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.

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.

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.

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).

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]

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).

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.

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 e