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After years of agitating over Internet piracy and spending millions of dollars to press their case in Washington, the entertainment and software industries have gained a powerful ally: the U.S. Department of Justice. With just months until the presidential election that could end his term in office, Attorney General John Ashcroft has launched an ambitious effort to crack down on digital piracy and protect the interests of copyright holders. The initiative is led by Ashcroft’s deputy chief of staff, David Israelite, who chairs a newly formed task force on intellectual property issues. The high-level task force, which includes a dozen influential DOJ and Federal Bureau of Investigation officials, will draft plans to revamp federal law enforcement’s approach to IP matters, including widespread file sharing over peer-to-peer networks. Task force members will consider whether the Justice Department should take the lead role in going after online file-swappers — individuals who share copyrighted material across the Internet. Tactics being considered include ramping up criminal prosecutions and filing civil lawsuits similar to those now being brought by the recording industry. Not surprisingly, the DOJ task force has been applauded by industry groups, many of which have spent millions to deter online file swapping. But critics complain that the Justice Department may be overstepping its appropriate role by championing the interests of a powerful industry that some think can take care of itself. “I think there are serious questions about whether taxpayer funds should be used to benefit a particular industry,” says Philip Corwin, a lobbyist for Australia-based Sharman Networks, which owns Kazaa, a popular Internet file-sharing program that has drawn fire from the industry.”How many U.S. attorneys are going to be involved? How many serious criminal and terrorist matters won’t they be pursuing?” Israelite says the increasing volume of intellectual property crime over the Internet and its impact on the American economy demands a government response. “We view IP theft as a threat to our national security,” Israelite says. “As we move into the future, our economy is going to be increasingly dependent on our ability to protect IP. If theft increases at the rate we see long term, you’re looking at a scenario for economic disaster.” The new focus on Internet file sharing comes as a number of senior Justice Department officials have left government and joined the ranks of influential music and entertainment lobbies. Last December, Bradley Buckles, director of the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives, signed on with the Recording Industry Association of America as head of the anti-piracy unit. Former DOJ Public Affairs Director Barbara Comstock, now a lobbyist with Blank Rome Government Relations, registered as a lobbyist for the RIAA in April. Also in April, John Malcolm, a top Criminal Division official, took over anti-piracy efforts for the Motion Picture Association of America. “Peer-to-peer piracy is a huge problem, and it’s getting worse,” Malcolm says. “Nobody can bring resources to bear like the federal government. We’re doing what we can to assist them.” WALK THIS WAY Since September 2003, the RIAA has sued nearly 3,000 individuals for illegally distributing files on the Internet over peer-to-peer networks. But so far the Justice Department has stopped short of pursuing individuals who download content for personal use and focused instead on those who release proprietary software, music, video games, and movies onto the Internet in the first place. Even as the DOJ’s task force gets off the ground, Congress is contemplating two bipartisan bills that would draft the Justice Department even further into the fight over online piracy. A Senate bill sponsored by Orrin Hatch (R-Utah) and Patrick Leahy (D-Vt.) would empower the Justice Department to bring civil lawsuits against online file-swappers. Monetary damages would flow to the copyright holders. “It is critical that we bring the moral force of the government to bear against those who knowingly violate the federal copyrights enshrined in our Constitution,” Hatch said when the bill was introduced March 25. “Tens of thousands of continuing civil enforcement actions might be needed to generate the necessary deterrence. I doubt that any nongovernmental organization has the resources or moral authority to pursue such a campaign.” Jason Schultz, a staff attorney with San Francisco’s pro-consumer Electronic Frontier Foundation, says the Senate proposal would “shift the cost of enforcement from private corporations like record labels to the taxpayer.” On the House side, the Piracy Deterrence and Education Act of 2004 would lower the bar for copyright violations to be treated as federal felonies and would require the Justice Department to develop a public education program aimed at deterring online piracy. Under current law, individuals can be charged with a federal felony for downloading copyrighted material worth more than $1,000, even if it is not done for commercial gain. Individuals who willfully download during a 180-day period at least 10 copies of works worth more than $2,500 total face up to three years in prison. The pending House bill would criminalize simply possessing 1,000 or more copyrighted works in a shared folder on a file-sharing network. The Justice Department has not taken an official position on either legislative proposal. Rep. Rick Boucher (D-Va.), a leading Capitol Hill advocate for consumer rights on the Internet, says that both bills raise serious concerns. “We have seen a concerted effort year by year from the content-creating community to have Congress pile on more and more IP protections, typically at the expense of consumers,” Boucher says. UNDER PRESSURE According to congressional records, Sharman Networks spent $200,000 on outside lobby firms in 2003. In contrast, the RIAA and the MPAA spent nearly $3 million. Their message — that the ease with which copyrighted material can be reproduced and transmitted using digital technology threatens the vibrancy not only of the their industries, but of the larger American economy — has resonated on both sides of the aisle. In July 2002, 19 lawmakers including Sen. Joseph Biden (D-Del.) and Rep. F. James Sensenbrenner Jr. (R-Wis.) wrote to Ashcroft encouraging more aggressive enforcement of the laws against online