U.S. Trade Rep Report ID's Nations Needing Stronger IP Protections

 On April 29, the Office of the U.S. Trade Representative released its 2025 Special 301 Report. Based on an annual review of the state of intellectual property (IP) protection and enforcement in foreign nations, the 2025 Special 301 Report identifies "law, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers, which, in turn, harm American workers whose livelihoods are tied to America’s innovation- and creativity-driven sectors." 

Mexico continues to suffer from very high rates of copyright piracy, including through online streaming, peer-to-peer file sharing, direct downloads, stream-ripping, illicit streaming devices and apps, circumvention devices for video games and consoles, and physical media. As broadband access increases, online piracy has been increasing, and stakeholders report that Mexico has one of the highest rates of music and video game piracy in the world. A barrier to effective criminal copyright enforcement is the requirement to prove a direct economic benefit to the infringer and the submission of a legitimate physical copy of the pirated content, even if the pirated copies were distributed online. The 'direct economic benefit' requirement also prevents effective criminal enforcement against not-for-profit acts of piracy, such as interrupting and distributing cable and satellite signals. According to stakeholders, civil copyright enforcement is difficult and expensive due to the lack of secondary liability for Internet service providers (ISPs), no pre-established damages, no lost profit recovery, no recovery of attorney fees, and lengthy court cases.

The 2025 Special 301 Report identifies foreign countries that the Trump Administration plans to engage during the year ahead to improve legal protections for Americans' copyrighted property and other IP overseas. Hopefully, those efforts will bear fruit and better safeguard the value of American-owned creative works. 

 

Focusing here on copyrights, areas of concern covered in the report include, "challenges with border and criminal enforcement against counterfeits, including in the online environment," "high levels of online and broadcast piracy, including through illicit streaming devices," and "systemic issues regarding IP protection and enforcement, as well as market access."

 

According to the report, "during the review period, countries such as Argentina, Bulgaria, Canada, Chile, China, Colombia, Ecuador, Guatemala, India, Mexico, the Netherlands, Pakistan, Poland, Romania, Russia, Switzerland, Thailand, and Vietnam had high levels of online piracy and lacked effective enforcement." It observed that "stream-ripping was reportedly popular in countries such as Canada, Chile, India, Mexico, Nigeria, Russia, and Switzerland."

 

Furthermore: "Stakeholders continue to report notable levels of piracy through ISDs and illicit IPTV apps, including in Algeria, Argentina, Brazil, Canada, Chile, China, Guatemala, Hong Kong, India, Indonesia, Jordan, Mexico, Morocco, Singapore, Switzerland, Taiwan, Thailand, the United Arab Emirates, and Vietnam. China, in particular, is a manufacturing hub for these devices."

 

Also, "[t]he proliferation of 'camcords' – that is high-quality unlawful video recordings of new movies shown in theaters – continues to be a significant trade problem" in Russia, China, and India. The report stated that some foreign countries need to update their laws to deter such conduct. Apparently, "the requirement in some countries that a law enforcement officer must observe a person camcording and then prove that the person is circulating the unlawfully recorded movie before intervening often precludes effective enforcement." The report added that countries such as Argentina, Brazil, Ecuador, and Russia do not effectively criminalize unauthorized camcording in theaters. 

 

Along with ongoing challenges and concerns regarding online copyright piracy in countries such as China and Russia, the report also spotlighted Mexico: 

Mexico continues to suffer from very high rates of copyright piracy, including through online streaming, peer-to-peer file sharing, direct downloads, stream-ripping, illicit streaming devices and apps, circumvention devices for video games and consoles, and physical media. As broadband access increases, online piracy has been increasing, and stakeholders report that Mexico has one of the highest rates of music and video game piracy in the world. A barrier to effective criminal copyright enforcement is the requirement to prove a direct economic benefit to the infringer and the submission of a legitimate physical copy of the pirated content, even if the pirated copies were distributed online. The 'direct economic benefit' requirement also prevents effective criminal enforcement against not-for-profit acts of piracy, such as interrupting and distributing cable and satellite signals. According to stakeholders, civil copyright enforcement is difficult and expensive due to the lack of secondary liability for Internet service providers (ISPs), no pre-established damages, no lost profit recovery, no recovery of attorney fees, and lengthy court cases.

In the year ahead, we will see if the Trump Administration is successful in prompting improvements in copyright protections for Americans in those nations identified by the 2025 Special 301 Report.

Bill Would Fill the Gap in Copyright Protections for Music on AMFM Radio

On January 31, Sen. Marsha Blackburn filed the American Music Fairness Act. If it were to become law, the bill would secure full public performance rights in copyright owners' music sound recordings. The bill is backed by a bipartisan group of co-sponsors, including Senators Alex Padilla, Thom Tillis, and Corey Booker. An announcement for the bill states that Rep. Darrell Issa will be introducing companion legislation in the House. In the 119th Congress, both chambers should give the American Music Fairness Act the timely consideration it deserves. 

