            according to law.
                ``(C) In this paragraph, the term `aiding and abetting'
            means to knowingly provide aid to the violator with the intent
            to facilitate the violation.
                ``(2) Criminal forfeiture proceedings.--(A) The court, in
            imposing sentence on a person convicted of an offense under
            this section, shall order, in addition to any other sentence
            imposed, that the person forfeit to the United States the
            following property:
                        ``(i) Any counterfeit documentation or packaging,
                    and any counterfeit label or illicit label, that was
                    used, intended for use, or possessed with intent to use
                    in the commission of an offense under subsection (a),
                    and any article to which such a counterfeit label or
                    illicit label has been affixed, which such a
                    counterfeit label or illicit label encloses or
                    accompanies, or which was intended to have had such
                    label affixed, enclosing, or accompanying.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of an offense under subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or substantially facilitate the commission of
                    an offense under subsection (a).
                ``(B) The forfeiture of property under subparagraph (A),
            including any seizure and disposition of the property and any
            related judicial or administrative proceeding, shall be
            governed by the procedures set forth in section 413 of the
            Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
            U.S.C. 853), other than subsection (d) of that section. At the
            conclusion of the forfeiture proceedings, the court shall order
            that any counterfeit label or illicit label and any article to
            which a counterfeit label or illicit label has been affixed,
            which a counterfeit label or illicit label encloses or
            accompanies, or which was intended to have had such label
            affixed, enclosing, or accompanying, be destroyed or otherwise
            disposed of according to law.
                ``(3) Restitution.--When a person is convicted of an
            offense under this section, the court, pursuant to sections
            3556, 3663A, and 3664, shall order the person to pay
            restitution to the owner of the marks or copyrighted works
            involved in the offense and any other victim of the offense as
            an offense against property referred to in section
            3663A(c)(1)(A)(ii).'';
                (2) by striking subsection (e); and
                (3) by redesignating subsection (f) as subsection (e).
        (b) Criminal Infringement of a Copyright.--
                (1) In general.--Section 2319 of title 18, United States
            Code, is amended by adding at the end the following:
        ``(g) Forfeiture and Destruction; Restitution.--
                ``(1) Civil forfeiture proceedings.--(A) The following
            property is subject to forfeiture to the United States:
                        ``(i) Any copies or phonorecords manufactured,
                    reproduced, distributed, sold, or otherwise used,
                    intended for use, or possessed with intent to use in
                    violation of section 506(a) of title 17, and any
                    plates, molds, matrices, masters, tapes, film
                    negatives, or other articles by means of which such
                    copies or phonorecords may be made and any devices for
                    manufacturing, reproducing, or assembling such copies
                    or phonorecords.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of a violation of section 506(a) of title 17.
                        ``(iii) Any property used, or intended to be used,
                    to commit or facilitate the commission of a violation
                    of section 506(a) of title 17 that is owned or
                    predominantly controlled by the violator or by a person
                    conspiring with or aiding and abetting the violator in
                    committing the violation.
                ``(B) The provisions of chapter 46 of title 18 relating to
            civil forfeitures shall extend to any seizure or civil
            forfeiture under this section. At the conclusion of the
            forfeiture proceedings, the court shall order that any
            forfeited infringing copies or phonorecords, and any plates,
            molds, matrices, masters, tapes, and film negatives by means of
            which such unauthorized copies or phonorecords may be made, be
            destroyed or otherwise disposed of according to law.
                ``(C) In this paragraph, the term `aiding and abetting'
            means to knowingly provide aid to the violator with the intent
            to facilitate the violation.
                ``(2) Criminal forfeiture proceedings.--(A) The court, in
            imposing sentence on a person convicted of an offense under
            subsection (a), shall order, in addition to any other sentence
            imposed, that the person forfeit to the United States the
            following property:
                        ``(i) Any copies or phonorecords manufactured,
                    reproduced, distributed, sold, or otherwise used,
                    intended for use, or possessed with intent to use in
                    the commission of an offense under subsection (a), and
                    any plates, molds, matrices, masters, tapes, film
                    negatives, or other articles by means of which the
                    copies or phonorecords may be reproduced, and any
                    electronic, mechanical, or other devices for
                    manufacturing, reproducing, or assembling such copies
                    or phonorecords.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of an offense under subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or substantially facilitate the commission of
                    an offense under subsection (a).
                ``(B) The forfeiture of property under subparagraph (A),
            including any seizure and disposition of the property and any
            related judicial or administrative proceeding, shall be
            governed by the procedures set forth in section 413 of the
            Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
            U.S.C. 853), other than subsection (d) of that section. At the
            conclusion of the forfeiture proceedings, the court shall order
            that any forfeited infringing copies or phonorecords, and any
            plates, molds, matrices, masters, tapes, and film negatives by
            means of which such infringing copies or phonorecords may be
            made, be destroyed or otherwise disposed of according to law.
                ``(3) Restitution.--When a person is convicted of an
            offense under this section, the court, pursuant to sections
            3556, 3663A, and 3664, shall order the person to pay
            restitution to the copyright owner and any other victim of the
            offense as an offense against property referred to in section
            3663A(c)(l)(A)(ii).''.
                (2) Conforming amendments.--(A) Section 506(b) of title 17,
            United States Code, is amended by striking all that follows
            ``destruction'' and inserting the following: ``of property as
            prescribed by section 2319(g) of title 18.''.
                (B) Section 509 of title 17, United States Code, relating
            seizure and forfeiture, and the item relating to section 509 in
            the table of sections at the beginning of chapter 5 of title
            17, United States Code, are repealed.
        (c) Unauthorized Fixation and Trafficking.--
                (1) In general.--Section 2319A of title 18, United States
            Code, is amended--
                        (A) by striking subsection (c) and redesignating
                    subsections (d), (e), and (f) as subsections (c), (d),
                    and (e), respectively; and
                        (B) by amending subsection (b) to read as follows:
        ``(b) Forfeiture and Destruction; Restitution.--
                ``(1) Civil forfeiture proceedings.--(A) The following
            property is subject to forfeiture to the United States:
                        ``(i) Any copies or phonorecords of a live musical
                    performance described in subsection (a)(1) that are
                    made without the consent of the performer or performers
                    involved, and any plates, molds, matrices, masters,
                    tapes, and film negatives by means of which such copies
                    or phonorecords may be made.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of a violation of subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or facilitate the commission of a violation
                    of subsection (a) that is owned or predominantly
                    controlled by the violator or by a person conspiring
                    with or aiding and abetting the violator in committing
                    the violation.
                ``(B) The provisions of chapter 46 relating to civil
            forfeitures shall extend to any seizure or civil forfeiture
            under paragraph (1). At the conclusion of the forfeiture
            proceedings, the court shall order that any forfeited
            unauthorized copies or phonorecords of live musical
            performances, and any plates, molds, matrices, maters, tapes,
            and film negatives by means of which such unauthorized copies
            or phonorecords may be made, be destroyed or otherwise disposed
            of according to law.
                ``(C) In this paragraph, the term `aiding and abetting'
            means to knowingly provide aid to the violator with the intent
            to facilitate the violation.
                ``(2) Criminal forfeiture proceedings.--(A) The court, in
            imposing sentence on a person convicted of an offense under
            this section, shall order, in addition to any other sentence
            imposed, that the person forfeit to the United States the
            following property:
                        ``(i) Any unauthorized copies or phonorecords of a
                    live musical performance that were used, intended for
                    use, or possessed with intent to use in the commission
                    of an offense under subsection (a), and any plates,
                    molds, matrices, masters, tapes, and film negatives by
                    means of which such copies or phonorecords may be made.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of an offense under subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or substantially facilitate the commission of
                    an offense under subsection (a).
                ``(B) The forfeiture of property under subparagraph (A),
            including any seizure and disposition of the property and any
            related judicial or administrative proceeding, shall be
            governed by the procedures set forth in section 413 of the
            Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
            U.S.C. 853), other than subsection (d) of that section. At the
            conclusion of the forfeiture proceedings, the court shall order
            that any forfeited unauthorized copies or phonorecords of live
            musical performances, and any plates, molds, matrices, masters,
            tapes, and film negatives by means of which such unauthorized
            copies of phonorecords may be made, be destroyed or otherwise
            disposed of according to law.
                ``(3) Notification of importation.--The Secretary of
            Homeland Security shall issue regulations by which any
            performer may, upon payment of a specified fee, be entitled to
            notification by U.S. Customs and Border Protection of the
            importation of copies or phonorecords that appear to consist of
            unauthorized fixations of the sounds or sounds and images of a
            live musical performance prohibited by this section.
                ``(4) Restitution.--When a person is convicted of an
            offense under this section, the court, pursuant to sections
            3556, 3663A, and 3664, shall order the person to pay
            restitution to the performer or performers involved, and any
            other victim of the offense as an offense against property
            referred to in section 3663A(c)(1)(A)(ii).''.
                (2) Applicability.--Section 2319A(e), as redesignated by
            paragraph (1) of this subsection, is amended by inserting
            before the period the following: ``, except that the forfeiture
            provisions under subsection (b)(2), as added by the
            Prioritizing Resources and Organization for Intellectual
            Property Act, shall apply only in a case in which the
            underlying act or acts occur on or after the date of the
            enactment of that Act''.
        (d) Unauthorized Recording of Motion Pictures.--Section 2319B(b) of
    title 18, United States Code, is amended to read as follows:
        ``(b) Forfeiture and Destruction; Restitution.--
                ``(1) Civil forfeiture proceedings.--(A) The following
            property is subject to forfeiture to the United States:
                        ``(i) Any copies of a motion picture or other
                    audiovisual work protected under title 17 that are made
                    without the authorization of the copyright owner.
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of a violation of subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or facilitate the commission of a violation
                    of subsection (a) that is owned or predominantly
                    controlled by the violator or by a person conspiring
                    with or aiding and abetting the violator in committing
                    the violation.
                ``(B) The provisions of chapter 46 relating to civil
            forfeitures shall extend to any seizure or civil forfeiture
            under this section. At the conclusion of the forfeiture
            proceedings, the court shall order that any forfeited
            unauthorized copies or phonorecords of a motion picture or
            other audiovisual work, or part thereof, and any plates, molds,
            matrices, masters, tapes, and film negatives by means of which
            such unauthorized copies or phonorecords may be made, be
            destroyed or otherwise disposed of according to law.
                ``(C) In this paragraph, the term `aiding and abetting'
            means to knowingly provide aid to the violator with the intent
            to facilitate the violation.
                ``(2) Criminal forfeiture proceedings.--(A) The court, in
            imposing sentence on a person convicted of an offense under
            this section, shall order, in addition to any other sentence
            imposed, that the person forfeit to the United States the
            following property:
                        ``(i) Any unauthorized copies of a motion picture
                    or other audiovisual work protected under title 17, or
                    part thereof, that were used, intended for use, or
                    possessed with intent to use in the commission of an
                    offense under subsection (a).
                        ``(ii) Any property constituting or derived from
                    any proceeds obtained directly or indirectly as a
                    result of an offense under subsection (a).
                        ``(iii) Any property used, or intended to be used,
                    to commit or substantially facilitate the commission of
                    an offense under subsection (a).
                ``(B) The forfeiture of property under subparagraph (A),
            including any seizure and disposition of the property and any
            related judicial or administrative proceeding, shall be
            governed by the procedures set forth in section 413 of the
            Comprehensive Drug Abuse Prevention and Control Act of 1970 (21
            U.S.C. 853), other than subsection (d) of that section. At the
            conclusion of the forfeiture proceedings, the court shall order
            that any forfeited unauthorized copies or phonorecords of a
            motion picture or other audiovisual work, or part thereof, and
            any plates, molds, matrices, masters, tapes, and film negatives
            by means of which such unauthorized copies or phonorecords may
            be made, be destroyed or otherwise disposed of according to
            law.
                ``(3) Restitution.--When a person is convicted of an
            offense under this chapter, the court, pursuant to sections
            3556, 3663A, and 3664, shall order the person to pay
            restitution to the owner of the copyright in the motion picture
            or other audiovisual work and any other victim of the offense
            as an offense against property referred to in section
            3663A(c)(1)(A)(ii).''.
        (e) Applicability.--The amendments made by this section shall apply
    only in a case in which the underlying act or acts occur on or after
    the date of the enactment of this Act.

    SEC. 203. DIRECTIVE TO UNITED STATES SENTENCING COMMISSION.

        (a) Review and Amendment.--The United States Sentencing Commission,
    pursuant to its authority under section 994 of title 28, United States
    Code, shall review and, if appropriate, amend the Federal sentencing
    guidelines and policy statements applicable in any case sentenced under
    section 2B5.3 of the Federal sentencing guidelines for exporting
    infringing items in violation of section 602(a)(2) of title 17, United
    States Code, to determine whether a defendant in such case should
    receive an upward adjustment in the offense level, on the grounds that
    exportation introduces infringing items into the stream of foreign
    commerce in a manner analogous to the manner in which manufacturing,
    importing, and uploading such items introduces them into the stream of
    commerce.
        (b) Authorization.--The United States Sentencing Commission may
    amend the Federal sentencing guidelines under subsection (a) in
    accordance with the procedures set forth in section 21(a) of the
    Sentencing Act of 1987 (28 U.S.C. 994 note) as though the authority
    under that section had not expired.

    SEC. 204. TRAFFICKING IN COUNTERFEIT GOODS OR SERVICES.

        (a) In General.--Section 2320 of title 18, United States Code, is
    amended--
                (1) in subsection (a)--
                        (A) by striking ``Whoever'' and inserting ``
                ``(1) In general.--Whoever'';
                        (B) by moving the remaining text 2 ems to the
                    right; and
                        (C) by adding at the end the following:
                ``(2) Serious bodily harm or death.--
                        ``(A) Serious bodily harm.--If the offender
                    knowingly or recklessly causes or attempts to cause
                    serious bodily injury from conduct in violation of
                    paragraph (1), the penalty shall be a fine under this
                    title or imprisonment for not more than 20 years, or
                    both.
                        ``(B) Death.--If the offender knowingly or
                    recklessly causes or attempts to cause death from
                    conduct in violation of paragraph (1), the penalty
                    shall be a fine under this title or imprisonment for
                    any term of years or for life, or both.''; and
                (2) in subsection (b)(l)--
                        (A) by redesignating subparagraph (B) as
                    subparagraph (C); and
                        (B) by inserting after subparagraph (A) the
                    following:
                        ``(B) Any property constituting or derived from any
                    proceeds obtained directly or indirectly as a result of
                    a violation of subsection (a).''.

       TITLE III--COORDINATION AND STRATEGIC PLANNING OF FEDERAL EFFORT
                       AGAINST COUNTERFEITING AND PIRACY

         Subtitle A--Office of the United States Intellectual Property
                           Enforcement Representative

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

        (a) Establishment Within Executive Office of the President.--There
    is established within the Executive Office of the President the Office
    of the United States Intellectual Property Enforcement Representative
    (in this title referred to as ``the Office'').
        (b) United States Intellectual Property Enforcement
    Representative.--The head of the Office shall be the United States
    Intellectual Property Enforcement Representative (in this title
    referred to as the ``IP Enforcement Representative'') who shall be
    appointed by the President, by and with the advice and consent of the
    Senate. As an exercise of the rulemaking power of the Senate, any
    nomination of the IP Enforcement Representative submitted to the Senate
    for confirmation, and referred to a committee, shall be referred to the
    Committee on the Judiciary. The IP Enforcement Representative shall
    hold office at the pleasure of the President, shall be entitled to
    receive the same allowances as a chief of mission, and shall have the
    rank of Ambassador Extraordinary and Plenipotentiary.
        (c) Duties of IP Enforcement Representative.--
                (1) In general.--The IP Enforcement Representative shall--
                        (A) have primary responsibility for developing,
                    coordinating, and facilitating the implementation, by
                    the departments and agencies listed in subsection
                    (d)(2), the policies, objectives, and priorities of the
                    Joint Strategic Plan against counterfeiting and piracy
                    under section 321;
                        (B) serve as the principal advisor to the President
                    on domestic and international intellectual property
                    enforcement policy;
                        (C) assist the United States Trade Representative
                    in conducting negotiations on behalf of the United
                    States relating to international intellectual property
                    enforcement, including negotiations on any intellectual
                    property enforcement matter considered under the
                    auspices of the World Trade Organization or in the
                    course of commodity and direct investment negotiations
                    in which the United States participates;
                        (D) issue and coordinate policy guidance to
                    departments and agencies on basic issues of policy and
                    interpretation that arise in the exercise of domestic
                    and international intellectual property enforcement
                    functions to the extent necessary to assure the
                    coordination of international intellectual property
                    enforcement policy and consistent with any other law;
                        (E) act as the principal spokesperson of the
                    President on domestic and international intellectual
                    property enforcement matters;
                        (F) report directly to the President and the
                    Congress regarding, and be responsible to the President
                    and the Congress for the administration of,
                    intellectual property enforcement programs;
                        (G) advise the President and the Congress with
                    respect to domestic and international intellectual
                    property enforcement challenges and priorities;
                        (H) report to the Congress, as provided in section
                    322, on the implementation of the Joint Strategic Plan,
                    and make recommendations to the Congress for
                    improvements in Federal intellectual property
                    enforcement efforts;
                        (I) chair the interagency intellectual property
                    enforcement advisory committee established under
                    subsection (d)(2), and consult with such advisory
                    committee in the performance of the functions of the IP
                    Enforcement Representative; and
                        (J) carry out such other functions as the President
                    may direct.
                (2) Sense of congress.--It is the sense of the Congress
            that the IP Enforcement Representative should--
                        (A) be the senior representative on any body that
                    the President may establish for the purpose of
                    providing to the President advice on overall policies
                    in which intellectual property enforcement matters
                    predominate; and
                        (B) be included as a participant in all economic
                    summit and other international meetings at which
                    international intellectual property enforcement is a
                    major topic.
                (3) Delegation.--The IP Enforcement Representative may--
                        (A) delegate any of the IP Enforcement
                    Representative's functions, powers, and duties to such
                    officers and employees of the Office as the IP
                    Enforcement Representative may designate; and
                        (B) authorize such successive redelegations of such
                    functions, powers, and duties to such officers and
                    employees of the Office as IP Enforcement
                    Representative considers appropriate.
        (d) Coordination of Intellectual Property Enforcement Actions.--
                (1) In general.--In carrying out the functions of the IP
            Enforcement Representative, the IP Enforcement Representative
            shall coordinate the allocation of interagency resources for
            intellectual property enforcement, including identifying, and
            referring to the appropriate Federal department or agency, for
            consideration with respect to action, violations of
            intellectual property laws.
                (2) Advisory committee.--For purposes of assisting the IP
            Enforcement Representative in carrying out the functions of the
            IP Enforcement Representative, there is established an
            interagency intellectual property enforcement advisory
            committee composed of the IP Enforcement Representative, who
            shall chair the committee, and senior representatives of the
            following departments and agencies who are involved in
            intellectual property enforcement, and are appointed by the
            respective heads of those departments and agencies:
                        (A) The Department of Justice (including the
                    Intellectual Property Enforcement Officer appointed
                    under section 501).
                        (B) The United States Patent and Trademark Office
                    and other relevant units of the Department of Commerce.
                        (C) The Office of the United States Trade
                    Representative.
                        (D) The Department of State (including the United
                    States Agency for International Development and the
                    Bureau of International Narcotics Law Enforcement).
                        (E) The Department of Homeland Security (including
                    U.S. Customs and Border Protection and U.S. Immigration
                    and Customs Enforcement).
                        (F) The United States International Trade
                    Commission.
                        (G) The Food and Drug Administration of the
                    Department of Health and Human Services.
                        (H) The United States Copyright Office.
                        (I) Such other agencies as the IP Enforcement
                    Representative determines to be substantially involved
                    in the efforts of the Federal Government to combat
                    counterfeiting and piracy.
        (e) Identification of Countries That Deny Adequate Protection of
    Intellectual Property Rights.--Section 182(b)(2)(A) of the Trade Act of
    1974 (19 U.S.C. 2242(b)(2)(A)) is amended by inserting ``the United
    States Intellectual Property Enforcement Representative,'' after
    ``shall consult with''.
        (f) Powers of IP Enforcement Representative.--In carrying out the
    responsibilities under this title, the IP Enforcement Representative
    may--
                (1) select, appoint, employ, and fix the compensation of
            such officers and employees as may be necessary to carry out
            those responsibilities;
                (2) request the head of a department, agency, or program of
            the Federal Government to place personnel of such department,
            agency, or program who are engaged in intellectual property
            enforcement activities on temporary detail to the Office of the
            IP Enforcement Representative to assist in carrying out those
            responsibilities;
                (3) use for administrative purposes, on a reimbursable
            basis, the available services, equipment, personnel, and
            facilities of Federal, State, and local government agencies;
                (4) procure the services of experts and consultants in
            accordance with section 3109 of title 5, United States Code,
            relating to the procurement of temporary and intermittent
            services, at rates of compensation for individuals not to
            exceed the daily equivalent of the rate of pay payable under
            level IV of the Executive Schedule under section 5315 of title
            5, United States Code, and while such experts and consultants
            are so serving away from their homes or regular place of
            business, to pay such employees travel expenses and per diem in
            lieu of subsistence at rates authorized by section 5703 of
            title 5, United States Code, for persons in Government service
            employed intermittently;
                (5) issue such regulations as may be necessary to carry out
            the functions vested in the IP Enforcement Representative;
                (6) enter into and perform such contracts, leases,
            cooperative agreements, or other transactions as may be
            necessary in the conduct of the work of the Office and on such
            terms as the IP Enforcement Representative considers
            appropriate, with any department, agency, or instrumentality of
            the United States, or with any public or private person, firm,
            association, corporation, or institution;
                (7) accept voluntary and uncompensated services,
            notwithstanding the provisions of section 1342 of title 31,
            United States Code;
                (8) adopt an official seal, which shall be judicially
            noticed; and
                (9) accept, hold, administer, and use gifts, devises, and
            bequests of property, both real and personal, for the purpose
            of aiding or facilitating the work of the Office.
        (g) Compensation.--Section 5312 of title 5, United States Code, is
    amended by adding at the end the following:
                ``United States Intellectual Property Enforcement
            Representative.''.

