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Hearing of Subcommittee on Courts, the Internet, & Intellectual Property of the House Judiciary Committee - International Piracy:Intellectual Property

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Location: Washington, DC


Hearing of Subcommittee on Courts, the Internet, & Intellectual Property of the House Judiciary Committee - International Piracy:Intellectual Property

BREAK IN TRANSCRIPT

REP. GOODLATTE: Thank you, Mr. Chairman, and I want to thank all the panels. I'm sorry; I've not been able to be present earlier; that two other hearings, one in this committee and one in the agriculture committee, have kept me elsewhere.

But I am very pleased that you have taken up this subject, Mr. Chairman. It's one that's very important to me. I serve as one of the co-chairs of the international anti-piracy caucus, and welcome the exposure that you have afforded this issue.

One of the things that I raise with other countries when I have the opportunity to do so whether representatives come here or whether I'm eating with them in other places is to point out that it is in their interest to support intellectual property law and -- (coughing) -- built out of the infrastructure necessary to both have the law and enforce it because if they hope to transition into an innovation-based economy -- many countries that are developing have many creative scientists and researchers and people involved with the technology community in other areas where the advancement of intellectual property is worth protecting; entertainment, artists and so on, and that we're not asking them to enforce those laws just out of our interest in protecting what we export to those countries, but that it's in their interest to do that for the development and growth of their own intellectual property community.

We've been hearing reports that China is beginning efforts to transition from a manufacturing-based economy to an innovation-based economy, and it seems like this could present a unique opportunity to make headway with the Chinese on the importance of intellectual property.

So I would direct this to Ms. Espinel and to Mr. Smith. But in light of this apparent desire on the part of the Chinese, are there additional opportunities we should be pursuing to leverage this critical time to encourage China to take its own intellectual property laws more seriously as well as its obligations to honor the intellectual property of other nations and vendors and authors?

MS. ESPINEL: I would say that I agree with you. I think China's desire to become a leader in innovation does presents an opportunity.

I think there are actually several other countries as well, major training partners, that see themselves as wanting to enter the future and build a knowledge economy.

And, I think, all of those do presents real opportunity for us. We have a number of tools that we use to push China and other countries to further strengthen intellectual property.

But I think what you've just raised is, and in terms of what we can do more, I think, that is an opportunity for the United States to try to cooperative further on China.

So USTR is best known, and in many ways, for the Stick Approach for the Special 301 report for WTO dispute settlement, and we will continue to use all of those tools as aggressively as we feel is wanted in order to make progress.

But, I think, countries -- where there is an opportunity for a country to recognize that it is in their own domestic interest to be protecting intellectual property, I think the United States, USTR and the other government agencies can build on that desire through cooperation, through using, for example, our system as a model and having dialogues, with China, for example, on how to build a system that is closer to the U.S. system and is modeled on the U.S. in some of the ways that we have encouraged innovation. So, for example --

REP. GOODLATTE: I know that in some countries, Russia, for example, at least a few years ago, we were making pretty serious efforts to help translate U.S. intellectual property law decisions and documents related to it into Russian, that we were trying to help them with the court system and how they would handle disputes in this area and so on. Do we have any initiative like that with the Chinese or they've shown any interest in working with us in terms of looking at laws that respect property rights.

MS. ESPINEL: I think the Chinese do pay close attention to their laws. One specific example I could say that pertains to China and actually India as well, is our Baidu legislation.

Baidu in the United States is extremely effective in terms of increasing research and industry and building partnerships between the universities and industry, thereby increasing the number of products that were brought to market. China, in looking at our Baidu system, India is looking at our Baidu system because it has proved to be successful.

And while Baidu is not an intellectual property rule per se, having China and India and other countries become innovators, begin to build their system or base their system on aspects of the U.S. system that have been successful, I think, will long-term be very effective in helping us improve IP enforcement as they see that they have a greater stake themselves, domestically, in protecting the intellectual property and as they see themselves having a greater stake in the international system for protecting the intellectual property.

REP. GOODLATTE: Thank you. Now, let me -- if I might, Mr. Chairman, I know that my light has already gone on, but had a lot of competition.

REP. BERMAN: Well, you'd be the only person to have actually observed it, if you --

REP. GOODLATTE: (Laughs). Well, if you would give me that preference, I would like to ask one more question.

REP. BERMAN: It wouldn't be preference, it would be nondiscrimination.

REP. GOODLATTE: I thank the chairman for his indulgence. And I'll ask this to all the panel members, but it follows along with what we've just been talking about.

The Internet provides the means for massive copyright infringement in a single instance. While the U.S. has strong laws against online piracy, it seems that most of the discussion about international IP theft centers around the production of pirated products in physical form.