Copyright law contains a gap in its protection of the property rights of sound recording owners. Currently, terrestrial commercial AM/FM radio stations are allowed to broadcast copyrighted music sound recordings to attract listening audiences and earn money from airing ads around those recorded songs – all without obtaining a license or compensating the recordings' owners. 

 

The American Music Fairness Act would fix the issue. Under the Act, AM/FM stations would be required to pay royalties to owners of sound recordings – just like satellite radio and Internet radio stations pay public performance royalties to sound recording owners. 

 

Importantly, the American Music Fairness Act would set low, set flat royalty rates for smaller stations. For instance, the bill would establish a rate of $10 per year for non-profit and commercial stations that generate less than $100,000 in revenue each year. An annual rate of $500 would apply to stations that generate revenues over $100,000 but less than $1.5 million each year. 

 

Another merit of the Act is that it would enable sound recording owners to receive public performance royalties from foreign radio stations. The U.S.’s lack of full public performance rights has enabled foreign stations to lawfully withhold royalties from American copyright owners. But if the Act becomes law, foreign trade agreement provisions would kick in and compel those stations to finally pay American sound recording owners for the use of their copyrighted property. 

 

Previously, the American Music Fairness Act has been falsely attacked as a tax bill. In reality, the Act is a pro-property rights bill. No intellectually honest person can claim one private party's obligation to pay another private party for the use of private property is a government tax. Copyright royalties are not taxes. (The obvious differences between payments for the right to make copies, publicly display, or publicly perform another's copyrighted property and payments of taxes or fees to the government are addressed in more detail in my blog post from September 2022.) 

 

The American Music Fairness Act was introduced in both the House and Senate in prior Congresses, and the House Judiciary Committee passed it in December 2022. Sen. Blackburn and her colleagues deserve thanks for reintroducing the American Music Fairness Act in the 119th Congress and giving sound recording owners another chance at being fully secured in their rights. Hopefully, the Senate will take up the bill for due deliberation.

 

Additional background on the American Music Fairness Act can be found in my 2022 Perspectives from FSF Scholars, "American Music Fairness Act Would Secure Copyrights in Sound Recordings," as well as in my April 2021 Perspectives, "Congress Should Secure Full Copyright Protections for Music Sound Recordings."

American Copyright Owners Deserve Royalties When Radio Stations Use Their Property

 On June 26, the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet held a Hearing titled "Radio, Music, and Copyrights: 100 Years of Inequity for Recording Artists." The hearing featured testimony from witnesses on two competing legislative measures introduced in the 118th Congress: the American Music Fairness Act of 2023 and the Supporting the Local Radio Freedom Act.

The American Music Fairness Act – H.R. 791 and S.253 – would finally recognize a public performance right in terrestrial AM/FM radio broadcasts of copyrighted music recordings. If passed into law, the Act would require for-profit AM/FM stations to pay royalties to owners of sound recordings for the use of their intellectual property just like online streaming services do. Smaller commercial AM/FM stations as well as non-profit stations that have less financial resources would qualify for a significantly reduced annual royalty payment of $500, $100, or $10. 

Testimony by country music star Randy Travis and his wife Mary Travis challenge the position of many radio stations that American recording artists don't deserve a public performance right for their sound recordings for radio airplay because radio broadcasts of their music promote sales of physical CDs, merchandise, and tickets. Indeed, in the age of digital streaming services, revenues from CD sales are only a fraction of what they were many years ago, and many recording artists struggle to make a living and pay their crew and other co-workers. Commercial terrestrial AM/FM radio stations profit from playing copyrighted sound recordings. Internet streaming and satellite radio services pay public performance royalties for broadcasting copyrighted sound recordings, and it makes no sense to continue giving terrestrial AM/FM radio services. 

 

At the hearing, SoundExchange CEO Michael Huppe testified to the important point about how the American Music Fairness Act would benefit American recording artists and copyright owners by unlocking significant royalties from foreign radio stations. As explained in my March 27 blog post, "Music Revenue Report Should Spur Congress to Secure Copyrights Fully":

Under existing international agreements, foreign terrestrial AM/FM radio stations do not have to pay royalties for playing copyrighted music owned by Americans so long as domestic terrestrial AM/FM radio stations in the U.S. have no obligation to pay such royalties. Passing the American Music Fairness Act would open up those foreign royalty streams to U.S. copyright owners. Importantly, the legislation is sensitive to the limited financial resources of smaller commercial and non-profit stations by treating them to a low, flat royalty rate. 

The case for the American Music Fairness Act is presented in further detail in my February 2022 Perspectives from FSF Scholars, "American Music Fairness Act Would Secure Copyrights in Sound Recordings," and in my August 2021 Perspectives from FSF Scholars, "Congress Should Secure Full Protections for Music Sound Recordings." 

