Last week I noted that former Intel VP Les Vadasz wrote an editorial in the Wall Street Journal opposing the Inducing Infringement of Copyrights Act (IICA, née INDUCE Act) (Fmr Intel VP and CEI Oppose INDUCE Act (IICA)). Unfortunately, the op-ed was behind a subscription wall, so not everyone could read the full thing. Fortunately, I've gotten permission to republish the op-ed in full here. Read on...

Reprinted from The Wall Street Journal © 2004 Dow Jones & Company, Inc. All rights reserved.

The Wall Street Journal
(Copyright (c) 2004, Dow Jones & Company, Inc.)

Wednesday, July 21, 2004

A Bill That Chills

By Les Vadasz

Two years ago, I had the "pleasure" of testifying before the Senate Commerce Committee on the so-called Hollings bill, which aimed to protect entertainment content against piracy by getting the government involved in the design of the innards of personal computers. Far from protecting against piracy, the bill would have suffocated innovation in the high-tech industry. Rationality prevailed, and the bill never moved forward. Yet last month, a bill with similar goals was introduced by Orrin Hatch. The Inducing Infringement of Copyrights Act of 2004 -- the "Induce bill" for short -- would make liable anyone who "intentionally aids, abets, induces or procures" a copyright violation. As President Reagan once remarked, "Here we go again." Sen. Hatch and others argue that the bill will protect kids from porn and punish those who "intentionally induce" piracy. In reality it will do neither. But it will do serious harm to innovation.

The problem with the "Induce bill" is not its intent, but its overly broad language: Any person or device that "aids, abets or induces" the sharing of copyrighted material would be subject to civil and criminal proceedings. This would include the manufacturers and end-users of such popular file-sharing devices as Apple's iPod. A mock lawsuit is currently circulating on the Internet, showing how iPods could be deemed illegal under the bill, and how Apple could face fines of $150,000 for each one produced; Toshiba could even face fines for making the hard drives inside them. But it doesn't stop there. There might even be fines for newspapers like The Wall Street Journal for publishing reviews of iPods. This is, of course, ridiculous, but certainly possible under the wording of Induce.

The chilling effect that a law like this would have on innovation cannot be underestimated. I spent most of my 42-year career in high-tech focusing on the business challenges of new technology, either as an engineer or manager developing new products, or as the president of Intel Capital, funding many new ventures in the IT industry. I learned that innovation needs the right environment for it to be nurtured, funded, protected and rewarded.

Even in the most optimal situation, only a small minority of projects become commercial successes. Although we know this, we fund them because of the huge opportunity they represent if they succeed. We feel comfortable judging the risk, since the past performance and creativity of the group means that some of the outcome is under our control. But the final result is always uncertain and a law with dodgy legal implications will tip the balance against funding.

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Consider this: What if the "Induce bill" had passed back when one of my projects was the development of the first microprocessor? Intel was a tiny company then, but with high hopes, operating in a yet-to-be-developed market. Would we have pursued this idea if someone said that we'd get sued for "inducing" someone to steal? After all, computers that pirates use have microprocessors, too. This may sound far-fetched, but it isn't; you need to live within one of these tiny, innovative, high-tech companies to really understand what uncertainty means. I'm glad that a development as important as the microprocessor never had to face this dilemma.

If this bill is enacted, many new opportunities will migrate outside the U.S.; others will never happen. It's unconscionable that at a time when our economy needs more innovation, we'd consider enacting a law that would surely lead to less. Innovation means jobs, productivity, a betterment of our lives. When you tamper with that, you damage the engine that gave us our living standards. The Hollings bill was attempting to tamper with innovation -- it had to be stopped. The "Induce bill" is similarly attempting to tamper with innovation -- it must be stopped, too.

To be sure, new technology will pose societal challenges. The Internet and the PC were very important developments, and we have yet to fully digest all their ramifications in our everyday lives. Some of the unintended consequences of new technology are clearly not desirable. No responsible person in the high-tech industry condones the practice of piracy or the exposure of our children to porn via the Internet. However, bills like Induce are misleading us, by making us believe that they "solve" the problem, when in effect they only cause bigger problems.

What we need more are innovations like Apple's iTunes Music Store that make the Internet a more friendly business environment for entertainment content. What we need is more risk-taking by the entertainment industry to utilize new technologies, to both deliver and protect their content. The more we attempt to provide government protection to the old ways of doing business, the less motivation we provide to the entertainment industry to adapt and benefit from new technology. We need better ways for parents to supervise children's use of the Internet: New filtering technology is invented every day. We need more willingness by parents to oversee what kids are doing with the computer -- and new technology can help with this task. Let's not abdicate this responsibility to the government.

Most importantly, what we need are legislators who can curb their urge to legislate in areas where their actions are likely to do more harm than good.

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Mr. Vadasz was a director and executive vice president of Intel until his retirement last year.

Reprinted from The Wall Street Journal © 2004 Dow Jones & Company, Inc. All rights reserved.

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.