Recently, a controversial new bill was introduced in the United
States House of Representatives. The new bill, entitled the Stop Online Piracy Act, aims
to undercut the business model of websites who sell or distribute
pirated American products or works by imposing obligations on third
parties who deal with the sites. Its purpose is to indirectly
target foreign websites that may be outside the direct reach of
One of the main components of the Stop Online Piracy Act is
section 103, which provides IP owners with a tool to enforce their
rights against sites "dedicated to theft of U.S.
property." Under this section, an IP rights-holder can
notify a payment network provider (defined as an entity that
directly or indirectly provides the proprietary services,
infrastructure, and software to effect or facilitate a debit,
credit, or other payment transaction) or company that provides
internet advertising services of IP infringement by a particular
site. Providing that the notification meets the requirements set
out in the section, the recipient must respond with
"technically feasible and reasonable measures" within 5
days to essentially cutting off the infringing site from its
services. For payment network providers this would generally entail
preventing the completion of transactions involving American
customers and the infringing website, and for advertisers it would
mean ceasing to advertise the website or provide advertisements to
The owner of the allegedly infringing site can respond with a
"counter-notification," which requires that the site
accept the jurisdiction of US courts. This allows the IP owner to
bring a claim directly against the infringing site. Once a counter
notification is provided, the payment networks and advertisers can
return to dealing with the site. Companies that cease to deal with
allegedly infringing sites cannot be held liable for doing so.
The bill also gives the US Attorney General the ability to get a
court-ordered injunction, which would impose similar obligations on
payment network providers and advertisers dealing with a foreign
infringing site. In addition, the injunction would require Internet
Service Providers and search engines to take reasonable measures
essentially preventing access to the site, in the case of ISPs, and
preventing search results from linking to the site, in the case of
search engines. The injunction would be modified if the site
removed the illegal activity.
In addition, the bill provides increased penalties for certain
piracy-related criminal offences, including streaming of
copyrighted works. It also contains several sections which call for
ongoing study and consultation between various US government bodies
and stake-holders on the issue of protecting US IP from foreign
The House's bill is similar to the Protect IP Act of 2011
introduced last month by the Senate. Both bills have been the
subject of controversy because of the severe measures that can be
invoked relatively quickly and easily to block access to, or
financially cripple, allegedly infringing websites. Both bills are
still in the early stages of the legislative process, making it far
from certain that either will be passed in its current form.
However, if and when any such legislation becomes law it will have
significant implications not only for websites that may contain
potentially infringing content, but also for many legitimate
companies that have dealings with these websites.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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