    SEC. 302. DEFINITION.

        For purposes of this title, the term ``intellectual property
    enforcement'' means matters relating to the enforcement of laws
    protecting copyrights, patents, trademarks, other forms of intellectual
    property, and trade secrets, both in the United States and abroad,
    including matters relating to combating counterfeit and pirated goods.

                        Subtitle B--Joint Strategic Plan

    SEC. 321. JOINT STRATEGIC PLAN.

        (a) Purpose.--The objectives of the Joint Strategic Plan against
    counterfeiting and piracy that is referred to in section 301(c)(1)(A)
    (in this section referred to as the ``joint strategic plan'') are the
    following:
                (1) Eliminating counterfeit and pirated goods from the
            international supply chain.
                (2) Identifying individuals, financial institutions,
            business concerns, and other entities involved in the
            financing, production, trafficking, or sale of counterfeit or
            pirated goods.
                (3) Identifying and sharing information among the relevant
            departments and agencies for the purpose of arresting and
            prosecuting individuals and entities that are knowingly
            involved the financing, production, trafficking, or sale of
            counterfeit or pirated goods.
                (4) Disrupting and eliminating counterfeit and piracy
            networks.
                (5) Strengthening the capacity of other countries to
            protect and enforce intellectual property rights, and reducing
            the number of countries that fail to enforce laws preventing
            the financing, production, trafficking, and sale of counterfeit
            and pirated goods.
                (6) Working with other countries to establish international
            standards and policies for the effective protection and
            enforcement of intellectual property rights.
                (7) Protecting intellectual property rights overseas by--
                        (A) working with other countries to ensure that
                    such countries--
                                (i) have adequate and effective laws
                            protecting copyrights, trademarks, patents, and
                            other forms of intellectual property;
                                (ii) have legal regimes that enforce their
                            own domestic intellectual property laws,
                            eliminate counterfeit and piracy operations,
                            and arrest and prosecute those who commit
                            intellectual property crimes;
                                (iii) provide their law enforcement
                            officials with the authority to seize, inspect,
                            and destroy pirated and counterfeit goods,
                            including at ports of entry;
                                (iv) provide for the seizure of property
                            used to produce pirated and counterfeit goods;
                            and
                                (v) are not on the Priority Watch List
                            issued by the United States Trade
                            Representative under section 182 of the Trade
                            Act of 1974 (19 U.S.C. 2242);
                        (B) exchanging information with appropriate law
                    enforcement agencies in other countries relating to
                    individuals and entities involved in the financing,
                    production, trafficking, or sale of pirated or
                    counterfeit goods;
                        (C) using the information described in subparagraph
                    (B) to conduct enforcement activities in cooperation
                    with appropriate law enforcement agencies in other
                    countries; and
                        (D) building a formal process for consulting with
                    companies, industry associations, labor unions, and
                    other interested groups in other countries with respect
                    to intellectual property enforcement.
        (b) Timing.--Not later than 6 months after the date of the
    enactment of this Act, and not later than December 31 of every third
    year thereafter, the IP Enforcement Representative shall submit the
    joint strategic plan to the President, to the Committee on the
    Judiciary and the Committee on Appropriations of the House of
    Representatives, and to the Committee on the Judiciary and the
    Committee on Appropriations of the Senate.
        (c) Responsibility of the IP Enforcement Representative.--In
    developing the joint strategic plan, the IP Enforcement
    Representative--
                (1) shall consult and coordinate with the appropriate
            officers and employees of departments and agencies represented
            on the advisory committee appointed under section 301(d)(2) who
            are involved in intellectual property enforcement; and
                (2) may consult with private sector experts in intellectual
            property enforcement.
        (d) Responsibilities of Other Departments and Agencies.--To assist
    in the development and implementation of the joint strategic plan, the
    heads of the departments and agencies identified under section
    301(d)(2) (including the heads of any other agencies identified by the
    IP Enforcement Representative under section (d)(2)(I)) shall--
                (1) designate personnel with expertise and experience in
            intellectual property enforcement matters to work with the IP
            Enforcement Representative; and
                (2) share relevant department or agency information with
            the IP Enforcement Representative, including statistical
            information on the enforcement activities of the department or
            agency against counterfeiting or piracy.
        (e) Contents of the Joint Strategic Plan.--Each joint strategic
    plan shall include the following:
                (1) A detailed description of the priorities identified for
            activities of the Federal Government relating to intellectual
            property enforcement.
                (2) A detailed description of the means and methods to be
            employed to achieve the priorities, including the means and
            methods for improving the efficiency and effectiveness of the
            Federal Government's enforcement efforts against counterfeiting
            and piracy.
                (3) Estimates of the resources necessary to fulfill the
            priorities identified under paragraph (1).
                (4) The performance measures to be used to monitor results
            under the joint strategic plan during the following year.
                (5) An analysis of the threat posed by violations of
            intellectual property rights, including targets, risks, and
            threats of intellectual property theft, and the costs to the
            economy of the United States resulting from violations of
            intellectual property laws and the threats to public health and
            safety created by counterfeiting and piracy.
                (6) An identification of the departments and agencies that
            will be involved in implementing each priority under paragraph
            (1).
                (7) A strategy for ensuring coordination between the IP
            Enforcement Representative and the departments and agencies
            identified under paragraph (6), including a process for
            oversight of, and accountability among, the departments and
            agencies carrying out the strategy.
                (8) Such other information as the IP Enforcement
            Representative considers important in conveying to the
            recipients of the report, and to the people of the United
            States, the costs imposed on the United States economy and the
            threats to public health and safety created by counterfeiting
            and piracy, and the steps that the Federal Government will take
            over the period covered by the succeeding joint strategic plan
            to reduce those costs and counter those threats.
        (f) Enhancing Enforcement Efforts of Foreign Governments.--The
    joint strategic plan shall include programs to provide training and
    technical assistance to foreign governments for the purpose of
    enhancing the efforts of such governments to enforce laws against
    counterfeiting and piracy. With respect to such programs, the IP
    Enforcement Representative, in developing the joint strategic plan,
    shall--
                (1) seek to enhance the efficiency and consistency with
            which Federal resources are expended, and seek to minimize
            duplication, overlap, or inconsistency of efforts;
                (2) identify and give priority to those countries where
            programs of training and technical assistance can be carried
            out most effectively and with the greatest benefit to reducing
            counterfeit and pirated products in the United States market,
            to protecting the intellectual property rights of United States
            persons and their licensees, and to protecting the interests of
            United States persons otherwise harmed by violations of
            intellectual property rights in those countries;
                (3) in identifying the priorities under paragraph (2), be
            guided by the countries identified by the United States Trade
            Representative under section 182(a) of the Trade Act of 1974
            (19 U.S.C. 2242(a)); and
                (4) develop metrics to measure the effectiveness of the
            Federal Government's efforts to improve the laws and
            enforcement practices of foreign governments against
            counterfeiting and piracy.
        (g) Dissemination of the Joint Strategic Plan.--The joint strategic
    plan shall be posted for public access on the website of the White
    House, and shall be disseminated to the public through such other means
    as the IP Enforcement Representative may identify.

    SEC. 322. REPORTING.

        (a) Annual Report.--Not later than December 31 of each year, the IP
    Enforcement Representative shall submit an report on the activities of
    the Office during the preceding fiscal year. The annual report shall be
    submitted to the President and the Congress, and disseminated to the
    people of the United States, in the manner specified in subsections (b)
    and (g) of section 321.
        (b) Contents.--The report required by this section shall include
    the following:
                (1) The progress made on implementing the strategic plan
            and on the progress toward fulfillment of the priorities
            identified under section 321(e).
                (2) The progress made toward efforts to encourage Federal,
            State, and local government departments and agencies to accord
            higher priority to intellectual property enforcement.
                (3) The progress made in working with foreign countries to
            investigate, arrest, and prosecute entities and individuals
            involved in the financing, production, trafficking, and sale of
            counterfeit and pirated goods.
                (4) The manner in which the relevant departments and
            agencies are working together and sharing information to
            strengthen intellectual property enforcement.
                (5) An assessment of the successes and shortcomings of the
            efforts of the Federal Government, including departments and
            agencies represented on the committee appointed under section
            301(d)(2), in fulfilling the priorities identified in the
            applicable joint strategic plan during the preceding fiscal
            year.
                (6) Recommendations for any changes in statutes,
            regulations, or funding levels that the IP Representative
            considers would significantly improve the effectiveness or
            efficiency of the effort of the Federal Government to combat
            counterfeiting and piracy and otherwise strengthen intellectual
            property enforcement.
                (7) The progress made in strengthening the capacity of
            countries to protect and enforce intellectual property rights.
                (8) The successes and challenges in sharing with other
            countries information relating to intellectual property
            enforcement.
                (9) The progress of the United States Trade Representative
            in taking the appropriate action under any trade agreement or
            treaty to protect intellectual property rights of United States
            persons and their licensees.

    SEC. 323. OTHER INTELLECTUAL PROPERTY ACTIVITIES.

        If in any other case in which the IP Representative identifies
    other intellectual property initiatives of the Federal Government that
    include enforcement activities similar or identical to the activities
    described in this title, the IP Representative shall consolidate those
    activities into the work of the Office of the IP Representative in
    order to prevent duplication. Other activities that may improve
    intellectual property enforcement may continue outside of the Office of
    the Intellectual Property Enforcement Representative, including--
                (1) capacity building in other countries (other than
            activities to carry out the objectives described in section
            321(a)(7); and
                (2) bilateral and multilateral cooperative efforts.

    SEC. 324. SAVINGS AND REPEALS.

        (a) Repeal of Coordination Council.--Section 653 of the Treasury
    and General Government Appropriations Act, 2000 (15 U.S.C. 1128) is
    repealed.
        (b) Current Authorities Not Affected.--Except as provided in
    subsection (a), nothing in this title shall alter the authority of any
    department or agency of the United States to investigate and prosecute
    violations of laws protecting intellectual rights.
        (c) Register of Copyrights.--Nothing in this title shall derogate
    from the duties and functions of the Register of Copyrights.

    SEC. 325. AUTHORIZATION OF APPROPRIATIONS.

        There are authorized to be appropriated for each fiscal year such
    sums as may be necessary to carry out this title. By not later than the
    date on which the President submits to Congress the budget of the
    United States Government for a fiscal year, the IP Representative shall
    submit to the Committees on the Judiciary of the House of
    Representatives and the Senate the projected amount of funds for the
    succeeding fiscal year that will be necessary for the Office to carry
    out its functions.

              TITLE IV--INTERNATIONAL ENFORCEMENT AND COORDINATION

    SEC. 401. INTELLECTUAL PROPERTY ATTACHES.

        The Under Secretary of Commerce for Intellectual Property and
    Director of the United States Patent and Trademark Office (in this
    title referred to as the ``Director''), in consultation with the
    Director General of the United States and Foreign Commercial Service,
    shall appoint 10 intellectual property attaches to serve in United
    States embassies or other diplomatic missions. The 10 appointments
    shall be in addition to personnel serving in the capacity of
    intellectual property attache at United States embassies or other
    diplomatic missions on the date of the enactment of this Act.

    SEC. 402. DUTIES AND RESPONSIBILITIES OF INTELLECTUAL PROPERTY
                        ATTACHES.

        The intellectual property attaches appointed under section 401, as
    well as others serving as intellectual property attaches of the
    Department of Commerce, shall have the following responsibilities:
                (1) To promote cooperation with foreign governments in the
            enforcement of intellectual property laws generally, and in the
            enforcement of laws against counterfeiting and piracy in
            particular.
                (2) To assist United States persons holding intellectual
            property rights, and the licensees of such United States
            persons, in their efforts to combat counterfeiting and piracy
            of their products or works within the host country, including
            counterfeit or pirated goods exported from or transshipped
            through that country.
                (3) To chair an intellectual property protection task force
            consisting of representatives from all other relevant sections
            or bureaus of the embassy or other mission.
                (4) To coordinate with representatives of the embassies or
            missions of other countries in information sharing, private or
            public communications with the government of the host country,
            and other forms of cooperation for the purpose of improving
            enforcement against counterfeiting and piracy.
                (5) As appropriate and in accordance with applicable laws
            and the diplomatic status of the attaches, to engage in public
            education efforts against counterfeiting and piracy in the host
            country.
                (6) To coordinate training and technical assistance
            programs of the United States Government within the host
            country that are aimed at improving the enforcement of laws
            against counterfeiting and piracy.
                (7) To identify and promote other means to more effectively
            combat counterfeiting and piracy activities under the
            jurisdiction of the host country.

    SEC. 403. TRAINING AND DESIGNATION OF ASSIGNMENT.

        (a) Training of Attaches.--The Director shall ensure that each
    attache appointed under section 401 is fully trained for the
    responsibilities of the position before assuming duties at the United
    States embassy or other mission in question.
        (b) Priority Assignments.--In designating the embassies or other
    missions to which attaches are assigned, the Director shall give
    priority to those countries where the activities of an attache can be
    carried out most effectively and with the greatest benefit to reducing
    counterfeit and pirated products in the United States market, to
    protecting the intellectual property rights of United States persons
    and their licensees, and to protecting the interests of United States
    persons otherwise harmed by violations of intellectual property rights
    in those countries.

    SEC. 404. COORDINATION.

        (a) In General.--The activities authorized by this title shall be
    carried out in coordination with the United States Intellectual
    Property Enforcement Representative appointed under section 301.
        (b) Report on Attaches.--The Director shall submit to the Congress
    each year a report on the appointment, designation for assignment, and
    activities of all intellectual property attaches of the Department of
    Commerce who are serving at United States embassies or other diplomatic
    missions.

    SEC. 405. AUTHORIZATION OF APPROPRIATIONS.

        There are authorized to be appropriated for each fiscal year such
    sums as may be necessary for the training and support of the
    intellectual property attaches appointed under section 401 and of other
    personnel serving as intellectual property attaches of the Department
    of Commerce.

                    TITLE V--DEPARTMENT OF JUSTICE PROGRAMS

                            Subtitle A--Coordination

    SEC. 501. INTELLECTUAL PROPERTY ENFORCEMENT OFFICER.

        (a) Establishment.--There is established within the Office of the
    Deputy Attorney General in the Department of Justice the ``Intellectual
    Property Enforcement Division''. The head of the Intellectual Property
    Enforcement Division shall be the Intellectual Property Enforcement
    Officer (in this title referred to as the ``IP Officer''). The IP
    Officer shall be appointed by the Attorney General and shall report
    directly to the Deputy Attorney General.
        (b) Duties.--The IP Officer shall--
                (1) coordinate all efforts of the Department of Justice
            relating to the enforcement of intellectual property rights and
            to combating counterfeiting and piracy;
                (2) serve as the lead representative of the Department of
            Justice on the advisory committee provided for in section
            301(d)(2) and as the liaison of the Department of Justice with
            foreign governments with respect to training conducted under
            section 522; and
                (3) carry out such other related duties that may be
            assigned by the Deputy Attorney General.
        (c) Transfer of Functions.--
                (1) Criminal intellectual property enforcement.--There are
            transferred to the Intellectual Property Enforcement Division
            those functions of the Computer Crime and Intellectual Property
            Section of the Criminal Division of the Department of Justice
            that relate to the enforcement of criminal laws relating to the
            protection of intellectual property rights and trade secrets,
            including the following:
                        (A) Section 506 and 1204 of title 17, United States
                    Code.
                        (B) Section 2318 through 2320 of title 18, United
                    States Code.
                        (C) Sections 1831 and 1832 of title 18, United
                    States Code.
                        (D) Any other provision of law, including the
                    following, to the extent such provision involves the
                    enforcement of any provision of law referred to in
                    subparagraphs (A) through (C) or comparable provision
                    of law:
                                (i) Section 1341 of title 18, United States
                            Code, relating to frauds and swindles.
                                (ii) Section 1343 of title 18, United
                            States Code, relating to fraud by wire, radio,
                            or television.
                                (iii) Section 2512 of title 18, United
                            States Code, relating to trafficking in
                            interception devices.
                                (iv) Section 633 of the Communications Act
                            of 1934 (47 U.S.C. 553), relating to the
                            unauthorized reception of cable service.
                                (v) Section 705 of the Communications Act
                            of 1934 (47 U.S.C. 605), relating to the
                            unauthorized publication or use of
                            communications.
                (2) Intellectual property enforcement coordinators.--The
            Intellectual Property Law Enforcement Coordinators of the
            Department of Justice to whom section 521 applies shall also be
            in the Intellectual Property Enforcement Division.