 

Testimony from National Association of Broadcasters President and CEO Curtis LeGeyt endorsed the Supporting the Local Radio Freedom Act – H.ConRes.13 and Sen.Con.Res.5  – a resolution stating that Congress should not impose "any new performance fee, tax, royalty, or other charge" on a local radio station broadcasting sound recordings over the air. But Mr. LeGeyt's testimony, like the Supporting the Local Radio Freedom Act, wrongly lumps payment of royalties by a radio station for commercially exploiting someone else's copyrighted property in with fees and taxes paid to the government. NAB's position isn't new, and it doesn't overcome the just claims of the owners of copyrighted property. I addressed the critical distinction between royalties and taxes in my September 2022 blog post, "In Debate Over Radio Royalties, Congress Should Favor Property Rights."

 

The American Music Fairness Act deserves to be advanced by Congress because it is a sound policy rooted in constitutionally recognized property rights principles. The other legislative measure is not. 

World IP Day 2024: Time to Step Things Up Against Online Copyright Piracy

April 26 is World Intellectual Property Day. Copyrights are more important to the U.S. economy today than at any previous time in history. The American Founders had the wisdom and foresight to put copyright protections in the 1787 U.S. Constitution. But securing Americans' rights in creative works such as movies, TV shows, and music from mass online piracy is an ongoing responsibility of Congress. In 2024, Congress should consider establishing a legal process for copyright owners to obtain court orders requiring broadband providers to block access to third-party websites whose entire or overwhelming purpose is to unlawfully traffick copyrighted content. 

According to a January 30 report by the U.S. Trade Representative, commercial-scale copyright piracy causes "significant financial losses for U.S. right[s] holders and legitimate businesses" and it "undermine[s] critical U.S. comparative advantages in innovation and creativity to the detriment of American workers." The report cited a June 2019 study by the Global Intellectual Property Center that found online piracy costs the U.S. economy $29.2 billion in lost revenue each year. The study also found that illegal streaming and file-sharing operations cost about 250,000 American jobs yearly. 

As the Trade Representative's report explained, there is a worldwide "complex ecosystem" for online piracy.Unauthorized Internet Protocol television (IPTV) operators stream vast libraries of copyrighted content, including live sports and premium channels, at below-market prices. "Cyberlocker" sites "act as the hosting and content storage sites for the world's most popular piracy streaming and linking websites." Many cyberlocker sites "offer a tiered revenue sharing system to reward the uploaders of their most popular content," including copyrighted content that has not yet been commercially released to the public. Online infringements also are facilitated by foreign "bulletproof" Internet service providers (ISPs) that "often explicitly advertise leniency in allowing their customers to upload and distribute infringing content" and refuse to comply with U.S. law.

 

In a February 2024 Perspectives from FSF Scholars, "Congress and the Administration Should Move Against Online Copyright Piracy," I identified three ways to better protect Americans' copyrighted works from mass online piracy: (1) confirmation of an Intellectual Property Enforcement Coordinator (IPEC) to engage foreign nations on copyright piracy: (2) stepped-up prosecutorial efforts against commercial streaming piracy operations; and (3) establishment of a "notice-and-stay-down" requirement for major online platforms to prevent serial re-posts of infringing content on their websites as a condition for obtaining immunity for infringements. 

 

But here is a fourth way to combat online piracy and improve protections for copyrighted content: establishment of a legal process for judicial site-blocking of third-party websites that are dedicated entirely or overwhelmingly to unlawful online copyright piracy.

 

In an April 9 speech, Motion Picture Association (MPA) Chairman and CEO Charles Rivkin called digital piracy "a central threat to the security of workers, audience, and the economy at large." His estimate of the damages from such piracy is stunning: "In the U.S. alone, it steals hundreds of thousands of jobs from workers and tens of billions of dollars from our economy, including more than one billion in theatrical ticket sales."

 

Mr. Rivkin pledged that his organization is going to work with Congress on judicial site-blocking legislation that "focuses only on sites featuring stolen materials" and that is "within the bounds of due process, requiring detailed evidence establishing a target's illegal activities and allowing alleged perpetrators to appear in a court of law." On behalf of MPA, he also pledged an "unflinching commitment to the First Amendment."

 

Indeed, due process and free speech are essential starting points for any judicial site-blocking legislation worth considering. Such a bill must be tightly focused on websites that are entirely or overwhelmingly dedicated to trafficking commercial copyrighted content, not viewpoints expressed on such sites. It must authorize only a private civil cause of action and not be a potential tool for government censorship of lawful speech. Additionally, a worthy judicial site-blocking bill would avoid imposing any undue burdens or costs on compliant broadband ISPs. Also, there must be a legislative process that provides transparency on the content of bills and amendments, committee hearings, and opportunities for public input.

 

On World IP Day, Congress should remember the billions in economic damages suffered by American copyright owners each year because of the global online piracy ecosystem. In the months ahead, Congress should develop and consider a constitutionally sound bill authorizing judicial orders to block access to third-party sites that exist for the purpose of engaging in unlawful mass online infringements. 

USTR Report: Foreign Nations Should Step Up Efforts to Curb Online Copyright Piracy

On April 26, the Office of the U.S. Trade Representative (USTR) released its 2023 Special 301 Report on intellectual property (IP) enforcement and protection by our nation's trading partners. The Section 301 Report provides an overview of various initiatives by the Administration to promote stronger protections for Americans' IP overseas, tracks recent trends in other nations regarding IP, and offers succinct status reports on IP protections and enforcement – or lack thereof – in individual countries. 

