Patent Trolls: Cultivating A Growing Distaste Among Attorneys General In The U.S.

The term “patent troll” is nothing new. Patent trolls (also referred to as “patent assertion entities” (PAEs) or “non-practicing entities” (NPEs)) are patent holders that generate revenue by sending demand letters to claimed infringers in an attempt to produce licensing opportunities. In order to be considered a patent troll the entity must not actually practice the patent themselves, instead relying on the threat of litigation as a revenue stream. 

 

Image by Stuart Miles

Much has been made of patent trolls and their practices. An article recently published on JDSupra detailed several individual efforts undertaken by legal officials in a number of American states to curb the practices of patent trolls within their respective jurisdictions. To give a few examples:

•        In New York, Attorney General Eric Shneiderman investigated MPHJ Technology, an alleged patent troll. The investigation concluded with a settlement under which MPHJ agreed do desist from hundreds of threatened law suits against businesses in that state. Known as the “scanner troll”, MPJH claimed a patent on a process for scanning and emailing electronic documents. It sent demand letters asking businesses for $1,000 per employee to avoid having suit filed against them for patent infringement. The Attorney General of Vermont, Bill Sorrell has also taken up against MPHJ.
•        The Oregon State Senate introduced a bill that would amend the State’s Unlawful Trade Practice Act to allow individuals to sue supposed patent trolls for sending a demand letter without identifying the patents at issue or how it was infringed.
•          In early 2014, The Wisconsin State Legislature passed a bill that actually makes sending a demand letter a crime in certain instances. The bill requires that any demand letter relating to the assertion of patent rights must contain the patent’s registration number and a copy of the patent itself as well as the legal theory under which the complaining party asserts that the responding party infringed. The Law also prohibits a demand letter from containing “false, misleading, or deceptive information.” It enables the Attorney General to seek injunctions against alleged trolls and fine them up to “$50,000 for each violation or three times the aggregate amount of actual damages and costs and attorney fees awarded by the court, whichever is greater.”

These are but a few examples of actions taken by legislators and attorneys general in the U.S. against alleged patent trolls. The Wisconsin law is particularly ferocious, notwithstanding the fact that “misleading” and “deceptive” mean exactly the same thing. 

In addition to individual state efforts, the National Association of Attorneys General (NAAG) sent a letter to the U.S. Senate in February 2014 signed by 42 state attorneys general calling for a bi-partisan legislative amendment to the patent law aimed at addressing patent trolls. The only States that did not participate were California, Delaware, Georgia, Montana, North Dakota, Ohio, Oklahoma, South Dakota, and West Virginia.

In a 2006 case styled Ebay Inc. v. MercExchange, L.L.C., the U.S. Supreme Court had to decide whether injunctions should issue as a matter of course in patent infringement law suits. The Court found this not to be the case. Overturning the Court of Appeals for the Federal Circuit’s (CAFC) ruling that “the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances”, the Supreme Court held 8-0 (Justice Alito did not participate) that because the injunction is an equitable remedy, the legal test for obtaining one and the equitable factors apply. 

This is relevant because the Plaintiff at trial, MercExchange, was an alleged patent troll. The District Court for the Fourth Circuit ruled that MercExchange was not entitled to an injunction because it does not practice the patent. The CAFC overturned. Without endorsing the District Court’s reasons, the Supreme Court disabused us of the notion that injunctions should issue (almost) as a matter of course- a point I incidentally found myself squarely on the other side of when I argued for exactly that interpretation in a Canadian IP moot completion in 2012. 

One of the concurrences in that case penned by Justice Kennedy (joined by Souter, Breyer and Stevens) pointed out that granting injunctions in cases where a non-practicing entity sues a company engaging in commerce may run counter to the public interest. They noted that often money damages are more fitting. If that is the case, the injunction is inappropriate as it should only be granted when there is no sufficient remedy at law. 

It will be interesting to see if the U.S. Congress acts on the recommendations of the NAAG. There has been no sign of movement on this matter and no indication that there will be any in the near future. As noted above, however, individual states are not waiting for the Federal government to join the party.

SOPA on a Rope?

There has been an immense amount of talk lately regarding a bill currently making its way through US Congress known as the Stop Online Piracy Act (or SOPA).  SOPA has been fashioned as an effective response to rampant online piracy of copyrighted content by granting the Attorney General rather broad and sweeping powers to attack infringing websites. The law also gives individual rights holders a new procedure complete with remedes they’ve never had access to before.