                     Subtitle B--Law Enforcement Resources

    SEC. 511. LOCAL LAW ENFORCEMENT GRANTS.

        (a) Authorization.--Section 2 of the Computer Crime Enforcement Act
    (42 U.S.C. 3713) is amended--
                (1) in subsection (b), by inserting after ``computer
            crime'' each place it appears the following: ``, including
            infringement of copyrighted works over the Internet''; and
                (2) in subsection (e)(1), relating to authorization of
            appropriations, by striking ``fiscal years 2001 through 2004''
            and inserting ``fiscal years 2008 through 2012''.
        (b) Grants.--The Office of Justice Programs of the Department of
    Justice shall make grants to eligible State or local law enforcement
    entities, including law enforcement agencies of municipal governments
    and public educational institutions, for training, prevention,
    enforcement, and prosecution of intellectual property theft and
    infringement crimes (in this subsection referred to as ``IP-TIC
    grants''), in accordance with the following:
                (1) Use of ip-tic grant amounts.--IP-TIC grants may be used
            to establish and develop programs to do the following with
            respect to the enforcement of State and local true name and
            address laws and State and local criminal laws on anti-piracy,
            anti-counterfeiting, and theft of goods protected by any
            copyright, patent, trademark, service mark, trade secret, or
            other intellectual property right under State or Federal law:
                        (A) Assist State and local law enforcement agencies
                    in enforcing those laws, including by reimbursing State
                    and local entities for expenses incurred in performing
                    enforcement operations, such as overtime payments and
                    storage fees for seized evidence.
                        (B) Assist State and local law enforcement agencies
                    in educating the public to prevent, deter, and identify
                    violations of those laws.
                        (C) Educate and train State and local law
                    enforcement officers and prosecutors to conduct
                    investigations and forensic analyses of evidence and
                    prosecutions in matters involving those laws.
                        (D) Establish task forces that include personnel
                    from State or local law enforcement entities, or both,
                    exclusively to conduct investigations and forensic
                    analyses of evidence and prosecutions in matters
                    involving those laws.
                        (E) Assist State and local law enforcement officers
                    and prosecutors in acquiring computer and other
                    equipment to conduct investigations and forensic
                    analyses of evidence in matters involving those laws.
                        (F) Facilitate and promote the sharing, with State
                    and local law enforcement officers and prosecutors, of
                    the expertise and information of Federal law
                    enforcement agencies about the investigation, analysis,
                    and prosecution of matters involving those laws and
                    criminal infringement of copyrighted works, including
                    the use of multi-jurisdictional task forces.
                (2) Eligibility.--To be eligible to receive an IP-TIC
            grant, a State or local government entity must provide to the
            Attorney General--
                        (A) assurances that the State in which the
                    government entity is located has in effect laws
                    described in paragraph (1);
                        (B) an assessment of the resource needs of the
                    State or local government entity applying for the
                    grant, including information on the need for
                    reimbursements of base salaries and overtime costs,
                    storage fees, and other expenditures to improve the
                    investigation, prevention, or enforcement of laws
                    described in paragraph (1); and
                        (C) a plan for coordinating the programs funded
                    under this section with other federally funded
                    technical assistance and training programs, including
                    directly funded local programs such as the Local Law
                    Enforcement Block Grant program (described under the
                    heading ``Violent Crime Reduction Programs, State and
                    Local Law Enforcement Assistance'' in title I of the
                    Departments of Commerce, Justice, and State, the
                    Judiciary, and Related Agencies Appropriations Act,
                    1998 (Public Law 105-119)).
                (3) Matching funds.--The Federal share of an IP-TIC grant
            may not exceed 90 percent of the costs of the program or
            proposal funded by the IP-TIC grant, unless the Attorney
            General waives, in whole or in part, the 90 percent
            requirement.
                (4) Authorization of appropriations.--
                        (A) Authorization.--There is authorized to be
                    appropriated to carry out this subsection the sum of
                    $25,000,000 for each of fiscal years 2008 through 2012.
                        (B) Limitation.--Of the amount made available to
                    carry out this subsection in any fiscal year, not more
                    than 3 percent may be used by the Attorney General for
                    salaries and administrative expenses.

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

        (a) Evaluation of CHIP Units.--The Attorney General shall review
    the allocation and activities of the Computer Hacking and Intellectual
    Property (in this section referred to as ``CHIP'') units that have been
    established in various Federal judicial districts, with the goals of--
                (1) improving the effectiveness of CHIP units in
            investigating and prosecuting criminal offenses arising from
            counterfeiting or piracy activities;
                (2) ensuring that CHIP units are established and funded in
            every judicial district in which they can be effectively
            deployed;
                (3) upgrading the training and expertise of Department of
            Justice personnel participating in CHIP units; and
                (4) improving the coordination of the activities of CHIP
            units with corresponding efforts of State and local law
            enforcement agencies operating within the Federal judicial
            district in question.
        (b) Requirements.--In addition to any initiatives undertaken as a
    result of the review conducted under subsection (a), the Attorney
    General, in consultation with the Director of the Federal Bureau of
    Investigation, shall ensure that--
                (1) each CHIP unit is assigned at least 2 additional agents
            of the Federal Bureau of Investigation to support such unit for
            the purpose of investigating intellectual property crimes;
                (2) each CHIP unit is assigned at least 1 additional
            assistant United States attorney to support such unit for the
            purpose of prosecuting intellectual property crimes or other
            crimes involved in counterfeiting or piracy activities;
                (3) CHIP units are established and staffed in at least 10
            Federal judicial districts in addition to those districts in
            which CHIP units exist on the date of the enactment of this
            Act; and
                (4) an operational unit is created consisting of not less
            than 5 agents of the Federal Bureau of Investigation, attached
            to the headquarters of the Federal Bureau of Investigation in
            Washington, DC, and dedicated to working with the Intellectual
            Property Enforcement Division established by section 501 on the
            development, investigation, and coordination of complex, multi-
            district, and international criminal intellectual property
            cases.
        (c) Coordination With State and Local Authorities.--The United
    States attorney for each Federal judicial district in which a CHIP unit
    is in operation shall ensure that the activities of that unit are
    coordinated with the corresponding activities of State and local law
    enforcement agencies operating within that Federal judicial district in
    the investigation of intellectual property crimes and other crimes
    involved in counterfeiting or piracy, including by coordinating
    Federal, State, and local operations and intelligence sharing to the
    extent appropriate.
        (d) Additional Responsibilities of the Attorney General.--The
    Attorney General, in consultation with the Director of the Federal
    Bureau of Investigation as appropriate, shall ensure the following:
                (1) All agents of the Federal Bureau of Investigation, and
            all assistant United States attorneys, who are assigned to CHIP
            units have received advanced training, on an annual basis, in
            the investigation and prosecution of intellectual property
            crimes and other crimes involved in counterfeiting and piracy.
                (2) A comprehensive training program on the development and
            investigation of criminal offenses involved in counterfeiting
            and piracy is provided for all agents of the Federal Bureau of
            Investigation.
                (3) All relevant units of the Department of Justice are
            allocated sufficient funding and other resources as may be
            necessary to provide expert computer forensic assistance,
            including from nongovernmental entities, in investigating and
            prosecuting intellectual property crimes in a timely manner.
            For purposes of this paragraph, the term ``all relevant units''
            includes those officers and employees assigned to carry out the
            functions transferred by section 502(a)(1), CHIP units, offices
            of the United States attorneys, and units of the Federal Bureau
            of Investigation that are engaged in the investigation of
            intellectual property crimes.

    SEC. 513. TRANSPARENCY OF PROSECUTORIAL DECISIONMAKING.

        (a) In General.--The Attorney General shall direct each United
    States attorney--
                (1) to review the formal or informal standards currently in
            effect in that Federal judicial district for accepting or
            declining prosecution of cases involving criminal violations of
            intellectual property laws;
                (2) to consider whether the standards should be modified or
            applied more flexibly--
                        (A) to ensure that significant violations are not
                    being declined for prosecution inappropriately; or
                        (B) in light of the broader impact of individual
                    cases on the overall strategy to combat counterfeiting
                    and piracy; and
                (3) to review the practices and procedures currently in
            place for providing information to complainants and victims in
            cases and investigations involving criminal violations of
            intellectual property laws regarding the status of such cases
            and investigations, including the practices and procedures for
            apprising interested parties of the decision to decline
            prosecution of such cases.
        (b) Construction.--(1) Nothing in this section shall be construed
    to impinge on the appropriate exercise of prosecutorial discretion with
    regard to cases involving criminal violations of intellectual property
    laws or to require the promulgation of formal standards or thresholds
    regarding prosecution of any cases.
        (2) Nothing in the section shall give rise to any claim, cause of
    action, defense, privilege, or immunity that may be asserted by any
    party to Federal litigation.

    SEC. 514. AUTHORIZATION OF APPROPRIATIONS.

        There are authorized to be appropriated for each fiscal year such
    sums as may be necessary to carry out this subtitle.

                      Subtitle C--International Activities

    SEC. 521. INTERNATIONAL INTELLECTUAL PROPERTY LAW ENFORCEMENT
                        COORDINATORS.

        (a) Deployment of Additional Coordination.--The Attorney General
    shall, within 180 days after the date of the enactment of this Act,
    deploy 5 Intellectual Property Law Enforcement Coordinators, in
    addition to those serving in such capacity on such date of enactment.
    Such deployments shall be made to those countries and regions where the
    activities of such a coordinator can be carried out most effectively
    and with the greatest benefit to reducing counterfeit and pirated
    products in the United States market, to protecting the intellectual
    property rights of United States persons and their licensees, and to
    protecting the interests of United States persons otherwise harmed by
    violations of intellectual property rights in those countries. The
    mission of all International Intellectual Property Law Enforcement
    Coordinators shall include the following:
                (1) Acting as liaison with foreign law enforcement agencies
            and other foreign officials in criminal matters involving
            intellectual property rights.
                (2) Performing outreach and training to build the
            enforcement capacity of foreign governments against
            intellectual property-related crime in the regions in which the
            coordinators serve.
                (3) Coordinating United States law enforcement activities
            against intellectual property-related crimes in the regions in
            which the coordinators serve.
                (4) Coordinating with the activities of the intellectual
            property attaches appointed under title IV in the countries or
            regions to which the coordinators are deployed.
                (5) Coordinating the activities of the coordinators with
            the IP Officer.
        (b) Authorization of Appropriations.--There are authorized to be
    appropriated for each fiscal year such sums as may be necessary for the
    deployment and support of all International Intellectual Property
    Enforcement Coordinators of the Department of Justice, including those
    deployed under subsection (a).

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

        (a) Increased Training and Technical Assistance to Foreign
    Governments.--The Attorney General shall increase the efforts of the
    Department of Justice to provide training and technical assistance to
    foreign governments, including foreign law enforcement agencies and
    foreign courts, to more effectively combat counterfeiting and piracy
    activities falling within the jurisdiction of such governments.
        (b) Conduct of Programs.--The increased training and technical
    assistance programs under subsection (a) shall be carried out by the
    Intellectual Property Enforcement Division established by section 501,
    as well as through such other divisions, sections, or agencies of the
    Department of Justice as the Attorney General may direct.
        (c) Priority Countries.--The Attorney General, in providing
    increased training and technical assistance programs under this
    section, shall give priority to those countries where such programs can
    be carried out most effectively and with the greatest likelihood of
    reducing counterfeit and pirated products in the United States market,
    of protecting the intellectual property rights of United States
    persons, and of protecting the interests of United States persons
    otherwise harmed by violations of intellectual property rights in those
    countries.
        (d) Authorization of Appropriations.--There are authorized to be
    appropriated for each fiscal year such sums as may be necessary to
    carry out this section.

            Subtitle D--Coordination, Implementation, and Reporting

    SEC. 531. COORDINATION.

        The IP officer shall ensure that activities undertaken under this
    title are carried out in a manner consistent with the joint strategic
    plan developed under section 321.

    SEC. 532. ANNUAL REPORTS.

        Not later than 1 year after the date of the enactment of this Act,
    and annually thereafter, the Attorney General shall submit to the
    Committees on the Judiciary of the Senate and the House of
    Representatives a report on actions taken to carry out the requirements
    of this title, including a report on the activities of the IP Officer.

        Mr. Berman. At this point, I would like to recognize the
    chief sponsor of this legislation, the Chairman of the full
    Judiciary Committee, and our great friend and champion on these
    issues, Chairman Conyers.
        Mr. Conyers. Thank you very much, Howard Berman, Committee
    Chair on Intellectual Property. I may be the one that put this
    bill out, but I didn't name it PRO-IP, the Prioritizing
    Resources and Organization for Intellectual Property Act of
    2007. We have strong support on both sides of the aisle and we
    think this is very important in the fight to maintain our
    competitive edge in a global marketplace.
        By providing additional resources for enforcement of
    intellectual property, we ensure that innovation and creativity
    will continue to prosper in our society. I don't even know why
    I am talking about why we need this legislation. It is pretty
    clear, or it ought to be. Contrary to popular views expressed
    online, this bill is for the American people, not a specific
    industry. Counterfeiting and piracy cost the United States
    750,000 jobs. Secondly, it hits the economy of our country
    somewhere between $200 billion and $250 billion every year in
    lost sales.
        Moreover, counterfeiting of items such as pharmaceuticals,
    aircraft, and auto parts is placing human lives at risk. Right
    now, fake and unsafe drugs, inadequate brake pads, aircraft
    parts, undetectable to the average unsuspecting citizen--are
    being passed off as the real thing. Consumer Reports
    investigators have seized brake pads made of kitty litter,
    sawdust, dried grass; smoke alarms with phony product safety
    certifications; toothpaste made with a chemical found in
    antifreeze; cell phone batteries that have a potential to
    explode.
        We have two options. The first is we can sit on our hands
    and do nothing, or we can try to make a difference. This bill
    is our attempt at the latter. There are concerns over some of
    these provisions that I just want mentioned. First, there are
    some people claiming that section 104 of this legislation, the
    provision allowing a court to consider whether to award
    statutory damages for each work in a compilation will result in
    opportunistic lawsuits that would drive some smaller companies
    out of business.
        Well, we are always watching lawyers that are hustling the
    system, so that goes with the turf. That is part of the
    problem. But, I believe the current law is outdated. Damages
    need to reflect the fact that we live in a world where music
    and published works are being consumed in bite-size pieces, not
    just in albums or whole books. I understand the concerns, and I
    want everyone to know that I am committed to working further on
    the issue.
        On the issue of civil forfeiture, some think the bill will
    allow the seizure of a family's general purpose computer in a
    download case. Well, it is already in the law. We want to make
    sure that it is not abused. H.R. 4279 builds this current civil
    forfeiture law by enabling the seizure of property used to
    commit or facilitate violations of law. A warehouse used to
    store counterfeit goods could be seized. Property used to
    transport goods would be subject to forfeiture.
        We have carefully crafted the language in these sections to
    allow seizure only if the property was owned or predominantly
    controlled by the infringer. We have worked with a lot of
    different parties--civil rights organizations, Internet service
    providers--to arrive at the language that we are going to
    examine here this morning. In fact, the provisions were the
    subject of extensive negotiations, and I feel comfortable about
    it, but we are going to continue discussions. As everybody
    knows, you don't start off a bill written in concrete to begin
    with.
        I am aware of the concerns within the administration over
    restructuring the IP enforcement efforts. Yes, we create a new
    office of the U.S. intellectual property enforcement
    representative in the executive office of the President, as
    well as a key leadership position at the Department of Justice.
    The new Intellectual Property Enforcement Division that we
    envision is to provide better national planning and more
    effective coordination and accountability.
        So I want to work with DOJ and the administration on how we
    can accomplish these goals. Your constructive comments are
    going to be carefully considered. We have worked hard. We have
    a bipartisan bill. We have the Teamsters, the Directors Guild,
    AFTRA, SEIU, United Here, laborers, AFM, OPEIU, the Coalition
    Against Counterfeiting and Piracy, the Motor Equipment
    Manufacturing Association, even PhRMA, NBC Universal, and
    others.
        These are the ideas that I have that I am happy to start
    this discussion off with this morning, Mr. Chairman. I
    appreciate your courtesy.
        Mr. Berman. Thank you very much, Chairman Conyers.
        I am now pleased to recognize the Ranking Member of our
    Subcommittee, Howard Coble.
        Mr. Coble. Thank you, Mr. Chairman. I want to initiate my
    comments by thanking you for the leadership that you have
    demonstrated in chairing what I regard as the Judiciary's best
    Subcommittee generally. I want to thank you specifically for
    having convened this hearing today. On the rare occasions, Mr.
    Chairman, that you and I have not seen eye to eye on certain
    issues, we have without exception disagreed agreeably.
        Along with my colleagues who are cosponsors of this
    bipartisan bill, I share the view that this Congress must act
    to provide more effective tools and resources for those charged
    with combating piracy and counterfeiting. Indeed, I support the
    overwhelming majority of the provisions contained in this bill,
    and I hope to be able to add my name to that growing list at
    some point in the near future.
        Prior to doing so, however, I believe it is in the
    interests of copyright holders and users to have further
    conversation and to develop a better understanding about the
    potential impact of section 104, which relates to the
    computation of statutory damages in certain categories of
    copyright infringement actions. This, Mr. Chairman, as you and
    I have discussed earlier, is a complex issue.
        I appreciate your understanding of my concerns and your
    suggestions that the Copyright Office should, as soon as
    practicable, commence a roundtable dialogue among the broad
    cross-section of interested stakeholders, with the goal of
    providing further recommendations to our Subcommittee. I
    support this process, and want to take this opportunity to
    publicly encourage anyone with concerns about section 104 to
    fully participate in this proposed dialogue.
        Mr. Chairman, earlier this year, you will recall that
    Attorney General Gonzales appeared before the full Judiciary
    Committee to discuss a range of issues involving the Department
    of Justice. During the question and answer period, I asked the
    Attorney General to specifically address concerns that his
    department may lack the necessary tools to investigate and
    prosecute high-level intellectual property cases. I also asked
    him for guidance as to what steps we could take to more
    successfully prevent or prosecute counterfeiting and
    intellectual property piracy crimes within the United States
    and abroad.
        I was impressed with the breadth and candor of General
    Gonzales' unscripted response. He talked about the importance
    of increasing our level of cooperation with friends and allies
    around the world, as well as the need to improve communications
    and education efforts targeted at American consumers. He
    stressed the determination and sophistication of criminals and
    terrorists who will pay to advance technology by offering top
    dollar for the top innovators.
        The Attorney General described the department's engagement
    as an escalating real war that is being waged over the Internet
    through technology, and he candidly offered, ``I do sometimes
    worry that we don't have the best minds on this. We don't have
    adequate resources, and I think this is something that I would
    love to talk to the Congress about because I worry about this
    very much.'' General Gonzales also noted that you always need
    more FBI agents because these are very, very complicated cases.
        Mr. Chairman, the bill before us today is one that has been
    drafted with a high degree of deliberation, thought and
    sensitivity to the concerns expressed by former Attorney
    General Gonzales. I might add that they have been shared by
    many of us on this Subcommittee for some time. The views of the
    department, as well as other executive branch agencies and
    entities involved in enforcing and protecting IP rights have
    been weighed and given a great deal of consideration.
        That said, the bill includes two bold new proposals. The
    first will establish an Office of the United States
    Intellectual Property Enforcement Representative in the
    executive office of the President that is modeled, but on a
    much smaller scale, after the organic legislation that
    established the Office of the United States Trade
    Representative.
        The second will establish a new IP Enforcement Division at
    the Department of Justice that will ensure that IP enforcement
    issues, which are often forced to compete with other valid
    departmental priorities for scarce investigative and
    prosecutorial resources, will be able to receive a high level
    of dedicated attention, resources and priority that is
    commensurate to their importance to United States rights
    holders and to United States law enforcement interests.
        Mr. Chairman, I am sure much will be said as we continue to
    plow this field, but for the moment I look forward to hearing
    from our distinguished panel. I again thank you, Mr. Chairman,
    for having convened this hearing, and I yield back.
        [The prepared statement of Mr. Coble follows:]
     Prepared Statement of the Honorable Howard Coble, a Representative in
        Congress from the State of North Carolina, and Ranking Member,
        Subcommittee on Courts, the Internet, and Intellectual Property
        Thank you, Mr. Chairman, for convening this hearing on the newly-
    introduced anti-counterfeiting and piracy bill, your friendship and
    your leadership of this Subcommittee.
        On the few occasions you and I have not seen eye to eye on an
    issue, I have respected the fact that we have, as they say back home,
    been able to disagree without being disagreeable.
        Along with my colleagues who are cosponsors of this bipartisan
    bill, I share the view that this Congress must act to provide more
    effective tools and resources to those charged with combating piracy
    and counterfeiting.
        Indeed, I support the overwhelming majority of provisions contained
    in this bill and I hope to be able to add my name to that growing list
    at some point in the near future.
        But before doing so, I believe it is in the interests of copyright
    holders and users to have a further conversation and to develop a
    better understanding about the potential impact of section 104, which
    relates to the computation of statutory damages in certain categories
    of copyright infringement actions.
        This is a complex issue. I appreciate your understanding of my
    concerns and your suggestion the Copyright Office should, as soon as
    practicable, commence a dialogue among a broad cross-section of
    interested stakeholders with the goal of providing further
    recommendations to our Subcommittee.
        I support this process and want to take this opportunity to
    publicly encourage anyone with concerns about section 104 to fully
    participate in this planned dialogue.
        Mr. Chairman, earlier this year, General Gonzales appeared before
    the full Judiciary Committee to discuss a range of issues involving the
    Department of Justice.
        During the Q and A period, I asked the Attorney General to
    specifically address concerns that the Department may lack the
    necessary tools to investigate and prosecute high-level intellectual
    property cases.
        I also asked for guidance as to what steps we can take to more
    successfully prevent or prosecute counterfeiting and intellectual
    property piracy crimes within the U.S. and abroad.
        I was impressed with the breadth and candor of General Gonzales'
    unscripted response.
        He talked about the importance of increasing our level of
    cooperation with friends and allies around the world as well as the
    need to improve communications and education efforts targeted at
    American consumers.
        He stressed the determination and sophistication of ``[c]riminals
    and terrorists [who] will pay to advance technology'' by offering ``top
    dollar for the top innovators.''
        The Attorney General described the Department's engagement as an
    escalating ``real war that is being waged over the Internet'' through
    technology and he candidly offered:

