[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
PROMOTING INVESTMENT AND PROTECTING COMMERCE ONLINE: LEGITIMATE SITES
V. PARASITES (PART I & II)
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
INTELLECTUAL PROPERTY,
COMPETITION, AND THE INTERNET
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
MARCH 14 AND APRIL 6, 2011
__________
Serial No. 112-153
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://judiciary.house.gov
_____
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(COMMITTEE MEMBERS--MARCH 14, 2011)
COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TOM REED, New York LINDA T. SANCHEZ, California
TIM GRIFFIN, Arkansas DEBBIE WASSERMAN SCHULTZ, Florida
TOM MARINO, Pennsylvania
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------
Subcommittee on Intellectual Property, Competition, and the Internet
BOB GOODLATTE, Virginia, Chairman
HOWARD COBLE, North Carolina, Vice-Chairman
F. JAMES SENSENBRENNER, Jr., MELVIN L. WATT, North Carolina
Wisconsin JOHN CONYERS, Jr., Michigan
STEVE CHABOT, Ohio HOWARD L. BERMAN, California
DARRELL E. ISSA, California JUDY CHU, California
MIKE PENCE, Indiana TED DEUTCH, Florida
JIM JORDAN, Ohio LINDA T. SANCHEZ, California
TED POE, Texas DEBBIE WASSERMAN SCHULTZ, Florida
JASON CHAFFETZ, Utah JERROLD NADLER, New York
TOM REED, New York ZOE LOFGREN, California
TIM GRIFFIN, Arkansas SHEILA JACKSON LEE, Texas
TOM MARINO, Pennsylvania MAXINE WATERS, California
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
Blaine Merritt, Chief Counsel
Stephanie Moore, Minority Counsel
(COMMITTEE MEMBERS--APRIL 6, 2011)
COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TIM GRIFFIN, Arkansas LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania DEBBIE WASSERMAN SCHULTZ, Florida
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
[Vacant]
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------
Subcommittee on Intellectual Property, Competition, and the Internet
BOB GOODLATTE, Virginia, Chairman
BEN QUAYLE, Arizona, Vice-Chairman
F. JAMES SENSENBRENNER, Jr., MELVIN L. WATT, North Carolina
Wisconsin JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
STEVE CHABOT, Ohio JUDY CHU, California
DARRELL E. ISSA, California TED DEUTCH, Florida
MIKE PENCE, Indiana LINDA T. SANCHEZ, California
JIM JORDAN, Ohio DEBBIE WASSERMAN SCHULTZ, Florida
TED POE, Texas JERROLD NADLER, New York
JASON CHAFFETZ, Utah ZOE LOFGREN, California
TIM GRIFFIN, Arkansas SHEILA JACKSON LEE, Texas
TOM MARINO, Pennsylvania MAXINE WATERS, California
SANDY ADAMS, Florida
[Vacant]
Blaine Merritt, Chief Counsel
Stephanie Moore, Minority Counsel
C O N T E N T S
----------
MARCH 14 AND APRIL 6, 2011
Page
HEARINGS
Monday, March 14, 2011first date deg.
Promoting Investment and Protecting Commerce Online: Legitimate
Sites v. Parasites (Part I).................................. 1
Wednesday, April 6, 2011second date deg.
Promoting Investment and Protecting Commerce Online: Legitimate
Sites v. Parasites (Part II)................................. 155
(PART I)
OPENING STATEMENTS
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Chairman, Subcommittee on
Intellectual Property, Competition, and the Internet........... 1
The Honorable Melvin L. Watt, a Representative in Congress from
the State of North Carolina, and Ranking Member, Subcommittee
on Intellectual Property, Competition, and the Internet........ 3
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Chairman, Committee on the Judiciary....... 4
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Ranking Member, Committee on the
Judiciary, and Member, Subcommittee on Intellectual Property,
Competition, and the Internet.................................. 5
The Honorable Tom Reed, a Representative in Congress from the
State of New York, and Member, Subcommittee on Intellectual
Property, Competition, and the Internet........................ 12
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Member, Subcommittee on
Intellectual Property, Competition, and the Internet........... 12
WITNESSES
Maria A. Pallante, Acting Register of Copyrights, United States
Copyright Office
Oral Testimony................................................. 14
Prepared Statement............................................. 17
David Sohn, Senior Policy Counsel, Center for Democracy and
Technology (CDT)
Oral Testimony................................................. 27
Prepared Statement............................................. 30
Daniel Castro, Senior Analyst, Information Technology and
Innovation Foundation (ITIF)
Oral Testimony................................................. 43
Prepared Statement............................................. 46
Frederick Huntsberry, Chief Operating Officer, Paramount Pictures
Oral Testimony................................................. 61
Prepared Statement............................................. 63
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, Ranking
Member, Committee on the Judiciary, and Member, Subcommittee on
Intellectual Property, Competition, and the Internet........... 6
SUBMISSIONS FOR THE RECORD
Letter from Timothy Lee, Vice President of Legal and Public
Affairs, Center for Individual Freedom (CFIF).................. 127
Prepared Statement of Sandra Aistars, Executive Director,
Copyright Alliance............................................. 128
Prepared Statement of A. Robert Pisano, President and Chief
Operating Officer, Motion Picture Association of America, Inc.. 132
Letter from John Fithian, President and CEO, National Association
of Theatre Owners (NATO)....................................... 138
Letter from Michael McCurry and Mark McKinnon, Co-Chairmen, Arts
+ Labs......................................................... 140
Material submitted by MiMTiD Corp................................ 141
Prepared Statement of the Consumer Electronics Association....... 150
Letter from Kevin Spreekmeester, Vice President of Global
Marketing, Canada Goose........................................ 153
(PART II)
OPENING STATEMENTS
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Chairman, Subcommittee on
Intellectual Property, Competition, and the Internet........... 155
The Honorable Melvin L. Watt, a Representative in Congress from
the State of North Carolina, and Ranking Member, Subcommittee
on Intellectual Property, Competition, and the Internet........ 158
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Chairman, Committee on the Judiciary....... 159
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Ranking Member, Committee on the
Judiciary, and Member, Subcommittee on Intellectual Property,
Competition, and the Internet.................................. 160
WITNESSES
The Honorable John Morton, Director, U.S. Immigration and Customs
Enforcement
Oral Testimony................................................. 162
Prepared Statement............................................. 165
Floyd Abrams, Senior Partner, Cahill Gordon & Reindel LLP
Oral Testimony................................................. 186
Prepared Statement............................................. 188
Kent Walker, Senior Vice President and General Counsel, Google
Oral Testimony................................................. 200
Prepared Statement............................................. 202
Christine N. Jones, Executive Vice President and General Counsel,
Go Daddy Group
Oral Testimony................................................. 211
Prepared Statement............................................. 213
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Material submitted by by the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Subcommittee on Intellectual Property, Competition,
and the Internet............................................... 225
Material submitted by by the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Subcommittee on Intellectual Property, Competition,
and the Internet............................................... 244
Material submitted by by the Honorable Debbie Wasserman Schultz,
a Representative in Congress from the State of Florida, and
Member, Subcommittee on Intellectual Property, Competition, and
the Internet................................................... 257
SUBMISSIONS FOR THE RECORD
Prepared Statement of the Honorable Darrell Issa, a
Representative in Congress from the State of California, and
Member, Subcommittee on Intellectual Property, Competition, and
the Internet................................................... 271
Prepared Statement of the Honorable Tim Griffin, a Representative
in Congress from the State of Arkansas, and Member,
Subcommittee on Intellectual Property, Competition, and the
Internet....................................................... 273
Letter from Maria A. Pallante, Acting Register of Copyrights,
United States Copyright Office................................. 274
Prepared Statement of Brian Napack, President, Macmillian........ 277
Prepared Statement of the Motion Picture Association of America,
Inc............................................................ 284
Letter from David Wallace Cox, President and Chief Enforcement
Officer, MiMTid Corp........................................... 291
Press Release from the Interactive Advertising Bureau (iab)...... 298
PROMOTING INVESTMENT AND PROTECTING COMMERCE ONLINE: LEGITIMATE SITES
V. PARASITES (PART I)
----------
MONDAY, MARCH 14, 2011
House of Representatives,
Subcommittee on Intellectual Property,
Competition, and the Internet,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 4:05 p.m., in
room 2141, Rayburn House Office Building, the Honorable Bob
Goodlatte (Chairman of the Subcommittee) presiding.
Present: Representatives Goodlatte, Smith, Coble, Chabot,
Reed, Griffin, Marino, Adams, Quayle, Watt, Conyers, Berman,
Chu, Deutch, and Lofgren.
Staff Present: (Majority) David Whitney, Counsel; Olivia
Lee, Clerk; and (Minority) Stephanie Moore, Subcommittee Chief
Counsel.
Mr. Goodlatte. Good afternoon. The Subcommittee will come
to order.
I will recognize myself for an opening statement.
For more than two centuries, America's economic strength
has been built on a firm foundation. The rule of law, respect
for individuals and private property and the promotion of
industry through policies that reward creativity and innovation
are essential virtues that helped a fledgling Nation encourage
the initiative of its citizens and in time emerge as the most
advanced and prosperous on Earth.
But these virtues are not universal. In an increasingly
connected world, threats that emanate from areas where they are
not shared can jeopardize our ability to sustain the incentives
needed to foster growth and development and advance human
progress.
These threats create challenges for us in both the physical
world and the virtual world where the systematic and willful
violation of intellectual property rights now poses a clear,
present and growing danger to American creators and innovators,
U.S. consumers and our collective confidence in the Internet
ecosystem. Within that ecosystem today, there are legitimate
commercial sites that authorized goods and services. Indeed,
many exciting new technologies and websites help content owners
distribute music, movies, books, games, software and other
copyrighted works in ways that were not even imaginable 10
years ago.
However, there are also what might be called online
parasites, or rogue sites, that steal the intellectual property
of others and traffic in counterfeit and pirated goods. The
Merriam-Webster Dictionary defines a parasite as ``something
that resembles a biological parasite in dependence on something
else for existence or support without making a useful or
adequate return.''
In a very real sense, that is an apt description of how
these sites operate. They depend upon the investments,
creativity and innovation of others while offering nothing of
benefit in return.
Indeed, according to the Motion Picture Association of
America, websites that peddle stolen digital content represent,
``the most pernicious forms of digital theft,'' and they
present a two-pronged threat. They simultaneously weaken the
film and TV industry by undercutting, eliminating or reducing
the market for film and television production, which millions
rely on for jobs, and discourage legitimate companies from
investing in new business models to provide high-quality
content and more consumer choice online.
Frederick Huntsberry, the chief operating officer of
Paramount Pictures, who is with us today, believes these sites,
left unchecked, will decimate the motion picture industry. He
describes an online shadow economy that distributes stolen
property on a revenue-generating basis, diverting consumer
spending from the creators into the hands of criminals often
outside the United States and further robbing Americans of jobs
and investments in new productions, while depriving governments
of tax revenue.
In recent years, these websites have evolved. They have
become increasingly sophisticated and rival legitimate sites in
appearance, operation and indicia of reliability. U.S.
consumers are frequently led to these sites by search engines
that list them among the top search results. After clicking on
a site, they may be immediately reassured by the logos of U.S.
payment processors and the presence of major corporate
advertising supporting the site.
But just how popular and profitable are these sites? One
cyberlocker, that is used to store and stream copyrighted
content, ranks as the 51st most popular website while a
business analysis provided by Paramount estimated a minimal
annual profit of 41 to $304 million for one infringing
cyberlocker. Who says crime doesn't pay?
At the request of the Subcommittee, the Acting Register of
Copyrights, Ms. Maria Pallante, who is also with us today, has
been meeting with stakeholders to consider the issues
associated with online parasites. One of her conclusions is
that these sites exploit highly creative and economically
valuable copyrighted works because there is no real expectation
of enforcement. She notes that the most pressing issue is how
to tackle sites based in foreign jurisdiction and observes that
the continued evidence of widespread global Internet copyright
infringement suggests that international cooperation alone
cannot be the only solution to this global problem.
Ms. Pallante recommends that copyright enforcement follow
the money within the Internet ecosystem and cut off these sites
from U.S.-based revenue. She warns these sites undermine the
incentives for legitimate commerce and threaten to weaken the
robust innovation-based markets that exist in the United States
today.
This matter has been a top priority and will become a
principal focus for the Subcommittee in the coming months.
Today's hearing marks the first of two oversight hearings we
will conduct to make certain we are fully acquainted with the
range of issues involved.
I intend to take the time necessary to build a complete
record and balance appropriately all the interest before
introducing a bill that will contain meaningful and effective
new authority. As this process progresses, I look forward to
working with Members on both sides of the aisle and with our
colleagues on the other side of the Capitol, as well as
stakeholders in the private sector. With 19 million Americans
employed in IP intensive industries, we owe it to them and to
ourselves to ensure any legislation we send to the President
will be effective.
It is important to note that whatever legislative product
we enact will be only one solution to this problem. It is my
strong hope that the stakeholders in content, technology,
financial and Internet communities will see any legislation we
enact not as the end of this debate, but as the starting point
for more discussions among the private parties to find
additional innovative solutions to the threat of online piracy.
It is now my pleasure to recognize the Ranking Member of
the Committee, the gentleman from North Carolina, Mr. Watt.
Mr. Watt. Thank you, Mr. Chairman, and thank you for
convening this hearing. There is little disagreement that
online theft of intellectual property is increasing and
negatively impacting the rights holders and our economy.
As the GAO found last year, the problem is sizeable. The
Internet has provided an explosion of e-commerce and a new
marketplace for American innovators. Industries with heavy
intellectual property interests have powered the American
economy as the Internet has become a dominant venue for
commerce.
Today's hearing explores how to promote this commerce
online by protecting the legitimate sites, but addressing the
problems that have arisen as what the title to this hearing
refers to as ``parasites.'' I actually think a more appropriate
term for them would be pirasites, pirasites, rogue websites,
mostly foreign, engage in illicit conduct and are generally
designed to pirate others' property for economic gain.
A study from Frontier Economics estimates that in 2008
alone, over $650 billion was lost internationally from online
counterfeiting and piracy. Counterfeit goods sold online on
these pirasites posed serious health and safety concerns. Just
last night, 60 Minutes featured a segment on the sale of fake
and tainted medicines and medical products that often come from
illegitimate, online pharmacies.
Congress must take heed or run the risk that criminals and
organized crime cartels who profit from piracy and counterfeit
products hijacked the Internet to the disadvantage of law-
abiding citizens.
At a time that intellectual property intensive industries
provide more than 19 million U.S. jobs and account for more
than 60 percent of U.S. exports, pirasites and the theft of
intellectual property represents probably, far and away, the
largest criminal enterprise in the world, and we are probably
spending less to prevent it than we spend to counter old-
fashioned bank robberies. In fact, electronic bank robbery is a
much more significant threat now than armed bank robbery ever
was.
How we preserve due process and free speech rights, as well
as confront this problem, will be critically important as we
move forward. We cannot just go around and take sites down
without due process or probable cause any more than we could
arrest old-fashioned bank robbers only on suspicion.
I look forward to hearing each of the witnesses'
perspectives on the scope of the problem, and I hope that we
will also hear concrete proposals for legislative solutions to
help remedy this significant drain on our economy.
I yield back, Mr. Chairman.
Mr. Goodlatte. I thank the gentleman. It is now my pleasure
to recognize the Chairman of the Judiciary Committee and one
who has been deeply concerned and a leader on this issue, the
gentleman from Texas, Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
This important hearing will point out the destructive
effects of online parasites, those rogue entities that generate
huge profits from the theft of intellectual property.
The Internet is a wonderful tool that has forever changed
the way we communicate, conduct business and relate to one
another. Most users want a safe computing experience and only
use the Internet for lawful and legitimate purposes.
But others employ it as a tool to perpetrate fraud, steal
identities, traffic and counterfeit or pirated goods or engage
in even more disturbing crimes such as child pornography. Today
our focus is on the illicit trade in counterfeit and pirated
goods. This Committee has long recognized the positive
contributions of America's intellectual property industries.
They contribute 19 million jobs, more than 60 percent of U.S.
exports, support tens of thousands of small businesses and
generate tens of millions of tax revenue for communities across
our Nation.
IP enterprises drive our productivity, produce our
entertainment and promote our economy, but these industries
face a threat in the form of exponentially increasing
counterfeiting and piracy. A recent study revealed that one-
quarter of global Internet traffic infringes on the rights of
IP owners.
Internet piracy is so profitable and pernicious that it
discourages investments, innovation and licensed content from
legitimate companies. It is clear that existing laws are
inadequate and we must do more to confront the problem.
Just over 2 years ago, then-Chairman Conyers and I worked
with other Members of this Committee, including the Chairman
and Ranking Member of the Subcommittee, to enact the
prioritizing resources and organization for the Intellectual
Property Act of 2008 or PRO-IP. The purpose of that law was to
strengthen American industry and protect American jobs by
improving the government's response to the threats posed by
counterfeiting and piracy.
When considered on the House floor PRO-IP, passed by a vote
of 410-11, a result that demonstrated our bipartisan commitment
to IP protection. PRO-IP was a good start, but much more needs
to be done. We will work to strengthen the law to ensure
criminals who operate online are not able to harm U.S.
consumers and steal from American innovators.
Mr. Chairman, it is appropriate that Frederick Huntsberry,
the COO of Paramount Pictures, is a witness today, since the
present situation reminds me of a 1987 Paramount motion picture
that starred one of my favorite actors, Sean Connery.
In The Untouchables, Connery played Chicago Detective Jim
Malone. In a memorable scene, Malone tells Eliot Ness that if
he is serious about getting Al Capone, then he must be prepared
to pull a gun if one of Capone's gang pulls a knife. You all
have heard that.
For IP onlies and other legitimate companies who have had
to rely upon ineffective online enforcement regimes for far too
long, it must seem that they have been forced to take a knife
to a gun fight. It is time we help them fight back. We can no
longer tolerate a state of affairs that requires U.S. citizens
to be subjected to the illicit importation of infringing goods
in violation of Federal law, and the constitutional protections
that are designed to promote innovation and creativity.
Mr. Chairman, I look forward to moving strong and
appropriate legislation through this Committee, and I
appreciate the witnesses here today and their helping us
accomplish that goal.
I yield back.
Mr. Goodlatte. I thank the Chairman. The Chair now
recognizes the Ranking Member of the full Committee, the
gentleman from Michigan, Mr. Conyers.
Mr. Conyers. Thank you. I wanted to congratulate you,
Chairman Goodlatte, on the way all of us have come together on
this important subject. I will put my statement in the record,
but I would like to get this started by offering a definition
of rogue site and it will be distributed.
An Internet site is a ``rogue site'' if it is primarily
structured in order to, and has no demonstrable, or significant
commercial purpose or use other than to offer goods or services
in violation of title 17, including by offering or providing
access to, in a manner not authorized by the intellectual
property owner or otherwise by operation of law, copies of, or
public performance or display of, works protected by title 17,
in complete or substantially complete form, by any means,
including by means of download, streaming or other
transmission.
Because that is what I think is going to be the important
consideration for this Committee.
I join in welcoming, particularly the chief operating
officer of Paramount Pictures, our register of copyrights and
our two distinguished experts, David Sohn and Daniel Castro.
Thank you, Chairman Goodlatte.
[The prepared statement of Mr. Conyers follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
__________
Mr. Goodlatte. I thank the Chairman emeritus for his
remarks. We, by special request and agreement, are going to
recognize one additional Member on each side of the aisle for
an opening statement, and then we will ask all of our Members
to put their statements into the record.
So the Chair at this time recognizes the gentleman from New
York, Mr. Reed.
Mr. Reed. Thank you very much, Chairman, for this special
consideration. I would like to thank Chairman Goodlatte and
Ranking Member Watt for calling this important hearing today,
as well as thank our witnesses who have agreed to participate.
I firmly believe that criminal domestic and offshore
websites dedicated to the online theft of music, movies, books,
pharmaceuticals and other intellectual property harm the U.S.
economy, our balance of trade, U.S. employment and put
companies, consumers and other individual artists in New York
and throughout the country at a severe disadvantage.
What was once more about college students downloading music
in their dorm rooms, online piracy has now grown to the point
to where many U.S. companies and small creators are at risk of
surviving. I am pleased to see bipartisan legislation
introduced into the 111th Congress and the U.S. Senate by
Senators Lee and Hatch. I look forward to working in a
bipartisan fashion in the House to address many of these same
issues.
Many have said that legislative activity aimed at reducing
piracy could prevent free speech and shut down the
technological infrastructure which the Internet was built upon.
I, however, remain convinced that the popularity of the
Internet, in the first place, is driven largely from the
availability of high-quality copyrighted content, including
films and TV programs that are delivered to users in innovative
ways. I remain concerned these claims have yet to be fully
vetted and hope this hearing and those that follow touch on
these claims.
Finally, I am hopeful for an open dialogue with all
stakeholders in the Internet ecosystem as it relates to any
potential legislation out of the Judiciary Committee.
I am particularly concerned that inclusion of private right
of action language and the prospective negative impacts on any
legislation that we put forward. In addition, I amhopeful that
the Committee will be open to having discussions on search
engines and how they relate to the popularity of various
pirated websites.
I look forward to any comments on these topics at today's
hearings and I thank the witnesses again, and I thank you, Mr.
Chairman.
I yield back.
Mr. Goodlatte. I thank the gentleman, I think the award for
earliest riser and greatest distance traveled to be with us
today goes to the gentleman from California, Mr. Berman. And in
appreciation for that, we want to recognize him for his opening
statement as well.
Mr. Berman. Well, if that is the price of having an opening
statement, I will exercise it rarely.
Mr. Goodlatte. I think the strategy, actually.
Mr. Berman. Thank you very much, Mr. Chairman for holding
the hearing. I want to associate myself with yours and the
other opening comments.
In investigations you follow the money, which is why many
of us have invested time in trying to understand how those
involved in the unlawful distribution of trademarked,
copyrighted works are able to profit from their crimes. Five or
6 years ago, we worked with Visa and MasterCard to stop the
misuse of their financial networks by the notorious Russian
music site, allofmp3.com.
We also need to turn a spotlight to online advertisers that
are hoping that effective mechanisms are put in place to ensure
that some of America's best-known companies and brands are not
unwittingly helping to make piracy profitable.
The fight against these parasites or rogue sites is
difficult, especially when many operate from servers and
registrars located outside of the U.S. with the goal of selling
pirated material into the U.S.
In the Foreign Affairs Committee, the IP coordinator,
Victoria Espinel, and the ICE Director John Morton describe the
Administration's innovative efforts to combat counterfeiting.
They are trying new tactics because the anti-piracy tools we
adopted in the past are inadequate to confront the crimes of
today. As we evaluate new legislative tools, I have been
wrestling with how to define the targets narrowly enough so
that we can, on the one hand, rein in truly knowing infringers
without leaving loopholes that provide a roadmap to criminals
or, on the other hand, to put law-abiding sites at risk.
I am also wondering how we set up a streamline process to
address the whack-a-mole problem for seized sites that pop back
up under a different name. By and large, I trust prosecutors to
exercise their authority and discretion. Given the growth of
online theft, the Justice Department may have even been too
cautious for too long, but we must balance aggressive
enforcement with real due process.
And, lastly, as a special and an especially tough question
for me is whether, due to the lack of resources and competing
priorities at DOJ, we should take some of the responsibility
off law enforcement by setting up a mechanism that allows
private parties to bring the kinds of actions that ICE is now
bringing to protect their own property. There aren't any easy
answers, no silver bullets, but it is long past time for saying
``no'' to every new idea.
Thank you, Mr. Chairman.
Mr. Goodlatte. I thank the gentleman. We have a very
distinguished panel of witnesses today. Their written
statements will be entered into the record in their entirety,
and I ask the witnesses to summarize their testimony in 5
minutes or less to help you stay within that time, there is a
timing light on your table. When the light switches from green
to yellow you have 1 minute to conclude your testimony.
When the light turns red, it signals your 5 minutes have
expired.
And before I introduce our witnesses and as is customary
for this Committee, I ask that they stand and be sworn.
[Witnesses sworn.]
Mr. Goodlatte. Our first witness is Maria Pallante, a
senior adviser to the Librarian of Congress and the Acting
Register of Copyrights, a position she temporarily assumed at
the beginning of 2011.
The Register of Copyrights is a unique and important
position. Among other duties, the register serves as the
principal adviser to Congress on matters of copyright policy.
Ms. Pallante has spent much of her career in the office where
she previously served as the associate register for policy and
international affairs, deputy general counsel and a policy
adviser.
In addition, Ms. Pallante spent nearly a decade as
intellectual property counsel and director of licensing for the
Guggenheim Museums in New York. She earned her JD from George
Washington University and her bachelor's degree from
Misericordia University, where she was also awarded an honorary
degree of humane letters.
Our second witness is David Sohn, senior policy counsel and
director for the Center for Democracy and Technology, CDT's
project on intellectual property and technology. Prior to
joining CDT, Mr. Sohn worked for nearly 5 years as commerce
counsel to Senator Ron Wyden. Before that, he practiced law at
a Washington D.C. Law firm. He earned his JD from Stanford Law
School and his BA degree from Amherst College. Mr. Sohn has
also a degree from the London School of Economics.
Our third witness is Daniel Castro, a senior analyst with
the Information Technology and Innovation Foundation, ITIF.
Before joining ITIF, Mr. Castro worked as an IT analyst at the
U.S. Government Accountability Office where he audited IT
security and management controls at various government
agencies.
Mr. Castro was also a visiting scientist at the Software
Engineering Institute in Pittsburgh. He earned an MS in
information security and management from Carnegie Mellon
University and a BS in foreign service from Georgetown.
Our final witnesses is Frederick Huntsberry, the chief
operating officer of Paramount Pictures, where he is
responsible for strategic planning and operations for the
studio. Prior to joining Paramount, Mr. Huntsberry spent nearly
a decade serving in a wide variety of executive and senior
management positions at NBCUniversal and affiliated companies
as well as at Vivendi Universal.
He also spent over a dozen years with General Electric's
Europe division. Mr. Huntsberry has a bachelor's degree with a
concentration in finance from Boston University.
We welcome all of our witnesses to the Subcommittee on
Intellectual Property, Competition and the Internet today, and
we will begin with you, Ms. Pallante, welcome.
TESTIMONY OF MARIA A. PALLANTE, ACTING REGISTER OF COPYRIGHTS,
UNITED STATES COPYRIGHT OFFICE
Ms. Pallante. Thank you, Mr. Chairman. I would like to
express my gratitude to you and Ranking Member Watt for having
this hearing today, and for elevating the importance of
copyright protection in the context of online commerce.
I also would like to say that my office greatly appreciates
the support of Chairman Smith and Ranking Member Conyers on
these issues.
As you know, the U.S. Copyright Office is undergoing a
leadership transition following the retirement of Marybeth
Peters, and I want to take a moment to assure you that our
staff is very busy carrying out the work of the office,
including registering copyrights, eliminating the backlog,
securing works for the Library of Congress and, perhaps most
relevant for this hearing, studying and advising on domestic
and international copyright issues.
Copyright promotes innovation, by extending the number of
exclusive rights to creators, including the rights of
reproduction, distribution, the right to make derivative works,
and in some instances, the rights of public performance and
public display. Our law grants these rights, but they are of
little value to anyone if they cannot be effectively enforced.
There is nothing redeeming about parasites or rogue sites
that are entirely or substantially committed to infringement.
They exploit copyrighted works with impunity, because they have
little or no expectation of enforcement. And to be clear, we
are talking about activity that does not constitute fair use
and cannot qualify for any other defense available to good
faith actors under the law.
In support of the Subcommittee's work on this issue, my
staff and I have met with a broad spectrum of stakeholders, and
we will continue to do this in the weeks ahead. The issues are
complex but they present an opportunity for Congress to manage
the relationship between technology and intellectual property
as it has done many times before.
Rogue sites can be located anywhere in the world and have a
devastating effect on U.S. books, software, music, movies and
television programming. Unlike traditional brick-and-mortar
infringers, they can be quite difficult to identify and locate
and, when pursued, may simply and quickly reappear under
another domain name.
Those based outside the United States lack sufficient ties
to be compelled to appear before U.S. courts, or to allow the
enforcement of a judgment against them. It can be difficult for
rights holders, especially small rights holders, to litigate in
foreign countries or to enforce a judgment abroad.
