Trademark & Copyright Law Blog : Intellectual Property Lawyers & Attorneys : Foley Hoag Law Firm : Washington D.C., Boston

In the wake of last week’s web protests and media attention around pending anti-piracy legislation, leaders in both houses of Congress announced on Friday that they would indefinitely postpone further consideration of the Stop Online Piracy Act (“SOPA”) and the PROTECT IP Act (“PIPA”). Senate Majority Leader Harry Reid (D-NV) cancelled the cloture “test” vote to reopen debate on PIPA that had been scheduled for tomorrow, January 24, citing “legitimate issues raised by many” while expressing optimism “that we can reach a compromise in the coming weeks.” In response, SOPA sponsor Rep. Lamar Smith (R-TX) announced that the House Judiciary Committee would postpone consideration of SOPA, which it had intended to take up in February, “until there is wider agreement on a solution.” Sen. Patrick Leahy (D-VT), lead sponsor of PIPA, expressed disappointment at the delay of the Senate vote, calling it a “knee-jerk reaction” and reaffirming his commitment to see a version of the bill passed this year.

The stalling of SOPA and PIPA may make room for alternative anti-piracy legislation being advanced by Rep. Darrell Issa (R-CA) and Sen. Ron Wyden (D-OR). Dubbed the Online Protection and Enforcement of Digital Trade (“OPEN”) Act, the Issa/Wyden proposal omits some of the more controversial measures of SOPA and PIPA and concentrates enforcement powers in the International Trade Commission. Sen. Wyden introduced the OPEN Act as S. 2029 on December 17, 2011, and Rep. Issa officially introduced it as H.R. 3782 on January 18, during last Wednesday’s web blackout protests.

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The tide may be changing in the controversy over SOPA and PROTECT IP (or “PIPA”), the anti-piracy bills that have been making their way through, respectively, the House and the Senate in recent months. Yesterday’s unprecedented 24-hour global blackout of the English Wikipedia site in protest of the legislation and the new enforcement powers it would create has acted as a lightning rod for public attention. In concert with Wikipedia, Google ran a “censored” version of its logo on its home page yesterday, with a plea to users to contact their legislators, and many other popular sites displayed blacked-out screens together with information about the bills. Wikipedia reports today that SOPA was featured in a quarter-million Tweets per hour during the blackout.

Yesterday’s high-profile online activism follows months of public debate about SOPA and PIPA, which critics fear could chill online speech and destabilize the architecture of the Internet. While the legislation still has many vocal supporters – the Motion Picture Association of America’s chairman, former senator Chris Dodd, called the blackouts “stunts that punish users” – the ranks of opponents seem to be growing, and now include such strange bedfellows as the ACLU and the Tea Party. Ars Technica reports that 18 senators, seven of whom are former co-sponsors of PIPA, announced their opposition to the bill yesterday.

The White House Speaks

The White House has also expressed reservations about the bills in the past week, explaining in a statement released January 14 that, “While we believe that online piracy by foreign websites is a serious problem that requires a serious legislative response, we will not support legislation that reduces freedom of expression, increases cybersecurity risk, or undermines the dynamic, innovative global internet.”

Sponsors Tone Down Enforcement Powers to Move Bills Forward

Nevertheless, the bills’ lead sponsors are pressing on, albeit with some concessions to their critics. On January 13, House Judiciary Committee Chairman Lamar Smith (R-TX), a sponsor of SOPA, announced that he would remove the bill’s provisions requiring ISPs to block domain names of offending sites, which had been criticized as a threat to Internet stability and security. This week, he stated that markup hearings on the amended SOPA would continue in February.

In the Senate, PIPA’s lead sponsor, Sen. Patrick Leahy (D-VT) announced on January 12 that he was preparing an amendment to require that domain-name-blocking provisions be subjected to further study following passage of the bill, before they could take effect. Action on PIPA is likely to resume on January 24, when the Senate will hold a “test vote” on a motion for cloture, to lift a hold placed by Sen. Ron Wyden (D-OR) and begin debate on the bill.

Alternatives and Workarounds Spring Up

Rep. Darrell Issa (R-CA) and Sen. Wyden, the leading opponents of SOPA and PIPA, have introduced their own alternative legislation in both houses of Congress. The Online Protection & Enforcement of Digital Trade Act (or the “OPEN Act”) would give the International Trade Commission jurisdiction over challenges to allegedly infringing websites, and would target only payment processors and advertisers that support offending sites, not search results or domain name lookups.

