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US goes on offense against digital piracy

The U.S. government is cracking down on Internet piracy. This week, the Department of Homeland Security announced it had seized the domain names of five websites that it says were being used to sell counterfeit goods and illegally distribute copyrighted media content. NBC News' Rich Gardella reports.

By Rich Gardella and Jamie Forzato, NBC News

Amid growing calls for more government regulation of the Internet, the United States is conducting what it calls "a sustained law enforcement initiative aimed at counterfeiting and piracy" – an effort that already has resulted in arrests and the seizure of 125 websites.

Ask anybody who uses a computer if they've ever downloaded or streamed media content for free on the Internet, and the answer most likely will be yes. The U.S. government and the American media industry say as much as a quarter of this kind of media traffic violates U.S. copyright law, and both are getting serious in their attempts to turn off the spigot.

But detractors of the crackdown say that the government shouldn’t side with industry and attempt to restrict what flows across the Internet.

(A similar debate unfolded this week at the G8 summit in Paris, with French President Nicolas Sarkozy arguing that governments need to impose more rules of the road on the Internet, and tech leaders like Google’s Eric Schmidt and Facebook’s Mark Zuckerberg warning that could stymie innovation and squelch free expression.)

The most recent skirmish in the escalating conflict occurred this week, when the U.S. Immigration and Customs Enforcement agency (ICE) announced that its Homeland Security Investigations unit had seized the domain names of five websites that it said were being used to sell counterfeit goods or illegally distribute copyrighted materials, including media content.

"American business is threatened by those who produce counterfeit trademarked goods and pirate copyrighted materials," ICE Director John Morton said Wednesday in a press release announcing the seizures. "From counterfeit pharmaceuticals and electronics to pirated movies, music, and software, IP thieves undermine the U.S. economy and jeopardize public safety. Our efforts through this operation successfully disrupt the ability of criminals to purvey counterfeit goods and copyrighted materials illegally over the Internet."

The crackdown – dubbed “Operation In Our Sites" – is being spearheaded by ICE’s National Intellectual Property Rights Coordination Center, working in coordination with U.S. attorneys' offices across the country. The initiative has so far seized the domain names of 125 websites since it began last year, ICE says, effectively shutting them down.

Of the seized website domains, approximately 25 – including two of the five announced this week – were hosting or linking to copyrighted media content illegally, the government says. (The rest have been selling counterfeit goods, everything from shoes and clothing and accessories to DVDs of movies and TV shows to pharmaceutical products.)

Free downloading or "streaming" media content from Internet websites – including movies, TV shows, sports events and music – is a big and rapidly growing business. While an exact number is difficult to pin down, available data and estimates show that millions of streamings and downloads occur daily. 

A lot of that traffic is legal – downloading or streaming a full episode of a current television program from an authorized and sponsored service, such as a network's website, for example.

But the U.S. government and the American media industry claim a significant amount of it is illegal. A lot of the media content streamed and downloaded is copyrighted – owned by the person or entity that created it – and a lot of the services providing access to the material don't have permission from the copyright holder to do so.

The government and the media industry say U.S. copyright law (specifically, 18 USC 2319), states that distributing such content without permission from the copyright holder is a crime – copyright infringement.  They generally use a simpler name: theft – of intellectual property, or "IP theft" for short.

It’s been more than a decade since the online music-sharing service Napster made headlines for distributing copyrighted content without permission.  At the service's peak, millions of Napster users traded and downloaded millions of data files containing copyrighted music, free of charge. The music industry, through some of its largest companies, sued over copyright infringements and lost revenue. After losing in federal court, Napster shut itself down in 2001. (Its name and now-legal music service lives on as a part of the electronics retailer Best Buy.)  Despite Napster’s legal troubles, online services providing unauthorized access to copyrighted media content have continued to ply the Internet, though not on such a large scale.

Study: Nearly a quarter of streams, downloads illegal
The media industry seeks to quantify IP theft as a problem.  

It commissioned a study that found that almost one-quarter of all that streaming and downloading is illegal.  In a January report, the Internet intelligence and research company Envisional of Cambridge, England, found that "across all areas of the global internet, 23.76 percent of traffic was estimated to be infringing" on copyrighted material.  

(The report, "An Estimate of Infringing Use of the Internet," was commissioned by NBCUniversal Media LLC, part owner of msnbc.com. The media industry's powerful lobby, the Motion Picture Association of America, supports its conclusions. Microsoft, another parent company of msnbc.com, also is a leading advocate of stricter enforcement of digital copyright protections.)  

The industry claims that all that copyright-infringing media traffic translates not only to lost revenue, but also to lost jobs and wages for media industry workers.

The Motion Picture Association of America claims illegal streaming and downloading cost American workers 375,000 jobs and $16 billion in earnings every year.

A public service announcement, originally produced for the City of New York to help protect its film and television business, with support from NBCUniversal, makes that point bluntly.