So what can be done? Solutions that follow the money, for
example, sales, subscriptions and advertising revenue, may be
most successful. Payment processors like credit cards and
PayPal are essential to the Web-based commerce we all enjoy,
but rogue sites have no business using trusted companies to
process profits. Likewise, many rogue sites display
advertising, allowing them to run lucrative businesses using
copyrighted works as the hook.
Search engines are perhaps the most important, perhaps the
most impressive player in the ecosystem. Without them, the
Internet would be almost impossible to navigate. Unfortunately,
both paid and unpaid search results routinely point people to
rogue sites.
One solution might be to give enforcement entities like
Immigration and Customs Enforcement increased authority. For
example, ICE could request a court order requiring the payment
processors and ad networks to sever their financial ties to
rogue actors. Congress might also review the role of domain
registrars, registries and Internet service providers.
A harder question for Congress is whether it is reasonable
and viable to ask search engines to participate in a solution
by suppressing search results that send users to rogue sites.
Safeguards are important. Some have warned that some of the
proposed remedies would risk fragmenting the Internet's global
domain name system. These assertions would require careful
examination. It might also be helpful, however, if the dialogue
that Congress seeks includes the counsel of experts who can
objectively evaluate these relevant technical facts.
Principles of due process and freedom of expression are
also critical. Even the worst of the worst should receive
notice as well as an opportunity to be heard, and relief should
be narrowly tailored. However, injunctions have long been used
in copyright cases, and we do not believe that an order that
shuts down a web site dedicated to infringement would violate
the First Amendment.
Mr. Chairman, thank you again for inviting me to testify,
and I await any questions that you or the Subcommittee may
have.
Mr. Goodlatte. Thank you, Ms. Pallante.
[The prepared statement of Ms. Pallante follows:]
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Mr. Goodlatte. Mr. Sohn, welcome.
TESTIMONY OF DAVID SOHN, SENIOR POLICY COUNSEL, CENTER FOR
DEMOCRACY AND TECHNOLOGY (CDT)
Mr. Sohn. Thank you, Chairman Goodlatte, Ranking Member
Watt, Members of the Subcommittee. On behalf of the Center for
Democracy and Technology, thank you for the opportunity to
participate in today's hearing.
I would like to say at the outset that CDT recognizes the
problem posed by online infringement. Large-scale copyright
infringement affects not just rights holders, but also the
growth of new media, e-commerce and online expression, all of
which are values that CDT works hard to promote.
The main point of my statement today, however, is to
emphasize that the tactics chosen to fight infringement matter
a great deal. Some tactics might be superficially attractive,
but would not work very well in practice. Some tactics could do
a lot of collateral damage, for example, by inadvertently
impairing lawful online speech, lawful online communications
tools, or by undermining cybersecurity.
And some tactics, particularly the domain name focused
tactics that I discuss at length in my written testimony,
suffer from both problems. They won't have much impact on
infringement, and they risk doing significant inadvertent harm.
What I would like to do with the rest of my time is briefly
list some general principles that Congress should keep in mind
as it considers policy approaches in this area, and then turn
to the specific question of domain name blocking and domain
name seizures.
First in general. One, enforcement tactics should keep the
targeted focus on the true bad actors and be careful to avoid
impact on lawful businesses and speech. Doing that requires a
narrow focus on purposeful wrongdoers, and it requires
sufficient due process to avoid mistakes.
Two, proposals for a new law in this area really, as in any
area, should be subject to careful cost-benefit analysis. If
there are policies that offer small or ephermal gains at high
cost, that obviously doesn't make much sense.
And, three, when the infringers are overseas, cross-border
cooperation is essential to stop the illegal activity at its
source, and shut down the wrongdoers for good. Congress should
not assume that the best approach to foreign infringement is
necessarily a new domestic law.
Now, let me turn to the specific question of going after
infringement websites by blocking or seizing their domain
names. As I think the Members of this Subcommittee know well,
the Senate Judiciary Committee last year considered legislation
to expand this practice, by, among other things, asking
Internet service providers to block domain name lookup
requests.
The first thing to understand about this tactic is that it
does not actually remove bad sites from the Internet. Nothing
gets shut down. The servers and all the infringing content they
contain are still there online.
If the domain name has been seized, the site operator can
quickly hop to a new one, this time using a registrar outside
U.S. jurisdiction. And as for the users, my testimony lists
several completely easy ways they could reach a site whose name
has been blocked or changed. The ways aren't highly technical,
but for those users to whom it still seems complicated,
software tools would quickly spring up to automate the process.
So the bottom line is that domain name tactics will have
rapidly diminishing returns. The more common the interference
with the domain name system, the more these work-arounds will
go viral, and the more they will become routine. And I think at
the end of the day, any actual impact on infringement will be
fleeting at best.
Meanwhile, domain name tactics risk collateral damage in a
number of areas. First, the tactics will have some impact on
lawful speech. It is important to realize that targeting a
domain name affects all the content at that domain. It is
different than, for example, the DMCA notice and take-down
process where only the specific infringing material is
targeted.
Plus there are many domains that are shared by literally
thousands of individual sites, and we have already seen
concrete examples of mistakes and overbreadth because of this.
In February, ICE mistakenly seized a domain with 84,000 sub-
domain registrations. The result was that numerous, innocent
people, personal bloggers, small businesses and so forth, had
their websites replaced with a banner that read, essentially,
this site has been seized due to child pornography. Needless to
say, that is a very damaging allegation to have made against
one.
Second, there are serious technical and cybersecurity
concerns. For example domain name blocking is technically
incompatible with DNSSEC, which is a standard for protecting
the security of the domain name system that has been a decade
in the making and is just rolling out. In addition, the
technologies that users--or, excuse me, the techniques that
users would employ to circumvent blocking would create new
cybersecurity risks as well.
Finally, targeting domain names of purely foreign sites
would encourage a dangerous jurisdictional scrum
internationally with each country potentially trying to use the
domain name system to enforce domestic law against foreign
sites so that Congress has to consider the international
implications and the precedent it would be setting.
For all of these reasons, I believe that codification and
widespread use of domain name focused tactics would fail any
serious cost-benefit analysis, and I would urge Congress not to
go down that particular path.
Thanks for the opportunity to appear here today.
Mr. Goodlatte. Thank you, Mr. Sohn.
[The prepared statement of Mr. Sohn follows:]
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Mr. Goodlatte. Mr. Castro. Welcome.
TESTIMONY OF DANIEL CASTRO, SENIOR ANALYST, INFORMATION
TECHNOLOGY AND INNOVATION FOUNDATION (ITIF)
Mr. Castro. Chairman Goodlatte, Ranking Member Watt, and
Members of the Subcommittee, I appreciate the opportunity to
appear before you to discuss strategies for dealing with these
so-called parasitic, or rogue sites, on the Internet. These
websites steal American and intellectual property either
through engaging in digital piracy or selling counterfeit
goods.
Rogue sites stunt economic growth, eliminate American jobs,
and put U.S. consumers at risk. The problem of digital piracy
has become so pervasive today that one in four bits traveling
on the Internet is infringing content.
With just a few clicks, Internet users can download pirated
copies of full-length Hollywood movies, watch unauthorized
video streams of live sports games, and illegally download
software to use on their computers. Sometimes it is even easier
to find pirated content on the Internet than legitimate
content.
To give just one example, I recently performed a Web search
for ``watch Inception online,'' and there was not a single link
to a legitimate website in the first two pages of results.
Instead, I received a list of rogue sites that earned, had
revenue every time a user watches the movie illegally.
Consumers shopping online are also exposed to counterfeit
shoes, counterfeit goods, including prescription drugs,
cosmetics, handbags and shoes. Not only are these goods,
counterfeit goods, often of poor quality, many counterfeit
items such as infant formula or baby shampoo have been found to
be harmful to human health.
Here, too, the problem is substantial. A recent study found
that traffic to 48 sites selling counterfeit goods averaged
almost a quarter of a million visits per day. This translates
into serious consequences for our economy. One groups estimates
the counterfeiting has directly resulted in the loss of more
than 750,000 jobs.
Currently rogue sites operate in a low risk, high reward
environment. Site operators, especially those outside of the
United States, face few personal risks from law enforcement and
encounter few, if any, barriers to distributing illegal content
online. We need to change the equation.
More can be done to help reduce online infringement,
including the following, create a process by which the Federal
Government, with the help of third parties, can identify
websites around the world that are systematically engaged in
piracy or counterfeiting; enlist ISPs to combat rogue sites by
blocking them, implement notice and response systems for
repeated infringers and impose data caps where necessary;
enlist search engines to combat IP theft by removing rogue
sites from the search results; Require ad networks and
financial service providers to stop doing business with
websites supporting IT theft; create a process so that the
private sector can consult with government regulators on
proposed uses of anti-piracy or any counterfeiting technology;
use NSF or NIST to fund anti-piracy and anti-counterfeiting
technology R&D; and, finally, pursue global framework to
protect IP internationally, and impose significant pressure and
penalties on countries that steal from the United States.
The purpose of these actions should not be to target minor
violations of the law, but rather to target websites primarily
designed to steal intellectual property. New tools are
especially needed for foreign rogue sites such as the Pirate
Bay, a Swedish site dedicated to stealing software, movies,
music, video games, books and other digital content.
One way to address these sites is to block them at the DNS
level. DNS is like the global phone book for the Internet where
providers use the number that--provide users the number that
corresponds to each name. Using DNS to block rogue sites is
certainly straightforward.
DNS servers can be instructed to no longer resolve an IP
address when users look up the domain of a known rogue site.
Without this IP address, users would not be able to go on and
visit these sites. Basically this would be like taking a list
of criminal organizations out of the phone book.
Some opponents of better enforcement of IP claim this will
disrupt the Internet. I am here to tell you this claim is 100
percent false. The simple fact is that using DNS to block
access to websites or servers is not particularly new or
challenging. DNS redirection has been used for many years to
block spam and bot nets and to protect users from malware. It
is also widely used to provide parental control filters,
correct typos in URLs and to provide improved search results.
Another objection some critics make is that blocking rogue
sites contradicts the idea of a free and open Internet.
However, websites that egregiously violate the law at the
expense of American consumers and American workers have no
place on the Internet. Democratic nations are well within their
rights to use clear and transparent legal means to enforce IP
rights online.
The responsibility for maintaining the Internet falls upon
each user, each service provider and each business and
institution that uses it, operates it and profits by it. I
encourage you to put in place the frameworks and policies
needed to facilitate and encourage all actors within the
Internet ecosystem to take some measure of responsibility for
maintaining its integrity and protecting consumers.
Thank you.
Mr. Goodlatte. Thank you, Mr. Castro.
[The prepared statement of Mr. Castro follows:]
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Mr. Goodlatte. Mr. Huntsberry, welcome.
TESTIMONY OF FREDERICK HUNTSBERRY,
CHIEF OPERATING OFFICER, PARAMOUNT PICTURES
Mr. Huntsberry. Thank you, Chairman Goodlatte, Ranking
Member Watt, and the Members of the Subcommittee for holding
this important hearing. I am Frederick Huntsberry, Chief
Operating Officer at Paramount Pictures, and I appreciate the
opportunity to appear before you today.
I am here to discuss the theft of motion pictures and other
American-made products via the Internet, the devastating impact
the business of theft has on the U.S. economy, and the need for
legislation to enforce the rule of law on the Internet.
An online shadow economy has emerged that operates in
parallel to our legitimate economy. In this online shadow
economy, every single film we distribute is stolen and then
illegally made available online. Other forms of content like TV
shows, music, games, books and software are also illegally
distributed for profit.
The U.S. film industry creates jobs and tax revenue across
America ranging from advertising expenditures to employment at
movie theatres to retail jobs selling DVDs. But it is often
overlooked that motion pictures are shot in all 50 States,
creating local jobs, supporting local small businesses and
generating significant revenue and tax dollars all across the
country.
A typical Paramount motion picture will employ anywhere
between a few hundred to many thousand American workers. We
also spend money in States across the country. Last year ``True
Grit'' was shot in Texas and New Mexico, adding an estimated
$16 million to those local economies. ``The Last Airbender''
was shot in Pennsylvania, adding an estimated $72 million to
the local economy.
Paramount embraces technology, and we believe that
consumers will increasingly choose to view our films via
authorized Internet distributors like Netflix and iTunes.
Already today, we license our films to more than 200 online
digital distribution platforms across more than 70 countries
covering more than 750 films in more than 25 languages.
The online illegal shadow economy does not create any
American jobs. It does not reinvest any revenue in the creation
of new films or goods. It does not pay taxes and it does not
contribute to the U.S. economy. Instead, it steals from the
U.S. economy and enriches thieves.
Today an online search for movies leads consumers away from
legitimate services by providing results for numerous sites
that lead the consumer to stolen content. It is so simple and
convenient that consumers may never know the difference. Some
of these websites look like legitimate sites, accepting credit
cards and displaying ads for well-known products. Further
examples of these are in my written testimony.
Let me draw your attention to the screens in the room. Just
to give you an example how simple it is for a consumer who is
looking for legitimate ways to stream content online to find
illegal content. So you can go to Google and type in
``stream,'' just the word ``stream,'' and you will get an
auto.fill from Google that says ``stream movies'' or ``stream
TV shows,'' as well as a list of websites ranked in popularity.
It turns out all of the websites highlighted in yellow are
actually pirated websites. We are going to select the first
one, solarmovie.com. This brings us now to a site that is a
search engine called solarmovie.com, and this search engine
finds pirated content on the Internet.
We can see here movies that have been released over the
last few weeks, as well as ``Grease.'' We are going to select
now ``The Adjustment Bureau,'' which was released by Universal
last week, and then we are brought to a screen where we can see
all the cyberlockers, meaning the storage websites, where the
film is located. We are going to select videoBB.com, and two
more clicks later, we are actually streaming the movie.
Within 6 months after Paramount released ``Iron Man 2'' in
theatres, a camcorded copy was available in 12 languages. There
have been more than 15 million peer-to-peer downloads, and more
than 153,000 Internet links were made available for download or
streaming. Twenty Internet storage sites, also known as
cyberlockers, account for 96 percent of all infringing copies
of Paramount films found on cyberlocker sites.
These 20 cyberlockers received a total of 177 million
unique monthly visitors in February of this year. They use
incentive programs to encourage the uploading of stolen copies
of motion pictures. These programs pay cash to the person who
uploaded the content every time their content is downloaded or
streamed. Enormous profits can be made in trafficking and
stolen motion pictures.
We estimate that Megaupload, for example, earns an annual
profit of $40 to $300 million. We have reached the limits of
self-help. Last year, Paramount sent over 40 million
infringement notices, yet the same content is still a few
clicks away.
Legislation focusing on rogue online services is profoundly
needed to establish the rule of law on the Internet. Doing so
will not only benefit the countless American jobs and millions
of dollars in tax revenue that are currently being lost, but it
will also allow the Internet to fulfill its full commercial
promise.
Thank you again for affording me the opportunity to present
my views here today.
Mr. Goodlatte. Thank you, Mr. Huntsberry.
[The prepared statement of Mr. Huntsberry follows:]
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Mr. Goodlatte. I will begin the questioning with you and to
the very point you have raised. Where do you see the motion
picture industry in 5 years or so, if we don't anticipate and
provide the necessary tools to ensure effective online
enforcement of IP rights, at least within U.S. borders?
Mr. Huntsberry. Well, I think the future can be described
as one of less volume and different type of product. If you
look at the history of this industry, it has been one that was
never constrained by theft or piracy and, therefore, was able
to produce as many films as the market afforded, the
opportunity that was created.
As a result of the theft that has been going on already
over these last 5-plus years, we have seen a dramatic reduction
in the number of films produced. The six major motion picture
studios used to produce over 200 movies just 5 years ago; we
are down now to 140 movies as of last year. And also the
profile of those movies has changed, meaning that we are
concentrating more and more on movies that we believe can at
least withstand the pressure that piracy is putting on us.
That means that movies that are sort of in the mid-budget
range, which is sort of a $50-$100 million range, which are
dramas with a smaller audience, have a very hard time right now
reaching audiences. So as I said, we are going to see lower
volume going forward and we will see more changes in the
profile, which means there will be less choices offered to
consumers.
Mr. Goodlatte. Thank you.
Mr. Sohn, with that in mind, you stated that addressing
foreign infringement activity required international
cooperation. But what if the hosting country fails to act, or
as in the case of the Piratebay, the service hops to another
country.
Why should the U.S. be held hostage to hostile, corrupt or
uncooperative foreign interests? Don't we have the right and
responsibility to protect U.S. consumers who are targeted by
malicious foreign actors, and shouldn't we protect U.S.
creators who play by the rule?
Mr. Sohn. Sure. And I think we ought to be looking for ways
to do that. I do think that, as a starting point, though, it is
important to recognize that actually trying to punish and catch
actual bad actors is really the way you get the most bang for
the buck. If you can do that, you can actually get the problem
at its source.
So we have efforts underway to improve cooperation with
other countries. There is a chapter on that in ACTA. It is part
of the IPEC annual report. The IPEC, I think, was here and
listed a number of efforts in that area. I think it is
essential to pursue that kind of international cooperation. In
fact, there was a report that MarkMonitor put out in January
that said that the bulk of digital piracy sites are actually
based in North America and Western Europe.
So I think actually a lot can be done cooperating with our
known trading partners.
For that category of sites where we can really go through
the tools on the table and see that they don't work and that
can actually be shown, I think it is worth thinking about
whether there are narrowly targeted congressional actions that
could work. The phrase I have heard several times today is
``follow the money,'' and I think that would be a fruitful path
to explore.
Mr. Goodlatte. Thank you.
Ms. Pallante, in your opinion, has U.S. copyright law kept
pace with technology?
Ms. Pallante. Well, I think Congress has done a very good
job over the last hundred years of catching up to technology,
but we are rarely out in front of it. And the great thing about
this issue is that it is a chance for us to ensure, before we
go over a cliff, that there is a vibrant e-commerce environment
so that there are incentives. So it is not just about going
after the content that we already know is infringing, but, by
providing a safe environment, we can provide incentives for
commerce to flourish.
Mr. Goodlatte. You noted that operators of these parasitic
websites have no real expectation of enforcement. What are the
most important steps that we might take to put teeth in our
enforcement measures?
Ms. Pallante. As we said, we have been talking with a lot
of stakeholders who have a lot of views on this. But the theme
that has emerged is that by starving them from financial ties
like credit card processing and PayPal and advertising revenue,
that that would go a long way toward reducing the impact. Not
all of them operate with direct financial motivation, but it
would help a lot to start there.
Mr. Goodlatte. Thank you.
And, finally, about a dozen years ago, I spent many, many
weeks in a cramped room--warm, hot room downstairs in this
building with many of the Internet service providers, many
representatives of the content community, some companies that
had a foot in both camps; and we negotiated some of the key
provisions, particularly the notice and takedown provision of
the Digital Millennium Copyright Act, which is, as you know,
the principal tool copyright owners have to protect their
intellectual property online. It was written at a time when
relatively few people were connected to the Internet, and those
who were generally had a maddeningly slow connection.
Looking forward, do you think the balance struck in the
DMCA provides appropriate respect and protection for creative
works, or do we need to take a another look at it?
Ms. Pallante. Well, that is a big question.
Mr. Goodlatte. It is.
Ms. Pallante. I think it always helps when Congress takes a
look at existing law that relates directly to technology, so we
would not be afraid of that process. It is an important tool,
the takedown, and a lot of good companies have built into their
business practices ways to deal with those. Others don't. They
ignore them. They are not set up for them. They are set up so
that they have automated systems that repost the content
immediately through computer software. So there is that. And in
this context that we are talking about today, Chairman, the
DMCA doesn't help with the offshore rogue websites.
Mr. Goodlatte. Thank you very much.
The Chair now recognizes the gentleman from North Carolina,
Mr. Watt.
Mr. Watt. Thank you, Mr. Chairman.
I am not sure exactly where to start here. So many issues.
Ms. Pallante, let me be clear first, that, although your
testimony is directed at copyright, are there also similar
problems in trademark infringement and other areas and whether
you would treat those areas the same way as you would in the
copyright area?
Ms. Pallante. Thank you for the question.
Mr. Watt. Or whether there is an impediment to doing that?
Ms. Pallante. There are clearly very important trademark
violations and counterfeiting problems relating to drugs,
relating to toys, and relating generally to consumer products.
They were not the focus of my testimony because we administer
the copyright law in my office.
Mr. Watt. So my point is, whatever system we set up to deal
with one industry, we probably need to set it up to deal across
the board, right?
Ms. Pallante. Yes----
Mr. Watt. I am trying to cover a lot of territory here. I
just want to be clear on that.
Mr. Huntsberry, you described--you gave us these visuals on
a number of things that you all license, and you have pretty
good information about the people who are pirating. There seems
to me to be a dual track here that has to be being pursued.
That is the one that is on the criminal side, and one is on the
civil side. I thought you put up, identified, 18, 20 sites that
were doing 80, 90 percent of the pirating. What are you all
doing on the civil side to pursue those, or is there some
impediment to doing that?
Mr. Huntsberry. What we do is we work through the MPAA to
take action against those sites.
Mr. Watt. Why is that not an individual business
imperative? I mean, given the extent of this, you are working
through an association to do it, as opposed----
Mr. Huntsberry. That is right, because all studios are
affected by the same sites, typically.
Mr. Watt. What is the MPAA doing to really aggressive--can
they bring a lawsuit in the name of----
Mr. Huntsberry. In the name of some of the studios, that is
correct.
Mr. Watt. You also put up, identified on the screen the
companies that you all license to do this. Is there any way
that electronically or technologically you could require before
something is shown, some kind of discrete identification that
would enable it to be easier to identify the rogue sites?
Mr. Huntsberry. Mmh-hmm.
Mr. Watt. You understand what I am asking?
Mr. Huntsberry. I do, and I appreciate the question.
Because the problem that we run into is we find that----
Mr. Watt. Somebody would pirate that, too, right?
Mr. Huntsberry. That is exactly what happens today. In
fact, McAfee, which is a well-known protective software for
consumers, their logo is stolen and then used on the pages
where the rogue sites are asking consumers to subscribe to the
site.
Mr. Watt. There has got to be more than a logo. I am
talking about some unique identifier of some kind.
Mr. Huntsberry. Yes, but, again, what happens is whatever
you flash up can be copied by others. We even have an example
where a rogue website was luring consumers with a well-known
brand URL, www.redbox.com, which is a well-known company that
licenses legally or that rents DVDs in stores; and they were
using that brand name to then send consumers to a rogue
website.
Mr. Watt. Maybe in California you see a lot more coverage
of this, but I have seen very little coverage of any civil
litigation about this. Am I missing something here? Is that
being aggressively pursued?
Mr. Huntsberry. We are definitely pursuing it wherever we
can. Absolutely.
Mr. Watt. It doesn't seem to be getting much coverage.
Mr. Huntsberry. Well, many of the sites you also have to
remember are outside the United States; and so it becomes more
difficult to go after them because there is the question about
where does the management reside----
Mr. Watt. Law enforcement has them--domestic law
enforcement has that same impediment going across into another
country.
Mr. Huntsberry. That is part of the issue that we have here
today, is that we cannot go after the foreign sites.
Mr. Watt. My time has expired all too quickly. I will go on
to the next round if we have one.
Mr. Goodlatte. The gentlewoman from Florida, Mrs. Adams, is
recognized for 5 minutes.
Mrs. Adams. Thank you, Mr. Chair.
Ms. Pallante, I want to thank you for coming and agreeing
to meet with the stakeholders and everything to investigate
this matter.
Can you give us a sense of the process you have gone
through, the types of stakeholders you met with, and what
themes are emerging from those discussions?
Ms. Pallante. Yes, thank you very much for the question.
In the last month, we have had over 30 meetings with
probably over 50 stakeholders, really in a fact-gathering
approach. We have met with everybody from representatives of
small authors, book authors, for example, to corporations that
are in the music or movie businesses. We have met with search
engines. We have met with ISPs. We have talked to payment
processors. So we have really tried to cast a wide net. We have
also met with ICE, and we have met with the FCC. Because there
are other government entities that come into play on this, and
they have very valid perspectives that have been quite helpful
to us.
So we are still vetting the issues; and, as I keep saying,
they are very complex. But, in general, the complexity in the
view of most stakeholders is not a reason not to approach the
issue. In other words, just because these technical pirates may
be so smart and may get around anything that you may enact is
not a reason not to go down that road.
Most people do agree that there should be a role for all
who benefit in the ecosystem, and there should be a mix of
legislative and private procedures and practices that come into
play to solve it. Due process is extremely important, and
everybody agrees with that, and the remedies should not affect
the current doctrines of copyright liability. In other words,
this is really about remedies.
Mrs. Adams. Search engines, I know you noted that search
engines are perhaps the most important player on the online
ecosystem and stated search engines have sought algorithms that
currently often provide Internet users with search results for
rogue websites that technology makes--to allow search engines
to block such sites from paring the search results, much as
search engines have eliminated child pornography from results.
So as part of your discussions, has the Copyright Office
attempted to engage the search engine community? Do you think
it might be productive to discuss the adoption of voluntary
agreements to address the piracy through either the removal of
the illegal sites in search results and/or giving
prioritization to authorize domains in search results?
Ms. Pallante. I think all voluntary cooperation is a part
of this. The question is, can the suppression of searches to
rogue sites be possible technically? Is it viable? Would it
ruin the process that search engines engage in for good-faith
customers and in their good-faith business? And we don't know
the answer to the technical questions in the Copyright Office,
but we think that they need to be explored.
Mrs. Adams. You do agree they do need to be explored,
correct? I think we need to be looking at all avenues to try to
at least discourage the rogue sites from popping up so quickly.
I am curious, and maybe anyone--but what would you see as
Congress' role to the new--if they were to grant new
authorities to the Federal agencies, what resources do you
believe they would need?
Mr. Huntsberry. I think what we need is the ability to go
after foreign rogue sites, first and foremost.
Mrs. Adams. Mr. Castro.
Ms. Castro. I would just echo what has been said here
today, that it needs to be comprehensive. Too many of these
recommendations are only looking at domestic solutions; and
piracy, as we know, is global. So, yes, it needs to be a global
solution.
Mr. Sohn. In terms of resources I would say it is
especially important that law enforcement has the resources to
pursue actual cases against bad actors and to do the hard work
of working with other governments to try to pursue entities
that are abroad as well. I think some of that can be done. I am
sure it is resource intensive.
Mrs. Adams. You are grinning.
Ms. Pallante. Yes. I think our law enforcement entities
have something like 400 Federal laws that they are responsible
for enforcing. So, assuming they are doing the absolute best
that they can, they would need very clear parameters about what
they can go into court and request a court order for. So could
they shut down payment processors? Could they ask ISPs to
block? They would need to know exactly what the parameters of
the law were before they undertook the resources to go after
these kinds of sites.
Mrs. Adams. So very clear and distinction legislative laws,
I would agree, coming from the law enforcement community. Thank
you.
Mr. Goodlatte. I thank the gentlewoman.
The gentleman from Michigan, Mr. Conyers, is recognized.
Mr. Conyers. Thank you, Chairman Goodlatte.
This sounds like a 101 in copyright law in which everybody
redescribes the problem in their own unique way. But the
purpose of a hearing is for the witnesses to come to us and
give us some recommendations; and, so far, I haven't gotten one
concrete recommendation about what we do. You are all
describing the problem.
And I am disappointed in all the witnesses. I mean, here is
a trillion-dollar industry losing billions of dollars every
year. The Judiciary Committee holds a hearing, and what do you
four come and tell us? That this is a big, complicated problem,
much of it is offshore, so we can't do anything about it. And
the question comes down to, when this is all over, we are going
to read through this transcript and say, what did we learn?
And I can tell you what I have learned.
Now let me take the rest of my few minutes and ask you each
one specifically, starting with Paramount, what do we do in the
Congress?
Mr. Huntsberry. Right. So, as I said earlier, we need to
have the ability for law enforcement to pursue the owners of
foreign rogue websites. That is one of our biggest hurdles
today. These sites know exactly how----
Mr. Conyers. You mean you haven't--you don't have lawyers
that have recommended something specific to you?
Mr. Huntsberry. Oh, sure. But therein lies----
Mr. Goodlatte. Well, why don't you tell us?
Mr. Huntsberry. Because therein lies the problem. It is
today impossible to even discover who the owners are of these
sites as well as where the sites are served. It becomes very
complicated.
Mr. Conyers. That is an excuse. That is not answering my
question.
What do you say, Mr. Expert?
Mr. Castro. There are a number of recommendations that we
have that are very specific about what you can do.
