“Illegal streaming can cause individual harm that is not always apparent to consumers, including identity theft and the placement of harmful software on consumers’ devices.”

Chairman of the Senate Judiciary Committee’s Subcommittee on Intellectual Property, Senator Thom Tillis (R-NC), said last week that the subcommittee will “explore increasing criminal penalties and opportunities for stepped up intellectual property enforcement to prevent counterfeiting and piracy during a hearing titled “World Intellectual Property Day 2019: The Role of Intellectual Property in Sports and Public Safety.”

The hearing followed from the theme of this year’s World IP Day, “Reach for Gold: IP and Sports.” The sports industry witnesses and U.S. Senators in attendance emphasized that strong intellectual property frameworks, including enforcement, are critical to support successful global economies and provide health and safety protections for consumers of all ages, in addition to supporting wages for an effective work force.

The Role of Innovation

The witnesses’ perspectives aligned with respect to developing ideas and initiatives to help solve the challenges presented by counterfeiting and piracy, which can lead to severe consumer harm and financial distress.

“Technology can be a tool to help address the challenges posed by counterfeiting and piracy,” said Senate IP Subcommittee Ranking Member, Senator Chris Coons (D-DE), noting the role of innovation, such as artificial intelligence (AI) and blockchain, as part of authentication and supply chain initiatives that may be utilized to help address counterfeiting and privacy concerns. Together, Senators Tillis and Coons signaled a strong bipartisan interest and commitment to working with the stakeholder community on initiatives to help protect consumers and assist businesses in preventing the further growth of counterfeiting and piracy.

Senators Tillis and Coons’ statements followed testimony from sports industry witnesses focused on three issues: the challenges presented by large scale illegal streaming of sports broadcasts, the direct harm to consumers presented by counterfeit goods, and the immense public safety implications from counterfeiting and piracy. “This is part of a longer conversation regarding intellectual property, including how to address these issues to prevent consumers of all ages from purchasing counterfeit bike helmets, [for example],” said Tillis, who has a passion for biking.

Increasing Penalties for Illegal Streaming

Some sports, such as UFC fighting, are primarily viewed via streaming services. The witnesses discussed the scope of illegal streaming, which prevents sports organizations from collecting the revenue for these broadcasts and thereby affects their ability to fund their operations, including the employees and athletes who support the sport. Currently, these crimes are penalized as misdemeanors. The witnesses noted the need to make illegal streaming a felony crime, especially for large scale illegal streaming operations. Michael Potenza, Vice President and Assistant General Counsel, Intellectual Property, for NBA Properties, Inc., underscored the importance of facilitating opportunities for consumers to watch and interact with the sports that they love while balancing consumer safety. He noted the need for “more expedited processes for the taking down of sites” that are illegally streaming broadcasts. Illegal streaming can cause individual harm that is not always apparent to consumers, including identity theft and the placement of harmful software on consumers’ devices.

Consumer Safety and Counterfeits

Other witnesses described how counterfeit apparel and equipment can cause direct harm. In a powerful display, a staff member from Specialized Bicycles showed how a counterfeit bicycle helmet shredded into shards upon direct impact. The helmet would likely not provide the head protection expected by the cyclist and likely does not meet the current industry standards.

Counterfeit equipment and apparel can also cause disappointment for consumers, as the products often do not have the integral components and workmanship of authentic goods. Further, these goods often do not meet safety standards, which in turn causes reputational harm to brands. When speaking about the footwear industry, Matt Priest, President and CEO for the Footwear Distributors and Retailers of America, noted that counterfeit shoes meant to assist consumers might not help, especially with common foot challenges such as pronation and plantar fasciitis, and potentially could cause further consumer harm.

Witnesses also discussed the need for assistance in working with shippers and the supply chain, particularly entities delivering goods in small parcels, in order to prevent counterfeit goods from reaching consumers. Brand owners work collaboratively with customs officials globally, and enhancing and expanding these opportunities is a clear area of interest. Further, this is an area where technological innovation might be able to assist in authentication of products and examining supply chain processes using blockchain initiatives.

The industry representatives agreed that consumer education and outreach about counterfeit products continues to be a priority and a challenge, especially with increased consumer focus on online shopping. They noted that it is difficult for consumers to examine and explore products when shopping online.

The hearing is one of a number of dialogues taking place in Congress this session focused on intellectual property issues that directly affect consumers and the global economy. Senators Coons and Tillis expressed their firm commitment and immense interest in working with the stakeholder community on exploring, developing and working to implement changes to help address the challenges presented by counterfeiting and piracy.