Importance


July 17, 2004

Hearings to be Held on INDUCE Act (IICA)

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The original plan was to hurry the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) through Congress without hearings and before anyone paid any attention. As late as ten days ago, a spokesperson for the bill's leading sponsor, Sen. Orrin Hatch (R-UT), said that the Senator would only "schedule a meeting if the chairman [Hatch, chrm of the Senate Judiciary Committee] thinks it's necessary" (Opposition to INDUCE Act (IICA) Getting Mainstream Press - Bill Still Moving Through Senate Quickly). Apparently Sen. Hatch now thinks a meeting is necessary. Perhaps the request of numerous tech companies, civil liberties groups and consumer organizations convinced him (Many Organizations Sign on to Letter Requesting INDUCE Act Hearings).

In any case, hearings have been scheduled on IICA (aka INDUCE Act) for next Thursday, July 22 ("An Examination of S. 2560, The Inducing Infringement of Copyrights Act of 2004 "):

July 15, 2004
 
NOTICE OF HEARING
 
The Senate Committee on the Judiciary will hold a hearing on Thursday, July 22, 2004, at 2:00 p.m. in Room 226 of the Senate Dirksen Office Building on "An Examination of S. 2560, the Inducing Infringement of Copyrights Act of 2004."
 
Chairman Hatch will preside.
 
By order of the Chairman
Note that there is no witness list yet. Updates with details when they become known.

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.

Posted at 05:00 AM | Permalink | Comments (0) & TrackBacks (1) | Email this entry | Category: INDUCE Act

July 16, 2004

Hatch's Hit List #6 - Legos

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What is Hatch's Hit List? Sen. Orrin Hatch (R-UT) has introduced the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) in the Senate. The bill would make it illegal to "intentionally induce" copyright infringement, but is worded so broadly that it would have all sorts of unintended consequences, one of which is to severely limit, cripple or kill innovation in many different fields. Hatch's Hit List is a daily exploration of some of the technologies and fields that the bill would likely affect. See also, Introducing Hatch's Hit List and Hatch's Hit List Archives.

Today on Hatch's Hit List: Legos

It's Friday. So, I thought Hatch's Hit List could be a little more lighthearted. And what is more lighthearted than showing how the INDUCE Act could be used to sue a maker of children's toys?

Legos are a very cool, educational toy. Who doesn't like legos? They rock. And they're not just for kids; plenty of adults use legos to do some pretty amazing things, which Lego sometimes explicitly and sometimes implicitly supports. Unfortunately, many of these amazing things violate copyright, which makes the Lego company an inducer of copyright infringement.

Take for example Lego Mosaics, which would be derivative works of the original image. Lego will let you upload a picture file and then, using their Brick-o-Lizer, let you create a custom Lego mosaic from the photo. The next step is for Lego to ship you the custom kit, after you pay them $29.95 (aka commercial viablity). And this is what Lego has to say about the photos:

You can upload any .jpg or .gif file into the Brick-o-Lizer. You can use a scanner or a digital camera to get a picture into your computer to use with the Brick-o-Lizer..." [emphasis added]
Sure, there is a copyright disclaimer you have to "agree" to before you can use the Brick-o-Lizer but, please. The site is clearly geared towards children. Like kids understand lawyerese. This is just one of those phony warnings like the P2P companies use.

Even worse are the sample photos the Brick-o-Lizer lets you play with. They are all professional photos that no child could take. Clearly, the examples are telling kids that it is okay to use professional photos (aka copyrighted ones) with the Brick-o-Lizer.

And it is not only the Lego company; there are free versions of the Brick-o-Lizer available on the internet, such the Lego Users Group Network's Mosaic Maker. Any copyright warnings there? Nooooo....

And what about all those unauthorized derivative work Lego movies on the net at places like BrickFilms? What inspired induced those do you think? Might they have been inspired induced by Lego Comics and Movies?

Yeah, the Lego company is going to have a lot to answer for if the INDUCE Act becomes law.

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

The INDUCE Act (IICA) and Tertiary Liability

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During the original Napster's heyday, Bertlesmann, through a venture capital firm (Hummer Winblad), invested in the upstart filesharing company. After the original Napster was shut down by legal maneuvers, two record companies (UMG and Capital) decided to sue Bertlesmann (which owns a major record label itself: BMG) and Hummer Winblad in order to hold the two investors liable for supporting Napster and recoup some deep pocket damages. C|Net News reports that the lawsuit has survived a motion to dismiss (Case against Napster backers gets green light). Read the 14-page decision: UMG Recordings v. Bertlesmann AG [PDF].

The defendants had claimed that the lawsuit was one for "tertiary" copyright infringement, that is, contributory infringement of a contributory infringement (or inducing an inducement). "Tertiary" infringement is generally not accepted as a proper cause of action. Why? Because liability becomes too far removed from the actual criminal activity. Causality branches and diffuses. So, generally, there has to be something more than "but for" causality in order to hold someone liable.

This principle still stands. In UMG v. Bertlesmann the judge has held that the plaintiffs have made more than conclusory allegations that Bertlesmann and Hummer Winblad actually controlled the original Napster and directed operations, which would make then contributory infringers, not tertiary ones. This decision is a somewhat troubling. Personally, I'm not so sure that the allegations aren't conclusory, but the judge has ruled that the case can move at least to summary judgement motions.

The INDUCE Act Part

Which brings me to the concept of tertiary liability under the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act). Sometimes things are so obvious that they go without saying. However, as Derek Slater has pointed out to me, sometimes those are the most important points to talk about (Don't Innovate, Don't Even Invest).

One of the most devastatingly bad things that the INDUCE Act does is that it blows up the relatively clear lines of contributory and vicarious copyright infringment to extend liability into an ever more diffuse cloud of causality. As the EFF's mock INDUCE Act complaint shows, not only would the INDUCE Act permit lawsuits against Apple for the iPod, but plaintiffs could go after Toshiba for supplying Apple with the hard drives used in the device and C|Net for reviewing it (Prelude to a Fake Complaint). If contributory liability is similar to charging the promoter of illegal street races for reckless driving, the INDUCE Act is similar to charging automakers with reckless driving for making fast cars that can be used in street races. Under the INDUCE Act's doctrine of liability, if the Nile were guilty of flooding Cairo, lawsuits could be filed against every tributary.

According to the INDUCE Act, "intent [to induce] may be shown by acts from which a reasonable person would find intent to induce infringement based upon all relevant information about such acts then reasonably available to the actor." This is an incredibly low standard. Anyone in the vicinity of infringement can get sued and it isn't clear what one can do to remain safe, except be nowhere in the vicinity of infringement. Even worse is that the proposed statute is designed to allow plaintiffs to take their cases all the way through to trial, surviving all attempts at dismissal for even weak cases (and costing the defendants plenty even if they prevail).

The practical consequence of this is to chill innovation to subzero temperatures. Investors, suppliers, and potential business partners (among others) will all be potentially liable under the INDUCE Act. They'll all have to ask themselves whether doing business with a company that Hollywood might not like is worth the risk of being hit with a meritless lawsuit. The likely result? No one is going to go anywhere near innovative new internet and consumer electronics companies unless they already have Hollywood's blessing.

If innovation is Superman, the INDUCE Act is green kryptonite.

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.

Posted at 05:55 AM | Permalink | Comments (0) & TrackBacks (0) | Email this entry | Category: INDUCE Act

July 15, 2004

On the Burden of Persuasion for the INDUCE Act (IICA)

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Press coverage of the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) continues to be light. However, the San Jose Mercury News (annoying reg. req.) published an editorial that is sharply critical of the legislation (Piracy bill threatens Valley firms):

The Betamax decision has made possible an explosion of inventions, from MP3 players to CD burners. By undermining the Betamax decision, the Hatch bill could threaten current and future technologies. That's too much collateral damage in pursuit of Kazaa.
That's a very important point actually. The supporters of the INDUCE Act are going to strive to make passing the bill the default. They are going to make claims that "something has to be done" and if the opposition doesn't want this bill, then the burden is on them to provide an alternative. We cannot let that happen.

The legislation the copyright industry proposes is rash, precipitous and reckless. It risks great collateral damage for illusory benefits. We should not allow ourselves to be goaded into actions we will only regret later by the mere desire "to do something." Often, the best thing that one can do is to do nothing. The burden must be on the supporters of the INDUCE Act to propose a bill whose harmful effects do not outweigh the benefits.

Posted at 08:03 AM | Permalink | Comments (0) & TrackBacks (0) | Email this entry | Category: INDUCE Act

Hatch's Hit List #5 - Automatic Online Translators

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What is Hatch's Hit List? Sen. Orrin Hatch (R-UT) has introduced the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) in the Senate. The bill would make it illegal to "intentionally induce" copyright infringement, but is worded so broadly that it would have all sorts of unintended consequences, one of which is to severely limit, cripple or kill innovation in many different fields. Hatch's Hit List is a daily exploration of some of the technologies and fields that the bill would likely affect. See also, Introducing Hatch's Hit List and the INDUCE Act Archives.

Today on Hatch's Hit List: Automatic Online Translators with a tip o' the virtual hat to Matt Perkins.

Translations are derivative works. The making of derivative works is one of the exclusive rights in copyright (17 USC 106(2), to be precise). Therefore, making unauthorized translations is an infringement of copyright. Under the INDUCE Act, if you intentionally induce someone to infringe copyright, you are liable.

Ever do a search on Google and some of the results weren't in English? Notice that little "Translate this Page" next to the link? Yeah, that's an inducement. Google is practically begging you to create a derivative work. They do everything for you (aka aid and abet) except click the "Translate this" link. And let us not forget the ease of use of Altavista's Babelfish Translation.

It's crazy, but not only are there no copyright warnings on the translation home pages, but there aren't any copyright warnings on either Google's Translation FAQ or Babelfish's Help Page. But what can you expect from such blatant copyright scofflaws? This is clearly an open and shut INDUCE case. And let us not forget that both Google and Altavista have deep pockets to pay off a juicy lawsuit. (Ooops, I wasn't supposed to write that out loud.)

Seriously, this is actually a very good example of why the INDUCE Act is bad law.

Under existing copyright law doctrine, automatic online translators like Google and Babelfish have some very good defenses. For example, although one could make a prima facie case that both are guilty of direct infringement, the RTC v. Netcom decision would likely protect both. In Netcom, a BBS operator was held not liable for direct infringement basically because their system of uploading files was automatic and directed by third parties. A similar argument would protect automatic online translators as well, I think.

Secondary liability (contributory and vicarious) would also not be an issue here. There is no real way for Google or Babelfish to control how their system is used to translate webpages and text without simply shutting them down, and there is clear evidence of substantial non-infringing uses.

However, the INDUCE Act changes all this. The evidence is blatantly obvious that both Google and Babelfish encourage the creation of translations (aka derivative works). They had to have known that they were encouraging copyright infringement. I don't see how a "reasonable man" could believe otherwise.

I know that I'll be keeping copies of my referrer logs. Sto parlandovi, lettori in Italia!

July 14, 2004

The Abridged RIAA Letter on the INDUCE Act (IICA)

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Sometimes, you just don't have time to read a lengthy annotation (The Excessively Annotated RIAA Letter on the INDUCE Act (IICA)). In such cases, an abriged version is much better. Brad Hill of the Digital Music Weblog has done us all a favor and condensed the RIAA's letter to the Senate. Read the original letter: Letter to Senators from Mitch Bainwol, Re: INDUCE Act.

Read on for Brad Hills' abriged version:

Dear Senator,

Please pass S. 2560, and quickly. Our sales have slipped painfully. I wish I could draw a tight, scientific connection between sagging CD product and P2P file-sharing, but I cannot. So, in this letter I'll cite "common sense" a lot. I'll also state speculation as fact, like this: "It is the relatively new online piracy that has had a truly devastating impact in a short amount of time." Doesn't that go down easily? Most journalists, who are trained to ask questions and stuff, publish unfounded statements as fast as I can utter them, so I'm counting on you for the same level of gullibility.

It's common sense that we can't compete with free. Please don't remember I said that later tonight, when you're watching a premium
cable channel. And if you happen to be drinking bottled water right now, just forget that I brought it up.

P2P is rampant. Later I'll throw around some study results funded by invested industry groups, to prove that I've done some homework, but the important point is that most of your constituents probably love file-sharing. But they are not the villains! Even though we'll sue them if we can, one by one. Damn, this isn't coming out right...listen, trust me, everyone will be happier if we can wipe file-sharing off the face of the earth. Would you do this for us? We hate P2P companies, whether they hurt us or help us. Thinking is hard! And reinventing takes too much work! Don't make us do it, Senator, I beg you.

You might have heard a bunch of bull about how S. 2560 is worded too broadly, and some hoopla about stifled innovation, and a lot of
yadda-yadda about technology companies being sued. Please. I don't need to tell *you* who's paying dues and who isn't! None of our
friends will get burned by this, and if they do, well hell, isn't "technology" the real problem anyway?

In closing, Senator, I'd like to recycle the tired and thoroughly debunked concept that file-sharing is identical to shoplifting. By so doing, I have utterly discredited myself, and rendered this communication a waste of your time. If you'd like to talk, I'll be in
the bathroom sobbing.

Cheers,

Mitchy

The Excessively Annotated RIAA Letter on the INDUCE Act (IICA)

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Just about a week ago, a number of technology companies, civil liberties groups and consumer rights organizations sent a letter to Senators requesting hearings on the fast-tracked Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) (Many Organizations Sign on to Letter Requesting INDUCE Act Hearings). Read the letter at EFF (one of the signatories): Letter to Senator Hatch, Re: S. 2560, the "Inducing Infringement of Copyrights Act of 2004".

Today, Techdirt noted (RIAA Defends INDUCE Act; Explains Why It's No Betamax) a brief report in the Hollywood Reporter that the RIAA had responded with a letter defending the INDUCE Act to all 100 Senators (RIAA chief to senators: OK copyright bill). Read the RIAA's letter here: Letter to Senators from Mitch Bainwol, Re: INDUCE Act.

Read on for the annotated version ...

My comments are in brackets, bold and italics. I've added hyperlinks to Bainwol's text as I thought useful.

The Annotated RIAA Letter on the INDUCE Act (IICA)

July 13, 2004

The Honorable
United States Senate
Senate Office Building
Washington, DC 20510

Dear Senator :

It is no secret that the intellectual property assets of our nation are under assault, as never before. [Hmmm ... where have I heard that "assault" language before? Oh, yes, Jack Valenti twenty years ago. From his infamous testimony on the VCR, "while the Japanese are unable to duplicate the American films by a flank assault, they can destroy it by this video cassette recorder."] That is why we support S. 2560, an effective [Effective that is, if you're trying to cripple technological innovation.], bipartisan [Yep, both parties are selling out the consumer.] bill drafted by Senators Hatch and Leahy and introduced two weeks ago. The bill is aimed at ensuring the vibrancy of both our creative community and our technology community. [Well, no it isn't. Rather, it is aimed at ensuring the vibrancy of the creative community at the expense of the technology community.]

S. 2560, introduced by Senators Hatch [R-UT $158,860, an increase of $1,000 since my original annotation of Hatch's remarks.], Leahy [D-VT $220,450, an increase of $39,450.], Boxer [D-CA $517,660, an increase of $40,675.], L. Graham [R-SC $72,273, no known increase.] and both Majority Leader Frist [R-TN $58,550, no known increase.] and Democratic Leader Daschle [D-SD $382,760, an increase of $63,970.] - is timely, warranted legislation. We urge you to support it. It is intended to target bad actors only – those who have built business models to get away with stealing the creative work of predominantly American artists. [Intentions are funny things. The bill might be "intended" to go after "bad actors" only, but I think a "reasonable man" would think the intent was to crush any technology copyright holders don't like.] The bill finds the right balance to protect both technology AND content innovators. [I guess putting technology innovators out of business is "protecting" them now. That sure is an innovative use of language.]

Let me back up and set the context necessary for appreciating the true significance of this legislation. [Well, that's the problem isn't it? The true significance of this legislation.]

Global sales of recorded music – dominated by our country – quadrupled from 1980 to 1999. [And why did this happen? Could it have been a one-time surge as people bought music on a new medium (CDs) that they had already purchased on an older medium (tape/vinyl)? Could it have anything to do with the enormous general economic growth of the time? Might it have anything to do with innovative music development and support. I thought we were going to get some context.] Then, almost on a dime, that trend line reversed, with sales figures falling by about a third to the mid point of last year. [And why this turn around? Did it have anything to do with the end of the replacement surge? Did it have anything to do with poor marketing and music development changes? Did it have anything to do with an economic downturn? Did it have anything to do with other media (such as videogames) competing for consumer dollars? How about a little more context?] Before the launch of lawsuits by the industry last fall against those induced to steal music online, we were spiraling down with no sense of a floor. [So, everyone who has been sharing files was induced? No one did it of their own volition? Also, is there any evidence that it was the lawsuits that created a "sense of floor"? Is there no other reason?]

Why? There are a variety of factors, but the most critical are the twin challenges of physical and online piracy. [Really, the most critical? None of the other factors was as important? Is there any evidence for this assertion?] Physical piracy has been a problem as long as music has been recorded, and has climbed to staggering levels. But it is the relatively new online piracy that has had a truly devastating impact in a short amount of time, which makes action to combat it crucial. [And the RIAA has been taking action to combat it. There are devastating legal remedies at the RIAA's beck and call.] And the most virulent form of online piracy is file sharing on P2P (peer to peer) networks. [Filesharing is a disease and the RIAA is the cure?]

An independent study conducted last summer noted that over 97% of the files "shared" using these file-sharing networks are illegal. [Last summer is so 2003. This summer studies are showing an increaing use of P2P programs to distribute authorized content, such as Linux distributions via BitTorrent (one of those "virulent" P2P networks, apparently).]

