Closing the Loophole on Illegal Streaming

by Howard Gantman 06/01/2011 13:50 (UTC-08:00) Pacific Time (US & Canada)

A House subcommittee took a closer look today at a loophole in federal law that makes it more difficult to prosecute theft of films, TV shows, and other creative works. 

Here’s the problem: although criminals use both illegal downloading and streaming to distribute stolen online content, current federal law makes only one of those methods – downloading – a felony. 

When rogue websites steal and stream a motion picture, a TV program, or a live sports broadcast, the creators of that content are just as badly harmed, if not more, but the penalty to the thief might be substantially weaker because the lack of clarity in the law leaves prosecutors reluctant to pursue felony charges. 

Today, the House Judiciary Subcommittee on Intellectual Property, Competition, and the Internet heard testimony from Register of Copyrights Maria Pallante, Copyright Alliance Executive Director Sandra Aistars, and our own Michael O’Leary on the serious threat illegal streaming poses to content creators and the need for Congress to take action. 

Some highlights from their prepared testimony:

Ms. Pallante said:

“Although streaming can implicate various exclusive rights, our current law could potentially apply vastly different penalties to this conduct simply based on the unique technology involved and regardless of the ultimate result – the illegal and unauthorized dissemination of copyrighted works. The Copyright Office believes that this disparity deserves consideration as Congress considers whether to amend the criminal copyright statutes to address streaming that causes serious harm to the legitimate market for performances of works of authorship.

“… Copyright policy is never finished. As technology makes it possible for authors to deliver their creative works in new formats and through new platforms, nefarious actors devise new ways to play the spoiler, sometimes seeking to divert profits and amass wealth illegally, other times merely to bask in the glory of interfering with and doing great harm to the investments of others. Congress has repeatedly legislated to confine these bad actors and hold them accountable, including giving prosecutors the tools necessary to do their jobs. By updating the law, Congress ensures the constitutional bargain that promotes the progress of our culture by giving authors the exclusive rights to their works for limited times.”

Ms. Aistars said:

“At a narrow level, the issue of making illegal streaming a felony crime is simply a technical clarification. Illegally disseminating other people's works without their permission should be punished the same way under law regardless of the technology used to accomplish such dissemination.

“On a grander scale, this issue is another phase in the battle between creators and lawful distributors of copyrighted works on one hand, and on the other parasitic websites that expropriate their property, diminish the compensation and pension and health benefits of creators and workers, and harm communities across the United States by depriving them of jobs and diminishing their tax revenues.”

Michael said:

“In addressing the subject of illegal streaming, it is important to note what this debate is not about. It is not a debate between technology and innovation and the creation of content. That is a false choice raised by too many people. This issue is really about favoring legitimacy over theft – about promoting and preserving creativity and production and punishing people who seek to profit through stealing the hard work of others. … The activity that is the subject of today’s hearing is not innovation, it is theft.”

Read the rest of Michael's prepared testimony here.

The Commercial Felony and Streaming Act (S. 978), introduced last month by Senators Amy Klobuchar (D-MN) and John Cornyn (R-TX), would classify the illegal streaming of copyrighted works as a felony, thereby standardizing its criminal classification with that of illegal P2P downloading.  Visit our Rogue Websites page at for more information on this bill and the PROTECT IP Act, which would deter, prevent and root out websites that profit from trafficking in stolen content.

Follow the Money: One Powerful Way to Deter Content Theft

by Howard Gantman 06/01/2011 09:20 (UTC-08:00) Pacific Time (US & Canada)

What do spam and stolen movies have in common?  We think: a way to prevent them.

The New York Times published a great editorial over the weekend arguing that one way to stem the flood of spam choking our inboxes would be to get banks and other financial services companies to refuse to process payments to spammers. 

A study of close to a billion spam messages and 120 purchases, presented last week at the IEEE Symposium on Security and Privacy, found that 95 percent of credit card transactions were processed by only three overseas banks.  

The Times editorialized: “This suggests that if banks or credit card companies refused to settle payments for some transactions with these banks, they could deliver a blow to the spam economy. … The concentration of business in three banks suggests there aren’t that many willing to deal with spammers. It’s certainly worth pursuing.”

The same holds true for rogue websites that host stolen films and other creative content.  Many of these sites look legitimate and charge consumers for the content they provide, not only harming the millions of Americans who work in the creative industry, but also exposing consumers to identity theft and other harms.  If credit card processors and other financial services companies refused to handle transactions for stolen content, it would make it a lot harder for thieves to operate.

PROTECT IP Act: Workers vs. Wyden?

by Howard Gantman 05/27/2011 08:37 (UTC-08:00) Pacific Time (US & Canada)

When it comes to protecting creative expression in America, where do our leaders stand?  Some of the answers may surprise you.   