Mr. Conyers. Name them.
Ms. Castor. You can block the DNS-level foreign sites and
domestic sites that are systematically engaged in piracy. You
can require search engines, ad networks, financial service
providers to stop doing business with these sites. You can
create a process for the Federal Government to work with
industry to identify these sites, create a master list of all
of these sites. And then with this list, once you know where
all the rogue sites are, you can work to create a culture that
rejects piracy.
As you pointed out, we all know this is a big problem. If
we had a list and said, here are the top thousand sites that
are engaging in piracy--everyone in the Internet needs to be
involved in doing this. You can use a carrot, you can use a
stick, you can use a gentleman's agreement, but you can get it
done if you have that list.
Mr. Sohn. I wish that I had an easy answer for you to solve
the problems----
Mr. Conyers. I am not looking for an easy answer.
Mr. Sohn [continuing]. But here is what I would suggest.
Number one, I think Congress needs to continue the process
it started with the PRO-IP Act of trying to improve our law
enforcement capability, make sure that we are as effective as
possible in our actual prosecution of bad actors. That requires
the hard job of working with other countries, and I think
Congress has a really important oversight role there.
I think that it is worth looking at narrowly targeted ways
to address situations where we can show that that process can't
work. In other words, ordinary law enforcement can't work. And
the approach I would recommend that Congress look at is this
follow-the-money approach that has been discussed a couple of
times today. I think that trying to make sure that rogue
websites can't make a profit, can't turn this into a profitable
business enterprise, would be an important step.
Ms. Pallante. At this stage, our primary recommendation is
exactly that, that you find a way to give enforcement agencies
like ICE the authority to request a court order to ask payment
processors and ad networks to cut off their financial ties to
rogue sites.
Mr. Conyers. Thank you, Mr. Chairman. I can see why the
industry is losing so much money.
How many times do you think this Committee is going to have
hearings on this subject in the 112th Congress?
Well, this may be it. So I thank you, Chairman Goodlatte.
Mr. Goodlatte. I thank the gentleman; and the Chair now
recognizes the gentleman from New York, Mr. Reed, for 5
minutes.
Mr. Reed. Thank you, Mr. Chairman.
I am going to go down a path here that Mr. Conyers is kind
of exploring. When I have looked at this issue, I have looked
at it from a traditional model of historical thinking that this
is a common theft situation and we need to arm our law
enforcement with the traditional means and methods of enforcing
the laws and go after those offenders.
One thing that I have been asking myself recently when
looking at this issue is, is there something that we are
missing that the Internet presents to us in a new environment?
Is there something within the Internet itself, technological
protective measures or enforcement measures, we could be arming
our law enforcement with to go after these offenders? By that,
I mean the Chairman in the full Committee in his opening
comments said something about if you are getting into an armed
robbery situation you make sure you go in and cut off the
offender.
Is there some way that the technology offers us to utilize
to go after these offending entities that are engaged in this
clearly illegal activity--we go through the courts, we get the
appropriate measures, but is there something that technology
can provide to us that the law enforcement would be looking for
in order to go after the offending parties?
And I guess I will go to the government office to see if--
does law enforcement have any ideas that could be of assistance
to us?
Ms. Pallante. Thank you for the question; and, just to be
clear, our office is not a law enforcement agency.
Mr. Reed. I understand, but from the government, from your
dealings with the Department of Justice and whatever.
Ms. Pallante. In the greater government family, the law
enforcement piece is obviously the big hammer. It has to be
there or there is no real expectation of enforcement. The
technology has really been a huge investment on the part of
private rights holders based on everything they can do to track
infringement, to bring infringement to the attention of ISPs,
for example, so that they can put takedown notices out there in
the hopes that people will comply.
One interesting question is what responsibility, if any,
should those who host sites have in employing technology, say
filtering technology, to weed out infringement as a good
corporate citizen?
Mr. Reed. Okay. Any other suggestions? Any other tools that
could be at our disposal that we are missing, given the nature
of the Internet and its technological advancement?
Mr. Sohn. I think, at the end of the day, there are some
limits to what technology can do. Information technology puts
powerful tools in the hands of users, and I think in the long
run the solution here is not going to be so much the users not
having the technological capability to reach bad sites, but it
is going to be more trying to develop some norms and some
deterrents that prevent people from using it that way.
I think technology can play an important role as different
entities in the ecosystem try to roll out tools to stop
infringement. For example, technology can be used to make the
DMCA notice and takedown processes more effective, more
streamlined.
So I think there is lots of ways that individual entities
within the system--within the ecosystem, I should say--can be
more effective in the role they are trying to play. And that
can include, for example, YouTube, which has a process right
now for trying to identify infringing videos when they are
uploaded and for allowing rights holders to monetize that.
So I think there are lots of ways that technology can be
deployed. I think the difficulty is that it is unlikely to be a
one-size-fits-all technology solution, and it would be
difficult for Congress to go down the path of trying to mandate
particular technologies here. This is something that different
players have to explore.
Mr. Reed. I guess what I am hearing here--and I don't mean
to cut you off; I am running out of time--is we really have two
points of potential areas to look at this from, the money
perspective and also from the structure of the Internet
perspective.
Am I clearly understanding? Does anybody disagree with
those two points of areas where we can step in and potentially
attack this issue? Are there any other areas out there?
Mr. Huntsberry. I see it as money and technology. Those are
the two.
Mr. Reed. Money and technology?
Mr. Huntsberry. That is right.
Mr. Reed. Does anybody else disagree with that? Okay.
When we deal with the size of the enforcement mechanisms we
need, are there any limits that we should be considering on the
size of the penalties or tools that are at our disposal or
should we just be fully unlimited?
Anyone? Ms. Pallante.
Ms. Pallante. Well, one question that has been raised in
the stakeholder discussions that we have had is whether there
will ever be enough government resources for the government to
pursue this as a priority, this being infringement or
counterfeiting, for example. So even if the law were changed
and it were clear and they had more of an ability to cut off
the money and to starve these rogue websites and get at the
offshore operators and to block those sites here, the question
would still be, would you still be ahead of the problem? Or
would you still be limited to kind of the really, really big,
grossly infringing sites?
And so the question that I think is down the road is
whether there should be some additional right of private actors
to get into court on their own without always going through the
Department of Justice or ICE, for example. And you will hear
that from stakeholders as you talk to them.
Mr. Reed. Thank you. I yield back, Mr. Chairman.
Mr. Goodlatte. I thank the gentleman.
The Chair now recognizes the gentleman from California, Mr.
Berman.
Mr. Berman. Thank you very much, Mr. Chairman.
Mr. Sohn, one very quick, hopefully, answer to a quick
question.
You write in your testimony CDT recognizes the problem of
websites that seek to profit by distributing copyrighted
material without authorization and without paying the lawful
rights holders.
We are having a debate on what you meant. Is it one or the
other? Or even if they are paying the lawful rights holders, if
they did it without authorization that is wrong and you oppose
it?
Mr. Sohn. I think all we intended by that phrase was to
refer to entities that are violating the law because they had
not properly licensed the material that they are distributing.
Mr. Berman. So paying rights holders what you think is just
compensation if you don't have their permission or the license
from them is still wrong.
Mr. Sohn. Correct. I was envisioning by that phrase a
voluntary transaction in which the rights holder is paid a
licensing fee that the rights holder has agreed to.
Mr. Berman. Mr. Sohn's testimony, as he says there,
acknowledges the problem, talks about solutions that involve
the forfeiture and blocking of a website as ineffective. His
testimony, if you have a chance to read it in detail, it is
filled with lots of very interesting things which you can't do
justice to in 5 minutes. But challenging the effectiveness of
this approach, raising issues about the potential for
encompassing websites that may be doing some infringing work
but also are exercising non-infringing First Amendment
expression raises the philosophical question of the right of
U.S. law to try and affect behavior by parties in other
countries and then raises consequences of that approach in
terms of cybersecurity and inefficiencies in terms of the
Internet functioning.
Mr. Castro, I don't know if you have read the testimony,
but I would like to get your reaction to some of the points Mr.
Sohn raised in his much longer written testimony.
Ms. Castor. Absolutely. And, obviously, in the shortened
time, if you look at my written testimony, I believe I have
addressed all of those objections that have been raised. They
have been raised in a number of forums before.
If you look at the issue of DNS blocking, which is I think
where most of the objections have been raised, or blocking even
at the IP level, DNS blocking is something that is used already
today. There is a service, for example, called open DNS. People
actually subscribe to this service, and this service provides
users a number of tools like parental controls. It corrects
typos and URLs, and it ensures people get to only safe sites.
We can do something very similar with DNS blocking for
rogue sites. If you look at the objections that are raised,
most of them are speculative. If you look at the data, there is
none that supports it.
And if you look at what even the creators of DNS--for
example, Paul Vixie, he runs ISC, which is the company that
creates BIND which is a software that actually runs DNS on the
computers all over the world. He has even come out and said
that the idea that any site should be able to just have a
domain name, if they are a rogue site, that you should be able
to--the purpose of DNS is not to facilitate rogue sites. It is
not to facilitate piracy. It is not to facilitate
counterfeiting.
We can change the way these standards are written to
respond to this. We can create secure DNS protocols that allow
for the types of controls and mechanisms that we are talking
about today that would allow you to block rogue sites but still
have a very secure, even more secure, Internet architecture.
And that is the result we want. We want a result that
protects consumers and also gives a secure Internet experience.
Mr. Berman. Mr. Sohn, if I could, well, hopefully, I can
get this question in.
The issue of diplomacy and cooperative approaches--if you
look at Attachment 8 to Mr. Huntsberry's testimony, which lists
reasons why Pirate Bay based in Sweden refuses to comply with
DMCA takedown requests from copyright owners, it says it is not
a U.S. company and damned if it has to follow U.S. law. It will
not comply with requests to take down unlawful material and
then proceeds to call the victims of that theft morons and
suggest a number of acts which I prefer not to repeat in
public. But it is in Attachment 8 for those who want to read
it.
What do we ask the Government of Sweden to do? And if they
don't do it, do we put them on the USTR's 301 list? Lay out the
diplomatic strategy that might work in all the remaining time
that you have.
Mr. Sohn. Well, I think absolutely. What you try to do is
work with Swedish authorities to identity the people behind the
site and actually go after the individuals. That is where you
have a real deterrent effect, and that is where you have the
ability to seize the computer servers that the bad guys are
using.
My understanding is that in a number of ICE actions they
have done exactly this. They have cooperated with the
Netherlands, for example, in connection with some of the domain
name seizures. They have actually taken down some bad guys in
cooperation with foreign authorities. And I guess----
Mr. Berman. We have a good example, WikiLeaks. They go
after them on sexual misconduct charges.
Mr. Sohn. Ultimately, I think it is very difficult to use
the DNS system in a way that is going to effectively make these
sites inaccessible. That is why I am saying we have to do so
the hard work of actually trying to get the bad guys. Because I
think however much we like to use the DNS for that purpose, it
is not ultimately going to work.
Mr. Berman. I think my time is more than expired.
Mr. Goodlatte. I thank the gentleman, very pertinent
question.
The Chair now recognizes the gentleman from Arizona, Mr.
Quayle for 5 minutes.
Mr. Quayle. Thank you, Mr. Chairman. Thanks to all of you
for coming.
Mr. Sohn, during your testimony, you were talking about how
we shouldn't be overreaching in any law just to go after a few
bad actors. And I found that curious that you said ``a few bad
actors.'' Because if you are basing it on in comparison to
everybody who uses the Internet I think that might be accurate,
but when you are actually basing it on people that are
legitimately using copyrighted material, do you still believe
that it is just a few bad actors, not a large number of people
or entities that are doing this?
Mr. Sohn. Well, it is interesting. I think there are
certainly a large number of users that engage in infringement.
There was a recent study that looked at a couple of the top
BitTorrent sites and found that actually a relatively small
number of users, on the order of 100, were responsible for
uploading the large majority of the infringing material that
was found there. So it does appear that there are some power
users who are burning up their Internet connection trying to
upload pirated stuff day in and day out. So I do think that
going after some of the worst of the worst can make a dent in
the problem.
I also think that is where you send a strong deterrence
message to everybody else to say, look, you are not as
anonymous as you think you are. We will go through the effort
to track you down, and we can shut you down. If we do come
after you, there is going to be criminal penalties to pay.
Mr. Quayle. Going to the whole shutting-down part, in your
testimony you also presented several reasons why domain name
seizures would not be 100 percent effective and focused
primarily on how such a block might be circumvented. Can you
gave other examples of situations where authorities should not
take action against criminals because they can find a way
around it?
Mr. Sohn. I certainly don't think that a law enforcement
action has to be 100 percent effective in order to be worth
taking. I do think, though, that at the outset, when we are
talking about what new authorities could we create, we would
want to at least make sure it meets a certain minimum bar of
effectiveness.
And I guess my argument would be not that domain name
seizures and blocking are less than 100 percent effective but
that it is really going to be hardly effective at all, that if
you had a graph you will see a brief dip and then you will see
piracy levels go right back up because it is so easy to
circumvent for everybody in the system. And at the end of the
day what I think would happen is, if domain name seizures and
blocking are something that happens on an occasional basis, I
don't think that causes any great consequence. I think if that
becomes a mainstream tool of law enforcement, it will lose all
of its bite. People will just build other ways around the
navigation system.
To use an analogy that Mr. Castro bought up, he said it is
kind of like taking some of the bad guys' numbers out of the
phonebook. It is kind of like that. But, unfortunately, on the
Internet there are lots of ways to get information. You don't
have to use the phonebook. There are lots of navigation
opportunities to find out how to get to these sites. So just
purely on a practical level I think it is not a tactic that is
effective enough to be worth the risks that it causes.
Mr. Quayle. So you don't have any examples of other laws
where we can not push for it without 100 percent ability to not
having a circumvention of that law.
Mr. Sohn. I think when Congress weighs legislation on a
daily basis, probably the scrap heap floor is littered with
examples where we thought of ideas and decided they won't work.
Mr. Quayle. Thanks.
Now, Ms. Pallante, I was just wondering, to go back to
illegal streaming, as technology advances, do you think that
illegal streaming of copyrighted material is now the primary
chosen method to actually use and deliver those copyrighted
material over the Internet?
Ms. Pallante. I think for some works it will be. I am not
sure--I am sure Mr. Huntsberry can tell us what the breakdown
is between downloading and streaming for movies, for television
programming, and for sports streaming. It is very, very big.
Mr. Quayle. And so if that continues to kind of be the wave
of the future, do you think that it makes sense to actually
have a lesser penalty for those that illegally stream videos or
stream copyrighted content over the Internet rather than those
that provided them in downloaded form?
Ms. Pallante. Thank you for that question.
If that is a business model that is a primary way for bad
actors to pirate material and to make it available without
authorization, it doesn't make sense from a policy perspective
for that to be a misdemeanor and not a felony, as is the
reproduction and distribution right under copyright law.
Mr. Quayle. Thank you very much. I yield back.
Mr. Goodlatte. The gentleman from Florida, Mr. Deutch, is
recognized for 5 minutes.
Mr. Deutch. I thank you, Mr. Chairman.
Mr. Sohn, you say in your written testimony that
quantifying the problem is exceedingly difficult, and you point
out that parties commissioning studies that show the impact of
this type of piracy have vested interest in the results,
seeming to suggest that perhaps we are taking this more
seriously than we ought to.
I guess, Mr. Huntsberry, let me turn to you. Can you speak
to the vested interest that might exist here and can you talk
for a moment about the overall impacts on our economy?
Mr. Huntsberry. Well, I can tell you that there are a lot
of jobs at stake and they occur at different levels. So, for
one, you have the films themselves that, as I said, hire
between a few hundred up to 5,000 employees to actually produce
a movie. And so as volume of films decreases, there is a direct
correlation to the number of people who are being hired to make
those films.
The second part is that, at a local level, when we produce
films in the 50 States, we are not spending money in those
States, i.e., not hiring people in those States.
And then, finally, also at the studio level, where you have
people that are in the business of helping to produce those
movies, market, and distribute them, you have a direct impact
there as well, and we have seen decreases in the last few
years.
Mr. Deutch. Mr. Sohn, you can agree that there is no reason
for us to argue about the relative impact, that this is a
vitally important issue we ought to be tackling?
Mr. Sohn. It is an important issue, and my only point was
to try to emphasize that I think that some of the specific
statistics that get thrown around, when the GAO looked at it,
the GAO said, we can't really verify any of these statistics.
Mr. Huntsberry. Congressman, may I add something to that.
In fact, it plays also to a question that was raised
earlier. Last year, just Paramount alone, we actually issued 40
million infringement notices. Now infringement notices are
specifically targeted at peer-to-peer sites or users of peer-
to-peer networks who are downloading content. So we issue the
notice to the ISP, who then forwards it to the consumer.
With respect to cyberlockers, which are the online storage
sites, we issued 1.5 million takedown notices. That means there
were 1.5 million places where anybody in the world would have
been able to stream or download the movie.
Mr. Deutch. I want to go back--Mr. Sohn, you point out in
your written testimony that in 2007, 2008, which is generations
ago in terms of what we are combating, what we are dealing with
now, particularly in terms of cyberlockers and video streaming,
that CDT compiled a music download warning list.
Now if you agree that the primary focus here ought to be on
addressing--focusing the rogue sites so that they can't make a
profit, make this a profitable enterprise, which you said
earlier, shouldn't we be looking not only at advertising, as
you point out, but shouldn't we also be looking at the way that
they ultimately do make this a profitable venture, which is
making people--driving traffic to their site?
Isn't there an opportunity for the Internet service
providers to be involved here? Why shouldn't we be focusing on
that component as well? Since without those ISPs and without a
discussion about the various ways that we can ensure that these
sites don't come up and we can watch pirated content in one or
two clicks, without that, these aren't profitable ventures.
Shouldn't that be a key piece of this legislation?
Mr. Sohn. Well, the hard question there is, what is the
role that ISPs could play that would be effective? Because,
again, the kind of DNS blocking that was suggested in the
Senate bill last year I think just doesn't have any ultimate
effect if you actually track through what would likely happen
and if you look at the many ways to avoid it----
Mr. Deutch. Let me interrupt you for a second, because I am
running out of time.
Instead of--it seems like you are bending over backwards to
acknowledge that there are lots of ways to get around efforts
that we might wish to take in order to make this a less
profitable venture. Shouldn't we be looking at it the other
way, to come up with the technological ways that we can make it
more difficult for others to access this, as Mr. Castro points
out is eminently doable?
Mr. Sohn. I guess I disagree with Mr. Castro that it is
eminently doable to make sites hard to reach. If you look at
something like the WikiLeaks controversy, the lesson is it is
very hard on the Internet to just make stuff not reachable.
That is why I think the more effective approach would be to
say, if they can't process payments, for example, if they
can't----
Mr. Deutch. I understand that part of your testimony. Can
you get back to the ISPs, please?
Mr. Sohn. Right. So on the ISPs specifically, I think it is
very difficult to figure out how ISPs could actually block
people from getting somewhere in a way that wouldn't be
overbroad and have a lot of collateral consequences.
Mr. Deutch. I understand it is difficult. If there is a way
that it can be done without the collateral damage that you
fear, obviously, that should be something we consider.
Mr. Sohn. I think it is worth considering. I think what
Congress will probably find as it looks at that is that those
collateral damages, if you are looking at it from the ISP
level, are difficult.
Mr. Deutch. Thank you. I yield back, Mr. Chair.
Mr. Goodlatte. I thank the gentleman.
The Chair now recognizes the gentlewoman from California,
Ms. Chu, for 5 minutes.
Ms. Chu. Thank you, Mr. Chair.
I wanted to follow up with you, Mr. Huntsberry, about the
true economic impact of piracy; and the reason I wanted to get
more deeply into it is I represent a district in Los Angeles
County. There are many, many jobs that are related to the
entertainment industry; and, of course, Paramount Studios are
headquartered in Los Angeles County. So what happens to you
certainly has a great deal of impact on my constituents.
So in your written testimony you talk about the pre-
production investment by the studio. Taking an award-winning
move like ``True Grit'' for an example, can you describe the
investment for this economy?
Mr. Huntsberry. Sure. As you said, ``True Grit'' was shot
in Texas and New Mexico but then also produced in Los Angeles,
so it had an impact on multiple economies. And in the case of
``True Grit,'' we would have been spending in Texas, New Mexico
on hiring local laborers to build sets. That would include
carpenters. That would include painters. That would include set
designers. It would include caterers and so forth. In other
words, these are literally ten, sometimes hundreds of people
that we have to have on the set on location to service the
production of the movie. And so, again, like in the case of
``True Grit,'' it was an impact of $16 million between those
two States alone. That is not accounting for what we spent in
Los Angeles, which was even more than that.
Ms. Chu. And I understand residuals from DVD sales are an
important part of a compensation package for actors, directors,
electricians, painters----
Mr. Huntsberry. Absolutely. The guild members, as well as
the union members, are compensated as a percentage of the
revenues that we draw from DVD sales or from the sales of the
movies in general.
Ms. Chu. I understand ``True Grit'' was officially released
on December 22, 2010. How long did it take before the movie was
available on line for free?
Mr. Huntsberry. It turned out that in the case of ``True
Grit'' it took about 5 days, and it was a copy of a screener
that we had sent out to Academy members for the voting. And the
screener, by the way, was copyright protected.
Ms. Chu. Thank you. I yield back.
Mr. Goodlatte. Thank you.
The gentlewoman from California, Ms. Lofgren, is recognized
for 5 minutes.
Ms. Lofgren. Well, thank you, Mr. Chairman. I have so many
questions. I hope I can get them out and get answers promptly.
Mr. Huntsberry, I am wondering, the Senate bill last year
would have given government the exclusive power to initiate
legal actions to block domains. Is this satisfactory to you, or
do you believe that there should be a private right of action
to obtain DNS blocking orders?
Mr. Huntsberry. Well, first of all----
Ms. Lofgren. If you could just say ``yes'' or ``no,'' I
have only got 5 minutes.
Mr. Huntsberry. We don't know yet.
Ms. Lofgren. Okay, you have here 20 slides, and I am
wondering, of those, according to your written testimony, it is
about 90 percent of what is of concern was represented in those
20 slides. How many lawsuits have been brought against the
actors in those 20 slides?
Mr. Huntsberry. Against the what? I am sorry.
Ms. Lofgren. The actors that you identified in your slides,
how many lawsuits?
Mr. Huntsberry. It is not a number that I could quote you
here right now. But it is a large number.
Ms. Lofgren. Could you provide it to me later?
Mr. Huntsberry. Absolutely.*
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*The information referred to was not received by the Subcommittee
at the time this hearing was printed.
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Ms. Lofgren. Thank you very much. I appreciate it.
I am wondering about digital locker sites. Do you believe
that Congress should give the government the right or power to
seize those domains, even if they comply with the DMCA?
Mr. Huntsberry. Well, today they don't comply with the
DMCA.
Ms. Lofgren. But the question is, if you give the notice in
take down and they comply, do you think they still ought to be
subject to----
Mr. Huntsberry. If ``complied'' is defined as that you can
no longer find stolen content on the site, then yes.
Ms. Lofgren. You said in your testimony that, even with
DMCA takedowns, there is never a moment that stolen copies of
``True Grit'' are not accessible. Is your goal really to make
sure that there is not available anywhere a stolen copy of
``True Grit?'' Do you think that is achievable?
Mr. Huntsberry. What we are trying to do, we are trying to
level the playing field here between the good guys and the bad
guys. Today, even after 40 million infringement notices and 1.5
million takedown notices, the film is still available. So what
it has proven so far is that we are not able simply with these
notices to bring the problem to a halt.
Ms. Lofgren. You know, I do think that we have a problem
here. And the question I am trying to get at is what is an
adequate remedy that doesn't cause collateral damage? And I
think about we have heard from Hollywood, and that is an
extremely important industry for the United States. There is no
question about it. I hear from my constituency more about
software, because there is certainly a theft problem there. But
we have gone round and round with my software constituents and
finally agreed that, although it is always wrong to have
piracy, not every piracy is a lost sale, because a lot of what
is taken would never been sold. It doesn't mean it is right to
do it, but it is worth putting a grain of salt, as the GAO has
done, in terms of the dollar loss.
Thinking about that, how do we focus on dealing with bad
actors without avoiding the collateral damages?
I was listening to some of our freshmen Members about
illegal. I was designing this scenario in my mind. You have a
Tea Party website, and they are running without authorization
clips of the Patriot to inspire those who come to their
website, and they are also ad supported. Republican candidates
are buying ads on the site, and they are soliciting funds from
people who visit the site, and they are also hosting blogs from
people who believe in the Tea Party principles.
They have violated the copyright act. They are subject to
blockage, if I am reading the Senate bill correctly; and yet
there would be significant First Amendment collateral damage.
How would you deal with that, Mr. Sohn, that scenario?
Mr. Sohn. Well, I think, at a minimum, any step that
Congress takes here needs a much narrower definition than the
Senate bill contained about what constitutes a website
dedicated to infringing activity. The Senate bill used that
phrase, ``website dedicated infringing activity,'' but I fear
the actual definition they used was much broader than that and
could apply to any of a range of sites that do a range of
things and then happened to get some infringement on them
because users post some there.
Ms. Lofgren. For example, I notice this is not just foreign
nationals. Most of the companies listed on the site are
California companies, Google and Netflix and on and on and on,
Facebook. Facebook has tons of infringing material on it that
people have uplifted, and yet I wouldn't call Facebook a rogue
site. And yet I think it would be subject to--the entire site,
if ICE is to be believed, that whole thing would be taken down,
wouldn't it?
Mr. Sohn. Well, one certainly hopes that law enforcement
would not pursue a case like that, but there is no question
that----
Ms. Lofgren. Well, are the facts any different?
Mr. Sohn. And, furthermore, the process for seizures is
essentially a one-sided process. So law enforcement decides it
wants to target a site. It goes in and tells that to the judge.
The site can get seized without having an opportunity for the
site operator to come in and say, no, wait a minute, here is
why I am actually a lawful enterprise and why you've got this
wrong. And I think whenever you have a one-sided process like
that, the risk of either mistakes or just overaggressive action
is significant.
Ms. Lofgren. I see that the red light is on, Mr. Chairman.
I don't want to abuse your courtesy to me.
I yield back.
Mr. Goodlatte. We may have a question or two more here, and
so the gentlewoman might hang in.
Mr. Sohn, as you know, ICE has used authority provided by
PRO-IP over the past year to seize more than 100 domains that
judges found were engaged in online IP theft. In every
instance, the domain name owner had the right to petition a
Federal judge to require the return of the domain name. Can you
tell the Committee how many of these owners have actually filed
such a petition and appeared in Federal District Court?
Mr. Sohn. It is my understanding that nobody has done that
to date.
Mr. Goodlatte. Is that not an indication that seizing
domain name might be somewhat effective?
Mr. Sohn. Well, the fact that they haven't done it could
indicate a number of things. Number one, it could indicate that
some of them think that challenging the Federal Government in a
lawsuit is going to be costly litigation, and some of them may
figure it is just easier to----
Mr. Goodlatte. Has anyone come forward and said that of
these 100 sites, said, we are right. We have a legitimate
complaint that our domain name was seized improperly. We are
not engaged in facilitating pirated works, yet we don't want to
take on the Federal Government because of the cost or other
concerns?
Mr. Sohn. Sir, there are some entities that have publicly
said that they believe they were wrongly targeted. There were
some music blogs that said they actually had obtained the
material they posted from the record labels on a promotional
basis.
There was the example--I guess this is not an intellectual
property example, but there was an example just last month of a
service called moo.com which shares a domain among 84,000
registrants, as I mentioned in my testimony. And the entire
domain got seized because, presumably, there were some
individual sites there that were engaged in that criminal
activity, and a number of innocent individuals were affected
there. So there certainty have been cases where innocent
individuals have been affected.
I actually think the real reason that you probably don't
see entities challenging it is, number one, certainly the bulk
of them probably are just illegal enterprises and they have an
easy way around it. They can just go register a domain with a
foreign registrar that isn't subject to U.S. jurisdiction. So
why bother challenging it when you have that easy route around?
Mr. Goodlatte. Amongst these 100, have we seen evidence of
that occurring?
Mr. Sohn. Absolutely.
Mr. Goodlatte. Mr. Castro, what do you have to say in
response to that?
