The INDUCE Act makes it a crime to induce copyright infringement in very broad terms. Most of the commentary on the Act and what technologies, creativity and innovation it threatens have focused on two types of infringement, those of the right of reproduction (the right to make copies) and the right of public distribution. We should remember, however, that there are other exclusive rights that can be infringed. The intersection of the INDUCE Act with these other exclusive rights will create an even broader swath of technology and acts that Hollywood will have an effective veto over. Let's consider one of these other rights and the technologies that might be affected.
According to 17 USC 106, the second exclusive right is the right "to prepare derivative works based upon the copyrighted work."
Hmmm, I would imagine that it will be much easier for Hollywood to go after websites that promote fan fiction. Computer game companies that do not like modding can go after websites that teach people how to mod computer games. Websites that encourage or promote Machinima are in deep trouble. Things like remix "construction sets" would probably also be under legal threat, even if they didn't contain any unauthorized material. Certain editing technologies like the ClearPlay DVD player, which allows parents to skip offensive portions of a DVD, would certainly be more threatened than they are now. See, Liberals, Conservatives Favor Different Kinds of Censorship. Third-party annotations? Well, those are right out. Heck, it might be that a parody would be illegal because it encourages the creation of derivative satires. Anything that encourages you to change, edit, or manipulate copyrighted content would likely be forced to incorporate DRM else the technology provider be sued.
Just imagine if SCO, the company that wants to stop open source, had INDUCE in its arsenal. Linux, which never had much of a process (until recently) to ensure that submitted code was clean of adverse copyrights, would be toast. And how long before SourceForge and O'Reilly get C&D letters?
Now Hollywood might not win all these potential lawsuits, assuming the defense can afford to go all the way through trial and risk having a jury look askance at what they're doing, but how heavy will the threat of litigation weigh on those who encourage creation?