Canada: US Considers Tough Legislation To Cripple Foreign Sites That Infringe US IP

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 American law. 

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 website.

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 infringers.

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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