PRO-IP Act - Background

Background

The PRO-IP Act would serve to further protect rights holders in the case of secondary infringement, in which a consumer becomes liable for infringement committed by another. In Capitol Records v. Deborah Foster (2004), the Recording Industry Association of America (RIAA) could not charge Oklahoma woman, Debbie Foster, with infringement of shared files. Judge Lee suggested that Foster could not be held responsible for the download of files, which were attributed to her adult daughter and estranged husband who used her IP number. The RIAA’s use of IP numbers to charge users with infringement was not sufficient evidence to charge Ms. Foster and other defendants in the past. However, in another RIAA case, Elektra v. Santangelo, the judge did find Patti Santangelo potentially liable for file-sharing in her home via Kazaa software, despite the fact that she may not have been aware of the illegal downloads.

In one case, Capitol v. Thomas, Capital Records did receive an award of $9,250 in statutory damages for each of the twenty-four infringed songs. Although the jury settled on charging the defendant with only $9,250 out of the possible $150,000 per song, through these cases, Capital Records, the RIAA and others were primarily concerned with sending a message to the public that illegal distribution and download of copyrighted music was unacceptable.

In addition to these domestic issues, United States has a history of participating in global enforcement of intellectual property rights. In 1995, the U.S. participated in negotiating in the World Trade Organization (WTO) on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which established a minimum standard for protecting various areas of IP rights. Throughout fiscal years 2004 to 2009, the government has tracked the importation of counterfeit goods, including pharmaceuticals, cigarettes, apparel, footwear, computers, software, toys and electronics. In 2006, the government confiscated, for example, cargo containers of counterfeit Nike Air Jordan shoes, as well as counterfeit Abercrombie and Fitch clothing, which together were valued at about $19 million. According to the U.S. Government Accountability Office's April 2010 report, "Observations on the Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods," such goods undercut American competition with lower prices, thus causing damage to the domestic economy. The U.S. government was also strongly concerned about the piracy of digital products through peer-to-peer networks, streaming sites, and one-click hosting services. The sophistication of piracy among counterfeiters has harmed the music, motion picture, television, publishing and software industries. At the time, there was no government agency that collected or tracked data on digital copyright piracy. Alongside potential lost revenue, these pirated goods pressure producers and IP owners to compete with the counterfeit producers. Overall, this contributes to loss of brand value and reputation, as well as lost investment and innovation. Also, American companies are forced to expend further funds on protecting intellectual property in court.

Proponents of PRO-IP frequently cited a study from the U.S. Chamber of Commerce, claiming that intellectual property theft costs American businesses an estimated $250 billion each year, as well as an estimated 750,000 jobs. A subsequent investigation by the technology news site Ars Technica revealed that these statistics were both inaccurate and decades old. A report issued by the Government Accountability Office in 2010 confirmed that these figures had not been derived from any reliable research, and could not be substantiated.