Ms. Castor. I would say that if the fear is that these
sites will go abroad that is why exactly why we need to be
blocking these sites. That is specifically the reason that
enforcement mechanisms that only target domestic sites and
domestic bad actors ultimately will be ineffective. You can
think of the problem of having four----
Mr. Goodlatte. But what do you say to Mr. Sohn's contention
that that is not effective because they simply go and get
another domain name and keep right on going?
Ms. Castor. Well, I would say this Committee could perform
an experiment. If you have a domain name that everyone knows,
if that disappeared for a day, I bet your traffic would
disappear as well. I don't think it is that easy for people to
find sites when a domain that they know and use is gone.
Mr. Goodlatte. What do you have to say to that, Mr. Sohn?
Mr. Sohn. Well, I did a little experiment myself after ICE
seized I think 10 sports streaming domains back in January. And
I was curious. By the way, I did not want to engage in piracy
on these sites. I just wanted to find out if they had
resurfaced somewhere. So I just did a little bit. It really
only took 5 or 10 minutes of sleuthing on the Internet, if
that, really just a few searches. And what I discovered was
that there were plenty of people out there discussing precisely
this issue, people who had various posts and comments, various
places saying, hey, where did that site go? And someone answers
the question. Well, it has moved, and it is now located at this
other foreign top-level domain.
So what I found was, in looking at those sites, it is
actually quite easy to figure out where they had gone. And this
kind of gets back to my point----
Mr. Goodlatte. But no one knows what happened to the volume
at the site. I understand that the more dedicated person would
do exactly what you are talking about, and they will find the
new domain name and the new address and reach it fairly easily.
But the more casual customer can't find the site. Is that
having an effect? Is that reducing the volume of piracy or is
it not? I think that is a question I would like to have an
answer to.
Mr. Huntsberry.
Mr. Huntsberry. Yes, I think that is precisely the point.
We know that theft is always part of the business model. It is
no different than in the brick-and-mortar business. Brick and
mortar every day has to deal with theft, and so this will also
occur in the online space.
What we are trying to do here is level the playing field so
at least the average consumer is doing the right thing. The bad
guys will always find ways to find the content.
Mr. Goodlatte. What do you and Mr. Castro have to say about
the collateral damage that Mr. Sohn cited with regard to a
domain name that is shared and one violator messed up the other
63 or--how many? More than 63. You had----
Mr. Sohn. There were 84,000 registrations.
Mr. Goodlatte. There were 84,000 registrants.
Mr. Castro. What you have to do in this case is you want to
make sure that there are the right kind of processes in place.
This is something that this Committee can exactly work on, how
can you set up the right processes so mistakes aren't made?
Certainly in law enforcement this isn't the first time mistakes
were made. This won't be the last time. But the idea that free
speech trumps theft is I think absolutely ridiculous, and there
is no reason we can't take action.
Mr. Goodlatte. Thank you.
Mr. Watt, does that prompt any further questions?
Mr. Watt. Yes, let me pick up on right there. Because,
really, the question I was trying to get to, wanted to get to
is how can we set up a due process mechanism that takes these
things into account? What would be the ideal due process
mechanism, Mr. Sohn? How would you change the current process
that ICE is authorized or is undertaking?
Mr. Sohn. The ideal due process mechanism is always to let
the defendant have his day in court essentially and come in and
explain why it is not----
Mr. Watt. And what is the problem with doing that, Mr.
Castro? If I go to a judge and I have got a captive judge and I
got all the facts and no opportunity for anybody on the other
side to respond, that says, hey, I am legitimate, I got free
speech issues, how do those issues ever get raised before the
takedown?
Ms. Castor. I think there are a number of things you have
to keep in mind. If you are talking about domestic sites, you
have to have processes that can respond in Internet time. You
have to have, I think----
Mr. Watt. Well, you got to tell me what the processes are.
That is what we are here for. We are trying to set up a
mechanism now. I don't mean to be impatient like Mr. Conyers
has been, but you can't just tell me, you got to do this, you
got to do this. I don't understand what it is you are asking me
to do.
Ms. Castor. I think the right solution would be----
Mr. Watt. And while I think I agree with you that most of
the First Amendment defenses are crap, even though I am
probably the biggest First Amendment defender on this
Committee--or one of them at least, I would think--but I am not
much on allowing somebody's property to be taken without some
kind of opportunity to defend themselves. I am kind of on both
sides of this issue with you and Mr. Sohn.
But you got to tell me how to get around this. If one side
can go to a judge and get an immediate order, it seems to me
that the other side could come to that same judge and defend
themselves immediately. That is Internet fast time, I would
take it.
Are you advocating something different than that?
Mr. Castro. Well, I think there are a number of things you
could do. Well, one thing you could do is you could set a limit
on how long to have a site taken down without, you know, the
right to a appear before a judge.
Mr. Watt. But once the site is taken down, the damage is
done, if it's done wrong.
Mr. Castro. Well, you could do it, a very short site. You
could have administrative and other kinds of reviews before it
could be taken down in the first place, and you could also, of
course, have liability.
Mr. Watt. Well, that is I am asking you. Are you telling me
you can't get an administrative review? What's a judge? That's
an administrative review.
Mr. Castro. Well, before it's done internally.
Mr. Watt. Before it's done, internally, that is right. Why
can't I, as the site owner, have the opportunity to appear and
present my side at that administrative review?
Mr. Castro. You could certainly do that.
Mr. Watt. Okay, all right. So you all are saying the same
thing, then. I mean, that satisfies you, Mr. Sohn?
Mr. Sohn. I think, that, yes----
Mr. Watt. Okay. Then we agree we finally got some
reconciliation. It satisfies you, Mr. Huntsberry?
Mr. Huntsberry. I think I am not prepared yet to agree with
my colleagues here at this point.
Mr. Watt. Well, are you disagreeing with them or you just
not prepared to agree with them?
Mr. Huntsberry. No, no. I think that, look. I think due
process----
Mr. Watt. You told Ms. Lofgren that too. You didn't have an
answer to the question. We need you to answer questions here
today, otherwise we won't get anywhere.
Mr. Huntsberry. So, again, the parallel I like to draw here
is that if a store is selling----
Mr. Watt. I don't want you to draw parallels. I want you to
tell me how I can do this and give due process, and give you
what you are looking for at the same time.
Mr. Huntsberry. I think that once a site has been blocked,
I think, very quickly, the site owner has the ability to say
was it done justly or not done justly.
Mr. Watt. But the blockage of the site for somebody who is
legitimate, to give them the opportunity to the next day come
back and say you really blew this up, you screwed up, I don't
think is fair.
Mr. Huntsberry. But we know today who is stealing our
content. It is very obvious to us, because we know exactly who
we license to. Therefore any site at which we find our content
that we do not license is stealing our content.
Mr. Watt. Even the Facebook Tea Party people that Ms.
Lofgren described?
Mr. Huntsberry. Again, if we know our content is on a site
that we have not licensed to, we know that it is fraud.
Mr. Watt. Even if it's the Tea Party people on the Facebook
site that Ms. Lofgren described that you said you didn't have
an opinion about yet.
Mr. Huntsberry. And I still don't have one.
Mr. Watt. Well, but you just made a very broad statement,
anybody who puts something up that you haven't licensed is
violating your license.
Mr. Huntsberry. Yes. Well, that's true because that is how
the licensing agreement is reached. It is reached formally
between the studio and the site, and to the extent that the
site has not entered into a license----
Mr. Watt. So if law enforcement is going to go out and
seize that site, the Facebook site that Ms. Lofgren described,
without a hearing, and without that person, without the Tea
Party or whoever it is being able to come in and say, this is
legitimate First Amendment protected, you would say they are
violating it and they shouldn't be given that right?
Mr. Huntsberry. They should absolutely be given the right
to speak. I think what we are talking about is before----
Mr. Watt. But 2 days later you want to be given the right.
Mr. Huntsberry. Right. To me it should be the day after.
Mr. Watt. The day after?
Mr. Huntsberry. It should be after the seizure.
Mr. Watt. I don't know about that. Mr. Castro, you wanted
to make a point. Go ahead.
Mr. Castro. I just wanted to say that if you look at
physical goods, physical goods are seized before there is court
review. So if you want to have a similar----
Mr. Watt. I wasn't too hard on that process either. You
know, I am at least, you know. I try to be consistent. I am not
a big pre-seizure person. I never have thought that it was all
left there. Even if you are seizing unlawful stuff, you ought
to give people an opportunity to tell people that it's not
unlawful.
Anyway, my time has expired and I am far, far over.
But I wanted to ask Mr. Huntsberry one other question, and
you can answer for the record.
Mr. Goodlatte. Go ahead.
Mr. Watt. I am trying to find out what authority you are
advocating for on the civil side. I heard you say authorized
law enforcement to go do stuff in foreign countries. I need to
know what authority you need on the non-law enforcement side
that you don't currently have? We don't have time to have you
answer that not now.
Mr. Huntsberry. I will follow up.
Mr. Watt. You didn't seem to have a lot of opinions about a
lot of this stuff anyway, so this will give you a chance to
answer some of the questions that you haven't formulated
opinions about, and that's one you can spend several days and
then get back to us about.
Mr. Goodlatte. We will afford all the Members of the
Subcommittee the opportunity to submit questions in writing,
and we will afford you an opportunity to respond. Let me see if
anyone has a question they would like to ask right now. The
gentleman from Florida.
Mr. Deutch. Thank you, Mr. Chairman. It's a fascinating
conversation about whether or not the government has the right
to shut down Facebook.
But I believe that we have gone slightly astray here. Mr.
Sohn, let me ask you a question. When CDT put out that list of
47 sites that were falsely posing as legitimate music stores,
which is the way your testimony describes it, you put that list
together. When you put that list out, were you worried that
these might be legitimate sites that somehow by an organization
like yours putting on this list that somehow you might be doing
damage to them?
Mr. Sohn. Well, I will say first we did do due diligence
there.
Mr. Deutch. Right. I understand that. You did due
diligence. Of course you did.
Would we be wrong to suggest or to believe that there is a
difference between something that might get posted on Facebook
and what SolarMovie does or what a site--a movie site that
clearly is illegally streaming movies is doing, number one; or
a book site that is clearly permitting the illegal downloading
of copyrighted material; or in the case of music, a site that
is clearly permitting the illegal downloading of music without
respect for the intellectual property there.
Aren't there instances where, yes, we need to be worried
about the broader implications and making sure we get it right.
But aren't there instances where we ought to have enough,
enough faith in the Federal Government that they, just like
CDT, could get it right?
Mr. Sohn. Well, I think there is a big difference between a
private actor taking action and a small group like ours, and
the Federal Government taking action.
Mr. Deutch. Right, Mr. Sohn, I agree. Just, Mr. Chair, if I
may. I agree that there is a difference. And I don't know about
CDT's ability to gather, to do their due diligence before
putting out a list.
But I believe that probably most of us here would
acknowledge that there is no one who has more resources at
their disposal than the Federal Government in compiling such a
list, number one.
And number 2, with respect to some of these very specific
sites where there is nothing except what's illegal being done,
clearly, we ought to be in a position to acknowledge that and
the Federal Government ought to be in a position to make that
determination before moving forward on shutting down that
domain there.
Mr. Sohn. I think whenever you have government action
involved you do want to have due process, you want to have some
procedural guarantees of fairness, and, you know, unfortunately
we have already seen an example where the Federal Government
made a mistake here, went after moo.com and there were lots of
innocent users of that. Why?
Because they didn't quite understand that this was a--I
think, because they didn't quite understand because this domain
was shared between many users. So I think any time you don't
have due process, there are risks.
Mr. Deutch. Mr. Chairman, just before yielding back. I
would acknowledge. I would just point out that I think this
hearing was incredibly helpful in starting to flesh out some of
the tough issues that we need to grapple with.
At the same time, I think, also putting us in a position to
realize that if we grapple with those issues, that we can draft
legislation that will be respectful of due process, that will
build in sufficient due process, but will also permit us to
protect the intellectual property rights that are being
violated every single day.
I yield back. Thank you.
Mr. Goodlatte. Well, said. The gentlewoman from California.
Ms. Lofgren. Thank you, Mr. Chairman. I realized that I
wanted to ask Ms. Pallante if, you mentioned that you had
convened a group of stakeholders, a large number, I can't
remember the number you said.
Could you provide, later, a list of who have those
stakeholders were that you met with?
Ms. Pallante. Yes, I would be happy to.
Ms. Lofgren. Thank you very much.
You know, I was thinking about the DMCA, and I remember
very well, Mr. Chairman, I was a freshman, but the years that
we spent trying to sort through that, and although I don't
think it was perfect, by the time we finished it, it was a lot
better than it was when it started. I mean, the original draft
outlawed Web browsing, although I don't think it intended to.
Now we are being asked for new remedies. The question isn't
whether we shouldn't consider remedies, but whether they are
narrowly tailored to deal with a specific problem, and we won't
have collateral damage. That's, I think, one of the big issues.
And I was interested in, I think, this is a rough, I didn't
write down word for word, but that search engines and ISPs
should be required to prevent access to the bad actors,
essentially, that that was asserted as something that should
happen.
And in thinking about that, since the bad actors are not a
static list, I mean, there's constant movement in the Internet,
I am wondering how that squares with the Supreme Court's
decision in the Betamax case that basically says that
technology is capable of substantial non-infringing users, are
not inherently guilty of copyright infringement, and really,
our position as the government has been that we are not going
to either shut down non-infringing technologies if they have
substantial non-infringing uses, nor are we going to go in and
do the engineering from the government's point of view of
technologies that are in that category.
How does that precedence square with the assertion that we
should require ISPs and search engines to block an ever-
expanding list and technologies that we probably haven't
thought of? Can you think of that, Mr. Sohn, how that would
work?
Mr. Sohn. Yes. I think you raise a very good point. There's
a long tradition in this country of dealing with Internet
service providers and information tools like that in a certain
way. We have the DMCA that's addressed that.
I do think that one risk is that the current legislative
process could take us into really groundbreaking territory
where, you know, we toss aside some of our long-standing
principles regarding how the Internet operates and how ISPs and
intermediaries in the online context work.
One of the fears that I have tried to express here is that
I think that some of those proposals just wouldn't work anyway.
So it's asking us to really do a sea change in a legal
approach to some of these entities for results that I actually
don't think would make much difference in infringement.
Ms. Lofgren. One of the things that I think Mr. Deutsche
mentioned it and others, the utility of addressing the payment
scheme, and that intrigues me as an opportunity, because if you
do have a site where you are getting paid to stream or to
download material that you don't have a right to profit from,
that is an opportunity, you know, it seems to me, to deal with
it.
Visa came in to my office--and I didn't talk to their
representatives, but they talked to my staff last week--and
said they are watching the Senate bill, that in the last 6
months, they have been asked only 30 times. They have got a
voluntary system where they will block payment for infringing
uses, but they have only been asked 30 times in the last 6
months to do that.
So I am wondering how, why would that be, and are we using
the tools that have already been made available?
I mean, apparently, they are not very agitated about this
bill because they don't feel it would--I don't want to speak
for them, but my impression was they didn't think it would be a
big burden because nobody is asking them to do it now and they
are willing to do it.
Maybe you can comment on that, Mr. Huntsberry. Do you know
why only 30 times would Visa have been asked to block these
sites?
Mr. Huntsberry. No, as a matter of fact, we have been in
contact with Visa intensively over the last year, and also I
should say with MasterCard. And I will say that MasterCard has
done amazing steps forward in correcting this situation.
So we absolutely agree with you that this is a very good
area, as is, by the way, working with the ad providers, because
advertising revenue is another type of revenue that these sites
benefit from.
Ms. Lofgren. I know my time is up. I just would like to
make one comment that you are right. I mean, you have got
counterfeit goods. We don't have a due process issue when you
have got counterfeit goods, but you never have a problem
usually that counterfeit goods could be engaging in First
Amendment rights activity. It's a whole different type of risk
that we have as a country when we move into this.
And some of the, you know, there is a concept, of fair use
in the United States. It is possible to use some material and
have it be protected by the First Amendment. That's been really
not mentioned here today.
And just a final thought, if we move into designing
technology by the United States Government, that too will move
offshore as we know, Mr. Chairman, not all engineers currently
live in the United States. Not all technology is designed in
the United States.
That's another collateral issue that we should be
discussing and mindful of as we continue to discuss this
important issue.
I yield back with that. Thank you.
Mr. Goodlatte. I thank the gentlewoman. I thank all the
members of the panel. This has been a very good hearing. I
agree with some of the Members who have said that a number of
good ideas have been discussed here, a number of good caveats
about how to make sure how we don't violate legitimate
operators, due process, have been brought forward as well, and
I would encourage everybody involved here, the Internet service
providers, the content owners, everyone, to find as many
business model solutions to this problem as possible as well,
because while it is imperative that this Committee act, and I
believe that we will act in this area, and the Senate is hard
at work on this as well, that just like with the DMCA, we won't
find all the solutions here. They are going to have to be found
through the use of technology and through the use of better
business models to protect intellectual property as well.
So I thank everybody for their contribution today. We will
be hard at work at this. This is not our last hearing on this
subject. We will be working on legislation.
I would like to thank our witnesses for their testimony
today.
Without objection, all Members will have 5 legislative days
to submit to the Chair additional written questions which we
will forward to the witnesses and ask them to respond to as
promptly as possible so that their answers may be made a part
of the record.
Without objection, all Members will have 5 legislative days
to submit additional materials for inclusion in the record.
With that, I again thank the witnesses and adjourn the
hearing.
[Whereupon, at 6:15 p.m., the Subcommittee was adjourned.]
SUBMISSIONS FOR THE RECORD
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PROMOTING INVESTMENT AND PROTECTING COMMERCE ONLINE: LEGITIMATE SITES
V. PARASITES (PART II)
----------
WEDNESDAY, APRIL 6, 2011
House of Representatives,
Subcommittee on Intellectual Property,
Competition, and the Internet,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:49 a.m., in
room 2141, Rayburn Office Building, the Honorable Bob Goodlatte
(Chairman of the Subcommittee) presiding.
Present: Representatives Goodlatte, Smith, Quayle, Coble,
Chabot, Issa, Jordan, Poe, Marino, Adams, Watt, Conyers,
Berman, Chu, Deutch, Sanchez, Wasserman Schultz, Lofgren,
Jackson Lee, and Waters.
Staff present: (Majority) David Whitney, Counsel; Olivia
Lee, Clerk; and (Minority) Stephanie Moore, Subcommittee Chief
Counsel.
Mr. Goodlatte. Good morning. The Subcommittee on
Intellectual Property, Competition, and the Internet will come
to order.
And I will recognize myself for an opening statement.
Today's hearing is the second of two oversight hearings the
Subcommittee will conduct to examine issues that surround
digital theft and online counterfeiting.
At our first hearing on March 14, we received testimony
from the Acting Register of Copyrights, a representative from
the Center for Democracy and Technology, a representative from
the Information Technology and Innovation Foundation, and the
Chief Operating Officer of Paramount Pictures. While there was
disagreement as to solutions, each witness affirmed the
importance of protecting intellectual property online. They
also acknowledged the need to ensure that whatever legislation
Congress considers is appropriately balanced and takes into
account the views of a variety of stakeholders.
In discussing the first hearing, I want to take a moment to
clarify a point that arose and that we may revisit today. The
seizure process for IP crimes committed within the jurisdiction
of the United States is current law. It was enacted as part of
the PRO-IP Act that this Committee originated and passed on a
bipartisan basis several years ago. That process utilized by
the Government is the remedy for infringing sites over which
the U.S. can bring a seizure action. This includes, for
instance, domestic and foreign sites that are registered on the
dot com and dot net top level domains.
The purpose of these hearings is in a broad sense to
examine current and anticipated threats to IP online. As part
of that inquiry, we are looking into the adequacy of existing
laws that were enacted to protect investment and promote
creativity online. Foreign-based and foreign-registered
infringing sites are not reachable by U.S. authorities. Yet,
the Internet enables criminals anywhere in the world to defraud
and jeopardize U.S. consumers while generating revenue from
U.S.-based businesses.
Any legislation that grants new authority to protect
Americans and deny access to our market to wholly foreign
parasites will not be based on our seizure laws and processes.
That is because there is no property such as a server or a
domain name in the U.S. to be seized.
However, it has become increasingly clear that new tools
are, indeed, necessary to meet the growing levels of theft
online. Online theft significantly impacts the music, movie,
software, digital book, and other industries that are
increasingly moving to digital delivery of goods and services.
However, it is not limited to these industries. Indeed, it
also impacts traditional manufacturers. I hold in my hands a
real and a knock-off Vibram shoe. I challenge anyone to tell me
which one is real. They both have the toes that you all are
familiar with. And these fake goods, along with even more
dangerous goods, like fake medicine, car parts, and others, are
being sold illegally online and shipped directly to consumers
in the U.S.
These foreign sites go to great lengths to make their
illegitimate goods appear legitimate, including promoting the
logos of financial services companies, hosting advertising on
their sites from legitimate companies, and even charging close
to the same prices for fake goods that the lawful owner
charges. We must aggressively combat this theft.
Today we will receive testimony from an outstanding panel
of witnesses. First, ICE Director John Morton is here to
describe the critical role his agency plays in combating IP
theft in the physical world and on the Internet. Director
Morton will discuss the important role of the IPR Center which
brings together 17 key domestic and foreign investigative
agencies to leverage resources, skills, and authorities in
order to provide a comprehensive response to IP theft.
He will also describe the Operation in Our Sites
initiative, a law enforcement operation that uses the authority
contained in PRO-IP to target websites used to sell counterfeit
goods or distribute pirated merchandise and copyrighted digital
materials. Since June 2010, this high visibility and labor-
intensive operation has executed judicially authorized search
warrants and resulted in the seizure of 119 domain names as
part of ongoing criminal investigations. According to the
Motion Picture Association of America, the seizure of nine
sites that trafficked in infringing movies and TV programs in
the first operation had a huge deterrent effect and resulted in
the voluntary suspension of 81 of the 300 most active pirate
websites.
Our second witness, Floyd Abrams, is one of our Nation's
leading authorities on the First Amendment. Appearing on his
behalf, Mr. Abrams refutes the suggestion that the Internet,
while free, should also be lawless.
Our third witness is Kent Walker, the Senior Vice President
and General Counsel of Google. Best known for its interactive
search function, Google is the dominant player in web-based
advertising and applications and it is increasing its market
share in Internet-enabled mobile devices. Mr. Walker states
Google leads the industry in helping to combat copyright
infringement and the sale of counterfeit goods online. To their
credit, Google has taken positive steps such as developing the
content ID technology it uses on its YouTube platform. Google
has also announced the intention of taking additional steps to
improve copyright enforcement online.
That said, the question is isn't so much what Google has
done as much as it is what Google ought to do. Many
rightsholders have serious questions about Google's willingness
to cooperate in a meaningful way. Among their concerns, they
note the revenue that flows from Google's ad networks to
unlicensed sites that are clearly infringing, the prominent
posting of infringing files on Google's blogspot which is
hosted on Google-owned servers, and the time it takes for
Google to comply or even respond to DMCA notice and takedown
requests.
Time will not permit a complete discussion of all of these
concerns with Mr. Walker today, but I will appreciate his
public and personal commitment to myself and the other Members
of this Subcommittee to work closely with us to respond fully
and promptly to any further questions we have that we might
forward after today's hearing.
Our final witness is Christine Jones who serves as the
Executive Vice President and General Counsel of the Go Daddy
Group. As the world's largest registrar of domain names and a
hosting provider, Go Daddy maintains a large, 24/7 abuse
department whose mission it is to preserve the integrity and
safety of Go Daddy's network by investigating and shutting down
websites and domain names engaged in illegal activities. Go
Daddy's policy is to immediately investigate complaints that a
customer is engaged in unlawful online activity and to
permanently suspend services to any domain name, website, or
registrant they conclude is engaged in illegal activity. Go
Daddy voluntarily and permanently suspends support for all the
parasites associated with such a customer's account.
Ms. Jones has several specific recommendations on steps we
can take to make the Internet a safer and more trustworthy
place for consumers and owners of valuable IP.
In my own estimation, the need to fashion new tools to more
effectively and meaningfully combat digital theft and online
counterfeiting is beyond reasoned discussion. The most serious
questions relate to the scope of appropriate relief and the
balance of interests among stakeholders and the public.
In addition, I want to note that this is the furthest thing
from censorship. A civilized society respects property and
promotes lawful individual expression whether it occurs online
or in the public square. This hearing is another important step
in advancing the public debate and enhancing the ability of our
members to assess the true character and impact of criminal
infringement on the Internet and to design new tools that will
be adapted to current and emerging technologies.
I look forward to working with Members on both sides of the
aisle and with our colleagues on the other side of the Capitol
as we advance this effort.
It is now my pleasure to recognize the Ranking Member of
the Subcommittee, the gentleman from North Carolina, Mr. Watt.
Mr. Watt. Thank you, Mr. Chairman. And let me thank
Chairman Goodlatte for providing the Subcommittee with two
hearings on this important issue. I think it is critical that
we look more broadly at how we promote investment and protect
legitimate commerce online, and a primary means of doing that
is deterring the electronic theft of legitimate commerce and
products just as aggressively as we try to deter theft of
products on the ground. These hearings are affording us the
opportunity to do that.
I look forward to working with you, Mr. Chairman, to
fashion an appropriate remedy for what might romantically be
called piracy but what we still refer to in my neighborhood as
theft or simple stealing.
As I noted in our first hearing, online theft of
intellectual property is increasing and negatively affecting
both the rightsholders and the Nation's economy. Theft of
digital work such as music and movies carries with it
substantial downstream damage, hitting the pockets and
livelihoods of businesses, large and small, and their workers
and artists. Who wants to make something or use their
intellectual innovation or creative talents if the fruit of
their labor is just going to be stolen?
Businesses are hemorrhaging profits, shrinking staff, and
in some instances facing extinction. Counterfeit products of
all kinds sold online not only create a drain on the economy,
but they can also pose serious health and safety risks for an
unknowing public and jeopardize the financial security of
individuals. Luxury goods, automobile parts, foodstuffs, and
pharmaceuticals have all been hijacked by criminals with the
tacit assistance of credible payment processors and, yes,
reputable players in the Internet ecosystem and spurred by the
demand of consumers. The criminals would rather use their
ingenuity to deceive and exploit than to conduct legitimate
business. The magnitude of digital theft and online
counterfeiting together is simply staggering, and they have to
be stopped.
While the anti-circumvention provisions of the Digital
Millennium Copyright Act, the DMCA, have provided rightsholders
with some protections against theft, the scope of these
protections is narrow and their reach provides no protection
against threats from foreign websites.
Similarly, the notice and takedown provisions of the DMCA
established an enforcement model that, while engaging many
actors in the Internet ecosystem, relies in the final analysis
upon ISP's and other online service providers to implement
enforcement.
The gaps in the DMCA suggest that the time to supplement
its provisions to address the broader range of theft is upon
us. The scope of the problem has become so immense that every
participant within the Internet ecosystem must assume some
responsibility for taking the profit out of piracy.
As a member also of the Financial Services Committee, I am
familiar with the laws and regulations imposing obligations on
banks to curb the tide of money laundering. While we require
banks, not because they are bad actors, to report deposits in
excess of $10,000, we do so because we want to deter criminals
from using reputable financial institutions to further their
criminal enterprises.
Similarly, I believe it is incumbent on us to ensure that
legitimate Internet intermediaries are protected from criminal
elements which the evidence overwhelmingly suggests are
exploiting U.S.-based businesses to infiltrate the U.S. market,
reaping profits while undermining our economy.
This applies also to criminals who operate beyond our
borders and register domain names with foreign registrars.
Despite current efforts of IP rightsholders and law enforcement
officials, it seems clear that new authorities and enforcement
strategies and enhanced cooperative partnerships are critically
needed to combat the use of foreign websites by criminals to
reach American consumers.
Additionally, any law we craft must, to the greatest extent
possible, account for new technologies and anticipate the
creativity of criminals to circumvent the law. This is even
more important in a global economy.
I look forward to the recommendations of our witnesses and
thank them for being here.
And, Mr. Chairman, I yield back.
Mr. Goodlatte. I thank the gentleman for his very cogent
remarks.
And I am now pleased to recognize the Chairman of the
Judiciary Committee and a leading advocate for efforts in this
area, the gentleman from Texas, Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
This important hearing is the second of two of the IP
Subcommittee devoted to the destructive effects of online
parasites, web-based entities that steal intellectual property.
Practically anything capable of being reproduced digitally
or available for sale in stores is only a click or two away
today. That is a good thing when consumers purchase from
legitimate businesses, but increasingly consumers are being
steered to web stores that traffic in counterfeit products.
