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.

USTR Report Identifies Online Copyright Piracy Operations in Foreign Nations

On January 8, the Office of the U.S. Trade Representative (USTR) released its "2024 Review of Notorious Markets for Counterfeiting and Piracy" – also known as its Notorious Markets List (NML). The NLM “highlights prominent and illustrative examples of online and physical markets that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy or counterfeiting," with a goal "to motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting." 

The NML noted law enforcement actions taken in 2024 by foreign nations, in some instances in partnership with the US Department of Justice, against pirate streaming services, including pirate-enabled Internet Protocol television (IPTV) services that rely on ad-supported "cyberlocker" sites to facilitate the storage and distribution of pirated content. Also, the NML noted that many copyright owners who made filings in the US Trade Representative’s proceeding raised continued concerns about "bulletproof" Internet service providers that facilitate piracy through avowed leniency in permitting users to upload and distribute infringing content, hiding their locations, and refusing to respond to takedown requests from copyright owners. Additionally, the NML listed some websites across the globe that are known to traffic in infringing content as well as physical market locations in foreign nations where physical copies of infringing are trafficked. 

 

The U.S. Constitution's Article I, Section 8 Copyright Clause recognizes that copyrighted property deserves to be secured from online and physical piracy. My February 2024 Perspectives from FSF Scholars, "Congress and the Administration Should Move Against Online Copyright Piracy," points to stepped-up criminal prosecutions against mass online piracy operations as one way of securing copyrighted property. As pointed out in the 2024 NML, copyright piracy is a serious problem and it's one the incoming Trump Administration should make solid efforts to combat. Indeed, as explained in a June 2021 Perspectives from FSF Scholars, "Fighting Online Piracy Will Boost American Economy and Jobs."

Copyright Advocates Stepping Up Efforts Against Online Piracy

On November 26, The Motion Picture Association's (MPA) Executive Vice President and Chief Content Protection Officer Larissa Knapp, published a blog post announcing the MPA Content Protection team's strategic goals to deter, detect, and dismantle online piracy operations in 2025. Ms. Knapp's blog post can be found on the website of the Alliance for Creativity and Entertaining (ACE), an online antipiracy coalition of over 50 media and entertainment companies. ACE addresses piracy through public education, research into piracy trends, criminal referrals, civil litigation, and cease-and-desist operations. 

Hopefully, the efforts of MPA, ACE, and individual U.S. copyright owners to curb unlawful online copyright infringements in 2025 will be successful.

Online piracy of creative works, including movies and TV shows, undermines the rights of copyrighted property owners, inflicting large-scale damages on owners and reducing jobs and economic opportunities for those industries that help support creative enterprises. ACE's July 2023 report "2022 Movie & TV Piracy Trends Worldwide" cites analyst estimates for the U.S. that there were 14.7 billion visits to film and TV piracy sites that year, as well as 1.9 billion pirated movies, primetime TV, and video-on-demand (VOD) shows using peer-to-peer protocols, not including streaming and downloading sites. Additionally, ACE's report cited an estimate that revenue losses to the U.S. economy due to global online piracy totaled $29.2 billion in 2022. 

 

My February 2024 Perspectives from FSF Scholars, "Congress and the Administration Should Move Against Online Copyright Piracy," identified three ways to improve protections for Americans' copyrighted works from online piracy: (1) confirmation of an Intellectual Property Enforcement Coordinator (IPEC) to engage foreign nations on copyright piracy: (2) stepped-up prosecutorial efforts against streaming piracy operations; and (3) legislation by Congress to establish a "notice-and-stay-down" requirement for major online platforms as a condition for receiving immunity for infringements on their websites. My World IP Day 2024 blog post added: (4) legislation by Congress to establish a legal process for judicial site-blocking of third-party websites dedicated entirely or overwhelmingly to unlawful online copyright piracy. 