Yesterday, U.S. Senator Ron Wyden (D-OR) announced a plan to obstruct the PROTECT IP Act, a bipartisan bill sponsored by Senate Judiciary Committee Chairman Patrick Leahy (D-VT), leading Judiciary Committee Republicans Orrin Hatch (R-UT) and Chuck Grassley (R-IA), and 13 other Republicans and Democrats, which was approved yesterday – unanimously – by the Judiciary Committee. 

Senator Wyden has stated that he will try to prevent the full Senate from debating or voting on this critical legislation,  claiming that it would “muzzle speech and stifle innovation and economic growth.”

We respectfully disagree – and so do American workers.  In a recent blog post, the AFL-CIO, which represents 12.2 million working men and women in this country, praised the PROTECT IP Act, saying it would preserve jobs and strengthen intellectual property rights. 

As AFL-CIO President Richard Trumka wrote:

The economic well-being of workers in the United States—jobs, income, and benefits—turns more and more on our protecting the creativity and innovation that yield world-class entertainment, cutting-edge and sustainable manufacturing and construction, and disease-ending pharmaceuticals. In a tough economic time, the PROTECT IP Act will help to protect U.S. workers and consumers against digital thieves and counterfeit scammers.

Paul Almeida, President of the AFL-CIO Department of Professional Employees (DPE), added:

Digital theft costs the arts, entertainment, and media industries billions of dollars and hundreds of thousands of jobs. For these skilled professionals, online infringement is wage theft.

The PROTECT IP Act will also be an important safeguard of free speech.  As Constitutional expert Floyd Abrams has written:

It is one thing to say that the Internet must be free; it is something else to say that it must be lawless.  Even the Wild West had sheriffs, and even those who use the Internet must obey duly adopted laws. …

Copyright violations are not protected by the First Amendment … [The PROTECT IP Act] does not impair or overcome the constitutional right to engage in speech; it protects creators of speech, as Congress has since this Nation was founded, by combating its theft.

The truth couldn’t be clearer.  Foreign based rogue websites that steal and sell or give away American movies, TV shows, and other creative products endanger jobs, cut into our GDP, and put the consumers who use them at risk of identity theft or credit card fraud.  

We know where we stand, and we know where the 16 bipartisan sponsors and co-sponsors of the PROTECT IP Act stand: with the millions of Americans working in entertainment, the arts, and media whose jobs are threatened by content theft.  Where does Senator Wyden stand?

PROTECT IP Act Clears Key Hurdle in Senate

by Howard Gantman 05/26/2011 10:23 (UTC-08:00) Pacific Time (US & Canada)

The Senate Judiciary Committee has unanimously approved the PROTECT IP Act, sending it to the full Senate for a vote later this summer. 

This is a key step forward for this bill and a big win for the millions of Americans in the creative sector whose hard work is stolen every day by rogue websites overseas.  Here’s Michael O’Leary’s statement from our press release:

“The Judiciary Committee took an important step today to stop theft and save jobs.  By helping shut down rogue websites that profit from stolen films, television shows, and other counterfeit goods, this legislation will protect wages and benefits for the millions of middle class workers who bring America’s creativity to life. 

“We thank Chairman Leahy, Senators Hatch and Grassley, and all the cosponsors for their work and support today and we look forward to continuing to work with the Senate and the House to ensure that the final legislation passed by both chambers and presented to the President provides adequate online protection of the American film and television community.”

Read our full release here, which also includes statements from leaders of The Independent Film & Television Alliance® (IFTA®) and the National Association of Theatre Owners (NATO).

Also check out Chairman Leahy’s press release and statement on the bill here.

Constitutional Expert: ‘Copyright Violations Are Not Protected by the First Amendment’

by Howard Gantman 05/24/2011 16:06 (UTC-08:00) Pacific Time (US & Canada)

Floyd Abrams, a noted constitutional expert and defender of the First Amendment, today wrote the Senate Judiciary Committee, and firmly declared that there is no First Amendment right to steal creative content and distribute it on the Internet through rogue websites.

In his letter, Abrams defended the Constitutionality of the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011 (the PROTECT IP Act) and said the bill was needed to help stem the theft of American intellectual property that costs “American creators and producers billions of dollars per year,” and results in “hundreds of thousands of lost jobs annually.”

The letter from Abrams, who has an extensive history in arguing constitutional cases before the Supreme Court, is in direct contrast to assertions made by a number of bloggers who have mounted a campaign against the bill, and seem more interested in protecting the rights of mostly foreign based rogue websites than the American jobs and businesses whose livelihoods are placed at risk by the illegally obtained content being marketed on these sites.  He writes:

“It is no answer to this challenge to treat loose metaphors—the Internet as ‘the Wild West,’ for example—as substitutes for serious legal analysis.  It is one thing to say that the Internet must be free; it is something else to say that it must be lawless.  Even the Wild West had sheriffs, and even those who use the Internet must obey duly adopted laws.”