Comedian Tom Papa appears on a New York City sidewalk as a vendor hawking illegally downloaded "free movies." As passers-by express interest, Papa gestures to a woman standing beside him carrying audio equipment, who looks a bit forlorn. 

"These are illegally downloaded movies," Papa says, "and because of that people like her are losing their jobs."

"Whether you get it off the streets or off the Internet,” Papa concludes, now facing the camera, "digital piracy and product counterfeiting are not victimless crimes." 

The federal government has adopted that message, releasing the public service announcement to the public through its own media office, and linking it to some of now-shuttered websites whose domains it has seized.

A warning to surfers
Visitors to these websites are redirected first to a government warning banner bearing the seals of the Department of Justice, the National Intellectual Property Rights Coordination Center and Homeland Security Investigations. The banner states that the government has seized the domain name, that it is illegal to reproduce or distribute copyrighted material without authorization and that willful offenders risk prosecution for criminal felony violation copyright law. If convicted, the banner warns, even first-time offenders "will face up to five years in federal prison," plus "restitution, forfeiture and fine."  

William Ross, the unit chief for investigations at the National Intellectual Property Rights Center, said Operation In Our Sites is about enforcing copyright law and protecting the U.S. economy from intellectual property theft, which the government considers a national threat.

"We try to protect the economic interests of U.S. industries and manufacturers," Ross said. "We're protecting them from other people taking their ideas and selling them."

In some cases, the government has arrested and charged website operators. In February, it arrested and charged a Texas man who had streamed copyrighted sports events on one seized site, channelsurfing.net, claiming he'd collected $90,000 in online advertising revenue.

Most of the seized websites appear to be strictly online operations, and their operators were difficult to contact.  But NBC News found one willing to talk: Waleed Gadelkareem, an Egyptian businessman.

The U.S. government seized his domain – torrent-finder.com, which was based in the U.S. – in November. He says his site was getting 100,000 hits a day and generating revenue from online advertising. 

But Gadelkareem claims he wasn't doing anything wrong. He said his site was a just a search engine that linked to other sites with such content, just like other big search engines do.

"It's a dirty game they are playing. and it's totally unfair," said Gadelkareem, interviewed via Skype from his home office in Alexandria, Egypt. "I don't try to sell anything. I'm a search engine. I don't have any database of any copyrighted materials."

Ross said he could not discuss Gadelkareem's case, an ongoing investigation. But he said every website the government acted against was violating American copyright law. 

After the government seized his U.S.-based domain, which was run from a server in Texas, Gadelkareem changed its name slightly, to torrent-finder.info, and moved it to a server based in Sweden.  He continues to operate it from Egypt.

Ross said the U.S. is working with foreign governments to shut down sites if they move out of the U.S. "We keep going after them,” Ross said, “no matter how many times they come back up."

Proposed legislation in Congress would give the U.S. government the power to shut down copyright-infringing websites in other countries – even if they mainly link to copyright-protected material without permission.

Businessman says he was wrongly shut down
Waleed Gadelkareem sees big business behind the government’s efforts.

"The USA government is trying to shut it down," Gadelkareem said, "for the sake of a group of rich businessmen.  That's what I think. That's (what) everybody thinks."

His American lawyer, David Snead, who represents and advises online service providers who distribute content on copyright issues, agrees.

"The government is doing industry's bidding here," Snead said. "I think that it is wrong for prosecutorial resources to be used on behalf of any one industry."

There is vigorous debate in the various precincts of the Internet about whether the government's crackdown and seizures are appropriate. 

The media and entertainment industry – including NBCUniversal – has long advocated more government enforcement of intellectual property violations.

Ross said the motivation for the government's efforts to crack down on unauthorized distribution of media content is simply to enforce copyright law and to protect the U.S. economy and jobs.

He says the media industry itself takes down far more websites hosting illegal copyrighted content than the government does, using its own mechanisms.

"They have a lot more resources, a lot more manpower to do those type things than we have within the government,” Ross said. “So what we're doing is a very small percentage."

As the government and industry crack down on supply, what will happen to demand – the computer users who aren't distributing unauthorized media content but are consuming it, who initiate all those unauthorized downloads and streams?

NBC News recently discussed these issues with six college students at the University of Maryland. 

"I think it's common, especially among college students,” said one, “because it seems anonymous and it seems like something you can get away with."

All six students we talked to at the University of Maryland/College Park agreed that hosting or providing access to copyrighted content without the permission of the copyright holder was illegal. 

They made a distinction between illegal and wrong, however, with only one saying it was wrong.

"If it violates the law," the student said, "then, yeah, I think it should be enforced."

But while five of the six thought that consuming copyrighted media content without the permission of the copyright holder was illegal, none thought that was wrong.

"I just don't think that it's wrong enough for me to stop doing something that's so easy and so available to me," said another, expressing the view of the majority.  "I just don't feel it's wrong."