The purpose of the Online Protection and Enforcement of Digital Trade Act (OPEN) is “[t]o amend the Tariff Act of 1930 to address unfair trade practices relating to infringement of copyrights and trademarks by certain Internet sites, and for other purposes.”  This bill was introduced in the House as H.R. 3782 on January 18, 2012 and in the Senate as S. 2029 on December 17, 2011.  Unlike the Stop Online Piracy Act I examined in Stop Online Piracy Act Would Make Major Changes to Existing Law, OPEN makes no changes to the Copyright Act.

Section 2 of OPEN amends Title III of the Tariff Act of 1930 (19 U.S.C. 1304 et seq.) by adding §337A Unfair Trade Practices Relating to Infringement of Copyright and Trademarks by Certain Internet Sites.  Section 337A(a) defines terms used in the section.  Section 337A(b) prohibits operating or maintaining an Internet site dedicated to infringing activity.  An Internet site dedicated to infringing activity is an Internet site with a nondomestic domain name that conducts business directed at U.S. residents and whose primary purpose is to willfully criminally infringe copyrights (17 U.S.C. §506), use counterfeit trademarks (15 U.S.C. 1116(d)) or to willfully violate U.S. laws regarding copyright protection and management systems (17 U.S.C. §§1201-1205).  Subsections 337A(c) – (l) set out the substance of the act.

Section 337A(c) Investigation of Violations by Commission.  The “Commission” referred to in OPEN is the United States International Trade Commission (19 U.S.C. §1330).  Section 337A(c) provides that the Commission may investigate alleged violations on its own initiative or shall investigate alleged violations upon receiving a complaint from the owner of a copyright or trademark.  The Commission may consult with other officials as it sees fit. 

The Commission must terminate its investigation or not investigate if it determines that the domain name for the Internet site complained about is not a nondomestic domain name.  The Commission must also terminate its investigation or not investigate if the operator of the domain name for the Internet site complained of states in a legal notice on the Internet site that the operator consents to jurisdiction and venue in U.S. district courts, will accept service of process from the Attorney General and provides accurate contact information on the site.  If the operator is sued in U.S. district court for copyright infringement, trademark infringement or violating U.S. laws regarding copyright protection and management systems, the operator must accept service and waive objections to jurisdiction.

Section 337A(d) Complaints.  The owner of a copyright or trademark may file a complaint with the Commission alleging that an Internet site is dedicated to infringing activity and is infringing the owner’s copyright or trademark.  The copyright or trademark owner who files a complaint must send a notice of the violation alleged in the complaint to the owner or registrant of the domain name of the Internet site that the copyright or trademark owner alleges is infringing.

A complaint filed by a copyright or trademark owner must identify financial transaction providers and Internet advertising services that may be required to take action if the Commission issues a cease and desist order.  The copyright or trademark owner who files a complaint must notify any financial transaction provider or Internet advertising service identified.  A financial transaction provider or Internet advertising service that is identified in a complaint may intervene in an investigation that is initiated by the Commission pursuant to a complaint or a modification or revocation of a Commission order.

Section 337A(e) Determinations.  For each investigation initiated, the Commission shall determine whether the Internet site is operated or maintained as an Internet site dedicated to infringing activity.  The determination will take effect on the date the Commission publishes the determination in the Federal Register.  The Commission must also submit a copy of the determination to the President.  The President may disapprove the determination, in which case the determination and any orders issued will cease to have effect.

Section 337A(f) Cease and Desist Orders.  If the Commission determines that an Internet site is operated or maintained as an Internet site dedicated to infringing activity, the Commission may issue an order against the Internet site and to the site owner and operator to cease and desist from the infringing activity. 

A copyright or trademark owner who files a complaint may request the Commission to issue a temporary or preliminary cease and desist order.  The owner and operator of the allegedly infringing Internet site must have an opportunity to be heard and submit relevant information before the Commission can issue a temporary or preliminary cease and desist order.  An intervening financial transaction provider or Internet advertising service must have an opportunity to be heard regarding whether the order should be issued and the scope of the order.

The standard for relief for a temporary or preliminary cease and desist order is the same as the standard for issuing a temporary restraining order or preliminary injunction under Federal Rules of Civil Procedure Rule 65. 

The Commission may grant a request for a temporary cease and desist order on an expedited basis if the copyright or trademark owner makes a showing of extraordinary circumstances.  Such an order will usually expire 14 days or less after the issuance of the order.

A copyright or trademark owner who requests the Commission to issue a temporary or preliminary cease and desist order may be required to post a bond before the order is issued.  If the preliminary cease and desist order is issued and the Commission later determines that the Internet site that the order was issued against is not an Internet site dedicated to infringing activity, the Commission may require the copyright or trademark owner to forfeit the bond and provide that the owner or operator of the Internet site receive the bond.

At any time after a temporary or preliminary cease and desist order is issued, any entity that is bound by the order, the owner or operator of the Internet site, the domain name registrar or registry, or a financial transaction provider or Internet advertising provider required to comply with the order, may move to modify, suspend or vacate the order.  The complaining copyright or trademark owner may request the Commission to amend the order if an Internet site dedicated to infringing activity begins using a different domain name.