The infringement is remarkably pervasive. [Hmmm, maybe the infringers are trying to tell the RIAA something.] A recent academic study estimated that almost a billion illegal downloads take place each and every month. Four of the top ten downloaded applications on the Internet are P2P programs operated by companies who purposefully set them up to be used for illegal conduct. [Well, if the RIAA has proof of this purpose, then they should be able to bring these companies into court under current law.] Popular for sure… but lawbreaking nonetheless. [And when a law is unpopular and frequently broken, the answer is to make it more illegal?]

Let me be clear. There is nothing inherently evil about P2P. [Well, it is nice to concede that technology is simply a tool.] On the contrary, it's a magnificent technology. [As long as we can control it.] But it has been hijacked by some unscrupulous operators who have constructed a business model predicated on the taking of property financed by my member companies. [And Bainwol can distinguish between the admirable operators and unscrupulous ones, how?]

That taking has consequences, human and creative. [Some of the consequences are good, some are bad. Separating them, however, is a pain and may not be possible.] My companies make money almost exclusively from the sale of our creative product. [And they still can, they will have to make some adjustments to their business model.] We don't have a performance right on radio and therefore derive no income from radio play. [Welcome to the wonderful world of "when Congress tries to dictate business models." And so, the RIAA proposes a sequel.] We don't make money from artist tours or merchandise. [And why is that? Is there a law against it? If so, I would recommend it be repealed.] We don't make money from endorsements of other products. [Is someone stopping them from doing that?] We just sell recorded music. [You're free to structure business however you like.]

We take profits from sales – when we're good and lucky enough to get them - and plow money back into the search for that next great talent who will thrill music fans around the globe. [I guess the industry must have been bad these last few years.] When we think we have found that talent, we invest huge amounts to sign, nurture, promote and distribute their creative product. [And the RIAA is the only way talent can be found and promoted, because?] Our economic vitality is based on generating hits – finding special talents that enjoy strong commercial appeal. [And we should care about the hit-maker mentality, because?]

In 2000, the top ten hits sold 60 million units in the U.S. Seven of the ten sold more than 5 million units each; every one of them sold at least 3 million units. Then the slide kicked in. Last year, in 2003, the top ten hits were cut almost in half, to 33 million units. Just two of the ten sold more than 5 million units; five of those top ten hits sold less than 3 million units. [And this is a bad thing, why? Why shouldn't the music industry be subject to a less intense power curve? Wouldn't our culture be healthier for it? Are labels as hit-making gatekeepers really the cultural ideal?]

In our business, the hits are what allow investment in genres that do not accumulate great sales, such as jazz, classical, bluegrass, and the blues. [What a bunch of philanthropists the RIAA is. They take their profits and invest them in less popular genres out of the goodness of their hearts. God bless 'em!] By decimating the sale of hits, online piracy has devastated investment in an entire industry and in the development of great future cultural contributions. [You know, because the freedom of the internet hasn't led to any great cultural contributions, or anything. The internet is just one big wasteland, devoid of culture.]

Some have suggested P2P drives sales – or has little impact on sales. And pigs fly. The absurdity of that notion is made plain by the sales pattern of "hits." If you can get something for free, without consequence, buying it becomes less attractive. It's as simple as that. [Thank you Mr. Empirical Economist. Things aren't actually that simple. If they were, the RIAA would already be out of business. There is data for both sides of the argument and it isn't really clear where things are headed. After all, why did sales increase recently, if it were "as simple as that"?]

The revenue collapse has been staggering. Jobs in my industry are down by about a third over the last several years – and the exercise to cut costs is ongoing. [And the industry should remain the same size it always has, because? Even if filesharing went away, wouldn't the increased efficiencies of internet distribution mean that companies would shrink? Wouldn't the collaborative filtering of the internet decrease costs for finding and developing talent? Nor do I hear the RIAA complaining about the jobs lost in record stores because of the shift to internet distribution. Jobs at Tower Records are way down too. Thanks, iTunes!] Families have suffered. [You know, unlike the families of the entrepreneurs who will be sued under this law. Apparently, they feel no pain.] As troubling, if not more so, artist rosters have had to be slashed. [But there seem to be more artists than ever before, at least I'm exposed to more than ever before.] Fewer dreams are being funded. [But that doesn't mean people aren't chasing their dreams. And what dreams are these anyway? Hit stardom] This creative product is lost forever. [And other creative product becomes widely available.] Many of our greatest performers took years to catch on before their careers took off. [And even before filesharing, labels were moving away from long-term artist development.] In today's world, those performers are being cut before they have a chance to delight fans and realize their own dreams. [And then they have to take a different path to their fans.]

These rogue P2P companies make money by advertising and by bundling spyware in their applications. [So, we should pass laws against spyware, or programs that surreptitiously install themselves when you load a CD?] Their interest is to generate as many eyeballs as they possibly can. [You know, unlike all the other advertising-driven companies on the internet.] They do that by inducing American kids – and others – to break the law by stealing the work of creators. [And if you had proof of this, you wouldn't need the law.] The more eyeballs the better. [Unlike, say, the RIAA, which only wants to get good music out there.] That the lure to draw those eyeballs is our music is of no consequence to them, though of enormous consequence to us. They resist going legitimate because they know that a pay-for model can't compete on the same level with free. [Pay-for models can't compete with free on price, but they can certainly compete with free when it comes to convenience, ease-of-use, breadth of library, quality, lack of lawsuit risks, and all sorts of other factors. With all these other factors favoring legal filesharing, you have to be working pretty hard to make the virus-ridden, spammed, lawsuit-bait, P2P filesharing systems look attractive in comparison.] They won't go legitimate unless and until they have no alternative - until the game is up. [And the RIAA gets to decide what legitimate is.]

I invite you to look at these services. [Encouraging Senators to flood their machines with spyware. Smaaaart.] They are seductive. [That KaZaA is just so darn sexy.] They intentionally invite theft. [Theft, isn't that stealing physical goods? I thought were talking about infringement?] They are havens for pornographers that project their filth into your homes when your kids innocently seek to find their favorite artists. [Unlike the internet, where nary a pornographer is to be found. And, can't the Senate address pornography through other laws? Indeed, wouldn't you be inviting First Amendment problems if the Senate passed the INDUCE Act to target pornography?] They compromise computer security. [Which is why the RIAA wants Senators to use the programs. Again, aren't there other ways to go after spyware, which is often not associated with P2P anyway. Drat those forwarded email games!] They facilitate the unintended disclosure of personal documentation – resumes, tax and credit card data, medical returns and more. [Sounds like more of an education problem than a legal one] And their warnings – about privacy abuse, security, pornography and copyright - are anything but conspicuous. [Well, not according to testimony from the FTC:

"Although the Commission has required warnings with respect to inherently dangerous products in appropriate cases, we are not aware of any basis under the FTC Act for distinguishing P2P from other neutral consumer technologies....The FTC staff’s review revealed that distributors of P2P file-sharing programs use a variety of means to convey risk information to consumers. Distributors disclose risk information on their own Web sites or in their licensing agreements with consumers. Some distributors also provide consumers with a hyperlink to risk information at www.P2PUnited.org, one of the P2P file-sharing software industry’s trade associations. In addition, one of the main portals for downloading such programs, www.Download.com, discloses some risk information on its site."]
No objective review of these services can possibly conclude that they have any pretense of legitimacy. [Except for all those companies distributing their files via P2P networks.]

Do these illegitimate services compensate artists? No. Songwriters? No. Pay taxes on the value of product? No. Compensate the record label in any way? No. Invest in the generation of new art? No. [Translation: If you pay us, you're legitimate. Otherwise, not.]

They are scam artists of the highest order – hiding behind a veil of new technology and the aura of innovation. [You know, because P2P isn't innovative. Because creating a distributed network of peers that come and go is child's play.] They are illegitimate – and they are destroying the investment basis in new art. [Unlike the RIAA, which has spent millions developing boy bands.] A country – and an economy – that has as its core respect for property, cannot tolerate grand theft of this order. [Property defined as "the RIAA gets to decide who can own innovation."]

By anomaly, we can't get at these operators directly in the courts. [Or maybe by proper judicial reasoning. It's only anomalous if you don't like the outcome.]

The original illegitimate version of Napster (as distinguished from the new Napster which is a legitimate licensed service) was forced by the courts to eliminate unlicensed copyrighted songs from its service because it had central servers. [Isn't this what the RIAA wanted?] Napster exercised "control" and, therefore, was held responsible for the infringement it facilitated. ["Control." Sounds like a pretty good basis for liability to me.] Some companies read the Napster decision carefully, [I guess judicial decisions should only be read lightly?] and purposefully crafted a de-centralized system that intentionally offloads the risks, costs and liability it should bear to the users it lures to its service. [Otherwise known as comporting with the law. Attempting to avoid liability should now, itself, be a crime.] A District Court in California ruled that these new services were not liable despite the obvious profit-by-infringement business model, and invited Congress to address the loophole. [But I don't think the court was really asking for Congress to broaden the standards with some vague language and toss it back to the courts to figure out what Congress meant.] (The decision is being appealed.) [And so Congress needs to address this now, why?]

From a user experience, there is no meaningful distinction between centralized and de-centralized file sharing. [From a user's perspective, there isn't a meaningful distinction for a lot of the internet.] From a victim experience, the impact is the same. [But from the network's experience, it is certainly distinct. Shut down Napster's servers and you shut down Napster. Shut down KaZaA and KaZaA's network remains. I think that is relevant distinction.] In both cases, it's identical to someone walking into a store, taking some CDs off the shelf, and walking out of the store without paying for them. [Well, no it isn't, because the RIAA is proposing going after the company that made the jacket with pockets that the person used to carry the CDs. The jacket company might wish to protest that they didn't have anything to do with the person taking CDs.] Yet the courts have applied the law in a manner that this essentially meaningless distinction allows these parasitic inducers to perpetrate their fraud. [Since when has control been meaningless? Does Bainwol, who has no legal control over what his member companies do, think that he should be held accountable for their illegal actions? After all, control is a meaningless distinction according to Bainwol.]

And so, Congress should accept the court's invitation and act. Senators Hatch and Leahy have taken the lead in doing so.

To date, much attention in the policy arena has been focused on process questions relating to the lawsuits my industry was forced to initiate. [In my view, initiated too late. And now they want to complain because they let the problem grow out of control.] Importantly, the new legislation puts the spotlight exactly where it belongs – squarely on the bad actors that intentionally induce the illegal behavior. [Actually, the legislation puts the spotlight on those who innovate in ways that threaten copyright holders.]

My industry can continue to sue users, many of them kids, to establish deterrence and educate the public. [And indeed they will. The RIAA isn't promising to stop the lawsuits if this bill passes.] But the real villains are not the kids. [But we're going to continue to sue them anyway.] The real villains are those profiteers who offload liability on these kids and are laughing all the way to the bank as American courts struggle to apply existing law (or misapply it) to this abuse of good technology. [Actually, I don't think it is really possible to profit from P2P and avoid contributory or vicarious liability under existing doctrines. If the RIAA thinks it is hard to compete with free music, why isn't it just as hard to compete with free software? In any case, I've provided the RIAA with some hints as to how they can reduce the profitability of commercial P2P networks: The Best Defense is a Good Offense and One Way for the RIAA to Go on the Offensive.]

Wouldn't it be preferable to put these bad actors in the vise of the law? [Well, that is the trouble isn't it? Distinguishing the bad actors from the good. If we could pass a magical law that only put bad actors in jail, the Senate could just about close up shop and go home.] Isn't it time to end this charade? [Which charade is that? The charade that the INDUCE Act isn't wildly overbroad?] Isn't it time to stand up for the fundamental American value of property? [How about the fundamental American value of technological innovation? My America is an America of tinkerers and inventors, not an America of landed aristocrats.]

That's where S. 2560 comes into the picture. [Finally. I thought the "context" would never end.]

Instead of seeking to target a technology, we believe the bill rightly goes after bad behavior. [Translation: We don't want to define a technology because, a) we can't, since the internet is built on P2P and any definition we provide would almost inevitably encompass all sorts of technologies like FTP and email, b) thanks to the flexibility of the internet, there will inevitably be loopholes unless we ban wide swaths of technology, c) technology? We're the RIAA, we don't do technology.] It seeks to isolate bad actors that intentionally induce others to break the law. [Except that it defines "intentionally induce" as a guess at someone's motives with regard to mass amounts of others where some act illegally and others don't.] I'm not a lawyer, but intentional inducement is a high standard that is difficult to meet, consistent with the 1984 Sony Betamax case, and would not come anywhere near companies who simply produce devices that can be used for either legitimate or illegitimate purposes. [Well, I'm glad you're not a lawyer, because if that was the advice you were giving to Google, for example, you might just be guilty of malpractice. The real point is that the traditional standard for inducement is quite high. If the RIAA could prove that higher standard, existing laws would suffice to put the evildoers away. However, the RIAA can't meet that higher standard, and so they want to reduce the burden of proof necessary.] S. 2560 requires purposeful action, deliberate and intentional conduct to induce others to break the law. [Unfortunately, that is the thing with intent. The action is ambiguous. You look at an action and try to figure out what the actor intended. They might have good intentions, they might have bad intentions. If the action was clearly bad, you wouldn't need intent, now would you? This law allows courts and juries to impute bad intent to actions that will often have both good and bad effects.] It's common sense. [This am common sense in Bizarro world.] It's the premise behind aiding and abetting under the criminal laws. [It might be the premise, but it isn't how aiding and abetting are normally proven in court.] It's a moral behavioral test that targets the bad guys, not legitimate commercial actors. [A "moral behavioral test"? What the heck is that? Is this law ala BF Skinner?]

In Sony, the lower court found that Sony Corp., the maker of the Betamax, did not induce a violation of the law by consumers who used it to copy videos. [Funny, citing a case that was overruled and isn't good precedent. Still, yes, Betamax was not found guilty of inducement, but the court wasn't judging Sony under this proposed standard of the INDUCE Act. In fact, this court was judging whether or not Betamax induced infringement as part of the existing contributory liability test:

The Second Circuit has offered the most clear definition of contributory infringement:
(O)ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a "contributory" infringer.
Plaintiffs rely on the same factual allegations discussed above to support a finding of contributory infringement: the manufacture, advertising, demonstration and sale of Betamax causes, induces or, at the very least, encourages, furthers or materially contributes to the unauthorized recording of copyrighted motion pictures. According to plaintiffs, that is the primary use for which Betamax is designed and marketed and which defendants encourage in their ads and brochures. In addition, plaintiffs' witnesses testified at trial that while off-the-air recording was possible with machines available prior to Betamax, Betamax was the first compact, affordable consumer item. {citation omitted}
]
Sony made a machine that was capable of copying, but did not induce users to use it for illegal purposes. [That's not what Jack Valenti said at the time: "Now, these machines are advertised for one purpose in life. Their only single mission, their primary mission is to copy coyrighted material that belongs to other people. I don't have to go into it. The ads are here. Here is Sony that tells you that you can record one channel while watching another. You can program to record a variety of shows on four different channels for up to 14 days in advance if you like." Let's look at the arguments made in the case at the time.
ADVERTISING
DDBI is Sonam's advertising agency for consumer products. Since the introduction of the first Betamax model, DDBI, in cooperation with Sonam, has created and published Betamax advertisements for magazines, newspapers and television. In November, 1975, Sonam agreed to indemnify DDBI for any liability arising from this advertising campaign.
Many of these national ads for the Betamax have been introduced into evidence. Some of these exhort the public to "record favorite shows" or "build a library." Some have suggested recording "novels for television" and "classic movies." None of the Betamax advertisements warns that recording copyrighted shows is or may be a copyright infringement.
In addition to the DDBI national advertising campaign, Sonam operates a cooperative advertising program. Under this program, individual franchise dealers write and place ads for the Betamax and, if Sonam approves the ads, the local dealer receives 5% Of the cost of the ads as a credit to the balance owed Sony for previously purchased merchandise.
Henry's Camera has participated in this program and has received credit for advertisements with "record your favorite show" and "build a library" language.
WARNINGS
None of the Betamax models or the brochures describing them contains warnings about copyright infringement. Pre-Betamax videotape recorders manufactured by Sony (the U-Matic, AV and CV series) had a small plate attached to the back stating: "This videotape recorder is not to be used to record copyrighted works."
The Betamax operating instructions, however, include a warning about possible copyright infringement. On page 17 of the instruction booklet, the following language appears: "Television programs, films, videotapes and other materials may be copyrighted. Unauthorized recording of such material may be contrary to the provisions of the United States copyright laws." The Betamax machine and this accompanying booklet are delivered to the purchaser in a sealed box.
The Betamax warranty states that there shall be no liability on the part of the manufacturer, distributor or seller for any loss or damage arising directly or indirectly from the use of the Betamax.
Sounds an awful lot like what KaZaA and the others are accused of doing.] Sony, Apple and other legitimate participants in the marketplace, remain safe under this bill. [Gee, a major content owner and a company with contracts with the labels is protected, that's reassuring.] And that's why we support it. [Indeed, as long as Sony and Apple are protected, why not support the law?]

There has been concern expressed by the consumer electronics industry and some others that this legislation is overly broad as drafted and could have some unintended consequences. [See, me - INDUCE Act Archives & Hatch's Hit List] We would support any version of this bill that the sponsors develop, should they choose to do so, to assure that any valid concerns are addressed. [Anything that expands copyright liability is just dandy with the RIAA.] But doing nothing to address this problem – or opposing any initiative aimed at resolving the massive P2P piracy problem against the operators who are profiting – should not be an acceptable proposition. [If the only response is an overbroad one that provides far too much power to copyright interests, well, that is a sacrifice the RIAA is willing to make.]

Therefore, when you hear criticisms of this bill, I'd encourage you to ask a simple question: Is the criticism about the core purpose – getting at bad actors that are destroying the funding of new creativity – or is the criticism about definition? [You know, because definition is not an issue. Procedural safeguards and due process aren't important. What could I be thinking?] If it's about who gets caught in the net, then I'd suggest the response to the critics should be to seek their suggestions for improving the definition. [The law may be overbroad and unconstitutional, but the critics should show how to fix it. The RIAA, apparently, can't figure it out themselves and want others to do their work for them.]

