SOPA is DEAD but an industry war rages on. SOPA-H.R. 3261 (“Stop Online Piracy Act”) and PIPA-S. 968 (“PROTECT-IP Act”) were the latest proxy battles (following COICA last year) in the property-v.-liberty debate between Hollywood studios and Silicon Valley Internet service providers (“ISPs”), who duked it out under the cloak of their trade group lobbyists in Washington. The fight has become so contentious that Hollywood moguls declared they will stop donating to President Obama’s reelection bid as a result of his public opposition to the anti-piracy bills. Nevertheless, the ISPs won this battle by flexing their muscle.

Senate Majority Leader Harry Reid (D-NV), who had tried to cram through a cloture vote on PIPA without any debate, called off Tuesday’s vote and Rep. Lamar Smith (R-TX) indefinitely shelved plans to take up SOPA in the House Judiciary Committee. The ISPs forced Congress to back off from the bills by mobilizing millions of online Americans through cyber-protests, alerts, petitions, blackouts, and viral doomsday videos. Was the SOPA/PIPA hysteria justified? Yes. The text in these bills is overbroad and may cause unintended consequences. No vote should be rushed with so many outstanding issues. While accusations of criminalization and censorship were largely exaggerated, meritorious concerns about due process, potential engineering problems arising from blocking of Web site domains, and the necessity and prudence of spending tax and lobbying dollars on anti-piracy enforcement deserve more careful debate.

The latest proposal – OPEN Act – gives us just that. OPEN is an experiment that allows the public to participate in the bill-drafting process through a digital editing platform. Critics of SOPA and PIPA should use this opportunity to propose fairer legislation text that still allows U.S. creators to protect their property from foreign pirates who cannot easily be brought to court.

What SOPA critics are wrong about: Critics believe any site that links to an infringing site may be blocked under SOPA. This is an extreme reading of the text and would be highly impractical, unpopular, and unlikely. SOPA and PIPA target willfully infringing foreign-pirate sites by getting domestic domain registries to block U.S. access and cutting off their financial and technical support from domain registrars, search engines, ad-agencies, and financial transaction companies (only if a judge orders it). Sites that are not willfully engaging in piracy from foreign lands outside U.S. jurisdictions would have little to worry about. Also, sites like YouTube would not incur direct civil liability under PIPA as the DMCA safe harbors are expressly preserved. See 17 U.S.C. § 512.

Moreover, critics say the bill will create a chilling effect on First Amendment-protected free speech, noting that deleting Web sites is a practice used in repressive countries like Iran and China. Censorship is not a real issue here because court actions will be based on content-neutral property right violations only. The bills are not likely per se unconstitutional as Harvard’s Lawrence Tribe suggests, but may be applied in unconstitutional ways if the sites also contain non-infringing speech. Defendants are not prevented from showing up in court to make first amendment challenges in their particular case. If the Attorney General is engaging in content-discriminatory censorship, it will lose in court every time under First Amendment Supreme Court precedent. First Amendment expert and ex-MPAA attorney Floyd Abrams explains, “The Internet is not a law-free zone . . . Infringing materials have never been protected by the First Amendment.” Simply put, theft is not free speech.

Also, SOPA Title II (but not PIPA) expands the criminal copyright laws to “digital distributions” (streaming). This only applies to willful infringements and does not affect people who streamed a file in good faith belief that it was not copyright protected (such as under a fair use assumption). Do criminal penalties including up to 5 years of prison for streaming 10 videos on YouTube seem excessive? Even if so, 18 U.S.C. § 2319 (Criminal Infringement of Copyright) already exists and SOPA merely updates existing law to keep up with advances in technology. Willful theft and streaming of 10 or more unauthorized content files for commercial gain should be a more deplorable and punishable act than is currently regarded in our free-loader society.

Some critics suggest our government should not get involved in policing intellectual property (IP) rights; that rights owners should protect their own works. Why is protecting IP rights any different than protecting real property or personal property rights? Our Navy fights scurvy-ridden pirates off the coast of Somalia to protect commercial fisherman, cargo boats, and travelers. Our local police protect us from trespassers and burglars who come upon our land to steal our goods. Why not also protect our intellectual properties from being used without permission?