 

The Free State Foundation is dedicated to the protection of private property rights, including intellectual property. In the year to come, FSF scholars will have more to say about legal and policy measures to combat online copyright piracy. 

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.  

Arrests Made in Criminal Copyright Infringement Case Involving E-Book Piracy Ring

On November 16, the U.S. Attorney's Office for the Eastern District of New York announced the indictment and arrest of two Russian nationals for criminal copyright infringement and other charges in relation to their alleged operation of a massive online e-book piracy website operation.

The Office's press release states:

As alleged in the indictment and court filings, Z-Library bills itself as "the world's largest library" and claims to offer more than 11 million e-books for download.  Z-Library, which has been active since approximately 2009, offers e-book files in a variety of file formats, stripped of their copyright protections, and encourages users to upload and download titles. Many of the e-books offered by Z-Library are protected intellectual property for which authors hold copyrights and publishers hold exclusive distribution rights, and which Z-Library has no right or license to distribute, and which are available elsewhere only with anti-circumvention measures applied. As such, a central purpose of Z-Library is to allow users to download copyrighted books for free in violation of U.S. law. In addition to its homepage, Z-Library operates as a complex network of approximately 249 interrelated web domains. As part of this action, those domains were taken offline and seized by the U.S. government.

Like any other defendants, the defendants named in U.S. v. Napolsky and Ermakova are entitled to a presumption of innocence, and we can expect a future verdict based on the evidence. But what may safely be said at this point is that the trafficking of copyrighted works that is alleged in the complaint is precisely the type of criminal conduct that federal law enforcement ought to be targeting. Civil copyright enforcement is typically ill-equipped to deal with mass-scale piracy operations run by criminals whose intent is to evade the law. 

 

Free State Foundation President Randolph May and I address the topic of criminal copyright enforcement in our book, Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform (2020).

Report Shows Digital Piracy Spiked in 2022 in the U.S. and Worldwide

Muso's October 2022 report "Piracy Data Overview January 2022 to August 2022" indicates that Internet user visits to digital piracy websites increased 22% compared to a year earlier. That amounted to a staggering 141.7 billion visits to piracy sites for all industries – movies, TV, publishing, music sound recordings, and software. And according to Muso, "the United States accounts for 10.9% of piracy between Jan-Aug 2022" – the highest of any country – with nearly 15.5 billion visits by Internet users in the U.S. to unlicensed streaming, torrent download, web download, and stream-ripping websites. To put those piracy traffic numbers into perspective, the U.S. share of digital piracy reportedly was more than 87% higher than second-place Russia. India and China rank third and fourth among countries for visits to piracy sites.  

The report by Muso – a U.K. data research company that monitors and measures global piracy – compared piracy traffic between January and August 2022 with piracy traffic between January and August 2021. Another stunning finding by Muso is that film piracy traffic grew almost 50% during the period examined in 2022. Piracy traffic involving published content grew close to 40% during that same period. 

 

Digital piracy is wrong and harmful to copyright owners. It unfairly undermines the value of their intellectual property, seriously curbing copyright owners' opportunities to make honest gains on their creative labors. My June 2021 Perspectives from FSF Scholars, "Fighting Online Piracy Will Boost American Economy and Jobs," identified policy priorities that ought to guide Congress and the Biden Administration in combatting online piracy of Americans' copyrighted works. Some of those actions include: (1) insisting on stronger copyright provisions in foreign trade agreements and proactively seeking enforcement of those provisions when foreign countries fail to adequately protect copyrights; (2) prosecuting mass-scale piracy operators for criminal copyright violations; (3) revising the DMCA to establish a "notice-and-stay down" system that would more strongly protect copyrights from online infringements in an era of high-speed broadband and mass social media user uploads. 

 

Private initiatives as well as targeted law enforcement efforts also remain important for disrupting and dismantling the lucrative online advertising streams that fund online piracy websites. For more on that subject, see my August 2021 Perspectives, "Online Ads Supporting Copyright Piracy Need to Be Stopped." And as spotlighted in a blog post from September 19 of this year, malvertising on online piracy websites pose significant cybersecurity dangers to Internet users.  

