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Alert No. 2,321, December 21, 2011.
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OUSTR Releases Notorious Markets Report

12/20. The Office of the U.S. Trade Representative (OUSTR) released a report [6 pages in PDF] titled "Out-of-Cycle Review of Notorious Markets".

Ron KirkRon Kirk (at right), the USTR, stated in a release that "Piracy and counterfeiting continue to present a serious challenge to the innovation and creativity that is essential to supporting American jobs and creating economic growth around the world. The notorious markets highlighted in this review negatively impact legitimate businesses and industries of all sizes that rely on intellectual property to protect their goods and services".

This report states that notorious markets are "selected markets, including ones on the Internet, that are reportedly engaged in piracy and counterfeiting, according to information submitted to the" OUSTR.

It adds that they "are marketplaces that have been the subject of enforcement action or that may merit further investigation for possible intellectual property rights infringements. The scale and popularity of these markets can cause economic harm to U.S. and other IP right holders."

This report lists web sites that might be targeted by the Department of Justice (DOJ) if the Congress were to enact into law HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", which is currently under consideration by the House Judiciary Committee (HJC). This report also lists physical markets in other countries.

Steve Metalitz, counsel to the International Intellectual Property Alliance (IIPA), stated in a release that "We are extremely grateful for the U.S. Government’s enhanced focus on notorious piracy markets highlighted in today’s announcement. This focus has clearly gotten the attention of foreign governments and led to some notable developments in some of the markets previously listed." The IIPA represents the major intellectual property groups -- MPAA, RIAA, BSA, ESA, IFTA, AAP, and NMPA.

Notorious Markets List. This report states that since the release of the last notorious markets report in February "several markets took action to address the widespread availability of pirated or counterfeit goods". These include the "Chinese website, Baidu", the "Ladies Market in Hong Kong", and the "Savelovskiy Market in Russia". Hence, the OUSTR removed these markets from its "Notorious Markets List".

The just released report lists a class of Russian web sites identified as "Allofmp3 clones". It states that while allofmp3 "was shut down in 2007, sites that are nearly identical, many of which appear to be owned by the same parties, have taken its place. These websites appear to be designed to confuse consumers by operating much like popular, legitimate sites".

The report also lists "deep linking" web sites, for which the infringing works reside on third party servers. It names Sogou MP3 and Gougou in the People's Republic of China (PRC).

It also names business to business and business to consumer web sites Taobao in the PRC and and Consolesource in Canada, which "sell circumvention devices and components used to circumvent technological protection measures on game consoles".

The report also names several BitTorrent indexing web sites that are used for locating and downloading of infringing works. It names ThePirateBay (Sweden), IsoHunt (Canada), Btjunkie (Sweden and Netherlands), (Canada, Ukraine and Romania), and (Canada, Panama and Switzerland).

The report also names BitTorrent trackinging web sites, which can be used to "transfer allegedly infringing material, by directing users to peers who share the infringing content". It names Rutracker (Russia), Demonoid (Ukraine), and zamunda (Bulgaria).

This report also names the social media web site vKontakte (Russia), the cyber lockers Megaupload (Netherlands and Hong Kong and Putlocker (United Kingdom), the forum web site Warez-bb (Luxembourg, Switzerland and Sweden), and the sports programming retransmission peer to peer service TV Ants (PRC).

Basis and History of Notorious Markets Reports. Section 301 is the statutory means by which the U.S. asserts its international trade rights, including its rights under World Trade Organization (WTO) agreements. In particular, under the "Special 301" provisions of the Trade Act of 1974, the OUSTR identifies trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to U.S. artists and industries that rely upon intellectual property protection. See, 19 U.S.C. § 2242.

However, Section 2242 contains no reference to the identification of notorious web sites, or notorious markets. Rather, it requires the OUSTR to identify "foreign countries". The OUSTR must identify, for example, countries that "deny adequate and effective protection of intellectual property rights, or ... deny fair and equitable market access to United States persons that rely upon intellectual property protection".

Beginning in 2006, the OUSTR included sections on notorious markets in its annual Special 301 reports. In 2010, the OUSTR announced that it would also produce stand alone notorious markets reports. See, story titled "OUSTR Announces Separate Notorious Markets Process" in TLJ Daily E-Mail Alert No. 2,138, October 4, 2010.

 The OUSTR released its first notorious markets report in February of 2011.

Notorious Markets and SOPA. HR 3261, the "Stop Online Piracy Act" or "SOPA", would give the Intellectual Property Enforcement Coordinator (IPEC) responsibility for writing a report regarding notorious markets.