            I do sometimes worry that we don't have the best minds on this,
            we don't have adequate resources. And I think this is something
            that I would love to talk to Congress about because I worry
            about this very much.

        General Gonzales also noted, ``[y]ou always need more [FBI] agents,
    because these are very, very complicated cases.''
        Mr. Chairman, the bill before us today is one that has been drafted
    with a high degree of deliberation, thought and sensitivity to the
    concerns expressed by General Gonzales. Concerns, I might add, that
    have been shared by many of us on this Subcommittee for a long time.
        The views of the Department as well as other executive branch
    agencies and entities involved in enforcing and protecting IP rights
    have been weighed and given a great deal of consideration.
        That said, this bill includes two bold new proposals.
        The first will establish an Office of the U.S. Intellectual
    Property Enforcement Representative (USIPER) in the Executive Office of
    the President that is modeled, but on a much smaller scale, after the
    organic legislation that established the Office of the U.S. Trade
    Representative.
        The second will establish a new IP Enforcement Division at the
    Department of Justice that will ensure that IP enforcement issues,
    which are often forced to compete with other valid departmental
    priorities for scarce investigative and prosecutorial resources, will
    be able to receive a level of dedicated attention, resources and
    priority that is commensurate to their importance to U.S. rights-
    holders and to U.S. law enforcement interests.
        Mr. Chairman, I plan to have much more to say later about the
    specific solutions contained in H.R. 4279 but for now, I'm interested
    in giving our witnesses an opportunity to speak. With that, I yield the
    balance of my time.

        Mr. Berman. Thank you very much, Mr. Coble.
        Now, I am pleased to recognize the Ranking Member of the
    House Judiciary Committee, and a cosponsor of this legislation,
    Congressman Lamar Smith.
        Mr. Smith. Thank you, Mr. Chairman. I want to thank you, as
    well as Ranking Member Coble, for having a hearing on this
    important bill. I notice that it is, of course, bipartisan.
    There are five Republican and five Democrat original
    cosponsors, which augurs well for its success in this Congress,
    or more likely next year.
        I also want to point out, and I don't know who came up with
    it, that the acronym for H.R. 4279 is PRO-IP, which is very
    appropriate, and not a surprise. One of my favorite quotes is
    from the last days of the 19th century, in 1899, when the
    patent commissioner himself, Charles Duell, said ``Everything
    that can be invented has been invented.'' With all due respect
    to Mr. Duell, over 100 years later, it is abundantly clear that
    he was wrong.
        As we stand at the dawn of the 21st century, lawmakers must
    be willing to reexamine assumptions and consider new
    initiatives that help promote America's vital national and
    economic interests. Doing more of what has been done before is
    simply not good enough. We must work to improve the policies
    and institutions of the past to promote the ideas of the
    future.
        One specific area that should be provided more permanence
    and priority in our government is the promotion, protection and
    enforcement of intellectual property rights. The value of U.S.
    intellectual property is estimated at between $5 trillion and
    $5.5 trillion--an amount that is about 45 percent of our
    country's gross domestic product. America's IP industries
    provide valuable employment opportunities to tens of millions
    of our citizens.
        One recent study attributed 40 percent of the growth in GDP
    achieved by all private industry to U.S. IP industries alone.
    That same study concluded that nearly 60 percent of U.S. export
    growth is driven by international demand for the products and
    services created by our IP entrepreneurs. Significant
    investments are required to create and produce world-leading
    intellectual property. Unfortunately, those investments are in
    stark contrast to the easy, massive, unauthorized reproduction
    and distribution of fraudulent and unlicensed products and
    services. It is undisputed that the theft of U.S. IP costs
    American businesses their markets and American citizens their
    livelihoods.
        In cases that involve products such as fake
    pharmaceuticals, auto parts or aircraft parts, American
    consumers may even face debilitating injuries or even death.
    The ill-effects of counterfeiting and piracy cannot be
    catalogued by merely reciting statistics and cold mathematical
    calculations of economic costs alone. Neither, as I stated
    earlier, can we meet the new challenges and techniques employed
    by sophisticated counterfeiters and pirates by merely doing
    more of what has been done before.
        Our response to these threats must be proportionate to the
    harm inflicted. Among other efforts, our private and public
    activities must be directed towards, one, improving consumer
    education; two, enhancing communication and coordination among
    government departments and agencies involved in IP enforcement;
    and three, providing the resources to meet the challenges of
    protecting IP in an age of advanced technologies and
    globalization.
        Chairman Conyers, if he is still here--he is gone--but in
    any case, I want to commend him for the deliberate and
    transparent manner in which this bill was drafted. I also
    commend the work of the Bush administration, which has done
    more to elevate IP enforcement than any previous
    administration, in my judgment.
        Finally, I want to recognize the work of the Coalition
    Against Counterfeiting and Piracy, which succeeded this year in
    enlisting and uniting hundreds of businesses, associations and
    labor organizations in the fight against global IP theft.
    Protecting intellectual property is critical to preserving a
    strong economy. This bill protects American jobs, encourages
    innovation, and creates strong policies to protect the ideas of
    the future.
        Unlike Mr. Duell, I believe that we have merely scratched
    the surface of creativity and invention. I look forward to a
    productive discussion about ways to promote the efforts of
    American businesses and help preserve a strong American
    economy.
        Mr. Chairman, thank you for yielding to me, and I will
    yield back.
        [The prepared statement of Mr. Smith follows:]
     Prepared Statement of the Honorable Lamar Smith, a Representative in
     Congress from the State of Texas, and Member, Subcommittee on Courts,
                    the Internet, and Intellectual Property
        Thank you, Mr. Chairman and Ranking Member Coble, for scheduling
    this important legislative hearing on H.R. 4279, a bill known as the
    PRO-IP Act.
        During the waning days of the 19th century (1899), the Patent
    Commissioner, Charles H. Duell, remarked ``everything that can be
    invented has been invented.''
        With all due respect to Mr. Duell, over 100 years later it is
    abundantly clear that he was wrong.
        But as we stand at the dawn of the 21st century, lawmakers must be
    willing to reexamine assumptions and consider new initiatives that help
    promote America's vital national and economic interests.
        Doing more of what's been done before is simply not good enough. We
    must work to improve the policies and institutions of the past to
    promote the ideas of the future.
        One specific area that should be provided more permanence and
    priority in our government is the promotion, protection and enforcement
    of intellectual property rights.
        The value of U.S. intellectual property (IP) is estimated at
    between $5 and $5.5 trillion--an amount that is about 45 percent of our
    country's Gross Domestic Product (GDP).
        America's IP industries provide valuable employment opportunities
    to tens of millions of our citizens.
        One recent study attributed 40 percent of the growth in GDP
    achieved by all U.S. private industry to U.S. IP industries. That same
    study concluded that nearly 60 percent of U.S. export growth is driven
    by international demand for the products and services created by our IP
    entrepreneurs.
        Significant investments are required to create and produce world-
    leading intellectual property. Unfortunately, those investments are in
    stark contrast to the easy, massive unauthorized reproduction and
    distribution of fraudulent and unlicensed products and services.
        It is undisputed that the theft of U.S. IP costs American
    businesses their markets and American citizens their livelihoods.
        In cases that involve products such as fake pharmaceuticals, auto
    parts or aircraft parts, American consumers may even face debilitating
    injuries or even death.
        The ill effects of counterfeiting and piracy cannot be catalogued
    by merely reciting statistics and cold mathematical calculations of
    economic cost alone. Neither, as I stated earlier, can we effectively
    combat the new challenges and techniques employed by sophisticated
    counterfeiters and pirates by merely doing more of what's been done
    before.
        Our response to these threats must be proportionate to the harm
    inflicted. Among other efforts, our private and public activities must
    be directed towards:

            1)  improving consumer education;

            2)  enhancing communication and coordination among government
            departments and agencies involved in IP enforcement; and

            3)  establishing vigorous new organizations and leadership that
            are engineered to capitalize on the solid foundation laid by
            this Administration and providing the resources to meet the
            challenges of protecting IP in an age of advanced technologies
            and globalization.

        Chairman Conyers, I commend the deliberate and transparent manner
    in which this bill was drafted. I also commend the work of the Bush
    administration, which has done more to elevate IP enforcement than any
    previous administration.
        Finally, I want to recognize the work of the Coalition Against
    Counterfeiting and Piracy (CACP), which succeeded this year in
    enlisting and uniting hundreds of businesses, associations and labor
    organizations in the fight against global IP theft.
        Protecting intellectual property is critical to preserving a strong
    economy. This bill protects American jobs, encourages innovation and
    creates strong policies to protect the ideas of the future.
        Unlike Mr. Duell, I believe that we have merely scratched the
    surface of creativity and invention. I look forward to a productive
    discussion about ways to promote the efforts of American businesses and
    help preserve a strong American economy.
        With that, I yield the balance of my time.

