State of Innovation

Patents and Innovation Economics

COICA: Double Standard

The Combating Online Infringement and Counterfeits Act  S. 3804 [111th], is designed to reduce the online theft of copyrighted and trademarked materials.  It is clear that this theft is costing the United States billions of dollars annually.  Reducing the economic damage caused by IP (Intellectual Property) theft is important.  The Bill would allow “in rem jurisdiction” against infringing websites.  I believe this would be very helpful in combating piracy online.  Despite this, there are numerous problems with this bill and I am against its passage.

My first complaint is that this is another law that protects the copyright industry, which has been highly successful in getting laws passed to help their industry.  In the meantime, Congress has been gutting our patent laws.  This double standard between inventors and artists is illogical.  (For more information see Source of Economic Growth)  Inventors are vital to our long term economic success as a country.  While artists deserve to have their property rights protected, they do not have the same economic significance.  This double standard shows that Congress is much more concerned about campaign donations than the economic welfare of the people of theUnited States.

My second complaint about this Bill is that it is duplicative, with the exception of the in rem jurisdiction.  There are already civil and criminal penalties for infringement of copyrights and trademarks.  (Note there are no criminal penalties for patent infringement – another double standard without justification)  This law is unlikely to reduce the overall theft of copyrighted material.  What is need is vigorous enforcement of the laws we have and Congress needs to expand the number of judges/courts in the federal court system or reduce their caseload by not federalizing crimes that should be dealt with at the state court level.

My third compliant is that the Bill is poorly drafted.  For instance, it states the defendant can get an injunction vacated if “the interests of justice require that the order be modified, suspended, or vacated.”  Is it ever in “the interests of justice” to vacate an injunction where there is infringement?  How does the judge decided if it is in “the interest of justice” to vacate or suspend an injunction?  Does it depend on who the defendant is or what their political connections are?  Does it depend on who the plaintiff is or what their political connects are?  This sort of vague wording is not law, it is the arbitrary decree of the judge in charge of the case.  In other words, it is tyranny.

My fourth complaint is that the Bill is unconstitutional.  There is no constitutional authority for this law to require the Attorney General to create a list of websites alleged to be in the business of online infringement of copyrights or trademarks.  First of all, this violates the separation of powers.  The Attorney General is part of the Executive branch.  The Legislative branch cannot require the Executive branch to undertake activities that are not part of its Constitutional duties.  Where does the Constitution give Congress the right to require the Executive branch to create a public list of suspected infringers of copyrights?  The Commerce Clause?  While any rational interpretation of the Commerce Clauses cases shows that there is absolutely no limits to what Congress can consider covered by this clause.  Any rational interpretation of the framers intent of the Commerce Clause, would not include delegating power to the Attorney General to create a list of suspected infringers.  It might be a rational interpretation of the Commerce Clause to suggest a law that prohibits infringement of IP rights across interstate boundaries, but this would be redundant with federal preemption of copyrights (although not trademarks).  This still does not allow the delegation to the Attorney General to keep a list of suspected infringers.

From a practical point of view, this list is likely to hurt legitimate websites that are not infringing and have little effect on blatant counterfeiters.  Legitimate websites will most likely be selling to legitimate companies and people that are concerned about the list.  If a website is incorrectly identified that is a legitimate website then their business is likely to be significantly disrupted.  However, if it is a counterfeit selling website, its customers are likely to be unconcerned with the implicit counterfeit charge of being on the Attorney General’s list.  Thus, the law is likely to hurt innocent, incorrectly charged businesses and have little effect on counterfeiters.

Note the Bill requires the Attorney General to create the rules for people on the list to petition the Attorney General to be removed from the list.  This violates the due process clause of the Fifth Amendment.  It is a per se violation of the Due Process clause to have the same entity in charge of prosecuting a law also in charge of deciding the procedural rules of the prosecution.  The fact that judicial review of the case is provided, does not overcome this issue.

The Combating Online Infringement and Counterfeits Act is directed to a real problem, but is the wrong solution.

June 1, 2011 - Posted by | -Economics, Innovation | , , , , ,

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