What SOPA critics are right about: Critics are right to question due process, engineering feasibility, necessity, and fiscal effectiveness of SOPA/PIPA type legislation. Their concerns must be reconciled before passing any bill that allows judges to block sites.

Stanford Law Professor Mark Lemley and over 100 law professors suggest that SOPA/PIPA’s allowing of temporary restraining orders and preliminary injunctions to be granted ex parte is a serious undermining of due process. However, these are foreign sites often outside the reach of U.S. courts and they are stealing properties owned by U.S. citizens on a massive scale. Do they deserve due process if they are unwilling to even show up in our courts? Probably not. And even if an order is granted in a Defendant’s absence at a preliminary hearing, such defendant can ask the court for relief from the order; “Relief shall be be proper if the court finds that—(A) the foreign Internet site subject to the order is no longer, or never was, a foreign infringing site; or (B) the interests of justice otherwise re-quire that the order be modified, suspended, or vacated.”

The bigger issue is: can a court block a site that has thousands of non-infringing files just because there are a few willfully infringing ones? For example, the FBI just shut down MegaUpload for conspiracy charges under existing racketeering, copyright infringement, and money laundering conspiracy laws. The Bureau’s press release described Megaupload as a massive worldwide criminal operation (based mostly out of New Zealand and Germany) in which the main site acted as a conduit to other sites it financed where pirated content – books, movies and music – were easily available in exchange for ad dollars and premium subscriptions. Harm was estimated in excess of $500 million and the conspirators allegedly earned more than $175 million in illegal profits. This raises another question: why do we need additional anti-piracy legislation if the government can take down infringing sites like Megaupload under existing laws? First, it is possible the FBI’s actions may not be enforceable under the laws cited by the grand jury. Second, not all infringing sites are engaging in racketeering or money laundering and their infringements may not be akin to Megaupload’s. The real problem is that some users may have lost legitimate non-infringing files in the takedown. Would all of such files already been backed up and recoverable? Would this cause civil liability for our federal government?

The most serious concern that must be debated is the ability to block foreign rogue sites without affecting the structural integrity and functionality of the Internet. In an Open letter of Internet Engineers to Congress, Vint Cerf and other leading engineers stated: “Regardless of recent amendments to SOPA, both bills will risk fragmenting the Internet’s global domain name system (DNS) and have other capricious technical consequences . . . [causing]network errors and security problems . . . whether censorship is implemented via the DNS, proxies, firewalls, or any other method. Types of network errors and insecurity that we wrestle with today will become more widespread, and will affect sites other than those blacklisted by the American government.”

Finally, some question whether anti-piracy is a wise investment of tax dollars, especially in a time of national debt. SOPA supporters argue that money spent on protecting IP-based industries like entertainment, manufacturing, and pharmaceuticals help to improve our economy. There is evidence to show that takedowns may be working. RIAA cites studies which show that the October 2010 shutdown of unlawful site LimeWire resulted in a spike in legal content streaming. However, pirates always seem to find ways around anti-piracy measures. They cracked digital rights management tools, software activation codes, DVD and Bluray encryptions; hacked entertainment industry and government sites; and established new sites following takedowns of sites like BitTorrent and the Pirate Bay. Moreover, the public backlash from the record industry’s file-sharing lawsuits against fans resulted in a public relations disaster. Perhaps lobbying-dollars and federal anti-piracy funds would be better spent coming up with more attractive legal alternatives to piracy and education initiatives to teach why inringement is theft.

OPEN Act – Your chance to be heard. The latest bill introduced by Rep. Darrell Issa (R-CA) and Senator Ron Wyden (D-OR) – the OPEN Act (“Online Protection and Enforcement of Digital Trade Act”) offers a narrower approach to fighting piracy than SOPA/PIPA. The bill would call on the U.S. International Trade Commission (“ITC”), rather than the Justice Department, to cut off funding to oversees rogue sites found to be primarily and willfully trafficking in counterfeit goods, from perfumes and pharmaceutical drugs to Blurays and MP3s CDs. (Note: At this early stage, Senator Wyden’s draft, on his Web site, is limited to cease and desist orders against sites that are dedicated to facilitating infringing import of physical goods into the United States. See SEC. 337A(b) entitled “Applicability of Section” on page 8. The same section in Rep. Issa’s draft has a broader scope: “It shall be unlawful to operate or maintain an Internet site dedicated to infringing activity.”). OPEN would also take a follow-the-money approach by targeting only Internet ad-networks and financial transaction providers like credit card companies (but not search engines like SOPA/PIPA), rather than block entire sites.