The bill is a companion to the equally controversial PROTECT IP act, also being debated by congress. These two bills signify a sharp change in the American copyright landscape, specifically as it pertains to the Internet.

In addition to granting the Attorney-General the power to obtain a court order against a site that is either “committing of facilitating online privacy”, he may also order third party payment providers (such as Visa or PayPal) and online ad networks to stop supporting and dealing with the site in question.

photo by mikeleeorg

Furthermore, the Attorney-General may order the de-indexing of allegedly infringing sites from search engines.  Many have likened this rather extreme measure to the Internet censorship protocols enacted by the Chinese government (known coloquially as ‘The Great Firewall”).  While this may be a slightly extreme appraisal, this measure in particular brings up significant free speech issues.

As mentioned above, not only the Attorney-General but regular rights holders have been given powerful enforcement tools.  If a rights holder believes a site is infringing their copyright, they must undertake a two step process: First, they must contact payment providers and ad networks doing business with the site in question.  Upon forwarding them a compliant, they are to cease their service in relation to the website and forward the complaint to the owner of the domain. At this point, the site owner must reply and explain how their activities are not infringing copyright (eg. the material is legally licenced, fair use etc.).  if they do not, the rights holder may apply to a court for a limited injunction on the website.  

SOPA tries to incentivize the voluntary coming forward of ad and payment networks by extending them immunity from liability if they ”squeal” on an instance of copyright piracy or trademark infringement.

Finally, the bill expands the penalties related to certain activities including streaming video and various instances of counterfeiting.

Supporters of the bill tout it as the weapon American rights holders need to effectively police their IP rights. Supporting organizations include the obvious players such as the Recoding Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) but also large commercial entities like Nike, Ford and Pfizer.  SOPA would presumably make it easier for those large entities to enforce their trademark rights, adding to the ICANN Uniform Dispute Resolution Policy (UDRP).  While the latter only allows rights holders to go after infringing domain names, SOPA would allow them to pursue websites that make use of their trademarks in the actual content of the site itself.

Detractors contend that the bill is an absolute outrage and must be killed immediately. Representatives on both sides of the house have been outspoken critics, among them Rep. Nancy Pelosi and current Republican nominee for presidential candidacy Rep. Ron Paul.  In Rep. Paul’s own words, SOPA will likely result in "an explosion of innovation-killing lawsuits and litigation.”

Some even question the efficacy of the bill.  Sure the Attorney-General may order sites banned form the American web, but the DNS can be manipulated in creative ways to circumvent this roadblock. As was born witness to during this years “Arab Spring”, people can use mirror and proxy servers to get around national quarantines of the Internet.

The advent of these new measures also brings into question the utility of the DMCA’s notice and take-down system.  If SOPA passes, it will create a far stronger mechanism than what the DMCA currently offers thereby rendering those remedies obsolete. Unfortunately, the DMCA notice and take-down represents  significantly more balanced approach to dealing with piracy on the Internet than does the potentially Ex Parte (legal jargon meaning a hearing absent one of the parties) process put in place by SOPA. The latter allows actions to be taken against the infringing site itself if the Attorney-General is unable to locate the owner of the site.

It remains to be seen what type of effect SOPA and PROTECT IP will have in the Internet landcsape in the US.  The question also beckons as to whether any other countries will follow suit with national legislation of their own in the same vein.  Being the worlds largest exporter of Intellectual Property, the United States has a vested interest in seeing IP laws around the world tighten.  Here in Canada, our copyright modernization act (currently making its way through Parliament) seems to already reflect that exported interest.  The last thing Canada needs right now is “SOPA North”.  However, since “Stephen” and “Barack” are such good buddies these days, who knows what could happen?

Analysis of the Google Books settlement and its judicial rejection

The Google Books project and the suit

In 2004, Google undertook a gargantuan project to digitize a massive catalogue of books.  With the cooperation of a four university libraries and one public library, Google began scanning and cataloguing millions of books and volumes.  In the court’s written rejection of the Settlement agreement, the judge puts the number of books scanned at 12 million (though a recent estimate puts the number closer to 15 million).  

As part of the deal, Google would give the libraries a digital copy of their own catalogues and would create a master catalogue which would constitute the Corpus of the Google Books collection.  In typical Google fashion, this Corpus would be made searchable by the public.  For works in copyright, people would only be able to see snippets of the book containing the text of their search.  For works known to be in the public domain, the whole work would be viewable by the public.