        Mr. Berman. Thank you, Mr. Smith.
        I will recognize myself for an opening statement at this
    point.
        From Chairman Conyers, Howard Coble and Lamar Smith, we
    have had a good picture of the devastating impact of
    counterfeiting and piracy on our economy, on our health and on
    our safety. I share their desire to prioritize and better
    coordinate U.S. efforts at enforcing our intellectual property
    rights here and abroad.
        We will be hearing from the witnesses shortly to get their
    thoughts about this legislation and speak to any problems they
    see with it. I would like to note a couple of issues at the
    outset, rather than focus on that which has already been said.
    There were many suggestions proposed, such as allowing
    wiretapping for intellectual property crimes, or criminalizing
    attempted copyright infringement--both of which were purposely
    not included in this bill. I fought very hard to make sure that
    the death penalty would not appear either. [Laughter.]
        The Chairman and the Ranking Member of the Committee and
    their staffs worked very hard at trying to vet through many
    proposals to find an appropriate balance. Therefore, in
    addition to what was excluded from the bill, there were a
    number of provisions which underwent significant revisions to
    accommodate additional concerns. Furthermore, we met with the
    Department of Justice about some of their apprehensions, and
    our door remains open to try and constructively resolve our
    mutual concerns.
        My Ranking Member, Mr. Coble, has raised a good point about
    examining the possible effect of the change in statutory
    damages language in section 104 of the bill. In the course of
    the discussion of the provision, it became clear that there are
    a number of questions about the state of current law and the
    scope of this change as it relates to compilations and
    derivative works.
        But in this age where technology makes it possible and
    appealing to offer and purchase copyrighted materials either in
    compilations or in disaggregated formats or both, it would be
    irresponsible to ignore the policy implications of a provision
    that limits damages for compilations which in reality contain
    any number of valuable works. As such, I have asked, as Mr.
    Coble has mentioned, the Copyright Office to convene a series
    of meetings about this issue with the various parties.
        An additional point: While the bill represents a good
    compromise on a number of issues, I believe we shouldn't
    overlook many of the main issues facing owners and users today.
    As we approach the 10th anniversary of the Digital Millennium
    Copyright Act, we should be analyzing some of the protections
    we gave to intermediary services such as ISPs, and some
    exemptions provided to educational institutions, and the
    effectiveness of the takedown notice and procedure.
        We should also examine whether filtering technologies have
    advanced enough today that there should be some obligation to
    adopt them where appropriate. Mr. Boucher and I have even
    talked about this, and if he and others on the Committee feel
    that the review by the Librarian of Congress every 3 years on
    the ability to make fair use of copyrighted works, protected by
    digital rights management, is inadequate, we should look at the
    review process and discuss H.R. 1201 at that time as well.
        In other words, there are a number of issues this bill
    isn't addressing that come down on both sides of the debate
    that goes on about copyright in this new digital age. We don't
    want this bill to keep from having a discussion about those
    issues, but I think there is a logic to dealing with those
    issues in a separate framework.
        We saw recently a number of user-generated content sites
    and copyright owners sit down and negotiate an agreement which
    acknowledged the need for filtering and the importance of fair
    use. It would be nice if more companies could strive for the
    gold standard in terms of corporate copyright policy. With IP
    being one of America's top exports and the source of numerous
    jobs employing a huge sector of the economy, I don't see how we
    can afford not to prioritize intellectual property enforcement.
        Now, I think, contrary to the usual practice in the
    Committee, we may have other Members who want to make opening
    statements. Mr. Boucher, might you be one of them? I recognize
    Congressman Boucher.
        Mr. Boucher. Mr. Chairman, in the interest of bipartisan
    harmony, if there are Republican Members who would like to make
    a statement, it probably is time for the transition to go to
    that side of the aisle.
        Mr. Berman. Well, I hesitated, as we had done two on that
    side of the aisle, and now we are----
        Mr. Boucher. You are looking for balance here, is what you
    are saying.
        Mr. Berman. Go ahead.
        Mr. Boucher. I thank both gentlemen very, very much.
        Thank you, Mr. Chairman. There is much in this legislation
    that I support, and I also want to commend you and Chairman
    Conyers and Mr. Smith and Mr. Coble for bringing it forward.
        Let me also say that I appreciate the suggestion that you
    just made, Chairman Berman, that we should look perhaps at a
    broader range of issues. I welcome the suggestion that perhaps
    elements of H.R. 1201 and the fair use protections that it
    involves could be examined as a part of this overall
    comprehensive discussion.
        I want to make just a couple of comments today about some
    concerns that I have about the increase in statutory damages
    for compilations that would be contemplated by section 104 of
    the bill. That increase in statutory damages, in my opinion,
    would do little or nothing to deter willful infringers. There
    are already ample statutory damages directed at them. Those
    statutory damages are not deterring their conduct. They frankly
    don't think about that. They don't fear enforcement. The
    increase in statutory damages is not going to cause them to
    change.
        But there are legitimate companies that make devices that
    have the ability to record from TiVos to iPods to software
    products that facilitate the devices that have recording
    functions and that involve transmissions over the Internet,
    that always weigh the risk of a finding of secondary copyright
    infringement that would arise because of the infringing conduct
    of the users of those devices or software products or services,
    and then weigh that particular risk against the fair use
    privilege that they also have in the law to introduce those
    products or services.
        A balance based on that analysis is achieved, and then the
    decision is made as to whether or not to introduce that product
    and to involve themselves in that level of innovation. If we
    increase the statutory damages, we inevitably will increase the
    risk component of that analysis. And the effect on innovation
    will be real and it will be adverse. I would direct Members'
    attention to the letter that this Committee received from
    America's leading technology companies that produce software
    and services that involve copying and transmission as evidence
    of the effect that this measure would have on innovation.
        I think that perhaps as a part of the general larger
    conversation that the introduction of this bill might engender,
    that the time may have arrived when we consider a change in the
    way that we apply statutory damages. Bear in mind that anyone
    who can show actual damages because of either direct copyright
    infringement by an infringer, or because of secondary copyright
    infringement by a manufacturer of a product or service, can
    already get the actual damages that that individual can show he
    or she has sustain. We would not interfere with that.
        But the time may have arrived when we consider de-coupling
    the award of statutory damages for direct infringers on the one
    hand--the people who are willfully infringing copyright
    directly, and the award of statutory damages for indirect
    infringement, which would be secondary liability of device
    manufacturers. I have actually introduced a bill--Mr. Berman
    referenced that--that would remove the statutory damage
    liability with regard to secondary infringement. Perhaps the
    time for that de-coupling has now arrived. If we do that, that
    would address the concerns of the technology companies that
    have raised objections to section 104.
        There are other problems with section 104, which I won't
    burden the Committee with at this point, and we can discuss
    those at the proper time. I am sure some of the witnesses today
    will have some comments about those as well. But I would simply
    like to suggest that we not run the risk through this measure
    of retarding American innovation. That innovation is incredibly
    important.
        There was a study released last year that shows that
    companies that depend upon fair use as the legal foundation for
    their products or services, contribute fully 16 percent of
    American gross domestic product. They have annual combined
    revenues of $2.2 trillion per year. They employ one of eight
    Americans. It is critically important that we not dampen the
    innovation that has led to that economic success and that
    engenders that amount of economic contribution.
        Thank you, Mr. Chairman. I yield back.
        Mr. Berman. Thank you.
        I would remind the Committee that there is no mandate for
    any particular technology in this bill, and there is no mandate
    in the Committee rules that every Member needs to have an
    opening statement.
        With that, I recognize for an opening statement Mr. Issa.
        Mr. Issa. Thank you, Mr. Chairman. Thank you for
    recognizing my wanting to be recognized.
        I want to associate myself, oddly enough, with both Mr.
    Boucher and with the Chairman, because I believe that both are
    essential when the final passage of this bill occurs. I am a
    cosponsor of this bill and very proudly so. I believe that we
    have to put real teeth into enforcement.
        I do share the concern of Mr. Boucher that statutory
    damages for real disputes about what is or isn't fair use.
    Statutory damages, when you are dealing with, let's just say
    $100 million-plus companies on both sides, who might also be
    dealing in patent at the same time as they are dealing in
    copyright. We have no statutory rules, no per-piece minimum
    damages on a patent infringement. As a patent holder, some
    might say we should. But it is very clear that we do have to
    look carefully at the difference between a dispute about what
    is legitimate use and what isn't, versus those who wantonly use
    somebody else's intellectual property.
        Now, many people know that I came out of hardware
    production. I came out of the consumer electronics industry,
    which I note is one of the signatories to this grand alliance
    of companies with concerns. I would say that one of the things
    that people don't understand is that although the industry has
    concerns, the industry is also constantly being adversely
    affected.
        Taking only my former company that I have no economic
    interest in at all today, but I have a history. That history
    includes having my own voice that said ``protected by vipers,
    stand back'' stolen and used by others for profit, with no
    payment. I also had my major brand names, and in fact clones of
    my car security products, high-end home audio and car audio
    products duplicated, mostly in China, but not exclusively, and
    brought to this country to not only be sold, but for the
    defectives to come back to me, never having made the original
    sale.
        Those occur every day and they are not covered by patents,
    that in fact teeth in protection of copyright, trade dress and
    other protections are equally essential to patent protection on
    products, and particularly as consumer electronic products tend
    to become commoditized, except for their origin or source. The
    name Sony or Panasonic, et cetera, mean something and give you
    a premium over something produced somewhere in mainland China
    and delivered with a name that usually is not known.
        I believe therefore that we do have to make a
    differentiation between a dispute of a product like Slingbox,
    the dispute of a product like TiVo, where in fact the court
    needs to be available to both sides to enter into whether or
    not they are fairly using and fairly paying for intellectual
    property. But it is very, very clear that we should not be
    putting additional statutory demands that would simply cause
    these products not to be innovated.
        Therefore, I look forward to working not just on the
    bipartisan basis of the 10 of us who cosponsored this bill, but
    with those who are presently concerned, to make this bill not
    just good, but as close to revolutionary in protecting
    intellectual property, both here and on that 60 percent of
    products that we export.
        With that, I would yield back, in the nick of time.
        Mr. Berman. I don't know how many revolutionary efforts my
    heart can stand working with you, Mr. Issa. [Laughter.]
        Mr. Issa. Well, three or four ought to do it. And we can
    look at the death penalty again if we can't get statutory.
        Mr. Berman. I know Mr. Sherman had an opening statement, so
    I will recognize Mr. Sherman.
        Mr. Sherman. Thank you, Mr. Chairman.
        The theft of intellectual property and counterfeiting costs
    U.S. businesses $250 million annually. It is 6 percent to 9
    percent----
        Mr. Issa. Billion.
        Mr. Sherman. Did I say ``billion''?
        Mr. Issa. You should.
        Mr. Sherman. I should say ``billion.'' Thank you, Mr. Issa.
        It accounts for 6 percent to 9 percent of world trade
    annually. It steals 750,000 American jobs, including 200,000 in
    the auto industry and the auto parts industry, and 106,000 jobs
    just in the Los Angeles area, robbing our area of $5.2 billion
    in productivity, according to a Gallup study.
        As Chairman Conyers pointed out, it is also a consumer
    safety issue. Worldwide some 10 percent of all pharmaceuticals
    are counterfeit, 2 percent of all airplane parts are
    counterfeit as well. And finally, it is a threat to national
    security. The 1993 World Trade Center bombings were partially
    financed through the sale of counterfeit goods, and just a
    couple of years ago over $1 million of counterfeit brakes were
    found in Lebanon with the profits earmarked for Hezbollah.
        So clearly, we ought to do all we can. I commend the
    Chairman for introducing this legislation. Several months ago,
    I introduced, along with Mr. Chabot, Mr. Cohen, and Mr.
    Donnelly, the Intellectual Property Rights Enforcement Act. We
    have the support of the National Manufacturers Association, and
    the AFL-CIO.
        I take, however, no particular pride of authorship in this
    bill, because it is a 100 percent rip-off of the Bayh-Voinovich
    bill introduced in the Senate. This does not mean that I don't
    respect intellectual property rights. I am a fully licensed
    user of the Bayh-Voinovich bill. We could spend a lot of time
    worrying about the differences between the two approaches.
    Frankly, I think those can get ironed out rather quickly, and I
    think the greatest sage in America today is Larry the Cable
    Guy, when he said, ``git'er done.'' Let us move forward and get
    a bill passed that organizes the American government to deal
    with this major problem.
        I yield back.
        Mr. Berman. I thank the gentleman.
        Mr. Goodlatte?
        It would be great if we could finish opening statements
    before we have to go for our 15-minute and three 5-minute
    votes. I think we ought to come back and hear the witnesses.
    [Laughter.]
        Mr. Goodlatte?
        Mr. Goodlatte. Thank you, Mr. Chairman. I will abbreviate
    my statement.
        Because the United States has been the pioneer for
    intellectual property protections, it is no surprise that
    copyright industries are so successful and are so crucial to
    our national economy. The U.S. copyright industry has created
    millions of high-skilled, high-paying U.S. jobs and has
    contributed billions to our economy.
        However, the proliferation of copyright piracy in America
    is growing and is threatening to undermine the very copyright
    protections our founding fathers envisioned. The same fast
    Internet connections and innovative technologies that continue
    to bring us wonderful new products can also be used to
    download, upload and otherwise share illegal copies of songs,
    movies, games and software at an unprecedented level.
        To combat this rising theft, I am pleased to cosponsor this
    legislation which strengthens many provisions in the law,
    including increasing penalties for civil violations and repeat
    offenders, allowing treble damages in counterfeiting cases,
    increasing statutory penalties in counterfeiting cases, and
    increasing the maximum penalties for trafficking in counterfeit
    goods when those offenses endanger public health and safety.
        The bill creates an Office of U.S. IP Enforcement
    Representative within the executive office of the President to
    coordinate all the various agencies and departments that work
    on IP enforcement issues and to serve as the President's
    principal advisor for IP matters. In addition, it increase the
    number of IP liaisons from the Patent and Trademark Office in
    U.S. embassies around the world, and enhances the Department of
    Justice's computer crime units to make sure they are equipped
    and being used to prosecute IP violations.
        While I am a cosponsor of this legislation and believe it
    is a very good start, I also acknowledge that the bill is not
    perfect, and note that some of the technology and online
    sectors and the Internet users community have raised concerns
    about the effect that some of the damages provisions in the
    bill could have on innovation and their legitimate operations.
    I look forward to working with the Chairman and others on these
    issues as we consider this comprehensive update of our Nation's
    intellectual property laws.
        I yield back.
        Mr. Berman. I thank the gentleman.
        The gentlelady from Texas, Sheila Jackson Lee.
        Ms. Jackson Lee. Thank you very much, Mr. Chairman.
        I am very pleased to join as an original cosponsor of this
    legislation. As I look at the witnesses and can imagine the
    diversity of their statements, I might offer the thought that
    Americans are not absolutely against trade. They just want it
    to be a two-way street and they want it to work for them.
        The same thing with this question of piracy and the
    stealing of our creativity. What it does is it dumbs down the
    American genius and simply we have to protect that. That is
    what this legislation stands for--the opportunity for us to be
    creative and the opportunity for trade to be a two-way street.
    Enforcement has to be the key of moving us into the 21st
    century to ensure that more of us create and more of us have
    our creations protected.
        I thought one of the glaring insults of this piracy and
    trademark violation had to do with the incident in June, where
    counterfeit toothpaste containing a dangerous chemical was
    distributed and sold to U.S. consumers under a trademark owned
    by the company Colgate-Palmolive. The trademark holders were
    forced to apologize for the ill-effects of a product they had
    no part in creating or distributing, and the company suffered a
    loss of both reputation and sales.
        As we make our way through this legislation, I am
    considering and would hope that we would consider an
    enhancement of penalties on the trademark violation if, for
    example, there is an injury, a physical injury or an injury in
    some other form, so that there is an increased penalty, not a
    tort action, but an absolute increased penalty as it results in
    the harm to the individual who may have consumed the particular
    product.
        Mr. Chairman, I think this is an important step forward.
    Enforcement has to be the key to protect what is ours, and
    certainly to build our trade and effectively protect our
    creativity. I believe this is an important step and important
    legislative initiative.
        With that, I will yield back.
        Mr. Berman. Thank you.
        We have about 7 minutes. I don't want to put my friend from
    California under the notion of what she says----
        Would you like to make your statement when we come back?
        Ms. Lofgren. I will make a statement of about 2 minutes.
        Mr. Berman. You got it.
        Ms. Lofgren. I just would like to say that the hearing we
    had in October I thought was a good one, focusing on
    international piracy and what can bring us together. One of the
    things I note is that when we inspect less than 1 percent of
    the containers coming into the United States, this bill is not
    going to stop the piracy that we see that infuriates us,
    especially in China and in Russia. There are parts of this bill
    that I think are important. I would like to say I am deeply
    troubled by section 104 and I would ask unanimous consent to
    put in the record a letter signed by myself, Congressman
    Sensenbrenner, and Congressman Boucher, including a letter
    signed by 25 law intellectual professor law professors,
    expressing concern on section 104.
        Mr. Berman. That will be included in the record.
        [The information referred to is available in the Appendix.]
        Ms. Lofgren. Thank you.
        I do believe, as Mr. Boucher has indicated, that the
    statutory damages would have the effect of chilling innovation
    and preventing economic growth. It is of grave concern to me.
        There are other elements of the bill that I am sure we can
    work together on, but absent some modification, these statutory
    damages would provide for $1.5 million in statutory damages for
    a single CD. I think that is unreasonable, and I look forward
    to continuing to work with my friend from California on this.
        I would yield back.
        Mr. Berman. I can't resist pointing out that the 104
    authority is a discretionary authority. It is not a mandate.
        Ms. Lofgren. If I could just note, the courts have plenty
    of discretion right now and this section is unnecessary, but we
    will have a long dialogue on this, I am sure.
        Mr. Berman. I am sure we will. I didn't want my silence to
    be acquiescence. [Laughter.]
        I would recognize the gentlelady from Ohio, Ms. Sutton.
        Ms. Sutton. Mr. Chairman, I will put my statement into the
    record. Thank you.
        Mr. Berman. Okay. Thank you very much.
        [The prepared statement of Ms. Sutton follows:]
     Prepared Statement of the Honorable Betty Sutton, a Representative in
                        Congress from the State of Ohio
    Mr. Chairman,
        Thank you for calling this important hearing today. I would like to
    thank the panelists for their participation and for their thoughtful
    remarks.
        H.R. 4279, the ``Prioritizing Resources and Organization for
    Intellectual Property Act of 2007,'' will help to reduce counterfeiting
    and piracy and increase our Nation's economic strength. I want to thank
    the Chairman for his efforts to preserve the jobs of my constituents
    through enforcement of our intellectual property laws. I hope that we
    can continue to work together toward the goal of eliminating
    counterfeiting and piracy for the safety and security of all Americans.
        Thank you.

        Mr. Berman. We will recess for votes. We will be back to
    hear the reason we came.
        [Recess.]
        Mr. Berman. We will resume the hearing. I would like to
    introduce our excellent panel of witnesses. For one of the
    introductions, I would like to recognize the Chairman of the
    Committee, Mr. Conyers.
        Mr. Conyers. Thank you, Mr. Chairman.
        It is my pleasure to introduce James Hoffa, a Michigander.
    He joined the union when he was 18 years old. My father knew
    his father. My dad was an international representative for the
    United Automobile Workers. Of course, I knew James Hoffa's
    father as well. And so I am very proud of him. He is more than
    just a powerful labor leader. His interest in human rights,
    civil rights, and other issues makes him someone that I am
    proud to say comes from Detroit. We have had a good working
    relationship for a number of decades now.
        Thank you.
        Mr. Berman. Thank you, Mr. Conyers.
        Going back to the other panelists, Sigal Mandelker is
    Deputy Assistant Attorney General in the Criminal Division of
    the Department of Justice, and has been since July of 2006. She
    supervises the child exploitation and obscenity section, the
    computer crime and intellectual property section, the domestic
    security section, and the Office of Special Investigations.
        Prior to joining the Department of Justice, Ms. Mandelker
    served as counselor to the Secretary of Homeland Security, was
    an Assistant United States attorney in the Southern District of
    New York, and clerked for Justice Clarence Thomas on the United
    States Supreme Court, and the Honorable Edith Jones on the
    United States Court of Appeals for the Fifth Circuit.
        Ms. Mandelker received her bachelor's degree from the
    University of Michigan and her law degree from the University
    of Pennsylvania.
        Chairman Conyers has introduced Mr. Hoffa, who we are very
    pleased to have as part of our panel.
        Next to him is Gigi Sohn, who is President and Co-founder
    of Public Knowledge, a nonprofit organization that addresses
    the public stake in the convergence of communications policy
    and intellectual property law. Ms. Sohn's comments and articles
    on intellectual property and telecommunications matters have
    appeared in a variety of publications, including the New York
    Times and The Washington Post.
        Ms Sohn is a nonresident fellow at the University of
    Southern California Annenberg Center, and a senior fellow at
    the University of Melbourne faculty of law in Melbourne,
    Australia. Ms. Sohn holds a BS in broadcasting and film from
    Boston University and a law degree from the University of
    Pennsylvania Law School. You can all get together.
        Richard ``Rick'' Cotton is Executive Vice President and
    General Counsel of NBC Universal. He supervises the NBC
    Universal law department, among other duties. Prior to his
    appointment, Mr. Cotton held other positions within NBC,
    including President of London-based CNBC Europe.
        Prior to his work for NBC, Mr. Cotton was in private
    practice and served as Deputy Executive Secretary of the United
    States Department of Health, Education and Welfare, and was law
    clerk to another of my favorite judges, Judge J. Skelly Wright
    of the U.S. Court of Appeals for the District of Columbia, and
    law clerk to one of my favorite judges, Justice William Brennan
    of the United States Supreme Court.
        Mr. Cotton holds a law degree from Yale Law School.
        None of that should be taken as any comment about either
    Edith Jones or Clarence Thomas. [Laughter.]
        Without objection, I authorize myself to declare a recess
    of the hearing at any point.
        I would ask the witnesses now to let you know that your
    prepared statements will all be made part of the record in
    their entirety. I would ask you now, if you would, to summarize
    your testimony in 5 minutes or less. To help you stay within
    that time, there is a timing light at your table. When 1 minute
    remains, the light will switch from green to yellow, and then
    red when 5 minutes are up.
        We welcome all of you, and Ms. Mandelker, why don't you
    start?

      TESTIMONY OF SIGAL P. MANDELKER, DEPUTY ASSISTANT ATTORNEY
        GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE,
                             WASHINGTON, DC

        Ms. Mandelker. Thank you, Chairman Berman, Chairman
    Conyers, Ranking Member Coble, and Members of this Committee.
    Thank you for the opportunity to discuss the efforts of the
    Department of Justice to protect intellectual property rights
    through criminal enforcement. This Committee has been an
    important partner in this effort, and I look forward to
    discussing ways in which we can further enhance our efforts to
    combat IP theft.
        The proliferation of harmful counterfeit products entering
    our marketplace, the emergence of organized criminal syndicates
    increasingly financed by IP theft, and the exponential growth
    of IP crime worldwide emphasize the importance of criminal
    enforcement to protecting IP rights.
        In addition to establishing the intellectual property task
    force within the department to focus greater attention to IP
    enforcement efforts, the department plays a key role in
    targeted and coordinated administration efforts. First, we are
    an integral part of President Bush's strategy targeting
    organized piracy, or STOP initiative. We work closely with our
    partners in other departments, local and national law
    enforcement's rights-holders, and our international partners in
    a coordinated and aggressive strategy to fight global
    intellectual property crime.
        Second, we have significantly increased our domestic
    enforcement efforts. We now have over 230 computer hacking and
    intellectual property, or CHIP, prosecutors dedicated to these
    crimes, and 25 specialized CHIP units spread across the
    country. In the Criminal Division, where I work, we have 40
    prosecutors in the computer crimes and intellectual property
    section, including 14 who are specifically dedicated to
    combating IP theft. These efforts are yielding results. In
    fiscal year 2007, 287 defendants were sentenced on IP charges,
    representing a 35 percent increase over fiscal year 2006 and a
    92 percent increase over fiscal year 2005.
        Third, with the advent of the Internet and the steady
    increase in counterfeit products smuggled across our borders,
    we are placing great emphasis on our international efforts. We
    now have two intellectual property law enforcement coordinators
    stationed overseas--one in Bangkok and one in Sofia, Bulgaria.
    Indeed, I just got back from Bangkok, where we launched a new
    intellectual property crime enforcement network in Southeast
    Asia, with high-level law enforcement and customs officials
    from 13 countries.
        Of course, IP theft in the People's Republic of China
    remains a key concern to the department and the administration.
    So we have enhanced our law enforcement relationships with
    China's ministry of public security. This past summer, these
    efforts resulted in the largest-ever joint FBI-MPS
    international piracy operation, resulting in the seizure of
    over $500 million worth of counterfeit software and the
    dismantlement of what is believed to be one of the largest
    piracy syndicates in the world.
        Fourth, we are working closely with victim rights-holders,
    both by putting on joint training conferences, and most
    importantly through our aggressive enforcement actions.
        We are also working, of course, with this Committee and
    Congress on new policy initiatives and legislative tools to
    improve our enforcement efforts. While we are still in the
    process of reviewing the PRO-IP Act introduced last week, and
    hope to be able to provide more comprehensive comments at a
    later time, I wanted to share the administration's preliminary
    views toward this legislation.
        First, we greatly appreciate that the PRO-IP Act
    incorporates a large number of legislative recommendations
    contained in the administration's Intellectual Property
    Protection Act of 2007. These include provisions to increase
    penalties, harmonize and strengthen forfeiture and restitution
    provisions, and ensure that exportation and transshipment of
    pirated goods to the U.S. are subject to criminal penalties.
        I thank you, Chairman Berman and Chairman Conyers, on your
    remarks regarding working with the administration on other key
    provisions in this bill. As my written testimony reflects, we
    do have significant concerns with title V of the act, which we
    believe could have a detrimental effect on how the department
    conducts intellectual property enforcement.
        I see that my time has expired, so in conclusion I would
    like to thank you and other Members of the Committee for your
    leadership on protecting IP rights. We look forward to
    continuing to work with this Committee on the PRO-IP Act and to
    identify ways in which to advance our common goal of providing
    owners of intellectual property with the robust legal
    protections that they deserve.
        [The prepared statement of Ms. Mandelker follows:]
                    Prepared Statement of Sigal P. Mandelker

        Mr. Berman. Thank you very much, Ms. Mandelker.
        Mr. Hoffa?

