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January 9, 2012
Opponents overreact to online piracy legislation


Showdowns are likely in the Senate and House of Representatives later this month on legislation combating online piracy. The House Judiciary Committee is expected to vote on the Stop Online Privacy Act, H.R. 3261 (SOPA), and the full Senate on the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act, S. 968 (Protect IP Act). These measures have generated some overheated rhetoric.

A recent column in Roll Call by Stephen DeMaura and David Segal, entitled "All Candidates Should Be Concerned About SOPA," for example, suggests that SOPA could be exploited by political opponents to restrict free speech.

Here's a plausible campaign scenario under SOPA. Imagine you are running for Congress in a competitive House district. You give a strong interview to a local morning news show and your campaign posts the clip on your website. When your opponent's campaign sees the video, it decides to play hardball and sends a notice to your Internet service provider alerting them to what it deems "infringing content." It doesn't matter if the content is actually pirated. The ISP has five days to pull down your website and the offending clip or be sued. If you don't take the video down, even if you believe that the content is protected under fair use, your website goes dark.
Another recent column in Politico by Tim Mak entitled "Bloggers: SOPA's the end of us" makes a similar claim and implies a tidal wave of opposition is forming (we shall see).
The conservative and liberal blogospheres are unifying behind opposition to Congress's Stop Online Piracy Act, with right-leaning bloggers arguing their very existence could be wiped out if the anti-piracy bill passes.
There is no way these bills would permit an opposing campaign or campaign committee to pull down websites harboring "infringing content," nor would they authorize censorship of lawful speech.

First, SOPA, for example, only applies to foreign infringing websites. Few if any American political candidates are likely to have any need for establishing a website in China, Russia, or any other foreign country. Similarly, we do not have to worry about SOPA suffocating an innovative new American firm like YouTube, Facebook or Twitter, which operate domestic websites.

Second, access to a foreign infringing site cannot be blocked on the basis of a private right of action. Only the Attorney General can bring an action to block access to a site via the use of a familiar domain name. The holder of a valuable intellectual property right can only ask a federal court to stop payment processors and advertising networks from providing services to a rogue website, but not service providers or search engines. In either case, a federal judge would have to approve such a request. A third party, such as a rival political candidate, would lack "standing" to pursue a private right of action.

A manager's amendment further clarifies these issues. For example, the definition of a "foreign infringing site" is strengthened, and an informal process under which rights holders could have avoided judicial process by providing direct notice to intermediaries is eliminated. The manager's amendment also clarifies that providers have no duty to monitor the use of their networks or services for illegal activities, nor are they required to employ any particular technologies. Thus, it is fanciful to assume that combating online piracy will lead to censorship or heavy-handed regulation.

Also note how in DeMaura's and Segal's hypothetical the political campaign decided to post a clip of the interview to its website rather than furnish a link to the morning news show's website. Since the value of the advertising on the news show's website reflects how many visitors the site receives, the news show may not like the fact that the campaign is making it possible for viewers to watch the interview without visiting the news show's website. Under existing law, the news show, i.e., the copyright owner, can request that the campaign remove the clip. This isn't censorship, this is an accepted infringement remedy. If a campaign wanted to post the entire clip, the obvious course of action would be to request permission from the media outlet. Generally, media outlets have an incentive to cultivate relationships with political candidates, not poison them. A candidate could also request the right to display an interview on his or her website as a condition for giving the interview.

Property Rights Need Protecting
There is nothing un-American about protecting private property rights, in which there is a central role for government. In Capitalism: The Unknown Ideal, Ayn Rand warned that collectivists "seem to realize that patents are the heart and core of property rights, and that once they are destroyed, the destruction of all other rights will follow automatically..." Rand, who understood attacks on patents as a "spectacle of mediocrity scrambling to cash-in on the achievements of genius," was equally supportive of copyrights.

[W]hat the patent and copyright laws acknowledge is the paramount role of mental effort in the production of material values; these laws protect the mind's contribution in its purest form: the origination of an idea. The subject of patents and copyrights is intellectual property.

* * * *

The government does not "grant" a patent or copyright, in the sense of a gift, privilege, or favor; the government merely secures it -- i.e., the government certifies the origination of an idea and protects its owner's exclusive right of use and disposal.

There is room for disagreement on the appropriate breadth and length of intellectual property protections. And it is interesting to debate whether there is a superior approach, such as compulsory licenses (which would involve government in setting prices and dictating terms). It is because these issues are difficult to resolve to everyone's satisfaction that some people seek to sabotage enforcement of intellectual property rights on the whole. That's foolish, because intellectual property is an engine of economic growth.

