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SOPA: Hollywood's latest effort to turn back time

The bill introduced last week in the House is nothing short of a regulatory coup by Hollywood. It's the latest in a series of increasingly desperate efforts to put the Internet genie back in the bottle.

Larry Downes
Larry Downes is an author and project director at the Georgetown Center for Business and Public Policy. His new book, with Paul Nunes, is “Big Bang Disruption: Strategy in the Age of Devastating Innovation.” Previous books include the best-selling “Unleashing the Killer App: Digital Strategies for Market Dominance.”
Larry Downes
9 min read

commentary The introduction late last week by members of the House Judiciary Committee of the "Stop Online Piracy Act," or SOPA, may test a long-standing reluctance by technology companies to take up arms in the legislative battleground.

The bill, introduced as the House version of the Senate's Protect IP Act, solves few of the glaring problems of the Senate billand introduces many all its own. While Rep. Zoe Lofgren (D-Calif.) may have given in to hyperbole in calling SOPA "the end of the Internet as we know it," there is certainly a great deal in the bill that should concern even law-abiding consumers and leaders in the tech community.

Has Washington finally gone too far?
House leaders assured Silicon Valley they would correct serious defects in the Senate bill. Unfortunately, SOPA does just the opposite. It creates vague, sweeping new standards for secondary liability, drafted to ensure maximum litigation. It treats all U.S. consumers as guilty until proven innocent. If passed, the bill would give media companies unprecedented new powers to shape the structure and content of the Internet.

Critics of Protect IP pointed out that most of its provisions would only harm innocent foreign Web sites, since truly rogue Web sites could easily engineer around all of its provisions. Rather than give up on the idea of legislating a fast-changing Internet, the House authors have instead built in as many alternative definitions, open-ended requirements, and undefined terms as they could.

The result is not a better piece of legislation. It is simply one with no real boundaries. The House version throws legal and technical spaghetti against the wall, hoping some of it will stick.

The House bill, for example, dubbed the "E-PARASITE Act," proposes alternative versions of several provisions from Protect IP, including new authority for the attorney general to cut off access and funding for "parasite" foreign Web sites. (SOPA requires the U.S. copyright czar to determine the extent to which these foreign infringers are actually harming U.S. interests, data collection that logically should precede such sweeping new powers.)

Once the Justice Department determines a site "or a portion thereof" is "committing or facilitating" certain copyright and trademark violations, it can apply for court orders that would force ISPs and others who maintain DNS lookup tables to block access to the site.

Search engines (a term broadly defined that includes any website with a "search" field), along with payment processors and advertising networks, can also be forced to cut ties with the parasites. Operators of innocent sites have limited ability to challenge the Justice Department's decision before or after action is taken.

SOPA also includes its own version of another Senate bill, which would make it a felony to stream copyrighted works. The House version allows prosecution of anyone who "willfully" includes protected content without permission, including, for example, YouTube videos where copyrighted music is covered or even played in the background.

While supporters deny that such minimal infractions would meet the bill's definition of "willfully," the actual text suggests otherwise. Prosecutors need only demonstrate that the use had a total "retail value" of more than $1,000. To avoid a felony conviction, a defendant would have to prove they reasonably believed their conduct was lawful, as for example someone in a "bona fide commercial dispute" over the scope of a license to use the content.

The House bill also makes significant changes to provisions in the Senate bill that afford new enforcement tools to private holders of copyrights and trademarks. This "market-based system," as SOPA calls it, greatly extends existing provisions of the 1998 Digital Millennium Copyright Act, under which copyright holders can easily issue takedown notices for unlicensed use of protected content.

SOPA's "market based" provisions are not limited to foreign Web sites. Indeed, they apply to any site or "portion of" a site that is "dedicated to theft of U.S. property," a new category broadly defined by the bill. Under the new law, rightsholders could force payment and advertising networks to cut ties to such sites simply by sending a letter to their authorized agents (who must register with the U.S. copyright office). Site owners can object, in which case the private parties may sue to enforce their claims, similar to the new powers afforded the Department of Justice.

Unlike the DMCA, SOPA provides little penalty for wrongly targeting websites turn out not to be "dedicated to theft of U.S. property." Ad networks and payment processors are immune from liability if they fail to respond to a site's counterclaim, and damages to the site operator are only available if a claim "knowingly materially misrepresents" that the site satisfies the new definition.

These extensions are both extreme and unnecessary. For U.S.-based sites, the DMCA has proven highly effective, working in many cases automatically based on "reference files" provided by rightsholders. Though obviously not perfect, economists and legal scholars believe the DMCA has proven to be a cost-effective solution that protects content without squelching innovation.

SOPA's supporters have apparently concluded otherwise. Speaking on Monday to The Hill, Rep. Bob Goodlatte (R-Va.), one of SOPA's sponsors, said that while Congress is willing to continue tinkering with specific language in the bill, it "is unrealistic to think we're going to continue to rely on the DMCA notice-and-takedown provision." Instead, under SOPA, "Anybody who is involved in providing services on the Internet would be expected to do some things."

Technology advocates cry foul; Silicon Valley slumbers on
Despite the assurances of its supporters, SOPA may represent the most intrusive and dangerous effort yet to micromanage Internet infrastructure and services. A wide range of technology-oriented advocacy groups were quick to cry foul. The Electronic Frontier Foundation, in its initial review of the bill, determined the legislation would cause irreparable harm. "This bill cannot be fixed," the organization wrote on its Web site; "it must be killed."

