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« Backing Away from the INDUCE Act (IICA) | Main | Hatch's Hit List #11 - Virtual Jigsaw Puzzles »

July 23, 2004

Shredding the INDUCE Act (IICA) - CEA, IEEE-USA, NetCoalition

Posted by Ernest Miller

Three high tech organizations came out swinging against the Inducing Infringement of Copyrights Act (IICA, née INDUCE Act) during the Senate Judiciary Committee hearing (Protecting Innovation and Art while Preventing Piracy). Read on...

Consumer Electronics Association (and Home Recording Rights Coalition)

"In our view, S. 2560 is the most fundamental threat that consumers and technology industries have faced since the Ninth Circuit’s decision in 1981 [that the VCR was illegal]," said Gary Shapiro, president and CEO of the Consumer Electronics Assoc. as well as the representative for the Home Recording Rights Coalition in his testimony. Read the press release: INDUCE Act Will Eliminate Betamax Protections, Create a Huge New Class of Liability for Innovators and Others, Says CEA.

His statement is a blistering attack on the INDUCE Act from top to bottom. It is superb. If you read only one of the anti-INDUCE Act testimonies, read this one: Testimony of Mr. Gary Shapiro President and CEO Consumer Electronics Association, July 22, 2004 [PDF]. He destroys any argument that the INDUCE Act is consistent with the Sony (aka "Betamax") doctrine (take that, Marybeth Peters) as well as conclusively demonstrates that the INDUCE Act is not consistent with the doctrine of inducement under patent law. He also gets some telling blows against Sen. Orrin Hatch (R-UT), making reference to Hatch's original introduction of the bill:

With respect, Mr. Chairman, citing the MPAA and the RIAA as the guides and protectors of the Betamax doctrine would be akin to appointing Fagin as Oliver Twist’s personal protector. In fact it would be worse: Fagin sought to exploit Oliver, not to kill him. Neither the MPAA nor the RIAA has ever agreed that the Betamax case was correctly decided, or that private, noncommercial home recording by consumers is and ought to be legal. Each is on record as wanting to limit the principles underlying the Betamax holding strictly to its narrowest possible set of facts. So of course they see no “threat” posed by S. 2560.
I'd quote more, but there are simply too many good paragraphs to decide between. Read the whole thing (although I wish there were a better formatted version available).


Andrew C. Greenberg, Vice-Chairman of the Intellectual Property Committee for the IEEE, was also sharply critical of the current INDUCE Act. Read the press release: IEEE-USA Testifies for Balance in Copyright Policy. See also, the IEEE's information page on the INDUCE Act: Inducing Infringement of Copyrights Act of 2004 (S. 2560) Information Resources.

Bonus: This is the Andrew "Werdna" Greenberg of Wizardry fame. (Wow!)

Greenberg's testimony was the cool voice of copyright law moderation as he meticulously undermined the arguments in favor of the INDUCE Act as it exists. Read his 20-page testimony: Testimony of Andrew C. Greenberg Intellectual Property Committee to the Senate Committee on the Judiciary on An Examination of S.2560, The Inducing Infringement of Copyrights Act of 2004, 22 July 2004 [PDF].

The beginning of Greenberg's statement is an eloquent call for balance in copyright law. There is also some subtle humor:

Congress serves as the guardian of that balance in a changing world. You are the architects of that balance – the ones who measure and cut the chords of intellectual property policy; and the ones who determine whether our best and brightest will choose to write the Great American Novel, or go to law school. But Congress must also be mindful of how it measures and cuts the limits to those rights, to assure that our next generation of writers may use the works that have come before, and stand on the shoulders of giants. [emphasis added]
Heh. There is also some very good language arguing that existing secondary liability may be a bit too broad.
Vicarious Liability, traditionally, was liability from the relationship between defendant and the infringer. It has been more than seventy years since the first of the Dance Hall cases, where vicarious liability was extended from the confines of principal-and-agent relationships to find the owners of dance halls responsible for the infringement of independently contracting orchestras, even where the owners may not have known or determined the songs that were played. Inspired by the Dance Hall cases, the Second Circuit stated the modern rule to reach a chain of record stores for bootleg record sales by contracting retailers. There, the court found liability because the chain had “the right and ability to supervise” and “a direct financial interest” from the infringing activity.Unfortunately, as is all too common, the expansive language of this otherwise reasonable rule, when unmoored from the facts, has led to risk of judicial mischief. [citations omitted]
Good stuff. The analysis also goes on to take the Napster decision to task: "Secondary Liability Grounded in Control Is Both Too Much and Not Enough [emphasis in original]." The argument is a bit too brief to get into too much depth, but I agree that the control test might be too much, as IEEE-USA frames the issue.

The next section analyses the inducement elements in patent law and explains why they have worked so well. Without directly comparing the INDUCE Act, the discussion of patent law is a rebuke to the wide-ranging liability that the proposed bill would create. The direct comparison comes next and it is both eminently reasonable and devastating:

It is difficult for IEEE-USA to conceive of a fact pattern consistent with a defendant’s sale of a technology known to have infringing and noninfringing uses, in which the defendant could prevail in a motion to dismiss or for summary judgment.
There is more, of course, and I invite people to read it. The final element of the statement is some proposed alternate language:
Proposed Substitute to S. 2560
Section 501 of title 17, United States Code, is amended by adding at the end the following:

(g)(1) Inducement of Infringement. Whoever actively and knowingly induces infringement of a copyrighted work by another with the specific and actual intent to cause the infringing acts shall be liable as an infringer.
(2) Contribution to an Infringement. Whoever knowingly and materially contributes to the infringement of a copyrighted work by another shall be liable as an infringer.
(3) Vicarious Infringement. Whoever has the right and ability to supervise an activity resulting in a direct infringement and has a direct financial interest in such activity and infringement shall be liable as an infringer.
(4) Limitations on Secondary Liability.

