I recently had the pleasure of attending a very informative presentation given by the Media Law Resource Center on two very important pieces of legislation currently working their way through Congress. These contentious bills focus on curtailing online infringement and piracy in a creative way, by disabling access to the websites themselves and cutting off the website owners' financial incentives to enable infringement. These new solutions, if enacted, may present groundbreaking new enforcement tools for content owners – but will also present significant challenges for certain other industries, namely telecommunications and internet service providers.
The bills, the Protect IP Act in the Senate and the Stop Online Piracy Act in the House both seek to achieve the same goal, to isolate and financially starve foreign and certain domestic websites that are focused primarily on infringing the intellectual property rights of others. Since foreign websites are not as susceptible to the same legal protections available to content owners as are domestically run websites (e.g. service of legal process, litigation, subsequent liens and attachments, etc.), these bills attempt to impose upon the foreign websites certain punishments that should effectively achieve the same ends, i.e. shutting them down. Here are some brief highlights of the bills.
PROTECT IP ACT
The Protect IP Act is designed to stop websites that are "dedicated to infringing activities" whether they are located within or outside of the United States. Often owned and run anonymously, it is an expensive proposition for a U.S. copyright or trademark owner to attempt to track down and disable such a website. Typically these websites illegally stream major motion pictures, music, television shows or even sell counterfeit trademarked goods such as purses and shoes. The Protect IP Act aims to streamline the process of shutting down such websites by mandating that if certain conditions are met, many of the tools the owners of these websites rely on to generate business and profits would be disabled.
In order to enable U.S. law enforcement or a private party to take advantage of these remedies, the website must be "dedicated to infringing activities." The bill defines this term so that only websites, whose primary purpose is infringement, are affected. It seeks to maintain this line in the sand by requiring that it be proven that the website has "no significant use" other than engaging in, facilitating, or enabling any of the following:
- Copyright infringement; or
- Infringement or violation of any of the protections contained in the DMCA including its anti-circumvention provisions; or
- The sale or promotion of counterfeit goods
As you can see, one of the keys to triggering the remedies provided for in this bill would be a determination by a court that the website at issue has no significant use other than to infringe. It is not yet clear from the text of the bill how "significant" would be defined – 15%, 25%, 40%?
The remedies available if the website is proven to be dedicated to infringing activities are threefold and can involve all or some of the following internet "intermediaries" – DNS server operators, financial transaction providers, Internet advertising services, and information location tools (intended here to mean search engines). The available remedies vary depending on whether U.S. law enforcement or a private party has brought the enforcement action. The first remedy, blocking the domain name from DNS servers and search engine results so that it can't be found in the U.S. – is only available to U.S. law enforcement. While an effective tool to block most users, this strategy does have its flaws. This remedy would require that DNS servers disable the connection between the domain name (e.g. www.genericwebsite.com) and the actual IP address (the string of numbers) that the domain name is connected to. This means that once that connection is severed, users who type in the domain name directly into a browser won't be connected to the website. For example, here is a link to a website that was disabled by U.S. law enforcement using this process. The drawback is that the website isn't really blocked, a user is just unable to connect to it by typing in the domain name directly into the browser. Further, that domain name will also be blocked from showing up in search engine results. If a user is sophisticated enough, they can easily find ways around these problems and connect to the website even from within the U.S. In other words, this wouldn't make connecting to the website impossible, it would just make it more difficult. Another remedy would mandate that financial institutions cease doing business with the website to the extent U.S. customers are involved. This means U.S. credit card processors will no longer be able to remit payments to the website owner for U.S. derived revenue. Similarly, advertising services that provide ads to the website (from which they derive most of their revenue) would also be prohibited from doing business with the websites. These latter two remedies would be available to both U.S. law enforcement and private rights holders.
STOP ONLINE PIRACY ACT (SOPA)
SOPA, the House version of the Protect IP Act is similar in structure and intent to the Protect IP Act but does have some significant differences. The biggest difference is that SOPA lowers the bar on what types of websites can be considered "infringing." Unlike the Protect IP Act, SOPA defines the type of website that qualifies as infringing less stringently, leaving a little more room for content owners to argue that a website infringes its intellectual property. This is of course exactly what has many internet services providers, search engines, and telecommunications companies concerned. SOPA allows the government or a private owner to take action against a website that is "dedicated to the theft of U.S. property." Based on the definition contains in the proposed statute, it appears as though under either formulation a wide swath of websites could fall under this definition, much larger than would fall under Protect IP Act and its requirement that the website have "no significant use" other than to infringe.
Another difference versus the Protect IP Act is that SOPA implements a DMCA-type notice and counter-notice procedure that a private party must undertake prior to bringing any action against a website. More specifically, SOPA would require a content owner to send a notice to a payment network provider or internet advertising service prior to obtaining a court order alleging that the website is dedicated to the theft of U.S. property, and directing those companies to cease doing business with the website within five days. The intermediary receiving the notice is then entitled to file a counter notification, but unlike the notification provision in the DMCA counterpart, SOPA would not require the payment network provider or internet advertising service to restore services to the website in the event of a counter notification. As under the Protect IP Act, SOPA provides for financial and advertising embargoes in the event a court order is obtained designating a website a foreign infringing site.
Critics of the bills (particularly SOPA) are numerous and vocal. Many internet service providers and search engines, such as Google and Yahoo, are actively campaigning against them arguing that they amount to censorship and may have serious unintended consequences. Regardless of which side of this debate you are on, one thing is certain, the potential new enforcement tools these bills would create will be analyzed for months if not years to come and if enacted will have a significant effect on both content owners and the technology and communications industries. We will of course keep you closely informed as they progress.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.