It provides, at Section 204, that the IPEC "shall identify and conduct an analysis of notorious foreign infringers whose activities cause significant harm to holders of intellectual property rights in the United States".

The SOPA would require the IPEC to include certain sections in its notorious markets report that are not currently included in the OUSTR's notorious markets reports.

For example, the IPEC report would include "An examination of whether notorious foreign infringers have attempted to or succeeded in accessing capital markets in the United States for funding or public offerings." The IPEC would also be required to offer its recommendation as to whether there should be a "list of notorious foreign infringers that would be prohibited from raising capital in the United States."

Also, the SOPA would require that the IPEC report be written for the HJC and Senate Judiciary Committee (SJC). The SOPA could affect oversight jurisdiction.

Continuation of SOPA Mark Up Postponed

12/20. The House Judiciary Committee (HJC) postponed the continuation of the mark up of HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA". The HJC began its mark up of this bill on Thursday, December 15, and continued on Friday, December 16, 2011.

Rep. Lamar Smith (R-TX), the sponsor of HR 3261, and Chairman of the HJC, scheduled the bill for continued mark up on Wednesday, December 21, at 9:00 AM. However, late on Tuesday, December 20, he postponed this continuation "due to House schedule".

The HJC is considering an amendment in the nature of a substitute, which is also sometimes referred to as the manager's amendment. See also:

In This Issue
This issue contains the following items:
 • OUSTR Releases Notorious Markets Report
 • Continuation of SOPA Mark Up Postponed
 • Senators Kohl and Lee Urge FTC to Conduct Antitrust Investigation of Google
Washington Tech Calendar
New items are highlighted in red.
Wednesday, December 21

The House will meet at 10:00 AM for legislation business.

POSTPONED. 9:00 AM. The House Judiciary Committee (HJC) will continue its mark up HR 3261 [LOC | WW], the "Stop Online Piracy Act". See, notice. See also, amendment in the nature of a substitute [71 pages in PDF] offered by Rep. Lamar Smith (R-TX). Location: Room 2141, Rayburn Building.

Thursday, December 22

No events listed.

Friday, December 23

The Senate will meet at 9:30 AM in pro forma session only.

Sunday, December 25

Christmas Day.

Monday, December 26

This is a federal holiday. See, OPM list of 2011 federal holidays.

Tuesday, December 27

The Senate will meet at 12:00 NOON in pro forma session only.

Wednesday, December 28

No events listed.

Senators Kohl and Lee Urge FTC to Conduct Antitrust Investigation of Google

12/19. Sen. Herb Kohl (D-WI) and Sen. Mike Lee (R-UT), the Chairman and ranking Republican on the Senate Judiciary Committee's (SJC) Subcommittee on Antitrust, Competition Policy and Consumer Rights, sent a letter to Jonathan Leibowitz, Chairman of the Federal Trade Commission (FTC), urging the FTC to conduct a "thorough investigation" of whether Google's actions violate US antitrust law or substantially harm consumers or competition in online search.

They state that they "take no position on the ultimate legality of Google's practices under the antitrust laws and the FTC Act".

They want the FTC to investigate whether Google is using its market share and market power in "general Internet search" to "steer users to its own web products or secondary services and discriminating against other websites with which it competes".

They state that the FTC should investigate whether Google is biasing it search results in favor of its own offerings. They state that "Rather than act as an honest broker of unbiased search results, Google's search results appear to favor the company's own web products and services. Given Google's dominant market share in Internet search, any such bias or preferencing would raise serious questions as to whether Google is seeking to leverage its search dominance into adjacent markets, in a manner potentially contrary to antitrust law." (Footnote omitted.)

Leibowitz is a former long time SJC staff assistant to Sen. Kohl.

Wayner Crews of the Competitive Enterprise Institute (CEI) commented in a release that antitrust "is one of the worst forms of arbitrary, unaccountable regulation. A better, productive, job-enhancing investigation would instead be one into how to restrain federal antitrust interventionism generally -- here and in instances such as that leading to the collapse of the AT&T/T-Mobile merger. Clumsy smokestack-era antitrust is an innovation and job killer and has no role in the dynamic Internet economy."

He argued that "the free enterprise solution is to let the marketplace duke it out. Google, like all firms, answers to the media, policymakers, rivals, business partners, infrastructure firms, emerging search technologies, the global marketplace, shareholders, Wall Street and investors. These are the appropriate forms of "regulation" to deal with supposed "search bias" or other alleged harmful behavior."

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