[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

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               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



                                


                                








                                




                                


                                




                                


                                




                                



























































































































































                                 
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