In concluding that the bill passes constitutional muster, Abram’s responded directly to criticisms of the bill that have been raised:

“First, there is a recurring argument that the United States would be less credible in its criticism of nations that egregiously violate the civil liberties of their citizens if Congress cracks down on rogue websites. Second, there is the vaguer notion that stealing is somehow less offensive when carried out online.

“I disagree.  Copyright violations are not protected by the First Amendment.  Entities ‘dedicated to infringing activities’ are not engaging in speech that any civilized, let alone freedom-oriented, nation protects. That these infringing activities occur on the Internet makes them not less, but more harmful.  The notion that by combating such acts through legislation, the United States would compromise its role as the world leader in advancing a free and universal Internet seems to me insupportable.  As a matter of both constitutional law and public policy, the United States must remain committed to defending both the right to speak and the ability to protect one’s intellectual creations.  This legislation does not impair or overcome the constitutional right to engage in speech; it protects creators of speech, as Congress has since this Nation was founded, by combating its theft.”

Abrams is a partner at Cahill Gordon & Reindel LLP  who is representing the Directors Guild of America, the American Federation of Television and Radio Artists, the Screen Actors Guild, the International Alliance of Theatrical and Stage Employees, and the Motion Picture Association of America.  He noted that the PROTECT IP Act does not address all types of infringement online, but is focuses more precisely on “websites that are dedicated to infringing activities.”

“The PROTECT IP Act would establish a statutory category of websites that are ‘dedicated to infringing activities.’  There are two ways that a website can meet this statutory category:  Either a website has ‘no significant use other than engaging in, enabling or facilitating’ infringement; or a website is ‘designed, operated, or marketed [] primarily as a means for engaging in, enabling, or facilitating infringement,’ and ‘facts or circumstances suggest’ the website is used ‘primarily as a means for engaging in, enabling, or facilitating infringement.’  Under both definitions, infringement is defined by current copyright and trademark law. Thus the statute requires the offering of goods or services in violation of title 17 U.S.C., such as reproduction, distribution or public performance of copyrighted works (section 501), or circumvention of technological measures that control access to copyrighted works (section 1201), or the sale, distribution, or promotion of goods, services, or materials bearing a counterfeit mark (section 34(d) of the Lanham Act (15 U.S.C. 1116(d))

And finally, for those critics who have charged, without legal justification, that the bill would lead to a blacklist or crackdown on many legal commentary sites, Abrams notes that the PROTECT IP Act focuses “on a narrow category of entities which are not simply trafficking in some infringing content, or occasionally breaking federal laws, but which are primarily devoted to providing and selling infringing content in the United States.”

“Since the PROTECT IP Act applies only to websites that are ‘dedicated to infringing activities,’ based on the precedent for online infringement liability, Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 936 (2005), actions under the PROTECT IP Act require a showing that a target website is both violating current federal law and engaging in wholesale infringement.  Therefore, any website basically engaged in legal activities, such as commentary, socializing or commerce, cannot be pursued under the PROTECT IP Act.  Indeed, the definitions of ‘dedicated to infringing activities’ specifically exclude websites that have any other ‘significant use,’ or websites that are not ‘primarily’ used for infringement.”

Google Says It Won’t Obey Content Theft Laws?

by Howard Gantman 05/18/2011 13:44 (UTC-08:00) Pacific Time (US & Canada)

Google went way out on a limb today on content theft – saying it would “fight” laws designed to block rogue websites that display and sell copyrighted material.

Speaking in London earlier today, Google executive chairman Eric Schmidt told reporters that “[i]f there is a law that requires DNS [domain name systems, the protocol that allows users to connect to websites], to do X and it’s passed by both houses of congress and signed by the president of the United States and we disagree with it then we would still fight it...If it's a request the answer is we wouldn't do it, if it's a discussion we wouldn't do it.”  UK publication The Guardian first reported Schmidt’s comments here.

We think that’s pretty outrageous, and we’ve said so.  Here’s MPAA’s Michael O’Leary’s full statement in response:

In April, Google senior vice president and general counsel Kent Walker testified before Congress that ‘Google supports developing effective policy and technology tools to combat large-scale commercial infringement.’  That’s exactly what the PROTECT IP Act is designed to do – it creates a narrowly-drawn, carefully constructed solution to the threat to American jobs and America’s economy, a solution that protects and strengthens our right to free speech.   As constitutional law expert Floyd Abrams wrote, ‘[c]opyright violations are not protected by the First Amendment.’

Is Eric Schmidt really suggesting that if Congress passes a law and President Obama signs it, Google wouldn’t follow it?  As an American company respected around the world, it’s unfortunate that, at least according to its executive chairman’s comments, Google seems to think it’s above America’s laws.