Google, AOL, eBay, Facebook, LinkedIn, Twitter, Mozilla, Yahoo!, and Zynga have expressed tentative early support for this alternative. The leading sponsor of SOPA, Lamar Smith, however said it does not go far enough to stop online piracy and would essentially give a safe harbor to foreign criminals who steal American technology, products, and intellectual properties.

More than anything, OPEN is an interesting experiment which allows critics and supporters alike to propose changes to the actual text of the bill. The “Madison” software on Darrell Issa’s site provides an unprecedented opportunity for public stakeholders to edit line-by-line and help shape the right kind of legislation we need to protect our nation’s creators.

Here is your chance to make a difference in this fight.

The following summarizes pertinent text of SOPA, PIPA, and OPEN Act for comparison:

SOPA Title I (“Combating Online Piracy”) would allow the U.S. Attorney General to commence a court action against the registrant or owner of a FOREIGN INFRINGING SITE – an Internet site or portion thereof that is directed to and used by people inside the U.S. which is committing or facilitating the commission of criminal violations that would have been subject to seizure in the U.S. if it were a domestic site. If the persons cannot be located, the court action may be brought “in rem” against the site itself.

  • After notice is given to the defendants, a court may order a temporary restraining order or injunction for the site to cease and desist from undertaking any further activity as a foreign infringing site. Within 5 days of a court order being served: (a) SERVICE PROVIDERS must take technically feasible and reasonable measures designed to prevent access by its subscribers located within the U.S. to the foreign infringing site (or portion thereof) that is the subject of the order; (b) SEARCH ENGINES (like Google) must prevent a direct hypertext link to the site, (c) PAYMENT NETWORK PROVIDERS (like PayPal) must take reasonable measures to suspend service from completing payment transactions involving customers located within the U.S. or subject to the jurisdiction of the U.S.; and (d) ADVERTISING SERVICES must cut off ad placements on the site or links that provide access to that site or transact any compensation with the site.
  • Defendants may appear to challenge any of the elements of the proposed law. SOPA even arms defendants with an affirmative defense if they do not have the technical means to comply with the law without incurring an “unreasonable economic burden, or that the order is not authorized by this subsection.”
  • Relief available: Relief shall be be proper if the court finds that—(A) the foreign Internet site subject to the order is no longer, or never was, a foreign infringing site; or (B) the interests of justice otherwise re-quire that the order be modified, suspended, or vacated.
  • SOPA also sets up a DMCA-style agent registration and notice-and-takedown system for payment network providers and advertising services, with criminal penalties for misrepresentations made in a takedown notification.

SOPA Title II (“Additional Enhancements to Combat Intellectual Property Theft”) adds “digital transmissions” to the list of criminal offenses for willful commercial-purpose infringement of copyrights.

  • Anyone (not just foreigners) who streams/digitally transmits copyrighted works in willful violation of 17 U.S.C. § 506(a) shall be punished as under the criminal code of 18 U.S.C. § 2319 (the already existing law entitled “Criminal Infringement of a Copyright”), if the infringement was committed — “(A) for purposes of commercial advantage or private financial gain; (B) by the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, or by the public performance by means of digital transmission, during any 180-day period, of 1 or more copyrighted works, when the total retail value of the copies or phonorecords, or of the public performances, is more than $1,000; [OR] (C) by the distribution or public performance of a work being prepared for commercial dissemination, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial dissemination.”
  • However, “Any person acting with a good faith reasonable basis in law to believe that  the person’s conduct is lawful shall not be considered to have acted willfully for purposes of the amendments made by this section.”
  • Unlike the other two bills, SOPA would also mandate the Secretaries of State and Commerce, in consultation with the Register of Copyrights, to commit more resources and assign attaches to foreign embassies for defending IP rights of U.S. owners abroad.