According to the Alliance for Safe Online Pharmaceuticals,
95 percent of online pharmacies are unlicensed or traffic in
counterfeit drugs. When patients go online and end up buying
fake medicines, more than a trademark is in jeopardy. The lives
of those or their loved ones are placed at risk. So this is
about both protecting lives and intellectual property.
It is also about jobs, jobs lost as a result of digital
theft and online counterfeiting. The jobs lost in legitimate
industries tend to be high-paying jobs that provide income and
security to tens of thousands of Americans. For instance, jobs
in the U.S. entertainment industry have an average salary of
$76,000. This is 72 percent higher than the national average.
When jobs like these are lost, entire families become victims.
With digital theft, what is distributed was created by
those who have had their property stolen. Perfect reproductions
of movies, sound recordings, books, software, and musical
compositions compete directly with licensed goods.
The Constitution provides for the progress of science and
useful arts by giving Congress the specific responsibility and
duty to spur creativity and innovation by securing those IP
rights. Our job on the House Judiciary Committee is to protect
the right of free expression and to provide due process of law.
A recent study of online activity revealed that nearly one-
quarter of global Internet traffic involves stolen IP. This
digital theft is now so pervasive, profitable, and pernicious
that it discourages creative companies from investing in the
production of new licensed content. IP theft not only adversely
affects creators but also undermines investments in new
technology by innovative companies such as Netflix.
Securing property rights and protecting IP is a matter that
unites Members on both sides of the aisle and on both sides of
the Hill. While we will never achieve unanimity, there is a
great deal of consensus that new legislation is needed to deal
with threats that have emerged as technology has progressed.
Thank you, Mr. Chairman.
I yield back.
Mr. Goodlatte. I thank the Chairman.
And it is now my pleasure to recognize the Ranking Member
of the full Committee, the gentleman from Michigan, Mr.
Conyers?
Mr. Conyers. Thank you, Mr. Chairman.
We were yesterday over on the other side meeting with the
Chairman of the Senate Judiciary, the Chairman of this
Committee, the Subcommittee Chairman of this Committee, the
distinguished gentleman from California, Mr. Berman, and myself
pledging publicly to be as cooperative as we can in this
ongoing examination of how to get a bill out of here that will
satisfy at least a few, maybe even most of you that are present
in the room today.
Now, there are a number of companies--and Google is not the
only one--and other search engines that act as intermediaries
that facilitate what all this lecturing is about on piracy and
stealing and so forth. We are beginning to examine what
responsibility do they have. Are we all the innocents, and all
the bad guys are overseas doing all this?
Under title 17 and sections 501 and 506, this Government
and copyright holders cannot adequately stop, so far, online
infringement at the speed that is necessary to stop the crimes.
On the Internet, once a file of an illegal movie has been
uploaded, for example, days and even minutes can result in
copies of the file traveling to every corner of the Web. The
Department of Justice and our civil suit system move at a very
slow pace. The DMCA has been insufficient to stop what is going
on. There has been a proliferation of sites operating off our
shores. As fast as we close a few down, others spring up.
And so I am glad that Floyd Abrams is here, the number one
man in First Amendment concerns, because we have got a big
challenge in front of us.
Now, we are going to move toward closing down some of this
international illegal activity, and the challenge is how to do
it without violating due process and the First Amendment.
So I join everybody here in all the rhetoric.
But why don't we just cut off some of the money? These
streams of pirate sites--instead of cutting off each one every
time it pops up to pop up somewhere else, why don't we
eliminate some of the financial incentives by cutting off
funding from the customer through the payment processing system
or cut off the funding from the advertising networks?
What about the Department of Justice with the authority to
go after the worst, we could permit them to order court-
supervised takedowns and allow them to block access to rogue
sites from within the United States? And it may be we need to
talk to the Attorney General again on this subject.
Finally--and this is almost unthinkable--we could begin to
grant a right of private action to allow people to challenge
some of these providers, search engines and payment processors.
I will be the first to be critical if we step over the
line, but I think that there is more that can be done and I
think that we need to use this hearing as another opportunity
to come up with some legislation that we will all be proud of.
Thank you, Mr. Chairman.
Mr. Goodlatte. I thank the gentleman.
And without objection, other Members' opening statements
will be made a part of the record.
We have a very distinguished panel of witnesses today.
Their written statements will be entered into the record in
their entirety, and I ask the witnesses to summarize their
testimony in 5 minutes or less. To help you stay within that
time, there is a timing light on your table. When the light
switches from green to yellow, you will have 1 minute to
conclude your testimony. When the light turns to red, it
signals your 5 minutes have expired.
Before I introduce our witnesses, I would ask them to stand
and be sworn.
[Witnesses sworn.]
Mr. Goodlatte. Thank you and please be seated.
Our first witness is John Morton, the Director of
Immigration and Customs Enforcement. ICE is the principal
investigative arm of the U.S. Department of Homeland Security
and the second largest investigative agency in the Federal
Government. The primary mission of ICE is to promote homeland
security and public safety through the criminal and civil
enforcement of Federal laws that govern border security,
customs, trade, and immigration.
Before his confirmation in 2009, Mr. Morton spent 15 years
at the Department of Justice. While there, he served as an
Assistant United States Attorney, Counsel to the Deputy
Attorney General, and Acting Deputy Assistant Attorney General
of the Criminal Division. During his tenure, Mr. Morton has
sought to strengthen ICE's investigative and enforcement
efforts with a particular emphasis on border crimes, export
controls, intellectual property, and child protection.
Our second witness is Floyd Abrams. Mr. Abrams is a partner
at the New York law firm of Cahill, Gordon & Reindel. His
practice is diverse and includes intellectual property, media,
and communications law. An internationally noted trial and
appellate attorney, Mr. Abrams is best known for his experience
and expertise in First Amendment issues. He is the recipient of
countless awards and honors, which I will not attempt to
enumerate, but perhaps none is more noteworthy than the
description of Mr. Abrams by Senator Daniel Patrick Moynihan
as, quote, the most significant First Amendment lawyer of our
age. End quote.
Mr. Abrams earned his bachelor's from Cornell University
and his J.D. from Yale Law School. I understand he is
testifying in his personal capacity today.
Our third witness is Kent Walker. Mr. Walker is a Senior
Vice President and General Counsel of Google. In the latter
role, he is responsible for managing Google's global legal team
and advising the company's board and management on legal issues
and corporate governance matters.
Before joining Google, Mr. Walker served in a variety of
senior legal positions at other technology companies. These
include eBay, Liberate Technologies, Netscape, America Online,
and AirTouch Communications. Prior to serving in these
positions, he served as an Assistant United States Attorney
where he focused on the prosecution of technology crimes.
Mr. walker graduated magna cum laude from Harvard and
earned his J.D. with distinction from Stanford Law School.
Our final witness is Christine Jones. Ms. Jones is the
Executive Vice President and General Counsel and Corporate
Secretary to the Go Daddy Group, Incorporated. With more than
47 million domains under management, godaddy.com is the world's
largest domain name registrar. In addition to being responsible
for all legal affairs, Ms. Jones oversees the domain services,
network abuse, government relations, compliance, and legal
departments of the corporation. She has been active in her
support of Internet-related legislation to, among other things,
protect children from predators, protect patients from
counterfeit and unlicensed drugs, and enhance transparency and
accountability among those who operate online.
Before affiliating with Go Daddy, Ms. Jones practiced
privately and worked for the Los Angeles District Attorney's
office.
She earned her bachelor's from Auburn University and her
J.D. from Whittier Law School. In addition to being an
attorney, she is also a certified public accountant.
We welcome all of our witnesses to the Subcommittee on
Intellectual Property, Competition and the Internet today, and
we will begin with Mr. Morton's opening statement.
TESTIMONY OF THE HONORABLE JOHN MORTON, DIRECTOR, U.S.
IMMIGRATION AND CUSTOMS ENFORCEMENT
Mr. Morton. Good morning, Mr. Chairman, Ranking Member
Watt, Members of the Subcommittee. Good morning as well to
Chairman Smith and to Ranking Member Conyers from the full
Committee.
As you know, ICE is an aggressive investigator of
intellectual property offenses, and we run the National
Enforcement Center for IP Crime just across the river in
northern Virginia.
Now, why is ICE so heavily engaged in intellectual property
enforcement? The answer is simple. American businesses and
consumers are under assault from organized counterfeiters and
copyright thieves. American jobs, American innovation, the
safety of our people are all at risk, not minor risk, serious
risk, risk calculated in the billions, risk that threatens the
foundation of certain U.S. industries, risks that put people in
hospitals.
Remember, counterfeiters and copyright thieves aren't
trying to make America great. They don't pay taxes. They don't
create jobs. They don't provide health care or pensions. They
don't invest in the next Oscar-winning movie, the next
lifesaving drug, or the next technological advance. They don't
care about safety or health standards. Instead, they wait for
others to do the research, for others to work hard, for others
to play by the rules, and then they take what they can't make
on their own and profit at our country's expense.
In short, we have a significant problem on our hands, and
resolute action by Government, by industry, and the consumer is
necessary to turn the tide.
Why are we pursuing enforcement online? Again, the answer
is simple. That is where crime is taking us. The days of
counterfeiting and copyright theft occurring solely through the
mails, on the streets, or through our ports are over. Today
these crimes are just as likely to occur over the Internet as
they are on the corner of 4th and Main.
Let me be clear here. We are investigating crimes online
because copyright thieves and counterfeiters have led us there.
We are not seeking to regulate the Internet. We are not out to
stifle free speech. We are not out to trample anyone's
constitutional rights. Any suggestion to the contrary is simply
false. Full stop. We are a law enforcement agency out to deter
and prevent crime. Nothing more, nothing less. Crime is crime
wherever it occurs and we do not accept the view that the
Internet should somehow be off limits to enforcement if it is
knowingly being used to commit crime.
So what is ICE doing to combat the problem? Well, we are
making IP enforcement a priority for the agency and pursuing a
record number of IP cases. Last fiscal year, for example, we
opened over 1,000 new IP investigations, the largest number in
our agency's history.
Wherever we can, we pursue the traditional investigative
model; that is, we investigate the alleged crime, we seize the
contraband, we arrest and prosecute the perpetrators. That
approach doesn't always work well, however, on online cases as
online crime is frequently centered overseas and outside of our
legal jurisdiction. Take an online counterfeiting site, for
example. More often than not, the server, the criminals, and
the counterfeiting operation are all outside the U.S. The same
is true for infringing sites. Nothing need be based in the U.S.
As a result, we have also seized 119 domain names of sites
used to sell counterfeit goods and to illegally distribute
copyrighted materials. 119 sites, mind you, out of well over
200 million on the Internet. The majority of the sites were
linked to counterfeiting of hard goods; the rest were involved
in illegal streaming or downloads of entertainment or software.
Please note that we are not targeting lawful businesses,
blogs, or discussion boards. The sites we go after are
commercial and have engaged in repeated and significant
violation of the law. They are increasingly sophisticated and
often seek to dupe consumers.
I don't know if we can throw up--so here is just two quick
examples. Here is a website purporting to be an authorized
Louis Vuitton outlet and it offers Louis Vuitton products--and
I quote--100 percent handmade from France. The website has the
Louis Vuitton logo, name, and designs. What is missing, of
course, are any genuine Louis Vuitton products. Instead, none
of the products are handmade in France, but they are all
counterfeit in China and shipped to the United States.
The next slide, if you would. This is allegedly an
authorized retailer of Nike shoes, another site that we seized.
In fact, none of these shoes are authorized or made by Nike.
They are all counterfeit. Here you have Nike, one of the major
U.S. manufacturers based in Oregon, and it is if not the most
targeted, one of the most targeted companies in terms of
counterfeiting.
Let me close very quickly by saying we spend a lot of time
and attention on process. We can talk about that more in
detail.
I also recognize that good people can have different views
on how to solve counterfeiting and copyright infringement. That
is okay. I don't pretend to have all of the answers. Addressing
online crime is not an easy task and criminal investigation is
but one part of the solution.
I do know this, however, Mr. Chairman. If we do nothing to
keep pace with online criminals or give up this fight, little
good will come of it.
Thank you.
[The prepared statement of Mr. Morton follows:]
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__________
Mr. Goodlatte. Thank you, Mr. Morton.
Mr. Abrams, welcome.
TESTIMONY OF FLOYD ABRAMS, SENIOR PARTNER,
CAHILL GORDON & REINDEL LLP
Mr. Abrams. Thank you. Mr. Chairman, Mr. Ranking Member,
Mr. Chairman, Mr. Ranking Member, Members of the Committee, I
appreciate the opportunity to be here today and to offer a few
First Amendment views on the topic you have.
You have got three competing, sometimes overlapping themes
here today. We deal with the Internet, which is probably the
greatest enabler of free speech by everyone in the history of
the world. We deal with the copyright law which is a great
enabler of free speech by providing a basis for people to
engage in it, to create, and to profit from it. And we deal
with the First Amendment which limits the ability of government
in many areas to control free speech.
That we deal with the Internet does not mean that we are
dealing with an entity that is so unique that we must act as if
we are in a law-free zone. The law is the same with respect to
libel on the Internet as it is with respect to libel in a
newspaper. The law is the same with respect to invasion of
privacy on the Internet as it is with respect to television
broadcasts, and the law is the same with respect to copyright
on the Internet and off the Internet.
It is simply then not so for some people to suggest that
the Internet is the wild west and that we should leave it that
way. Even the wild west had sheriffs and even those who use the
Internet have to abide by our laws.
Now, how should you address the question which every Member
of this Committee has agreed is a significant one and, indeed,
a dangerous one as it currently exists in a way that complies
with the First Amendment?
First, any legislation has to be narrowly drafted, really
narrowly drafted so it only impacts websites, domains that are
all but totally infringing. We don't want a situation, either
as a matter of public policy and certainly not as a matter of
the First Amendment, where we are wiping out in some sense or
blocking in any sense protected speech. But if an entity, as so
many of the ones at issue here are, is nothing but a
transmitter of infringing products, which is to say acting
criminally under our laws, you are permitted to deal with it so
long as you do so without getting into an overbreadth
situation.
I suggest to you that so far as you can, you ought to base
any legislation on the law that currently exists. You don't
have to start from scratch as if there is nothing that can
guide you. We have a copyright law. We have means of
enforcement. Injunctions have been issued by courts since 1790
when the copyright law was first enacted by Congress before we
even had a Bill of Rights.
I would recommend to you that any legislation should
include some reference to and, I would urge, inclusion of
Federal Rule 65 which is the Rule of Civil Procedure which
deals with the modalities of assuring that people have notice
to appear, that judges don't have to issue injunctions, but
that they may do so, and which provides great procedural
protections for all that may be affected by legislation.
And I would simply sum up what I have to say in greater
length in my prepared statement by saying that by enacting
legislation in this area, we are not abdicating America's
leadership of the world with respect to freedom on the
Internet. We are simply enforcing well established, deeply
rooted, frequently abided by, until rather recently, copyright
law which exists for the purpose of furthering free expression
in the first place. There is no constitutional right to steal
someone else's intellectual property. And I urge the Committee
to act with that in mind.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Abrams follows:]
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__________
Mr. Goodlatte. Thank you, Mr. Abrams.
Mr. Walker, welcome.
TESTIMONY OF KENT WALKER, SENIOR VICE PRESIDENT
AND GENERAL COUNSEL, GOOGLE
Mr. Walker. Thank you, Mr. Chairman, Ranking Member Watt,
Mr. Chairman, Mr. Ranking Member, Members of the Committee.
As you have mentioned, Mr. Chairman, before I joined
Google, I was a Federal prosecutor. As an Assistant United
States Attorney, I prosecuted cyber crime. I brought some of
the first cases against criminal copyright enforcement in the
country. I recognize the challenges and the difficulties of
protecting intellectual property online.
The legal issues that we will discuss today are complex and
challenging. They require thoughtful approaches to preserve and
enhance the benefits of the Internet for consumers and
businesses in America and the world. And Google is dedicated to
addressing issues of online copyright infringement and
counterfeiting. We know that the future growth and the success
of our industry relies on fighting the bad guys who break the
law. And we stand ready to support further enforcement measures
against rogue foreign websites, focusing on financial
transactions and advertising where those measures are
appropriate and narrowly targeted against the worst of the
worst foreign websites, in line with Mr. Abrams' comments this
morning.
We do have concerns, however, about extending new law to
dictate natural search results. We would like to work together
to ensure that these efforts are effective, while not harming
legitimate services and technologies that drive U.S. economic
growth and our country's leadership in the global information
economy.
Let me share several ways that Google combats copyright
infringement and counterfeiting and then discuss principles for
how to address rogue foreign websites.
At YouTube as, Mr. Chairman, you recognized, we designed a
powerful tool that rights holders use to block or monetize
infringing content. Our content ID system, developed using
50,000 engineering hours at a cost of over $30 million, scans
every video uploaded to YouTube and typically within seconds
compares it against more than 4 million reference files
provided by rightsholders. Today over 1,000 media companies,
including every major U.S. studio and record label, use content
ID, and most of them choose to monetize rather than to block
the content. This shows the win-win possibilities that Internet
technologies can bring, getting money to rightsholders and
innovative services to users.
When it comes to online services like our search engine, a
major part of the explosive growth of the Internet in the
United States and around the world is due to the strong legal
foundation created by Congress in the Digital Millennium
Copyright Act. Last year, Google processed over 3 million DMCA
takedowns across our products, including search. These came
from copyright owners of all sorts from big movie studios to
small publishers of needlepoint patterns. And currently Google
engineers are building new tools so we can act on reliable
copyright takedown requests on our search engine within 24
hours. We are already testing the new tool with a content
industry partner and we hope to invite other partners into that
test in the weeks ahead.
When copyright owners tell us about infringement, we
disable access to the infringing content whether that content
comes from foreign or domestic sources. The shared
responsibility of the DMCA works. It assures that online
platforms like Google or Facebook or Twitter will not face
crippling liability when users post comments or files to online
sites. And as we committed last year, we are already excluding
several piracy-related terms from appearing in
``autocomplete,'' a feature on Google that predicts queries as
users type. And we have asked content industry representatives
to provide other terms for consideration.
Turning to our advertising programs, in AdSense we prohibit
ads on infringing web pages and we use automated and manual
review to weed out abuse. Last year alone, we took action on
our own initiative against over 12,000 sites for violating that
policy.
To address counterfeiting our policies ban selling ads to
advertisers who market counterfeit goods, and they always have.
We use automated tools to prevent violations of our policies,
and last year alone, we invested over $60 million in these
efforts. After all, a Google user who is duped by a fake good
is less likely to click on another Google ad. So the integrity
of the sponsored links on our sites is of paramount importance
to us. In the last 6 months of 2010 alone, we shut down 50,000
accounts for attempting to advertise counterfeit goods, and 95
percent of those shutdowns came not as a result of a complaint
but as a result of our own efforts. While it sounds like a
lot--and it is--the legitimate complaints we received concerned
less than one-quarter of 1 percent of advertisers.
We have also committed to an average response time of 24
hours to handle counterfeit complaints involving sponsored
links, and that too is in process and should be rolling out
fairly soon.
So finally, as you address the challenge of rogue foreign
sites, I would ask that you keep in mind the following three
points.
First, aim squarely at the worst of the worst foreign
websites without hurting legitimate technologies and
businesses. We agree with the goal of going after websites that
are outside the reach of U.S. law and whose main purpose is
commercial infringement. Procedural safeguards are critical,
though, to ensure due process and to avoid mistakes costing
legitimate businesses the use of their domain names.
Second, don't rewrite the DMCA and existing law that works.
Businesses benefit from stable and predictable rules with clear
standards. Targeted legislation to address rogue foreign
websites must not inadvertently dismantle the legal framework
that America's technology companies and innovators rely upon.
The DMCA strikes the right balance between thwarting
infringement and preserving free speech and we should build
upon it, not undermine it.
Third and last, tailor intermediary obligations
appropriately. Let me repeat Google is open to working with the
Subcommittee on additional enforcement tools. Search engines
already remove infringement by domestic and foreign sources, so
we think it is right for additional measures to focus on
financial transaction providers and advertising services, both
of which Google provides. But any legislation should avoid a
private right of action that would invite shakedowns against
companies making good faith efforts to comply with the law.
To sum up, these are complex issues. We need to address the
enforcement problems, while protecting the overwhelmingly
positive benefits of the Internet for our country and the
world. And we look forward to working with each of you to do
just that.
Thank you very much.
[The prepared statement of Mr. Walker follows:]
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__________
Mr. Goodlatte. Thank you, Mr. Walker.
Ms. Jones, we are pleased to have your testimony.
TESTIMONY OF CHRISTINE N. JONES, EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL, GO DADDY GROUP
Ms. Jones. Good morning, Chairman Goodlatte. Thanks so much
for the opportunity to be heard today.
You know, we put a lot of time and energy into getting rid
of bad actors from other Internet at Go Daddy. So we sincerely
appreciate that you guys have made parasites a priority for the
Subcommittee this Congress.
And I also want to extend my personal thanks to Ranking
Member Watt and Chairman Smith and Ranking Member Conyers of
the full Committee as well and, frankly, all the Members of the
Subcommittee because I spend a lot of my personal time on these
issues not because I have to but because I think it is the
right thing to do. Let me tell you it is nice to know that I
have an ally in this fight because sometimes we feel like we
are out there all by ourselves.
Having worked closely with law enforcement, the
intellectual property community, and others on a wide variety
of issues related to parasites, it is clear to me that we still
have a long way to go. I will be the first to admit there is no
silver bullet--no silver bullet. It doesn't exist. Just like in
offline crimes, it appears there will always be bad guys on the
Internet. That is a stark reality we all must face. And
although some of us have done a lot, there is still a lot more
that some can do. So let's talk about what that looks like.
We have had great success in the past with a hybrid
approach to illegal content. That means voluntary industry
cooperation on the one hand among all of the industry players
accompanied by targeted, specific Federal legislation designed
to protect the companies that are doing the right thing, but
provide a consequence for those who do not.
We have used this approach in addressing child pornography,
for example, to great effect, and Go Daddy and Google recently
worked together with the White House Intellectual Property
Enforcement Coordinator to gather representatives from all of
the major industry players to address rogue online pharmacies.
We feel like we are making progress there as well. That effort
resulted in the formation of a group known as the Center for
Safe Internet Pharmacies. That group's mission is to share
information among all of the players, work together to
terminate services for illegal online drug sellers. Whatever
your service is, if you are a payment card provider, if you are
a paid advertising provider, if you are a domain name
registrar, whatever it is, turn off your services. We feel like
that hybrid approach there is going to make it possible for us
to address a significant number of illegal drug sellers who
operate online today.
So we support that type of hybrid approach to address a
variety of types of criminal activity such as child abuse,
rogue pharmacies, spam, phishing, identity theft, intellectual
property infringement, terrorism, hate speech, on and on and
on. We think it works in all of those situations.
Of course, it is always just as important to focus on
enforcement as it is to enact new legislation. To do that, we
would suggest a few simple things. I think Ranking Member
Conyers mentioned this in his statement, that is, follow the
money, shut down all of the choke points in the system because
we have to disincentivize the bad actors. So in the IP context,
for example, we would take away the ability to search for, pay
for, ship, and make money from selling stolen or counterfeit
goods, but we have to do that while encouraging new innovation
and research and development. One thing we know is that the
better we get, the better we get. That means we have to think
of things we can hardly even imagine right now.
So what happens, for instance, in the case of cyberlockers
or infringing mobile applications or whatever infringement is
going to come up that is invented in the future? If we
establish a set of rules and procedures such as the DMCA which
can be applied to a wide array of situations, we can possibly
address those things that aren't, as if they were.
None of us can predict the next big thing. I mean, who
knows what is the next eBay or AOL or Netscape or Go Daddy or
Google or Twitter? Who knows? Not so long ago, there was a
monopoly for selling domain names. Nobody had ever heard of an
Internet browser or even a search engine. The term ``social
media'' didn't exist. It is common understanding now. And not
too long from now, there is going to be another idea like that
that nobody has ever heard of. We have to think in terms of
concepts rather than URL's or domain names or IP addresses or
whatever to make legislation that is designed to outlast the
current ideas.
And because these issues reach outside our borders, we
should all take steps to bind our foreign affiliates to the
actions that we take here in the United States.
A huge number of our customers make a living operating
online businesses. That is how they make their money. And their
ability to continue to do so is very important to us. We would
challenge our counterparts in the Internet ecosystem to do what
we do at Go Daddy, that is, to voluntarily take action against
the people that we know to be using our system for illicit
purposes, and that includes registrars, registries, hosting
providers, payment processors, shippers, ISP's, search engines,
online advertising providers and, oh, by the way, whoever joins
the community next, whoever that is. We challenge them all to
make the same commitment.
And I would submit that unless and until we provide a
consequence for the businesses that facilitate criminals in
their system, there will always be a safe harbor, a place where
crooks can go to engage in crimes online, and we must fix that
hole in the fence.
Thank you very much for the time.
[The prepared statement of Ms. Jones follows:]
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__________
Mr. Goodlatte. Thank you, Ms. Jones.
I will recognize myself to begin the questioning. Let me
warn my Committee Members I may take a little extra time here
because I want to go into some detail with this issue with some
specific examples.
Let me say at the outset that I want to restate my belief
that tech and content, two areas in which this Committee has
great interest, are not enemies and that they both bring
innovation to the table to solve various problems, and they
need each other, and we need both of them contributing to solve
this problem.
Mr. Walker, let me just say I am an avid user of Google's
search engine, and I welcome your comments here today that you
want to work with the Committee on some legislative solutions
that might involve your company and other players in the tech
community in this. And we hear your concerns as well.
And I want to commend you for a news release, which I will
put in the record, that says, ``Google boots Grooveshark from
Android Market,'' and it noted that this was done yesterday.
Grooveshark is a music app that has been found by many of the
top music labels to be violating copyright law, and a Google
spokesman said, ``We remove apps from the android market that
violate our terms of service.'' And it was also noted that we
were having a hearing on the subject here today. But we commend
you for that.
[The information referred to follows:]
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__________
Mr. Goodlatte. I want to go into some details about some of
the things we found in recent searches, however. In preparation
for today's hearing, we conducted searches in Google for free
mp3 Taylor Swift, quote/unquote. Over the past several days,
the first page of each search return appeared to show all
unlicensed sites. We checked with the distributor of Taylor
Swift's recordings, and they provided us three screen shots
from yesterday that show only two authorized sites out of
nearly 30. To access the first of those, a consumer would have
to scroll past the first 14 suggested by Google.
You wrote recently that Google was, quote, a big fan of
making authorized content more accessible, end quote, 4 months
ago, and yet this is the result.
I intend to check in a week, in a month, in 3 months, in 6
months. When I do that, will I find this same problem in
existence? What is Google doing about this?
Mr. Walker. Thank you, Mr. Chairman.
Let me go to the Grooveshark example first. I want to flag
that this is not the first time we have removed items from the
App Store. We have removed almost 2,000 different applications
from the App Store over time, something like 200 or 300 in
February alone. So we continue to look not just for copyright
infringement but malware and many other things. There are I
believe about 200,000 different applications. So it is a major
challenge for us to go through all them.
Mr. Goodlatte. And we commend you for that.
Mr. Walker. With regard to the additional items in the
search results, we do try and remove--when we get notice of
these individual infringing items, obviously, we try and take
them down. And at the same time, we have said we are eager to
work with the content industry on ways of making their sites
more accessible. In some cases, when they offer preview content
or other kinds of things where you can listen to 30 seconds or
a minute or a trial copy of the song, for example, that is very
attractive to users. And we talk with them about ways of
partnering that would actually make that more visible within
the snippets, within the search results that are returned, and
so as you get users clicking on that, that is sort of a natural
signal. The cream rises to the top even as we try and pull the
bad guys out.
Now, that said, the Internet is a big place, and as I think
all of the witnesses have said, we are never going to get rid
of all the bad guys. We play the Whac-A-Mole problem as much as
the content industry does, and it frustrates us. When you hear
me talk about taking down 50,000 sites for this or 12,000
accounts for that, that costs us a lot of time and effort. It
drives us crazy trying to get rid of these guys because, of
course, we take them down one place, they come back up in
another place using a different credit card, using a different
IP address. So it is a constant battle.