The recent letter signed by a group of interests seeking a hearing (which we too support) is a case in point. [The RIAA wants hearings. Who woulda thunk it?] It states:

"While we agree with the need to penalize those who intentionally cause Copyright infringement, we are concerned…"

Those who accept the core purpose of the bill ought to come forth with constructive and concrete suggestions, not hypothetical and peripheral concerns. [Here is my suggestion, use the existing definition of inducement. There, now that wasn't too bad was it?] Why? The men and women of the music community and their families – and other content creators – deserve action. [And the men and women of the technology community and their families – and others, like the consumers – deserve diddly squat.] We can't afford paralysis. [We can't afford ill-informed action, either.]

The bill does not mandate any technological fix, though you should know that technology does exist to filter out copyrighted works on these networks. [Must be talking about Audible Magic. For more on Audible Magic and why it doesn't work, read Audible Magic's Sleight of Hand and Does Audible Magic Violate Wiretap Laws?] This technology is in use in other applications – it's no longer conceptual. If these P2P networks adopt such a filter, the sharing then becomes legitimate, while the stealing that masquerades as sharing ends. [If the P2P networks adopt such a filter, then many of them will no longer be the same networks. And it is sort of hard to have open source code running such filters as well.]

Ironically, these P2P operators who hide behind the protective cover of "technology," resist deploying existing technological answers to solve this problem. [They have petty complaints, like, they don't work or change the nature of the technology.] They resist modernization because it undercuts their business model. [WHO resists modernization because it undercuts their business model? The irony is toooo rich.] There's a price to going legitimate. [There's a price for resisting change, too.] But you can make it harder for them to resist doing the right thing – without imposing a mandate. [That is because the mandate will be imposed by the RIAA, saving Congress the trouble.] And that's by raising the price for not going legitimate. [And raising the price for innovation as well.]

The legislation before the Judiciary Committee does not stifle innovation. [If you define innovations as "what the RIAA wants."] It inspires it. [Inspires it to move overseas.] It will unleash a wave of investment in legitimate P2P networks and alternative distribution approaches that want to go the right way – a model that respects property. [Alternative distribution. Riiight. That's what the RIAA supports, sure.]

I write you today to urge you to act. Today it's about music. Tomorrow it will be about movies, software and games. [Isn't that what the MPAA, BSA and ESA are already claiming?] Just last week we learned that pirated software hit nearly $29 billion globally in 2003 – 60% of legal sales- with much of the blame attributed to illegal P2P file sharing. [And these figures were accurate, because? I guess the fact that not every infringed copy is a lost sale, offset by the benefits of increased market penetration and network effects just hasn't made it through to the content industries.]

If we don't value intellectual property, we are compromising our country's economic future and the foundation of property rights that underlies our great capitalist system. [And if we don't value innovation and open networks, we are compromising our country's economic future even more.]

In the end, this debate is not about digital versus plastic or old versus new or technology versus content. [Yep, it isn't content vs. technology, it is content vs. every other value. It is Content Uber Alles.] It's about the delivery of digital music online – and whether Congress will accept a business model based on thievery or insist on the rule of law. [It's about Congress permitting the development of new business models, or insisting that the old ones be frozen in amber.]

So please look carefully at this legislation. [Yep. Look closely: INDUCE Act Archives & Hatch's Hit List] And please do not let perfection be the enemy of the good or tangential excuses be the enemy of common sense defense of property rights. [And let's not let a desire for action sweep us into doing things that will be detrimental in the long run.] Too much is at stake. [Indeed.]

We need your help. [Americans need to be protected from this "help."]

I'm available if you have any questions. [...Nah...]

Sincerely,


Mitch Bainwol

[PS. Here is another quotation from the district court decision in Betamax Bainwold likes to cite so much:

Plaintiffs' claims are unprecedented. Unlike the defendant in Gershwin, defendants here do not arrange for and direct the programming for the infringing activity. Unlike the defendants in Screen Gems I and II, defendants here do not sell or advertise the infringing work. Plaintiffs sue defendants because they manufacture, distribute, advertise and sell a product capable of a variety of uses, some of them allegedly infringing. Selling a staple article of commerce E. g., a typewriter, a recorder, a camera, a photocopying machine technically contributes to any infringing use subsequently made thereof, but this kind of "contribution," if deemed sufficient as a basis for liability, would expand the theory beyond precedent and arguably beyond judicial management.]

Hatch's Hit List #4 - Arcade Emulators

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What is Hatch's Hit List? Sen. Orrin Hatch (R-UT) has introduced the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) in the Senate. The bill would make it illegal to "intentionally induce" copyright infringement, but is worded so broadly that it would have all sorts of unintended consequences, one of which is to severely limit, cripple or kill innovation in many different fields. Hatch's Hit List is a daily exploration of some of the technologies and fields that the bill would likely affect. See also, Introducing Hatch's Hit List and the INDUCE Act Archives.

Today on Hatch's Hit List: Arcade Emulators

Some of the first examples I've used for Hatch's Hit List may have seemed a little obscure or out of the mainstream. Well, today I offer an obvious example of something certain to draw lawsuit wrath: the Multiple Arcade Machine Emulator (MAME).

For those unfamiliar with MAME (and you should be ashamed of yourselves) the MAME FAQ has this to say:

MAME stands for Multiple Arcade Machine Emulator. When used in conjunction with an arcade game's data files (ROMs), MAME will more or less faithfully reproduce that game on a PC. MAME can currently emulate over 2600 unique (and over 4600 in total) classic arcade video games from the three decades of video games - '70s, '80s and '90s, and some from the current millennium.

The ROM images that MAME utilizes are "dumped" from arcade games' original circuit-board ROM chips. MAME becomes the "hardware" for the games, taking the place of their original CPUs and support chips. Therefore, these games are NOT simulations, but the actual, original games that appeared in arcades.

You see, that is the tricky thing about MAME. The emulator is separate from the ROMS (which are copyrighted). Let's go back to the FAQ:
Emulating another platform, in itself, is NOT illegal. It is NOT illegal to have MAME on your computer, on your website, or to give it to friends.

ROM images are a different matter. Many ROM sites have been politely contacted by ROM copyright-owners and asked to take images offline. At the time of this writing, however, no site has been LEGALLY shut down, or prosecuted. [bold in original]

Sneaky, sneaky. The FAQ even goes on to say that:
"Distribution of MAME on the same physical medium as illegal copies of ROM images is strictly forbidden. You are not allowed to distribute MAME in any form if you sell, advertise, or publicize illegal CD-ROMs or other media containing ROM images. This restriction applies even if you don't make money, directly or indirectly, from those activities. You are allowed to make ROMs and MAME available for download on the same website, but only if you warn users about the ROMs's copyright status, and make it clear that users must not download ROMs unless they are legally entitled to do so." [italics in original]
Thus, MAME is perfectly legal under current copyright secondary liability doctrine.

But, come on, we all know that MAME is really about pirating Arcade games. Don't take my word for it, here's an admission from the videogame blog Joystiq (Emulator scene is our guilty pleasure):

It’s with a great amount of shame that we must admit that the emulator scene is swiftly becoming a guilty pleasure. Just like the music downloads we’ve all enjoyed once, twice or thrice, the old games of yesteryear can find new life on your PC. The rules of the emulator community dictate that you must own a copy of the game before you can download its emulation, but we all know that doesn’t happen. Where the hell would I put the full Star Wars arcade game? I live in a 900 square foot apartment! How dare they demand such a thing from me! As punishment I shall now download Donkey Kong! [emphasis added]
Seriously. Let's compare how many copies of MAME have been downloaded vs. the estimated number of actual arcade games out there. Anyone can see that MAME intends people to download ROMs no matter what their "disclaimer" says. Heck, if a disclaimer was all you needed to avoid liability, the INDUCE Act wouldn't be worth the paper it's written on, would it? And take a look at the FAQ again about getting ROMS:
The illegal option is to search the net with Google, Altavista, Yahoo, Webcrawler or other search engine, for the ROM files. You can also try other methods such as IRC, newsgroups, P2P software etc. Be aware that this is breaking the laws of almost every country. Before you consider doing this, see if the particular arcade games' copyright-owner has the ROMs available (as with Capcom and Atari). That way you will support the companies that support emulation.
Inducement, definitely.

And these old games are still worth money. Go into any videogame store and you'll see collections of classics still available. As this article from the Rocky Mountain News shows, millions of dollars are at stake (Retro's the name of the game for a new generation of videophiles).

If the Hatch Act passes, goodbye MAME, it was wonderful knowing you.

July 13, 2004

Not Much INDUCE Act (IICA) News

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Only one new article (that I could find) published yesterday on the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act). Slyck has a (very) brief overview of the issues (US Congress Wrestling Copyright Law).

Posted at 05:53 PM | Permalink | Comments (0) & TrackBacks (0) | Email this entry | Category: INDUCE Act

Hatch's Hit List #3 - AM/FM Transmitters

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What is Hatch's Hit List? Sen. Orrin Hatch (R-UT) has introduced the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) in the Senate. The bill would make it illegal to "intentionally induce" copyright infringement, but is worded so broadly that it would have all sorts of unintended consequences, one of which is to severely limit, cripple or kill innovation in many different fields. Hatch's Hit List is a daily exploration of some of the technologies and fields that the bill would likely affect. See also, Introducing Hatch's Hit List.

Today on Hatch's Hit List: AM/FM Transmitters

Another of the points that I want to emphasize with Hatch's Hit List is that inducement is not simply limited to the right of reproduction or making copies, but you can get in trouble for inducing actions that violate any of the the exclusive rights in 17 USC 106. Today's technology is an example of a device that can induce public performance.

Ramsey Electronics is a very cool company that provides all sorts of neat electronics equipment and kits for hobbyists and professionals. This isn't gear that you just order and pull out of the box in operating condition, but a lot of the time you're going to have to spend several hours with a soldering iron and testing rig to put it together.

Some of their most popular kits are AM/FM transmitters that you can use at home. Basically, its like running a very low power radio station. Once built, all you have to do is plug it in and insert a stereo jack connected to an audio source. Bingo! You're broadcasting.

Why would you want to? According to the website:

Unless you have a whole house sound system installed, you listen to your CD’s etc. in the room where your stereo is. If your house is like mine, sometimes “Mom” wants to watch the TV when you want music. An FM broadcaster connects directly to the line output from your CD player/changer, or to one of the tape-out connections on your receiver. It then broadcasts to any FM radio in your house or yard. Depending on the model you choose and your location, range is 1/4 mile or more under optimum conditions.
You know, they actually work pretty good. I built one that my brother uses at his home. It is connected to the stereo out of his PC's soundcard and now he can listen to his MP3s on his shower radio in the morning or from the boombox in his gym/garage. But then again, so can the neighbors, which makes it a public performance.

In fact I must say that Ramsey is encouraging public performance. From the description of the FM10C model (the type my brother has):

Here is a great entry-level kit that will teach the basics of FM Broadcast Transmission while finding many uses around the home or dorm room. [Why do you need to broadcast in a dorm room unless you plan to broadcast to the entire dorm?] The FM10C has plenty of power to cover your home, back yard, or city block. [City block ... the copyright lawyers smile.] Our manual goes into great detail outlining all the aspects of antennas, transmitting range and the FCC rules and regulations. [Ah, but the manual doesn't talk about copyright law. Pity that.] You’ll be amazed at the exceptional audio quality of the FM10C...Re-broadcast your favorite music commercial free and with the dynamic range the musician intended, without all that nasty compression the big boys use to make their station sound louder than the competition. ["Favorite music" certainly refers to copyrighted works. This is clearly inducement to public performance.]
Betcha Ramsey Electronics isn't thinking about the secondary copyright liability they may be setting themselves up for here.

Of course, this particular example may seem far removed from your home, but perhaps not for long. How much different is WiFi from FM transmitting? Won't everything have WiFi? Wouldn't it be cool if it did? Well, those sponsoring the INDUCE Act probably don't think so.

July 12, 2004

The INDUCE Act (IICA) and the Safe Harbor Provisions of the DMCA

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This may be the last post in my series exploring how the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) will interact with various elements of copyright law and related statutes. From now on I'll be concentrating on specific examples of how the INDUCE Act can be abused: Hatch's Hit List.

I've already discussed how the INDUCE Act will substantially broaden the materials that ISPs must take down in response to a request by copyright holders (The INDUCE Act (IICA) and the Notice and Takedown Provisions of the DMCA). Today, I'm going to look at the other half of those provisions and see whether or not ISPs will still be protected by the safe harbor provisions of the Digital Millennium Copyright Act ("DMCA"), codified at 17 USC 512. Read on...

Basically, and here once again, I'll cut-n-paste from Chilling Effects's website on section 512 (DMCA Safe Harbor Provisions:

Section 512 of the Digital Millennium Copyright Act (DMCA) protects online service providers (OSPs) from liability for information posted or transmitted by subscribers if they quickly remove or disable access to material identified in a copyright holder's complaint.

In order to qualify for safe harbor protection, an OSP must:

  • have no knowledge of, or financial benefit from, the infringing activity
  • provide proper notification of its policies to its subscribers
  • set up an agent to deal with copyright complaints
Anyway, section 512 protects ISPs from some liability for the infringements of their customers so long as they follow certain rules. The extent of this protection is not quite known. Though most commentators believe the protection extends to secondary liability ("A service provider shall not be liable for monetary relief") the district court in A&M Records v. Napster [PDF] didn't agree. The appeals court in the Napster decision didn't reach that issue.

Either way, since the INDUCE Act doesn't specifically overrule section 512, a straight-forward reading would indicate that as long as you already have protection under section 512, you are still protected under the INDUCE Act. The INDUCE Act expands copyright liability, but the safe harbor doesn't change. That seems to me the best reading of how the two laws interact.

However, the real world might be slightly messier. Undoubtedly, if the INDUCE Act is passed, someone will claim that it overrules section 512. One court has already been persuaded that section 512 doesn't apply to secondary liability. Other courts may conclude that the INDUCE Act is further evidence that Congress didn't want to protect ISPs from secondary liability under Section 512.

I think there is enough uncertainty, that were I advising an ISP, I would tell them to make sure this law doesn't pass.

A Few Columns on the INDUCE Act (IICA)

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For those paying attention (i.e., not most of the mainstream press) the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) continues to garner criticism.

Dan Gillmor's weekly column in the San Jose Mercury News is devoted to the INDUCE Act as well as the progress Rep. Rick Boucher's (D-VA) consumer rights bill is making (Glimmer of hope in copyright measures):

The tech industry and many other defenders of consumer rights weren't paying close enough attention when the senators, including the majority and minority leaders, introduced the legislation. But when it looked as though the lawmakers were preparing to whisk the bill to the Senate floor without bothering even to hold committee hearings, the threat galvanized opposition.

John Ginn of the Corvallis Gazette-Times is a tad upset with the RIAA (RIAA: You need to get a life!):

And as to all the little Oliver Twists out there, I don't want to induce you to anything — stealing music is bad — however, given no other choice, by legislation that continues relentlessly to constrict your options, you need to fight like hell, fight ferociously like spitting-mad cornered wolverines, against corporate bodies like the RIAA who see you as nothing but soulless obeying consumerbots, and would have you defined as such in the law of the land.

Fight them, fight them!

Dr. David P. Reed (co-inventor of the end-to-end argument [PDF]) has some analysis of the INDUCE Act from a technical point of view that is must reading (The INDUCE Act is utterly flawed):

I'm not any kind of expert on construction of legislation, but the proposed INDUCE Act (S 2560) seems to be rationalized on the most ignorant and stupid intellectual basis I have ever encountered since the Tennessee legislature attempted to declare by law that pi was equal to 3....It's time that the owners of intellectual property begin to recognize that their proper sphere of influence consists solely of the space around the specific fixed expressions that make up the boundaries of their synthetic rights. The bits are merely zeros and ones, and belong no more to the expression than do the particular particles of ink in a particular book. The systems that transport bits are indeed becoming more efficient, but that efficiency does not and cannot determine which bits are intellectual property and which are not. No bit transport technology is specific to intellectual property alone. Hijacking the bit transport industry by the intellectual property owners is an egregious expansion of their power, and government should be ashamed to even try to do this. [link and emphasis in original]

Posted at 05:31 PM | Permalink | Comments (0) & TrackBacks (0) | Email this entry | Category: INDUCE Act

Hatch's Hit List #2 - 3D Printers

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What is Hatch's Hit List? Sen. Orrin Hatch (R-UT) has introduced the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) in the Senate. The bill would make it illegal to "intentionally induce" copyright infringement, but is worded so broadly that it would have all sorts of unintended consequences, one of which is to severely limit, cripple or kill innovation in many different fields. Hatch's Hit List is a daily exploration of some of the technologies and fields that the bill would likely affect. See also, Introducing Hatch's Hit List.

Today on Hatch's Hit List: 3D Printers

One of the points that I want to emphasize with Hatch's Hit List is the effect it will have on nascent technologies; those technologies that are just around the corner. It is precisely these devices and the innovation they represent that are most vulnerable to Hatch's law. These are new technologies that usually lack significant monetary backing to fight massive copyright lawsuits. They are not yet well-established so that people can immediately see their benefit. For example, anyone who uses a TiVo realizes what a revolutionary device it is. Those who haven't used one often think they are nothing more than a glorified VCR. In other words, nascent technologies are frequently technologies that we don't realize we need yet and would be easily crushed by INDUCE Act lawsuits.

3D printers are a perfect example of this sort of technology. They seem to be making a great deal of progress and there is a good probability that they will eventually reach the consumer market. See, for example, New USC Process Offers Faster, Cheaper 3D Printouts, 'Gadget printer' promises industrial revolution, and Entering the Era of Printable Devices?. 3D printers may revolutionize our lives in ways we can't imagine (or they may not, but that's not the point).