Photo by Renjith Krishnan

To the objective observer this seems like an all around win for all parties involved.  Google grows its value while accomplishing a morally commendable enterprise; The public gains access to a wealth of culture and information otherwise lost or inaccessible; People with visual handicaps suddenly gain access to millions of works never before available to them; Authors of in-print books benefit from the muscle of Google’s impressive search algorithms to funnel otherwise untapped readers into purchasing their full work (once they’ve wet their appetites with the free snippet); Finally, authors of out-of-print books suddenly begin to see revenue again from material that was until now, commercially unavailable.  Indeed it seemed as though the Google Books project would bring the world closer to Shangri-La and “open knowledge”.  Certain people, however, saw things a little differently.

In September 2005, two lawsuits were brought against Google; One by the Authors Guild (Authors Guild v. Google) and the other by 5 major publishers (McGraw Hill v. Google).  The Authors Guild’s suit was a class action, ultimately joined by the publishers. 

The rights holders claimed “massive copyright infringement “on the part of Google.  Google contended that their acts were under the protection of the fair use doctrine.[1] Though public domain works were made available in their entirety, only snippets of protected works could be viewed for free. Google also specifically withheld the launch of ads on Google Books so that the claim couldn’t be made that they were engaging in commercial activity somewhat of a faux pas for a fair use defence.[2]

To this day, both parties stick by their original positions on the infringement/fair use issue even though such matters are no longer relevant (at least to this case). On October 28^th, 2009, a settlement agreement between the plaintiff class and Google was reached.

The Settlement Agreement

The agreement has taken the form of a massive 166 page document (plus appendices) outlining the rights and obligations incumbent on Google and the plaintiffs.[3]  The agreement was originally supposed to cover all authors (including their heirs, successors and assignees) and publishers with an American copyright interest as of January 5^th, 2009 (this scope was later changed.  See “International Law” below.).  

Google must also establish a “Book Rights Registry” where rights holders may register to receive royalty payments for their works that are included in the Corpus.  Google is to pay $34.5 million to establish and fund the operation of this registry.  

Not only that, Google must pay an additional $45 million into a settlement fund to pay out rights holders whose works were already digitized by Google without permission (as of May 5^th, 2009).  In actual fact, the settlement mandates that each author who makes a claim be paid out a set amount making the $45 million a primary figure.  Any claims above that amount would still be paid out by Google as they arise and should the number be lower, the remainder is divided among rights holders, not returned to Google as surplus. 

In addition to these “sanctions”, the settlement gives Google extensive rights. The document lays out five:

•  Google may continue growing the Corpus by digitizing books and inserts.   
•  Google may sell subscription based access to the Corpus (such as institutional subscriptions for universities. 
• Google may sell online access to individual books to users in an online store. 
• Google may sell advertising on pages of books.
• Other prescribed uses.

The settlement makes clear that those rights are non-exclusive and can therefore be licensed by rights holders to anyone, including direct competitors of Google. 

Google must share the revenues from these uses giving up 63% to the rights holders for works published before January 5^th 2009. For new works going forward, Google must hand over 70% of revenues from all sales (both subscription and per-use based) and advertising revenue derived from the Corpus- less a 10% deduction to cover Google’s operating costs.

The settlement draws an important distinction between two classes of books included in the Corpus: In-print books and out-of-print books.  In-print books are those that are still commercially available.  Concordantly, out-of-print books are those that are no longer being produced and are not commercially available.  An interesting question arises when a publisher offers online versions of books that it no longer prints for retail.  Is that book still in-print? It is commercially available but only in a digital format. 

It’s also worth mentioning that the settlement agreement stipulates the amount to be paid to the lawyers representing the class is $45.5 million.  Though this consideration is immaterial to the meat of the issue, it’s still a tad disconcerting that the lawyers are making more than the amount being paid out to establish a registry for the authors of what some say is up to 15 million books and counting.

Rejection of the Settlement by the Court of the Southern District of New York

On March 22^nd, 2011, Judge Chin of the Court of the Southern District of New York rejected the settlement agreement that received preliminary approval five months earlier.[4]  Judge Chin disagreed with Judge John E. Sprizzo on the fairness of the settlement agreement.  In truth, Judge Chin had the benefit of reading the hundreds of objections that were filed with the court between the preliminary ruling and his ruling. 

Before stating his reasons for rejecting the settlement, Judge Chin admitted two factors considered that weighed in favour of approval.  First, he commended the “arm’s length negotiation between experienced, capable counsel, with assistance from the DOJ” (Department Of Justice). Second, he rightly asserted that proceeding with a full blown trial (and the inevitable appeals process) would be very lengthy and wildly expensive.

