Annual USTR Notorious Markets Report Points Fingers, Includes Domain Registrars For First Time

The fifth annual Office of the United States Trade Representative review of “notorious” intellectual property infringing markets has been released, pointing out the world’s biggest problem commercial-scale markets. And for the first time, the report takes aim at internet domain name registrars.

Deputy USTR Robert Holleyman said the purpose of the Obama administration report is to “protect the American people and our entrepreneurs.”

“People who work hard, play by the rules, and use their creativity to innovate should get protection of the rule of law against the theft of their intellectual property,” he told reporters on a conference call today (5 March).

The “ingenuity” of US artists, scientists, entrepreneurs, business executives and others is “what sets us apart as a leader in the community of nations, and it keeps our economy on the cutting edge,” he said.

The 2014 Out-of-Cycle Review of Notorious Markets, issued on 5 March 2015, is available here [pdf].

“The results from the past Notorious Markets report are very encouraging,” Holleyman told reporters and said in the press release. “In a short time we have seen a real effort by private and public entities to take action against serious offenders and we have seen businesses that resisted change for years turn the corner toward legitimate commerce. The success of our campaign to shine a light on thieves as well as on misguided sites has been exciting to see. Sites that want to be taken seriously reform and those that don’t are being shuttered.”

“The Notorious Markets List is helping shift the rewards of e-commerce away from illicit trade and back to the entrepreneurs, artists, and legitimate businesses that provide the quality goods and services that consumers want,” he added. “We have found a helpful tool to shine a spotlight on efforts to combat this illicit activity.”

The report starts off on a positive note, recognising markets that have made improvements. An example is Taobao.com, part of the Alibaba Group, which has made progress in a number of ways against counterfeiting and piracy.

Then the report lists problem markets, with sections on both online and physical markets, spread around the world. Much of the focus is on unauthorised downloading of copyrighted material. In terms of physical counterfeiting, China was cited most as the largest source of counterfeit goods.

Internet Domain Name Registrars Targeted

For the first time, this year USTR singled out internet domain name registrars, the companies or organisations that sell domain names, for their involvement in online infringement. The main target seemed to be online pharmacies.

Registrars are handled by the Internet Corporation for Assigned Names and Numbers (ICANN), a California-based multi-stakeholder group that came under scrutiny in the past year or so for launching a large number of new domains on the internet (an example of a domain is .com), which upset trademark owners concerned about protecting their names under all of these new domains.

ICANN also has received attention as the US Commerce Department National Telecommunications and Information Administration (NTIA), which has always had a degree of control over ICANN, is preparing to relinquish its control over a key aspect of what ICANN does. ICANN oversees the function of the Internet Assigned Naming Authority (IANA), which has say over changes to the internet infrastructure, including active domain names.

“This year, USTR is highlighting the issue of certain domain name registrars,” it said, as “some of them reportedly are playing a role in supporting counterfeiting and piracy online.”

“In general, it is critical for rights holders to be able to enforce their rights, including through civil and administrative procedures, cooperation with law enforcement in criminal actions, and through the Internet Corporation for Assigned Names and Numbers’ (“ICANN”) procedures and policies. However, the IPR enforcement system can break down when the tools available to rights holders become ineffective, due to, among other things, the failure of domain name registrars or other similarly situated entities to follow rules intended to help combat illicit activity.”

Asked by Intellectual Property Watch in a press conference call today about the connection between USTR’s action and that of NTIA, a US trade official said it developed the notorious markets list in conjunction with other government trade bodies including the Commerce Department, and that the registrar initiative falls within existing policies.

The official pointed to a reference in the report to the Alliance for Safe Online Pharmacies, which promotes an online pharmacy verification tool, and is supportive of domestic brand-name pharmaceutical companies.

“With relatively few lawful sources amidst a sea of harmful ones, the public faces a substantial risk when navigating these online pharmaceutical markets. In addition to the public health and safety risks, there is also economic harm,” USTR said.

One registrar was seen as sufficiently problematic to land in the list of notorious markets this year. The registrar is Tucows of Canada, which USTR said fails to take action when notified about infringing activity among its clients. The report also noted that markets are more often using country-code top-level domains (an example is .fr for France), and so encouraged governments to become more involved.

Explaining the concern about registrars, USTR said: “The agreement between ICANN and domain name registrars requires that registrars take action when notified of illicit activity occurring on a website whose domain name they have registered. Some registrars, however, reportedly disobey court orders and other communications, including from government enforcement authorities.”

“Some registrars apparently even advertise to the online community that they will not take action against illicit activity, presumably to incentivize registrations by owners and operators of illicit sites,” USTR continued. “These entities reportedly refuse to abide by the rules that are designed to foster legitimate activity on the Internet, and instead help to create an atmosphere of lawlessness that adversely affects others, often profoundly.”

Overall, the list of offenders (and those making progress) is not necessarily a list of legal violations and is not from the US government’s own analysis, the report states. It is a part of the bigger process under USTR’s Special 301 report that assesses the adequacy of other countries’ protection of US IP rights.

Not Legally Binding, but Effective

Exposing problem markets to the “light of day” has proven effective so far, USTR said, though the notorious list does not have legal bearing.

“The List does not purport to reflect findings of legal violations, nor does it reflect the U.S. Government’s analysis of the general IPR protection and enforcement climate in the country concerned. A broader analysis of IPR protection and enforcement in particular countries or economies is presented in the annual Special 301 Report, published on or about April 30^th of each year (please refer to the Public Information section at the end of this document).”

Industry Response

US IP rights holder representatives responded favourably to the report.

The International Intellectual Property Alliance (IIPA), a cross-cutting coalition, praised it, saying that the report includes over 50 marketplaces with dozens recommended by the trade group’s members.

Motion Picture Association of America (MPAA) Chairman and CEO Chris Dodd said in a statement, “These notorious markets enable the theft of content on a massive scale, diminishing U.S. competitiveness, discouraging reinvestment from creators, and ultimately harming the consumer experience. We’d like to thank the USTR for publishing this important report that highlights the challenges content creators face.”

The US Chamber of Commerce Global IP Center praised the report, and mentioned the registrars. “GIPC applauds USTR for including in this year’s report a discussion on the importance of creating greater accountability within the ICANN multistakeholder model with respect to registrars, an issue that will have increased significance to brand owners, as well as emerging markets, as broad-band access continues to expand to previously under-served markets,” it said.

 

Image Credits: Notorious Outlaws of the American West