How bad is online piracy in Russia, in China, and do these countries' IP laws address online piracy sufficiently, and do you see any evidence that these countries are inclined to make any decent attempt to combat it?

Start with Mr. MacCarthy.

MS. EPSTEIN: I would start with -- (off mike).

MR. MacCARTHY: I think the one area --

REP. GOODLATTE: You can -- you're welcome to address my first question too.

MR. MacCARTHY: I will. Actually, I think, China is very interested in pursuing the digital environment in an aggressive way and I think we see it with the software industry in China that has seen more gains than any of our other industries.

So I think there is a place there where we can intervene and gain some things. Unfortunately, that interest does not extend to the cultural industries where China is an immensely protectionist.

But with respect to the internet, and I think you see it in the Internet environment, in 2006, they passed Internet regulations with respect to protecting content, and it was a very transparent process.

Quite surprisingly, for China, we intervened. We made three sets of comments. The regulations came out actually quite good and not that far from U.S. law. And I think China is interested in protecting on the Internet. What they haven't done yet and hopefully they will do is they haven't taken those regulations and then enforce them.

What we're facing in the Internet environment is just simply what we're facing in the physical environment; bad enforcement, no criminal enforcement, and very weak administrative enforcement, and lots of confusion in the ISP community has been, recently generated by some nonbinding regulations the government has put out, which have caused more burdensome notice requirements, if you're familiar with those. It's just -- it's a situation that hopefully China will, as distinct maybe from some other areas, find to be really in their interest.

And, of course, they want to control the Internet; we all know that. So the content issue, sort of, play into that political necessity that they have.

REP. GOODLATTE: Thank you. MacCarthy, do you want to add anything?

MR. MacCARTHY: I could just repeat some of the main points that I made in my testimony, which is, when we were involved with one of the -- two of the websites in Russia, we got caught up in complications from local Russian law. One of the court cases ruled against our local bank that they had violated their contract by cutting off service to that merchant.

And it seemed to want a ruling from a competent court within Russia before they would allow us to withdraw our service. And the second case was a case not brought by us and not involving us directly.

If we were the owner of one these sites who was absolved of taking any illegal action whatsoever under Russian law, as I talked about before, this situation may be improved in January of this year when a revision to their law on collective right society goes into effect.

In the meantime, what we've done is, we've tried to take account of the differences in local jurisdictions by making sure that international transactions from the Russian sites are not processed within the Visa system. Thank you.

REP. GOODLATTE: Thank you. Mr. Yager?

MR. YAGER: Yes, Mr. Goodlatte, just a couple of quick answers. With regard to the issue of these trading on the Internet in the near future certainly as the other countries' bandwidth increases, and a greater share of the populations there are able to secure these songs, movies online that will become a greater issue. I think there is a certain amount of time depending on the countries before that happens on a wide-scale basis.

But if I could also address the other point that you made about linking with like-minded countries or at least expressing their own interest, even in cases where the country as a whole may not feel that it is in their interest to give full protection there maybe industries within the country that can be useful for education purposes or others.

And I gave the example of Brazil, they have some very important recording artists, and a significant share of the music sold in Brazil is from domestic artists. And these folks have been quite successful in putting out the message that it's stealing, which is a long-term process in trying to get that message across.

So I think even in countries where there have been larger challenges, there are domestic industries that the United States can link up with.

On the other side of that coin there are also countries for example, in South America, again Paraguay is not a country that has a lot of content, an entire city exists in order to just take advantage of the illegal trade across the border, Ciudad del Este is the city that exists that between the two giants are Argentina and Brazil.

And it seems like everything that happens in that city is to take advantage of those trade opportunities and many of those obviously are illegal.

So I think that can work in place like China over the longer term and as well as other countries, but in some countries that don't have a lot of content production it's going to be a tougher sell.

REP. GOODLATTE: Thanks.

Ms. Espinel.

MS. ESPINEL: With respect to China, China has joined the WIPO Internet Treaties to protect digital projects over the Internet which has progressed, and we have noticed, and we note in our Special 301 provincial review report this year, that there have been some increased efforts, particularly in Beijing, has some innovative programs for fighting Internet piracy.

With Russia they have reported that they have opened 30 investigations this year against illegal websites.

Now, clearly this is a significant problem in Russia still, but that is a significant increase over last year.

One -- my last point I want to make is one of the challenges I think we faced in fighting Internet piracy around that world is that the -- there is no clear international regime for fighting Internet piracy the way there is for some other aspects of intellectual property, and one of the things the USTR would like to see is to see a stronger -- a consensus on stronger rules for enforcement, including a consensus on new rules for fighting Internet piracy.

REP. GOODLATTE: Thank you.

Thank you, Mr. Chairman

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