That being said, Judge Chin had a number of valid reasons for rejecting the proposed settlement:

·         Inadequate representation of the class members: The class of plaintiffs in the case is very large.  Google sent 1.26 million notices in 36 languages to copyright holders and potential class members as well as publishers and authors’ rights collectives.  For example, Scholars and academics usually publish with a motivation that is very different from a commercial writer.  Both are included in the settlement.  It is even conceivably arguable that publishers have very different motivations from authors and authors’ rights collectives. 

·         Encroachment by the court on Congress’ power: Under the settlement agreement, Google would have the rights to all orphan works[5] without any prior consent (a rights holder may step forward after the fact and make a claim).  Judge Chin acknowledged Sony Corp. Of America v. Universal City Studios Inc[6]. where the Supreme Court held that it is congress’ duty to keep up with technological advances and their effects on copyright law.  He further cited Eldred v. Ashcroft[7] where the Supreme Court said “It is generally for Congress, not the courts, to decide how best to pursue the Copyright Clause’s objectives.”

·         Google should not be allowed to take a “shortcut”: Instead of undergoing the long and prohibitively costly process of licensing and tracking down of rights holders, Google decided to take a “sue me” shortcut.  In violating copyright on an epic scale, they hope to circumvent both the time and cost associated with the above scenario.  Ironic that seven years and millions of dollars in billable hours later, we still have neither a verdict, nor a settlement.  As it was eloquently put by Stanford Law School Professor Pamela Samuelson “We’re giving Google a blank check to essentially engage in activity that would be considered clearly infringing activity but for the settlement”

·         Anti-trust concerns:  The settlement agreement would have the effect of giving Google the exclusive monopoly right over all orphan works.  This means that any institution or competitor who wishes to make use of or offer any of the millions of orphan works in the corpus cannot do so without paying Google a royalty.  Google also has the right to refuse a license to anyone it sees fit.  This is a prime example of what anti-trust law is supposed to prevent- anti-competitive and monopolistic behaviour.  The fact that this is a settlement for a legal action adds insult to injury in that it would create an injustice, potentially greater than the initial reason Google was sued in the first place.  There’s no Fair Use defence in anti-trust for Google to hide behind either.

·         Privacy concerns: No one is better at collecting data than Google.  Would this extend to information about the books we’re reading? Not only will Google know what you’re reading and when, they’ll know for how long, how many pages and which pages you read.  This is clearly a breach of our reasonable expectation of privacy.  What we read can often be personal.  It isn’t the sort of data everyone is ok with others collecting.  There is also the fear that such information can be forcibly turned over to government entities by way of the aging Electronic Communications Privacy Act (ECPA).  If Google Books ever does get started, don’t be surprised to hear about the F.B.I or the Department of Homeland Security compelling Google to hand over reader data of certain subscribers.[8]  Never before has law enforcement been so well equipped with readily available and invasive access into our lives (e-mails, online profiles and even cell phone location data).  Google Books subscriber data would simply be one more tool available to them.

·         International law: At first, the settlement was worded to include any book that had a U.S. copyright interest.  This would include almost every single book in the world.  The U.S is a signatory to the Berne Convention.  This means that the U.S. must give equal recognition and protection to any work published or performed in the U.S. regardless of its origin.  Objections to this language being used in the settlement resulted in the definition being narrowed to exclude non-American works that were not affirmatively registered in the U.S. Copyright Office.  That being said, Canadian, British and Australian works were still included in the settlement regardless of U.S. copyright registration. 

Uncertainty ahead

With this rejection on the books, it’s back to the drawing board for Google and the plaintiffs.  Though impressive opposition to the settlement has been mounted, it is unclear whether it will be abandoned entirely or not.  

The judge alluded to the fact that a matter like this is one for Congress, not the court to decide.  Which beckons the question, can Congress really do any better? There are mixed opinions as to how that question should be answered. However, one might posit that regardless of one’s faith in Congress to come to a better result, the Constitution mandates it.  

Article 1 Section 8 Clause 8 of the U.S. Constitution gives Congress the power to “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”[9]

The Settlement has far reaching implications on an entire category of works contemplated in the Copyright Act, orphan works.  This fact alone should militate in favour of a Congressional rather than judicial response.