A cease and desist order issued by the Commission stops being effective when the domain name registration for the Internet site expires.

Section 337A(g) Required Actions Based on Commission Orders.  If the Commission reasonably believes that a financial transaction provider or an Internet advertising provider identified by a complaining copyright or trademark owner provides services to an Internet site that is subject to a cease and desist order, the Commission may give the complaining copyright or trademark owner permission to serve the financial transaction provider or Internet advertising service with a copy of the cease and desist order.  After the complaining copyright or trademark owner files proof that the financial transaction provider or Internet advertising service was served with the order, the financial transaction provider or Internet advertising service must implement certain measures.

Financial transaction providers will be required to expeditiously take reasonable measures designed to prevent payment transactions between the Internet site and customers located in the U.S. from being completed.  The financial transaction provider does not have to implement measures that are not commercially reasonable, change its services or facilities or prevent transactions for which it could not reasonably determine beforehand whether the infringing Internet site was involved.

Internet advertising services will be required to expeditiously take technically feasible measures to stop serving advertisements to the infringing Internet site in situations in which the service would directly share the revenues generated with the infringing Internet site’s operator.  Internet advertising services would not be required to implement measures that are not commercially reasonable, modify services or facilities or stop serving advertisements to an Internet site if the service could not reasonably determine beforehand that the advertisement was being served to the infringing Internet site.

Financial transaction providers and Internet advertising services that are required to comply with these measures will determine how to communicate about the measures with their users or customers.

Financial transaction providers and Internet advertising services and their directors, officers and employees will be immune from civil actions for acts reasonably designed to comply with the order.  These entities and individuals will also be immune from civil actions for any act, failure or inability to meet their obligations under the order if the provider or service makes a good faith effort to comply with the obligations.  Financial transaction providers and Internet advertising providers will also not be liable for the circumventing acts of third parties.

Section 337A(h) Enforcement of Orders.  The Attorney General may compel compliance by bringing an action for injunctive relief against any person subject to a cease and desist order if that person knowingly and willfully fails to comply with the cease and desist order.  Affirmative defenses are the lack of technical means to comply without incurring an unreasonable economic burden and showing that the order is inconsistent with the statute.

Section 337A(i) Sanctions for Abuse of Process and Discovery.  The Commission may determine sanctions for abuse of process that are consistent with Federal Rules of Civil Procedure Rules 11 and 37.

Section 337A(j) Immunity for Enforcement of Orders.  Financial transaction providers and Internet advertising services are immune from causes of action, claims, and liability for taking actions required by this statute with respect to an Internet site when the financial transaction provider or Internet advertising service had a reasonable belief based on credible evidence that the Internet site was dedicated to infringing activity and the action taken was consistent with the terms of service or other contractual obligations.

Section 337A(k) Immunity for Taking Voluntary Action Against Sites that Endanger Public Health.  A financial transaction provider or Internet advertising services may refuse to provide service to an Internet site based on a good faith belief and credible evidence that the Internet site endangers public health.  Financial transaction providers, Internet advertising services, and their directors, officers, employees and agents that refuse to provide service based on endangerment to public health will not be liable under federal or state law for refusing to provide service. 

Financial transaction providers and Internet advertising services are not obligated to take voluntary action and have no vicarious or contributory liability for failing to take voluntary action.

An Internet site that endangers public health is one that is primarily designed to offer, sell, dispense or distribute prescription medications and does so regularly without a valid prescription.

Section 337A(l) Savings Clauses.  This section does not limit or expand civil or criminal remedies available to any person for activities on the Internet that infringe intellectual property rights.  This section does not limit defenses available in copyright and trademark cases, such as fair use.  The issuance of an order under this section is inadmissible as evidence in a civil action, including one under the DMCA, to establish that the recipient of the order has knowledge of infringing activity on the part of the Internet site that is the subject of the order.

Section 3. Appointment of Hearing Officers for Proceedings Under Sections 337 and 337A of the Tariff Act of 1930.  Section 3 of OPEN amends Title III of the Tariff Act of 1930 by adding §337B  Section 337 Judges.  This section empowers the Commission to appoint hearing officers who are not administrative law judges to conduct hearings and make initial and recommended decisions in investigations.

Section 4.  Information Sharing with Respect to the Importation of Infringing Merchandise.  The Secretary of Homeland Security may share information with the holder of a trademark it suspects of being infringed by merchandise being imported into the U.S., for the purpose of determining whether the merchandise is being imported in violation of trademark law.  The Secretary of Homeland Security may notify a copyright owner when seized merchandise being imported into the U.S. is suspected of violating copyright protection and management systems provisions.

Section 5.  Regulations.  This section directs the United States International Trade Commission to specify regulations no more than 270 days after the enactment of this act.

Section 6.  Study and Reports by Register of Copyrights.  The Register of Copyrights must conduct a study on the enforcement and effectiveness of this act and submit a report to various congressional committees within 2 years of the enactment of this act.