     TESTIMONY OF JAMES P. HOFFA, GENERAL PRESIDENT, INTERNATIONAL
                BROTHERHOOD OF TEAMSTERS, WASHINGTON, DC

        Mr. Hoffa. Thank you very much, Chairman Berman, Ranking
    Member Coble, and Members of the Subcommittee. It is a great
    honor to be here today. I want to thank you for the opportunity
    to testify about this very important bill, H.R. 4279. It is
    very important because it protects intellectual property rights
    and raises the fines for stealing copyrights.
        I am here on behalf of the Teamsters Union and our 1.4
    million members. I am also speaking for all workers who are
    lucky enough to belong to a union, and those who belong to a
    guild or an association. I am also speaking for those that are
    not as lucky to belong to a union, but we are here to protect
    them, too.
        Intellectual property theft is a terrible problem for
    American workers. As Chairman Conyers said, over 750,000 jobs
    have been lost. By the way, I say hello to my great friend, the
    great congressman from Michigan, John Conyers. We go back many,
    many years.
        You know, we are talking about where do we go from here?
    How do we protect these jobs at a time that we see America
    losing jobs? We see trade deficits out of control. Where do we
    start? One of the ways to start is to stop the counterfeiting
    and stop the invasion of these products and all the different
    things we see coming into our markets.
        I also appreciate the fact that there has been tremendous
    work done by the Coalition Against Counterfeiting and Piracy.
    The job they have done in documenting many of the things that
    we are talking about here today is very important. They have
    spoken out about these crimes that hurt corporate profits and
    take American jobs.
        Some people might think that it is no big deal to buy a
    knockoff handbag or a fake DVD, but it is. These crimes kill
    jobs. They take good jobs and it is in the hundreds of
    thousands. As part of our fight for good jobs, my union and
    many other unions have battled against so-called ``free trade
    agreements'' that open the door for piracy. We fought NAFTA and
    we fought PNTR. We have said all along that they kill American
    jobs and hurt the American economy, but even in my wildest
    dreams did I ever think the damage would be as severe as it is,
    or that counterfeiting would be as widespread as it is today.
        China is now the biggest source of knockoff products and
    pirated goods in the world. There are 88 different companies in
    China that make knockoff Yamaha motorcycles. Can you imagine
    that? Almost all the personal computers in China use pirated
    operating systems. When the Chinese government tried to crack
    down on counterfeiting last year, they confiscated 85 million
    books, movies and computer discs.
        In the United States, if we hadn't agreed to PNTR with
    China, we might not now be dealing with tainted food, exploding
    cell phone batteries, toxic toothpaste, and defective tires.
    Today, China's aggressive export agenda is more than our
    country can handle. The part of the bill that creates new
    intellectual property enforcement positions within the
    executive branch will do much to control and address the
    problems we are talking about.
        Changes in civil and criminal law to keep pace with new
    technologies is also important. This bill is particularly
    relevant to my union. We represent workers in many industries
    that are hurt by counterfeiting and piracy. Teamsters work very
    hard to keep good-paying jobs in this country. We are very
    active in the motion picture industry. We also have many
    members that are animal handlers, location managers, and
    drivers who transport actors around the sets. We are very
    active in that industry and we have seen layoffs because of
    counterfeiting and knockoffs.
        People who steal movies may think that they are not hurting
    anyone, but they are. They are stealing 140,000 jobs a year.
    They are also stealing millions of dollars from pension and
    health and welfare funds that have revenues that are linked to
    the sales of DVDs.
        The recording industry has been hit even harder than the
    motion picture industry. In the past few years, EMI Group,
    Warner Music, Sony Music, and Universal Music Group have laid
    off thousands of American workers because of theft and
    counterfeiting. All told, the American entertainment industry
    loses 370,000 jobs to pirates and counterfeiters every year.
        Some people think that they have a right to information on
    the DVDs and CDs, stuff they can take right off their computer.
    They don't think that they are hurting anybody, but in the end
    they really are. I think that is wrong. People have a right to
    earn money from the intellectual property that they create. By
    the way, the Teamsters Union supports our brothers who are very
    active in this strike with the Writers Guild. The television
    and motion picture industry wouldn't exist without the content
    that these proud union members provide.
        The Teamsters represent several hundred thousand truck
    drivers. According to the Consumer Reports, there is a growing
    problem with counterfeiting of brake pads. There are brake pads
    that are even made with kitty litter, and we find out that
    many, many people have had this problem and we see that there
    are problems there.
        I see that my time has run out. Let me summarize by saying
    this is a continuing problem, and what we have to do is to have
    strong legislation to address it. But we have to do more than
    that. We have to do something with trade. We have to inspect
    what comes into this country, whether it comes across the
    border from Mexico or whether it comes in from the Far East. It
    is a global problem that all of us can address, and I think
    that this bill is a very important beginning to enforcement and
    to stop counterfeiting.
        Thank you very much, Mr. Chairman.
        [The prepared statement of Mr. Hoffa follows:]

                      Prepared Statement of James P. Hoffa

        Mr. Berman. Thank you, Mr. Hoffa. It is great to have your
    support.
        And speaking of support, I recognize Gigi Sohn.

      TESTIMONY OF GIGI B. SOHN, PRESIDENT AND CO-FOUNDER, PUBLIC
                       KNOWLEDGE, WASHINGTON, DC

        Ms. Sohn. Chairman Berman, Chairman Conyers, Ranking Member
    Coble and other Members of the Subcommittee, thank you for
    inviting me to speak today on H.R. 4279. I want to thank you
    first for keeping the process of looking at this bill open and
    inclusive, and I do want to praise you, both Chairmen, for you
    and your staff's work in deleting some of the most onerous
    provisions, as you mentioned before, Mr. Berman. Thanks are
    definitely due to both of you.
        While I agree that enforcing IP laws is essential to
    encouraging creativity and promoting economic growth, certain
    parts of the bill could undermine these goals by threatening
    ordinary consumers and legitimate innovators with broad and
    inappropriate penalties. I would like to focus specifically on
    three provisions.
        First, section 104 of the bill would disaggregate the parts
    of a compilation or derivative work for the purposes of
    calculating damages, multiplying the already massive statutory
    damages associated with copyright infringement. Increasing
    damages this way will have a severe chilling effect on
    legitimate users of copyrighted work and on innovation. This
    stands in stark contrast not only to the legislative history of
    the 1976 Copyright Act, but also to the goals of the Patent
    Reform Act of 2007. The apportionment of damages in that bill
    recognizes the harm to innovators inherent in disproportionate
    damages awards.
        Second, section 202 significantly expands the forfeiture
    provisions attached to four different kinds of IP violations,
    applying the exact same standards to each. This expansion risks
    even further upending rational copyright remedies and ignores
    the significant differences between copyright, trademark and
    anti-bootlegging laws. Section 202 allows forfeiture of
    materials only remotely connected to an infringement, including
    materials and devices merely intended to be used in
    infringement. It also creates a new civil forfeiture remedy
    with a far lower burden of proof.
        Third, section 102 eliminates the requirement that
    copyrights be registered before criminal enforcement proceeds.
    Copyright registration is critical to informing the public of a
    work's copyright status and its proper owner. Without a vibrant
    copyright registry, users of a work are often unable to find
    the copyright owner and obtain permission to use that work.
    This leads to orphan works that can no longer be exhibited,
    reproduced, or seen. Reducing the incentives for creators and
    authors to register their works can only worsen this problem.
        These three provisions represent a step away from a
    rational, realistic copyright regime, one that can allow a
    copyright law enacted before the invention of the VCR to adapt
    to a post-YouTube world.
        Numerous problems confront current copyright law, but
    increased enforcement is not a cure-all. When the mere act of
    forwarding your e-mail or posting pictures on your blog can
    infringe copyright, it makes more sense to have the law comport
    with reality before increasing the sanctions for infringement.
        While a complete review and overhaul of copyright law might
    be an ideal, I propose a set of six more modest reforms for the
    immediate future. They include, one, reforming fair use. With
    the introduction of new technologies, courts have recognized
    newer forms of fair use like time-shifting and other personal
    transformative and incidental uses of copyrighted works yet
    these uses continue to be challenged by litigious plaintiffs.
    These fair uses should be expressly added to section 107. Fair
    use should also be restored to section 1201 of the DMCA and
    passing H.R. 1201 would be good place to start. I was pleased
    that that is something you might consider, Mr. Chairman.
        Two, placing reasonable limits on secondary liability.
    Innovators should not be afraid to innovate. Congress should
    codify the standards set out in Sony, that technologies with
    substantial noninfringing uses are not liable for infringement
    committed by others.
        Three, preventing copyright abuse. Copyright owners should
    be discouraged from filing spurious DMCA takedown notices or
    from threatening copyright lawsuits in order to suppress
    speech.
        Four, providing for fair and accessible licensing.
    Licensing provisions need to be clear, simple and rational for
    creators and users. The fee that webcasters pay to composers
    and performers should be reduced to a reasonable level, and
    performing artists should be compensated for public
    performances of their works regardless of the medium on which
    they are played.
        Five, addressing the problem of orphan works. I discussed
    that already.
        Six, informing consumers of digital restrictions on their
    media. Consumers should know before they buy digital media
    whether it is restricted by DRM and they should know the legal
    penalties for removing it.
        Each of these proposals directly addresses a situation
    where a consumer innovator might face the already draconian
    sanctions of copyright law. If the disconnect between the law
    and the reality of copyright isn't tackled first, increasing
    the severity of those sanctions further does very little good.
        Thank you again for the opportunity to testify and I look
    forward to your questions.
        [The prepared statement of Ms. Sohn follows:]
                       Prepared Statement of Gigi B. Sohn

        Mr. Berman. Thank you.
        Mr. Cotton?

    TESTIMONY OF RICK COTTON, EXECUTIVE VICE PRESIDENT AND GENERAL
                  COUNSEL, NBC UNIVERSAL, NEW YORK, NY

        Mr. Cotton. Chairman Berman, Ranking Member Coble and
    distinguished Members of the Subcommittee, I thank you for
    inviting me here today to testify on H.R.4279. My day job is
    executive vice president and general counsel at NBC Universal,
    but I appear here today in my role as the chair of the
    Coalition Against Counterfeiting and Piracy, or CACP.
        The CACP is a broad cross-sector business coalition led by
    the U.S. Chamber of Commerce and the National Association of
    Manufacturers. The CACP now numbers more than 500 companies and
    associations from two dozen different sectors across the
    economy who have come together to fight the vital economic
    battle against counterfeiting and piracy. I might note that our
    coalition includes technology companies, both software and
    hardware, all of whom have IP that deserve and need protection.
        At the outset, let me quickly emphasize four points, many
    of which were addressed by Committee Members in their opening
    statements. First, the economic future of the U.S. rests on our
    technological invention, our creativity, and our innovation.
    Counterfeiting and piracy corrosively and perniciously
    undermine that future. IP theft is a jobs issue and that is
    what brings the business community and the labor community
    before you today united in support of stronger IP enforcement.
    IP-dependent sectors drive 40 percent of the growth of the U.S.
    economy and 60 percent of the growth of our exportable goods
    and services.
        Second, counterfeiting and piracy constitute a health and
    safety issue that presents a clear and increasing danger to the
    public, from counterfeit toothpaste laced with antifreeze to
    exploding batteries.
        Third, counterfeiting and piracy is the new face of
    organized crime. Organized crime goes where the money is, and
    today that means piracy and counterfeiting.
        And fourth, and this I submit should drive a lot of the
    attention of the Committee, counterfeiting and piracy today
    simply represent a global pandemic that is getting worse, not
    better, in every sector which it afflicts. Over the past 20
    years, advances in technology, manufacturing capabilities, and
    transportation have allowed organized criminal gangs,
    counterfeiters and pirates to escalate the scale and the scope
    of their operations to tidal wave proportions. It is not a
    criticism to say that our current enforcement is not stemming
    the tide. Our efforts to counter this pandemic have simply not
    kept pace.
        Despite the daunting scope of the challenge there is hope
    and a clear path forward. If we are to turn the tide in this
    country, we must radically escalate our efforts on many fronts
    to protect the economic fruits of our innovation and our
    creativity--efforts in the private sector in developing
    technology and at the forefront of our discussion today,
    government action.
        The PRO-IP Act is a needed declaration of war, escalating
    the priority of this vital public policy and deploying
    dedicated enforcement resources to the battle. We commend the
    Committee leadership and their staff who have worked so hard to
    pull this important and comprehensive bill together. While the
    act does not contain everything the CACP had proposed, it does
    recognize three fundamental steps that our government must
    undertake in order to make a difference.
        Number one, the act creates key leadership positions to
    address the challenge of counterfeiting and piracy at the White
    House level and within the Department of Justice.
        Number two, it mandates a dramatic reorientation of
    government strategy to focus on dedicated specialized
    resources, including FBI agents and Federal prosecutors
    dedicated to IP investigations, money for state and city IP
    enforcement programs and international specialists based in
    U.S. embassies in key countries around the world.
        Number three, it updates several laws that have failed to
    keep pace with the burgeoning threat of counterfeiting and
    piracy.
        In conclusion, two final points. First, these steps are
    strongly supported by a powerful new study released today by
    Dr. Laura Tyson, former chair of the Council of Economic
    Advisors. That study concludes that for every dollar invested
    in IP enforcement, Federal tax revenues would increase by four
    dollars to five dollars. U.S. economic output would increase
    anywhere from $40 to more than $120 for every dollar invested,
    and state and local revenues would increase by nearly $1.5
    billion.
        In conclusion, a plea to the Subcommittee. Every generation
    faces new threats and is judged by how quickly it recognizes
    and responds to them. Make no mistake about it. The U.S.
    business community and the U.S. labor movement have come here
    today with a single and simple message: Global counterfeiting
    and piracy have reached epidemic proportions and will choke off
    future economic growth and future job growth if current trends
    continue.
        It is not too strong to say that the unprecedented and
    explosive scale of counterfeiting and piracy represent a dagger
    aimed at the heart of America's future economic security and
    the health and safety of our people. My plea to the
    Subcommittee is to confront this threat and to take strong,
    swift action to enact the PRO-IP Act in this Congress.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Cotton follows:]