We think the best way to fight that battle is
collaboratively, to your point about the content industry and
the technology industry working together. We are in the best
position to rapidly remove content and build tools and filters
to help do that. The content industry is in the best position,
maybe a unique position to let us know what is authorized and
what is not because, of course, there are multiple authorized
sites for different kinds of songs. The music industry is a
very complicated place with label rights and publisher rights
that expire over time in different geographies and the like.
They know what is authorized and what is not, and we rely on
them to let us know and then we take action.
Mr. Goodlatte. Let me follow up on that. As I indicated, I
use Google frequently. I am frequently amazed at the
sophistication of the algorithms that you use in your search
process. When I type in things, I like to see how many letters
I have to type in before Google knows what I am looking for.
And I am frequently very impressed.
3 days ago, we conducted a search for ``watch movies
online.'' We typed in those words. Without prompting, the first
suggestion that appeared in the dropdown box that comes--which
is exactly what I am talking about, anticipating what I want.
In the dropdown box, the first suggestion was ``watch free
bootleg movies online.'' And I am sure as a former Federal
prosecutor, you know the meaning of the term ``bootleg.'' If
you click, you go to a results page full of infringing links.
Clicking on one of the sites at the top of the page takes you
to a website that is a notorious infringing site. It even
advertises pre-release movies. We have a movie coming out on
Friday that they are advertising now will be available online
illegally. ``Hanna'' is the movie and it is going to appear in
the theaters on Friday, and you will be able to see it online
on Friday too apparently. It even advertises pre-release
movies.
Why exactly does Google suggest to users that they click on
``watch free bootleg movies online''?
Mr. Walker. So the functionality you are speaking to is
referred to as autocomplete. It is essentially the sum of what
other users are doing. So it is not really Google knowing what
you want. It is you asking for things that other users are
interested in, and the fact that some of these terms come up
actually reinforces the importance of education among the
American public because it is a reflection of how many users
are, in fact, trying to seek illegal, bootleg, pirated,
otherwise infringing content out there.
Mr. Goodlatte. Well, let me ask you this. Would Google
think it appropriate to, when these things are called to your
attention, review the things that you anticipate and put up
there and block some of them from occurring?
Mr. Walker. Absolutely. In fact, we have committed to do
just that. And the challenge in doing it, obviously, is making
sure that the terms we are blocking are uniquely or highly
correlated with infringing material and not with other sort of
material. So, for example, if you put in ``cheap'' or ``free,''
many of those are perfectly appropriate and legitimate
searches. You wouldn't want to not suggest that. Even terms
like ``faux'' or ``replica,'' in many cases it is faux leather,
or even to go farther, terms like ``knock-off,'' there are
knock-off dresses that are sold by Macy's and Nordstrom's. So
we have to figure out what are the list of terms that really
are pushing people to something that is almost unambiguously,
to Mr. Abrams' point, infringing material.
And we have started that process, and in fact, we are in
dialogue with the content community to ask them what are your
key terms. What terms would you like us to include in that
list, and how can we do that analysis and move forward?
Mr. Goodlatte. Thank you.
And let me follow up on that. As I think you know, many
Members of the Subcommittee are interested in your December 2
policy blog post regarding steps Google would take to address
the growing number of issues involving the use of its services
in connection with copyright infringement. Interesting among
them was a pledge to, quote, prevent terms that are closely
associated with piracy from appearing in autocomplete, the
Google feature whereby Google's search engine will suggest
search terms to its users as the users type, based on its
prediction of what they might be looking for.
As you know, I am the co-chair of the bicameral
congressional International Anti-Piracy Caucus, along with
Congressman Adam Schiff. Last year we released our annual
international piracy watch list which included six foreign
websites that are notorious for providing access to infringing
copies of works by U.S. creators. These included sites like the
Pirate Bay, whose principals have been criminally convicted or
their activities in Europe, and isoHunt, which is a file
sharing site that is the subject of an injunction issued by a
U.S. court for copyright inducement and whose owner is
described another Federal court as, quote, an admitted
copyright thief.
I am told that a review of the 15 sites identified 6 weeks
ago by the USTR as notorious markets for piracy show nearly
identical results. In other words, Google continues to suggest
each one of those sites as search terms through the
autocomplete function.
I would like to know what you are doing to address this
problem and if you are doing your best to prevent terms that
are closely associated with piracy from appearing in
autocomplete. Again obviously somebody looking for something,
they can type out that whole word and will not get to it, but I
think it would help Google's reputation as not aiding and
abetting the infringement by not having these pop up on your
autocomplete.
Mr. Walker. We understand the optics of it, and we are
working on it. I think it is an extension of our prior
conversation. The challenge is that a lot of those sites are
broad-based sites. The Chinese search engine Baidu, for
example, I believe appears on that list, and Baidu does allow a
large amount of pirated and infringing material to be
accessible through its search engine. And yet, we are in a
difficult situation essentially discriminating against a search
competitor and leaving them out of autocomplete.
But I think the spirit of my answer here would be the same
as before, which is we really want to identify things that are
unambiguously infringing and we are open to removing those from
the autocomplete list.
Mr. Goodlatte. Thank you, Mr. Walker. I appreciate your
answering those difficult questions.
And to not single you entirely out, I have one for Ms.
Jones. You mentioned that Go Daddy strongly prefers DNS
blocking by registrars, registries to DNS filtering by ISP's as
a strategy to shut down rogue websites because DNS filtering
will not provide 100 percent protection. Is DNS blocking, as
you describe it, effective against websites hosted and
registered through overseas companies, and doesn't DNS
filtering provide a better way to disable access to those types
of foreign-based websites? Should both types of technologies be
employed to combat the problem?
Ms. Jones. To answer your last question first, yes, I think
that is absolutely necessary, and it is a pretty complicated
technical explanation. I will try not to get too much into the
weeds. But if you block DNS at the definitive root level,
nobody can access the website from anywhere. The problem comes
where you don't have cooperation from entities who are willing
to do the blocking, and then if you want to block at least some
access, you may have to engage in some filtering. And we know
that both blocking and filtering take place today in a variety
of contexts.
The Internet community is a little bit remiss to employ
these kind of tactics because the more you filter, the more you
splinter, the less stable and secure the root becomes, and you
end up with a giant grid, a three-dimensional grid actually, of
things that are blocked by people, from people in various
geographies, and it gets very shaky. So really, that suggestion
is more of a technical approach as opposed to a policy approach
or a policy belief.
I was going to answer one of Mr. Walker's questions, but I
know I am not allowed to ask questions here. So I will just
leave it at that.
Mr. Goodlatte. That is good advice to yourself. [Laughter.]
Now I will recognize the gentleman from North Carolina, Mr.
Watt.
Mr. Watt. I can't resist. I got to let her answer whatever
question she wanted to answer. [Laughter.]
Mr. Watt. If she is willing to answer it, I am willing to
listen to the answer.
Ms. Jones. It just occurred to me that once in a while we
have foreign websites that we can't block because they are
foreign, and we don't have a good, cooperative U.S. company
that is willing to do it. So the example that the ICE gentleman
put up here of the fake Louis Vuitton or the fake Nike, those
are almost certainly--I don't know--I haven't looked them up,
but they are almost certainly foreign registrars and foreign
hosting providers, and they won't take them down. No offense,
Mr. Walker, but that doesn't mean that we can't disable the
search to those because I can almost guarantee you that Louis
Vuitton and Nike have contacted somebody to say could you
please stop sending people to those websites. It is an
approach.
Now he is going to have to answer.
Mr. Watt. What do you say to that, Mr. Walker?
Mr. Walker. Thank you, sir.
It is exactly right. I am sure we are contacted by many of
those sites, and we remove them. And that is the way the system
should work. Louis Vuitton and Nike are in the best position to
know what is appropriate and what is not. In many cases, when
you put those search terms in, you may get ads for competitors,
for example, and that is a good thing. Competitive advertising,
comparative advertising helps consumers, helps them find out
about more products that are out there, pay less money for
them.
Mr. Watt. What do you say to that, Ms. Jones?
Ms. Jones. I happen to hear from the Louis Vuitton and Nike
lawyers all day every day, and they are very willing to tell
you which sites they want you to take down. So I don't have the
data from any of the other providers except for the ones that I
represent. So I don't know if they have the lists, but I would
be shocked if they hadn't provided those.
Mr. Watt. Mr. Morton, would it be more effective to block
them or filter them?
Mr. Morton. Well, as Ms. Jones noted, it gets very
complicated, the sort of technical arrangements. What I will
say is, first of all, on those sites, they weren't seized or
terminated by industry. We seized them, both of those sites. We
seized them and we forfeited both of those sites because they
were notorious counterfeiting sites and they were referred to
us by industry. And those are the instances in which you can
have good cooperation between the Government.
I think what you have heard going before suggests, however,
that industry can do a lot more and on a much greater scale
than Government ever can. We are part of the solution. We are
not the solution by a long shot.
Mr. Watt. Mr. Abrams, any free speech implications in any
of those situations?
Mr. Abrams. You know, everything we are talking about today
is suffused with a danger of free speech violation. We don't
want Google taking down sites just because people are angry at
them or upset. We don't want the public to have less access
unless we are talking about genuinely infringing or otherwise
criminally or civilly violative sites.
It seems to me that the hard issue here is that we are
often talking about taking down an infringing movie, say,
taking down an infringing design when the real problem is very
often that these sites are only infringing sites. Everything on
them is infringing. And there the question is, as a
congressional matter, what can you do about that? That is what
the Senate focused on in its attempt to draft legislation, and
I suggest to you that when you focus on drafting anything, that
you ought to propose legislation which focuses not just on
individual files, not an individual movie or an individual
design only, but on the sites themselves which contain them.
Mr. Watt. But wouldn't a convenient way, quick way around
that be just to----
Mr. Abrams. I am sorry. I didn't hear.
Mr. Watt. Wouldn't a quick way around that be just to put
up some legitimate stuff on the same site? I mean, seldom are
you going to have a criminal that is not--if you tell him that
all you are doing is taking down sites that are exclusively
dedicated to criminal activity, he is going to mix in a little
legitimate stuff, don't you think?
Mr. Abrams. That is a fair point. Therefore, what I am
talking about will never be a complete solution.
But law enforcement authorities deal with that when they
deal with stores that sell 90 percent of child pornography.
They can close down the store in that circumstance. If you get
to a much lower amount, A, you have done something. You have
accomplished something I think of a serious public policy
nature, and then, yes, you have to go after the individual sale
of an individual book. All I am saying is that it is a step
forward to try to deal with the sites which is the reality, as
I understand it, today where there are many sites which are
either nothing but or almost nothing but infringing entities.
Mr. Watt. I am sure I have plenty more questions, Mr.
Chairman, but out of respect for other Members, I will come
back around the next time I guess.
Mr. Goodlatte. I thank the gentleman.
The gentleman from Arizona, Mr. Quayle, is recognized for 5
minutes.
Mr. Quayle. Thank you, Mr. Chairman, and thank you for
holding this hearing.
Annually billions of dollars are being stolen through
pirated or counterfeited goods. In the last hearing that we
had, a number of us, including myself, had mentioned some of
our concern of how illegal streaming was being treated. I am
actually very pleased that the IP Enforcement Coordinator,
Victoria Espinel, issued a white paper recently which states
that illegal streaming should be a felony and not a misdemeanor
as it currently is. And I know the Chairman of this
Subcommittee and the full Committee have been working on this,
and I look forward to seeing a piece of legislation soon.
I would also like to specifically thank Mr. Morton and ICE
for all their good work in enforcement against illegitimate
sites, and I thank you for being here today.
My first question is for you, Mr. Walker. Now, does Google
currently have algorithms in place that allow ads that are paid
for to show up during search results based on the search terms
that are placed into the query?
Mr. Walker. Yes. That is fundamentally how what is called
the AdWords side of our business works.
Mr. Quayle. So those algorithms are basically personalized
for each search result based on the search terms that are
utilized. Correct?
Mr. Walker. They are personalized based on a lot of
different factors. So, for example, a different part of a
country, different time of day, different time of season, et
cetera, but there is a correlation that takes a lot of things
into account.
Mr. Quayle. Are these updated regularly, daily, weekly,
monthly?
Mr. Walker. Almost instantaneously because it looks at the
quality of different websites, the amounts that different
advertisers are paying, user preference. The more users click
on an ad, the more popular it becomes and therefore more
relevant. There are a lot of factors that go into that. But it
is almost in real time.
Mr. Quayle. I went to law school. I wasn't an engineer. So
that sounds pretty----
Mr. Walker. That makes two of us.
Mr. Quayle. That sounds pretty sophisticated.
So based on that, I mean, Google has extremely
sophisticated algorithms that it uses in its search results and
queries, and because of that, Google has really become a noun,
not just a verb. But based on that, a recent report stated that
domains classified as digital piracy attracted 32 million daily
visits. Do you think that a company that has sophisticated
algorithms like Google could create an algorithm in which
search requests, using words that are among the most frequently
associated with a crime, are able to filter out those results?
Have they tried to do this or have you chosen not to?
Mr. Walker. The challenge is that it is sort of a different
kettle of fish. It is a different task to solve. In the context
of trying to come up with what is most relevant or related to a
keyword, taking all those different factors into account, you
can use user feedback. As I referred to, if you rank something
fourth and all your users click on that, well, you probably
made a mistake and it probably should be ranking higher and
vice versa.
In the context of trying to target what is authorized and
what is unauthorized on the Web, that is a much harder
challenge. And the feedback loop we use there is essentially
DMCA notices. We referred to before our process for when we get
a notice of something from the rightsholder, then we know it is
illegal and we remove the link from our system. We don't just
demote it. We take it out entirely.
Mr. Quayle. I remember an article in the New York Times--I
think it was earlier this year--regarding J.C. Penney and how
it had been pushed to the top of the search results for
everything from SkinnyJeans to grommetted top curtains.
Anything that you put into the search query in Google came up
J.C. Penney.
Now, when you guys were actually notified of this, you
changed your algorithm so that that wouldn't happen. How can
you not then use that type of sophistication that you do--I
mean, I know you just explained that portion of it, but I think
that it would seem to be feasible that those common search
terms that are used to find pirated works on the Internet could
be put into the algorithm so that those searches and the
results are actually filtered out of that.
Mr. Walker. There are two problems there. I mean, one is
that a lot of times searches, queries that are used to find
pirated stuff are also used to find all sorts of other things
as well--the word ``cheap'' or ``discount'' that I talked about
before. So you are trying to separate the wheat from the chaff.
That is problem one. You don't want to be over-inclusive and
knock out a lot of legitimate sites.
Problem two is figuring out what the wheat is, and there we
need to partner with the content industry because there are
lots of sites out there that make fair use of items, that have
remixes and different sorts of things that are protected under
the DMCA again that we don't want to knock out. So we rely on
the content industry to say that is bad. That site is bad, pull
that out of your index.
We don't want--and I don't think the Members of the
Committee want--us or any company to be the judge, jury, and
executioner against an entire site.
Mr. Quayle. I agree with that, but you have got to
understand the frustration. I think Google does understand the
frustration of those that have copyrighted work that is being
infringed because recently, just last week, you reached a
settlement--Google did--with six companies in which Google was
suing because the companies were misusing Google's trademarks
and name. In addition, I have read other pending lawsuits
Google was involved in over domain names that are oddly similar
to Google's domain name and logo. In all of these instances,
other companies were profiting off of Google.
So I think you can see where I am going with this. I think
you can understand the frustration of copyright holders because
they are having their content being illegally sold via the top
results from searches on your search engine, and they are
actually making a profit from that.
So can Google play a more proactive role in this in
combating some of the deliberate illegal sites without
infringing on any other----
Mr. Walker. Yes, I think we can. And look, we not only
understand the frustration, we share it. As you said, we are a
big IP owner ourselves. We went after some bad guys who were
misusing our name in scammy sort of ways that were misleading
consumers. You know, buy the Google work at home kit which, of
course, had no association with Google, and pay 100 bucks to
get a bunch of worthless paper. And we went after those guys
and won that case. And we are committed to doing that against
all these bad guys when we can identify them and clearly know
who to go after. It is one thing for us, though, to be able to
remove the individual links to stuff that we can look at and
say, yes, that is infringing, and another to try and go after
the entire domain. That is a harder procedural thing for us as
a private company to do.
Mr. Quayle. Thank you very much.
Mr. Goodlatte. I thank the gentleman.
The Chair now recognizes the Ranking Member of the
Judiciary Committee, the gentleman from Michigan, Mr. Conyers,
and as I do that, I will ask the Vice-Chairman of the
Committee, Mr. Quayle, to take the Chair.
Mr. Conyers. Thank you.
Attorney Christine Jones, why can't you organization build
intellectual property protections into its user agreements and
terminate customers that provide or facilitate online piracy?
Ms. Jones. I am sorry. I missed the last word. Online
privacy?
Mr. Conyers. Piracy.
Ms. Jones. Oh, piracy. I think we do substantially build
those protections into our agreements, and the agreements are
written generally very broadly.
Like Google and other providers, we do rely on the content
industry to let us know when they find things that are
inappropriate.
But what we do that is somewhat more aggressive than most
is if there is some infringing content and the person who runs
the website doesn't cure it, we disable the entire website
because you either are engaged in unlawful activity or you are
not. There is no such thing as halfway. So if your domain name
contains bad stuff and you don't take it down, we kill the
entire domain. Period. If you fix it, we will put it back up.
But we don't incentivize people to make part of their website
good and part of their website bad because as our First
Amendment professor--I call him a professor--says, some of it
is good and some of it is bad, and you have to be able to make
a decision.
Mr. Conyers. You say you are doing it already.
Ms. Jones. I think we do it already, yes, to the extent
that we can.
Mr. Conyers. Mr. Kent Walker, when someone types in child
pornography into a Google search, Google doesn't connect the
user to images of child abuse. Now, that means to me that the
technology exists to block illegal material from appearing in
your searches. Why don't you employ the same technology to
block searches for illegal content and illegal goods?
Mr. Walker. When it comes to child pornography, we do two
things that are unique compared to the problem of online
counterfeiting and infringing material. Child pornography is
recognizable to some degree with filters. You can build a
filter that will detect flesh tones, for example, most flesh
tones, and that gives you a clue. And then you can use human
reviewers to look at the sites one at a time, and to some
degree, as the Supreme Court has put it, you know it when you
see it. And we have people who are working on that.
In the context of unauthorized goods where it is not clear
who has got the legal rights to something, it is much harder.
You may remember the case that Viacom brought against YouTube
not long ago. Viacom itself sued us over thousands of clips
from their files that they had actually authorized--they or
their subsidiaries had authorized be uploaded to YouTube. So
they themselves didn't actually know what was legitimate or
what wasn't. So it is a harder problem.
Mr. Conyers. So why can't you block the searches? Tell me
the answer again.
Mr. Walker. Sure. We can in cooperation with the content
owner. If they let us know that a given item is unauthorized,
we block that search. We take that link out of our results if
it is for copyrighted material.
Mr. Conyers. Could I ask the Director of ICE? I am glad you
didn't mention all the lack of due diligence and collateral
damage that occurred February in your organization during
recent seizures where legitimate sites were taken down in
droves. Do you want to admit that before we get to the
question?
Mr. Morton. Either way.
Mr. Conyers. What do you mean ``either way''?
Mr. Morton. If you want to continue with your question----
Mr. Conyers. I mean, didn't that happen?
Mr. Morton. What happened in that case, Ranking Member
Conyers, was this. That wasn't an IP investigation. It had to
do with child pornography. We were investigating 10 sites that
were offering images of children as young as 4 and 5 engaged
in--you know, in sex----
Mr. Conyers. Yes, but how did you get the good guys
involved? That is what I am getting to.
Mr. Morton. What happened in that particular case was that
in one of the 10 sites that we were seizing, the seizure was
overbroad and the site we were going after was a subdomain of a
secondary domain level. And we seized for a little less than 2
days more than that site. Two people contacted us. We noticed
our error and we put all the sites back up.
Mr. Conyers. Okay.
The last question, with your forbearance, Mr. Chairman, to
Professor Abrams. What did you think of the Senate attempt on
the same subject we are working on?
Mr. Abrams. I thought the Senate attempt was
constitutional.
I think the notion of trying to define a rogue site in a
way which requires a very stiff showing, a very difficult but a
possible showing, of a site itself or a domain itself being so
devoted, dedicated in the draft statute's language to
infringement works--and I think that it works in a way which
goes beyond the simple question of what can happen to that
site. It raises issues, at least, about intermediaries. If you
have a court and the court says this whole site at this moment
as it is today, this whole site is an infringing site, and you
get a court order to that effect and you serve it on ISP's, it
seems to me perfectly constitutional to require the ISP not to
carry material from the site. And that would be true of other
intermediaries as well at least with respect to direct links to
the site.
I mean, I don't think you can limit information about the
sites. I don't think Google can be limited any more than the
Washington Post can be limited in writing about, containing a
summary, describing, mentioning the website involved. But I
think intermediaries might well be able to limited after being
served with a finding by a court from linking to a site that
has been held by a court to be an infringing one.
Mr. Quayle [presiding]. Thank you.
The Chair now recognizes the gentleman from North Carolina,
Mr. Coble, for 5 minutes.
Mr. Coble. Thank you, Mr. Chairman.
Good to have you all with us, I will say to the panel.
Mr. Abrams, I think you touched on this. I was going to ask
you how precise does the definition of rogue websites need to
be in order to be constitutionally sound. Did you want to add
anything to it? I think you have touched on that.
Mr. Abrams. Not really. I mean, obviously, language has to
be very carefully drafted, but I think the notion at least of
the Senate bill which focuses on dedicated to infringing with
no other commercial purpose than infringing, which as I said is
a very tough standard to meet, but if that can be met, I don't
think there is a constitutional right of that site anymore to
continue as it had been operating previously.
Mr. Coble. I thank you, sir.
Mr. Walker, some have alleged that Google benefits from
illicit websites through advertising revenue. What do you say
in response to that allegation?
Mr. Walker. These sites cost us money, sir. They cost us
money to try and get rid of them. They cost us money when we
find them and we refund money to advertisers. They cost us
money when they use fake credit cards or stolen credit cards to
pay for what they are doing. We have no interest in having
advertising on these sites. We have no interest in having
advertising leading to these sites.
There are two separate problems here. One is a problem of
the digital piracy, songs and videos, which typically are given
away for free on the Web. Those sites have no trouble drawing
traffic. Everybody wants something for free. Those sites have a
problem with monetization and so they use ad services to try
and raise money, and we want to block that. And in fact, every
time you see a Google ad on one of those sites, if they have
gotten through our systems, there is a way to click on that ad
and report that site for having infringing content on it.
There is a separate problem with regard to people selling
counterfeit and real goods, analog goods, traditional stuff.
Those sites have no problem making money because they are
making the good for this much and they are selling it for that
much. Their problem is they are trying to drive traffic. And so
on that side for our systems, that is an AdWords problem, and
so we go through the ads on the Google sites and try to make
sure that we don't have ads going to sites that are infringing
like the Louis Vuitton sites that we talked about before. And
when we find it, when we hear about it, we pull them out.
Mr. Coble. I thank you, sir.
Let me ask you another question, Mr. Walker. If Google
learns that certain websites are illicit or illegal, can it
restrict those websites from its searches?
Mr. Walker. So we have been talking sort of on the
advertising side. The search is more challenging, and again, to
Mr. Abrams' point, we need to be very focused here. It is
correct that if we have the Government come and tell us that a
given site is illegal, we can address that problem in our
search results. But we want to do that in a way that,
obviously, has appropriate due process involved and doesn't put
us in the position of having to make those evaluations. Right
now, we need to work together with the content industry to do
that.
Mr. Coble. I thank you, sir.
Ms. Jones, what is your recommendation for the best
approach to eliminate these websites in the United States and
abroad? Or do you have a recommendation?
Ms. Jones. Sure. I always have a recommendation.
We have had a really good----
Mr. Coble. Truth is a good defense. If you can do it, it
ain't bragging.
Ms. Jones. We have had a really good string of luck with
voluntary cooperation from all of the players on the Internet
to take action against operators of websites that are engaged
in bad action, whatever their service is. So I recommend that
we as an industry do that first and foremost. So, in other
words, if I send to Google the 36,000 domain names that we took
down under the Ryan Haight Act in 2010, I think Google ought to
disable the search to those sites, and I think Visa and
MasterCard and PayPal and Discover should disable the payment
processing. And I think FedEx and UPS and the United States
Postal Service should stop shipping drugs for those companies,
and so on and so forth.
However, we know that not everybody cooperates and not
everybody is a good guy. So in addition to that, I think we
have to have legislation that says if you don't, there is a
consequence. If we give you notice and you take down your
services, you're good. If we give you notice and you fail to
respond, you're not good. That is my recommendation.
Mr. Walker. Mr. Coble, could I jump in on that for a
moment?
Mr. Coble. Sure.
Mr. Walker. I want to make the point that the real way to
go after these guys is to go after these guys and get them off
the Web. Because if they are out there just saying they can't
be in a search engine or they can't be in Facebook or they
can't be on a blog or a link to them can't be there isn't going
to solve the problem because people are going to talk about
them, and when they talk about the Pirate Bay or someone else,
those links are going to come back up in any search engine
worth its salt. So our worry is that we can cut--we would
recommend cutting off the money to these guys. Cut off the
advertising. Cut off the financial services. When you start to
go after the pure search side of it, the risk is that you are
both overbroad and ultimately ineffective in doing it.
Mr. Coble. I see my red light has illuminated. I yield
back.
Good to have you all with us this morning. Thank you.
Mr. Quayle. Thank you.
The Chair now recognizes the gentlewoman from California,
Ms. Lofgren, for 5 minutes.
Ms. Lofgren. Thank you, Mr. Chairman. I think this is an
excellent hearing and it shows how complicated some of these
issues are, and yet it is important that we deal with the
challenges in a way that is serious but also works as a
technical matter and also with an eye to our Constitution, not
only the First Amendment, but the Fourth Amendment. We want to
make sure that we are effective but smart.
And along those lines, Mr. Morton, I was interested in the
Operation in Our Sites effort. How many of the owners of those
sites that were the subject of your action were arrested? And
for the seizures that have not been followed by an arrest, has
ICE attempted to make arrests, and if not, why not?
Mr. Morton. I will have to get you the exact numbers, Ms.
Lofgren, but a couple of things are going on. Several of these
cases are part of an ongoing criminal investigation. So I can't
really predict one way or another how they are going to end up.
A few people have been arrested and I can get you those stats.
But the real challenge, as I alluded to in the beginning,
is that in many of these cases, we have a criminal
investigation but most of the actors are, for practical
purposes, outside of our reach. They are not in this country.
They are in----
Ms. Lofgren. Perhaps what I can do off calendar is just get
the stats because you are going to court, you are bringing a
criminal action, you are getting a matter signed by a
magistrate, and I want to know then what. How many criminal
prosecutions? How many arrests? And I am eager--I understand if
somebody is outside our jurisdiction, that is a more
complicated factor which goes to the other question I have
which has to do with the jurisdiction itself.
Now, my understanding is that the customs part of ICE--they
have jurisdiction over goods that cross international borders.
What is the limit on ICE's authority over the Internet? Is it
the international aspect of it, or is it ICE's position that
you have jurisdiction over the Internet itself?
Mr. Morton. That latter proposition is not our position.
Our position is that we have jurisdiction over the relevant
Federal offenses provided there is the necessary constitutional
nexus to the United States for the Congress to assert
jurisdiction. So in practical terms, that means there needs to
be some element or instrument of the crime occurring here in
the United States.
Ms. Lofgren. So it is wrongdoing crossing into the United
States. Is that your position?
Mr. Morton. That is right, involving the United States or
United States rightsholders, some U.S. interest.
Ms. Lofgren. But it has to be an international component to
it.
Mr. Morton. That is right. So if you were engaged in
counterfeiting of Indian goods in China and there was no nexus
whatsoever to the United States at all, that is not a case we
would investigate.
Ms. Lofgren. Let me ask you this, and it is something that
I think people--obviously, we have a need for enforcement, but
we also want to make sure that things are done in a proper way.
Recently--obviously, we are not the same, but Russia used
copyright enforcement--it was pirated copies of Microsoft
software. They used those pirated copies as an excuse to go in
and take computers and shut down dissident groups. And there
was, in fact, infringement going on, but they used it really
for a political reason. What do we have in place that would
prevent the Government from that sort of activity here?