Report Identifies Dangers to Internet Users from Malvertising and Piracy

On September 15, the Digital Citizens Alliance released a report titled "Unholy Triangle: From Piracy to Ads to Ransomware: How Illicit Actors Use Digital Ads on Piracy Sites to Profit by Harming Internet Users." The report, which the Digital Citizens Alliance prepared jointly with White Bullet and Unit 221B, spotlights the phenomena of online pirates working with "malvertisers" and with the effective assistance of online ad intermediaries to exploit Internet users. 

As the report explains, operators of piracy websites lure Internet users by offering them access to "free" content – including copyrighted movies, TV shows, music sound recordings, and ebooks. But many piracy sites feature a barrage of malicious ads intended to confuse, deceive, or scare Internet users into clicking them. The clicked ads then infect Internet users' computers with malware that can steal their financial and personal information as well as with spyware that can track all of their online activities. The report identifies the creators of these harmful ads as "malvertisers" and it calls their tactics "malvertising."

One particularly pernicious malware-related activity is known as "ransomware." In a ransomware attack, an Internet user's computer files are encrypted and the user is locked out. Cybercriminals then demand payment from the Internet user in order to unlock the files. A source cited by the report estimated that global losses due to ransomware totaled $20 billion in 2021.

 

The report authors investigated many online piracy sites and found ransomware and other malware schemes in operation. According to the report, in just a one-month period, visitors to piracy sites were barraged with an estimated 321 million ads designed to harm them. Indeed, the report found that malvertising accounts for 12% of total ads on piracy sites and generates an estimated minimum of $121 million annually, with more than $68 million coming from U.S. Internet user visits to such sites. 

 

Significantly, these piracy website-hosted malvertising schemes would not be operating without ad intermediaries. In their investigation, the report's authors found that some foreign owned and operated ad intermediaries were willing to place deceptive ads and thereby effectively facilitate malvertising campaigns. The report found that the ad industry has made progress in reducing ads for legitimate companies on piracy sites, and it credits the creation of the Trustworthy Accountability Group (TAG) by U.S. ad associations for helping bring about those reductions. 

 

Copyright piracy is wrong in itself and commercial traffickers in infringing content ought to be the target of federal law enforcement efforts. Free State Foundation President Randolph May and I have written about the harms from online piracy – including the role of online ads in facilitating piracy – which undermines copyright owners' ability to seek financial returns and devalues their intellectual property. But the harms of online piracy don't end there. The "Unholy Triangle" report rightly calls attention to the dangers to unsuspecting Internet users from malware on piracy websites that host infringing content. More Internet users should become aware of those dangers. Hopefully, further efforts will be made by responsible U.S. ad associations and by others to curb the high volumes of malicious ads and the illicit revenue streams that they generate.

US Trade Representative Report on Global IP Threats Focuses on China

On April 27, 2022, the Office of the United States Trade Representative (USTR) released the 2022 edition of its annual Special 301 Report (Report). The Report identifies 27 trading-partner nations where the threat to American Intellectual Property (IP) rights is particularly high.

Emphasizing that "[c]ombating … unfair trade policies will encourage domestic investment in the United States, foster American innovation and creativity, and increase economic security for American workers and families," the Report places seven countries – Argentina, Chile, China, India, Indonesia, Russia, and Venezuela – on a "Priority Watch List" and twenty others on a "Watch List."

Among other concerns, the Report focuses on counterfeits, both physical and digital; online and broadcast piracy; trade secret protections; and "indigenous innovation" policies.

China, given statements by government officials suggesting that its approach to IP "should serve the needs of domestic innovation-driven development" at the expense of foreign IP rights holders, receives the lion's share of the Report's attention. Forced technology transfers, onerous licensing terms, IP-centered hacking, counterfeiting, and bad-faith trademarks are just some of the issues specific to China that the Report discusses.