One area of attention in the Section 301 Report is online piracy. According to the report, in 2022 and early 2023, "countries such as Argentina, Bulgaria, Canada, Chile, China, Columbia, the Dominican Republic, India, Mexico, the Netherlands, Pakistan, Romania, Russia, Switzerland, Thailand, Ukraine, and Vietnam had high levels of online piracy and lacked effective enforcement." In particular, the report identified high incidence of music piracy by the use of "stream-ripping" software to create unlawful copies of songs in Canada, India, Korea (the report never specified North or South), Mexico, Russia, Switzerland, Ukraine, and the United Arab Emirates. 

Additionally, the Section 301 report called attention to the use of illicit streaming devices (ISDs) to facilitate unauthorized streaming of copyrighted video content offered by illicit Internet Protocol television (IPTV) services. As the report observed: "Today, there are many illegal IPTV services worldwide, many of which are subscription-based, for-profit services with vast and complex technical infrastructures." Significant levels of piracy via ISDs and illicit IPTV apps reportedly takes place in Argentina, Brazil, Canada, Chile, China, Guatemala, Hong Kong, India, Indonesia, Iraq, Jordan, Mexico, Morocco, Singapore, Switzerland, Taiwan, Thailand, Tunisia, and Vietnam. And report rightly observes that online piratical activities inflict substantial economic harm on American creators of copyrighted works and undermine the competitive viability of legitimate online platforms for distributing creative content. 

 

The Section 301 report ought to be a reminder of the need for the U.S. to keep up pressure on foreign nations that do not take IP protection and enforcement seriously and turn a blind eye to online copyright piracy and other forms of IP theft and counterfeiting. In our book, Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform(Carolina Academic Press, 2020), Free State Foundation President Randolph May and I provide a brief history of early U.S. efforts to secure copyright protections for Americans' creative works in foreign countries. Our book also addresses the need for domestic criminal copyright enforcement against large-scale commercial piracy operations as well as the need for strong copyright protections in free trade agreements.  

Recording Music Revenues Up: Stronger Copyrights Would Increase the Pot

Late September of this year, the Recording Industry Association of America (RIAA) released its "Mid-Year 2022 RIAA Revenue Statistics." RIAA's report reveals many interesting and positive trends and data points for the U.S. recorded music market. The report also ought to serve as a reminder that the sound recording industry is copyright intensive and that Congress can bolster copyrights for owners of music recordings by passing the American Music Fairness Act.

According RIAA's report, during the first half of 2022, retail revenues for the U.S. sound recording industry grew to $7.7 billion, up from $7 billion during the first half of 2021. And wholesale revenues rose to $4.9 billion during the first half of the year, up $300 million compared to the first half of the prior year. 

Streaming is overwhelmingly the dominant source of revenue for the sound recording industry, as about 84% of its revenues during the first half of 2022 came from streaming services. Of the $6.5 billion generated by streaming during the first half of the year, about 78% or $5 billion came from paid streaming subscription services. Meanwhile, revenues from digital downloads of single tracks and albums declined 20% to $256 million, amounting to only 3% of total revenues for the recorded music industry. As RIAA's report shows, paid subscriptions have continuously increased in recent years and have now reached the 90 million subscriber mark.

 

Conversely, RIAA reported declines in revenues from digital and customized radio services such as SiriusXM and Internet radio stations. Total revenues from that category of services dropped 3%, down to $556 million. Notably, U.S. copyright law does not secure a public performance right for sound recording owners when AM/FM terrestrial radio stations broadcasts their music. As a result, direct revenues to the music recording industry from airplay on terrestrial radio is effectively zero. 

In terms of revenues from retail sales of physical products, revenues from CD sales declined 2% to $200 million. CD sales constitute 26% of physical revenues. Yet revenues from vinyl records continue to grow. According to RIAA's report, "[r]evenues from vinyl albums grew 22% to $570 million, and vinyl's share of the physical market increased from 68% to 73%."

Having noted these overall positive trends in music recording revenues, there are things that Congress can do to help promote the music marketplace and grow the pie bigger for recording artists and music fans. Perhaps the most immediate thing Congress can do is pass the American Music Fairness Act – H.R. 4130 and S. 4932. 

As previously mentioned, current copyright law exempts terrestrial AM/FM radio stations from having to pay royalties to owners of copyrighted sound recordings when their music is played on the air. This means that commercial AM/FM stations can profit off of copyrighted sound recordings by broadcasting them to attract audiences and then draw revenue from running ads. 

The American Music Fairness Act would require AM/FM stations to pay royalties to owners of sound recordings for the use of their intellectual property just like satellite radio and Internet radio stations pay public performance royalties to sound recording owners.

 

So long as the U.S. exempts American AM/FM stations from paying royalties to American sound recording owners, foreign stations have no obligation to pay royalties for broadcasting copyrighted sound recordings owned by Americans. But by passing the American Music Fairness Act into law, Congress would open up royalty revenue streams from foreign radio stations and American copyright owners would receive revenues that they rightfully deserve. Importantly, the legislation includes a low, flat royalty rate for smaller commercial stations as well as for non-profit stations. 

