On October, 13, 2008, President Bush signed into law the Prioritizing Resources and Organization for Intellectual Property Act (PRO-IP). PRO-IP alters the federal government’s involvement in the enforcement of intellectual property rights within the United Stated and throughout the world.
PRO-IP stiffens the civil and criminal penalties for copyright infringers. It provides that any articles in violation of 17 U.S.C. § 506 or sections § 2318, § 2319, or § 2320 of title 18, are subject to forfeiture. Similarly, it provides that in an infringement action, a court may impound records documenting the manufacture, sale, or receipt of infringing copies. Critics of PRO-IP argue that these changes open the door for the government to seize any property it believes to be facilitating piracy, including the family computer or a company’s computer network if employees commit acts of piracy at work.
PRO-IP also expands the application of copyright laws to exported, pirated goods in the same manner as is currently applied to imported, pirated goods. This expanded reach may prove limited in its application, since policing imported and exported goods often is an ineffective way to combat piracy. Nonetheless, on its face, it broadens the government’s ability to fight piracy, and as society begins to realize the importance of IP to the economy’s future, more resources likely will be devoted to policing imported and exported goods.
PRO-IP also relaxed standards for registering a copyright. PRO-IP now provides that an application for copyright registration will not be denied even if the application contains inaccurate information, unless the applicant knew of the inaccuracies and the deficiencies in the application would have led to a refusal by the Copyright Office. Prior to PRO-IP, copyright owners who committed a harmless error on their application for registration could be denied registration, thus affecting their ability to file suit in federal court.
PRO-IP doubles the statutory damages for those who either used or willfully used a counterfeit mark. A user of a counterfeited mark will now be liable for statutory damages no less than $1,000 or no more than $200,000 per counterfeit mark per counterfeit type of goods or services sold, offered for sale, or distributed. If the defendant willfully used a counterfeit mark, he will now liable for as much as $2,000,000. PRO-IP also makes treble damages and attorney’s fees mandatory in the intentional use of a counterfeit mark, or provision of goods or services knowing that such goods and services would be used with counterfeit marks.
Critics argue that any increase in statutory damages will suppress the very purpose of intellectual property law. They argue that businesses working on innovative projects will be less willing to take on creative or innovative projects that have the slightest chance of being challenged, thus stifling the progression of the sciences and useful arts. Supporters counter that the increase may be justified when the IP owner, often a small business, needs the statutory damages to help offset the loss of thousands if not millions of dollars to counterfeit sales. It is often difficult to prove lost profits and statutory damages cure that difficulty.
Federal IP Taskforce
The biggest change brought about by PRO-IP is the creation of an Intellectual Property Enforcement Coordinator (IPEC). IPEC will serve within the executive office of the President. It will not have the ability to control or direct any law enforcement agency. The IPEC’s main objective is to chair an interagency intellectual property advisory committee. This committee will be tasked with developing a joint strategic plan to combat infringement and counterfeiting within the U.S. and throughout the world. IPEC also is charged with reporting to Congress and the President any recommendations for improvements in federal intellectual property laws or enforcement efforts. PRO-IP also allows the Department of Justice to provide grants to state or local law enforcement entities to combat local piracy.
Critics Impact Final PRO-IP Law
PRO-IP has been heavily criticized by groups like Public Knowledge and Electronic Frontier Foundation, for giving too much power to the government and minimal protection to the individual. These groups were not successful in preventing passage of PRO-IP but were able to achieve some changes to the final law. One notable victory for these groups was the removal of a provision that would allow the Department of Justice to litigate civil suits on behalf of IP owners. Another victory was the removal of a provision that would have allowed the entertainment industry to seek damages per song instead of per album.
Organizations such as the MPAA, RIAA, PPA, NAM, INTA and the U.S. Chamber of Commerce have applauded the passing of PRO-IP. PRO-IP likely is the first of many major changes to come in federal IP law and enforcement. As the economy struggles, the importance of protecting the nation’s intellectual property takes center stage. It is estimated that $250 billion dollars is lost to counterfeit and infringing materials each year.
Jeffrey Kass is a partner at the full service St. Louis-based law firm of Gallop, Johnson & Newman. He is chair of the firm’s Intellectual Property Litigation Practice Group. He is a graduate of The Ohio State University. Jeffrey also teaches Intellectual Property Litigation at the University of Toledo College of Law, where Matt Hainen is a student of his. It was difficult to co-author this article with a graduate of the University of Michigan.
Matthew Hainen is a J.D. Candidate at the University of Toledo College of Law, focusing on preparing for a career as an IP lawyer. Matt is a graduate of the University of Michigan.