Ukraine, which appeared on the "Priority Watch List" in the 2021 Special 301 Report, is excluded from the 2022 Report in light of its "premeditated and unprovoked further invasion" by Russia earlier this year. Saudi Arabia, meanwhile, was removed from the list after implementing measures to improve its enforcement of IP rights.

The Report also targets the European Union's geographical indications (GI) policies, which can cause problems for certain U.S. trademark holders.

In a March 2022 post to the Free State Foundation's blog, I noted the release of a related USTR annual report, the Notorious Markets List, which "identifies illustrative examples of online and physical markets that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial copyright piracy and trademark counterfeiting."

Foreign Stream Ripping Operation Loses Big in U.S. District Court

On February 11, the U.S. District Court for the Eastern District of Virginia entered an order in UMG Recordings, Inc. v. Kurbanov, awarding copyright holders nearly $83 million in statutory damages against two of the world's most high-trafficked websites offering stream-ripping services. Plaintiff copyright owners also received an award of costs and statutory attorney fees, as well as a preliminary injunction against the stream-ripping operation. The respondent in the case owns stream-ripping websites that unlawfully convert copyrighted sound recordings into stored electronic files and makes copies downloadable by users across the world, including about 1.5 million users in Virginia. The websites generate ad revenues targeted to its large user base. 

The District Court's order from February 11 followed an October 2021 default judgment order, as well as a March 2021 order on remand from the Fourth Circuit in which the District Court concluded that its exercise of jurisdiction over the foreign website owner satisfied constitutional due process concerns. My blog post from June 2020 analyzed the Fourth Circuit's opinion that recognized the District Court's specific personal jurisdiction in the case. 

It may be very difficult for the copyright owners in in UMG Recordings, Inc. v. Kurbanov to collect on their judgment against the owner of the stream-ripping websites. But as explained in my June 2020 blog, the Fourth Circuit's decision may serve as a precedent that will bolster the prospects for copyright owners in pursuing civil justice against online piracy in future cases. 

Free State Foundation President Randolph May and I wrote about the importance of efforts to combat online copyright infringement, including by stream-ripping websites, in our June 2021 Perspectives from FSF Scholars, "Fighting Online Piracy Will Boost American Economy and Jobs."

2021 List of Notorious Piracy, Counterfeiting Markets Released

On February 17, 2022, the Office of the United States Trade Representative (USTR) released the eleventh edition of the Notorious Markets List (NML), its annual overview of the most glaring hotbeds, virtual and physical, for counterfeit goods and pirated content.

Officially titled the "2021 Review of Notorious Markets for Counterfeiting and Piracy," this most-recent NML provides a summary of markets "that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy or counterfeiting."

The NML, which incorporates responses from the public to a Request for Comments published in the Federal Register in August of last year, is designed "to increase public awareness and help market operators and governments prioritize intellectual property enforcement efforts that protect American businesses and their workers."

(Incidentally, the NML is separate from, but related to, USTR's "Special 301 Report," a congressionally mandated yearly summary "of the global state of intellectual property (IP) rights protection and enforcement.")

The theft of copyrighted material is a serious criminal problem with massive financial implications for creative industries. Citing a U.S. Chamber of Commerce report, the NML notes that piracy "in 2019 cost the U.S. economy an estimated $29.2 billion in lost revenue." Accordingly, one of the goals of the NML is to "motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting."

The 2021 edition of the NML highlights 42 online destinations and 35 geographic locations where the manufacture of counterfeit goods and the theft of copyrighted material run most rampant. The latter includes applications like Popcorn Time ("Known as the 'Netflix of piracy'") and websites such as ThePirateBay ("the most frequently visited bittorrent index site in the world").