When 3D printers first reach the consumer market, what are they frequently going to be used for? Copyright infringement, of course. Very few people will ever master the skills to create even a basic CAD/CAM design. So the designs for the items their brand-new 3D printer will create will have to come from somewhere. Since the 3D printer market will initially be small, it is unlikely that there will be all that many companies selling designs. Infringement will be the obvious source for 3D printer designs. I mean, really, who wouldn't want to print out a collection of bootleg Garfield figurines if they could? I don't even want to think about the headaches this would cause eBay.

You can justify 2D printers with claims that people will write their own papers or print their own photographs. You can't say the same for consumer-grade 3D printers and, thus, they will surely induce people to infringe copyrighted designs, which means that Hatch's law will make them effectively illegal (at least for consumers).

July 09, 2004

Introducing Hatch's Hit List

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When the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) first became news it was disparagingly (and rightfully so) compared to an infamous bill from 2002, the Consumer Broadband and Digital Television Protection Act aka CBDTPA aka Hollings Bill (after the Senator who sponsored it) (INDUCE Act = Son of Hollings?). One of the most clever attacks on the CBDTPA was a little thing Ed Felten came up with on Freedom to Tinker: Fritz's Hit List. What was Fritz's Hit List? Well, the name came from Sen. "Fritz" Hollings. More importantly though and in Felten's own words (New Feature: Fritz's Hit List):

Most readers have probably heard me, or someone like me, say that the Hollings CBDTPA has far-reaching effects -- that it would regulate virtually all digital devices, including many that have nothing at all to do with copyright infringement. Though this argument is right, it is too abstract to capture the full absurdity of the CBDTPA's scope.

To foster reasoned debate on this topic, I'm inaugurating a new daily feature here at freedom-to-tinker.com, called "Fritz's Hit List." Each entry will give an actual example of a device that would meet the CBDTPA's definition of "digital media device" and would thereby fall under the heavy hand of CBDTPA regulation.

I'll post a new example every weekday for as long as I can keep it up. Please email me if you want to suggest an example. (I have plenty of good ones in the queue already, but your suggestions may be better than mine.)

Well, I think the far-reaching effects of the INDUCE Act are worthy of similar treatment. So, starting today, I will endeavor to post every weekday an example of a nascent technology that can be quashed by the INDUCE Act. Of course, "Orrin's Hit List" doesn't quite roll off the tongue, thus "Hatch's Hit List." As with Fritz's Hit List, please email me (ernest.miller 8T aya.yale.edu) with suggestions. Read on...

UPDATE
The entire list can be found here: Hatch's Hit List

Hatch's Hit List #1: WiFi Car Stereos

Ford has released the first production car with WiFi so that you can transfer MP3s from PC to car wirelessly (SUV's Wi-Fi system lets drivers leave CDs at home). On Copyfight Donna Wentworth notes that this capability is just begging to be sued under the INDUCE Act (Cars + WiFi + Digital Music = Induce Bait). She's right.

After all, you have other automakers, such as BMW, offering digital music for car stereos but through a safe, DRM'd product (You Just Can't Trust BMW Owners). Clearly, offering wireless transfers of non-DRM'd music is begging for piracy. For example, see this article on Ford's newest car accessory (Wi-Fi In Cars -- The More Practical Version):

[S]ometimes the most useful technologies have a way of "sneaking" their way into the market. They're designed for one small thing, but people figure out ways to use them for much, much more.
Isn't that what Ford is trying to do, "sneak" P2P into its cars? Indeed, Ford should know better; check out the first comment on the article (I'm not making this up):
He he, this might be the start of those P2P highway networks we've already mentionned ;)
Or how about this post on Boing Boing by the notorious Cory Doctorow (WiFi car-stereos):
A new generation of WiFi-equipped in-car MP3 players is shipping. The possibilities are endless -- imagine a traffic-jam-area file-sharing/streaming net...

Or how about some of the conversations in the forums of Rockford Omnifi Media (makers of aftermarket MP3 WiFi Car Stereos) (Omnifi™ for the Car: How can I get my MP3's off of my DMP1 drive?):

OK...hear's my deal - I am about 2600 miles from home...on a really long business trip. I happen to have my car (and my Omnifi DMP1) with me, but of course I do not have the computer that holds all of my MP3's. I recently bought an iPod and I am trying to figure out a way to copy the music off of my DMP1 drive and onto my new iBook so I can load all of that music on my iPod. Any ideas? .... There is an app to get content from you Omnifi Hard Drive: http://members.cox.net/omnifiuser/ Don't know if it will run on a Mac, but it's Java & opensource. Might want to e-mail the author.
A business trip, yeah, sure. You don't have your computer that has the MP3s, but you've got a brand new iBook and iPod. Ooookay. Clearly, however, Omnifi Media knows that its consumers are writing apps letting people upload music from its players: Doctorow's Car Audio Paaaartay!

Heck, check out this review that Omnifi Media touts: Driving Beats [PDF]. The magazine is the hardcopy edition of WIRED - the infamous Feb 2003 edition - the one with the Hindenberg on the cover under the title "Rip. Mix. Burn" and the subtitle "The Fall of the Music Industry."


And don't even go to the forums over on Rockford Fosgate (another audio electronics company owned by the same people who own Omnifi - originally Omnifi was part of Rockford Fosgate) (The Lounge: Music Tracks: Downloading):

anyone else been having trouble with kazaa? it seems most of the songs i dload go haywire after the first 15 seconds or so. is there any other software ya'll use to dload besides overnet? i couldnt get overnet to dload anything.
The forums might not be moderated, but that doesn't mean that the people at Rockford don't read them. After all, why have forums at all if you aren't going to read them for feedback from your customers?

Clearly, copyright will be much more secure when the INDUCE Act is used to ensure that car stereos are required to incorporate DRM. Of course, that will probably mean that your Ford might not be able to downloads WMA files from your Wintel box, and your Chevy won't accept iTunes from your G5. But, hey, copyright is more important that compatibility, convenience and ease-of-use, right?

Bonus LawMeme Poll

LawMeme is running a new poll which asks:

What Will Be Banned First If the INDUCE Act Passes?

  • iPods
  • VCRs
  • KaZaA
  • FTP
  • PCs
  • Paper
  • Senator Hatch
  • Fred von Lohmann
  • TCP/IP
  • Common Sense
Go. Vote.

Are the Opponents of the INDUCE Act (IICA) Claiming that the Sky is Falling?

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The Motley Fool calls opponents of the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) the "Chicken Little crowd" (Will Congress Kill the iPod?):

What the bill would do is amend existing copyright law to allow lawsuits against those who "intentionally induce" copyright infringement. It would be nearly impossible for a reasonable person -- and that is the standard used in the bill -- to decide that an iPod is a tool for intentional violation of copyright. Ditto a pay-per-download service with copy-protection schemes. [italics in original]
Well, I'm so relieved. After spending millions to get through a jury trial, established technologies would likely survive. We can be sure that the reasonable person would have voted to save the VCR (in the early years when they were expensive and not widely used), what with Valenti (a reasonable guy himself) telling the reasonable man that the VCR was a vicious serial killer designed by the Japanese to assault Hollywood. Oh, and systems with copy-protection schemes would be allowed to thrive. Why, that is just dandy.

Actually, however, this column does make a very good point, one I've made on the Pho List. If the INDUCE Act actually becomes law, it is highly improbable that Apple would be sued over the iPod. Yes, a plausible case could be made against Apple: EFF's Mock INDUCE Act Lawsuit. However, realistically, the RIAA has made its peace with Apple and would not sue them. That's a bit of the problem with the Save the iPod campaign. The website asks "Is the iPod Really at Risk?" and answers "Yes!" Well, no. It isn't the iPod that is at risk, it is the small company's non-DRM'd wireless iPod clone that is at risk. The biggest threat is to the innovative next-generation iPod from some company that no one has heard of yet that the RIAA will quash long before it can sell millions of units and make us all wonder how we survived without one.

That's a harder story to sell and make bumper stickers for. On the other hand, by claiming a need to "Save the iPod," you run into a problem when people say, "don't be ridiculous, Apple isn't going to be sued," because they're right. Your "Save the iPod" campaign will certainly not look credible if Apple is supporting the other side (they certainly haven't come out against the INDUCE Act yet). As a consequence, it is going to be a little harder, now, to convince the readers of the Motley Fool that they should oppose the INDUCE Act.

In other INDUCE Act news, Digital-Lifestyles.info, has a brief piece on the IICA (Senate Moves to Outlaw P2P Applications):

The sponsors of this bill are being blinkered into a view that is entirely concerned with the profits of one group – the music industry. The backers of the Induce act are rallying towards just one group at the moment, because that's where the money is.
I have to disagree. The IICA backers are also rallying for the MPAA and BSA.

UPDATE

Audio/Video Revolution does a short straight-up story on the issue (New Bill Suggests Apple Could Get Sued For What People Do With Their iPods).

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July 08, 2004

INDUCE Act (IICA) Press Roundup - July 8, 2004

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The Inducing Infringment of Copyrights Act (IICA, née INDUCE Act), is starting to get a little more press, though most of it remains ghettoized in the technology sector. Here are a few notable articles:

Number one is the transcript of USA Today's talk with EFF's Ren Bucholz' about the INDUCE Act (File sharing and the law: Ren Bucholz). Unfortunately, there were more questions than time. Hopefully, USA Today will invite Ren back to keep the public informed about this issue.

PC World senior editor Anush Yegyazarian does a very good job providing the big picture about the pro-copyright industry legislation that we're facing. (Copy Crime and Punishment). Definitely recommended.

Internet News focuses on the fast-track process Sen. Orrin Hatch (R-UT) is using to sneak the INDUCE Act through Congress (P2P Bill Induces Tech Group to Action).

The Philadelphia Daily News (annoying reg. req.) has a very interesting column that is fairly supportive of many of the recent copyright-related bills (PIRATE Act, Camcorder Use in Theaters, etc.), but really goes after the INDUCE Act with a vengeance (High-tech products taking a licking):

But a third measure (S. 2560), promoted by Hatch, is really scary in a "Big Brother" kind of way. Called the Inducing Infringements of Copyright Act, it could put the kibosh on all sorts of technological advancements by making "criminally liable" any equipment or service provider whose product has the potential to "aid, abet, induce or procure" copyright infringement.

Hopefully, we will see more mainstream press coverage of the INDUCE Act.

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The INDUCE Act (IICA) - Putting the Pornography Industry in Charge

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I've discussed before how Senator Orrin Hatch's (R-UT) legislative proposals seem to strangely benefit pornographers. See, PIRATE Act Reveals Sen. Hatch as Strange Ally of Pornography Industry. Why should the Inducing Infringment of Copyrights Act (IICA, née INDUCE Act) be any different?

I've already written about how easy it would be under the INDUCE Act for anyone who owns a copyright to haul innovators into court, not because of the merits of their case, but merely because the law basically lets them extort money from the target (INDUCE Act (IICA) = Patent Extortion, but for Copyrights?). A similar argument is made by the organizations and companies that sent a Letter to Senator Hatch, Re: S. 2560, the "Inducing Infringement of Copyrights Act of 2004"):

There are many, many more copyright owners than there are patent owners, and the burden of proof to establish at least a prima facie case of copyright infringement is minimal rather than significant and specific as in patent cases.
However, if one wants to show infringement, the copyrighted work would still have to be illicitly distributed or copied somehow. Not all copyrighted works will do the trick. Let's face the facts, most copyrighted works (like this blog), just don't get much attention. Most copyrighted works are not infringed because no one cares to. For example, as I've noted elsewhere, the likelihood of finding a copyrighted work on a filesharing network is determined more by the popularity of the work than just about any other factor.

So, what is an INDUCE Act exploiter to do? They must not simply own any old copyright, they must own a copyright that is reasonably likely to be infringed. Sure, the RIAA, MPAA, BSA and their members are likely to have access to widely infringed works, but what about the group of enterprising lawyers little guy who can't easily pull a popular band or film out of his back pocket? What's easy and cheap to produce, but is also popular to infringe? Pornography, of course.

Moreover, pornography companies have generally been hesistant to sue their customers; they see P2P networks as free advertising (P2P and Pornography: Cheap is More Convenient). Consequently, many filesharers don't hesitate to share pornography as they might lawsuit-inducing music or movie files. Of course, the would be exploiters won't really care about the infringing either, but they will be able to take advantage of it to legally extort money from innovators. Heck, these enterprising pornographers wouldn't even have to bring the lawsuits themselves. They would merely have to seek to join the inevitable lawsuits that the big boys will bring.

Once again, Sen. Hatch has designed a law eminently suited for exploitation by pornographers. I'm starting to think the guy has a secret agenda.

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July 07, 2004

Lessig on Hollaar's "Sony Revisited" and the INDUCE Act (IICA)

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Cyberlaw Prof Larry Lessig takes a look at some of the reasoning that seems to have informed those behind the Inducing Infringments of Copyright Act (IICA, née INDUCE Act) (continuing congressional confusion on copyrights (ie, not just (c), or (cc), or even (ccc) but (cccc))). He points to a recent paper (Sony Revisited [PDF]) from Lee Hollaar, Computer Science Professor with the Univ. of Utah. From the introduction of the paper:

Today, tens of millions of people participate in peer-to-peer systems like Kazaa, with most users “sharing” not their own material, but more likely music whose copyrights are owned by others. Whether such activities hurt the copyright owners by being a substitute for legitimate sales and license fees, or help by sparking interest in a new work, is not the question here. The Constitution and the copyright statutes give a copyright owner the exclusive right to the protected work during the limited duration of the copyright, and therefore the right to determine the business model for its distribution to the public. [footnotes omitted]
Lessig briefly addresses Hollaar's arguments, but really pushes the point that Sony enshrines the separation of powers, that,
This is not an opinion about copyright law alone. It is an opinion about separation of powers — about which branch is best able to do the necessary balancing that copyright law demands, “within the limits of the constitutional grant.” Sony says, in effect, when a technology is not simply a technology for violating the law, then it is left to Congress to decide whether and how that technology is to be regulated. Congress, not the courts. [link in original]
My perspective on Hollaar's paper when I've had a chance to go through it.

TiVo vs. Media Center Edition vs. INDUCE Act (IICA) vs. Broadcast Flag

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A couple of weeks ago Eric Harrison wrote a head-to-head comparison of Windows Media Center Edition and TiVo. (TiVo versus Media Center Edition PC's - finally!). TiVo won, partly because the original Windows machine had all sorts of defects, but mostly because TiVo is a more solid performer. Paul Robichaux's comparison goes into more depth about the MCE (Media Center Eye for the TiVo Guy).

Jupiter Research analyst Michael Gartenberg looks at Harrison's comparison and adds some thoughts of his own, as JR is working on a report on standalone DVRs (Tivo comparison to Windows Media Center):

First, the PC is more flexible. If I want to store and view my pictures, music and other video content, burn to DVD, copy to a portable media player and stream that content to other devices in my home, I can do that with the PC and not with the TiVo. The MCE EPG is also more flexible. Try and record the West Wing on TiVO, just the 7pm episodes shown on channel 44, not the other boradcasts. You can't do it. It's a snap on MCE. (why would you want to? to record a series according to airdates so you can watch the episodes in order). On the other hand, my TiVO never crashed, locked up, missed a scheduled record or any other annoying issue. Clearly the dedicated funcitonality makes for a more stable platform. Part of the MCE experience issue is that it's still a PC. You still need to exit to the shell to get some things done. You need to re-boot from time to time. If MCE is going to make inroads in the next year it needs to be able to shed the PC experience and live 24/7 as a consume electronics device.
Here are my thoughts. I already have a TiVo. I already have a PC. Most of the people who are considering buying a TiVo already have a PC as well. If the TiVo could simply talk to the PC, then they (and I) could get the benefits of consumer electronics reliability and the flexibility of a PC without having to buy a whole new, rather expensive PC.

So why don't DVRs offer this flexibility? They get sued into oblivion: EFF Archives: Newmark v. Turner Broadcasting System. Need I mention that the IICA (née INDUCE Act) will make bringing such company-resource-draining lawsuits easier? Or that, in a little less than a year, the government will burden such capability with mandatory DRM: Digital Television Liberation Front?

July 06, 2004

Many Organizations Sign on to Letter Requesting INDUCE Act Hearings

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A plethora of technology companies and civil liberties organizations have sent a letter to Senator Orrin Hatch (R-UT) requesting that he hold hearings on the IICA (née INDUCE Act). Read the letter at EFF (one of the signatories): Letter to Senator Hatch, Re: S. 2560, the "Inducing Infringement of Copyrights Act of 2004". The letter argues among other things that,

This new threat would chill innovation and drive investment in technology (and accompanying jobs) overseas. By combining (1) a new and separate cause of action for "intentional inducement," (2) a lower civil, rather than higher criminal, standard of liability, and (3) a circumstantially "reasonable" test, S. 2650 would seem to ensure that massive and intrusive discovery proceedings, and a jury trial, would await any innovator or investor who introduces to the market a product that some copyright owner, someplace, believes will "induce" infringement. (There are many, many more copyright owners than there are patent owners, and the burden of proof to establish at least a prima facie case of copyright infringement is minimal rather than significant and specific as in patent cases.)
I've written (with more to come) about various specific possibilities of abuse of the proposed Act here: INDUCE Act Archives.

via Copyfight

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Opposition to INDUCE Act (IICA) Getting Mainstream Press - Bill Still Moving Through Senate Quickly

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Despite a plethora of online reporting and opposition to the IICA (née INDUCE Act) from the usual suspects in the tech community (such as WIRED, C|Net, Slashdot and The Register), the mainstream press has been remarkably silent. However, two articles this morning indicate that that may be changing. USA Today has a good article summarizing the bill and the views of its opponents (Copyright bill poses threat to iPod's future). Scarily, however, the bill continues to move forward quickly:

Hatch can decide to schedule the bill for a committee vote as early as Tuesday, or at the end of the current congressional session. Hatch spokesman Margarita Tapia says there's no timetable. As for hearings, she says, "We may schedule a meeting if the chairman thinks it's necessary."
Translation: "Hearin's? Hearin's? We don't need no stinkin' hearin's. And if we tells you the schedule, how we goin' to sneak the bill through?"