We’ve heard this ‘but the law doesn’t apply to me’ argument before – but usually, it comes from content thieves, not a Fortune 500 company.  Google should know better.  And  the notion that China would use a bi-partisan, narrowly tailored bill as a pretext for censorship is laughable, as Google knows, China does what China does.

Sandra Aistars from the Copyright Alliance has also weighed in with a great blog post on this.  One quote:

Perhaps the Google view is that a mere threat of non-compliance will somehow scare off officials eager to defend American creativity and American jobs. But the strident statements smack of corporate imperialism, and – delivered across the Atlantic in London – are a far cry from the tone Google’s General Counsel took while testifying back home in America before the House Judiciary Committee a mere six weeks ago.

CNET is also following this news and includes a quote from an unnamed Google spokesperson that suggests that Schmidt may have stepped out of bounds:

In response to questions from CNET a Google spokesperson issued this statement: “Free expression is an issue we care deeply about and we continue to work closely with Congress to make sure the Protect IP Act will target sites dedicated to piracy while protecting free expression and legitimate sites.”

In Case You Missed It: Senior DOJ Official Says Prosecuting Content Theft Is a Top Priority for the Obama Administration

by Howard Gantman 05/18/2011 06:52 (UTC-08:00) Pacific Time (US & Canada)

We wanted to make sure you saw this speech from the Justice Department’s top official overseeing criminal prosecutions asking manufacturers, law firms, and government agencies to keep up the fight against content theft. 

Addressing the spring conference of the International Anti-Counterfeiting Coalition last Thursday, Assistant Attorney General Lanny A. Breuer described the DOJ’s extensive efforts to prevent, investigate, and prosecute intellectual property crimes like counterfeit goods, stolen trade secrets, and illegal copies of movies, music, and TV shows that show up for sale on rogue websites like those targeted in the PROTECT IP Act

“[I]t is not always obvious to people why we devote as many resources as we do to fighting IP crime.  In part, I think that’s because of a misperception that IP crimes are victimless, or that the victims of IP crime don’t really suffer.  Everyone in this room, of course, knows that isn’t true,” he said.  “We know that counterfeit pharmaceuticals and other consumer products can cause serious harm to people; and companies whose trade secrets are stolen or whose goods are counterfeited may be forced to downsize or go out of business, costing individuals their jobs.  Still, stealing a trade secret feels more abstract to most people than stealing a car.  And IP crime is becoming the province of sophisticated, international organized crime groups that are drawn to it because of its perceived low risk and high reward.”

AAG Breuer also reminded his audience that law enforcement can’t stop content theft alone – we all have a role to play:

What can you, the industry leaders whose intellectual property is at risk, do to help?  

The first thing you can do is to continue educating the public about the scourge of IP crime.  The perception that IP crime is a “soft” crime has a counterproductive effect on our efforts, and we need you to help us educate people about the real consequences of these offenses.

Second, we urge you to develop strong internal mechanisms for detecting IP crime with respect to your products and services.  We cannot police the entire global economy, and so we absolutely count on you to detect IP crime as it happens.   Our partnership with all of you must be strong if we are to make real progress.

Finally, let us know what you find.  Just as you would report a burglary in your home, we need you to report the theft of your intellectual property.  When we learn, in real-time, of IP crime, we can act more effectively and aggressively than if we learn about it long after the fact.

Explore our Content Protection page for more on how content theft hurts all of us.

White House Global Cybserspace Strategy Urges Protection Against IP Theft

by Howard Gantman 05/17/2011 15:13 (UTC-08:00) Pacific Time (US & Canada)

The White House on Monday announced an International Strategy for Cyberspace, which recognizes that intellectual property theft is a serious challenge to workers and businesses all around the globe, whose products are often stolen and distributed for profit by international criminal enterprises.  As Commerce Secretary Gary Locke told the New York Times: “The effort to build trust in the cyberspace realm is one which should be pushed in capitals around the world.”  We couldn’t agree more.  

The report lists protecting intellectual property, including commercial trade secrets, from theft as one of its top policy priorities:

“The same global networks that power innovation also open up new avenues for industrial espionage and the theft of intellectual property and commercial information. Cyberspace can be used to steal an unprecedented volume of information from businesses, universities, and government agencies; such stolen information and technology can equal billions of dollars of lost value. Individual incidents often go unreported or undetected. Results can range from unfair competition to the bankrupting of entire firms, and the national impact may be orders of magnitude larger. The persistent theft of intellectual property, whether by criminals, foreign firms, or state actors working on their behalf, can erode competitiveness in the global economy, and businesses’ opportunities to innovate. The United States will take measures to identify and respond to such actions to help build an international environment that recognizes such acts as unlawful and impermissible, and hold such actors accountable.”

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