In addition, the NML reports on enforcement-related developments, concluding that there have been "notable efforts" and "impressive results" in the ongoing fight to rein in online piracy enabled by Internet protocol television (IPTV) apps and physical illicit streaming devices (ISDs).

However, the NML also acknowledges commenters' serious concerns regarding the existence and continued evolution of what it describes as a "complex ecosystem" facilitating efforts to steal, and profit from, copyrighted content. One that includes "domain name registries and registrars, reverse proxy and other anonymization services, hosting providers, caching services, advertisers and advertisement placement networks, payment processors, social media platforms, and search engines."

A related development of heightened concern involves what the NML describes as "piracy-as-a-service" – that is, comprehensive wholesale offerings that make it even easier for a would-be pirate by providing all of the required tools: "website templates that facilitate the creation of streaming websites, databases of infringing content, dashboards that allow a pirate IPTV operator to oversee the infrastructure of their service, IPTV panels used for generating and distributing playlists of pirate IPTV channels, and hosting providers that specialize in servicing infringers."

Online Piracy Poses Substantial Malware Threat to Employer Networks via Remote Access

Digital Citizens Alliance, a nonprofit focused on the threats consumers face on the Internet, has released a research survey highlighting a disturbing connection between online piracy, working from home, and employer network security threats.

As a consequence of the COVID-19 pandemic, millions of Americans are working remotely. When employees allow piracy devices and apps to access their home Internet connections, they open the door to malware attacks.

Alarmingly, it appears that a significant number of consumers do just that: 1 in 5 of those surveyed admitted to visiting a piracy website, 1 in 10 to using a piracy device.

Home networks that include piracy devices, or other devices running piracy apps, are three times more likely to experience issues relating to malware, which in turn expose the employer networks that they are used to access to cybersecurity risks.

Such concerns are particularly troubling with respect to those employees remotely accessing systems upon which confidential or sensitive data is stored.

Fully half of the respondents with access to such information and piracy devices attached to their home networks had issues relating to malware during the previous 12 months. By contrast, less than 20 percent of those not using piracy devices reported malware infections.

MEDIA ADVISORY: Congress Passes Copyright Reforms on Streaming Piracy and Small Claims

The following statement may be attributed to Free State Foundation Senior Fellow Seth Cooper regarding the passage of   the Protect Lawful Streaming Act and the Copyright Alternative in Small-Claims Enforcement Act (CASE Act) – both of which were included in the omnibus spending bill for 2021.

The Senate and House deserve thanks for passing these needed reforms and strengthening copyright protections against online infringements that cost copyright owners hundreds of millions of dollars each year.  The Protect Lawful Streaming Act targets illicit commercial streaming operations with tougher criminal penalties. As I recently stated in a blog post, operators of illegal movie and music streaming services faced less severe penalties than operators of online piracy sites for downloading copyrighted content. There obviously was no reason for that disparity in the law. By increasing criminal infringement penalties for streaming piracy, Congress has helped make it worthwhile for prosecutors to go after illegal commercial streaming operations. 

By passing the CASE Act, Congress has provided many copyright owners with access to justice through a less expensive and voluntary small claims venue for hearing infringement claims. The six-figure costs of hiring attorneys as well as fees and legal costs of going to federal court make civil copyright enforcement beyond the reach of copyright owners of modest means. Now copyright owners will soon have a less expensive and simpler process for resolving copyright infringement claims, including certain types of online infringement claims.

Congress Should Pass the "Protect Lawful Streaming Act"

Pandemic-related lockdowns have heightened the importance of copyright protections against online piracy. Yet copyright law has failed to keep pace with the precipitous rise of illicit video and music streaming services. Under existing law, piracy of online content that is streamed is only a misdemeanor, whereas other forms of piracy are felonies. Bipartisan legislation called the "Protecting Lawful Streaming Act of 2020," which has just been introduced, would reform the law by targeting illicit commercial streaming operations with tougher criminal penalties.