The Register brings welcome news that free expression hero Rep. Rick Boucher (D-VA) will be a vigorous opponent of the Act (Hatch's Induce Act comes under fire):

"Anyone making ANY kind of recording device, even an innocent recorder that has many other fair uses, could be in breach of this law just for making that technology available. Frankly there is no need for the statute at all."
UPDATE 0830 PT

Homestate newspaper castigates Hatch on INDUCE Act. The Provo Daily Herald has the following, less than flattering words for their senator (Beehives & Buffalo Chips):

Buffalo Chip to Utah Sen. Orrin G. Hatch, who's taking his hatred for people downloading music to new depths. Hatch, who previously suggested frying the computers of those who download MP3 files through filesharing software, now wants to make the software illegal, on the grounds that Gnutella, KaZaA and others "induce" people to flout copyright laws. That's like arguing that bolt cutters should be illegal because they may induce someone to commit burglary. Maybe Hatch is upset because few people, if any, are downloading his schmaltzy music.[emphasis in original]

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The INDUCE Act (IICA) and the Broadcast Flag

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A little over a week ago, I discussed how the IICA (née INDUCE Act) might end up extending the already overbroad Broadcast Flag Treaty (INDUCE Act + Broadcast Flag Treaty = ???). Today I continue my series on how various aspects of the copyright law may interact with the INDUCE Act by discussing the FCC's domestic broadcast flag regulation. Read on...

First, a caveat. Although the broadcast flag walks like copyright regulation and quacks like copyright regulation, the FCC assures us it is not copyright regulation and makes no changes to copyright law. This is good, because the FCC doesn't have authority to regulate copyright (FCC Sued Over Broadcast Flag - Yay! and Significant Procedural Victory in Broadcast Flag Lawsuit).

Anyway, since the broadcast flag is not actually copyright law, the INDUCE Act will not directly affect it. However, enforcement of the broadcast flag will certainly be affected. After all, in its order, the FCC found (among other things) that (Report and Order and Further Notice of Proposed Rulemaking):

We recognize that piracy concerns are likely to be addressed through a number of approaches, including consumer education, law enforcement, and changed business models. In order to effectively address these concerns, however, we believe that technological steps must be taken now before the DTV transition matures any further. [emphasis added]
If a company violates the broadcast flag, not only will they be in trouble with the FCC, but the FCC's findings in the broadcast flag report will be cited as evidence against them in an INDUCE Act infringement suit. Reasonable men would have taken the FCC's findings into account, wouldn't they? And the government wouldn't be wrong about the steps that "must be taken" to reduce piracy, would they? Thus, violators of the broadcast flag regulations will not only get FCC fines, but would likely be easily nailed by a subsequent civil infringement lawsuit (with its massive penalties). Ouch.

Also, imagine if we are lucky and the courts force the FCC to abandon broadcast flag regulation. This wouldn't happen for months. In the meantime, many companies are gearing up to produce HDTV equipment that meets broadcast flag requirements. Indeed, some companies are already selling such compliant equipment and would continue to do so even in the absence of FCC requirements. However, what happens to the companies that decide not to go along with the broadcast flag regulations once they are eliminated? Again, the FCC's own findings would be used as evidence in an INDUCE Act case against those who don't play along with broadcaster's DRM fantasies. The INDUCE Act might be enough for the copyright holders alone to force consumer electronics companies into compliance with the broadcast flag, even if the FCC couldn't require it.

Another possible effect of the broadcast flag regulation in light of the INDUCE Act is that the Act may close the broadcast flag export loophole (Broadcast Flag Loophole Watch - Manufacture for Export). If the broadcast flag regulations are necessary domestically, I'm not sure why they wouldn't be similarly necessary for those devices exported overseas. Now, maybe the FCC doesn't see why we should cripple our sales to countries overseas, but why should Hollywood be so reticent? After all, we know what all those lousy Canadians who live near the border will do with their HDTV tuners ... they'll capture US HDTV video signals and pirate them!

July 02, 2004

The INDUCE Act (IICA) and the Notice and Takedown Provisions of the DMCA

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Continuing my series on how various aspects of the copyright law may interact with the INDUCE Act (née IICA), this post will address the "notice and takedown" provisions of the Digital Millennium Copyright Act ("DMCA"), codified at 17 USC 512. Now the notice and takedown provisions of the DMCA have already had more than their fair share of controversy, including some rather clear cases of abuse. See, EFF's Unsafe Harbors: Abusive DMCA Subpoenas and Takedown Demands and Chilling Effects's DMCA Safe Harbor Provisions. Guess what. If the INDUCE Act passes, things may get a whole lot worse. Read on...

Basically, well, since I'm lazy, I'll just cut and paste from the Chilling Effects website:

In the online world, the potentially infringing activities of individuals are stored and transmitted through the networks of third parties. Web site hosting services, Internet service providers, and search engines that link to materials on the Web are just some of the service providers that transmit materials created by others. Section 512 of the Digital Millennium Copyright Act (DMCA) protects online service providers (OSPs) from liability for information posted or transmitted by subscribers if they quickly remove or disable access to material identified in a copyright holder's complaint.

In order to qualify for safe harbor protection, an OSP must:

  • have no knowledge of, or financial benefit from, the infringing activity
  • provide proper notification of its policies to its subscribers
  • set up an agent to deal with copyright complaints

While the safe harbor provisions provide a way for individuals to object to the removal of their materials once taken down, they do not require service providers to notify those individuals before their allegedly infringing materials are removed. If the material on your site does not infringe the intellectual property rights of a copyright owner and it has been improperly removed from the Web, you can file a counter-notice with the service provider, who must transmit it to the person who made the complaint. If the copyright owner does not notify the service provider within 14 business days that it has filed a claim against you in court, your materials can be restored to the Internet.

But what does section 512 actually say about what materials can be requested to be removed? Obviously, directly infringing material can be removed. However, section 512 also provides for the removal of material that is "the subject of infringing activity." What does that mean? If the INDUCE Act passes, I think it could mean that software that has been found to "induce" infringement is the proper object of a section 512 notice and takedown request because it is "the subject of infringing activity." It may not be the subject of infringement, but of "infringing activity," whatever that means. In other words, a copyright holder could request that websites like Download.com stop hosting copies of P2P filesharing software.

Of course, one of the wonderful (sarcasm) things about section 512 is that the copyright holder requesting removal of files doesn't have to prove that the files are infringing (or the subject of infringing activity) in order to get them taken down. The copyright holder merely has to claim "a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law." Well, if you are saying that a particular type of software "induces" infringement, then that would seem to be covered by "use of the material in the manner complained of is not authorized by the copyright owner,... or the law."

Another problem with section 512 is that ISPs basically have no incentive to fight these notice and takedown requests. If they don't take down the file, the ISP may be liable for secondary copyright infringement. By taking down the materials, ISPs are sure to avoid liability. Generally, for the ISPs, that is the end of the story as far as they are concerned.

The same incentives would apply with the INDUCE Act. If an ISP received a section 512 notice and takedown request targeted at an "inducing" file that was claimed to be "the subject of infringing activity" why would the ISP want to fight the letter? If the ISP doesn't take down the file, they may be facing an INDUCE Act lawsuit themselves. If the ISP takes down the file, they avoid potential liability.

Now, perhaps my analysis here is incorrect. I haven't checked the legislative record to figure out what they might have meant by "the subject of infringing activity," which only appears in the Copyright Act in section 512. However, I do think this is a serious question we should be concerned about. Will copyright holders be able to easily force removal of files they don't like through this already abused statute?

June 30, 2004

INDUCE Act (IICA) = Patent Extortion, but for Copyrights?

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WIRED reports on the launch of EFF's Patent Busting Project (EFF Publishes Patent Hit List). Slashdot discussion here: EFF, PubPat Each Seeking Some Patent Sanity. This is a much needed project, as patent abuse has become a rampant problem. EFF explains it this way:

Unlike most technologies, software and the Internet have attracted a vast number of small business, non-profit, and individual users – each of whom has adopted and built upon these resources as part of their daily interaction with computers and the online world. From open source programming to online journaling to political campaigning, the average citizen is using new technology online and on her desktop as often as any traditional company.

With this increased visibility, however, comes increased vulnerability. Previously, patent holders had only targeted competing companies. These companies have established legal departments and outside counsel and are thus able to defend against illegitimate patent threats. Now some patent holders have begun to set their sights on the new class of technology users–small organizations and individuals who cannot afford to retain lawyers. Faced with million-dollar legal demands, they have no choice but to capitulate and pay license fees – fees that often fund more threat letters and lawsuits. And because these patents have become cheaper and easier to obtain, the patentee’s costs can be spread out quickly amongst the many new defendants. Our patent system has historically relied on the resources of major corporate players to defeat bad patents; now it leaves these new defendants with few if any options to defend themselves.

Illegitimate patents can also threaten free expression. More and more people are using software and Internet technology to express themselves online. Website and blogging tools are increasingly popular. Video and audio streaming technology is ubiquitous. E-mail and Instant Messaging have reached users of all ages. Yet because patents can be anywhere and everywhere in these technologies, the average user has no way of knowing whether his or her tools are subject to legal threats. Patent owners who claim control over these means of community discourse can threaten anyone who uses them, even for personal non-commercial purposes. We lose much if we allow overreaching patent claims to reduce the tremendous benefits that software and technology bring to freedom of expression.

Hmmm...I wonder what would happen if you put a law similar to the patent law (only more flawed) into the hands of just about anyone who wants to abuse it (copyrights being even easier to obtain than patents)? Imagine a small team of lawyers company that put together a portfolio of copyrighted works that are shared (at least somewhat) via various networks and then start going after individuals and companies who didn't infringe the works, but "induced" infringement by numerous, unknown others. Even if the case is winnable, defending it will be very costly. Small organizations and individuals who cannot afford to retain lawyers will have no choice but to capitulate and pay license fees – fees that often fund more threat letters and lawsuits.

Yes, the INDUCE Act (née IICA) would have yet another unintended consequence.

Quote of the Day - CD Burner INDUCE Act (IICA) Edition

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What if CD burners had to be removed from the shelves until a license from ALL rights holders could be obtained. Would eight years have passed until the shelves were re-stocked?
- David Touve

The INDUCE Act (née IICA) would definitely have made this a possibility if it had been in force when CD burners were introduced. It is unlikely the RIAA would go after them today (but who knows? Maybe they've been saving boxes of "evidence" just in case.) After all, why would burner companies need to sell so many CD burners that could burn Red Book Audio? The burner manufacturers must certainly have known there aren't that many musicians and that the biggest use for the drives (at least the Red Book Audio capabilities) would be nothing less than piracy.

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Study Finds Americans Opposed to RIAA Suing Direct Infringers - INDUCE Act (IICA) Supporters Cheer

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Legal website Findlaw has released the results of a study about Americans' attitudes toward the RIAA lawsuits against filesharers. Read the press release: FindLaw Survey Reveals RIAA Lawsuits Unpopular with Americans. The survey found that:

According to the national survey by FindLaw, 56 percent of American adults oppose the lawsuits. Thirty-seven percent support the industry's legal actions. Seven percent of those surveyed had no opinion. One thousand adults were surveyed, with results accurate plus or minus three percent.
Problem. The questions were apparently regarding the RIAA suing downloaders. Downloaders. Even survey firms are still so clueless they can't distinguish between downloaders and uploaders. I imagine the percentages would be somewhat different if the questions were framed regarding uploaders, though I'm sure the lawsuits will still be unpopular.

That's not the important point, however. In the near term, this survey will lend support to those trying to get the INDUCE Act (née IICA) passed. One of the major reasons that the RIAA, MPAA and BSA ostensibly support the INDUCE Act is because they claim to not want to sue end-users but only the P2P companies. This survey will lend their argument support. For example, let's see what Sen. Orrin Hatch (R-UT) had to say about this issue when he introduced the Act:

In theory, a rule that immunizes inducement still permits enforcement against those induced to infringe. At first, this remedy seems viable because copyrights have traditionally been enforced in lawsuits against direct infringers who actually make infringing copies of works.

But a fallacy lurks here: The “direct infringers” at issue are not the traditional targets for copyright enforcement. In fact, they are children and consumers: They are the hundreds of millions of Americans – toddlers to seniors – who use and enjoy the creative works that copyrights have helped create.

There is no precedent for shifting copyright enforcement toward the end-users of works. For nearly 200 years, copyright law has been nearly invisible to the millions who used and enjoyed creative works. Copyright law was invisible to consumers because the law gave creators and distributors mutual incentives to negotiate the agreements that ensured that works reached consumers in forms that were safe to use in foreseeable ways. Now, those incentives are collapsing. As a result, artists must now waive their rights or sue consumers – their fans.

Worse yet, artists must sue their fans for the sin of misusing devices designed to be easy and tempting to misuse. That is unfair: When inducement is the disease, infringement can be seen as just a symptom. Yet artists must ignore inducers who profit by chanting, “Hey, kids, infringement is cool, and we will help you get away with it.” Instead, artists can only sue kids who succumb to this temptation. They must leave Fagin to his work – and sue Oliver Twist....

Today, artists are suing high-volume filesharers who cannot be identified until late in the process. One filesharer sued for violating federal law over 800 times turned out to be a 12-year-old female honor student. This otherwise law-abiding young girl and her family then faced ruin by the girl’s favorite artists. The public knew that something was wrong, and it was outraged. So the people who gave that girl an easily misused toy – and profited from her misuse of it – exploited public outrage with crocodile tears about the tactics of “Big Music.” And then, I imagine, they laughed all the way to the bank.

With regard to this study, Hatch will be laughing all the way to a vote on the Senate floor.

via Tech Law Advisor

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The INDUCE Act (IICA) and the Anti-Circumvention Provisions of the DMCA

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Continuing my series on how various aspects of the copyright law may interact with the INDUCE Act (née IICA), today let us discuss the anti-circumvention provisions of the Digital Millennium Copyright Act ("DMCA"), codified at 17 USC 1201. For those of you who have been travelling with the Mars Rover for the past few years, the relevant portions of the DMCA make it illegal to distribute devices that circumvent access controls and copy controls, basically, DRM cracks. The DMCA is a bad law, but I'm not going to go into details here.

Now the thing with many anti-circumvention devices is that they are "capable of substantial noninfringing uses" and thus avoid secondary copyright liability under the Sony (Betamax) doctrine. Backups, fair use, playback on alternative devices; all are common examples of noninfringing uses that circumvention devices enable. DMCA plaintiffs could fight this in court, but it would be tough and probably not worth it. So, while a company may get busted for violating § 1201, which is bad enough, they will generally have a pretty good defense against claims of secondary copyright liability.

But how hard would it be to prove secondary liability under the INDUCE Act? Once you've shown that a company has violated the DMCA, it isn't much farther to push a jury to find that they "induced" copyright infringement as well, thus bringing all the secondary liability down like a ton of bricks without all the hassle associated with proving contributory or vicarious liability. Indeed, merely advertising a circumvention device or providing instructions on how to use it will probably be enough to trigger inducement liability.

Now, think about how the DMCA has been abused to do things like control markets in ink cartridges. Now, imagine that plaintiffs get to slap a secondary copyright liability suit on top of that. Bonus!

The INDUCE Act will make the unbalanced anti-circumvention provisions of the DMCA even more unbalanced.

June 29, 2004

The INDUCE Act and the Right to Prepare Derivative Works

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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?

Supporting the INDUCE Act

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Not too long ago, I explained why I believed Microsoft was a supporter of DRM (Metaphors Gone Wild: On Pies, Ships, Regressive Taxes, DRM and Microsoft). Basically, my argument was that DRM acted as a barrier to entry and slowed innovation so that Microsoft could remain at the top of the mountain. Today, Ed Felten makes a similar argument with regard to the INDUCE Act and why tech companies can't seem to get their act together with regard to combatting Hollywood's lobbyists ("Tech" Lobbyists Slow to Respond to Dangerous Bills). Says Felten:

Giving the entertainment industry a veto over new technologies would have two main effects: it would slow the pace of technical innovation, and it would create barriers to entry in the tech markets. Incumbent companies may be perfectly happy to see slower innovation and higher barriers to entry, especially if the entertainment-industry veto contained some kind of grandfather clause, either implicit or explicit, that allowed incumbent products to stay in the market -- as seems likely should such a veto be imposed.

Just to be clear, an entertainment-industry veto would surely hurt the tech incumbents. It's just that it would hurt their upstart competitors more. So it's not entirely surprising that the incumbents would have some mixed feelings about veto proposals, though it is disappointing that the incumbents aren't standing up for the industry as a whole.

Absolutely, and Felten's argument is yet another facet of the technology industries that the Boston Globe's Hiawatha Bray doesn't get (For geeks, it's a big misunderstanding).

The question is, how do we convince the incumbent industries to defend the industry as a whole? With regard to Microsoft, I'm not sure that we can. I don't think it is anymore possible to convince Microsoft to support open innovation and markets than it would have been to convince AT&T to open up the telephone markets to competition in the late '70s.

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June 28, 2004

Go Ahead with the INDUCE Act - A View from Overseas

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Dr. Karl-Friedrich Lenz, a professor at Aoyama Gakuin University in Japan, has a different perspective on the INDUCE Act (A Balanced View of the INSANE Act Proposal). Of course, there must be something wrong with the translation, Dr. Lenz has the Act as named, "Intentionally Stopping Advances of the Nation's Economy," or INSANE Act. Anyway, he is not nearly as opposed to it as many commentators here in the US:

First of all, while it might be true that this legislation will help to make America a technological backwater, with iPods and the Internet being illegal under this legislation, depending on your perspective, that is actually a good thing. It helps Europe and Japan in the global competition with America to have strange American laws strangling research and development there, so from an international point of view, I can only say "go ahead".
Lenz notes that the law could use some improvements, and if they were made, then, "it might be better than the Japanese approach of just arresting creators and sort out later if it was actually illegal what they did."