And in another form of tech activism, the anonymous coders behind MAFIAA Fire, who originally created a browser plug-in to circumvent domain name seizures by the Department of Homeland Security, have come up with a new plug-in to address the domain-blocking measures of SOPA/PIPA. (As the MAFIAA Fire FAQs point out, such circumvention is legal at least until SOPA passes.) The MAFIAA Fire team also claims to have technical responses in the works to counteract other measures proposed in SOPA/PIPA.
 

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Bills were introduced in both the House and the Senate earlier this month to increase the penalties for trafficking in counterfeit drugs. Both versions of the proposed “Counterfeit Drug Penalty Enhancement Act of 2011” (H.R. 3468 and S. 1886) would amend 18 U.S.C. § 2320, which criminalizes the use of counterfeit marks on or in connection with goods or services, to provide for enhanced penalties when the good in question is a drug.

A similar measure was introduced in October as part of H.R. 3261, the “Stop Online Piracy Act” or “SOPA,” a bill aimed primarily at shutting down web sites that traffic in goods that infringe copyright or trademark rights. (See our earlier post for further information on SOPA.) The SOPA provision would clarify that § 2320 applies to drugs, but would only enhance the penalties in cases involving serious bodily harm, death, or counterfeit military goods or services.

Given the relatively controversial nature of some of SOPA’s other provisions, it is possible that the new, simpler legislation will prove to be a more efficient route to addressing this one aspect of the counterfeiting and piracy issue.

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Back in May, we wrote about MAFIAA Fire, a browser plug-in created by anonymous coders to counteract the government’s efforts to shut down copyright-infringing web sites by seizing the domain names. 

As we mentioned at the time, the PROTECT IP Act currently pending in the Senate would give the government (and private parties, for that matter) enhanced tools to bring down foreign-hosted rogue sites. 

Now the House has its own version of the legislation, dubbed the Stop Online Piracy Act (SOPA), and it has a provision that appears to be directed squarely at MAFIAA Fire. The bill would empower the Attorney General to seek an injunction against anyone who provides a service or product designed to circumvent the government’s enforcement efforts, including domain name blocks. This, of course, is exactly what MAFIAA Fire does.

The most notable other change in the House bill is the addition of a notice-and-takedown procedure that would allow private plaintiffs to instruct payment processors and advertising services to cut off the revenue to alleged rogue sites without having to go to court first. This robust new tool is backed by a broad coalition of industries.

For further information about both bills, see http://www.fightonlinetheft.com/, a web site set up by supporters. For an opposing view, check out the Electronic Frontier Foundation’s comments on SOPA. The House Judiciary Committee has scheduled a hearing on the bill for Wednesday, November 16. Check back soon for more updates on the bills’ progress. 

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I am attending the INTA Annual Meeting in San Francisco, and a number of people are talking about the “trademark bully” report released a few weeks ago by the Department of Commerce. During these conversations, it became clear that a few people misconstrued some comments that I made to the press and in my prior blog post . I would like to clarify my views.

While I am not in favor of devoting scarce government resources to address the so-called trademark bullies issue, I have no problem with how the Department of Commerce conducted the study. In fact, I think the Department of Commerce did a good job carrying out the directive of Congress within the mandated one-year period. It is clear that the Department of Commerce, working with the PTO, reached out to a broad range of constituencies and made very significant efforts to obtain input from small businesses as well as trademark owners (which are often larger companies) and organizations representing intellectual property interests. Of the 79 comments received, nearly half were submitted by small business owners or their attorneys. I myself participated in the preparation and submission of comments on behalf of an organization.

In my view, the shortcomings of the “trademark bully” study have nothing to do with how it was carried out, but rather stem from the nature of the assignment itself. We didn’t need a study to tell us what we already know – that some people think “trademark bullying” is a problem and others do not. I certainly do not fault the Department of Commerce for concluding that “it is extremely difficult to determine the extent to which trademark owners may be purposefully overreaching when enforcing their rights, and doing so with sufficient regularity for it to qualify as a significant problem." I agree with that conclusion, and indeed believe that it was the predictable outcome of the study.

The Department of Commerce and PTO did a good job with a bad assignment. Now that the “trademark bully” report is behind us, hopefully their talents can be put to better use. 

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UPDATE:  More Thoughts on the "Trademark Bully" Report: The Department of Commerce did a Good Job with a Bad Assignment

Posted by: Julia Huston on 1:20PM, May 17, 2011 

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The long-awaited study of so-called trademark bullies was recently released by the Department of Commerce. As you may recall from our prior blog post, the study was the result of legislation filed by Senator Leahy of Vermont and signed into law by President Obama on March 17, 2010 (Pub. L. 111-146, Sec. 4). The legislation gave the Secretary of Commerce one year to “study and report to [Congress] the extent to which small businesses may be harmed by litigation tactics [by corporations] [the purpose of which is] attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner." (Subsequent to enactment, the words “of corporations” were stricken and replaced by "the purpose of which is" by Pub.L. 111-295, Sec. 6(h).)