Mr. Morton. Well, I am not familiar with that particular
case, but I think the short answer to your question is that we
have a wonderful judicial system in this country. We have a
great sense of the rule of law. We have a great sense of
ethical behavior on the part of Government. I have to go----
Ms. Lofgren. No, but procedurally. Right now there is an ex
parte communication. You go to a magistrate. You say what you
think. There is nobody on the other side saying what they
think. You get, in most cases, the order. You take it down.
What constraint is there on you?
Mr. Morton. I have to demonstrate that there is probable
cause for the seizure to the Federal judge, and the day we do
it, you can walk into court and challenge that seizure
immediately in addition to the separate rights you have to
challenge the ultimate forfeiture if the Government pursues a
permanent seizure of the site. So there is a tremendous amount
of process that is provided upon seizure. The seizure itself
follows the traditional rules in rule 41 where we go to a
magistrate judge ex parte, and we say we believe a crime is
being committed.
Ms. Lofgren. I have about five pages more of questions for
you. So, Mr. Morton, I will deliver those to you in writing.
As I listened especially to the testimony from Go Daddy and
Google, I am reminded that this stuff is more complicated than
is obviously understood and how useful it might be to have some
of the big tech presences engage in more deep conversations
with content holders who are understandably concerned about
what is happening to them. That might yield an effective result
that is far superior to what the non-engineers in the Congress
might craft. So I would just leave that suggestion with the
panel. They don't need the permission of the Congress to do
that. But I think that might be a good outcome of this hearing.
And I yield back the balance of my time.
Mr. Quayle. Thank you.
The Chair now recognizes the gentleman from California, Mr.
Issa, for 5 minutes.
Mr. Issa. I thank the Chairman.
I think I will take the liberty of taking us a little off
IP for a moment since we have a representative of ICE here.
What is the financial threshold for you to care about
counterfeiting?
Mr. Morton. Typically there isn't one. We are quite
aggressive when it comes to intellectual property enforcement.
Obviously, the various prosecutors, the United States
Attorney's offices we deal with do have at some point some
limitations. There is enough work out there----
Mr. Issa. Why don't you give us an idea? You know, there
was a movie back, I think, in the 1930's with Cagney, ``Never
Steal Anything Small.'' It was actually a union organization,
but it was a great one because basically he stole enough to be
the hero of the union.
How do we change the system, which Congress has the right
to do, so that every single crime that you know is a crime can,
in fact, be pursued in a way that will allow a change of
behavior? Now, I am not talking about going after the P2P
swapper who is exchanging his own library with somebody down
the street. But I am talking about somebody who commercializes
the selling of counterfeits. And I did not say intellectual
property. I said counterfeits. I don't see a difference. I
don't think anyone on this panel should see a difference of
whether it is tangible and you can feel and touch it or it
simply plays through a speaker.
What change in the law would allow you to pursue everyone
for all practical purposes where today you probably pursue
what? One-half, one-quarter, one-tenth of 1 percent? Certainly
you pursue less than 1 percent in the tangible world, don't
you? If you find--and I will get to the question.
And I will take an example from my own life. If you find
500 Viper alarms inside a shipment of--my former life, if you
will--clothing and it is designated as clothing and you find
it, basically you seize it and that is the end of the story.
Isn't it? So you found tens of thousands of dollars of value.
You found registered trademarks, copies of the images that make
the product real, patented product, tangible, and the most you
will do is destroy it. That is the practical reality today.
And you are shaking your head yes. That is the record that
I hope we will make here today. And I appreciate all the people
in the IP world. We are talking about organizations. We are
saying you have to do better. You have to get it down to zero.
What can we do, in your opinion--and I will take it from
each of you, please--to get to a zero tolerance? And I am not
trying to get you to go after fake Viper car alarms or any of
the other things from my own past. But I will give you a recent
one, and I will give it to you as anecdotal.
About a year ago, my congressional office ordered a USB
thumb drive. They were tired of me carrying three different
thumb drives. So we ordered one of the new 256-gig thumb
drives. We ordered it from one of the major companies not
represented here today. Their vendor was a group, which I will
give, called Fantastic Deal. Now, today they are called Good
Old Deal and Fantastic Deals, but if you Google them, you will
get the actual company selling on that other company. So the
meta-data that they put in to make sure that they still come up
under their old name of Fantastic Deal--and by the way, they
are still Fantastic Deal when they tell you that we at
Fantastic Deal are committed to your satisfaction. Please don't
hesitate to contact us. They flat shipped on its face--it was
256 gig, but it was not made by Kingston. It was not authentic
in any way, shape, or form. And they shipped it out. They are
still selling. They paid no price for it. The most they had to
do was live up to that company's guarantee of letting me cancel
the credit card, which I did around them anyway.
What change from the dais here will allow you to not let
those go because they didn't meet a financial threshold that
was in the tens or hundreds of thousands of dollars?
Mr. Morton. Let me start and then I will try to be brief so
the rest of the panel can give you their thoughts as well.
Some of it is a resource issue. Some of it is--take ICE,
for example--a question of balancing competing enforcement
priorities. Obviously, we have to go after the cartel members
and child pornographers and other things of weighty importance
to the Nation.
I think the big challenges are focusing on the foreign
actors who are in the game as a form of organized crime and
have no intention whatsoever of coming to the United States, of
basing their operations here. They are able, sadly in many
instances, through the Internet to commit a crime on the United
States on a grand scale, on a repeated scale from afar.
So we need, I think, a balance of authorities. Criminal
authorities will never get us all there. Civil authorities that
address that, aggressive seizure, penalties for where we can
bring U.S. enforcement action. International cooperation is
critical. You could give ICE triple the number of agents it
has. We have no authority to arrest people in China. We have no
authority to----
Mr. Issa. I appreciate that, although all the examples I
gave had a U.S. nexus.
Could the rest of you weigh in please?
Mr. Abrams. I agree with Mr. Morton. I think all we can
do--but it is important--is to do everything we can to drain
actions of this sort of the profits that have been building up
over the years and increasing, indeed, more and more as time
passes because I agree that the criminal law is not going to
work very easily or comfortably when you deal with foreign
actors that never come here. So we are going to have work, I
think, in the main through changes in our civil legislation to
take all the steps that we can to make it impossible or at
least very difficult for these entities to continue to engage
in the criminal--and it is criminal--activity that they are
currently engaged in.
Mr. Issa. Mr. Walker?
Mr. Walker. I would have three thoughts building on the
comments here.
First, go after the bad guys directly whether that is more
resources for ICE or otherwise.
Second, it is an international problem. Right now the MLAT
process, the Multilateral Legal Assistance Treaty process, is
broken. It can take months, sometimes up to 6 months, for
international law enforcement to cooperate with each other in
going after these guys. That doesn't work for them and it
doesn't work for us in trying to stop it.
And then lastly, I agree again: follow the money. If we can
cut off the funding sources, if we can identify the bad guys
and then cut off advertising on their sites, that will be
powerful.
Mr. Issa. Ms. Jones?
Ms. Jones. Thank you, sir. I would second the comments of
my fellow panel members, but also from the dais what you can do
to be helpful to us, to answer your question, is give us cover
so that if we take action against these people, we have a safe
harbor. We don't have people suing us. We are not going to
jail. We want to help you but you have to help us help you.
Mr. Issa. Thank you for the best of all answers.
I yield back.
Mr. Quayle. Thank you.
I just want to put everybody on notice we have been called
for a vote, but the Chair recognizes the gentlelady from
California, Ms. Chu, for 5 minutes.
Ms. Chu. Well, thank you, Mr. Chair, for convening this
important hearing.
As you know, this issue of online piracy is of great
concern to my Los Angeles district, given the importance of the
motion picture and recording industry to the city and the many
residents who are employed by them. So I hope that we can all
work together to come up with a solution that gives law
enforcement a real tool to stop this practice.
While the Combating Online Infringement and Counterfeits
Act that was introduced in the Senate last year is a great
start, I am concerned that it doesn't address the problem of
cyberlockers that are flooded with infringing content. It is
important that we don't hurt legitimate business interests, but
these businesses that reward these customers for uploading
infringing content and refuse to penalize the offenders are not
legitimate business interests. So I hope that we can address
these infringing websites and cyberlockers.
I also want to thank Mr. Morton for joining us today and
for all the great work that he has done on the Operation in Our
Sites.
And let me just start then by asking Mr. Walker. I am very
concerned, of course, as you heard, about the infringement
facilitated by the cyberlockers, but I don't want to affect
legitimate developments in cloud computing. How can Congress
help law enforcement go after the bad actors in the cyberlocker
space without interfering with legitimate economic interests?
Mr. Walker. It is the right balance to draw, Congresswoman.
The challenge with cyberlockers, which are really just a
different way of describing storing content online, is a real
one because, as you can tell, the entire direction of the
industry is in favor of moving toward the cloud, allowing
people across the country, across the world to access music,
video, content, documents, email in much more flexible ways
than they were able to even a dozen years ago. That is a great
thing for consumers and then we think ultimately a great thing
for the content industries because it provides more platforms
and more ways that people can consume content lawfully and
legitimately. iTunes is in a sense a version of the cyberlocker
that allows you to download information from the cloud. We have
seen other significant companies launch ways of offering online
storage.
When you get into the question of the legitimacy of the
business or not, it really goes to the question of an intent to
induce infringement, and the existing copyright laws have been
used in some cases to go after companies that clearly, again,
are sort of dedicated to just having illegal content hosted and
promoting that kind of activity, distinguished from legitimate
companies who may have broad-based, multipurpose storage that
is abused by some of their users. That does raise more
difficult First Amendment questions.
Ms. Chu. How about you, Ms. Jones? I understand Go Daddy
also provides remote storage services. How can we ensure that
law enforcement has all the tools that it needs to go after
cyberlockers that intentionally promote the sharing of
infringing content without impeding legitimate businesses?
Ms. Jones. We are a very large provider of cloud-based
services. And it is difficult for us to go, say, scan all of
the files that are stored on our online file folder product.
But what we can do is limit storage, limit bandwidth usage, and
know patterns of behavior so that if there are very, very, very
large quantities of data and they all seem to be copies of
movies, our system might pick that kind of thing up.
But short of that, it is really important to us to have
information from the content providers. So if it is the song
makers, the movie makers, the video producers, whatever those
people are, to help us be helpful and also so that it helps law
enforcement to know which ones to go after because it is not
enough for me to just say customer A has 47 dedicated servers
and they are all filled with video stuff. It is not good enough
because I don't know if it is legitimate content or not. That
guy could have bought 47 dedicated servers worth of videos.
So it is really important for us to be able to identify--
and I think Mr. Walker has pointed this out as well--what is
the legitimate content and what is not. Again, we don't want to
be facilitating bad guys, but we need help to identify which
ones they are.
Ms. Chu. Thank you.
And, Mr. Morton, what are the next steps in Operation in
Our Sites?
Mr. Morton. Well, we are going to continue to work with
industry. We have been very careful not to focus on any one
industry over the other. As you know, sadly the whole landscape
of American industry is under assault right now. So we will
focus on pharmaceutical sites. We will focus on entertainment
sites. The counterfeiting sites we can do all day long, sadly;
there are so many of them. And we are just going to keep at it.
Wherever we can, we are going to pursue a full criminal
investigation for those sites. Where all of the elements of the
crime, other than the domain name, are outside of the United
States, we will focus on the domain names and take them down as
aggressively as we can, recognizing that is not the long-term
solution. It is one part of trying to combat this problem.
But we got to do something. My perspective is do nothing
and you fail, and so we have tried very hard to get out there,
do something, and work with the other parts of the system to
get us to a better, more comprehensive solution.
Ms. Chu. Thank you.
I yield back.
Mr. Quayle. Thank you very much.
As previously noted, we have a vote. So this hearing shall
be temporarily adjourned until immediately following the vote.
Recessed. Thank you, Mr. Watt.
[Recess.]
Mr. Goodlatte [presiding]. The Committee will reconvene.
Before I turn to the gentleman from California, I would
like to ask unanimous consent to enter in the record two
letters: one from the National Center for Missing and Exploited
Children dated March 30, 2011, addressed to Chairman Smith and
pertinent to the issue raised by the gentlewoman from
California; and another a letter to the Members of the United
States Congress from a coalition of groups dated March 30, 2011
on a related subject.
[The information referred to follows:]
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__________
Mr. Goodlatte. At this time, it is my pleasure to recognize
the gentleman from California, Mr. Berman, for 5 minutes.
Mr. Berman. Well, thank you very much, Mr. Chairman, and
thank all of you for your testimony.
Mr. Morton, I want to join with others in praising some
very effective initiatives you are undertaking to deal with the
problem we are discussing today.
Mr. Walker, I appreciate your testimony and your comments
about the Digital Millennium Copyright Act. I am sure the
Chairman of the Subcommittee does. He spent a great deal of
time negotiating that legislation, and a lot of us were
involved in it. But if that legislation were really working, I
don't think we would be having this hearing. I don't think
there would be a Senate bill. I don't think Customs would be
undertaking the initiatives it is undertaking.
Ms. Lofgren is right. This is a complicated subject. But
there is one element that is quite simple, and that is truly
billions of dollars and thousands of jobs are being lost
because of digital theft. I think we are focused on trying to
do something about it.
In terms of a legislative approach, I wanted to take off on
what you said. You said that Google doesn't want to be the
judge, jury, and executioner. But right now under the Digital
Millennium Copyright, you are the judge, jury, and executioner.
You don't just take down anything that you are asked to take
down. You go and try and go through some process to determine
if it is a valid request, if in fact it is directed at
infringing material.
The legislative approach is an approach to try and create a
process where a judge is the judge and all you have to do is be
the executioner. I am wondering if in that sense this might be
something you would be more enthusiastic about because it puts
the onus of looking at the whole site and whether it is--I
mean, nothing is going to be 100 percent infringing because
some things will be in the public domain that could be on that
site. But fundamentally it is a site that is marketing
illegally placed content, content without permission of the
copyright owner.
So I guess I would like your thoughts. Let me ask a few
questions and you can answer them. One is I would like your
thoughts on whether having a judge rule that a site itself is
dedicated to infringement and blocking that site may be a far
more effective way of ensuring due process while actually
making a difference, and also your reaction to the notion that
the DMCA, as good as it is, in the context of today's
technology, yes, you get that takedown letter.
You try to do it expeditiously, although there is testimony
submitted for the record which says that it frequently takes as
much as 20 days for you--or maybe that is an average of time
before actually the link comes down. And I believe Google has
said they are going to try and do this within 24 hours. But I
do notice that the searches and the algorithms take a few
seconds. And when you are talking about a newly released film
or music, 24 hours on a site is disaster in terms of the
millions of people who can then get it for free.
But your notion of why a judge doing this isn't more
effective than putting all the onus on you.
And correct me if I am wrong, but when you get such a
letter, you take down the link to that site. I don't even know
if you have the legal ability or the functional ability to take
down that site as a site. So all you are doing is taking out a
link to one of what could be thousands of different works that
are on that site. It is a little bit like trying to empty the
ocean with a bucket. And I would like to get your reaction to
some of those things.
Mr. Walker. Sure. There were a lot of comments there, so
let me try and address them all, and if I miss one, please let
me know.
I would say our fundamental position is that we agree that
there is a way to complement the DMCA. The DMCA has been very
effective for what it has done, but there are additional
measures that can be taken to go after the money, to go after
some of the advertising, to go after the payment processors
that may reach some things that are outside the copyright
domain, counterfeiting and the like. And we have indicated we
are happy to work with the Subcommittee on that.
There is a balance, obviously, because there are millions
of dollars--billions of dollars on each side of the table.
Google accounts for $54 billion in economic activity in the
United States.
Mr. Berman. Yes, that is important and innovation is
important. But to the extent that some portion of that billions
of dollars is coming from giving people access to copyrighted
works that they didn't have their permission to use, it is
fruits of poisonous trees.
Mr. Walker. Sure. No, we understand and we don't want money
from illegal services and never have. But most of it, the vast
majority is going to small businesses, small publishers,
advertisers whose businesses actually exist because the
Internet is out there. So we are trying to, again, separate the
wheat from the chaff and do it in the most effective way we
can.
The DMCA has been a good model for what it has done. That
notice and takedown has been very robust and the work of this
Committee and Congress has been adopted around the world in
Europe and elsewhere. So we want to be careful about doing
something that would undercut that. But that is not to say we
are opposed to additional sort of targeted measures that go
after things.
To your comments and Ms. Lofgren's comments earlier, we are
in fairly frequent conversations with the general counsels and
representatives of the trade associations, of the major motion
picture studios, the RIAA, et cetera to try and refine and
improve and streamline our processes. In many cases it is
challenging. It does take a long time--and we are hoping to
make it a much shorter time--to go back and forth through the
different DMCA notices we get. There are a lot of people out
there who just don't understand copyright law or are using them
for abusive purposes to try and take down competitors' sites
without a legitimate legal claim. And we need to sort through
those, but I think we can do it, especially with regard to some
of the online tools that we are soon to be launching in a much
faster way than we are doing now.
You had asked also with regard to question of--there was
one question about pre-release movies. We have actually talked
to the studios about that and are there ways of being able to
address that in an even more expedited fashion where there is
real economic injury at issue there.
And then lastly, I would say we do have--focusing on your
question with regard to whether or not a court finding would be
useful in this, before anyone takes significant steps of taking
away a domain name or cutting off advertising to a site, I
think it is appropriate for a court to weigh in with
appropriate due process to review that. And the model of doing
that in a way that is targeted on the truly bad sites--and I
think for some reasons we have talked with the staff on the
Senate side with regard to the bill that was introduced in the
last session. In some ways that definition was somewhat
overbroad and created some of the free expression and due
process issues we have talked about. But we are optimistic that
we can work together to get to a more focused definition and we
would be prepared to support that.
Mr. Berman. Mr. Chairman, my time is quite expired. Could I
squeeze one more in here, though?
Mr. Goodlatte. Without objection.
Mr. Berman. In your testimony, you say the DMCA has
practical and real effect on thwarting infringement, and
legislation that targets the worst of the worst should not
increase liability for online services that are playing by the
rules.
What if we maintained the level of liability, not increase
the liability, but required more affirmative steps to be
undertaken under that standard of liability?
Mr. Walker. Well, I think much of the proposal, again, on
the Senate side would have required affirmative steps based on
a finding that a given site was dedicated to illegal content by
having us remove it from our search results. And we are----
Mr. Berman. But that doesn't increase your liability.
Mr. Walker. No. I think generally not. Ms. Jones has raised
concerns about needing to have a safe harbor on that side, but
generally speaking, we have been able to terminate people for
violating our policies without getting suits back from the bad
guys in response.
Our focus has been mostly on the collateral consequences of
undermining the DMCA. For example, if a site is judged to be
bad and that URL is out there and then somebody using our
services posts that URL in a Google doc or in an email--I send
you an email that includes that URL--well, Google is now
hosting that content in a sense. Are we liable for including
that URL? I think the common sense answer is no we shouldn't be
and that the DMCA insulates that from liability, but if just
that sort of in rem order were deemed to be de facto red flag
knowledge, there would at least be an open question. So we need
to clarify those kinds of unintended consequences.
Mr. Berman. Thank you.
Mr. Goodlatte. The gentleman from Florida, Mr. Deutch, is
recognized for 5 minutes.
Mr. Deutch. Thank you, Mr. Chairman.
Director Morton, you and I have spoken many times about the
recent ICE seizures of rogue websites, and I have been very
open about my admiration for the way that your office took the
absolute worst of the worst of these websites hosting illegal
content. And I would just like to say publicly again that more
agencies, I think, ought to take a look at their existing
authorities and find new ways to use those clear and
established powers to combat and recognize problems, and I hope
that others will learn from your excellent example.
Mr. Walker, I wanted to follow up on two online points and
then shift slightly.
You had spoken earlier about autocomplete and the fact that
autocomplete really reflects what people are searching for.
That is how it actually works. Is there anything that you can
do to change that? For example, drugs, pornography. Is there
any way that you ever modify autocomplete so that it doesn't
show the list of search terms that might actually be a popular
search term?
Mr. Walker. There are, in the pornography realm, for
example, terms that are facially offensive to virtually every
user of the site that are blocked. Yes.
Mr. Deutch. So it is possible. It is not simply the will of
the masses that will dictate what autocomplete shows. It is
possible to actually----
Mr. Walker. No. Absolutely, and we have already said that
we are doing that in this context as well.
Mr. Deutch. And then one other follow-up. The issue of
searches and the efforts that you have taken on specific
websites and specific searches where it is clear that they lead
to pirated material, stolen material. In addition to those
terms, do you also include specific websites that are provided
to you? I mean, a lot of times people who search the Web who go
on Google are fairly sophisticated. They know what they are
looking for. They don't need to search free movies or free
music. They know the site that they heard about in their high
school class. That is what they go to search for. So have you
taken steps and can you take steps to stop so when someone
starts typing in whatever that violating website is, that that
website name won't come up as well?
Mr. Walker. Yes, and that is consistent with the effort we
have already announced. And we are working with the content
industries to try and focus on that.
Mr. Deutch. Great.
And so I would like to just shift then and move on to
really where the world is going and that is apps. There was a
conversation earlier, an exchange that you had, where there was
some discussion of this Grooveshark app that was removed from
your marketplace. I just wanted to pursue that a little bit
further. That was ultimately taken down. When were you first
made aware that that site was available--that app was available
in your marketplace?
Mr. Walker. I am not sure, Congressman. We can get back to
you.
I will tell you that the apps marketplace has probably been
in existence for a little bit more than a year. During that
period of time, we have removed something on the order of 2,000
different applications for a variety of reasons, including
intellectual property infringement.
Mr. Deutch. Okay, because I played around on one of my
staff member's Google phones and went to the App Store, and
still when you type in ``free,'' the autocomplete on the phone
will finish and you can find free music. And if you go to free
music within the marketplace, you can still find what appears
to me to be hundreds of sites that deal in stolen music, stolen
movies as well, perhaps stolen books. I couldn't quite tell.
That wasn't as easily identifiable.
So if you could speak to the efforts being made to crack
down. There is one example, this one app that you took down.
But what steps are taken? What do you do to actually take them
down?
And if I can suggest, when you are in the store, there is
an opportunity for you to flag as inappropriate the app that
comes up. and I would respectfully suggest that in addition to
the reasons that you list already, sexual content, graphic
violence, hateful or abusive content, and other objection, that
it might be helpful for those of us who are concerned about
these issues and who monitor this to include a specific check-
off box for stolen content, pirated content, whatever you think
is most helpful. I think that might help you investigate.
But if you could speak a little bit about the steps that
you do take.
Mr. Walker. It is a helpful suggestion, Congressman, and we
are, across our products, trying to have a more standardized
approach to Web forms that allow people to report all of the
kinds of content that we are talking about here today and
create cues for review and processing that in an expeditious
way.
We do have a team of people who review the apps in the App
Store. It is sometimes challenging because any number of people
have an incentive to get their app in there. In some cases
those apps are camouflaged or difficult to determine. There are
legitimate apps that will allow you to obtain free content, and
there is a lot of legitimate free content out on the Web. And
so we are trying to distinguish the apps that are well
intentioned from the apps that are essentially designed to
induce infringement. And that is the approach that we have
taken there and continue to take as we review these, as well as
apps that are trying to get malware out and various other sort
of negative content.
Mr. Deutch. And again, what I am concerned about is your
marketplace. And if you could actually help me understand this
a little better. Your marketplace functions essentially as an
online mall, and stores open in this mall. In a traditional
bricks and mortar mall, those stores would pay rent. Can you
explain how Google is compensated by these apps that pop up in
the marketplace?
Mr. Walker. Sure. It varies which is perhaps one of the
reasons why it is not as clear as it could be. Many apps are
free, so there is not compensation per se. Some of those are
supported by advertisements; some of them are not. And then
some of them where you actually pay for the app, and in that
case, Google takes a small amount of money as a fee for its
service in providing the platform.
Mr. Deutch. On the free apps, the ones that are free to the
consumer, is there any other way that Google is compensated for
those? Are there advertisements that----
Mr. Walker. Yes. They may choose to use advertisements or
they may not. And they may use Google ads or other forms of
ads.
Mr. Deutch. I hope that you can understand my concern here.
In a traditional shopping center, there would be no place for
any store that opens that sells illegal goods. In this case,
Mr. Morton and his good folks are effectively playing the role
that the sheriffs in Palm Beach County would play if a shopping
center opened in my district that wanted to sell illegal
merchandise. And those stores would immediately be shut down as
soon as they were notified.
Just trying to bring this full circle, I would ask that you
can provide the Committee with some details on the Grooveshark
example since it has been touted as a great example of your
efforts to try to crack down on these apps that merchandise in
illegal goods. I would like to understand when you were first
notified and how long it took to investigate. If there is any
way for you to determine how many songs might have been
downloaded illegally during the period of that investigation,
that would all be most helpful, I think, as we go about this.
And finally, Mr. Chair, if I could also ask--I know you are
going to be requesting some additional information as well. I
hope that you can broaden your request to focus on the
application world as well, given that this is really the
direction that we are going.
Mr. Goodlatte. Yes. If the gentleman would yield. If the
gentleman would work with the Committee staff, we will be happy
to incorporate your question into the questions that we will
submit to the members of the panel.
Mr. Deutch. I appreciate it, Mr. Chairman, and I will yield
back.
Mr. Goodlatte. I thank the gentleman.
The gentlewoman from Florida, Ms. Wasserman Schultz, is
recognized for 5 minutes.
Ms. Wasserman Schultz. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member Watt, who I know is not here
at the moment, I really want to start off by thanking you for
holding this hearing today and for officially opening this
investigation into rogue websites here in the House.
As our economy continues to recover, we really must take
every action that we can to create jobs and meaningfully
address intellectual property theft. It is a great place to
start.
That is why I have been having a conversation with Google
about this for almost 3 years now. Mr. Walker, it is good to
see you.
In the last hearing, Mr. Chairman, I focused on the problem
of advertising on rogue sites, advertising which not only lines
the pockets of those who facilitate theft, but also advertising
that makes many of these rogue sites seem legitimate to
unwitting users.
Today, Mr. Walker, I would like to talk with you about two
related issues, as you have spent the morning doing talking
about your autocomplete feature on search and your notice and
takedown times under the DMCA. First I want to start with
autocomplete.
In your testimony, you say that Google is committed to
prevent terms that are closely related with piracy from
appearing in autocomplete. And you go on to say that you are
working with the industry stakeholders to suggest specific
terms that shouldn't appear in autocomplete.
And you were kind enough to come see me in my office almost
a month ago, March 10th, and I raised this issue with you then.
So I know you won't be sandbagged by my raising it here now. I
showed you--let me just grab it--this screen shot, and it was a
screen shot that lists what comes up in a search when you type
in the word ``knock-off.''
Then Google's algorithm automatically filled in the
suggested search terms that I described, some of which UGGs and
Coach were the names of specific brands. I showed you this
screen shot which showed all the suggested autofills when I
typed in the word ``knock-off'' into the search engine window.
It showed knock-off handbags, knock-off UGGs, knock-off Coach
handbags, knock-off shoes, knock-off watches, and knock-off
sunglasses, among others.
Now, all I typed in was ``knock-off.'' I didn't type in
anything else, and that is the list that came up. These weren't
words that I typed. It is what your autofill automatically
filled in.
Mr. Chairman, I would like to ask unanimous consent to
admit this screen shot into the record.
Mr. Goodlatte. Without objection.*
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*The information referred to was not received by the Subcommittee
at the time this hearing was printed.
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Ms. Wasserman Schultz. And then we searched the word
``fake'' and got similar results. Fake Rolexes and fake Louis
Vuitton purses.
Now, I realize--and from our conversation--fake can be
attached to a lot of different kinds of things. As we discussed
in my office, ``knock-off'' doesn't really conjure up anything
other than trying to steal something that is someone else's
intellectual property. And I know you referenced that they sell
knock-off dresses and other kinds of products in Nordstrom's
and Macy's. It would be very simple to simply have your
autofill put those search terms in after knock-off if that is
really what someone is searching for. But instead, your
autofill brings up things that are not appropriate and are, in
fact, facilitating illegal content and illegal products.
Now, I had my staff perform--this was a month ago that we
had this conversation. I had my staff perform the same test
yesterday, and they got the same results as they did before I
shared these concerns with you a month ago. So nothing has
changed since we talked. And I am concerned that your
autocomplete feature continues to suggest that people visit
websites with pirated content, that Google enables and
facilitates theft by suggesting words that people haven't even
typed in yet.
