President signs controversial IP enforcement act into law

Convicted counterfeiters will now be subject to increased fines and the forfeiture of their property, under a new law that took effect yesterday. And the size of government just got bigger, with the creation of one more office.

While opposition was, as we put it some weeks ago, "mounting" against an intellectual property enforcement bill that would create a new government office in charge of enacting government policy against IP infringement, piracy, and counterfeiting, it's fair to say that opposition remained in large part outside of Congress. Last September 26, the US Senate passed the PRO-IP Act by unanimous consent; two days later, the House ratified it by a vote of 381-41.

The new law strengthens provisions for fines and punishment in civil cases, tripling some fines in cases of counterfeiting and enabling the US government to impound equipment used in the act of counterfeiting.

Heralding the bill as a strike against terrorism, the White House yesterday released a statement which reads in part, "In recent years, counterfeiting has grown rapidly. Counterfeiting costs America hundreds of billions of dollars a year and has harmful effects throughout the economy. Fake products can expose consumers to serious health and safety risks. Government loses out on tax revenues and is forced to divert law enforcement resources. Terrorist networks use counterfeit sales to finance their operations."

One of the bill's most contentions sections concerned what rights investigators had when impounding property that is suspected of being used in counterfeiting. An earlier draft of the bill supported by its principal author, Sen. Patrick Leahy (D - Vt.), explicitly stated that the government must prove a "substantial connection" exists between anyone who is the subject of a raid by law enforcement, and the equipment seized in that raid. That provision was stricken from the final language of the bill signed by the President yesterday.

"The protective order shall provide for appropriate procedures to ensure that confidential, private, proprietary, or privileged information contained in such records is not improperly disclosed or used," the final version of the PRO-IP Act reads. "At the conclusion of the forfeiture proceedings, unless otherwise requested by an agency of the United States, the court shall order that any property forfeited...be destroyed, or otherwise disposed of according to law."

The new law will create the office of the Intellectual Property Enforcement Coordinator (IPEC), a sort of IP czar who reports directly to the President. However, despite the "E" in its title, the office will be explicitly separated from responsibility for or direction of any law enforcement agency that carries out IP law, according to the law's final language.

"The IPEC may not control or direct any law enforcement agency, including the Department of Justice, in the exercise of its investigative or prosecutorial authority," the law now reads. That distinction may please the US Justice Dept., which reportedly raised private concerns that the IPEC would interfere with its established law enforcement operations.

So what is it that the IPEC will actually do? The PRO-IP law will have this Presidential appointee chair a committee, made up of other leading officials such as the Register of Copyrights and the head of the Patent and Trademark Office, as well as representatives from the State Dept. and the Dept. of Homeland Security. That committee will create a joint policy for refining anti-counterfeiting policies and coordinating with other countries for anti-piracy and anti-IP infringement operations. The involvement of DHS implies that the advisory committee will be actively engaged in investigating the funding sources for terrorism operations.

What's now missing from the newly signed law is any loosening of statutory definitions of counterfeiting. Earlier, rights advocates had protested the possibility that law enforcement officials -- or perhaps a separate operation run by the IPEC (one which cannot now exist under the law's current language) -- could use the new law as a means of seizing computers of individuals suspected of merely trading illicit files over P2P networks. Though it's still conceivable that an administration may still attempt that approach, using the new law as cover, the PRO-IP law as passed actually does not make such an attempt more feasible than it already was.

The White House's statement yesterday made no mention of the IPEC office, which may be an indication that it could remain vacant in the final months of the Bush Administration.