Copyright Industries Get Their Stats on the Ground, ‘Special 301’ Officials Hear

Officials from several agencies participating in the Special 301 review asked witnesses at a hearing to give them additional sources for statistics, but, to their frustration, largely came up short. Unlike in the comments that flooded USTR, the Anti-Counterfeiting Trade Agreement (ACTA) got short shrift in witness statements and back-and-forth with officials. USTR late Tuesday made public Ambassador Ron Kirk’s responses to a letter from Sen. Ron Wyden, D-Ore., on negotiations around ACTA and provisions the U.S. intends to push for or preempt.

USTR’s top aim should be preserving “balance” in copyright law, both for the U.S. and its many limitations and exceptions, and other countries with similar qualified regimes, said Public Knowledge staff attorney Rashmi Rangnath. There’s little substantive difference between fair use in the U.S. and a similar version in Israel, yet major copyright owners call Israel’s exemption a treaty violation worthy of USTR’s rebuke, she said. USTR should elaborate on “general statements” that a given country poorly enforces IP rights, and independently examine economic-loss figures from the copyright industries, which lack “citations to any authoritative source,” Rangnath said.

But the lawyer couldn’t provide any alternative sources for statistics to Stan McCoy, assistant USTR for intellectual property and innovation. Rangnath asked USTR to review copyright industries’ methodologies and let civil society groups in targeted countries counter with their own statistics in a second round of comments. Beyond an “iterative comment process,” though, where should USTR be looking? McCoy asked. Rangnath said the burden should be on the industries to justify their stats’ validity.

"Our industries could be at the forefront” of U.S. economic recovery through exports, which President Barack Obama has called for doubling in the next five years, said Eric Smith, president of the International Intellectual Property Alliance. But that depends on clamping down on piracy abroad, he said. Enforcement remains “inadequate and non-deterrent” with the U.S.’s biggest trading partners, Smith said, calling for more criminal prosecution of software, Internet and optical-disk piracy. USTR should press for the end to “onerous” burdens on judicial action in civil cases and pressure allies to adopt notice-and-takedown systems for ISPs with repeat-infringer provisions, he said.

The alliance gets its piracy figures from “people on the ground or people in the region,” in addition to secondary sources, Smith told Jean Bonilla, director of the State Department’s Office of International Intellectual Property Rights Enforcement. Those local staff members in places such as China “intimately cover raids, sentencing, law reform, and over the years we've grown quite expert” in devising trustworthy piracy figures, he said. But Smith conceded that lifting China’s market-access barriers alone would have a “tremendously positive impact on the U.S. economy.” He told Georgia Sambunaris, a senior adviser on economic growth at the U.S. Agency for International Development, that Internet piracy is “spiraling out of control” for industries that just got a handle on physical piracy. Mobile piracy on China’s nascent 3G networks especially worries the alliance, Smith said.

Unauthorized live-streaming of baseball games has “grown rapidly,” said Michael Mellis, general counsel for Major League Baseball Advanced Media (MLBAM), the league’s Internet arm. The biggest source is China, whose websites and services handle half of the world’s illicit streams, while 75 percent of the total comes from outside the U.S., he said. TV programming is an export and import for many countries, so crackdowns on illicit streaming should be a priority in trade negotiations, Mellis said. He told officials to add to the Special 301 record a December hearing by the House Judiciary Committee on sport-stream piracy (WID Dec 17 p1) and an Organisation for Economic Co-operation and Development report on the subject.

The league knows everything about piracy except its impact on the bottom line, Mellis said. MLBAM has dedicated employees monitoring the Internet for illicit feeds, logging and cataloguing hundreds of websites and routinely sending cease-and-desist notices, especially into China, but only one site there has complied, he said. It’s part of the Coalition Against Online Video Piracy, which has had “informal discussions” with the Chinese government, and contrary to entertainment companies, the league has no known market barriers to selling Internet programming abroad, Mellis said. But “the recency of the problem” means the league doesn’t yet have loss estimates, he told Timothy McGowan, economic officer at State’s IPR office. “Our perspective is about threat of harm” and growth trajectory of piracy, Mellis said.

Proceeding against countries with exceptions to copyright law “may simply be shifting around benefits between U.S. companies,” said Matt Schruers, senior counsel for litigation and legislative affairs for the Computer and Communications Industry Association. Those limitations are crucial for many tech companies’ economic growth both in the U.S. and abroad, he said. The Berne Convention on copyright creates a “mandatory access right to quotations” yet some service providers have been held liable by signatory nations for publishing quotations, he told Amanda Wilson, Copyright Office counsel for policy and international affairs. Punishment for policy disagreement “undermines the credibility of the process,” reducing the effect of the “scarlet letter” applied to countries that actually fail to protect IP, Schruers said.

Countries’ treatment of technological protection measures and consideration of a U.S.-style notice-and-takedown system, often used by U.S. companies against competitors, should be irrelevant to the review, Schruers said. The recording industry’s talks with U.S. ISPs on repeat-infringer penalties actually resemble Canada’s notice-and-notice system, he said: “We should recognize there are different roads to reach better enforcement.” Schruers also declined to suggest any other sources of data for USTR’s McCoy. The point is that some submissions in Special 301 are advocating a “mission creep” from adequate enforcement to “ideal policy."

China deserves an “out-of-cycle review” from USTR “with some real teeth,” said Shaun Donnelly, senior director of international business policy at the National Association of Manufacturers. The group is a strong supporter of the ACTA process, he said. Susan Wilson, director of the Commerce Department’s Office of Intellectual Property Rights, asked with some exasperation how the U.S. can use Special 301 review in a “new and creative way” after a decade of mixed results. “It takes a somewhat sophisticated approach,” Donnelly said. “The stick needs to be substantial. There have been a lot of carrots” with China.