Online streaming services have overtaken downloads as the most popular way that consumers enjoy video and music content. Streaming also has become the predominant means for online piracy of copyrighted works. So-called "stream-ripping" websites and apps provide Internet users unauthorized access to copyrighted movies, TV shows, and sound recordings. Meanwhile, illegal Internet Protocol Television (IPTV) services offer paying subscribers unauthorized access to vast collections of copyrighted content, including live sports.

 

An August 2020 report by the Digital Citizens Alliance estimated that illegal IPTV services annually generate $1 billion in U.S. subscription revenues, with 9 million fixed broadband subscribers. Moreover, there is evidence that these online piracy streaming services have increased in popularity since the beginning of the 2020 lockdowns. For example, the piracy tracking firm Muso found a 43% surge in American visits to movie pirating sites during the last week of March 2020 compared to a month earlier.

 

Federal copyright law criminalizes intentional or willful infringement of protected works. Criminal prosecutions are not numerous, and they are directed against traffickers in pirated works, not individual Internet users. Such prosecutions are necessary to address bad actors who inflict harm on a mass scale on copyright owners and evade the civil justice system. 

 

But as Free State Foundation President Randolph May and I point out in our book, Modernizing Copyright Law – Constitutional Foundations for Reform, federal copyright law predates the precipitous rise of illicit video and music streaming services. Under existing law, criminals who operate illegal IPTV streaming services can only be charged with misdemeanor infringement, not felony infringement. As a result, operators of these illegal streaming services face less severe penalties than operators of online piracy sites for downloading copyrighted movies and music. There obviously is no reason for this disparity in the law. Also, prosecutors generally are reluctant to direct substantial resources towards misdemeanors. Streaming piracy deserves stronger sanctions, and stiffer penalties are needed to ensure future prosecutions against illegal streaming piracy. 

 

By increasing enforcement against sophisticated illicit streaming copyright criminals, the Protecting Lawful Streaming Act of 2020 will modernize the law. The legislation was introduced by Sen. Thom Tillis with bipartisan backing. The legislation provides that it is a felony for persons to "willfully, and for purposes of commercial advantage or private financial gain" offer digital transmission services to the public. It is narrowly targeted to digital transmission services that are primarily designed for unauthorized streaming (or public performances) of copyrighted works, have no commercially significant purpose other than unauthorized streaming of copyrighted works, or are intentionally marketed to promote their unauthorized streams. Notably, the terms of the Protecting Lawful Streaming Act are not directed toward individual Internet users or subscribers of IPTV services. 

 

As of this writing, the Protecting Lawful Streaming Act is attached to the omnibus spending bill being considered by Congress. Budgetary issues aside, the Protecting Lawful Streaming Act is strong on its own merits. In whatever legislative vehicle proves most practical, Congress should pass the bill and the President should sign it. 

Consumer Survey Shows the Dangers of Malware from Video Piracy

A survey released on June 22 by the U.S. consumers by the Digital Citizens Alliance offers additional evidence of the strong link between video piracy and malware. According to the Digital Citizens Alliance, 13% of respondents admitted to using devices like Kodi boxes or jail-broken Amazon Firesticks to view pirated copies of copyrighted movies and TV shows. Of those users of piracy devices, 49% reported experiencing malware in the last year and 25% reported a malware problem in the prior three months. Check out the Digital Citizens Alliance website – including its handy infographic – for more on the survey's findings.

In a June blog post, I noted the dangers of malicious software to users of illicit streaming devices and illegal IPTV services. Those dangers were the issue focus of the U.S. Trade Representative's 2019 Review of Notorious Markets Report. FSF President Randolph May and I also addressed the dangers of malware to users of illicit streaming devices and illegal IPTV services in our newest book, Modernizing Copyright Law for the Digital Age – Constitutional Foundations for Reform.