As discussed in my February 2022 Perspectives from FSF Scholars, "American Music Fairness Act Would Secure Copyrights in Sound Recordings," H.R. 4130 has received a hearing in the House Judiciary Committee. And S. 4932 was introduced in September of this year. There is still time in the 117th Congress for the American Music Fairness Act to become law. Congress ought to make it so. 

IP Commission Recommends Policies to Protect Americans from Theft

On March 15, the Commission on the Theft of American Intellectual Property released its 2021 review report containing policy recommendations for strengthening protections for American intellectual property from theft by China and pirates in other foreign nations. As the IP Commission's report points out, "IP-intensive industries support more than 45 million U.S. jobs," but IP theft inflicts on the U.S. economy hundreds of billions in annual losses as well as reduced investment and innovation. The report's policy recommendations include statutory authorization for the Secretary of Commerce to be the principal officer on all aspects of IP protection as well as authorization for the U.S. Trade Representative to develop and implement a national IP protection strategy and coordinate interagency efforts. It also recommends that U.S. policy make it a goal to delegitimize communist Chinese business efforts that are dependent on IP theft. Without staking definitive positions here on the report's recommendations, suffice to say they deserve careful consideration. Additionally, the IP Commission released a backgrounder that describes recent and ongoing legislative efforts to strengthen American IP protections. 

As mentioned in previous blog posts, the IP Commission has issued important reports that highlight the massive economic losses and harms suffered by U.S. innovators and our economy due to theft of copyrighted works, patented inventions, and other forms of IP. The 117th Congress and federal agencies must make protection of American IP for foreign bad actors in communist China and other nations. 

IPEC's 2020 Report Highlights Federal Agencies' Pro-Copyright Initiatives

On January 7, the Intellectual Property Enforcement Coordinator (IPEC) released its Annual Intellectual Report to Congress for 2021. The report summarizes the Trump Administration's IP enforcement strategy and policy initiatives across numerous federal agencies. 

The IP Report rightly extols the constitutional basis for copyrights as well as its vitality to American prosperity: 

Intellectual property is integral to our nation’s economic competitiveness and the growth of our innovative economy. For instance, copyrights are not only economically important, but a key part of our culture and society. A well-functioning copyright system is essential. The U.S. copyright system is grounded in our Constitution, and built on centuries of extensive jurisprudence, statutes and regulations. 

Among other things, the IP Report recounts the Trump Administration's elevation of the IPEC within the Executive Branch: 

[U]nder the leadership of President Trump and with the support of Congress, the White House Office of the U.S. Intellectual Property Enforcement Coordinator (IPEC) was established as a new component agency of the Executive Office of the President and part of the National Economic Council, ensuring that in the decades to come the IPEC will be there to advise the President, coordinate policy, and advocate for American interests abroad.

The IP Report also overviews the Trump Administration's efforts through foreign trade agreements such as USMCA and other diplomacy efforts to ensure Americans' copyrighted works and other IP are better protected overseas. And the report includes appendices describing IP protection and enforcement initiatives undertaken over the last few years by Executive Branch Departments, the Office of the U.S. Trade Representative, as well as the U.S. Copyright Office. The Justice Department's appendix, for instance, highlights notable criminal infringement prosecutions. And the Copyright Office's appendix discusses the Section 512 Study Report that was released in May 2020. 

 

The need for an overhaul of Section 512 is the subject of my January 12 Perspectives from FSF Scholars paper titled "Congress Should Hold Big Tech Accountable for Copyright Violations." This year, expect Free State Foundation scholars to have more to say about needed pro-IP policy actions. 

Trump Administration Releases its Joint Strategic Plan for IP Enforcement

On November 9, the Intellectual Property Enforcement Coordinator (IPEC) released the 2020 to 2023 Joint Strategic Plan by coordinated federal agencies for promoting and protecting intellectual property (IP) rights. 

The IPEC-developed plan provides an overview of recent and ongoing strategic efforts by the Trump Administration in all areas of IP policy, including copyrights. And it addresses domestic IP policy issues as well as initiatives to ensure that Americans' IP rights receive protections internationally. Included in the Joint Strategic Plan are efforts to better secure copyrights from infringement – particularly online infringement:

The [U.S.-China] Phase One Agreement requires China to provide effective and expeditious action against infringement in the online environment, including by requiring expeditious takedowns and by ensuring the validity of notices and counter notices. It also requires China to take effective action against e-commerce platforms that fail to take necessary measures against infringement. The United States and China agreed to address additional intellectual property issues, including with regard to unauthorized camcording of motion pictures and copyright protection for sporting event broadcasts, in future negotiations... 