On its face, this settlement appears to be a misuse of the class action mechanism.  In general, a class action suit is usually taken to compensate the victims of damages caused by the plaintiff(s).  Though the settlement covers compensatory considerations, it also provides for a forward looking licensing and royalty scheme. This scheme also implicates millions of people who some contend are not being accurately represented by the class representatives. 

In a debate on the Settlement at the University of Richmond Law School, Professor James Grimmelmann of New York Law School delivered a brilliant analogy to illustrate this point:

Say that 5 years ago there was a minor oil spill (nothing on the magnitude to the one that recently occurred) in the Gulf of Mexico caused by BP.  A class forms that comes to represent all residents and business of Gulf Coast states.  In a settlement, to facilitate the pay-out of any future damages caused by an oil spill in the area, BP sets up a compensation fund and a streamlined process by which people can easily make claims.  Imagine that BP agrees to put $500 million in that fund to assure that no damage that could possibly arise would remain uncompensated.  Fast forward to the events of last year.  That settlement, already having been signed and approved would exonerate BP from liability for the astronomical damages it has caused to date (far exceeding the once seemingly adequate sum of $500 million).[10]

This scenario helps highlight exactly what may be wrong with a significantly forward looking settlement like this one.

Professor Samuelson brings up an interesting point on the future implications of the settlement on the Corpus itself.  What if the settlement goes through and 10, 15 or 20 years down the line Google shuts down or goes bankrupt or otherwise?  We will all have become so dependent on Google Books that its failure would become an unacceptable reality.  A service like this truly is a public good and as such, should be protected.  This presents a “too big to fail” scenario in which the Government may eventually have to step in out of necessity.  

Google also has the right to sell the Corpus to anyone.   Some people fear that Google has carte blanche to engage in “price-gouging” considering they are the only source for a large part of the Corpus. Even if we presume Google will not abuse their right, who’s to say the next owner wont? As Samuelson suggests, those who aren’t afraid of price-gouging on the part of Google may reassess that fear should the database be sold in the future. 

This entire saga started out with Google trying to do what Google does best, cataloguing and indexing data in order to make it searchable.  The matter has evolved into what could be one of the most important and impacting copyright cases in history.  While experts continue to speculate on possible and desirable outcomes, people concerned with copyright around the world are watching intently as the situation continues to slowly unfold.  

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[1] Fair use is a part of the American Copyright act that presents a non-exhaustive list of uses of a work that would otherwise infringe copyright but do not because they are considered to be fair uses of the original work.  Canadian Copyright law has a concurrent (but not identical) regime referred to as fair dealing.  These regimes are not to be viewed as a simple defence, but as an integral part of the copyright act and therefore a clear delimitation on the exclusive right afforded a copyright holder.  See McLachlin CJ. In the Supreme Court of Canada’s decision in CCH Canadian Ltd. v. Law society of Upper Canada: “...the fair dealing exception is perhaps more properly understood as an integral part of the Copyright Act than simply a defence.”

[2] One of the factors considered in the Fair Use analysis is the purpose and character of the use.  It is harder to mount a fair use defence if the use in question is highly profitable to the alleged infringer.  That being said, the commercial nature of a use does not automatically preclude it from being fair.  The U.S. Supreme Court has even said that this factor is not the most important to be considered.

[3] Google makes the updated settlement agreement as well as an FAQ on the settlement available at the following link: <http://books.google.com/googlebooks/agreement/press.html>.

[4] For a complete PDF version of the decision see <http://www.openbookalliance.org/wp-content/uploads/2011/03/JudgeChinGBSCourtOrder.pdf>

[5] An Orphan Work is one where the Copyright owner is unknown or cannot be located but is still under copyright protection.  One problem relating to Orphan works is that if they are used without clearing the rights, a task that cannot be completed, the user opens themselves to the risk of the rights holder “popping up” out of nowhere with an infringement suit.

[6] 464 U.S. 417 (1984). For the full text of the decision see: <http://supreme.justia.com/us/464/417/case.html>

[7] 537 U.S. 186 (2003). For the full text of the decision see: <http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=01-618>

[8] For more information on the ECPA and it’s implications on online privacy, please see: <http://jamesplotkin.blogspot.com/2011/07/digital-due-process-bid-to-modify-ecpa.html>

[9]Text available at <http://www.house.gov/house/Constitution/Constitution.html>

[10] Video of the debate: <http://www.youtube.com/watch?v=uWd2O6jNJZY>

Inside the Protect IP Act

Early last month, United States Congress introduced a Bill entitled “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011”, also known as the “Protect IP Act”.  The stated goal of the legislation is quite simple: to protect the economic interests of American intellectual property owners from theft and piracy online. 