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INDUCE Act + Broadcast Flag Treaty = ???

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The WIPO Treaty for the Protection of Broadcasting Organizations would basically give copyright protections (fixation, reproduction, distribution, DMCA) to broadcasters, cablecasters and, if the US gets it way, webcasters (whatever that means). Read more about this dangerous draft treaty here: The Broadcast Flag Treaty - Draft Available.

The WIPO treaty doesn't call for anything like the INDUCE Act, but to implement it, the US would basically have to extend most basic copyright law (and the DMCA) to cover broadcasts. What do you think? Will Congress revisit and change copyright law to apply it to broadcasters, or will Congress basically port over everything in copyright law to the new broadcast rights law? If the US signs the Broadcast Flag treaty, you don't think that broadcasters would get less protection do you?

Yep, yet another reason to make sure the INDUCE Act doesn't pass.

June 27, 2004

Crawford on the INDUCE Act: Not With a Sledgehammer, But a Stiletto

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Prof. Susan Crawford, who was the first to post the text of the INDUCE Act (aka IICA), writes that (Overstatement and IICA):

There are reasonable people walking on this earth who will say that the IICA is not a big deal. Rather than jump down their throats, I'm going to suggest that we slow things down, have some hearings, and try to get to the bottom of what's going on.
Crawford's arguments are meant to be the reasonable, low-key responses to proponents of the Act. They may be that, but they conclusively show how overbroad the Act is:
Let's assume, for the sake of this argument, that both sides have good points. But there is a great deal of fear on the IT sector side, and there's no limiting language in the bill that focuses on "illegal file sharing."
Well, that's the problem, isn't it? There is no limiting language. What some say with a sledgehammer, Crawford says with a stiletto.

On the question of whether the INDUCE Act overrules Sony, Crawford notes:

Similarly, so the argument goes, the IICA's creation of a new kind of secondary liability, triggered by "acts from which a reasonable person would find intent to induce infringement based upon all relevant information about such acts then reasonably available to the actor, including whether the activity relies on infringement for its commercial viability," would leave judge-made theories of contributory liability in place -- but no one would ever use them again.
Indeed. Although I think people would still use Sony, just because you almost always bring every charge you can.

Crawford's conclusion?:

So where are we? We're worried enough to hold a hearing. We don't need to scream or claim that the other side is witless or evil. We just need to think this through.
Indeed we don't have to call the other side witless or evil. Even if they were, this is a very politic and reasonable argument to make. More hearings needed. Of course.

Spokespeople need to make these arguments. However, my cynical self believes that the drafters of this law know full well what they were doing. The Business Software Alliance pays good money for their lawyers; they best not be witless. Neither are they evil; they're simply self-interested. In dealing with public policy issues, such as this one, we call this behaviour "rent-seeking." Rent-seeking isn't necessarily evil, but we don't generally like it. I'm going to call "rent-seeking" when I see it.

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Quote of the Day: Legal Programming Edition

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From News You Can Bruise regarding the INDUCE Act (And Another Thing):

Also, all laws should be written in my Leibnitzian Python wonder-language that contains no ambiguity.

PIRATE Act + INDUCE Act = ???

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On Friday, C|Net News reported that the Senate had passed the PIRATE Act (S.2237 Status) "overwhelmingly" (Senate OKs antipiracy plan). The Act would permit government to bring civil enforcement lawsuits against willful infringers. As Frank Field said on Furdlog, "So much for all the whistling past the graveyard, claiming that Congress had too much real work (like passing a budget) to mess with the copyright fights" (PIRATE Act Passes Senate). Indeed. Previous coverage here: PIRATE Act Reveals Sen. Hatch as Strange Ally of Pornography Industry and PIRATE Act - Wiretaps for Civil Copyright Infringement?.

Of course, attention-wise, the PIRATE Act has taken a backseat to the INDUCE Act this past week. The INDUCE Act claims that "Whoever intentionally induces any" copyright infringement "shall be liable as an infringer." How does this interact with the PIRATE Act? Could the government start suing P2P companies and putting them out of business? Possibly. I'd like to say, unlikely, but I'm not sure.

Under the PIRATE Act, for the government to go after someone, they have to meet the requirements of 17 USC 506:

(a) Criminal Infringement. - Any person who infringes a copyright willfully either -
(1) for purposes of commercial advantage or private financial gain, or
(2) 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, which have a total retail value of more than $1,000,
shall be punished as provided under section 2319 of title 18, United States Code. For purposes of this subsection, evidence of reproduction or distribution of a copyrighted work, by itself, shall not be sufficient to establish willful infringement.
Proving "for purposes of commercial advantage or private financial gain" would definitely be pretty easy in the case of most commercial entities sued under the INDUCE Act. The question is whether being "liable as an infringer" is the same thing as one who "infringes a copyright willfully." Although a plain reading of the statute would seem to indicate it isn't, I believe there are some plausible arguments that it is. If someone who "infringes a copyright" is the same as someone "liable for infringement," then the government would be able to bring civil law enforcement suits under the INDUCE Act. Certainly an agressive DOJ might try to push this issue. And how many juries would fail to convict with the government telling people what rotten dirty inducers the defendants are?

Hmmm...

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June 25, 2004

EFF's Mock INDUCE Act Lawsuit

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Brilliantly satirizing (is it really satire if its true?) how easily Hollywood (or any copyright holder) could bring a lawsuit under the proposed INDUCE Act, EFF attorneys have drafted a mock lawsuit complaint against Apple (for making the iPod), C|Net (for reviewing the iPod), and Toshiba (for supplying hard drives for iPods).

Read the press release: Will the Inducing Infringement Act Kill the iPod?.
Read the 9-page complaint: Fake Apple Complaint [PDF].
My take on the INDUCE Act here: The Obsessively Annotated Introduction to the INDUCE Act.

The complaint is rock solid and shows how easy it would be for a plaintiff to force an extended court battle:

Because the Induce Act defines "intent" as being "determined by a reasonable person taking into account all relevant facts," it's unlikely that a technology company like Apple would be able to easily dismiss any lawsuit brought against it. It would face the prospect of an expensive trial, with all the attendant legal fees and negative publicity. One such company, SonicBlue, recently fought against a group of copyright holders in court over its ReplayTV and spent close to $1,000,000 per month in legal fees alone. In essence, this means that copyright owners can use the "inducement" theory to inflict an arbitrarily large penalty on any tech company that builds a device they don't like. That's not a pleasant possibility for an innovator to face as he or she tries to launch a new product.
Read on...

The complaint reads like an RIAA wet dream:

8. Before the introduction of portable digital music players, the value of the music files derived from infringing sources was limited by the fact that computer users generally had to be sitting at their computers in order to play and enjoy them. Defendant Apple knew this and hence made the calculated decision to intentionally induce and enhance the attractiveness of infringement by providing these infringers with a device to enhance the rewards of their illegal labors – the iPod.

9. As detailed further in Professor Expert’s report, the iPod would have been much less attractive to consumers had it been incompatible with the music files downloaded from P2P networks and had it not allowed consumer-to-consumer transfers. Professor Expert’s report also makes it clear that the iPod, in turn, enhanced the attractiveness of P2P networks by offering iPod owners expansive storage capability and lightning- fast data transfer, allowing them to listen to any number of infringing music files when away from the computer.

10. Surveys conducted by Professor Expert establish that a majority of iPod owners have used at least some significant portion of their iPods to store and play infringing music files, whether derived from P2P networks or promiscuous hand-to-hand copying. Upon information and belief, Apple was certainly aware of this fact from its own internal marketing research.

Apple’s “Rip, Mix, Burn” Campaign Demonstrates Its Intent To Induce Infringement

11. Apple has directly encouraged music piracy through its “Rip, Mix, and Burn” campaign used to sell both its Macintosh computers and iPod player. There can be no better evidence of inducing infringement than to literally spell out the steps to one’s customers.[emphasis in original]

Read the whole thing. Laugh. Then cry.

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June 24, 2004

The Obsessively Annotated Introduction to the INDUCE Act

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Yesterday, as C|Net News reported, Senator Orrin Hatch (R-UT) officially introduced the INDUCE Act to the public (Senate bill bans P2P networks). See also, Susan Crawford (INDUCE Act introduced) and Larry Lessig (even I can’t believe this). Read the bill here: Inducing Infringement of Copyrights Act of 2004 [PDF].

In introducing the bill, Hatch provided extensive justifications and arguments on behalf of the bill. Eight pages worth: Before the United States Senate on Introduction of the “Inducing Infringement of Copyrights Act of 2004” S. 2560 [PDF]. Since it looks like this bill will move quickly in Congress, opponents will have to get up to speed quickly. Thankfully, Hatch provided an excellent guide to the talking points proponents will use. Consequently, I've decided to go through Hatch's introduction and extensively annotate it. However, this is just a response piece and many arguments against the bill won't be here. The annotation is long, but I think there are definitely some valuable nuggets of information, such as, towards the end, Hatch makes clear he wants criminal enforcement of the Act.

My comments are in brackets, bold and italics. I've added hyperlinks to Hatch's text as I thought useful. Read on...

Statement of Senator
Orrin [Will someone please think of the children?] Hatch
Before the United States Senate on Introduction of the “Inducing Infringement of Copyrights Act of 2004” S. 2560
June 22, 2004


SEN. HATCH [R-UT $157,860]. Mr. President, I rise with my esteemed colleague and friend, Senator Leahy [D-VT $181,000], ranking Democrat Member of the Senate Judiciary Committee, to introduce the “Inducing Infringement of Copyrights Act of 2004 [PDF].” [The Act has changed its name. Before it was introduced it was called the "Inducement Devolves into Unlawful Child Exploitation Act" or INDUCE Act. Presumably, the new title will be subject to less ridicule.] This Act will confirm that creative artists [Note to self: When introducing copyright legislation always refer to "creative artists" and not "large corporate conglomerates, many of which are foreign-owned."] can sue corporations [Hmmm ... my copy of the bill doesn't say "corporations." It says you can sue "whoever."] that profit [Or not. You don't have to profit in order to be sued. Many not-for-profit open source software projects (and their coders) will be targeted for elimination if this bill becomes law.] by encouraging children, teenagers [Will someone please think of the children?] and [millions of] others to commit illegal or criminal acts of copyright infringement [as well as frowned upon use of fair use rights and freedom of expression]. Senator Leahy and I are pleased that Majority Leader Frist [R-TN $58,550] and Minority Leader Daschle [D-SD $318,790] and Senators Graham [R-SC $72,273] and Boxer [D-CA $476,985] are co-sponsoring this important bipartisan legislation.

Mr. President, it is illegal [If it is already illegal, why do we need a statute?] and immoral to induce or encourage children [Will someone please think of the children?] to commit crimes. Artists realize that adults who corrupt or exploit the innocence of children are the worst type of villains. [Well, call me morally challenged, but I consider murderers worse. And I take it these are different artists than the ones that corrupt children through that "rock and roll" or "rap" noise?] In Oliver Twist, Fagin and Bill Sikes profited by inducing children to steal. [Hatch fails to note that Oliver was forced into the streets when the moralistic parish authorities sent him to a workhouse that nearly starved him to death and then sold him to an abusive undertaker as a slave/apprentice when he asked "for more." I think one of the points Dickens was making was that if you treat people better, there will be less cause for them to turn to crime. Sort of like if the RIAA treated people better they might not engage in infringement.] In the film Chitty-Chitty Bang-Bang, the leering “Child-Catcher” lured children into danger with false promises of “free lollipops.” [Actually, the Child-Catcher was acting as an agent of the government because a nonsensical law banning children had been passed by a ruler who feared kids, sort of like other nonsensical laws banning things those in power fear.] Tragically, some corporations now seem to think that they can legally profit by inducing children to steal – that they can legally lure children [Will someone please think of the children?] and [millions of] others with false promises [If the promises are false, then no infringement takes place, right?] of “free music.” [Tragically, some major corporate copyright holders now seem to think that they can legally profit by getting laws passed that inhibit innovation and free speech.]

Such beliefs seem common among distributors of so-called peer-to-peer filesharing (“P2P”) software. ["So-called," indeed. Hatch isn't about define what P2P software is because it would end up including things like e-mail, IM, VoIP, HTTP and plenty of other internet protocols. P2P is how much of the internet works.] These programs are used mostly by children and college students – about half of their users are children. [You can say the same things about videogames, as well as other popular technologies like IM and SMS. It is frequently the case that the younger generation adopts new technologies sooner than older users.] Users of these programs routinely violate criminal laws relating to copyright infringement and pornography distribution. [You can say the same thing about plenty of internet protocols, such as HTTP, FTP, SMTP, and so on.] Criminal law defines “inducement” as “that which leads or tempts to the commission of crime.” [Luckily, not every temptation is a crime or there would be more people in jail than free.] Some P2P software appears to be the definition of criminal inducement captured in computer code. [Software is a tool. This is the same as saying that bolt-cutters and crowbars are inducements to burglary.]

Distributors of some P2P software admit this. The distributors of EarthStation 5 state, “While other peer 2 peer networks like Kazaa or Imesh continue to deny building their programs for illegal file sharing, at ES5 we not only admit why we built ES5, we actually promote P2P, endorse file sharing, and join our users in swapping files!” [Unfortunately for Hatch and copyright holders, EarthStation 5 claims to be located in a Palestinian Refugee Camp and is beyond the reach of US law. Point out problems that your statute will do nothing about. That's persuasive.]

Recently, in the Grokster case, a federal court drew similar conclusions about the intent of other distributors of P2P software. It warned that some P2P distributors “may have intentionally structured their businesses to avoid secondary liability for copyright infringement, while benefiting financially from the illicit draw of their wares.” [Generally, those who structure their companies so that they remain within the bounds of the law are considered admirable. We call these people "businessmen," "entrepreneurs," and "capitalists."] In other words, many P2P distributors may think that they can lawfully profit by inducing children [Will someone please think of the children?] to break the law and commit crimes. [What about those who have no intention of profiting, but merely like to code?]

They are dead wrong. America punishes as criminals those who induce others to commit any criminal act, including copyright infringement. [So we need this statute, why?] The first sentence of our Criminal Code states:

Whoever commits an offense against the United States or aids, abets, counsels, commands, induces, or procures its commission, is punishable as a principal….

Indeed, it is absurd to think that our law might be otherwise. No civilized country could let sophisticated adults profit by tempting its most vulnerable citizens – its children [Will someone please think of the children?] – to break the law.

I think we must understand how some corporations came to confuse child endangerment with a legal business model. [Again with the corporations. Unfortunately, the law isn't limited to corporations.] Their confusion seems to arise from court cases misinterpreting a well-intended Supreme Court decision that tried to clarify two critical components of federal law: the law of secondary liability and the law of copyright. [Senator Hatch, legal scholar. I like this quote from The Hill, "No Republican senator has sponsored more laws later held unconstitutional than Hatch." That's quite an impressive record and says something about his legal acumen. And what it is saying can't be printed on a family webpage.]

The Supreme Court states that secondary liability is “imposed in virtually all areas of the law.” Secondary liability is universal because its logic is compelling. [Except when it isn't compelling.] It does not absolve lawbreakers of guilt. But it recognizes that we are all human: We are all more likely to break the law if encouraged or ordered to do so. [Encouraging and ordering are far more direct actions than "inducing." Thesaurus.com doesn't show either "encourage" or "order" as being synonymous with "induce."] Secondary liability thus discourages lawlessness by punishing people who manipulate others into doing the “dirty work” of breaking the law. [Nope, "manipulate" isn't a synonym for induce either. "Manipulate" usually indicates some form of control.] Secondary liability usually targets two types of persons: 1) those who induce others to break the law, and 2) those who control others who break the law. [Ok. But let's remember that P2P software also has legitimate uses (dual-use), which Hatch doesn't deny. What does a real legal scholar, like UCLA Law Professor Eugene Volokh, have to say about inducement, particularly in speech cases involving dual-use, in his paper on Crime Facilitating Speech {PDF}?:

First, aiding and abetting laws and crime facilitation laws are almost never applied to dual-use conduct. In the typical aiding case, the aider knows that his services will be used by one particular person, solely to commit a crime. Even when the aider is generally in the business of providing a dual-use product—such as metal-cutting equipment—he is generally prosecuted only when he knows that a particular sale is going to a person who intends to use the product illegally (for instance, to break into a bank).]

Though secondary liability is nearly ubiquitous, it has almost always remained as a judgemade, common-law doctrine – and for a good reason. [Judgemade that is, except for that first sentence in the Federal Criminal Code cited above.] Secondary liability prevents the use of indirect means to achieve illegal ends. Consequently, the scope of secondary liability must be flexible – otherwise, it would just instruct wrong-doers on how to legally encourage or manipulate others into breaking the law. [It must also be flexible otherwise you are going to be tossing a lot of people into jail unjustly. You see, the more secondary liability you impose, the more likely you significantly increase the costs of obeying the law. For example, you could hold sellers of bolt-cutters secondarily liable for burglary, unless they proved they did a background check before selling bolt-cutters.] The common-law judicial process is ideally suited to evolve flexible secondary-liability rules from the results of many individual cases. [Indeed. Unfortunately, it isn't providing the answers Hollywood wants.]

As a result, Congress rarely codifies secondary liability. It has codified secondary liability to narrow it, as in the Patent Act. Congress has codified secondary liability in the Criminal Code to ensure that the narrow construction given criminal statutes would not foreclose secondary liability. In the Digital Millennium Copyright Act, Congress codified a complex balance between opposed interests that expanded one type of secondary liability and narrowed another. [If Hatch considers the DMCA balanced, I'm not sure he has any idea what the word actually means.]