                      Prepared Statement of Richard Cotton

        Mr. Berman. Thank you, Mr. Cotton. In your comments about
    the revenue impacts of dollars spent on enforcement, I am
    wondering if we couldn't calculate the benefits of this bill in
    dealing with our appropriations process in these last days--the
    creative scoring that frequently has been----
        Mr. Cotton. Well, we would ask that Dr. Tyson's study be
    included in the record and it might help in that respect, Mr.
    Chairman.
        Mr. Berman. Good. We will do that.
        [The information referred to is available in the Appendix.]
        Mr. Berman. I will recognize myself for 5 minutes.
        Ms. Sohn?
        Ms. Sohn. I am ready. [Laughter.]
        Mr. Berman. You made a number of interesting suggestions
    and helped set the framework for some of the discussions. I
    want to focus on the registration issue first.
        I agree we have to turn to orphan works and this Committee
    plans to do this early next year. But I am curious about two
    aspects of your testimony dealing with your opposition to the
    provision in this bill on registration. You talk about the
    orphan works problem, and that it is crucial to require
    registration before criminal enforcement because you can
    minimize the orphan works problem that way. If that is the
    case, and I see your point, would you support a carve-out for
    registered works from being considered orphaned?
        Ms. Sohn. Would I consider a carve-out for registered
    works?
        Mr. Berman. In other words, you are concerned about us
    removing the registration requirement to allow enforcement that
    creates potential for many more orphan works, and so then I
    say, is the flip-side true? Once it is registered, then it
    really isn't orphaned.
        Ms. Sohn. That is an interesting idea, but here is the
    problem. As you well know, photographers who I know have spoken
    to you and who have the most objection to orphan works, fixing
    the orphan works problem, it is because the Copyright Office
    only has a text-based registry. It is almost impossible, even
    if you do a good-faith search, to find that work. So if I am a
    photographer and I have a picture of the Statue of Liberty, the
    way I register it is a picture of the Statue of Liberty in
    text.
        So part of the problem is that the current copyright
    registry doesn't make it easy to find certain works that are
    already registered. So in my mind, it would be unfair to punish
    somebody who wanted to use, let's say for a history book, a
    picture of the Statue of Liberty, did a good-faith search, but
    could not find the owner because there is no way to actually
    right now find a picture. I think there is technology that will
    allow you to actually scan that picture, but we don't have it
    right now.
        Mr. Berman. What if you narrowed the carve-out. I take your
    point, but there are a lot of works that the act of
    registration means you know where the owner is, and you don't
    have the problem that you have just raised in those areas.
        Ms. Sohn. That is correct. And at that point, a reasonable
    search under the last bill we had on orphan works--I am using
    the language from that--a reasonable search would come up with
    that. That shouldn't be a problem. The problem is that there
    are certain instances, particularly visual arts as you well
    know, where it is not that easy to find it on the copyright
    registry.
        Mr. Berman. One more issue on registration. You talk about
    the disincentive to register because of the ability to proceed
    in criminal enforcement cases without a registration. Yet on
    statutory damages, where a registration is required in order to
    receive statutory damages or attorney's fees, you talk of the
    possibility of damages being so draconian that it forces
    excessive damages or settlement and is enough to stifle
    innovation.
        Wouldn't the possibility of statutory damages and attorney
    fees be motivation enough for a copyright owner to register
    their work? Isn't the ability to get those statutory damages
    and attorney fees far going to exceed the incentive to not
    register? And wouldn't this change about the requirement of
    registration to bring a criminal case not have repercussions? I
    am wondering, given the balance of incentives.
        Ms. Sohn. I would agree with you, and that is why I don't
    understand why this provision is in this bill.
        Mr. Berman. There are some good reasons and I am going to
    let--I think rather than go to my next question, I will let Mr.
    Cotton develop the reason. It is a narrow, but very important
    situation why the provision is in the bill. My only point was,
    I can't buy the notion that it is such a huge disincentive for
    people who would otherwise register their works not to register
    them, given that they lose the chance for statutory damages and
    attorney's fees if a registered work is infringed, and they
    don't have that opportunity if it is not registered.
        But Mr. Cotton, why don't you just----
        Ms. Sohn. As you know, you can always register after
    infringement happens. Okay? This eliminates the need to, or
    might. So if you are not registered and somebody infringes on
    your work, you have time to basically fix that and then
    register.
        Mr. Berman. I think if the infringement--and I am not sure
    I know what you think I know, because I am not sure that if the
    infringement comes before the registration, I am not sure if
    for that infringement you can collected attorney's fees and
    statutory damages, but we will find that out.
        Mr. Cotton?
        Mr. Cotton. Mr. Chairman, I would make two points. From a
    public policy point of view, there is simply no reason to tie
    the hands of a prosecutor from taking action when there has
    been a clear action of copyright infringement, whether or not
    there has been a registration. The question is whether there
    has been an infringement. In many cases, certainly in the
    industry that I come from, where there can be a pre-release
    theft of a very valuable piece of work when in fact the
    registration cannot have taken place, and there may be very
    urgent need for the prosecutor and investigators to move
    quickly. There is no reason to tie their hands.
        Secondly, from the point of view of incentive, I would just
    have to say that I can't conceive that anyone who was
    interested in preserving and protecting their IP and which
    would allow them access to statutory damages would make the
    decision not to register based on the highly uncertain question
    as to whether a prosecutor might or might not take up a
    criminal case to protect their particular work.
        So I would say, (A), from a public policy point of view
    there is no reason not to allow prosecution in serious cases.
    And secondly, the notion that there is an incentive which would
    cause a copyright owner not to register because they would be
    relying on the highly unpredictable notion of whether or not
    there would be a criminal prosecution is just not in the real
    world.
        Mr. Berman. My time has more than expired.
        Mr. Coble?
        Mr. Coble. Thank you, Mr. Chairman, and I thank the
    witnesses for appearing this morning.
        Ms. Mandelker, it is my belief that IP-related criminal
    offenses traditionally have not enjoyed a high prosecutorial
    priority. I do believe, however, that has improved in recent
    times. With that in mind, what percentage of the department's
    resources are dedicated exclusively to the investigation and
    prosecution of IP-related criminal offenses?
        Ms. Mandelker. Mr. Coble, I can't give you a specific
    percentage, but I can tell you what resources we do have
    dedicated to this important problem. We have 230 computer
    hacking and intellectual property prosecutors spread throughout
    the country in the various U.S. attorneys' offices. Each U.S.
    attorney's office has at least one prosecutor who is specially
    trained to work on these types of cases. In addition, within
    the U.S. attorneys' offices, we have 25 units of CHIP units,
    prosecutors of two or more who are again specially focused on
    IP theft.
        Within the Criminal Division where I work, we have 40
    prosecutors in the computer crimes and intellectual property
    section, 14 of which are exclusively dedicated to IP theft. Of
    course, this is an issue that is a priority within the
    department, and so we have a task force of individuals across
    the department who are focused on this problem, including
    myself, including somebody in the Attorney General's office and
    also in the Deputy Attorney General's office.
        Mr. Coble. Thank you.
        Ms. Sohn, let me get your opinion. Do you know whether
    websites may be considered to be a compilation under the
    Copyright Act, (A), and if so, do you know whether website
    owners actually register their sites with the Copyright Office
    and whether they would be conceivably entitled to statutory
    damages in the event of infringement?
        Ms. Sohn. Certainly, I don't see why a website couldn't be
    considered a compilation. I don't really know if website
    owners--I assume some website owners would register their
    websites with the Copyright Office, sure.
        Mr. Coble. Some critics of section 104 have alleged that it
    might have the effect of intervening in ongoing copyright
    litigation. What do you say to that?
        Ms. Sohn. Could you repeat the question? I am not quite
    sure I understand.
        Mr. Coble. I said some critics of section 104 have alleged
    that this section, if enacted, might have the effect of
    intervening in ongoing copyright litigation that has been
    initiated. What is your response to that?
        Ms. Sohn. That is entirely possible. I mean, it depends on
    whether you want to make it retroactive or not. Obviously,
    Google is being sued in the Google book search case, they are
    being sued. YouTube is being sued by Viacom. So it is possible
    it might have an effect.
        Mr. Coble. I was going to ask Mr. Cotton a question. I am
    having a senior moment. I was going to ask you a question, Mr.
    Cotton, but I cannot grasp it for the moment. So with that in
    mind, Mr. Chairman, I will yield back before the red light
    appears.
        Mr. Berman. Thank you, Mr. Chairman, Mr. Coble.
        Mr. Coble. Thank you, sir.
        Mr. Berman. You were Chairman for a long time. [Laughter.]
        The great days when you were Chairman, I remember them
    well.
        Mr. Coble. Thank you, sir.
        Mr. Berman. Mr. Watt, the gentleman from North Carolina.
        Mr. Watt. Thank you, Mr. Chairman.
        Mr. Chairman, I find myself in much the same position with
    respect to this bill as I did at the outset of our discussion
    about the patent reform bill. My sense is that there is a
    substantial amount of need to reform and do something to
    address the problems that exist. Yet, the technicalities of
    what need to be done there is substantial disagreement about.
        So I am here really to try to learn more about what those
    technicalities should be, what the concerns are, and try to get
    enough basic knowledge before I really start going through the
    details of the bill to try to figure out where some of those
    inquiries and concerns might be addressed.
        So with that, I think I will yield my time to the chair,
    who can ask some of those technical questions. He had a long
    list. I knew he had a long list and needed more time to explore
    it. So I think I will yield him the balance of my time and I
    will sit and listen like I intended to when I came in.
        Mr. Berman. That is very nice of you, and I accept. But I
    would say the one difference between this and the patent bill
    is that here I would say 90 percent of the bill is not
    particularly controversial. I wish I could have said that about
    the patent bill. [Laughter.]
        Mr. Watt. Well, that is what you told me at the outset of
    the patent bill. [Laughter.]
        Mr. Berman. It is my line. This one isn't as controversial.
        Mr. Watt. The more I looked at it, and the more I talked to
    people, the less I believed you. [Laughter.]
        Mr. Berman. And the less I believed myself.
        I want to take a little time here on 504. You were kind
    enough not in your public testimony to argue that which you
    argued in your written testimony that my approach on damages in
    copyright is somehow inconsistent with my approach to damages
    in the patent bill. Other than the hobgoblin argument, I
    actually don't think they are that inconsistent.
        It seems to me section 504 now--that phrase--``for the
    purposes of this subsection, all parts of compilation or
    derivative work constitutes one work.'' I think that language
    has a bias in favor of the infringer, rather than the owner. I
    understand a very different time when technology was very
    different why it was done. Somebody was infringing the sixth
    edition of a book, because there were five other earlier
    editions in circulation, you shouldn't be charged with
    infringing all six versions of the book.
        But what is the policy reason to distinguish between
    infringer ``A'' who takes 20 photos from one site, and
    infringer ``B'' who takes 20 photos, one each from 20 Web
    sites? Under current law, ``A'' infringer would be liable for a
    single statutory damage award, as determined by the court, not
    mandated by this bill, and infringer ``B'' would be subject to
    20 separate statutory damage awards as determined by the court.
        There may be objections to the overall level of the
    statutory damages, but accepting for the moment that we are
    going to have some statutory damages, how is that disparity
    justified?
        Ms. Sohn. Well, I think the disparity comes from what kind
    of threats one copyright holder can make to a legitimate user
    or somebody at least who thought they were using copyright work
    legitimately, or an innovator. I mean, you talk a lot about the
    judicial discretion, but the fact of the matter is that most of
    these cases don't ever go to court. The threat is held over the
    innovator's head or the user's head, and it never goes
    anywhere. There is a settlement. The person no longer uses the
    copyrighted work.
        So to me, the judicial discretion doesn't really solve the
    problem, and it is the same problem in the patent context, is
    that the threat is enough to stop people from innovating and
    the threat is enough to get people to settle even though they
    might have a good case in court. They won't test the bounds of
    the law.
        Mr. Berman. All right. Well, we will continue this
    discussion. But in the patent context you never argued that and
    you were a great supporter of that legislation----
        Ms. Sohn. And I continue to be.
        Mr. Berman. You never argued that we should, on a
    counterfeit product that infringed 50 different patents because
    it was all in one product, consider it as one patent violation.
    Our goal in the patent bill was simply to give the court the
    discretion that courts here have to decide on how to calculate
    the damages. But I think I have used Mr. Watt's time.
        And now, Mr. Goodlatte.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        I wonder if Ms. Mandelker--is that how you pronounce it?
        Ms. Mandelker. Yes.
        Mr. Goodlatte. Would you explain in some more detail some
    of the concerns you have about the provisions in the bill that
    require reorganization within several Federal agencies? What
    are your specific concerns?
        Ms. Mandelker. Yes, thank you for that question.
        In particular, I would note that we have a current
    structure of coordination within the administration that works
    quite effectively. As it currently stands, we have an IP
    coordinator who sits in the Department of Commerce, and who
    regularly ensures that we as an administration convene and
    coordinate as appropriate.
        So for example, I meet personally monthly with my
    colleagues in the other departments. We coordinate regularly on
    international programs. We work very closely, for example, with
    the State Department in the deployment of our intellectual
    property law enforcement coordinators. We recently put on a
    conference both with the Patent and Trademark Office and the
    State Department in Bangkok, Thailand in which we launched a
    new regional network. That type of coordination is very
    important and it is happening at very high levels within the
    administration.
        Our concern with putting an office within the executive
    office of the President is in particular for the Department of
    Justice, we are always going to be concerned when you have
    somebody at the White House who may be in the position of
    directing our enforcement priorities or directing what cases we
    should do and what cases we shouldn't do. That would be
    contrary to the longstanding tradition of the department,
    making independent decisions when it comes to law enforcement
    decisions.
        In addition, as I noted, what we have right now is actually
    quite effective. While we don't coordinate with the USTR, for
    example, on all matters, we do contribute to the section 301
    process. We do provide them guidance as necessary when it comes
    to criminal enforcement policy that they seek to promote
    overseas, and likewise with the State Department.
        But what we have really right now is a flexible
    coordination process that can adjust to the changing needs of
    the different departments, and it doesn't impose unnecessary
    bureaucratic reporting structures.
        Mr. Goodlatte. Thank you.
        Mr. Cotton, we have been talking about the compilations,
    and I wanted to give you an opportunity to explain the
    rationale for allowing damages for each individual piece of
    those compilations. I wonder if you might explain the nature of
    what compilations are and the rationale.
        Mr. Cotton. Well, let me just speak carefully here, Mr.
    Goodlatte. The change in the law was not part of the original
    CACP proposals, which is the organization I am representing
    today. We have strongly endorsed the Committee leadership's
    bill, including 104. In doing so, we really are focused not
    necessarily on the specifics of that provision, but on the
    anomaly really that the Chairman reflected, which is it does
    seem a problem to us in terms of the fact that the current
    penalties for a compilation, which may include 12 or 16 or many
    multiples of that in terms of individual works, is the same
    penalty as for the infringement of a single work. And those
    works in a compilation may have different owners and different
    creators.
        And so in terms of resolving that anomaly, we do think it
    is worth the effort to try to find a resolution which does
    recognize the fact that it is in many circumstances a more
    extensive violation of copyright in the context of compilation
    than in the infringement of an individual work.
        Mr. Goodlatte. Ms. Sohn?
        Ms. Sohn. Yes, I think I finally have the answer to Mr.
    Berman's question. I think it will also answer yours.
        The reason that a compilation is looked at as one work is
    because you are looking and differentiating that from engaging
    20 different or 10 different acts of infringement, is that you
    look at the act. You don't want to punish somebody 10 times for
    one act of infringement. So if I am infringing on 20 separate
    photographs, I have engaged in 20 different acts of
    infringement. If I have infringed on one album, I have engaged
    in only one act of infringement.
        It seems to me to be a pretty dangerous tool, again getting
    back to the answer that I originally gave you, to a copyright
    holder to all of a sudden turn one act of infringement into 10
    or 20 or, you know, depending on how big compilation is even
    more.
        Mr. Goodlatte. Do you want to respond to that, Mr. Cotton?
        Mr. Cotton. Yes. I think the law's tradition has been
    precisely to make those kinds of tradition. Petty larceny is
    not viewed the same as grand larceny. So the precise question
    that gets addressed in a criminal assessment is exactly the
    extent of the damage and the extent of the criminal act. And
    certainly one likely, I would say, grounds on which to make
    that assessment is the number of infringements involved, and
    therefore the extent of the damage to what, as I say, may be
    multiple different owners and creators.
        Mr. Goodlatte. Thank you.
        Thank you, Mr. Chairman.
        Mr. Berman. Thank you.
        The gentlelady from Texas, Sheila Jackson Lee.
        Ms. Jackson Lee. Thank you, Mr. Chairman.
        I thank the witnesses for their testimony. I was detained
    in another meeting, but in reviewing briefly your statements, I
    appreciate very much your presence here today.
        Mr. Hoffa, you have had a long history of speaking what we
    call truth to power. As I reviewed your statement, it was
    provocative because I begin my remarks about the devastating
    impact that piracy and trademark violation has had in the
    American economy. I think the mood is very sour in the United
    States right now in terms of our economy and generating jobs.
        I would just like you to pointedly repeat again or to focus
    on how you think this legislation can be a viable component in
    saving jobs, in producing jobs, and the impact that you have
    seen in, for example, certainly we know that your home,
    Michigan, or your beginnings, was at the top of the heap as
    many of us grew up. We will never forget that first shiny car
    coming from, obviously from Detroit, but whatever showroom it
    was, maybe some of us got a shiny used car, but how proud we
    were of that vehicle.
        And where we are now as it relates to that whole effort,
    even though we might not attribute that to trademark violation.
    But what kind of piercing impact has trademark violation and
    piracy done from your perspective?
        Mr. Hoffa. Well, thank you, congresswoman. I think it is
    all tied together. The idea of unfair trade and the fact that
    we do not build in strong enough protections in our trade bills
    are all related. That is why we have fought a number of the
    trade bills that are before Congress, whether it goes from
    NAFTA to PNTR to the recent Peru agreement. And we have talked
    about the fact that we must have ways to, number one, protect
    our economy.
        And when we talk about that, we are talking about
    copyrights. We are talking about counterfeiting. And we are
    also talking about the idea that trade should open up markets
    of countries that we make agreements with. And too many of our
    agreements are one-sided. They basically open up our economy to
    a flood of goods from all over the world, as we see with China
    and Mexico, and especially India.
        So much of that material is counterfeit. We all know that
    we can go on the streets of New York in Manhattan. We can go
    over here to Georgetown and we see whole stalls of counterfeit
    material that looks like something that has been made by a
    major manufacturer. The answer is, we are not policing and
    protecting ourselves. Trade has been a major issue of labor
    talking about how do we protect American jobs. We have seen a
    hemorrhaging of millions of jobs going to cheaper economies,
    going to Mexico, going to India.
        That is part and parcel of the same problem of copyrights
    and counterfeiting. That counterfeiting--and what we are
    talking about is part of the same problem because when you open
    these economies, whether they come in legally or illegally,
    they are coming in and just flooding into this economy.
        I have testified before Congress about how we don't police
    what comes into this country. The container--90 percent of what
    comes in comes in containers. And if you have been to the ports
    of Port Elizabeth in New Jersey or you have been to Long Beach,
    you see all these containers coming in.
        Ms. Jackson Lee. Yes.
        Mr. Hoffa. Much of this stuff is in that stuff, and they
    are only protecting and inspecting 1 percent. And if we had
    better inspection, then we could find out where these
    counterfeit goods are and confiscate them at the border. The
    answer is we are not doing that, and that is why there is such
    a flood of counterfeit goods in this country.
        Ms. Jackson Lee. This legislation moves us in that
    direction.
        Mr. Hoffa. That is right.
        Ms. Jackson Lee. Thank you.
        Let me quickly ask questions of the final three witnesses.
    I want Ms. Sohn to give us the most troubling feature in this
    legislation from your perspective. Ms. Mandelker, if you would,
    I mentioned earlier the incident with the Colgate-Palmolive
    toothpaste, and the impact as it relates to the consumer.
    Someone injured. We don't know if there was any loss of life,
    any long-term damage.
        My thought was, not from the tort perspective or liability
    perspective, but the injured party may have, but the enhanced
    penalties if, for example, it does result in the injury and-or
    death of an ultimate consumer of that pirated product or that
    trademark violation product. Why don't you comment on that? And
    Ms. Sohn, if you could. Let me go to Ms. Mandelker first,
    please.
        Ms. Mandelker. We agree with you, Congresswoman. In fact,
    that is why we were so pleased to see enhanced penalties in
    this bill for instances where there is a knowing or reckless
    injury, serious bodily injury. So we think it is quite
    appropriate to have enhanced penalties when our citizens are
    being harmed by these products.
        Ms. Jackson Lee. And it separates it from a tort action. It
    triggers under the actual trademark violation, which I think is
    very important.
        Ms. Sohn, what is it that----
        Ms. Sohn. Really section 104 is the most troubling. I would
    note that the other supporters of this bill actually haven't
    mentioned it in their written testimony, something that is
    really important to them. I am also pleased to hear Mr. Coble
    talk about possible----
        Ms. Jackson Lee. Why don't you just go ahead and say 104,
    and then how would you fix it or what is your issue with it.
        Ms. Sohn. I think it needs to be deleted from the bill.