Jobs
The true cost of online piracy is a matter of debate. "The illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult," notes a recent report from the Government Accountability Office (GAO-10-423), yet the report acknowledges that "research in specific industries suggest that the problem is sizeable, which is of particular concern as many U.S. industries are leaders in the creation of intellectual property."

According to Rep. Marsha Blackburn (R-TN),

Estimates show almost 25 percent of total global online traffic goes to pirated sites. Why are we allowing profits from a quarter of all Internet traffic to flow to criminal interests? If copyright piracy is expected to take approximately 375,000 jobs away from the U.S. economy next year, shouldn't we do something serious to minimize the damage?
While the opponents of SOPA and the Protect IP Act may still wish to debate the jobs issue, they recently proposed an alternative, albeit possibly less effective, solution in apparent recognition that most people seem to understand that rampant online piracy in China, India, Russia and elsewhere does not help the U.S. economy.

Online Protection and Enforcement of Digital Trade Act (OPEN)
The draft Online Protection and Enforcement of Digital Trade Act (OPEN), which is supported by Senator Ron Wyden (D-OR) and Rep. Darrell Issa (R-CA), would authorize the International Trade Commission (ITC) to investigate alleged infringements and serve orders preventing financial transaction providers and Internet advertising services from supplying service to foreign rogue websites. Internet service providers and search engines are left out.

There are several other problems with the Wyden-Issa proposal. For one thing, OPEN authorizes the President to terminate a determination of the ITC "for policy reasons." This provision provides enormous scope for political shenanigans.

The proposal would also establish another specialized tribunal, with hearing officers who possess a minimum of only 7 years of legal experience and whatever technical expertise and experience in patent, trademark, copyright and unfair competition law as the ITC shall prescribe by regulation. Appeals of ITC determinations are heard in the U.S. Court of Appeals for the Federal Circuit.

Specialized tribunals are a double-edged sword. The Federal Circuit, for example, has received significant criticism over the past several years for being too patent-friendly; or biased, in other words. In Innovation and its Discontents (Princeton Univ. Press 2004), Adam B. Jaffe and Josh Lerner write that the creation of the Federal Circuit in 1982 is one of two seemingly mundane procedural changes that resulted in the most profound changes in patent policy and practice since 1836.

Whereas 62 percent of district court findings of patent infringement were upheld by generalist courts of appeal in the three decades before the Federal Circuit was established, they report, 90 percent of these decisions were affirmed by the Federal Circuit in its first 8 years. "As Richard Posner has argued," they note, "judges in specialized courts may be particularly prone to identify with government programs. Put another way, they may be prone to be 'captured' by those who benefit from the program." (footnote omitted.)

While it may be hard for a politician to anticipate the views of a [judicial] appointee across a variety of disciplines, an appointee to a specialized court may be more easily vetted to ensure decisions of a particular type. This narrowing of focus might lead to the creation of highly ideological courts, reflecting the political preferences of the chief executive -- or the special interests that gained a disproportionate control over the appointments process.
SOPA and the Protect IP Act avoid these pitfalls, while providing a more robust combination of remedies.

Domain Name System Security Extensions (DNSSEC)
There is an interesting debate about whether a provision in SOPA that would require Internet search engines, pursuant to a court order, to prevent a foreign infringing site from being served as a direct hypertext link in search results might be both ineffective as a result of, and also threaten, the implementation of a protocol (DNSSEC) intended to prevent criminals from redirecting traffic to fake websites. Stewart Baker, for example, explains the DNSSEC will automatically locate a server in a foreign jurisdiction, not subject to a U.S. court order, to find the desired web address, and thus expose search engines to unacceptable legal liability. But as Dan Castro points out, DNSSEC is still a work in progress.

Although DNSSEC has been codified in various technical documents, it continues to evolve over time as researchers propose new modifications to the standard to address various limitations. (footnote omitted.) The question policymakers should be asking is not whether the proposed solution is compatible with the current version of DNSSEC, but how to craft policies that best take advantage of potential improvements in the DNSSEC standard.
The fact is, today, intermediaries such as Internet service providers, search engines, payment processors and advertising services have the capability to make it much more difficult for foreign rogue websites dedicated to the theft of U.S. intellectual property to prosper. They had less capability in the past, and that is what justified the comparatively minimal role heretofore expected of them. That justification is disappearing.

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