 

The Justice Department and the Department of Homeland Security will continue to aggressively investigate and prosecute individuals and corporations that engage in large-scale online copyright piracy (through illicit streaming services and anti-circumvention devices), which not only violates the rights of copyright holders but also often involves the commission of other serious crimes such as money laundering and tax evasion… In addition, the Justice Department, DHS, and other Federal agencies (as appropriate) will also continue to work with foreign law enforcement and other governmental offices to prosecute and otherwise prevent large-scale online copyright piracy, including the large-scale online pirates that are identified in USTR’s annual List of Notorious Markets... 

 

The Department of Homeland Security (U.S. Customs and Border Protection (CBP)) will continue to modernize, update and expand the existing e-Recordation program, which provides right holders the opportunity to record their registered trademarks and copyrights to receive enhanced border enforcement of the IP. DHS will continue to provide education and outreach to the industry regarding the critical importance of obtaining trademark and copyright recordations in order to stem the flow of infringing goods into the United States. DHS will continue to educate personnel at all Ports of Entry on the importance of IP enforcement, and arm them with the necessary tools to detect and interdict infringing goods at the border...

 

The United States will continue to support and encourage the broader and more regularized adoption of voluntary "Trusted Notifier" agreements involving Internet domain registries. These agreements have proven effective in removing websites that engage in large-scale copyright piracy, as has been demonstrated in the implementation of the agreements that the MPAA (now, the MPA) entered into in 2016 with the Radix and Donut registries.

We will likely have more to say on the Joint Strategic Plan – particularly its call for further examination of the copyright "notice-and-takedown" system for removing expeditiously infringing content from Internet websites. Free State Foundation President Randolph May and I wrote about the need for reforms to the "notice-and-takedown" provision in the Digital Millennium Copyright Act in our June 2020 Perspectives from FSF Scholars paper, "Copyright Office Report Should Spur Modernizing the DMCA."

U.S. Trade Rep's Notorious Markets Report Tackles Online Copyright Piracy

Today, Free State Foundation President Randolph May and I published a Perspectives from FSF Scholars paper titled "Modernize Copyright Protections to Combat Worldwide Online Piracy." The short paper discusses the U.S. Trade Representative's "Special 301 Report" and the need for updated measures to combat online piracy of copyrighted movies, TV, and music.

The U.S. Trade Representative released the Special 301 Report alongside a second report: the 2019 Review of Notorious Markets for Counterfeiting and Piracy. The Notorious Markets Report "highlights prominent and illustrative examples of online and physical markets that reportedly engage in or facilitate substantial privacy or counterfeiting. A goal of the [Notorious Markets List] is to motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting."

This year's Notorious Markets Report includes e-commerce platforms and related online third-party marketplaces along with physical markets that traffic in counterfeit and pirated goods. The Report calls on third party marketplaces to do more to curb such trafficking, and endorsed the steps urged by the Department of Homeland Security in a report released in January of this year.

Additionally, this year's Notorious Markets Report features the nexus between malware and piracy as a focus issue. Dangerous malware is frequently involved in the payment processes or embedded with the pirated content, putting financial and other data of users at risk. Purchasing movies, TV, music and other content from legitimate vendors is therefore a matter of consumer safety. The connection between malware and copyright piracy is also addressed in our new book, Modernizing Copyright Law for the Digital Age – Constitutional Foundations for Reform.

We have called attention to previous editions of the Notorious Markets Report in blog posts from 2019 and 2018.

New Book: "Modernizing Copyright Law for the Digital Age"

In Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform, Randolph May and Seth Cooper connect constitutional principles and historical insights to recommendations for updating U.S. copyright law to meet the challenges of the Digital Age.

Copyright owners and copyright-intensive industries are vital engines of prosperity in our Digital Age economy. But current U.S. copyright law fails to protect adequately copyrighted works from infringement enabled by modern-day digitization and Internet connectivity. The law needs updating to curb the billions in economic losses caused annually by bad actors in America and abroad.

In reforms grounded in constitutional principles, Modernizing Copyright Law for the Digital Age addresses areas such as international trade, public contracts, private contracts, compulsory licensing and rate regulation, antitrust, and so-called moral rights. This timely book details steps that Congress should consider for updating copyright policy in hot-topic areas, including music royalties, Copyright Office reform, civil enforcement, criminal enforcement, and international protections.

The book is now available from Amazon here or from Carolina Academic Press here.

Senate Passes the USMCA

On January 16, the U.S. Senate passed H.R. 5430, the United States-Mexico-Canada Agreement Implementation Act. The Senate deserves credit for promptly approving the USMCA following its passage in the House of Representatives in December 2019. The USMCA includes several provisions that will help strengthen Americans' copyrights in those neighboring nations. H.R. 5430 has been transmitted to President Trump for signature. 

Free State Foundation President Randolph May and I described the pro-copyright provisions contained in the USMCA and recommended its passage. My April 2019 Perspectives from FSF Scholarspaper, "Trade Agreements Should Include Stronger Online Copyright Protections" and my similarly-titled October 2019 Perspectivespaper, "Trade Agreements Should Strengthen Copyright Protections Against Piracy" also discussed the USMCA's pro-copyright features.