PIPA is essentially the same as SOPA’s Title I with different wording, but does not include the criminal law expansions of SOPA’s Title II. It allows the Attorney General or an intellectual property rights-holder to commence an action against a registrant, owner, or operator of “a NONDOMESTIC domain name used by an Internet site dedicated to infringing activities.” (emphasis added). If the Attorney General, after due diligence, is unable to find such person within a U.S. judicial district, it may commence an in rem action (a suit against property) against a non-domestic domain name used by an Internet site dedicated to infringing activities.

  • Notice and Service of Process must be given to the suspected infringing site; after which the court may issue a temporary restraining order or injunction to cease and desist from undertaking any further activity as an Internet site dedicated to infringing activities, if the domain name is used within the US, the site conducts business directed to residents of the U.S., AND harms U.S. intellectual property rights holders.
  • When an order is served, operators must prevent the domain name from resolving to that IP address, financial transaction providers must take reasonable measures to suspend services between customers in the US and the site, Advertising services must cut off ad placements to the site or links that provide access to that site, and search engines must remove or disable access to the site.
  • Relief available: relief under this subsection shall be proper if the court finds that—(A) the Internet site associated with the domain name subject to the order is no longer, or never was, an Internet site dedicated to infringing activities; or (B) the interests of justice require that the order be modified, suspended, or vacated.

OPEN Act currently states that it will be a violation of the Smoot-Howley Tariff Act of 1930 and an unfair practice in import trade, for an Internet site dedicated to infringing activity to facilitate imports into the U.S. The International Trade Commission (“ITC”) may investigate an alleged violation on its own initiative and shall investigate any alleged violation upon receiving a complaint.

  • However, there is a safe harbor if jurisdiction is conceded: The ITC shall terminate, or not initiate, an investigation under paragraph with respect to a domain name if its operator provides in a legal notice on the site accurate information consisting of the name of an individual authorized to receive process on behalf of the site, an address at which process may be served, a telephone number, and a statement that the operator of the site consents to jurisdiction, venue, and service of process in U.S. district courts.
  •  The ITC shall determine, with respect to each investigation initiated under subsection (c) alleging that an Internet site  dedicated to infringing activity is operated or maintained in violation of subsection (b), whether or not the Internet site is operated or maintained in violation of subsection (b).
  •  The President may terminate the determination based on policy reasons.
  • If the ITC determines under subsection (e) that an Internet site dedicated to infringing activity is operated or maintained in violation of subsection (b), it may ‘‘(A) issue an order to cease and desist the infringing activity of the Internet site against the Internet site and to the owner and the operator of the Internet site; and ‘‘(B) cause the order to be served on the owner and the operator.
  • Expedited proceeding is available for temporary cease and desist order (a bond may be required for filing a petition).
  • Relief available: The Commission shall modify, suspend, or vacate an order, as appropriate, if the Commission determines that ‘‘(i) the Internet site subject to the order is no longer, or never was, an Internet site dedicated to infringing activity; or “‘(ii) the interests of justice require that the order be modified, suspended, or vacated.
  • An order issued under this subsection against an Internet site shall cease to have any force or effect upon expiration of the registration of the domain name of the Internet site.
  • Similar rules are included for financial transaction providers and advertising services as SOPA/PIPA.
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About Author

A. James Boyajian is an attorney in downtown Los Angeles practicing Intellectual Property, Corporate, and Entertainment law. He previously interned at the FCC's Office of Strategic Planning and edited for the Federal Communications Law Journal. J.D. Indiana University Maurer School of Law. Contact: [email protected]

  • Shanlian

    James, this is an excellent comparison of these legislative proposals Thank you for this timely analysis.

    In the course of your research, had you encountered any discussion of what would constitute a “willful” violation? Would it be necessary to prove the person had the specific intent to violate the law? Could defendants establish they are innocent if they reasonably believed their conduct was not illegal?

    It is troubling that a file sharing site could be shut down based upon allegations of law enforcement agencies with minimal court scrutiny before the defendants have an adequate hearing.