Shortly after the Bill was tabled, Senator Ron Wyden (D-Oregon) exercised his power to put a temporary hold on the Bill.  In his estimation, the Act, as worded would have the undesired effects of limiting free speech and negatively impacting e-commerce. In a press release on the issue Wyden said: 

"At the expense of legitimate commerce, [the bill's] prescription takes an overreaching approach to policing the Internet when a more balanced and targeted approach would be more effective. The collateral damage of this approach is speech, innovation and the very integrity of the Internet."

The senator’s appraisal of the Bill is quite accurate.  As written, the Protect IP Act gives power to the Attorney General as well as private IP rights holders to not only sue owners and operators of American based websites, but to execute what is known as an In Rem action- essentially an action against property without involving the owner- against web sites where the owner is not American or cannot be located.  

Many critics of the Bill including The Electronic Frontier Foundation (EFF) warn that allowing individual IP owners to execute actions In Rem will limit the ability of site owners to defend themselves before a judgement is rendered. EFF points out that this is ostensibly an offence to due process. 

The Bill vests plaintiffs with the powers of restraining orders, preliminary-injunctions and injunctions to enforce their rights against non-domestic domain owners so long as their service is being used by Americans and that the service “harms holders of United States intellectual property rights.”

One of the tools the Protect IP Act would provide rights holders is the ability to prevent what the Bill calls Domain Name System (DNS) servers (such as Internet service providers) from allowing access to infringing web sites.  In other words, access to websites being attacked in a law suit under this law would be restricted at the ISP level. This will obviously put an additional strain on ISP’s; one the government won’t reimburse them for.  

 

EFF also warns that the definition of DNS in the law is too broad and could easily be interpreted to cover things like personal and corporate e-mail clients, routers and even operating systems.  It should be noted that such interpretations, if ever made, would be left to the courts.  That being said, powerful IP rights holders tend to hire pretty good lawyers.

Two other major groups are affected by the legislation: online financial transaction providers (most notably PayPal) and online advertising services.

E-commerce providers would be forced to cease all payments and transfers of funds being made to or by American customers located in the US upon being presented with an order to do so. Online ad companies would be forced to immediately stop doing business with any site listed in the order. The Bill says this must be done “expeditiously”, once again, at the cost of the service provider.

 I share Senator Wyden’s feelings on the Bill in that even though the cause may be noble, the legislation may produce broad and overarching undesirable effects.

First, the targets of this Act are stated as being entities “dedicated to infringing activities”. Though the U.S  Supreme Court has rendered decisions on the subject (See: Sony Corp. of America v. Universal City Studios, Inc.; A&M Records, Inc. v. Napster, Inc.; MGM Studios, Inc. v. Grokster, Ltd.), the introduction of this law would likely cause a flare up in the debate on what is and what isn’t “dedicated to infringing activities”.

Second, the fact that any IP owner can go and get a judgement In Rem against a website so long as they complete “due diligence” in attempting to identify the domain owner is a little farfetched.  If nothing else, it certain disrupts due process and what most legal systems refer to as Audi Alterem Partem, a principal of fundamental justice essentially meaning the right to plead ones case and make arguments against the other party’s assertions. What if the web site owner is out of the country or otherwise indisposed when the plaintiff is supposedly trying his best to locate them? 

Third, it’s my belief that this Bill may ultimately come to cover not only the use infringing material at the front end or service level of the site (eg. Streaming of pirated TV shows or movies) but the coding level as well. 

For example, a company that owns patents or copyrights on a web player or its supporting software that believes their player is being used by a site would be able to avail themselves to the remedies afforded by the Act.  It wouldn’t technically matter if the content being played on the players is infringing if the alleged use of the player on the website infringes someone’s software patent or copyright.

Finally, and perhaps most importantly to the average American, I fear that the additional economic burden sustained by ISP’s and e-commerce providers may ultimately be transferred onto the backs of consumers.  It would be unreasonable to assume that these corporations, in an act of benevolence, would bear these additional costs that do nothing but subtract from their bottom line.

It remains to be seen if Congress will scrap the Bill, re-tool it or carry on with the Bill in its current form.  Though the US (and Canada for that matter) may require new and up to date legislation that addresses the reality of online pirating, one can only hope that the final product will attempt the achievement of its goals with more finesse than the currently tabled version of the Protect IP Act.