Congress Kills Big Penalty for Mix Discs

A U.S. House of Representatives subcommittee has stripped out a provision in a copyright enforcement bill that would have increased fines for compilation CDs containing pirated music by 10 times or more.

Penalty Called Excessive

Critics of the original version of the Prioritizing Resources and Organization for Intellectual Property (PRO IP) Act had complained that one provision would assess fines for each separate copyright work on a compilation work such as a CD, meaning the fines for a 10-song compilation CD would range from US$7,500 to $1.5 million, instead of the current $750 to $150,000. But the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property voted on Thursday to approve an amendment that stripped out the controversial provision.

Critics, including online civil rights group Public Knowledge, had complained that the compilation provision in the original bill would have gone too far with new penalties. The compilation provision would have treated each song on a compilation CD as a separate copyright violation, instead of treating the entire CD as one copyright violation, as is the practice now.

"We are pleased that the subcommittee deleted from the bill the section ... that would have allowed multiplied damages for infringement of a compilation far beyond any reasonable levels," Public Knowledge President Gigi Sohn said.

The compilation provision in the original bill raised too many questions, said Representative Howard Berman, a California Democrat and subcommittee chairman. Lawmakers need "more time to identify the appropriate legislative solution," he said during a hearing to amend the bill.

Several lawmakers, including Representative Zoe Lofgren, a Democrat representing part of Silicon Valley in California, praised sponsors of the bill for removing the compilation provision. "I was concerned that [the compilation provision] would stifle innovation by exposing American business to uncertain, and potentially crushing, liability," she said.

Some Stiff Fines Remain

The PRO IP Act would still increase other penalties for copyright infringement, including a doubling of damages in counterfeiting cases, with the maximum penalty for a counterfeiting offense rising to $2 million. The bill would create an Office of U.S. Intellectual Property Enforcement Representative in the White House, and would create an intellectual-property division in the U.S. Department of Justice.

Lofgren and Representative Robert Scott, a Virginia Democrat, said they still have concerns about the bill. The White House intellectual-property office's mandate is unclear, and could end up going after legitimate businesses, Lofgren said. The amendment approved by the subcommittee softened a provision that would allow for forfeiture of devices and property used to create counterfeit goods, the bill could still allow law enforcement authorities to seize devices that were used without the owner's consent, Lofgren said.

The forfeiture provision also appears to create a new form of seizure, in civil lawsuits involving copyright claims, Scott added. Scott had no objections to property seizure in criminal copyright cases, where the defendants have been charged and convicted, but the new civil forfeiture provision "starts to raise flags," and could result in overly aggressive seizures of property, he said.

Public Knowledge's Sohn said she was happy to that the forfeiture provision was amended to require that the U.S. Department of Justice show a "substantial connection" between the property it wanted to seize and the infringing activity. "This change would protect against a defendant having property taken by the government, such as a car or a home, which has only the most tangential relationship to infringing activity," she said.

Piracy Costly, Say Proponents

Several lawmakers praised the bill, saying stronger penalties and better coordination of intellectual-property enforcement are needed in the U.S. Intellectual property makes up about 45 percent of the gross domestic product in the U.S., and protecting intellectual property is critical to maintaining a strong U.S. economy, said Representative Lamar Smith, a Texas Republican.

Copyright violations are "easy and massive" and cost the U.S. hundreds of billions of dollars each year, Smith said. "Our response to these losses must be proportionate to the harm inflicted," he said.