Senator Leahy apparently requested the study because he was frustrated that Vermonster, a local brewery of beers and ales in his home state, was being targeted by Hansen Beverage Company, the producer of Monster Energy Drink. The legislation was quickly passed by the House and Senate, before anyone in the intellectual property community had a chance to react or submit comments.

This unfortunate legislation is an example of what lawyers call "bad facts make bad law." Many people questioned the wisdom of commissioning an expensive study of trademark issues during a severe national budget crisis, especially given the other priorities facing the nation. Others felt that so-called trademark bullying did not deserve any more attention than patent bullying or any other kind of litigation-related bullying.

The Department of Commerce dutifully undertook the required study, and publicly released the results on April 27, 2011. Ultimately the study did not tell us anything that we did not already know. The study revealed that some people think that over-aggressive trademark enforcement is a problem, and some do not. The views expressed to the Department of Commerce were largely drawn from the respondents' own anecdotal experiences rather than any consensus among similarly situated constituents. The Department of Commerce ultimately could not answer the question that Congress had posed, and acknowledged that, "Given the limited data available, it is extremely difficult to determine the extent to which trademark owners may be purposefully overreaching when enforcing their rights, and doing so with sufficient regularity for it to qualify as a significant problem."

The Department of Commerce did not recommend any radical changes in trademark law or practice, but instead suggested exploring ways to educate potential trademark litigants and make pro bono counsel available to parties who cannot afford attorneys. While these ideas are certainly uncontroversial, they are also not likely to make a significant difference in the way that trademarks are enforced and defended in the United States.

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Nobody likes a bully, and I think we can all agree that the world would be a better place without bullying. Yet bullying in the schoolyard is not the same as bullying in the courtroom, and the issues can be complex. Is it fair to apply the bully label to any intellectual property owner who seeks to enforce its rights against a smaller company or who ultimately loses the case? If not, how can one tell the difference between legitimate enforcement and so-called bullying? These tricky issues are raised in a recent trademark bill signed into law earlier this month.

On January 28, 2010, Senator Leahy of Vermont introduced the Trademark Technical and Conforming Amendment Act of 2010 (Senate Bill 2968). The primary purpose of the bill was to harmonize the procedures governing trademark registration with respect to applications filed in the U.S. directly and pursuant to the Madrid Protocol, such as to make the grace periods following missed deadlines consistent.These provisions were uncontroversial enough, and were indeed received favorably in the trademark community. But Senator Leahy tacked on a statement at the end of the bill requiring the Secretary of Commerce to “study and report to” Congress The extent to which small businesses may be harmed by litigation tactics [by corporations] attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner." S. 2968, Sec. 4(a)(1).

This section became known as the “trademark bullies” provision. It was reported that Senator Leahy included this provision because he was frustrated that Vermonster, a local brewery of beers and ales in his home state, was being targeted by Hansen Beverage Company, the producer of Monster Energy Drink. (Senator Leahy later agreed to remove the words “of corporations,” but the remainder of the language remains intact.)

The legislation was quickly passed by the House and Senate, and was signed into law by President Obama on March 17, 2010 (Pub. L. 111-146).

The notion of conducting a study to determine whether and to what extent brand owners are “attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner” is a controversial one. Unfortunately, the bill moved through the legislative process so quickly that the intellectual property community did not have time to comment.

In my view, the fundamental premise of the proposed study is deeply flawed. Trademark owners are entitled to enforce their rights, and doing so does not make them “bullies” even if they are ultimately unsuccessful or the defendants are small companies. It is the role of the courts to weed out unmeritorious cases pursuant to well-established legal standards. In appropriate cases, courts may exercise their discretion to award attorneys’ fees to the prevailing party under 15 U.S.C. §1117(a) or Rule 11 of the Federal Rules of Civil Procedure. The Legislature should not second-guess whether the courts are doing their job. It is the role of the Legislature to make the law, not apply it.

In addition, the proposed “trademark bullies” study raises a host of practical questions and challenges. Who will conduct this study? What will its scope be? Most importantly, what standards will be applied to determine whether a particular litigant has crossed the line and gone “beyond a reasonable interpretation” of the trademark laws?

Finally, who will pay for this study and is it worth the cost? Americans on both sides of the aisle are concerned about the federal government’s budget deficit, and this does not seem to be a good time to “pile on” by commissioning a study of questionable value.

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