House of Representatives Passes the USMCA

On December 19, the House of Representatives passed H.R. 5430, the United States-Mexico-Canada Agreement Implementation Act. The House should be commended for its approval of the USMCA, which contains many provisions that will help strengthen Americans' copyrights in those neighboring nations. 

Free State Foundation President Randolph May and I have previously described the pro-copyright merits of the USMCA and called on Congress to pass it. As I explained in my April 2019 Perspectives from FSF Scholars paper, "Trade Agreements Should Include Stronger Online Copyright Protections":

By negotiating for stronger copyright protections and enforcement in international trade agreements, the U.S. can help curb the significant economic losses sustained by American copyright owners. The proposed USMCA, signed by President Trump in October 2018, and likely to be voted on by Congress this year, includes many provisions that would modernize and strengthen protections for Americans' copyrighted works in Canada and Mexico. For instance, under the USMCA, each member nation would be required to secure copyright owners' full enjoyment of exclusive rights in sound recordings and public performances. Each nation would guarantee contractual liberty so that copyright owners can transfer their rights for full value. Also, each nation would make available stronger remedies in civil copyright infringement cases, including injunctive relief as well as statutory damages. And each nation would authorize their border officials to pursue, seize, and destroy pirated goods. 

For more, see my similarly-titled October 2019 Perspectives paper, "Trade Agreements Should Strengthen Copyright Protections Against Piracy," which touches on the importance of the USMCA and other pro-copyright trade agreements in the context of the current problem of online piracy of movies and TV content. 

Hopefully, the Senate will promptly take up and pass the USMCA in early 2020. 

IP Enforcement Coordinator's Report Spotlights Copyright Protection Progress

In late February, the Intellectual Property Enforcement Coordinator (IPEC) released its Annual Intellectual Property Report to Congress. The Report provides "an overview of the Trump Administration's intellectual property enforcement strategy and policy efforts" across multiple agencies. IPEC's coordination and development of U.S. IP policy is intended "to promote innovation and creativity, and to ensure effective intellectual property protection and enforcement, domestically and abroad." 

Although the Trump Administration's enforcement policy "includes all areas of intellectual property and innovation policy," its policy activities regarding copyright protections merit attention. In 2018 progress was made in better securing copyrights. But there is plenty more that the Trump Administration and the 116th Congress can do to modernize and strengthen protections for Americans' creative works. 

One achievement touted in the Report is the passage of the Music Modernization Act of 2018. In an op-ed for The Hill and in several blog posts, Free State Foundation President Randolph May and I urged Congress to adopt reforms contained in that legislation. The Act (1) secured federal copyright protections for public performances via digital audio transmission of pre-1972 sound recordings; (2) established a streamlined process for producers, mixers, and sound engineers to directly receive royalty payments; and (3) facilitated more timely and accurate payment of songwriter "mechanical license" royalties and also provided blanket licenses for digital streaming services. As I explained in a February blog post, the widely endorsed MLC Coalition will be submitting to the U.S. Copyright Office a proposal for creating a collective entity to administer mechanical license royalties pursuant to the Act. 

An appendix in the IPEC Report highlighted the Copyright Office's expected release of its public study report on the "moral rights" of authors. Moral rights provisions in foreign nations typically restrict or prohibit sales or transfers of authors' rights to be acknowledged as creators of their works as well as their rights to control the integrity or future use of their works. In a Perspectives from FSF Scholars, Randolph May and I made the case that "current U.S. copyright law as well as contract law protect authors’ and creative artists’ rights to control whether they receive credit for their copyrightable works and whether their works are adapted into new media or transformed." We concluded: "Importing additional foreign-based moral rights restrictions into U.S. copyright law would create legal uncertainties, destabilize existing voluntary contract arrangements, reduce market freedom, and threaten the market value of copyrighted works."

The IPEC Report also referenced the Copyright Office's ongoing public study of Section 512 of the Digital Millennium Copyright Act of 1998 (DMCA). Section 512 contains the so-called "notice-and-takedown" provision under which copyright holders are entitled to give notice to an online service provider when infringing content is posted on its network or website. A provider receives immunity if it “responds expeditiously to remove, or disable access to, the material that is claimed to be infringing.” 

Unfortunately, owners of copyrighted sound recordings, movies, and other creative works suffer steep financial losses from mass online infringement. They also experience difficulties navigating the DMCA's outdated legal processes. The DMCA was adopted before user-upload sites such as YouTube became prevalent. In a Perspectives paper, Randolph May and I called attention to the urgent need to update the law, and we highlighted ways that Congress can reduce notice-and-takedown compliance burdens for copyright holders and improve protections from online infringement. That same paper also called on Congress to adopt a voluntary small claims court for resolving disputes over alleged online infringement involving copyright owners of modest means. 