Piracy of copyrighted video content is violation of the exclusive property rights of copyright owners, and therefore wrong in itself. But as the Digital Citizens Alliance's survey reminds us, video piracy also poses harms to the viewers of pirated content.

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.

Homeland Security to Step Up Efforts Against Counterfeit and Pirated Goods

On January 24, the U.S. Department of Homeland Security released "Combatting Trafficking in Counterfeit Goods," a report to the President of the United States. The report lays out a series of actions that federal law enforcement agencies plan to take in order to combat the growing problem of trafficking in copyright-infringing goods as well as other counterfeit or pirated products.

Over the last several years, international trafficking in counterfeit and pirated goods – including infringing copies of copyrighted works – has increased. The report cites OECD figures indicating an increase in internationally traded counterfeits from $200 billion in 2005 to $509 billion in 2016, a 154% increase. As the report observes: "E-Commerce…facilitates the widespread sale of pirated versions of copyrighted works. Pirated medical books — which can contain errors that endanger patients’ lives — have been found on platforms along with other pirated books (textbooks and trade books) and illicit reproductions of music-CD box sets."

The purpose of DHS's report is "to develop a deeper understanding of how e-commerce platforms, online third-party marketplaces, and other third-party intermediaries facilitate the importation and sale of massive amounts of counterfeit and pirated goods." The report points out: "[R]ights holders are often burdened by e-commerce platforms that operate third-party marketplaces with a disproportionate share of the costs of monitoring, detection, and enforcement falling on rights holders. This burden falls heavily on smaller American enterprises that cannot spread the costs due to trademark infringements and brand enforcement over large sales and inventories." 

The report sets forth several enforcement-related actions that the U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement agencies intend to take to curb the trafficking of counterfeited pirated goods into the U.S. Significantly, the report identifies application of civil fines, penalties, and injunctive actions for imports of counterfeit and pirated products. According to the report:

• CBP and ICE will immediately begin to identify cases in which third-party intermediaries have demonstrably directed, assisted financially, or aided and abetted the importation of counterfeit merchandise. In coordination with the Department of Justice, CBP and ICE will seek all available statutory authorities to pursue civil fines and other penalties against these entities, including remedies under 19 U.S.C. § 1526(f), as appropriate. 

• DHS recommends the administration pursue a statutory change to explicitly permit the government to seek injunctive relief against third-party marketplaces and other intermediaries dealing in counterfeit merchandise. 

• In the interim, DHS will provide information and support to registered brand owners looking to utilize statutory authorities to seek injunctive relief against persons dealing in counterfeit merchandise, whether through direct sales or facilitation of sales, following seizures of goods that are imported contrary to law. 

• ICE shall prioritize investigations into intellectual property-based crimes regardless of size and will make referrals for all such investigations where appropriate. 

• ICE will coordinate with the Department of Justice to develop a strategy to investigate and prosecute intellectual property violations at all levels of the supply chain at a sufficiently high level to respond to the concerns raised in this report and according to its budget and broader mission goals. 

The DHS report's action items and recommendations appear sensible and hopefully will help reduce trafficking in copyright-infringing goods as well as other counterfeit and pirated products. Free State Foundation President Randolph May and I have previously recommend that foreign trade agreements and treaties negotiated by the U.S. include language requiring foreign nations to improve their interdiction efforts and prosecutorial resources to stop the international flow of infringing goods and other illicit products. 

A Principled Call for a National Consumer Privacy Protection

On September 10, Business Roundtable sent a letter signed by 31 CEOs to leaders of Congress, calling for a comprehensive consumer data privacy law. The letter states:

Consumers should not and cannot be expected to understand rules that may change depending upon the state in which they reside, the state in which they are accessing the internet, and the state in which the company’s operation is providing those resources or services. Now is the time for Congress to act and ensure that consumers are not faced with confusion about their rights and protections based on a patchwork of inconsistent state laws. 

