WASHINGTON (Reuters) - President George W. Bush signed into law on Monday a controversial bill that would stiffen penalties for movie and music piracy at the federal level.

Crushed pirated CDs and DVDs of music, films and software seized from street sellers and shops are seen in Bucharest May 4, 2007. REUTERS/Bogdan Cristel

The law creates an intellectual property czar who will report directly to the president on how to better protect copyrights both domestically and internationally. The Justice Department had argued that the creation of this position would undermine its authority.

The law also toughens criminal laws against piracy and counterfeiting, although critics have argued that the measure goes too far and risks punishing people who have not infringed.

The Recording Industry Association of America and Motion Picture Association of America backed the bill, as did the U.S. Chamber of Commerce.

“By becoming law, the PRO-IP Act sends the message to IP criminals everywhere that the U.S. will go the extra mile to protect American innovation,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

Counterfeiting and piracy costs the United States nearly $250 billion annually, according to the U.S. Chamber of Commerce.

Rick Cotton, general counsel for NBC Universal, said the bill would give movie and music makers more tools to fight what he called a “tidal wave” of counterfeiting and piracy of everything from medical devices to automobile parts to media by organized crime.

“That is at the core of what this discussion is about,” he said. “It is not about teenagers.”

Cotton said he did not expect an IP czar to be named before Bush’s term ended in January.

Richard Esguerra, spokesman for the Electronic Frontier Foundation, said he was relieved to see lawmakers had stripped out a measure to have the Justice Department file civil lawsuits against pirates, which would have made the attorneys “pro bono personal lawyers for the content industry.”

But the advocacy group Public Knowledge had argued that the law went too far, especially given that fair use of copyrighted material was already shrinking.

Public Knowledge particularly opposed a measure that allowed for the forfeiture of devices used in piracy.

“Let’s suppose that there’s one computer in the house, and one person uses it for downloads and one for homework. The whole computer goes,” said Public Knowledge spokesman Art Brodsky.

Brodsky argued that, at best, the bill was unnecessary because the recording and movie industry had the right to take accused infringers to court.

“There’s already lots and lots of penalties for copyright violations,” he said. “They’ve got all the tools they need.”