And I want to suggest to you, Mr. Walker, the word ``knock-
off,'' as I just said, is probably a word you don't need to get
consensus on from the Nation's designers of purses, handbags,
watches, shoes, and furry boots. It is probably okay to
eliminate those words after the word ``knockoff.'' What other
meaning is there for the word ``knock-off'' than a fake product
that is meant to be passed off as the real thing? Couldn't you
instead redirect that traffic to legitimate sites?
Now, Chairman Goodlatte brought up Taylor Swift earlier.
Way back in 2008, Mr. Walker, I sat down with some of your
colleagues. Several of them are here today. And way back then,
I showed them screen shots of unauthorized Hannah Montana songs
on Google-hosted blogger sites with Google's ads on them on top
of that. We talked about Google's obligations under the DMCA
and we asked for you to help rightsholders by designing a
product that would help them identify infringing content and
pull it down more quickly. You said you would try to work with
us, but that was 3 years ago. I continue to hear from the
rights community that it was taking too long for Google to pull
down pirated content.
So a year later, in November 2009, I facilitated a meeting
between your lobbyist and RIAA President Cary Sherman. In that
meeting, Google said you would try again to develop a product
cooperatively. That was 2 years ago. Again, no real impact.
In May 2010, Google sent Rick Klau to meet with my staff,
and I was so excited by what I believed was finally a new
attitude at Google that I actually drafted a letter commending
you for your leadership and your willingness to address these
issues. Mr. Chairman, if I can ask that--well, is there a
Chairman? [Laughter.]
If I can ask unanimous consent to admit this into the
record. Sorry.
Mr. Goodlatte. Yes, Virginia, there is a Chairman.
[Laughter.]
Ms. Wasserman Schultz. Thank you.
Mr. Goodlatte. Without objection, so ordered.
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__________
Ms. Wasserman Schultz. Thank you.
And I realize that my time has run out. If I can ask
unanimous consent for just a couple of extra minutes, Mr.
Chairman. I am wrapping up.
That was a year ago. But I have learned since then that
there still has been very little improvement on notice and
takedown times. According to the IFPI, for the month of
February 2011, the latest month for which they have records, 46
percent of the blogspot infringement notices sent to Google
remained active for longer than 7 days.
So, Mr. Chairman, would it be possible to include notice
and takedown times as part of your investigation? Chairman
Goodlatte?
Mr. Goodlatte. Yes. The answer is yes.
Ms. Wasserman Schultz. That would be great.
Mr. Walker, you really have an obligation to take those
down within 24 hours. You know that you do. We have discussed
it. But for a blogger in February, almost half were still up
after a week. There really isn't a question here, Mr. Walker.
You are Google. You helped overthrow the head of an entire
country in a weekend. I mean, really, you are Google. Okay? So
really, to suggest that this is difficult, too difficult for
Google to accomplish, it seems to me that it is more expression
of a lack of will, and I think that is unacceptable. I know
that you say your heart is in it. Prove to use that you want to
go beyond the boundaries that the law requires you to do
because that is the right thing to do. Short of that, you are
essentially promoting trafficking of stolen property, and that
is just unacceptable.
Thank you, Mr. Chairman.
Ms. Lofgren. Will the gentlelady yield?
Ms. Wasserman Schultz. Oh, I would be happy to yield.
Ms. Lofgren. As you were talking, I just went on my little
android and typed in ``knock-off Coach purses,'' for example,
on Google search. The first one, if you go to it, there is a
site from ICE saying it has been taken down. The second one, if
you go to it, the site is not found. And the third one is how
to spot a fake Coach bag. So I think we can get overwrought
here. The World Wide Web is a great big place, and we need to
make efforts to get these counterfeit goods taken down.
Ms. Wasserman Schultz. Reclaiming my time. I don't really
have any more.
Mr. Goodlatte. The gentlewoman's time has expired, and I
think it would be only fair to allow Mr. Walker to respond to
both comments.
Ms. Wasserman Schultz. Thank you very much.
Mr. Goodlatte. Mr. Walker is recognized to respond, and
then we will move on to the next Members of the Committee.
Mr. Walker. Thank you very much, Mr. Chairman. I will look
forward to addressing both of those points. Thank you.
And congratulations, Congresswoman, on your appointment
yesterday.
Let me do it in reverse order, if I can, because the most
important thing to me and to us is that you do believe and
recognize that we are actually making progress here.
Over the last 6 months or so, we have announced commitments
to this 24-hour turnaround time. It is about to be unveiled in
the next week or 2. We actually have it up and running now in a
test mode, and that goes to both copyright and the
counterfeiting materials that we have talked about. So that is
a dramatic change and streamlining with the sort of key tools
that we have been able to implement. There is engineering work
there and there is also partnering work there with the key
companies we are working with.
Beyond that, in the last month or so, we have unveiled a
Web tool, a Web form that goes across many of our products
because one of the problems we were having was that we were
getting so many low quality notices from people who didn't
understand copyright. In some cases things were abusive,
meaning one competitor was taking down another competitor's
materials, fans of one football team were trying to take down
the websites or links on another football team's listings using
the DMCA. These are the kinds of things we need to sort out.
The Web tool replaces a lot of the old paper and faxes and
emails we were getting with a more standardized process.
And as a result of that, the good news is it is much easier
for rights owners to be able to file material. The bad news is
we have had blip in terms of being able to respond as quickly
as we would like to, but we are looking forward to getting
those response times down as we go forward. And that is above
and beyond the 24-hour commitments we have talked about with
the express tools.
So I think we are seeing progress. I recognize it has been
a continuing conversation with you and your office. But judge
us on--as we are going forward, I think we are making really
material progress.
And to Congresswoman Lofgren's earlier comment, we spent a
lot of time working with the content industry on this. I have
talked to most of the general counsels of most of the MPAA and
RIAA and their trade association. We understand where they are
coming from. While there may always be some difference with
regard to scope of fair use and these sorts of issues, there is
no reason for grit in the system to be slowing down the
operation of the DMCA, and we are trying to really make sure it
is an efficient tool for everybody.
Ms. Wasserman Schultz. Mr. Chairman, I realize I am
yielding back time I don't have, but I do appreciate your
willingness and expression that there is will. And I will just
point out that when I did type in ``knock-off,'' it was simply
``knock-off'' and those other words came up in your autofill.
Mr. Goodlatte. This discussion is going to go on for quite
a while.
Ms. Wasserman Schultz. Thank you very much. I yield back
the time I don't have.
Mr. Goodlatte. I have been very generous.
And now we will recognize the gentlewoman from California,
Ms. Sanchez.
Ms. Sanchez. Thank you, Mr. Chairman. I want to begin by
thanking Mr. Morton for the initiative you have shown in being
proactive in going after infringers. I do have some questions
for you that I will come back to, but I want to start with Mr.
Walker.
Mr. Walker, I want to address your AdSense program, if I
may. In your written testimony, you stated that you respond
swiftly when notified by rightsholders that an ad is being
placed on an infringing site. And I am just curious to know on
average how long does it take Google to comply with a DMCA
notice.
Mr. Walker. It varies dramatically, Congresswoman, based on
the different products and the different nature of the request.
We get requests in foreign languages, paper, they are
incomplete, et cetera.
Ms. Sanchez. Ball park figure?
Mr. Walker. Our gold standard right now is YouTube where we
are typically able to process DMCA requests in a matter of
minutes, and we have a very sophisticated system. That is above
and beyond the content ID system that we have already talked
about that automates the process for rightsholders.
With regard to other products, our goal is to move that
within 24 hours for people able to use our sort of advanced and
sophisticated tools. There will always be some cases that take
longer, in some cases days, as we go back and forth with the
rightsholders to clarify or correct defective DMCA notices,
DMCA notices that aren't really about copyright, for example,
and the like.
Ms. Sanchez. Okay. So there really isn't a typical time
that you can say a ball park figure that it takes?
Mr. Walker. Unfortunately, it is very different for
different products.
Ms. Sanchez. Okay. Let us start this way then. What is the
shortest length of time it takes Google to respond?
Mr. Walker. I would say it is the YouTube example, a matter
of minutes.
Ms. Sanchez. And the longest amount of time?
Mr. Walker. Well, some notices----
Ms. Sanchez. I am just trying to get a scope here of time.
Mr. Walker. I don't mean to be evasive. Many notices are
actually never processed because they are incorrect.
Ms. Sanchez. But for a correct notice. Let's qualify that
and say for a correct notice. What is the longest amount of
time it has taken?
Mr. Walker. You know, I think it is certainly in days and
might even be in weeks depending on the nature of the notice,
if it is in a foreign language, if it is submitted in a way
that is difficult for us to process or we have questions.
Ms. Sanchez. Let's leave that topic
Let me ask you what happens to the ad revenue that was
generated by that site while it was hosting infringing
material. Does the ad revenue go to the rightsholder?
Mr. Walker. There are different scenarios with regard to
our AdSense product which is the product that puts ads up
against publisher websites and our AdWords product which are
ads on Google essentially or hosted ads that go out. But when
we discover somebody who is infringing, we stop payments to
them if they are on the publisher side of it, and we refund
money to the advertisers if money has been paid out.
Ms. Sanchez. But none of that money goes to the
rightsholder who is being infringed upon.
Mr. Walker. It is in many cases difficult for us to
determine who the rightsholder is in some of these situations.
In the case of music, as you know, there are labels and
publishers and artists.
Ms. Sanchez. Sure. So somebody is making money off of these
sites, but it is almost like the rightsholder is--it is sort of
a double whammy. They are being infringed upon by somebody else
who is using their content in a way that isn't authorized, and
then somebody who is selling ad revenue then on those sites is
also making money and that is not going to the rightsholder.
Mr. Walker. I want to be clear. We are not making money
really because we are refunding the money back to the
advertiser when we discover that the site that the ad was
appearing on was infringing. So it is not as though Google is
holding that money.
Ms. Sanchez. Well, you and I will have to disagree on
whether or not there is profit to be made in advertising on
infringing sites.
I want to go back to Mr. Morton and your public education
efforts. Now, you mentioned a successful symposium that you had
last year and you talked about one that is also planned for
this year. And the question that I have for you--and I am not
trying to be impertinent here, but it seems like symposiums,
which are a great idea--it is sort of like preaching to the
converted because the folks that are attending those symposiums
are probably the most informed or at least the most aware of
the problem of IP theft. And I am talking specifically about
industry leaders, Government officials, and congressional
staffs. And reinforcing information to those folks may be
beneficial, but if we are talking about the vast scope of IP
theft, I would think that probably education efforts are
probably better aimed toward a younger audience and the people
who are actually doing the infringing.
So I want to know if you are taking any steps to inform,
say, teenage kids who are looking for the new album of their
favorite artist or a college student who is looking to watch a
movie online or that type of crowd. Are there any efforts that
you are dedicating toward making them more aware of the issue?
Mr. Morton. It is an excellent question. The Government has
not typically been expert in the public education arena in this
area, but it is exactly where we need to be.
So one of the things that we have been thinking about is
the seizure banners that we use right now are static, and they
just say we have seized this site. One of the things we have
been contemplating is when we actually forfeit a site that was
dedicated to infringing or counterfeiting, can we use the fact
that so many people are going to see our banners. I mean, they
have become a sort of unanticipated Internet phenomenon. Can we
use those as an educational opportunity and instead of them
just being static, have a public service announcement?
The other thing that we need to do and work on is working
with the rightsholders so that we have--let's take the
entertainment industry--updated public service announcements in
the movie or maybe it is on iTunes or using the platforms that
already exist that people are going to that are legitimate to
help preach the gospel as it were. So we are very much focused
on that. It is a need. It is a work in progress.
Ms. Sanchez. Great. Thank you.
And I thank the Chairman and I yield back.
Mr. Goodlatte. I thank the gentlewoman.
The gentlewoman from California, Ms. Waters, is recognized
for 5 minutes.
Ms. Waters. Thank you very much, Mr. Chairman.
And to our Ranking Member, all of the Members of this
Committee, this is a fascinating discussion and one that is
very much needed, and I am really appreciative for the
opportunity to engage our folks who have come here today to
help us to learn about this problem of rogue sites and
infringers, et cetera.
And while I thank everyone, I am particularly drawn to Ms.
Christine Jones of Go Daddy Group who is so confident about
what she is attempting to do and your description of the
volunteer effort that you are attempting to get everyone
involved in.
I notice in your testimony, I think you said you had
identified 36,000 infringers or websites and that you told
Google about them, and you expected them to take them down. Is
that what you meant, or did you mean something else that you
didn't have time to discuss about what you expected of Google?
Would you elaborate a bit on that?
Ms. Jones. Sure. In 2010, we disabled 36,000 websites that
were engaged in selling drugs illegally online. We worked
together with the Intellectual Property Enforcement Coordinator
from the White House and Google who has co-led this effort with
me the entire way to form a group that would address those
sorts of things. So if I suggested that I gave them a list that
they did not act on, I misspoke and let's correct the record on
that.
Ms. Waters. Okay.
Ms. Jones. What I am saying is that is exactly the sort of
thing that voluntary cooperative group is designed to address,
and I think it can be done effectively and successfully in
other contexts as well.
Ms. Waters. Is there some way that we could be helpful
incentivizing everyone so that there is more cooperation and
that people are looking out for each other? Is there something
that we can do legislatively?
Ms. Jones. Well, one of the things that we have heard from
some of our brethren in the industry is that, look, we are not
as big as Google and we are not as big as Go Daddy. You guys
have scale. You have resources to effort against these
problems. We don't. Some registrars have 10 employees in the
entire company. We have thousands. So one of the things that
they have specifically asked for--and I think I can speak on
their behalf here--is help them know when a site is engaged in
illicit activity. Don't leave it to them to decide. And
frankly, we would like to have that too. It is just that we
might have some experts on our staff who have some knowledge
and some judgment. So I think help them know. Don't threaten
them with a lawsuit if they take action against a website. Give
them a safe harbor if they do what they are supposed to do and
then provide a consequence for the people that refuse to do it.
I mean, I think we have to keep in mind here we are
vilifying Google because they are big, and they have the
ability to influence a whole lot of what happens on the
Internet. And some people vilify us because we are big and we
have the most domain names under management of anybody in the
whole world. But we don't engage in infringing other people's
intellectual property. Right? So I think you have to be a
little careful about throwing the spears against the people who
are trying to make it better. And that is my one single defense
of Mr. Walker today. [Laughter.]
Mr. Walker. And for the record, Mr. Chairman, I don't feel
particularly vilified here.
Ms. Waters. Well, let me turn to Mr. Walker. I am glad you
don't feel that you have been vilified. Perhaps you don't know
it when you see it. [Laughter.]
But I would like to know what you think you can do better.
You obviously have identified ways that you have tried and the
complications of that. What else can you do?
Mr. Walker. I think we can continue to work with the
content industry to make the process faster. We have a common
goal on that and we are in the late stages of actually being
able to deliver in a big way on that. And that has been an
initiative that we announced in December and has been
universally applauded, I think, by the folks on that side of
the aisle.
Also as we have said, we are open to working on the
advertising side, which is really the right complement to the
DMCA process, to try and cut off advertisements to sites that
courts have adjudicated to be illegal essentially and dedicated
to infringing content. That makes sense to us as a complement.
We are also doing a lot of things to try and make life
easier for rightsholders. We have hundreds of people working on
this problem now. We spend, as I have told you, tens of
millions of dollars to try and address it in a better way. We
are trying to take the friction out of the system. And there
are a lot of ways of doing that. Having a simplified Web form
is one. Faster turnaround time is another. Working on the
advertising system is a third.
Ms. Waters. Thank you.
I yield back the balance of my time.
Mr. Goodlatte. I thank the gentlewoman.
The gentlewoman from Texas, Ms. Jackson Lee, is recognized
for 5 minutes.
Ms. Jackson Lee. Let me thank you very much, and I think
you can just look at the activity on the dais of Members coming
in and out that this is an important hearing. And Mr. Chairman
and Ranking Member, I thank you for holding this hearing. Many
of us are in a number of different hearings, and so we are very
appreciative of this particular meeting.
I would like to focus on some of the issues that you have
addressed but allow me the benefit of just trying to delve in
it further.
I don't take ownership of this, but what I will take
ownership of is the very interesting and important byline here,
``Fight Online Theft.'' And I think each and every witness
here, from the Government on, would say that you are
unanimously in support of fighting online theft. I think I need
yeses so it will be audible.
Ms. Jones. Yes, Congresswoman.
Mr. Walker. Yes.
Mr. Abrams. Yes.
Mr. Morton. Yes.
Ms. Jackson Lee. In the course of that, the documentation
notes 2.5 million jobs lost to counterfeiting, $135 billion
total global sales of counterfeit goods--I have seen it as I
have traveled--$75 billion, cost of global piracy of copyright,
$1.77 trillion by 2015. I think that is an enormous dent in the
genius of America and the creation of jobs. I really think we
are talking about jobs.
Let me just go right to Google because I frankly think it
is important that you are here. I feel that there is going to
be legislation, but it will not be punitive and it should not
be punitive. It should be collaborative, and I encourage the
collaborative process.
I will use the term ``web crawling'' to identify--and I
want to know the difficulty that Google would have in
identifying and working with better site placement and, as
well, the taking down. You are committed, know that there is a
job issue here. But I want you to know there is a genius issue
here. We are proud of Google. We are proud of all of the
witnesses that are here as it relates to their input into this
economy, into the new job creator of the 21st century into the
22nd century. We are discovering something every single minute.
The better discoveries we make--or as my son explains to me,
the development side of the business and, if you will, the
programmer or the person who is coming up with the ideas--the
better off we are.
But can you tell me what would be the challenge for a
greater engagement in the work of taking these sites down?
Mr. Walker. Sure. Congresswoman, thank you.
The key issue is the need for collaboration and
identification of who the bad guys are, sorting out the baby
from the bath water. We already do a lot of that on the DMCA
side. We hear from the content industry.
Ms. Jackson Lee. So do you have a team? Do you have a
department, a section that deals with that?
Mr. Walker. Yes, we do.
Ms. Jackson Lee. That has the expertise.
Mr. Walker. Yes.
Ms. Jackson Lee. So those individuals could give us input
into the crafting of the legislation, to be honest with you.
Mr. Walker. No, absolutely, and we would be delighted to
work with both this Subcommittee and the folks over at the
Senate to try and make sure that we are coming up with a
refined definition of who the bad guys really are.
Ms. Jackson Lee. So I get to other witnesses, just quickly
what do they do in the pulldown? You are pulling down now. What
can you do better to pull it down even more?
Mr. Walker. Sure. We can do it faster. We can do it with
less friction. We can make it easier for rightsholders, and we
are working on all three of those things.
Ms. Jackson Lee. Mr. Morton, you need help. Your staff is
dwarfed by the employees that are in these companies that are
sitting with you, but behind you I know are people in different
industries. Musicians are being impacted. People with unique,
inventive talents--their products are being taken. In the old
days, you would go to a certain country and find people's
pocketbooks were labeled and weren't the correct pocketbooks
that you thought you were purchasing.
What tools do you need? I think you need an expanded team
in ICE, to be frank with you, that is dedicated solely to this
issue. But give us a point that we can hang our hats on.
Mr. Morton. A couple of things. Just a real focus on
additional tools for foreign actors where there really isn't
much based here in the United States, particularly either the
defendants or the server. Help from Congress understanding that
the challenge here is so much broader than simply the
traditional entertainment industry. This has gotten to a point
where it is an assault on U.S. industry.
Ms. Jackson Lee. So the foreign element is something we
need to include in the legislation and give you tools to reach.
Is that what I am understanding?
Mr. Morton. It is really a collaborative one. It is not
just Government. It is again allowing Government to work with
the people to my left and to encourage the people to my left to
work on this in a collaborative way. They can do so much more
on a grander scale than we do. We are a specialized tool in the
toolbox. It is important to have us, but we are not the end all
and be all.
Ms. Jackson Lee. Let me just quickly, Mr. Chairman, if I
could. Mr. Abrams, the First Amendment. This whole question of
cyberlocking, this whole question of these parasite sites, your
leadership on the First Amendment. And I am thinking about
people stealing people's ideas. We have got to do a statutory
fix I believe. Is there a comment that you want to expand on?
Mr. Abrams. All I would say is that I agree with you that
you need to do something which involves additional methods,
that enforcement of the copyright law that already exists. We
have a copyright law. We are talking about entities that are
already routinely and increasingly violating our copyright law
by taking, stealing intellectual property that doesn't belong
to them. And I think one of the main things that you can do
which would be constitutional is to come up with a definition,
difficult as it is, but a definition of a site or a domain that
by its nature is so overwhelmingly dedicated to copyright
infringement that a court can enter an order so designating it
and that that order can be used and is available to entities
such as, but not limited to, Google but the whole range of
intermediaries in this area who, once they have it, can at
least not be in the position of having to decide for themselves
on an ad hoc basis all the time whether this is too much taking
or that is too much taking. If we can get a judge, if we can
get a magistrate to play that role--and I think a properly
drafted statute can--I think that would be a very, very big
step.
Mr. Goodlatte. And with that, the time of the gentlewoman
has expired.
Ms. Jackson Lee. I thank the Chairman.
Mr. Goodlatte. Mr. Abrams' comments are a good note to end
the hearing on with one exception. We are going to submit many
questions to the panel for you to answer in writing and any
other Members who wish to do so will have an opportunity to do
so.
Mr. Watt wants to pose one of those questions which you can
answer in writing, but he wants to pose it verbally. So we are
going to yield to him for that purpose and then we will
conclude the hearing.
Mr. Watt. I thank the Chairman for providing me this
opportunity. I do this not to get a response today. It is
addressed to Mr. Walker and Ms. Jones, but it is also addressed
to people in the audience who are invested in this issue in
various ways.
It has occurred to me that one of the areas we are going to
have to look more aggressively at is this safe harbor notion. I
am not sure I understand how it is being applied, but it seems
to me that one possibility might be to impose some of the
greater obligation and risk on the people who are requesting
these takedowns, rather than just you having potential
liability. The people who are best positioned to identify the
culprits are the owners of these intellectual property, songs,
materials that are being counterfeited. And when they request
you to take something down, what I need to know is there some
viable way to structure something that would put them at risk,
in addition to putting you at risk, as opposed to just
providing an absolute safe harbor here because safe harbors, it
seems to me, are subject to being more abused than if somebody
has some skin in the game, so to speak.
Ms. Lofgren. Would the gentleman yield?
Mr. Watt. Well, I am not sure the Chairman is going to let
me yield.
Ms. Lofgren. Just on the point. One of the things we
worried about when we wrote the DMCA--at least I worried about
and expressed at the time--was that when you have notice and
takedown request, who is going to stand up for the First
Amendment. If it is somebody who has a different agenda, you
know, the smartest thing for the person who it is directed to
is just to comply. I think that gets to the issue you are
talking about.
Mr. Watt. All I am trying to do is get all of these issues
out. So I would welcome written comments from anybody on this
whole notion of how the safe harbor works, whether it could
work more effectively if we put some additional incentives in
for people to put something on the line when they assert that
they ought to be given a safe harbor.
And with that, Mr. Chairman--my, you have changed.
[Laughter.]
Instantly you changed.
With that, I yield back.
Mr. Marino [presiding]. And I am not going to touch that
statement.
Thank you, Mr. Watt.
Mr. Marino. I think I am the one left that has some
questions, and I apologize for running in and out of here, but
it is one of those days where several Committees are going at
the same time. Actually I will be brief.
First, there was a statement made earlier, and I think it
was by Attorney Jones, and Attorney Walker responded to it to a
certain extent on giving notice. And I liked that idea of
people within the industry giving each other notice of rogue
websites and getting them shut down.
Does anyone on the panel--and I will start with you, Mr.
Walker--have any problem with that?
Mr. Walker. The challenge, Mr. Chairman, is the
verification of what is legitimate and what is illegitimate.
Some of the bills that are being talked about here would have
appropriate due process and a court review, and that is, I
think, where we are most comfortable before we are talking
about something like taking down somebody's website or cutting
off access to their services or advertising.
There have been other examples in the pharma case and the
like where there are a limited number of authorized websites
out there. You know, there may be only 20 people who are
allowed to buy ads for pharmaceuticals. That is somewhat
different than in the content industry where there are a
million different people. Everybody who posts something on
YouTube, including their home movies--that is a copyrighted
act, copyrighted work. So we have to be a little careful about
that.
That said, we are delighted to work with the rest of the
industry to share information. We have worked, in fact, with
ICE. We have somebody down at the IPR Center today helping them
get up to speed on some of the technology issues at play here,
and we are delighted to do that.
Mr. Marino. Does anyone else care to respond to that?
Ms. Jones. I will briefly. I mean, I suggested it. We like
getting information from people and we like sharing information
with other people.
I think it might be slightly disingenuous to suggest that
somebody can't verify that a pharmacy is selling drugs without
a prescription. That is a pretty easy case. I will agree that
it is much more difficult to determine a genuine Louis Vuitton
bag or a song recording that has been authorized by the
production company, the distributor, or the writer, and so on
and so forth. So the issue is very complicated, but the sharing
of information is really, really important.
Mr. Marino. Attorney Walker, you noted that defining a
rogue site is not simple. Would you be able to come up with at
this moment a definition of what you would propose?
Mr. Walker. Absolutely, at least at a level of principle.
Because we thought the comment may come up, forgive me as I
refer to my notes here.
Mr. Marino. Sure.
Mr. Walker. I think we are in the process of actually
sharing specific statutory language we propose, but at a high
level, we would say there are four key principles to be looked
at. One is that the site is knowingly violating copyright law.
Second is that it contains complete copies of works or
counterfeit goods. Third is it has a commercial purpose. And
four is that it refuses to respond when notified by rights
owners. Within that construct, I think we are comfortable with
a notion of a site that is dedicated to infringement.
Mr. Marino. Would you agree with me--and see if my research
is right. You were an Assistant United States Attorney.
Mr. Walker. That is correct.
Mr. Marino. And I was a United States Attorney. Many times
we have prosecuted people for omission, turning a blind eye. A
scenario I could use is when I made a drug arrest and went into
a crack house, and there were several individuals who were not
particularly selling the drugs but they were facilitating the
dealers and knew that it was going on. Would you agree with me
that those individuals could be prosecuted for aiding and
abetting?
Mr. Walker. So long as there is a finding of specific
knowledge and intent to have the transaction proceed, yes, sir.
Mr. Marino. Sure. I would think a specific knowledge is
here I have the cocaine in my pocket and I am going to give it
to the guy at the door so he can sell it. So I think we get
over that hurdle.
But not equating the industry with that, but don't you
think there could be a situation where it may appear that
industry is turning an eye and simply saying because of cost or
other reasons, this is just too much for us to address?
Mr. Walker. I want to be very clear that we are not saying
that. I recognize it is a growing problem, and as I say, it is
a frustration for us, as it is for the content industry. When
the bad guys' sites proliferate or change their identity or
Congressman Issa earlier referred to a site that changed its
name to avoid detection, we have that problem too. And it is
important to not confuse the message with the messenger. It is
a difficult problem and we work on it hard every day.
Mr. Marino. And please continue.
One more question I have for the Director. How would
enforcement be affected if prior notice of seizure blocking
orders was given to parasites before they were shut down, and
how easy is it for websites to change domain names or redirect
traffic to other websites?
Mr. Morton. The answer to your question depends on whether
or not we are in a civil or criminal context. I think the
Government's view in the criminal context would be that we
shouldn't alter basic criminal procedure which doesn't provide
notice in most instances to Government search warrants or
arrests prior, obviously, to the execution of the search or the
arrest.
In the civil context, it is a different story, and I think
there is plenty of room for prior notice. That is a common
hallmark of civil enforcement, and I don't see why it would be
any different than it is in other areas of the law.
Mr. Marino. Anyone else wish to make a comment pursuant to
my questions to the Director?
[No response.]
Mr. Marino. No? Well, I think that concludes our hearing
today. I would like to thank our witnesses for their testimony,
and I really appreciate your being here. I certainly want to
thank my colleagues for the in-depth questions.
And without objection, all Members will have 5 legislative
days to submit to the Chair additional written questions which
we will forward to the witnesses and ask them to respond to as
promptly as possible so their answers may be part of the
record.
Without objection, all Members will have 5 legislative days
to submit additional materials for inclusion in the record.
With that, I again thank the witnesses.
This hearing is adjourned.
[Whereupon, at 2 p.m., the Subcommittee was adjourned.]
SUBMISSIONS FOR THE RECORD
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Prepared Statement of the Honorable Darrell Issa, a Representative in
Congress from the State of California, and Member, Subcommittee on
Intellectual Property, Competition, and the Internet
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