piracy, including the prosecution of “individuals who intentionally allow mass copying from their computer over peer-to-peer networks.” “Online theft of our nation’s creative works is a growing threat to our culture and economy,” the letter stated. But Boucher points to a new study conducted by professors at Harvard Business School and the University of North Carolina that contradicts the recording industry’s assertions that file sharing has caused a massive dip in sales since 1999. Rather, the March 2004 analysis concludes that downloads of music files have no statistical effect on sales. The RIAA responded to the study by calling it “inconsistent with virtually every other study done . . . about the impact of illegal file sharing.” “The evidence is contradictory,” says Adam Thierer, director of telecommunications studies at the libertarian Cato Institute. The industry already has an effective recourse for copyright infringement, he says — civil lawsuits, like the thousands brought recently by the RIAA. “The question I have is why industry can’t pursue these things on their own, using their own staff, own time, own money?” Thierer says. “Why is it we have to have the Department of Justice involved adjudicating things on their behalf?” One former high-ranking Justice Department official agrees. “If you have a large, well-funded business that has legal tools to protect themselves, let them deal with it,” the Clinton administration official says. “To take the resources of federal law enforcement and devote them to going after this kind of activity at a time when they’re chasing terrorists and large-scale corporate fraud is a tremendous misallocation of resources.” YOU’VE GOT A FRIEND In many ways, the emerging alliance between Hollywood executives and the Ashcroft Justice Department seems counterintuitive. In the 2002 election cycle, campaign contributions from the television, movie, and music industries topped $39 million — with nearly 80 percent of funds going to support Democratic candidates — according to Washington, D.C.’s Center for Responsive Politics. In the movie industry alone, more than 90 percent of donations in 2002 went to Democratic candidates. In the 2004 campaign cycle, under new campaign finance laws, the entertainment industry has donated approximately $14 million — 63 percent to Democrats. Presidential candidate Sen. John Kerry (D-Mass.) is the largest overall recipient of industry funds, collecting $1.2 million. President George W. Bush has received just over $1 million. But Ashcroft has been a staunch supporter of the music, movie, and software companies on copyright issues since his days in the Senate. After taking over as attorney general, getting tough on cybercrime was one of Ashcroft’s top priorities. In his first few months in office, he expanded a computer and intellectual property crime pilot program that had been developed in the U.S. Attorney’s Office for the Northern District of California into nine additional districts, at a cost of more than $3 million. Under Ashcroft’s watch, the Justice Department conducted its first major investigations involving international online piracy. In April 2004, the Justice Department led a massive sting operation targeting organized hacking rings around the globe, known as “warez” groups. The takedown, which involved 120 searches in 27 states and 11 countries, marked the DOJ’s second major operation related to online file sharing. A similar effort in 2001, known as Operation Buccaneer, yielded 27 U.S. convictions and prison sentences ranging from 33 to 50 months. “Generally, the people we go after are the people engaged in pretty serious conduct,” says prosecutor Michael O’Leary, head of the DOJ’s 11-lawyer intellectual property section. “There are statutory thresholds. Most of the people we are dealing with are so clearly past the threshold, there is no question as to whether it constitutes criminal activity.” Israelite compares the challenge of enforcing copyright laws in the digital era to combatting illegal drug use. “We approach the drug problem in many different ways. We target suppliers, we target users, we target education so that we help people make the right choices,” Israelite says.”I think the same approach is going to be needed in IP theft.” Like Ashcroft, the 35-year-old Israelite is a Missouri native. A graduate of William Jewel College in Liberty, Mo., Israelite first worked for Ashcroft when Ashcroft was Missouri’s governor. He earned a law degree at the University of Missouri, and after three years in private practice went to work for Missouri Sen. Christopher “Kit” Bond. In 1998, Israelite joined the Republican National Committee as director of political and governmental affairs. He now advises Ashcroft on legal, political, and public affairs issues. Israelite says the Intellectual Property Task Force was modeled in part after the Corporate Fraud Task Force launched in the wake of the Enron Corp. scandal, which secured 250 convictions in its first year. However, with just a few months left before a possible change in administrations, the IP initiative may not yield much in the way of concrete action. (“We’re going to completely ignore the fact that there’s an election,” Israelite jokes.) Ultimately, the five working groups of the IP Task Force, which are examining issues related to criminal law, civil law, international treaties, legislative proposals, and public education, plan to make policy recommendations to the attorney general. The task force, which includes DOJ Criminal Division chief Christopher Wray, FBI General Counsel Valerie Caprioni, Civil Division head Peter Keisler, and Deputy Solicitor General Paul Clement, held its first meeting last month. As part of the process, Israelite has met with numerous trade groups, and this week will travel to California, where he plans to speak with representatives of several major film studios. “Private industry is also on their own trying to deal with this problem,” Israelite says. “It’s important that we learn about what they’ve been doing and how we can form partnerships.” The Electronic Frontier Foundation’s Schultz says that, so far, the DOJ’s outreach has overlooked pro-consumer organizations. “The discussions seem to be mostly between the Justice Department and content owners,” Schultz says. “We would welcome a chance to present our side of the story before they decide to devote increased resources in this area.”

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