Congress has always assumed that infringers could readily induce consumers to accept infringing copies of works. It thus created “a potent arsenal of remedies against an infringer….” But secondary liability often arises if a third party can be ordered or induced to make the infringing copies. [If P2P networks were ordering people to infringe copyright I would be all for prosecuting them.] Consequently, only after copying devices became available to people who might be induced to infringe did questions about secondary liability for infringement become pressing. [Today, we call these copying devices "Personal Computers connected to the internet." Of course, they do a lot more than copy things, but if you talk about them as "copying devices" it sounds better.]

In 1984, these questions reached the Supreme Court in Sony Corp. v. Universal City Studios, Inc. Sony held that the makers of the Betamax VCR could not be held secondarily liable in a civil suit brought by copyright holders – even though some consumers would use VCRs to make infringing copies of copyrighted TV broadcasts.

Sony also created a broader limitation on secondary liability by importing a limitation that that Congress had codified only in the Patent Act; this was the substantial-noninfringing-use rule, also called the “staple article of commerce” doctrine. Sony intended this rule to strike, as between creators of works and copying equipment, the same “balance” that it had struck under the Patent Act between the rights of patent holder and makers of staple products.

Under the Patent Act, the substantial-noninfringing-use rule bars secondary liability for selling a “staple” product that has a “substantial noninfringing use” – even if that staple could also be used as a component in an infringing copy of a patented invention. [Of course, in Sony, the Supreme Court said that a device "need merely be capable of substantial noninfringing uses" in order to avoid copyright liability.] This rule protects makers of staples without changing the nature of secondary liability. In particular, it does not immunize bad actors who intend to distribute “patent-infringement kits.” Even in the rare case of a novel invention that consists only of “staple” components, an “infringement kit” must bundle components and include assembly instructions. [Well, that is one of the problems, isn't it? P2P is a staple component of the internet. If P2P was only useful for infringement it would be easy to pass a law banning P2P, now wouldn't it? And what about those assembly instructions? What P2P network, other than EarthStation 5, is bundling infringement instructions? It doesn't take a genius to figure out that P2P filesharing programs can be used to infringe copyright; no instructions are needed. Of course, I can also say the same thing about email, FTP, HTTP, you get the picture.] Neither the bundle nor the instructions will likely have a “substantial noninfringing use.” [Well, then there isn't a problem is there? The "substantial noninfringing use" test is already part of the legal landscape.]

Sony intended this rule to strike the same admirable “balance” under the Copyright Act. Unfortunately, Sony also proposed that if this rule proved problematic, Congress should alter it on a technology-by-technology basis. [Not quite. The court basically said to Congress, if you don't like our ruling, change the law. I don't recall the Court demanding Congress only change the law on a technology-by-technology basis.] This proposal was flawed: In 1976, Congress redrafted the Copyright Act to avoid the need to re-adjust copyrights on a technology-by-technology basis because legislation could no longer keep pace with technological change. [Which explains why Congress had to pass the No Electronic Theft Act, Digital Audio Home Recording Act and the DMCA. Hatch has been around long enough that he should remember these laws.] Returning to this impractical technology-based approach would create an endless procession of “tech-mandate” laws that discriminate between technologies Congress deems “good” or “bad.” [Instead, Hatch proposes that Hollywood deem what technologies are “good” or “bad” through the courts. And don't think it won't happen. As soon as Hollywood manages to get a judgement against the provider of a particular technology, no one will dare touch it for fear of liability.] But technologies are rarely inherently either “good” or “bad.” [Hollywood thinks that the only good technology is technology that it controls. I can't think of a major advance in consumer electronics that Hollywood hasn't tried to put out of business through lawsuit.] Most can be used for either purpose; the effect depends on details of implementation impossible to capture – or predict – in prospective legislation. [Similar excuses are used whenever a legislature wants to pass the buck on deciding what the law should be to another branch. "Stop the bad uses. Here is a broad, vague mandate of power."]

Of course, the dysfunctional corrective mechanism that Sony proposed would have become problematic only if the Sony limitation was misunderstood or misapplied by lower courts. Unfortunately, that has now happened. ["Lower courts." You know, we already have a correction mechanism for lower courts. They are called "appellate courts." We even have a correction mechanism for appellate courts. It is called the "Supreme Court." You might argue that the system doesn't operate quickly enough. But we do have things like temporary injunctions and what not that are supposed to balance the harms while a decision is being made. Can you imagine if Congress had to jump in to change the law everytime a lower court screwed up? Congressmen would never have any time to raise more election money.]

In cases like Napster and Grokster, lower courts misapplied the substantial-non-infringing-use limitation. [I imagine that Napster would be quite surprised to hear this.] These courts forgot about “balance” and held that this limitation radically alters secondary liability. [Yeah, Napster was a hugely unbalanced loss for the RIAA.] In effect, these cases retained secondary liability’s control prong but collapsed its inducement prong. [Or, one could say that the courts were following the common law and applying the precedents. If "inducement" has been commonly cited in secondary liability copyright cases, I must have missed it.] The results of these cases prove this point: Napster imposed liability upon a distributor of copying devices who controlled infringing users; Grokster did not impose liability upon distributors who appeared to induce and profit from users' infringement. [Funny, there is no "and" in the statute. You don't have to "induce and profit from" users' infringement.]

A secondary-liability rule that punishes control and immunizes inducement is a public policy disaster. [This is highly disputable. One could argue that punishing inducement without control of dual-use technology is not a good idea, which explains why courts are reluctant to do it. I highly doubt that the judges in Grokster and Napster stayed away from inducement arguments because they favor copyright infringement. Let's see what Volokh has to say:

I know of no aiding and abetting or criminal facilitation prosecutions where the seller sold a genuinely dual-use product (other than speech), and couldn’t tell which users were going to use it for criminal purposes. If anything, the cases suggest the opposite: Even when a seller of a dual-use good or service knows (but doesn’t intend) that a particular customer will use the product criminally—for example, when an answering service operator knows that particular clients are prostitutes who use the service to arrange assignations—courts often refrain from imposing liability.]
It seems to permit the distribution of “piracy machines” designed to make infringement easy, tempting, and automatic. Even Harvard’s Berkman Center for Internet and Society suggests that this is happening. The Center warns that “it can be extremely difficult for a non-expert computer user to shut down” the viral redistribution that can otherwise automatically make the user an international distributor of infringing works. [Bad interface design - now a violation of copyright. More importantly, Derek Slater, who works for the Berkman Center, says this quote is taken out of context: Things That Bother Me, Vol. 1] The Center notes that the “complexity of KaZaA’s installation and disabling functions” may leave many users unaware that they have become a contributor to global, for-profit copyright piracy. [It is only "for profit" if you already assume liability for the network.] Unfortunately, “piracy machines” designed to mislead their users are just one of the perverse effects of a secondary liability rule that punishes control and immunizes inducement. [And one of the perverse effects of misleading consumers is that consumers stop using your products and software, especially when consumers get sued for using your products. Also, where Hatch has been arguing that the infringers are complicit in violating the law, now he seems to be arguing that they are unwitting dupes. If people are "unaware" that they are violating the law, does it really make sense to talk of "inducement"?]

Perhaps the least perverse of these effects has been years of conflict between the content and technology industries. Content creators sought the tech-mandate “corrections” that Sony proposed. [Now, the content owners are asking Congress to let them decide what the mandates are.] Technology industries opposed such laws because they too easily foreclose innocent or unforeseen applications. P2P software illustrates the problem: Today, most P2P software functions like Earthstation 5’s “piracy machine.” [If a company run out of a Palestinian Refugee Camp bought a bunch of photocopiers and claimed to support all sorts of book piracy, that would be a reason to regulate photocopiers?] Yet all agree that non-piracy-adapted implementations of P2P could have legitimate and beneficial uses. [Unfortunately, and this is what all the disagreement between the content and technology companies is about, is that they don't agree about what a non-piracy-adapated implementation of P2P would be. Democrats and Republicans agree that promoting a strong economy is a good thing. Unfortunately, they disagree what counts as promoting a strong economy.]

A rule that punishes only control also produces absurd results. Secondary liability should focus on intent to use indirect means to achieve illegal ends. [But intention will lead to results even more absurd. The problem, which Hatch ignores, is that intent is normally very difficult to prove. You have to look at all sorts of things outside the technology itself. Basically, it will normally come down to whether a jury likes the defendants or not. With plenty of Hollywood spokespeople willing to talk about "Boston Stranglers" and "hackers" it would be easy to paint any new technology as meant for evil purposes. When the Betamax debuted, Valenti basically painted Sony as the Yellow Peril - bent on destroying Hollywood and apple pie. Hollywood will do it again.] A rule that punishes only control degenerates into inane debate about which indirect means was used. [Well, this wouldn't be the first inane debate copyright has launched. Is a computer program in RAM a "copy" for purposes of copyright law or not, Senator?] Thus Napster and Grokster are regulated differently – though they function similarly from the perspective of the user, the distributor, or the copyright holder. [Strangely, that is how patent law works. I build something that does the exact same thing, but does it in a different manner, I don't get busted for patent infringement. There are other legal examples, but this isn't a terribly unusual thing in law.]

A rule that punishes only control also acts as a “tech-mandate” law: It mandates the use of technologies that avoid “control” – regardless of whether they are suited for a particular task. [Well, any sort of secondary liability rule is going to have tech-mandate qualities. For example, if one is going to design a technology, it had better have the possibility of substantial non-infringing uses. Also, as I noted above, an intention rule will also act as an effective tech-mandate, except that it will be Hollywood who determines what the mandate is.] Napster was punished for processing search requests efficiently on a centralized search index that it controlled. Grokster escaped by processing search requests less efficiently on a decentralized search index that it did not control. Rewarding inefficiency makes little sense. [Tell that to patent law. Seriously, though, what is Hatch arguing here? Does he think we could have Napster as it was under his new law? Since the law purports to leave the current doctrines of contributory and vicarious copyright liability unchanged, the original Napster would still be illegal. If Hatch was proposing to replace contributory and vicarious infringement with intentional inducement, that would be different. So, yes, the current regime supports some forms of inefficiency - though completely decentralized systems may be more robust - which is another type of efficiency. However, Hatch is only adding more potential inefficiencies into the system. Under this statute not only will Napster be illegal, so will Grokster (almost certainly). What is efficient about that? See also, Derek Slater, Things That Bother Me, Vol. 2. Derek's arguments about control are actually very similar to mine, so I won't repeat them here. And, hey, congratulations for reading this far! Thanks!]

A secondary-liability rule that punishes only control also punishes consumers: It encourages designers to avoid “control” by shifting risks onto consumers. [Whereas laws that punish control AND intent punish consumers by eliminating types of software many consumers use quite legitimately. It also punishes consumers by taxing innovation and turning technology development over to Hollywood. Another, less drastic solution would be for the government to sponsor a consumer education program, like those "no smoking" ads. Heck, why should government do it? If Hollywood is so concerned with the consumers, let them pay for an education campaign.] For example, Napster incurred billion-dollar liability because it controlled computers housing a search index that located infringing files. Programs like Kazaa avoid Napster’s “control” by moving their search indices onto computers owned by unsuspecting consumers. [Unsuspecting consumers or willful infringers? Which is it, Senator? If the consumers are unsuspecting, shouldn't we be considering a law absolving them of liability as well?] Consumers were never warned about the risks of housing these indices. [Call me crazy, but I think 3,000+ lawsuits is pretty good warning.] As a result, many consumers, universities, and businesses now control computers that house “mini-Napsters” – parts of a search index much like the one that destroyed Napster. [Remember that DMCA law, Senator? Most of these unsuspecting types will escape liability if they didn't install this software themselves. If they are still liable despite not knowing, shouldn't we be creating a safe harbor for them?] These indices could still impose devastating liability upon anyone who “controls” a computer housing them. A secondary-liability rule that punishes only control thus rewards Kazaa for shifting huge risks onto unsuspecting consumers, universities and businesses. [Of course, suing KaZaA out of business doesn't eliminate the liability for these people. That is the problem with decentralized services, there is no single point of control to eliminate. So, let's assume KaZaA is sued out of existance tomorrow. Does that do anything with regard to all those “mini-Napsters” out there?]

And search indices are just one of the risks that designers of P2P software seem to impose upon their young users to avoid control. For example, the designers of most filesharing software choose to lack the ability to remove or block access to files known to contain viruses, child pornography or pornography mislabeled to be appealing to children. [What does this have to do with copyright infringement? Isn't this a consumer protection issue? Shouldn't we call the FTC? Oh, yeah, the FTC has this to say: "Although the Commission has required warnings with respect to inherently dangerous products in appropriate cases, we are not aware of any basis under the FTC Act for distinguishing P2P from other neutral consumer technologies." And hasn't Congress already passed several laws dealing with pornography on the internet? Oh, yeah, they keep getting struck down by the courts, mostly.] This ability could create “control” and trigger liability. Aiding distributors of viruses and pornography may be just an unfortunate side effect of avoiding control while inducing infringement. [Hatch keeps talking about "avoiding control." Like companies will start creating filesharing programs that can be controlled as long as the Napster decision is still valid law. Hello, 2+2=4, Senator.]

A secondary-liability rule that immunizes inducement also encourages attempts to conceal risks from consumers: It is easier to induce people to take risks if they are unsure whether they are incurring a risk or its severity. The interfaces of most P2P software provide no warnings about the severe consequences of succumbing to the constant temptation of infringement. [Back to the FTC's testimony on this issue:

There is reason to believe that many consumers already are aware of some of these risks. For example, with respect to the concern that consumers may use P2P software illegally to download copyrighted material, the recording industry has brought nearly 2000 copyright infringement actions since July 2003 against consumers who used P2P file-sharing programs to download music. Thus, many consumers likely are aware that they also could be liable for copyright infringement if they engage in similar conduct....The FTC staff’s review revealed that distributors of P2P file-sharing programs use a variety of means to convey risk information to consumers. Distributors disclose risk information on their own Web sites or in their licensing agreements with consumers. Some distributors also provide consumers with a hyperlink to risk information at www.P2PUnited.org, one of the P2P file-sharing software industry’s trade associations. In addition, one of the main portals for downloading such programs, www.Download.com, discloses some risk information on its site.]

Another risk to users of P2P software arises when pornography combines with the “viral redistribution” that thwarts removal of infringing copies of works. Most filesharing networks are awash in pornography, much of it mislabeled, obscene, illegal child pornography, or harmful to minors. [Mislabeled porn. Damn, I hate that.] Anyone risks criminal prosecution if they distribute pornography accessible to minors over these child-dominated networks. [If they know they are children, yes. Otherwise I'm sure Ashcroft would be throwing every XXX webmaster in jail who hides pornographic images behind an "I'm 18" button. In any case, if someone knows for sure they are sharing with a minor and does it anyway, can the technology possibly be at fault?] As a result, one P2P distributor who does distribute “adult” content demands that it be protected by access controls. But every adult who uses this distributor’s software as intended to download one of millions of unprotected pornographic files automatically makes that pornography available for re-distribution to millions of children. [Will someone please think of the children?] This distributor has sat silently – knowing that its software exposes millions of its users to risks of criminal prosecution that the distributor cannot be paid to endure. [Hatch knows these people can't be prosecuted for this, but it turns opponents of this bill into supporters of smut, at least to those who are logically challenged.]

Perhaps the worst effect of punishing control and rewarding inducement is that it achieves precisely what Sony sought to avoid: It leaves copyright holders with an enforcement remedy that is “merely symbolic”: It seems real, but it is illusory. [Hardly. There are plenty of strategies that Hollywood can use to thwart illicit filesharing, but it would require a shift in business model, something they refuse to do. Of course, we could also consider ways to make enforcement against direct infringers more efficient, but that wouldn't give Hollywood the distribution control that is their true aim.]

In theory, a rule that immunizes inducement still permits enforcement against those induced to infringe. [I bet it doesn't seem theoretical to those targeted by the John Doe lawsuits.] At first, this remedy seems viable because copyrights have traditionally been enforced in lawsuits against direct infringers who actually make infringing copies of works.

But a fallacy lurks here: The “direct infringers” at issue are not the traditional targets for copyright enforcement. [Why is "direct infringers" in quotes? Are they direct infringers or not?] In fact, they are children [Will someone please think of the children?] and consumers: They are the hundreds of millions [Hundreds of millions. That is an awful lot of "direct infringers." Certainly a higher estimate of infringers than I have seen before.] of Americans – toddlers to seniors – who use and enjoy the creative works that copyrights have helped create. [Indeed. Perhaps Hatch should pass a law immunizing children and consumers from infringement lawsuits if he is so concerned.]

There is no precedent for shifting copyright enforcement toward the end-users of works. [Now, Hatch has dropped all the infringement talk.] For nearly 200 years, copyright law has been nearly invisible to the millions who used and enjoyed creative works. [Well, that horse is out of the barn and closing the door ain't gonna help. Even if KaZaA goes out of business tomorrow, Gnutella won't. In any case, as the world becomes ever more connected, citizens are going to have to become more familiar with copyright law, whether we have an INDUCE Act or not.] Copyright law was invisible to consumers because the law gave creators and distributors mutual incentives to negotiate the agreements that ensured that works reached consumers in forms that were safe to use in foreseeable ways. [Plus, consumers were unable to be publishers. Now that consumers have these great "copy devices," aka connected PCs, you'll never be able to keep consumers ignorant. Doesn't make sense.] Now, those incentives are collapsing. [And the INDUCE Act brings these incentives back, how?] As a result, artists must now waive their rights or sue consumers – their fans. [Shucky darn. And the INDUCE act will immunize fans threatened by the "artists," how? Is Hatch guaranteeing that the RIAA will drop its consumer lawsuits if they get this law?]

