On October 13, 2008, President Bush signed into law the Prioritizing Resources and Organization for Intellectual Property Act of 2008, also known as the PRO-IP Act.1 Reflecting concerns about the piracy of intellectual property online and internationally, the Act amends existing trademark and copyright laws to potentially expose infringers to expanded and harsher penalties. The PRO-IP Act also establishes a new position within the Executive Office of the President that is responsible for coordinating the enforcement and improvement of intellectual property rights worldwide.
Changes to Trademark and Copyright Law
The PRO-IP Act emphasizes deterrence and restitution through enhanced trademark and copyright infringement damages and forfeiture provisions. For example, § 104 of the Act doubles the statutory damages available for the use of a counterfeit mark to a range of $1,000 to $200,000. See § 104, 122 Stat. at 4259. When the infringing trademark’s use is willful, maximum statutory damages are increased to $2,000,000. Id.
Another provision codifies the Fraud on the Copyright Office doctrine and removes federal registration as a prerequisite to criminal prosecution for copyright infringement. See § 101, 122 Stat. at 4257. More significant than these provisions, though, are new provisions that place restrictions on the flow of counterfeit goods in commerce. Goods bearing a counterfeit mark, for example, are now subject to forfeiture and destruction should they be transshipped within or exported from the United States. See § 205, 122 Stat. at 4261. Moreover, persons responsible for such goods will be liable to the owner of the mark for damages. See § 206, 122 Stat. at 4263. Similarly, in addition to civil liability for copyright counterfeiting, criminal liability now attaches to those who transship or export unauthorized reproductions of copyrighted works. See § 105, 122 Stat. at 4259.
Applying to both trademarks and copyrighted works, the PRO-IP Act’s new damages and forfeiture provisions have a broad reach. The provisions extend not only to counterfeit goods but also to any property used to make and distribute the goods and any property bought with the proceeds from trafficking in such goods. Furthermore, in criminal cases, these provisions can be invoked to obtain property forfeitures before a guilty verdict is rendered.
The IP Czar: A New Paradigm for Government IP Coordination
In addition to the expanded remedy provisions described above, the PRO-IP Act restructures the federal government’s posture with respect to IP theft and piracy by creating a position for an Intellectual Property Enforcement Coordinator (IPEC), also known as an IP Czar. The IPEC is tasked with planning, budgeting and directing federal efforts to combat the piracy and theft of intellectual property that has ballooned with the rise of globalization and the Internet.2 With the creation of the IPEC position, intellectual property owners will now have the opportunity to highlight to the IPEC what they perceive as weaknesses in existing IP laws and can more effectively participate in efforts to strengthen such existing IP laws.
To restructure the federal government’s efforts, Title III of the PRO-IP Act creates both the IPEC and an Advisory Committee for interagency intellectual property enforcement. Previously, the federal government’s intellectual property enforcement efforts were coordinated by the National Intellectual Property Law Enforcement Coordination Council (NIPLECC) and chaired by a position in the Department of Commerce.3 This new committee, which the IPEC will chair, is anchored directly to the White House, not the Department of Commerce, and is composed of a much broader cross-section of federal agencies than was the previous council. For example, under the new paradigm, members from the Office of Management and Budget, the Department of State, the Food and Drug Administration, and the Department of Homeland Security have all been named as part of the Advisory Committee. At the NIPLECC, these groups did not have a place at the table.4
Another structural shift in the PRO-IP Act is in its reporting requirements. Unlike the NIPLECC, which reported to Congress annually, the Advisory Committee is tasked with reporting to Congress every three years. This new report, titled the Joint Strategic Plan, is much more focused than was the NIPLECC’s previous report. In that report, the NIPLECC merely reported the status of coordination efforts between agencies. The Joint Strategic Plan is aimed at improving the effectiveness and efficiencies of federal efforts. In particular, some of its goals are to reduce the flow of counterfeit and infringing goods, eliminate barriers to enforcement efforts, and minimize redundancies among the various agencies. Moreover, in an effort to halt the growing influence of organized crime in matters of counterfeiting, the Plan accounts for intellectual property issues existing at home and overseas.
Part of the Plan’s purpose, for instance, is to strengthen the enforcement of intellectual property rights abroad by establishing international standards, disrupting international piracy networks, and strengthening intellectual property rights overseas. Up until now, efforts to enforce cross-border rights were loosely led by the U.S. Trade Representative and they involved little coordination with individual rights holders. The PRO-IP Act places the IPEC in control of coordination efforts and requires the IPEC to consult with intellectual property owners regarding protection of rights around the globe. Using the information gleaned from such consultations, the IPEC is charged with improving enforcement efforts abroad, including those of the State Department, and with reporting the results in its Joint Strategic Plan.
To meet these ends, the Act also establishes dedicated positions within the FBI and the Department of Justice and provides for the establishment of new programs to aid local and foreign governments in battling counterfeiting and infringement. As a result, the Congressional Budget Office has estimated that the PRO-IP Act will consume $429 million of the federal budget between 2009 and 2013.5 As this concerted effort gets underway, new opportunities are sure to emerge for intellectual property owners to shape the federal government’s position on counterfeiting and to increase meaningful enforcement of copyright and trademark rights.
Long-Term Effects of the PRO-IP Act
In the long run, the PRO-IP Act may be a turning point for owners of intellectual property. After having lost a significant amount of revenue in recent years from counterfeiting and IP theft,6 IP owners now have a stronger federal ally and stronger civil remedies to aid in the protection of their rights.7 As trademark owners police their marks and as copyright owners police their content, they should leverage these enhanced penalties accordingly and should continue to exercise caution when clearing marks and content so as to avoid running afoul of the enhanced enforcement provisions of the PRO-IP Act.