Additionally, the IPEC Report identifies ongoing criminal copyright investigations and prosecutions by federal law enforcement. A Report appendix noted that the U.S. Justice Department "continues to pursue significant, large-scale piracy and counterfeiting operations." It cited the March 2018 sentencing for criminal copyright infringement of the owner of Sharebeast.com, which "operat[ed] a massive file-sharing infrastructure that distributed approximately 1 billion copies of copyrighted musical works through Internet downloads." Indeed, the Report cited the Recording Industry Association of America's (RIAA) description of Sharebeast.com as "the largest online file-sharing website specializing in the reproduction and distribution of infringing copies of copyrighted music operating out of the United States." The RIAA estimated $6.3 billion in total loss to its members. Furthermore, according to the Report, the FBI had pending "23 investigations of copyright infringement related to software,""41 investigations of other copyright infringement," and "8 investigations of copyright infringement related to signal theft" of video programming at the end of fiscal year 2018. 

Randolph May and I published a Perspectives paper on how Congress ought to modernize criminal copyright law to combat online piracy. For starters, Congress should make online piracy via Internet streaming a felony. Prosecutions for criminal copyright infringement are not numerous, and they are limited to willful infringement of protected works. However, civil copyright enforcement is oftentimes inadequate for curbing large-scale online piracy operations like Sharebeast.com. In another Perspectives from FSF Scholars, we emphasized the need to modernize international agreements by requiring foreign nations to step up criminal copyright enforcement against large-scale online piracy. 

The IPEC Report is valuable in spotlighting key achievements and ongoing initiatives by the Trump Administration to strengthen protections for IP, including copyrighted works. In 2019, the Trump Administration and the 116th Congress ought to commit to building on that progress to better secure Americans IP rights and to advance our economy in the Digital Age. 

IP Commission Recommends Steps to Protect America From International IP Theft

On February 21, 2019, the Commission on the Theft of American Intellectual Property issued a report highlighting "policy developments in the last 18 months related to strengthening the United States' ability to protect IP." The IP Commission's 2019 Review focused on U.S.-China relations, offering recommendations for more effectively preventing forced technology transfers, economic espionage, and intellectual property (IP) theft. 

According to the IP Commission's 2017 report, "the annual cost of counterfeit goods, pirated software, and theft of trade secrets to the U.S. economyis between $225 billion and $600 billion," and China is "the world's principal IP infringer." In fiscal year 2017, 87% of counterfeit goods seized coming into the U.S. originated from China and Hong Kong.

The IP Commission's 2019 Review applauded American policymakers' responses to Chinese IP wrongful practices:

The Trump Administration has elevated the elimination of China’s theft of American IP, whether through cyber-theft, forced technology transfers, stolen trade secrets, counterfeiting of products, or other means, to one of the leading foreign policy priorities and a top goal of the U.S.-China economic negotiations. 

The IP Commission acknowledged the Section 301 investigative report findings of the United States Trade Representative (USTR) regarding Chinese IP policies and practices. The USTR concluded that China "unfairly target[s] critical U.S. technology with the goal of achieving dominance in strategic sectors" and that its practices are harmful to American innovation and competitiveness. Additionally, the IP Commission's 2019 Review acknowledged the USTR's placement of China on the "Priority Watch List" over concerns that include "trade secret theft, online piracy and counterfeiting, a high volume of manufacturing and exporting counterfeit goods, technology transfer requirements, mandatory application of adverse terms to foreign IP licensors, localization requirements, and weak enforcement." 

Finally, the IP Commission made several recommendations for strengthening American IP protections from foreign theft, including: (1) construction of an"independent international database for scoring of entities from foreign countries that pose IP risk;" (2) a streamlined process for reporting and responding to IP theft; (3) requiring the Securities and Exchange Commission (SEC) to determine whether companies' use of stolen IP ought to be publicly reported; (4) meaningful sanctions by the Federal Trade Commission (FTC) against foreign companies using stolen IP; and (5) use of "multilateral institutions to harmonize national and international legal and regulatory frameworks."

Previously, FSF President Randolph May and I have addressed the pressing need to strengthen protections for Americans' IP internationally – particularly for copyrighted movies and music. In our Perspectives from FSF Scholars paper, "Modernizing International Copyright Agreements to Combat Copyright Infringement," we explain that several foreign countries insufficiently protect Americans' copyrighted works from digital piracy and online infringement taking place through cyberlocker websites and stream-ripping websites. As we urged there: "The Trump Administration should ensure that stronger protections for Americans' creative works are included in new treaties and trade agreements that are attuned to the Digital Age."

In particular, the proposed United States-Mexico-Canada Agreement (USMCA) would strengthen copyright protections and enforcement by securing Americans' full enjoyment of exclusive rights in sound recordings, ensuring longer protection terms, and providing stronger civil remedies and criminal penalties for copyright infringement. However, international agreements such as USMCA should not include outdated online infringement provisions that are similar to Section 512 of the Digital Millennium Copyright Act of 1998. Section 512 is ineffective in protecting copyrighted movies and music from massive online infringement via user-upload websites. We identify problems with Section 512 and call for reforms to strengthen online copyright protections in our Perspectives paper, "Modernizing Civil Copyright Enforcement for the Digital Age Economy: The Need for Notice-and-Takedown Reforms and Small Claims Relief."

In sum, in the interest of securing greater protection for Americans' intellectual property, it's worth paying close attention to the IP Commission's most recent report.