(A) manufacture, distribution, marketing, operation, sale, servicing, or other use of embodiments of an otherwise lawful technology by lawful means, with or without the knowledge that an unaffiliated third party will infringe, cannot constitute inducement of infringement under Subsection g(1) in the absence of any additional active steps taken to encourage direct infringement.
(B) manufacture, distribution, marketing, operation, sale, servicing or other use of embodiments of an otherwise lawful technology capable of a substantial noninfringing use cannot constitute contribution to an infringement under Subsection (g)(2) or vicarious infringement under Subsection (g)(3).
(5) Damages for violations of section (g)(1) of this section shall be limited to an injunction against inducement, and actual damages for infringement of a work for which the defendant had specific and actual knowledge the work would be infringed.
Very interesting. More about this alternative in another post.


Kevin McGuiness, Executive Director and General Counsel of the NetCoalition (which basically represents ISPs), was the next to speak. Interestingly, McGuiness is a former chief of staff to Sen. Hatch. Read his 13-page testimony: Before the US Senate Committee on the Judiciary, Statement of Kevin S. McGuiness, Exec. Dir., NetCoalition, July 22, 2004 [PDF].

The essential thrust of McGuiness' testimony is that NetCoalition agrees with the intent of the INDUCE Act, but not the execution. He makes the good point that the internet is basically one big P2P network:

While the members of NetCoalition strongly oppose the unlawful downloading and distributing of copyrighted works over P2P networks, we also caution against the summary adoption of what purports to be a simple legislative fix to complex online problems. The Internet is essentially a peer-to-peer network, a tool that allows users to connect with other users. Technologies such as email, instant messaging, search engines, web browsers, and broadband, to name just a few, are basically peer-to-peer platforms. Any proposal designed to eliminate one kind of a P2P platform has the potential of barring comparable communications platforms that are considered by most users to be not only lawful but essential.
Additionally, the NetCoalition makes a number of suggestions similar to those of the newly-INDUCE Act-phobic BSA:
  • Legislation must be premised on the Supreme Court's ruling in Betamax that a provider of a technology that is capable of substantial legal uses cannot held liable for copyright infringement simply because the technology can be used by third parties for unlawful purposes.
  • Legislation should target unlawful behavior and uses of technology rather than the technology itself.
  • Legislation must provide a bright line between lawful and unlawful conduct so that litigation cannot be used as an economic weapon against innovators and entrepreneurs.
  • Legislation that attempts to codify concepts of secondary liability for copyright infringement should incorporate current case law relating to contributory infringement, vicarious liability, and the Betamax standard.
  • Legislation should ensure that entities that advertise and provide product reviews that simply demonstrate how a product can be used are not swept into the scope of possible defendants under any new cause of action.
Many of the points McGuiness makes should be familiar to all those following the INDUCE Act debate: the INDUCE Act undermines the Betamax decision; it triggers a flood of litigation; and, it doesn't really follow the Patent Act standard. However, McGuiness also makes two unique arguments.

First, he notes that the INDUCE Act could undermine the safe harbors of the DMCA. How, you ask? Didn't I already write that the INDUCE Act would likely not impact the DMCA safe harbors (The INDUCE Act (IICA) and the Safe Harbor Provisions of the DMCA)? Indeed, but McGuiness points out something I didn't consider: ISPs often distribute software to their customers. Says, McGuiness:

While these limits would continue to apply with respect to the services offered by ISPs (i.e., routing, hosting, and linking), they would not apply to software provided by the ISPs to consumers to enable these services (e.g., instant messaging or Internet access software). Currently, the provision of the software is protected by the Betamax standard. But, under S. 2560, an ISP could be sued for inducing infringement by distributing software that enables infringement, such as software enabling broadband services. [italics in original]
Yep. Absolutely.

Second, he makes the argument that Grokster might not be liable under the INDUCE Act either:

in briefs to the Ninth Circuit, in the press, and in communications to Senators, the entertainment industry contends that Grokster and other P2P companies not only induce infringement, but actually ?seduce? children into engaging in infringing acts. However, the Grokster court found no evidence of such seduction. It did not find a single advertisement encouraging users to engage in the unauthorized trading of copyrighted works. It did not find a single email instructing users how to break the copyright laws. Accordingly, if the entertainment industry were to bring an inducement action under S. 2560 against Grokster, the suit would probably survive motions to dismiss and for summary judgment, because the industry could argue that Grokster intended to induce infringement; but the suit would probably fail at trial unless the industry could produce more solid evidence of intent to induce infringement. [italics in original]
Yep, again.

There is nothing particularly interesting about McGuiness' conclusion.


Well, there you have it. Three devastating critiques of the INDUCE Act. Ouch. Only Marybeth Peters can fail to see that the Act has some serious flaws.

Want to know more about the INDUCE Act?
Please see LawMeme's well-organized index to everything I've written on the topic: The LawMeme Reader's Guide to Ernie Miller's Guide to the INDUCE Act.

Comments (2) + TrackBacks (0) | Category: INDUCE Act


1. Mike on July 23, 2004 07:28 PM writes...

I found the document at to be nearly illegible because it seems the PDF source was converted to HTML badly. The PDF at is easier to read.

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2. Ernest Miller on July 23, 2004 07:43 PM writes...

Thanks Mike. I've changed the link. For some reason I couldn't find that link last night.

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