Yesterday several blogs reported on the bill proposed yesterday entitled the “Combating Online Infringement and Counterfeits Act”. (pdf)

I spent a while today reviewing the bill to see what if any effect it could have on domainers.

I also chatted with Phil Corwin general counsel that represents the Internet Commerce Association about the proposed law.

Here are my thoughts:

As I read it, the law, although intended to only effect websites that seek to distribute pirated material such as music and movies or sell fake trademarked goods like designer clothes or purses, seems as though it could apply to simple parked pages in which links to any such sites are present.

Since domainers are generally not aware of every advertiser on every domain they own, the law could be used to lock parked domains and prevent the domain from resolving.

The law would then put the burden on the domain holder to get the domain unlocked and to once again start resolving.

Under the proposed law, the order of the court can be served upon the registrar if located in the United States and upon the registry if located in the US, if the registrar is not located in the US.

So the only domains that would avoid this law entirely are those in registered with a non-US based registrar, with a domain extension whose registry is not US based.

So basically Non US based ccTLD’s registered with non US based registrars.

The law places a lot of burdens and responsibilities on ISP’s to block sites, financial institutions not to process transactions involving a lot of goods and services which may not be obviously to the institutions and oad networks like Google which already have well defended policies of selling ads to competitors of trademark holders.

There is also of course the civil liberty groups that probably will not like degree of government intrusion the law places on “freedom of speech”

So unlike some of the laws that have been proposed before domainers will not be the only group against this one.

So at this point I’m not sounding the alarm but everyone needs to keep their eye on the bill.

This is what Phil will post on the ICA website tonight:

On September 20, 2010 Senate Judiciary Committee Chairman Patrick Leahy, joined by nine other Senators, introduced S. 3084, the “Combating Online Infringement and Counterfeits Act”.

If enacted, this proposal would expedite Department of Justice (DOJ) actions against domains that abet the sale or distribution of unauthorized copyrighted materials and counterfeit goods.

It would also give U.S. law extraterritorial effect by requiring certain actions of third parties beyond ICANN-accredited registries and registrars.

The ICA certainly supports effective efforts to curb the online piracy of copyrighted materials as well as the distribution of counterfeit goods. But we also have some specific and general concerns about the bill as introduced and intend to monitor its progress through the legislative process and work with lawmakers and other parties of interest to address those concerns.

At the outset, it’s important for domain investors and developers to understand that this is in no way a new version of the Snowe bill of several years ago, which would have set up a domain name trademark infringement regime in addition to and in conflict with the Anticybersquatting Consumer Protection Act (ACPA). S. 3084 focuses on the activities facilitated by domains, and not on the domain name itself.

Further, the bill only authorizes actions by the Attorney General and creates no new private cause of action.

Also, the seizure of domains involved in facilitating online intellectual property (IP) infringement is not unprecedented. The DOJ seized nine unauthorized movie streaming websites this spring.

While S. 3084 would make such domain seizures/blockages a regular part of DOJ IP enforcement actions, to the extent that it sets forth statutory standards and requires judicial oversight that is probably a good thing. And, while the bill establishes in rem jurisdiction against websites, that precedent was established a decade ago by the ACPA.
But there are certain aspects of the bill that raise legitimate concerns.

Our review of its statutory language finds that it covers not just websites that directly infringe IP but also those that include “the provision of a link or aggregated links to other sites or Internet resources”.

While one hopes for prosecutorial discretion in utilizing such power, the linkage nexus could encompass both search engines and non-infringing websites that unintentionally provide 1-click access to infringing materials.
The proposal also allows DOJ to establish a public list of domain names that it believes are “dedicated to infringing activities but for which the Attorney General has not filed an action”. Various parties would be immunized from any negative actions they took against such a listed website absent any judicial review to prevent mistakes or abuse, and that seems like a highly questionable concept at odds with basic due process.
In attempting to reach websites for which neither the registry or registrar is domiciled in the U.S., the proposal gives DOJ the authority to cause Internet Service Providers, financial transaction providers, and advertising networks to block access to and withdraw their services from such domains. This aspect of the bill may well be opposed. The banking industry, for one, did not like being “deputized” to withdraw payment services from Internet gambling websites and has been hoping to get that legislation repealed – a goal shared by House Financial Services Committee Chairman Barney Frank.
The proposal also lacks any consideration of defensive factors such as notice and takedown policies to remove infringing materials and links – and such policies have provided shields for such services as Google and eBay in civil IP infringement litigation.
Online fair use and civil liberties groups may well raise their own concerns. Public Knowledge, for example, has already issued a statement that reads in part:
“The bill has some troubling political and technical implications, particularly as it attempts to extend U.S. control over the worldwide Internet addressing system.

“Domestically, we are concerned that the bill would establish an Internet black list of sites that the Justice Department thinks are ‘pirate’ sites but against which it hasn’t taken action.  Putting an innocent site on this list could seriously harm the business of legitimate Web site operators.  The remedies in the bill for those guilty until they prove themselves innocent are inadequate.

“We are also concerned about some of the vague definitions of what constitutes an infringing site and of the level of proof needed.  It’s quite possible that this bill would have allowed entertainment companies to throttle YouTube at the beginning of its creation by alleging piracy and the young company would have been unable to defend itself.”
The likelihood of enactment in the few remaining days of the 111th Congress is exceedingly slim. That said, Chairman Leahy has added the bill to the Judiciary Committee’s calendar for consideration on September 23rd – and we think that’s a bad idea. Our experience is that no legislative proposal is perfect upon introduction and that proceeding in regular order, with hearings that allow for constructive input and subsequent amendment, is the sound way to create good law. Judiciary Committee rules allow for any member to object to a bill and automatically defer its consideration until the following business meeting and we would hope that option is exercised on this proposal.
Aside from tightening the bill’s language, any consideration of this measure should seriously consider some broader implications. These include whether U.S. actions against domains for which there is no domestic nexus will be cited as justification by foreign regimes that regularly block their citizens’ access to websites that contain “subversive” speech and ideas. Further, will such U.S. assertions of extraterritorial authority against wholly foreign domains in any way undermine ICANN’s legitimacy and thereby provide ammunition to those who seek to transfer ICANN’s functions to the ITU or a similar body — a development that would place DNS management solely in the hands of governments to the exclusion of business and civil society?
The goals of this legislation are laudable. But when access to a website is blocked, or when it is deprived of critical payments and advertising services, the speech and commerce it facilitates are terminated. If mistakes are made the operators of such a blocked website may have been effectively denied the resources they need to obtain judicial redress. Congress needs to proceed deliberatively so that all relevant considerations are examined before a law this sweeping is enacted.””