Accompanying the letter, the Business Roundtable released a "Framework for Consumer Privacy Legislation." The Framework includes a set of principles regarding protections for consumers and requirements for responsible collection, use, and sharing of personal information by businesses. It endorses a national consumer privacy law that would pre-empt state and local government provisions regarding data collection, use, and sharing. And it provides for the Federal Trade Commission (FTC) to be the enforcer of the national consumer privacy law, with State Attorneys General being permitted to bring enforcement actions in federal court in certain instances. Also, the national consumer privacy law would not provide a private right of action. Congress ought to take seriously the principles contained in the Framework in establishing a national consumer privacy law.

Many of the principles and concepts touched on in the letter and Framework were addressed at the Free State Foundation's privacy policy seminar, held on June 26, 2019. The seminar was titled: "Privacy Regulation: Why, What, and When?" The seminar included a keynote address by FTC Commissioner Noah Phillips, a panel discussion, and a closing keynote by Senator Marsha Blackburn. The YouTube video of FSF's privacy policy seminar may be found here. 

For several years, Free State Foundation President Randolph J. May and I have recommended a uniform federal standard to protect consumer privacy on the Internet. For further discussion of privacy policy see FSF Board of Academic Advisors member Theodore Bolema's Perspectives from FSF Scholars paper: "Protecting Privacy on the Internet: Key Principles for Any Reform." 

Report Finds Streaming Piracy Poses Cybersecurity Dangers to Consumers

The Digital Citizens Alliance has just published an important investigative report titled "Fishing in the Piracy Stream: How the Dark Web of Entertainment is Exposing Consumers to Harm." The report calls needed attention to the cybersecurity dangers posed to users of illicit streaming devices (ISDs) and piracy apps designed to stream pirated movies, TV episodes, and live video programming content via the Internet. As the report observes, many downloadable piracy apps and apps that are pre-installed in ISDs contain malware. The malware steals user names and passwords, scans user networks, and uploads user data without their knowledge. 

The report's findings are further described in Digital Citizens' press release.

Cybersecurity dangers posed by ISDs and piracy apps were a focus point in the US Trade Representative's 2017 Notorious Markets Report, which I blogged about here. Free State Foundation President Randolph May and I also touched on the problems posed by ISDs and stream-ripping sites and the need for stronger measures to combat them in our Perspectives from FSF Scholars paper, "Modernizing Criminal Copyright Law to Combat Online Piracy."

Commissioner O'Rielly Asks eBay and Amazon to Remove Fraudulent TV Devices

On Friday May 25, 2018, FCC Commissioner Michael O'Rielly sent a letter to eBay CEO Devin Wenig and Amazon CEO Jeff Bezos to warn them about certain manufacturers of video television set-top boxes who fraudulently place the FCC's trusted logo onto devices that have not been approved by the Commission's equipment authorization process. Despite proactive steps by both eBay and Amazon to reduce theft of intellectual property (IP) from their websites, pirated goods, such as these fraudulent set-top boxes, are still sold on both online marketplaces, putting consumers at serious risk and legitimate manufacturers at an economic disadvantage.

Commissioner O'Rielly requests that eBay and Amazon continue to remove devices that fraudulently bear the FCC logo and to provide the FCC with any additional information that will help combat IP theft and consumer fraud.

Music Industry Grew Significantly in 2017

The Recording Industry Association of America (RIAA) recently released its 2017 Revenue Statistics, which show significant growth in the music industry over the last few years. In 2017, music streaming revenues were $5.7 billion, more than triple what they were in 2014 at $1.8 billion. Streaming applications now generate 65% of music industry revenues. Moreover, the number of paid music subscriptions grew by more than 55% from 2016 to 2017. Overall, the retail value of revenues throughout the entire music industry grew by $1.2 billion from 2016 to 2017.

While there are still problems with online piracy that need to be addressed, the growth of the music industry would not be possible with strong copyright protections, which enable artists and creators to earn a return on their labors.