Worse yet, artists must sue their fans for the sin of misusing devices designed to be easy and tempting to misuse. [Yeah, that IM is just totally too tempting. Oh, wait, Hatch is talking about P2P, as he ... well, he actually never defines it.] That is unfair: When inducement is the disease, infringement can be seen as just a symptom. [You're not guilty of infringement - you're just sick. "Hi, I'm Ernest, and I'm an infringer." "Hi, Ernest!"] Yet artists must ignore inducers who profit by chanting, “Hey, kids, infringement is cool, and we will help you get away with it.” [Well, if they are chanting ... oh, wait, the only one chanting is in Palestine, outside of Hatch's reach. The FTC says the ones in the US give adequate warning of the risks.] Instead, artists can only sue kids [Will someone please think of the children?] who succumb to this temptation. They must leave Fagin to his work – and sue Oliver Twist. [The difference being, however, that Fagin has specific knowledge of the specific individuals he is sending out to commit specific crimes. Slightly different case, don't you think?]

This sue-Oliver “remedy” is a debacle. For example, immunizing inducement ensures that artists will have to sue their fans: Inducers will have both the incentive and the means to thwart less extreme measures, like educational campaigns. [Yep, I was in a theater the other day and as soon as the "Don't Pirate" message came on, some dude in a KaZaA jacket distracted me with a bright shiny light.] For example, RIAA tried to avoid lawsuits against filesharers by sending educational instant messages to infringers. Kazaa, for “privacy” reasons, disabled instant messaging by default in the next version of its software. Lawsuits then followed. [Where's the memo in which the RIAA says, "if only we could send instant messages we won't sue direct infringers"?]

And imagine the poor parent who tries to tell a teenager [Will someone please think of the children?] that free downloading of copyrighted music is illegal. The teenager, confused because “everyone is doing it,” consults a leading technology-news site promising a “trusted source of information for millions of technology consumers.” [Yeah, teenagers are confused. I would expect the average teenager is, by this time, more knowledgeable about copyright law than their parents.] There, the teenager finds a P2P distributor promoting “Morpheus 4.0, the only American filesharing software ruled legal by a U.S. federal court.” [That damn C|Net News! When will the free press ever learn?] This statement is false: Grokster did not rule Morpheus “legal”; in fact, the case only confirmed that downloading copyrighted works is illegal. [Umm, if Grokster is not legal, what is the issue again?] Below this misinformation, the teenager will find an independent editorial review rating Morpheus 4.0 as a “Recommended” download and “an excellent choice” for those seeking “the latest and greatest.” Who will the teenager believe? [The Senator who is trying to confuse the issue?]

Worse yet, if artists must sue only the induced, they just feed the contempt for copyrights that inducers breed. [Enforcing the law creates contempt for the law. That is a new one on me. I thought it was the unenforced laws that created contempt. I thought it was the fact that the RIAA didn't sue for direct infringerment for a couple of years of P2P filesharing that increased people's belief that it was okay. See, Why the RIAA Should Continue to Sue Filesharers. Perhaps we should immunize consumers for infringement lawsuits and the artists won't be tempted to create contempt for the law.] Inducers know that people induced to break a law become that law’s enemies: Once you break a law, you must either admit wrongdoing or rationalize your conduct. [You know what else make people become the law's enemies? When the powerful use the law to needlessly ignore consumers desires. Would it have been that difficult to launch something like iTunes shortly after Napster launched?] Rationalization is often so easy. You can blame the law: Copyright is a stupid law needlessly enshrined in the Constitution by naives like James Madison. [That James Madison, I knew there was something wrong with him. Of course, using the law to ignore consumer desires and create demand for infringement is also easily rationalized.] You can blame the victim: Some rock stars still make money; I do not like the “business model” of the record labels. [On the other side, you could blame new technologies that restructure business relationships. "I don't like what the internet does to my business model. I shouldn't have to change."] You can blame the randomness of enforcement: Everyone else was doing it, so why not me? Anyone who has talked to young people about filesharing has heard such rationalizations time and again. [And anyone who has talked to record industry executives has heard rationalizations as to why they shouldn't have to make any changes as technology develops.]

And forcing artists to ignore inducers and sue the induced locks artists into a war of attrition that they are unlikely to win. [Well, if all they do is launch lawsuits, yes. But there are plenty of other business models they could adopt.] If you imagine inducement as a bush, this “remedy” forces artists to spend their money to sever each leaf – while the inducer makes money by watering the root. [If you were a little more imaginative, you could see content owners placing little ceramic pots for the leaves to voluntary fall into and sprout. It's a messy metaphor, but you get the picture.] Artists may not be able to sustain this unending battle. [What is Hatch talking about? Infringement lawsuits could become a profit center. I'd start by concentrating on the Hollywood, Manhattan and Georgetown neighborhoods.]

This may let inducers attempt an extortionate form of “outsourcing.” Inducers can increase or decrease their devices’ propensity to encourage piracy. [Inducers aren't the only ones with a piracy knob to turn. Content owners can also increase and decrease piracy. If DVDs cost $100, there would be more DVD piracy. Hatch calls this extortion, I call it a market. It may not be a market that Hatch likes, but is isn't going away.] Inducers can thus tell American artists that if the artists pay the inducers to become licensed distributors of their works, perhaps fewer bad things will happen. [American artists, perhaps, but not American content owners.] Implicitly, if artists do not pay, perhaps more bad things will happen. [Alternatively, the non-American content owners can increase the costs of filesharing through a variety of tactics and make licit downloading more attractive. No need to do a deal with the "inducers".] Were artists to succumb to such tactics, jobs and revenues created by the demand for American creative works would go overseas to some unsavory locales. [P2P = Terrorism? What is the argument here? Is Hatch claiming that INDUCE Act will impact piracy overseas? Is so, huh?]

Worst of all, inducers will inevitably target children. [Will someone please think of the children?] Children would be easily induced to violate complex laws like the Copyright Act. [Yeah, the Copyright Act is so complex that explaining the basics of filesharing is beyond children who can download and install a filesharing program.] Any child is a terrible enforcement target. And because most adults never induce children to break laws, children induced to infringe copyrights would not even be “bad kids.” [Don't we already have a government agency to deal with problems like this? Let me think, isn't there some government agency that keeps track of Hollywood advertising, Tobacco advertising, and similar? Oh, yeah, the FTC. The way Hatch is talking, one would think we've never had to deal with similar problems before.] Indeed, they would probably be smart, mostly law-abiding young people with bright futures. Innocent, mostly law-abiding children make the worst enforcement targets – and thus the best “human shields” to protect an inducer’s business model. [Apparently these mostly law-abiding children don't have any adult supervision.]

This threat to children is real. Today, artists are suing high-volume filesharers who cannot be identified until late in the process. One filesharer sued for violating federal law over 800 times turned out to be a 12-year-old female honor student. This otherwise law-abiding young girl and her family then faced ruin by the girl’s favorite artists. The public knew that something was wrong, and it was outraged. [Interestingly, this also served to alert and educate the public to the dangers of filesharing. That is often how these things work. How many times do parents only find out about the illegal actions of their children when one of them has a run in with the law?] So the people who gave that girl an easily misused toy – and profited from her misuse of it – exploited public outrage with crocodile tears about the tactics of “Big Music.” [Problem is, did the software company specifically know it was giving software to a child? Should we require companies to require adult verification before people can download software (although the law won't let us require this for pornography)? What about IM? What about IRC and email? Who knows what sort of mischief a teenager can get into with GMail account? How does Google know how old the people who use its services are?] And then, I imagine, they laughed all the way to the bank. [Actually, I doubt it. The PR backlash hit both the RIAA and the P2P companies.]

The Supreme Court could not have intended to force artists to sue children [Will someone please think of the children?] in order to reduce the profits that adults can derive by encouraging children to break the law. No one would intend that. Yet it seems to be happening. [Yeah, it could be that the courts expect the companies to adapt to the new business environment and provide attractive alternatives. If videotapes were only sold for $100 or more, Betamaxes would have been used for a lot more piracy. But that didn't happen and everyone was happy.]

These are the inevitable results of a secondary-liability rule that immunizes inducement. [Umm, no. It is also a combination of the RIAA not taking the step of providing appropriate alternatives to reduce the incentive to infringe. Actually, about the only thing inevitable here is that innovation will be severely taxed by Hollywood. Piracy won't stop. That is why these programs are called "decentralized P2P."] This “rule” has created the largest global piracy rings in history. [Global, as in this law will not actually accomplish much, except to burden US innovators.] These rings now create billions of infringing copies of works, and reap millions in profits for leaders who insulate themselves from direct involvement in crime by inducing children and students to “do the dirty work” of committing illegal or criminal acts. ["Rip, Mix, Burn" Apple?] These rings then thwart deterrence and condemn attempts to enforce the law. [Correct me if I am wrong, but didn't Hatch just condemn attempts at enforcing the law as creating contempt?] These rings may now use profits derived from rampant criminality to extort their way into the legal Internet distribution market – a market critical to the future of our artists and children. [No industry has ever done that before. Not the piano roll market, not the film market, not the cable market. Oh, wait...]

This must stop – and stop now. Artists have tried: They targeted for-profit inducers. [Yeah, and the case hasn't come out of a single appellate court yet. Let's not rush to fix what might not be broken.] But artists were thwarted by a court ruling that held, in effect, that although artists can sue exploited children and families into bankruptcy, courts need “additional legislative guidance” to decide whether artists can, instead, sue the corporations that profit by inducing children to break the law. I find this assertion wholly inconsistent with the intent of both Congress and the Supreme Court. But until this fundamentally flawed ruling is overruled by legislation or higher courts, artists cannot hold inducers liable for their actions.

Fortunately, Congress has charged the Department of Justice to enforce the Criminal Code. [Phew ... glad to know that they're not ignoring what we pay them to do.] In the Criminal Code, Congress made it a federal crime to willfully infringe copyrights or to distribute obscene pornography or child pornography. [So now, instead of being sued into bankruptcy, those children Hatch is so concerned about will be going to jail?] Congress also made it a crime to induce anyone – child or adult – to commit any federal crime. [So ... the point of this staute is? After all, how hard would it be for the DOJ to toss the executives of these inducing companies into the klink?]

Indeed, Congress codified many forms of criminal secondary liability in the Criminal Code. I have already quoted its first sentence. Here is its second: “Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.” One court has said that this ensures that “[a] crime may be performed through an innocent dupe, with the essential element of criminal intent residing in another person.” [Gee, "one court." That's persuasive argument Senator. It would be nice to know a few of the details of the case. I suspect that the criminal working through a dupe was working through a specific dupe that they knew would be committing a specific crime. Not quite the same thing as P2P.] Not coincidentally, some federal prosecutors worry that P2P software makes infringement so tempting, easy and automatic that many of its users will lack criminal intent. [So, do you want to prosecute them or not, Senator? And do you think they should also be innocent of civil liability for direct infringement? After all, if you can enforce against the inducers, why do you need to enforce against the direct infringers, since they sound like such innocents?] Perhaps – but their relative innocence will not protect their inducers. [Good, no need for this statute then. After all, how hard will it be to find willful infringement with all this inducement going on?]

The Criminal Code also codifies other forms of secondary liability, like this one:

If two or more persons conspire to injure, oppress, threaten any person in any State … in the free exercise or enjoyment of any right or privilege secured to him by the Constitution or the laws of the United States, …. [t]hey shall be fined under this title or imprisoned not more than ten years, or both…. [This is relevant, why?]

These examples of laws imposing secondary criminal liability have something in common: Congress codified no exceptions for “substantial non-criminal uses.” [Indeed. But, luckily, the courts have generally required something more than essentially knowing that some of your actions will likely assist others in committing crime, as Volokh has shown. Otherwise, gasoline stations in crime-ridden neighborhoods could be held liable for knowing that some of the gas they sell will be used in drive-by shootings.] The message is clear: Those who induce others to commit crimes cannot avoid prison by showing that some of them resisted. [Hatch calls it "resisted." I call it people using P2P for perfectly legitimate reasons. You might as well say, sports car dealers cannot avoid prison by showing that some sports car owners resisted speeding.] I will work with my colleagues in Congress to ensure that the Department of Justice enforces the federal laws that prevent anyone from inducing violations of any federal law by our citizens, our students, or our children. [Will someone please think of the children?]

Congress, too, must do its part by enacting the Inducing Infringement of Copyrights Act, S. 2560. This bill will protect American artists, children [Will someone please think of the children?] and taxpayers by restoring the privately funded civil remedy crippled by the Grokster ruling. Congress must act: A federal court has held [Oh my God! A single federal district court!] that artists can only enforce their rights by suing exploited children and students pending “additional legislative guidance” about whether artists can, instead, sue the corporations that profit by inducing children to break laws and commit crimes. ["instead" or "in addition to." Somehow I doubt all the consumer-targeted lawsuits will stop.] Silence could be misinterpreted as support for those who profit by corrupting and endangering others. [Indeed. It might also be interpreted as support for technological innovation and progress. Or support for a reasonably limited copyright monopoly. Or support for calm, rational thought instead of hysteric demagoguery.] This bill will restore the tried, privately funded civil enforcement actions long used to enforce copyrights. [Funny, I thought Hatch wanted the government to start engaging in civil enforcement. I think he called it the "PIRATE Act": PIRATE Act Reveals Sen. Hatch as Strange Ally of Pornography Industry]

This bill will also preserve the Sony ruling without reversing, abrogating or limiting it. [Only in the narrow sense that one will still be able to sell the Betamax videotape system, except that it has been discontinued.] The Inducement Act will simply import and adapt the Patent Act’s concept of “active inducement” in order to cover cases of intentional inducement that were explicitly not at issue in Sony. [They weren't at issue in Sony because there was no doctrine of copyright inducement, otherwise, believe me, Hollywood would have made the argument in court. They certainly made the argument in the court of public opinion and Congress. Let's go back, shall we, to Valenti's infamous testimony:

It is a piece of sardonic irony that this asset [Hollywood], which unlike steel or silicon chips or motor cars or electronics of all kinds -- a piece of sardonic irony that while the Japanese are unable to duplicate the American films by a flank assault, they can destroy it by this video cassette recorder....Now, these machines are advertised for one purpose in life. Their only single mission, their primary mission is to copy coyrighted material that belongs to other people. I don't have to go into it. The ads are here. Here is Sony that tells you that you can record one channel while watching another. You can program to record a variety of shows on four different channels for up to 14 days in advance if you like....Now, Mr. Chairman, how many people would want to buy these machines if you said you couldn't use any copyrighted material on it. The machine would be useless and this is what the Ninth Circuit said. They advertise their machine blatantly and deliberately saying the way to enjoy this machine is to copy somebody else's copyrighted programs.
That certainly sounds like it would meet the "inducement" criteria that Hatch is talking about. So, when Hatch says it wouldn't overturn Sony, he is being disingenuous at best. As an aside, don't you like how charming Jack Valenti slyly insinuates that the insidious Japanese can't win a direct assault on Hollywood and thus must, shall we say, sneak attack with the VCR?] The Inducement Act also preserves the Section 512 safe harbors for Internet service providers. [Wait a minute, I thought Hatch was implying above that colleges, universities and businesses would be liable for the "mini-Napsters" on their servers.]

The bill also contains a savings clause to ensure that it provides the “guidance” courts have requested – not an iron-clad rule of decision for all possible future cases. This flexibility is critical because just as infringement cases are fact specific, so should inducement cases center on the facts of a given case, with courts endowed with the flexibility to impose just results. This bill does not purport to resolve or affect existing disagreements about when copies made and used within an individual’s home environment are permissible and when they are infringing. Rather, this bill is about is the intentional inducement of global distribution of billions of infringing copies of works at the prodding and instigation of sophisticated corporations that appear to want to profit from piracy, know better than to break the law themselves, and try to shield themselves from secondary liability by inducing others to infringe and then disclaiming control over those individuals. [Honestly, I don't know how Hatch makes these claims with a straight face. If someone sells a device that makes it easier to transfer files within the home, the device likely makes it easier to infringe in the home. There is really no limiting clause. Courts will be forced to argue about whether certain copying within the home environment is infringing.]

I also want to thank everyone who has worked with us to craft a bill that addresses this serious threat to children and copyrights without unduly burdening companies that engage in lawful commerce in the wide range of devices and programs that can copy digital files. As Sony illustrates, clear knowledge that a copying device can be used to infringe does not provide evidence of intent to induce infringement. [Ummm ... no. The issue of inducement was not properly addressed by the Sony case. I thought you were supposed to be a legal expert, Senator.] It was critical to find a way to narrowly identify the rare bad actors without implicating the vast majority of companies that serve both consumers and copyright-holders by providing digital copying devices – even though these devices, like all devices, can be misused for unlawful purposes. [Indeed, it is critical, unfortunately this is not a narrow bill.] In particular, I would like to thank the Business Software Alliance for its invaluable assistance in crafting a bill that protects existing legitimate technologies and future innovation in all technologies – including peer-to-peer networking. [Wait a minute ... I thought all the existing technologies were legitimate, but it was the actor's intentions that were the crime, not the technology itself. The cognitive dissonance of this speech is giving me a headache.]

Senator Leahy and I look forward to working with all affected parties to enact this bill and restore the balance and private enforcement that Sony envisioned. [Technically, this isn't a lie. But it is the functional equivalent of one. You see, it is pretty clear to me that Hatch's intent here is to mislead.] But until Congress can enact the Inducing Infringement of Copyrights Act, the duty and authority to stop inducement that targets children [Will someone please think of the children?] and students resides in the Department of Justice that Congress has charged to protect artists, commerce, citizens and children. [Mr. Ashcroft - sic 'em.] The Department must act now to clarify some simple facts: American has never legalized the “business model” of Fagin and Bill Sykes. [Interesting factoid: Some people spell "Sykes" as "Sikes." Hatch spells it both ways in this speech.] Modern Child-Catchers cannot lawfully profit by luring children into crime with false promises of “free music.” [Again, I remind the reader that the Child-Catcher was an agent of the government, arresting children because Congress the evil ruler had made all children illegal. Let's not have a Hollywood-run "Technology-Catcher" tossing innovators into jail with false promises of campaign contributions for Congress.]

Mr. President, I urge all of my colleagues to support S. 2560, the Inducing Infringement of Copyrights Act. [Hey, what the heck, I urge them to undermine the bill....Congratulations! You made it all the way through. I hope you enjoyed this annotation and please leave your comments and suggestions.]