The Center for Democracy and Technology's David Sohn, similarly, called out the bill's broad and vague new standards for "facilitating" copyright and trademark infringement.

He argues that SOPA effectively introduces new monitoring requirements for all websites that allow user content, even comments posted to blogs. Rightsholders, Sohn wrote, need only "a good faith belief that a Web site is 'avoiding confirming' infringement, and they can demand that payment systems and advertising networks cease doing business with the Web site."

And Gary Shapiro, president and CEO of the Consumer Electronics Association, pulled no punches in an article Monday calling for rejection of both the House and Senate bills. "The Protect IP Act and SOPA will do plenty of harm," he wrote, "without providing any real assurance that they will stem the flow of digital piracy."

The response from leading technology companies and Internet Service Providers, on the other hand, has been muted. This is also not surprising. At best, Silicon Valley historically leaves advocacy groups and trade associations to work with Congress on technology-focused legislation, preferring to avoid direct contact with federal and state regulators. For decades, even the largest technology leaders have dealt with Washington like a baby playing peek-a-boo: by covering their eyes and imagining themselves invisible.

If that was ever a sensible strategy, failure by innovators and entrepreneurs to engage the legislative process has become certifiable dangerous. As the information economy increasingly becomes the only economy, regulators around the world are looking for ways to assert their authority. The result, over the last few years, has been a flurry of legislative initiatives both in the U.S. and abroad.

Legislation has been introduced that would apply or adapt a vast corpus of industrial-age laws to online behavior, including not only copyright and trademark abuse but also privacy, crime, antitrust, net neutrality, spam, spyware, data retention and data disclosure, geolocation services, pornography, gambling, electronic surveillance, taxation, and patents.

Much of it fails to become law, which as a general rule is a good thing. While digital life is hardly without its problems, the likelihood that solutions will come from disconnected legislators is low. Most of the hearings I've attended over the last few years begin with members of Congress confessing their ignorance of the particular technologies under investigation.

All they know is that their kids are using them, which seems to suffice for expertise. But the last decade has provided ample evidence to the contrary. Washington is far more likely to produce unintended consequences than effective responses, especially when it focuses on flavor-of-the-month technology crises that change quickly.

Hollywood vs. Silicon Valley: Round Infinity
Whatever the ultimate fate of SOPA, the bill's introduction may at last awaken Silicon Valley from its regulatory slumbers. That change could not come too soon. The bill's 79 pages of legalese do little to disguise its real agenda--to give Hollywood the kind of control over the Internet it has tried and failed to assert over every new media technology since the invention of the player piano.

Let's be clear: SOPA is not the first and will certainly not be the last effort by Hollywood to stage a regulatory coup. At its core, the bill demonstrates once again that content providers have still not come to terms with the reality of the Internet--the latest innovation to upset traditional business models.

While Hollywood has taken baby steps to embrace the potential of the digital revolution, very little has changed since 1982, when MPAA President Jack Valenti famously testified that the invention of the VCR was "to the American film producer and the American public as the Boston strangler is to the woman home alone."

After all, the studios tried and failed to have VCRs banned. In the end, video became one of many disruptive technologies that ultimately saved the industry. The Internet is likely to do the same.

But after failing to stuff the genie back in the bottle early on, content providers still struggle a decade later to find new ways of doing business that take advantage of the technologies and devices consumers are clearly eager to embrace.

In the absence of legitimate, appropriately-priced alternatives, consumers always create their own channels and invent their own services. Often, it must be said, those alternatives violate copyright and trademark. Along the way, consumers and others who dare to test new services and new devices are punished harshly, only to be replaced by more resilient successors. Napster is gone, but iTunes thrives.

But the solution isn't to strengthen the law, choking off innovation. The solution is to give consumers what they want, which Hollywood always, if begrudgingly, figures out how to do.

If parasitic foreign Web sites are truly costing the U.S. economy significant losses (a claim made regularly by content industries but without credible data to back it up), then the best use of government resources is not to surgically remove hyperlinks and DNS table entries. Rather, we should step up the pressure on foreign governments to enforce their own laws and international treaties extending U.S. protections abroad.

And indeed, one positive development in SOPA is a provision that does just that. It requires both the State and Commerce Departments to make protection of U.S. copyright and trademark a priority in both diplomatic and trade negotiations. To fulfill SOPA's stated goal of reducing foreign infringement of U.S. interests, that section should have been the beginning and the end of the bill.

The proposed legislation, unfortunately, goes much farther, losing sight of any actual harms in need of legislative correction, and invoking repeatedly the likely application of the law of unintended consequences.

Stripped of their obfuscations, SOPA and Protect IP suggest increasing desperation by media companies. A bill that was to target only the "worst of the worst" foreign Web sites committing blatant and systemic copyright and trademark infringement has morphed inexplicably into an unrestricted hunting license for media companies to harass anyone--foreign or domestic--who questions their timetable for digital transformation.

Nothing can change the fact that Hollywood's way of life is transforming once again. The only unknown is time--will a profitable future for digital content arrive in a few years or will it take another decade? SOPA only seeks to delay the inevitable, at the cost of wasteful litigation and overzealous law enforcement.

As anyone knows who's ever watched a Hollywood move about time travel, trying to change history always turns out badly, usually with an ironic twist. Technology companies, that's your cue. Whether you like it or not, you've been cast in the role of villain. You can still be the hero.