There’s no question that counterfeiting and intellectual property theft threaten legitimate businesses. However, a government crackdown on websites used to sell counterfeit goods and illegally distribute copyrighted materials could also sweep innocent businesses into its net, legal experts say.
In June 2010, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) launched “Operation In Our Sites,” a sustained law enforcement initiative aimed at counterfeiting and piracy over the Internet. During the course of the operation, ICE HSI agents have investigated websites suspected of selling counterfeit goods and illegally distributing copyrighted material in the United States. Once the materials were confirmed as counterfeit or otherwise illegal, seizure orders for the domain names of the websites that sold or distributed the items were obtained from federal magistrate judges. Individuals accessing the websites found a banner notifying them that the domain name of that website had been seized by federal authorities.
The fight against counterfeiting and intellectual property theft ultimately benefits American businesses and consumers. It is estimated that intellectual property theft costs American industry billions of dollars and hundreds of thousands of jobs every year. Additionally, counterfeit pharmaceuticals, software, electronics, games and other products threaten public health and safety.
At the same time, however, legal experts are concerned that Operation In Our Sites raises questions of due process because the domain name owner is not notified prior to seizure. Sites that post user-generated content could get caught in the sting if that content violates intellectual property laws — even if the primary purpose of the website is legitimate.
Ongoing Operation
Operation In Our Sites is being spearheaded by the ICE HSI-led National Intellectual Property Rights Coordination Center (IPR Center), a partnership of federal agencies including U.S. Customs and Border Protection, the FBI, the Food and Drug Administration and the Postal Inspection Service, among others. INTERPOL, the Government of Mexico Tax Administration Service and the Royal Canadian Mounted Police are also partners.
Since the launch of this operation, ICE HSI and the IPR Center have seized a total of 125 domain names and redirected those domain names to a seizure banner. Seventy-six of the seized domain names have been forfeited to the U.S. government.
In May, ICE HSI seized domain names Mygolfaccessory.com, Watchnewfilms.com and Re1ease.net, among others, during the fifth phase of Operation In Our Sites. The fourth phase, dubbed "Operation Broken Hearted," took place around Valentine’s Day and resulted in the seizure of 18 domain names of commercial websites engaged in the illegal sale and distribution of counterfeit goods. During the course of the operation, federal law enforcement agents made undercover purchases of counterfeit items representing 14 name brands, including Chanel, Coach and Rolex.
Earlier in February, seizure warrants were executed against 10 websites that illegally streamed live sporting telecasts and pay-per-view events over the Internet. The seized websites were popular “linking” sites — a type of website that provides access, or “links,” to other websites where pirated sporting and pay-per-view events are hosted. Users simply click on a link to begin the process of downloading an illegal broadcast of a sporting event from the third-party website that is hosting the stream. Linking websites are popular because they allow users to quickly browse content and locate illegal streams that would otherwise be more difficult to find.
In November 2010, 82 domain names of commercial websites engaged in the illegal sale and distribution of counterfeit goods and copyrighted works were seized. In June 2010, investigators executed seizure warrants against nine domain names of websites offering pirated copies of first-run movies, music and software.
One Side of the Story
According to the ICE, the domain names are subject to seizure under a federal statute governing the forfeiture of stolen property, which includes counterfeit goods or packaging and pirated movies, music and other intellectual property. The problem, according to legal experts, is the way in which seizure warrants are executed. The warrants are issued in so-called ex parte proceedings, meaning that the domain name owners are not represented at the hearing before the federal magistrate judge. The domain name owner can challenge the warrant by filing a motion with the court that issues the seizure order, but at that point the domain has already been seized.
The Electronic Frontier Foundation and other organizations concerned with civil liberties in cyberspace say that domain name owners should be allowed to defend their operations before their sites are taken down. Many organizations would be put out of business if their websites were unavailable for even a short period of time. The potential damage to wrongly targeted businesses could be great.
Other analysts say that the law allows the shutdown of an entire site even if only a portion is implicated in illegal activities. This gives rise to the concern that user-generated content could cause an otherwise legitimate site to be seized. There does not even have to be illegal content on a site — links alone would qualify. In addition, the PROTECT IP Act — which passed the Senate Judiciary Committee but has been placed on hold by Senator Ron Wyden of Oregon — would broaden the government’s power to crack down on so-called rogue websites.
So far, the ICE has gone after sites engaged in criminal-level copyright infringement and counterfeiting. The odds of a legitimate website being seized remain small. Still, there is enough concern that some members of Congress are pushing for legislation clarifying the seizure process. Businesses should remain vigilant to ensure that their websites are not replaced by a banner notifying visitors of seizure by the U.S. government.