    Right now, I mean, hopefully we will have this roundtable. I am
    not sure how you fix it because it is so core, it is so
    opposite to what the Copyright Act has been about.
        Ms. Jackson Lee. And you feel that it does what? When I say
    ``does what,'' does what negatively?
        Ms. Sohn. It increases the statutory damages for copyright
    infringement so much as to place very bad limits, chill
    innovation and chill legitimate speech.
        Ms. Jackson Lee. So you are thinking that people will be
    fearful because they might step on someone's toes and therefore
    deny their own creativity because the penalties are so high.
        Ms. Sohn. They already are fearful, but this would make it
    far worse.
        Ms. Jackson Lee. Well, don't you think the counter-impact
    that then we would have at least a sanctity around this whole
    concept of copyright, patent and the lack of trademark
    infringement?
        Ms. Sohn. Well, I think we already do. I don't think
    anybody is arguing that statutory damages these days are
    inadequate. You may have heard about the woman in Minnesota who
    was just fined $222,000 for 24 songs she had on a peer-to-peer
    network. That was $9,250 a song. I don't think anybody is
    arguing that that is inadequate and that is the law today. So I
    am not sure that increasing penalties 10-fold or 20-fold does
    anything other than stop legitimate innovators and legitimate
    speakers or users of copyrighted works, legitimate creators
    from creating.
        Ms. Jackson Lee. I thank the gentleman. I just would say,
    Ms. Sohn, I think it is worthy of consideration of the
    provision that you have highlighted. I think what we have seen
    in some of the egregiousness of trademark infringement has
    moved this Congress to believe that there are larger bodies
    other than the unfortunate woman in Minnesota and maybe others,
    that we have to make a very strong statement.
        I know Mr. Cotton is shaking his head, and I would ask the
    Chairman to yield him just a second to comment, because he is
    the poster child in terms of this issue. If the Chairman would
    yield him a minute.
        Mr. Berman. Mr. Cotton for a quick response.
        Ms. Jackson Lee. And I thank the Chairman for his
    indulgence.
        Mr. Cotton. I would just say that I think the emphasis that
    the congresswoman placed is the fundamental thrust of what the
    big picture of what this bill is all about, which is what we
    know right now is that our enforcement regime, both in terms of
    penalties and in terms of enforcement resources, is not
    stemming the tide that we face collectively.
        What is critical is that we step up. We make the penalties
    that we create not just a cost of doing business for the
    counterfeiters and the organized criminal conspiracies that are
    behind the flood that we face, but that we actually make it a
    serious deterrent. We apply enforcement across the board. That
    is the big picture.
        Ms. Jackson Lee. Thank you, Mr. Chairman.
        Mr. Berman. The gentleman from Georgia, Mr. Johnson.
        Mr. Johnson. Yes, just some thoughts. And certainly I
    appreciate the efforts of the Chairman, who has introduced this
    legislation to help mitigate some of the loss that Americans
    are undergoing as a result of copyright and trademark
    infringement. I am fully supportive of efforts to cut that, so
    that American businesses can prosper.
        I am concerned about the fact that the enforcement
    provisions of this law, of this proposal, both civil and
    criminal, would go more toward Americans, as opposed to those
    in other countries who are responsible for the tsunami, if you
    will, of counterfeit products entering this country and
    circulating around the world.
        So that brings me to my issue of free trade, if you will,
    and the agreements that this country signs with other
    countries. There seems to be a lack of strong protections in
    these trade agreements that would be helpful in stemming the
    tide of these counterfeit goods coming here and circulating
    around the world.
        Would you comment on that, Mr. Cotton?
        Mr. Cotton. I would make three very quick points in
    response. First, I think the issue that you raise is critically
    important, but what I would say to you is that in arguing the
    case internationally for stronger IP protection action by
    countries internationally, they look to the example of the
    United States in terms of what they should do and how they
    respond.
        Mr. Johnson. Even the Chinese?
        Mr. Cotton. Well, ultimately I would say to you yes, that
    is to the extent that we wind up with counterfeit goods on our
    streets, and to the extent that we ask countries everyplace
    from China to many other countries in the world to devote very
    significant resources to enforcement and to escalate the
    message, for example in----
        Mr. Johnson. How do we do that in a free trade agreement?
    How do you counter the notion that our free trade agreements
    don't go far enough with respect to strong protections?
        Mr. Cotton. I am sorry. I would agree with you that it
    would be desirable to use every lever that we have available to
    us. I guess my only point I was making was that, I would agree
    with you that it would be desirable to have our free trade
    agreements. It is desirable----
        Mr. Johnson. It seems that those are the best route to be
    able to stem this tsunami of counterfeit goods coming over here
    and circulating around the world, even though I appreciate the
    stronger enforcement mechanisms that are a part of this
    legislation and the aspirational aspects of this in so far as
    international enforcement coordination that is called for under
    this bill.
        But let me shift now to this issue of the registration of
    copyrights as a prerequisite to criminal prosecution, and then
    this legislation would remove the registration requirement. I
    would ask Ms. Mandelker, normally in a criminal case you have a
    need to prove intent. I would assume that that need to prove
    intent is a part of the criminal laws, in so far as copyright
    infringement that exists now. Would that change under this new
    legislation? And if it does not change, how could you prove
    intent in a situation where you could not find where, say, a
    photograph has copyright protection, but you can't find it due
    to the technological limitations of the copyright department
    today. How could you prove intent?
        Ms. Mandelker. Well, let me just say at the outset that we
    actually see this provision as a clarification of existing law.
    We think it is important to make it clear in existing law that
    proof of registration is not a requirement when we bring our
    criminal cases, but we don't think this is actually something
    new. It is just, again, a clarification.
        Certainly, we need to prove intent, willful intent.
        Mr. Johnson. How can you do that without registration,
    without a registration requirement?
        Ms. Mandelker. I might turn to the--if you have an
    individual, for example, who clearly tried or made a good-faith
    effort to find out whether or not a particular work was
    registered, who wanted to----
        Mr. Johnson. They would have a defense, but it would not
    protect them from being prosecuted, being hauled off to the
    jail, fingerprinted, have to make bond, hire an attorney, and
    then present your defense at some point later.
        Ms. Mandelker. Let me just say that at the department, we
    are really interested in going after willful infringers.
        Mr. Johnson. How can you prove willfulness without a
    prerequisite of registration? How could a prosecutor make that
    assessment without a requirement that the work be registered?
        Ms. Mandelker. Again, I would note that we don't think that
    it is currently a requirement for prosecutors.
        Mr. Johnson. Well, it should be, it would seem to me. It
    should be.
        Ms. Mandelker. I would also note that in many of our cases,
    we are dealing with not just one good, but many counterfeited
    goods. As was noted earlier, it would really slow down the
    criminal prosecution process to force our prosecutors to go
    make that determination. Again, at the department we are not
    going to be focused on the example that Ms. Sohn noted of an
    individual who took a photograph. We are going to be focused on
    those large-scale infringers.
        Mr. Johnson. Yes, well, if the state of the law allows you
    to go against that small photographer, sometimes it will
    happen--a renegade prosecutor, if you will. So I am concerned
    about doing away with the registration requirement. I am
    concerned about that.
        Mr. Berman. The time of the gentleman has expired. We will
    be having a vote soon.
        I recognize the gentleman from California, Mr. Sherman.
        Mr. Sherman. Mr. Chairman, I am one person in this room who
    supports section 104, and I think we ought to try to emerge
    with as strong a bill as possible. But I am going to focus my
    attention on title IV, which deals with the international
    provisions.
        Mr. Hoffa, we have kind of a procedure here under our
    wonderful free trade agreements. Under this bill, we are going
    to have 10 new intellectual property attaches for the whole
    world. It will go something like this. One of these attaches
    will go talk to the Chinese and yell and beg and point to them
    where it is their legal obligation, because we are good lawyers
    and we believe that paper matters. And point to them how they
    are supposed to enforce intellectual property. Then he or she
    will leave the room. The Chinese will explode into laughter
    because they are good enough diplomats to be able to suppress
    that laughter while we are actually in the room.
        Then they will put back on their earnest faces. They will
    have a press conference. They will announce that they are going
    to do something. They may actually go out and grab a few
    counterfeit products and put them in a warehouse until they re-
    sell them later. And then we repeat the whole process at the
    beginning of the next year.
        I wonder whether you think that we need to instead think of
    some things that go beyond the text of these free trade
    agreements and actually, for example, take a boatload or two of
    goods coming in from China and turn them around in order to
    demonstrate our concern on this issue.
        Mr. Hoffa. Well, I think the problem is that in this
    country if you find a clear copyright and you buy the
    counterfeit goods, you can sue. There is a legal system here
    where you can enforce rights. That isn't really true in China.
    You are subject to a completely different system. If you do
    find a copyright infringement in China, you really are in tough
    shape. Our agreements have not done anything to give you any
    type of rights to enforce your rights over there.
        You might go to the communist government, and they might
    say, ``Okay, we have found 1,000 DVDs,'' and then they will run
    a steamroller over them for the TV cameras. Or they will set
    some DVDs on fire for the video cameras. And that has nothing
    to do with enforcement.
        There isn't really a way to bring lawsuits over there that
    can be effective to stop this. When there are violations found
    in China, it isn't the Chinese government that finds them. And
    I don't want to single out the Chinese because it is true in
    India and it is true in Mexico. The problem is, it is the
    industry that finds them. Every major manufacturer has a part
    of their company that is devoted to finding knockoffs or
    copyrights. So they go and find these and they show the Chinese
    or the Indians, ``Look what you are doing. What are you going
    to do about that?''
        And then you can bring a lawsuit and then they will shut
    down two or three factories. But the two or three they shut
    down, there are 10 more. So somehow we have to have in our
    trade agreements some way either to reciprocate or some way to
    protect our products from being copied.
        Of course, the best example is the dog food example, where
    we had that this summer. We went through and the dog food came
    in and the dogs were dying because it had different products in
    it. And then we had the issue about the Colgate copyright, with
    the antifreeze in it. These were dreadful examples of what can
    happen because there isn't anybody in these countries looking
    for these violations. Anything goes in these new economies.
    Unfortunately, they are early economies. Anything to make money
    goes.
        Over here, we don't have that problem. We have consumer
    safety. We have the Justice Department. We have a lot of
    enforcement. We have individual lawsuits, and we have damages.
    You know, if somebody does do this and we identify them, they
    can be sued for millions of dollars. You really can't do that
    in China and you can't do that in India.
        So the problem is, how do we put that into a trade
    agreement? I think until we figure that out, we ought to stop
    doing trade agreements for awhile and realize the problems that
    we are losing jobs, and we ought to figure it out.
        Mr. Sherman. Should we be forcing a renegotiation of the
    trade agreements we have now, or just leave those on the books
    the way they are?
        Mr. Hoffa. I think that all of them should be. You know, we
    have talked about renegotiating NAFTA or terminating it and
    starting over again. People cringe at that. Think about it. All
    the trade agreements that we have done, have you ever known one
    that has ever expired or that we have stopped? I mean, once
    they are on the books, they are like no one can ever stop them.
        You talk about, well, why don't we just void that
    agreement. Every one of these agreements has a provision to end
    that agreement. You know, it is a 60-day notice.
        Mr. Sherman. I would also point out that every single one
    of them has increased our trade deficit with the country
    involved.
        We have talked a little bit about the need to inspect these
    containers. Should the cost of inspecting these containers fall
    upon all taxpayers, even the businesses that are in competition
    with imports? Or should we have at least the fair cost of
    examining the containers fall upon those who are bringing the
    containers into the country?
        Mr. Hoffa. Well, there are billions of dollars in profits
    being made by these large shipping companies. I don't think it
    would be wrong that they pay part of this cost. They are the
    ones that are bringing in these shiploads of goods in these
    containers that are coming from the Far East and all over the
    world. If you have been to the ports, and most of us have, you
    see how they are piled so high.
        The odd thing is, there are shiploads of containers coming
    in, but when they go out, they go out empty. That is really a
    story about what is wrong with our trade agreements. It is a
    one-way deal. They are not buying our products, but we are
    bringing their products in. So we have talked about the fact
    that large shippers should pay a small portion, or at least a
    per-container cost of inspection, rather than have it put on
    the American taxpayer.
        Mr. Berman. The time of the gentleman has expired.
        Mr. Sherman. Thank you.
        Mr. Berman. I have an idea. We have been doing it with
    terrorism laws and nonproliferation laws. You and I have been
    doing it with laws dealing with Iran. We should have
    extraterritorial application of our copyright and trademark
    laws. [Laughter.]
        Mr. Sherman. Mr. Chairman, you surprise me. You are going
    one step beyond what I thought was already a pretty extreme
    position.
        Mr. Berman. The gentleman from North Carolina gave up part
    of his time earlier. We have had a string of Democrats. So I am
    now going to recognize him because he did have a question he
    wanted to ask Mr. Cotton.
        Mr. Coble. Mr. Chairman, I apologize for my ineptness. I
    misfiled my question. I just wanted to hear from Mr. Cotton. I
    don't think it has been addressed.
        Mr. Cotton, the decision to require dedicated resources at
    DOJ, the White House and elsewhere is somewhat unusual, and
    some in the executive branch I think will argue, wrongheaded.
    They imply that it will create an inflexible and meddlesome
    bureaucracy. I am not convinced that that would be the case.
    What do you say in response to that?
        Mr. Cotton. I think our experience teaches one lesson very
    clearly. It is one that has been reported to me from every
    sector of the coalition that I am involved with, which is that
    officials that have a general jurisdiction responsibility wind
    up having other pressures on them to the extent that IP
    enforcement tends to fall down the to-do list. Until there are
    both senior policy executives and until there are significant,
    dedicated, specialized IP enforcement resources, we will not
    make progress in addressing the issues that are on the table.
        Mr. Coble. Thank you. That is what I wanted to get in.
        Mr. Chairman, I thank you for recognizing me.
        Mr. Berman. I appreciate it. The gentleman yields back.
        I recognize another gentleman from California, Mr. Schiff.
        Mr. Schiff. Thank you, Mr. Chairman.
        I join my colleagues in strongly supporting the
    legislation, and I congratulate the Chairman on all his superb
    work. I appreciate in particular also inclusions of sections
    511 and 512 that we proposed parts of to create the state and
    local law enforcement grants, as well as strengthen the CHIP
    units.
        I had a couple of questions, some ideas that we have been
    kicking around. It goes a little shy of what Mr. Sherman and
    Mr. Berman were just proposing on the international front.
        Mr. Berman. I was kidding around.
        Mr. Schiff. I know you were. I have a more modest idea I
    would like to run by the Committee. Before I do, I just want to
    make a comment on section 104, which has some surface appeal to
    me, but I am still wrestling with it. When I think about the
    analogy, Mr. Cotton, that you mentioned of prosecutors or
    judges separating out petty larceny from grand larceny, I also
    think about the fact, though, that when we charge someone for
    theft of an automobile, we charge them for theft of the
    automobile, theft of the radio in the automobile, theft of the
    seats in the automobile, or the theft of a briefcase in the
    automobile, even though the briefcase might belong to someone
    different than the automobile belonged to. It would be theft of
    an automobile.
        Just looking at the discretion we are giving to the judge
    to determine whether distinct works have independent economic
    value, you could say that also about objects in a car. So I
    think when you think about it a little more, I haven't reached
    a conclusion on it. I can see certainly the value to be added
    by it.
        But I wanted to run some other thoughts by you on the
    international front. For example, one of the thoughts that we
    were kicking around was the idea of tasking the Commerce
    Department with posting a list of Web sites that clearly
    infringe. We know many of the most well known. A lot of them
    use major credit cards, take major credit cards. A lot of them
    have advertisements from major companies. Presumably some of
    those companies or credit card agencies aren't aware that these
    are Web sites that are dealing in hundreds of thousands of
    pirated works every day.
        Do you have any feedback on whether you think that kind of
    idea, whether it be housed in Commerce or the Copyright Office
    or somewhere else, might have some value to it?
        And then a second thing I would like to throw out there,
    which is I guess more incendiary. We do a favor for some
    institutions of higher learning, which are also often very
    problematic from an IP point of view, by giving them a broad
    safe harbor. Should we require the use of filtering devices if
    we are going to allow that safe harbor?
        So if I could throw those two ideas out there and get your
    feedback.
        Mr. Cotton. I am delighted to make a comment because this
    entire area is really the second focal point, in addition to
    governmental action, of the Coalition Against Counterfeiting
    and Piracy. It is a recognition that there are sectors of the
    economy that are intermediaries. Frequently, they are actually
    business partners of many of the brand owners in the sense of
    working with us.
        But the question that you pose is whether perfectly
    legitimate businesses, but who by virtue of their
    infrastructure become the means by which counterfeit and
    pirated goods get into the stream of commerce, have some
    responsibility to address that issue and to take action to
    reduce the degree to which their infrastructure is used.
        My primary example of this would be the collective judgment
    that we as a society came to concerning financial institutions
    and money laundering. Banks are perfectly legitimate and
    important institutions. We have imposed on them an obligation
    not simply to take cash and close their eyes as to who brings
    it to them and what the source of that money was, but to ask
    questions about their customers and to ask questions about the
    source of cash that may be deposited with them.
        The question is a delicate question and I would cite you
    the most recent example where I think there was a successful
    negotiation between brand owners and intermediaries in the case
    of YouTube-like sites, where a number of user-generated content
    sites signed a voluntary agreement of principles with content
    owners committing to adopt by the end of this year filtering
    technology, which they recognize was commercially available and
    technologically feasible.
        I think the question becomes for other institutions, other
    sectors such as the ones you referenced--financial
    intermediaries--I think you could ask the same question about
    shippers, warehousers, retailers. The question becomes: When is
    it reasonable for those sectors? What actions are reasonable
    for those sectors to take and how can they work collectively
    with brand owners that from the point of view of protecting the
    health and safety, in many cases, of consumers and preventing
    pirates and counterfeiters from using their infrastructure,
    what actions can they take?
        Mr. Schiff. Would it be feasible to have a government
    agency tasked with developing the IP terrorist watch list that
    at least companies would be on notice? Even if there wasn't a
    legal prohibition against their doing business, they couldn't
    very well claim ignorance if they are processing credit card
    transactions or advertising on clearly piracy-oriented sites.
        Ms. Sohn. Yes, I think Mr. Cotton just pointed out what the
    problem is in doing something like that is that you are just
    opening up the floodgates to massive litigation against every
    single company that might have any kind of tangential
    relationship to copyright infringement. A court in California
    in a case involving a pornography site had sued MasterCard and
    Visa claiming that because it had given financial services to
    other Web sites that had stolen their pornographic pictures,
    that they were not liable.
        I just think that if you open the floodgates in that way,
    then you are just going to be flooding the courts with people
    going--copyright trolls, basically patent trolls--copyright
    trolls going after every single company which might have the
    most tangential relationship to an infringing Web site.
        Mr. Schiff. You might be if you enacted some liability for
    doing business with someone on the list, but if you post the
    list of piracy sites, how does that expand the liability other
    than putting people on notice? In other words, if the top 10
    Web sites are responsible for 60 percent of all the piracy, and
    I am just guessing at a big number, and you can identify those
    and you can stigmatize doing business with those, why does that
    open floodgates of litigation? If it would deter legitimate
    companies from doing business with those Web sites, wouldn't
    that be desirable?
        Ms. Sohn. I think that might be a good marketplace solution
    to the problem. I am not sure government should be involved.
    But it might be nice, yes, to do a watch list of a hall of
    shame. I have no problem with that.
        Mr. Cotton. If I might must make one point. Just to be
    clear what I said, which was I was referring to negotiated
    agreements between sectors. That is what the CACP is
    endeavoring to accomplish before we turn to the question of
    legal standards or legal questions.
        Mr. Berman. The time of the gentleman has expired.
        I have one short question for Sigal Mandelker. You
    testified that the department implemented all 31
    recommendations from the IP task force report. One of the
    recommendations was that the FBI should increase the number of
    agents dedicated to IP investigations. Can you tell me how many
    FBI agents are dedicated to IP investigations, meaning that is
    their full-time job?
        Ms. Mandelker. I can't give you a specific number since I
    am from the Criminal Division, but I am happy to make that
    inquiry and report back to the Committee. I can tell you that
    they have increased the number of arrests and indictments, and
    I am also happy to provide those statistics.
        Mr. Berman. That is important, good and useful, but I would
    like just the name and phone number of one FBI agent who has
    been told ``full-time, this is your job.'' If you could find
    that out, that would be great for me.
        There are a lot of comments I could make, but I think we
    have a vote coming up. This has been a very useful panel, very
    interesting, a lot of issues raised, not all of them resolved.
    I appreciate all of you coming.
        With that, unless anybody says something different, I am
    going to adjourn the hearing.
        [Whereupon, at 1:01 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

     Prepared Statement of the Honorable Steve Cohen, a Representative in
       Congress from the State of Tennessee, and Member, Subcommittee on
                Courts, the Internet, and Intellectual Property